99 010
Calendar No. 269
107 th Congress
Report
SENATE
1st Session
107 116
WORLD TRADE CENTER ATTACK CLAIMS ACT
December 7, 2001.--Ordered to be printed
Mr. Jeffords , from the Committee on Environment and Public Works,
submitted the following
REPORT
[to accompany S. 1624]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was referred
a bill (S.1624), to establish the Office of World Trade Center Attack
Claims to pay claims for injury to businesses and property suffered as a
result of the attack on the World Trade Center in New York City that
occurred on September 11, 2001, and for other purposes, having
considered the same, reports favorably thereon with an amendment and
recommends that the bill, as amended, do pass.
BACKGROUND
On September 11, 2001, terrorists attacked the Pentagon and the World
Trade Center. These horrible events marked the first time since the 1941
attack on Pearl Harbor that the United States has suffered a foreign
attack on domestic soil. The magnitude and enormity of these attacks are
unprecedented in our Nation's history. Thousands of innocent people lost
their lives. Tens of thousands more lost their homes, their businesses,
their jobs, their livelihoods as a result of this attack.
In New York, the attack left in its wake a mountain of debris,
damaged buildings and inaccessible businesses and residences. New York
City will lose an estimated $105 billion as a result of the attacks over
the next two years. The attack damaged or destroyed nearly 25 million
square feet of office space, roughly equivalent to 20 percent of all the
office space in downtown New York. The attack physically displaced some
850 businesses and over 125,000 workers, and an additional 9,000
businesses and over 145,000 people have only restricted access to their
property.
Before the work of rebuilding lower Manhattan can begin, crews must
remove over a million tons of debris from the site, a process that will
likely take more than a year. Physical reconstruction of destroyed
buildings is most likely years away. Many businesses and individuals do
not have adequate insurance or resources to sustain themselves in the
near term or to rebuild their businesses and lives in the long term.
S. 1624, the ``World Trade Center Attack Claims Act,'' responds to
the overwhelming needs of the businesses and the people of lower
Manhattan, those directly and seriously impacted by the recent attacks.
The bill would provide compensation for residential and business losses
suffered by injured persons as a result of the events of September 11th.
The bill would create an Office of World Trade Center Attack Claims
(Office) within the Federal Emergency Management Agency (FEMA). The
Office would process and pay claims at the discretion of the Director of
the Federal Emergency Management Agency (Director) acting in accordance
with the legislation and regulations promulgated by FEMA.
SECTION-BY-SECTION ANALYSIS
Section 1. Short Title
The World Trade Center Attack Claims Act.
Section 2. Findings and Purposes
Summary
Section 2 sets out the Congressional findings and purposes of the
legislation.
Discussion
The purpose of the legislation is to compensate certain individuals
and businesses located within a specific geographic region within lower
Manhattan suffering injury as a direct result of the attack. It is not
the intent of this committee to create an entitlement to disaster relief
funds made available under this Act. Nor is it the intent of this
committee to compensate claimants for losses that bear no relation to
the September 11th attack. The intent of the legislation is to allow the
Director to determine and to make discretionary awards on a case-by-case
basis for qualifying business and residential loss caused by the
September 11th attacks until the Office exhausts funds authorized and
appropriated under this Act. For businesses and residences located in a
specific geographic region in Lower Manhattan prior to September 11,
2001, this Act provides aid to assist attack victims to continue,
replace, start, establish, or locate their business or residence in New
York City.
Section 3. Definitions
Section 3 defines the following terms for purposes of the legislation.
Affected area.--The term ``affected area'' means the area in lower
Manhattan, New York City, that is comprised of the area located on or
south of Canal Street, on or south of East Broadway (east of its
intersection with Canal Street), or on or south of Grand Street (east of
its intersection with East Broadway).
Attack.--The term ``attack'' means the attack on the World Trade
Center in New York City that occurred on September 11, 2001.
Claim.--The term ``claim'' means a claim by an injured person under
this Act for payment for injury suffered by the injured person as a
result of the attack.
Claimant.--The term ``claimant'' means an injured person that
submits a claim under section 5(b) of the bill.
Director.--The term ``Director'' means--
(A) the Director of the Federal Emergency Management Agency; or
(B) if an Independent Claims Manager is appointed under section
4(d)(4) of the bill, the Independent Claims Manager.
