Category: KPW Blog

Defending Energy Infrastructure: the Defense Production Act of 1950

Defending Energy Infrastructure: the Defense Production Act of 1950[1]

By: Sarah C. Thompson

On May 29, 2018, one day before a National Security Council meeting on the subject of energy resiliency, a draft White House memorandum was published which outlines plans for the utilization of the Defense Production Act of 1950 (“DPA”), in concert with the Federal Power Act (“FPA”)[2], as a means of reversing what the White House describes as the rapid depletion of our nation’s critical energy infrastructure.[3] This memorandum suggests that the Department of Energy may be able use its powers under the aforementioned Acts to stem the ongoing tide of “premature retirements” occurring among domestic coal and nuclear plants.[4]

So what is the DPA?

Based on the War Powers Acts of WWII and initially authorized during the Korean War, the DPA authorizes the President to control and direct certain aspects of domestic industry in the interest of national defense. Facing a series of post-war labor strikes resulting from widespread industrial and economic turmoil and in the face of growing Cold War tensions, the Truman administration enacted the DPA on September 8, 1950.[5]  By design, the DPA is a temporary law requiring periodic reauthorization. The most recent reauthorization occurred on December 1, 2005, and will expire on September 30, 2019.[6] The provisional nature of this law enabled the evolution of its terms, with amendments modifying and updating the Act’s authorities continuously.

In its original form the DPA granted to the President a number of authorities, such as the authority to demand that manufacturers give priority to defense production, to requisition materials and property, to expand government and private defense production capacity, to ration consumer goods, to fix wage and price ceilings, to force settlement of some labor disputes, to control consumer credit and regulate real estate construction credit and loans, to provide certain antitrust protections to industry, and to establish a voluntary reserve of private sector executives who would be available for emergency federal employment.[7] Currently, only a portion of these original authorities granted by the Act remain.

Today, under the DPA, the President may act to ensure that the U.S. possesses the military resources necessary to respond to an attack, and further enables the President to enhance and support domestic preparedness, including taking measures to ensure a prompt and thorough response to and recovery from natural hazards, terrorist attacks, and other national emergencies.[8] Subchapter II (formerly Title III) of the DPA deals with expansion of national defense “productive capacity and supply.” The various sections therein generally authorize the President to provide or guarantee loans to industry in order to expedite deliveries or expand discovery and production of , purchase industrial items or technologies for installation in government or private industrial facilities, and to encourage development of synthetic fuels.[9] It is apparently this authority, along with powers derived from the FPA that the memorandum proposes may be utilized to save ailing coal and nuclear facilities. Under section 202 of the FPA, the Secretary of Energy may “require by order temporary connections of facilities, and generation, delivery, interchange, or transmission of electricity as the Secretary determines will best meet the emergency and serve the public interest.”[10] However, this power may only be used “during the continuance of a war” or “when an emergency exists by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy, or of facilities for the generation or transmission of electric energy.”[11]

This begs the question: Are we facing an emergency situation? The United States has not declared war since 1941, but that does not necessarily mean that exerting economic influence in the interest of national defense cannot still be accomplished through the use of its war powers. The constitutionality of the DPA was called into question not long after its enactment by Excel Packing Company when the company was found liable for damages under the Act, for selling meat in excess of maximum prices fixed by the regulation.

The United States appealed a judgment from the United States District Court for the District of Kansas dismissing its action against the meat packing company. On appeal, the Tenth Circuit Court of Appeals found in favor of the United States, holding that “the right of Congress to exercise its war power does not end with the cease fire order. Neither is Congress limited in its right to invoke such powers only upon a formal declaration of war or from the firing of the first gun.”[12] In Excel, the power of Congress to legislate for the national defense and security in time of war or during a national emergency was not challenged. Id. (emphasis added). The Tenth circuit cited to language of the DPA and explained,

“the policy of the United States [is] to oppose acts of aggression and to promote peace” and in doing so the United States “is determined to develop and maintain whatever military and economic strength is found to be necessary to carry out this purpose” which “task requires diversion of certain materials and facilities from civilian use to military and related purposes” and that it is intended “to provide the President with authority to accomplish these adjustments in the operation of the economy.” There can, therefore, be little question that the Act was primarily passed to promote the national defense.”

