Aaron Allan, Senior Partner of the Environmental & Energy Department at Glaser Weil speaks on saving clients during lawsuits.

“Managing environmental risks and having appropriate insurance is more important than ever given the high stakes that face our clients,” he explains.

“We have been successful not only in identifying risks for clients, but also in obtaining new insurance and maximising the value of historic policies when confronted with new or potential liabilities. “While I pride myself on my ability to win lawsuits, the best lawsuit for a client is the one that never happens.”

Below he speaks more on energy law and how it is impacting his clients.

How have you seen insurance coverage change in relation to energy law, with the increasing environmental concerns?

Over the past 10-15 years, there generally has been a reduction in the availability of insurance to cover environmental issues (including shorter terms, and higher self-insured retentions). Environmental disasters, such as the offshore spill in Santa Barbara and the water quality problems in Flint, Michigan, coupled with more aggressive government regulation (prior to 2017), have also led insurance companies to demand higher premiums and deductibles, and to refuse types of coverage that used to be routinely available, such as "cost-cap" environmental coverage, which protects against cost overruns for the remediation of polluted sites. In the energy sector, whether in new shale plays or traditional resource plays, there are a limited number of insurers willing to entertain environmental risks. Those writing policies have been successful, but many insurers appear to be wary of the technology and appear not yet ready to correctly underwrite the risk. The tide may be turning, however, because of several factors: (1) a trend down in oil prices has led to decreased production activities and a reduction in the number of claims, (2) increased regulation and new technologies have led to improved safety of operations; and (3) recent large spills, such as Deepwater Horizon, have inspired industry wide efforts to better protect workers, property and natural environments, of which insurance companies have taken notice.

Are there any rumored changes expected to occur, which you think may deeply affect your clients?

The recent prolonged downturn in energy prices, which has led to reduced demand for insurance among energy providers, coupled with anticipated relaxed enforcement efforts from the current administration in Washington D.C., is expected to put pressure on insurance carriers to loosen underwriting standards and expand the terms and conditions under which they offer coverage to energy companies. The rise in alternative energy companies and sources is also expected to generate incentives for insurance carriers to come up with creative new products to insure against financial loss in this sector, which should also benefit more traditional energy providers.

What do you think is key in ensuring you obtain full (or the best) coverage for your clients during lawsuits?

First, while it may seem obvious, it's important to carefully read every term and condition of the policy. Second, in all dealings, I have found it extremely helpful to act reasonably and maintain credibility with the insurance carrier representatives and counsel. Finally, the case law affecting coverage is constantly evolving, particularly here in California, and it's imperative to keep up to date with the most recent decisions that may affect your clients on coverage issues.

What would you claim are three important factors to address during environmental due diligence?

The most important aspect of performing environmental due diligence is completeness. For the deals that I have been involved in handling, there has been simply too much at stake to think about cutting corners. Second, it's important to understand the limitations of a Phase I Environmental Site Assessment. A Phase I should only be used only as a starting point for evaluating the need for other tools to complete due diligence. Third, you must gain a complete understanding of the target company's operations, both present and historical, which often requires interviews with both current and former officers and employees. Without that understanding, there is too much of a risk of missing indicators for both on-site and off-site liabilities.

Aaron Allan | Partner
10250 Constellation Blvd., 19th Floor, Los Angeles, CA 90067
Main: 310.553.3000 | Direct: 310.282.6279 | Fax: 310.785.3579
E-Mail: aallan@glaserweil.com | www.glaserweil.com

Aaron P. Allan, a Senior Partner in Glaser Weil’s Environmental & Energy Department, has for over twenty-five years represented a diverse range of business entities on significant issues involving energy, environmental, consumer products, insurance coverage, toxic tort and real property issues. He has published and presented on significant topics such as groundwater management, environmental lender liability, and California's Prop. 65, and is currently working on an article discussing California's cap and trade programme to reduce greenhouse gas emissions. He has successfully represented oil and gas companies, solar providers, water utilities, insurance companies, hotels, banks, and other business entities on such matters.

Glaser Weil, based in Los Angeles, is one of the country’s premier full-service law firms. Advising a roster of diverse, selective clients — from start-ups and large global corporations to high-profile entertainers and other well-known individuals — Glaser Weil represents clients’ interests with an unprecedented level of dedication and commitment.

In the case of Google vs. Equustek, some weeks back a Canadian Supreme Court ordered Google to eliminate a number of search results from a previous distributor that was reportedly using its sites to sell, illegally, the defendant Equustek Solutions’s IP. On November 2^nd 2017, a California district court granted Google’s request for a preliminary injunction preventing US enforcement of the order. Below, Gwilym Roberts, Chairman and Partner at Kilburn & Strode, discusses the Canadian Supreme Court's decision and what it means for the prospects of more global injunctions.

