[Senate Hearing 109-1007]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1007
 
                  THE IMPACT OF CERTAIN GOVERNMENTAL 
                   CONTRACTOR LIABILITY PROPOSALS ON 
                           ENVIRONMENTAL LAWS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                     SUPERFUND AND WASTE MANAGEMENT

                                 of the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 8, 2005

                               __________

  Printed for the use of the Committee on Environment and Public Works



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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island         BARBARA BOXER, California
LISA MURKOWSKI, Alaska               THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota             HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia              BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director
                                 ------                                

             Subcommittee on Superfund and Waste Management

                   JOHN THUNE, South Dakota Chairman

JOHN W. WARNER, Virginia             BARBARA BOXER, California
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
JOHNNY ISAKSON, Georgia              FRANK R. LAUTENBERG, New Jersey


                            C O N T E N T S

                              ----------                              
                                                                   Page

                            NOVEMBER 8, 2005
                           OPENING STATEMENTS

.................................................................
Boxer, Hon. Barbara, U.S. Senator from the State of California...     7
.................................................................
Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New 
  York...........................................................     9
.................................................................
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma, 
  prepared statement.............................................    52
.................................................................
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     3
.................................................................
Thune, Hon. John., U.S. Senator from the State of South Dakota...     1
.................................................................
Vitter, Hon. David, U.S. Senator from the State of Louisiana.....     5

                               WITNESSES

Becker, Paul, president, Willis North American Construction 
  Practice.......................................................    45
     Prepared statement..........................................    94
    Responses to additional questions from:
        Senator Jeffords.........................................    96
Feigin, Michael, executive vice president, Bovis Lend Lease 
  Holdings, Inc..................................................    28
     Prepared statement..........................................    69
    Responses to additional questions from:
        Senator Boxer............................................    71
        Senator Jeffords.........................................    72
King, Craig S., Government contracts attorney....................    40
     Prepared statement..........................................    78
    Responses to additional questions from:
        Senator Boxer............................................    83
        Senator Jeffords.........................................    84
        Senator Thune............................................    83
Perkins, Warren, vice president, Risk Management, BOH Brothers 
  Construction Company...........................................    20
     Prepared statement..........................................    64
    Responses to additional questions from:
        Senator Boxer............................................    67
        Senator Jeffords.........................................    69
Riley, Don T., Major General, Director of Civil Works, United 
  States Army Corps of Engineers.................................    12
     Prepared statement..........................................    52
    Responses to additional questions from:
        Senator Boxer............................................    54
        Senator Jeffords.........................................    54
Schooner, Steven L., co-director, government procurement law 
  program, George Washington University Law School...............    43
     Prepared statement..........................................    84
    Responses to additional questions from:
        Senator Jeffords.........................................    90
        Senator Thune............................................    91
Shufro, Joel, executive director, New York Committee for 
  Occupational Safety and Health.................................    30
     Prepared statement..........................................    72
    Responses to additional questions from:
        Senator Boxer............................................    77
        Senator Jeffords.........................................    75
        Senator Thune............................................    74
Wright, Beverly, Ph.D, director, Deep South Center for 
  Environmental Justice and co-chair, National Black 
  Environmental Justice Network..................................    18
     Prepared statement..........................................    57
    Responses to additional questions from:
        Senator Boxer............................................    63
        Senator Jeffords.........................................    64
        Senator Thune............................................    64
Zelenka, Anthony, president, Bertucci Contracting Corporation....    15
     Prepared statement..........................................    55
    Response to additional question from:
        Senator Boxer............................................    56
        Senator Jeffords.........................................    57

                          ADDITIONAL MATERIAL

Article, The Associated Press: Hundreds Sue Over Health Effects 
  of World Trade Center Clean-up.................................    99
Statements:
    American Road and Transportation Builders Association........    97
    American Society of Civil Engineers..........................    98


 THE IMPACT OF CERTAIN GOVERNMENTAL CONTRACTOR LIABILITY PROPOSALS ON 
                           ENVIRONMENTAL LAWS

                              ----------                              


                       TUESDAY, NOVEMBER 8, 2005

                               U.S. Senate,
         Committee on Environment and Public Works,
            Subcommittee on Superfund and Waste Management,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:30 p.m. in 
room 406, Senate Dirksen Building, Hon. John Thune (chairman of 
the subcommittee) presiding.
    Present: Senators Thune, Vitter, Jeffords, Boxer, Clinton.
    Senator Thune. Today's hearing will come to order.

  OPENING STATEMENT OF HON. JOHN THUNE, U.S. SENATOR FROM THE 
                     STATE OF SOUTH DAKOTA

    Senator Thune. We will allow the distinguished Senator from 
Vermont to make his statement in just a minute, but I want to 
say good afternoon and thank you to all of you for coming. We 
are here this afternoon to hear testimony from the U.S. Army 
Corps of Engineers and various other individuals regarding 
disaster cleanup efforts that are currently underway in the 
Gulf Coast region.
    Because we have a full hearing today, I will keep my 
opening remarks brief. As many of you know, roughly 4 weeks 
following the tremendous destruction that Hurricane Katrina 
caused the Gulf Coast region, I introduced legislation that 
seeks to assist in the cleanup and recovery of the most 
destructive natural disaster in our Nation's history.
    Just as our Nation witnessed during the September 11th 
terrorist attacks, private contractors have stepped forward in 
the Gulf region to support the Federal Government in providing 
the resources that are necessary to assist in the recovery of 
both persons and property dislocated by Hurricane Katrina, to 
demolish, remove, repair and reconstruct both structures and 
utilities damaged by the hurricane and to cleanup property 
polluted by that hurricane and to remove vast amounts of 
debris, and finally, to de-water flooded areas.
    However, because of the ongoing multi-billion dollar class 
action cases filed against the contractors who assisted the 
Government in the cleanup of the World Trade Center, I have 
concerns that other major disaster cleanups, including 
Hurricane Katrina, may be stymied due to the potential for 
future lawsuits being brought against contractors who carry out 
major disaster cleanups on behalf of the Government.
    Just last week, New Orleans' Mayor Nagin testified before 
the full committee about the destruction the storm had caused. 
In his testimony, the Mayor noted: ``This storm forced hundreds 
of thousands of people to flee, flooded thousands of homes and 
decimated many lives. The damage to homes, schools, businesses, 
hospitals, roads, water plants, communications facilities and 
electrical power infrastructure was unprecedented. The economic 
and social fabric of the area was damaged in its entirety.''
    Because large-scale disaster recovery in the Gulf Coast 
region doesn't occur in a vacuum, I strongly believe that 
Congress should provide private contractors with a measurable 
level of liability protections due to the nature of the work 
they do and helping the Government restore the basic services 
the public expects and deserves. Contrary to some claims, my 
legislation, which is co-sponsored by eight Senators, including 
Senator Vitter and Senator Lott, does not weaken existing 
environmental protections; nor does it grant contractors 
protection from Federal, State or local enforcement actions. It 
does not limit any Agency's authority or discretion to take 
whatever steps it may deem necessary to ensure full compliance 
with its rules or regulations or to punish non-compliance. Nor 
would the bill relax any duty or obligation that any employer 
owes to its employees. The bill would leave contractors fully 
accountable for any failure to protect the safety or health of 
their employees.
    Last but not least, the Gulf Coast Recovery Act would not 
in any way limit any contractor's liability for recklessness or 
willful misconduct. There would be no limits on any punitive, 
non-economic or other damages otherwise recoverable for such 
recklessness or misconduct. Simply put, my bill would provide 
private disaster contractors a limited measure of protection 
comparable to but less than the protection that Federal 
officials enjoy when exercising their discretion.
    [The prepared statement of Senator Thune follows:]

 Statement Hon. John Thune, U.S. Senator from the State of South Dakota
    Today's hearing will come to order. Good afternoon and thank you 
all for coming. We are here this afternoon to hear testimony from the 
U.S. Army Corps of Engineers and various other individuals regarding 
disaster cleanup efforts that are currently underway in the Gulf Coast 
Region. Because we have a full hearing today, I will keep my opening 
remarks brief.
    As many of you know, roughly 4 weeks following the tremendous 
destruction that Hurricane Katrina caused the Gulf Coast Region,\1\ I 
introduced legislation that seeks to assist in the cleanup and recovery 
of the most destructive natural disaster in our Nation's history.
---------------------------------------------------------------------------
    \1\The Corps of Engineers Estimates Katrina left 80 million cubic 
yards of debris that could take over a year to cleanup. In comparison, 
Hurricane Andrew left 17 million cubic yards of debris when it struck 
in 1992.
---------------------------------------------------------------------------
    Just as our Nation witnessed during the September 11th terrorist 
attacks, private contractors have stepped forward in the Gulf Coast 
Region to assist the Federal Government in providing the resources 
necessary to assist in the recovery of both persons and property 
dislocated by Hurricane Katrina, to demolish, remove, repair and 
reconstruct both structures and utilities damaged by that hurricane, to 
cleanup property polluted by that hurricane, to remove vast amounts of 
debris, and to dewater flooded areas.
    However, because of the on-going multi-billion dollar class action 
cases filed against the contractors who assisted the Government in the 
cleanup of the World Trade Center, I have concerns that other major 
disaster cleanups (including Hurricane Katrina) may be stymied due to 
the potential for future lawsuits being brought against contractors who 
carry out major disaster cleanups on behalf of the Government.
    Just last week, New Orleans Mayor Ray Nagin testified before the 
full Committee about the destruction the storm caused. In his 
testimony, the mayor noted:
    ``This storm forced hundreds of thousands of people to flee, 
flooded thousands of homes and decimated many lives. The damage to 
homes, schools, businesses, hospitals, roads, water plants, 
communication facilities, and electrical power infrastructure was 
unprecedented and the economic and social fabric of the area was 
damaged in its entirety.''
    Because large-scale disaster recovery in the Gulf Coast Region 
doesn't occur in a vacuum, I strongly believe that Congress should 
provide private contractors with a measurable level of liability 
protections due to the nature of the work they do in helping the 
Government restore the basic services the public expects and deserves.
    Contrary to some claims, my legislation, which is cosponsored by 
eight Senators (including Senator Vitter and Senator Lott), does not 
weaken existing environmental protections, nor does it grant 
contractors protection from Federal, State, or local enforcement 
actions. It does not limit any Agency's authority or discretion to take 
whatever steps it may deem necessary to ensure full compliance with its 
rules or regulations, or to punish noncompliance. Nor would the bill 
relax any duty or obligation that any employer owes to its employees. 
The bill would leave contractors fully accountable for any failure to 
protect the safety or health of their employees.
    Last but not least, the Gulf Coast Recovery Act would not in any 
way limit any contractor's liability for recklessness or willful 
misconduct. There would be no limits on any punitive, non-economic or 
other damages otherwise recoverable for such recklessness or 
misconduct.
    Simply put, my bill would provide private disaster contractors a 
limited measure of protection--comparable to but less than the 
protection that Federal officials enjoy when exercising their 
discretion.
    Before turning to our first panel, I would like to recognize 
Senator Boxer, the ranking member of this subcommittee for her opening 
statement.

    Before turning to our first panel, I would like to 
recognize Senator Jeffords for any statement he may have as the 
Ranking Member of the full committee, then also I will turn to 
my colleague, Senator Vitter. Senator Jeffords. Oh, I'm sorry, 
Senator Boxer----
    Senator Boxer. I am happy to wait.
    Senator Thune. Well, let's go to Senator Jeffords as the 
Ranking Member of the full committee, then we will come back.
    Senator Boxer. Absolutely right. I will go after David.

OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Senator Jeffords. Thank you for holding this oversight 
hearing on Governmental Contractor Liability Proposals related 
to Hurricane Katrina. I am greatly concerned for the people who 
have been affected by our Nation's largest natural disaster. I 
will do everything in my power to help them get back on their 
feet.
    As a Nation, our focus should be on rebuilding the Gulf 
Coast so that residents can safely return to their homes and 
get on with their lives. Last month, I joined the Democratic 
members of this committee to introduce S. 1836, the Gulf Coast 
Infrastructure Redevelopment and Recovery Act of 2005. This 
legislation would ensure a more coordinated rebuilding effort 
in the aftermath of Hurricane Katrina. The bill will set up a 
Federal task force to coordinate Katrina response efforts among 
the agencies. It establishes the National Preparedness Grants 
and would work to fix the needless and catastrophic problems we 
saw emerge in our Nation's emergency response plans.
    Our bill also establishes the National Levee Safety Program 
and requires EPA to develop a comprehensive sampling plan for 
hazardous substances that may threaten human health or the 
environment. Recent press reports indicate that the levees in 
New Orleans may have failed because of faulty construction 
practices by Government contractors. We must ensure that the 
rebuilding of the levees in the Gulf Coast region is done by 
competent contractors who adhere to the law.
    Any legislation that would limit the liability of 
contractors who assist Federal or State Governments with relief 
and reconstruction efforts in this region is a bad idea. Now, 
more than ever, our Government's role should be to ensure that 
citizens are protected from faulty cleanup efforts.
    With all that is going on in their lives, the people in the 
Gulf Coast should not have to worry about contaminated drinking 
water, hazardous waste exposure, destruction of property, 
personal injury or even death. These citizens have already 
suffered a tremendous loss that will take many years to get 
over. To limit their legal remedies at a time like this is 
unconscionable.
    Simply put, we must not provide corporations with liability 
shields and exempt them from environmental regulation at the 
expense of Gulf Coast residents. The rush to cleanup from 
Katrina is not a rationale for allowing contractor negligence. 
Given the same Katrina contractors are greatly benefiting from 
no-bid contracts, we should be extra vigilant to see that it is 
done right. These contractors and corporations do not deserve 
special treatment at the expense of those who have lost their 
family members and homes and jobs.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Jeffords follows:]

      Statement of Hon. James M. Jeffords, U.S. Senator from the 
                            State of Vermont

    Mr. Chairman, thank you for holding this oversight hearing on 
Governmental Contractor Liability Proposals related to Hurricane 
Katrina.
    I am greatly concerned for the people who have been affected by our 
Nation's largest natural disaster, and I will do everything in my power 
to help them get back on their feet. As a Nation, our focus should be 
on rebuilding the Gulf Coast so that residents can safely return to 
their homes and get on with their lives.
    Last month, I joined with Democratic members of this committee to 
introduce S. 1836, the ``Gulf Coast Infrastructure Redevelopment and 
Recovery Act of 2005.'' This legislation would ensure a more 
coordinated rebuilding effort in the aftermath of Hurricane Katrina. 
The bill sets up a Federal task force to coordinate Katrina response 
efforts among agencies. It establishes National Preparedness Grants, 
and would work to fix the needless and catastrophic problems we saw 
emerge in our Nation's emergency response plans. Our bill also 
establishes a National Levee Safety Program, and requires the EPA to 
develop a comprehensive sampling plan for hazardous substances that may 
threaten human health or the environment.
    Recent press reports indicate that the levees in New Orleans may 
have failed because of faulty construction practices by Government 
contractors. We must ensure that the rebuilding of the levees, and the 
Gulf Coast Region, is done by competent contractors who adhere to the 
law. Any legislation that would limit the liability of contractors who 
assist Federal or State Governments with relief and construction 
efforts in this region is a bad idea. Now more than ever, our 
Government's role should be to ensure that its citizens are protected 
from faulty cleanup efforts. With all that is going on in their lives, 
the people of the Gulf Coast should not have to worry about 
contaminated drinking water, hazardous waste exposure, destruction of 
property, personal injury or even death. These citizens have already 
suffered a tremendous loss that will take many years to get over. To 
limit their legal remedies at a time like this is unconscionable.
    Simply put, we must not provide corporations with liability shields 
and exemption from environmental regulation at the expense of the Gulf 
Coast residents. The rush to cleanup from Katrina is not a rationale 
for allowing contractor negligence. Given that some Katrina contractors 
are greatly benefiting from no-bid contracts, we should be extra 
vigilant to see that it is done right. These contractors and 
corporations do not deserve special treatment at the expense of those 
who have lost their family members, homes, and jobs.

    Senator Thune. Thank you, Senator Jeffords.
    Senator Vitter.

 OPENING STATEMENT OF HON. DAVID VITTER, U.S. SENATOR FROM THE 
                       STATE OF LOUISIANA

    Senator Vitter. Thank you, Mr. Chairman. I will submit my 
full opening remarks for the record. I will be very brief 
summarizing them here.
    First of all, thank you for this hearing, and thank you for 
the legislation. As you noted, I am a co-sponsor and I strongly 
support it. I strongly support it for a real simple reason. I 
was on the ground virtually every day in the immediate 
aftermath of Katrina. I saw a lot of folks, including these 
contractors, at work. I realize that it was very much an 
emergency situation. Extraordinary emergency measures were 
being taken because people's lives and property were at risk of 
further destruction. There was just a flurry of activity to 
close the levee breaches at the 17th Street Canal, at the 
Industrial Canal and other locations. That was very much 
emergency activity.
    We need to allow that to happen responsibly in true 
emergency situations. I believe this bill does that.
    It does not protect and shield when there are cases of 
reckless or willful misconduct. So it clearly doesn't do that. 
It does not apply to new construction activity. It only applies 
to true emergency repair activities.
    So for instance, in the case of levee work in the New 
Orleans area, it would apply to that emergency activity, 
plugging the breaches that I described. It would not apply to 
new construction activity, for instances, to raise the system 
to category 5 protection. It is not a pass on Government 
regulations, environmental and other mandates. It does not 
affect that in any way.
    Finally, it is needed. This is not an academic discussion. 
We know from true, recent experience after 9/11 that there 
could well be a flurry of class action lawsuits to try to 
profit from the emergency measures that needed to be taken, the 
very quick decisions that needed to be made in a true emergency 
situation. So this is not some theoretical discussion. We know 
from a similar situation that it is a very real need.
    So again, I thank you for the legislation. I very much 
thank you for this hearing. I am proud to join you and many 
others, including Senator Lott, again, from the disaster area, 
in pushing forward the legislation. Thank you.
    [The prepared statement of Senator Vitter follows:]

    Statement of Hon. David Vitter, U.S. Senator from the State of 
                               Louisiana

    Good Afternoon. I would like to thank the subcommittee's chairman, 
Senator Thune, for inviting me to this hearing and for his leadership 
on this very important issue. I would also like to thank all of the 
witnesses for agreeing to testify before the subcommittee, especially 
those from Louisiana. I also look forward to hearing from Major General 
Riley from the Army Corps of Engineers, and I hope that he is able to 
assure me that the Corps is making a concerted effort to give 
preference to local contractors.
    In the past few months, the State of Louisiana has suffered record 
devastation from two major hurricanes. Just over 2 months have passed 
since Hurricane Katrina left an entire major metropolitan area 
evacuated, flooded and completely closed for weeks. Only a few weeks 
later, Louisiana was struck by another major storm, Hurricane Rita.
    Contractors play a vital role in relief efforts following a natural 
disaster. The Federal Government relies on contractors to quickly 
address dangerous conditions that threaten life and property, to 
restore basic public services, and to protect public safety and health. 
The Army Corps of Engineers and FEMA have relied on contractors to pump 
water out of New Orleans and repair the breached levees, many of which 
began work without a contract. Without the help of the private 
contractors, the City of New Orleans would still be under water.
    However, many contractors need assurances that if they aid in 
disaster recovery efforts they will not be subject to the same class 
actions filed against those contractors who helped in the rescue, 
recovery, and cleanup at the World Trade Center following the September 
11, 2001 terrorist attacks. The Gulf Coast region desperately needs 
contractors to restore the 90,000 square miles damaged by Hurricane 
Katrina and Hurricane Rita. The Federal Government simply lacks the 
resources and the expertise needed to cleanup and restore the Gulf 
Coast region in an efficient and effective manner.
    Shortly after Hurricane Katrina made landfall in Louisiana, Senator 
Thune introduced S. 1761, The Gulf Coast Recovery Act, to limit the 
liability that private contractors face as they aid in rescue, 
recovery, cleanup, and reconstruction efforts in the devastated 
regions. I am proud to say that I am an original co-sponsor of this 
very important legislation. The Gulf Coast Recovery Act limits the tort 
liability of those contractors who the Army Corps of Engineers deems 
necessary for recovery efforts associated with Hurricane Katrina and 
other major disasters. It does not apply to new construction. So, for 
example, a contractor charged with plugging the breaches in the levees 
in New Orleans would be covered by the bill, whereas, a contractor 
charged with building the levees to a Category-5 level of protection 
would not.
    The Gulf Coast Recovery Act does not limit any public agency's 
authority to take whatever steps it deems necessary to ensure full 
compliance with its rules or regulations, or to punish noncompliance. 
Thus, contrary to the assertions made by many of the bill's opponents, 
the Gulf Coast Recovery Act does not relieve contractors from their 
legal obligation to comply with environmental laws. If this bill is 
enacted, the EPA and its state and local counterparts will retain their 
full enforcement powers to bring an action against a contractor for 
noncompliance with rules and regulations.
    My interest in Government contracting post-Hurricane Katrina and 
Hurricane Rita also goes to how the contracts are awarded. First, I am 
concerned with the award of no-bid mega contracts. While I understand 
that emergency situations sometimes call for faster action than the 
Federal Acquisition Regulation's (FAR) full and open competition 
process allows, I believe that it is in the best interests of the 
parties involved, including the businesses and the people of the Gulf 
Coast States, to use full and open competition for all but a very 
limited number of contracts. Currently, the Federal Acquisition 
Regulation requires full and open competition except in specific 
instances. However, I believe that these exceptions should be narrowed 
only for those activities related to relief and recovery from Hurricane 
Katrina and Hurricane Rita. In an effort to address this concern, I 
introduced ``The Hurricane Katrina and Hurricane Rita Fairness in 
Contracting Act'', which limits the number of exceptions to the Federal 
Acquisition Regulation's full and open competition requirement and it 
requires advance notice to Congress of any non-competitive contracts.
    Second, I am concerned that companies from Louisiana and other Gulf 
Coast States are not being awarded recovery and reconstruction 
contracts. Although the Stafford Act (42 U.S.C. 5150) contains local 
preference language, it only requires that agencies give preference to 
local contractors ``to the extent feasible and practicable''. I do not 
believe that the Stafford Act's language is strong enough. Therefore, I 
am working with the Senate Small Business Committee to draft stronger 
local preference language. Since the need for emergency action has for 
the most part subsided, I encourage Federal agencies to make more of an 
effort to hire local contractors.
    The Gulf Coast region cannot achieve full economic recovery unless 
the businesses located within that region are given the chance to play 
a leading role in the recovery and reconstruction effort, and Senator 
Thune's common sense legislation is an important part of that process.
    Once again, I would like to thank Chairman Thune for inviting me to 
speak at this hearing and for taking a leading role on this very 
important issue. I look forward to hearing what each of the witnesses 
has to say.

    Senator Thune. Thank you, Senator Vitter, and thank you for 
your leadership for the people that you represent who have been 
victimized by this great disaster, and thank you for your 
direction and guidance in helping us as we shape responses that 
are effective and that help get that area back on its feet. 
Thank you for everything that you are doing.
    Senator Boxer.

OPENING STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Boxer. Thank you so much.
    I just want to pick up on something Senator Vitter said, 
that in an emergency we need to waive these liabilities. The 
fact is this bill talks about way beyond emergencies. It talks 
about repair, cleanup, alteration, remediation, construction 
and the rest. So I do not agree with Senator Vitter's analysis 
of it, but I am sure if this bill gets to markup we will have a 
chance to talk about that.
    Mr. Chairman, as your Ranking Member, I want to publicly 
state that I support very strongly your right to hold any 
hearing you want, and I know you would do that if I was in the 
chair instead of the Ranking Member. I just want to make sure 
that the record is clear: that as your Ranking Member this was 
not a hearing that I supported. I personally would prefer us to 
be looking at the ways to help the victims of Katrina. Even 
though I think you believe that this does help them, I think at 
the end of the day it hurts them. I am going to go through my 
brief opening statement.
    I think that this committee sometimes loses its charge. 
This is the Environment Committee. A couple of weeks ago we had 
a hearing on what I call the Oil Company Protection Act, which 
was a way to give big oil the ability to get free land to build 
refineries. Luckily, the committee stopped it in its tracks in 
a bipartisan vote.
    I have to say in all honesty, I think today we are looking 
at what I call the Halliburton Protection Act, not that it just 
applies to Halliburton, but it does apply to some of these big 
contractors.
    I think that for us, we should be on the side of the people 
that get hurt directly, and that we shouldn't be in a situation 
where we are trying to make it more difficult for them to 
receive compensation. Government contractors should be held 
responsible for what they do. It is as simple as that. 
Otherwise, the burden falls on the victims, the injured 
workers, or those who live in the disaster-affected region or 
Federal taxpayers, for that matter.
    I think it is wrong, from a moral standpoint, if we are 
supposed to talk about community and responsibility, this bill 
flies in the face of that by eliminating the rights of victims. 
I think it sends a subtle message, or not so subtle, to the 
contractors, well, do your best, because if you make a mistake, 
if you burn toxics, if you do some other things, you know, you 
won't be held responsible. I am glad the Senator from New York 
came in here, because later I am going to show you a picture 
from there, from the horrific experience we had before.
    I would ask unanimous consent to place in the record an 
article that appeared November 4th in the Los Angeles Times 
talking about the Katrina cough, where we see that mold and 
muck may be causing respiratory illnesses in people who have 
returned home. If I might get that into the record?
    Senator Thune. Without objection.
    [The referenced information was not submitted at the time 
of print.]
    Senator Boxer. Thank you.
    So I wish, as an Environment Committee, we were looking at 
these victims and figuring out ways to help them and to work 
with the contractors to help them do the best they can do and 
to give them that sense of moral responsibility. I mean, what 
if a contractor exposes children to contamination or sends 
workers into water filled with waste and people get sick or 
die? Under S. 1761, a bill, by the way, that is outside this 
committee's jurisdiction as I understand it, this should fall 
to Judiciary, the family is forced to bear not only the 
emotional burden of the injury but also the financial costs of 
caring for the injured.
    It is not hypothetical, and as I say, I am glad that the 
Senator from New York is here. Let's look at the workers who 
have been cleaning up and rebuilding the World Trade Center 
site. We have a photograph, here they are. Sixty percent of all 
of them who participated in a health monitoring program had at 
least one respiratory illness. Eighty-five percent of those 
workers continue to have respiratory illness 4 years later. 
Only 21 percent of them had appropriate respiratory protection 
while working at Ground Zero. Only 21 percent of them.
    Thank you. I think we remember those faces.
    Now we have the Gulf Coast, and we have a bill that could 
let Government contractors off the hook. The potential is 
there. The areas hit by Hurricanes Katrina and Rita had 54 
Superfund sites. Mr. Chairman, I know you and I have a lot of 
work to do in making sure we do proper oversight over those 
cleanups. As of the 1st of November, EPA had not yet completed 
assessments at 38 sites in the hurricane region. EPA has 
collected 680,000 household hazardous waste or orphaned 
containers. Eight million gallons of oil was spilled.
    Now, these facts are not the fault of the Government 
contractors, not one bit. If they are going to decide that they 
want to work and get paid for their work, they have to follow 
the rules to protect people, once they get involved in a 
cleanup. The people in New Orleans have suffered enough. 
Virtually eliminating their right to get compensation from 
negligent contractors only compounds their suffering. To me, 
the most important thing is it sends a terrible signal to the 
contractors: don't worry about it, because you know, you are 
off the hook.''
    One of the reasons we have the safest products in the 
world, Mr. Chairman, and I can prove this, chapter and verse, 
is because we don't let people off the hook when they endanger 
lives. It isn't just the narrow meaning of reckless 
endangerment and negligence. We are talking about the way you 
approach a job, and I think higher of our contractors, I think 
more of them than they should have this get out of jail free 
pass.
    It isn't right. It sends a wrong signal, and I am 
disappointed that we are moving forward with this. Mr. 
Chairman, again, it is your full right, and it is my full right 
to disagree. At the end of the day, you have the votes, you get 
a bill out, at the end of the day you don't, you don't get a 
bill out.
    I did want to say today that I have very strong feelings 
against this bill. I don't think it is what we should be doing 
in the Environment Committee. This isn't how it can be more 
gentle to the contractors committee. It really isn't. It is how 
we can help the victims, that is really what we need to do, how 
we can help them and protect them from environmental damage.
    Thank you very much.
    Senator Thune. Thank you, Senator Boxer. Senator Clinton 
has joined us as well. Senator Clinton, do you have an opening 
statement?

OPENING STATEMENT OF HON. HILLARY RODHAM CLINTON, U.S. SENATOR 
                   FROM THE STATE OF NEW YORK

    Senator Clinton. Yes, thank you, Mr. Chairman. I appreciate 
your raising this issue, because it is a vitally important 
topic. I want to thank the witnesses for coming here today to 
testify, particularly those who have come from the Gulf Coast, 
given the circumstances that they are facing.
    Mr. Zelenka and Mr. Perkins are from New Orleans, 
representing companies that have been heavily involved in the 
response and recovery efforts since Katrina hit. Dr. Wright is 
also from New Orleans and working to ensure that the recovery 
and rebuilding is done in a safe and fair manner for all 
residents along the Gulf Coast. I really appreciate what you 
are trying to do under very difficult circumstances.
    As my colleague, Senator Boxer, said, we have some of the 
same kinds of challenges after 9/11. We know that there are 
many, many difficult issues that have to be sorted out. I 
appreciate and welcome Joel Shufro of the New York Committee on 
Occupational Safety and Health for being here. NYCOSH is an 
outstanding and well-respected organization that I have worked 
with closely on a number of 9/11 issues.
    I also appreciate very much Michael Feigin from Bovis Lend 
Lease Holdings being here. Bovis was one of the four 
contractors that got the contracts for the cleanup on Ground 
Zero. They each did a quadrant, they came in ahead of time and 
below budget. They did a really superb job.
    I think we all share common goals about how we face these 
disasters, whether man-made in the case of New York or natural 
in the case of the Gulf Coast. How we respond and how we 
respond in an effective, cost-effective manner. When disaster 
hits, we obviously turn to those who know how to do the job, 
contractors and experienced employees.
    We do expect that the contractors who are called upon will 
comply with Environmental and Occupational Safety laws and take 
precautions to protect their employees. We expect that 
employees who are injured or who develop medical problems as a 
result of their recovery work should receive the care and 
compensation they deserve.
    Now, these are familiar problems, and there are lessons 
that can be learned from what happened on September 11th and in 
the months following. Unfortunately, with all due respect, Mr. 
Chairman, I think S. 1761 ignores and mis-applies the lessons 
of September 11th.
    When the World Trade Centers and the surrounding buildings 
collapsed, it created an unprecedented demolition and cleanup 
challenge. Literally, there were workers who were in mid-town 
or uptown or Brooklyn who dropped what they were doing at the 
construction sites they were working on and brought their 
equipment and were there by that evening ready to help. We 
really tried to set up a system that would be effective but 
also fair to everyone involved.
    I have been outspoken in my criticism of the Federal 
Government response, particularly in the first days after 
September 11th. We did have a lot of workers on the pile who 
didn't have adequate equipment for personal protection.
    We know from an EPA IG report that there was interference 
from the highest levels of our Government, with EPA 
communications about the pollution hazards in lower Manhattan. 
That affected both the employers and the employees who were 
there at Ground Zero. It obviously affected more directly the 
people who were digging through the rubble and spending 16, 18 
hour days on the pile. We now are living with the consequences 
that we have a lot of people who have chronic illnesses.
    Now, the Centers for Disease Control issued a study last 
September that found that the 3 days following September 11th 
when exposure was greatest and therefore the danger most acute, 
only 21 percent of the study's participants reported using 
respirators. For some, those were not available. For others, 
they were so anxious to work that they just plunged ahead and 
didn't want to have the discomfort, in their opinion. There was 
a lot of confusion at the site about what kind of personal 
protection should have been available to them.
    The bottom line is that we have large numbers of 
participants who were at Ground Zero with persistent 
respiratory problems. The findings that we have is information 
collected by the Mt. Sinai's World Trade Center Worker and 
Volunteer Medical Screening Program. We have documented these 
health problems and we know that we can learn from this.
    The lesson is not that we need to provide unprecedented and 
sweeping liability waivers. I understand why any contractor 
faced with the challenge of responding to these disasters 
obviously wants financial protection. There are other ways we 
can try to provide that. We need to be sure that our Government 
agencies do a better job advising contractors and workers about 
the hazards they face.
    We need to establish a system to track the health of first 
responders, something Senator Voinovich and I have worked 
closely on. We actually have a bill to provide Stafford Act 
authority to do this in disaster areas, and to follow up on the 
medical needs.
    What we did in New York was to have a captive fund. As you 
will hear in the testimony from Bovis, they couldn't get 
insurance. Nobody would write a policy for them, because we 
didn't know what the liabilities would be.
    I think that we need to come up with a more comprehensive 
solution, because otherwise, if we don't plan ahead, the 
Government is going to pick up the cost, as we have found we 
are trying to do with all of these injured workers. We are 
going to have to continue to provide some kind of care and 
compensation and we want to do it in a way that doesn't unduly 
burden the contractors, but also doesn't throw out the window 
everything we have learned.
    So I think, Mr. Chairman, that your legislation in my view 
is not the answer but the problem you have identified is a real 
problem. So we need to figure out how we can address it 
together.
    [The prepared statement of Senator Clinton follows:]

    Statement of Hon. Hillary Rodham Clinton, U.S. Senator from the 
                           State of New York

    Thank you, Mr. Chairman. This is a vitally important topic, and I 
appreciate the opportunity to discuss it here today.
    I want to thank all of our witnesses for coming to testify.
    Many of you have come a long way. I particularly want to thank the 
witnesses who came from the Gulf Coast.
    Mr. Zelenka and Mr. Perkins are from New Orleans representing 
companies that have been heavily involved in the response and recovery 
efforts since Katrina hit. Dr. Wright is also from New Orleans, and is 
working to ensure that recovery and rebuilding are done in a safe and 
fair manner for all residents of the Gulf Coast regions.
    I thank all of you for the work that you have done and are 
continuing to do under extremely trying personal and professional 
circumstances.
    I also particularly want to welcome Joel Shufro of the New York 
Committee on Occupational Safety and Health for being here to testify. 
NYCOSH is an outstanding and well-respected organization that I have 
worked with closely on a number of 9/11 issues.
    I think that we all share common goals.
    When disaster hits, we want our Government to respond.
    Our Government's response has to rely on contractors and their 
employees.
    We also expect that in doing response work, contractors will comply 
with environmental and occupational safety laws and will take 
precautions to protect their employees.
    We expect that employees who are injured or who develop medical 
problems as a result of their recovery work should receive the care and 
compensation that they deserve.
    I think probably everyone here can agree on those goals.
    These are familiar problems to me, as we encountered them in the 
aftermath of September 11 in New York City.
    There are lessons learned from September 11 that should be applied 
in the Gulf.
    Unfortunately, S. 1761 ignores and misapplies the lessons of 
September 11.
    When the World Trade Center collapsed, it created an unprecedented 
demolition and cleanup challenge.
    Contractors and their employees responded swiftly, and worked 
tirelessly under difficult and dangerous conditions to remove debris 
from Ground Zero.
    Now, I have been outspoken in my criticism of the Government 
response--particularly in the first days after September 11.
    An August, 2003 EPA Inspector General Report concluded that the 
White House interfered with EPA communications about air pollution 
hazards in Lower Manhattan.
    I said it then, and I will say it again now: that is unacceptable.
    It is possible that the Government's missteps contributed to the 
fact that proper precautions were not taken as much as they should have 
been.
    A Centers for Disease Control study issued last September found 
that in the three days after September 11, when exposure was greatest, 
only 21 percent of the study's participants reported using respirators.
    The CDC study also found that half of the study's participants had 
new and persistent respiratory problems and more than half had 
persistent psychological symptoms.
    These findings are reinforced by information collected by Mt. 
Sinai's World Trade Center Worker and Volunteer Medical Screening 
Program. Dr. Steven Levin, who is the co-director of that program, has 
documented continuing health problems among first responders, 
contractor employees, and others who worked in lower Manhattan.
    There are lessons to be learned from all this.
    The lesson is not that we need to provide unprecedented and 
sweeping liability waivers for contractors.
    Instead, there are other lessons from September 11 that we need to 
apply.
    We need to be sure that our Government agencies--EPA and OSHA--do a 
better job advising contractors and workers about the hazards they 
face.
    We need to establish a system to track the health of first 
responders and recovery workers--this is something Senator Voinovich 
and I have worked closely together on since September 11. We have a 
bill to provide Stafford Act authority to do this in disaster areas, 
and we need to pass that legislation.
    We need to attend to the medical needs of those who develop health 
problems. I am fighting now to prevent the Administration from reneging 
on their pledge to provide $125 million for workers compensation and 
medical expenses of 9/11 first responders.
    I am sympathetic to the challenges that contractors face in getting 
liability insurance. That's something we went through in New York.
    To the extent that contractors cannot obtain the liability 
insurance that they need to do the work, then Congress should consider 
stepping in.
    As Mr. Neigin points out, this is what we did in New York when the 
Ground Zero contractors were unable to purchase liability insurance in 
New York City.
    It's not clear to me from reviewing the testimony whether that type 
of program is necessary for the Gulf Coast effort.
    Along with better monitoring and help for workers, that's a 
proposal that we ought to consider, rather than the approach in S. 
1761.

    Senator Thune. Thank you, Senator Clinton.
    We have a vote going on right now, Senator Boxer went to 
vote, and she will return. I think what we will try and do is 
continue to move forward with the hearing. Our first witness 
today is General Riley, with the Army Corps of Engineers. 
General, it is good to have you, and we welcome your 
participation today and look forward to an update about how the 
contracting process is going down in the Gulf Region.
    General Riley, please proceed with your testimony.

