BOARD MEETING DATE: March 22, 2006
AGENDA NO. 2

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

SYNOPSIS:

This item is to fund a contract in the amount of $550,000 with the law firm of Jones Day to assist in defending the railroad rules.  The District is currently involved in a major lawsuit regarding the railroad rules requiring the assistance of outside counsel, particularly with discovery and trial preparation.  The railroads have hired two large, well-known firms to represent them in the litigation.  The District requires assistance of a firm with special expertise and significant resources to devote to the trial and trial preparation work.  This action is to appropriate $700,000 from the Designation for Litigation and Enforcement to the District Counsel budget, Professional and Special Services account, and to authorize the Executive Officer to execute a contract in the amount of $550,000 with Jones Day to expend these funds.

COMMITTEE:

Not applicable

RECOMMENDED ACTION:

1. Appropriate $700,000 from the Designation for Litigation and Enforcement to the District Counsel’s FY 2005-06 Budget, Professional and Special Services account.
2. Authorize the Executive Officer to execute a contract with Jones Day or an equally qualified firm as determined in consultation with the Board Chairman and Vice Chairman in the amount of $550,000 and to execute contracts or amend contracts in the future with specialized legal firms and expert witness services with $150,000 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 will require 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.  The railroad case will require that at least $550,000 to be appropriated to Jones Day to handle the initial phase of the lawsuit.  Staff recommends an additional $150,000 be appropriated to execute and/or amend contracts in the future with Jones Day or other specialized firms and/or expert witness services as the need arises.  District Counsel will 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 these major litigation cases.

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.