1.

responsibility for the whole program can be fixed by the statement of the Supreme Court which, on page 18 of the majority opinion, reads: This fertilizer had been produced and distributed at the instance, according to the specifications and under the control of the United States.

Tests conducted at the request of the Government to determine the explosive and fire hazards of FGAN were terminated by it at an intermediate stage against the recommendations of a research laboratory hired by the Government, and in the face of the suggestion that further research might point up suspected dangers. In addition there was a continuing history of fires, complaints of overheated FGAN in charred bags, and incidents of ammonium nitrate explosions. Yet, in the shipment of this product, the Government treated it as an everyday commodity of commerce labeling it simply as a fertilizer without warning of its propensities. Certainly the common carriers and people who handled the cargo in transit could not be expected to possess the facilities or technical knowledge to determine for themselves the latent and inherent dangers of this complex compound. Manufacturers today must keep pace with the times and use the greatest caution and integrity to insure the safety and well-being of all. Since the Government knew that FGAN possessed explosive characteristics, it had the duty and obligation, as would be expected of any manufacturer, to know its own product thoroughly and to ascertain the enormity of the forces it was turning loose upon unsuspecting persons.

The particular fertilizer which blew up at Texas City was part of a project through which the United States Government was seeking to carry out a program of foreign aid to various war-ravaged and famine-stricken areas overseas. It not only initiated the program but, controlled all phases of the project right from the manufacturing stage to the final delivery of the fertilizer at its destination. While it has been claimed that, pursuant to a sell-back arrangement, title to the FGAN at Texas City was not in the United States Government, a thorough study of the evidence makes it all too clear that the Government exercised substantially all the prerogatives of ownership over the fertilizer and, through a system of priorities, controlled or had the power to control the entire fertilizer program to the exclusion of all others.

Of course, whether the Government owned the fertilizer which blew up at Texas City or whether title to the product had passed to another is, in the final analysis, unnecessary to decide. The evidence before the committee overwhelmingly proves that FGAN, an inherently dangerous and hazardous explosive, was introduced into the flow of commerce by the Government without proper safeguard. That fact alone, in the opinion of the committee, is sufficient to place responsibility on the Government, for it is a well established jurisprudential principle that the manufacturer of a dangerous commodity who introduces it into the stream of commerce must fully test its properties and even though the product has passed beyond its ownership and control, it must nonetheless take adequate precautions and give adequate warnings for the protection of those who may be exposed to the danger. This the Government failed to do. And as a result over 4,000 innocent victims-people who not only were incapable of contributing to the disaster but, because of the suddenness and force of the explosions.

could not even take flight from it-were either injured or killed. The committee therefore believes that it is morally right that the United States Government should reimburse these claimants for the injury and damage caused by its officers and employees in negligently carrying out the FGAN program.

In undertaking the manufacture and production of FGAN, the Government took what is known as a calculated risk. As the majority opinion of the Court of Appeals for the Fifth Circuit states:

Even if some danger were recognized, the necessity of providing means of existence to the devastated areas might have called for the exercise of discretion as to whether to take a "calculated risk." (197 F. 2d, 771, 778.)

The "calculated risk" was taken for the benefit of the devasted areas of the world. It resulted in a benefit to the United States as a whole in that it prevented unrest and disorders which would have resulted from hunger and mass starvation. As noted in the court of appeals' opinion, such disorders would have required the maintenance of adequate military forces in occupied areas (197 F. 2d 777) and might have lost some of our allies like France to communism. Since the fertilizer program was taken by the Government for humanitarian purposes, among others, it seems only right that it should reimburse, insofar as it is humanly possible, the comparatively few people who happened to be injured or damaged because of it.

RECOMMENDATIONS

For reasons set out in the preceding pages, the committee is of the considered opinion that the Government is wholly responsible for the explosions at Texas City and the resulting catastrophe. It therefore recommends that Congress take appropriate action, through legislation, to compensate claims for property damage, personal injuries, and death caused by the explosions which occurred at Texas City, Tex., on April 16 and 17, 1947.

There is set out as a part of this report a draft bill containing provisions which would effectuate the recommendations of the committee. Generally, the draft bill would authorize the Secretary of the Army to investigate the claims to determine whether they are causally connected to the explosions and then to settle the damages claimed to have been sustained by each individual claimant (sec. 1 (a) of the draft bill). Precedent for such action is to be found in the Port Chicago, Calif., explosions where, through legislation, the Congress conferred expanded jurisdiction on the Secretary of the Navy to settle claims for property damage, death, and personal injury arising out of that disaster. (See Public Law 423, 78th Cong., and Public Law 637, 80th Cong.)