As walls spring up everywhere internationally, we are seeing a counter-intuitive move towards cross-border injunctions in Intellectual Property cases. IP is becoming a test bed for remedying infringement in multiple jurisdictions, with the internet at the root of the issues.

Two recent developments are at the forefront – firstly the ruling by the Supreme Court of Canada in Google vs. Equustek, and secondly a draft EU convention on the recognition and enforcement of foreign judgements.  Each deals with cross-border issues in a different way – the Supreme Court of Canada (SCC) by imposing an injunction which it can enforce at least in Canada if it is not obeyed globally, and the other by asking EU governments to actively sign up to mutual recognition. And each raises practical and legal issues.

In the Google case, the facts were straightforward. Canadian company Equustek Solutions sued distributor Data Link Technology Gateways for listing its products on Google as their own. The facts were agreed and so Google’s case was merely that it was not even a party (which was quickly dismissed) and that there was a “freedom of information” angle which could be breached by an injunction being awarded in other jurisdictions even if not in Canada. Google cooperated initially by de-indexing pages on Google.ca but the SCC issued a global “Google Order” requiring Google to de-list around the world.

Many rights holders have welcomed the decision as providing fair protection, but free speech organisations characterise the decision as “race to the bottom”. The SCC itself has indicated that if Google can demonstrate that the injunction does cause problems in other jurisdictions it will reconsider but points to other instances of global injunctions that have seemed acceptable including the take down of defamatory material, copyright enforcement and the EU “right to be forgotten”.

The EU meanwhile continues to strive for multi-territory enforcement. The current draft EU recognition convention proposes cross-border enforcement for a range of rights and, for now, leaves IP open for discussion. Its principal IP target may well be online infringement of the type dealt with by the SCC, but broader rights, including patents, are still up for grabs.

In any event, IP emerges as a common denominator for cross jurisdictional disputes, fuelled by the ease of infringement on the web.  The internet after all provides perfect data liquidity, with IP acting as its legal vessel.  However, IP law sharply defines territorial boundaries and problems emerge with the combination of the internet, information, and intellectual property.

Long before the draft recognition convention appeared, assorted enforcement initiatives had been tried in relation to IP – pan-European patent injunctions faded, the EU Criminal Enforcement Directive for IP floundered and the proposed Unified Patent Court, having tripped over Brexit, has now landed hard on a German constitutional challenge.

For now, therefore, it may well be that judicially-driven pan-territorial remedies may be the practical option rather than Directives. This raises practical considerations for rights holders. Google’s example casts light on this – Canada is evidently a huge market for them, they can’t pull out, therefore, they either need to observe the SCC injunction globally or face sanctions at least in Canada. So for other, less international companies, a consideration of where their headquarters are based may be highly relevant. Setting yourself up in a country which is less likely to issue an injunction, particularly a global one, may make some sense if you have the freedom to drop out of other risky territories.

At the moment, it remains to be seen whether courts will enforce an injunction issued in another jurisdiction, and it seems fairly unlikely without some form of international convention of the type proposed by the EU. However, economically speaking, global injunctions clearly still have teeth if they issue in commercially important territories.

As elsewhere, the internet has provoked a major rethink of how businesses operate internationally. Mixing the internet, unlimited data and the highly territorial nature of IP law creates a potent cocktail. Even in the absence of government-level cooperation we can expect to see ever more creative legal/commercial solutions to global disputes, with IP at the forefront.

Kenneth R. Baker is a Professional Engineer and licensed General Contractor with a practice in construction and real estate consulting and claims. With knowledge on construction regulations based all over the globe, he speaks with Lawyer Monthly about how the field is developing, where construction can go wrong and what investors in real estate can do to avoid rising costs.

How has real estate risk changed over the years in California? Have regulations become tighter, and if so, what has been the effect of this?

California is a progressive state in terms of technology, politics, natural resources and it is the largest state with the largest population, so it has unique challenges; there are a lot of regulations in place to protect these resources, so builders and workers that come from outside of California are often surprised by the degree to which the process is regulated by the government and third parties. You can’t come in and just build what you want, as California has very specific sets of requirements that don’t exist in other places. For example, hospital construction in California has its own regulatory agency called OSHPD and their regulations are quite unique. Most people who get involved with hospital projects discover the process is very slow; review and analysis is very robust so there are a lot of things that may be done in terms of construction details and the way the hospital is laid out.

