BOARD MEETING DATE: November 7, 2003
AGENDA NO. 33

Amend Contract with Gelfand, Rappaport & Glaser 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") has reached the point where it is necessary to procure the additional services of a business litigation specialist to assist the District's litigation team with economic issues associated with the case. Marvin Gelfand, of Gelfand, Rappaport & Glaser, has been selected for this task. This action is to appropriate an additional $200,000 from the General Fund, Undesignated Fund Balance, and to authorize the Executive Officer to amend the contract with Gelfand, Rappaport & Glaser in an amount not to exceed a total contract price of $250,000.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

1. Appropriate $200,000 from the General Fund, Undesignated Fund Balance, to the District Prosecutor's FY 2003-04 Budget, Professional and Special Services Account.
    
2. Authorize the Executive Officer to amend the contract with the law firm of Gelfand, Rappaport & Glaser to increase funding by $200,000, bringing the total contract to an amount not to exceed $250,000.

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 needs the additional assistance of a law firm with specialized experience in business litigation involving complex economic issues. Marvin Gelfand, of Gelfand, Rappaport & Glaser, is being recommended for this purpose. Mr. Gelfand has an excellent reputation for successfully resolving complex economic litigation. The selection of Mr. Gelfand's firm is acceptable to Board Chairman Burke and Board Member Carney who were designated by the Chairman to assist staff in the selection of outside counsel in this matter. The Executive Officer authorized $50,000 to the firm of Gelfand, Rappaport & Glaser so that assistance could be provided on some time-sensitive matters currently underway. Consequently, staff is requesting approval to appropriate $200,000 from the General Fund, Undesignated Fund Balance, to the District Prosecutor's FY 2003-04 Budget, Professional and Special Services account.

Proposal

Staff recommends that the Board: (1) appropriate $200,000 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 Executive Officer to amend the contract with the law firm of Gelfand, Rappaport & Glaser to increase funding by $200,000, bringing the total contract to an amount not to exceed $250,000.

Sole Source Justification

Gelfand, Rappaport & Glaser 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.

Gelfand, Rappaport & Glaser's expertise in business litigation is needed to develop and effectively prosecute a number of complex economic issues in People vs. BP West Coast Products, et al. These issues include matters requiring an understanding of the determination of lost profits attributable to defective wind turbines. Not only was an understanding of the complex mechanical technology required, proper analysis of the lost profits demanded working knowledge of capitalization methods and consequences, the cost of expected downtime, and the fixed and variable operational expenses associated with it. The firm has also handled matters seeking damages to a major toy manufacturer suffered as a result of lost operating capital, including lost profits attributable to delayed entry in a specific market segment. As a final example, the firm defended a claim for damages to a quasi-governmental agency for failure to deliver a custom investment and debt management software program that managed billions of dollars, including derivatives and other exotic financial instruments. Lastly, the firm does not have any conflicts relative to other clients.

This firm has an excellent reputation for successfully litigating economic disputes. Their expertise will ensure that the economic aspects of the BP case will be effectively addressed. Lastly, the firm does not have any conflicts relative to other clients.

Resource Impacts

The sum of $200,000 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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