NATIONAL COMMISSION ON TERRORIST ATTACKS UPON THE UNITED STATES

Public Hearing

Wednesday, November 19, 2003

Drew University
Madison, New Jersey

PRIVATE-PUBLIC SECTOR PARTNERSHIPS FOR EMERGENCY PREPAREDNESS

CHAIRED BY: THOMAS H. KEAN

HIGHLIGHTS OF NEW JERSEY'S PUBLIC-PRIVATE SECTOR PARTNERSHIPS:

JAMES E. MCGREEVEY, GOVERNOR, NEW JERSEY;

RISKS AND CONSEQUENCES OF TERRORISM FOR THE PRIVATE SECTOR:

JOHN DEGNAN, VICE CHAIRMAN, THE CHUBB CORPORATION;

PANEL ON SKYSCRAPER SAFETY ISSUES FROM 9/11 FAMILY MEMBERS:

MONICA GABRIELLE, CO-CHAIR, SKYSCRAPER SAFETY CAMPAIGN;

SALLY REGENHARD, FOUNDER AND CO-CHAIR, SKYSCRAPER SAFETY CAMPAIGN;

PANEL ON PUBLIC-PRIVATE INITIATIVES SINCE 9/11:

MICHAEL F. BYRNE, DIRECTOR, OFFICE OF NATIONAL CAPITAL REGION COORDINATION, DEPARTMENT OF HOMELAND SECURITY;

DENNIS J. REIMER, DIRECTOR, NATIONAL MEMORIAL INSTITUTE FOR PREVENTION OF TERRORISM;

RICHARD A. ANDREWS, SENIOR DIRECTOR, NATIONAL CENTER FOR CRISIS AND CONTINUITY COORDINATION;

PANEL ON PRIVATE SECTOR EXPERIENCE ON 9/11:

WILLIAM Y. YUN, PRESIDENT, FIDUCIARY TRUST COMPANY INTERNATIONAL;

PANEL ON STANDARDS FOR EMERGENCY MANAGEMENT AND BUSINESS CONTINUITY:

GLENN CORBETT, PROFESSOR OF FIRE SAFETY, JOHN JAY COLLEGE OF CRIMINAL JUSTICE, MEMBER, NIST INVESTIGATION, AND BERGEN COUNTY FIRE CAPTAIN;

RANDALL YIM, DIRECTOR, NATIONAL PREPAREDNESS TEAM, GENERAL ACCOUNTING OFFICE;

PANEL ON FUTURE STRATEGIES FOR PRIVATE SECTOR PREPAREDNESS:

WILLIAM G. RAISCH, DIRECTOR, GREATER NEW YORK SAFETY COUNCIL;

PETER R. ORSZAG, JOSEPH A. PECHMAN SENIOR FELLOW IN ECONOMIC STUDIES, THE BROOKINGS INSTITUTION;

JAMES HAVIARIS, VICE PRESIDENT FOR OPERATIONS AND MANAGEMENT, ROCKEFELLER GROUP DEVELOPMENT CORPORATION;

THOMAS SUSMAN, PARTNER, ROPES & GRAY AND CHIEF AUTHOR OF BUSINESS ROUNDTABLE REPORT ON "TERRORISM: REAL THREATS, REAL COSTS, JOINT SOLUTIONS"

MR. THOMAS H. KEAN: If I could call the hearing to order. Ladies and gentlemen, before we begin, let me bring your attention to a yellow sheet of paper entitled "Emergency Procedures in the Baldwin Gymnasium." While no one anticipates any emergencies or fire alarm today, part of emergency preparedness includes being aware of your surroundings and looking around whenever you go into a building like this and seeing where the fire exits might be. Since the focus of this hearing is on emergency preparedness, we want your visit here to Drew University to be a safe one, so please take a moment to look over this sheet and be prepared.

So as chairman of the National Commission on Terrorist Attacks Upon the United States, I hereby call this hearing to order. I guess I want to additionally thank the President of the University. But I'm glad -- and thank you all for coming to the university here. I want to particularly thank Emily Walker and Ellie Hartz, as members of the Commission staff, for all they did to organize this hearing and to assemble the really extraordinary panels of witnesses that we will hear from shortly. I also want to thank Former Attorney General John Farmer for pitching in here to help as well.

Let me also express the gratitude of the Commission to the staff of Drew University for all the behind the scenes work they did to assure the success of the hearing. Much of the attention on national preparedness in the two years since 9/11 has centered understandably on the government's role. The government has an absolutely essential role in making sure that we are prepared in the homeland. But almost lost in this tremendous focus on what is the federal and state government doing has been the fact that 85 percent of our nation's critical infrastructure is controlled not by the federal government or the state government or local government, it's controlled by the private sector.

Now, clearly, any successful preparedness strategy must engage the private sector in partnership with the government at every level, whether it's local, state or federal. Today's hearing, I suspect, will demonstrate what Comcast Chairman Michael Armstrong said, providing homeland security is our country's most critical joint venture. So today's hearings then underscore the importance of the private sector in preparing for and responding to disasters, and will provide the basis for the commission's consideration of recommendations to promote energy preparedness -- emergency preparedness in the future.

Now, the families of the 9/11 victims care deeply about this particular issue, and we as a commission share their belief that addressing the issue of private sector preparedness is essential to our work as a commission and even to our security as a nation. Our discussions today have shown that the tenants of the World Trade Center varied widely in their levels of preparedness on 9/11. Many of those companies lacked proper evacuation plans. Many others had never practiced plans for evacuation.

Communications were disrupted immediately, and in many cases there wasn't any backup system that was available. In other words, employees didn't know what to do, and after the event, when companies were trying to account, to the families and others for their employees, they had no system for finding out where those employees were. So many companies didn't even have an accurate list or a count of employees on 9/11.

Now, business continuity, of course, was also a problem. Now, obviously no one could have predicted that horrible catastrophe, but there were elements of preparedness that would have assisted, nevertheless. The lessons learned on 9/11 by those companies located at the World Trade Center have led to notable changes in the way some companies are going about emergency preparedness and providing for the safety of their employees.

But how much has really improved? What lessons have we really learned? Well, a recent survey sponsored by Guardmark, a security firm, reported that 45 percent of some 800 companies that they interviewed were still not conducting emergency drills.

Well, are we spending more on emergency preparedness? The conference board study on security spending since 9/11 reports that spending on security has only increased an average of 4 percent over pre-9/11 spending. Well, are we more prepared? The Wall Street Journal noted recently, and that was on September 29th, 2003, that while, and I quote, "some companies have been revising and updating their workplace security plans since September 11th, a large portion appear to be blithely unprepared for any sort of attack. And many don't even have an effective evacuation procedure in place."

Now, we must not just learn from 9/11. We have to learn permanently. The Commission is concerned that as time passes, the lessons of 9/11 will fade, and our resolve to be better prepared will fall casualty to complacency and sometimes even bottom line expediency.

This hearing today will provide information that will help us make recommendations to ensure that the lessons we've learned on 9/11 will be challenged into action and improvements in overall preparedness, so that in case -- in the deadly case of any tragedy in the future, people will be prepared, and as many families as possible will be reserved from the horrible fate of the families of 9/11. So that is what this hearing is all about.

Our first witness is here -- no, not yet. No, not yet. Governor, yes. It's my pleasure at this point to introduce the Governor of the state of New Jersey, who's been not only a -- he first served as mayor of Woodbridge successfully, then as governor of our state. He's a long and dear and old friend of mine, and, Governor, it's a pleasure to have you open up our hearing today.

GOVERNOR JAMES E. McGREEVEY: Thank you, Governor. And, Governor, if I could, to my right at the table is Mr. Sid Caspersen, the director of the Office of Counter Terrorism. To Governor Kean, to Vice Chairman Hamilton, to the Commission members and staff, particularly Governor Kean, again, welcome home, and thank you for your long, dedicated service to this state and particularly your leadership with Mr. Hamilton as to this commission.

The state enjoys the opportunity to share with you our knowledge and experience. New Jersey was injured deeply on September 11th. We lost nearly 700 of our own citizens. Approximately one out of every four persons who died at the World Trade Center called the Garden State home. Our lives, our sense of security, our economy, were all shaken. But we have worked to take the grief, the pain and the anger and to channel them into making our state measurably safer.

New Jersey in many respects has worked to set a national standard for designing and implementing a comprehensive security strategy. In that effort, the private sector has been an indispensable partner. They hold nearly 90 percent of the critical infrastructure in our state, including the nation's highest concentration of oil refineries, oil storage facilities and pharmaceutical and chemical manufacturing facilities. No domestic security plan would work without their cooperation and dedicated involvement. And so today I thank you for the opportunity to share with you some of the ways we're working with the private sector to make our state measurably more secure.

Any discussion of the domestic security in our state begins with the New Jersey Domestic Security Preparedness Task Force, which was created in the weeks after the September 11th attack. This body, unique to New Jersey, represents intergovernmental collaboration at its highest level. The task force is chaired by the attorney general and consists of Cabinet-level officials charged with significant security responsibilities. These individuals gather regularly to focus on the most pressing security issues confronting our state: counterterrorism, weapons of mass destruction, and bioterrorism, among others.

I'd particularly like to commend former New Jersey Attorney General John Farmer, currently senior counsel to this committee, who served as the first chairman of this task force. The Task Force Infrastructure Advisory Committee is comprised of representatives from New Jersey's 23 industry sectors. The various IAC groups meet regularly among themselves to share information and security strategies. They also meet with the task force and their liaisons and state agencies, such as the Department of Environmental Protection for the chemical sector, and the Department of Health and Senior Services for the healthcare sector.

During the past two years, the task force and the IAC have worked with industry to develop best security practices. These recommendations focused on prevention, mitigation and response and recovery from terroristic activities. They include considerations such as site specific vulnerability assessments, target hardening and mitigation measures, protocols for background checks, protocols related to security, protocols for adjusted security measures, based on changes in the Homeland Security Alert System, communication protocols, crisis response, contingency and continuity plans.

In 2002, the IAC sectors all submitted best security practices to the Domestic Security Preparedness Task Force for review. Now we have embarked upon a second generation of industry best security practices. After they are approved by the task force, they are sent to my office for final approval. In every case, I have directed the appropriate Cabinet officer to work with the industry sector and to monitor compliance towards full implementation of best security practices.

In this second generation review, we have already approved 10 of 23 recommendations. We are working in partnership with the private industry to get these practices in place as rapidly as possible. We have also established an innovative relationship with Business Executives for National Security. A memorandum of understanding has been drafted between BENS and the state Office of Emergency Management to provide a database of business sector volunteers and resources that could be deployed during an emergency.

Working alongside the task force is the Office of Counterterrorism, whose Director Sid Caspersen, who sits with me here this morning. This office, which I created with the Attorney General's Office through executive order last year, under the direction of Sidney Caspersen, a 25-year veteran of the FBI who headed the agency's Office of Intelligence Community Support for New York City, the OCT has taken significant steps towards fulfilling the mandate to identify, detect and deter terrorist-related activity in New Jersey.

As my chief liaison to the federal intelligence and law enforcement communities, the Office of Counterterrorism has forged close ties with the Office of Homeland Security, the FBI, the Department of Energy and the Transportation Security Agency. This partnership has allowed us to develop unique initiatives, like the New Jersey law enforcement counterterrorism training, which has trained literally thousands of state and local police officers across this state.

It has also enhanced our infrastructure protection efforts. For example, if I again -- if I could praise the efforts of Secretary Ridge, the Department of Homeland Security, we have implemented a buffer zone protection plans for a number of the state's high-risk chemical facilities. To test our plans, we conducted New Jersey's first buffer zone protection plan tabletop exercise.