Given that the United States has been embroiled in “Extended Military Campaigns”[13] off and on for the better part of a century, it is not beyond the realm of possibility that a court would find the measures proposed in the memorandum to be justified and properly exercised under the war powers and authorities granted by the Act. Judging by various industry responses to the memorandum thus far, these measures could face some tough legal challenges.[14]

What exactly does the memorandum propose?

The rapid rate at which coal and nuclear energy generating facilities are being retired could be creating a shortage of energy generation diversity sufficient to justify action under the DPA/FPA. The memorandum suggests that too many “fuel-secure plants” have closed prematurely and many more have recently announced retirement. The term “fuel secure” refers to facilities which maintain their power source on site, such as coal and nuclear facilities, as opposed to those utilizing natural gas, which must be piped-in.[15] The memorandum acknowledges that currently the lost megawatts of coal/nuclear power are being replaced by new generation from natural gas and renewable energy sources, but warns that this transition comes at the expense of fuel security and resilience.[16]

What has the industry response been?

Administrations on both sides of the aisle have relied on DPA authorities to direct energy production (During January 2001, both Presidents William J. Clinton and George W. Bush invoked DPA powers, in conjunction with those granted in the Natural Gas Policy Act of 1978 (P.L. 95-621, 92 Stat. 3350), to ensure that emergency supplies of electrical power and natural gas continued flowing to California utilities, deflecting threatened electrical blackouts.[17]). However, its proposed use to safeguard, and some critics would say interfere with, the domestic energy market has sparked quite a bit of controversy.

An unlikely alliance of environmental groups and oil and gas industry interest groups have spoken out in opposition to the proposed measures.[18] Todd Snitchler of the American Petroleum Institute has called for less government intervention in energy markets and expressed concern that the proposed use of the DPA/FPA to support “high-cost generation” (referring to coal and nuclear) could result in consumers paying more for their electricity.[19] Amy Farrell, vice President of the American Wind Energy Association stated, “[o]rderly power plant retirements do not constitute an emergency for our electric grid”.[20] PJM[21], the east coast grid operator which serves 65 million customers, published an analysis of recently announced planned deactivations of certain nuclear plants and determined that there was no immediate threat to system reliability. “There is no need for any such drastic action,” said a PJM spokesperson referring to the memorandum’s proposals.[22]

How likely is implementation of the proposals in this memorandum?

The memorandum directs the DOE to protect the ailing coal and nuclear industries from further decline by requiring power market operators “to purchase or arrange the purchase of electric energy or electric generation capacity from a designated list of Subject Generation Facilities (SFGs) sufficient to forestall any further actions towards retirement, decommissioning, or deactivation…”[23] The proposed use of the DPA is unique in this instance because the memorandum seems to say that at any moment an emergency could arise, and this risk is itself sufficient to invoke the DPA.[24] The memorandum warns that “[t]he vulnerability of U.S. critical infrastructure to cyber, physical, and electromagnetic attacks means that adversaries could disrupt military command and control, banking and financial operations, the electrical grid, and means of communication.”[25] It remains yet to be seen whether the looming threat of attack to critical infrastructure[26] would be considered an “emergency” sufficient to justify use of the authorities granted by the DPA and FPA.[27]

Further, the draft DOE directive lacks many details addressing how it would actually be implemented. For instance, the memorandum provides that systems operators would be instructed to purchase energy from a specified list of “Subject Generation Facilities.” However, statements made by Federal Energy Regulatory Commission Chairman Kevin McIntyre and DOE Undersecretary Mark Menezes suggest that details on who these “subject generation facilities” are, or how they will be chosen, are not only unclear, but do not yet exist.[28] The lack of specificity about how the DOE would actually implement this plan, as well as the fact that the memorandum was a draft subject to modification, makes it difficult to assess the feasibility of utilizing the DPA to assist the struggling coal and nuclear industries.

Keeping things in context.

