Thank you, Mr. Chairman, for the opportunity to address you and the other members of this Subcommittee. My name is Warren Perkins, and I am a Vice President of Boh Bros. Construction Company (hereinafter “Boh Bros.”). I serve as the company’s Risk Manager.
I am here today to express the company’s views on the matters before this Subcommittee, but as I begin, let me just say a few words for and on behalf of the Mr. Robert S. Boh, who serves as the company’s President. Mr. Boh wanted to be here today, to personally represent the company, and he deeply regrets that he cannot. He asks you to appreciate that he simply cannot leave the scene of the great devastation that Hurricane Katrina has wrought on the Gulf Coast and New Orleans, in particular. There is simply too much to do.
Boh Bros. is a general construction contractor native to Louisiana and based in New Orleans. It is closely held, 96 years old, and currently in its third generation. It is a union contractor that works under collective bargaining agreements in Louisiana. It is, however, large enough to perform civil work throughout Gulf Coast, building bridges, paving roads, constructing underground drain and sewer systems, driving pile, and erecting levees and other and flood protection systems.
Boh Bros. and its employees are among the many victims of Hurricane Katrina. The company lost equipment and its work was interrupted. The hurricane shut down all of its projects in the Greater New Orleans area, and even today, only a handful of those projects have resumed. Many are in jeopardy of being cancelled.
Moreover, as the storm approached, all of the employees in the Greater New Orleans area had to evacuate to other locations. I had to move my family to an Aunt’s house in Montgomery, Alabama, and for three weeks, I had to work out of an office setup for me in downtown Montgomery. When I finally returned to New Orleans, I learned that a foot of water had flooded my home. I have been living in and working on my home ever since, and commuting to Baton Rouge daily.
As soon as the storm passed, Boh Bros. started scrambling to locate its people, to ensure that they were safe, and to let them know that we were temporarily moving our headquarters to our small office in Baton Rouge. We posted an emergency notice on our company web site; we set up temporary e-mail addresses for our office people; and we began calling people on their cell phones, trying to locate as many as possible.
It took a week for us to locate just 50% of them. It also took several days and several helicopter rides over New Orleans to assess the condition of out main office, equipment yard and jobsites, and the damage done to the city as a whole. Before Katrina hit, Boh Bros. had over 180 pieces of equipment worth over $60 million in the Greater New Orleans Area, and it took us two weeks to recover just 50% of that equipment. Many pieces were damaged, destroyed or lost.
During that time, we also set up a “command center” where we received emergency calls for recovery operations, including emergency repairs to the breached levees. Each morning at 7:00 a.m., our President met with our field department leaders and project superintendents to plan the coming day’s activities and share information on any new developments. While we were cramped into our Baton Rouge quarters, and lacked our computer and other basic systems, we were determined to get the job done. We worked 15 to 20 hours per day, and 7 days a week, for an entire month. We knew we were one of the few companies capable of providing emergency service to our community. We were also committed to getting our employees paid, and to keeping them secure.
Some of the first phone calls came from the Louisiana Department of Transportation and the U.S. Army Corps of Engineers. We were asked to deploy personnel and equipment to the downtown area, and to stop the flooding. By the end of the first week, we had received more than ten requests from government agencies to fill breaches in the levees, to pump water out of the flooded areas, to move barges blocking parts of the inland waterway system, and to repair bridges over those waterways. We trusted the people calling us, and so we immediately went to work. We did what we had to do.
In the following month, we received many more calls from government agencies. We also bid for and were awarded a contract to repair of the I-10 Twin Span bridge over Lake Pontchartrain, which runs between New Orleans and Slidell, and which the storm surge had severely damaged. We were told we had 45 days to get two-way traffic moving on one span, and I am extremely proud to tell you that we did it in 29 days.
For the first few days, our temporary headquarters was chaotic, with 200 employees working in an office that normally housed only 40 employees. But we persevered. We were often acting on oral instructions, but determined to be faithful to those instructions, because we knew that the government agencies could not do it on their own. It was all about taking orders and then following them, to the letter.
To get to the areas that needed our help, we had to find access routes through flooded streets and around both debris and power lines. We had to set up supply lines outside the area capable of providing our people with literally everything they needed, from water to food to fuel.
We also had to do our very best to protect our people from environmental and other hazards. We made sure to comply with all OSHA and maritime regulations, but that was just the beginning. As soon as we could, we hired two engineering companies to do environmental testing of our worksites before we moved our people into them. We talked to industrial hygienists about the personal protective equipment we should use. We had all of our people vaccinated for Hepatitis A & B and gave them Tetanus and Diphtheria shots. We even hired security guards to protect our people from the sniper activity encountered in and around the areas where they had to work. All of our guards were former members of specialized forces in the military.