The Domestic Security Preparedness Task Force, the Office of Counterterrorism are now working with the Department of Homeland Security to expand their training on buffer zone protection to critical infrastructure sites in the chemical and petroleum industries identified by the state. This sort of cooperation is critically important because the private sector has every right to expect the government, state and federal, to approach them in a cogent, unified manner. We need to continue improving the coordination so that we are complementing one another's efforts to strengthen security.

OCT is also sharing information and intelligence with the private sector as to potential threats. In the past year, they have sent out more than 80 bulletins and alerts to various industry sectors. They have developed a secure website for infrastructure protection that serves as a statewide clearinghouse for information. And they have deployed a high-speed notification system called the Communicator that automatically sends alerts to an unlimited number of individuals, groups or teams by phone, pager, fax and e-mail.

Another way we are working with the private sector is through the Medical Emergency and Disaster Prevention and Response Expert Panel, MEDPREP, under the leadership of Dr. Clifton Lacy. It is a collection of the state's top health experts, drawn from a wide range of backgrounds, such as emergency medicine, infectious diseases, as well as hospital care. Through MEDPREP, we've become the first state to have a 24/7 bioterrorism rapid response team to provide medical expertise for suspected bioterrorism events. We are the first state to install 800 megahertz non-interruptible radios in all of our acute care hospital facilities, and the New Jersey Hospital Communications Network interconnects 85 such hospitals with state government and one another, allowing for a reliable interoperable communication in the case of a large-scale terroristic event or natural disaster.

We are also including the private industry sectors in our training exercise. The Infrastructure Advisory Committee and the task force created the Domestic Security Exercise Support Team, which has begun exercises and training simulations that incorporate both public and private sector players. The State Board of Public Utilities, for example, has already run a tabletop exercise with water and energy sectors to determine how to best maintain continuity of operations in the face of a terrorist attack.

Early next month, the Department of Environmental Protection will be participating in a similar tabletop exercise with our petroleum industry. The Board of Public Utilities is also working with the IAC to review the results of the August 14th blackouts. This incident provided an excellent test case with a new spirit of cooperation between the public and private sectors. Through close communication with the utility in that case, PSE&G, we were immediately able to get the state police resources to support local police services based on information we received from the utility literally on a minute-to-minute basis.

Just this past Saturday, New Jersey and the Port Authority, along with the Federal Office of Domestic Preparedness and 600 local county and state first responders from 70 agencies, staged one of the largest full-scale emergency exercises in New Jersey history. The exercise simulated the release of biological and radiological agents at Port Newark. Although we await formal after-action reports, from all accounts the exercise went extremely well. I mention this exercise because it is a good example of the cooperation needed at all levels to prepare for future acts of terrorism.

In closing, I want to emphasize again how critical it is that the private sector, which controls 90 per cent of our state's infrastructure, be involved in all security planning. They hold much of the critical infrastructure in our state and throughout our nation, and we must consult with them early and often. In New Jersey we have done that, and as a result, we are immeasurably more secure than we were two years ago, and we're working to become safer every day. Thank you, Mr. Chairman.

MR. KEAN: Governor, thank you very, very much. Would you be willing to take one question from Senator Gorton?

GOV. MCGREEVEY: Yes. And Mr. Caspersen.

MR. KEAN: And Mr. Caspersen, yes.

SEN. SLADE GORTON: Governor, that is an extraordinarily impressive record in the two years since 9/11, but would you say a word about the degree of cooperation you get, in a sense, upward in the other direction with the various federal agencies and the interest that they have in what you are doing at the local level and with the private sector?

MR. SID CASPERSEN: I'll answer that if you don't mind. We have a great working relationship with the Department of Homeland Security, with the FBI, with CIA and with NSA even, and with the 10 northeast regions' state Homeland Security directors and their governors' offices. We established our own information sharing system within the 10 states in northeast region, realizing that we all rely on one another.

Something happening in Delaware could easily -- and Maryland could easily be happening in New Jersey, New York, or all the way up to Maine. So we have a really good information sharing. We share information every day. We created a number of web portals allowing people to access our databases securely. We've set up a Memex intel system which we are giving to the FBI, they already have it in place.

The Office of Counter Terrorism works both with the Philadelphia office and with the Newark office. We're also putting it at NYPD. We have staff there that we keep in the NYPD intel center to make sure we monitor all the time what's going on in the city. Anything affecting the city would obviously affect New Jersey.

We are putting these web portals in Homeland Security. They are designing an initiative for a pilot project for information sharing for the northeast, using the northeast as a pilot project. Both New York and New Jersey would have regional intelligence centers established, having secure communications with Homeland and the other intelligence agencies.

So I think we're doing that but we're working very hard now with the private sector, with DOE, with the Information Analysis and Infrastructure Protection Group, and we've designed a system where we can instantly communicate with our private sector, both sector-wise and both all across the state. We just met with some partners in New York to help them do the same thing in New York with some of their private sectors.

SEN. GORTON: The feds aren't cutting you off from information you consider vital?

MR. CASPERSEN: We are getting information from a number of federal entities, including the FBI. The process of having this new intelligence sharing center creates an atmosphere where we're on the link with the other intelligence agencies we will actually be doing analysis with, DHS. I think what they're working through right now at the federal level is the TTIC, all the combined agencies being together there, and getting that information piped down to DHS and getting it out to state and locals. I think being fair to them, they're working very hard on the system. Coming from the federal system I realize how difficult that is, but I think they're really making great strides.

General Libutti, the undersecretary who's in charge of information protection for DHS is very aggressive in getting the system out and hopefully it will be signed off and we will be implementing it within six months in New Jersey and New York, because I think they're striving to do that.

GOV. MCGREEVEY: And if I can, I'd also like to give praise to Secretary Ridge. I think Secretary Ridge and many of the governors -- in fact, I was among the first governors, the governors to call for the adoption of the Office of Homeland Security. We very much want to recognize Secretary Ridge's efforts, but also one-stop shopping. As everyone on this commission knows, governors frequently have to go from department, to department, to department, and homeland security, as across the breadth of state government, to say the least, frequently was an arduous process. And I believe Secretary Ridge has worked very closely with this nation's governors to provide not only a single point of entry but to work collaboratively.

One recent example was, for example, in Port Philadelphia, Port Camden, as opposed to Port Newark, Port Elizabeth and the Port Authority, there existed slightly different protocols for manifests. It was Secretary Ridge's leadership that helped to provide a uniform framework so that we're operating, ironically, in the same pattern in the southern half of New Jersey as we are in the northern half. The only area that of concern -- that continues to be of concern is obviously the question of funding.

In the Administration's approach of sometimes focusing on the density of cities, municipalities, New Jersey happens to be the most densely populated state in the nation. We were not able to access some of that funding based on having a singular large city, despite the fact that we are that most densely populated state. Secretary Ridge did provide a significant level of intervention but it still remains that the funding formula, both because of the congressional allocation -- New York and New Jersey still receive less than $1.75 per person, whereas North Dakota is $7 plus and Wyoming $10. But in addition to that, our concern that the present funding formula that focuses on occasion on a municipal or citywide, city-centric approach, sometimes places New Jersey at a disadvantage.

But that being said, I believe Secretary Ridge has performed a phenomenal task, and not only centralizing but being available and working cooperatively and trying to put a measured elasticity into a system so that it continues to be responsive as opposed to become simply another bureaucracy.

MR. KEAN: Thank you. Governor McGreevey, Mr. Caspersen, thank you very, very much for being here with us today and for your leadership. Thank you very much.

GOV. MCGREEVEY: Thank you very much, Governor.

MR. CASPERSEN: Thank you.

RISKS AND CONSEQUENCES OF TERRORISM FOR THE PRIVATE SECTOR

MR. KEAN: Perhaps no aspect of the private sector is more keenly attuned to the challenges of private sector preparedness than the insurance industry, which must value and allocate the risks associated with a possible terrorist attack. Chubb took the lead in the immediate aftermath of 9/11 when it decided to honor all claims, declining to invoke the standard wartime exclusion, notwithstanding the President's statement that the nation was at war, and in a climate of great uncertainty in the rest of the insurance industry about what to do. Here to talk about Chubb's experience on 9/11, the current climate for terrorism insurance, and future challenges is John Degnan, vice chairman of Chubb Corporation, and former attorney general for the state of New Jersey.

MR. JOHN DEGNAN: Thank you, Governor Kean. With your permission I've asked Matt Campbell, who's the general counsel of our Commercial Insurance Division to join me here, in case the Commission has any technical questions which Matt may be more able to answer than I am. Governor Kean, Vice Chairman Hamilton, members of the commission, I welcome this opportunity to appear before you this morning on behalf of the Chubb Corporation. I'm vice chairman of that company, as the governor has said, and the company has been in the business of providing property and casualty insurance for over 120 years.

We were one of the largest insurers of the World Trade Center itself and of the tenants of the World Trade Center, and expect to pay, as a company, $3.2 billion in gross losses arising out of the September 11 attack on the World Trade Center. It's obviously the largest loss that we've ever experienced and surely the greatest tragedy that we've ever managed, and we're very proud of the role that both Chubb, and for that matter, the entire property and casualty insurance industry has played in meeting our promise of claims payments.

You've asked me this morning to address three subjects, and I'll try to do so briefly. I've submitted to the Commission a more extended set of comments. The first question was our experience as a company in the aftermath immediately after September 11. Second was our experience in the current insurance marketplace in the context of a Terrorism Risk Insurance Act, sometimes called TRIA. And third, the consequences, at least from our perspective, of a failure to reauthorize TRIA, which would -- or substitute legislation, which without congressional intervention will inspire at year end 2005.

So let me start with how we responded to the September 11 attack. I suppose like most folks did, I'm sure members of the Commission, we first confirmed that our family members, our employees, our colleagues and our friends were safe. We reached out to hear their voices, we rejoiced over their emails, we generally reassured ourselves as human being that the awesome horror generated by that event would not cripple us, either as individuals or as a business.

Then within only hours, we had to set about the task at hand, as so many others did. As a company, we had to determine whether, in the absence of a full understanding at that time of who the responsible parties were for this event, whether the attack fell within the wording of the traditional War Act exclusion that most insurance policies have. If it did fall within the definition of a war, then the event would not have triggered covered losses under many of the policies then governing the tenants and the owners of the World Trade Center.

That analysis, as you can imagine, was undertaken in the context of an unknown dimension of the ultimate loss, Who knew on September 11, aside from the personal tragedy dimensions, what the economic consequences would be? But we all knew that it would be many billions of dollars, and surely the largest loss the insurance industry has ever experienced.

Obviously it could have been about the company proposition, although no one had that on their mind that day. Frankly, the debate even within our own company was intense and often emotional about whether this was a war, whether there was coverage under the policies, and whether we would pay the claims. We had no idea whether our reinsurers -- in our business, when a risk is too large we pass off some of that - re-insurer who stands in our stead in paying the losses. And we had no idea, because they had War Act exclusions in their reinsurance treaties with us, whether they would invoke the War Act, many of these not being U.S. reinsurers. And if we said that the War Act did not apply and paid claims and the reinsurers said, yes it did, we won't reinsure you, it meant that we would lose the benefit of the reinsurance.

The President and others in authority that day were, it turns our correctly, probably referring to the event as an act of war, and that had an impact on our deliberations. Finally, though, within about 12 hours of debate, we did what Chubb has, in my judgment, always done, the right thing, and we announced that we would not apply the War Act exclusion and we would adjust and pay all covered claims with speed, empathy and integrity.

While Chubb generally gets credit for having been the first insurance company to publicly acknowledge that position, I'm very proud to say that our industry all came to the same conclusion, reinsurers and insurers alike. And as my submitted testimony indicates, the private sector insurance proceeds, by and large, in my judgment, defeated the economic goals of the terrorists who sought to bring down our economy. It was certainly my proudest moment as an officer at Chubb and as a member of this industry.