  STATEMENT OF MAJOR GENERAL DON T. RILEY, DIRECTOR OF CIVIL 
          WORKS, UNITED STATES ARMY CORPS OF ENGINEERS

    General Riley. Thank you, Mr. Chairman and members of the 
subcommittee.
    I am Major General Don Riley, Director of Civil Works, Army 
Corps of Engineers. Thank you for inviting me to testify today.
    Under the National Response Plan, the Corps has been 
assigned Emergency Support Function 3, public works and 
engineering. Under this ESF-3, the Corps assumes the lead in 
the procurement of water and ice, provision of temporary power, 
installation of temporary roofing and removal of debris. Prior 
to emergencies, under the 6-year old advance contracting 
initiative, or ACI program, we competitively award contracts 
for future use. We used our ACI contracts to support our 
response to the recent hurricanes.
    During the emergency, the FAR allowed us to shorten the 
standard time period of award. For example, we awarded the 
contract to unwater New Orleans under the urgency exception to 
the Competition in Contracting Act. In our other response 
missions, the Corps considered and used the entire suite of 
available contracting options authorized under the FAR, 
including verbal and letter contracts.
    Using these methods, the Corps found available local 
contractors and procured such critical items as sand bags to be 
used to stop the flow of water into New Orleans. Additionally, 
we made use of an existing Naval facilities contract to assist 
in the un-watering of the city. In addition, the Corps awarded 
debris and roofing contracts in excess of those contracts pre-
placed under the ACI program.
    Also, within 2 days of the storm, I directed our internal 
review staff to team with the Defense Contracting Auditing 
Agency and the Army's Criminal Investigation Division and 
deploy to the area of operations. Their mission, which is still 
ongoing, is to provide oversight of the operation, to include 
looking for instances of fraud, waste and abuse and to review 
contracts.
    We are now working to return to standard procurement 
operations. We are advertising our requirements for longer 
periods than we did under the urgent situation. We are 
attempting to give prospective contractors as much time as 
possible to prepare their proposals, and we are using the non-
emergency provisions of the FAR to the maximum extent possible.
    Additionally, the Corps has made extensive use of standard 
authorities granted to us under the various small business set-
aside programs, especially 8(a) firms. We have also held and 
will continue to hold 8(a) competitions.
    When we have awarded contracts to large businesses, we 
encourage the use of local business subcontractors. For these 
contracts, we have instituted goals for small business 
subcontracting and reporting. Contractors report their 
subcontracting efforts to us weekly for the first 90 days and 
monthly thereafter instead of every 6 months, which is the 
typical reporting requirement.
    To help disaster-stricken communities, we have also 
inserted clauses citing our preference for use of local 
subcontractors.
    Mr. Chairman, thank you again for the opportunity to 
testify and I would be happy to answer any questions.
    Senator Thune. Thank you, General.
    Let me just ask this question. From your testimony today, 
would it be accurate to say that the Corps of Engineers would 
be unable to address major disaster cleanups without assistance 
from the private sector?
    General Riley. Yes, Mr. Chairman, it sure would. We don't 
do anything alone. We contract 99 percent of our construction 
and over 50 percent of our architectural and engineering work 
is contracted. So we see ourselves as just being a piece of 
this partnership with the local community and private 
contracting firms.
    Senator Thune. Do your contracts, when you do a contract 
with these private firms, do your contracts require that the 
contractors who perform on those comply with environmental, 
labor, safety laws, existing laws?
    General Riley. Yes, sir. We comply with all the appropriate 
laws and all permitting requirements, and require the 
contractor to do that as well.
    Senator Thune. What would be the risk of not expeditiously 
addressing the aftermath of major disasters? If you were to 
follow your normal procedures and the FAR and everything else, 
when it comes to issuing contracts, would you sort of explain 
why it is you do things the way you do?
    General Riley. Mr. Chairman, there are emergency provisions 
under the FAR which we used quite substantially in the early 
days of this disaster, in addition to the ACI contract program. 
The danger, of course, is it is an emergency and we need to get 
contractors out there quickly. One contractor that you have on 
the next panel, we made a phone call to and he moved on a 
verbal order and then we followed that up with a letter 
contract and then we continued to refine the specifications and 
processes after that.
    That is all allowable within the FAR, but that is both a 
risk to the Government and to the contractor when you move in 
an emergency situation like that.
    Senator Thune. Based on your experience, was the situation 
with Katrina different than other Federal procurement you have 
undertaken, and if so, what were some of those differences?
    General Riley. Mr. Chairman, I think that the major 
difference was just simply in the magnitude of the problem. It 
was an unprecedented disaster, huge destruction to personnel 
and property from 100 miles from Grand Isle to the Gulf Coast. 
So it was different in that sense, although we followed all the 
appropriate laws and the emergency authorities that we have as 
well as that the Government has.
    For instance, in the case of NEPA, the National 
Environmental Policy Act, there were authorities that reside 
with the oversight of CEQ, the Council of Environmental Quality 
in the White House, and they issued some emergency procedures 
under NEPA. It was all allowable within the law.
    Senator Thune. But this one, in terms of the magnitude, 
obviously very different than any previous disaster you have 
dealt with. In terms of the contracting process, fairly similar 
in using and exercising these emergency powers that you have, 
at which time you can go out and just, if you have to, find 
somebody who can do the job, get them in there on the job 
immediately. Not doing that, I assume, of course means that you 
run great risk to the people who are involved.
    General Riley. That is correct. The risk is, if you don't 
act quickly there is a severe health and safety problem, if you 
don't get the ice and water there quickly or if you don't get 
the flood waters stopped quickly, or if you don't get a roof on 
a house quickly, you dramatically increase the cost to FEMA in 
the long run if you don't act quickly.
    Senator Thune. Have you worked closely with the other 
agencies in this particular disaster and FEMA and others, their 
relationship and so forth as it has unfolded? I know there were 
a lot of early criticisms. It appears now from a distance that 
there is a unified front, so to speak.
    General Riley. Yes, sir. We work essentially for FEMA in 
disaster operations. We do have authorities of our own in flood 
control and navigation, but all the other operations that I 
described were under the mission taskings from FEMA.
    Senator Thune. I think what we will do, I assume Senator 
Boxer is going to have questions for you, General Riley. She 
will return from voting in just a moment. Those are all the 
questions I have for you. Since we don't have other members 
here, I assume we are all over on the floor voting, we will 
take a temporary recess until she returns. I am going to have 
to go over and vote, too, or they are going to clank the gavel 
down on me.
    So we will recess for a moment, and as soon as Senator 
Boxer returns, we will commence and she can pose her questions 
of you.
    [Recess.]
    Senator Thune. This hearing will come back to order.
    General, I think you lucked out. We are going to be able to 
release you, but if you could stay with us for just a minute, I 
talked to Senator Boxer on the floor, she does have at least 
one question for you. So I might bring you back up.
    I would like to bring up our second panel, if that's OK, 
and then we will get them started with their testimony. Then 
when Senator Boxer returns, if she does have a question for 
you, I think she just had one question she wanted to pose. We 
will let you go and ask the second panel to come up.
    On the second panel, we have Mr. Tony Zelenka, who is 
President of Bertucci Contracting Corporation from Jefferson, 
LA; Dr. Beverly Wright, Deep South Center for Environmental 
Justice; Warren Perkins, who is Vice President for Risk 
Management at Boh Brothers Construction; Michael Feigin, 
Executive Vice President and Chief Administrative Officer of 
Bovis Lend Lease Holdings, Inc.; and finally, Dr. Joel Shufro, 
New York Committee for Occupational Health and Safety.
    I don't know if he is with us here or not. Perhaps not. But 
we will just start, we will go from left to right, so Mr. 
Zelenka, if you would proceed. If you could, we are probably 
going to have another series of votes about an hour from now. 
So we are going to try and adhere, if we can, to the 5-minute 
rule when it comes to oral testimony. We will make sure that 
all your written testimony is made a part of the record.
    Thank you for being here.

 STATEMENT OF ANTHONY ZELENKA, PRESIDENT, BERTUCCI CONTRACTING 
                          CORPORATION

    Mr. Zelenka. Thank you, Chairman Thune, Ranking Member 
Boxer and the distinguished members of the subcommittee, for 
this opportunity to testify on Louisiana's struggle to recover 
from Hurricane Katrina and the great need for legislation along 
the lines of the Gulf Coast Recovery Act, which I support and 
urge Congress to enact.
    I am Tony Zelenka, I am President of Bertucci Contracting 
Corporation. My company is a small business that performs levee 
and coastal restoration work across the Gulf Coast. I was born 
and raised in New Orleans, and I have over 20 years of 
experience in the construction industry.
    My family's firm traces its history back to 1875, when my 
great-great-grandfather founded the company in New Orleans. The 
morning after the hurricane hit the Gulf Coast, I waded through 
chest-deep water to reach the closest highway, carrying my 
bicycle over my head so I could ride to my truck and then drive 
to check on my family, which had evacuated to Jackson, MS. I 
had stayed behind to make sure our home and businesses survived 
the storm.
    While with my family, I learned that the levees in New 
Orleans had failed. I knew that the Army Corps of Engineers was 
going to need contractors to stop the flooding, so I headed to 
the Corps' emergency response center in Vicksburg, MS. After 
meeting with Corps officials that first day, and with no more 
than an oral agreement to execute a written contract, I went to 
work hauling stone and rock to repair the breached levees that 
had flooded New Orleans. I was one of the first contractors to 
arrive on the scene.
    In a situation like this, contractors like me focus on 
protecting our employees and helping our communities as quickly 
as possible. Under the direction of the appropriate 
authorities, we help our Country recover from one disaster 
after another. We are the first entities, the first responders 
to arrive on the scene of a disaster with the goal of providing 
whatever support we can.
    In the case of Hurricane Katrina, we did everything we 
could to stop the water from pouring into New Orleans, and for 
the past 10 weeks, we have been working 7 days a week. 
Personally, this disaster has touched many contractors in the 
area. While my home, thankfully, was spared from the 
devastation, many of my employees and their families' lives 
have been ruined by this disaster. As we continue our efforts 
to cleanup the city, I have also sought to help my employees 
re-establish their lives and livelihoods.
    The cleanup process in New Orleans continues to move 
forward. Standing side by side with my employees, I have 
personally done a lot of the work, and I have done it under 
crisis conditions. From the beginning, we have worked with 
personal protective equipment and done our best to protect 
ourselves from the many hazards. Like it or not, we have had to 
wade through the flood waters and deal with the spray that the 
helicopters caused. We continue to deal with gas leaks, oil 
spills, downed electrical lines and backed up and overflowing 
sewer lines.
    While all of you have been watching the devastation on 
television, we have been living it. Many of my employees are 
still homeless and have had their families displaced. My city 
is uninhabitable. In fact, I am a little nervous about being 
away from the job site for the first time since this terrible 
tragedy first happened.
    Construction contractors have a critical role in providing 
disaster assistance to Federal, State and local officials. We 
are essential in the rescue of both persons and property. Our 
Country has never experienced a dislocation of the size and 
scope of Hurricane Katrina. Contractors like me stopped the 
flow of water into the city, and we will be busy for months on 
the demolition, removal, repair and reconstruction of both 
structures and utilities damaged by the hurricanes. We will 
cleanup property polluted by the hurricane, remove vast amounts 
of debris and de-water flooded areas. This is our city, and we 
want to bring it back.
    Unfortunately, there are people out there who want to 
capitalize on this tragedy and others like it. Lawsuits have 
been filed against contractors who have performed the types of 
rescue and recovery work my firm has been doing in New Orleans. 
Take a look at what happened in New York after the terrorists 
on 9/11. Hundreds of lawsuits were filed against contractors 
for the heroic work they did to cleanup Ground Zero in a short 
amount of time at the express direction of the Federal, State 
and local authorities. I have attached an AP story to this 
testimony that reports on the litigation.
    [The referenced AP Article can be found on page 99.]
    The madness has already started in Louisiana, where a 
contractor was named as a defendant in a class action only 3 
weeks after the hurricane hit. The trial lawyer sued the 
contractors for building a faulty levee which the contractor 
did not build in the first case. The case was dismissed after a 
few days, but it is a prime example of the hunger out there, no 
matter how arbitrary the suit may be, to sue contractors.
    I worry that I may be sued for property damages as part of 
the cleanup. Recently I have been hired to work on the massive 
debris removal contract in New Orleans, which may include the 
demolition of private homes damaged by the hurricane. This is a 
very emotional situation, even though all levels of Government 
have determined that many of these homes are completely 
uninhabitable and beyond repair or restoration. The Government 
has decided that they must be torn down and completely rebuilt 
due to the flooding, hurricane winds and mold.
    I now fear legal risks for moving ahead and doing exactly 
and only what the Government hired me to do. Why am I worried? 
Because everyone has spent all this time looking for someone to 
blame instead of looking for a solution. Meanwhile, contractors 
are expected to continue the cleanup and do it as safely and 
quickly as possible, despite an uncertain legal and logistical 
environment.
    Remember, unlike many public officials and their agencies, 
contractors have no sovereign immunity. We look to the 
Government at all levels for guidance on the best way to do 
this work safely and efficiently. Ultimately, in emergency 
situations, we have to put our assets on the line if we want to 
help, which means I may be at risk of losing my company for 
simply doing what I have been hired by the Federal Government 
to do: trying to help save my city.
    I believe passing the Gulf Coast Recovery is necessary to 
ensure that contractors like me will be there to do the work in 
the future without fear of reprisals. The bill offers limited 
protection to Government contractors from any citizen suits 
that might result from their performance on a disaster recovery 
contracts, enabling them to focus on the work. This legislation 
would give my firm a reasonable measure of protection, allowing 
me to pass this fifth generation family business on to the 
sixth.
    Do not let the trial lawyers penalize the contractors like 
me who report for duty. We are a critical link in the 
restoration of our city. I ask you to pass this legislation.
    I also ask you to do something else. Listen to the experts, 
listen to the Army Corps of Engineers, listen to local levee 
districts. Do not shortchange the rebuilding and flood 
protection efforts underway.
    I have been asking for increased funding for the Southeast 
Louisiana Urban Flood Control project for years. Unfortunately, 
my calls for increased funding to rebuild the wetlands and 
coastlands and provide additional protection for New Orleans 
have consistently fallen on deaf ears. Please tell your 
colleagues to not only increase investment, but fully fund this 
national priority.
    Please approve the Gulf Coast Recovery Act, and please 
commit to rebuilding my city. Thank you for this opportunity to 
comment, and I look forward to working with the subcommittee, 
and I am happy to answer any questions.
    Senator Thune. Thank you, Mr. Zelenka.
    Dr. Wright.

STATEMENT OF BEVERLY WRIGHT, PH.D, DIRECTOR, DEEP SOUTH CENTER 
    FOR ENVIRONMENTAL JUSTICE AND CO-CHAIR, NATIONAL BLACK 
                 ENVIRONMENTAL JUSTICE NETWORK

    Ms. Wright. Good afternoon, Mr. Chairman. I am Dr. Beverly 
Wright, Director of the Deep South Center for Environmental 
Justice at Dillard University, formerly at Xavier University. 
Regrettably, both of these Historically Black Colleges are 
underwater now and temporarily closed due to Hurricane Katrina. 
I am also here today representing the National Black 
Environmental Justice Network.
    Thank you for the opportunity to testify before the 
Subcommittee on critical issues of concern in the aftermath of 
the hurricanes. My professional and personal experiences of 
growing up, living and working in the city of New Orleans 
greatly influenced my perspective and testimony. Just like 
Tony, I can trace my ancestry back seven generations in the 
city of New Orleans, extending from free coloreds in that city. 
So I am very much vested in the city of New Orleans.
    The Mississippi Gulf Coast region suffered severe 
environmental damage during Katrina, the extent of which has 
yet to be determined. Massive amounts of toxic chemicals were 
used and stored along the Gulf Coast before the storm. 
Literally thousands of sites in the storm's path used or stored 
hazardous chemicals, from the local dry cleaner and auto repair 
shops to Superfund sites and oil refineries in Chalmette and 
Meraux, LA.
    Katrina displaced just under 350,000 school children in the 
Gulf Coast. An estimated 187,000 school children have been 
displaced in Louisiana, 160,000 in Mississippi, and 3,118 in 
Alabama. The powerful storm closed the entire New Orleans 
public school system. More than 110,000 of New Orleans' 180,000 
houses were flooded, including my own, and have set for days or 
weeks in more than six feet of water. As many as 30,000 to 
50,000 homes city-wide may have to be demolished, while many 
others could be saved with extensive repairs.
    Katrina affected over 2,000 black-owned businesses in 
Mississippi. These firms generated over $126 million in sales 
and receipts in 2004. More than 20,000 black-owned businesses 
were affected in Louisiana. These firms generated sales and 
receipts of $886 million a year. It is likely that many of 
these businesses will not recover.
    Katrina could hurt over 60,000 black-owned businesses in 
the Gulf Coast region that generate $3.3 billion a year. Black-
owned businesses have met roadblocks and have been virtually 
frozen out of the rebuilding of the Gulf Coast region. 
Complaints about being shut out of the Gulf Coast 
reconstruction are not limited to minority-owned firms. Many 
white Gulf Coast workers and businesses also rail about being 
left out, while they see out of State companies receiving the 
lion's share of the contracts.
    The annual payroll alone in the metropolitan area hardest 
hit by Hurricane Katrina, those being New Orleans, Biloxi and 
Mobile, exceeded $11.7 billion in 2002.
    Short-term rebuilding objectives must not outweigh long-
term public health protections for all Americans and the 
environment they depend upon. Some of the legislative proposals 
now under consideration in the aftermath of Katrina do not 
adhere to these principles. Congress must act now to protect 
our most vulnerable populations and preserve our most unique 
and irreplaceable resources.
    It is ironic that the tragedy of Hurricane Katrina is being 
used to justify sweeping waivers of public health, safety and 
environmental laws. The Gulf Coast Recovery Act would leave 
many citizens without a remedy against contractors that cause 
irreparable harm to the air and water. The bill gives 
unprecedented legal protection to contractors being paid for 
work related to Katrina in areas of rescue, recovery, repair 
and reconstruction.
    The bill is far-reaching in that these protections do not 
only apply to Katrina contractors. Under the bill, they will 
also apply to contractors in all future disasters that result 
in at least $15 billion of Federal assistance.
    The Gulf Coast Recovery Act, while designed to help victims 
of Katrina, could very well end up helping everyone but the 
victims in the long run. S. 1761 is particularly egregious to 
low income and minority communities in the Gulf Coast region. 
All of the limitations apply only to actions brought by private 
citizens. The Section 4 limitation on filing a lawsuit is 
specifically limited to private parties and Section 5(e) 
specifically provides that nothing in that section limits an 
action that any Governmental entity may bring.
    I thought that the Government's role was to protect the 
citizenry. This bill seems designed to do just the opposite. By 
eliminating the threat of liability for contractors, you in 
effect remove an essential protection for the public. Where 
there are no consequences there are higher risks and general 
disregard for the public safety.
    This bill seems not to be well thought out. The actions 
taken by this bill, in my opinion, aptly depicts the moral of 
the old adage of throwing out the baby with the bath water. We 
should remember that in this case, it is not the contractors 
who are the victims. Powerful corporations with huge Government 
contracts will make millions in profit from the Katrina 
tragedy. The payments will be made with our tax dollars.
    This bill should be rejected by the Senate. In essence, it 
will ultimately defeat the overall purpose of cleaning up the 
Gulf Coast and setting the road for its recovery. If 
contractors no longer fear legitimate legal liability, where is 
the incentive to do good work? When the dust settles, with 
possibly untold numbers of properties improperly cleaned up, 
debris inadequately disposed of with personal injury due to 
contractors' negligence, who will pay that bill?
    The victims of Katrina have suffered immensely, first from 
an inadequate response that cost the lives of many citizens, 
the loss of property, family members and their communities. Now 
the Government will hold harmless contractors who may further 
injure the citizenry through neglect and irresponsibility 
without liability.
    These citizens of the United States and victims of the 
worst natural disaster every in North American have been placed 
in double jeopardy by this event. In each instance, the 
Government has played a major role, first with the slow and 
inadequate response to Katrina and now with the quick response 
that fails to adequately protect citizens in the aftermath of 
the storm.
    I believe that the most important question to ask when the 
Senate examines this bill is not who will this bill help, but 
who will this bill hurt. What segment of our society will be 
left unprotected and who will be denied a basic legal right in 
this Country to sue a party that has caused irreparable harm to 
your family and your property?
    A major reason cited by the proponents of this bill for its 
existence is that it is in the national interests to have 
private contractors assist public officials in times of 
disaster. What I disagree with is the statement that well-
founded fears of future litigation and liability under existing 
law discourage contractors from assisting in times of 
disasters. From where I sit, this statement is a complete 
fabrication.
    Senator Thune. Dr. Wright, if you could summarize.
    Ms.Wright. I'm over time?
    Senator Thune. Yes. You are considerably over.
    Ms. Wright. In fact, for every contractor that you find who 
is hesitant to accept billions of dollars in contractors, I can 
find hundreds who will. In fact, there was nearly a riot at a 
recent meeting in Baton Rouge with all of the large companies 
who received no-bid contracts for work after Katrina by local 
businessmen who have lost everything looking for work.
    In closing, what I want to say is that there are many 
contractors, particularly small businesses, minority 
businesses, who are willing and ready to take the charge of 
doing this work and they are also willing to take the 
responsibility of liability.
    Senator Thune. Thank you, Dr. Wright. We will include your 
entire statement as part of the record, the parts you didn't 
get to.
    Mr. Perkins.

 STATEMENT OF WARREN PERKINS, VICE PRESIDENT, RISK MANAGEMENT, 
               BOH BROTHERS CONSTRUCTION COMPANY

    Mr. Perkins. Thank you, Mr. Chairman, thank you for the 
opportunity to testify before the subcommittee.
    My name is Warren Perkins, I am vice president, Risk 
Management, for Boh Brothers Construction Company. I serve with 
the responsibilities for risk management and controlling and 
advising on being able to transfer risk in our company where we 
can and protect our company. I am here today to express the 
company's views on matters before this subcommittee.
    My President, Mr. Robert Boh, intended to be here. He, like 
Tony, was nervous to be away from operations. We have 100 plus 
jobs that were pre-Katrina projects that we can't get back to. 
He is meeting with agencies to try to get back to work, try to 
get our people back to work. So he sent me. This is kind of 
under my purview, and I am happy to have his confidence that I 
will represent the company well.
    Boh Brothers is a general construction contractor native to 
Louisiana and based in New Orleans. It is a closely held, 96 
year old company. We are a civil contractor, Union contractor 
in Louisiana. We pursue and get work throughout the entire Gulf 
Coast region. Basically, we are a civil contractor that does 
bridge work, roads and sewer drainage, levee, flood protection 
system type work.
    Boh Brothers 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 
canceled.
    Moreover, as the storm approached, all 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 and work 
in an office that was set up for me in downtown Montgomery. 
When I finally returned, I learned that my house was flooded 
with a foot of water. I have been living in it and working on 
my home ever since and commuting to Baton Rouge, where we had 
to relocate our office, because we could not work out of our 
office in New Orleans.
    As soon as the storm passed, Boh Brothers started 
scrambling to locate its people to ensure that they were safe, 
to let them know that we were temporarily moving our 
headquarters to Baton Rouge. It took a week for us to locate 50 
percent of them. It also took us several days to assess the 
condition of our main office, equipment yard and job sites and 
the damage done to the city as a whole.
    Before Katrina hit, Boh Brothers had over 180 piece of 
equipment worth over $60 million strewn out through the greater 
New Orleans area. It took us 2 weeks to recover some 50 percent 
of them. 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 breached levees. 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 have received more 
than 10 requests from Government agencies to fill breaches in 
the levees, to pump water out of flooded areas, to move barges 
out of blocking parts of the inland waterway and to repair 
bridges over waterways that needed to be repaired because of 
Katrina.
    To get to the areas that needed our help, we had to find 
access routes through flooded streets and around debris and 
power lines, all at the risk of our employees. 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 work sites before we moved into 
any work site areas. We hired industrial hygienists to give us 
advice on what personal protection we should use. We had all of 
our people vaccinated with hepatitis A and B and gave tetanus 
and diphtheria shots. We even hired security guards to protect 
our people from the sniper activity encountered at some job 
sites in and around the areas where we worked.
    In the early days, we were ready to start on little more 
than a handshake. We did not demand the time we would normally 
take to scrutinize contractual terms and conditions, 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 in 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 we have taken and continue to take? Will the trial 
lawyers really sue us simply for trying to put our community 
back together? Some people disagree with the contracting 
regulatory agencies and believe that the agencies are not doing 
enough. Would such people actually sue us simply for following 
the Agency's instructions and 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 regulatory agencies if we fail to comply with 
their standards. We expect them to take some kind of 
enforcement action. The problem is that we cannot be sure that 
the agencies are in charge, that the problem is in the future 
tort litigation could rewrite the rules long after the fact.
    Boh Brothers has simply responded to the many requests that 
the 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 of Engineers 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 on 
into the 2006 hurricane season and beyond. If future hurricanes 
breach any one of these temporary repair locations, will the 
trial lawyers sue us, the Government Agency or both?
    The exposure is real. Even if we are confident our work 
meets all relevant standards, litigation takes an enormous toll 
on a company, any company. The cost of litigation is enormous.
    During the early stages of our recovery efforts, a lawsuit 
has already been filed, a meritless class action lawsuit was 
filed against us in the first few weeks of our recovery 
efforts. We were sued on a project we did not even do. We were 
sued allegedly for performing work on a bridge that was near 
the breach of the 17th Street Canal. We were not the contractor 
that did that. The attorney did not do his research, did not 
attempt to do any research. He sued the wrong company that was 
doing the work, wrong name, and he just assumed that Boh 
Brothers had to be involved in the construction of that 
contract, therefore he sued us in a class action suit.
    We immediately wrote him a letter demanding that he dismiss 
the lawsuit with consequences of defamation of character, 
defamation of reputation, rather, and sanctions under the law 
in Federal court and give an apology for going into the 
newspaper and the press, television station, and announcing 
that Boh Brothers was responsible and sued for the breach in 
the 17th Street Canal when we were there fixing the breach and 
fixing all the breaches and bringing the city back to recovery.
    I am not here to bash plaintiff attorneys. My wife works 
for plaintiff attorneys. We are still married, and I have been 
married to her for 35 years. So I am not here to bash plaintiff 
attorneys.
    When asked to do the right thing for New Orleans and its 
residents, Boh Brothers 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 some reasonable measure of 
protection from unlimited tort liability, simply for being 
there to meet the need. Congress should quickly enact S. 1761.
    Boh Brothers is a member of the Associated General 
Contractors of America. I can assure you that responsible 
contractors throughout the Country are paying close attention. 
They are aware of what has happened to the contractors who 
responded to the terrorists attacks in New York. They are aware 
of the litigation that followed. They are responsible corporate 
citizens, but they are deeply concerned.
    In closing, let me just add that the greater New Orleans 
area requires your particular attention. It heavily depends, 
for its very survival, on the design and construction of the 
flood protection system. For itself, its employees and its 
community, Boh Brothers also urges you to quickly 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 never return or rebuild, if 
they do not have the confidence that this won't happen again. 
Thank you for allowing me to provide Boh Brothers' opinion.
    Senator Thune. Thank you, Mr. Perkins. I appreciate it. I 
have been fairly lenient with the gavel, because I think all 
your testimony is very pertinent and obviously deeply felt, 
based on what many of you have experienced there.
    I do want, if you can, your entire statements will be 
included as part of the record. If you can keep them down to 
the 5 or 6 minute level, it will be very helpful, because we 
are going to run out of time for our last panel.
    Senator Boxer has a commitment at 4 o'clock. So what I 
would like to do at this point before I ask Mr. Feigin to offer 
his testimony is, she has a question that she would like to 
direct, one, I think to General Riley, and then perhaps to 
those of you who have already testified on this panel. Then she 
will have to duck in and out.
    Senator Boxer. Mr. Chairman, thank you. It is such a tough 
day and the panel has been so very respectful of our situation. 
We are very respectful of yours, and we are just not in control 
of the voting today.
    I want to say that I heard just two witnesses here today 
and I think they are both very eloquent. I missed the Army 
Corps, and I did have a question, sir.
    We have been in touch with you--staff to staff contacts 
have been made--because when the Senator introduced this bill, 
we said, is there a problem? Are you having problems getting 
the contractors to sign up? Dr. Wright points out that, she 
said there was a near riot for people trying to get these 
contracts. Are we having a problem? Are contractors staying 
away because they are so nervous about their liability issues, 
in your opinion?
    General Riley. Ma'am, that is sort of a mixed bag. If you 
look at the history of our contracting during Katrina, early on 
we went to contractors, like Mr. Zelenka who sits here, with a 
call and a letter contract. We knew he was there and available, 
then we also looked for a contractor to do un-watering. We 
called four different large contractors that could do that 
quickly. One was available and responded.
    For the largest debris contractors, we advertised and we 
got 22 respondents for those 4 contractors. However, just in 
the last few weeks, we had a contract out for levee repair, 
five different contracts; on one contract we had four bidders, 
on another contract, we had two bidders, and on three of them, 
we only had one bidder. I don't know the reasons, you would 
have to ask the contractors. It could be their crews had homes 
damaged or they just weren't available, they were too far away, 
or they considered the risks. I just don't know. I think the 
contractors would be better to answer that.
    Senator Boxer. We talked to Colonel Doyle. Colonel Doyle 
told us that he never, he didn't see any problem whatsoever. We 
will have to work further with you, maybe get some more--I 
mean, there are certain areas where you are looking for some 
specific skill, I would assume, right away, your universe is 
smaller.
    Everything I hear is the opposite, that the contractors who 
were displaced and, unlike Mr. Perkins, who worked in the area 
of, and I am sure Mr. Zelenka, are you from the area as well, 
sir?
    Mr. Zelenka. Yes.
    Senator Boxer. For many years, since the 1800's or 
something. I mean, there are still a lot of folks that are 
complaining that they are not getting the contracts.
    So I will keep on evaluating this, we will get something in 
writing. The question, Mr. Perkins, I think it is so funny that 
you are married to someone who works for a trial lawyer. 
Because you mentioned trial lawyers are at least five times. 
You said trial lawyers are coming around and looking to sue. 
The last I knew, trial lawyers represent injured parties. 
That's OK, I mean, I didn't think they can come around unless 
they have injured parties. But that's OK.
    I am married to a lawyer, my son is a lawyer, my father was 
a lawyer. I am not. So I could be wrong on that. I don't think 
trial lawyers can get a case brought unless they have a party. 
No. 1, did you ever see the movie Erin Brockovich?
    Mr. Perkins. Yes, ma'am.
    Senator Boxer. I think, from what I hear from you, you say 
that some foolish attorney brought suit against the wrong 
company, right?
    Mr. Perkins. Right.
    Senator Boxer. That's outrageous, and of course, that suit 
isn't going forward against you, is it?
    Mr. Perkins. Not after we made the demand that we were 
going to come after him for sanctions and he realized that we 
were not the contractor. The point is that it was a distraction 
and a wrongly filed distraction. He didn't do his homework. 
That's the kind of things we get faced with. We are doing 
temporary repairs here. We are not hearing anything about what 
the permanent repairs are going to be. How long those temporary 
repairs are going to stay there. So we are exposed to 
hurricanes.
    Senator Boxer. Would you rather not--I mean, if you were 
faced with this, suppose this committee decides, and the Senate 
decides, that we are not changing the rules, that we really 
think that having laws that are reasonable are a deterrent to 
some of the bad actors? I am assuming those of you here are 
good actors, you are good actors, you have been in the 
community, the last thing you would ever want to do is hurt 
anybody.
    All you have to do is be alive through our history and see 
what people do to other people. I'm saying, if you play by the 
rules, somebody makes a mistake and comes after you, you have 
every right to be upset about it. Why the heck would we change 
the laws of this Country to let the bad actors off the hook? 
Because you're going to be taken care of.
    Mr. Perkins. Senator, with respect to the Corps of 
Engineers, they have immunity. We are asking for some 
protection ourselves.
    In my opinion, there is just as much of a likelihood, and 
perhaps more, that the Corps of Engineers and the design that 
they provide and the supervision that they provide as well on 
the job site is potentially the problem. Yet we get to be the 
scapegoat and we get the suits, and we have to spend the costs 
on attorneys and expert witnesses and all the things that----
    Senator Boxer. Well, wait a minute. Who is suing you now?
    Mr. Perkins. Nobody is suing me now. I am concerned that I 
am doing temporary repairs and we are out there responding on a 
handshake and a prayer. Those temporary repairs are not meant 
to withstand hurricanes of the nature of Katrina or probably 
well below Katrina.
    If the temporary band-aid is not permanently fixed, who are 
they going to sue? If the breach occurs at the temporary 
location----
    Senator Boxer. Well, I'm assuming--sir, I'm assuming, 
because I've read all about this, that there is a clear 
understanding with the Corps that we are doing these temporary 
repairs. Everybody knows we are not doing permanent repairs, 
sir. So I would assume that you would have a good lawyer who is 
going to look over the contract and you are going to be just 
fine. That's how the system works.
    My understanding is that you were involved, your company, 
in writing this legislation, is that correct?
    Mr. Perkins. Our company?
    Senator Boxer. Your organization, the trade association, 
was involved in putting together, drafting this legislation?
    Mr. Perkins. The AGC, yes.
    Senator Boxer. Who was at the table? Was Dr. Wright at the 
table to speak up for the victims who might have a problem in 
the end?
    Mr. Perkins. I don't----
    Senator Boxer. Do you think your company would have a 
problem meeting a negligence standard?
    Mr. Feigin. Senator Boxer, may I say something?
    Senator Boxer. Just a minute. I just want an answer. Do you 
think that your company would have a problem meeting the 
current negligence standard?
    Mr. Perkins. The problem is that the work that was asked of 
us had no specifications, had nothing to rely on, no design 
specifications, no specifications whatsoever. We were called 
out to respond and through our efforts, we recovered the city, 
stopped the breaches. We did it in record time.
    Senator Boxer. OK, well, you know, Mr. Chairman, maybe what 
we should be doing is looking at the contracts the Corps get 
for these temporary repairs and if we've got a problem with the 
temporary repairs, and people are fearful they are going to be 
sued for the temporary repairs, that is one set of 
circumstances. I think everyone is willing to look at that.
    But this legislation goes far, far, far beyond that, way, 
way, way beyond that. It looks to me, you know, call me old-
fashioned, but I've been around here long enough to see that 
when there is an excuse to change a law you don't like, you go 
far beyond it. Not you personally, sir. We just keep seeing 
this again and again. We have an issue, we have an issue with 
oil prices. So now we're faced with, oh, well, let's give land 
to the oil companies. The oil companies are making record 
profits.
    This is not the way to respond to Katrina. I just look at 
this and I say, this goes far, far beyond any reasonable fear 
that you may have as a solid company. I think the protections 
that are granted in this go way beyond the circumstances you 
are describing. If my chairman wants to talk about narrowing 
the scope of this bill to these areas where you may well have a 
legitimate point, I'm very open to that.
    What I'm not open to is changing the law, not only for this 
situation, but every other ``emergency'' situation where 
there's $15 billion or more in Federal expenditure. This thing 
is way beyond just protecting you from a band-aid type of 
situation, which I agree with you, that's what we're begging 
you to do and help us to do to give us a modicum of protection 
now until we get our act together and figure out what's the 
long-term solution.
    So maybe there's something here, Mr. Chairman, where we can 
focus on a legitimate issue without, you know, trial lawyers 
this and trial lawyers that, and trial lawyers are working, you 
know. Give me a break. You say you're not bashing trial 
lawyers. Read back what you said. Because at the end of the 
day, that's what this comes down to, another excuse to weaken 
the laws, and as far as I'm concerned, it's wrong.
    You want to do something narrow, but when a group of 
contractors get together, help write a bill, and we don't have 
anybody from the public--excuse me, the victims, the public 
sector who care about environmental justice, who care about 
victims, not at the table, seems to me you're presenting a one-
sided deal here. It's sad. Because if you had called Dr. Wright 
or other people to the table or maybe the folks from New York 
who went through this situation, maybe you'd have something 
here that we could do together instead of always having to 
battle it out.
    Mr. Feigin. Senator Boxer, may I say something?
    Senator Boxer. I think I've spoken long enough. I would be 
delighted to hear from you, sir.
    Mr. Feigin. You haven't heard my testimony, but I would 
just like to respond quickly.
    Senator Thune. Yes, hold on, just before you do that, I 
want to take you up on that offer. If you want to provide some 
protections for temporary repairs we would be happy to work on 
that.
    Senator Boxer. Yes, absolutely. I'm happy to look at that.
    Senator Thune. I do, in fairness, too, the bill is narrow 
in scope, it is narrowly drawn. I think it's unfair to 
characterize--a lot of the people at this table are also 
victims. These are people who I think care passionately about 
their fellow Louisianans and Mississippians and others who were 
victims of this disaster.
    So I don't think characterizing them as somehow not 
sympathetic to the needs of the people that they live with----
    Senator Boxer. Well, let the record be clear here, OK? I 
love everyone at this table, it's nothing about that. It's 
about what we're doing when we write laws that are too broad. 
Mr. Chairman, I have legal experts who have read this who tell 
me that you are protecting people from negligence. It's not 
your intent. You said that. But there's interpretations that 
would go that way.
    For example, if somebody came in to clean out, to haul away 
a big bunch of barrels that are sitting out there and they 
don't look at what's inside, they think one thing's inside but 
they don't test. Turns out a barrel is punctured, some of the 
most toxic liquid gets into the water supply, off the hook, 
according to the legal people that I have talked to. So let's 
try to find some common ground.
    I'd love to hear from you, sir, if my chairman would allow 
it, then I've got to--I'm like really behind, so I've got to--
--
    Senator Thune. Mr. Feigin.
    Mr. Feigin. I know you have to run, but I didn't want you 
to leave without hearing a couple of things from the 
contractors that have actually been through it.
    Senator Boxer. Yes.
    Mr. Feigin. Right now, currently pending against the 
contractors who were down at the World Trade Center site, there 
are 5,000 claims. The problem isn't that we don't believe that 
we can sustain a standard of negligence. We believe that we've 
done nothing wrong. We are actually very proud of our safety 
record down at Ground Zero. Nobody got hurt while we were down 
there, there were no deaths when we were down there in one of 
the most difficult circumstances that anyone in the 
construction industry has ever faced.
    But we are facing 5,000 claimants. The legal fees alone to 
defend----
    Senator Boxer. Against how many companies?
    Mr. Feigin. Against 140 companies.
    Senator Boxer. These are individual suits?
    Mr. Feigin. They are all individual suits. It has not been 
certified as a class action.
    Senator Boxer. OK, well, fine. I think Dr. Shufro has some 
information on that. I'm aware of his testimony.
    The point I want to make is 5,000 people have sued. It's 
not a class action.
    Mr. Feigin. It has not been certified as a class action.
    Senator Boxer. Right. Well, I understand that.
    Mr. Feigin. The legal fees alone in defending our position, 
we feel we will be exonerated in the end, because we don't feel 
we did anything wrong. The legal fees alone could put a company 
like ours, as big as we might be, out of business. Then the 
plaintiffs are left with nothing. There's nobody to sue, 
there's no money to get anywhere.
    So I'm not sure--I support this bill because I think it 
provides some kind of relief for the contractors. I would just 
like some acknowledgement that the contractors need some kind 
of relief in situations like this, and all you are really 
talking about are details.
    Senator Thune. I think it was recognized in the aftermath 
of 9/11 that there was a need for that, because a pool was 
created to provide some help.
    Mr. Feigin. Well, we tried to get the legislation that 
Senator Boxer refers to, legislation that would help us, and we 
couldn't get any legislation. So what we ended up with was a 
billion dollars to start an insurance company. The experts say 
now that maybe a billion dollars won't be enough. Then we will 
be right back where we started right after 9/11.
    Senator Thune. Well, let's--Senator Boxer had to leave us 
for a while. But let's move on, Mr. Feigin, with your testimony 
and Mr. Shufro, with your testimony. Then I have a couple of 
questions I would like to ask as well.

 STATEMENT OF MICHAEL FEIGIN, EXECUTIVE VICE PRESIDENT, BOVIS 
                   LEND LEASE HOLDINGS, INC.

