BOARD MEETING DATE: April 1, 2005
AGENDA NO. 31

Amend Contract and Appropriate Funds from General Fund, Undesignated Fund Balance, to District Prosecutor’s FY 2004-05 Budget and Establish BP ARCO Settlement Projects Fund.

SYNOPSIS:

The Prosecution of the District's enforcement case against BP West Coast Products, et al., is completed. Pursuant to the Governing Board's understanding, payment needs to be finalized for additional work associated with the final phase of the prosecution performed by O'Donnell & Shaeffer. This action is to amend the contract with O'Donnell and Shaeffer and appropriate $559,936 from the General Fund, Undesignated Fund Balance to District Prosecutor's FY 2004-05 Budget.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

1. Appropriate $559,936 from the General Fund, Undesignated Fund Balance, to the District Prosecutor’s FY 2004-05 Budget, Professional and Special Services.
    
2. Amend the contract with the law firm of O’Donnell and Shaeffer to increase funding by $559,936 bringing the total expenditures on this contract to $3,734,319.
    
3. Establish the BP ARCO Settlement Projects Fund.
    
4. Transfer $25 million, upon receipt of settlement, from the Agency Fund to the BP ARCO Settlement Projects Fund.
    
5. Recognize $6,012,360 revenue, upon receipt of settlement, in the General Fund for reimbursement of litigation costs in the BP case.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On March 15, 2005, the District settled its enforcement case against BP West Coast Products, et al., for $81 million. The settlement obligates BP to spend $30 million on public benefit programs in $3 million increments over ten years, and $20 million on emission reduction projects at the Carson refinery not otherwise required by law. Additionally, BP is obligated to pay $31,012,360 to AQMD as follows: $25 million in civil penalties and $6,012,360 in back emission fees.

There is a balance due in the amount of $559,936 for work performed by O’Donnell and Shaeffer in the final phase of the District’s enforcement case against BP West Coast Products, et al.

Proposal

Staff recommends that the Board appropriate $559,936 from the General Fund, Undesignated Fund Balance, to the District Prosecutor’s FY 2004-05 Budget, Professional and Special Services Account and authorize the Governing Board Chairman to amend the contract with the law firm of O’Donnell and Schaeffer to increase funding by $559,936, bringing the total expenditures on this contract to $3,734,319. Additionally, staff recommends that the Board establish the BP ARCO Settlement Projects Fund, transfer $25 million from the Agency Fund to the BP ARCO Settlement Projects Fund, and recognize $6,012,360 revenue in the General Fund to reimburse that fund for all outside litigation costs associated with the case.

Resource Impacts

The sum of $559,936 will be appropriated from the General Fund, Undesignated Fund Balance to the District Prosecutor’s FY 2004-05 Budget as set forth in the above proposal.

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