SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

For the transition period fromto

Commission File Number 000-33433

KAISER VENTURES LLC

(Exact name of small business issuer as specified in its charter)

3633 East Inland Empire Blvd., Suite 480

Ontario, California 91764

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (909) 483-8500

No Change

(Former name, former address and former fiscal year, if change since last report)

CheckIndicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  x

At August 1, 2008, 7,190,8063, 2009, the registrant had 6,617,834 Class A Units were outstanding includingincluding: (i) 104,267 Class A Units outstanding but reserved for distribution to the general unsecured creditors in the Kaiser Steel Corporation bankruptcy andbankruptcy; (ii) 113,501 Class A Units deemed outstanding and reserved for issuance to holders of Kaiser Ventures Inc. stock that have to convert such stock into Kaiser Ventures LLC Class A Units.Units; and (iii) 84,612 units outstanding that are subject to certain vesting requirements.

KAISER VENTURES LLC AND SUBSIDIARIES

TABLE OF CONTENTS TO FORM 10-Q

AVAILABILITY OF PREVIOUS REPORTS

The Company will furnish without charge, to each member, upon written request of any such person, a copy of the Company’s 20072008 Annual Report on Form 10-KSB, including the financial statement schedules thereto10-K and the Company’s Quarterly Report on Form 10-Q for the periodquarter ended March 31, 2008 and Quarterly Report on Form 10-Q for the period ended June 30, 2008.2009. Those requesting a copy of the 10-KSB Report10-K report and/or the 2008 Form2009 first quarter 10-Q reportsreport that are not currently members of the Company may also obtain a copy of each report directly from the Company upon payment of a nominal photocopying charge. Requests for a copy of any report filed with the Securities and Exchange Commission should be directed to Executive Vice President-Administration, at 3633 East Inland Empire Boulevard, Suite 480, Ontario, California 91764. All such reports can also be accessed from the Company’s website atwww.kaiserventures.com.

The reader is encouraged to read this Report on Form 10-Q in conjunction with the Company’s 20072008 Annual Report on Form 10-KSB10-K and the Company’s 20082009 first and second quarter Report on Form 10-Q reports as the information contained herein is often an update of the information in such reports.

i

KAISER VENTURES LLC AND SUBSIDIARIES

PART I

FORWARD-LOOKING STATEMENTS

Except for the historical statements and discussions contained herein, statements contained in this Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any 10-K Report, 10-KSB Report, Annual Report, 10-Q Report, 10-QSB Report, 8-K Report or press release of the Company and any amendments thereof may include forward-looking statements. In addition, other written or oral statements, which constitute forward-looking statements, have been made and may be made in the future by the Company. You should not put undue reliance on forward-looking statements. When used or incorporated by reference in this 10-Q Report or in other written or oral statements, the words “anticipate,” “estimate” “project” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties, and assumptions. We believe that our assumptions are reasonable. Nonetheless, it is likely that at least some of these assumptions will not come true. Accordingly, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, or projected. For example, our actual results could materially differ from those projected as a result of factors such as, but not limited to: Kaiser’s inability to complete the anticipated sale of its Eagle Mountain landfill project; litigation, including, among others, claims that relate to Eagle Mountain, including the adverse federal land exchange litigation, pre-bankruptcy activities of Kaiser Steel Corporation, the predecessor of Kaiser, and asbestos claims; insurance coverage disputes; the impact of federal, state, and local laws and regulations on our permitting and development activities; competition; the challenge, reduction or loss of any claimed tax benefit, including Kaiser’s conclusion that the Company’sits tender offer completed in December 2008 will not result in the Company being treated as a “publicly traded partnership”; the impact of natural disasters on our assets; and/or general economic conditions in the United States and Southern California. The Company disclaims any intention to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

ADDITIONAL INFORMATION

A reader of this Report on Form 10-Q is strongly encouraged to read the entire report, together with the Company’s 20072008 Annual Report on Form 10-KSB,10-K and the Company’s first quarter 2009 Report on Form 10-Q for the period ended March 31, 2008 and the Company’s Report on Form 10-Q for the period ended June 30, 2008, for background information and a complete understanding as to material developments concerning the Company. Such reports can be found on Kaiser’s website atwww.kaiserventures.com under the “Member Relations” tab.

WHO WE ARE

Unless otherwise noted: (1) the term “Kaiser LLC” refers to Kaiser Ventures LLC; (2) the term “Kaiser Inc.” refers to the former Kaiser Ventures Inc.; (3) the terms “Kaiser,” “the Company,” “we,” “us,” and “our,” refer to past and ongoing business operations conducted in the form of Kaiser Inc. or currently Kaiser LLC, and their respective subsidiaries. Kaiser Inc. merged with and into Kaiser LLC effective November 30, 2001; (4) the terms “Class A Units” and “members” refer to Kaiser LLC’s Class A Units and the beneficial owners thereof, respectively; and (5) the term the “merger” refers to the merger of Kaiser Inc. with and into Kaiser LLC effective November 30, 2001, in which Kaiser LLC was the surviving company.