Should the measures proposed in the May 29 draft memorandum be implemented, the oil and natural gas industries would inevitably feel the impacts. One commentator expressed concerns that a push to help one sector of energy production would inevitably cut in on the success of its competitor producers, and in this instance could introduce uncertainty and challenges into the oil and gas industry not previously present.[29] Additionally, the proposed assistance to the coal and nuclear industry comes on the heels of newly imposed steel tariffs, a measure that has already been speculated to negatively impact the oil and gas industry,[30] and follows ongoing discussions on modifying the North American Free Trade Agreement, which could also have an impact upon oil and gas exports.[31]

Until an official directive is released by the White House, it is impossible to assess the legality and feasibility of the proposed use of the DPA and FPA to bolster struggling nuclear and coal facilities. However, it is safe to say that the memorandum presents a novel approach to ensuring domestic energy resilience, and should an official directive be released, this discussion will certainly be revisited, and more thoroughly. At the very least, the memorandum’s release is a reminder that a free energy market is still subject to expansive federal oversight—especially where national security is concerned.

 

[1] 50 U.S.C.A. § 4501 (Formerly cited as 50 App. USCA § 2061).

[2] Under FPA section 202(c) during the continuance of a war in which the United States is engaged or when an emergency exists by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy, or of facilities for the generation or transmission of electric energy, or of the fuel or water for generating facilities, or other causes, the Secretary of Energy may require by order temporary connections of facilities, and generation, delivery, interchange, or transmission of electricity as the Secretary determines will best meet the emergency and serve the public interest.  16 U.S.C. § 824a(c).

[3]Taken from a statement by Whitehouse spokeswoman Sarah Huckabee Sanders following the memorandum’s release. https://www.nbcnews.com/news/us-news/trump-energy-plan-would-prop-failing-coal-nuclear-plants-n879406.

[4] See “Addendum, Draft-5/29/18”, p. 1, https://www.documentcloud.org/documents/4491203-Grid-Memo.html.

[5] P.L. 81-774, 64 Stat. 798.

[6] 50 U.S.C.A. § 4564

[7] Brown & Else, Congressional Research Service report: The Defense Production Act of 1950: History, Authorities, and Reauthorization (July 28, 2014), available at www.crs.gov

[8] Defense Production Act, “Declaration of Policy”, 50 U.S.C.A. § 4502.

[9] Else, Congressional Research Service report: The Defense Production Act: Purpose and Scope (May 14, 2009), available at www.crs.gov.

[10] 16 U.S.C. § 824a(c).

[11] 16 U.S.C. § 824a(c).

[12] United States v. Excel Packing Co., 210 F.2d 596, 598 (10th Cir. 1954).

[13] The US Doesn’t Declare War Anymore, 9/18/2014, Times.com http://time.com/3399479/war-powers-bush-obama/

[14] Energy analysist Katie Bays stated in an interview with Reuters online that “While we believe DOE has broad privileges to identify threats to national security, we are skeptical that (the order) entitles DOE to direct power market operators (…) to pay generators more based upon that threat… Litigation would begin almost immediately.” https://www.reuters.com/article/us-usa-electricity/trump-throws-ailing-u-s-coal-nuke-plants-a-lifeline-triggers-backlash-idUSKCN1IX51Q.

[15] “Gas-fired power generators are more vulnerable to cyber attacks than coal plants and nukes because gas must be delivered from remote fields via pipelines, according a draft report by the department. Coal and nuclear plants, on the other hand, keep fuel stored on site, eliminating a potential weak point that could be targeted by malicious hackers.” https://www.bloomberg.com/news/articles/2018-06-01/trump-s-coal-nuke-push-pegged-to-security-threats-to-gas-pipes.

[16] See “Addendum, Draft-5/29/18”, p. 1, https://www.documentcloud.org/documents/4491203-Grid-Memo.html

[17] Unattributed, “Bush Administration Extends Emergency Orders Requiring Electricity and Natural Gas Shippers to Continue Supplying California Utilities,” Foster Electric Report 209, January 31, 2001, p. 6. The use of these authorities was criticized by some as improper. Bart Jansen, “Gramm Raps Cold War Law,” San Antonio ExpressNews, February 10, 2001, p. 19A.