    Mr. Feigin. If I have to keep it under 5 minutes, I am 
going to read my testimony, but it might be a little repetitive 
of what I just said.
    Mr. Chairman, I would like to thank you, I would like to 
thank Senator Boxer and the committee for inviting me to 
participate on today's panel and allowing me to discuss my 
company's experience after the terrorist attacks on 9/11.
    The proposed legislation, S. 1761, addresses some of the 
problems following Hurricane Katrina. I hope to use the 
knowledge we gained through our 9/11 experience to draw 
parallels to Katrina and future disasters and encourage the 
committee to take into consideration the role private business 
has played in helping Government with disaster relief.
    At 1 o'clock p.m. on September 11, 2001, hours after the 
first attack, Bovis received a call from the city of New York. 
The city wanted Bovis to come to what was being called Ground 
Zero to help manage the daunting task of making sense of the 
chaos in an effort to save lives. Without a moment's 
hesitation, Bovis went to help.
    The initial Government estimates were that the recovery 
efforts, debris removal and site stabilization would take 2 
years and cost over a billion dollars. The work was actually 
finished in 265 continuous days, working 24 hours a day at a 
total cost of somewhere around $500 million. Bovis was 
particularly proud that we had no fatalities and only 36 
reportable accidents with over 3.2 million manhours worked.
    No consideration was given by any of the contractors to 
liability issues or potential claims or lawsuits before 
beginning work after September 11th. 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. It soon became apparent that the 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 
liability coverage was obtained.
    After many months of work we received a commitment from 
Congress to fund a captive insurance program. This WTC captive 
provides coverage for the city of New York as the named insured 
and all the contractors, subcontractors, architects and 
engineers working at Ground Zero as additional named insurers. 
The policy currently has approximately 140 additional named 
insurers.
    The captive was funded at a billion dollars because this 
was the quickest agreeable amount to get a program in place. 
Some now claim that even the billion dollars may not be enough.
    Today there are claims against the contractors from over 
5,000 individual claimants. These lawsuits claim existing 
respiratory and related injuries, or fear of such injuries in 
the future arising from or related to the debris removal work. 
The captive is vigorously defending these lawsuits.
    Bovis did receive compensation for its work at Ground Zero. 
For the WTC captive, however, 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 current insurance coverages. In short, 
absent the captive, responding to a disaster when called would 
have taken a thriving business employing over 2,500 people in 
20 States and Latin America and put us out of business. We put 
our business, our livelihood and our families' prosperity on 
the line to help people and do the right thing.
    If asked again, we owe it to our company and our employees 
to think very hard about what our response should be. 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 contractors from 
liability, but also to eliminate or discourage the costly and 
time consuming process of the litigation itself, except in 
appropriate circumstances. Protection from liability needs to 
be put in place to eliminate any question of response and to 
avoid penalizing companies that come when called and do the 
right thing.
    S. 1761 does this and should be supported by this 
Committee. Mr. Chairman and members of the committee, thank you 
for the opportunity to speak about our experiences down at 
Ground Zero. You have our written testimony and I will answer 
any questions you might have.
    Senator Thune. Thank you, Mr. Feigin.
    Dr. Shufro.

    STATEMENT OF JOEL SHUFRO, EXECUTIVE DIRECTOR, NEW YORK 
          COMMITTEE FOR OCCUPATIONAL SAFETY AND HEALTH

    Mr. Shufro. Thank you. My name is Joel Shufro. I am the 
Executive Director of the New York Committee for Occupational 
Safety and Health, NYCOSH, a non-profit educational 
organization dedicated to every worker's right to a safe and 
healthful workplace.
    We have a 26 year history of providing quality safety and 
health training and technical assistance to working people, 
unions, employers, Government agencies and community based 
organizations about how to recognize and eliminate workplace 
health hazards. Since the attack on the World Trade Center, 
NYCOSH has had extensive involvement with workers who 
participated in the rescue, recovery and cleanup operations at 
the World Trade Center site, workers in offices surrounding 
Ground Zero, immigrant workers who cleaned offices and 
residents, utility workers who restored essential services to 
the area and residents living in or returning to contaminated 
homes around Ground Zero.
    To those involved in the rescue and recovery and cleanup, 
working at the World Trade Center was more than a job. Those 
who responded to the disaster did so for many reason: 
patriotism, altruism and humanitarianism, among other motives. 
They responded to the needs of their Country, many working 12 
hours a day, 7 days a week for months. They assumed that if 
they were harmed as a result of working at the site, their 
medical needs would be taken care of and their families would 
not be driven into poverty. They believed that they would not 
be forced to give up their homes and that their children would 
not have to drop out of college so medical bills could be paid.
    Unfortunately, 4 years following the devastating attacks on 
the World Trade Center, respiratory illness, psychological 
distress and financial devastation have become a new way of 
life for many of the responders, office workers and residents 
in lower Manhattan. According to the Centers for Disease 
Control, workers and volunteers who worked at the World Trade 
Center site continue to experience high rates of respiratory 
problems, sinusitis, laryngitis and higher rates of lower 
respiratory problems, asthma, bronchitis, chest tightness, 
coughing and wheezing.
    Many of the workers are disabled by chronic pulmonary 
problems. Some are unable to work. Many have also suffered 
substantial economic disruption of their lives because of World 
Trade Center related problems and do not have health insurance 
and are unable to pay for treatment or needed medicine. As Dr. 
Robin Herbert, co-director of the World Trade Center Worker and 
Volunteer Medical Screening Program at Mt. Sinai, testified in 
front of Congress, there are grave concerns about the potential 
for workers developing slower starting diseases, such as 
cancer, in the future.
    For many coming through the screening program, the World 
Trade Center screening program, the fears of future 
catastrophic diseases like cancer, which can take as long as 20 
to 30 years to show up, loom as large or larger than their 
acute ailments. These concerns have been heightened by the 
recent passing of two New York City emergency technicians whose 
deaths have been related to illnesses resulting from exposure 
to toxic substances at the World Trade Center.
    Rather than make a stronger commitment to protect workers 
and residents from environmental and occupational hazards in 
future disasters, S. 1761 would free contractors from most 
liability for personal injury claims when engaged in responding 
to a major disaster, such as Katrina, as well as from citizen 
suits under Federal environmental laws. We believe that such 
legislation would undercut any incentives contractors have to 
comply with safety and health environmental regulations.
    Federal contractors who are paid by the taxpayer for the 
work that they do should be held fully accountable to the 
public if they behave carelessly or cause harm to people or the 
environment. No public policy reason justifies a taxpayer 
subsidy for negligence or illegal activity. What S. 1761 does 
is to shift the costs of personal injuries and property damage 
from the Government contractors to the workers and/or the 
residents in the disaster areas.
    It is imperative that workers know that if they come to the 
aid of their Country, as the contractors, and are injured or 
contract an illness in the process, their medical needs will be 
taken care of and that their families will be secure. They need 
the guarantee that contractors who do not act responsibly will 
be held liable.
    Responsible Government contractors should have no need of 
the sweeping immunity this bill would provide. We urge you to 
oppose the legislation which would provide a windfall to 
irresponsible contractors at the expense of public health and 
the environment.
    Senator Thune. Thank you, Mr. Shufro.
    Let me just ask a couple of questions, if I might. Just 
incidentally, for the record, too, the legislation does not 
exempt any contractor from labor, environmental or safety laws. 
They have to apply to those. It is a narrowly drafted bill 
which provides some protection so that we are able to get, as 
the Corps mentioned, when they need on short notice someone to 
come in and do the kind of work that assists in the recovery, 
assists in the debris removal, and again, there are five 
criteria here or five conditions under which this bill would 
apply. It is narrow in scope.
    Having said that, you raised some questions about people 
who are injured, and I guess I would ask the question of some 
of the contractors who are here, do you all carry workers comp 
insurance for your employees?
    Mr. Perkins. Absolutely. It is required by law.
    Mr. Zelenka. We carry it, too. If I could, for a second, in 
listening to Dr. Shufro's testimony, we are not trying to get 
away from liability caused by our own negligence. In listening 
to what he was saying, it appears that the terrorist acts of 
attacking the World Trade Center and all of the respiratory 
illnesses that it caused to everybody in Manhattan now should 
become the contractors' liability. Because we are the only 
person in there that can be sued. There is no Government Agency 
to sue for that attack, so everybody who got exposed to 
something now needs to be able to sue the contractor who was 
working on the job site.
    We shouldn't have to assume the liability of the terrorist 
activity. We shouldn't have to assume the liability of what 
happened with Katrina just because we are the only people or 
the only entity involved in there that can be sued.
    Mr. Shufro. I believe for the record that the city of New 
York is also being sued.
    Mr. Feigin. The city of New York has a cap on its liability 
under the Airline Security Bill of $350 million.
    Senator Thune. That is, I think, a fair question, and Dr. 
Shufro, the implication that somehow the contractors caused the 
9/11 contamination, I think you have to ask the fundamental 
question of who caused it, the contractors or the terrorists. I 
think most people know the answer to that.
    Mr. Feigin. May I answer the question, Senator Thune? We 
have workers compensation insurance as well, but we also spend 
a lot of money on an annual basis providing additional medical 
coverages for our employees so that they don't have to worry 
about these things. So it is not an issue for us of being 
negligent on the job site. The issue for us is really, like I 
said before, trying to defend 5,000 different claims. The legal 
fees alone would put a company under. It's not a matter of 
worrying about being responsible or not.
    Senator Thune. Mr. Perkins
    Mr. Perkins. We're not afraid of negligence, either. The 
point is, he's not afraid of it, we're not afraid of it, he's 
not afraid of it, the point is the cost. He is talking about 
the cost. We go to trial all the time and we protect ourselves 
and we win cases on negligence. It's not about that. It's about 
the fact that you have to go through this long, drawn-out 
process before you are able to prove yourself not to be 
negligent.
    The fact that a Corps of Engineers job is designed, 
supervised and accepted by the Corps you would think would 
indicate that there is no negligence. If we get sued, we have 
to go to court and prove it. We have to spend the money to 
prove it, when we already have a stamp of approval by the Corps 
of Engineers who accepted the job. That's the point.
    Ms. Wright. May I speak?
    Senator Thune. Dr. Wright.
    Ms. Wright. I think that our concern is based on something 
that we are already seeing in New Orleans, and that is that 
contractors are hiring people and giving them a 20-minute class 
in the proper gear to wear when they are doing the kind of 
work, like debris removal and things of that sort. Twenty 
minutes, and then telling them where they are going, they don't 
need any equipment. So people are being exposed every day, 
workers are being exposed every day.
    As it relates to the hassle of dealing with the legal 
system in this Country, I think that the average citizen would 
tell you that it is a hassle for us, if you are trying to buy a 
house, for example, is what happened to me, and someone with a 
similar name ends up on your report. So when you go to closing, 
you can't close, first you have to prove that it's not you. By 
the time you finish all of that, the interest rates have gone 
up. I mean, it's not just the companies that have hassles 
dealing with our legal system.
    I can't go and say credit bureaus need to be destroyed 
because they actually caused me to lose a house that my family 
wanted, because this is the way the system is. There are lots 
of things that need to be fixed, and maybe there are some ways 
that companies can be helped.
    I'm really a bit disturbed by the fact that companies want 
the Federal Government to give them some special leniencies or 
special protections. The average citizen on a daily basis, all 
of the people dealing with the insurance companies right now 
and the things that we are having to go through to get the 
insurance that we deserve for paying premiums for all of these 
years, what should I say? Well, you know, insurance companies 
shouldn't have a right to closely examine the damage that 
occurred by Katrina, they should give me all the money that's 
in my policy. Now I have to sit and wait and go through the 
process.
    My understanding is that companies generally pass on the 
costs of whatever their legal fees are to the consumers. I 
expect that will happen with these companies. I also believe 
that if a company ends up going out of business because of 9/
11, they will very quickly open under a different name, at 
least that's been my experience, startup shop, they already 
have all of the relationships with the Army Corps, and that 
business is up and running very quickly.
    I don't think we should throw the baby out with the basket. 
Try to fix the problem, but this law is wrong.
    Senator Thune. Dr. Wright, are you aware, though, of any 
Louisiana workers that aren't covered by workers comp?
    Ms. Wright. I can't speak to that. I don't know. I believe 
that some of these laborers that are just being picked up to do 
debris work by these contractors are not covered. They have no 
coverage at all.
    They are also doing things like group hire, where the 
person who has the crew to go in and do the work is in fact 
paid a particular amount of money. We have undocumented workers 
like you wouldn't believe in the city of New Orleans. You don't 
see white or black workers. All we see are Mexican workers. 
Many of them are undocumented.
    This is not a slap in the face to the poor Mexican workers 
who are also being extremely exploited. I am concerned about 
their health, too. They are not wearing any kind of protective 
gear doing the kind of debris removal that we see going on in 
the city.
    I invite you to come down and just observe what's happening 
in the city as it relates to that.
    Mr. Shufro. In New York City the workers who were cleaning 
up the office buildings surrounding Ground Zero were for the 
most part immigrant workers. My organization placed a screening 
van about a block away from the Ground Zero. We saw 410 
workers. Four hundred ten of them had respiratory problems. 
Four hundred ten of them, if they were lucky, got a paper mask, 
which was not sufficient to protect their health. Most of these 
were, all of them were immigrant workers. While they are 
eligible for workers compensation in New York State, because 
most of them are what are called medical only cases, there is 
no wage loss in many of these cases, they can't get legal 
representation, and going through the system is virtually 
impossible without a lawyer.
    We have examples of people in New York City who are today, 
years after filing their case, still haven't received a dime 
from workers compensation. The cases are contested, fought 
through, and people who worked on the pile are being denied 
their compensation. I can go through people who have lost their 
houses, kids who have dropped out of college because their 
parents can't--their father or mother, actually, have not been 
able to pay medical bills.
    The system hasn't worked, and all the workers are asking, 
the same thing that the contractors are asking here, but in 
reverse. They want to know that if they go out and cleanup and 
come to the aid of their Country in a disaster situation that 
they are going to be taken care of. That's what this bill will 
not allow.
    Senator Thune. One final question, and I guess it relates 
to the complaint that's leveled that this legislation would 
eliminate any incentive for contractors to do good work. How do 
you respond to that?
    Mr. Feigin. Can I answer that? This is no insult to the 
plaintiffs bar, and I am an attorney. We don't sit in our 
offices worrying about lawsuits being brought by the plaintiffs 
bar against us, because we are doing our work. We don't worry 
about the nuisance of being in court all the time, and we 
successfully defend those lawsuits.
    This is a unique situation, unprecedented in the history of 
America, that required some unprecedented results. From my 
perspective, our company doesn't think about any--we go beyond 
what OSHA requires us to do to keep our contractors safe on our 
job sites. We do that because we are in the business of keeping 
people safe.
    So we are not going to sit here and say that because 
somebody passed a bill that may apply twice a decade to a job 
that's so big and so unprecedented that it requires that kind 
of--we hope we never have to ask for the help that this bill 
gives us. Having gone through this, something like this really 
is necessary. It may not be this, maybe it's something else.
    Some kind of relief is necessary to make sure that 
contractors respond, qualified contractors who are interested 
in their workers' safety, who have the kind of high standards 
for worker safety that companies like ours and Boh Brothers and 
the subcontractors who are here today have. We want to make 
sure those are the companies that go to ground zero and go to 
these disasters, but if these companies are out of business, 
the companies that are going to be going are the ones that may 
not care so much about this.
    From our perspective, safety is our No. 1 concern. It is a 
core value of our company. We actually go beyond many OSHA 
requirements for the safety of our people on job sites.
    Mr. Zelenka. As a small business, we don't have much 
ability to fight claims. It wouldn't take much to put us in an 
uninsurable position, in that insurance costs could get so high 
that it wouldn't be feasible for us, we could not maintain our 
business.
    But you don't work to different levels as you go to 
different jobs. We perform at the best level we absolutely can 
perform at on every job, not just on the quality of the work we 
do, but also the way we approach safety. Our employees are the 
single biggest asset we have. I assign a senior, a junior and a 
third check. We are a family business. We have been involved 
for generations, our employees have been involved for 
generations. We are not going to do anything to put anybody at 
risk just because we may perceive the law is more lax. 
Everything is going to be done to the same level.
    Senator Thune. I'll tell you what. Senator Boxer has a 
question she wants to ask. I have more than used my time under 
this round. Hopefully I will have a chance to----
    Senator Boxer. Maybe we can hear the next panel before we 
vote.
    Senator Thune. If we could ask the third panel to come up, 
what we may do, if you all could hang here for just a minute, 
is we will get a chance to ask questions.
    Senator Boxer. Then the third panel can jump in and we can 
hear you before we run to the floor for a series of votes.
    Let me just say, because I have a lot of questions, I am 
not going to ask them now because of the timeframe, but I would 
like to submit them if that's OK with you, Mr. Chairman.
    Senator Thune. Without objection.
    Senator Boxer. For me, the issue is, what is the problem? 
We need to document what is the problem. That means looking at 
the whole picture. At the end of the day, what's the best thing 
to do for the community, for the people of the community, and 
what's the fair thing to do.
    Now, my understanding of life is that if you do the right 
thing, we have a court system that at the end of the day is 
fair. It is true that when you are sued, it's an awful 
experience, it's awful for every party, because they all put 
money on the line, they may never recover it. Depending on your 
point of view. If you are a big company and you keep a full-
time legal staff, it's a heck of a lot cheaper than if you're a 
plaintiff's lawyer who is representing a bunch of poor people 
and they may never get their case certified.
    So don't try to pull the wool over anybody's eyes. We know 
there's frivolous lawsuits. There are laws against that to get 
the suit thrown out. Then there are the cases, and I go back to 
Erin Brockovich, who I happen to know, where chromium 6 got 
into the water, no one did anything about it, and people died. 
Children died, people died.
    Finally, these people were held to account and thank God 
for that. In a lot of these cases, people don't act. They are 
not good actors. They are bad actors. They are bad actors, 
whether, you can go back to the Edsel car, you can just do a 
lot of things where people knew. It wasn't the Edsel. What was 
the car that had the--the Pinto, where they knew that, they 
wrote into the cost of doing business, as Dr. Wright said--X 
number of lawsuits a year. Because they made so much money. It 
came out at discovery.
    You can shake your head all you want. You're a good actor. 
Hopefully you would never do that.
    Mr. Feigin. That's not the point, Senator. It's not the 
point.
    Senator Boxer. I'm not asking you a question. I'm talking.
    The fact is, there are bad actors. You have to be very sure 
when you write legislation like this, and you said it's only 
for big disasters, $15 billion, I don't want to say anything, 
is in my State not a big disaster. It happens, sad to say, very 
often. Earthquakes, floods, fires, drought, and all of a 
sudden, you want to do a narrow bill, and all of a sudden you 
are finding out you're changing the law for certain people and 
not for other people?
    How is that equal protection under the law? How is a person 
who is victimized by a bad actor in the case of Katrina, none 
of you at this table, some bad actor who comes in and 
victimizes people, and how does that victim feel? Are they 
getting equal protection where they may get cancer or some 
awful thing because some contractor didn't do the proper 
testing that was required? At the end of the day, that's not 
right.
    So if there's a problem, Mr. Chairman, let's narrow it 
down.
    I have one question for Dr. Shufro. I just want you to tell 
me in human terms, if you can, in your experience, because we 
have to say, although this was a natural disaster compared to a 
terrorist attack, do you, could you describe the kinds of 
injuries that you have seen and what might have been prevented 
if the contractors had done the right thing there? Can you give 
us a couple of examples?
    Mr. Shufro. The most prevalent disease seen by the Mt. 
Sinai Worker and Volunteer Screening Program is respiratory 
problems. This could be prevented through respiratory 
protection.
    On a good day, and you can correct me if I am wrong, 
according to OSHA statistics, workers on the site at Ground 
Zero, it was never more than 50 percent, never more than 50 
percent. That meant at least 50 percent of the workers were 
working among toxic substances unknown, and a lot know, but 
also unknown, without appropriate protection.
    Mr. Feigin. May I correct you now?
    Mr. Shufro. Let me finish.
    So all of that could have been protected, and on----
    Senator Boxer. Are you saying on a good day half the people 
working on the site were not properly protected? Is that what 
you're saying?
    Mr. Shufro. That's what I'm saying. Fifty percent were not 
wearing respiratory protection at any given time. There were 
days that it was below that, very few above that. At a 
different site, at the landfill, you had 85 percent respiratory 
protection. So you have clearly a management problem, it seems 
to me. If you are able to enforce 85 percent at one site and 50 
percent at another, there is something that's going on at these 
two sites that's different.
    Had you had workers who were wearing their protection, we 
would not have seen the high rates, and we're talking about 
thousands of workers who are sick today as a result of 
exposure.
    Senator Boxer. I think Mr. Feigin wanted to say something.
    Mr. Feigin. Yes, if you don't mind.
    It is interesting, were you down at the site ever?
    Mr. Shufro. Yes, I was down at the site.
    Mr. Feigin. Then you know that on the site there was a 
perimeter set up by OSHA on the site. Nobody was allowed inside 
that perimeter without the appropriate respiratory protection, 
and there was appropriate training and fitting and baseline 
testing of everybody who went within that protected area.
    So everybody had the appropriate respiratory protection. 
Also, there were not just construction workers on that site, 
but there were many police, fire workers on that site over whom 
the contractors really had no control. So it would be 
interesting to kind of look at the detail of what that 50 
percent number is, whether they had it and simply refused to 
wear it, or whether they didn't have it at all.
    The other thing, too, over at Freshkills, which is where we 
brought the debris, I think if you look at percentages, it is 
interesting, but you've got to look at what the total number of 
people were, because you had 1,000, you may have had 1,000 
workers at Ground Zero, you may have had 30 people over there. 
So it's not a lack of supervision or management, it's a lot 
easier to manage 80 people and require them to do something 
than have 1,000 people and require them to do something.
    Senator Boxer. Dr. Shufro, did you want to respond?
    Mr. Shufro. You know, it well may be that people were 
provided with protection and weren't wearing it. That is a 
management problem. If people are doing the job improperly and 
not wearing their protection, then there is something the 
matter with the management of that site.
    Senator Boxer. Mr. Chairman, others may like to comment on 
this.
    Mr. Perkins. I just wanted to comment on a couple of 
examples related to Erin Brockovich and the other example you 
used. I don't think this bill protects us from that type of----
    Senator Boxer. I know. We have a disagreement. My lawyers 
tell me it's broad, sweeping. The Chairman says it's not. It's 
very narrow.
    Mr. Perkins. Those two examples were reckless----
    Senator Boxer. So we need to talk. We need to sit down.
    Mr. Perkins [continuing]. willful misconduct types of 
situations.
    Senator Boxer. We need to talk, because we read it 
differently. I think it was written by the industry. I mean, 
let me put it this way. I'll restate that. I think it was 
written with the advice and counsel of the industry, and I 
don't think anyone from the other side sat at the table.
    So you can have an argument, you know, the best legislation 
I've ever written calls in everybody from all sides. I just let 
them sit there and argue with one another, well, we meant this, 
well, we didn't mean that, we meant that, we meant this. At the 
end of the day you come out, you get a bill that you can pass. 
I don't think a bill that could pass if it doesn't have 
everybody's advice and counsel.
    Ms. Wright. I just wanted to say that what I keep hearing, 
and I may be wrong, but I keep hearing all of these worries 
about companies going out of business, insurance costs being so 
high. I just want to say that the same thing is true for the 
average citizen when it comes to insurance, for example. If you 
get two claims with your regular insurance company, by the 
third claim, you can't get insured any more.
    So what is being put in place is another insurance pool, in 
Louisiana, where if you can't get insured because you have had 
insurance claims, whether it is by natural disaster, or just a 
pipe breaking, the insurance companies will not insure you. 
There is a Louisiana plain. That's where you go.
    So I'm saying, why not the same answer that you've given 
for regular citizens then be given for companies under these 
extreme circumstances, not this kind of sweeping bill? So it 
seems to me that as Senator Boxer was saying, let's just figure 
out what the problem is and try to put some protections in. In 
that way, that protects everybody, and not just this sweeping 
bill that I think ultimately hurts the citizenry.
    Mr. Zelenka. There is no pool in there for insurance. As a 
small business, I sit here and listen to this, and I listen to 
you say, the courts will protect you and you will fight all 
your claims.
    But I go back to once again, I won't survive as a small 
business if I have to continue to defend myself against claims 
that don't have anything to do with my negligence or my 
company's negligence, just the fact that I am the only easily 
suable entity in the loop here. I'm in there trying to do the 
right thing and be a good actor, and I'm the only guy that can 
be sued, so I have to defend myself from all these suits. Small 
business is going to suffer. All these businesses, as you 
talked about, wanting to get in line, they are going to suffer. 
Going out of business, declaring bankruptcy and popping up 
under another name isn't a very good way to do business. We 
wouldn't be around for over 100 years if we----
    Senator Boxer. Well, Mr. Zelenka, for me as a U.S. Senator, 
from a State that has so many natural disasters, I don't even 
want to talk to you about it. I mean, it's just, every other 
day, we have so many happening. I work closely with my business 
community, with my unions, with non-union workers, with the 
immigrant community and everything else.
    I want to help people who are caught in a situation where 
they are a good actor. I do not want to help people and send 
the wrong message that you can get a Government contract and 
then be sloppy, don't live up to the highest standard and all 
the rest.
    Mr. Zelenka. I agree with you.
    Senator Boxer. If we could agree on that, it seems to me 
that we have some common ground. Nobody wants to see a good 
actor, a good business, a good citizen be driven out of 
business.
    Mr. Zelenka. That's where I'm headed.
    Senator Boxer. Dr. Wright said, I think what she said was 
making an overture. She said maybe we need a fund where for 
these circumstances, where there is no blame, that we can have 
an insurer of last resort, kind of like the terrorism concept. 
I mean, there are ways that we can reach to help the good 
businesses.
    Not to use this as an excuse to give some broad liability 
waiver to people who are not good actors and to people who are 
clearly negligent. Again, this isn't the chairman's 
interpretation, and I respect that. But we have a disagreement.
    My lawyers have looked at it, his lawyers have looked at 
it. I think it's broad, it's sweeping, it will apply too often. 
It's a gift to some potentially bad actor. It's an incentive 
for them not to do right by their workers, by the community, 
what do they care at the end of the day?
    You know, these big oil companies now that were crying so 
much, oh, oh, it's a terrible thing, Katrina, we can't get the 
supply, it's awful, it's awful, it's awful, at the end of the 
day, they not only made more money than they ever made before, 
but they took bonuses that are so outrageous that the 
Republican Senate is having a hearing tomorrow where we are 
just going to come down on these folks.
    So I think the American people are fair people. If you are 
good citizens, if you want to do the right thing, we don't want 
you to be hurt. That would be a terrible thing. At the same 
time, if you write legislation that you say is going to protect 
the good but takes away incentives for corporations to be good 
actors, you have done damage to the American family who is just 
trying to get up in the morning and not die of a heart attack 
or get cancer that's going to give them 20 years or have to 
wheeze their way through the day, as we have here.
    I agree with Mr. Shufro, you give a worker equipment to 
protect himself or herself and they don't use it, you need to 
give a warning and then give a second warning and they're out. 
I have a rule in my office, no smoking. If anyone does it, you 
get a warning, then they're gone. They can go somewhere else 
that has a different policy, that's fine.
    In any event, I've spoken too long. I just want to say, Mr. 
Chairman, to you, because we are friends and we work together, 
that if you want to take another crack at something that I 
think is addressing a real problem, I'm there. But if you 
don't, we're going to have a big, big debate over this. I think 
it's not going to lead to anything much, because I think you 
take Senator Clinton, Senator Shumer, who have gone through 
this stuff, and it's not like you're coming at this where 
there's no experience.
    So anyway, I thank you very much for your allowing me to 
discuss this matter. I thank the panel, it's terrific.
    Senator Thune. I would expect you to disagree with me, 
frankly. I will say that part of this is based upon the 
experience we have been through in New York. I think lessons 
learned and trying to do something that is instructive that 
would apply to future, and again, bear in mind, these are $15 
billion, which in California may not be as much money as it is 
other places, but that's still a pretty high threshold.
    It is very narrowly drawn. The people who we are talking 
about here are people who are being asked by their Government 
to do this work. It's not like they are out there trying to 
profiteer from sweeping in on this disaster.
    Senator Boxer. They're being invited.
    Senator Thune. A lot of these folks----
    Senator Boxer. They're being invited. They don't have to do 
a thing they don't want to.
    Senator Thune [continuing]. Are from Louisiana, too.
    Senator Boxer. They don't have to do it if they don't think 
it's going to be worthwhile. This is a capitalistic system. 
We're not telling people, you have to do the work. We're 
saying, here is a contract, if you are interested, please let 
us know.
    Senator Thune. I think the concerns being expressed by the 
people who are doing that work is they may not do that work in 
the future if they don't have some protection from what now has 
turned out to be literally thousands of claims in the case of 
New York. I suspect we will see a considerable amount of that 
with respect to Katrina.
    With respect to them being, just allowing them to be 
sloppy, this is all Federal oversight. If it's sloppy, it's 
because the Federal agencies that are overseeing this work are 
allowing it to be done in a sloppy way.
    Just one final point on the question of jurisdiction. This 
Subcommittee does have jurisdiction on waste and disposal. I 
think it is important for us to be able to have a discussion 
about this subject, whether or not ultimately this bill is 
marked up in the Judiciary Committee or not.
    I think we will release this panel. We have a vote on. How 
much time is left? How many votes, is it a series? Two votes.
    Senator Boxer. Mr. Chairman, I just want to say, I got this 
from the Dolan Media News Wire. It says,

    ``according to the Louisiana Contractors Licensing Board, the 
number of applications for a contractor's license nearly doubled in 
September to 224 from a normal 120. In the first week of October, the 
number of applications increased an additional 300 percent.''

    I would like to put that into the record.
    Senator Thune. Without objection, that will be entered into 
the record.
    Senator Boxer. Thank you.
    Senator Thune. We will take a brief recess to go and vote, 
and then, with the indulgence of our last panel, if their 
stomachs aren't growling too much, we will come back, I will 
get the testimony going and we will try and ask some questions 
of that panel as well.
    So we will release this panel. Thank you very much for your 
testimony. Thanks for your responses to questions.
    [Recess.]
    Senator Thune. Is everyone still awake out there?
    We have returned. I want to ask the final panel to present 
their testimony. We will have a few questions. I don't think we 
are going to see Senator Boxer return from the floor. There 
will be another series of votes here before long.
    In any event, I am very pleased and thankful for your 
patience, but very pleased to welcome Craig King, who is a 
Government contracts attorney; Professor Steve Schooner, from 
George Washington University Law School; and Paul Becker, who 
is President of Willis' Construction Practice to the hearing 
today. Mr. King, please proceed and thank you again for being 
here, and thank you for taking time and thank you for your 
patience.

            STATEMENT OF CRAIG S. KING, GOVERNMENT 
                       CONTRACTS ATTORNEY

    Mr. King. Thank you very much, Mr. Chairman, and thank you 
for the invitation to provide testimony regarding Government 
contractor liability provisions of S. 1761.
    There is a strong Federal interest in establishing 
appropriate standards for liability for Government contractors 
for actions taken in the exigencies of a disaster situation. 
Now, if you read the written testimony, it is clear that 
Professor Schooner and I diverge to some degree on this bill. 
So for purposes of my oral remarks, what I would like to do is 
really focus on those areas, those key areas where we do have 
some differences of opinion, and do so with all respect and 
admiration for the good professor.
    At the core of the bill is the Government contractor 
defense. The defense was established by the Supreme Court and 
is part of the Federal common law of the United States. It 
provides that if certain requirements are met, a contractor 
stands in the same legal position as the Government, meaning 
that it bears no liability to third parties if the contractor 
does what the Government tells it to do in the contract.
    Under Supreme Court standards, the Government contractor 
defense would apply to disaster relief efforts without S. 1761. 
Applying the Government contractor defense, however, would 
involve costly and unnecessary litigation, and what the bill 
does is add protections that will limit that type of wasteful 
legal process.
    Go back with me if you will to 1988. In that year the 
Supreme Court decided a seminal case setting forth the 
Government contractor defense, Boyle v. United Technologies. In 
that case, the Supreme Court considered the effect on 
contractors of third party suits. It observed that if such 
suits are allowed, then the contractors have only two 
economically viable alternatives. No. 1, to not do the work, or 
No. 2, to raise the price to compensate for the legal risks. 
Either way, the Supreme Court said, the interests of the United 
States are adversely affected.
    In his written testimony, Professor Schooner laments that 
he has seen no empirical evidence that contractors are refusing 
to do the work. The Supreme Court has the answer. There are 
only two economically rational options. If the contractors are 
doing the work, then the Government is under pressure to pay a 
higher price to cover the risks of those lawsuits.
    But there are some complicating factors. We have heard 
about them today. First of all, there is the selfless desire of 
contractors to help, to do what's right. There is also the 
desire not to profiteer or be perceived as profiteering. Also 
in the Federal Acquisition Regulations, there are limits on 
price that keep, or at least put restrictions on the ability to 
act in an economically rational manner.
    Consequently, the contractors are in a vise, and what's 
left for them to do is come to Congress and say, can you 
relieve the pressure, can you help us out of this situation. 
Now, the Government contractor defense is rooted in the 
Government's sovereign immunity. Congress waived sovereign 
immunity of the United States when it enacted the Federal Tort 
Claims Act. It enabled private parties to sue the Government in 
certain situations.
    In so doing, it exempted from this consent to sue the 
Government any situation where there is what the Supreme Court 
calls a discretionary function exercised by a Government 
official. So Professor Schooner has really two criticisms here. 
First he says if the parties can't sue the Government, well, 
they ought to be able to sue the contractors. His complaint is 
not really about S. 1761. His complaint is that he thinks the 
Federal Tort Claims Act is too narrow.
    He says the liability should be allocated to the superior 
risk bearer, and that is clearly the Government. The Government 
has the agencies that can really know about how to respond to a 
natural disaster, but then he reasons that the Government is 
immune from suit, so let's let the private parties go after the 
contractors.
    The essence of the Supreme Court's Government contractor 
defense is that private litigants simply cannot get indirectly 
from the contractors that which Federal law prohibits them from 
getting directly from the Government.
    Now, the second criticism of Professor Schooner is that the 
discretionary decisions in disaster recovery situations are 
made by contractors, not by Government officials. So he says 
the Government contractor defense should not apply.
    To the contrary, the Supreme Court has found explicitly 
that the Government contractor defense applies in remediation 
situations, because in a contract for remediation efforts, for 
example, the EPA making decision regarding the cleanup of 
contaminated sites, these are discretionary Government 
decisions.
    Really, the point is being missed. The key point is that 
the bill provides expressly that protections of the Government 
contractor defense will apply only where a Government official 
does indeed exercise a discretionary function regarding the 
work. The bill specifically provides a process for the 
Government official to review the scope of work in the contract 
and certify that that particular work is necessary to the 
disaster recovery effort. The Government official must 
determine that the work fits into any of five specific types of 
recovery work and that discretionary function requirement then 
is fulfilled by the certification process.
    The bill provides then that with a properly certified 
contract, the elements of the Government contractor defense are 
deemed satisfied. What this means is that for contracts that 
are so certified, and that's a narrow group of contracts, for 
contracts that are so certified, there is no need to litigate 
regarding the elements of the defense.
    Let me be specific about what that means. In Boyle, that is 
the Supreme Court case, the Court said that there are three 
elements necessary to apply the defense. No. 1, the first 
element is that the Government must approve a reasonably 
precise scope of work. That is fulfilled by the certification 
requirement. There is no need for cost of litigation about 
that.
    No. 2, it says the contractor must perform in accord with 
that scope of work. There is nothing in the bill that provides 
any protection for a contractor when that contractor's conduct 
is outside the scope of work of the contract.
    Third, the contractor has an obligation to warn the 
Government when the contractor knows about dangers that the 
Government is not aware of. The bill does not reduce in any way 
the contractor's obligation to warn the Government when the 
contractor has actual knowledge.
    What the bill does is it enables contractors and the 
Government to get on with business and to go about the cleanup 
and recovery efforts where the risks are unknown and 
unknowable. Inherent in the nature of disaster recovery is that 
many of the risks are indeed unknown and unknowable.
    By deeming the Boyle elements to have been satisfied, a 
contractor can proceed with the disaster recovery efforts, can 
do what's directed by the Government, can do so in good faith, 
and that is the reasonable way to proceed in a disaster 
recovery situation.
    Mr. Chairman, just to end, the bill is reasonable. It 
implements the requirements already set forth by the Supreme 
Court. There is a Federal interest in having the best 
Government contractors respond in these types of situations 
without reservation. A certification by a cognizant Government 
official does meet the requirement of a discretionary function 
and should not be second-guessed by third party litigation.
    Therefore, State tort laws where third parties are enabled 
to sue contractors just because they were there should be 
displaced in the absence of contractor fraud, recklessness, 
willful misconduct. Contractors don't escape from their acts. 
They simply are protected in the way the Government is where 
they do what is right. The bill should be enacted.
    Thank you.
    Senator Thune. Thank you very much, Mr. King.
    Mr. Schooner, now you have a chance to rebut or refute Mr. 
King's testimony. Please proceed.

   STATEMENT OF STEVEN L. SCHOONER, CO-DIRECTOR, GOVERNMENT 
   PROCUREMENT LAW PROGRAM, GEORGE WASHINGTON UNIVERSITY LAW 
                             SCHOOL

    Mr. Schooner. Chairman Thune and members of the committee, 
I appreciate this opportunity to discuss these Government 
contractor liability proposals.
    S. 1761, the Gulf Coast Recovery Act, is simply 
unnecessary. It would discourage responsible contractor 
behavior, and it would expose the public to unnecessary risk 
and harm. The bill asserts that the fear of future litigation 
and liability discourages contractors from assisting in times 
of disaster. At best, that's hyperbole. At worst, it's false.
    We routinely hear apocalyptic tales of monumental barriers 
to entry that deter firms from seeking the Government's 
business. What we do not see is empirical data supporting the 
assertion. The absence of this support is palpable. Nothing 
suggests that any significant population of contractors refused 
to seek their share of the Government's $300 billion annual 
procurement budget. To the contrary, the best contractors, 
small and large, domestic and foreign, aggressively vie for 
this work every day.
    Insulating contractors from liability improperly allocates 
risk of harm between the public, the contractors, and the 
Government. A better solution, and Mr. King mentioned it, is to 
allocate risk to the superior risk bearer, the party best 
positioned to appraise the likelihood that harm will occur, 
avoid the occurrence of the risk, insure against the risk, or 
bear the cost of the risk. What this bill does is allocate the 
risk of loss to the individual, the party least able to 
anticipate, assess, or avoid the risk, let alone insure against 
it or bear its costs.
    Thus, the Government neither assumes responsibility for its 
contractors nor would it permit the public to hold the 
contractors accountable. In a responsible Government, 
protection of the public from harm, rather than the protection 
of the economic interests of contractors, must come first.
    Now, the bill creates a rebuttable presumption that all 
elements of the Government contractor defense are satisfied. 
This turns the Government contractor defense on its head. 
Historically, the Government contractor defense insulated 
supply contractors that explicitly followed Government 
direction to their detriment. The defense does not protect 
contractors that exercise significant amounts of discretion.
    Mr. King ignores the fact that when the Government rushes 
to identify contractors, hastily drafts contracts, and loosely 
manages those contractors, the Government abdicates, nay, 
delegates its exercise of discretion. Thus, in removing debris, 
a contractor faces significant economic choices. For example, 
drivers with spotless safety records probably demand higher 
wages. Newer, better maintained trucks likely cost more to 
lease. Minimally acceptable environmental standards cost less 
than potentially cleaner or safer technologies. Truck drivers 
could save time and money by transporting hazardous waste 
through, rather than avoiding, residential communities.
    It makes no sense to insulate contractors from the fiscal 
ramifications of these discretionary decisions.
    Now, this differs dramatically from the SAFETY Act, which 
assumes that without liability protection, contractors might 
not let the Government deploy qualified anti-terrorism 
technologies to combat terrorism. This bill involves common 
tasks: demolition, repair, debris removal, de-watering flooded 
property, where the existing standards of care are reasonable.
    Moreover, Mr. King ignores the fact that the rather 
mechanical certification assigned to the Chief of Engineers is 
a far cry from the highly judgmental and discretionary SAFETY 
Act certification. Now, consistent with what Mr. King says, in 
a fraction of the Government's contracts that involve nuclear 
materials or highly volatile missile fuel, work is 
extraordinarily complex and dangerous. In extraordinary 
circumstances, we have unique rules that insulate and indemnify 
contractors from liability.
    Do not confuse the extraordinary with the ordinary. For 
basic public services, extraordinary measures are not 
appropriate. This bill also continues a trend that exploits 
Katrina to pursue otherwise untenable public policies. Look, 
Congress hastily raised the micro-purchase threshold, in 
effect, the charge card purchase cap, to $250,000, even though 
the Government's management of the charge card program has been 
abysmal. Fortunately, the Administration stopped that. 
Subsequently, the same can be said for the suspension, and 
later repeal of the suspension, of the Davis-Bacon Act for 
totally disingenuous purposes.
    Now, hopefully reason will prevail here. Knowledgeable 
procurement executives understand that the current procurement 
regime contains sufficient flexibility for the Government to 
meet its purchasing requirements in times of crisis, and I 
believe that's what the Corps told you today and what their 
written testimony says. They are not having trouble getting 
contractors to do the work.
    Finally, elsewhere Congress has called for more auditors 
and inspector generals to scrutinize Katrina-related 
contracting. Don't forget that an ounce of prevention is worth 
a pound of cure. The 1990's witnessed dramatic acquisition 
workforce cuts, and since 
9/11, procurement spending has increased by more than 50 
percent. More auditors and inspector generals will not help 
avoid the scandals or improve the performance of the 
procurement system. Conversely, an investment in the number and 
skills of purchasing officials would reap huge dividends.
    Thank you again for this opportunity, and of course, I 
would be pleased to answer any questions.
    Senator Thune. Thank you, Professor Schooner.
    Mr. Becker.

