BOARD MEETING DATE: July 9, 2010
AGENDA NO. 17

PROPOSAL:

Appropriate Funds and Authorize Amending of Existing Contract with Special Outside Counsel to Assist with Litigation Regarding SB 827 and AB 1318 and Internal Bank

SYNOPSIS:

This item is to consider appropriating funds from the Undesignated Fund Balance and amending the existing contract with outside counsel to assist in defending the agency in litigation relating to operation of the internal bank, including readoption of Rule 1315 and implementation of SB 827 (Wright) and AB 1318 (Perez). Additional funding is necessary to complete two pending projects – completion of the CEQA document for readoption of Rule 1315 and ongoing state and federal lawsuits.

COMMITTEE:

Administrative, June 11, 2010. Less than a quorum was available for this item; the Committee members present expressed their concurrence that his item be forwarded to the Governing Board for approval.

RECOMMENDED ACTIONS:

1. Transfer $800,000 from Designation for Litigation and Enforcement to the Legal Office FY 2010-11 Budget, Services and Supplies Major Object, Professional and Special Services Account to be used for litigation related to the internal credit bank.
   
   
2. Authorize the Chairman to amend the existing contract to add up to $800,000 with the law firm of Bingham McCutchen for a total contract value of $2.3 million to provide legal services in connection with litigation regarding operation of the District’s internal credit bank.

 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Certain environmental groups have sued the AQMD and petitioned USEPA to set aside the operation of its internal bank of offset credits. To address the effects of this litigation, the Legislature adopted SB 827 (Wright). Plaintiffs have sued the AQMD challenging implementation of SB 827 as well as AB 1318, a bill that requires the AQMD to transfer offsets from its internal bank to the Sentinel Power Plant project in the Coachella Valley. To address the credit moratorium, AQMD intends to complete a revised CEQA document and readopt Rule 1315 at the earliest possible date. Regarding the litigation, the District has a motion for judgment scheduled to be heard on June 11, 2010. The need for additional funding, above and beyond the amounts requested here, will depend on the court’s ruling and on petitioners’ response, as well as their response to the completed CEQA document. If necessary, an additional request for funding will be made at that time. 

Proposal

Staff is proposing that the Board authorize the transfer of $800,000 from the Designation for Litigation and Enforcement to pay for the continuing litigation and for the outside legal review of the CEQA document. The Board appropriated $500,000 in October 2009 and $1 million in February 2010 for legal fees for legal work related to defending challenges to operation of the internal bank.

Fiscal Impacts

The total cost of this contract shall not exceed $2.3 million. Sufficient funds will be available in Legal’s FY 2010-11 Budget following the transfer of funds from the Designation for Litigation and Enforcement.