MINUTES OF THE METRO COUNCIL REGIONAL ENVIRONMENTAL MANAGEMENT COMMITTEE MEETING

Tuesday, May 5, 1998

Council Chamber

Chair Morissette called the meeting to order at 11:05 AM.

0.  RESOLUTION NO. 98-2634, FOR THE PURPOSE OF APPROVING THE YEAR 9 ANNUAL WASTE REDUCTION WORK PLAN FOR METRO AND LOCAL GOVERNMENTS

Chair Morissette noted that according to the minutes of April 21, 1998, the committee had voted to amend Resolution No. 98-2634, but had not voted to forward it to Council for adoption. He asked Marvin Fjordbeck, Senior Assistant Counsel, whether corrective action should be taken at this time to remediate the situation. Mr. Fjordbeck reviewed the minutes, and advised the committee to vote on the resolution as amended at this time.

1.  CONSIDERATION OF MINUTES OF APRIL 21, 1998

The committee did not consider the minutes of April 21, 1998

2.  REGIONAL ENVIRONMENTAL MANAGEMENT DIRECTOR’S UPDATE

Bruce Warner, Director of Regional Environmental Management, gave the Regional Environmental Management (REM) Director’s Update. The following items were updated: a mercury spill at Metro South, transfer station/hazardous waste surveys, the Wood Village Household Hazardous Waste event, and Earth Day billboards. Jan O’Dell, REM Senior Public Affairs Specialist, showed a video of local news broadcasts reporting on the billboard projects. A copy of Mr. Warner’s update is included as part of the meeting record.

3.  STATUS OF REGULATORY CODE UPDATE

Mr. Warner distributed a revised schedule for the revision of Metro Code Chapter 5.01 - Facility Registration. A copy of this schedule is included as part of the meeting record. Mr. Warner said partners have expressed concern that the process is moving too quickly, so times have been extended. He reviewed the revised schedule.

Mr. Warner said a special SWAC meeting is suggested for May 13. Chair Morissette said he will not schedule any additional SWAC or REM meetings for the rest of the calendar year. He agreed that additional time will be needed after the final SWAC meeting to work on the issues, and he asked Mr. Warner to push the dates back by one week after the May 20 SWAC meeting. This will further revise the schedule, which has already been pushed back by three to four weeks, and will result in the schedule being pushed back four to five weeks.

Mr. Warner said the schedule assumes that the ordinance will go through the REM Committee without amendments, and will be adopted by the Council without change or controversy. However, this will probably not be the case. He said staff has been working to have the new code and exchange agreements in place so that partners can take advantage of rebates in the incentive-based curve for materials recovery on July 15, 1998. If it looks like the schedule will fall short of this goal, staff will devise a plan to allow the existing facilities to take advantage of the credits.

Mr. Warner said when the code ordinance appears as a formal agenda item, the committee will have received issue papers on all of the items identified at the April 21, 1998 REM Committee meeting. The committee will receive a recommendation from SWAC as well as from staff. All of the issues will be fully aired, and many of them will be resolved before the ordinance is written.

Chair Morissette opened a public hearing.

• Merle Irvine, president, Willamette Resource, appeared before the committee to speak about the revised schedule. He said has was happy with the original draft schedule that was distributed a few weeks ago. He said extending the schedule will delay regional system fee credits, and will have a negative financial impact on his company. In response to a question by Councilor McFarland he said that each delay in adopting the code will cost MRFs money.

Chair Morissette said he understood from Mr. Warner that partners are very concerned that the process is moving too fast. He pointed out that Mr. Irvine’s testimony did not support this concern.

• Jeff Murray, Far West Tigard Easy Recycling, member of SWAC, appeared before the committee to speak about the code revision. He expressed the concern of the recycling industry over a certification process for clean recycling facilities. Historically, clean recycling facilities such as his, Smurfit’s, Weyerhaeuser’s, and others have been exempt from any type of regulation. Mr. Murray said these businesses work closely with Metro staff to make sure Metro understands what goes on in their facilities, and to ensure the facilities continue to be exempt from regulation. He has polled other clean recycling facility operators and all are strongly opposed to being regulated. However, they are willing to cooperate with Metro to create an exempt status, where they could provide information showing why they should be exempt.