  STATEMENT OF PAUL BECKER, PRESIDENT, WILLIS NORTH AMERICAN 
                     CONSTRUCTION PRACTICE

    Mr. Becker. Thank you, Senator Thune, good afternoon.
    My name is Paul Becker. I work at Willis, a global 
insurance broker, as a North American Construction Practice 
group leader. I am proud to lead this practice, as my 
colleagues and I represent over 3,500 contractors in North 
America. We work to structure and secure effective risk 
management programs that can address safety issues, contractual 
liabilities and surety bonds.
    I have been in the insurance business for 27 years, and the 
vast majority of this has been in the construction sector. It 
is my pleasure and honor to appear before you today to testify 
to the importance of insurance in the cleanup of New Orleans 
and the Gulf Coast in the wake of Hurricane Katrina; 
specifically, the need to limit the liability of the 
contractors engaged in this work.
    As insurance brokers, we work with our clients around the 
world and across all industries, helping them assess, quantify, 
mitigate and transfer these risks, thereby allowing them to 
focus on achieving their business goals. Doing so affords them 
the comfort and the confidence that their assets, property, 
people, intellectual capital and equipment are more than 
adequately and properly protected against a broad range of 
risks.
    We are not an insurance company. That is, we do not 
underwrite the risks. We are an intermediary, bringing the two 
parties together, working to fashion the very best customized 
coverage we can secure for our clients. As part of this client 
advocacy, we work and have developed strong relationships with 
insurance carriers around the world, such that we know their 
risk appetite, how they consider certain risks and the various 
factors that weigh in their underwriting decisions.
    Given our experiences, we have a working knowledge as to 
how they think and how they approach various risks. 
Essentially, whether or not to underwrite a risk, how to price 
a policy and how to set the terms and conditions of a policy 
which amounts to a contract.
    In the aftermath of the events of September 11, Willis 
secured the insurance coverages for the contractors who cleaned 
up the World Trade Center site. As was spoken earlier today, 
those insurances were somewhat limited to workers compensation 
and a narrow scope of liability. Quite thankfully, and for 
obvious reasons, the characteristics of this site were unlike 
any we or anyone else in either the construction or insurance 
industry had ever seen. Normally, before the cleanup of a 
disaster site starts, environmental and engineering firms 
conduct studies, run assessments and issue reports as to the 
nature of the site and the specifics involved.
    Due to the outstanding circumstances of the events of 9/11, 
there was not time for such exercises, and contractors got to 
work without a full understanding of what was ahead: how stable 
was the ground, what were the asbestos levels, what other 
hazardous materials could have a long-term impact on the health 
of the workers and the general public. Today, over 4 years 
since 9/11, the number of suits, as was heard earlier today, 
being filed continues to grow. Only in time will we determine 
the balance between the insurance purchase versus the claims 
now being filed in New York.
    But one thing is certain. Litigation upon litigation upon 
litigation has created a great deal of uncertainty and serious 
concern among the contractors involved. While the scope of the 
New Orleans effort is multiples larger than the World Trade 
Center site, the same concerns are on hand today as were on 
hand on 9/11. The fundamental problem in securing the necessary 
coverage is a reflection of four component actions I mentioned 
a few moments ago. Insurance is about assessing, quantifying, 
mitigating and transferring risks. Models predict likely 
scenarios, calculate possible losses and then intelligent plans 
determine how to avoid such problems and spread the risk among 
various parties at appropriate price.
    In these unique situations, there can be a tendency to 
focus on the financing of the risks so the work can get 
underway. Without the assessment, how does a carrier know what 
the possible losses are? If the risks are unknown, there can be 
significant unforeseen liabilities. One, how can contracting 
firms adopt preventive measures to avoid problems which can 
give rise to future claims? How can carriers determine the 
right price for the coverage?
    Over the last several weeks, we have engaged in 
conversation with carriers around the world on this matter, and 
they are expressing to us the various concerns that I am 
sharing with you today. Uncertain site conditions, unusual and 
known health hazards, what chemicals are being released into 
the air during the cleanup, the limited nature of the tools 
available to assess the number and types of environmental 
factors in play, the varying standards between local, State and 
Federal authorities, the fast-track nature of the work to be 
done, and the lack of certainty on contracting provisions and 
legal environments.
    All of these factors substantiate the traditional methods 
of risk identification, control and underwriting have been 
significantly altered and make it difficult to estimate or even 
guess what the full extent of the long-term liabilities arising 
from the cleanup will be. Make no mistake: these are long-term 
liabilities. It leads us to question whether the insurance 
industry has the ability to fully underwrite the risks inherent 
in the work.
    If this bears out, contractors will be left fending for 
themselves without adequate insurance protection. This is not 
to say that contractors will not be able to procure insurance 
in some form for their activities in the Gulf. Rather, without 
addressing the unique factors in this situation, the coverage 
they will be able to obtain will in most cases not adequately 
protect them over time from the exposures they will be facing.
    This is not a question of if, but when, and based on our 
experience, these matters will manifest themselves over a 5- to 
10-year timeframe. There is talk already of a Katrina cough. 
This is very similar to the World Trade Center.
    I might add that without protection, contractors cannot 
properly account for their risks and endanger the long-term 
viability of their companies. Accordingly, these issues could 
prevent quality contractors from participating in the cleanaup 
and recovery efforts.
    This is important legislation. Reasonable and responsible 
contractors tend not to get involved in projects of any 
magnitude unless they have insurance against what are normally 
quantifiable risks, and carriers as well tend not to write 
policies if they are not able to make the necessary judgments. 
In the case of New Orleans, as it was at the Trade Center, 
neither can establish the proper control procedures to protect 
their interests.
    Limiting the liability of construction companies engaged in 
the cleanup such that they can gain the cover they need is 
critical. It has been my distinct honor to share my experiences 
with you this afternoon. Mr. Chairman, I conclude this section 
of my report and will submit the rest into the record.
    Thank you.
    Senator Thune. Thank you, Mr. Becker.
    Let me ask you a question. In your experience, how many 
Federal responses have exceeded $15 billion? Do you know the 
answer to that question?
    Mr. Becker. According to the Insurance Institute, there 
have been four distinctive disasters that have been assessed at 
more than $15 billion.
    Senator Thune. So it is very narrow, based on at least 
historical experience?
    Mr. Becker. With insurance catastrophic modeling, that is 
correct. Those are not all inflation adjusted, but those would 
be Hurricane Andrew, the World Trade Center, certainly Katrina 
and probably Northridge Earthquake.
    Senator Thune. What do you think is the risk if Congress 
does nothing to address the liability issue?
    Mr. Becker. As it stands right now, the insurance companies 
are telling us that they are having a very difficult time 
coming up with insurance products that will extend over the 
long term and appropriately cover the long-term risks. Most of 
what we saw at the Trade Center, as you can see, are continuing 
to evolve, long-term chronic injuries or health issues that are 
just now becoming apparent in a big way. We believe that that 
long-term nature of it is the most difficult part for the 
insurance companies to address.
    So right now they are not responding to many of our 
contractors with the type of coverage that we believe is 
appropriate.
    Senator Thune. I have to say, I guess it is probably 
indicative of this entire discussion, but the profound 
difference of opinion between Mr. King and Mr. Schooner is if 
nothing else very interesting to listen to. Let me ask a 
question for Mr. King, and this sort of ties back into your 
testimony.
    Do you believe, from a legal perspective, that it is fair 
for private contractors, which act as an extension of the 
Federal Government during disaster situations, to be subject to 
tort claims when all applicable Federal rules and regulations 
are adhered to?
    Mr. King. Let me address it this way. Senator Boxer said 
something earlier that I agree with, which is, when you have a 
problem like this, what you want to do is sit down, look at the 
interests of all parties and say, what's the right thing to do. 
In this instance, the right thing is probably two stages. The 
first stage is to not penalize contractors for showing up to 
help. Professor Schooner says, listen, we ought to focus on who 
is the most appropriate to bear the liability as between a 
company and an individual. That's the wrong question.
    As between everybody out there, the contractor should not 
be penalized for showing up. So the first step is to provide 
this limited liability so that the contractor is in the same 
shoes as the Government with regard to third party suits.
    Having done that, we have done the first step of the right 
thing. The second step is to then sit back and say, who is it 
that should pay the money and how should it be paid for 
individuals who are affected adversely by Hurricane Katrina, 
previously the terrorist activities up at the World Trade 
Center, who should pay the price. It is not intuitively obvious 
that the contractor, just because they are the only ones on the 
scene who have any money, ought to pay the price.
    So it is appropriate for Congress to answer that question. 
Now, clearly, if we look at the question of who is the superior 
risk bearer it's the Government. But the Government really has 
to decide what's the appropriate compensation mechanism. As 
your question implies, the answer is, it's not the contractors 
who showed up to help you through the problem.
    Senator Thune. Mr. Schooner.
    Mr. Schooner. I actually think that until he closed, what 
Mr. King was offering was an attractive oversimplification, but 
in the end he hit the nail on the head. Faced with a situation 
like this, and this is not unprecedented in terms of 
experiences the Government has had, we have experience with the 
nuclear industry. We have experience dealing with volatile 
missile fuel where the potential for disaster exceeds anything 
that the insurance industry has ever been capable or willing to 
absorb.
    So you get a simple calculus, as he pointed out. The 
Government can require the contractor to purchase insurance and 
reimburse those costs of insurance, which is what happens in 
Government contracts every single day. So we allocate the risks 
to the contractor and the Government reimburses the contractor 
for its costs.
    When we reach the point where insurance becomes so 
expensive that the Government doesn't want to pay it or that 
the contractor truly cannot get insurance, historically the 
Government has indemnified the contractor and in effect become 
a self-insurer. The main point I am trying to make here is, Mr. 
King is right that if the Government is willing to assume the 
responsibility for injured individuals, none of this is 
relevant, because the Government is a far superior risk-bearer.
    It is irresponsible and ultimately unacceptable to say, as 
a matter of policy, that when a contractor injures someone, we 
have decided that the superior risk-bearer is an individual 
that cannot anticipate, cannot avoid, cannot insure against, 
and cannot bear the costs. It is not what a responsible 
Government would do.
    Mr. King. May I respond to that just briefly?
    Senator Thune. I'm sure you will.
    [Laughter.]
    Mr. King. Professor Schooner posed two very interesting 
questions. One of them is, and just to put it in jargon in 
which he and I deal, it is the insurance liability clause of 
the Federal Acquisition Regulations, 52228-7, I believe it is, 
to throw the numbers out there. What it says is that in 
particular instances, the Government can require a certain 
amount of insurance and reimburse the contractor for that. Then 
any liability over and above that, the Government would 
reimburse the contractor.
    What he forgot to tell you is that the Government as a 
policy decision has made it so that that cause is inapplicable 
to construction contractors and engineering contractors. What 
he has also forgotten to tell you is you only get paid if you 
go through the full litigation, come back, seek reimbursement, 
having gone through all this disruption, and then there is the 
question of whether you get your litigation costs paid. It is 
not an adequate response in this type of a situation.
    The second one that he points out is what's called Public 
Law 85-804, incorporated by Part 50 of the FAR. In that 
instance, the Government does say if we have these 
extraordinary nuclear sorts of issues, then the Government may 
bear the risk. There is a process you go through to do that. It 
is quite burdensome, probably doesn't fit the Hurricane Katrina 
type situation.
    What he doesn't tell you is that is limited to national 
security situations. There is nothing in the Stafford Act that 
allows that to happen.
    So what you have is, in the case of anti-terrorism, you had 
a war on terrorism declared so the White House could then issue 
an executive order that brought that entire rubric under the 
national security interests of that sort of indemnification. 
That doesn't apply in these types of situations. Again, it is 
not as good or effective as the bill that we've got pending 
here that limits liability, doesn't make you go through all of 
those hoops for extraordinary contractual relief.
    Mr. Schooner. First, Mr. King's points are perfectly valid, 
but what he's ultimately advocating is first, you could fix or 
modify a clause or you could expand or modify Public Law 85-
804, both of which would be perfectly reasonable solutions.
    But as a matter of policy, for the Government to stake out 
as statute that the least able risk-bearer should be the one to 
bear the loss is totally irresponsible. It is just unthinkable 
that our Government could do such a thing.
    Senator Thune. And least able risk-bearer being?
    Mr. Schooner. Individual members of the public that can't 
anticipate the risk, can't insure against it, and can't bear 
the costs.
    Senator Thune. What would the Federal Government's legal 
exposure be if it carried disaster cleanups without private 
sector firms today?
    Mr. King. I think the contractors that preceded us 
indicated they simply couldn't do the job. I guess the General 
is the one who said, we couldn't do it without contractors. So 
you have a situation where I believe the General said, 99 
percent of this work has to be done by contractors. The 
Government directs the work, the Government is immune. Somehow, 
because the contractors show up, they are supposed to be 
liable. That just doesn't make sense.
    Senator Thune. That immunity that applies in these types of 
situations, though, the Federal Government's ``sovereign 
immunity,'' has that ever, in a situation like that, have we, 
the Federal Government, ever waived that? We did in New York to 
some degree.
    Mr. Schooner. You mean like creating a fund.
    Senator Thune. Right, which we did in New York.
    Mr. Schooner. We do that.
    Senator Thune. That was sort of an exceptional 
circumstance, although now it sounds like the claims are well 
in excess of what was allowed.
    Mr. Schooner. There's a number of good models, where the 
Government has stepped into the fray and solved a failure of 
the marketplace. I think for example the vaccine fund is a 
perfectly reasonable situation. Bottom line is, vaccine 
manufacturers pay into a fund. People who are injured by the 
vaccines have, in effect, an automatic suit to the United 
States Court of Federal Claims, and the only real issue is 
damages.
    So the point there is that you can either prospectively 
have contractors pay into a pool if you like that approach, or 
you could have the Government indemnify. The only point that I 
return to time and time again is: why would you assign or 
allocate the risk to the least able risk-bearer when there is a 
harm there?
    I agree with everyone who has testified today. The goal 
here is not to make contractors responsible for injuries to the 
public by terrorists. The question is: when the contractor 
comes in to perform their work, why shouldn't they, when faced 
with a choice, exercise standards of care to the extent that 
the insurance industry would normally cover them? It just seems 
reasonable.
    Senator Thune. Mr. King.
    Mr. King. The issue very much is models. There are models 
to do all sorts of things. What Professor Schooner has tried to 
sidestep is the model of the Safety Act. He says it doesn't 
apply, we shouldn't consider it. There is no doubt on earth 
this statute is patterned after the Safety Act.
    Now, let's talk about what the Safety Act is for just a 
moment. In the wake of 9/11, Congress enacted a statute that 
said exactly what this statute said, but applies it to anti-
terrorism technologies. Congress invited companies to have 
their technologies certified by the Government as desirable for 
use against terrorism, then in the event of lawsuits, the 
Government contractor defense would apply.
    Basically all the same types of protections that we are 
talking about here would be there. There would be a 
certification process, the whole sort of thing.
    Now, what Professor Schooner says is, that is not like 
disaster recovery efforts for hurricane relief. That is 
absolutely wrong, because what he is focusing on is the 
technology, not the risk. If you focus on the risk, the risk of 
the extraordinary cleanup going on down in New Orleans is very 
much comparable to the risk of those anti-terrorism 
technologies.
    When you focus on the risk, what you look at is the types 
of risk to the company, and I will tell you, if you go look at 
the applications for Safety Act certification, it is companies 
taking the normal work that they do and saying, we would like 
to have this sort of Government contractor defense apply for 
it, it is doing their normal work in an environment of 
extraordinary risk, which is exactly what our contractors told 
us is going on down in New Orleans. They are taking their 
normal work and they are going into an environment of 
extraordinary risk, and they are saying, it is not the typical 
situation, we need to have this sort of relief.
    So this is exactly the same sort of thing that we did with 
regard to anti-terrorism technologies under the Safety Act. The 
decisions by the Government are the same types of decisions. 
The risks are comparable, and a Safety Act type model applies, 
not those other models that the professor was talking about.
    Senator Thune. I do have to go vote again. This is 
fascinating, and we could go on for a long time.
    I will say, and I think that, I am aware of at least one 
example where, it was not while I was in the Congress, but when 
the anthrax incident hit, actually I think I was in the House 
at the time, I wasn't in the Senate, but it was in the Senate 
buildings, Dirksen and Hart Buildings, the contractor that came 
in to do the work on that, the Government did indemnify them.
    Mr. King. That was Public Law 85-804, under the Executive 
Order.
    Senator Thune. Right.
    Mr. Schooner. So it works.
    [Laughter.]
    Senator Thune. Well, that debate will rage on.
    I thank you very much for your testimony and for your 
responses to the questions. I do want to include, without 
objection, I will include Chairman Inhofe's statement for the 
record, which we will insert.
    Senator Thune. Also, I have a couple of letters of support 
for this legislation. One from the American Road and 
Transportation Builders Association.
    [The reference letter can be found on page 97.]
    Then also the Transportation Construction Coalition, which 
is a coalition of not only engineering and construction but 
also some labor unions as well.
    [The referenced material was not submitted at the time of 
print.]
    Senator Thune. With that, thank you so much for being here. 
We will leave the record open for a week. I suspect Senator 
Boxer will have some questions for you that she will submit in 
writing. Regrettably, she could not get here for the balance of 
this.
    Thanks so much. The hearing is adjourned.
    [Whereupon, at 5:47 p.m., the subcommittee was adjourned.]

       Statement of Hon. James M. Inhofe, U.S. Senator from the 
                           State of Oklahoma

    Senator Thune, I would like to start off by thanking you for 
holding this important hearing. As Chairman of the Superfund and Waste 
Management Subcommittee, you have and continue to show great leadership 
and consideration over new and evolving issues.
    The devastation from the recent hurricanes has been well covered in 
the media, but the rebuilding efforts--the positive aspects of the 
story have not been given the same level of attention. I hope that 
changes soon.
    Today's hearing on your bill, the Gulf Coast Recovery Act focuses 
on another issue that has escaped the public eye--looming litigation 
and liability costs from trial lawyers against well-intentioned private 
contractors could have a significant chilling effect on disaster 
response and cleanup.
    When the state, local or the Federal Government asks for help to 
rebuild our cities, the public expects the private sector to heed that 
call, and to work with the authorities. The public certainly does not 
anticipate that those well intending companies should be penalized 
simply for meeting their civic and patriotic duties.
    We should promote policies that encourage good deeds, not restrict 
them. Senator Thune's bill does just that, and I am proud to be a co-
sponsor.
    I look forward to hearing from the witnesses, some of whom will 
explain the problems that they have encountered on the ground and the 
fear of unknown but likely litigation and liability costs makes them 
think twice before doing the right thing.
    Penalizing Good Samaritans is bad public policy and bad moral 
policy. We cannot let that happen.
                                 ______
                                 
   Statement of Major General Don T. Riley, Director of Civil Works, 
                 United States Army Corps of Engineers

                              INTRODUCTION

    Mr. Chairman and members of the committee, I am Major General Don 
T. Riley and I am the Director of Civil Works for the U.S. Army Corps 
of Engineers. Thank you for the opportunity to testify before you today 
concerning the Corps' disaster-relief contracting procedures. Under the 
leadership of the Chief of Engineers, LTG Carl A. Strock, we practice a 
concept of openness. We strive to maintain transparency in our 
contracting activities and welcome oversight of our activities. From a 
contracting perspective, this visibility and transparency is best 
demonstrated by the publishing of our contract listing on our web site 
where we give specific contract information, to include the contractor, 
dollar value, and purpose of the contracts for all to see.
    My statement is divided into four parts, pre-disaster planning, 
contracting during the ``emergency'' situation, ``a return to 
normalc'', and I will finish with comments on small and local business 
utilization.

                         PRE-DISASTER PLANNING

    In our pre-disaster planning, the Corps has been assigned Emergency 
Support Function No. 3 (ESF 3) under the National Response Plan. This 
is one of fifteen assigned functions to various elements of the Federal 
Government. Under ESF 3, Public Works and Engineering, the Corps 
assumes the lead in the areas of water, ice, power, temporary roofing 
and debris removal. Having this responsibility, the Corps has created a 
program called the Advanced Contracting Initiative, or ACI. Under the 
ACI program, we competitively award contracts for future use in the 
areas of water, ice, power, temporary roofing, and debris removal. 
Having these contracts in place allows the Corps to rapidly respond to 
emergency situations. We did in fact use our ACI contracts to not only 
support the Katrina recovery, but those areas impacted by Hurricanes 
Rita, Wilma and Ophelia as well. We also used the contracts to support 
recovery efforts in the Southeast after several hurricanes of last 
year's hurricane season. The ACI program has been in place for about 
six years.

                               EMERGENCY

    Using contractors to provide services that are not governmental in 
nature is typical of Government operations under normal circumstances. 
That is even more necessary in a disaster or emergency. Emergency 
situations typically require the application of significant resources 
beyond those that Federal organizations, the Corps included, need for 
use during normal operations. For example, it would be prohibitively 
expensive to maintain a full time, properly trained and equipped 
workforce sufficiently large and sufficiently diverse to react to needs 
arising from any kind of disaster response scenario. Instead, we 
maintain sufficient resources to oversee a quick ramp-up of 
contractors, enabling us to tailor our response to the specific needs 
of the emergency. This avoids having resources that would be 
underutilized the majority of the year, but enables us to react 
quickly.
    Turning to the emergency situation, the Federal Acquisition 
Regulation, (FAR), is based upon the principle of full and open 
competition. Drafters of the FAR, however, realized that emergency 
situations sometimes require emergency actions. As a general rule, the 
FAR mandates a 15-day advertisement period. The FAR also requires a 30 
day proposal period in most cases. What does this mean? Simply stated, 
if we were to follow the rules for full and open competition, we would 
not have awarded a contract to get the flood waters out of the city of 
New Orleans until the end of October. Clearly the people of New Orleans 
could not wait. In fact, the FAR allowed us to considerably shorten the 
time period of the award, under the urgency exception to the 
Competition in Contracting Act. The Corps contracting officer contacted 
four companies on September 1, 2005. Of those four companies, only Shaw 
Environmental, Inc, of Baton Rouge, Louisiana, could respond in a 
timely manner to begin the un-watering effort. Contract award was made 
on September 2, 2005.
    In our other efforts to support relief efforts in response to this 
emergency situation, the Corps considered and used the entire suite of 
available contracting options authorized under the FAR, including 
verbal and letter contracts. Using these methods, the Corps procured 
such critical items as sand bags to be used to stop the flow of water 
into New Orleans. You probably saw pictures of helicopters dropping 
these huge sand bags into the various levee breaches. It was an urgent 
situation, which required expedited procurement. Additionally, we made 
use of a Naval Facilities contract to assist in the un-watering of the 
city.
    Due to the magnitude of Katrina and the wide-spread devastation, 
the Corps needed to award debris and roofing contracts in excess of 
those contracts pre-placed under the ACI program. Based on the large 
scale of the work that needed to be performed, we awarded four debris 
removal contracts following the emergency. Each contract is valued at 
$500 million with a $500 million option. This requirement was open to 
any company, under a shortened advertisement and proposal period. The 
Corps received 22 proposals in response to the advertisement. The 
contracting officer awarded the contracts on a best value to the 
Government basis. The Army Audit Agency is reviewing the award and 
administration of these four contracts.
    Oversight of Corps contracts, especially in an emergency situation, 
is important to the Corps. Within just a few days of the storm hitting 
the Gulf coast, our internal review staff teamed with the Defense 
Contract Audit Agency and the Army's Criminal Investigation Division 
and deployed to the area of operations. Their mission, which is still 
ongoing, is to provide oversight of the operation, to include looking 
for instances of fraud, waste and abuse. This includes reviewing 
contracts.

                           RETURN TO NORMALCY

    In our efforts to assist in the recovery of areas affected by 
Hurricane Katrina, we concluded that it is not yet prudent to follow 
the full waiting periods that apply in normal circumstances, before 
awarding contracts. It is our goal, however, to return to standard 
procurement operations as soon as possible. The Corps is currently 
moving in that direction. We are currently advertising our requirements 
for longer periods than we did under the urgent situation, we are 
attempting to give prospective contractors as much time as possible to 
prepare their proposals, and we are using Federal Acquisition 
Regulations principles and competitive awards to the maximum extent 
possible.

               UTILIZATION OF SMALL AND LOCAL BUSINESSES

    The Corps has made extensive use of standard authorities granted to 
us under the various small business set aside programs, especially in 
the area of 8(a) firms. Section 8(a) is a Small Business Administration 
business development authority to benefit minority owned, socially and 
economically disadvantaged firms. The program helps aspiring 
entrepreneurs build their businesses by helping them obtain Government 
contracts. Participants can receive non-competitive awards up to $3 
million during a 9-year developmental program. Many of these small 
companies are local and therefore are already in the area and available 
quickly to participate in recovery efforts. We have also held, and will 
continue to do so, 8(a) competitions in which only Small Business 
Administration registered 8(a) firms from designated areas can compete. 
In those areas where we have awarded contracts to large businesses, our 
debris contracts mainly, we encourage use of local business 
subcontractors. We have instituted high goals for small business 
subcontracting and a reporting requirement that keeps them focused on 
achieving results in these areas. These contractors report their sub-
contracting efforts to us weekly for the first 90 days, and monthly 
thereafter instead of every six months, the typical reporting 
requirement. We have also inserted clauses citing the preference for 
use of local subcontractors.
    We are in the process of developing our acquisition strategy for a 
newly assigned mission from FEMA, demolition, where the Corps will raze 
structures determined to be uninhabitable. We will include 
opportunities at the prime level for local disadvantaged companies and 
a geographic set aside for the unrestricted portion of the strategy. We 
are considering limiting competition to Mississippi companies for the 
Mississippi aspect of the mission and to Louisiana companies for the 
Louisiana aspect of the mission. Our estimates at this time are that 
the costs in Mississippi will be $500 million and $600 million in 
Louisiana. Award is planned for late December.

                                SUMMARY

    To close, I would like to thank you once again, Mr. Chairman, for 
allowing the Corps of Engineers the opportunity to appear before this 
committee to discuss contracting procedures during times of 
emergencies. I would be happy to answer any questions Members of the 
committee may have.
    Thank you.
                                 ______
                                 
     Responses by Major General Riley to Additional Questions from 
                             Senator Boxer

    Question 1. Major General Riley, you indicate in your testimony 
that the Army Corps relied on the Advance Contracting Initiative. Did 
the Initiative allow you to rapidly respond to emergency situations 
after Hurricanes Katrina and Rita?
    Response. Yes, the Advance Contracting Initiative allowed us to 
rapidly respond to emergency situations after Hurricanes Katrina and 
Rita. We were fortunate to have contracts already in place for debris, 
ice, power, and water, which we used extensively in responding to the 
hurricanes.

    Question 2. Major General Riley, what is the number and value of 
contracts that the Army Corps has entered into that address the cleanup 
and rebuilding process following Hurricanes Katrina and Rita?
    Responses. We have awarded a total of 106 contracts (87 for 
Hurricane Katrina and 19 for Hurricane Rita) to date for the two 
storms. In addition, we have awarded 248 task orders (216 for Hurricane 
Katrina and 32 for Hurricane Rita) to date for the storms not including 
modifications to task orders. A total of approximately $2 billion has 
been obligated as of 13 December 2005.

    Question 3. Major General Riley, you indicate in your testimony 
that the Army Corps awarded four $500 million Katrina-related debris 
removal contracts, and that each had an additional $500 million option. 
You also indicated that the Army Corps got two dozen proposals for the 
work. Are you dissatisfied with the quantity of the contractors you 
selected for these contracts?
    Response. No, we are not dissatisfied with the quantity of the 
contractors selected for these contracts. In fact, we are very pleased 
with the 22 proposals we received for this emergency acquisition. Given 
the magnitude of the work and the geographic scope covered by the work, 
we felt that four contractors were adequate to respond to the debris 
removal action.
                                 ______
                                 
     Responses by Major General Riley to Additional Questions from 
                            Senator Jeffords

    Question 1. Major General Riley, on November 3, 2005, the 
Washington Post published an article, entitled ``Levee Construction 
Faulted in New Orleans Flood Inquiry.'' The article discussed an 
inquiry of New Orleans levee construction by independent investigators 
and how faulty construction practices by contractors may have played a 
role in failure of the levees. I have three questions regarding the 
contracting practices of the U.S. Army Corps of Engineers. First, how 
does the Corps screen potential contractors that it employs?
    Response. The Corps generally uses sealed bidding or competitive 
negotiations. In sealed bidding competitions, the contracts are awarded 
to the contractor that submits the bid containing the lowest price. 
Competitive acquisitions represent the best value for the Government 
and are awarded based on an examination of the offeror's past 
performance, technical capabilities, management plan and price as 
presented in the bid package.

    Question 2. Second, does your screening include a review of 
complaints and lawsuits filed by private parties against contractors?
    Response. The General Services Administration maintains a 
Government-wide listing of all firms that have been debarred or 
suspended from contracting with the Federal Government. The Contracting 
Officer's Representative screens this listing prior to making a final 
contract award decision.

    Question 3. Third, regarding S. 1761, if contractors are shielded 
from liability by private parties, how will this impact the Corps in 
awarding contracts for relief efforts related to Hurricane Katrina and 
future natural disasters?
    Response. We do not know what impact this proposed legislation 
would potentially have on competition
                                 ______
                                 
     Statement of Anthony Zelenka, president, Bertucci Contracting 
                              Corporation

    Thank you Chairman Thune, Ranking Member Boxer and the 
distinguished members of the Subcommittee for this opportunity to 
testify on Louisiana's struggle to recover from Hurricane Katrina, and 
the great need for legislation along the lines of the Gulf Coast 
Recovery Act of 2005 (S. 1761), which I support and urge Congress to 
enact.
    I am Tony Zelenka, the President of Bertucci Contracting 
Corporation. My company is a small business that performs levee and 
coastal restoration work across the Gulf Coast. I was born and raised 
in New Orleans, and I have over 20 years of experience in the 
construction industry. My family's firm traces its history back to 
1875, when my great-great grandfather founded the company in New 
Orleans.
    The morning after Hurricane Katrina hit the Gulf Coast, I waded 
through chest-deep water to reach the closest highway. As I did, I 
carried my bicycle over my head, so I could ride to my truck and then 
drive to my family, who had evacuated to Jackson, Mississippi. I had 
stayed behind to make sure our home and business survived the storm.
    While with my family, I learned that the levees in New Orleans had 
failed. I knew that the Army Corps of Engineers was going to need 
contractors to stop the flooding, so I headed for the Corps' emergency 
response center in Vicksburg, MS. After meeting with Corps officials 
that first day, and with no more than an oral agreement to execute a 
written contract, I went to work hauling stone and rock to repair the 
breached levees that had flooded New Orleans. I was one of the first 
contractors to arrive on the scene.
    In a situation like this, contractors like me focus on protecting 
our employees and helping our communities as quickly as possible. Under 
the direction of the appropriate authorities, we help our country 
recover from one disaster after another. We are the first entities, the 
first responders, to arrive on the scene of a disaster with the goal of 
providing whatever support we can. In the case of Hurricane Katrina, we 
did everything we could to stop the water from pouring into New 
Orleans. For the past 10 weeks, we have been working seven days a week.
    Personally, this disaster has touched many contractors in the area. 
While my home, thankfully, was spared from the devastation, many of my 
employees and their families' lives have been ruined by this disaster. 
As we continue our efforts to cleanup the city, I have also sought to 
help my employees re-establish their lives and livelihoods.
    The cleanup process in New Orleans continues to move forward. 
Standing side-by-side with my employees, I have personally done a lot 
of the work, and I have done it under crisis conditions. From the 
beginning, we have worn personal protective equipment, and done our 
best to protect ourselves from the many hazards, but like it or not, we 
have had to wade through the flood waters, and deal with the spray that 
the helicopters caused. We continue to deal with gas leaks, oil spills, 
downed electrical lines, and backed up and overflowing sewer lines.
    While you all have been watching the devastation on television, we 
have been living it. Many of my employees are still homeless and have 
had their families displaced, and my city is uninhabitable. In fact, I 
am a little nervous about being away from the job site in the daylight 
for the first time since this terrible tragedy first happened.
    Construction contractors have a critical role in providing disaster 
assistance to Federal, State and local officials. We are essential in 
the rescue of both persons and property. Our country has never 
experienced a dislocation of the size and scope of Hurricane Katrina. 
Contractors like me stopped the flow of water into the city and we will 
be busy for months on the demolition, removal, repair and 
reconstruction of both structures and utilities damaged by the 
hurricane. We will cleanup property polluted by the hurricane, remove 
vast amounts of debris, and dewater flooded areas. This is our city and 
we want to bring it back.
    Unfortunately, there are people out there who want to capitalize on 
this tragedy and others like it. Lawsuits have been filed against 
contractors who have performed the types of rescue and recovery work my 
firm has been doing in New Orleans. Take a look at what happened in New 
York after the terrorist attacks on 9/11. Hundreds of lawsuits were 
filed against contractors for the heroic work they did to cleanup 
Ground Zero in a short amount of time at the express direction of the 
Federal, State and local authorities. I have attached an AP story to 
this testimony that reports on the litigation.
    The madness has already started in Louisiana, where a contractor 
was named as a defendant in a class-action only three weeks after the 
Hurricane hit. The trial lawyers sued the contractor for building a 
faulty levee which the contractor did not build in the first place. The 
case was dismissed after a few days, but it is a prime example of the 
hunger out there no matter how arbitrary the suit may be - to sue 
contractors.
    I worry that I may be sued for property damage as part of the 
clean-up. Recently, I have been hired to begin work on the massive 
debris removal contract in New Orleans, which may include the 
demolition of private homes damaged by the hurricane. This is a very 
emotional situation even though all levels of Government have 
determined that many of these homes are completely uninhabitable and 
beyond repair or restoration. The Government has decided that they must 
be torn down and completely rebuilt, due to the flooding, hurricane 
winds and mold. But I now fear legal risk for moving ahead, and doing 
exactly and only what the Government hired me to do. Why am I worried? 
Because everyone has spent all this time looking for someone to blame, 
instead of looking for a solution. Meanwhile, contractors are expected 
to continue the cleanup, and do it as safely and quickly as possible, 
despite an uncertain legal and logistical environment.
    Remember, unlike many public officials and their agencies, 
contractors have no sovereign immunity. We look to the Government at 
all levels for guidance on the best way to do this work safely and 
efficiently. Ultimately, in emergency situations we have to put our 
assets on the line if we want to help, which means I may be at risk of 
losing my company for simply doing what I have been hired by the 
Federal Government to do trying to help save my city.
    I believe passing The Gulf Coast Recovery Act (S. 1761) is 
necessary to ensure that contractors like me will be there to do the 
work in the future, without fear of reprisal. The bill offers limited 
protection to Government contractors from any citizen suits that might 
result from their performance of disaster recovery contracts, enabling 
them to focus on the work. This legislation would give my firm a 
reasonable measure of protection, allowing me to pass this fifth-
generation family business on to the sixth generation.
    Do not let the trial lawyers penalize the contractors like me who 
report for duty. We are a critical link in the restoration of our city. 
I ask you to pass this legislation. I also ask you to do something else 
listen to the experts. Listen to the Army Corps of Engineers. Listen to 
the local levee districts. Do not shortchange the rebuilding and flood 
protection efforts underway.
    I have been asking for increased funding for the Southeast 
Louisiana Urban Flood Control Project (SELA) for years, but 
unfortunately, my calls for increased funding to rebuild the wetlands 
and coastline and provide additional protection for New Orleans have 
consistently fallen on deaf ears. Please tell your colleagues to not 
only increase investment, but fully fund this national priority.
    Please approve the Gulf Coast Recovery Act and please commit to 
rebuilding my city.
    Thank you for this opportunity to comment. I look forward to 
working with the Subcommittee and would be happy to answer any 
questions.
                                 ______
                                 
  Response by Anthony Zelenka to an Additional Question from Senator 
                                 Boxer

    Question 1. Mr. Zelenka, do you believe that negligent contractors 
should be shielded from liability to private parties in cases of a 
declared disaster of the scope described in S. 1761?
    Response. I do not believe that contractors should be shielded from 
liability to private parties in cases of a declared disaster of the 
scope described in S. 1761 to the extent that the damage is caused by 
the contractors negligence.
                                 ______
                                 
      Response by Anthony Zelenka to an Additional Question from 
                            Senator Jeffords

    Question 1. Mr. Zelenka, in your testimony, you referenced lawsuits 
filed against contractors performing rescue and recovery work in New 
Orleans. Are any of these suits for damages related to environmental 
pollution or adverse health effects from pollution?
    Response. I do not know of any lawsuits for damages related to 
environmental pollution or adverse health effects from pollution.
                                 ______
                                 
  Statement of Beverly Wright, Ph.D, Director, Deep South Center for 
   Environmental Justice and Co-Chair, National Black Environmental 
                            Justice Network

                              INTRODUCTION

    Good morning Mr. Chairman. I am Dr. Beverly Wright, Director of the 
Deep South Center for Environmental Justice at Dillard University, 
formerly at Xavier University. Regrettably, both of these Historically 
Black Colleges are underwater now and temporarily closed due to 
Hurricane Katrina. I am also here today representing the National Black 
Environmental Justice Network (NBEJN).
    Thank you for the opportunity to testify before the Subcommittee on 
critical issues of concern in the aftermath of the hurricanes. My 
professional and personal experiences of growing up, living and working 
in the City of New Orleans greatly influence my perspective and 
testimony.

                               Who We Are

    The Deep South Center for Environmental Justice (DSCEJ), at Dillard 
University in New Orleans, formerly at Xavier University of Louisiana, 
is now temporarily relocated in Baton Rouge, Louisiana.
    The Deep South Center was launched in 1992 in collaboration with 
community environmental groups and other universities within the 
southern region to address environmental justice issues. DSCEJ provides 
opportunities for communities, scientific researchers, and decision 
makers to collaborate on programs and projects that promote the rights 
of all people to be free from environmental harm as it impacts health, 
jobs, housing, education, and general quality of life. A major goal of 
the Center is development of minority leadership in the areas of 
environmental, social, and economic justice along the Mississippi River 
Chemical Corridor. The Deep South Center for Environmental Justice is a 
powerful resource for environmental justice education and training.
    DSCEJ has developed and embraces a model for community partnership 
that is called ``communiversity.'' The essence of this approach is an 
acknowledgement that for effective research and policy-making, valuable 
community life experiences regarding environmental impacts must be 
integrated with the theoretical knowledge of academic educators and 
researchers. The Deep South Center for Environmental Justice has three 
components in terms of reaching our objectives: (1) research and policy 
studies, (2) community outreach assistance and education; and (3) 
primary, secondary, and university education.
    The National Black Environmental Justice Network was founded in New 
Orleans, LA in December 1999. NBEJN members founded the organization in 
New Orleans because we felt then, as now, that Louisiana and the 
Chemical Corridor between the City and Baton Rouge are under siege from 
and epitomize environmental and economic assaults. These assaults are 
costing Black people their very lives. NBEJN believes in the sacred 
value of every human life regardless of race, ethnicity, religion or 
socioeconomic status. We see in the tragedy of Hurricane Katrina, 
Hurricane Rita and the aftermath a unique opportunity to shape the 
conversation and dialogue about rebuilding of New Orleans and the Gulf 
Coast region with the goals of environmental and economic justice for 
everyone.