The Financial Statements are located at the end of Item 3, beginning on Page 1614 of this Report and are incorporated herein by this reference.

KAISER VENTURES LLC AND SUBSIDIARIES

BUSINESS UPDATE

General

Kaiser is the reorganized successor to Kaiser Steel Corporation, referred to as KSC, which was an integrated steel manufacturer that filed for bankruptcy protection in 1987. Since KSC’s bankruptcy, we have been developing assets remaining after the bankruptcy and have realized substantial value from certain of those assets. In summary, our principal remaining assets currently include:

As of SeptemberJune 30, 2008,2009, we also had cash and cash equivalents, receivables and short and long-term investments of approximately $8,786,000.

Tender Offers

A tender offer dated September 19, 2008, and amended and restated by Amendment No. 1 to Schedule TO filed September 26, 2008 (the “MacKenzie Offer”), was commenced by certain affiliates¹ of MacKenzie Patterson Fuller, LP (“MacKenzie”) to purchase up to 1,400,000 Class A Units of the Company at a purchase price equal to $.50 per Unit, less: (i) each Unitholder’s pro-rata share of certain transfer costs described in the MacKenzie Offer without any limit; and (ii) the amount of any distributions

KAISER VENTURES LLC AND SUBSIDIARIES

declared or made with respect to the Units between September 19, 2008 and October 30, 2008, or such later date to which the MacKenzie Offer may be extended. As required by applicable law, the Company’s Board of Managers met and carefully considered the MacKenzie Offer. It was the conclusion and recommendation of the Board that unitholders should reject the Mackenzie Offer. The Board’s recommendation and a summary of the reasons for its recommendation were communicated in a letter to unitholders dated October 2, 2008, and in a press release of the same date.

In response to the MacKenzie Offer and in recognition that some of our unitholders may have a desire or an immediate need for liquidity, diversification, risk reduction, or other circumstance, the Company’s Board approved the commencement of an offer by the Company (the “Company Offer”) to purchase for cash up to 700,000 Class A Units at a purchase price of $.90 per Unit, without interest and without any deduction for transfer costs, upon the terms and conditions set forth in the Company’s Offer to Purchase dated October 14, 2008, and the related Letter of Transmittal. The Company Offer expires at 3:00 p.m. Pacific Time on November 14, 2008, unless extended by the Company.²

Like the MacKenzie Offer, the Company’s Board of Managers also recommended that unitholders reject the Company Offer as neither offer represents fair value for the Company’s units at this time.

The MacKenzie Offer expired on October 30, 2008. MacKenzie terminated its tender offer and decided not to purchase any Kaiser Class A Units.$8,099,000.

Eagle Mountain Landfill Project

Background. In 1988, the Company entered into a 100-year lease agreement (the “MRC Lease”) with MRC. MRC is seeking to develop the Company’s former iron ore mine near Eagle Mountain, California into a large, regional rail-haul, municipal solid waste landfill. The Company currently owns 83.13% of the Class B units and 100% of the Class A units of MRC. In December 1999, the Landfill Project received its last major permit necessary to construct and operate a rail-haul landfill. The Landfill Project is permitted to receive 10,000 tons per day of municipal solid waste for the first ten years of operation and

KAISER VENTURES LLC AND SUBSIDIARIES

up to a maximum of 20,000 tons per day thereafter. The landfill is permitted to receive municipal solid waste for up to 88 years.

Sale of Landfill Project. In August 2000, MRC entered into that certain Agreement for Purchase and Sale of Real Property and Related Personal Property In Regard To The Eagle Mountain Sanitary Landfill Project and Joint Escrow Instructions (“Landfill Project Sale Agreement”) with the District. In summary, the Landfill Project (which includes our royalty payments under the MRC Lease) is being sold for $41 million, plus an estimated approximate $8.3$8.5 million in accrued interest from May 2001 to the date of this Report on Form 10-Q. The closing of this transaction is currently scheduled to occur by September 30, 2008.2009. However, the initial closing date has been extended a number of times. The sale of the Landfill Project is subject to the results of the District’s due diligence, satisfaction of numerous contingencies and the negotiation of various ancillary agreements. The contingencies include, but are not limited to, obtaining the transfer of the Landfill Project’s permits to the District and obtaining all necessary consents to the transaction. Even with an initial closing, payment of the purchase price will be delayed as described in more detail below. In September 2005, a U.S. District Court decision was issued that was

KAISER VENTURES LLC AND SUBSIDIARIES

adverse to the Landfill Project which may negatively impact the sale of the Landfill Project to the District. This decision has been appealed to the U.S. 9^th Circuit Court of Appeals and we are awaiting the Court’s decision. See “Landfill Project Litigation”below.