Injured person.--
(A) In General.--The term ``injured person'' means an individual,
corporation, partnership, company, association, cooperative, joint
venture, limited liability company, estate, trust, or nonprofit
organization that
(i) suffered injury as a result of the attack; and
(ii) resides or maintains a place of business in the affected area.
(B) Exclusions.--The term ``injured person'' does not include
(i) a lender that holds a mortgage on or security interest in real or
personal property affected by the attack; or
(ii) a person that holds a lien on real or personal property affected
by the attack.
Office.--The term ``Office'' means the Office of World Trade Attack
Claims established in section 4 of the legislation.
Section 4. Office of World Trade Center Attack Claims
Summary
Section 4 establishes within FEMA an Office of World Trade Center
Attack Claims. This section also authorizes the Director to appoint an
Independent Claims Manager to head the Office and to assume the duties
of the Director under this Act.
Discussion
The purpose of the Office is to receive, to process, and to pay
claims in accordance with the provisions set out in section 5 of the
bill. The Office will not diminish FEMA's authority or funding under the
Stafford Act. Funding for the Office will come from funds authorized
through this legislation, and not from the Disaster Relief Fund or other
FEMA sources. But the committee does not intend to prohibit FEMA from
utilizing Stafford Act resources in the administration of the program on
a cost reimbursable basis provided that the use of those resources does
not substantially affect FEMA's ability to carry out its Stafford Act
mission. Examples of Stafford Act resources that FEMA might use in
administering the Office include FEMA's National Processing Service
Centers, its information technology capabilities, and its cadre of
experienced, customer-service oriented disaster assistance employees.
The Director may also hire temporary personnel to staff the Office, and
other Federal agencies may detail, on a reimbursable basis, personnel to
assist in carrying out the duties of the Office.
The committee does not view the Office established under S. 1624 as
duplicative of other Federal programs currently available to victims of
the September 11th attack. Recent news accounts concerning various
relief agencies and their slow and sometimes ineffectual administration
of disaster assistance shows that many directly affected victims are not
receiving the necessary funds to restart their lives and their
businesses. The intent of S. 1624 is to provide direct and timely
assistance to victims who qualify under this Act.
Section 5. Compensation for Victims of the Attack
Summary
Section 5 establishes the framework for the processing and payment of
claims by the Office of World Trade Center Attack Claims and places the
burden of substantiating loss on the claimant. Section 5 also
establishes a claimant appeals process.
Discussion
Processing Claims
In processing claims and making payment decisions, the Director will
have complete discretion to determine disposition of each claim in
accordance with the provisions of this legislation and with regulations
promulgated by FEMA for the purpose of processing claims under this Act.
The Director will publish final interim regulations in the federal
register not later than 45 days after enactment of this legislation. Not
later than two years after the publication of the final interim
regulations, an injured person may file a claim for injury suffered as a
result of the September 11th terrorist attacks.
Qualifying claims fall into two categories of compensable loss
residential loss and business loss. Residential losses include uninsured
or underinsured property loss, damage to or destruction of physical
infrastructure, insurance deductibles, temporary living or relocation
expense, debris removal and other cleanup costs, or any other type of
related injury that Director determines appropriate.
Business loss may include uninsured or underinsured property loss,
damage to or destruction of tangible assets or inventory, business
interruption loss, overhead costs, employee wages for work not
performed, insurance deductibles, temporary relocation expenses, debris
removal and cleanup costs, and any other type of injury that the
Director determines appropriate. Business loss claims are subject to an
additional limitation. An injured person may receive compensation for
business loss only if the injured person's business facility has
suffered disruption of power, disruption in telecommunications capacity,
damage to or destruction of physical infrastructure, or disruption in
physical access by employees or customers to the business facility.
Any qualifying claim is subject to a payment ceiling and other
offsets. Payment on a claim submitted by an injured person may not
exceed the amount necessary to compensate for injuries suffered during
the 18-month period following the September 11th attack. Also, payment
on an injured person's claim may not exceed $500,000, except in those
instances where the Director determines a greater amount is appropriate.
To prevent recovery by a claimant in excess of the equivalent of
actual compensatory damages, the committee anticipates that insured
claimants will seek redress from their insurance companies first. The
committee expects that the Office will require insured claimants to file
claims with their insurance companies first and to disclose the extent
of their insurance coverage to the Office. However, it is not the
committee's intent that insured claimants wait for insurance companies
to fully process their claims before filing a claim or receiving payment
under this Act.
