The large-scale disruption of fuel supplies caused by Superstorm Sandy brought the vulnerabilities of the New York Tri-state fuel supply system into sharp relief. In the three and one-half years since the storm, concerns about extreme weather and overall energy security have only grown, leading policymakers at all levels, fuel suppliers to the region and related power providers to examine how this system can be strengthened against future risks.
In a series of forums with senior-level, regional industry and government officials convened by the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs (CGEP) initiated in 2014, public sector situational awareness was identified as a critical problem exposed by Sandy. Situational awareness, in this context, refers to the quick, reliable, and efficient communication of information between the private sector and the public sector critical to understanding the fuel supply system in real time and restoring its operations during emergencies. It also includes the need for prompt sharing of this critical information between and among public officials at all levels of government responsible for emergency preparedness and response. Access to this information is essential for public officials to evaluate and implement response measures as well as to credibly inform the public of rapidly changing conditions, and for private and public sector coordination.
Since Sandy, efforts have been made to enhance public sector understanding of the fuel supply system, improve voluntary engagement between industry and government, secure fuel supplies for priority services, and facilitate the restoration of power to critical fuel supply assets during crises. But given the growing threats to the system, more work needs to be done.
This report puts forward a series of recommendations to improve communications and overall situational awareness between the private and public sectors to facilitate effective response to fuel emergencies. The Report concludes that the current voluntary system of information sharing is inadequate to the needs of the public sector and recommends creating mandatory requirements at various levels to address fuel crises.
It also proposes further efforts to increase the understanding of the Tri-state fuel supply system, including the adequacy of critical asset resiliency, and to improve communications and coordination among crucial public sector officials to streamline necessary regulatory relief to move fuel and use of government-owned fuel reserves.
Based on the CGEP forums and extensive research by the authors, these critical steps ensure the government has the information it needs when it needs it to make and carry out decisions to protect the public good during these fast- moving situations, including deference to market solutions that serve common objectives.
The market plays an important role in responding to fuel disruptions. The private sector may have concerns regarding disclosure of proprietary information, potential antitrust issues, and excessive regulation. The sharing of proprietary information with the government is not a new concept, however, and energy companies are regularly required to provide similar information to government agencies. This paper stresses the need for strict limitations on the use of proprietary information needed for emergency response as well as on its distribution, and the need to tailor reporting requirements to alleviate antitrust concerns.
The reports recommendations are below and the complete report is available here [PDF]
- Government and industry should work together to identify and prioritize critical fuel supply chain infrastructure and distribution channels, including related power supply and other interdependencies, and their vulnerabilities. Government and industry contacts with critical information and decision-making power during emergencies should be identified, and the resulting contact lists should be regularly updated and distributed. Formal coordination and communication between electric utilities and their petroleum sector customers should be established, including periodic drills to improve response to fuel disruptions.
- The Department of Energy (DOE) should establish requirements for industry to report critical baseline and real-time information on a facility- and company-specific basis, and should share this information with relevant federal and state officials, with safeguards to protect proprietary and security-sensitive information. States should similarly establish supplemental information-reporting requirements for industry and share this information with relevant federal and other state officials as needed, to plan for and respond to fuel emergencies. Legislation recently introduced in the New York State legislature requiring registration and reporting by major fuel suppliers and pipeline operators of base-line and real-time information essential to responding to energy emergencies provides a useful guide for state action.
- The DOE’s capability to lead and coordinate public sector situational awareness on national and regional levels should be enhanced. Pending DOE proposals to establish a permanent Energy Response and Operations Center; expand its capacity to secure and share real-time, actionable information on critical infrastructure with key stakeholders; establish permanent representatives in the field to direct regional information gathering and resilience enhancement efforts; and provide increased funding and technical assistance to state energy officials, should be pursued aggressively. In addition, responsibility for energy sector emergency preparedness and response at each level of government should be clarified.
- The public sector should be given access to private sector business continuity and emergency response plans for fuel emergencies regarding critical infrastructure as well as privately arranged efforts by critical fuel suppliers to allocate supplies to address fuel disruptions. This information should be subject to appropriate protection for demonstrated proprietary information.
- New York State and New Jersey should enter into a Memorandum of Understanding to formalize joint gathering and sharing of critical information and coordination of response plans to address fuel emergencies affecting the New York Tri-state area. These efforts should include coordination with and other appropriate involvement by New York City as well as DOE and the United States Department of Homeland Security (DHS).
- DOE should hold and lead regional drills and exercises with senior public sector and private sector stakeholders, including the power sector, to address fuel emergencies. States with interconnected fuel systems should also hold periodic drills and exercises with industry. New York and New Jersey should formally agree to the joint gathering and sharing of critical information and coordination of response efforts for Tri-state fuel emergencies. As appropriate, New York City, DOE, and the Department of Homeland Security (DHS) should participate or coordinate in these activities.
- DOE and lead energy agencies at the state level, as well as in New York City, should establish permanent fuels task forces to facilitate coordination of planning and response efforts such as regulatory relief, administration of refined product reserves, and assessment of critical infrastructure resiliency, and as appropriate, periodically include industry representatives.
- Owners and operators of fuel facilities and related power suppliers should participate in voluntary regional resiliency assessments of critical energy infrastructure under the leadership of the DHS and DOE, such as the assessment now underway regarding the fuel supply system serving New York State and the one completed last year for New Jersey’s petroleum sector. Such assessments can improve discussions between the public and private sectors on the resilience of infrastructure, risk assessment and predictive tools, developing metrics for measuring resilience, and identifying best practices as well as other options to improve critical infrastructure resiliency, including related costs and financing options.
Implementation of these recommendations will require committed and sustained leadership among senior-level, public and private stakeholders, and allocation of sufficient funding, technical and other resources at all governmental levels.
"Situational awareness is critical for public officials to effectively prepare for and respond to fuel emergencies, particularly those impacting the highly interdependent and vulnerable supply chain serving the New York Tri-state area. The authors present a compelling case for fundamental improvements in how information regarding fuel supplies, related power supply to and other operations of critical fuel assets and their response plans is gathered and shared among key stakeholders. At the top of the list is the urgent need to require mandatory reporting and sharing at the federal, state and regional levels of this critical information in real time for normal operations and during crises, including adoption of a proposal pending in the New York State Legislature to mandate such reporting by major petroleum suppliers and petroleum product pipelines."
- Michael B. Gerrard, Andrew Sabin Professor of Professional Practice, Director, Center for Climate Change Law, Columbia Law School
"As we look towards a future in which sea level continues to rise, hurricanes likely strengthen, and the populations and assets at risk on our coasts grow in tandem, we need to make all the complex and interlocking systems of our infrastructure more resistant to Sandy-like events. This Report looks in great depth at why our liquid fuel supply system failed during Sandy, and comes up with a well-researched, comprehensive, and authoritative set of recommendations for how our public and private sectors, separately and especially together, can overcome structural barriers and do better next time. The approach the authors take to diagnosing the problem could be well applied to other critical systems, so the report's relevance extends even beyond energy policy."
- Dr. Adam Sobel, Professor of Applied Physics and Applied Mathematicsand of Earth and Environmental Sciences; Director and Chief Scientist, Initiative on Extreme Weather and Climate, Columbia University
"This report highlights the need to further examine how more effective approaches can improve decision-makers ability to understand the risks and consequences of energy supply disruptions. Ideally this will lead to a more rapid and effective response based on better and more comprehensive situational awareness."
- Jeff Pillon Director of Energy Assurance at the National Association of State Energy Officials