As of the date of the filing of this Report, the parties agreed to extend the closing date to no later than December 31, 2008.September 30, 2009. The contractual expiration date has been extended a number of times previously. The conditions to closing are not expected to be met by the current expiration date, and the parties will each need to decide whether to extend the period one or more additional times or waive certain conditions. There is no assurance or requirement that either of the parties will continue to extend the closing date and, if it is extended, for how long.

Upon the occurrence of an initial closing, the total purchase price will be deposited into an escrow account and will be released when litigation contingencies are fully resolved. Currently the only existing litigation contingency arises out of the federal litigation challenging the completed federal land exchange. As discussed in more detail below in “Landfill Project Litigation,” on September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued an adverse decision in the federal land exchange litigation, which would, if fully affirmed on appeal, jeopardize the viability of the Landfill Project and its sale to the District.

The foregoing summary of the Landfill Purchase Agreement is qualified in its entirety by the Landfill Purchase Agreement filed as an exhibit to Kaiser Inc.’s second quarter 2000 Report on Form 10-Q and the more extensive discussion contained in our 20072008 Annual Report on Form 10-KSB.10-K.

Flood Damage to Railroad. The Company owns an approximate 52-mile private railroad that runs from Ferrum Junction near the Salton Sea to the Eagle Mountain mine. In late August and early September of 2003, limited portions of the railroad (less than ten percent of the railroad) and related protective structures sustained damage due to heavy rains and flash floods. This damage included having some rail sections buried under silt while other areas had their rail bed undermined. We have currently accrued on our balance sheet a liability of approximately $4,338,000 for the estimated cost of repair. While the Company undertakes, from time to time, the work necessary to maintain and to assist in preserving and protecting the railroad, the major repairs required to return the railroad to its condition prior to the flood damage are being deferred until a later date.

Current Landfill Project Litigation. On September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued its opinion in Donna Charpied,et al., Plaintiffs v.United States Department of Interior, et al., Defendants (Case No. ED CV 99-0454 RT (Mex)) and inNational Parks and Conservation Association, Plaintiff v.Bureau of Land Management, et al., Defendants (ED CV 00-0041 RT (Mex)). The decision is adverse to the Landfill Project in that it sets aside a land exchange completed between the Company and BLM in October 1999 and two BLM rights-of-way.

KAISER VENTURES LLC AND SUBSIDIARIES

In the land exchange, the Company’s wholly owned subsidiary, Kaiser Eagle Mountain, Inc. (now Kaiser Eagle Mountain, LLC) transferred approximately 2,800 acres of Kaiser-owned property along its railroad right-of-way to the BLM and a cash equalization payment in exchange for approximately 3,500 acres of land within the Eagle Mountain landfill project area. The land exchanged by the Company was identified as prime desert tortoise habitat and was a prerequisite to completion of the permitting of the Eagle Mountain landfill project. Following completion of the land exchange, two lawsuits were filed challenging it and requesting its reversal. The plaintiffs argued that the land exchange should have been reversed, because, among other reasons, the BLM failed to comply with the National Environmental Policy Act and the Federal Land Policy and Management Act. The U.S. District Court concluded that the environmental impact statement was deficient in its explanation and/or environment analysis with regard to: (i) the issue of eutrophication which deals with the introduction of nutrients, in this case primarily nitrogen, as a result of the existence of the landfill; (ii) Big Horn Sheep, which is not an endangered species; (iii) the statement of purpose and need for the Landfill Project; and (iv) the reasonable range of alternatives to the proposed project. The court did rule in favor of the Landfill Project with regard to the

KAISER VENTURES LLC AND SUBSIDIARIES

environmental analysis and explanation for: (i) noise; (ii) night lighting; (iii) visual impacts; (iv) the desert tortoise; (v) groundwater; and (vi) air. The court also ruled that the environmental impact statement was deficient under the Federal Land Policy and Management Act with regard to: (i) the appraisal undertaken by the BLM in the land exchange; and (ii) a full discussion of the BLM’s conclusions on the public need for the landfill project.

