theless needed an increase in the production of food. In addition, France was threatened with the possibility of a communistic government. As stated in one report, the situation "was most critical in France and in the nations served by UNRRA, where short rations and actual starvation exist."

In June 1946, when the Nitrogen Producers Industry Advisory Committee met, its purpose was to discuss, among other things, the estimated nitrogen available to meet the need of domestic use and the requirements of areas overseas occupied by the United States. When it met in November, however, the purpose of its meeting was expanded to "discuss means by which CPA will be enabled to meet International Combined Food Board allocation of ammonium sulphate and ammonium nitrate to foreign countries and United States possessions." In other words, the Government's fertilizer program was no longer confined to occupied areas but had been expanded to take in "foreign countries and United States possessions.' The additional overseas areas listed for fertilizer aid, under the expanded program, included such nonoccupied countries as Puerto Rico, Philippines, Latin American Republics, France and colonies, Netherlands, Netherlands East Indies, UNRRA, and Finland.

Several members of the nitrogen industry called attention to the position in which they would be placed if, as proposed, the Army shipped its nitrogen production to other countries instead of returning it to the producers as originally promised. Producers had made commitments to their domestic customers and depended on the Army supply under the sell-back arrangements to fill their own orders. Adoption of a device

The Government, however, was determined that its own commitments should be met. It was, of course, faced with the fact that if the fertilizer was shipped directly overseas it would be in a position of breaking faith with commercial producers for the return of the material. In order to prevent this, it worked out and adopted the device of delivering the fertilizer to private industry and then, through a system of priorities, it forced the producers to sell the material to France and the foreign countries to which it was committed.

The particular FĞAN involved at Texas City was delivered to Lion Oil for shipment to France in the following manner: The Federal allocation of ammonium nitrate on November 7, 1946, for French colonies was fixed for the first quarter of 1947 at 55,000 tons. This allocation, it may be well to note, was made before the material which blew up at Texas City was manufactured, and also before the Lion Oil Co. entered into the so-called contract with the Government under the sell-back arrangement. That contract was not written until January 10, 1947.

5

Prior to the date of the contract and on November 25, 1946, the French Supply Council, acting for the Government of France, filed application with the Civilian Production Administration for approximately 70,000 short tons of FGAN. The applications were approved by the CPA and given CC priority rating. A memorandum relating to these applications contained the following illuminating paragraphs: As you know, we have been informed that the United States Army is now returning to producers the tonnage of ammonium nitrate which they had bor

4 See footnote 3.

Bee footnote 2.

rowed. Our chemicals division states that these producers are reluctant to ship to export either from this returning tonnage or from new production and, therefore, the United States Government commitment is in danger of not being fulfilled. Mr. Hart, chemicals division, is of the opinion that the only method by which this export requirement will be filled is through the use of a CC rating authorized to cover these unfilled balances.

As indicated above, producers are still reluctant to ship to export. We had hoped that with the return of the borrowed quantities this reluctance would disappear. Since it has not, it is recommended that a CC rating be authorized to the quantities indicated in order that these applicants may receive delivery of the balances which have been allocated to them.

After CPA approved the applications and issued a priority rating for the fertilizer, it assigned a quota to Lion Oil. A contract was then entered into between Lion and the purchasing agent of the French Supply Council for the sale and exportation of the FGAN to France. In accordance with French shipping instructions transmitted through Lion, the FGAN was shipped to Texas City. Government control

It is clear from the foregoing that the whole operation was one of Government control. The so-called delivery to Lion was at best a mere paper transaction. Lion had the role of a mere automaton in the fulfillment of the Government's commitments to France. It was not connected in any way with the manufacturing, shipping, testing, or handling of the FGAN which blew up at Texas City and while it may have "resold" the material to the French Supply Council, it had no more power or control over the sale or disposition of the FGAN, than if the Government itself had shipped the material to France. Whatever may be the technical and legal connotations to be drawn from the sale transaction, there can be no doubt in the minds of fair and reasonable persons that because of its complete dominance over all phases of the program, the responsibility for the FGAN involved in the Texas City disaster was the Government's. The committee is of the opinion that it would be wriong indeed to permit the Government, when for reasons of political expediency it continues to exercise substantially all the prerogatives of ownership over the fertilizer, to avoid responsibility therefor simply because bare legal title may have been in another.

CONCLUSIONS

There can be no doubt that the fertilizer known as FGAN is a dangerous and hazardous explosive. The disaster itself is ample proof of this fact. As the majority opinion in the Supreme Court succinctly states:

Following the disaster, of course, no one could fail to be impressed with the blunt fact that FGAN would explode (Dalehite v. United States, 346 U. S. 15, 23).

The Army knew that FGAN possessed dangerous characteristics. It had been using ammonium nitrate, the primary ingredient of FGAN, for years as a component in the manufacture of explosives. In fact, the particular FGAN which blew up at Texas City was manufactured under an explosives patent at Army ordnance plants formerly used for the manufacture of munitions. Government

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 $260,000an 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 ove 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 Justice on the Texas City disaster. In this connection, the committee wishes to make clear that the decisions of both the Supreme Court and the Court of Appeals for the Fifth Circuit were based upon a construction and interpretation of the Federal Tort Claims Act. Neither court.