"(e) Service of an individual as a member of the Commission or employment of an individual by the Commission shall not be considered to be service or employment bringing such individual within the provisions of sections 281, 283, 284, 434, or 1914 of title 18 of the United States Code, or section 190 of the Revised Statutes (5 U. S. C. 99). "SEC. 3. (a) The Commission shall receive, investigate, and allow claims against the United States for damages sustained by individuals, firms, companies, associations, and corporations as a result of the disaster at Texas City, Texas, on April 16 and 17, 1947. The Commission shall limit itself to the determination of (1) the amount to be allowed and paid pursuant to this Act, and (2) the individuals, firms, companies, associations, and corporations entitled to receive the same. "(b) Prior to the expiration of sixty days after the date on which two of its members shall have been appointed and have taken office, the Commission shall promulgate and publish rules of procedure for handling the claims to which this section applies. It shall determine and fix damages, if any, in the case of each claim within twelve months from the date on which the claim was submitted. "(c) No claim shall be allowed unless, prior to the expiration of one hundred and eighty days after the date on which two members of the Commission shall have been appointed and have taken office, the claimant submits such claim in writing in accordance with rules prescribed by the Commission. "(d) No claim shall be approved for payment under this Act unless it shall appear to the satisfaction of the Commission 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 the Commission, for good cause shown, may waive the limitation date of April 25, 1950, where it is shown that the claimant, because of infancy, insanity, or other reason, was unable to bring such civil action. "(e) Except as otherwise provided in this Act, in carrying out its provisions the Commission shall be governed by the law of the State of Texas. "(f) Claims for damages based on death may be submitted only by persons, or their legal representatives, authorized to sue for wrongful death under the revised statutes of the State of Texas. "SEC. 4. (a) 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 in the amounts approved for payment by the Commission. "(b) Any payment made under subsection (a) shall be in full settlement and discharge of all claims against the Government of the United States. "(c) Before paying any claim allowed by the Commission, the Secretary of the Treasury shall require of and receive from the claimant an assignment to the United States, to the extent of the payment to be made by the Secretary, of any right of action arising out of the Texas City disaster which such claimant may have against a third party. "SEC. 5. No attorney or agent shall receive, on account of services rendered in connection with any claim allowed under this Act, in excess of 15 per centum of the amount paid under this Act, any contract to the contrary notwithstanding. Whoever violates this section shall be fined not to exceed $5,000. "SEC. 6. The Commission, twenty-four months after the date of enactment of this Act, shall transmit to the Congress a report containing "(a) a statement of each claim submitted in accordance with this Act which has not been settled by it, with supporting papers and a report of its findings of facts and recommendations; and "(b) a report of each claim settled and paid pursuant to this Act, which report shall include a brief statement concerning the character and justice of the claim, the amount claimed, and the amount approved and paid. "SEC. 7. At the close of the sixtieth day after the date on which its report is submitted to the Congress pursuant to section 6, the Commission shall cease to exist." This proposed legislation, if enacted, would create a precedent for private relief legislation of general application to a disaster area, authorizing compensation to all affected parties, including subrogated insurance companies, for their losses, even though the Supreme Court of the United States has held that the acts complained of on the part of our Government relating to this disaster, came within an exception to the waiver of sovereign immunity as contained in the Federal Tort Claims Act. This legislation would waive that immunity for claims based on the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a Federal agency or an employee of the Government, whether or not the discretion involved be abused. Such a broad extension of the boundaries of tort liability of our Government, to encompass acts of a governmental nature or function, causes this Department to strongly urge that this proposed legislation be not favorably considered by the Congress. Such an extension poses problems of far-reaching effect and should only be considered by the Congress, if at all, in the form of appropriate general legislation amending the Federal Tort Claims Act. This bill would also bestow upon the individuals, corporations, subrogated insurance companies, etc., that would be placed in a position of being able to recover, a finding of fact that agents and employees of the United States were negligent in the exercise of discretionary functions in connection with their conduct of governmental affairs relating to the fertilizer involved, and that such negligence was the sole proximate cause of the disaster. Such a finding of fact has not and could not ever be tested by the judicial branch of the Government. Such a finding of fact would completely ignore the fact that the fire (which could have been controlled by proper fire-fighting technique) was combated in a negligent manner pursuant to orders issued by the master of the Grandcamp, and would also ignore the fact that the master of the Highflyer (owned by Lykes Bros., which company has alleged its damage to be $2,640,000) ordered the crew to abandon ship about 1 hour after the Grandcamp exploded and before any fire existed in the Highflyer. The Highflyer did not explode until the following day. The magnitude of this manmade disaster, in itself, is sufficient