The Company and the U.S. Department of Interior evaluated their alternatives with respect to the decision and each decided to appeal the decision to the U. S. 9^th Circuit Court of Appeals. There can be no assurance that the Company and the Department of Interior will be successful in their appeal. Oral argument in the case was held on December 6, 2007, before a three judge panel of the 9^th Circuit Court of Appeals. TheWhile the U.S. 9^th Circuit Court of Appeals usually announces its decisions six to twelve months following oral argument. However,argument, on occasion the announcement of a decision may take substantially longer. Since oral argument in our appeal was held more than 19 months ago as of the date of the filing of this Report on Form 10-Q, the decision may be announced at any time. If the U.S. District Court’s decision is fully affirmed on appeal, the decision would jeopardize the viability of the Landfill Project and could adversely impact the agreement to sell the Landfill Project to the District, including termination of the agreement.

In April 2007, Donna Charpied, et al, filed a motion with the same U.S. District Court seeking to enforce the court’s order in the above referenced case. On September 18, 2008, the U.S. District Court denied the Charpied motion. The plaintiffs’ allegations were that additional actions were necessary to set aside the land exchange and to prevent the use of property at Eagle Mountain that would “change the character and use of the exchanged properties …”. In the motion, the opponents objected to the military training that has taken place and may take place on Kaiser fee owned land at Eagle Mountain (even though military and law enforcement training previously took place at Eagle Mountain), the possible use of a portion of the Eagle Mountain Townsite for a prison facility (even though one operated successfully at the Eagle Mountain Townsite for over 12 years) and the possible use of rock from Eagle Mountain to help remediate acknowledged environmental problems at the Salton Sea located in Imperial and Riverside counties in Southern California.

The Court denied the Plaintiffs’ motion and determined that: (i) the BLM’s actions to date to set aside the land exchange were sufficient and that no reconveyance documents needed to be recorded; (ii) the military training activities that had taken place at Eagle Mountain did not change the character and use of the exchange lands; and (iii) the activities associated with the testing of the suitability of Eagle Mountain rock for use in a possible Salton Sea restoration plan were acceptable. The Court declined to rule on the challenge to a private prison project since there is no current private prison project.

Eagle Crest Energy Company. Eagle Crest Energy Company, referred to as ECEC, a previous opponent to the landfill project, currently has a preliminary permit with the Federal Energy Regulatory Commission, referred to as FERC, for a proposed 1,300 mega-watt hydroelectric pumped storage project and ancillary facilities to be located at the Company’s Eagle Mountain mine site. This projectIn June 2009 ECEC filed a license application with FERC for the potential project. However, in July 2009 FERC issued to ECEC a letter of more than fifteen pages in length discussing deficiencies and requests for additional information in connection with the license application. ECEC has been proposed in one form or another since 1991.pursuing this project for nearly 20 years. This project is essentially the same project that ECEC previously proposed and was dismissed by the FERC in July 1999. ECEC is on its fourth preliminary permit. The proposed ECEC project would utilize two of the mining pits and other property at the Eagle Mountain Site, portions of which are currently leased to MRC and are the subject of the pending sale to the District. The Company has not agreed to sell or lease this property to ECEC. In addition, the ECEC project is not compatible with the Landfill Project regardless of claims to the opposite by ECEC. As a result of the October 1999 completed land exchange with the BLM, there is no title reservation on any portion of the property. As discussed below this may change if the land exchange is ultimately reversed. In January 2008 ECEC filed a preliminary application document with FERC in which it asserts that it will now be taking the steps necessary to seek a license from FERC. In June 2008 ECEC circulated a draft license application and we, along with others, submitted extensive comments on the draft license application document. For example, we continue to maintain that the landfill project and the proposed pump storage project are incompatible and that the proposed pumped storage project is not economically feasible. ECEC is continuing to take certain preliminary steps necessary to seek a license and welicense. We will continue to oppose suchECEC’s licensing efforts.

KAISER VENTURES LLC AND SUBSIDIARIES

If the completed land exchange is ultimately and permanently reversed in accordance with the September 2005 U.S. District Court decision, certain lands currently owned in fee by Kaiser will revert back to federal lands, although a substantial amount of such lands will then be controlled by Kaiser because of its federal mining claims. As a result of any final reversal to federal ownership, a portion of

KAISER VENTURES LLC AND SUBSIDIARIES

the land may be subject to a title encumbrance associated with the issuance of the preliminary permit to ECEC by FERC.

MRC Financing. Since Kaiser became an owner of MRC in 1995, MRC has been financed through a series of private placements to its existing equity owners. To cover the continuing costs of MRC such as the costs of the appeal, various anticipated closing matters and other similar items additional funding of up to $1.2 million payable in installments was completed in the third quarter of 2007 through a private placement to MRC’s existing members. The funding was payable in two installment with the first installment paid with a member’s subscription and the second installment was paid by March 31, 2008. Owners of approximately 94% of MRC participated in the private placement. However, since not all of the owners of MRC purchased their respective pro rata interest in the private placement, we purchased those interests. Accordingly, we invested an additional $1,057,000 in MRC through the private placement. As a result of this investment,our investments in MRC our ownership interest in MRC increased from 82.48% tois currently 83.13%. Even with the full $1.2 million raised from the completed private placement, additionalAdditional funding will be required to complete the sale of the Landfill Project assuming MRC is successful in its appeal of the current federal land exchange litigation. There is no assurance that any such additional funding can be obtained or that it can be obtained on acceptable terms.

