ment was in no way negligent or otherwise responsible for the explosions and fires which took place at Texas City. As noted earlier both the Court of Appeals for the Fifth Circuit and the Supreme Court of the United States held that there was no legal liability on the part of the United States Government, because the actions of the Government in connection with this ammonium-nitrate fertilizer were performed in the exercise of a "discretionary function" within the meaning of the Federal Tort Claims Act. It was therefore unnecessary for either of these two courts to decide the further question of whether or not the Federal Government was negligent. It is not the purpose or intention of this report to go into a detailed analysis of all the testimony or to undertake to reargue the evidence of this disaster either on the law or the facts. It does deem it appropriate, however, to refer in brief, to the argument which has been urged that the appellate courts accepted and agreed with the district court's views that the Government was negligent. It is the opinion of this committee that neither the Supreme Court nor the judges of the court of appeals so acted. It was only necessary, in view of the grounds upon which their decisions were based, to accept the district court's findings for purposes of argument on appeal only. A reading of the Supreme Court opinion certainly indicates serious reservations with respect to the district court's findings of negligence. In a footnote (346 U. S. p. 24) it expressed agreement with the characterization by the court of appeals that the district court's findings were "profuse, prolific, and sweeping" and stated that "no proper review could be exercised by taking the 'fact' findings of 'negligence' at face value." As a matter of fact, the Court expressly noted that the Government manufactured and shipped the fertilizer "for more than 3 years without even minor accidents," and, in addition, it pointed out that (346 U. S. 15): “*** *The basic ‘plan' * * * was drawn up in the light of prior experience by private enterprise and the TVA. In fact it was as we have pointed out, based on the latter agency's engineering techniques, and specifically adopted the TVA process description and specifications (pp. 38-39)." The lack of participation by Government employees in the negligent conduct found by the district court is underlined by the following excerpts from the Supreme Court's opinion "As well, serious judgment was involved in the specification of the bag labels and bills of lading. The importance of this rests on the fact that it is the latest point in time and geography when the Government did anything directly related to the fire, for after bagging the FGAN was of course physically in the hands of various nongovernmental agents. ***there was serious room for speculation that the most direct operative fact causing the immediate fire on the Grandcamp arose from errors that the French Council, longshoremen, or ship staff committed *** (p. 41)." The opinion also stresses complete compliance with applicable regulations of the Interstate Commerce Commission in shipping the material "* **The Plan had been prepared in this regard by the Transportation Officer of the Director's Office. His decision in the matter was dictated by the ICC regulations. These did not provide for a specific classification for the material other than as fertilizer. Labeling it as anything but 'oxidizing material' was not required— indeed was probably forbidden—and even this requirement was waived for bags of less than 200 pounds. To the extent, then, that the Army had a choice in the matter, its decision not to seek to list its FGAN in any other fashion was within the exception. The immunity of a decision as to labeling, in fact, is quite clearly shown by the fact that the ICC's regulations, for instance, could not be attacked *** (pp. 41-42)." Similarly, with respect to the Coast Guard, the Supreme Court observed: "The findings of negligence on the part of the Coast Guard in failing to supervise the storage of the FGAN, and in fighting the fire after it started, were rejected by a majority of the Court of Appeals (p. 42)." The majority opinion of the court of appeals also indicated that there was fundamental error in the district court's findings. While the court's decision rested upon the conclusion that the Federal Government is not liable because of the "discretionary function" exemption in the Tort Claims Act, a reading of the majority opinion makes it clear nevertheless that the court did not agree with the district court's basic findings that the fertilizer was an inherently dangerous explosive substance, the qualities of which the Government's employees were or should have been so aware of that the fertilizer program should not have been undertaken as it was. Contrary to the findings of the district court, this opinion stated that: "In this case, it can hardly be argued that the dangers of explosion from FGAN were so well known prior to the disaster that judgment or discretion were not called into exercise as to whether it should be manufactured at all and under what safeguards and warnings it should be distributed. 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." The committee's amendment places jurisdiction in the Department of the Army to investigate and settle the claims hereunder. The committee considered placing jurisdiction in the Federal courts but it was thought, however, that the courts, with their present heavy calendars, could not properly process these claims without appointing masters, auditors, examiners, and other clerical personnel to hear and, for all practical purposes, adjudicate these claims. It was therefore felt that jurisdiction could well be placed in the Army, since that agency of Government has the facilities for and experience in processing claims against the United States Government. 