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 devastated 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.

The committee gave careful consideration to the claims of the so-called subrogated insurance companies, but because of their complexity and mixed opinions as to their magnitude, eliminated such claims from the benefits of this bill and, without deciding their merits.

The committee earnestly urges upon the Senate that speedy approval be given to S. 1077, as amended.

[H. Rept. No. 1305, 84th Cong., 1st sess.]

TEXAS CITY DISASTER

The Committee on the Judiciary, to whom was referred the bill (S. 1077) to provide for settlement of claims for damages resulting from the disaster which occurred at Texas City, Tex., on April 16 and 17, 1947, having considered the same, report favorably thereon with amendment and recommend that the bill do pass.

The amendment, in the form of a substitute bill, is to strike out all after the enacting clause and substitute the following language:

"While denying any equitable or legal responsibility on the part of the United States, but for compassionate reasons, and as a gratuity, it is the intention of the Congress to make payment on behalf of those persons who suffered death, personal injury, and property losses as a result of the explosions and fires at Texas City, Texas, on April 16 and 17, 1947.

"SEC. 2. The Secretary of the Army or such persons as he may designate shall investigate and settle claims against the United States for death, personal injury, and property losses proximately resulting from the disaster at Texas City, Texas, on April 16 and 17, 1947, commonly referred to as the Texas City disaster.

"SEC. 3. (a) Claimants shall submit their claims in writing to the Secretary of the Army, under such rules as he prescribes, within one hundred eighty days after the enactment of this Act.

"No claim shall be entertained by the Secretary of the Army unless it shall appear to his satisfaction that such claim was a part of a civil action filed against the United States in a United States district court prior to April 25, 1950, except that, for good cause, the Secretary may waive the limitation date of April 25, 1950, where it is shown that claimant, by reason of infancy, insanity, or other legal reason, was unable to bring such civil action.

"(b) The Secretary of the Army shall promulgate and publish rules of procedure for handling the claims referred to in section 2 within sixty days after the date of enactment of this Act.

"He shall determine and fix the amount of awards, if any, in each claim within twelve months from the date on which the claim was submitted.

"SEC. 4. Since it is the intention and purpose of this Act, and of the Congress, to relieve the claimants hereunder, the Secretary of the Army shall limit himself to the determination of:

"(1) whether the losses sustained resulted from the explosions and fires at Texas City on April 16 and 17, 1947,

"(2) the amounts to be allowed and paid pursuant to this Act, and

"(3) the persons entitled to receive the same.

"SEC. 5. (a) Claims for awards based on death shall be submitted only by duly authorized legal representatives. No claim under this subsection shall be approved by the Secretary of the Army in an amount in excess of $20,000.

"(b) No claim for personal injuries may be approved by the Secretary of the Army in amounts in excess of $20,000.

"(c) No claim for property losses may be approved by the Secretary of the Army in amounts in excess of $20,000.

"SEC. 6. (a) In determining the amounts to be awarded for death, personal injury or property losses, the Secretary of the Army shall reduce any such amount by an amount equal to the total of insurance benefits (except life-insurance benefits), or other payments or settlements of any nature, previously paid with respect to such death claims, personal injuury or property loss.

"(b) Payments approved by the Secretary of the Army on death, personal injury, and property loss claims the same being gratuitous, shall not be subject to insurance subrogation claims in any respect.

"(c) The Secretary of the Army shall not include in an award any amount for reimbursement to any insurance company or compensation insurance fund for loss payments made by such company or fund.

"(d) No claim cognizable under this Act shall be assigned or transferred.

"SEC. 7. The Secretary of the Treasury shall pay out of moneys in the Treasury not otherwise appropriated, the claims referred to in this Act in the amounts approved for payment by the Secretary of the Army.

"SEC. 8. A payment made under the provisions of section 7 shall be in full settlement and discharge of all claims against the Government of the United States.

"SEC. 9. The Secretary of the Army shall require assignment to the United States of any right of action against a third party arising from the death, personal injury or property loss claims with respect to which settlement is made.