I don't want to leave this subject, though, without giving the Commission just a glimpse of how our people at Chubb responded. There are too many incidences of personal sacrifices to recount here, but one set of them exemplifies them all. Our claims adjusters who handle workers' compensation claims came together as a team that day on a volunteer basis to service the most difficult of all claims that have come out of the World Trade Center, those involving injuries or deaths to the employees of our insurers.

Our claims personnel solicited and received permission from the New York Department of Insurance to condense the application required for a workers' compensation claim from about 108 questions to eight. We got permission to accept these claims on an oral basis rather than a written basis, and instead of waiting for the families to submit the claims, we put our people together in a crisis unit and asked them to call family members, and we had perhaps 900 plus of the deaths that emanated from the World Trade Center loss.

We wanted to try, as paltry as it seems, to soften the economic loss to families whose losses were obviously un-reimbursable, either emotionally or economically. But if we could make emergency benefits available, as we had the right to do under the policy within 72 hours, we didn't want to wait until somebody submitted the claim, that they needed the money that day. The calls we made were often emotional and sometimes reached family members who had not yet acknowledged their losses, and they often produced tears and certainly always empathy. In time, some of our own people needed grief counseling.

The Chubb adjusters did what needed to be done economically, as so many people did in those days after September 11, to soften the crushing, and as I said, the un-reimbursable loss of a family member. Like so many others in the company -- in the country -- Chubb and its people responded selflessly and generously and it made me proud to be part of a response which was so much more powerful and inspiring than the attack which prompted it.

Now, with your permission, let me turn to the current environment in the insurance marketplace. After a frustrating and often discouraging public debate, Congress passed and the President signed in November 2002, the Terrorism Risk Insurance Act, TRIA. It took consistent and firm leadership from President Bush and a handful of persistent and constructive Congressional leaders to secure passage of that bill more than a year after that event. There's general agreement, I would say, that at least as it is operating in its first year, TRIA does provide some level of solvency protection for insurers.

Nevertheless the program today has some significant shortcomings. First, perhaps of most concern, is that the per insurance company retentions simply are too high. Before September 11, for example, when an insurer looked at a workers' compensation risk for a financial services provider, as many of the companies in the World Trade Center were, the maximum probable loss of such a firm was relatively low compared to often other more dangerous lines of work. White collar workers generally don't experience the same incidence of claims or severity of claims that manufacturing workers experience, and we underwrote to that risk.

But after September 11, even a moderate sized financial services company can face a maximum risk of more than half a billion dollars. So even under TRIA, each individual risk that we write has a probably maximum loss of up to the per company deductible, and insurers continued to be faced with staggering potential losses. Second, TRIA does not effectively prevent states from preempting federal law. For example, because insurers are required to provide insurance for what we call fire following a terrorist attack in 26 of our states, we're forced to apply inconsistent standards of both underwriting and pricing to national clients who have risks that overlay many state involvements, and we have to tailor the product as well to that.

And third, unlike Pool Re, which is the reinsurance device put into place in the U.K. to deal with terrorist attacks, TRIA is voluntary for the policyholders. An insured makes a decision, based on the availability of terrorism coverage and the price, whether they want to buy it. As a result, the market is experiencing what we call adverse selection, that people with the greatest exposure to terrorist events.

Those who, for example, work in signature buildings, such as the Empire State Building in New York or the Sears Tower in Chicago, generally are buying the terrorist insurance. But if you live in a low -- or you work in a low-rise office building outside Des Moines, Iowa, you're less likely to buy terrorism insurance. And the only way insurance really works as a mechanism is if the fortunate many take care of the misfortunate few by allowing their money to be pooled to deal with catastrophic risk. But because terrorism presents such unique risk management issues and concerns, policyholder participation in a terrorism insurance arrangement should be compulsory.

About 80 percent of our clients and customers are buying terrorism insurance, but there are many companies in the insurance industry who are experiencing much lower rates of companies and customers actually buying the insurance. So as I noted, while TRIA does have some basic value in insuring protection for the solvency of the insurance industry, it does have defects.

And I'd now like to address the challenges that the marketplace will face in trying to manage the risk of terrorism after TRIA expires, the potential prospects of TRIA extension. And I'd like to begin with the very real concern of insurer solvency. TRIA will expire, if nothing else happens, on December 31, 2005. Sadly, the threat of catastrophic terrorism risk will remain after that date. The expiration of the current TRIA program will exacerbate the solvency challenge faced by insurers.

And to give this issue some context, consider that currently the United States domestic property and casualty industry has approximately $300 billion in surplus. But roughly half of that represents automobile insurance and homeowners insurance, leaving approximately only $150 billion -- if you can put an only before that amount. But that's set aside to pay for all types of commercial insurance losses. If we had another event in the order of magnitude of $70 billion, which was the early projection of loss for September 11 -- it's come in somewhat lower than that -- the economic consequences against that $150 billion surplus would be significant to say the least, and would seriously jeopardize the financial stability of the industry, clearly rendering insolvent many of the insurance companies whose capital base is less strong than others.

I would hope that the Commission would agree that were the insurance industry to be insolvent after the next terrorist, event, as it wasn't after this one -- it was solvent after this one -- the economic reverberations of our inability to pay would be felt not only in the United States but around the world. The insurance losses associated with the World Trade Center attack were huge and unprecedented, yet they could have been substantially larger if, for example, the attack had occurred only a few hours later, when even more people were in the towers, if the planes had hit a lower floor or if there was less time available for evacuation.

And the consequences for the primary insurance industry in the future would be far greater than those horrendous consequences of September 11, because if TRIA did not exist, private reinsurance for terrorism, private reinsurance that we would buy from other insurance companies, is generally unavailable today in the marketplace and certainly unavailable for nuclear, biological, chemical and radiological risks in particular. Accordingly, some governmental program is needed. And the approach of the Commission today to study private-public partnership in addressing this risk as a nation is critically important.

Currently the industry, the insurance industry, is looking at a variety of options. They include a federal reinsurance program, a combination of regulatory standards and terrorism reinsurance pools, a workers' compensation only backstop. If TRIA is not available for property risks going forward, would it make sense to make it available for at least workers' compensation risks, where coverage is mandated, an insurance company must provide terrorism coverage for a workers' compensation loss. A tax deduction, perhaps for terrorism reserves, or a federal terrorism reinsurance bond mechanism, state-based solution. Or even private sector solutions in combination with those.

Unfortunately, each of those options in some way has substantial flaws. Given the current reluctance of many to extent TRIA, it's doubtful that the administration and Congress would seriously consider a federal terrorism insurance program, despite the fact that nine countries already have such a program in place. The current system under TRIA of regulatory standards and federal reinsurance might be suitable for ultra high-risk facilities, such as nuclear reactors or chemical plants, biological plants or telecommunications and cyber infrastructure.

However, our attention cannot be limited to those exposures. Terrorists, as we know, most often strike at soft targets in an attempt to disrupt everyday life. An effective federal terrorism insurance program, therefore, has to address the exposures presented by high profile, and to a terrorist, highly desirable targets, like sports arenas, universities, shopping malls, daycare facilities, and even hospitals. And while these soft targets are perhaps the most emotional risks, the greatest terrorism threat to the insurance industry's solvency is workers' compensation.

Inconsistent state regulation limits insurers' ability to effectively respond to workers' compensation exposures. It would frankly benefit the insurance industry and all who rely on it if TRIA were improved and extended if only for workers' compensation. But a truly effective federal program should really address other lines of insurance as well. The tax deductibility of terrorism reserves, which are currently not tax deductible to an insurance company does create an adverse budget scoring implication, growing the federal deficit.

The TRIA bill, by the way, originally improved by the House Financial Services Committee, did have such a provision in it. It would have allowed insurance companies such as Chubb to set up reserves against the possibility of a terrorist loss, but it was stripped out by the House Ways and Means Committee. The purchase of federal reinsurance bonds would probably do little in the short term to build capacity. Those bonds would have to have fairly low interest rates and have restrictive access to the funds. State-based solutions would not be able to build sufficient capacity, nor would they address the reality that terrorism is truly a national problem that must be addressed nationally in a consistent way.

So to rely solely on the private sector to solve the problem cannot be the right way. The terrorism risk is too great, the consequences too terrible to rely only on the private sector's ability to solve it and absorb the loss. Another terrorist attack is sadly a virtual certainty. Only its manner and its timing and its magnitude are impossible to predict. Unfortunately, current prospects for improving or extending TRIA are dim. Even the administration which worked so hard to pass the original bill has indicated it does not plan to push for extension.

As I've said, though, insurers alone probably cannot provide the coverage needed in the face of an incalculable risk. If you can't quantify the risk and determine its probability, it becomes essentially an uninsurable risk. As a result, the insurance industry, and I would suggest even the economy as a whole, remains at great risk. An effective federal insurance program is an absolute necessity, and wouldn't it be a shame if it took another terrorist tragedy on U.S. soil in order to induce us all to do the right thing.

On that note, Governor, let me end by thanking you for the opportunity to appear before you today and particularly to you and Vice Chairman Hamilton and the other members of the Commission for your attention and your leadership on this critical issue. I would be happy to answer any questions that either you or members of the Commission might have.

MR. KEAN: General, thank you very much.

Commissioner Gorelick.

MS. JAMIE S. GORELICK: Mr. Degnan, it's good to see you again. Thank you very much for your testimony today and for your thoughtful comments. While I might wish to return to the body of what you presented today, I would like, I think, to focus on the role of the insurance industry in getting the private sector to where it needs to be.

The Chairman noted at the outset that the national security of this country sits on a bed of infrastructure that is owned privately. And that is a signal challenge to all of us, how to get the private sector to do what it needs to do to harden itself against attack, to ensure that it has procedures to mitigate the harm if there should be an attack, to make sure that it responds approximately to protect its people and its facilities. That is, I think, the largest challenge that we face in the subject matter of the hearing today.

And I come at this not only as a member of this commission but as the co-chair of a commission with Sam Nunn on critical infrastructure protection in the late '90s, where we looked at this. And we're very frustrated by what we saw as a lack of incentives for industry to do what we thought needed to be done. Now, traditionally your industry has led the way. Where there is a potential harm that can be mitigated, there have been incentives in the pricing of the insurance product that lead a business to say, well, this is cost-effective to do.

The Governor came before us and laid out a broad consultative process with industry. If I had had the chance to ask him a question, I would have said, you have cash-strapped companies in your state. What is going to make them, besides a sense of duty to their employees and patriotism, which are good motivators but only go so far when you're trying to manage a business, do what they need to do? And so that's what I'd like to talk to you about.

When it became clear that if you had airbags in your automobile, your losses would be lower if there were an accident, and therefore the insurance company would give you a cut of your rate. Same thing with fire alarms in your house. Where is the industry in establishing a set of best practices that companies can use to aspire to and to try to get their procedures so that their people and their facilities are protected and hardened? Do we have a set of best practices and do we incent companies to adopt those best practices?

MR. DEGNAN: It's a great question, Ms. Gorelick and I think --

MS. GORELICK: Well, thank you.

MR. DEGNAN: -- it does focus on exactly the right issue, both from an overall economic impact of the terrorist incidents and on the insurability of those losses. Let me answer your question first, bluntly and honestly. There are no standards nationally available that deal with all terrorist events. There are, though, a number of initiatives underway that deal with standards for what I would refer to as conventional terrorist attacks. That would include a nuclear, biological, radiological attack, which raise questions that are much more difficult to address from a standards point of view.

The federal government has taken some steps by virtue of creating working groups around certain kinds of best practices to disseminate information about the availability of those kinds of protective or precautionary devices. There are groups like the National Fire Prevention Association that are developing best practice safety and physical security recommendations that would help mitigate the magnitude of a loss from a conventional nuclear attack.