                   Target Area and Population Served

    DSCEJ is national in scope with emphasis on the Mississippi River 
Chemical Corridor and Gulf Coast Region and global emphasis on 
communities impacted by the petrochemical industry. The major 
populations served include people of color with special concentration 
on African Americans and the African Diaspora, students and faculty at 
Historically Black Colleges And Universities/Minority Serving 
Institutions (HBCU/MSI) and public school teachers in urban areas. 
DSCEJ has forged collaborations with other major research institutions 
and Governmental agencies that can assist in the development and 
implementation of the center's work.

                           Center Objectives

    DSCEJ principal objectives include: (1) development of minority 
leadership in the field of environmental justice; (2) development of 
culturally sensitive training models for minority residents in at-risk 
communities; (3) development and distribution of culturally sensitive 
environmental justice education materials and training modules; (4) 
increasing environmental justice literacy among college students at 
HBCU/MSI's; (5) development of a pipeline creating a new generation of 
environmental justice leaders at HBCU/MSI's; (6) development and 
implementation of a K-12 teacher training program in environmental 
justice; (7) conducting research to determine the impact and extent of 
toxic exposure for minority communities as it affects health and the 
environment; (8) investigating means of addressing these problems 
(i.e., brownfields redevelopment, toxics use reduction, climate change, 
clean production and green chemistry, and economic development; and (9) 
creating linkages between impacted communities, scientific researchers, 
and Government officials to address environmental justice issues as 
they impact health, jobs, housing, and overall quality of life.

                         The Katrina Aftermath

    As the floodwaters recede in New Orleans and the Gulf Coast region, 
it is clear that the lethargic and inept emergency response immediately 
following this devastating storm was the real disaster that nearly 
overshadowed the actual storm. We were all left nearly paralyzed in 
front of our television sets completely unable to continue with our 
daily lives watching the unbelievable events unfold right before our 
eyes. Americans were shocked beyond belief that this could happen in 
America, to Americans. It also raised lingering questions and doubts 
about our overall security. Is Government equipped to plan for, 
militate against, respond to, and recover from natural and manmade 
disasters? Can the public trust Government's response to be fair? Does 
race matter?
    Examination of historical data reveals that emergency response 
reflects the pre-existing socioeconomic and political structures of a 
disaster area and is based on race and class differentials. Generally 
communities of color receive less priority in response time than do 
their white counterparts where emergency response is required. We can 
assume that this differential response will occur in all areas relative 
to the resolution of the aftermath of Hurricane Katrina.

                          Environmental Damage

    New Orleans and outlying areas suffered severe environmental damage 
during Katrina, the extent to which has yet to be determined. The post-
Katrina New Orleans has been described as a ``cesspool'' of toxic 
chemicals, human waste, decomposing flesh and surprises that remain to 
be uncovered in the sediments. Massive amounts of toxic chemicals were 
used and stored along the Gulf Coast before the storm. Literally 
thousands of sites in the storms path used or stored hazardous 
chemicals, from the local dry cleaner and auto repair shops to 
Superfund sites and oil refineries in Chalmette and Meraux, La, where 
there are enormous stores of ultra-hazardous hydrofluoric acid. In the 
aftermath of the storm some sites were damaged and leaked. Residents 
across the Gulf Coast and the media reported, ``oil spills, obvious 
leaks from plants, storage tankards turned on end and massive fumes.''
    Short-term rebuilding objectives must not outweigh long-term public 
health protection for all Americans and the environment they depend 
upon. Some of the legislative proposals now under consideration in the 
aftermath of Katrina do not adhere to this principle. Congress must act 
now to protect our most vulnerable populations and preserve our most 
unique and irreplaceable resources. It is imperative that Congress 
responds quickly and effectively to the devastating aftermath of 
Hurricanes Katrina and Rita. It is also important, to temper our haste 
to rebuild with a strong commitment to public health and the 
environment. Moreover, the public has a right to clean air and water 
and it must be protected. No law should ever move forward that would in 
any way sacrifice these principles.
    Have we learned anything over the last 40 years, since Hurricane 
Betsy struck, that should guide our decisions after Hurricanes Katrina 
and Rita? Much of the proposed legislation concerning rebuilding the 
Gulf Coast region strongly suggests that we have not. In fact, it seems 
that some are using the crisis of Hurricane Katrina to advance their 
political and policy agenda, including weakening, waiving and rolling 
back public health, environmental justice and environmental laws and 
regulations.
    It is ironic that the tragedy of Hurricane Katrina is being used to 
justify sweeping waivers of public health, safety and environmental 
laws. The Gulf Coast Recovery Act (S. 1761) would leave many citizens 
without a remedy against contractors that cause irreparable harm to the 
air and water. The bill gives unprecedented legal protection to 
contractors being paid for work related to Katrina in areas of rescue, 
recovery, repair and reconstruction. The bill is far reaching in that 
these protections do not only apply to Katrina contractors; under the 
bill, they will also apply to contractors in all future disasters that 
result in at least $15 billion dollars of Federal assistance.
    The Gulf Coast Recovery Act, while designed to help victims of 
Katrina, could very well end up helping everyone but the victims in the 
long run. S. 1761 is particularly egregious to low income and minority 
communities in the Gulf Coast Region. All of the limitations apply only 
to actions brought by private citizens. The section 4 limitation on 
filing a lawsuit is specifically limited to ``private parties'' and 
section 5(e) specifically provides that nothing in that section limits 
an action that any Governmental entity may bring. I thought that the 
Government's role was to protect the citizenry. This bill (S. 1761) 
seems designed to do just the opposite.
    By eliminating the threat of liability for contractors you in 
effect remove an essential protection for the public. Where there are 
no consequences there are high risk and general disregard for the 
public's safety.
    This bill seems to not be so well thought out. The actions taken by 
this bill in my opinion, aptly depicts the moral of the old adage of 
``throwing out the baby with the bathwater.'' We should remember that, 
in this case, it is not the contractors who are the victims. Powerful 
corporations with huge Government contracts will make millions in 
profit from the Katrina tragedy. The payments will be made with our tax 
dollars. This bill S. 1761 should be rejected by the Senate. In essence 
it will ultimately defeat the overall purpose of cleaning up the Gulf 
Coast and setting the road for its recovery. If contractors no longer 
fear legitimate legal liability, where is the incentive to do good 
work? And, when the dust settles with possibly untold numbers of 
properties improperly cleaned up, debris inadequately disposed of with 
personal injury due to contractor's negligence, who will then pay the 
bill?
    The victims of Katrina have suffered immensely from first an 
inadequate response that caused the lives of many citizens, the loss of 
property, family members and their communities. Now, the Government 
will hold harmless contractors who may further injure the citizenry 
through neglect and irresponsibility.
    These citizens of the United States and victims of the worst 
natural disaster ever in North America have been placed in double 
Jeopardy by this event. And in each instance the Government has played 
a major role. First, with the slow and inadequate response to Katrina 
and now with a quick response that fails to adequately protect citizens 
in the aftermath of the storm.
    I would like to put into context exactly what has happened here, 
and who it has happened to, in an attempt to explain why S. 1761 is so 
objectionable.

          BEFORE HURRICANE KATRINA PREEXISTING VULNERABILITIES

    Katrina struck a region that is disproportionately African American 
and poor. For example, African Americans make up twelve percent of the 
United States population. New Orleans is nearly 68 percent black. The 
African American population in the Coastal Mississippi counties where 
Katrina struck ranged from 25 percent to 87 percent black. Some 28 
percent of New Orleans residents live below the poverty level and more 
than 80 percent of those are black. Fifty percent of all New Orleans 
children live in poverty. The poverty rate was 17.7 percent in 
Gulfport, Ms. and 21.2 percent in Mobile, AL. in 2000. Nationally, 11.3 
percent of Americans and 22.1 percent of African Americans live below 
the poverty line in 2000.
    New Orleans is prototypical of environmental justice issues in the 
Gulf Coast region. Before Katrina, the City of New Orleans was 
struggling with a wide range of environmental justice issues and 
concerns. Its location along the Mississippi River Chemical Corridor 
increased its vulnerability to environmental threats. The City had an 
extremely high childhood environmental lead poisoning problem. There 
were ongoing air quality impacts and resulting high asthma and 
respiratory disease rates and frequent visits to emergency rooms for 
treatment by both children and adults. Environmental health problems 
and issues related to environmental exposure was a grave issue of 
concern for New Orleans residents.
    The African American community in New Orleans was already grappling 
with the nationally identified health disparities for minorities 
reported by the National Institutes of Health (NIH). These conditions 
were exacerbated by environmental conditions triggering asthma and 
exposing children to lead. High blood pressure, diabetes and cancer 
were also prevalent in the African American community.

                       DISPLACEMENT POST KATRINA

    Residents in the Gulf Coast region fled the hurricane zone. More 
than a million Louisiana residents fled Hurricane Katrina. An estimated 
100,000 to 300,000 Louisiana residents alone could end up permanently 
displaced. Nearly 100,000 Katrina evacuees are in 1,042 shelters 
scattered in 26 States and the District of Columbia. Katrina has left 
environmental contamination in Gulf Coast neighborhoods that will have 
to be cleaned up before residents can move back. An estimated 150,000 
houses may be lost as a result of standing in water from Katrina. We 
are still grappling with understanding the full impacts of both 
Hurricanes Katrina and Rita.
    Thousands of hurricane survivors along the Gulf Coast must now cope 
with the loss of relatives and friends, homes, and businesses and, what 
we term, loss of community. Katrina displaced just under 350,000 school 
children in the Gulf Coast. An estimated 187,000 school children have 
been displaced in Louisiana, 160,000 in Mississippi and 3,118 in 
Alabama. Katrina closed the entire New Orleans school system 
indefinitely. One hundred and twenty-five thousand New Orleans children 
alone are attending schools elsewhere. Over 93 percent of New Orleans 
schools students are African American. Evacuees' children are being 
enrolled in schools from Arizona to Pennsylvania, including almost 
19,000 who will be attending schools in Texas.
    For the survivors who lost everything, it involves coping with the 
stress of starting all over. Two weeks after Katrina struck, more than 
2,500 children were still separated from their families. One can only 
imagine the mental anguish these families are going through. On the 
heels of this disaster, Hurricane Rita struck the coastal areas again.
    There is much speculation about what the new New Orleans will look 
like: whether the Mississippi Gulf Coast should now consider land-based 
Casinos versus riverboats; the social economic and political structure 
of ``New'' New Orleans; rebuilding a green and sustainable Gulf Coast 
region that embraces innovative green building technologies and 
principles; construction of a levee system that will protect New 
Orleans; and development of environmentally and economically 
sustainable communities must all be explored simultaneously. None of 
these concepts are relevant unless the cleanup in the region is 
properly conducted and completed. This conclusion is not based on 
speculation. The community of Agriculture Street Landfill in the City 
of New Orleans has lived the nightmare of discovering that their homes 
were built on top of a landfill that was reopened to dispose of the 
tons of debris resulting from Hurricane Betsy.

                    HURRICANE BETSY--NEW ORLEANS, LA

    Hurricane Betsy struck the State of Louisiana and the City of New 
Orleans in 1965. Betsy was then the ``most destructive hurricane on 
record to strike the Louisiana coast.''\1\ The damage and flooding 
throughout the State covered 4,800 square miles, killed 81 persons, 
caused the evacuation of 250,000 persons, and disrupted transportation, 
communication, and utilities services throughout the eastern coastal 
area of Louisiana for weeks. Betsy hit the mostly Black and poor New 
Orleans Lower Ninth Ward especially hard. This is the same neighborhood 
that was inundated by floodwaters from Katrina and then suffered the 
indignity of a second flooding by Rita. Over 98 percent of the Lower 
Ninth Ward residents are Black and a third live below the poverty 
level.
---------------------------------------------------------------------------
    \1\Craig E. Colten and John Welch. ``Hurricane Betsy and Its 
Effects on the Architecture Integrity of the Bywater Neighborhood: 
Summary.'' May 2003.
---------------------------------------------------------------------------
    Many Black New Orleans residents still believe that white officials 
intentionally broke the levee and flooded the Lower Ninth Ward to save 
mostly white neighborhoods and white business districts. In 1965, a 
disproportionately large share of Lower Ninth Ward residents did not 
receive adequate post-disaster financial assistance in the form of 
loans and other support to revitalize the area. Betsy accelerated the 
decline of the neighborhood and out-migration of many of its longtime 
residents. Debris from Betsy was buried in the Agricultural Street 
Landfill located in a predominately Black New Orleans neighborhood. 
Over 390 homes were built on the northern portion of the site from 
1976-1986. The Agricultural Street Landfill neighborhood was added to 
the National Priorities List as a Superfund site in 1994.\2\
---------------------------------------------------------------------------
    \2\See Agency for Toxic Substances and Disease Registry, Public 
Health Assessment-Agriculture Street Landfill, New Orleans, Orleans 
Parish, Louisiana, Atlanta, GA: ATSDR (June, 1999); Alicia Lyttle, 
Agriculture Street Landfill Environmental Justice Case Study, 
University of Michigan School of Natural Resources, Ann Arbor, MI 
(January 2003)
---------------------------------------------------------------------------
           New Orleans Agriculture Street Landfill Community

    Dozens of toxic time bombs along Louisiana's Mississippi River 
petrochemical corridor, the 85-mile stretch from Baton Rouge to New 
Orleans, make the region a major environmental justice battleground. 
The corridor is commonly referred to as Cancer Alley. Black communities 
all along the corridor have been fighting against environmental racism 
and demanding relocation to areas away from polluting facilities.\3\
---------------------------------------------------------------------------
    \3\Robert D. Bullard, The Quest For Environmental Justice: Human 
Rights and the Politics of Pollution (San Francisco: Sierra Club Books, 
2005).
---------------------------------------------------------------------------
    Two largely Black New Orleans subdivisions, Gordon Plaza and Press 
Park, have special significance in terms of environmental justice and 
emergency response. Both subdivisions are built on a portion of land 
that was used as a municipal landfill for more than 50 years. The 
Agriculture Street Landfill, covering approximately 190 acres, was used 
as a city dump as early as 1910. Municipal records indicate that after 
1950, the landfill was mostly used to discard large solid objects, 
including trees and lumber, and it was a major source for dumping 
debris from the very destructive 1965 Hurricane Betsy. It is important 
to note that the landfill was classified as a solid waste site and not 
a hazardous waste site.
    In 1969, the Federal Government created a home ownership program to 
encourage lower income families to purchase their first home. Press 
Park was the first subsidized housing project of this program in New 
Orleans. The Federal program allowed tenants to apply 30 percent of 
their monthly rental payments toward the purchase of a family home. In 
1987, seventeen years later, the first sale was completed. In 1977, 
construction began on a second subdivision, Gordon Plaza. This 
development was planned, controlled, and constructed by the U.S. 
Department of Housing and Urban Development (HUD) and the Housing 
Authority of New Orleans (HANO). Gordon Plaza consists of approximately 
67 single-family homes.
    In 1983, a portion of the Agriculture Street Landfill site was 
purchased by the Orleans Parish School Board as a site for a school. 
The fact that this site had previously been used as a municipal dump 
prompted concerns about the suitability of the site for a school. The 
school board contracted engineering firms to survey the site and assess 
it for contamination and hazardous materials. Heavy metals and organics 
were detected.
    Despite the warnings, Moton Elementary School, an $8 million state-
of-the-art public school opened with 421 students in 1989. In May 1986, 
EPA performed a site inspection (SI) in the Agriculture Street Landfill 
community. Although lead, zinc, mercury, cadmium, and arsenic were 
found at the site, based on the Hazard Ranking System (HRS) model used 
at that time, the score of three was not high enough to place them on 
the National Priority List (NPL).
    On December 14, 1990, EPA published a revised HRS model in response 
to the Superfund Amendments and Reauthorization Act (SARA) of 1986. At 
the request of community leaders, in September 1993, an Expanded Site 
Inspection (ESI) was conducted. On December 16, 1994, the Agriculture 
Street Landfill community was placed on the NPL with a new score of 50.
    The Agriculture Street Landfill community was home to approximately 
900 African American residents. The average family income is $25,000 
and the educational level is high school graduate and above. The 
community pushed for a buy-out of their property and to be relocated. 
However, this was not the resolution of choice by EPA. A cleanup was 
ordered at a cost of $20 million, the community buy-out would have cost 
only $14 million. The actual cleanup began in 1998 and was completed in 
2001.\4\
---------------------------------------------------------------------------
    \4\Alcia Lyttle, ``Agricultural Street Landfill Environmnetal 
Justice Case Study,'' University of Michigan School of Natural Resource 
and Environment found at http//www.umich.edu.snre492/Jones/
agstreet.htm. (Accessed on October 6, 2004).
---------------------------------------------------------------------------
    The Concerned Citizens of Agriculture Street Landfill filed a class 
action suit against the City of New Orleans for damages and relocation 
costs. It took 9 years to bring this case to court.\5\ The case was 
still pending before Katrina struck. It is ironic that the 
environmental damage wrought by Katrina may force the cleanup and 
relocation of the Agriculture Street Landfill community. But nothing 
can give them back their health and well being, or replace the family 
members and friends who might still be with them were it not for the 
health effects of living on a landfill.
---------------------------------------------------------------------------
    \5\Robert D. Bullard, The Quest For Environmental Justice: Human 
Rights and the Politics of Pollution.
---------------------------------------------------------------------------
                          The Most Vulnerable

    The majority of households and businesses in the 12 Hurricane 
Katrina affected counties in Alabama, Mississippi, and Louisiana do not 
have flood coverage. FEMA estimates that 12.7 percent of the households 
in Alabama, 15 percent in Mississippi, and 46 percent in Louisiana have 
flood insurance. Similarly, on 8 percent of the businesses in 
hurricane-affected counties in Alabama, 15 percent in Mississippi, and 
30 percent in Louisiana have flood coverage.
    Generally, people of color have higher levels of physical damage 
than whites largely due to segregated housing in older, poorly built 
homes. Black households are less likely to have insurance to cover 
storm losses and temporary living expenses. Because of racism and 
racial redlining, blacks are more likely than whites to receive 
insufficient insurance settlement amounts. Blacks are less likely than 
whites to have insurance with major companies as a result of decades of 
insurance redlining.
    Because of the legacy of ``Jim Crow'' segregation, many African 
American consumers in the Louisiana, Mississippi, and Alabama Gulf 
Coast region may be concentrated in the secondary insurance market--
smaller and less well-known insurance firms. This could prove 
problematic for Katrina victims. Nearly a dozen small insurance 
companies collapsed after Hurricane Andrew, which cost the industry 
about $23 billion in today's dollars. Andrew was the most expensive 
single hurricane until Katrina. The same thing could happen after 
Katrina. Many, if not most, Katrina low and moderate-income victims may 
not have resources to hire lawyers to fight the insurance companies.

           CLEAN-UP STANDARDS AND PROTECTION OF PUBLIC HEALTH

    Hurricane Katrina has left environmental contamination in Gulf 
Coast communities that will have to be cleaned up. In the New Orleans 
area alone an estimated 22 million tons of debris must be cleaned up 
and 145,000 cars ruined by hurricane floodwater will have to be 
disposed of. How, when, and at what level (methods of clean-up and 
clean-up standards) contaminated neighborhoods get cleaned up is a 
major environmental justice concern for African American communities.
    Where the hurricane debris and waste end up is another issue that 
causes concern because of pre-existing power arrangements and the 
historical legacy of unequal protection and differential treatment 
provided to communities of color. It is important that Government 
officials not repeat the mistakes made in 1965 with debris from 
Hurricane Betsy disposed in an African American area--later to become 
the Agricultural Street Landfill Superfund site community. Black 
communities in the South, as documented in Dumping in Dixie: Race, 
Class, and Environmental Quality, are dotted with landfills, toxic 
waste dumps, and hazardous waste disposal sites.
    Katrina toppled offshore oil platforms and refineries sending shock 
waves throughout the economy with the most noticeable effects felt at 
the gas pump. Katrina and Rita temporarily closed all oil operations 
and most natural gas operations in the Gulf region that supplies 29 
percent of U.S.-produced oil and 19 percent of U.S.-sourced natural 
gas.
    Katrina caused an unprecedented environmental and health crisis. 
The powerful storm caused 11 oil spills releasing 7.4 million gallons 
of oil. It also hit 60 underground storage tanks, five Superfund sites, 
and numerous hazardous waste facilities. More than 1,000 drinking-water 
systems were disabled and lead and ecoli in the floodwaters have far 
exceeded the EPA's safety levels.
    Tests from the U.S. EPA and independent sampling conducted by the 
Louisiana Environmental Action Network (LEAN) in several New Orleans 
areas exceed Federal standards for residential communities. LEAN 
sampling found high levels of polynuclear aromatic hydrocarbons (PAHs) 
exceeding residential standards. Many PAHs are known or suspected of 
causing cancer. The testers found 12 PAHs in sediments the Lower 9th 
Ward. One, benzo (a) pyrene, was at 195 parts per billion, three times 
greater than the EPA residential standard of 62 parts per billion. 
Arsenic, another known cancer-causing agent, was found at concentration 
75 times higher than residential standards. Tests revealed elevated 
levels of heavy metals and volatile organic chemical associated with 
petroleum products. Ten PAHs were found on Agricultural Street, 
designated a Superfund site, with benzo (a) pyrene at concentration 2.7 
times higher than EPA residential standards. The arsenic level in the 
Morrison Road area was 13.3 times higher than EPA residential 
standards.
                                 ______
                                 
       Responses by Beverly Wright to Additional Questions from 
                             Senator Boxer

    Question 1. Dr. Wright, according to the Louisiana Contractor's 
Licensing Board, the number of applications for a contractor's licenses 
nearly doubled in September, from 120 to 224. In the first week of 
October, the number of applications increased an additional 300 
percent. Do you believe it is necessary to limit contractor liability 
for injuries to ensure enough contractors are interested in the 
billions of dollars of post-Katrina contractor work?
    Response. No. According to Charles G. Marceaux, the executive 
director of the Louisiana's Contractor Licensing Board, for the 8 
months ended August 31, 2005, application volume averaged 183 per 
month. For the period September 1st through October 14th, 2005, 
applications surged to 540 per month. Thus, there is no reason to limit 
contractor liability for injuries to ensure enough contractors are 
interested in the post-Katrina contractor work due to the fact that the 
LA Contractor Licensing Board has seen such an overwhelming demand for 
contractor licenses!

    Question 2. Dr. Wright, I believe that you have experience with 
worker protection issues. In your experience, is preventing injuries so 
impossible that contractors must be relieved of responsibility for 
negligence to ensure cleanup work gets done? Also, is work more likely 
to be done properly or do we risk further damage if negligence is 
considered acceptable in Government contracts?
    Response. No. S. 1761 would immunize contractors from liability for 
personal injuries or property damage in most cases. This would be 
unfair to the victims of contractor wrongdoing and would burden the 
Federal Government with the cost of any personal injuries and damages 
caused by contractors. In addition, we'd risk further damage to worker 
health and safety and the environment if there was no negligence 
standard in Government contracts. The bill would immunize contractors 
by improperly expanding the Government Contractor Defense far beyond 
its traditional purpose, turning it into a blanket immunity provision 
for most cases. Government Contractor Defense is appropriate only if in 
fact it was the Government's negligence that caused the injury. The 
defense generally applies only if the Government provides ``precise 
specifications to which the contractor must adhere''--such as 
specifications for manufacturing military airplanes. The Government 
instructions must be very specific, mandatory, and nondiscretionary.
    Section 5(d) of this bill would create a presumption that all 
elements of the Government Contractor Defense are satisfied by nothing 
more than a finding that the Army Corps' Chief of Engineers certified 
the contract as necessary for disaster recovery (or the contract is a 
subcontract to a certified contract and not expected to exceed $10 
million). That presumption can only be overcome by evidence that the 
contractor acted fraudulently or with willful misconduct in submitting 
information to the Chief of Engineers at the time of the contract. In 
other words, the defense will almost always apply to disaster 
contractors.

    Question 3. Dr. Wright, S. 1761 eliminates the right of private 
parties to bring claims under the environmental laws. Such claims could 
include situations where contamination ruins drinking water supplies. 
What does this exemption mean to the people in the New Orleans 
community where you are from? What do you think these changes in the 
law will mean to the future reconstruction of New Orleans?
    Response. S. 1761 ignores this basic reality and principles of 
fairness; instead, the bill proposes to exempt contractors from citizen 
suits brought under Federal environmental laws. Specifically, the bill 
would bar any citizen suit against a contractor under the Clean Water 
Act, the Oil Pollution Act, the Resource Conservation and Recovery Act, 
Superfund and numerous other Federal laws. This means that citizens 
could not hold contractors responsible if they illegally discharge 
polluted wastewater or oil into rivers or wetlands, illegally dumping 
hazardous waste or burning toxic materials. Even where the contractor's 
actions constituted negligence or recklessness, citizen suits under 
these statutes would be barred.
    People of color and low income communities in New Orleans are 
disproportionately exposed to toxic sites. The Mississippi River 
Chemical Corridor, between Baton Rouge and New Orleans, contains about 
140 petrochemical plants, six oil refineries and numerous state and 
national Superfund sites.
    If this bill is enacted, the citizens of New Orleans will be 
slammed with yet another man-made another disaster. This disaster will 
appear insidiously after citizens would have spent more of their 
limited assets trying to rebuild New Orleans only to find that the 
construction was shoddy and dangerous due to whole sale waiver of 
contractor's liabilities.
                                 ______
                                 
       Responses by Beverly Wright to Additional Questions from 
                            Senator Jeffords

    Question 1. Dr. Wright, how would S. 1761 impact low income and 
minority communities in the Gulf Coast Region?
    Response. Under the pretext of aiding the recovery of hurricane-
ravaged areas in the Gulf Coast, S. 1761 would put the public at 
greater risk by removing important deterrents against irresponsible 
conduct that harms public health or environmental safety. These 
deterrents, in of themselves, are not usually adequate to protect the 
public from environmental injustices. With the existing deterrents, 
environmental injustices have continued to plague the New Orleans and 
Gulf Coast region for decades. For example, the 85-mile stretch of the 
Mississippi River between Baton Rouge and New Orleans--the ``Louisiana 
Petrochemical Corridor''--is home to more than 140 oil refineries and 
chemical plants, accounting for one-fourth of the nation's 
petrochemical production. These factories have for decades spewed a 
toxic brew of pollutants into local communities. Just in the state of 
Louisiana, more than 50 percent of all residents who live within 3 
miles of a refinery are African American. Routine operations at these 
plants and risky past and present waste disposal practices are what 
provided the ingredients to contaminate the toxic mud that now fills 
New Orleans' streets. With S. 1761's proposed waiver of contractor's 
liabilities around Katrina activities, those who are most at risk, low 
income communities of color, will only face further environmental 
hazards as there will be less incentives by contractors to protect 
public health and environmental safety. During times of natural 
disaster are when disproportionately impacted communities need public 
health and environmental protections the most.

    Question 2. Dr. Wright, how will S. 1761 impede rebuilding efforts 
in the Gulf Coast Region?
    Response. See answer to question No. 3 from Senator Boxer.
                                 ______
                                 
        Response by Beverly Wright to Additional Question from 
                             Senator Thune

    Question 1. In your opinion, are there any instances where special 
procedures will need to be used for emergency environmental cleanup?
    Response. Yes. Of particular concern are toxic ``hot spot'' sites 
that were impacted by Katrina. Big industrial facilities, Superfund 
sites, and other toxic hotspots should be far more carefully 
investigated, with comprehensive sampling and on-site analysis. During 
cleanup, special attention and priority should be devoted to dangerous 
releases from these sites should be contained immediately, and longer-
term cleanup planned, initiated, and budgeted.
    Specifically, as you know, the flood waters that inundated these 
regions carried a mixture of soil, sewage, and industrial contaminants. 
The flood waters left behind a layer of sediment--in some places 
several feet thick--that still covers vast areas, including many 
neighborhoods in which family's have already returned to live.
    Authorities must immediately remove surface sedimentation from 
public and private areas in the affected flood areas, as well as from 
hotspot contamination sites such as the Agriculture Street Landfill, 
and the areas surrounding the former Thompson-Hayward pesticide 
facility. In doing so, FEMA should utilize EPA's screening levels for 
soil quality, adjusted to take into account all likely routes of 
exposure in light of ongoing construction, demolition, and cleanup 
activities which will unquestionably create more of an inhalation risk 
than is covered by EPA's standards. In addition, we urge use of the 
most recent and scientifically sound cancer risk estimates for arsenic 
ingestion from the National Academy of Sciences' 2001 report, available 
at www.nap.edu/books/0309076293/html.
    Finally, a uniform Federal standard must be employed by EPA in 
gauging environmental health risks in areas affected by Hurricane 
Katrina and Rita. EPA's current reliance on differing state standards 
is at odds with EPA's oversight responsibility under the currently 
activated National Contingency Plan within the Hurricanes Katrina and 
Rita Federal disaster areas. This is most apparent when the EPA 
utilizes, without any opportunity for public comment or input, 
environmental health criteria far less stringent than Federal 
safeguards.
                                 ______
                                 
   Statement of Warren Perkins, Vice President, Risk Management, Boh 
                     Brothers Construction Company

    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 canceled.
    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, AL, 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 percent 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 job sites, 
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 
percent 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 Brothers?
    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.
                                 ______
                                 
 Responses by Warren Perkins to Additional Questions from Senator Boxer

    Question 1. Mr. Perkins, the Washington Post reported on September 
20th, that a contractor's trade group, the Association of General 
Contractors of America, was drafting legislation to shield contractors 
from claims by workers. I believe that you company is a member of this 
trade association and the President of Boh Brothers was quoted in the 
article in support of this legislation.
    Did Boh Brothers or the General Contractors of America participate 
in the drafting of S. 1761 under discussion? If so, please specifically 
describe how?
    Response. I believe that you are referring to the Associated 
General Contractors of America, the oldest and largest of the 
nationwide trade associations in the construction industry, commonly 
known, throughout the country, as ``AGC.''
    As a threshold matter, I would certainly hope and expect that any 
member of Congress contemplating legislation on or relating to the 
construction industry to solicit AGC's views on such legislation. A 
nonprofit corporation founded in 1918 at the express request of 
President Woodrow Wilson, AGC now represents more than 32,000 firms in 
more than 98 chapters throughout the United States. AGC members include 
more than 7,000 of the nation's leading general contractors, 11,000 
specialty contractors and 13,000 material suppliers and service 
providers to the construction industry. AGC members construct 
commercial buildings, shopping centers, factories, warehouses, 
highways, bridges, tunnels, airports, waterworks facilities and multi-
family housing units; and they prepare sites and install the utilities 
necessary for housing development. Among AGC's members are literally 
thousands of both union and open shop contractors. While it represents 
and serves the nation's largest construction contractors, the vast 
majority of its members are small businesses. I simply cannot think of 
a better place for any member of Congress to go for a fair and balanced 
view of how Federal legislation would be likely to affect the 
construction industry as a whole.
    I am pleased to confirm that Boh Bros. has long been an active 
member of both AGC and its Louisiana chapter, that my company has 
encouraged AGC to support S. 1761, and that AGC has expressed such 
support. I am, however, confused by your reference to legislation that 
would ``shield contractors from claims by workers.'' I am not aware of 
any such legislation.
    In its article, the Washington Post referred to something that 
would ``limit [contractors'] liability from lawsuits,'' but of course, 
the workers compensation statutes in all 50 states and the District of 
Columbia already substitute a no-fault compensation system for the 
litigation that might otherwise arise out of any injuries or illnesses 
that construction workers suffered in the course of their employment, 
and S. 1761 expressly provides that it does not apply to ``any claim 
for loss under any workers compensation statute.'' Some workers 
compensation laws do permit employees to sue their employers under 
extenuating circumstances, but S. 1761 also provides that it shall not 
``affect[] the liability of any person or entity for recklessness or 
willful misconduct.''
    In sum, it is one thing to limit contractor's liability from 
lawsuits and quite another to shield them from workers claims. It is 
one thing to support S. 1761 and quite another to diminish workers' 
rights. Boh Brothers supports S. 1761 on the understanding that it does 
not diminish workers rights, and in a press release announcing its 
support for the bill, AGC expressed the same understanding that ``[a]ll 
environmental, safety and health, labor and ethics laws would continue 
to apply.''
    Boh Bros. did not participate in the drafting of S. 1761, either 
directly or through AGC. I would assume that AGC communicated its 
support for such legislation to Senator Thune, but I was not involved 
in any meetings or other communications with the Senator, and I cannot 
say whether or to what extent he relied on any information that AGC did 
provide.

    Question 2. Mr. Perkins, you indicated in your testimony that you 
did your best efforts to protect people from environmental and other 
hazards in your New Orleans cleanup efforts. The bill, S. 1761, would 
relieve your company of its liability if it is negligent and injures 
people or property.
    Are you concerned that Boh Brothers' best efforts are no better 
than negligent performance, and do you now believe that Boh Brothers 
must be shielded as a result?
    Response. In my testimony I referred to protecting ``our people 
from environmental and other hazards''. I was referring to protecting 
our employees. As stated above, Bill S. 1761 has nothing to do with 
relieving our company of its liability and responsibility to our 
employees. In the testimony Senator Boxer has referenced, I was simply 
painting a picture of the hazards Boh Bros. faced in order to respond 
to the emergency calls for help to seal the levee breaches, to restore 
the pump system, to dewater flooded areas, etc.
    S. 1761 would limit Boh Brother's risk of liability to private 
third parties only for work that the Government requested, directed and 
controlled, and expressly found necessary for the Gulf Coast's recovery 
from Hurricane Katrina and future such catastrophes. The bill would not 
apply to any or all of my company's activities, even in New Orleans, 
nor would it apply to any or all activities of other recovery 
contractors on the Gulf Coast.
    Nor would it excuse any failure to meet the Government's 
expectations. Quite to the contrary, my company would still have to 
satisfy all terms and conditions of all Government contracts, and to 
comply with all Federal, State and local regulations that apply to the 
work, including but not limited to all environmental, safety and health 
regulations, and all employment laws. The Government would retain tight 
control.
    The problem is that meeting all of the Government's expectations 
will not be enough to protect my company from tort liability, much less 
litigation. As things stand today, my company can fully perform all 
Government contracts for the recovery of the disaster zone, and it can 
do so to the Government's express satisfaction, and in full compliance 
with all regulatory requirements--and still incur liability for 
``negligence.'' As we heard at the hearing on November 8, 2005, over 
5,000 lawsuits have been brought against the contactors that responded 
to the attacks on the World Trade Center, and yet, to the best of my 
knowledge, not one of the contracting or regulatory agencies has found 
fault with their practices. The tort system has left juries free to set 
different standards, or to reinterpret existing standards, or to 
second-guess what these contractors ``should have known,'' long after 
the horror of the 9/11 disaster has passed, and memories have faded. In 
New York, the Occupational Safety and Health Administration obviously 
thought that it was enough for every contractor to provide a respirator 
to every worker. At the hearing, it was seriously suggested that the 
contractors should have gone further, and indeed, that they should have 
physically forced not only employees but also third parties who refused 
to wear their respirators off of the site.
    By all accounts, Hurricane Katrina was an unprecedented event. It 
was unlike anything that this country had ever seen. Just how was a 
``reasonable person'' supposed to respond to the facts on the ground? 
Just what was it that such a person ``should have known''? Moving 
construction workers and heavy equipment into New Orleans was and is a 
far cry from driving a car down a highway. The rules of the road to New 
Orleans recovery were are far from clear.
    Yes, I am concerned that someone far removed from the actual 
disaster might decide at some point in the future that my company's 
best efforts were not enough. At the leisurely pace of a jury trial, 
with the benefit of hindsight, comfortable in the knowledge that my 
company's assets are the only thing at stake, and with an 
understandable sympathy for someone who has suffered a loss, a jury 
might decide that my company should have know something that it did not 
know, or to use your pejorative phrase, that even my company's best 
efforts were ``no better than negligent performance.''
    I am even more concerned that the cost of defending my company 
against allegations that it was ``negligent.'' It would cost tens if 
not hundreds of thousands of dollars to defend my company against such 
allegations. Even if, as I believe, my company did everything that 
anyone can expect of a ``reasonable person,'' the cost of making that 
point could be enough to drive my company out of business, not to 
mentions the thousands of small and minority-own businesses in the Gulf 
Coast.
                                 ______
                                 
       Response by Warren Perkins to an Additional Question from 
                            Senator Jeffords

    Question 1. Mr. Perkins, in your testimony, on page 5, you state 
that: ``The problem is that we cannot be sure that the agencies are in 
charge. The problem is that future tort litigation could rewrite the 
rules, long after the fact.'' Please clarify what you mean by these 
statements.
    Response. The tort system is entirely independent of the 
contracting and regulatory agencies responsible for directing and 
overseeing the response to a major disaster, and the tort system is 
therefore free to second-guess any direction or guidance that the 
contracting and regulatory agencies give to the contractors actually on 
the ground, undertaking search and rescue, repairing public 
infrastructure, remediating polluted areas or removing debris. It 
follows that the recovery contractors cannot take the agencies' 
direction, or rely on their guidance, without risking tort litigation 
and perhaps liability. Whatever the agencies say today, a jury might 
later say that the contractors should have done something differently.
    As explained to Senator Boxer, a construction contractor can fully 
perform all Government contracts for the recovery of a disaster zone, 
and it can do so to the Government's express satisfaction, and in full 
compliance with all regulatory requirements--and still incur liability 
for ``negligence.'' As we heard at the hearing on November 8, 2005, 
over 5,000 lawsuits have been brought against the contractors that 
responded to the attacks on the World Trade Center, and yet, to the 
best of my knowledge, not one of the contracting or regulatory agencies 
has found fault with their practices. The tort system has left juries 
free to set different standards, or to reinterpret existing standards, 
or to second-guess what these contractors ``should have known,'' long 
after the horror of the 9/11 disaster has passed, and memories have 
faded. In New York, the Occupational Safety and Health Administration 
obviously thought that it was enough for every contractor to provide a 
respirator to every worker. At the hearing, it was seriously suggested 
that the contractors should have gone further, and indeed, that they 
should have physically forced not only employees but also third parties 
who refused to wear their respirators off of the site.
    Under these circumstances, contractors have to hesitate. The have 
to pause and reflect on the direction and guidance that Government 
agencies are giving them, and to decide, case-by-case whether to do 
what they are told. What FEMA or the Corp of Engineers now finds 
critical to do, a jury could later find to be ``negligent.'' And what 
the agencies lose is their power to control an emergency situation.
                                 ______
                                 
Statement of Michael Feigin, Executive Vice President, Bovis Lend Lease

    Mr. Chairman, 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 United States 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 p.m. 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 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 2,300 (including uniform services), and was stable at 1,700 
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 Insurers. The 
policy currently has approximately 140 Additional Named Insures.
    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.
                                 ______
                                 
 Responses by Michael Feigin to Additional Questions from Senator Boxer

    Question 1. Mr. Feigin, did Bovis conduct its own environmental 
testing at the World Trade Center? Did you conclude that any special 
worker protections were warranted?
    Response. Bovis worked closely with the City of New York, State and 
Federal agencies and other entities throughout the course of Bovis' 
work at the WTC site and/or related locations as environmental data was 
collected, reviewed and used to make decisions and recommendations 
regarding worker safety issues--including the types of personal 
protective equipment to be used by workers. For example, Bovis worked 
closely with numerous City, state and Federal agencies and others 
regarding an Environmental Safety & Health plan for the WTC site and/or 
related locations and regarding an OSHA Partnership Agreement--as 
applied by the city, State and Federal agencies and other entities, 
these plans identified the nature and types of worker protections to be 
used at the WTC site and/or related locations.