Risks. As is discussed in this Report on Form 10-Q and discussed in more detail in the Company’s Annual Report on Form 10-KSB10-K for 2007,2008, there are numerous risks associated with MRC and the Landfill Project, including the numerous risks and contingencies associated with the pending sale of the Landfill Project to the District. There can be no assurance that all outstanding matters currently preventing an initial closing with the District will be resolved to the satisfaction of the parties. Accordingly, there can be no assurance that the sale to the District will occur or that the current terms of the pending transaction may not be significantly modified or the contract terminated as a result of future discussions with the District or as a result of the adverse U.S. District Court decision. In addition, there can be no assurance: (a) that both parties will continue to extend the closing date; (b) as to the timing of the receipt of the purchase price if a closing does take place; and (c) that the ownership of the competing Mesquite Landfill Project by the District and its construction and operation will not adversely impact the negotiations and the closing on the sale of the Landfill Project to the District.

The September 2005 decision of the U.S. District Court to reverse a completed land exchange with the BLM, if fully affirmed on appeal, jeopardizes the viability of Landfill Project. While the Company and the Department of Interior have appealed the decision, there can be no assurance that the appeal will be successful. The litigation and appeal process has caused considerable delays to the Landfill Project. These delays have resulted in additional investments in MRC which in turn will reduce our projected return if the Landfill Project is ultimately sold. In addition, no assurance can be made that we will successfully and timely resolve these matters so as to avoid a material adverse effect on the Landfill Project and on our current plan to sell the Landfill Project to the District. If we are unable to manage any of these risks or uncertainties, we may not have a viable Landfill Project and/or may not be able to sell the Landfill Project and thus the value of our Class A Units could be materially reduced.

In addition, there are risks that the Landfill Project will be impacted by natural disasters like the floods that caused significant damage to a limited portion of the rail line in 2003. Certain risks may be uninsurable or are not insurable on terms which we believe are economical.

West Valley Materials Recovery and Transfer Station

West Valley MRF, LLC referred to as “West Valley,” was formed in June 1997 by Kaiser Recycling Corporation (now Kaiser Recycling, LLC (formerly Kaiser Recycling, Inc.)), a wholly-owned subsidiary of Kaiser, and West Valley Recycling & Transfer, Inc., a wholly-owned subsidiary of Burrtec Waste Industries, Inc. (“Burrtec”). This entity was formed to construct and operate the materials recovery

KAISER VENTURES LLC AND SUBSIDIARIES

facility and is referred to as the West Valley MRF. This facility is permitted to receive up to 7,500 tons per day of municipal solid waste. Currently, the facility is processing approximately 4,000+ tons per day of municipal solid waste and recyclable materials.

Construction of the West Valley MRF was financed primarily by bonds issued by the California Pollution Control Finance Authority. The bonds have a variable interest rate that is adjusted weekly. As a result of the credit and liquidity crises in the financial markets, the interestThe rates for the bonds dramatically fluctuated during the third quarter. The ratessecond quarter of 2009 have ranged from a low of 1.41%.55% to a high of 8.55%.82%; however, the average rate for the second quarter of 2009 has been 0.70%.

KAISER VENTURES LLC AND SUBSIDIARIES

No cash distributions were received from the West Valley MRF during the first ninesix months of 2008 has been 2.45%.

We have2009; however, a $500,000 cash distribution was received $2.0 million in July 2009. Given the adverse world-wide economy and the material decrease in commodity prices, we anticipate that there will be a material reduction in the financial performance of and in the amount of cash distributions received from the West Valley MRF in 2008 through the third quarter of 2008 and an additional $500,000 in October 2008.2009.

