BOARD MEETING DATE: December 3, 2004
AGENDA NO. 13

Appropriate Funds from Designation for Litigation and Enforcement and Authorize Amending Existing Contracts to Expend Such Funds

SYNOPSIS:

The District is currently involved in six major lawsuits using outside counsel assistance. These include the Fleet Rules, the two challenges to the most recent amendments to the architectural coatings rule, the challenge to the refinery ESP rule, and two CEQA challenges to the ConocoPhillips negative declaration. Funds have been depleted much faster than anticipated due to the complexity of these cases. This action is to appropriate $350,000 from the Designation for Litigation and Enforcement to the District Counsel budget, Professional and Special Services account, and to authorize the Executive Officer to amend existing contracts with Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart to expend these funds.

COMMITTEE:

Administrative, November 12, 2004, Recommended for Approval

RECOMMENDED ACTION:

1. Appropriate $350,000 from the Designation for Litigation and Enforcement to the District Counsel’s FY 2004-05 Budget, Professional and Special Services account.
    
2. Authorize the Executive Officer to amend existing contracts with Shute, Mihaly & Weinberger by and additional $200,000 and with Woodruff, Spradlin & Smart by an additional $100,000 with the remaining $50,000 to be appropriated to either firm as the need arises.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In the FY 2004-05 Budget, the Board created a $1 million Designation for Litigation and Enforcement designed to cover outside counsel expenses for this fiscal year. At the September 2004 Board meeting, $350,000 of these funds was appropriated to the District Counsel’s budget for outside counsel expenses. These funds have been expended much faster than anticipated due to the complexity of these cases. For example, in the CEQA cases there has been a motion for preliminary injunction, a motion for stay, a demurrer to the first amended complaint, motions to strike, as well as the main hearing on the case. In the fleet rules case, the AQMD decided to file a motion for a stay as well as responding to plaintiff’s motion for summary judgment. The brief on the merits of this case will be lengthy and complex. Counsel also assisted substantially in preparing AQMD’s comments on CARB’s public notice seeking comment on whether to submit the fleet rules to U.S. EPA for a waiver of preemption. Funds will also be needed for the appeals on the architectural coatings case and the refinery ESP rule case, regardless of who wins the case in the trial court.

Proposal

In order to defend this litigation, it is necessary to appropriate additional funds for expenditure by outside counsel. The CEQA cases will require at least an additional $100,000 to be appropriated to Woodruff, Spradlin & Smart. The fleet rules case and waiver, as well as the appeals on the architectural coatings and refinery ESP rule cases, will require at least an additional $200,000 to be appropriated to Shute, Mihaly & Weinberger. Staff recommends an additional $50,000 to be appropriated to either firm as the need arises. These funds are essential to adequately defend the AQMD’s interests in these major litigation items.

Resource Impacts

Sufficient funds ($650,000) are available in the Designation for Litigation and Enforcement. In addition, the Undesignated Fund Balance is approximately $23 million.

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