In calculating the amount of any compensable claim, the committee
expects the Office will consider expected insurance proceeds an injured
party may receive. Awards are also offset by other benefits received
through FEMA's individual and public assistance benefits program and
other government programs as a result of the September 11th attacks. But
the office should not offset awards by the amount of any government loan
received by the claimant.
It is important to note that the intent of the committee is not to
eliminate or to supplant the duty owed by individual insurance companies
to their policyholders. To the maximum extent possible, the committee
expects that insured claimants will seek redress under existing
insurance policies first. The intent of the legislation is to provide a
secondary source of remuneration for actual compensatory damages
suffered as a direct result of the attack.
Burden of Proof
Under this section, the claimant has the burden of substantiating
loss. If documentary evidence substantiating the injury is not
available, the Director may pay a claim based on an affidavit or other
documentation provided by the claimant.
Payment of Claims
Once an injured person has submitted a claim for loss to the Office,
the Director, to the maximum extent practicable, will process the claim
within 180 days. If the Director determines the injured party has
suffered compensable loss under this section, the Director will pay the
claim subject to the limitations set out in this section. The Director
may give processing priority to certain claims based on the claimants'
assessed needs and any other criteria the Director deems appropriate. In
determining the validity of a claim, the Director will determine whether
the claimant is an injured person, whether the injuries suffered
resulted directly from the attack, the amount, if any, to be paid under
this section, and the person or persons entitled to receive payment.
Again, in considering the amount of a claim, the Director will reduce
the award by the amount of any payments on insurance policies made as a
result of the September 11th attack. The Director will also reduce the
award by the amount of any benefits received in response to the
September 11th attack under the public assistance program or any other
FEMA program. But the Director will not reduce the award by the amount
of any government loan received by the injured person.
The United States may recover any portion of a payment improperly
paid to the claimant because of fraud or misrepresentation on the part
of the claimant, a material mistake on the part of the United States,
insurance benefits not properly accounted for, or failure of the
claimant to cooperate with an audit.
The Director may make one or more advance or partial payments before
the final settlement of the claim.
Appeals
If the claimant does not agree with the Director's disposition of a
claim, the claimant may appeal the decision in accordance with the
appellate process regulations jointly promulgated by FEMA and the Small
Business Administration. The claimant must file the notice of appeal no
later than 60 days after the date the Director notifies the claimant
that the claim will or will not be paid. The Administrator of the Small
Business Administration will consider the business loss appeals, and in
the case of residential loss, the Director will consider the appeal. In
either case, appellate decisions must be rendered not later than 90 days
after receipt of the notice of appeal.
Debt Collection Requirements
Section 5 also includes a provision stating that the Debt Collection
Act shall not preclude the payment of any claim. Injured persons cannot
assign claims paid under this Act, and this bill exempts paid claims
from creditors. However, the Director may require repayment of Small
Business Administration disaster loans from the proceeds of claims paid
under this Act.
Section 6. Acceptance of Services of Other Agencies and
Volunteers; Gifts
Section 6 allows the Director to accept and to use the facilities or
employees of any State or local government or agency with the consent of
the government. The Director may also accept voluntary and uncompensated
services by individuals or organizations and gifts of supplies,
equipment, and facilities as needed.
Section 7. Relationship to Federal Entitlement Programs
Summary
Section 7 states that nothing in the bill prevents an injured person
from seeking benefits under any Federal entitlement program. Further,
calculation of eligibility for any Federal benefit or entitlement
program should not include any compensation received under this Act.
Discussion
Section 7 is necessary to prevent injured persons receiving
compensation under this Act from being excluded from receiving benefits
under Federal entitlement programs. Asset calculations for programs such
as the food stamp program under the Food Stamp Act of 1977 (7 U.S.C.
2011 et seq.) and any program established under the Social Security Act
(42 U.S.C. 301 et seq.) should not include monetary compensation for
compensable loss under this Act.
This section insures that injured persons can receive compensation
from the Office without fear of losing essential Federal entitlements.
Section 8. Reports and Audits
Summary
Section 8 mandates that the Director submit to Congress a report
describing the claims submitted under this Act during the year preceding
the report. Section 8 also directs the Comptroller General to conduct an
annual audit of the payment of all claims submitted under this Act and
to report the results to Congress.