[18] “The White House billed the effort as a way to shore up national energy security, but the announcement triggered swift backlash from an unusual alliance of drillers, renewable energy producers and environmentalists who called it an unfair attempt to prop up non-competitive industries.” https://www.reuters.com/article/us-usa-electricity/trump-throws-ailing-u-s-coal-nuke-plants-a-lifeline-triggers-backlash-idUSKCN1IX51Q.

[19] https://www.cnbc.com/2018/04/15/api-opposes-trump-administration-bailout-of-firstenergy.html; https://www.nytimes.com/aponline/2018/06/01/us/politics/ap-us-trump-coal-plants.html.

[20] Farrell called the draft plan “a misapplication of emergency powers” and said, “There’s certainly no credible justification to force American taxpayers to bailout uneconomic power plants.” https://www.nytimes.com/aponline/2018/06/01/us/politics/ap-us-trump-coal-plants.html.

[21]In 1997 the Federal Energy Regulatory Commission (FERC) approved PJM as the nation’s first fully functioning independent system operator (ISO). ISOs operate, but do not own, transmission systems in order to provide open access to the grid for non-utility users. http://www.pjm.com/about-pjm/who-we-are/pjm-history.aspx.

[22] https://www.reuters.com/article/us-usa-electricity/trump-throws-ailing-u-s-coal-nuke-plants-a-lifeline-triggers-backlash-idUSKCN1IX51Q

[23] See “Addendum, Draft-5/29/18”, p. 3, https://www.documentcloud.org/documents/4491203-Grid-Memo.html

[24] Previous uses of the FPA include responses to massive blackouts caused by incidents like hurricanes Rita and Katrina, https://www.energy.gov/oe/services/electricity-policy-coordination-and-implementation/other-regulatory-efforts/does-use.

[25] See “Addendum, Draft-5/29/18”, p. 7, https://www.documentcloud.org/documents/4491203-Grid-Memo.html, citing National Security Strategy of the United States of America, at 12 (Dec. 20 17), available at https://www.whitehouse.gov/wp-content/uploads/20 17112/NSS-Final-12-18-20 17-0905-2.pdf.

[26] The term “critical infrastructure” means any systems and assets, whether physical or cyber-based, so vital to the United States that the degradation or destruction of such systems and assets would have a debilitating impact on national security, including, but not limited to, national economic security and national public health or safety. 50 U.S.C.A. § 4552

[27] The DPA does not provide a statutory definition of what would constitute an “emergency”, however the holding in Excel suggests that neither a declaration of war, nor recognition of any national emergency is necessary, where the Act is used to promote national defense.

[28] Statement of Samantha Gross, a fellow in foreign policy focused on international energy and climate at the Brookings Institution, https://www.rtoinsider.com/ferc-doe-trump-rick-perry-kevin-mcintyre-coal-nuclear-93744/.

[29] https://www.usnews.com/national-issues/energy-environment/articles/2018-06-07/trump-backing-coal-and-nuclear-shuns-natural-gas

[30] For a more thorough discussion of this, see: Trump’s Steel Tariff Threatens His Goal Of Oil And Natural Gas Dominance, https://www.forbes.com/sites/judeclemente/2018/03/04/trumps-steel-tariff-is-bad-for-his-oil-and-natural-gas-dominance/#190380c82550.

[31] https://www.bloomberg.com/news/articles/2018-06-11/mexico-turns-attention-to-japan-as-nafta-trade-talks-at-risk; https://www.politico.com/story/2018/06/10/kudlow-trump-nafta-trudeau-041630.

When Fixing a Pleading, Make Sure Not to Break Your Case

When Fixing a Pleading, Make Sure Not to Break Your Case

By: Mark E. Best, Esq.

The Louisiana Fifth Circuit Court of Appeal recently reaffirmed that a fax-filed version of a pleading must be absolutely identical to the hard-copy version later filed with the court pursuant to the 2016 amendments to La. R.S. § 13:850.  In Smith v. St. Charles Par. Pub. Sch., 17-475 (La. App. 5 Cir. 5/1/18) the Court held that even a one-character typographical difference is enough to render a fax-filing void and without effect.

