BOARD MEETING DATE: September 3, 2004
AGENDA NO. 10

Appropriate Funds from the Designation for Litigation & Enforcement to District Counsel’s FY 2004-05 Budget and Amend Contracts to Expend These Funds

SYNOPSIS:

AQMD is currently involved in major litigation challenging the architectural coatings rules (two cases), the refinery FCCU Rule 1105.1, a CEQA decision on a permit (two cases), and the fleet rules (remanded to federal District Court). This action is to appropriate $350,000 from the Designation for Litigation & Enforcement to District Counsel’s FY 2004-05 Budget, Professional & Special Services Account to carry out this litigation and to amend existing contracts to expend these funds.

COMMITTEE:

Administrative, August 13, 2004. Less than a quorum was present for the discussion of this item; those Committee members who were present communicated their concurrence.

RECOMMENDED ACTIONS:

1. Appropriate $350,000 from the Designation for Litigation & Enforcement to District Counsel’s FY 2004-05 Budget, Professional and Special Services Account.
    
2. Authorize the Executive Officer to amend the existing contract with Shute, Mihaly & Weinberger for up to an additional $200,000 and the existing contract with Woodruff, Spradlin & Smart for up to an additional $100,000, with the remaining $50,000 to be allocated to either firm or additional firms selected through AQMD’s approved administrative processes.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The District is currently involved in six major cases in which outside counsel is assisting defense efforts. These cases include: the challenge to the fleet rules, remanded to District Court for determination of whether the rules could be upheld as applied to state and local government entities; the challenge to the 2002 amendments to the architectural coatings rule; the challenge to the 2003 amendments to the architectural coatings rule; the challenge to refinery Rule 1105.1; and two lawsuits challenging the CEQA document for the ConocoPhillips Ultra Low Sulfur Diesel project. In addition, outside counsel is actively involved in preparing legal arguments concerning the fleet rules, and in advising staff regarding potential legal issues arising out of proposed RECLAIM amendments.

Therefore, it is necessary to appropriate additional funds to defend existing litigation. In this year’s Budget, the Board set aside a $1 million Designation for Litigation & Enforcement. This Designation provides funding for outside legal support. Due to the heavy existing caseload, it is necessary to appropriate additional funds at this time.

While it is difficult to predict how much funding will be required to defend litigation, staff anticipates at least an additional $350,000 will be required in this budget year. The funds will be divided between the two firms on AQMD’s list of prequalified firms approved by the Board in October 2002, plus a contingency amount available to either firm. Staff proposes allocating $200,000 for the four cases, including the fleet rules, architectural coatings, and Rule 1105.1, being handled by Shute, Mihaly & Weinberger. This firm has successfully defended AQMD in numerous cases in the past. Staff proposes allocating $100,000 for the two new CEQA cases being handled by Woodruff, Spradlin & Smart. The attorney handling these cases is a specialist in CEQA law and also has experience with air quality issues. Staff proposes allocating an additional $50,000 to be allocated to either firm as needed or additional firms selected through AQMD’s approved administrative processes.

Proposal

Staff proposes to appropriate $350,000 from the Designation for Litigation & Enforcement to District Counsel’s FY 2004-05 Budget, Professional & Special Services Account, and authorizing the Executive Officer to amend contracts with Shute, Mihaly & Weinberger by $200,000, and with Woodruff, Spradlin & Smart by $100,000, with the remaining $50,000 to be available to either firm or another firm selected through the District’s approved administrative processes.

Resource Impacts

Sufficient funds are available from the Designation for Litigation & Enforcement to make this appropriation.

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