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.) In placing a $20,000 limitation on the claims in this legislation the committee has done so, because of the fact that there is a lack of legal liability on the part of the Government and, too, because the committee views the grants of awards to be given hereunder as gifts in the nature of disaster relief based on humanitarian principles. While this legislation cannot reach all of the claimants for all of their losses, the committee feels that it will at least help a substantial majority of those unfortunate people who suffered losses as a result of the disaster. SUBROGATED CLAIMS Neither the Senate bill nor this committee's amendment makes provision for subrogated insurance claims. Of serious concern to the committee was the question of whether any part of the moneys distributed to claimants under its amendment could be thereafter subject to recoupment claims by insurance companies against the claimants, for reimbursement to the extent, at least, that the companies had previously paid the claimants under policies of insurance. It is, of course, the intention of the committee that no moneys awarded under this act be paid over, under any circumstances, to subrogees. The awards are intended as gratuities, and the rights, hereunder, are not to be extended by implication, or by recourse to assignment or by the principles of subrogation. Precedent for such action can be found in the act of 1874 when Congress by law (18 Stat. 245, 247, sec. 12) authorized payments to be made to persons who had suffered losses at the hand of the Confederate man-of-war, Alabama, and others but limited such disbursements, in the case of claimants who had been compensated by insurers, to the difference between the amount of such compensation and the true value of the loss sustained. When marine underwriters sued to recover a portion of the moneys thus disbursed, they were defeated in British courts on the ground that "title to the indemnity granted in particular terms out of a particular fund at the disposal of the United States by an act of Congress is not a title which can possibly result in law from the [insurance] contract itself. [If such right of recoupment existed, the British judges noted] it must exist by the combined effect of the contract between the insurer and the insured and the act of Congress. It cannot follow from the contract of insurance alone, without the act of Congress ***. Whatever views of moral obligation may be entertained with regard to the act of Congress, *** it is correctly described *** as an act of pure gift from the American Government ***. If once the right had vested to recover any such sum, of course an act of Congress could not take it away; but when Congress in express terms say, "We cannot pay the money for the purpose of repaying or reducing the loss against which the insurance company has indemnified, but for another and different purpose," it effectually prevents the right arising ***. In this case the act of Congress declares in very express terms, *** that no compensation is to be given * * * on account of loss which has been *** covered by insurance, and secondly that underwriters are not to receive any benefit from the funds distributed under the act ***. It was an act of grace on their part to assign [this fund], and give it either to one or to the other of the losers by the acts of the Alabama, and * * * in giving it as they have done, they were attaching a condition to the gift, which condition was not only entirely within their power but which they might attach without violating any legal responsibility or moral obligation (Burnand v. Rodocanachi (1882) 7 Law Reports (App. Cas.) 333, 335-336, 341, 343; Md. Casualty Co. v. Lincoln Bk. and Trust Co. (1937) 18 F. Supp. 375; Col. L. R. (1928), 28: 208)." PROVISIONS OF THE COMMITTEE AMENDMENT (AN AMENDMENT IN THE NATURE OF A SUBSTITUTE BILL) Generally the amendment would authorize the Secretary of the Army to investigate the claims to determine whether they resulted from the explosion and then to calculate the damages claimed to have been sustained by each claimant and decide who is entitled to receive the award, if any (secs. 2 and 4). The total amount claimed either by or on behalf of persons who had suffered damages as a result of the explosion was roughly set at the time of the court litigation at $200 million. Experience as shown, however, especially with regard to disasters that amounts claimed against the Government are for the most part in excess of what Federal courts will finally allow. At the various hearings which were held on this legislation, lawyers representing several hundred claims testified that the total amount of all claims, including insurance subrogated claims, could more realistically be set at somewhere between $60 million and $100 million. Since the committee amendment eliminates subrograted insurance claims (sec. 6) and puts a limitation of $20,000 on all other claims (sec. 5) it is felt that the total amount which the Government is likely to pay will be substantially less than the above-estimated figures. Section 3 sets up procedures under which claimants shall submit their claims. It limits the claims to be entertained hereunder to those which were filed in the district courts under the Tort Claims Act. The committee wishes to state that in limiting the claims, generally, to those which have already been filed in the Federal courts, it is its intention that the Secretary of the Army should, where practicable, consider the claims in the manner in which they were originally filed. While it is the intention of the committee to authorize payment to those individuals, firms, companies, associations, and corporations, other than subrogees, the committee wishes to prevent the severing or the division of any claim by any claimants who may thereby seek to circumvent the $20,000 limitation provided for in the committee amendment for