And while I said that there are standards available, effectively today, much of what you suggested needs to go on is going on with respect to conventional terrorism and property risks or business interruption losses that would flow from those property risks. So, for example, at Chubb. And I think this is pretty typical of the insurance industry today. We have loss prevention control experts. Before we write a risk, we send them out to do an analysis of the structure and the procedures that are in place in that structure.

Based on their findings, if they've made a determination that the company insured has taken precautionary security measures, and I'll list some of them for you, we will write that risk more willingly. We'll probably write it with a smaller deductible so that the insurance dollar comes into play at a lower dollar loss. We'll probably provide more limits if the insured wants higher limits available for the loss than we would if the risk were greater in order of magnitude because of an absence of security devices. So some of the things we look at would be, do they have a disaster recovery plan?

Financial institutions, by the way, are mandated by the federal government, and many of those that lost all of their assets in the World Trade Center, and many of their employees were up and running and doing business within a matter of 72 hours --

MS. GORELICK: Most of them here in New Jersey.

MR. DEGNAN: -- after the loss, many of them coming to New Jersey to use space in order to do that, until they could get back to New York. Where's the company's physical location? Is it in a high-risk, high-profile building or is it even within a high-profile city but a less high-profile building? Does the company do evacuation drills on a regularly basis, something Governor Kean mentioned? Are delivery vehicles authorized to be on the premises? Are their physical security barriers that prevent access to the building?

Do companies use employee screening processes to monitor who they hire to protect themselves from self-inflicted terrorist events? Are the ventilation systems properly protected? Do they use reflective paint in the stairwells so that people can evacuate the premises more quickly? Are chemicals stored on the premises, and if so, how secure they are?

Our loss control folks look at those things and then advise the underwriters with respect to the underwritability of the loss. Again, only against a conventional terrorist act would I argue that you can responsibility underwrite. But we do take into consideration where state law allows, and it doesn't always, us to adjust a price based on that, certainly to provide more favorable terms and conditions to an insurer who has taken those steps. So there is an economic incentive. I apologize for the length of my answer.

MS. GORELICK: No. I had a lengthy question, you're entitled to a lengthy answer. Would it be more powerful in moving industry to implement state of the art evacuation procedures and the hardening of buildings against attack if there were a clear and more universally accepted set of standards? I mean, you've indicated there's a proliferation of information and that your underwriters make a qualitative assessment, but my concern is that the lack of clarity and the lack of unity as to what is the right thing to do breeds a lack of incentive and impetus to do what needs to be done.

MR. DEGNAN: Clearly I think there's not much doubt that a uniform national set of standards that govern property exposure to conventional nuclear attacks would be desirable for the insurance industry, and more importantly, for the companies that have responsibilities for their shareholders and their employees to provide an environment which is safe and allows them to continue to conduct business. That does not exist today.

MS. GORELICK: And that would be for all manner of terrorist attacks then?

MR. DEGNAN: Well, it's not easy but it's much more -- it's easier, frankly, to get one's arms around a set of standards in the face of conventional terrorist attacks, such as an attack on a property or a building or a particular company.

MS. GORELICK: And yet we know --

MR. DEGNAN: Much more difficult than radiological, nuclear, biochemical attacks to devise what those standards would be. We have not been able to do that.

MS. GORELICK: And yet we know that even such basic standards as standards for evacuation procedures, standards for the construction of buildings, where the attack could be with a much more conventional weapon don't exist, and there are few incentives to make them exist. Isn't that true?

MR. DEGNAN: Yes. But that's not a reason not to do it. I didn't mean to suggest that. There are -- a precedent would be the uniform fire code, which provides standardized sets of procedures and best practices. And I actually am recommending and supporting the notion that we ought to have such.

MS. GORELICK: Now, you mentioned a regulatory barrier. Is there a barrier for the insurance industry to offer price incentives to companies that abide by best practices, let's say if there were a set of best practices out there?

MR. DEGNAN: You know, the insurance industry is regulated by 50 different state regulators. It is one of the few major sectors in our economy that requires public oversight that's not done at the federal level. Chubb and many of the companies in our business would support a federal optional chartering system which would allow one federal regulatory to oversee insurance regulation. But the answer to your question is yes, there are barriers, because in many states, commercial property forms need to be filed in advance of their being put on the market.

Rate structures in many states are very minutely regulated and controlled by the state departments of insurance, many of whom are very slow to respond and insensitive at times, not all of them, to the exigencies that require a quick decision. So I would pose that to you as a significant barrier in the ability of the private sector to respond to the normal marketplace impulses or factors and developments that we would want to respond to.

MS. GORELICK: Well, that's a very helpful answer and very concrete. So far I've taken from your testimony, in addition to the concerns you've raised about TRIA, that, while we have a lot of information out there about what might be the best way to protect ourselves, we don't have any coalescing around a set of standards that can be implemented, if you would, by the insurance industry. And even if we had the standards, there are regulatory barriers to offering very clear-cut price incentives to companies to adopt those standards.

MR. DEGNAN: Potentially. And I would focus not just on price but on terms and conditions. Many companies are willing to pay whatever it takes, as long as they can buy enough insurance and they can have it attach at a level which doesn't render them insolvent before the insurance comes into place.

MS. GORELICK: Well, I accept that perfectly. It seems to be me that more broadly one could call it financial incentives to do what is right. I noticed that the Business Roundtable in April came out with a call on boards of directors to make security a key part of corporate governance, and you probably have a window into corporate America that most people don't have. In the report it notes that security generally is a responsibility of someone fairly low down in the organization, not someone very close to the senior leadership and certainly not close to the boards of directors. And it generally calls on corporate America to change that and to make security an important part of corporate governance. Has that happened?

MR. DEGNAN: It's certainly happened at our company. I chair the internal security caucus group that overlays all of the departments of the company. Our board requires an annual update now on the status of our disaster recovery planning and our business continuity planning as well. I would -- I don't know for a fact, but my sense is, as an insurer of many companies, directors and officers' liability, that boards are treating this as a board level matter for attention these days, and when that happens, inevitably the management of a company treats it as a critical imperative.

Certainly in publicly traded companies today, a director would be taking a risk in terms of liability, and not assuring himself or herself of the adequacy of the planning measures and security measures that a company should take. So I suspect it is happening. I was taken by Governor Kean's remarks at the beginning that many of these things do not seem to be evidenced in surveys that are done. From our perspective it's much different, much better and much more engaged than it was before September 11.

MS. GORELICK: Do you at Chubb or do you as an industry have data that reflect these changes, because the data that are available to us are not particularly consistent with that assessment? I don't have any reason to question your anecdotal perception but the data seems to reflect that little has been done, and if that were true, it would be of significant concern to us, and we would address it perhaps differently if we had different facts.

MR. DEGNAN: I wish I did. I don't. It was anecdotal. But one empirical piece of data that I could refer you to is the fact that about 80 percent of our insureds are buying terrorism coverage. That says to me that there is an awareness of the risk on the part of the customer and a willingness to pay a price to secure at least economic protection against it. If they have that, one would surmise that they are incented [sic.] highly to minimize the risk as well as buying coverage for it.

MS. GORELICK: If they're behaving rationally --

MR. DEGNAN: Which not all do.

MS. GORELICK: -- which occasionally is not the case. Mr. Degnan, I want to note that the record of Chubb's activities in the days following 9/11 is really an impressive one. And, you know, I've read Steve Brill's book and read your account of what occurred and the business decision that you made that reflected the values of your company, which was to step up to the plate and fulfill the commitments that you had made to your insureds.

Your testimony, in part, urges us to look forward to the unhappy possibility that this is not a one-off event. And most of the witnesses whom we have heard from in the course of our inquiry so far who are experts on terrorism say that no matter what we do to one extent or another, some additional attacks in our country are inevitable. And so my last question to you is this. Do you think that your industry could and will respond in the same way in the future, which was with a, if I may characterize it, a sense right off the bat that it was the right thing to do to pay these claims? Do you think that you and your industry will be able to act in the same way in the future?

MR. DEGNAN: There will certainly be desire to act in the same way in the future on the part of not only Chubb but of almost every company, particularly domestic companies in the industry. Whether we're able to or not is the more fundamental question. It's very interesting to me. The insurance industry is not a very popular industry in this country, to be honest. When I came to Chubb and I went to a party afterwards and someone said, "Well, what have you done, John, with your career," and I realized I had to say I'd been a politician, a lawyer and now I'm an insurance company executive, I tried to change the subject.

(Laughter.)

When September 11 happened, within a matter of days, the airline industry secured a limitation by federal law on its liability, defined by its insurance liability standards. So Congress essentially said, pay all of your limits but you don't have to be exposed to any liability. Even Mr. Silverstein, the owner of the World Trade Center, from Congress got a federal bill which limits his liability to his insurance proceeds. The insurance industry did not at the time ask for any assistance in paying these losses. We said, notwithstanding an unknown dimension of those losses, we will pay them. In fact, sitting here today, I'm very proud of the fact that we have and are continuing to pay all of those losses.

What we asked for was help against the next one, because these aren't insurable risks, they're government responsibilities to protect its economy and its people. It took us until November 2002, and only at huge political price, to convince Congress that they should provide a mechanism to soften the economic blow on the next event so that we can meet the promise in the same way we were able to do from our own assets on September 11. Absent TRIA, to be very candid with you, and in the event of a catastrophic loss in the order of magnitude of the World Trade Center alone, much less the greater one that we all know could happen, there are many companies in our industry who will not be able to honor that promise because they won't have sufficient assets to do it.

Last point of this. You know, what an underwriter generally does is try to dimension what the ultimate loss could be. How much is the building worth? What would it cost to rebuild it? How long will it take their operations to get back up in operation, so their business interruption? And we try to put a price to that. It sounds like a mechanical process but it's a fairly sophisticated process. And then what we do is try to price against the probability of that loss.

Now, in terrorism, we can generally dimension the potential loss. We can make a projection of how much is likely to be lost. What we can assess is the probability that that loss will occur. And unless that critical component of the underwriting process can be empirically demonstrated, one can't price the risk, and therefore if you can't price the risk you can't assemble the pool from everyone who wants insurance that allows you to spread the risk to the few who are hurt.

The fundamental proposition I'd leave with this commission is, yes, the insurance industry will do what its contracts oblige it to do. We'll do even more. We'll do all that we can. But it would be wrong to rely on insurance as the softening mechanism against economic terrorism that it was after September 11. We won't be able to.

MS. GORELICK: Thank you for your testimony.

MR. DEGNAN: Thank you.

MR. KEAN: Thank you, General. One last question, and that comes from Secretary Lehman.

MR. JOHN F. LEHMAN: Thank you.

Mr. Degnan, I have a double-barreled question, following on- to Commissioner Gorelick's question. As we examine the vulnerabilities and the inadequacies of the private sector emergency preparedness and crisis management, that the lessons are being drawn from 9/11, we face really two contending schools of what to recommend.

One is government mandates and regulation on compliance, other kinds of compliance such as corporate governance certification and so forth, on the one hand. On the other hand, seeking standards to become enforceable from the private sector. And the reason why the insurance industry is of such interest to us is, as one of the most regulated of industries, they also have evolved -- the industry has evolved some of the best standard setting and rating agencies, like ISO, Insurance Services Office, and so forth.

Does the structure exist within the insurance services industry and the industry itself to provide the kind of ratings such as you did after Hurricane Andrew and so forth for building code compliance to provide the answer to these concerns that we have, so that you'd have a direct mechanism for rating a skyscraper as complying in fire drills, building codes compliance, inspections and so forth? Or is it you feel we have to depend on the federal government to do this for our overall private sector property? Because we're going to recommend one direction or the other or some combination.