"SEC. 10. The Secretary of the Army shall, twenty-four months after the date of enactment of this Act, transmit to the Congress

"(a) a statement of each claim submitted to the Secretary of the Army in accordance with this Act which has not been settled by him, with supporting papers and a report of his findings of facts and recommendations; and

"(b) a report of each claim settled by him and paid pursuant to this Act. 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. 11. Attorney and agent fees shall be paid out of the awards hereunder. No attorney or agent on account of services rendered in connection with each claim shall receive in excess of 10 per centum of the amount paid, any contract to the contrary notwithstanding.

"Whoever violates the provisions of this Act shall be fined a sum not to exceed $5,000.

"SEC. 12. If any particular provision of this Act or the application thereof to any person or circumstance, is held invalid, the remainder of the Act shall not be affected thereby."

Amend the title to read as follows: "A bill to provide for settlement of claims resulting from the disaster which occurred at Texas City, Texas, on April 16 and 17, 1947."

PURPOSE

The purpose of this legislation is to recompense, to a limited extent, those persons or their survivors, who suffered death, personal injury, and property losses as a result of the explosions and fires at Texas City, Tex., on April 16 and 17, 1947, commonly referred to as the Texas City disaster.

PRELIMINARY STATEMENT

While denying any equitable or legal responsibility on the part of the United States Government, the committee nevertheless, in recognizing the enormity of

the disaster, the great number of innocent victims who were either killed or injured thereby, and in remembering that the ammonium-nitrate fertilizer shipment which exploded formed a part of and was in aid of this Government's foreign-aid program, feels that, for compassionate reasons, these persons who suffered losses should receive some help from the Federal Government to assist them in their losses.

Since, however, the Supreme Court of the United States has held that there is no legal liability on the part of the Federal Government for this disaster, the committee feels that all payments hereunder, since they are to be in the nature of a grant rather than in payment of a lawful obligation, should be limited to amounts not in excess of $20,000 for each death, personal injury, or property loss claim and it is so provided in the substituted bill.

INTRODUCTORY STATEMENT ON TEXAS CITY DISASTER

On April 16 and 17, of 1947, a manmade disaster occurred in Texas City, Tex., of almost unbelievable proportions. Loaded bags of ammonium nitrate fertilizer stowed for overseas shipment in the holds of two ships at the docks in that city blew up. The shipment was destined for France as part of the United States Government's program of foreign aid to various war-ravaged and faminestricken areas overseas. Over 570 persons perished in the disaster, and about 3,500 more suffered injuries. Damage to private properties ran into millions of dollars.

UNITED STATES GOVERNMENT'S FOREIGN-AID PROGRAM

Toward the end of the hostilities of World War II it was recognized that an acute world food shortage existed. The problem of increasing the supply of food became an integral part of the United States occupation and administration of enemy territories. Secretary of War Patterson wrote that unless "the urgent requirements of Generals MacArthur and McNarney for the occupied areas" were met "in real volume, we anticipate * * * famine conditions." According to the Secretary's representative, "The occupying commanders in Germany, Japan, and Southern Korea report* ** that the choice may be considered one of supplying additional food or additional troops to control the conquered peoples."

Quantities of food necessary to alleviate the problem were not in existence. Even if food had been available, shipping capacity to transport it could not be obtained. The use of fertilizer, therefore, to increase the production of foodstuffs in occupied areas presented an obvious means of avoiding widespread famine and unrest. A ton of fertilizer can produce 7 tons of food; and it helps people in occupied areas, in permitting them to grow their own food, to help themselves. The securing of fertilizer for occupied areas was, therefore, a practical solution to a difficult problem.

Under its program of supplying fertilizer for occupied areas, the Government produced the material known as fertilizer grade ammonium nitrate (hereafter referred to as FGAN or fertilizer). FGAN as a fertilizer had been recognized for several years in agriculture. This was due to the fact that ammonium nitrate, the basic ingredient for FGAN, has a high free-nitrogen content, an essential to plant growth. Furthermore, the Government had 15 surplus ordnance plants readily convertible for the manufacture of ammonium nitrate fertilizer. When it became clear that the Government could produce a satisfactory fertilizer and also utilize its surplus ammonium nitrate facilities, Secretary of War Patterson decided that the program should be undertaken. He "reported in substance this decision to the Cabinet" where it was "approved and the decision was to go ahead with this production."

