BOARD MEETING DATE: June 9, 2006
AGENDA NO. 5

Establish Four-Month Budget for Jones Day LLC for Attorneys' Fees and Costs for Railroad Litigation and Appropriate Funds from Designation for Litigation and Enforcement and Authorize Contracts to Expend Such Funds

SYNOPSIS:

This item is to 1) establish a budget for the next four months of the Railroad Litigation for the law firm of Jones Day LLC for attorneys' fees and costs; 2) to appropriate funds from the Designation for Litigation and Enforcement in the amount of $872,000; and 3) authorize the Executive Officer to amend existing contracts with Jones Day LLC or enter into contracts with equally qualified firms to expend such funds to assist AQMD in defending the railroad rules.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

1. Establish a budget for the next four months of the Railroad Litigation for the law firm of Jones Day LLC for attorneys' fees and costs for the period from June 15, 2006 to September 15, 2006.
2. Appropriate $200,000 from the Designation for Litigation and Enforcement to the District Counsel’s FY 2005-06 Budget, Professional and Special Services account, to cover payments from June 15, 2006 to June 30, 2006.
3. Appropriate $672,000 from the Designation for Litigation and Enforcement to the District Counsel’s FY 2006-07 Budget, Professional and Special Services account, to cover payments from July 1, 2006 to September 15, 2006.
4. Authorize the Executive Officer to amend existing contracts with Jones Day or enter into contracts with equally qualified firms as determined in consultation with the Board Chairman and Vice Chairman to expend these funds and to execute contracts or amend contracts in the future with specialized legal firms and expert witness services with monies to be appropriated as the need arises.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In the FY 2005-06 Budget, the Board created a $2 Million Designation for Litigation and Enforcement designed to cover outside counsel expenses for this fiscal year.  In the FY 2005-06 Budget, the District Counsel’s Office was allocated $250,000 for Professional and Special Services for outside counsel/litigation expenses.  The railroad litigation will require additional assistance beyond that currently available to AQMD.  The railroad litigation will place a heavy emphasis on development of facts during trial preparation and at trial.  The railroads have hired two large, well-known firms to represent them in the litigation.  To keep up with the litigation, the AQMD has contracted the assistance of Jones Day, a firm with significant resources and special expertise in trial and trial preparation work.  Also, the AQMD will need to work with various experts to ensure the best possible defense.

Proposal

In order to defend this litigation, it is necessary to appropriate additional funds for expenditure by outside counsel for the time period from June 15 to September 15, 2006.  The railroad case will require $822,000 be appropriated to Jones Day to handle this phase of the lawsuit.  In addition, up to $50,000 will be required for other specialized firms and/or expert witness and court reporting services.  District Counsel will continue to provide monthly reports on the litigation at closed session, including expenditures to date.  These funds are essential to adequately defend the AQMD’s interests in this major lawsuit.

Sole Source Justification

AQMD's Procurement Policy, Section VIII B2, provides for a waiver of formal bid processes under certain circumstances based upon documentation justifying a sole-source award.  The award to Jones Day is justified pursuant to Procurement Policy Section VIII B2(d), other circumstances exist justifying a sole-source award, subdivision (4), level-of-effort expert consultation services, in view of the need for immediate significant work involving special expertise in major and complex litigation.  The firm's blended hourly rate is commensurate with the level of expertise and consistent with past Board-approved expenditures.

Resource Impacts

Sufficient funds are available in the Designation for Litigation and Enforcement.