And the second, as a related part of the question, do you and your underwriting and your evaluation that you so effectively described in writing and underwriting for these kinds of policies, find a significant difference between regulated industries like utilities, on the one hand? Are they better at it because they're regulated, compared to other industries that are totally unregulated?

MR. DEGNAN: On your first question, Mr. Secretary, I believe that the expertise exists within the property and casualty industry today to devise consistent standards for conventional terrorism risks. We are, notwithstanding the highly regulated environment in which we work, though, fiercely competitive, and we are businesspeople ultimately. We find it sometimes very difficult to put that done to coalesce in one group, and we run some antitrust risk when we do, to say that there's a common set of standards against which we will all underwrite. So there are antitrust considerations to be taken into account and there are competitive considerations to be taken into account.

If, in combination with a federal regulatory entity or some other consolidating unit that was authorized to do that, I can say without any hesitation that the industry would be extremely eager to contribute collectively whatever expertise we have in handling losses in the past, or this one, to that process. And I do think that we would all be aided and better informed and that the country would be better off if there was such a set of standards that could be devised. While we have the expertise, I don't think we'll be able to do it on our own. So it needs to be in combination with others.

As to the second part of your question, without a doubt, in my judgment, regulated risks are easier to write. I made the point about financial services institutions, where every investment bank is required by the federal government -- every bank is required by the federal government to have disaster recovery planning and business continuity plans. That's one of the reasons, to be candid with you, that Chubb is such a large underwriter of financial institutions and why we were the second or largest loss provider or payer in the World Trade Center. These are our kinds of clients. We like them because they have those plans in place.

And, frankly, as large as our loss was, had they not had business interruption capabilities in place to get them up and running in 72 or 96 hours, our loss would have been much greater. The proof of the success of the underwriting to those kinds of preparedness levels is actually exhibited in the size of the loss that we incurred, which would have been much larger without that. I know less about the utility industry, but I'd hazard a guess, although we're not a large writer of utilities for other reasons, that the existence of disaster preparedness preparation, for example, with them and the increased security around their perimeters make them a more underwritable risk for the companies who do that today.

MR. LEHMAN: Thank you.

MR. KEAN: General, thank you very much for your time and for your testimony.

MR. DEGNAN: You're welcome.

MR. KEAN: Good work. Thank you.

MR. DEGNAN: Thank you, Governor. Members of the commission, thank you.

(Tape change)

PANEL: SKYSCRAPER SAFETY ISSUES FROM 9-11 FAMILY MEMBERS

MR. KEAN: -- and of the need for private sector engagement and preparedness, then the families of the victims of the attacks on 9/11. Two family members are here with us today to talk about their ongoing work.

Sally Regenhard and Monica Gabrielle have formed a Skyscraper Safety Campaign group, looking into the issues of evacuation, safety and building codes. Sally lost her son, Michael, age 28, of the Engine Company 249 and Monica lost her husband, Richard, who worked at Aon who worked in World Trade Center II on the 103rd floor. Sally and Monica are working with the distinguished advisory panel, as well as leading interested groups throughout the country to develop and implement changes to the fire and building codes, as well as evacuation procedures and firefighting technology for skyscrapers. They were instrumental in getting the Columbia University Evacuation Study of the World Trade Center off the ground and I believe they're going to discuss some of that today.

MS. MONICA GABRIELLE: Good morning.

MR. KEAN: Good morning.

MS. GABRIELLE: My name is Monica Gabrielle. I am co-chairperson of the Skyscraper Safety Campaign and a widow of 9/11. I would like to thank Governor Kean, Congressman Hamilton and the commissioners for allowing me this very important opportunity to provide testimony regarding 9/11.

On the crisp clear morning of September 11, 2001, my concentration was abruptly shattered by the extremely loud and out of place sound --

MR. KEAN: Excuse me. Could you speak up a little bit, or put the microphone a little closer, one or the other? I think some of the people in the back are having a little trouble hearing.

MS. GABRIELLE: My concentration was abruptly shattered by the extremely loud and out of place sound of an airliner careening down the island of Manhattan. Minutes later, in my office, I was facing the inconceivable scene being watched by millions, black smoke pouring out of one of the World Trade Center towers. What separated me from the millions, my husband was in one of the towers and I didn't know which one. At 9:02, it would make little difference, as I watched the second plane swing around and slam into the second tower. Both towers were now hit and burning.

The shock setting in would be completely embedded into my being as I watched the first tower fall, now knowing it was Rich's building. It would be three days before I would get any information regarding what Rich had endured. He, along with a group of colleagues, was waiting on the 78th floor sky lobby for one of the express elevators when the second plane hit. The group and approximately 200 others in the sky lobby at the time were thrown around as the building swayed by the impact. Rich was hit by the marble walls, which fell on his legs, breaking and/or crushing them. He was pinned under the marble debris and unable to move.

He was waiting for rescue, most likely under the most gruesome conditions imaginable: fire, smoke, dead, dying, and quite possibly the sound of the building collapsing and falling apart. Imagine their relief when Battalion Chief Orio Palmer and Fire Marshall Ronnie Bucca appeared like angels to help them to safety. These unbelievable men were in the process of coordinating the evacuation of the injured when the building collapsed, stealing their last breaths, crushing every person still in there to death only 59 minutes after impact. They never had a chance.

In my voice, hear the voices of all the victims of the needless, horrible murder crying out. Let my voice, on behalf of all the victims, implore you to listen and listen well. Families left behind to suffer from the memories of this atrocity are too many. We have an obligation to the victims, the families and the citizens of the United States to look at what went wrong and to make sure we do everything in our power to ensure safety and security in buildings going forward.

We must first separate the events of September 11th into two categories: the terrorist attacks and the subsequent building failures, which alone encompass a variety of appalling conditions. Unbelievably, evacuation emergency preparedness were sorely lacking or totally non-existent on 9/11. This, along with critical flaws in the design and construction of the buildings, contributed to the ominous conditions occupants found themselves in, which ultimately claimed the lives of thousands.

I am here today to speak about evacuation emergency preparedness. On September 10th, I, like so many of you, had little knowledge in this area. I, like so many of you, entrusted my family's security and safety to others. That ignorance changed one day later. During the course of the past two years, I have been shocked to discover how very deadly that decision was. In order to properly move forward, we must first go back. As the World Trade Center began to accept tenants in December of 1970, it was fairly common knowledge among those close to the project that there were inherent problems, safety issues, if you will.

The construction of the buildings would be termed fragile by their critics, the fire service, the very service commanded to protect it. The towers shot upward into the sky to the height of 110 stories, a quarter mile. They contained lightweight floors, acre-large expanses of open floor space, substandard fire proofing. The thinnest, lightest steel would be found at the top. Worst of all these innovative, experimental, mammoth buildings were constructed and opened without any automated sprinkler system installed in them.

Subsequently, in any major fire, the risk would be great. There were no fire barriers on these acre spans of open floor space, no water, still the best measure against fire. Any fire was free to spread and spread quickly. The potential occupancy of each tower was 25,000. Each tower had only three staircases, clustered in the center core of the building, along with the elevators, and contained no cement or masonry. The only protection afforded in any emergency or evacuation, whether stairs or elevators, were two layers of fire rated gypsum board, or drywall.

The World Trade Center, over the course of its life would have numerous incidents which would give the Port Authority the opportunity to address the very serious challenges regarding the safety and security of the occupants. As would become all too evident, the strategy of defend-in-place would not work in any major fire in these buildings. Their inherent design flaws, and most importantly, the inadequate, untested fireproofing would require full evacuations each time.

Unbelievably, with all the warnings, the Port Authority, in its arrogance, claimed that these were indestructible buildings, never prepared the tenants for that eventuality. On September 11th, this negligence would cost the lives of thousands and the faulty fireproofing would play a major role in bringing the buildings down.

Before midnight in February of '75, an arson fire was started at the Trade Center inside a closet with switching -- telephone switching equipment, cabinets filled with paper and fluid for office machines. This, combined with the open floor design, allowed a fire to get out of control very quickly. It would take 132 firefighters three hours to finally put it out.

Fire Commissioner O'Hagan stated at the time, "Had the building been fully occupied, and given the stack action that exists in this 110-story building, the rescue problem would have been tremendous." Although it was night, everyone had to evacuate, the maintenance workers, cleaners, security. Pressure was applied and the Port Authority made some concessions. They installed more walls and doors on open floors, they improved some of the alarms and communications, they installed fire smoke detectors. Yet the one sure thing to help control a fire was ignored: water. The sprinkler systems were just too costly to install.

In '81, the Trade Center towers had another scare. A Boeing 707 on its way to JFK International Airport missed hitting the tower by a mere 90 seconds. What had been speculative was now a reality. One of the risks to the towers and their occupants now included the danger of collision by a commercial airliner and fire from its jet fuel. During the '80s the Port Authority finally set the funds aside and started the sprinkler installation which would happen over the course of many years.

In '84, with growing concern with the global climate and terrorism, Peter Goldmark, who was the executive director of the World Trade Center at the Port Authority at the time, ordered a report on the vulnerability of the towers. The Office of Special Planning was born and charged with the task. Appointed to oversee the project was Edward O'Sullivan. He spoke with many domestic and international intelligence agencies and conducted a top to bottom investigation of the towers and assessment, and it was clearly evident that there were numbers of vulnerabilities. The danger for a potential bomb in the parking garage, a plane hitting the towers, even a building collapse was a serious concern.

When they questioned Leslie Robertson, the original structural engineer, with this concern, he claimed that the towers were Gibraltar. By the time the report was eventually completed, Mr. Goldmark had left the Port Authority. He was no longer there. Consequently, the excellent recommendations of eliminating the public parking, or at the very least doing random checks of cars coming into the garage, dispersing the emergency centers, installing better internal radios, battery powered lighting, more video cameras, these were all ignored.

The poor decision making about the recommendations would come back to haunt the Port Authority on February 26th in '93, when a bomb did go off in the sub-basement, as had been feared. The lack of additional security in the parking area allowed the van loaded with explosives to enter. The lack of emergency lighting made the evacuation of thousands a terrifying experience. The lack of the proper venting, the stack effect, caused the life-threatening risk with the smoke that eventually covered the entire towers.

During the '93 evacuations, the lack of preparedness was blatantly evident. People didn't know what to do, they didn't know where to go. The standard optional drills which consisted of moving to a designated area, going down two floors and waiting for instructions, the defend-in-place strategy, didn't help in this extreme circumstance. The evacuation lasted over 10 hours and the buildings quickly filled up with black acrid smoke. Everything went out, lights, ventilation, elevators stopped, trapping people in the cars filled with smoke.

Some tried to walk down to safety, only to return because it was too smoky to come back -- to go all the way down. People were absolutely terrified. Those who knew the building's construction well, the Port Authority engineers, they were able to dig their way through the gypsum board with keys and nail files and escape from a stopped elevator. Others went down through dark smoky stairwells holding on to the shoulders of the person in front of them. The stairwells quickly become crowded as people from other floors entered.

Several were rescued by helicopter off the south tower. After the '93 bombings, some safety improvements were made. Battery operated emergency lighting was installed in the stairwells, luminescent paint was added. A separate emergency command center was put in each building. The ever inadequate and in some places non-existent fireproofing was finally to be increased to one and a half inches, three times the amount that was currently on the trusses. This was to be done as tenants moved out. It would set a potential timeframe for completion at over 10 years. At 9/11, it had not been completed.

For most, the years following the '93 bombing resulted in complacency. For Morgan Stanley, more vigilance. This company took the initiative to make sure its employees knew exactly what to do if there was ever another emergency. The only way to accomplish this was to practice, practice and practice. As a result of the constant drilling, on the morning of 9/11, the only casualties Morgan Stanley sustained were those of the employees going back to help others. So far, each and every incident that occurred at the Trade Center was an opportunity for an honest, critical look at the safety of the buildings, at the evacuation and potential problems with the evacuation of getting nearly 50,000 occupants out quickly.

