16-acre WTC site, must continue work on site 4 as well as site 2. The Port Authority is liable for paying SPI daily penalties with interest retroactive to Oct. 5--the day the authority certified site 4 as construction-ready and site 2 as partially ready.

At issue was a 400-foot-long wall the authority had constructed on site 4, in the so-called East Bathtub of Ground Zero, which SPI claimed interfered with its ability to lay the foundation for Tower 4. The wall was constructed to support the "box" surrounding the tracks that the No. 1 subway train rides on through the site. For its part, the authority maintained that the wall was not part of the plot it had agreed to turn over to SPI, and that the parcel as certified on Oct. 5 met the specifications in the original lease agreement. The two parties agreed last month to bring the matter to arbitration.

The panel ruled that "by changing its plan for excavation under and support of the subway box, and by erecting the soldier pile wall, the Port Authority has neither completed the East Bathtub preparatory work nor delivered Site 4 in construction-ready condition." On site 2, the authority is required to "burn off" the rock-bolt projections in the north slurry wall of the East Bathtub.

According to a joint statement from the Port Authority and SPI, "The arbitration panel ruled that work must continue on World Trade Center sites 2 and 4 in order to complete the Port Authority's site turnover obligations, and as a result, the panel reinstated liquated damages effective to Oct. 5. In anticipation of this ruling, the Port Authority and Silverstein Properties had already begun working cooperatively to resolve the outstanding issues that remain." The authority had already paid SPI--headed by developer Larry Silverstein--a reported $43.5 million in penalties when the original June deadline was missed.