Production of fertilizer

In May 1946 the Director of the Office of War Mobilization and Reconversion requested the War Department "as an emergency matter for national defense" to undertake the production of the fertilizer program "without delay, and to take whatever action is appropriate to expedite the attainment of maximum production." The surplus plants were released to the Secretary of War, and the Army Chief of Ordnance was directed to carry the program into effect.

The Army entered into a number of cost-plus-fixed-fee contracts with private firms to move into the ordnance plants and produce the fertilizer.

Purchase of fertilizer from private producers

When the plan to reactivate idle ordnance plants was first conceived, it was apparent that those plants would be unable to produce sufficient quantities of

fertilizer to meet the early requirements of the program. The War Department therefore entered into agreements with commercial producers to purchase fertilizer from them and, under a sell-back arrangement, it further agreed to return in kind the "borrowed" fertilizer to the producers out of future production of the ordnance plants.

Fertilizer which blew up at Texas City

The particular fertilizer which blew up at Texas City had been produced at three of the Army ordnance plants reactivated by the Government for the fertilizer program and pursuant to the sell-back arrangement was allotted to the Lion Oil Co., one of the commercial producers which had furnished fertilizer to the Government in 1946. Since the contract provided that Lion Oil Co. could designate a third-party recipient, Lion contracted for resale of the fertilizer with the French Supply Council, a French Government agency. The French Supply Council had earlier secured a governmental priority allocation, and, in pursuance thereof, the French shipping orders were turned over to the Army for execution, The fertilizer, in accordance with contract requirements, was shipped by rail, undr Government bills of lading, from ordnance plants in Nebraska and Iowa to the French Supply Council as consignee in Texas City. It was stored in shipside warehouses in Texas City.

EXPLOSIONS AT TEXAS CITY

By April 15, 1947, 1,850 tons of FGAN had been loaded on the steamship Grandcamp, a French Liberty ship owned by the Republic of France, and 1,000 tons on the privately owned steamship Highflyer. The Grandcamp carried, in addition, a quantity of munitions originally consigned to Venezuela but for undisclosed reasons not discharged there. The Highflyer also had an additional cargo of 2,000 tons of sulfur.

Dunnage, consisting of wooden boards and paper to protect the cargo, was land on the floor of the holds. The bags of FGAN were packed one on top of the other in solid layers.

Loading of No. 4 hold of the Grandcamp, where the fire started, ceased at 5 p. m. in the afternoon of April 15, and its hatch was closed and remained battened down until 8 o'clock the following morning when longshoremen boarded the ship and started removing the hatch covers. At approximately 8:15 a. m. smoke was observed coming from hold No. 4 containing 880 tons of FGAN and, upon inspection, fire was discovered. Efforts to halt the fire were unavailing. The captain ordered all personnel off the ship. Meanwhile the hatches were covered and steam was introduced into the holds to smother the flames and put out the fire.

In

At 9:15 a. m. the fertilizer on the Grandcamp exploded with tremendous force. The explosion resulted in the spread of the fire to warehouses and other nearby structures and to the steamship Highflyer in a nearby slip. The fires continued all day and into the night. At approximately 1:10 a. m. on April 17 the FGAN in the Highflyer detonated, completely demolishing that vessel and the Steamship Wilson B. Keene which had been lying alongside. These explosions and resulting conflagrations virtually leveled the dock area in Texas City. addition, approximately 1,000 residences, industrial plants, and other buildings were either totally destroyed or suffered major structural damage. Flying steel fragments and portions of the cargo of Grandcamp-including a 30-footlong drill stem weighing over a ton-were found 2 miles distant. As noted earlier about 570 persons suffered violent death. More than 3,500 other people were injured and suffered either delayed death or mental and physical anguish attendant upon months of hospital confinement and medical care.