It was an opportunity to address these things in order to minimize injury or death in the event of another major catastrophe. The bombing in '93 was a major indication that evacuation of these buildings was a very real problem and a comprehensive plan needed to be drawn up, fine-tuned, disseminated, implemented and practiced. An enormous task to be sure, but these were enormous buildings and they brought with them enormous responsibility.

On the morning of September 11th, the first day of school and primary voting would delay many, thereby saving their lives. Unfortunately, many, too many, were at their desks. Occupants of the towers consisted of the usual diversity, employees, people from branch offices for day meetings, companies conducting breakfast meetings, visitors, messengers. When the planes hit the towers, they virtually sliced right through the buildings, penetrating the soft curtain with little to no resistance, taking with them all means of escape above the impact zone in tower one and leaving a lone and barely known about stairway open in tower two.

What happened in those towers is unforgivable. Untold numbers were instantly killed because they were in the direct path of the planes. Those at and above the point of impact in tower one endured unimaginable conditions, as is evident by the number who chose to leap to their death. Others tried frantically to escape, only to learn that every potential access to safety was closed to them, the stairwells were gone and the elevators were gone. Unable to go down, the soon-to-be victims went up. Up to the roof where they encountered locked doors. No one had bothered to tell them that rooftop rescue was no longer an option. Their only escape and chance of survival would have been a rooftop rescue. They waited for help that would never come, a quarter mile above ground.

These innocent souls stood at windows waving to attract attention hoping and praying that someone would reach them in time. Last calls were made, final messages were sent. Too smoky, can't breathe. Should we break a window? What should we do, where should we go, how do we get out?

In tower two, similar events were occurring. The difference, tower two had a critical 15-minute window of opportunity to evacuate, a missed opportunity to minimize the casualties. Instead, occupants were told to stay, to go back. Many already in the process of leaving the building turned around, trusting the announcements that the building was secure. That decision would cost them their lives. Once again, untold numbers were killed by the planes.

Once again, others would find themselves searching for a way out only to be met by locked doors, stairwells that were destroyed, elevators that didn't work. Some were trapped in offices. Again the roof was sought as a point of rescue, again locked doors, wasting precious minutes going up, instead of finding the one lone staircase left, never having been told the rooftop rescue wasn't an option. Again, final messages were sent, too smoky, can't breathe. The ceiling is falling in, the floor is giving way, the stairwells are blocked, the stairwells are gone.

Some of these soon-to-be victims were on phones with loved ones, pleading for information and options. No communication from the Port Authority was forthcoming. Innocent victims sitting in offices waiting for instructions on what to do, most likely contemplating their fate. Innocent victims waiting for rescue, all of them perished, many while still on the phone with their loved ones. These memories will haunt us forever.

At present, there are two investigations of the World Trade Center being conducted. Congress has charged the National Institute of Standards and Technology with the daunting task of conducting a federal investigation into the building failures. Columbia University is conducting an evacuation study. These investigations, along with others around the world, will hopefully submit very concise recommendations which will address the safety and security of occupants in buildings. It is our hope that this commission will push to make sure that those recommendations end up fast-tracked into best practices.

It is our hope that this commission will make an irrefutable statement that it is imperative for all concerned, real estate, architects, builders, code groups, fire service, and advocates for safety to speak in one voice to ensure that recommendations become mandates quickly. It is our fervent hope that the first obvious recommendation issued by this commission is the immediate removal of the immunities to critical building and fire codes, the bare minimum standards, which are currently still enjoyed by the Port Authority in the construction of the new World Trade Center as I speak to you now.

Safety concerns need to be addressed before construction begins, not after. Economic gains cannot be allowed to dictate what those safety measures will be. Emergency preparedness cannot be allowed to remain a vague notion. We must educate all citizens to be able to get out of a life-threatening situation quickly. We must provide them with the tool, knowledge. The responsibility must rest with anyone potentially affected, building owners, building managers, tenants, employers and employees.

In closing, I would like to say that prior to September 11th, I was simply a wife and mother. My life's goal was never to be a public spokesperson or advocate; however, that horrible day has changed my life dramatically. I am honored to be heard on behalf of all the families whose lives will never be the same.

I sincerely hope that this commission understands a legacy of truth, accountability and reform is the greatest tribute to all the innocent victims of this tragedy. The time has come to address the deadly mistakes of 9/11. A safer environment for our children and for all of America will be a direct result. We now look to you for leadership. Thank you.

MR. KEAN: Thank you very much.

(Applause.)

Ms. Regenhard.

MS. SALLY REGENHARD: Good morning, Chairman Kean, Vice Chairman Hamilton and commissioners. It is an honor to address the 9/11 Commission today. My name is Sally Regenhard and I am the founder and chairperson of the Skyscraper Safety Campaign.

The Skyscraper Safety Campaign was created in December 2001 by the Regenhard family, in memory of my beloved son, Christian Michael Otto Regenhard, a 28-year-old probationary firefighter, who remains missing at the World Trade Center, along with his entire engine company, 279, to this date. He is one of 17 probationary firefighters lost at the World Trade Center and is one of the 45 percent of victims whose remains were never found. I brought a picture of him today because pictures of the victims I know inspired this wonderful commission. And I brought his picture today to represent all the victims, whether uniformed or civilian, and I know that you will keep them in mind as you go about your most important work.

The goals of the Skyscraper Safety Campaign are: first, to have a federal comprehensive investigation with subpoena power into the collapse of the World Trade Center, this investigation is currently going on; secondly, to encourage better compliance with building and fire codes in New York City and nationwide; third, to educate codes groups to allow the fire service to have more input into the writing of building codes which now, sadly, is not the case; fourth, to ensure that all future World Trade Center development by the Port Authority of New York and New Jersey will be characterized by safety, quality, security and will be under the legal jurisdiction of New York City building and fire codes.

My remarks today will focus on the skyscraper safety issues of 9/11/01. On 9/11, the cloak of competence was pulled off the city of New York. On that dreadful day, we found out how ill-prepared we really were, and this knowledge came at an awful price: the needless death of nearly 3,000 people, 343 of them firefighters, including my beautiful son, Christian.

On 9/11, the city of New York and the Port Authority of New York and New Jersey had no plan for terrorism, despite the fact that the World Trade Center was previously attacked in 93 with deadly consequences. At that time, the terrorists vowed to return to, quote, "finish the job," and they kept that promise on 9/11.

The widespread failures in evacuation procedures, building code issues and emergency communications became a prescription for disaster at the World Trade Center. Despite propaganda to the contrary, the Port Authority, a bi-state agency which built the World Trade Center and is totally immune from all local building and fire codes, really had no evacuation procedures in place at all. They said they did training, but the fact is that evacuation was left up to the individual tenants, not to the Port Authority.

The majority of the occupants who survived felt that they were improperly trained or not trained at all. If they were trained, they would never have gone up to the roof to try to escape. All those who made that crucial mistake paid dearly with their lives. If they were properly trained, they would have known that access to the roof was impossible because of two locked doors that were only accessible to maintenance workers with keys. The inadequacy of codes to ensure safety of persons in high-rise buildings became glaringly apparent on 9/11.

In 2001, the New York City building codes, as well as all model codes throughout this country, treated a 100-story building with the same guidelines as a 10-story building. No fire drills with full building evacuations were ever mandated, and the World Trade Center occupants were just as totally unprepared for a mass evacuation as they were during the 1993 attack. New York City codes allowed a building designed to house 25,000 people to have only three staircases for emergency escape. It allowed gypsum board walls in stairways, which at the World Trade Center collapsed under impact and pressure, trapping fleeing victims.

New York City codes allowed many or all of the high-rise buildings stairwells doors to be locked, trapping fleeing victims when stairs collapsed and preventing firefighters from gaining timely access to floors where people needed to be rescued. The unfortunate truth is that today, very little has changed in the area of building code reform throughout this country, including few extra safety measures for high-rise buildings.

But any discussion of the New York City code is completely irrelevant to the World Trade Center because these buildings were and remain above the law. The Port Authority's buildings were totally immune from every single New York City building and fire code and were subject to, quote, "the Port Authority's own codes," which remain a mystery to this day because no one has ever seen them. The Port Authority repeatedly claims that they, quote, "meet or exceed New York City codes;" however, history has shown that this is a falsehood. No high-rise building of 100 percent bar joist floor construction before or since the World Trade Center has ever been allowed under New York City standards and practices.

According to the NIST WTC collapse investigation, there is no evidence that fire tests were ever done on the fireproofing of the World Trade Center. This is a glaring example of lack of code compliance, to say the very least. Finally, the untested fireproofing was grossly inadequate, a clear violation of New York City codes. However, since no FDNY violations can be issued to such a, quote, "immune building," no codes violations were ever served on these dangerous buildings. Indeed, the FDNY had no jurisdiction in the World Trade Center, but paradoxically they were required to risk and eventually lose their lives in these buildings.

One of the most tragic and abominable failures of 9/11 was the total breakdown of emergency communication and coordination in the World Trade Center. Lacking any real plan for terrorism and lacking a unified command structure, the Port Authority, NYPD and the FDNY operated basically separately on 9/11. For the most part they did not and could not communicate with one another.

The FDNY generally could not even communicate among their fellow firefighters. Numerous newspaper articles, interviews and 9/11 tapes have evidenced this fact. The fact that my son and his FDNY brothers were sent into the World Trade Center with radios that did not work in 1993 and were no more capable of working in 2001 resulted in evacuation orders which were unheard and therefore unheeded, a fact that surely contributed to their deaths.

In an effort to minimize the atrocity of the deaths of 343 firefighters, heroic urban legends were promulgated by leaders, such as the former mayor of New York, and others who still claim to this day that, quote, "25,000 people were rescued by the FDNY in the largest rescue effort in world history." To the contrary, evacuation specialists and researchers have determined that the true number of occupants who escaped that day was closer to 7,000 people per tower, a total of 14,000 people.

The sad truth is that whoever could get out, did get out. And while the FDNY valiantly entered these buildings to save lives, it was an impossible and deadly situation. They were essentially sent in to an inevitable death, with radios which did not work. To this day, no one has been held accountable or responsible for these massive failures of the public trust.

Since 9/11, we are moving in the direction of change, but far too slowly. Generally, we are crawling, instead of running, towards change. One outstanding exception to this situation is the New York City Department of Buildings and its World Trade Center Building Code Task Force, which is effecting sweeping changes and reform for New York City's building code.

In February of 2003, this proactive department of the Bloomberg administration approved comprehensive safety measures, such as the temporary outlawing of bar joist floor assembly, commonly known as truss construction, which characterized the World Trade Center, in high-rise buildings. They are also calling for the hardening of cores of stair cases and elevator banks, the retrofitting of sprinklers in older buildings, and other safeguards which will be incorporated into the New York City building code. As the Skyscraper Safety Campaign praises such actions, however, we are greatly dismayed that there is still unbelievably widespread resistance to national reform.

One example of this is the fact that all model codes still treat a 100-story building with the same guidelines as a 10-story building. Another example is evidenced in the recent failures of a codes group to initiate basic fire safety reform through the widening of staircases in new high-rise buildings.

For example, the National Fire Protection Association, the NFPA, recently had the opportunity to effect a code change of widening staircases in newly constructed skyscrapers by just 1 foot, yet failed to do so. Who can forget the stories of narrow congested stairwells in the World Trade Center, where it was impossible for firefighters to go up while people were fleeing for their lives, and vice versa?

