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88 Page 49 Cease and Desist Order: Several permit violations and a Cease and Desist Order have been issued by the LEA to the Company for operating without having all its permits in conformance with CIWMB requirements. This non-conformance has been the result of the longtime that the City of Los Angeles Planning Department has taken to complete the company's permit process (apparently to determine the type of CEQA required and then to review the CEQA process). In 2002 the CIWMB passed regulations requiring that the "open operations" (those not under cover) must have a special permit and Community applied for the permit in 2002. The LEA required Community to apply to the City of Los Angeles Planning Department, for a CEQA review. The Planning Department, due to staffing issues, was unable to act on the application in a timely manner. The Planning Department did respond in 2006 that an EIR would be required for the facility permit. The EIR is in process. The LEA usually conducts routine inspections of the entire facility twice per month. The inspectors complete a standard form which includes a question about whether or not the facility has a permit for the operations being observed. Since the organics and C&D activities are currently regulated by an lOA and not a permit,. every LEA inspection results in a Notice of Violation (NOV) which recognizes the fact that the permit process has not been completed. In 2007 there were 26 NOVs issued. In the first half of 2008 there have been 11 NOVs for the same issue and NOVs will continue until the final permit is completed which is expected to be in early 2009. (Contact information for each regulator agency with permit oversight: Community MRF/TS- David Thompson (213) 978-0868; Community GW/C&D-David Thompson (213) 978- 0868; Compost Facility- Bill O'Rullian (661) 862-8731). Status of the Memorandum of Understanding with Local 350 The Facilities Operations RFP advised proposers to become familiar with the current Collective Bargaining Agreement (CBA) and to include all costs associated with the continuation of the current CBA in their proposals. Under the current CBA, the MRF material sorters are not included in the bargaining unit and Allied Waste currently hires temporary labor to perform this function in the MRF. The cost proposals that were received from each of the seven original proposers did not include the higher labor costs that would be incurred by altering the current CBA to add MRF sorters. The Teamsters (Local 350) have expressed their intent to change the structure of the current CBA and to include MRF sorters in a new labor contract (to be negotiated in 2009). To advance this goal, the Teamsters prepared a Memorandum of Understanding (MOU) which states that the new Facilities Operations contractor will treat the MRF sorters as union employees (see copy of MOU in Appendix D). By signing the MOU, proposers are committing to a material change in the current CBA in advance of being selected as the facility operator. If enacted, the increased operating costs resulting from the change will significantly increase the cost of SBWMA MRF operations (up to $1 M per year). HBC has signed the MOU as presented by the Teamsters and SBR has not signed the MOU. In discussions with SBR and the Union, SBR has sited their concern about committing to additional costs without reassurance from the SBWMA that this cost will be reimbursed as an acceptable change to their cost of operations. The SBWMA issued a letter to proposers which provide clarification on this point of reimbursements that result from a change in the CBA (see Appendix C). Considering that the CBA is scheduled to be renegotiated in 2009, SBR has stated that they will honor whatever agreement is in force at the commencement of the new facility operations agreement in 2011. SBWMA - EC Report Page 25 1/15/2009