Along with support for reconstruction and fundraising came an investigation into what caused the disaster. The federal government in Washington D.C. appointed a team of chemists, engineers, and transportation officials to investigate the disaster, beginning with the way the ammonium nitrate was handled and extending through the progression of the disaster. After months of tests and evaluation, the team concluded that conditions aboard the ship were conducive to a reaction of the ammonium nitrate, although the cause of the original fire aboard the Grandcamp was never identified.

Literally hundreds of lawsuits were filed on behalf of the disaster victims. In one of the most notable lawsuits, the Dalehite Case of 1950, [10] several claimants compiled multiple lawsuits into one, filing jointly against the federal government. The case eventually made it to the Supreme Court, where the court ultimately ruled in favor of the U.S. government ( Dalehite v. United States, 1953 ).

At the time of the Disaster, the Federal Emergency Management Agency (FEMA) did not exist, nor was there another government system in place to provide monetary aid to disaster victims who had lost their homes, possessions or means of making a living. With this in mind, U.S. Representative Clark Thompson of Galveston introduced legislation to Congress that would provide compensation to Disaster victims to help them rebuild their town and their lives. The bill passed in 1955. It allowed about seventeen million dollars to be distributed to almost 1,400 claimants. The Texas Legislature also agreed to rebate municipal and school taxes in Texas City for three years following the disaster, in an effort to stimulate an economic recovery in the area [10].