In the early days, we were ready to start working on little more than a handshake. We did not demand the time we would normally take to scrutinize contractual terms and conditions. We were ready to go. We knew that we were incurring great expenses, and that we would have to meet our payroll, but we expected the government agencies eventually to sign the contracts, and we trusted them to pay us fairly. The U.S. Army Corps of Engineers had come to the Shaw Group, another Louisiana firm, and Boh Bros., the most qualified and capable construction contractors in the area, asking for our immediate help, and we were not going to let the country down.
Nor did we dwell on the risk of tort litigation. We knew that the trial lawyers were out there, but we simply could not take the time to imagine that someone would sue us for trying to save the city. The only risk on our minds was the risk that New Orleans would simply cease to exist.
Now, however, we wonder. Do we risk tort litigation over the actions that we have taken, and continue to take? Would the trial lawyers really sue us simply for trying to put our community back together? Some people disagree with the contracting and regulatory agencies, and believe that the agencies are not doing enough. Would such people actually sue us simply for following the agencies’ instructions, or relying on their conclusions?
We understand that the contracting agencies have to guide and direct the recovery effort. If we fail to follow their instructions, we expect to have a problem. We also have to answer to the Environmental Protection Agency, the Occupational Safety and Health Administration, and other regulatory agencies. If we fail to comply with their standards, we expect them to take to take some kind of enforcement action. We also expect and intend to provide financial support for any employees injured during the course of their employment, and to pay their medical bills. As required, we carry and continue to pay the premiums for workers compensation insurance, and we know that those premiums will climb if we fail to take the steps necessary to safeguard our workers.
The problem is that we cannot be sure that the agencies are in charge. The problem is the future tort litigation could rewrite the rules, long after the fact.
Boh Bros. has simply responded to the many requests that the U.S. Army Corps of Engineers and other government agencies have made of our company. At their request, and as they instructed, we have, for example, made temporary repairs to New Orleans’ flood protection system. These temporary repairs are intended to protect the city only for a short time, as the Corps and other government agencies develop and implement permanent solutions to the many problems that Hurricane Katrina revealed. But we really do not know how much time the agencies will require. The time could stretch into the 2006 hurricane season and beyond. If a future hurricane breached any one or more of these temporary repairs, would the trial lawyers sue the government agencies? Or Boh Bros.?
The exposure is real, even if, as we are confident, our work meets all relevant standards. Litigation takes an enormous toll on any company. The costs of litigation are enormous. They include both legal and expert witness fees, and a host of indirect expenses. Time is lost. Employees are distracted. Insurance carriers may hesitate to provide future coverage. And all too often, a company’s reputation is both wrongly and irreparably damaged.
Since the hurricane hit New Orleans, the trial lawyers have already filed one meritless class action against Boh Bros. While based on events that preceded the hurricane, it is highly instructive. It demonstrates that the trial lawyers are already hoping to profit on the disaster, and it reveals some of the potentially great costs involved in simply being sued. The complaint alleged that Boh Bros. had defectively constructed a bridge that is very close to the area where the 17th Street Canal floodwall failed, and that we were therefore responsible for the flooding of an entire neighborhood. The potential liability was enormous. In fact, our company did not even work on the bridge. The plaintiffs’ attorney did no research to determine the facts. He simply assumed that Boh Bros. must have been involved. The complaint was quickly dismissed. But not until the plaintiffs’ lawyer had gone on the evening news to make his sensational allegations and cause lingering damage to our good name and reputation.
When asked to do the right thing, for New Orleans and its residents, Boh Bros. responded. Now, it is time for Congress to do the same. Now it is time for Congress to give the contractors working hard to revive New Orleans and the remainder of the Gulf Coast with some reasonable measure of protection from unlimited tort liability simply for being there to meet the need. Congress should quickly enact S. 1761.
Boh Bros. is a member of the Associated General Contractors of America, and I can assure you that responsible contractors throughout the country are playing close attention. They are aware of what has happened to the contractors who responded to the terrorist attacks on New York City. They are aware of the litigation that followed. They are responsible corporate citizens, but they are deeply concerned. If they cannot rely on the instructions that contracting agencies give them, or the guidance that regulatory agencies provide, they may find it hard to respond to the next natural or other disaster.
In closing, let me just add that the Greater New Orleans Area requires your particular attention, as it heavily depends, for its very survival, on the design and construction of a new flood protection system. For itself, its employees, and its community, Boh Bros. also urges you quickly to provide enough funding to design and construct a flood protection system that will protect the city from future hurricanes. In our opinion, if proper funding is not quickly provided, many of the city’s residents will neither return nor rebuild.
Thank you again for providing Boh Bros. with an opportunity to testify. I would be glad to answer any questions you may have.