Risks. There are a number of risks associated with the West Valley MRF which are discussed in more detailed in the Company’s Annual Report on Form 10-K for 2007. Of particular concern are the risks associated with the financial and credit markets which have cause a dramatic increase in the interest rate on the outstanding bonds. These interest rates should decline once the U.S. credit crisis abates.2008. Waste volumes are also being negatively impacted by the down-turn in the California economy. Until recently, the high price of fuel was negatively impacting operating margins and net earnings. Additionally the volatility of commodity prices and any material reduction in such prices, which are occurring, will negatively impact the revenues, margins and net income of the West Valley MRF. CompetitionGovernmental regulation and competition for and loss of expiring waste contracts would also negatively impact the West Valley MRF. A material contract accounting for approximately one-third of the gross revenues of the West Valley MRF is currently scheduled to expire December 31, 2008, and its loss would materially adversely impact the West Valley MRF. West Valley MRF is currently bidding and in negotiations with regard to the municipal waste stream delivered pursuant to such contract but there is no guarantee that West Valley MRF will be successful in retaining the municipal waste stream that is represented by such contract or if West Valley MRF is ultimately successful in retaining such waste stream, that the current financial terms will remain in effect.

Eagle Mountain, California

Until December 31, 2003, a portionSubsequent to the closure of the private prison at Eagle Mountain Townsite was leased on a month-to-month basis to a company that operated a minimum security prison under contract with the State of California. Funding for many private prisons was eliminated from California’s 2003 - 2004 state budget as of December 31, 2003, including the private prison located at Eagle Mountain. During 2004 we developed and implemented a plan to partially mothball the Eagle Mountain Townsite. Although we are continuing our efforts to find a replacement tenant for the private prison, we have not had any success as of the date of this Report on Form 10-Q. However, portions of Kaiser’s fee owned land at Eagle Mountain have occasionally been leased to third parties in connection with the training of U.S. military personnel, the filming of commercials and other similar types of uses. We will continue to explore these types of opportunities and other opportunities for the use of the land, facilities and facilitiesother resources at Eagle Mountain. However, opponents to the landfill project often attempt to prevent us from exploring and from implementing alternative uses for our fee owned land at Eagle Mountain. As of the date of this Report, there has not been any new military training at Eagle Mountain since opponents to the Landfill Project filed an ultimately unsuccessful motion in court to prevent the use of the Eagle Mountain property. For additional information, see “Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Business Update - Eagle Mountain Project - Landfill Project Litigation” above.

As a result of previous mining activities, it is estimated that there are over 150 million tons of rock stockpiled on our fee owned land at Eagle Mountain that is not a part of the Landfill Project. While we have sold and shipped rock of various quantities over the years, we are exploring marketing and other opportunities for the sale of material quantities of rock from this acreage.

KAISER VENTURES LLC AND SUBSIDIARIES

Shipments of rock are dependent upon market conditions and the Eagle Mountain mine having all necessary permits.

Lake Tamarisk

The Company continues to consider the possible sale and other opportunities forof its property at Lake Tamarisk including exploringTamarisk. However, given the current state of the California economy and based upon an analysis of the development opportunities that may enhance the ultimate value and sale ofwe have been exploring for our Lake Tamarisk property, we have indefinitely delayed such properties.development opportunities.

OPERATING RESULTS

Summary of Revenue Sources

Due to the nature of the Company’s projects and the Company’s recognition of revenues from non-recurring items, historical period-to-period comparisons of total revenues may not be meaningful for developing an overall understanding of the Company. Therefore, the Company believes it is important to evaluate the trends in the components of its revenues as well as the recent developments regarding its long-term ongoing and interim revenue sources. See “Part I, Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - OPERATIONS—BUSINESS UPDATE” for a discussion of recent material events affecting the Company’s revenue sources.

KAISER VENTURES LLC AND SUBSIDIARIES

Results of Operations

Table of Major Variances in Net Loss for the QuarterQuarters Ended SeptemberJune 30, 20082009 and 2007:2008:

Analysis of Results for the Quarters Ended SeptemberJune 30, 20082009 and 20072008

Revenues. Total revenues for the thirdsecond quarter of 20082009 were $811,000,$273,000, compared to $661,000$655,000 for 2007.2008. The reasons for this increasedecrease are discussed below.

Revenue from the Company’s equity method investment in the West Valley MRF increaseddecreased by $113,000$346,000 to $765,000.$263,000. This increase,decrease, which correlates to higherresults from lower operating profit from the West Valley MRF, is due primarily to: (a)to lower operating expenses; (b)recyclable sales as a result of the impacts of the world-wide economic recession and the associated significant decrease in commodity prices which were partially offset by lower depreciation expenses relatingrecyclable rebates paid by the West Valley MRF. In addition, the volumes of municipal waste and green waste processed by the West Valley MRF declined in the second quarter of 2009 as compared to fully depreciated equipment; and (c) reduced maintenance of rolling stock.the same period in 2008 due to the current economic recession.

Revenue from Eagle Mountain operations increaseddecreased to $46,000$10,000 for the thirdsecond quarter of 20082009 from $9,000$47,000 for the same period in 2007.2008. This increasedecrease is primarily the result of there being no salvage and scrap sales in the salesecond quarter of scrap metal from surplus equipment, and machinery and salvaged rail line.2009.