Smith sued St. Charles Parish Public Schools for damages sustained as a result of an October 6, 2015 zip-line accident involving his minor child.  One day before the first anniversary of the accident, plaintiff fax-filed a petition that stated that the date of the accident was “October 6, 2005.”  The original hard-copy version of the pleading, which was timely filed within seven days of the fax in accordance with La. R.S. § 13:850(B), stated the date of the accident was “October 6, 2015.”  Plaintiff’s counsel admitted that the change was made to correct the typographical error.  Upon defendant’s prescription exception, the district court found that the hard copy violated La. R.S. § 13:850(B)(1) because it was not “identical to the facsimile filing.”  The faxed version was rendered without effect and the subsequent hard copy was untimely, as it had been filed more than one year after the date of the accident.  The Fifth Circuit Court of Appeal agreed and affirmed the dismissal of plaintiff’s suit.

The Louisiana Supreme Court has held that prescriptive statutes are “designed to protect a defendant against prejudice from lack of notification of a claim within the period of limitation, [but] are not designed to protect a defendant against non-prejudicial pleading mistakes that his opponent makes in filing the claim within the period.”  Findley v. City of Baton Rouge, 570 So.2d 1168, 1170 (La.1990) citing Giroir v. South Louisiana Medical Center, 475 So.2d 1040 (La.1985).  At first blush, it might sound like the Smith panel ran afoul of this precedent.  A close analysis instead reveals that the Smith panel impliedly held that plaintiff made the “non-prejudicial mistake” in a fax—not a “filing” within the limitations period—because the statute rendered the fax null, void, and without effect before it could become a “filing.”

In light of this ruling, practitioners should correct pleading errors via formal amendment only after a fax-filing has been perfected via delivery of an identical hard-copy document.

Learning from a Mentor is More Cost-Effective and Less Painful than Learning from Mistakes

Learning from a Mentor is More Cost-Effective and Less Painful than Learning from Mistakes

By: Mark E. Best, Esq.

My first mentor in private practice was the managing partner of the firm that hired me.  He was always happy to help, no matter how obvious the answers to my questions were to him.  He’d drop by my house on random weekends to talk shop over a beer.  He’d even answer my calls to his home phone late in the evening.  He attended meetings and depositions with me to monitor my progress and to give pointers along the way. He told me often that he was invested in my success, which is why he spent a good deal of unbillable time showing me the ropes.  This level of mentorship is atypical for young lawyers, and I’ve never forgotten just how fortunate I was to have been a true apprentice to a talented litigator at the very beginning of my career.  But hey, when you follow your father into the legal profession and he gives you a job, that’s what should happen, right?

As a newly minted partner in a law firm with several young, crafty, whip-smart lawyers, I know that if I can deliver the same level of mentorship that I received, the firm’s long-term probability of success will increase.  To the experienced attorneys reading this and thinking, “I just don’t have the time for that,” perhaps what you really mean is, “We just don’t have the firm culture for that.”  After all, you could spend a few hours each month mentoring instead of billable work, if your firm valued it (and compensated for it accordingly).  Kuchler Polk Weiner does just that.

When I eventually left my father’s firm just before his retirement, I came to work with Deb Kuchler.  Almost immediately, she took me to a joint defense group meeting consisting of some of the best lawyers in the city of New Orleans representing Fortune 100 clients in toxic exposure litigation.  In the hours that followed, I understood little about the enormous complexity of the cases, the players, or the issues—but I watched and I learned.  Afterwards, I was surprised when Deb told me to record my time as “non-billable” to ensure the hours would be included in my year-end assessment.  I learned that the reciprocal was also common practice—partners would “no charge” their time while attending depositions or conferences with young associates for mentoring purposes.

A short time later, after I’d completed a particularly complex maritime contractual indemnity analysis, Deb insisted that I accompany her and in-house counsel to a pre-suit mediation with eight figures on the line.  Again, I watched and I learned—until, without warning, Deb turned to me in the presence of the client and the mediator and said, “I’m sure Mark can tell us the answer to that…”  I don’t recall the issue or what I said.  The next thing I remember was riding in the car on the way back to the office after a favorable settlement was reached.  With the radio playing softly in the background, Deb casually informed the client that although she hadn’t intended to bill for my time at the mediation, she felt my performance warranted compensation.  The client agreed.  No one else noticed, but it felt like more than coincidence when “I Alone” by Live came on, and a couple of the lyrics seemingly encapsulated what Deb had done:

I’ll read to you here, save your eyes

You’ll need them, your boat is at sea

Your anchor is up, you’ve been swept away

And the greatest of teachers won’t hesitate

To leave you there, by yourself, chained to fate.