reason to bring into play the checks and balances of our three branches of Government and thereby assure that the responsibilities of the parties involved be determined by the judicial process. In view of the lengthy and complicated factual situation surrounding the Texas City disaster, a complete discussion of the facts does not appear to be appropriate or necessary at this time. The Department of the Army transmitted a 26 page report on June 8, 1954, to the Honorable Chauncey W. Reed. chairman, Committee on the Judiciary, House of Representatives, on H. R. 8572, 83d Congress, a bill to provide a method for compensating claims for damages sustained as the result of the explosions at Texas City, Tex., which was a bill similar in nature to the present bill, H. R. 4045. The report of this Department goes into every phase of this disaster and is set forth in full on pages 56 to 70, inclusive, of the report of the Committee on the Judiciary, House of Representatives, to accompany H. R. 9785, 83d Congress, a bill to provide a method for compensating claims for damages sustained as the result of the explosions at Texas City, Tex. (H. Rept. No. 2024, 83d Cong., 2d sess. (1954)). Although H. R. 4045 does not contain the limitations which were present in previous bills, as to amounts payable to subrogated insurance companies, or for wrongful death, the purpose of H. R. 4045 is the same, viz: to provide a method whereby the United States may assume liability for these explosions. This issue of liability has been consistently contested by the Attorney General and by this Department while the matter was pending in the courts, and also while the matter was pending in the 83d Congress. The Attorney General has stated "In view of the absence of negligence and the fact, recognized by the Supreme Court, that the material was in possession and control of private persons from a long time before the fire and explosion occurred, it is submitted that suit was brought against the United States because of the magnitude of the disaster and the ability of the United States to pay for it, rather than upon conventional theories of tort liability." (H. Rept. No. 2024, 83d Cong., 2d sess., p. 38 (1954)). This Department has stated "No legal or equitable basis can be found to support the position that the Government is responsible, or should assume responsibility for the explosions at Texas City" (H. Rept. No. 2024, 83d Cong., 2d sess., p. 70 (1954)). The Committee on the Judiciary, House of Representatives, 83d Congress, in their report to accompany H. R. 9785, recommended that this issue of fact be resolved in favor of the claimants and concluded that "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 famine-stricken and war-ravaged areas overseas. 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, in 1947, the maintenance of additional military forces in occupied areas (197 F. 2d 777). Without it some of our allies, like France, may have been lost to communism. Since the fertilizer program was taken by the Government for humani tarian 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" (H. Rept. 2024, 83d Cong., 2d sess., p. 9 (1954)). It should not be overlooked that in the actions instituted against the United States, seeking damages in excess of $200 million under the provisions of the Federal Tort Claims Act, 6 of some 8,500 plaintiffs sued for approximately 36 percent of the total amount involved in that litigation as follows: 1. Monsanto Chemical Co--- 2. Texas City Terminal Railway Co.. 3. Republic Oil Refining Co.. 4 Hutchings, trustee, and Lykes Bros. Steamship Co., Inc.......... Total $50, 000, 000 12, 000, 000 5, 500, 000 2, 640, 000 1,500,000 1,250,000 72, 890, 0000 According to representatives of insurance companies, subrogated insurance companies have paid out to all claimants $41,200,000, which amounts to 24 percent of the total amount claimed by all claimants (H. Rept. No. 2024, 83d Cong., 2d sess., p. 7 (1954)). No information is available to this Department showing how much, if any, of the loss by the six plaintiffs listed above, was covered by insurance. For reasons not apparent to this Department section 2e of this proposed legislation would exempt individuals serving as members of the Commission or employed by it from the provisions of various sections of Title 18: Criminal Code and Criminal Procedure, United States Code, as follows: "Section 281. Compensation to Members of Congress, officers, and others in matters affecting the Government. * "Section 283. Officers or employees interested in claims against the Government. "Section 284. Disqualification of former officers and employees in matters connected with former duties. "Section 434. Interested persons acting as Government agents. "Section 1914. Salary of Government officials and employees payable only by United States. and would also exempt the above individuals from the provisions of one section of Title 5: Executive Departments-Officers-Employees, United States Code, as follows: "Section 99. Ex-officers or employees not to prosecute claims in departments. This proposed legislation, if enacted, would— (1) vastly enlarge the scope of tort liability of our Government; (2) accomplish such enlargement by private legislation and thereby engulf the Congress with a flood of claims for private relief alleging damages resulting from governmental acts or functions; (3) label the Government as solely responsible for the disaster; (4) completely ignore the fact that a disaster such as this is likely to occur at any time improper fire-fighting techniques are used in any industrial area; (5) authorize subrogated insurance companies to be reimbursed for the expense of satisfying their contractual obligations entered into at a time when it was as clear as it is now that our Government has retained its sovereign immunity for governmental acts or functions; (6) authorize millions of dollars as attorneys' fees, even though such authorization is an exception to the normal policy of the Congress; and (7) create a most unusual Commission to accomplish this purpose. For all of the foregoing reasons, the Department of the Army strongly recommends that this bill be not favorably considered by the Congress. The fiscal effect of this proposed legislation cannot be accurately determined, but it has been estimated that the cost of the bill, including the expenses of maintaining the Commission, would be $200,500,000. This report has been coordinated within the Department of Defense in accordance with the procedures prescribed by the Secretary of Defense. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, ROBERT T. STEVENS, Secretary of the Army. Mr. LIFTIN. That, Mr. Chairman, is one of the points I was going to come to in my discussion about the substance of this bill and the tremendous sweep of it. Mr. MILLER. In this case then it would mean that the Government would be reimbursing some people who may have been negligent. Mr. LIFTIN. But something even more important than that, Mr. Chairman. There could be paid out under this bill over $40 million to insurance companies who have paid out claims of the kind mentioned and who over the period of time had taken premiums and were in the business of taking that business. Our position was based primarily on the fact that we in the Justice Department entrusted with defending the Government's economic interests in this kind of an area see no occasion for reimbursing insurance companies for forty-odd million dollars for losses they incurred in the process of their normal business of taking risks. They say they never take this into account. It is the business of insurance companies to take such things into account. In addition to that, there would be a good many millions of dollars to which industrial enterprises who are making a claim for reimbursement over and above the amount of insurance they have already recovered. These companies are saying to you, "We did not carry enough insurance on our plant and when the plant was leveled off to the ground we lost $50 million so we want you to reimburse us because we did not carry enough insurance." That is an unfortunate circumstances, of course, but it does not seem to us that it is within the reach of the ordinary intent of Congress in dealing with private relief bills. Mr. LANE. Right there, Mr. Deputy Attorney General, under the provision of this bill this Commission, as set up, isn't it a fact that they would take into consideration all these matters you are talking about? Mr. BURGER. I don't think they come under this bill. I don't think this bill is designed to take into consideration Mr. LANE. I mean the amount of money involved when you say they did not carry enough insurance? Mr. BURGER. There is nothing in this bill to prevent the Commission from giving the Monsanto their $50 million. Mr. LANE. On the other hand, don't you think the Commission to be set up by the President would give the amount to the Monsanto Chemical Co. which is only a guess. Don't you think that you in the Department of Justice would be guided by the amounts they would suggest? Mr. BURGER. Well, the committee if they thought that was not the real figure would cut it down to what the company really lost. That might be 40 or 50 million dollars. From where we sit we do not think they should get 5 cents. If they did not carry enough insurance that is not the responsibility of the Congress. Mr. BOYLE. Under this bill we would be actually-and I use the word editorially-we would be actually subsidizing the insurance of the shippers or handlers in this case. That is argumentatively correct. So, their own negligence is going to be the reason and a basis for them recovering money. That is abhorrent. You cannot conceive of a person's own negligence as a basis on which he is to get money. It may be a reductio ad absurdum. : Mr. DONOHUE. When this ammonium nitrate blew up and ruined their property they did not have any way of participating in the manufacture or loading. Mr. LANE. This explosion was such that automobiles traveling for miles away were blown off the street. Houses were blown off. Mr. BURGER. There is no question of the devastating effect of the explosion. Mr. DONOHUE. So that the claimants did not participate in this entire matter of manufacture or loading? Mr. BURGER. Most of the claimants did not participate. That is correct. You have the Texas City Terminal Railway. That would be what the gentleman had in mind when I suggested that some of the large amounts here would go back to people who themselves had a responsibility. Mr. BOYLE. Is that a $12 million claim? Mr. BURGER. Yes. And here is another claim for $2,600,000; South Port Terminal. Some of them were as free from negligence as the man walking on the street. That is why we put the emphasis on these other two factors: First: The insurance companies have no equitable claim. They are in the risk-taking business and are paid to give you the money in the ordinary course of the risk-taking business. J Second: These large industrial enterprises-assuming it is true their loss was greater than the insurance they carried. They are, in effect, saying, we did not carry enough insurance and we want you to underwrite it. In the Senate where we had a rather extensive hearing we pointed out that the Department of Justice, while we could not approve and do not approve, and you do not ask us to approve, but we would not raise objection to a bill which had proper limits to take care of the people who suffered personal injury; the small householder and the other little people who got hurt. That was in the oral discussions between the last session and this. We assumed that was the kind of bill that might be presented; a bill with a ceiling of $10,000 or $20,000 for any claimant for a death or injury or having his house blown down or his little filling station blown down. But above and beyond that there was no occasion to reach them. Mr. LANE. Right there, Mr. Burger, when your assistants have opportunity, will they present a bill along those lines to this committee? Mr. BURGER. Subject to the general proposition, Mr. Chairman, and I say this only as a matter of policy; we do not ordinarily draft bills. But I think we would be willing to work with your staff in making suggestions on a bill they might draft. |