    Question 2. Mr. Feigin, do you believe that performance no better 
than negligence is the standard most appropriately applied to cleanup 
contractors?
    Respones. There are various standards of behavior or action that 
potentially may be applicable to contractors performing different types 
of tasks in different environments. There are standards or regulations 
applied by local, State and Federal law regarding workplace safety, 
environmental hazards, construction, demolition, and a host of other 
activities that could be involved in a ``cleanup'' situation. In 
addition, the emergent nature of the situation and/or the activities 
involved and the environment in which those activities are to be 
performed also could affect the standards which a governing body or 
court may find were or were not applicable or relevant in a particular 
situation or context. Assuming that the question is directed to the 
standard typically applied by a court of law in determining liability 
for a person or company's actions and understanding that the factors 
just discussed may affect a court's determinations in this regard, it 
is correct that the tort theory of negligence typically is used. Which 
approach is appropriate in an extreme ``cleanup'' situation, as was 
faced in the aftermath of Hurricane Katrina or the WTC disaster, cannot 
be determined without a complete analysis of the specific situation and 
the applicable law and/or standards.

    Question 3. Mr. Feigin, do you believe that workers who can prove 
that they were injured due to a company's negligence should not be able 
to get compensated for their injury in connection with a declared 
disaster as described in S. 1761?
    Response. I do not understand that S. 1761's purpose is to prohibit 
workers injured as a result of a company's negligence from getting 
compensation for their injuries. Rather, I understand that S. 1761's 
purpose is to provide protections to contractors who answer the 
Government's call for help and provide immediate assistance in times of 
catastrophic emergency. A private contractor's rapid involvement in 
responding to an emergency often comes at the request of a Governmental 
entity because the Government is unable on its own to accomplish tasks 
such as debris removal and/or cleanup or other efforts related to the 
public health and safety. Legislation (such as S. 1761) is needed that 
provides further protection to Government contractors from the risk of 
liability from such emergency response and that eliminates the costly 
and time consuming process of litigation over that statutory 
protection.

    Question 4. You indicated in your testimony that there were a total 
of 36 reportable injuries in connection with the Ground Zero site. 
Please describe the nature and extent of all accidents and injuries and 
how you determined if an injury was reportable. Please also provide 
copies of all accident and injury reports in connection with or related 
to work at Ground Zero in New York.
    Response. In my prior testimony, I indicated that there were ``only 
36 reportable accidents with over 3.2 million man-hours worked--'' This 
information was obtained from an OSHA Trade News Release dated April 
12, 2002 and entitled ``Injury and Illness Rate at World Trade Center 
Site Nearly Half National Average for Similar Sites'' which reflects 
that there were only 35 workers at the World Trade Center Site that 
suffered injuries resulting in lost workdays. My earlier reference to 
36 such accidents apparently was the result of a typographical error. I 
understand that the parameters regarding what is to be classified as a 
``reportable'' injury for OSHA purposes is set forth in OSHA 
regulations and guidelines.
                                 ______
                                 
Responses by Michael Feigin to Additional Questions to Senator Jeffords

    Question 1. Mr. Feigin, have any of the lawsuits filed against your 
company related to cleanup of the World Trade Center involved claims by 
private parties for damages resulting from environmental pollution or 
adverse health effects from pollution?
    Response. Bovis is not aware of any lawsuits against it relating to 
its work at the World Trade Center Site and/or related locations which 
involve claims by private parties for damages (either property damage 
or personal injury) resulting from alleged environmental pollution. The 
lawsuits filed against Bovis and others regarding the debris removal 
and cleanup operations at the World Trade Center Site and/or related 
locations include allegations by individuals of personal injuries 
allegedly resulting from inhalation and/or exposure to airborne and/or 
surface contaminants present at those locations. As such, those 
personal injury cases do not appear to allege adverse health effects 
from environmental pollution.
                                 ______
                                 
 Statement of Joel Shufro, Executive Director, New York Committee for 
                     Occupational Safety and Health

    My name is Joel Shufro and I am the executive director of the New 
York Committee for Occupational Safety and Health (NYCOSH), a non 
profit educational organization dedicated to every workers' right to a 
safe and healthful workplace. We have a 26 year history of providing 
quality safety and health training and technical assistance to working 
people, unions, employers, Government agencies, and community-based 
organizations about how to recognize and eliminate workplace health 
hazards. Since the attack on the World Trade Center, NYCOSH has worked 
with these constituencies to evaluate the environmental and 
occupational health consequences resulting from the release of dust and 
fumes which contaminated Lower Manhattan. We have had extensive 
involvement with workers who participated in rescue, recovery and 
cleanup operations at the World Trade Center site, workers in offices 
surrounding Ground Zero, immigrant workers who cleaned offices and 
residences, utility workers who restored essential services to the 
area, and residents living in or returning to contaminated homes around 
Ground Zero.
    We are here to oppose S. 1761, which exempts contractors from 
citizens' suits brought under Federal environmental law and immunizes 
contractors from liability for personal injuries or property damage in 
response to disasters. Our position is informed as a result the 
thousands of workers who have developed physical and mental illnesses 
in the aftermath of the tragedy at the World Trade Center, September 
11, 2001.
    To those involved in the rescue, recovery and cleanup, working at 
the World Trade Center site was more than a job. Those who responded to 
the disaster did so for many reasons: patriotism, altruism, and 
humanitarianism, among other motives. They responded to the needs of 
their country; many working 12 hours a day, 7 days a week for months. 
But they, like all workers, expected that those who employed them would 
provide them with safe and healthful working conditions and comply with 
Federal, State and city regulations. They assumed that if they were 
harmed as a result of working at the site, their medical needs would be 
taken care of and they and their families would not be driven into 
poverty. They believed that they would not be forced to give up their 
homes, and that their children would not have to drop out of college so 
medical bills could be paid.
    Unfortunately, four years following the devastating attacks on the 
World Trade Center, respiratory illness, psychological distress and 
financial devastation have become a new way of life for many of the 
responders, office workers and residents in Lower Manhattan. According 
to statistics released by the Centers for Disease Control, workers and 
volunteers continue to experience high rates of upper respiratory 
illnesses high rates of upper respiratory problems, sinusitis 
laryngitis and higher rates of lower respiratory problems-asthma, 
bronchitis, chest tightness, coughing and wheezing. In fact, the 
persistent cough is so unique it has been named the World Trade Center 
Cough. It is essential that you understand that these health problems 
were incurred not only by exposure to toxic substances in the dust 
cloud released at the time of the collapse of the twin towers. Rather 
it is likely that the majority of cases of adverse health effects were 
caused or exacerbated by exposure to toxic chemicals by workers and 
residents engaged in recovery and cleanup operations in the 10 or so 
months following 9/11. Many of these workers were either employed by 
Federal or private contractors.
    Nor is the appearance of illness among workers who worked in the 
area following the September 11th tragedy and residents abating. 
According to Dr. Steven Levin, co-director of the World Trade Center 
Worker and Volunteer Medical Screening Program at Mt. Sinai, symptoms 
continue to appear among workers four years after exposure. Other 
workers, whose symptoms abated after initial onset, are experiencing 
re-current symptoms related to their initial exposure. Additionally, as 
Dr. Robin Herbert, also co-director of the WTC Worker and Volunteer 
Medical Screening Program at Mt. Sinai, points out there are, ``grave 
concerns about their potential for developing slower-starting diseases 
such as cancer in the future. For many coming through our program, the 
fears of future catastrophic diseases like cancer, which can take as 
long as twenty to thirty years to show up, loom as large or larger than 
their acute ailments.'' These concerns have been heightened by the 
recent passing of two New York City Emergency Medical Technicians (EMT) 
whose deaths have been related to illness resulting from exposure to 
toxic substances at the World Trade Center.
    Many of the workers are disabled by chronic pulmonary problems. 
Some are unable to work. In many cases, workers' lives have been 
significantly altered by breathing difficulties and the psychological 
consequences of their response efforts. Many have also suffered 
substantial economic disruption because of WTC-related health problems, 
do not have health insurance and are unable to pay for treatment or 
needed medicine. According to the doctors at WTC Screening Program at 
Mt. Sinai, who have seen the most diseased workers resulting from 9/11, 
many workers are without medicine, medical treatment and wage 
replacement.
    What happened during recovery and cleanup operations at the World 
Trade Center was a preventable public health disaster. There is no 
doubt that the World Trade clean up was one of the most dangerous and 
complex construction sites in the history of the country. But, those 
who had management responsibility failed to provide workers with 
working conditions that protected their safety and health. They failed 
to provide workers with a ``safe and healthful workplace, free of 
recognized hazards'' as required by law. Rather than make a stronger 
commitment to protect workers and residents from environmental and 
occupational hazards in future disasters, the contractors are lobbying 
to pass S. 1761, which would free them from most liability for personal 
injury claims when engaged in responding to a major disaster such as 
Katrina, as well as from citizen suits brought under Federal 
environmental laws. We believe that such legislation would undercut any 
incentives contractors have to comply with safety and health and 
environmental regulations.
    Federal contractors, who are paid by the taxpayers for the work 
that they do, should be held fully accountable to the public if they 
behave carelessly and cause harm to people or the environment. No 
public policy reason justifies a taxpayer subsidy for negligence or 
illegal activity. What S. 1761 does is to shift the cost of personal 
injuries and property damage from Government contractors to the workers 
and/or residents in the disaster areas.
    It is imperative that workers know that, if they come to the aid of 
their country in disaster situations, contractors employed by the 
Government will be held to high standards which protect both the 
workers and the members of the community in which they are working. 
They need to know if they should be injured or contract an illness in 
the process, their medical needs will be taken care of and that their 
families will be secure. They need the guarantee that contractors who 
do not act responsibly will be held liable.
    Responsible Government contractors should have no need of the 
sweeping immunity this bill would provide. We urge you to oppose this 
legislation, which would provide a windfall to irresponsible 
contractors at the expense of public health and the environment.
                                 ______
                                 
  Response by Joel Shufro to an Additional Question from Senator Thune

    Question 1. It is my understanding that all fifty states, including 
New York, require employers to carry workers compensation insurance for 
their employees, and that, by law, such insurance must pay for any 
medical treatment that employees may need, as a result of any injuries 
or illness they suffer in the course of their employment. It seems that 
these workers compensation laws also require at least some wage 
replacement for people who cannot work. Is that essentially correct? 
And if so, how is it that the people who worked at Ground Zero cannot 
get medical treatment or wage replacement?
    Response. Workers compensation is inadequate to provide workers and 
community residents with a remedy for the types of damages from which 
contractors are asking for relief in the proposed legislation (S. 
1761).
    First, workers compensation applies only to workers who are in an 
employer/employee relationship. By definition, workers who are not 
employed by the contractor who caused the harm, as well as residents 
and volunteers, would be excluded from receiving medical treatment or 
wage replacement for injuries or illnesses incurred as a result of the 
negligent actions of a contractor responding to a disaster situation.
    Second, it is not true that workers compensation is mandatory in 
all jurisdictions. For example, coverage is optional in Texas.
    Third, workers compensation systems do not allow workers to recover 
for a wide array of damages such as those which may occur as a result 
of work around disaster response, recovery and cleanup. For example, 
adverse reproductive health outcomes caused by exposure to toxic 
substances are not compensable under workers compensation; nor is an 
injured worker able to recover for pain or mental anguish or loss of 
companionship.
    Fourth, medical coverage varies from State to State. This is 
particularly the case with occupational illnesses and diseases with 
long latency periods. Definitions of what constitutes an ``occupational 
disease'' also vary and may preclude workers from filing claims for job 
related illnesses. Diseases covered in one state may not be covered in 
another. In addition, what medical treatment and/or procedures are 
provided through workers compensation also varies dramatically State to 
State.
    Fifth, wage replacement benefits also vary widely from State to 
State. Since disasters, such as Hurricane Katrina, often affect workers 
in more than one State, relying solely on workers compensation, results 
in significant inequities in the wage replacement workers receive. For 
example, the maximum weekly benefit is $400 in New York, $666 in New 
Jersey, $716 in Pennsylvania and $931 in Connecticut.
    Sixth, many States have a cap on the length of time a worker can 
collect wage replacement for an injury no matter how long the 
disability lasts or how severe the injury is. Consequently, a worker 
who is permanently totally or permanently partially disabled and unable 
to work may, after a defined period, face poverty and/or financial ruin 
and be forced onto welfare or social security disability.
    Many workers who responded to the tragic collapse of the World 
Trade Center and who worked at or around Ground Zero were exposed to 
highly caustic dust and a plethora of toxic fumes. Many of these 
workers have developed respiratory illnesses.
    These workers have had great difficulty in accessing medical and 
wage replacement benefits through the workers compensation system. 
Unlike workers who suffer traumatic job-related injuries, whose cases 
are relatively straight-forward, workers who contract occupational 
diseases routinely have their cases controverted by insurance carriers. 
While their cases are being litigated, carriers will not provide either 
medical treatment through the workers compensation system or wage 
replacement payments. Furthermore, even if a worker has employer-paid 
or private health insurance, many health insurers will deny claims if 
workers indicate that their condition is work-related. Therefore, until 
their case is established, workers who file for workers compensation 
are denied needed medical treatment and wage replacement payments.
    In New York State, as in many other jurisdictions, it can take 
years for contested occupational disease cases to be resolved. For 
example, a study at conducted at the Irving J. Selikoff Occupational 
and Environmental Medicine Cline at Mt. Sinai Medical Center of workers 
who filed claims as a result of musculo-skeletal repetitive stress 
injuries found that it took, on average, approximately 2 years from the 
time a worker filed a claim with the New York State Workers 
Compensation Board to the time that the case was established. For some 
cases, it took over four years after the claim was filed for it to be 
established. he consequence of such delays for injured workers are 
traumatic; claimants often are forced back to work resulting in further 
injury and/or experience other adverse health outcomes. Other workers, 
who have no financial reserves are forced into poverty. There are cases 
in which workers are forced to sell their homes or their children are 
required to drop out of college to help support the family.
    Recent research has demonstrated that most workers who contract an 
occupational illness do not receive medical or wage replacement 
benefits through workers compensation. According to one study, workers 
receive compensation for less than 1 percent of all occupational 
disease claims. Rather, than receiving wage replacement from workers 
compensation, injured workers are forced to rely on state run welfare 
programs or social security disability, which are financed through 
general tax revenues, for sustenance and on programs like Medicaid for 
medical treatment. There are additional impediments which workers face 
when they apply for Workers Compensation which prevent many workers 
whose health has been impaired by work-related causes from receiving 
medical treatment. In New York State, as in many states, the workers 
compensation system is difficult to navigate without legal 
representation. However, there are certain classes of cases for which 
there are there are strong financial disincentives for attorneys to 
take cases which are not deemed profitable. These include more 
difficult cases such as occupational disease claims where causation is 
difficult to prove and cases where it is difficult to prove who the 
employer was or if the employer was uninsured (discussed above).
    A significant number of workers who require medical treatment as a 
result of illnesses arising out of employment at the World Trade Center 
are still working. These workers will not be able to find legal 
representation because there no legal fees paid to lawyers in cases 
where there is no wage loss--cases known as ``medical only.'' Without 
the help of an attorney, workers will not get the benefits to which 
they are entitled. Despite the need for medical treatment, these 
workers, many of whom are immigrants, many of these workers, who have 
legitimate claims will drop their cases out of frustration, 
discouragement, ignorance or fear of dealing with a litigious process 
which they neither understand and perceive as hostile.
    By eliminating the ability of workers and residents to bring suits 
against contractors who are negligent in the performance of their 
contracts, the S. 1761 would prevent those injured by the negligent 
actions of contractors from holding them accountable, allowing them to 
cut corners and operate in a fashion which could endanger members of 
the public and residents. Since workers compensation is an exclusive 
remedy and prevents workers from suing their employer, workers would be 
unable to hold liable other contractors who may be operating on the 
same site who created hazards. It would also penalize those employers 
who comply with health, safety and environmental regulations. In 
complex response to disasters this would place workers at a serious 
disadvantage and undercut any incentive for employers to adhere to 
safety standards and protocol
                                 ______
                                 
Response by Joel Shufro to an Additional Question from Senator Jeffords

    Question 1. How did the managers of the contracting firms providing 
cleanup and recovery efforts at the World Trace Center fail to provide 
workers with working conditions that protected their safety and health?
    Response. The attack on the World Trade Center on September 11, 
2001 and the subsequent magnitude of the destruction and loss of life 
at the World Trade Center created an emergency response, rescue and 
recovery effort of enormous proportions. According to the head of OSHA, 
the World Trade Center site was ``potentially the most dangerous 
workplace in America.'' Although there were no fatalities on the job, 
there were a large number of serious injuries as well as thousands of 
workers who developed respiratory illnesses, some so severe as to 
prevent workers from ever working again and surely not as construction 
workers.
    As noted by John Moran and Don Elisburg, leading construction 
safety and health experts, who issued a report for the National 
Institute for Environmental Health Sciences (NIEHS) entitled ``Worker 
Education and Training Program Response to the World Trade Center 
Disaster: Initial WETP Grantee Response and Preliminary Assessment of 
Training Needs''
        The situation created a very complex safety and health setting 
        in which there was confusion as to which occupational safety 
        and health standards were applicable, whether enforcement 
        agencies indeed had enforcement jurisdiction, and at what point 
        in time the WTC Disaster Site Safety and Health Plan would 
        become effective and operative.''

    The report based on observations from September 22-27, 2002 found:
        What emerged in this massive disaster and the protracted and 
        complex response is the fact that rescue, recovery, and other 
        activities have occurred in a scenario never anticipated by the 
        safety and health legislation or the subsequent standards/
        regulations. The injury and illness reports for the initial 
        weeks of the search and rescue activity were at unacceptable 
        levels. Mover, the exposure data, as well as the potential for 
        serious exposure to toxic materials (including asbestos) among 
        the construction response workers, raises significant 
        concerns.\1\
---------------------------------------------------------------------------
    \1\National Institute of Environmental Health Science (NIEHS), 
(Worker Education and Training Program (WETP) Response to the World 
Trade Center (WTC) Disaster: Initial WETP Grantee Response and 
Preliminary Assessment of Training Needs.
---------------------------------------------------------------------------
    However, from the outset, worker safety and health took a back seat 
to production. While the pressure for such production was politically 
motivated, contractors did not provide working conditions which were 
protective of the safety and health of the workers they employed.
    First, safety and health training of workers was woefully 
inadequate. From the outset, it was clear that workers would be exposed 
to a wide range of hazards. According to Moran and Elisburg, workers 
needed to be trained in, at least, the following areas:
     Asbestos
     Lead
     Confined Spaces
     General Construction Safety/OSHA-10
     Personal Protective Equipment
     Respirator Protection (and remaining requirements of 
1910.134)
     Fall Protection
     HAZCOM
     Ergonomics\2\
---------------------------------------------------------------------------
    \2\Ibid.
---------------------------------------------------------------------------
    Unfortunately, training of workers did not commence until 78 days 
after September 11th, in mid-to late November. However, the training 
was an abbreviated version of what was required by OSHA standards. In 
our opinion, the training was not sufficient to prepare workers to 
protect themselves for the wide range of hazards to which they would be 
exposed while working on the pile.
    Second, despite the presence of a wide range of toxic substances, 
including dusts and fumes, fit- testing to wear respirators was not 
widely offered on the site until 36 days after September 11th. 
According to Bruce E. Lippy, CIH, CSP, the Director of Research and 
Special Projects for the Operating Engineers National Hazmat Program, 
who was on the site working with heavy equipment operators, 
``Compliance with respiratory protection was generally poor at Ground 
Zero, less than one-half, and sometimes less than one-third, of the 
heavy equipment operators were wearing their respirators while working 
on the pile.''\3\ Even after fit testing was offered, at no time were 
contractors in compliance with OSHA's respiratory protection standard. 
For months into the disaster workers were allowed to wear respirators 
if they had beards.
---------------------------------------------------------------------------
    \3\Bruce E. Lippy, CIH, CSP, ``Safety and Health of Heavy Equipment 
Operators at Ground Zero,'' American Journal of Industrial Medicine, 
(2002) 42:539-542
---------------------------------------------------------------------------
    The situation was complicated by several factors. First, lines of 
authority were complex and unclear. According to Bruce Lippy, 
``Participants at the December 2001, National Institute of Occupational 
Safety and Health (NIOSH) conference on worker safety at the WTC noted 
the lack of a clear command structure at the World Trade Center (site) 
thwarted efforts to enforce PPE (personnel protective equipment) and 
risk-reduction behaviors'.\4\
---------------------------------------------------------------------------
    \4\Ibid
---------------------------------------------------------------------------
    Since the Occupational Safety and Health Administration (OSHA) saw 
its role during this period as that of a consultant to the Federal 
Emergency Management Agency (FEMA), rather than as an enforcement 
Agency, contractors did not have an incentive to require workers to 
comply with OSHA's protective standards. The consequence was that 
wearing a respirator was voluntary and contractors took little, if any, 
responsibility for ensuring that workers wore appropriate personal 
protective equipment.
    Second, contractors created working conditions which guaranteed 
that workers would suffer workplace injuries and illnesses. It is 
difficult for any worker to wear a respirator for a full 8 hour shift 
while doing heavy labor, let alone to work for 12 consecutive hours as 
did the workers at the World Trade Center site. Contractors should have 
developed a programs which included administrative controls, limiting 
work to a reasonable period of time, giving workers time to rest and 
recover. Moran and Elisburg noted that by the end of three and a half 
weeks ``The intensity of effort, long hours, continual work seven days 
a week has resulted in severe stress and fatigue, and a high rate of 
injury and illness among those workers.''\5\ Work continued at this 
pace for over 9 months with the consequence that thousands of workers 
have been diagnosed with mental illness from the stress experienced 
working at the World Trade Center site. Also, contractors did not take 
into account that OSHA standards were written based on 8-hour 
exposures. Levels of exposure to which a worker may be exposed over 8 
hours which are deemed acceptable, may not be the same as those 
appropriate for a 12-hour shift.
---------------------------------------------------------------------------
    \5\Op.cit.
---------------------------------------------------------------------------
    Third, the contractors did not issue a site safety and health plan 
until 48 days after September 11th. By failing to develop safety, 
detailing lines of authority and the responsibilities of each party 
while work was proceeding, the contractors sent a message about the low 
priority they gave to safety on the job.

                           IMMIGRANT WORKERS

    While construction workers, firefighters, police, volunteers and 
others were performing the rescue and recovery operations at Ground 
Zero, day laborers were hired by private contractors to shovel the 
thick dust and debris from the buildings near the World Trade Center 
site. Their job was to make the inhabitable offices and residences in 
lower Manhattan livable. An estimated 1,800 to 2,000 day laborers 
worked immediately following the disaster and for many months 
thereafter. These are primarily immigrant workers from Latin America, 
Poland and parts of Africa. Most of them do not speak fluent English.
    For the most part, contractors and their sub-contractors provided 
these workers with no personal protection, special equipment or safety 
training. Indeed, at the outset, many of the contractors were not 
paying workers and it was only after the intervention of the New York 
State Attorney General who intervened to force contractors to live up 
to their contractual obligations.
    Because of the contractors failure to provide training and 
protective equipment, ,any of the workers have developed health 
problems as a result of their work at the World Trade Center site. In 
January of 2002, the Center for the Biology of Natural Systems, New 
York Committee for Occupational Safety and Health and the Latin 
American Workers Project provided medical screening to 410 workers 
engaged in the cleanup of Lower Manhattan. Of the workers who 
participated in the medical screening, nearly 100 percent had developed 
respiratory illness requiring medical attention as a result of dust 
exposure.
                                 ______
                                 
  Responses by Joel Shufro to Additional Questions from Senator Boxer

    Question 1. Do you think S. 1761 sends workers a signal that their 
health may be sacrificed without recourse against a negligent 
contractor? If so, do you think it creates a disincentive for the best 
workers to join in cleanup efforts?
    Also, could such a negative signal actually undermine cleanup 
efforts rather than aid those efforts as contracting companies suggest?
    Response. The legislation, if enacted, sends a clear message to 
workers and volunteers: if you respond to a disaster situation, you are 
doing so at your own risk. Worse, it allows contractors to operate 
outside the legal framework which protects workers and residents from 
negligent behavior of a contractor which adversely affects the health, 
safety and property of workers, volunteers and community residents.
    Workers responded to the catastrophe on 9/11/2001 out of many 
different motivations: some did so out patriotism, others out of 
humanitarianism, some out of altruism and others for economic reasons. 
No matter what the reason that impelled workers to respond during a 
time of emergency, they expected that they, and their families, would 
be taken care if they are injured or made ill as a result of a 
negligent contractor. Although it is hard to predict an individual's 
behavior in the future, I think that the knowledge that participating 
in a rescue or recovery operation would may not only endanger your own 
health, but threaten the well-being of your families, would provide a 
disincentive for participation.
    Given the levels of unemployment among the immigrants, there will 
always be a labor pool who will work-even under the most dangerous of 
conditions. At the World Trade Center and in the Gulf Coast, 
contractors have taken advantage of the vulnerability of workers, 
particularly immigrants, to avoid Government safety and health and 
environmental regulations. In both situations, the consequence has been 
that thousands of workers have contracted occupational illnesses and 
have suffered significant loss of income, family life and their own 
health.
    During the hearing on this legislation, contractors explicitly 
stated and implicitly implied that if they were not able to escape 
liability for their actions, they would be reluctant in the future to 
respond in emergency situations. What this legislation does is to shift 
the costs from the contractors to workers and holds them harmless for 
violations of the country's environmental and labor laws.
    This form of cost shifting is unacceptable and unproductive.
                                 ______
                                 
       Statement of Craig S. King, Government Contracts Attorney

    Mr. Chairman, I appreciate the invitation to provide testimony 
regarding the impact of certain Government contractor liability 
provisions--in particular, Senate bill 1761 (hereinafter ``S. 1761'' or 
the ``bill'')--on environmental laws.
    There is an important Federal interest in having the best, most 
responsible private contractors respond promptly and without 
reservation in the event of a disaster. In recent disasters, many 
private contractors have responded selflessly, even heroically, to 
provide the immediate response necessary to preserve life and property 
and, in subsequent months, to help remediate and restore normalcy to 
devastated communities.
    However, disaster recovery efforts--even when performed responsibly 
by these companies and in accordance with contracts awarded by Federal, 
State and local Government authorities--expose private contractors to 
potentially costly litigation and even liability. The risks of 
litigation and potential liability that arise from contractors' 
responsible, good faith performance in response to disasters threaten 
to undermine future responses. The best, most responsible companies 
must think twice before becoming involved in future disaster recovery 
efforts, and may opt to stay away altogether. Equally important, the 
price tag for disaster recovery efforts necessarily includes 
compensation to contractors for the risks associated with the work--
which means significant increases in the Government's costs to the 
extent contractors face lawsuits and potential liability for doing the 
work directed by the Government.
    Thus, the Federal Government (``Government'') has a strong interest 
in establishing appropriate standards for liability of Government 
contractors for actions taken under the exigencies of a disaster 
response. Of course, any limitations on contractor liability must be 
narrowly tailored to the needs of the disaster response, and must 
complement, not undercut, the enforcement of environmental laws, labor 
laws, safety laws and similar laws that promote additional Federal 
interests. Also, any limitations on contractor liability must not 
absolve private contractors from liability if they behave recklessly or 
commit willful bad acts. Contractors must remain accountable for 
improper conduct, as well as for proper performance of their contract 
obligations. Even in the exigencies of a disaster response, there can 
be no excuse for recklessness or willful misconduct.
    The bill provides a reasonable approach to achieving the foregoing 
objectives. Key provisions of S. 1761 that bear on Government 
contractor liability are discussed below.

                  A. THE GOVERNMENT CONTRACTOR DEFENSE

    Section 5(d) of S. 1761 provides that, if certain requirements are 
fulfilled, a contractor can avail itself of the Government contractor 
defense in the event of third-party litigation arising out of disaster 
recovery efforts. As discussed more fully below, the essence of the 
Government contractor defense is that a contractor stands in the same 
legal position as the Government, and thus bears no liability to third 
parties, if it does what the Government tells it to do in the contract 
(provided, of course, that certain requirements are fulfilled).
    The Government contractor defense is well established in the 
Federal common law. The principles underlying the defense reach back as 
far as 1940, when the U.S. Supreme Court determined that a contractor 
that performed a Federal contract to build dikes to improve navigation 
of the Missouri river was not subject to liability in a suit by a 
landowner for erosion caused by the work. Yearsley v. W.A. Ross 
Construction Co., 309 U.S. 18 (1940). In Yearsley, the Court found that 
where there is a valid Federal contract, ``there is no liability on the 
part of the contractor for executing [the Government's] will.''
    In 1988, the U.S. Supreme Court set forth more fully the parameters 
of, and rationale for, the Government contractor defense. In Boyle v. 
United Technologies Corporation, 487 U.S. 500 (1988), the Court found 
that a Federal interest exists in Government procurement contracts--
stating:

        The imposition of liability on Government contractors will 
        directly affect the terms of Government contracts; either the 
        contractor will decline to manufacture the design specified by 
        the Government, or it will raise its price. Either way, the 
        interests of the United States will be directly affected.

    Boyle, at 507.
    The Court explained that the Government contractor defense is 
rooted in the Government's sovereign immunity. The Court observed that 
when Congress waived the Government's sovereign immunity in the Federal 
Tort Claims Act to enable suits against the Government arising out of 
acts of Government employees, Congress exempted from this consent to 
suit any claim ``based upon the exercise or performance or the failure 
to exercise or perform a discretionary function or duty on the part of 
a Federal Agency or an employee of the Government, whether or not the 
discretion involved be abused.'' Boyle, at 511. The Boyle Court 
concluded that contractors should be subject to the same limits on 
liability as the Government officials who direct the contractor's 
actions. The Court stated: ``It makes little sense to insulate the 
Government against financial liability for the judgment that a 
particular feature of military equipment is necessary when the 
Government produces the equipment itself, but not when it contracts for 
the production.''
    The Court reasoned as follows: the selection of the appropriate 
design for military equipment is a discretionary function which should 
not be second-guessed in tort litigation; the financial burden of tort 
judgments against contractors will predictably raise their prices to 
cover, or insure against, such contingent liabilities; and state law 
which holds Government contractors liable for design defects does in 
some circumstances present a ``significant conflict'' with Federal 
interests and must be displaced. The Boyle Court embraced a standard 
that liability for design defects in military equipment cannot be 
imposed, pursuant to state law, when (i) the Government approved 
reasonably precise specifications; (ii) the equipment conformed to 
those specifications; and (iii) the contractor warned the Government 
about the dangers in use of the equipment that were known to the 
contractor but not to the Government.
1. The Government Contractor Defense Applies to Contractors that Enter 
        Government Contracts to Respond to Disasters
    The Supreme Court's reasoning in Boyle and Yearsley applies equally 
today in the case of contractors that enter Government contracts to 
respond to disasters:

     There is a Federal interest in having the best, most 
responsible private contractors respond promptly and without 
reservation in the event of a disaster.
     Determinations as to the work that should be done to 
respond to a disaster are a discretionary function of cognizant 
Government officials--and should not be second-guessed in tort 
litigation under State law.
     The financial burden of tort judgments against contractors 
will predictably raise the prices to cover, or insure against, such 
contingent liabilities--or may lead the best, most responsible 
contractors to decline to participate in disaster recover efforts.
     Here, as in Boyle, it makes little sense to insulate the 
Government against financial liability for the judgment as to work to 
be performed in response to a disaster if the Government performs the 
work itself, but not when it contracts for performance of the work.

    It follows that state tort laws that would make Government 
contractors liable for work performed in response to a disaster present 
a ``significant conflict'' with Federal interests and must be 
displaced. Applying the standards announced in Boyle, it is already 
clear that liability for work done under Government contracts to 
respond to disasters cannot be imposed, pursuant to state law, when: 
(i) the Government approved a reasonably precise scope of work; (ii) 
the work performed was in accordance with the scope of work; and (iii) 
the contractor warned the Government about any dangers in performing 
the work that were known to the contractor but not to the Government.
    As set forth below, the effect of the bill is to avoid costly 
litigation about the applicability of the Boyle standards in the case 
of contracts undertaken pursuant to the exigencies of disaster 
recovery.
2. The Effect and Limited Scope of the Applicability of the Government 
        Contractor Defense Under S. 1761
    S. 1761 affirms that the Government contractor defense is 
applicable to certain contracts entered for the purpose of disaster 
recovery, and provides certainty and uniformity of approach to the 
application of the defense by providing, among other things, a process 
by which a cognizant Government official reviews the scope of work of a 
contract and certifies that the contract is necessary to the disaster 
recovery effort. More specifically, the Bill provides that the elements 
of the Government contractor defense shall be deemed satisfied without 
further proof in Court if the following conditions are satisfied:

    i. A competent Government authority (i.e., the Corps of Engineers) 
certifies in accordance with the Bill that it has reviewed the scope of 
work set forth in the contract and the work is necessary for the 
recovery of the disaster zone\1\ from a disaster. In order to so 
certify, the Government authority must determine that a majority of the 
scope of work set forth in the contract is for one or more of the 
following five activities:

    \1\A disaster zone is any region of the United States in which 
major disasters relating to Hurricane Katrina were declared by the 
President on August 29, 2005 under the Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5170), or were so declared 
thereafter if the disaster requires Federal assistance in an amount 
that exceeds $15 billion.
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    a. The search, rescue, or recovery of individuals or property 
dislocated by the disaster;
    b. The demolition, removal, repair, or reconstruction of structures 
or utilities damaged by the disaster;
    c. The clean-up or remediation of property polluted by the 
disaster;
    d. The removal of debris deposited by the disaster (including 
dredging); or
    e. The de-watering of property flooded by the disaster.

    ii. The contractor did not act fraudulently or with willful 
misconduct in submitting information to the Government to obtain the 
certification (Section 5(d)(3)), and did not act with recklessness or 
willful misconduct in performing the work (Section 5(e)(3)).
    The bill is subject to appropriately narrow limitations as to 
geographic scope (i.e., the bill applies only to Government contracts 
necessary for the recovery from Hurricane Katrina or a similarly 
declared disaster that requires at least $15 billion in Federal 
assistance--and does not apply to any other situation). In addition, 
the Bill applies only to contracts involving the five specified types 
of contracts.
    S. 1761's provision for deeming the elements of the Government 
contractor defense to have been satisfied is important to reduce risks 
and costs, and to provide for uniformity of application of the defense. 
In cases in which the Government contractor defense has been invoked, 
there often has been protracted litigation over the application of the 
Boyle standards. After considerable legal wrangling, it has by now 
become reasonably well settled that, for example, Boyle applies in non-
military as well as the military contexts and applies to virtually all 
types of Government contracts, and Government decisions with respect to 
remediation efforts (e.g., EPA decisions regarding clean-up of 
contaminated sites) are ``discretionary functions''. Nonetheless, there 
has been considerable litigation to reach these conclusions, and legal 
wrangling continues in particular cases to meet plaintiff's challenges, 
for example, as to whether the Government's work specifications in that 
particular case are sufficiently specific to support the Government 
contractor defense.
    The bill's process for the Government to provide a certification 
that the scope of work of a contract fulfills one of the five purposes 
of disaster recovery is a reasonable approach that will provide 
certainty in the application of the Government contracts defense to 
contracts for disaster recovery. The ``discretionary function'' 
requirement of Boyle is fulfilled by the certification. A cognizant 
Government official will have reviewed the scope of work and determined 
that the work is necessary for the recovery of the disaster zone from a 
disaster. The limitation to a specified geographic region and to the 
five specified types of activities keeps the application of the Bill 
appropriately narrow. The exigencies of a disaster response warrant 
providing the assurance that, for contracts within the five specified 
disaster response activities, the Government's exercise of discretion 
as to the work that will be performed will not be second-guessed in a 
tort litigation.
    Certainty and uniformity of approach are enhanced in a reasonable 
manner by S. 1761's provisions for: (i) a Federal cause of action for 
claims arising out of performance of a contract that is certified by a 
Government official; and (ii) original and exclusive Federal 
jurisdiction over lawsuits for loss of property, personal injury, or 
death arising out of the performance of such a contract. Consistent 
with U.S. Supreme Court's findings in Boyle and Yearsley, S. 1761 
amounts to a Congressional declaration that: there is Federal interest 
in having the best, most responsible private contractors respond 
promptly and without reservation in the event of a disaster; a 
certification by a cognizant Government official under the Act that 
certain work is necessary for the recovery of the disaster zone is 
``discretionary'' and should not be second-guessed under State tort 
laws; and therefore state tort laws must be displaced absent evidence 
of contractor fraud, recklessness or willful misconduct. As the Court 
stated in Boyle, these are matters of Federal common law that involve 
Federal preemption to displace state tort laws. It is appropriate that 
such be resolved in the Federal courts. Indeed, one would be hard 
pressed to think of issues more suited to be resolved in Federal, 
rather than State, court.
    Of course, this does not complete the analysis. Under the Act, the 
Government contractor defense would apply only if the contractor did 
not act fraudulently or with willful misconduct in submitting 
information to the Government to obtain the certification, and did not 
act with recklessness or willful misconduct in performing the work. 
These seem to be reasonable parameters for proscribing wrongful conduct 
of contractors vis-`-vis third parties--especially in view of the 
exigencies associated with a disaster response. The ultimate effect is 
that contractors are held accountable under the contract to perform the 
work set forth therein--but they are not liable to third parties for 
the Government's decisions as to what work should be done or for their 
non-reckless performance of that work. Absent recklessness of willful 
misconduct, third parties must look to the Government for any available 
relief--if not through tort litigation against the Government, then in 
some other manner. But where a private suit against the Government is 
barred by sovereign immunity (i.e., is not available under the Federal 
Tort Claims Act), there is no alternate route under the law to sue a 
contractor that performed the job the Government asked it to do.
    Private litigants simply cannot recover indirectly from contractors 
that which Federal law bars them from recovering directly from the 
Government. This is the essence of the U.S. Supreme Court's holdings 
relative to the Government contractor defense. The bill recognizes what 
is embodied in Federal common law, and provides assurances of certainty 
and uniformity of approach in the application of the Government 
contractor defense for contracts entered to respond to disasters.
    What S. 1761 means as a practical matter is that, for contracts 
certified as necessary for disaster relief, there will be no litigation 
as to the application of the Boyle standards. The first Boyle standard 
(i.e., Government approval of a reasonably precise scope for the work) 
is satisfied by the certification process, and thus is appropriately 
deemed fulfilled under the bill. The second Boyle standard (i.e., the 
work was performed in accordance with the scope of work), is deemed 
fulfilled subject to a showing that the contractor was reckless or 
committed willful misconduct. The Bill does not provide protection for 
contractor conduct that is not covered by the second Boyle standard--
i.e., activities that are outside of the scope of work.
    Finally, the deeming of the third Boyle standard (the contractor's 
obligation to warn the Government of dangers about which the contractor 
is aware but not the Government) means that contractors may proceed 
with disaster recovery work directed by the Government even though many 
risks are unknown and unknowable. The bill eliminates costly litigation 
over what the contractor knew or did not know in undertaking work in a 
disaster relief situation. It is inherent in the nature of disaster 
relief work that many risks are unknown and unknowable. Government 
officials and contractors make good faith efforts to act in a prudent 
manner, but cannot fully assess the risks. By deeming the Boyle 
elements to have been satisfied, a contractor can proceed immediately 
with disaster recovery work as directed by the Government without the 
type of risk assessments that may be expected in normal construction 
and remediation efforts but that cannot reasonably be done in a 
disaster relief situation.
3. Potential Amendments to S. 1761
    As discussed below, the subcommittee may wish to consider an 
alteration to the provisions of S. 1761 that designate the Army Corps 
of Engineers (``Chief of Engineers'') as exclusively responsible for 
the review and certification of Government contracts under the Bill.
    Government contracts certified under the Bill might be awarded by 
the Army, FEMA or other Federal agencies. In addition, state and local 
Governments may enter contracts for work in the five areas identified 
in the Act, and then request that FEMA reimburse them with Federal 
funds. As I understand it, if FEMA were to deny reimbursement for a 
contract awarded by a state or local Government, the Bill nonetheless 
would apply and such a State or local contract could qualify for 
certification.
    S. 1761 contemplates that, in order for the certification 
provisions to apply, the Chief of Engineers will review the scope of 
work and provide the requisite certification for all disaster recovery 
contracts--whether issued by a Federal Agency or a state or local 
Government. This imposes a burden on the Chief of Engineers that may be 
undue and unnecessary. It also divorces the certification process from 
the contract award process (and from the decision whether to provide 
Federal funds to reimburse a state or local Government contracts)--and 
this has been shown in another context not to be a particularly 
effective approach.
    The certification process described in S. 1761 is similar to the 
process for certifying antiterrorism technologies under the SAFETY Act. 
In the SAFETY Act, Congress invited companies to apply to have their 
technologies certified by the Government as desirable for use against 
terrorism. In the event of lawsuits arising out of the use of a 
certified technology, the Government contractor defense applies and, as 
under the Bill at issue here, the elements of the Government contractor 
defense are deemed to have been satisfied through the certification. 
The Department of Homeland Defense was given exclusive responsibility 
for certifying antiterrorism technologies under the SAFETY Act. The 
certification process was divorced from the procurement process. The 
result has been that few certifications have been granted, and the 
certification process has not been very effective in meeting the needs 
of the companies or Government procurement officials.
    The subcommittee may, instead, want to consider having the 
certifications done by: (i) in the instance of a contract awarded by a 
Federal Agency, the Government contracting officer who awards the 
Federal contract; and (ii) in the instance of a contract awarded by a 
state or local Government, by the Federal official who determines 
whether to reimburse the contract with Federal funds. As to the first 
of these, the Government contracting officer would be well suited to 
review the scope of work and make the appropriate determinations, and 
could do so as part of the contract award process. Nobody is in a 
materially better position to make the type of determinations required 
by the Act--and having the contracting officer provide the 
certification likely would result in little or no delay due to the need 
for a certification. As to the second point, the Federal official who 
reviews the scope of work for reimbursement would be well positioned to 
make the certification. For State and local contracts that are not 
submitted for Federal reimbursement, an alternate mechanism for 
providing the certification may need to be developed--or the committee 
might choose to exclude such contracts from the coverage of the Act.