The total amount claimed either by or on behalf of persons who had suffered damages as the result of the explosion was roughly set at the time of the court litigation at $200,000,000. Experience has shown, however, especially with regard to disasters, that amounts claimed against the Government are, for the most part, in excess to what Federal courts will finally allow. At the hearings which the special subcommittee conducted in Galveston and Texas City, Tex., lawyers representing several hundred claims testified that the total amount of all claims could more realistically be set at somewhere between $60,000,000 and $100,000,000. In fact, it was admitted by

one attorney that he filed, because of the running of the statute of limitations, a John Doe claim for $40,000,000 on behalf of any claimants which he might have thereafter acquired and that in truth and in fact the claims which he did acquire were not worth $260,000— an overestimated difference of some $39,740,000.

In order to cut down the amount for which the Government would be liable, the committee recommends that a limitation of $10,000 be placed on claims for wrongful death (sec. 2 (a) of draft bill), and that only those persons permitted to bring such actions under the laws of Texas be permitted to submit wrongful death claims to the Secretary of the Army. The committee is also recommending that a limitation of 40 percent of the amounts paid out by the subrogees be placed on subrogated claims (sec. 2 (b) of draft bill). It may be well to point out that Congress in the past has provided for the reimbursement of subrogees in claims against the United States. (Cf. Public Law 637, 80th Cong.; S. Rept. 1355, 80th Cong.; and H. R. 104, 82d Cong., 1st sess.) The committee feels, however, that since insurance premium rates take into consideration anticipated losses, the Government should not be made to fully reimburse insurance companies for their so-called calculated business risks.

Section 3 of the draft bill provides that the Secretary of the Treasury shall pay, in full settlement, the claims approved by the Secretary of the Army. Section 4 of the bill would require that all such settlements be in full discharge of all claims against the United States Government. The Secretary would be required to take an assignment to the United States of any right of action against third parties (sec. 5 of draft bill). The bill would direct the Secretary of the Army to transmit to Congress each claim submitted to the Department of the Army which is not settled by him with supporting papers, finding of facts and recommendations thereon, as well as a report of each claim settled and paid in accordance with this act.

Section 7 of the draft bill contains a standard provision relating to attorneys' fees. Ordinarily, special legislation relating to claims against the Government limits attorneys in their fees to 10 percent of the amounts awarded. However, section 16 of the Rules of the Subcommittee of the Judiciary which has jurisdiction of claims, permits the committee to set a different figure where, as here, extraordinary services have been rendered. In recommending that attor neys' fees be set at 20 percent of the amounts paid, the committe is mindful of the tremendous services rendered by the lawyers over the past 7 years. While they were unsuccessful in their case before the Federal courts under the Tort Claims Act, they nevertheless performed extensive services in legal research, in traveling about the country obtaining depositions and examining literally hundreds of witnesses in preparation for trial. They have, of course, also expended efforts on behalf of their clients in developing briefs and presenting arguments both before the appellate courts and before this committee of Congress

At the end of the draft bill there is a letter from an Assistant Attorney General containing the views of the Department of Justic on the Texas City disaster. In this connection, the committee wishe to make clear that the decisions of both the Supreme Court mo Court of Appeals for the Fifth Circuit were based upon a en and interpretation of the Federal Tort Claims Act.

weighed the evidence insofar as the facts relating to the liability of the United States Government were concerned; rather, they held, as a matter of law, that the Government's fertilizer program was a "discretionary function" within the meaning of the Federal Tort Claims Act and that Federal courts, therefore, were without jurisdiction to entertain the claims. (See pp. 3-5, supra.) This is made clear by the dispositive statement in the majority opinion of the Supreme Court which reads (p. 24):

Even assuming their correctness arguendo, though, it is our judgment that they do not establish a case within the act. This is for the reason that as a matter of law the facts found cannot give the district court jurisdiction of the cause under the Tort Claims Act.

The conclusion and recommendations of the committee, on the other hand, are based upon a study of the merits of the issues and facts connected with the disaster.

[Draft bill]

A BILL To provide a method for compensating claims for damages sustained as the result of the explosions at Texas City, Texas

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That

SECTION 1. (a) The Secretary of the Army shall investigate and may settle claims against the United States insofar as they relate to damages for compensation for property, death, or personal injuries, resulting from the explosions at Texas City, Texas, on April 16 and 17, 1947, commonly referred to as the Texas City disaster.

(b) Claimants shall submit their claims in writing to the Department of the Army, under such rules as the Secretary of the Army prescribes, within one year after the date of enactment of this Act.