Scores of still photos of persons evacuating demonstrate that occupants had to stop and turn sideways every time firefighters passed them on the way up because the stairways were so narrow. How many of those deadly 110 stories did my beautiful son climb up on that dreadful day, against the tide of frantic desperate people, fleeing for their lives. Whose child, husband, parent or sibling could have escaped by fleeing more quickly down a wider staircase? Did my son somehow get word of the order to evacuate but could not because he, like the other desperate people, was jammed into a too narrow staircase with a frantic sea of humanity trying to run for their lives? What unspeakable horrors led to the brutal deaths of nearly 3,000 people in those buildings that day?

The cruel reality is that I will never know the answers to these devastating questions, but I do know that a staircase that is 1 foot wider can save a life. Most regrettably, the NFPA yielded to special interest groups and did not pass this most basic building code reform.

The Skyscraper Safety Campaign now requests that the leadership of this fine commission becomes a catalyst for most needed code change throughout this country. The recent fires in Rhode Island and Chicago illustrate that disasters which happen locally should have national implications for change and reform, yet they nearly always remain a local issue.

One example of this is the Seton Hall New Jersey dorm fire disaster, which resulted in widespread reform in fire safety and sprinkler installation for college dorms in New Jersey, but not across the country. I appeal to this commission to further the cause of the skyscraper safety by doing the following.

First, closely monitor the National Institute of Standards and Technology, NIST, investigations, findings and recommendations, and encourage new coalitions of public-private partnerships with a goal of adopting these changes for the purpose of code reform and enhancement of fire safety and evacuation procedures for all buildings.

Secondly, make sure that the NIST recommendations for code changes are quickly adopted. It now can take from three to six years to change codes and practices. We cannot wait that long to safeguard the American public. There must be a national perspective from all disasters like the World Trade Center, the Rhode Island fire and the Chicago fire. We need the shepherding of this 9/11 Commission to effect timely code change, led by the International Code Council and the National Fire Protection Association.

Third, invite the two key organizations which control public safety in buildings in this country, the NFPA and the International Codes Council, to testify at your commission as to specifically how they are positioning themselves to quickly move forward on anticipated NIST proposed code changes. The Skyscraper Safety Campaign has established a relationship with the International Codes Council and we look forward to working with both the NFPA and the ICC with the goal of widening staircases and incorporating many other safety reforms into these codes.

Fourth, invite the General Services Administration, the GSA, and the Building Owners and Managers Association, BOMA, to testify as to why they oppose the widening of staircases in new high-rise buildings, under the proposed NFPA code changes which were defeated.

Fifth, encourage reform and codes groups to allow greater participation from the fire service and fire professionals in the field of codes and practices. Allow the profession of fire protection engineering to have responsibility for fire proofing and fire safety issues in building construction. At present, architects, who are not fire experts, have this obligation.

Sixth and last, require that the Port Authority of New York and New Jersey rebuild the new World Trade Center under the legal jurisdiction of New York City building and fire codes. We need a set of national codes and standards with input from the fire safety professionals for all buildings, including governmental agencies. There should be no exemptions for any agency or authority, and the Port Authority of New York and New Jersey should not be allowed to rebuild the new World Trade Center under their immunities from local building and fire codes. No building should be above the law when fire safety is the issue.

To conclude, please keep in mind that no reform codes and no method of enforcement will be of any value to safeguard the American public unless there is a system of accountability and responsibility in place. We need this for the effective safeguarding of human life in all buildings and especially for the failures of 9/11 in New York City. There was a wholesale betrayal of all those in the World Trade Center and all the rescue workers who ran into a hopeless situation with radios that did not work.

The former mayor, fire commissioner and police commissioner of New York, as well as the Port Authority of New York and New Jersey, are just some of the individuals who must be questioned by this commission regarding what happened to New York City on 9/11 and why the greatest city in the world was so totally unprepared for this terrorist attack, despite warnings. Accountability and responsibility are the hallmarks of a democratic society. Without a system of accountability and responsibility for all public and private officials, there will be no real impetus to change an irresponsible system like the one that characterized the city of New York and the World Trade Center on 9/11.

In closing, I would like to tell you that the writer, Gertrude Stein, once said that, "the dead speak to us." Members of the 9/11 Commission, the dead are speaking to us today. They are asking you, by your work, to give others the gift of life through accountability, responsibility, change and reform. The dead are speaking to us. I hope that you will listen to them. Thank you.

MR. KEAN: Thank you both very much for that factual and very moving presentation.

Secretary Lehman?

MR. LEHMAN: Thank you, Ms. Gabrielle, Ms. Regenhard. Thank you very much for all you've done, first in being very key in bringing this commission into existence, and as importantly, guiding us from the very first day and assisting our staff and us in understanding these issues and guiding the inquiry so that it will, indeed, we are confident, make the kind of difference that you and your efforts deserve.

I have a number of questions, but since my colleague Tim Roemer was one of the principal authors of this commission, I'd like to ask him to begin with a question.

MR. KEAN: Congressman Roemer?

REP. TIMOTHY J. ROEMER: Thank you, Mr. Chairman.

Thank you, John, for that courtesy.

Although very difficult to follow up on what you both have said, if I may, Sally and Monica, thank you so much. I know how difficult -- I can maybe imagine how difficult it is for you to get before the commission and tear open the wounds that you continue to feel so often with respect to Rich and Christian, and we very much appreciate you being here today.

Gail Sheehy has written this book about 9/11 and in it she talks about the heroic acts, the courage and the bravery of people in the towers and those people that assisted others in coming down, despite the un-preparedness of some of the companies involved in not having evacuation plans properly in place, despite not enough planning after the Trade Towers were attacked in 1993, we saw real acts of courage and bravery. And I put your testimony and the families that are here today in the same category. Thank you so much for helping us create the 9/11 Commission. Thank you so much for helping us in having the Joint Inquiry be successful in making certain recommendations to hopefully make the country safer, and thank you for what you are doing for this 9/11 Commission.

My children asked me why I was coming up here today, and what we hope to accomplish in a hearing like this, and as the Chairman has said in his eloquence in his opening statement, when 85 percent of the critical infrastructure is controlled by the private sector, the people in those buildings are the targets for the next terrorist attack. What do we do about this? How do we try to do some things to make this country safer from the terrorist attack that we know is coming next? And you are here today to talk about that, to advise us, to show us through your knowledge and your frustration and your anger what this 9/11 Commission might be able to do in the future, and we're very grateful for that advice.

I want to ask you specifically with respect to the tragedy on 9/11. You travel the country. You have gone to Indianapolis, Indiana, my home state, and you have made presentations there not just about what terrorism's threat might be to us but what inadequacy there is in the uniformity of our building codes, how no building should be exempt from those codes, whether it's in New York City or Indianapolis, and how we need a better set of standards and code enforcement today in America. While our intelligence communities are trying to get better in coordinating and communicating information, they're not nearly there yet. We haven't seen some of the same progress in this area.

You are very frustrated by that. Could you tell me, Sally and Monica, just very briefly in my first question, what did you say to the people in Indianapolis at this conference? What recommendations will you make in the future and are we making any kind of significant progress if you continue to do those kind of conferences across the country, even before we make our recommendations on the 9/11 Commission?

MS. REGENHARD: Well, one of the conferences I attended was the FDIC conference, which is the Fire Instructors Conference which is held yearly in Indianapolis, Indiana. This serves thousands of firefighters, both professional and volunteer, and their instructors, and it's really a place to showcase the latest innovations in firefighting techniques and fire safety. When I addressed this large, large group, I asked them first of all to take a stronger role in advocating for fire safety and the strengthening of fire codes.

The fire service has really been the last group to be -- to have a voice. They are a stakeholder in the area of fire safety and in codes, but they're the last group to have a voice. I asked them to stand up, to insist at their unions, that their national and international organizations which purport to represent firefighters throughout this nation and even throughout the world that the firefighters need to contact these people and tell them, get involved in strengthening building codes, get involved in firefighter safety. Because a firefighter will not be able to save the public unless they have the training, technology, equipment and they are backed by stronger fire codes.

I also appealed to them to recognize that without accountability and responsibility, we're not going to make progress. That has to be the overriding situation. I would appeal to you and to all groups that there has to be a public-private partnership, but it can't be on a basis where if a company feels like being safe, they will be safe. We have to have this commission, which -- I look at this commission as really the last chance for the families of the victims and for the future of the safety of many people in this country on many levels. But when it comes to code change, no one has been able to do it. I spoke to firefighters from Indianapolis to California, and they all shared the same information with Monica and myself, and that is, please help us, we're counting on you.

I get so shocked when I am told that firefighters, fire departments are counting on us and the Skyscraper Safety Campaign. And just to illustrate this, I want to briefly read you a brief email that I received in the aftermath of the Chicago fire from a lieutenant in the Chicago Fire Department. "I am a lieutenant in the Chicago Fire Department. I came across this site, your Skyscraper Safety Campaign site, and I would like to know more about your organization and how it might help the firefighters and the citizens in Chicago." This is a lieutenant on the Chicago Fire Department asking me how I can help them. This shows you the state -- (tape change) -- such as yours, because in the past codes groups are so diverse, there's no standardization --

MS. REGENHARD: (In progress) -- but it's dialogue. But please don't forget it's accountability and responsibility, whether that's of governmental elected officials, governmental agencies, the private sector. Without that, there will be no impetus for real change.

MR. ROEMER: Thank you, Sally.

Monica, if I could ask you a question. Today we're talking about code enforcement and code recommendations as they affect buildings, and trying to make sure that we have certain codes that protect our buildings, and buildings and organizations are not exempt. And we're talking about the width of stairwells and fire code safety and sprinklers. On standards, we're talking about evacuation plans.

I got on a plane to fly from Washington DC up to Newark last night, and it's standard for them to tell us how to get out of that airplane if something should happen. Some people listen, some people don't. And we were given this today about how to get out of this building, should something happen.

In the World Trade Center, in a 100-story building, there was in some instances little or no preparedness for those workers to have an evacuation plan to get out of that 100-story building. What can we do about this standards issue in the future? And especially I want to ask you, if the NIST study comes out in August of '04 and we're supposed to be done, if we can get done, by May of '04, and we make our recommendations in the spring or the summer but the NIST study is after that, I would hope that we would continue to work with you, even anticipating what NIST may say in making recommendations on the standards side. But if you could speak to that in terms of the timing and in terms of what recommendations you all may make to us, I would appreciate that as well.

MS. GABRIELLE: The NIST investigation I think is going to probably come up with pretty much what is already obvious, but I don't think there are any smoking guns. It's obvious that you can't get people out of a 110-story building quickly, it's obvious that there was no preparedness training. It was an optional event that you could participate in or not participate. I think going forward, we have to make evacuation drills mandatory, no questions asked. There are no more options. The only way that you get out of a building or you know what to do is by practicing, so in the case of a panic situation, you're going to do things automatically, and that's, you know, I think a given.

And we have to draw from all sectors. I think it goes -- it's got to flow from top down, starting with the CEO setting an example, and bottom up with the employees taking some initiative for their own safety, and somewhere in the middle come up with the perfect plan. What it is, I don't know. I just know that it's a very critical thing that needs to be looked at.

MS. REGENHARD: I'd like to add also I'd like to see a change in building codes, which now allow stairways of skyscrapers and all other buildings to be locked. There are different guidelines and certainly later on today you will be speaking to some experts, such as our eminent Professor Glenn Corbett, a resident of New Jersey I might add, and someone who has brought the excellent practices and fire code issues of New Jersey really to the table in New York, and I want to thank you for him. I want to thank New Jersey for giving us Professor Glenn Corbett and many others of our New Jersey-based advisors.

But right now, in building codes throughout this country, you can lock all the stairways' doors of a high-rise building if you have a sprinkler system and if you have some other systems in place. That should be eliminated immediately. Industry says you have to lock the stairway doors because of theft and so on. I say put closed-circuit cameras in those staircases, leave those doors open. Observe what's going on with closed-circuit cameras. And that's even an enhancement to fire safety, because if you're in a high-rise building and you have closed-circuit, you can see what's going on up there on the upper floors. Locking doors is an abomination.