There are also regulations that consider California’s long coastline – there is a public governmental Coastal commission regulating what can be built miles within the coastline. That’s a special regularity review which developers and agencies must know. They are aimed at protecting and enhancing the assets that California has; many complain it is very expensive and these regulations add further expense, but they are there for protection. California is not a cheap place to live or do business in that matter.

What are the most common reasons to why construction goes wrong and thus results in legal disputes? What could be done to avoid this?

Different owners have different needs that drives the project, so many times projects go wrong for different reasons. If you’re in the business long enough, you get an idea to what could be going better and if people could alter the way they do projects. In infrastructure projects, public agencies are often involved and as a result the agencies are susceptible to disputes, due to budgets and funding constraints. Money affects how projects are delivered and in many cases these constraints result in alternative delivery methods, where the design is partially done by the owner/agency and then the rest of the design is completed by the contractor they retain. The contractor, instead of just building has to finish the design which can cause problems.  Agencies may not be happy with the design, so then the project agency gets involved and try to change and adapt the design that the contractor has developed. Many construction projects agencies have poor management practices like so, which causes legal disputes.

Projects also run into their own problems just because the field is unpredictable. In construction, you can’t control all the variables; for example, regarding foundations and underground work, you have to know the rock and soil and their conditions. You devise reports on what you suspect is underground, but you really don’t know what is underground until you start building. These ‘surprises’ are built into the construction world and you find out later down the line the foundation you thought was perfectly fine, actually is not; everything following cannot go on until the foundation is changed, which delays everything else.

What are the most vital things that clients need during real estate asset investigations?

What is growing fast is capital programmes and risk assessments. Capital programmes are for big companies and governmental agencies that have capital spending on an annual basis. The way in which they deliver projects in this programme often needs updating and could benefit from observing what others are doing, so our services are aimed at helping clients treat their real estate assets to do more with less money and do more with money they have. The services are aimed at how you deploy your capital most efficiently and what aspects are causing problems. A factor business people address is money – they need to get money at an attractive rate and need to know how and when to spend that money. However, technical areas they don't deal with everyday are: external factors - evaluating restrictions on entitlement and regulations when buying property -, and internal factors that affect real estate development, for example building suitable foundations and assessing soil conditions. This expertise is needed; our company has that expertise in all the different areas. You can always short cut some of these costs, but you find out during construction that this can cause more problems in the long run, thus higher costs. Even natural disasters such as earthquakes, can affect building constructions and regulations, as constructions obviously need to be stronger. If you are going to be a smart investor or builder, you want to get the best people on your team who are aware of these little things.

With a denser population and with America being a developed country, how do you see engineering and construction developing? What problems do you see along the way and what changes do you think will be made to adapt to this?

The urban environment and where jobs are have changed. Cities have grown and rural areas have shrunk and advancements in technology have allowed the traditional office-based role to change. Companies are lot more flexible, so offices designs have developed; people are often more global and better accommodated, sometimes working from home. All these developments have changed the way in which construction has progressed, including transportation and travel, due to changes in movements, especially in suburban areas. There are still needs for infrastructure - roads and the energy system are constant in need of updating. Rather than a decrease in commercial construction, we see different types of buildings now and a changed planning mindset and model.

How often is analysis poor, which results in problems in the long run for businesses and corporations? What could be done to avoid this?

Our business focuses on a fact-based analysis, which is driven so our clients make the best decisions. The thing which affects our ability to do our best work is poor budgets. Clients do not always want to spend realistically on things they need. A poor analysis also involves a poor investigation into looking at the things that need to increase the liability. We have adapted ways to help clients to not spend maximum amount of money; the ways in which we do this involves a phased analysis where we tackle the bigger issues and spend money progressively and in stages. We look at the fundamentals, what they’re strong in and the challenges they will have so the money is used to maximum benefit. Business people who are trying to spend their money wisely need to know if their investment is worth it and so we become their trusted advisers and take on the ability to try put ourselves in their shoes. Many people go into a lawsuit due to attitudes and opinions that have been shaped by the project and not objectively trying to see if it is a reputable and economically wise move.

How do you ensure you remain neutral during disputes?

One of the core services we provide is dispute resolution support for our clients, whether they are public agency clients or private owners, contractors, designers - people part of the construction process. My mission is to seek the truth and this serves both sides of the dispute. I try to advise and council clients if they have vulnerable aspects in their claim, but I cannot stray from the truth. I am independent and neutral and not an advocate; as an expert I perceive my role as if I am working for the judge. I try to get to the bottom of the cause and the effects of the project and staying objective is what drives our success in this business. We evaluate the facts, contracts and law and we present that knowing the third party, the judge and arbitration panel will evaluate both sides and make a fair decision.