each claim. Claims should be entertained, where possible, in the manner and under the circumstances under which they were originally filed. Section 6 also provides that in determining the amounts to be awarded under this bill the Secretary of the Army shall reduce any award by an amount equal to the total of insurance benefits (except life-insurance payments) and other payments previously received by the claimants with respect to such losses. Section 7 provides that the Secretary of the Treasury shall pay, in full settlement, the claims approved by the Secretary of the Army. Section 8 would require that all such settlements be in full discharge of all claims against the United States. The Secretary would also be required to take an assignment to the United States of any right of action against third parties (sec. 9). Section 10 directs 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, findings of facts, and recommendations thereon, as well as a report of each claim settled and paid in accordance with the committee amendment. Section 11 contains a standard provision relating to attorneys' fees and also contains a penal provision providing for a fine of not in excess of $5,000 for anyone who violates the provisions of this legislation. Section 12 contains a severability clause. VIEWS OF GOVERNMENT DEPARTMENTS There follows a report of the Department of the Army on the legislation as introduced. It may be well also to mention that while the Department of Justice is opposed to the legislation as introduced, representatives who testified at the hearings stated that the Attorney General would not be opposed to legislation which was in the nature of a disaster-relief bill and which would omit subrogated insurance claims and place a reasonable monetary limitation on claims for death, personal injury, or property losses. It is felt that the committee amendments meet the objections of the Department of Justice and in fact are in accordance with its suggestions. MAY 9, 1955. Hon. EMANUEL CELLER, House of Representatives. DEAR MR. CELLER: Reference is made to your letter of April 20, 1955, relative to the hearings on H. R. 4045, 84th Congress, a bill to provide for settlement of claims for damages resulting from the disaster which occurred at Texas City, Tex., on April 16 and 17, 1947, presently scheduled for May 11, 1955 before Subcommittee No. 2 of the Committee on the Judiciary, House of Representatives, and the advisability of having a representative present the views of the Department of the Army at such hearings. The Secretary of Defense has been asked to report the views of the Department of Defense on the bill and has delegated the responsibility therefor to the Department of the Army. The Army report is in the process of being coordinated within the Department of Defense and will be presented to the committee prior to the hearings. Additionally, the Department of the Army, on behalf of the Department of Defense, submitted a very lengthy report on H. R. 8572, 83d Congress, a similar bill. That report sets out in detail the facts surrounding the events of April 16 and 17 at Texas City, and is set forth in full on pages 56 to 70 of the report of the Committee on the Judiciary, House of Representatives, to accompany H. R. 9785, 83d Congress. This report, together with that which will be submitted to the committee on H. R. 4045, 84th Congress, elaborately explains the position of the Department of Defense on the bill, and it does not appear that any additional information of value to the committee would be presented by having a witness testify at the hearings. Accordingly, in the absence of an indication that the committee desires the presence of a witness, the Department of the Army does not plan to present any testimony over and above the views reflected in the above-mentioned reports. Sincerely yours, ROBERT T. STEVENS, [H. Rept. No. 1623, 84th Cong., 1st sess.] TEXAS CITY DISASTER CONFERENCE REPORT The committee of conference on the disagreeing votes of the two Houses on the amendments of the House to the bill (S. 1077) to provide for settlement of claims for damages resulting from the disaster which occurred at Texas City, Texas, on April 16 and 17, 1947, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the Senate recede from its disagreement to the amendment of the House and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the House amendment insert the following: The Congress recognizes and assumes the compassionate responsibility of the United States for the losses sustained by reason of the explosions and fires at Texas City, Texas, and hereby provides the procedures by which the amounts shall be determined and paid. 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 dale 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. Except as otherwise provided herein, the law of the State of Texas shall apply. 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 amount in excess of $25,000. (b) No claim for personal injuries may be approved by the Secretary of the Army in amount in excess of $25,000. (c) No claim for property losses may be approved by the Secretary of the Army in amount in excess of $25,000. 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 injury, or property loss. (b) Payments approved by the Secretary of the Army on death, personal injury, and property loss claims, 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) Except as to the United States, 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 claim 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. And the House agree to the same. That the Senate recede from its disagreement to the amendment of the House to the title of the bill and agree to the same. EMANUEL CELLER, THOMAS J. LANE, WILLIAM E. MILLER, DEWITT S. HYDE, Managers on the Part of the House. OLIN D. JOHNSTON, THOS. C. HENNINGS, Jr., ARTHUR V. WATKINS, Managers on the Part of the Senate. |