Discussion
Not later than one year after the promulgation date of final interim
regulations and annually thereafter, the Director must submit to
Congress a report describing the claims submitted under this Act during
the preceding year. The report should include information on each claim
including the amount claimed and a brief description of the nature and
status of each claim including any payment on the claim.
The Comptroller General must complete the first annual audit not
later than 120 days after the Director submits the first claims report
to Congress, and annually thereafter. The purpose of the audit is to
ascertain adherence to the requirements and standards of this Act,
particularly with regard to the qualifications of the applicants.
The committee expects that FEMA's Office of Inspector General will
maintain a full-time presence in the Office of World Trade Center Attack
Claims to deter fraud and to promote efficiency, consistent with its
obligations under the Inspector General Act of 1978, as amended.
Section 9. Authorization of Appropriations
Summary
Section 9 authorizes $2 billion for the purposes of carrying out this
Act.
Discussion
The section authorizes $100 million for administrative expenses and
$1.9 billion for the payment of claims. The committee anticipates that
these funds will be part of the President's proposed $20 billion relief
package for New York. These will remain available until expended. The
Director will not spend disaster relief funds to carry out this Act.
Section 10. Termination of Authority
The authority of this Act terminates 42 months after the date of
enactment of this Act.
LEGISLATIVE HISTORY
Senator Hillary Rodham Clinton introduced S. 1624, ``The World Trade
Center Attack Claims Act,'' on November 1, 2001. The committee held a
legislative hearing to take testimony on the proposed legislation on
November 1, 2001. The committee reported the bill, with an amendment in
the nature of a substitute, on November 8, 2001 by voice vote.
HEARINGS
On November 1, 2001, the committee held a legislative hearing on S.
1624, a bill to establish the Office of World Trade Center Attack Claims
to pay claims for injury to businesses and property suffered as a result
of the attack on the World Trade Center in New York City that occurred
on September 11, 2001, and for other purposes, receiving testimony from
Michael Brown, Deputy Director, Federal Emergency Management Agency; Joe
Moravec, Commissioner, Public Building Service, General Services
Administration; Dr. David Sampson, Assistant Secretary for Economic
Development, Economic Development Administration, U.S. Department of
Commerce; Richard Meserve, Chairman, Nuclear Regulatory Commission;
Herbert Mitchell, Associate Administrator for Disaster Assistance, Small
Business Administration; and Marianne L. Horinko, Assistant
Administrator. Office of Solid Waste and Emergency Response,
Environmental Protection Agency.
ROLLCALL VOTES
The Committee on Environment and Public Works met to consider S. 1624
on November 8, 2001. By voice vote, the committee agreed to amendment
offered by Sentor Clinton in the nature of a substitute. In addition,
the committee adopted a second degree amendment offered by Senator
Clinton by voice vote. The committee then agreed to report S. 1624, as
amended, by voice vote with Senator Bond recorded as voting ``no.''
REGULATORY IMPACT STATEMENT
In compliance with section 11(b) of rule XXVI of the Standing Rules
of the Senate, the committee makes evaluation of the regulatory impact
of the reported bill.
The bill does not create any additional regulatory burdens, nor will
it cause any adverse impact on the personal privacy of individuals.
MANDATES ASSESSMENT
In compliance with the Unfunded Mandates Reform Act of 1995 (Public
Law 104-4), the committee finds that S. 1624 would impose no unfunded
mandates on local, State, or tribal governments.
COST OF LEGISLATION
Section 403 of the Congressional Budget and Impoundment Control Act
requires that a statement of the cost of the reported bill, prepared by
the Congressional Budget Office, be included in the report. That
statement follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 5, 2001.
Hon. James Jeffords, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has prepared the
enclosed cost estimate for S. 1624, the World Trade Center Attack Claims
Act. If you wish further details on this estimate, we will be pleased to
provide them.
The CBO staff contact is Julie Middleton, who can be reached at 226
2860.
Sincerely,
Dan L. Crippen.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
S. 1624, World Trade Center Attack Claims Act, As ordered
reported by the Senate Committee on Environment and Public Works on
November 8, 2001.
SUMMARY
S. 1624 would authorize the Federal Emergency Management Agency
(FEMA) to establish the Office of World Trade Center Attack Claims to
process and pay claims for injury to businesses and property suffered as
a result of the September 11, 2001, terrorist attack in New York. The
bill would authorize the appropriation of $2 billion for this purpose.