Chair Morissette asked Mr. Murray if he favors the extension of the code revision schedule. Mr. Murray said he does not have a problem with an extension, because he is not in the same situation as Mr. Irvine and other dirty MRFs. He said steps should be taken to ensure the ordinance revision is done right, without costing MRFs money. He suggested a compromise could be to schedule extra meetings.

• Ray Phelps, representing Waste Management, appeared before the committee to speak about the revision schedule. He said although the schedule as revised is acceptable, he would prefer the original schedule. He said delays will cost Waste Management money. Additional slippage in the schedule will cost them even more money. Mr. Phelps said he believes staff has done an excellent job with the code, and few changes will be needed.

• Easton Cross, representing BFI, appeared before the committee to speak about the revision schedule. He asked that the extension in the schedule be approved. He said the money about which Mr. Irvine spoke is compensation to the MRFs for lowering the rate effective with the new rate schedule. Applying this rate to June is a bonus for them that will come out of Metro’s reserve fund. He said the ordinance could broken into two parts, thereby permitting the rate ordinance to be adopted without voting on the rest of it. Mr. Cross reported there is a large segment of the SWAC membership that is not here today that has asked for the extension.

Chair Morissette asked Mr. Cross whether it would be acceptable to send the ordinance from SWAC on May 20 to Council on May 21. Mr. Cross said this would mean the draft had already obviously been formalized before it got to SWAC, and their whole part of the process was simply pro forma.

Chair Morissette closed the public hearing.

Chair Morissette asked Mr. Warner asked if the work could be done without any of the proposed extensions except those dates that have already been missed. Mr. Warner said the original schedule could be followed, which would require that the ordinance be filed this Thursday or Friday. Mr. Fjordbeck said the ordinance will not be ready to file by the end of this week. He said a draft version of the code needs to be converted into a 56-section ordinance.

Councilor McFarland said she believed people in the industry are in favor of extending the process. Councilor Washington said it has taken ten years to get to this point, and extending the process by a small amount should not constitute a hardship. Chair Morissette said no additional meetings should be scheduled to accommodate the approval schedule. He suggested extending the dates on the revised schedule following the May 20 SWAC meeting by one week. Following discussion councilors were unable to determine a schedule.

4.  DISCUSSION OF BUDGET, CONTRACTUAL, AND OPERATIONAL ISSUES RELATED TO THE PROCESSING OF SOURCE-SEPARATED ORGANICS AT METRO TRANSFER STATIONS

Mr. Warner said this agenda item will eventually come before the committee in the form of a resolution authorizing a contract amendment with BFI for operation of Metro transfer stations. The purpose of today’s discussion is to brief the committee prior to presentation of the actual resolution.

Terry Peterson, Environmental Services Manager, appeared before the committee to update the committee on discussions with BFI. He said the original contract signed with BFI in October, 1997 did not contain a provision for BFI to accept or transfer source-separated organics. Metro has been conducting a pilot project over the past few months that has been analyzing the operational feasibility of accepting source-separated organics at transfer stations and sending them to composting operations. Mr. Peterson reported it has now been determined to be operationally feasible to do so without impacting the normal transfer of garbage. Organics make up a huge part of the waste stream, and this is driving Metro’s interest in trying to increase organics recovery. Customers at the transfer stations have asked that this service be provided. Mr. Peterson said Metro has drafted a change order that establishes the price BFI would charge Metro for doing this work. It does not obligate Metro to proceed, because the Council has not yet set a fee for accepting source-separated organics. It does commit BFI to a price, which is the same price it charges for transferring garbage. The change order will give Metro the option of having either BFI or Metro arrange for transport and composting at a composting facility.

Councilor McFarland asked whether, when the RFP for the transfer stations was put out to bid, did Metro not turn down a bid that included dealing with organic waste, at a cost that was very little more than the proposal Metro ultimately accepted. Mr. Peterson said there was a discussion about a proposal from Waste Management for recovering organic waste. He said process under discussion today is different because the resolution will deal with source-separate materials that are received at the station with no residuals. This is quite different than recovering organics from mixed waste. Councilor McFarland maintained the two are the same.

