BOARD MEETING DATE: May 4, 2007
AGENDA NO. 6

PROPOSAL:

Appropriate Funds for Litigation Defense and Authorize Contracts to Expend Such Funds

SYNOPSIS:

The District is currently involved in several major lawsuits employing outside counsel. These include the Fleet Rules, the challenges to the most recent amendments to the architectural coatings rule, the ConocoPhillips ultra-low sulfur diesel project, a PUC proceeding regarding long-term supplies of natural gas, and AQMD’s permitting of a power plant in Riverside. This action is to appropriate $250,000 from the BP/ARCO Settlement Fund to the District Counsel FY 2006-2007 budget, Professional and Special Services account, and to authorize the Executive Officer to amend existing contracts with Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart

COMMITTEE:

Administrative, April 13, 2007, Recommended for Approval

RECOMMENDED ACTION:

1. Appropriate $250,000 from the BP/ARCO Settlement Fund to the District Counsel’s FY 2006-07 budget, Professional and Special Services account.
2. Authorize the Executive Officer to amend existing contracts with Shute, Mihaly & Weinberger and with Woodruff, Spradlin & Smart or other equally-qualified outside counsel as the need arises.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The AQMD has existing contracts with the law firms of Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart to provide legal services in the areas of the California Environmental Quality Act, AQMD rulemaking and planning procedures, issues relating to statute and rule interpretation, air quality laws, administrative law, representation of government agencies, constitutional issues, the Brown Act, and complex environmental litigation. Currently, the firms are representing the AQMD in litigation matters including the Fleet Rules litigation, a challenge to the aggregate mining rule, and a PUC proceeding regarding long-term supplies of natural gas. In addition, Woodruff Spradlin & Smart is advising District Counsel on specialized legal issues regarding a lawsuit with CBE and CURE.

In October of 2005 the Board authorized three-year contracts for Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart. The contracts authorized the Executive Officer to make annual expenditures up to $225,000 on approval of the Board Chairman, for a three-year total of up to $675,000. Funds for FY 2006-2007 have been depleted because of unanticipated costs involving the litigation brought by the Fleet Rules lawsuit, CBE and CURE lawsuits, as well as the lawsuit against the California Public Utilities Commission. This has occurred despite District Counsel's best efforts to reduce costs. It is expected that expenses on these matters, and the other matters handled by Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart, will require an additional amount up to $250,000 before additional authorized funding is available in July of 2007.

Also, it will be necessary for the Board to appropriate $250,000 from the BP/ARCO Settlement Fund to make the requested increases. As noted above, the budgeted amount available from District Counsel’s Professional and Special Services accounts, which totals $225,000 for FY 2006-2007, has been exhausted. It is requested that the Board approve the appropriation of $250,000 from the BP/ARCO Settlement Fund to fund the shortfall until budgeted monies from the FY 2007-2008 budget become available in July of 2007.

Proposal

It is therefore recommended that the Board authorize an additional amount up to $250,000 for the existing contracts with Shute, Mihaly & Weinberger and Woodruff, Spradlin & Smart, to bring the total amount of the contracts to $725,000 for FY 2006-2007. It is further recommended that the Board amend the FY 2006-2007 budget by appropriating $250,000 from the BP/ARCO Settlement Fund to the District Counsel’s FY 2006-2007 Professional and Special Services account.

Resource Impacts

Sufficient funds are available in the BP/ARCO Settlement Fund.