SEC. 2. (a) Claims for damages based on wrongful death may be submitted only by persons authorized to institute actions for wrongful death under the Revised Civil Statutes of the State of Texas and may be approved for settlement by the Secretary of the Army in sums not to exceed $10,000.

(b) The Secretary of the Army may approve for settlement subrogated claims in sums not to exceed 40 per centum of the amounts paid by subrogees.

SEC. 3. The Secretary of the Treasury shall pay out of moneys in the Treasury not otherwise appropriated, in full settlement, the claims referred to in this Act which are approved for settlement by the Secretary of the Army or his designate. SEC. 4. A settlement made under the provisions of section 3 shall be in full discharge of all claims against the Government of the United States.

SEC. 5. The Secretary shall require assignment to the United States of any right of action against a third party arising from the property damage, death, or personal injuries, with respect to which the settlement is made.

SEC. 6. The Secretary of the Army shall transmit to the Congress:

(a) each claim submitted to the Department of the Army in accordance with section 1 which has not been settled by him, with supporting papers and a report of his finding of facts and recommendations;

(b) a report of each claim settled by him and paid pursuant to section 3. The reports shall contain a brief statement concerning the character and justice of each claim, the amount claimed, and the amount approved and paid.

SEC. 7. No attorney or agent on account of services rendered in connection with each claim shall receive in excess of 20 per centum of the amount paid, any contract to the contrary notwithstanding. Whoever violates the provisions of this Act shall be fined not to exceed $5,000.

APPENDIX TO COMMITTEE REPORT

JANUARY 4, 1954.

Hon. EDGAR A. JONAS,

Committee on the Judiciary,

House of Representatives, Washington, D. C.

MY DEAR MR. CONGRESSMAN: This is in response to your letter of December 2, 1953, addressed to the Attorney General, transmitting copies of volumes 1 and 2 of the transcript of hearings before the subcommittee of the Committee on the Judiciary of the House of Representatives in connection with the Texas City disaster, and of your additional letter of December 4, 1953, transmitting volume 3 of the hearings before your subcommittee at Galveston, Tex., on November 16, 17, and 18, 1953.

You have requested expressions of the Department of Justice relative to the subject matter of the hearings.

In the first place, I wish to express my appreciation of the opportunity to appear informally with a member of my staff before your subcommittee in Washington on November 9, 1953, and of the present invitation to comment on the arguments and statements presented by claimants' counsel to your subcommittee in Galveston. Not merely as a preliminary remark, but as a sincere expression on behalf of myself and of the several officers, employees, and counsel of the Government who have had the responsibility of representing the United States in this matter, I want to state that all of us are fully aware of the magnitude of the destruction of property and of the loss of life at Texas City on April 16, 17, 1947; and all of us, as individuals, are moved by the considerations of human sympathy so eloquently expressed by Representative Thompson of the Ninth Congressional District of Texas and other spokesmen for those who suffered the losses.

At this late stage we do not deem it appropriate or necessary to undertake a reargument of the case on the facts or the law. The Government's position was fully and carefully presented in the trial court, the United States Court of Appeals for the Fifth Circuit, and in the Supreme Court of the United States. Copies of the Government's briefs in the appellate courts have been made available to your subcommittee. It is clear from these briefs that the statement of claimants' leading counsel that the Government "never really questioned these facts [the district court's findings of negligence] (tr. comm. hearings, p. 122) is considerably less than accurate.

We invite the subcommittee's attention to pages 88 through 146 of the brief for the United States in the court of appeals and to pages 55 through 167 of the brief in the Supreme Court. As will be seen, at least one-half of the written argument on behalf of the United States in the appellate courts was addressed to the errors of the district court in its findings that any employee or employees of the Government were guilty of actionable negligence in connection with the disaster at Texas City. Extended oral orgument was addressed to the same aspect of the case.

More important than the arguments of Government counsel, however, is the fact that neither the judges of the court of appeals (197 F. 2d 771), nor the Justices of the Supreme Court (346 U. S. 15), accepted the district court's views that the Government was negligent. We believe that all six judges of the court of appeals decided that at least the basic findings of the district court were clearly erroneous. Judge Strum's opinion (197 F. 2d at 781-782) expressly noted plaintiff's failure to establish fault or negligence in any respect. He found that assertions of negligence in the manufacture, labeling, and handling of the fertilizer and in notice of its character were not supported by the evidence. He specifically found that there was no evidence that the commodity was an inherently dangerous explosive or that there was any failure to use reasonable care in its manufacture, packaging, or transportation, and that the bags were plainly labeled in a manner "sufficient to put the ship operators on notice as to the nature of the substance they were handling." He characterized as "clearly erroneous" the district