HISTORY OF COURT LITIGATION

After the disaster approximately 300 court actions were instituted against the United States in the names of some 8,500 claimants under the Federal Tort Claims Act for death, personal injury, and property damages arising out of the disaster. The suits were consolidated with the approval of the United States District Court for the Southern District of Texas under civil action No. 787, Elizabeth Dalehite et al. v. United States (1950). After a trial of the issues, the district court judge, sitting without a jury, found negligence on the part of the Government and rendered judgment in favor of the plaintiffs. The court, inter alia, found that the United States produced an inherently dangerous

product and that it was negligent in manufacturing the fertilizer, in the manner in which it prepared the fertilizer for shipment, and that "each shipment of such fertilizer was a dangerous public and private nuisance from the time it was manufactured."

On appeal, however, the Court of Appeals for the Fifth Circuit unanimously reversed (197 F. 2d 771) and the United States Supreme Court, by a divided court, affirmed the decision of the court of appeals (346 U. S. 15). The Supreme Court, through its majority decision, decided, as a matter of law, that the actions of the Government and its employees as found by the district court were performed in the exercise of a "discretionary function" and that the Federal Tort Claims Act exempted the Government from tort liability for errors made in the exercise of "discretionary functions." To put it another way, the Supreme Court held that even if the Government was negligent, it could not, because of the wording of the Tort Claims Act, be sued for its actions which resulted in the Texas City disaster. This is made clear from the following excerpts of its majority opinion:

"An analysis of section 2680 (a), the exception with which we are concerned, emphasizes the congressional purpose to except the acts here charged as negligence from the authorization to sue (p. 32).

"Even assuming their correctness arguendo (the district court's findings of the Government's negligence), 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 case under the Tort Claims Act (p. 24)."

PRIOR LEGISLATION

After the Supreme Court's decision in the Dalehite case supra, the House of Representatives adopted House Resolution 296, 83d Congress, sponsored by Congressman Clark Thompson of Texas, directing this committee to make an investigation and study of the merits of all claims against the United States arising out of that disaster. As a result of the investigation H. R. 9785 was introduced in the 83d Congress, which passed the House, compensating the claimants for death, personal injury, and property loss resulting from the disaster. The Senate thereafter acted upon and passed the same bill, but in a different form. It was then late in the session, however, and since no conferees were appointed to try and resolve the differences between the Senate and the House versions of the bill, no further action was taken and the bill died at the end of the 83d Congress.

COMMITTEE'S ACTION ON PRESENT LEGISLATION AND REASONS THEREFOR

In the present Congress identical bills were introduced simultaneously in both the House and the Senate. Since the Senate bill, S. 1077, has passed that Chamber, the committee has laid aside the House bill and directed its attention to S. 1077.

The major differences between S. 1077 and this committee's amendment, which is in the nature of a substitute bill to S. 1077, are three: First, the Senate bill makes a finding of fact that the Federal Government is equitably responsible for the explosion at Texas City. The committee amendment denies any equitable or legal responsibility on the part of the United States Government for that disaster. In providing compensation for these people the committee amendment bases such relief on the theory that such payments are to be in the nature of disaster-relief benefits. Second, the Senate bill places jurisdiction in the Federal district courts of Texas to adjudicate and settle these claims, whereas the committee amendment authorizes the Secretary of the Army to settle the claims. Third, the Senate bill would compensate all claims for death, personal injury, and property damage without limitation in amount, whereas the committee amendment sets a maximum limitation of $20,000 for each type of claim.

It is true that when this committee and the House acted favorably upon this legislation in the 83d Congress it did so upon the ground that the Federal Government was wholly responsible for the explosions and the resulting catastrophe at Texas City, Tex. However, after extensive hearings this year in which representatives from the Department of Justice were heard in oral testimony for the first time, and after a reappraisal of the testimony not only of this Congress and of the 83d Congress, but also of the record in the Federal litigation in the Dalehite case, the committee is of the considered opinion that the Federal Govern