BOARD MEETING DATE: November 7, 2003
AGENDA NO. 32

Amend Contract with O'Donnell and Shaeffer and Appropriate Funds from General Fund, Undesignated Fund Balance, to District Prosecutor's FY 2003-04 Budget

SYNOPSIS:

The prosecution of the District's enforcement case against BP West Coast Products, et al. ("BP ARCO") is proceeding. It is appropriate at this point in the litigation to appropriate additional funds sufficient to cover anticipated fees and expenses associated with all phases of the prosecution. This action is to appropriate an additional $2,882,383 from the General Fund, Undesignated Fund Balance, and to authorize the Governing Board Chairman to amend the contract with O'Donnell and Shaeffer in an amount not to exceed a total contract price of $3,174,383.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

1. Appropriate $2,882,383 from the General Fund, Undesignated Fund Balance, to the District Prosecutor's FY 2003-04 Budget, Professional and Special Services Account.
    
2. Authorize the Governing Board Chairman to amend the contract with the law firm of O'Donnell and Shaeffer to increase funding by $2,882,383, bringing the total contract to an amount not to exceed $3,174,383.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On March 11, 2003, staff filed a complaint for civil penalties in the amount of $319 million against BP West Coast Products, the successor in interest to Atlantic Richfield Company, for tank self-inspection, public nuisance, permit condition, and flare monitoring violations at its Carson refinery. The complaint was later amended to include additional public nuisance violations, raising the civil penalty demand to $413 million.

The matter has not settled and a trial date in the fall of 2004 is anticipated. The case is presently in the discovery and law and motion phase. Discovery will entail the review of thousands of documents, responses to written discovery questions, and the deposition of a large number of witnesses. In addition, critical motions are pending and more are anticipated. The trial of this matter will potentially be lengthy and complex.

In order to effectively present the District's enforcement action, staff recommended, and the Board approved on October 3, 2003, the contracting of services from Pierce O'Donnell, of O'Donnell and Shaeffer. The Executive Office initially authorized $50,000 to the firm of O'Donnell and Shaeffer so that assistance could be provided on some time-sensitive matters then underway. Staff subsequently came back to the Board with an additional request in the amount of $200,000, but even with this additional amount it was necessary for the Executive Officer to authorize an additional $42,000 to the firm of O'Donnell and Shaeffer so that critical tasks could continue to be performed. Accordingly, the pace of the litigation has reached a point where funds sufficient to cover all anticipated fees and expenses associated with all phases of the prosecution should be appropriated and budgeted. Consequently, staff is requesting approval to appropriate $2,882,383 from the General Fund, Undesignated Fund Balance, to the District Prosecutor's FY 2003-04 Budget, Professional and Special Services account for anticipated work in this litigation.

Proposal

Staff recommends that the Board: (1) appropriate $2,882,383 from the General Fund, Undesignated Fund Balance, to the District Prosecutor’s FY 2003-04 Budget, Professional and Special Services Account; and (2) authorize the Governing Board Chairman to amend the contract with the law firm of O’Donnell and Shaeffer to increase funding by $2,882,383, bring the total contract to an amount not to exceed $3,174,383. A monthly status report on expenditures will be provided to the Governing Board from the District Prosecutor’s Office.

Sole Source Justification

O'Donnell and Shaeffer qualify as a sole source for this project under Section VIII(B)(2)(C)(1) of the SCAQMD Procurement Policy and Procedures, "Desired services are available from only the sole-source based upon one or more of the following reasons: (1) The unique experience and capabilities of the proposed contractor or contractor team."

O'Donnell and Shaeffer may be considered as holding a unique position among environmental litigation firms. Their firm has extensive experience not only in air quality legal matters, including emissions fate and transport, dose-response, industrial practices, risk assessment, and regulatory compliance, but they combine this environmental experience with virtually unparalleled trial experience, particularly that of Pierce O'Donnell. Mr. O'Donnell was recently named one of the "100 Most Influential Lawyers in America" by the National Law Journal. An elected Fellow of the International Academy of Trial Lawyers and American Board of Trial Advocates, he has handled numerous trials and appeals in various courts throughout the country. He was lead counsel for Firestone in the landmark case of Potter v. Firestone Tire & Rubber Co., 6Cal. 4^th 965 (1993). He also served as lead trial counsel for Pfizer Inc., successfully defending 375 anxiety/emotional distress cases involving allegedly defective heart valves. Most recently, he successfully defended Lockheed Martin Corporation against over 3,000 toxic tort claims relating to water contamination. In addition, the firm of O'Donnell and Shaeffer has extensive experience pursuing recovery for companies and clients in numerous actions premised upon alleged toxic exposures, including airborne toxins. They also have extensive experience in complex litigation, including matters with the potential for significant damages or civil penalties. Lastly, the firm does not have any other client conflicts.

Resource Impacts

The sum of $2,882,383 will be appropriated from the General Fund, Undesignated Fund Balance to the District Prosecutor’s FY 2003-04 Budget, Professional and Special Services account.

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