Reflections on a disaster hitting home
Hurricane Sandy blasted dark clouds, high winds, and rain over the Northeast coast and left in its wake, not only a disaster but also an opportunity to assess the successes and failures of our disaster preparation, performance, and recovery.
In the aftermath of Sandy, there will also be legal fallout. Inadequate preparation by mission-critical facilities, such as hospitals, in addition to a human toll, can give rise to substantial liability. I addressed this issue in a previous column regarding Hurricane Katrina. It remains to be seen what litigation Sandy causes, but it is sure to come. For example, a class-action lawsuit by plaintiffs against a New Orleans hospital that was submerged in floodwaters following Katrina reportedly settled for $25 million.
In a catastrophic storm, any serious gap in a facility’s or organization’s emergency planning and equipment quickly and painfully becomes obvious. New York University’s Langone Medical Center located near the East River in Manhattan, which had been evacuated prior to Hurricane Irene in 2011, had to again be evacuated as a result of the failure of both its main and backup power generators. By way of contrast, Bellevue Hospital Center, situated near to the Langone Center and also proximate to the East River, remained open. That hospital suffered basement flood damage, but its backup generators never failed.
Backup generation on a high floor or level can become useless if it depends upon a submerged basement pump. Such situations can require old-fashioned human power to meet the emergency. For instance, Peer 1 Hosting in Manhattan, which provides cloud services, suffered basement flooding in the recent storm, which caused the failure of a diesel fuel pump serving its 17th-floor generators. The media reported that Peer 1 mobilized 30 people in a fuel bucket brigade.
The remarkable reliability of our electric systems and robust fuel supply infrastructure tend to lull us into failing to develop well thought out emergency preparations to counter events that—we assume—rarely happen. In addition, global warming and other factors have led many insurance companies, coastal facility owners, governmental bodies, and others facing storm-related disasters to anticipate that rare storms will become more frequent, and they are planning for a future of rising water levels and heavy storm impacts.
At Funk & Zeifer, we thought we had prepared for a possible loss of power, but the storm and its related burdens proved to be far more disruptive than our worst-case projections. During the days leading up to the storm, we were inundated with storm-related client issues, such as providing notices to contractors of partially constructed solar facilities of their obligations to secure the sites. Even though weather broadcasts reported that the storm was downgraded from a hurricane to a tropical depression, we assumed that travel would be disrupted. As a result, Peter informed the World Energy Engineering Congress that he did not expect to be able to fly from LaGuardia airport to Atlanta on Wednesday, November 1, to give a speech. We had no idea of how correct we would be; LaGuardia, JFK, and Newark airports were closed completely for days after the storm.
Since they are below 39th Street in Manhattan, our offices lost power and steam for a full week as a result of the 14th Street explosion of a ConEd transformer. We had no access to the building that houses our law offices or to our papers, data, and resources since the outage shut down our servers. Fortunately, our apartment (and home office) continued to have power, enabling us to work, at a reduced level, from external hard drives and to communicate by email via our web provider, Network Solutions. Many clients had similar issues, and some lost power in both offices and residences. For that reason, even though we had phone and email service, many telephone numbers and email addresses were useless.
The reality of a legal practice is that, as a service provider, if we cannot provide services, we get no income; so it is essential to function under what was called, when Peter was in the army in Vietnam, “less-than-ideal conditions.” Ironically, we may have benefited from the fact that we have not yet switched to a cloud provider for data storage and have been using external hard drives, since many data centers lost power in Manhattan. Making sure any cloud provider we use has geographically dispersed data centers will be important to our choice of cloud provider.
One of the less-than-ideal conditions was the salt-water flooding New York City’s subway system and railroad tunnels connecting New York City and its suburbs, so there was little train service. New Yorkers can tend to forget how much we depend on public transportation.
Restoration of subway service was one of the disaster recovery success stories.
Peter’s brother, an executive with a national insurance broker, was hit hard by Sandy; his Water Street offices were flooded with salt water and will not be available for some time; his New Jersey home was without power more than two weeks. Peter’s nephew, an intern at a video game company in New York City, came to stay at our home, as there was not only no electricity at home but also no train service. We extended an invitation to his brother and sister-in-law, but she did not want to be away when the power went back on. Since no power usually means no water, the associated need for water for drinking and cooking to meet routine needs such as bathing and washing dishes and clothes quickly mounts up. Many in New York City accommodated family and friends in need of something as basic as a shower.
Peter’s lucky brother managed to successfully make his way to Florida for business. Like many in this region to whom we have spoken, he plans to have an emergency generator installed with as substantial fuel supply as permitted by local ordinances.
Since nearly all mission-critical entities in Manhattan below 39th Street lost power for days and many experienced severe flooding, a host of questions follow. What was the specific impact upon data centers, hospitals, international banks, and others that need uninterrupted power and robust uptime? How effective was planning and execution? How well did backup generation perform? What about equipment performance during takedown when power failed and recovery when power resumed? Did the equipment perform to specifications and expectations? In hindsight, what should and could have been done differently? Why was Goldman successful in storm preparation and why did its backup generators perform when others failed? How did others cope?
For those facilities that did continue to operate in areas without power, was the fuel supply adequate for the duration of the power outage? A lesson of these types of disasters is that backup generation may be required to operate for extended periods of time when deliveries of diesel fuel are limited or unavailable, as has been the case with Sandy. Siting and constructing on-site storage for a substantial amount of fuel is costly. Backup generation operated over a prolonged period of time can consume great amounts of fuel. During a 38-day post-flood recovery period in the past at the Memorial Hermann Hospital campus in the Houston area, 36 portable generators consumed an estimated 10,000 gallons of fuel each day. By way of comparison, prior to deregulation in New York State, electric utilities were required to keep a 45-day supply of fuel available on or adjacent to the power plant site.
From a legal viewpoint, this storm raises numerous questions such as: What legal liability will ensue? How will this event impact due diligence? What resulting revisions will be made to leases, contracts, and insurance policies? What new laws, ordinances, and rules will be promulgated? An issue that will inevitably be hotly debated in legal forums is the extent to which flooding by a storm in lower Manhattan is reasonably foreseeable and that it might coincide with a high tide and full moon? This trifecta has happened before. Manhattan is surrounded by water, and sections of the island sit only few feet above high tide. Like New Orleans, storm flooding has always been a possibility.
It is time to put aside arguments as to the cause and potential frequency of these no-longer-rare storms and plan for the future.
Peter Funk is a partner at Funk & Zeifer LLP where he practices in the area of energy law with a focus on energy generation and energy management/conservation projects. Funk's column Legal Perspectives discusses legal issues pertaining to energy generation and conservation.
Ellen Zeifer, also a partner in Funk & Zeifer, concentrates upon art law, intellectual property and general business law.