Operating Costs. Operating costs increaseddecreased to $493,000$436,000 for the thirdsecond quarter of 20082009 from $485,000$505,000 for the same period in 2007.2008. This increasedecrease relates primarily to: (a) legal anda decline in consulting services associated with the development of the Eagle Mountain rock resources and the development of the Company’s land at Lake Tamarisk;resources; and (b) an increase in personnel coststhe absence of bulk fuel purchases at Eagle Mountain.

Corporate General and Administrative Expenses.Corporate general and administrative expenses increased to $510,000 for the thirdsecond quarter of 2008 remained constant at $422,000 compared to $423,0002009 from $445,000 for the same period in 20072008. This increase is primarily the result of an increase in other outside services associated with the cost of temporary personnel plus the cost of restricted units granted as minor costpart of the overall compensation package for the executive officers. These increases in outside services related to temporary personnel were partially offset by reductions in other corporate expenses and increased overhead cost allocations to Mine Reclamation, LLC and the West Valley MRF, LLC.

KAISER VENTURES LLC AND SUBSIDIARIES

Net Interest and Investment Income. Net interest and investment income including, realized and unrealized gains/(losses) for the thirdsecond quarter of 20082009, was a lossnet gain of $206,000$280,000 compared to a gain of $123,000$59,000 for the same period in 2007. This change is2008. Of the result$280,000 of a temporary reduction inincome for the “Market Value”second quarter of investments during the quarter. The current U.S. credit crisis has caused some of2009, $155,000 relates to interest income and net realized and unrealized gains(losses) on the Company’s commercial papershort-term investments and $125,000 relates to decline in value as of September 30, 2008. The Company expected to hold these investments to maturity so that this decline in market value at September 30, 2008, is considered temporary.net realized and unrealized gains/(losses) on the Company’s SERP contributions. As of January 2008, the Company has adopted FAS 159 “The Fair Value Option for Financial Assets and Financial Liabilities” which permits entities to choose to measure many financial instruments and certain other items at fair value. Investments are marked to market and unrealized earnings or loss is reflected in income for the period in which they are earned. For the quarter ended September 30, 2008, the adoption of FAS 159 decreased investment income by $256,000.

Pre-Tax Income (Loss) andLoss Before Income Tax Provision. The Company recorded a pre-tax loss of $310,000$393,000 in the thirdsecond quarter of 20082009 versus a pre-tax loss of $124,000$236,000 for the same period in 2007.2008. The Company is taxed as a

KAISER VENTURES LLC AND SUBSIDIARIES

partnership and, thus, the Company’s results of operations (on an income tax basis) are allocated to the unit holders for inclusion in their respective income tax returns. There are, however, income taxes imposed on the Company and imposed on Business Staffing Inc., the Company’s only corporate subsidiary; andsubsidiary plus a gross revenue tax imposed by the State of California.

Net Loss.For the thirdsecond quarter of 2008,2009, the Company incurred a net loss of $684,000,$395,000, or $0.10$0.06 per unit, versus a loss of $126,000, reported$321,000, or $0.04 per unit for the same period in 2007.2008.

Results of Operations

Table of Major Variances in Net Loss for the Nine Months Ended September 30, 2008 and 2007:

Analysis of Results for the NineSix Months Ended SeptemberJune 30, 20082009 and 20072008

Revenues. Total revenues for the first ninesix months of 20082009 were $1,979,000,$338,000, compared to $2,139,000$1,168,000 for 2007.2008. The reasons for this decrease are discussed below.

Revenue from the Company’s equity method investment in the West Valley MRF increaseddecreased by $71,000$796,000 to $1,872,000$311,000 for the first ninesix months of 20082009 as compared to the same period in 2007.2008. This increase, which correlates to higher operating profitdecrease in equity income from the West Valley MRF is the result of lower revenues relating to reduced transfer and green waste tonnage ($1,197,000) and related to lower recyclable sales ($2,808,000). Decreased revenues from commodity sales were partially offset by lower recyclable rebate payments paid by the West Valley MRF. The West Valley MRF also experienced lower transportation costs ($662,000) due to decreased fuel costs as our hauling contract includes fuel surcharges based on the price of fuel which decreased from the same period last year. The lower revenues were partially offset by rate increases which went into effect in July 2008. Finally, operating expenses decreased by $651,000 due primarily to: (a) lower operatingto reductions in payroll ($193,000); and partnership expenses; (b) lowermaintenance of rolling stock ($238,000); and a drop in depreciation expenses relatingexpense due to additional fully depreciated equipment; and (c) the absence of periodic adjustments to the allowance for doubtful accounts relating to disputed transportation rates with one customer, which was settled in September 2007.assets ($272,000).

