States possessions." The additional overseas areas listed for fertilizer aid, under the expanded program, included such nonoccupied countries as 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 FGAN 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.

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 borrowed. 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 automation 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

See footnote 4.

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 wrong indeed to permit the Government, when for reasons of 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 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