THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, August 2, 1994 TAG: 9408020328
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 79 lines
Legal bills for the Lake Gaston water pipeline are now averaging more than $1 million a year. Over the past decade, the city has paid lawyers $6.5 million - $2 million more than estimated as necessary just two years ago.
The city has busted its long-term legal budget so frequently that project manager Thomas M. Leahy III says officials have stopped trying to put a number on it.
``There is just no way to project what legal fees will or will not be,'' Leahy said. ``That would mean you know whether you will win a case, or will appeal. Legal fees are just a necessary part of life.''
The money has principally gone to fight North Carolina, which wants to stop the city from tapping into the lake that straddles the North Carolina border. The latest battle involves securing permission from the Federal Energy Regulatory Commission, which is insisting on a comprehensive environmental review.
The bills, at times up to $200 an hour, go for everything from answering phone calls to appearing before federal officials in Washington. Most of the money has gone to Mays & Valentine, a politically well-connected firm in Richmond that has handled pipeline work for years.
Of the $6.5 million in bills, about $3 million has come in the past 2 1/2 years. The city of Chesapeake has paid about one-sixth of it. The neighboring city, which is also water thirsty, is sharing in the cost of the project.
Meanwhile, total estimated project cost has steadily dropped, something unusual for a large public project. Total estimated cost is now $142 million, down from $219 million three years ago. About $30 million came off when the city dropped a final eight-mile segment of the pipeline. The rest
is mostly because inflation has been less than anticipated when the city set the $219 million figure in 1987.
Leahy said taxpayers should not expect a rate reduction anytime soon, despite the lower costs. Any consideration of that would probably wait until after the project is built.
The city raised water rates and connection fees five years ago to pay for the pipeline. That money goes into a restricted bank account that now totals more than $60 million.
There's no telling when the legal bills will stop. Leahy says that litigation frequently totals 5 percent of the budgets on major public construction projects - a figure almost reached now by the Lake Gaston project.
Leahy insisted any alternative to the Lake Gaston project, such as tapping into another water source, would prompt their own big legal bills.
National experts say enormous legal bills for public projects are increasingly common. Paul Kamenar of the Washington Legal Foundation noted that Florida recently spent more than $5 million in 2 1/2 years fighting the federal government over enforcement of environmental laws governing the Everglades.
``As a general matter anything dealing with environmental law is extremely complex, with involved multiple layers of litigation,'' Kamenar said.
``It can certainly run up the tab very quickly. It suggests these regulations and permitting processes need to be streamlined.'' ILLUSTRATION: Graphic
EXPENSES
Legal expenses over past 11 months
August 1993 - $33,000
September - $57,000
October - $95,000
November - $57,000
December - $209,000
January - $100,000
February - $290,000
March - $28,000
April - $130,000
May - $213,000
June 1994 - $43,000
Total $1,255,000
by CNB