                      B. WHAT THE BILL DOES NOT DO

    As a conclusion, it may be appropriate to emphasize what the bill 
does not do. The bill does not abrogate the applicability of any other 
laws or regulations. All environmental laws would continue to apply. 
Federal State and local Government enforcement officials would continue 
to be able to take whatever steps they deem necessary to enforce full 
compliance with the environmental laws, and to punish noncompliance. As 
I understand it, the bill would limit certain private rights of action, 
but would do nothing to impair the ability of cognizant Federal, State 
and local officials to fully enforce these laws.
    Similarly, all Federal, State and local labor and employment laws 
would continue to apply. The rights of cognizant Government officials, 
individual applicants and employees to enforce these laws in court are 
unaffected by the bill.
    The same holds true for health and safety laws. The enforcement 
authorities of the U.S. Occupational Safety and Health Administration 
are not affected by the bill.
    Perhaps most important, as discussed above, the bill does not limit 
the liability of Government contractors for recklessness or willful 
misconduct, nor does it limit the ability of the Government to require 
proper performance of contract obligations. The bill does not allow 
contractors to escape liability for bad acts.

                             C. CONCLUSION

    The thrust of S. 1761 is merely to put contractors that perform 
Government contracts on the same legal footing as the Government 
personnel who award them those contracts. It provides for cognizant 
Government personnel to review the scope of work for such contracts, 
and determine that the work is necessary to the disaster recovery 
effort. With such deliberation and exercise of discretion on the 
Government's part, it is fair and reasonable for Contractors to proceed 
with the work promptly and without fear of legal liability so long as 
they are not reckless and commit wrongful misconduct. In view of the 
exigencies of disaster response, and the Federal interest in having the 
best, most responsible contractors available for recovery efforts, the 
bill seems a measured and appropriate approach.
    Thank you.
                                 ______
                                 
  Response by Craig King to an Additional Question from Senator Thune

    Question 1. Because Section 4 of S. 1761 waives an individual right 
of action for contractors who carry out a Government disaster contract, 
can you explain whether or not this provision waives a contractors 
obligation to follow existing Federal environmental laws?
    Response. The waiver of an individual right of action that is 
contained in S. 1761 would not diminish contractors' obligations to 
follow existing Federal environmental laws. All Federal environmental 
laws would continue to apply. Federal, State and local enforcement 
officials would continue to enforce compliance with those laws. There 
is nothing in S. 1761 that would abrogate the applicability of any 
other laws or regulations, or impair the enforcement of the 
environmental laws by Government officials.
                                 ______
                                 
  Response by Craig King to an Additional Question from Senator Boxer

    Question 1. Mr. King, if a contractor is negligent in its 
performance of a contract and injures or kills an innocent citizen in a 
declared disaster as described in S. 1761, will the contractor receive 
liability protection and the victim lose their claim unless the victim 
can show that a Government contractor acted fraudulently or with 
willful misconduct in merely submitting information to the Chief of 
Engineers for the Army Corps? More specifically, this information is 
the material that the Chief of Engineers uses to determine whether the 
work is necessary for the recovery of a disaster zone from a disaster, 
including a review of the scope of work that the Government contract 
does or will require and that the work includes cleanup, debris 
removal, reconstruction, de-watering and other such tasks.
    Response. The thrust of S. 1761 is that a contractor who is doing 
what the Government directed it to do will not be second-guessed in 
tort litigation unless it can be shown that the contractor acted with 
``recklessness or willful misconduct.'' The liability protection 
derives from the Government contractor defense--which is well 
recognized in the common law and provides that a contractor stands in 
the same legal position as the Government, and thus bears no liability 
to third parties, if it does what the Government tells it to do in a 
contract. Sovereign immunity shields Government officials from third-
party suits when these officials make the type of discretionary 
decisions that are necessary in disaster relief efforts. The courts 
have made clear that in instances where the decisions of Government 
officials are insulated from liability, it makes little sense to not 
similarly insulate contractors who implement such Government decisions.
    It would not be appropriate for this protection to apply to 
contractors who fail to implement dutifully the Government decisions 
and instead commit wrongful acts that cause injury. Thus, S. 1761 
specifically provides that a contractor would be subject to full 
liability to third parties arising from the contractor's reckless acts 
or willful misconduct. More specifically, S. 1761 provides that the 
liability protections shall not affect ``the liability of any person or 
entity for recklessness or willful misconduct.''
    The question suggests that the Senator may believe that, in holding 
contractors accountable for any wrongful acts, it is more appropriate 
to use a standard of ``negligence'' rather than ``recklessness or 
willful misconduct.'' This is certainly a debatable proposition. Under 
a negligence standard, any person adversely affected in a disaster 
could sue so long as they could come up with a plausible theory as to 
why the Government's decision, or the contractor's implementation of 
it, was not ``reasonable''. This seems too loose a standard for 
application in the exigencies of a disaster response. Disaster 
situations often require prompt, decisive action by the Government and 
its contractors with little time for the type of engineering, planning 
and risk assessments that would be normal in other circumstances. Under 
a negligence standard, a contractor could perform precisely and 
dutifully in accordance with the Government's direction and still face 
suits for ``negligence'' based on third-party arguments that the 
Government's decisions were not reasonable. Under the exigent 
circumstances of disaster recovery, such after-the-fact second-guessing 
of the actions of the Government and its contractors, absent evidence 
of recklessness or willful wrongdoing, seems highly likely to be 
unfair--and to create unwise legal impediments to contractors pitching 
in when needed in future disaster recovery situations. By not using a 
``negligence'' standard, S. 1761 provides a measure of deference in 
disaster recovery situations to Government decision makers and the 
contractors who implement the Government's decisions. That deference 
seems warranted under the exigencies of disaster recovery efforts.
    That does not end the issue. It may well be appropriate to provide 
compensation to those who suffer injuries in disaster recovery 
situations even if the contractor was not reckless or willful. It does 
not necessarily follow, however, that contractors must be, in effect, 
the default source of such compensation. During the hearing, the panel 
participants discussed several potential approaches for providing 
compensation to parties injured in disaster recovery situations through 
no recklessness or willfulness of a contractor. Congress should 
seriously consider enacting one or more of these approaches, or some 
other appropriate measure, to ensure that individuals injured in 
disaster recovery situations receive due compensation.
    Finally, the question refers to the provision in S. 1761 that 
allows for defeating the presumption that the elements of the 
Government contractor defense have been satisfied. The presumption can 
be defeated based upon a ``showing that a person or entity awarded a 
Government contract acted fraudulently or with willful misconduct in 
submitting information'' to the Chief of the Corps of Engineers. The 
reference in the question seems to be based on an incomplete 
understanding of S. 1761. Certainly, the presumption that the 
Government contractor defense applies can be defeated by showing fraud 
or willful misconduct in submitting the information to the Government. 
However, the more relevant provision for purposes of the question is 
the very last clause of S. 1761, which was discussed above. That 
provision makes the liability protections completely inapplicable--and 
thus enables suits by injured parties--where a contractor acts 
recklessly or with willful misconduct in performing disaster recovery 
activities.
                                 ______
                                 
 Response by Craig King to an Additional Question from Senator Jeffords

    Question 1. Mr. King, in your testimony, on page 3, you discuss the 
Government contractor liability defense and relevant case law on this 
defense. You have interpreted this case law to provide that private 
litigants cannot recover indirectly from contractors when they are 
barred under Federal law from recovering directly from the Government. 
How does the bill's bar against private parties filing claims against 
contractors for Federal environmental laws affect a citizen's ability 
to sue a negligent contractor whose negligence results in harm to human 
health and the environment?
    Response. The bar in S. 1761 against private parties filing claims 
for violations of the Federal environmental laws does not bar private 
party claims that do not arise under the Federal environmental laws. 
While enforcement of the environmental laws is reserved for Government 
enforcement authorities, a party injured by a contractor's actions in a 
disaster recovery effort could bring suit against the contractor on 
other appropriate grounds. As discussed above, there is room for honest 
debate as to those other appropriate grounds--i.e., whether the 
appropriate legal standard for such suits by injured parties is 
``negligence'' or ``recklessness or willful misconduct.'' S. 1761 
embraces the notion that under the exigencies of a disaster recovery 
there should be a measure of deference to Government decision makers 
and contractors who implement the Government's decisions--and that 
therefore it is appropriate that a contractor doing the Government's 
bidding be immune from suits unless the contractor is reckless or 
commits willful misconduct.
                                 ______
                                 
 Statement of Steven L. Schooner, Co-Director, Government Procurement 
          Law Program, George Washington University Law School

    Chairman Thune, Ranking Member Boxer, and members of the committee, 
I appreciate the opportunity to appear before you today to discuss the 
impact of certain Government contractor liability proposals on 
environmental laws. My discussion of S. 1761, the Gulf Coast Recovery 
Act, and its treatment of Government contractor liability, derives from 
my experience in Federal procurement policy, practice, and law. This 
committee's focus upon, and interest in improving, the procurement 
process is an important and valuable public service.
    From a public procurement perspective, this legislation is entirely 
unnecessary. The bill would expose the public, specifically 
individuals, to unnecessary risk and harm. Moreover, the bill would 
discourage responsible contractor behavior and, instead, encourage 
behavior that is harmful to the public. Further, this bill reflects a 
disconcerting trend of seemingly opportunistic post-crisis behavior. 
Specifically, the bill seeks to capitalize upon hurricane Katrina's 
devastation to obtain, for the contractor community, long-sought after, 
and long-denied, insulation from liability. This type of opportunistic 
behavior is not only ill-conceived, but it is harmful to the 
credibility of the Federal Government's procurement process.

                THIS LEGISLATION IS ENTIRELY UNNECESSARY

    The bill's findings assert that ``well-founded fears of future 
litigation and liability under existing law discourage contractors from 
assisting in times of disaster.'' Experience suggests that this 
assertion, the premise underlying S. 1761, is, at best, hyperbole and, 
at worst, simply false. I have seen nothing that suggests that a 
significant number of the nation's (or the world's) best contractors 
have been discouraged from seeking the United States Government's 
business.
    This tactic is not new. Throughout my career (in the private 
sector, in the Government, and in academia), I have heard apocalyptic 
tales of monumental barriers to entry, erected by the Government, that 
frighten firms away from seeking, or continuing to seek, the 
Government's business. (As a procurement policy official, I most often 
confront these assertions in the context of efforts to eliminate the 
qui tam provisions in the False Claims Act.)\1\ What I have not seen--
and what is again absent here--is empirical data or concrete 
information supporting the assertion. This absence of support is 
palpable.\2\
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    \1\U.S.C. 3730.
    \2\Here, history is instructive. At similar hearings 20 years ago, 
Senator Grassley asked the Aerospace Industries Association [AIA] 
whether any members of its association ``no longer bid on Government 
contracts because of the fear of liability suits?'' AIA asserted that 
it lacked sufficient information to respond at the hearing and, in a 
subsequent written response, was no more convincing. Even responding 
``on a non-attribution basis[,]'' AIA failed to identify a single firm.
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        Q: Has any AIA member company declined to bid for or accept the 
        award of a Government contract because that company could not 
        be indemnified by the Government for catastrophic risk?
        A: The consequences of unusually hazardous or nuclear risks 
        arising under Government contract, generally, do influence the 
        business decision process.
    Letter from Lloyd R. Kuhn to the Honorable Charles E. Grassley, 
June 28, 1985, S. Hrg. 99-321, Hearing before the committee on the 
Judiciary on S. 1254, U.S. Senate, 99th Congress, 1st Session (Serial 
No. J-99-32, June 11, 1985) at 96-97.
    Every day, the best contractors, small and large, domestic and 
foreign, aggressively vie for a share of the Government's $300 billion 
procurement budget. At one end of the spectrum, firms compete for the 
lion's share of the Government's contracts, which might be described as 
garden-variety or commercially available work, providing, for example, 
office supplies, custodial services, construction, or information 
technology support. At the other end of the spectrum, a far smaller 
population of firms compete to design and build unique systems 
involving the most advanced, cutting edge technology imaginable. In a 
fraction of contracts found in the latter group, where the work can be 
extraordinarily complex and dangerous, unique rules have evolved to 
insulate contractors from certain liabilities. But a stark, deep chasm 
distinguishes these extraordinary contractual actions from the 
ordinary. S. 1761 does not appear to cover extraordinary work; rather 
the bill specifically describes seemingly ordinary tasks such as debris 
removal, logistics, reconstruction, and basic public services. 
Accordingly, extraordinary measures are neither necessary nor 
appropriate.

  ALTERING THE EXISTING RISK ALLOCATION REGIME SENDS THE WRONG MESSAGE

    S. 1761 intends to insulate certain contractors from liability, 
even when the contractor is at fault. If that is the case, the bill's 
mechanism is flawed, particularly in its allocation of risk of harm 
between the public, contractors, and the Government.\3\ As a matter of 
policy, we should prefer a solution that allocates risk to the superior 
risk bearer. Here, it seems reasonable to conclude that the superior 
risk bearer is the party best positioned to, among other things, (1) 
appraise, in advance, the likelihood that harm will occur; (2) avoid 
the occurrence of the risk; (3) insure against the risk; or (4) bear 
the cost of the risk. This bill appears to do the exact opposite. S. 
1761 allocates the risk of loss to the individual, the party with the 
least opportunity to anticipate, assess, or avoid the risk, insure 
against it, or bear its costs. Ultimately, however, what is 
particularly troubling is that the bill dilutes contractors' incentives 
to assume responsibility for their work and adopt prudent risk 
avoidance strategies.\4\
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    \3\Generally, the Government expects contractors to purchase 
insurance and, accordingly, the Government willingly pays contractors 
to obtain that insurance. Prospective indemnification is employed only 
in extraordinary circumstances (for example, in the nuclear industry) 
where contractors either cannot obtain insurance for a certain risk or 
the cost of insurance would be prohibitive. See, e.g., 48 C.F.R. 
50.403 (indemnification for unusually hazardous or nuclear risks); 
Public Law No. 85-804. Thus, indemnification--through which the 
Government, in effect, self-insures rather than reimbursing the 
contractor for its insurance costs--derives from a failure of the 
marketplace, specifically the insurance industry. See, generally, Ralph 
C. Nash & John Cibinic, Risk of Catastrophic Loss: How to Cope, 7 NASH 
& CIBINIC REP.  44 (July 1988). But bear in mind that the 
indemnification debate focuses upon prospective allocation of risk 
between the Government and its contractors--it does not suggest that 
members of the public, if injured, should have no remedy.
    \4\As the Defense Department explained twenty years ago:
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        . . .Indemnification creates a difficult balance. In the 
        commercial world, risks of third party liability are covered by 
        insurance or are assumed by the manufacturer. . .  We are 
        concerned that blanket indemnification may reduce the 
        contractors' incentive to assume responsibility for the 
        performance of their products. . .  We prefer to contract in an 
        environment similar to the commercial marketplace where 
        companies must take all the steps that would be required of a 
        prudent businessman in order to ensure the safety of the 
        company's product.
    Statement of Mary Ann Gilleece, Deputy Under Secretary of Defense 
for Acquisition Management, S. Hrg. 99-321, Hearing before the 
committee on the Judiciary on S. 1254, U.S. Senate, 99th Congress, 1st 
Session (Serial No. J-99-32, June 11, 1985) at 30.
    Again, under S. 1761, the Government neither will take 
responsibility for its contractors' actions, nor will the Government 
permit the public to hold those contractors accountable. The bill 
appears to determine, in advance, that neither the Government nor its 
contractors would be held responsible if contractors injured (or 
killed) people or damaged (or destroyed) personal or commercial 
property.\5\
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    \5\This seems troubling from a behavioral standpoint.
---------------------------------------------------------------------------
    The immediate effect of the [Government contractor] defense is to 
place the full cost of mishaps on injured parties who, but for 
Government involvement, would be able to shift that cost to the 
contractors. Conversely, assimilating contractor liability to normal 
tort rules might advance traditional objectives of compensating injured 
parties, spreading losses, or implementing generalized notions of 
fairness.
    Ronald A. Cass & Clayton P. Gillette, The Government Contractor 
Defense: Contractual Allocation of Public Risk, 77 Va. L. Rev. 257, 260 
(1991) (emphasis added, footnotes omitted).
    Protection of the public from harm--rather than protection of the 
economic interests of contractors--must come first.\6\ In contrast, 
this legislation appears to mandate that: (1) the party at greatest 
risk should be the individual, a member of the public, who is harmed; 
(2) neither the Government nor the Government's contractors should bear 
responsibility for harm inflicted upon the public; and (3) this outcome 
should prevail even if the insurance market could better allocate, in 
advance, the risk of harm. Again, these issue of contractor liability 
is not new.\7\ But the solution--that the public should bear the risk 
of loss, rather than the Government or its contractors--is as novel as 
it is unappealing.
---------------------------------------------------------------------------
    \6\Consider the 1963 report on catastrophic accidents in Government 
programs prepared by the Legislative Drafting Research Fund of Columbia 
University on behalf of the National Security Industrial Association. 
Albert J. Rosenthal, Harold L. Korn & Stanley B. Lubman, Catastrophic 
Accidents in Government Programs, 72-76 (1963). The report staked out 
the immensely reasonable conclusion that: ``The most important 
objective--is the assurance of prompt and adequate compensation of the 
public.'' Id., Summary at 12.
    \7\The Department of Justice (DOJ) objected to a 1985 bill to, 
among other things, reduce liability of contractors, because it did not 
``believe that Government indemnification of contractor losses is the 
appropriate way to solve the problems faced by Government contractors 
because of changing tort liability--'' S. Hrg. 99-321, Hearing before 
the committee on the Judiciary on S. 1254, U.S. Senate, 99th Congress, 
1st Session (Serial No. J-99-32, June 11, 1985). ``In the past few 
years, the efforts of Government contractors to transfer their product 
liability exposure to the Government has increased dramatically.'' Id. 
at 22. Although DOJ acknowledged ``that the changes in the tort system 
have created problems for contractors, [it] did not believe that 
indemnification is an appropriate response, and certainly it does not 
correct the underlying reasons for these problems.''
---------------------------------------------------------------------------

              MISUSE OF THE GOVERNMENT CONTRACTOR DEFENSE

    Unfortunately, the bill attempts to apply, quite broadly, the 
``Government contractor defense'' to disaster relief. In so doing, the 
bill turns the Government contractor defense on its head. S. 1761 would 
create a ``rebuttable presumption that--all elements of the Government 
contractor defense are satisfied; and--the Government contractor 
defense applies in the lawsuit.'' This would be a dramatic (and 
inappropriate) application of the Government contractor defense.
    The Government contractor defense, as it has been interpreted, 
seeks to insulate (historically, supply) contractors that explicitly 
follow Government direction to their detriment.\8\ To the extent that 
contractors exercise significant amounts of discretion in the 
performance of their contracts, however, the defense has not protected 
them.\9\ This point is particularly important. When the Government 
rushes to identify contractors, hastily drafts its contracts (or merely 
relies upon open-ended, vague statements of work), and loosely manages 
contract performance, the Government necessarily delegates the exercise 
of discretion to contractors in performing their contracts. 
Specifically, contractors must weigh, among other things, haste versus 
caution, or, to some extent, profits versus care.\10\ It is troubling 
enough that the Government would cede such important decisions to 
contractors; but it seems strange that the Government, prospectively, 
would insulate its contractors from the fiscal ramifications of those 
decisions.
---------------------------------------------------------------------------
    \8\See, e.g., Boyle v. United Technologies Corp., 487 U.S. 500 
(1988).
    \9\The Boyle decision seems to be providing the logical framework--
to decide whether the Government contractor defense will protect 
contractors from tort liability--[T]he Supreme Court has given a set of 
straightforward requirements--the most important of which is the 
Government approval requirement.--[W]here the Government Agency is a 
full participant in the design process, the defense can be predicted to 
be a winner. In contrast, if the Government has not participated in 
design the contractor will find it very hard to use the defense. If the 
plaintiff can prove that the defect occurred in the manufacturing 
process, the defense will be of little or no value to the contractor. 
Ralph C. Nash & John Cibinic, Postscript: The Circuit Court View of the 
Government Contractor Defense, 8 Nash & Cibinic Rep.  52 (August 
1990).
    \10\In removing debris, for example, a contractor faces significant 
economic choices with regard to, among other things, (1) the experience 
of its personnel (e.g., drivers with spotless safety records might 
demand higher wages); (2) the quality and maintenance of its equipment 
(newer, better maintained trucks likely cost more to purchase or 
lease); (3) the means of performance (the minimally acceptable 
environmental standards likely cost less than more current, potentially 
cleaner and/or safer technologies); or (4) time management (truck 
drivers might save time and money by transporting hazardous waste 
through, rather than avoiding, residential communities).
---------------------------------------------------------------------------
    This scenario is dramatically different from, for example, the 
types of contracts intended to be covered by the Support Anti-Terrorism 
by Fostering Effective Technologies Act of 2002 (SAFETY Act).\11\ The 
SAFETY Act sought to encourage the development, and protect the use of, 
new or evolving (and, implicitly, unproven) technologies. The 
underlying assumption of the SAFETY Act is that, without insulation 
from liability, contractors might not otherwise permit the Government 
to deploy these technologies, known as qualified anti-terrorism 
technologies (QATTS), to combat terrorism. In other words, the 
contracts involve unusual work or technologies (or unusual use of 
technologies) that is perceived as extraordinarily risky.\12\
---------------------------------------------------------------------------
    \11\Pub. L. 107-296,  861. See, generally, Homeland Security 
SAFETY Act page at https://www.safetyact.gov/DHS/SActHome.nsf/
Main?OpenFrameset&6HYKFL;Alison M. Levin, Note: The SAFETY Act of 2003: 
Implications for the Government Contractor Defense, 34 Pub. Cont. L.J. 
175 (2004).
    \12\This point cannot be over-emphasized. For a good articulation 
of this principle, see, e.g., Patrick E. Tolan, Jr., Environmental 
Liability Under Public Law 85-804: Keeping the Ordinary Out of 
Extraordinary Contractual Relief, 32 Pub. Cont. L.J. 215 (2003) 
(emphasizing the unique (or, specifically, extraordinary) nature of the 
contractual requirements, particularly in research and development, 
that proved uninsurable because they involved, for example, nuclear 
power or highly volatile missile fuels).
---------------------------------------------------------------------------
    Here, the statute would apply to far more common, if not mundane, 
tasks. Although clearly important, by and large, the contracts that 
this bill would cover involve routine tasks such as search and rescue; 
demolition and repair; debris removal; and de-watering of flooded 
property. In all such cases, the existing standard of care seems 
reasonable. Moreover, the rather mechanical certification 
responsibility assigned to the Chief of Engineers is a far cry from the 
highly judgmental and discretionary decision required of the Homeland 
Security Department Under Secretary pursuant to the SAFETY Act. 
Specifically, the SAFETY Act employs a number of criteria,\13\ most, if 
not all, of which are absent here. For example, it is difficult to 
create a scenario in which there would be a ``substantial likelihood 
that the technology [involved in, e.g., debris removal] will not be 
deployed unless the [Gulf Coast Recovery Act] protections are 
extended.''
---------------------------------------------------------------------------
    \13\The seven criteria include: prior United States Government use 
or demonstrated substantial utility and effectiveness; availability of 
the technology for immediate deployment in public and private settings; 
existence of extraordinarily large or unquantifiable potential third 
party liability risk exposure to seller (or another provider of the 
technology); substantial likelihood that the technology will not be 
deployed unless Safety Act protections are extended; magnitude of risk 
exposure to the public if the technology is not deployed; evaluation of 
all scientific studies that can be feasibly conducted to assess the 
capability of the technology to substantially reduce risks of harm; and 
whether the technology would be effective in facilitating the defense 
against acts of terrorism. See, e.g., Homeland Security SAFETY Act page 
at https://www.safetyact.gov/DHS/SActHome.nsf/Main?OpenFrameset&6HYKFL.
---------------------------------------------------------------------------
  OPPORTUNISTIC POST-CRISIS LEGISLATION HARMS THE PROCUREMENT PROCESS

    As discussed above, this legislation may be good for contractors, 
but it does not appear to be in the best interests of the nation. 
Frankly, it is difficult to understand why Congress would rush to 
protect, prospectively, those contractors that, in performing post-
Katrina construction work, unnecessarily fail to take precautions, 
inadequately supervise employees, or employ unduly risky processes or 
substandard materials or equipment that place the public's health, 
safety, and property at risk. Unfortunately, this bill seems to further 
the trend, since hurricane Katrina, to utilize the disaster to pursue 
public policies that otherwise might prove untenable.
    For example, in its $51.8 billion post-Katrina emergency 
supplemental appropriation, Congress hastily raised the ``micro-
purchase threshold'' (which, in effect, serves as the charge card 
purchase cap) to $250,000 for purchases relating to relief and recovery 
from Hurricane Katrina.\14\ That's a 100 percent increase on the 
typical $2,500 limit and a completely different animal from the $15,000 
limit previously imposed during contingencies and emergencies. 
Fortunately, the administration soon thereafter chose to bar further 
use of this authority.\15\ That this authority became law is 
breathtaking.\16\ At the time, more than 300,000 Government purchase 
cards were in circulation. A mountain of Inspector General reports, 
Government Accountability Office studies, and Congressional hearings 
have demonstrated that the Government's management of its charge cards 
has been abysmal. In August, the White House issued long overdue 
guidance mandating fundamental training and risk management 
policies.\17\ Moreover, the effect upon small businesses would have 
been devastating.
---------------------------------------------------------------------------
    \14\Public Law 109-62,  101(2).
    \15\Memorandum from Clay Johnson III, Deputy Director for 
Management, Limitation on Use of Special Micro-purchase Threshold 
Authority for Hurricane Katrina Rescue and Relief Operations (October 
3, 2005).
    \16\Steven L. Schooner, Fiscal Waste: Priceless, L.A. Times 
(September 14, 2005).
    \17\Appendix B to Revised OMB Circular A-123, ``Improving the 
Management of Government Charge Card Programs.''
---------------------------------------------------------------------------
    The same can be said for the administration's suspension--and 
subsequent repeal of the suspension--of the Davis-Bacon Act.\18\ The 
suspension of this law, which requires that workers on Federal 
construction contracts be paid prevailing wage rates, would have 
ensured that contractors could profit from the massive reconstruction 
effort without permitting minimum wage workers to receiving prevailing 
wages that might permit them to rise into the lower middle class. The 
administration's putative explanation--that without suspension of the 
Davis-Bacon Act, insufficient labor would be available--was simply 
disingenuous.
---------------------------------------------------------------------------
    \18\Proclamation by the President: Revoking Proclamation 7924 
(November 3, 2005), http://www.whitehouse.gov/news/releases/2005/11/
20051103-9.html.
---------------------------------------------------------------------------
    In both of these examples, the rush to change procurement policies 
subsequently was overcome by reason. Hopefully, reason will prevail 
here as well. Bear in mind that knowledgeable Federal procurement 
executives--both with regard to Iraq and post-Katrina relief understand 
that the current procurement regime contains sufficient flexibility for 
the Government to meet its purchasing requirements in times of 
crisis.\19\
---------------------------------------------------------------------------
    \19\``Iraq--taught us that many of the flexibilities contained in 
the Federal Acquisition Regulation--are poorly understood by many in 
Congress and the media--These flexibilities include limited as opposed 
to full and open competition, higher levels under which purchases can 
be made instantly, and more. Capitalizing on these flexibilities 
enables us to meet the demands for speed and agility integral to any 
recovery effort.'' Stan Soloway, Baghdad's Lessons for Orleans, GOV. 
EXEC. (Oct. 1, 2005), http://www.govexec.com/features/1005-01/1005-
01advp2.htm. Last year, the Defense Department created the Joint Rapid 
Acquisition Cell (JRAC), because: ``Some combatant commanders, as well 
as acquisition experts, don't realize that many legal requirements that 
tend to bog down military contracts don't apply during wartime--'' See, 
e.g., http://www.defenselink.mil/news/Nov2004/n11242004--
2004112405.html.
---------------------------------------------------------------------------
  THIS LEGISLATION IGNORES THE GOVERNMENT'S MOST CRITICAL PROCUREMENT 
                                PROBLEM

    I would be remiss if I failed to take this opportunity to address a 
pressing matter that cries out for Congressional attention and 
intervention.\20\ The Federal Government must devote more resources to 
the acquisition function. This investment is urgent given the 
combination of the 1990's Congressionally-mandated acquisition 
workforce reductions, the administration's pressure to outsource,\21\ 
and the dramatic increase in procurement spending since the September 
11, 2001 attacks and, now, hurricane Katrina.\22\
---------------------------------------------------------------------------
    \20\See also, Steven Kelman & Steven L. Schooner, Scandal or 
Solution?, GOVEXEC.COM 
http://www.govexec.com/dailyfed/1105/110705ol.htm (November 7, 2005).
    \21\Outsourcing, or its more palatable pseudonym, ``competitive 
sourcing,'' has been one of five Government-wide initiatives in the 
Bush management agenda. See, e.g., Executive Office of the President, 
Office of Management and Budget, The President's Management Agenda, 
Fiscal Year 2002, www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf. 
``President Bush is a major advocate of--hiring private firms to do the 
Government's work--'' Dru Stevenson, Privatization of Welfare Services: 
Delegation by Commercial Contract, 45 Ariz. L. Rev. 83 (2003), citing, 
David J. Kennedy, Due Process in a Privatized Welfare System, 64 Brook. 
L. Rev. 231, 232 (1998) (referencing ``Governor Bush's effort to 
privatize most of Texas' welfare system--in his attempt to make a name 
for himself--that could carry him to national office.'' See also, 
Matthew Diller, Form and Substance in the Privatization of Property 
Programs, 49 UCLA L. Rev. 1739, 1763, n. 94 (2002) (``Governor Bush 
sought to hand the administration of the state's welfare system over 
to--Lockheed Martin--and Electronic Data Systems--'').
    \22\See, generally, Steven L. Schooner, Feature Comment--Empty 
Promise for the Acquisition Workforce, 47 The Government Contractor  
203 (May 4, 2005), available at http://ssrn.com/abstract=719685; Griff 
Witte & Robert O'Harrow, Jr, Short-Staffed FEMA Farms Out Procurement, 
Washington Post D01 (September 17, 2005).
---------------------------------------------------------------------------
    Congress has been quick to call for more auditors and inspectors 
general to scrutinize Katrina-related contracting. That's a responsible 
gesture. But there has been no corresponding call for more contracting 
experts to perform the many functions that are necessary for the 
procurement system to work well. In order to serve the taxpaying public 
and meet the needs of Agency customers, acquisition professionals must 
promptly and accurately describe what the Government wants to buy, 
identify and select quality suppliers, ensure fair prices, structure 
contracts with proper monetary incentives for good performance, and 
manage and evaluate contractor performance.\23\
---------------------------------------------------------------------------
    \23\A simple Iraq ``lesson learned'' was that, if the Government 
relies heavily upon contractors, the Government must maintain, invest 
in, and apply appropriate acquisition professional resources to select, 
direct, and manage those contractors. Unfortunately, insufficient 
contract management resources were applied. See, generally, Steven L. 
Schooner, Contractor Atrocities at Abu Ghraib: Compromised 
Accountability in a Streamlined, Outsourced Government, 16 Stanford Law 
& Policy Review 549 (2005). For example, General Fay poignantly 
articulated: ``[T]here was no credible exercise of appropriate 
oversight of contract performance at Abu Ghraib.'' MG George R. Fay, 
Investigating Officer, AR 15-6 Investigation of the Abu Ghraib 
Detention Facility and 205th Military Intelligence Brigade, at 52 ( 
``the Fay Report''). This problem exists Government-wide: ``[T]he 
administration of contracts[,] once they have been signed[,] has been 
the neglected stepchild of [procurement system reform] effort.'' Steven 
Kelman, Strategic Contracting Management, in Market Based Governance: 
Supply Side, Demand Side, Upside, and Downside at 89-90, 93 (John D. 
Donahue & Joseph S. Nye Jr. eds., 2002).
---------------------------------------------------------------------------
    Sadly, the contracting workforce desperately requires a dramatic 
recapitalization.\24\ A bipartisan, post-Cold War, 1990's initiative 
severely reduced the contracting workforce, leaving the Government 
unprepared for a post-9/11 spending binge. In the last four years, 
contracting dollars have increased by half, without a corresponding 
increase in the workforce. For fifteen years, the Government skimped on 
training, while contracting officers faced increasing workloads and 
confronted increasingly complex contractual challenges. Scarce 
resources, when they become available, were allocated to oversight, 
rather than supplementing, supporting, or training contracting people. 
Senior procurement officials increasingly bemoan that no young person 
in his or her right mind would enter Government contracting as a 
career.
---------------------------------------------------------------------------
    \24\See, generally, Federal Procurement: Spending and Workforce 
Trends, GAO-03-443 (April 2003); Steven L. Schooner, Fear of Oversight: 
The Fundamental Failure of Businesslike Government, 50 AM. U.L. REV. 
627 (2001); Office of the Inspector General, Department of Defense, DoD 
Acquisition Workforce Reduction Trends and Impacts, Report D-2000-088 
(February 29, 2000).
---------------------------------------------------------------------------
    The old adage--an ounce of prevention is worth a pound of cure--
rings true. More auditors and inspectors general will guarantee a 
steady stream of scandals, but they'll neither help avoid the scandals 
nor improve the procurement system. Conversely, a prospective 
investment in upgrading the number, skills, and morale of Government 
purchasing officials would reap huge dividends for the taxpayers.

                               CONCLUSION

    That concludes my statement. Thank you for the opportunity to share 
these thoughts with you. I would be pleased to answer any questions.
                                 ______
                                 
     Response by Steven L. Schooner to an Additional Question from 
                            Senator Jeffords

    Question 1. Please discuss how the Government contractor defense 
would work under S. 1761.
    Response. Frankly, the Government contractor defense simply would 
not work--in terms of serving its original purpose--under S. 1761. My 
perception is that the process would entail the following:
    1. A request would be submitted to the Corps of Engineers for a 
certificate. This request could be prospective or retrospective. It 
also appears that such a request could be submitted either by the 
Government, a contractor, or another entity such as an insurance 
company.
    2. The Chief of Engineers would be required to issue a 
``certificate of need.''

     if the work would take place in the disaster zone. (It is 
unclear whether the Chief of Engineers actually would need to determine 
whether the work ``was or will be necessary for the recovery of a 
disaster zone from disaster. . . .''); and
     if at least 50 percent of the work fell into any of the 
identified (albeit broad) categories (including construction, clean-up, 
debris removal, etc.); and
     regardless of how much discretion the contractor enjoyed 
in performing the work; and
     regardless of whether the request applied to a Federal, 
State, or local Government contract.

    3. Contractors (and subcontractors) could raise the Government 
contractor defense to defeat claims brought by a damaged party (e.g., a 
member of the public or a contractor employee). Specifically, they 
would be entitled to a rebuttable presumption that all of the elements 
of the Government contractor defense were satisfied and that the 
Government contractor defense applied to the lawsuit.