Right now in the city of New York, we can -- only every fifth door I believe needs to be unlocked. In the World Trade Center, that was -- it was a disaster, but the -- when the flames hit the buildings, the buildings shifted and all those doors which were locked and supposedly could have been unlocked through a central system were not able to be opened. Locking doors is deadly. And I must tell you, recently I was at a meeting concerning -- the Columbia Evacuation Study -- concerning concerns of the World Trade Center in a very older solid landmark building in New York City on Fifth Avenue. It was a five-story building. I like to take the stairs, so I just ran down to try to get down to where I needed to be, and I was locked in the staircase. I was locked. I went to every floor and then I saw the sign saying, no reentry. You can't get back.

You know, that is a glaring example of the fact that we need to change our codes. We need to change them immediately. We have to prohibit the locking of stairwells. I can't think of anything worse than being locked in a stairwell. In my own example, it was a very large stairwell, it was very well lit. It was not during a fire, a panic, the lights were not out. My goodness. You know, I try not to think about what happened in those buildings because it devastates the families of the victims. But, you know, one of the things we have to do is stop the locking of stairwell doors.

MR. ROEMER: Sally, from that personal experience, it just continues to bring up factually that we have not made enough progress in these areas over the last two years. And when Professor Corbett testifies or talks to our commission later on today, having read his testimony, he looks at standards and he looks at code enforcement as kind of a ruler, and says, here's how we measure our progress in these areas. And too often times, that measurement is absolutely insignificant and insufficient today. And we are very grateful for your continuing to go out there on a daily basis and try to make the code enforcement and the standards for evacuation plans right, front and center, in every city in the country.

Monica, let me ask my last question for you, and it goes to what you said in your testimony. On these ways to measure our standards and our effectiveness in these standards, you mentioned Morgan Stanley as somebody -- as a company who did do some things right. After 1993 and the World Trade bombing there that killed -- or wounded 1,000 people, and some things were done properly then for evacuation plans. What kinds of things did Morgan Stanley do that we would like to see in a measure of better standards set forward for more companies to achieve in the future?

MS. GABRIELLE: Well, I think it's clear that the defend-in-place strategy doesn't work, it doesn't exist, not when you have a high-rise because you just can't get people out. Morgan Stanley practiced evacuation, and I think what we need to do going forward is you have to have an assessment of the building. I mean, everything is going to be different from another -- depending on how big the building is and where you are in relation. And as Sally said, stairwell size is critical because you have that flow of bodies moving into the stairwell, and the further down you go, the more people, and it's going to bottleneck. And we were also in an evacuation, and that was horrifying.

We have to come to the table with all the people that are responsible, the architects, the structural engineers, and address these things before a building is built, and put the safety factors and be innovative and see what's out there. There are elevators that are supposed to be able to be used in fires. These are areas that we need to look at and, you know, bring everybody in to look at these things before a building goes up and put the value on the safety issues, on the structural integrity of the buildings and not the economic gains. I mean, those will come. If everyone does the right thing, the economic gain will be a byproduct.

MR. ROEMER: I just want to thank you again as I hand the questions back over to Secretary Lehman for all your help through the last several years in all our efforts to try to improve not only this but the intelligence and the policymaking and a better response from our country to 9/11 type activities and future terrorist attacks. Thank you again so much.

MR. LEHMAN: I have lots of questions but I know we'll be working closely together, so I'll save most of them for then. I would just like to ask both of you if you would -- now you have a large public forum, you certainly have our very close attention this minute, and I think you have a very large television audience across the nation today. Would you, for the nation, give a report card briefly on a number of important organizations and people that you're talking with? And I'd like you to give it in one of three categories: they're obstructing, they're ignoring, or they're helping.

First, let's start with the federal government, and particular OSHA. The Occupational Safety Hazard Agency is supposed to be in charge of these kinds of issues. Obstructing -- I'm talking about today, not before 9/11. Today, in working with you and as you observe, obstructing, ignoring or helping?

MS. GABRIELLE: It's interesting. OSHA, as we've learned, or come to find out, is reactionary. They respond to complaints, which you wonder why they're there. It's ineffective. They don't do a good job, if anything. What I have here, as a matter of fact, are letters that were sent by the families to OSHA after 9/11. Under normal circumstances, there should be an investigation. What we were told was that because the buildings are no longer there, there won't be one. You know, the companies are still there, the practices can be researched. So, you know, we can do away with OSHA.

MR. LEHMAN: Sally, you agree with that?

MS. REGENHARD: Well, I must say that, you know, keeping in mind that nearly 100 families of the victims felt strongly enough, were outraged enough by what they felt was the flagrant safety violations under which their loved ones worked in those buildings. They wrote these complaints to OSHA will full faith that they would be looked into and either fines or criminal penalties would be issued. And in a startling break with precedence, OSHA announced that in the case of the World Trade Center, there would be no investigation, there would be no inquiries and there would be no fines or criminal penalties. So we are aghast really.

Since that time, the only interaction we've had with OSHA is trying to get copies of these letters. I'm very happy to say after two years we got the copy. I think Monica Gabrielle received the copy the day before yesterday. So I'm really perplexed. I don't have enough information. I'm just not sure what to say about that setup. I would say, however, that any agency that doesn't have enforcement to back it up, I'm just -- I don't know the value of it. I'm not sure.

MR. LEHMAN: So you give them -- you both give them an F for their current effort. Let's go onto the mayor of New York. Obstruct, ignoring your efforts or helping your efforts?

MS. REGENHARD: Well, you know, if we're talking about the present mayor --

MR. LEHMAN: The present mayor. I'm talking about present in all cases.

MS. REGENHARD: Okay. If we're talking about the present mayor, I have to say that I'm known -- most people realize that I'm not a person who gives gratuitous compliments to elected officials -- (laughter) -- to say the least. However, I have to say that the Department of Buildings, under the Bloomberg administration has taken a leadership role and has been, in my opinion, one of the only departments of city government that's taken a leadership role in responding to these terrible failures of 9/11.

The Department of Buildings, Mayor Bloomberg's Building Code Review Task Force was open enough to allow the Skyscraper Safety Campaign and our wonderful advisors and professors of fire protection, fire science engineering, to come in to address their group, to help -- to give input into their reforms. And some of our advisors are still on the technical committees. To me, who was been banging on the door of the government for two years, to me that's the only agency under the Bloomberg administration that's really -- locally, that's ever opened the door. Certainly, you know, this commission has to a great degree. So I would give the Bloomberg administration, regarding their building code work, I have to give them a --

MR. LEHMAN: Helpful?

MS. REGENHARD: I have to give them -- because they're the only ones that have done anything proactive. I'm going to give them an A.

MR. LEHMAN: Monica, do you agree with that assessment?

MS. GABRIELLE: I'm not -- you know what, there's no room for improvement, and I'll give them a C plus, you can try harder.

(Laughter.)

MR. LEHMAN: Okay. I'd like to then -- in the interest of time, because I have eight more agencies I want you to rate, if you could just answer fail, pass or an A, okay, because I'd really like to get your views on them. The Port Authority?

MS. GABRIELLE: Fail.

MS. REGENHARD: Fail.

(Laughter, applause.)

MR. LEHMAN: One of the more powerful groups in New York City, the commercial real estate owners?

MS. REGENHARD: I'd like to give them an incomplete actually, because after years of resisting codes improvements and safety improvements, I see that they are slowly coming to the table and expressing interest in this new field of safe buildings. So I really -- I'd like to give them an incomplete. I'm cautiously optimistic. It remains to be seen.

MR. LEHMAN: Building managers?

MS. REGENHARD: I'd have to say the same thing. You know, I know that they are slowly coming to the table. However, this national BOMA, Building Owners and Managers Association, is one of the groups that effectively derailed the opportunity to have a staircase 12 inches wider. So I have to say for that I'd have to fail them, but hopefully for their willingness to come to the table and change their opinion on that, I'll give them an incomplete.

MR. LEHMAN: The Architects Governing Group?

MS. REGENHARD: Well, architects, I have great respect for architects. The Department of Buildings is top-heavy with architects in the city of New York. I think in general they are on a higher level, they want to do the right thing, they are very talented people, but they don't -- they know very little about building safety -- fire safety, rather. Architects want to learn how to build a safe building, but you know, the way it stands now, they really don't know.

So I will give them -- I'm going to give them, you know, an A for effort, but we have to change the system. Fire protection engineers need to have the responsibility for fireproofing and putting safety into buildings. So I'll give them A for willingness, but as far as their ability to build, you know, a safe building that's very well fire protected, I'm going to have to give them a C because they just don't know how to do it. It's not their fault.

MR. LEHMAN: Overall the business community that would make up the tenants, the large corporations, are they helping or --

MS. REGENHARD: Until we have accountability and responsibility, you know, for their fire safety plan, for the responsibility for the people in buildings, you know, I'm just going to have to give them somewhere between a C and a D. I guess I'm a good grader. I'm going to give them really a D. A D.

MR. LEHMAN: Thank you very much. That's very helpful and hopefully we'll move everybody back into the passing at least before this effort is over.

MR. KEAN: Okay.

Last question, Commissioner Fielding.

MR. FRED FIELDING: Mr. Chairman -- first of all, thank you, Monica and Sally, very much, not just for today, but for all you've done, as has been spoken here before.

Mr. Chairman, in the sake of time, I would ask that we direct the staff to talk to the International Codes Council and to the NFPA. It seems as though they are the leading people, I've heard the testimony of that, the leading organizations. I would suggest that we interview them, hopefully bring them to the table together and find out what the problem is so we can solve it.

MR. KEAN: Thank you, Commissioner.

MS. REGENHARD: Great idea.

MR. KEAN: Sally, Monica, I thank you more than I can say, you know. You are such an example of somebody who has taken your own personal tragedy and have used it to help other people in a most wonderful way, so thank you very, very much for that.

MS. REGENHARD: Thank you very much.

(Applause.)

PANEL: PUBLIC/PRIVATE INITIATIVES SINCE 9-11

MR. KEAN: If I could ask the next panel, please, to take their seats. We are running considerably behind, so I would ask this panel, if they can, to limit their remarks as much as you possibly can. I know Mr. Andrews will do that because he has to catch a plane, but I'd ask the rest of you also to limit your remarks to the best of your ability.

First of all, we have Richard Andrews, who is senior director of homeland security projects at the National Center for Crisis and Continuing Coordination, and they're about advancing crisis management and business continuity readiness through public-private sector collaboration. He served on the president's Homeland Security Advisory Council and served as director in California of their council.

Next will be Michael Byrne. Michael Byrne is from the Department of Homeland Security. He has a wealth of experience in emergency preparedness, first response, and public sector/private sector cooperation and coordination. He was, by the way, a first responder to the 1993 bombing at the World Trade Center.

And finally General Reimer, director of the National Memorial Institute for the Prevention of Terrorism in Oklahoma City in April 2000. They're doing a database to find the best practices, and it's important that we include the Oklahoma experience in our deliberations today.

So Mr. Andrews.

MR. RICHARD A. ANDREWS: Thank you, Chairman Kean, Vice Chairman Hamilton, members of the Commission. I thank you very much for the opportunity to appear before you today and to assist in a small way in furthering your important work. As requested, I provided the staff with written testimony, and today I would like to highlight several issues and respond to the specific topics that the staff have asked me to address.

The National Center for Crisis and Continuity Coordination, or NC4, is a division of Candle Corporation, an El Segundo, California-based technology company. Candle initially became interested in public-private collaboration during the preparations for Y2K. When we noted that while government and companies were paying a great deal of attention to issues within their organization at the