Mr. Peterson said this is a revenue-neutral proposal. Metro currently budgets and pays for transporting organics to the landfill. The proposal would permit Metro to send the material to a composting facility for the same cost. He said there will be concern in the private sector regarding the change in operations, and the question will arise about whether this is something the private sector can do. He said the more options businesses and haulers have for doing recovery, the better.

5.  ORDINANCE NO. 98-742, AMENDING THE FY 97-98 BUDGET AND APPROPRIATIONS SCHEDULE BY TRANSFERRING $150,000 FROM CONTINGENCY TO CAPITAL OUTLAY IN THE SOLID WASTE REVENUE FUND TO PROVIDE FOR INITIAL EXPENDITURES ASSOCIATED WITH THE REPLACEMENT OF COMPACTION SYSTEMS AT METRO SOUTH STATION, AND DECLARING AN EMERGENCY

Mr. Warner gave a report on Ordinance No. 98-742, which would amend the FY 97-98 Budget to provide funding associated with new compactors at Metro South. A staff report and executive summary to the ordinance includes information presented by Mr. Warner, and is included as part of the meeting record.

Councilor McFarland asked why this ordinance is an emergency. Mr. Warner said there is no broken equipment that requires the emergency clause, however, the emergency clause will appropriate money in this fiscal year to pay for the initial payment of the new compactors. He said the majority of construction and payment will occur next fiscal year. Chair Morissette said the clause permits staff to get the process started before the compactor breaks down.

Chair Morissette opened a public hearing. No one appeared to speak with regard to the ordinance. Chair Morissette closed the public hearing.

Councilor McFarland will carry the ordinance to full Council.

6.  RESOLUTION NO. 98-2639, FOR THE PURPOSE OF AUTHORIZING THE EXECUTIVE OFFICER TO EXTEND CONTRACTS WITH DEVIN OIL, INC. AND STEIN OIL, INC. FOR PURCHASING DIESEL FUEL UNTIL JUNE 30, 1999

Mr. Warner gave a presentation on Resolution No. 98-2639, which would extend contracts with Devin Oil, Inc. and Stein Oil, Inc. for purchasing diesel fuel until June 30, 1999. A staff report and executive summary to the resolution includes information presented by Mr. Warner, and is included as part of the meeting record.

Chair Morissette said it is important that the bidding process be considered before extending the contract. In response to a question by Councilor Washington, Mr. Warner explained the price structure. Councilor McFarland asked if there would be a chance Metro could get a better deal by putting the contract out to bid. Mr. Warner said there is a chance Metro could get a better price, and there is a chance the price could go up. He said the current contractor has absorbed some costs over the last couple of years that they would want to recover in a new contract. He said competition usually presses costs downwards.

Chair Morissette said he would prefer to open up the bid process before deciding whether to extend the current contract. Mr. Warner said he was not sure if this would be possible. Councilor McFarland said she believed you need to make one choice or another. Mr. Fjordbeck his understanding is that the committee must either decide to extend the contract or to put it out to bid. He is not aware that Metro has the option of extending the contract and then putting it out to bid. Chair Morissette asked whether Metro could put the contract out to bid before extending the current contract. Mr. Fjordbeck said the problem is that there is already a contract in place. He suspects there would be an objection from the current contractor if the committee proceeds in this manner. Mr. Warner said he could foresee serious problems arising from Chair Morissette’s proposal.

Chair Morissette opened a public hearing.