 

There is little I could have said in that separate mediation session that would have adversely affected the outcome.  But there was some limited risk to Deb’s relationship with the client if my words had revealed me as unprepared (or worse).  Deb decided that this was a safe spot to test me—to leave me alone, chained to fate.  And when I passed this test, she positively reinforced the experience by pointedly alerting the client to what I’d done.

I tend to agree with the old adage that law school teaches you how to think like a lawyer, not how to practice law.  I don’t recall any classes on how to estimate damages exposure, how to prepare a witness to testify, how to negotiate a settlement, or how to write a proper report to in-house counsel.  Out of necessity, young lawyers will inevitably learn to do these things.  But if you are not mentoring them, their mistakes will teach them for you, at your cost.  The most successful firms are those that do the best job of teaching and learning.

From the Mouths of Babes… to the Ears of the 9th Circuit

From the Mouths of Babes… to the Ears of the 9th Circuit

By: Sarah C. Thompson

Kelsey Cascadia Rose Juliana v. USA, the lawsuit brought by a group of children against the federal government seeking relief from environmental harms, has survived yet another motion to dismiss. The suit was initially filed in District Court in Eugene, Oregon, and has been elevated into the Ninth Circuit Court of Appeals. On Wednesday, March 7, 2018, the Ninth Circuit refused to grant the United States’ writ of mandamus seeking a dismissal.

The plaintiffs in Juliana are seeking a court order which would require the government to protect the “Public Trust” by, among other measures, adopting a plan to reduce carbon dioxide emissions. Plaintiffs’ claims assert that energy policies enacted by the US government and its agencies have enabled the continued “subsidization of fossil fuel extraction, development, consumption, and exportation- activities producing enormous quantities of [carbon dioxide] emissions that have substantially contributed to the increase in the atmospheric concentration of [carbon dioxide].” Juliana v. United States, 217 F. Supp. 3d 1224, 1251 (D. Or. 2016), motion to certify appeal denied, No. 6:15-CV-01517-TC, 2017 WL 2483705 (D. Or. June 8, 2017). These policies, plaintiffs argue, are in violation of the Constitution’s mandate that the government must provide for the “General Welfare” of its people.

Specifically, the Ninth Circuit panel found the United States’ motion to be premature, holding that “mandamus relief was inappropriate where the district court had not issued a single discovery order, nor had the plaintiffs filed a single motion seeking to compel discovery. The panel also held that any merits errors were correctable through the ordinary course of litigation. The panel further held that there was no controlling Ninth Circuit authority on any of the theories asserted by plaintiffs, and this weighed strongly against a finding of clear error for mandamus purposes. Finally, the panel held that district court’s order denying a motion to dismiss on the pleadings did not present the possibility that the issue of first impression raised by the case would evade appellate review. The panel concluded that the issues that the defendants raised on mandamus were better addressed through the ordinary course of litigation.” In re United States of America, No. 17-71692, (9th Cir. Mar. 7, 2018).

This case is one among a number of recent “Atmospheric Trust Litigation” lawsuits, and is part of a legal movement whose proponents are attempting to hold the government responsible for reducing carbon pollution. Nature’s Trust, Wood, 2013. The decisions which have enabled Juliana to climb into federal court have, thus far, supported this proposition. Judge Aiken’s opinion in the United States District Court for the District of Oregon posited that “The sovereign’s public trust obligations prevent it from “depriving a future legislature of the natural resources necessary to provide for the well-being and survival of its citizens.” The court expanded that there exists a “natural resources trust” which operates according to basic trust principles, and imposes upon the trustee a fiduciary duty to “protect the trust property against damage or destruction.” Juliana, 217 F. Supp. 3d at 1254.

