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PROPOSAL:

Amend Litigation Services Contract with Shute, Mihaly & Weinberger to Increase Contract Amount by $150,000 and Authorize Appropriation of $90,000 from the Undesignated Fund Balance

SYNOPSIS:

In October 1996, the Board approved three-year contracts for three law firms, including Shute, Mihaly & Weinberger, to handle future litigation involving CEQA and air quality issues. The total authorized amount of $360,000 has been expended before completion of the contract because of unanticipated litigation involving the 1994 SIP and the lawsuits against EPA for failing to act on the 1997 plan and failing to implement federal measures. Additional litigation against EPA may be necessary to challenge the proposed disapproval of the 1997 plan. It is requested that the Board authorize an additional $150,000 to fund the contract to completion in October 1999. Since this exceeds the current budget for litigation services, it is further requested that the Board authorize an appropriation of $90,000 from the Undesignated Fund Balance.

COMMITTEE:

Administrative, January 22, 1999, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Executive Officer to amend an existing contract for litigation services with Shute, Mihaly & Weinberger by increasing the contract amount by $150,000 and approve the appropriation of $90,000 of that amount from the Undesignated Fund Balance.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The AQMD has an existing contract with the law firm of Shute, Mihaly & Weinberger to provide specialized legal services. The firm provides, and this contract has involved, legal services in the areas of CEQA and air pollution litigation. Currently, the firm is representing the AQMD in seven separate litigation matters: a lawsuit in federal District Court over the 1994 SIP; a proposed cross claim by the AQMD against EPA for failing to implement the plan's federal measures; a lawsuit to compel EPA to act on the 1997 SIP and 51 overdue rule actions; a potential lawsuit against EPA in the federal Circuit Court of Appeals against EPA for pending disapproval of the 1997 plan; two lawsuits involving challenges to the architectural coatings Rule 1113 amendments and the 1997 AQMP coatings measures adopted in November of 1996; and a lawsuit involving an environmental group's challenge to CARB's approval of the RECLAIM program.

In October 1996, the Board authorized a three-year contract for legal services on matters involving CEQA and air quality law. The contract authorized the Executive Officer to make annual expenditures up to $120,000 on approval of the Board Chairman, for a three-year total of no more than $360,000. In addition, staff recently issued a small RFP for up to $10,000 a year for general tort liability legal work, which will be carried out under the Executive Officer’s authority. The AQMD will spend all amounts authorized under the environmental contract prior to its termination because of the scope of litigation, including unanticipated litigation involving the 1994 SIP and the lawsuits against EPA for failing to act on the 1997 plan and failing to implement federal measures. The actions against EPA have required significant unanticipated expenditures and will continue to do so. This has occurred despite District Counsel's efforts to reduce costs, which have included handling all aspects of the litigation in-house when possible, and relying on outside counsel principally for assistance with briefing. It is expected that expenses on these matters, and the other matters handled by Shute, Mihaly & Weinberger, will require an additional $150,000 before the contract is completed in September 1999.

Additionally, it will be necessary for the Board to approve an appropriation of $90,000 from the Undesignated Fund Balance to pay the amounts that are now expected to be due to Shute, Mihaly & Weinberger. Payments to Shute, Mihaly & Weinberger are made from the District Counsel budget from accounts for specialized legal services and litigation services including expenses for depositions. The budgeted amount available from these accounts, which totals $150,000, has been largely exhausted. It is requested that the Board approve an appropriation from the Undesignated Fund Balance to fund the shortfall until budgeted monies from the FY 1999-2000 contract become available in June of 1999. It is estimated that $90,000 is required from the Undesignated Fund Balance to pay the Shute, Mihaly & Weinberger contract until June of 1999.

Proposal

It is therefore recommended that the Board authorize an additional $150,000 to be applied to the existing contract of Shute, Mihaly & Weinberger, to bring the total amount of the contract to $510,000 over three years, and of that amount, the Board authorize the appropriation of $90,000 from the Undesignated Fund Balance.

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