Under this bill, FEMA would be authorized to issue claims for
residential and business losses, though each individual claim could not
exceed $500,000 except under certain circumstances. (The funding
authorized by this legislation would not be used for compensation to
injured individuals or families of individuals killed in the terrorist
attack. That compensation will be provided under Public Law 107-42, the
Air Transportation Safety and System Stabilization Act.)
Under S. 1624, residential losses would include an uninsured or
under-insured property loss, damage to or destruction of physical
infrastructure, an insurance deductible, temporary living or relocation
expenses, and clean-up costs. In addition, business losses would include
all of those listed as residential losses as well as damage to or
destruction of assets or inventory, a business interruption loss,
overhead costs, and employee wages for work not performed. Any amounts
awarded would be net of insurance claims that the person or business
receives. Such claims would also be net of any public assistance
provided by federal, state, or local agencies. Under the bill, the
authority to approve claims would end 42 months after enactment.
Assuming appropriation of the authorized amount, CBO estimates that
implementing S. 1624 would cost $2 billion over the 2002-2006 period. S.
1624 would also have an insignificant effect on receipts by establishing
a new civil penalty; therefore, pay-as-you-go procedures would apply.
S. 1624 would exempt the compensation awarded under the bill from the
attempts of creditors to collect outstanding debts. That is, the bill
would prohibit public and private creditors from making claims against
awards made to individuals or businesses who qualify for compensation
under the bill. This prohibition would be both an intergovernmental and
private-sector mandate as defined in the Unfunded Mandates Reform Act
(UMRA). CBO estimates, however, that any costs to comply with that
mandate would be negligible.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of S. 1624 is shown in the following
table. The costs of this legislation fall within budget function 450
(community and regional development).
By Fiscal Year, in Millions of Dollars
2002 2003 2004 2005 2006
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level 1,925 25 25 25 0
Estimated Outlays 385 500 510 410 195
BASIS OF ESTIMATE
For this estimate, CBO assumes S. 1624 will be enacted early in
fiscal year 2002. The bill would authorize the appropriation of $2
billion to pay business and property-loss claims related to the
September 11, 2001, terrorist attack in New York. According to a report
issued by the New York City Office of the Comptroller, the city
estimates the level of uninsured property loss and damage as a result of
the terrorist attack will be about $17 billion. Under that information,
CBO assumes that there would be strong demand for the grants offered
under this program and that all of the funds authorized to be
appropriated would be spent. Under the process established in the bill,
CBO assumes that it would take five years to resolve all of the claims
submitted to FEMA. Consequently. we estimate that implementing S. 1624
would cost $2 billion over the 2002-2006 period, assuming appropriation
of the authorized amounts.
S. 1624 would establish a ci viI penalty for lawyers who overcharge
victims for their services. Collections of civil fines are recorded in
the budget as governmental receipts (revenues). CBO expects that any
additional receipts would be less than $500,000 because the number of
cases involved is likely to be small.
PAY-AS-YOU-GO CONSIDERATIONS
The Balanced Budget and Emergency Deficit Control Act sets up
pay-as-you-go procedmes for legislation affecting direct spending or
receipts. CBO estimates that enacting S. 1624 would increase revenues by
less than $500,000.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
S. 1624 would exempt the compensation awarded under the bill from the
attempts of creditors to collect outstanding debts. That is, the bill
would prohibit public and private creditors from making claims against
awards made to individuals or businesses who qualify for compensation
under the bill. This prohibition would be both an intergovernmental and
private-sector mandate as defined in UMRA. Because the compensation
would be new income generated under the bill, creditors would not lose
access to funds that they could have made claims against in the absence
of the bill. Consequently, CBO estimates that the costs to comply with
the mandate would be negligible, if any, and would fall well below the
annual thresholds established by UMRA ($56 million for intergovernmental
mandates and $113 million for private-sector mandates in 2001, adjusted
annually for inflation).
Estimate Prepared by: Federal Costs: Julie Middleton (226-2860);
Impact on State, Local, and Tribal Governments: Leo Lex (225-3220);
Impact on the Private Sector: Lauren Marks and Patrice Gordon
(226-2966).
Estimate Approved by: Peter H. Fontaine, Deputy Assistant Director
for Budget Analysis.
CHANGES IN EXISTING LAW
Section 12 of rule XXVI of the Standing Rules of the Senate, provides
that reports to the Senate should show changes in existing law made by
the bill as reported. Passage of this bill will make no changes to
existing law.
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