This lawsuit departs from traditional public trust suits, in that it seeks to position the federal government as trustee. There is considerable debate as to whether the state or the federal government is the holder of a duty to protect resources falling within the public trust, as well as debate as to whether the atmosphere falls within that trust. The Juliana decisions appear to suggest that such a trust duty does indeed belong to the federal government. After a lengthy discussion, wherein Justinian concepts of property, Jefferson’s Social Contract theory, and the seminal Illinois Central case are invoked, Judge Aiken states, “This action is of a different order than the typical environmental case. It alleges that defendants’ actions and inactions—whether or not they violate any specific statutory duty—have so profoundly damaged our home planet that they threaten plaintiffs’ fundamental constitutional rights to life and liberty… I can think of no reason why the public trust doctrine… would apply to the states but not to the federal government.” Juliana, 217 F. Supp. 3d at 1259.

In light of the ever evolving legal climate surrounding energy development, as well as the growing popularity of “Atmospheric Trust Litigation”, those monitoring energy and environmental litigation matters would be wise to monitor Juliana, and be mindful of the impacts such litigation has on developments in energy legislation and regulation.

Confidentiality in the Digital Age

Confidentiality in the Digital Age

By: Mark E. Best, Esq.

It seems like every day there is a new story about hackers stealing and publishing confidential personal information.  Even the largest, most tech-savvy telecommunications companies in the world have been proven vulnerable.  It’s one thing to have your name and date of birth exposed; it’s quite another to have your corporation’s trade secrets and litigation-sensitive information fall into the wrong hands.  Good thing your attorney is keeping it safe, right?  After all, “a lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.” La. State Bar Art. 16, RPC Rule 1.6(c). So what exactly are the “reasonable efforts” attorneys must make?

In the 1980s, reasonable efforts might have included placing paper documents in a folder marked “confidential” in a file cabinet in a locked office.  With the advent of electronic documents in the 1990s, it was probably reasonable to “burn” CD-ROMs stored under lock and key, or to save client documents to individual computers protected by passwords.  Nowadays, attorneys have 24/7 worldwide access to their clients’ confidential information—and hackers can invade those data streams from the privacy of their own homes. As technology advances, attorneys’ data protection efforts must keep pace. 

The American Bar Association suggests a multi-factor test to determine whether an individual lawyer or firm is keeping up.  Factors include, but are not limited to, the sensitivity of the information, the likelihood of disclosure if additional safeguards are not employed, the cost of employing additional safeguards, the difficulty of implementing the safeguards, and the extent to which the safeguards adversely affect the lawyer’s ability to represent clients.[1]

As with all of our client services, Kuchler Polk Weiner, LLC has found that the best way to ensure compliance with our information protection obligations is to “Lead the Pack” and stay ahead of the curve.  Rather than doing the bare minimum to pass muster under the ABA’s balancing test, we sought guidance from our Fortune 100 clients who are at the forefront of information security.  Several of them employ the best practices recommended by the International Organization for Standardization (ISO) and others hold ISO/IEC 27001 information security certifications.

ISO/IEC 27001 is the best-known worldwide standard for an information security management system (ISMS).  An ISMS is a systematic approach to managing sensitive company information so that it remains secure. It includes people, processes and IT systems by applying a risk management process.[2] Our firm ISMS ensures that our client data is secure and always available to our staff.  Our customized processes are regularly monitored to ensure all systems are working effectively, so modifications can be implemented to strengthen any weakness. An annual audit is performed by a certified ISO Auditor to measure and verify the effectiveness of our system.

Kuchler Polk Weiner, LLC is one of only a handful of law firms in the United States with an ISO/IEC 27001 Certification and, to our knowledge, the only one in Louisiana at this time.[3]  The certification process is time-consuming, expensive, and not required by law.  So why did we do it?  Our clients go to great lengths to protect their sensitive information.  When they hand it over to us, we want to protect it at least as well, if not better, than they do.

[1]https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6.html.

[2] https://www.iso.org/isoiec-27001-information-security.html.

[3] For complete ISO survey data, see http://isotc.iso.org/livelink/livelink?func=ll&objId=18808772&objAction=browse&viewType=1.