• Doug Hattenhauer, Hattenhauer Distributing Co., 110 Union, The Dalles, Oregon, appeared before the committee to protest the process of extending the contract at Metro’s discretion. In 1995, he bid on the Eastern Oregon project. He believes the annual extension is in violation of Oregon’s bidding law, particularly given the substantial amount of money involved. He requested that Metro consider re-bidding the Eastern Oregon project. Mr. Hattenhauer said the monthly savings of $45,000 achieved by extending the contract as referred to in the staff report is not an accurate reflection of the situation. He said a $.24 per gallon federal excise tax savings that Devin intends to pass on to Metro could also be passed on by Hattenhauer Distributing. He said he can offer Metro a much better price than the current price, and Metro will be remiss if it does not go out to bid. Mr. Hattenhauer said he realizes his company may not be awarded the bid, but the bid process will guarantee that Metro gets the best price. He said it is remarkable that staff called Devin Oil and asked them to reduce their margin, because this is not in compliance with the state of Oregon’s process for bidding on “OPEC/S” (?) average. Mr. Hattenhauer said today’s market has changed. For the original bid, Texaco charged a “worse” (?) hazardous tax that is no longer charged. Freight has been deregulated. Costs have decreased, not increased. Mr. Hattenhauer said there is a gray area in the winter months about how much winterization goes on. He said he could save Metro $.02 to $.04 per gallon in a winterizing process. He said the new process, which is cheaper, is now an industry standard. He said there is only one week out this year that more than $.01 per gallon should have been spent on winterization of fuel. It appears $.04 to $.06 has been spent, instead.

Councilor McFarland said with the present contract, about 95% of the fuel is purchased from a card lock station in Arlington. She asked Mr. Hattenhauer whether savings could be achieved by having a station between Portland and Arlington. Mr. Hattenhauer said he could offer less freight as the distance from Portland decreases. He said he has terminals in The Dalles, Hood River, Rufus, and Arlington.

No one else appeared to testify. Chair Morissette closed the public hearing.

Councilor Washington Mr. Fjordbeck if Metro is in violation of the bidding process. Mr. Fjordbeck said he does not believe Metro is in violation. He said the original ordinance set forth the extension proposal and allowed that extension to be reviewed every year. He said this process is allowed under the Metro Code, and allowed under state law if done by resolution.

Mr. Warner said he believes Metro is getting a very good price. However, until Metro goes out with a bid, that fact will not be certain. It takes time and money to go through a proposal process, about $15,000 for advertisement and review of proposals. Mr. Warner said Metro will need to realize savings of about $.02 per gallon in order to see a new bid process pay off.

Chuck Geyer, Senior Solid Waste Planner, said he believes the cost savings would be very close. He said last year, he was asked to investigate what sort of opportunities are available system-wide to save money. He said marginal savings could occur if the contract is re-bid. Larger savings could be achieved if Metro goes into the card-lock business itself, with a central staging area located closer to Portland. He said there are political and logistical aspects to that concept that need to be investigated. Chair Morissette said he would not like to see Metro get into the fuel business.

Councilor McLain said her issue last year was that she wanted to make sure Metro is not spending too much money administering RFPs. She said Mr. Geyer’s contention that there are no new players in the area is not a reason to not go to bid because there are existing parties who want to bid on the contract, and there could be movement among the existing players.

Chair Morissette asked that the resolution before the committee be modified to request bid proposals for the gas contract. Mr. Fjordbeck said if the committee wishes to extend the contract, it should pass the resolution. If the committee takes no action, it effectively ends the contract, and staff will come forward with a new RFP or RFB. Chair Morissette said he does not want to void the current contract, however, he does not want to extend the current contract until it is put out to bid. Mr. Fjordbeck asked Chair Morissette to hold off on action at this time to give legal counsel time to determine whether it is permissible to send out a bid before the decision is made about whether to continue the current contract. Chair Morissette proposed that action not be taken on this resolution, and that a RFB be prepared following the meeting.

Councilor Washington asked what happens to Metro’s ability to obtain fuel if the committee does not take action on this resolution. Mr. Warner said the contract expires at the end of June, so staff will need to accelerate a competitive process for bids or proposals. He said Metro may need to extend the contract for a month or 15 days. He said staff will come back with a competitive process and timeline proposal.

Chair Morissette said he believes staff made a decision, which is their job; and the committee simply disagrees in the approach. He said there is some risk in asking for a competitive process, but the committee has decided this is one of the risks it is willing to take. He said Mr. Warner and staff did an excellent job.

7.  COUNCILOR COMMUNICATIONS

None.

There being no further business before the committee, Chair Morissette adjourned the meeting at 12:32 PM.

Respectfully submitted,

Lindsey Ray

Senior Council Assistant

C:\Micro Focus Content Manager\WebDrawerWorkpath\TEMP\HPTRIM.18480\t00098J5.doc