     ``Moreover, a damaged party could not overcome the above 
presumption without producing evidence that the contractor acted 
fraudulently or with willful misconduct'' in relation to the 
certificate process. Accordingly, this usage of the phrase ``rebuttable 
presumption'' seems inapt. Typically, one rebuts a presumption by 
producing evidence to the contrary. Here, however, even the production 
of specific, unequivocal evidence that demonstrated that it was 
inappropriate to apply the Government contractor defense would be to no 
avail.
    4. Ultimately, then, the bill turns the Government contractor 
defense on its head. As I explained in my written statement:\1\
---------------------------------------------------------------------------
    \1\ In these excerpts, the numbering of the footnotes has changed 
from the original.
---------------------------------------------------------------------------
     The Government contractor defense, as it has been interpreted, 
seeks to insulate (historically, supply) contractors that explicitly 
follow Government direction to their detriment.\2\ To the extent that 
contractors exercise significant amounts of discretion in the 
performance of their contracts, however, the defense has not protected 
them.\3\ This point is particularly important. When the Government 
rushes to identify contractors, hastily drafts its contracts (or merely 
relies upon open-ended, vague statements of work), and loosely manages 
contract performance, the Government necessarily delegates the exercise 
of discretion to contractors in performing their contracts. 
Specifically, contractors must weigh, among other things, haste versus 
caution, or, to some extent, profits versus care.\4\ It is troubling 
enough that the Government would cede such important decisions to 
contractors; but it seems strange that the Government, prospectively, 
would insulate its contractors from the fiscal ramifications of those 
decisions.
---------------------------------------------------------------------------
    \2\ See, e.g., Boyle v. United Technologies Corp., 487 U.S. 500 
(1988).
    \3\ The Boyle decision seems to be providing the logical framework 
. . .  to decide whether the Government contractor defense will protect 
contractors from tort liability--[T]he Supreme Court has given a set of 
straightforward requirements, the most important of which is the 
Government approval requirement. [W]here the Government Agency is a 
full participant in the design process, the defense can be predicted to 
be a winner. In contrast, if the Government has not participated in 
design the contractor will find it very hard to use the defense. If the 
plaintiff can prove that the defect occurred in the manufacturing 
process, the defense will be of little or no value to the contractor. 
Ralph C. Nash & John Cibinic, Postscript: The Circuit Court View of the 
Government Contractor Defense, 8 Nash & Cibinic Rep. 52 (August 1990).
    \4\ In removing debris, for example, a contractor faces significant 
economic choices with regard to, among other things, (1) the experience 
of its personnel (e.g., drivers with spotless safety records might 
demand higher wages); (2) the quality and maintenance of its equipment 
(newer, better maintained trucks likely cost more to purchase or 
lease); (3) the means of performance (the minimally acceptable 
environmental standards likely cost less than more current, potentially 
cleaner and/or safer technologies); or (4) time management (truck 
drivers might save time and money by transporting hazardous waste 
through, rather than avoiding, residential communities).
---------------------------------------------------------------------------
                                 ______
                                 
    Reponses by Steven L. Schooner to an Additional Questions from 
                             Senator Thune

    Question 1. In your testimony, you expressed great dismay at what 
you call a ``disconcerting trend of seemingly opportunistic post-crisis 
behavior.'' I am not sure what you mean by that, so let me ask what it 
is that you heard during our subcommittee hearing (from Mr. Zelenka, 
Mr. Perkins, or Mr. Feigin) that you would consider opportunistic? Are 
these gentlemen among the people you have in mind?
    Response. My oral testimony was an effort to condense my prepared 
statement, which addressed this issue at great length under the 
heading: ``Opportunistic Post-Crisis Legislation Harms the Procurement 
Process.'' Please consider the following excerpt:

        . . . Unfortunately, this bill seems to further the trend, 
        since hurricane Katrina, to utilize the disaster to pursue 
        public policies that otherwise might prove untenable.
        For example, in its $51.8 billion post-Katrina emergency 
        supplemental appropriation, Congress hastily raised the 
        ``micro-purchase threshold'' (which, in effect, serves as the 
        charge card purchase cap) to $250,000 for purchases relating to 
        relief and recovery from Hurricane Katrina.\5\ That's a 100 
        fold increase on the typical $2,500 limit and a completely 
        different animal from the $15,000 limit previously imposed 
        during contingencies and emergencies. Fortunately, the 
        administration soon thereafter chose to bar further use of this 
        authority.\6\ That this authority became law is 
        breathtaking.\7\ At the time, more than 300,000 Government 
        purchase cards were in circulation. A mountain of Inspector 
        General reports, Government Accountability Office studies, and 
        Congressional hearings have demonstrated that the Government's 
        management of its charge cards has been abysmal. In August, the 
        White House issued long overdue guidance mandating fundamental 
        training and risk management policies.\8\ Moreover, the effect 
        upon small businesses would have been devastating.
---------------------------------------------------------------------------
    \5\ Public Law 109-62, 101(2).
    \6\ Memorandum from Clay Johnson III, Deputy Director for 
Management, Limitation on use of Special Micro-purchase Threshold 
Authority for Hurricane Katrina Rescue and Relief Operations (October 
3, 2005).
    \7\ Steven L. Schooner, Fiscal Waste: Priceless, L.A. Times 
(September 14, 2005).
    \8\ Appendix B to Revised OMB Circular A-123, ``Improving the 
Management of Government Charge Card Programs.''
---------------------------------------------------------------------------
        The same can be said for the administration's suspension--and 
        subsequent repeal of the suspension--of the Davis-Bacon Act.\9\ 
        The suspension of this law, which requires that workers on 
        Federal construction contracts be paid prevailing wage rates, 
        would have ensured that contractors could profit from the 
        massive reconstruction effort without permitting minimum wage 
        workers to receiving prevailing wages that might permit them to 
        rise into the lower middle class. The administration's putative 
        explanation-that without suspension of the Davis-Bacon Act, 
        insufficient labor would be available--was simply disingenuous.
---------------------------------------------------------------------------
    \9\ Proclamation by the President: Revoking Proclamation 7924 
(November 3, 2005), http://www.whitehouse.gov/news/releases/2005/11/
20051103-9.html.
---------------------------------------------------------------------------
        In both of these examples, the rush to change procurement 
        policies subsequently was overcome by reason. Hopefully, reason 
        will prevail here as well. Bear in mind that knowledgeable 
        Federal procurement executives--both with regard to Iraq and 
        post-Katrina relief--understand that the current procurement 
        regime contains sufficient flexibility for the Government to 
        meet its purchasing requirements in times of crisis.\10\
---------------------------------------------------------------------------
    \10\ ``Iraq . . .  taught us that many of the flexibilities 
contained in the Federal Acquisition Regulation . . .  are poorly 
understood by many in Congress and the media. . .  These flexibilities 
include limited as opposed to full and open competition, higher levels 
under which purchases can be made instantly, and more. Capitalizing on 
these flexibilities enables us to meet the demands for speed and 
agility integral to any recovery effort.'' Stan Soloway, Baghdad's 
Lessons for Orleans, Gov. Exec. (Oct. 1, 2005), http://www.govexec.com/
features/1005-01/1005-01advp2.htm. Last year, the Defense Department 
created the Joint Rapid Acquisition Cell (JRAC), because: ``Some 
combatant commanders, as well as acquisition experts, don't realize 
that many legal requirements that tend to bog down military contracts 
don't apply during wartime. . . .'' See, e.g., http://
www.defenselink.mil/news/Nov2004/n11242004--2004112405.html.

    Following this section, my written statement attempted to contrast 
this opportunistic behavior with what, instead, would prove a more 
productive focus of legislative energy in a section titled: ``This 
Legislation Ignores The Government's Most Critical Procurement 
---------------------------------------------------------------------------
Problem.''

        I would be remiss if I failed to take this opportunity to 
        address a pressing matter that cries out for Congressional 
        attention and intervention.\11\ The Federal Government must 
        devote more resources to the acquisition function. This 
        investment is urgent given the combination of the 1990's 
        Congressionally mandated acquisition workforce reductions, the 
        administration's pressure to outsource,\12\ and the dramatic 
        increase in procurement spending since the September 11, 2001 
        attacks and, now, hurricane Katrina.\13\
---------------------------------------------------------------------------
    \11\ See also, Steven Kelman & Steven L. Schooner, Scandal or 
Solution?, GOVEXEC.COM http://www.govexec.com/dailyfed/1105/
110705ol.htm (November 7, 2005).
    \12\ Outsourcing, or its more palatable pseudonym, ``competitive 
sourcing,'' has been one of five Government-wide initiatives in the 
Bush management agenda. See, e.g., Executive Office of the President, 
Office of Management and Budget, The President's Management Agenda, 
Fiscal Year 2002, www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf. 
``President Bush is a major advocate of. . .  hiring private firms to 
do the Government's work. . .'' Dru Stevenson, Privatization of Welfare 
Services: Delegation by Commercial Contract, 45 Ariz. L. Rev. 83 
(2003), citing, David J. Kennedy, Due Process in a Privatized Welfare 
System, 64 Brook. L. Rev. 231, 232 (1998) (referencing ``Governor 
Bush's effort to privatize most of Texas' welfare system. . .  in his 
attempt to make a name for himself. . .  that could carry him to 
national office.'' See also, Matthew Diller, Form and Substance in the 
Privatization of Property Programs, 49 UCLA L. Rev. 1739, 1763, n. 94 
(2002) (``Governor Bush sought to hand the administration of the 
State's welfare system over to. . .  Lockheed Martin. . .  and 
Electronic Data Systems. . . .'').
    \13\ See, generally, Steven L. Schooner, Feature Comment--Empty 
Promise for the Acquisition Workforce, 47 The Government Contractor 203 
(May 4, 2005), available at http://ssrn.com/abstract=719685; Griff 
Witte & Robert O'Harrow, Jr, Short-Staffed FEMA Farms Out Procurement, 
Washington Post D01 (September 17, 2005).
---------------------------------------------------------------------------
        Congress has been quick to call for more auditors and 
        inspectors general to scrutinize Katrina-related contracting. 
        That's a responsible gesture. But there has been no 
        corresponding call for more contracting experts to perform the 
        many functions that are necessary for the procurement system to 
        work well. In order to serve the taxpaying public and meet the 
        needs of Agency customers, acquisition professionals must 
        promptly and accurately describe what the Government wants to 
        buy, identify and select quality suppliers, ensure fair prices, 
        structure contracts with proper monetary incentives for good 
        performance, and manage and evaluate contractor 
        performance.\14\
---------------------------------------------------------------------------
    \14\ A simple Iraq ``lesson learned'' was that, if the Government 
relies heavily upon contractors, the Government must maintain, invest 
in, and apply appropriate acquisition professional resources to select, 
direct, and manage those contractors. Unfortunately, insufficient 
contract management resources were applied. See, generally, Steven L. 
Schooner, Contractor Atrocities at Abu Ghraib: Compromised 
Accountability in a Streamlined, Outsourced Government, 16 Stanford Law 
& Policy Review 549 (2005). For example, General Fay poignantly 
articulated: ``[T]here was no credible exercise of appropriate 
oversight of contract performance at Abu Ghraib.'' MG George R. Fay, 
Investigating Officer, AR 15-6 Investigation of the Abu Ghraib 
Detention Facility and 205th Military Intelligence Brigade, at 52 ( 
``the Fay Report''). This problem exists Government-wide: ``[T]he 
administration of contracts[,] once they have been signed[,] has been 
the neglected stepchild of [procurement system reform] effort.'' Steven 
Kelman, Strategic Contracting Management, in Market Based Governance: 
Supply Side, Demand Side, Upside, and Downside at 89-90, 93 (John D. 
Donahue & Joseph S. Nye Jr. eds., 2002).
---------------------------------------------------------------------------
        Sadly, the contracting workforce desperately requires a 
        dramatic recapitalization.\15\ A bipartisan, post-Cold War, 
        1990's initiative severely reduced the contracting workforce, 
        leaving the Government unprepared for a post-9/11 spending 
        binge. In the last four years, contracting dollars have 
        increased by half, without a corresponding increase in the 
        workforce. For fifteen years, the Government skimped on 
        training, while contracting officers faced increasing workloads 
        and confronted increasingly complex contractual challenges. 
        Scarce resources, when they become available, were allocated to 
        oversight, rather than supplementing, supporting, or training 
        contracting people. Senior procurement officials increasingly 
        bemoan that no young person in his or her right mind would 
        enter Government contracting as a career.
---------------------------------------------------------------------------
    \15\ See, generally, Federal Procurement: Spending and Workforce 
Trends, GAO-03-443 (April 2003); Steven L. Schooner, Fear of Oversight: 
The Fundamental Failure of Businesslike Government, 50 Am. U.L. Rev. 
627 (2001); Office of the Inspector General, Department of Defense, DoD 
Acquisition Workforce Reduction Trends and Impacts, Report D-2000-088 
(February 29, 2000).
---------------------------------------------------------------------------
        The old adage--an ounce of prevention is worth a pound of 
        cure--rings true. More auditors and inspectors general will 
        guarantee a steady stream of scandals, but they'll neither help 
        avoid the scandals nor improve the procurement system. 
        Conversely, a prospective investment in upgrading the number, 
        skills, and morale of Government purchasing officials would 
        reap huge dividends for the taxpayers.

    Moreover, just to be clear, no, my testimony was not written with 
Messrs. Zelenka, Perkins, or Feigin in mind.

    Question 2. How would you characterize the work being done in New 
Orleans? Are these ``seemingly ordinary tasks''? Are they mundane? Are 
these ordinary working conditions? Is there nothing unique about the 
situation? I ask this question because earlier this month, the mayor of 
New Orleans testified before the full EPW Committee and described the 
destruction as being ``unprecedented'' in nature.
    Response. On a contract-by-contract basis, the lion's share of the 
work that would be covered by S. 1761, consistent with the work being 
done in New Orleans, can fairly be described--from a public procurement 
perspective--as ordinary or mundane. I do not dispute that the scope of 
the destruction is unprecedented. Nor do I mean to suggest that the 
affected work is in any way unimportant. Rather, this characterization 
merely reflects the nature of the work, rather than the working 
conditions, the situation, or the scope of the combined tasks.
    To be clear, I use these terms to describe tasks such as search and 
rescue; demolition and repair; debris removal; and de-watering of 
flooded property in contrast to work for which (a) an extremely small 
number of contractors (or a limited pool of individuals) are capable of 
performing, or (b) unique facilities are required to perform, the work. 
To put this in context, the ordinary nature of the work is reflected in 
the fact that the private sector, in the United States and abroad, 
offers a nearly unlimited capacity to perform these tasks. Contrast 
this, for example, with the extremely limited private sector capacity 
available to design, manufacture, or repair a nuclear submarine.
    As indicated above, my oral testimony was an effort to condense my 
prepared statement, which addressed this issue at great length under 
the heading: ``Misuse of the Government Contractor Defense.'' Consider 
the following excerpt:

        This scenario is dramatically different from, for example, the 
        types of contracts intended to be covered by the Support Anti-
        Terrorism by Fostering Effective Technologies Act of 2002 
        (SAFETY Act).\16\ The SAFETY Act sought to encourage the 
        development, and protect the use of, new or evolving (and, 
        implicitly, unproven) technologies. The underlying assumption 
        of the SAFETY Act is that, without insulation from liability, 
        contractors might not otherwise permit the Government to deploy 
        these technologies, known as qualified antiterrorism 
        technologies (QATTS), to combat terrorism. In other words, the 
        contracts involve unusual work or technologies (or unusual use 
        of technologies) that is perceived as extraordinarily 
        risky.\17\
---------------------------------------------------------------------------
    \16\ Pub. L. 107-296, 861. See, generally, Homeland Security 
SAFETY Act page at https://www.safetyact.gov/DHS/SActHome.nsf/
Main?OpenFrameset&6HYKFL;Alison M. Levin, Note: The SAFETY Act of 2003: 
Implications for the Government Contractor Defense, 34 Pub. Cont. L.J. 
175 (2004).
    \17\ This point cannot be over-emphasized. For a good articulation 
of this principle, see, e.g., Patrick E. Tolan, Jr., Environmental 
Liability Under Public Law 85-804: Keeping the Ordinary Out of 
Extraordinary Contractual Relief, 32 Pub. Cont. L.J. 215 (2003) 
(emphasizing the unique (or, specifically, extraordinary) nature of the 
contractual requirements, particularly in research and development, 
that proved uninsurable because they involved, for example, nuclear 
power or highly volatile missile fuels).
---------------------------------------------------------------------------
        Here, the statute would apply to far more common, if not 
        mundane, tasks. Although clearly important, by and large, the 
        contracts that this bill would cover involve routine tasks such 
        as search and rescue; demolition and repair; debris removal; 
        and de-watering of flooded property. In all such cases, the 
        existing standard of care seems reasonable. Moreover, the 
        rather mechanical certification responsibility assigned to the 
        Chief of Engineers is a far cry from the highly judgmental and 
        discretionary decision required of the Homeland Security 
        Department Under Secretary pursuant to the SAFETY Act. 
        Specifically, the SAFETY Act employs a number of criteria,\18\ 
        most, if not all, of which are absent here. For example, it is 
        difficult to create a scenario in which there would be a 
        ``substantial likelihood that the technology [involved in, 
        e.g., debris removal] will not be deployed unless the [Gulf 
        Coast Recovery Act] protections are extended.''
---------------------------------------------------------------------------
    \18\ The seven criteria include: prior United States Government use 
or demonstrated substantial utility and effectiveness; availability of 
the technology for immediate deployment in public and private settings; 
existence of extraordinarily large or unquantifiable potential third 
party liability risk exposure to seller (or another provider of the 
technology); substantial likelihood that the technology will not be 
deployed unless SAFETY Act protections are extended; magnitude of risk 
exposure to the public if the technology is not deployed; evaluation of 
all scientific studies that can be feasibly conducted to assess the 
capability of the technology to substantially reduce risks of harm; and 
whether the technology would be effective in facilitating the defense 
against acts of terrorism. See, e.g., Homeland Security SAFETY Act page 
at https://www.safetyact.gov/DHS/SActHome.nsf/Main?OpenFrameset&6HYKFL.
---------------------------------------------------------------------------
                                 ______
                                 
      Statement of Paul Becker, President, Willis North American 
                         Construction Practice

    Good afternoon. My name is Paul Becker; I work at Willis, a global 
insurance broker, as the North American Construction Practice Group 
Leader. I am proud to lead this practice, as my colleagues and I 
represent more than 3,500 construction related clients in North 
America. We work to structure and secure effective risk management 
programs that can address safety issues, contractual liabilities, 
surety bonds and more. I have been in the insurance business for 27 
years--the vast majority of which has been in the construction sector--
and it is my pleasure and honor to appear before you today testifying 
as to the importance of insurance in the cleanup of New Orleans in the 
wake of Hurricane Katrina--specifically the need to limit the liability 
of contractors engaged in this important work.
    As insurance brokers, we work with our clients around the world and 
across all industries helping them assess, quantify, mitigate and 
transfer their risks thereby allowing them to focus on achieving their 
business goals. Doing so affords them the comfort and confidence that 
their assets--property, people, intellectual capital, equipment--are 
more than adequately and properly protected against a broad range of 
risks. We are not an insurance company--that is, we do not underwrite 
the risks. We are an intermediary bringing the two parties together 
working to fashion the very best, customized coverage we can secure for 
our clients. As part of this client advocacy, we work with and have 
developed strong relationships with insurance carriers around the world 
such that we know their risk appetite, how they consider certain risks 
and the various factors they weigh in their underwriting decisions. 
Given our experiences, we have a working knowledge as to how they think 
and how they approach various risks--essentially whether or not to 
underwrite a risk, how to price a policy and how to set the terms and 
conditions of a policy--which amounts to a contract.

              EXPERIENCE WITH EXTRAORDINARY ``JOB SITES''

    In the aftermath of the events of September 11, 2001, Willis 
secured the insurance coverages for the contractors who cleaned up the 
World Trade Center site. Quite thankfully--for obvious reasons--the 
characteristics of this site were unlike any we or anyone else in 
either construction or insurance had previously seen. Normally, before 
the clean-up of a disaster site starts, environmental and engineering 
firms conduct studies, run assessments and issue reports as to the 
nature of the site and the specifics involved. Due to the outstanding 
circumstances of the events of 9/11, there was not time for such 
exercises and contractors got to work without a full understanding of 
what was ahead. How stable was the ground? What were the asbestos 
levels? What other hazardous materials could have a long-term impact on 
health of the workers and general public? Today, over four years since 
9/11, the number of law suits being filed continues to grow. Only in 
time will we determine the balance between the insurance purchased vs. 
claims now being filed in New York. But one thing is certain, 
litigation, upon litigation, upon litigation has created a great deal 
of uncertainty and serious concern among the contractors involved.
    While the scope of the New Orleans effort is multiples larger than 
the World Trade Center site, these same concerns are at hand today as 
they were in September 2001. The fundamental problem in securing the 
necessary coverage is a reflection of the four component actions I 
mentioned a few moments ago--insurance is about assessing, quantifying, 
mitigating and transferring risk. Models predict likely scenarios, 
calculate possible losses and then intelligent plans determine how to 
avoid such problems and spread the risk among various parties at an 
appropriate price. In these unique situations, there may be a tendency 
to focus on the financing of the risk so the work can get underway. 
Without the assessment, how does a carrier know what the possible 
losses are? And if the risks are unknown such that there could be 
significant unforeseen liabilities, 1) how can contracting firms adopt 
preventative measures to avoid problems which will give rise to future 
claims? and 2) how can carriers determine the right price for the 
coverage?
    Over the last several weeks, we have been engaged in conversations 
with carriers around the world on this matter and they are expressing 
to us the very concerns that I am sharing with you today:

     Uncertain site conditions;
     Unusual and unknown health hazards;
     What chemicals are being released into the air during the 
cleanup?;
     The limited nature of the tools available to assess the 
number and types of environmental factors in play;
     Varying standards between local, state and Federal 
authorities;
     The fast track nature of the work to be done; and,
     The lack of certainty on contracting provisions and legal 
environments.

    All these factors substantiate that the traditional methods of risk 
identification, control and underwriting have been significantly 
altered and make it difficult to estimate--or even guess--what the full 
extent of the long-term liabilities arising from the cleanup will be. 
It leads us to question whether the insurance industry has the ability 
to fully underwrite the risks inherent in this work. If this bears out, 
contractors will be left fending for themselves without adequate 
insurance protection. That is not to say that contractors will not be 
able to purchase insurance in some form for their activities in the 
Gulf; rather, without addressing the unique factors in this situation, 
the coverage they will be able to obtain will in most cases not 
adequately protect them over time from the exposures they will be 
facing. And this is not a question of if but when and based on our 
experience, these matters will manifest themselves over a 5- to 10-year 
timeframe--though there is already talk of the ``Katrina Cough.''
    I might add that without adequate protection, contractors cannot 
properly account for their risks and endanger the long-term viability 
of their companies. Accordingly these issues could prevent quality 
contractors from participating in the clean-up and recovery efforts.
    This is important legislation. While many first-rate contractors 
are already on the ground participating in this important effort, many 
others are hesitant to get involved in projects of this magnitude 
unless they have insurance against what are normally quantifiable 
risks. And carriers as well tend not to write policies if they are not 
able to make the necessary judgments. In the case of New Orleans, as it 
was with the World Trade Center, it will be almost impossible to 
establish the proper control procedures to protect their interests. 
Limiting the liability of construction companies engaged in the clean-
up of New Orleans such that they can gain the cover they need is 
critical and it has been my distinct honor to share my experiences with 
you this afternoon.
    Mr. Chairman, I've concluded the section of my prepared remarks 
that I would like to share with you today and am happy to enter the 
remainder--which addresses some general issues of insurance you may 
wish to consider--into the record. And I would be happy to answer any 
questions you might have.

                SOME ADDITIONAL BACKGROUND ON INSURANCE

    Insurance is meant to have the premiums of many similarly insured 
parties pay for the losses of the few which actually have claims. By 
financing risks in such a way, insurance serves as a vital tool 
supporting commercial activity. It brings the assurance of capital when 
the unforeseen and unfortunate event occurs. Insurance enables 
construction firms to undertake work knowing that they have a financial 
partner ready to provide capital that may be necessary to assure that 
the contractor remains viable and can complete the work as promised.
    Both the insurance carriers and their insured construction 
contractors have a great interest in working together to identify risks 
and to develop effective protocols and procedures to avoid or control 
those risks. Clearly identifying and managing risks to avoid losses is 
the most cost-effective approach for both parties. This critical part 
of the insurance process, that of identifying and trying to measure 
risks, is often not understood by non-insurance professionals, but it 
is completely integrated into the process of agreeing to insure certain 
risks and how much such insurance costs. Simply put, if insurance 
companies do not or can not understand the risks they are being asked 
to insure, they have a very difficult time providing the risk financing 
which allows companies to operate.
    Insurance policies by their nature are specific to different types 
of risks and exposures, and contractors often purchase a number of 
different types of coverage each year to address different operational 
risks. The most relevant to today's hearing are the coverages which 
come into play for liability protection when claims are brought by 
third parties. They include:

     General Liability Insurance, which addresses the 
liabilities contractors have to third parties for operations and for 
damages or injuries which occur once those operations are completed. 
This coverage applies to many obvious types of situations including 
injuries to third parties, and damage to property while performing 
operations and once the work is completed. These policies do not 
normally extend to environmental liabilities which arise out of the 
work. Those types of risks are usually insured by Pollution Liability 
policies.
     Contractors Pollution Liability, which addresses 
liabilities that arise out of hazardous materials which contractors 
encounter on job sites. In the case of the clean-up and reconstruction 
activities it is expected that this will be a critical coverage. It is 
important to note that this policy differs from insurance company to 
insurance company and as a result has significant differences in scope 
of coverage and limits of liability which can be obtained.
     Umbrella and Excess Liability, which is used as a method 
to obtain higher limits of coverage excess of the General Liability 
insurance limits. It does not act to increase the pollution liability 
limits.

    To understand the complex limitations of such insurance, it is 
important to note:

     Each insurance company offers different coverages for each 
policy depending on their underwriting philosophy and financial goals.
     Policies are underwritten based on the underwriters' 
understanding of the risks and typically narrowed to cover those risks 
which are known or can be anticipated.
     These policies all have a defined limit of insurance which 
once exhausted, cause the policies to no longer respond.
     The policies respond to the liability of the specific 
contractor so it is often the case that a claim will cause several 
insurance carriers to respond to several contractors. This can cause 
significant delays in addressing claims as liability is sorted out by 
the legal process and each carrier defends each insured separately.
     Coverages vary as noted from carrier to carrier and from 
contractor to contractor based on the individual contractors' 
understanding of its risks, its expertise in obtaining coverage and the 
amount of premium involved.
    Insurance is a risk financing business which uses historical data 
to predict future costs and establish premiums. The limitations noted 
above create a situation where, in the case of a broad based 
catastrophe such as Katrina, claims will be unknown at the outset, 
difficult to predict or measure, and subject to uncertainty of how 
insurance coverage will respond. This contrasts with normal 
construction activities where underwriters have significant experience 
and data which shows a path to pricing the risk and taking on the 
exposure in the form of insurance policies.
                                 ______
                                 
Response by Paul Becker to an Additional Question from Senator Jeffords

    Question 1. Mr. Becker, In your testimony, you stated that 
insurance is about assessing, quantifying, mitigating and transferring 
risk and you wonder if the insurance industry has the ability to fully 
underwrite the risks related to a tragedy like Hurricane Katrina.
    The exceptionally broad liability shield for contractors in S. 1761 
passes the risk of loss from the insurer and contractor to the citizens 
of the Gulf Coast. How does the bill's treatment of private citizen 
correlate to the insurance industry's usual practice of spreading the 
risk among parties?
    Responce. Senator Jeffords, thank you for your question on how the 
Gulf Coast Recovery Act's (S. 1761) treatment of private citizens 
correlates to the insurance industry's usual practice of spreading risk 
among parties.
    In evaluating risks, the insurance industry typically evaluates the 
exposures and the spread of the risk among parties. In the case of the 
damages from Hurricane Katrina, the insurances community needs to first 
determine the risks and exposures that will be associated from the 
recovery efforts. Without this information, insurance carriers will be 
unable to provide accurate coverages and establish reasonable premiums. 
As a result, contractors will be assuming risk which will be difficult 
to predict (or in many cases will be impossible to identify) and will 
be faced with essentially rolling the dice on longer terms risks versus 
available insurance.
    Absent of a large disaster like Hurricane Katrina, the typical 
spread of risk by insurance carriers remains a difficult job. Given the 
broad affects of claims that arise out of construction general 
liability insurance coverages, the insurance industry must consider the 
various contractual relationships of their insured contractors. In the 
evaluation to exposures and the adjustment of losses, the insurance 
industry also takes into consideration Federal and local jurisdictional 
statutes that may alter the liability of their insured. In many local 
jurisdictions (for example-- Georgia and Florida), contractors are 
afforded liability caps in situations where all project specifications 
of a State's Department of Transportation Contracts were adhered to. 
Thus, in cases of lawsuits against roadway contractors alleging a 
design defect in the roadway (possibly causing an automobile accident--
for example), these statutes provide equal protection to contractors 
who built or re-designed a roadway to the exact specifications and 
codes stated by the local Department of Transportation.
    In the end, S. 1761 would provide insurance carriers greater 
information on potential risks from the recovery efforts. The bill's 
effects on the evaluation of exposures and spreading of risk by the 
insurance industry would be similar to their typical assessment of 
other Federal and local statutes that alters liability in loss 
situations among parties.
                                 ______
                                 
 Statement of The American Road and Transportation Builders Association

    Chairman Thune and other members of the subcommittee, thank you for 
providing the American Road and Transportation Builders Association 
(ARTBA) an
    opportunity to submit testimony on Government contractor liability 
issues arising from major disaster situations. ARTBA is the only 
national organization representing the collective interests of the 
transportation construction industry before the Federal Government. 
ARTBA's membership includes public agencies and private firms and 
organizations that own, plan, design, supply and construct 
transportation projects throughout the country. Our industry generates 
more than $200 billion annually in the United States economic activity 
and sustains more than 2.2 million American jobs.
    Mr. Chairman, there are two common themes to every national 
disaster situation: 
they occur with little to no advance warning; and a herculean response 
and recovery effort is required by those in and outside the affected 
area. Major disasters hit hard and fast. Those responding to these 
events must be allowed to react with the same vigor. The widespread 
damage accompanying national catastrophes frequently call for a 
comprehensive response from a host of partners, including the 
construction industry.
    Federal, State and local Governments need the assistance of the 
construction industry in these situations. ARTBA member firms 
routinely--and voluntarily--step up when emergencies arise. 
Construction and engineering companies are often the first responders 
in declared disasters, providing critical knowledge, know-how, and 
skills--as well as equipment and materials--to rescue and recovery 
efforts. Working at the direction of public agencies and officials, 
these firms lead efforts to demolish, remove, and repair and 
reconstruction damaged utilities, structures and facilities.
    Our industry, for example, played a major role in the rescue and 
recovery efforts following the September 11 terrorist attacks on the 
World Trade Center and Pentagon. Employees of Tully Construction of 
Flushing, New York, were among the first to arrive at the Ground Zero 
site. Tully was completing work on the Westside Highway in Lower 
Manhattan when the attacks occurred, which enabled the firm to have 
equipment and manpower in place to begin assisting with rescue, 
recovery and debris removal efforts immediately.
    Once the magnitude of the devastation and the complexity of the 
clean-up necessary were fully understood, the industry's role at the 
site increased, and these firms and individuals remained on the job 
until it was completed. Tully was named as one of the four prime 
contractors responsible for debris removal, demolition work, and 
construction of temporary structures at the site. ARTBA's New York City 
chapter--the General Contractor's Association of New York--provided 
critical leadership to the efforts by assisting Federal, State and 
local officials in the coordination of operations. Numerous engineering 
firms provided technical expertise and project managementexperience to 
carry out the complex recovery effort. Finally, equipment manufacture's 
worked to locate and deliver the construction machinery necessary to 
carry out the clean-up.
    Many of these activities were carried out before contracts for the 
work could be drafted and signed. Rescue and recovery could not wait 
for contracts, and these firms did not hesitate to assist Federal, 
State and local officials in the efforts.
    The transportation construction industry also routinely provides 
Federal, State and local officials assistance in recovery, repair and 
rebuilding efforts following natural disasters. After Hurricane Katrina 
devastated the Gulf Coast, ARTBA member firms joined in efforts to 
clear debris and reopen airport, roadway, rail, transit and other 
transportation infrastructure facilities damaged during the hurricanes.
    In assisting Federal, State and local Governments respond to 
disasters, these contractors are often times exposed to liability and 
litigation for doing the right thing and responding in time of national 
tragedy. Unlike public officials and the agencies firms are assisting, 
private contractors are not protected by the principle of sovereign 
immunity.
    The firms responding to the September 11 terrorist attacks were 
subject to substantial litigation costs. With approximately 3,000 
actions filed to date against the contractors involved in the Ground 
Zero site clean-up, litigation cost are expected to grow. In fact, 
several of these companies were threatened with the loss of insurance 
coverage for the potentially open-ended liability they incurred by 
doing the right thing.
    As such, the threat of class action lawsuits and lack of liability 
protections could dampen private firms' response to emergency 
situations. Contractors do not carry the insurance necessary to cover 
all of the many potential risks involved in taking necessary action 
during times of crisis. Companies are risking crippling financial 
impacts on their firm for responding to emergency situations for which 
they do not have liability coverage. The lack of limited liability 
protections for construction and engineering firms providing important 
public service during emergency situations could undermine response, 
and ARTBA urges congressional action to ensure that the threat of open-
ended lawsuits does not slow or block future disaster recovery efforts.
    To this end, ARTBA fully supports, the ``Gulf Coast Recovery Act,'' 
S. 1761. This measure would better prepare our nation for disaster 
response by ensuring that construction and engineering firms that 
respond to major natural disasters, terrorist incidents or other 
emergencies are not putting themselves at risk for unwarranted 
liability claims and litigation tied to rescue and cleanup efforts. 
This common-sense proposal would provide contractors assisting in 
rescue, recovery, repair, and reconstruction work a limited measure of 
liability protection. In doing so, the bill would also limit potential 
legal actions that slow recovery efforts and reduce legal expenses that 
lead to increase recovery costs.
    Specifically, S. 1761 would provide the construction firms working 
on Hurricane Katrina and major future disasters the same liability 
protections Congress provided security technology companies from 
lawsuits that arose out of the September 11 terrorist attacks. It would 
also make critically important legal procedural improvements to ensure 
that firms and contractors receive the protections necessary to allow 
them to focus rescue, recovery and rebuilding efforts without having to 
worry about being subjected to unwarranted and costly lawsuits.
    While S. 1761 provides limited liability protection to contractors, 
it would not undermine Federal safety, health, ethics, environmental or 
labor laws. Contractors would remain liable for any reckless or willful 
acts, and would remain subject to punishment for noncompliance with any 
Federal rule or regulation. S. 1761 would not limit the command of the 
Federal agencies charged with rescue, recovery, and rebuilding efforts.
    As was demonstrated in New York City, the ability of transportation 
construction industry firms to respond quickly during times of crisis, 
delicately move large amounts of debris and manage complex projects 
under demanding conditions are invaluable skills when responding to any 
emergency. Without reasonable protections, however, our industry's 
ability to respond to future acts of terrorism, natural disasters or 
other emergencies would be constrained.
    S. 1761 would provide reasonable level of liability protections for 
construction and engineering firms involved in the clean-up efforts in 
the Gulf Coast region and future major disasters, without undermining 
Federal laws or requirements. This legislation will also help ensure 
that construction and engineering firms continue to serve as first 
responders in future emergency situations. Thank you again for the 
opportunity to submit testimony on this important topic. We look 
forward to continuing to work with the subcommittee and its members to 
address this situation.

          Statement of the American Society of Civil Engineers

    Mr. Chairman and Members of the Subcommittee. The American Society 
of Civil Engineers (ASCE)\1\ is pleased to offer this statement for the 
record in support of S. 1761, the Gulf Coast Recovery Act of 2005, a 
bill that would clarify the liability of Government contractors 
assisting in rescue, recovery, repair, and reconstruction work in the 
Gulf Coast region of the United States affected by Hurricane Katrina or 
other major disasters.
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    \1\ ASCE, founded in 1852, is the country's oldest national civil 
engineering organization. It represents more than 139,000 civil 
engineers in private practice, Government, industry, and academia who 
are dedicated to the advancement of the science and profession of civil 
engineering. ASCE carried out Building Performance Assessments of the 
World Trade Center, the Pentagon, and the Murrah Federal Building, and 
technical assessments following earthquakes, hurricanes, and other 
natural disasters. ASCE is a 501(c) (3) non-profit educational and 
professional society.
---------------------------------------------------------------------------
    We believe the bill is a good start toward enacting a broad-based 
Federal ``Good Samaritan'' law to protect professionals who engage in 
disaster recovery efforts at great potential cost to themselves. As of 
now, 21 states have Good Samaritan legislation to cover those who 
respond to natural disasters and other emergencies. Louisiana, 
Mississippi, Alabama, and New York do not have Good Samaritan 
legislation at all. We are not aware of any state laws that protect 
those who would aid in the recovery from terrorist attacks or the 
aftermath of such attacks. When professional design and construction 
expertise is needed, there should be no legal impediment to our 
members' responding to provide help and possibly saving lives.
    ASCE encourages its members, as individuals, to provide pro bono 
expertise and professional services to charitable causes and those in 
emergency situations. Members who provide professional services pro 
bono for ASCE-endorsed programs are covered by the Society's liability 
insurance.
    But pro bono services provided by an individual in emergency 
situations or to charitable institutions outside of ASCE's endorsed 
programs are not covered by the ASCE liability policy. The engineer, in 
emergency situations, may be called upon to make decisions with little 
or no opportunity for study, evaluation, or even identification of 
alternatives and should not be held to the same standard of care that 
would be used in evaluating her actions under normal circumstances. 
Legislation is needed to protect the engineer under these 
circumstances.
    Engineers have the technical ability to assist in emergency 
situations. Protection as proposed in S. 1761 rightly would not relieve 
the engineer of responsibility to act in accordance with the ASCE Code 
of Ethics. The engineer must continue to act within his appropriate 
level of expertise, with due recognition of the limitations of that 
expertise.
    Finally, the United States legal system has evolved to a point 
where excessive litigation, including frivolous lawsuits, often occurs. 
Moreover, findings of liability increasingly bear no relationship to 
the proportion of fault in a case, and astronomical damage awards for 
unquantifiable claims are frequently granted.
    The enormous growth in litigation against businesses and 
professionals, coupled with excessive and unreasonable jury awards, has 
led to dramatic increases in insurance premiums, reduced policy 
coverage, and even outright cancellations of professional liability 
insurance coverage.
    A growing number of professional engineers, including those with 
little or no history of litigation ever brought against them, have 
found that professional liability insurance is a substantial cost of 
doing business. In addition, efforts to advance innovation, new 
products and designs are inhibited by the current legal climate.
    ASCE is very concerned about the adverse economic impact of the 
nation's litigation crisis and escalating liability insurance costs on 
the civil engineering profession. These adverse economic impacts affect 
the availability and affordability of professional liability insurance 
needed for the orderly and responsible conduct of business, including 
engineering services, in the United States.
    Mr. Chairman, ASCE thanks you for your efforts. Please do not 
hesitate to call on us for assistance with this important legislation.
                                 ______
                                 
                      The Associated Press Article

               HUNDREDS SUE OVER HEALTH EFFECTS OF WORLD 
                         TRADE CENTER CLEAN-UP

    NEW YORK--Hundreds of people who worked on the World Trade Center 
clean-up have filed a class-action lawsuit against the leaseholder of 
the towers and those who supervised the job, alleging they did little 
to protect workers from dust, asbestos and other toxins in the air.
    The lawsuit, filed in Federal court on Friday and made public 
Monday, was brought against Silverstein Properties and the four 
construction companies hired to oversee the removal of the 1.5 million 
tons of debris.
    David Worby, a lawyer for the plaintiffs, said he will seek 
billions of dollars in compensation for victims. The lawsuit also asks 
for the establishment of a system to track for the next 20 years all 
those who were exposed.
    The lawsuit alleges that many workers did not have access to 
protective gear, and those who did were not taught how to wear it 
properly.
    While some of the plaintiffs suffer from afflictions ranging from 
tumors to heartburn, many say they show no symptoms from their work at 
the site, but have joined the suit because they fear they risk 
developing cancer in the future.
    ``The tragic reality is that so many of the brave heroes who worked 
so tirelessly and unselfishly are becoming a second wave of casualties 
of this horrific attack, and we're only seeing the tip of the 
iceberg,'' Worby said.
    The defendants said they had not seen the complaint and had no 
immediate comment.
    The class-action case, with about 800 plaintiffs, was filed the 
last day before a Federal 3-year statute of limitations expired for 
lawsuits related to the terrorist attack.
    The Government is already funding six health screening programs to 
monitor ground zero workers, but none are funded beyond 2009.
    Last week, the Centers for Disease Control and Prevention released 
a study showing that many recovery workers suffered from respiratory 
problems long after the clean-up concluded, and that some still battle 
ailments. Problems include asthma, sinusitis, constant coughing and 
stuffy nose, facial pains, chest tightness, wheezing and shortness of 
breath.
    Proper respiratory gear would have allowed the workers to block out 
smoke, dust, diesel exhaust, pulverized cement, glass fibers, asbestos 
and other chemicals and prevent throat and lung diseases, according to 
the CDC study. It found that only about one in five of the workers wore 
respirators while they worked at the site.
    The four companies that led the clean-up were Turner Construction, 
AMEC Construction, Tully Construction and Bovis Lend Lease. According 
to AMEC's Web site, the company stationed safety experts on site during 
the clean-up and provided respirators, hard hats and safety goggles to 
workers.
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