BOARD MEETING DATE: December 5, 2003
AGENDA NO. 32

Appropriate Funds from Undesignated Fund Balance to District Counsel’s FY 2003-04 Budget and Amend or Execute Contracts to Expend These Funds

SYNOPSIS:

AQMD is currently involved in litigation before the United States Supreme Court challenging AQMD’s fleet rules. There is also major litigation pending challenging AQMD’s administration of the RECLAIM rules, and litigation is anticipated over year 2003 rulemakings. This action is to appropriate $300,000 from the Undesignated Fund Balance to District Counsel’s FY 2003-04 Budget, Professional and Special Services Account to carry out this litigation and to execute contracts or amend existing contracts to expend these funds.

COMMITTEE:

Not applicable.

RECOMMENDED ACTIONS:

1. Appropriate $300,000 from the Undesignated Fund Balance to District Counsel’s FY 2003-04 Budget, Professional and Special Services Account.
    
2. Authorize the Executive Officer to amend the contract with Shute, Mihaly & Weinberger for an additional $150,000.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The District is currently involved in litigation in the United States Supreme Court challenging AQMD’s groundbreaking fleet rules. Expenditures for this litigation have exceeded estimates and we now believe approximately an additional $100,000 will be needed to conclude this litigation. This will bring the total expenditures for the Supreme Court phase of this litigation to approximately $460,000, including the firms of Wilmer, Cutler & Pickering in Washington, D.C., as well as Shute, Mihaly & Weinberger. Our Washington firm includes Supreme Court advocate Seth P. Waxman, former Solicitor General of the United States, who has recently been described as the dominant force in Supreme Court litigation. He will be handling the oral argument in the Supreme Court.

District Counsel budgeted funds have been depleted substantially. Therefore, it is necessary to appropriate additional funds to defending existing and anticipated litigation. Existing litigation includes a challenge to AQMD’s December 2002 re-adoption of the May 1999 architectural coatings amendments. In addition, Communities for a Better Environment has initiated federal court litigation challenging AQMD’s administration of the RECLAIM program. There may be additional litigation resulting from recent rulemakings or permit actions. While it is difficult to predict how much funds will be required to defend litigation that has just been initiated or is anticipated, staff expects an additional $200,000 will be needed in this budget year.

It is expected that much of this funding will be allocated to Shute, Mihaly & Weinberger ($150,000), which has successfully represented AQMD in numerous lawsuits and is included in AQMD’s list of pre-qualified firms approved by the Board in October 2002. However, the remainder of the funds may be allocated to additional firms on this list or otherwise selected through AQMD’s approved administrative processes.

Proposal

Staff proposes to appropriate $300,000 from the Undesignated Fund Balance to the District Counsel’s FY 2003-04 Budget, Professional & Special Services Account. In addition, staff proposes to authorize the Executive Officer to execute new contracts or amend existing contracts with law firms from AQMD’s pre-qualified list, or selected through AQMD’s approved administrative processes.

Resource Impacts

AQMD’s Undesignated Fund Balance includes sufficient monies to expend the $300,000. Expending this amount from the fund balance will not reduce funds below what is necessary to maintain a prudent reserve.

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