Hearings - Testimony
 
Subcommittee on Superfund and Waste Management
Impact of Certain Government Contractor Liability Proposals on Environmental Laws
Tuesday, November 8, 2005
 
Michael Feigin
Executive Vice President, Chief Administrative Officer, Bovis Lend Lease Holdings, Inc.

I would like to thank you, Senator Boxer and the Committee for inviting me to participate in today’s panel, allowing me to discuss my company’s experience after the terrorist attacks on the World Trade Center on 9/11. My testimony today will outline our company’s response to the immense tragedy that occurred and offer perspective on the pitfalls and hazards with recovery and cleanup efforts following both terrorist and natural disasters.

 

Natural disasters are impossible to prevent but proper planning is the essential element in coping and rebuilding following their occurrence. The proposed legislation we are discussing today, S. 1761, the Gulf Coast Recovery Act, addresses some of the problems following hurricane Katrina. I hope to draw upon the knowledge we gained through our 9/11 experience to draw parallels to Katrina and future natural disasters and encourage this Committee to take into consideration the role private businesses play in helping government with disaster relief.

Supporting the needs of communities, governments, commerce and industry on a local, national and multinational level, Bovis Lend Lease ranks among the world's leading project and construction management companies. In the United States of America, Bovis Lend Lease is the nation's second largest construction manager with coverage emanating from its 20 US offices and in Latin America.

I begin with a quote from our CEO at Bovis Lend Lease, Peter Marchetto:

At “Ground Zero”, we saw “all the worst that you could imagine and all the best you could ever see. “

At 1 pm on September 11, 2001, approximately 5 hours after the first attack, Pete received a call from the department of Design and Construction of the City of New York (DDC). They wanted Pete, together with a few others from Bovis Lend Lease (BLL), to come to what was being called Ground Zero to help DDC manage the daunting task of making sense of the chaos in an effort to save lives. Without a moment’s hesitation, Pete and other members of BLL went to help.

That afternoon, BLL employees were working hand in hand with, and under the oversight of, the NYC DDC and the Office of Emergency Management. BLL and subcontractors retained by BLL on behalf of the City of New York, supplied labor, materials and equipment at “ground zero” for 9 ½ months.

Shortly after September 11, in addition to its work at Ground Zero, BLL answered the call for help from the city’s Economic Development Corporation by completing the Family Center at Pier 94 (this facility houses the Red Cross, NYPD, Medical Examiner and many others), a Command Center at Pier 92 and ferry slips at Pier 11. All of this work was done in three days or less and completed on Sunday, September 16.

Our debris removal work in the World Trade Center area included, at different times, search and rescue efforts, removal of debris, demolition work, construction of temporary structures and netting and scaffolding. BLL and the three other contractors asked to work at Ground Zero – Turner Construction, AMEC Construction and Tully Construction – each worked in a quadrant of Ground Zero. BLL began working in an area in the South West quadrant of “ground zero” that included the South WTC Tower and the Marriott Hotel.

By January of 2002, DDC decided to assign a larger role in the management of demolition and construction operations at Ground Zero to an alliance between BLL and AMEC Construction, and to abandon the quadrant system. Tully Construction stayed on as a subcontractor to BLL and AMEC, and Turner left the site.

The initial estimates by DDC and the federal government were that the recovery efforts, debris removal and site stabilization would take 2 years and cost over $1 billion. The Contractors and others finished the work in 265 continuous days, 24 hours per day. The Labor force peaked at 2300 (including uniform services), and was stable at 1700 for much of the period, which included about 250 Bovis personnel. BLL was particularly proud that we had no fatalities and only 36 reportable accidents with over 3.2 million man-hours worked.

No consideration was given by the Contractors to liability issues or potential claims or lawsuits before beginning work on September 11. When asked to perform work on any other project, any one of these contractors would have been given the time to properly analyze the situation, the risks associated with the assignment, and the methods to manage those risks. The Contractors also would have determined how to insure whatever potential liability might arise. There was no time to do this before starting work at Ground Zero. Immediate response was necessary.

It soon became apparent that these liability issues would have to be addressed. However, given the dangerous conditions, the retroactive nature and the unknown aspects of this unprecedented effort, commercial insurance companies would not provide the coverage needed and ultimately only limited coverage was obtained.

After many months of work, discussions with many members of Congress from the New York delegation and our two New York senate members, we received a commitment from Congress to fund a Captive Insurance Program for a broad range of third party liability claims including general liability, environmental liability, professional liability and marine liability. The Captive was funded with a one time paid in premium of $1 billion. After many months working with FEMA to establish the details of the program, the WTC Captive was formed. This WTC Captive Policy provides coverage for the City of New York as the Named Insured, and all of the contractors, subcontractors, architects and engineers working at Ground Zero as Additional Named Insureds. The policy currently has approximately 140 Additional Named Insureds.

The Captive was funded at $1 billion because this was the quickest agreeable amount to get a program in place. Some now claim that even the $1 billion might not be enough. A significant number of claims have been filed against the Contractors. Today, there are claims from over 5000 individual claimants. These lawsuits claim injuries arising from or related to debris removal work at the WTC site following the collapse of the buildings on September 11, 2001. The cases predominately involve allegations of respiratory and related injuries including asthma, chronic cough, chronic obstructive lung disease, pulmonary fibrosis, and fear of cancer. As provided for in the Captive policy documents, the Captive has retained lead defense counsel for the City and the Contractors and is vigorously defending these lawsuits.

It is essential that the United States be prepared to respond immediately in cases of national emergency, whether it is natural or man made disaster. The sad events of 9/11 and the recent events in Louisiana make this painfully clear. What we have learned from our experiences at Ground Zero is that the response to these disasters cannot wait until the disaster occurs. Resources must be put in place long before a disaster for response to be swift and adequate. A disaster response infrastructure must be put in place with experienced, qualified oversight and the ability to call upon local resources as required. An essential element of such preparedness is a plan to protect those who respond from liability.

BLL did receive compensation for its work at Ground Zero. But for the WTC Captive, expenses for lawyers and consultants would have exceeded any fees made in a matter of months. As a result of these ongoing expenses and potential liabilities, we would probably lose our bonding lines, our banking support and our insurance coverages. In short, responding to a disaster when called would have taken a thriving business employing over 2,500 people in 20 states and Latin Americas and put us out of business. Every company responding to a disaster without some kind of protection faces the same choice.

We cannot say in hindsight that we would not respond if called upon again in a similar situation. When people’s lives are at stake, we will do our duty. What we can say is that we will not voluntarily go into such a situation again. We will not extend ourselves, but we will respond if asked. With our experience at Ground Zero, and the potential liability we now face, we would be foolish to do otherwise. We have put our business, our livelihood, and our families’ prosperity on the line to help people and do the right thing. While we think existing law offers a shield in this area, the current World Trade Center related litigation demonstrates the need for additional clarity not only to protect the Contractors from liability, but also to eliminate or discourage the costly and time consuming process of the litigation itself except in extreme cases. Protection from liability needs to be put in place to eliminate any question of response, and avoid penalizing companies that come when called. S. 1761 bill does this and requires the support of this committee.

Mr. Chairman and members of the committee, thank you for the opportunity to speak with you today about Bovis Lend Lease experience and I submit my written testimony for the record and look forward to any questions you may have.

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