Revenue from Eagle Mountain operations for the first ninesix months of 20082009 decreased to $107,000$27,000 from $338,000$61,000 for the same period in 2007.2008. This decrease is primarily the result of decreased utilization of our fee owned property for military training and media activities.

Operating Costs. Operating costs increaseddecreased to $1,475,000$825,000 for the first ninesix months from $1,213,000$982,000 for the same period in 2007. This increase relates primarily to: (a) legal2008 as a result of a drop in new business and consulting services

KAISER VENTURES LLC AND SUBSIDIARIES

associated with theland development of theexpenses (other than landfill development expenses which are capitalized) at Eagle Mountain; a reduction in Eagle Mountain rock resourcestownsite maintenance expenses; and the development of the Company’s land at Lake Tamarisk; and (b) an increasea decrease in Eagle Mountain site personnel costs at Eagle Mountain.costs.

Corporate General and Administrative Expenses.Corporate general and administrative expenses for the first ninesix months of 2008 decreased 5%2009 increased 6% to $1,346,000$981,000 from $1,412,000$924,000 for the same period in 20072008. This increase is primarily due to lower expenses related tothe result of an increase in other outside services associated with the cost of temporary personnel plus the cost of restricted units granted as part of the overall compensation package of the executive “New Business Participation Bonuses” for which thereofficers. These increases were none recordedpartially offset by reductions in 2008.other corporate expenses and increased overhead cost allocations to Mine Reclamation, LLC and the West Valley MRF, LLC.

Net Interest and Investment Income (Loss). Net interest and investment lossincome for the first ninesix months of 20082009 was $54,000$260,000 compared to a gain of $359,000$152,000 for the same period in 2007. This change is2008. Of the result$260,000 of a temporary reduction in the “Market Value” of investments during the year. The current U.S. credit crisis has caused some of the Company’s commercial paper investments to decline in value as of September 30, 2008. The Company expected to hold these investments to maturity so that this decline in market value at September 30, 2008, is considered temporary. As of January 2008 the Company has adopted FAS 159 “The Fair Value Option for Financial Assets and Financial Liabilities” which permits entities to choose to measure many financial instruments and certain other items at fair value. Investments are marked to market and unrealized earnings or loss is reflected in income for the period in which they are earned. Asfirst six months of September 30, 2008,2009, $201,000 related to interest income and net realized and unrealized gains/(losses) on the adoption of FAS 159 decreased investment income by $266,000 year-to-date.Company’s short-term investments and $59,000 relates to net realized and unrealized gains/(losses) on the Company’s SERP Contributions.

Pre-Tax Loss andBefore Income Tax Provision. The Company recorded a pre-tax loss of $896,000$1,208,000 in the first ninesix months of 20082009 versus a pre-tax loss of $127,000$586,000 for the same period in 2007.2008. The Company is taxed as a partnership and, thus, the Company’s results of operations (on an income tax basis) are allocated to the unit holders for inclusion in their respective income tax returns. There are, however, minor income taxes imposed on the Company;Company, a gross revenue tax imposed by the State of California, and imposedincome taxes on Business Staffing Inc., the Company’s only corporate subsidiary; and a gross revenue tax imposed bysubsidiary. These taxes amounted to $7,000 for the Statefirst six months of California.2009 versus $112,000 for the same period in 2008.

KAISER VENTURES LLC AND SUBSIDIARIES

Net Loss.For the first ninesix months of 2008,2009, the Company incurred a net loss of $1,382,000,$1,215,000, or $0.19 per unit, versus a net loss of $137,000,$698,000, or $0.02$0.10 per unit, reported for the same period in 2007.2008.

FINANCIAL POSITION

Cash, and Cash Equivalents and Short-Term Investments. The Company defines cash equivalents as highly liquid debt instruments with original maturities of 90 days or less. Cash and cash equivalents increased $18,000$347,000 to $1,437,000$1,464,000 at SeptemberJune 30, 20082009 from $1,419,000$1,117,000 at December 31, 2007.2008. Included in cash and cash equivalents is $960,000$660,000 and $905,000$785,000 held solely for the benefit of MRC at SeptemberJune 30, 20082009 and December 31, 2007,2008, respectively. The increase in cash and cash equivalents is primarily due to net short-term investment activity which included the liquidation of some short-term investments ($830,000), cash distributions from the West Valley MRF of $2.0 million, and additional minority interest investment in MRC received from third parties of $57,000. These increases were partially1,869,000). This increase was offset by capital expenditures ($25,000); an increase in accounts receivable ($51,000); capitalized landfill expenditures ($143,000); and net other cash used for operations of $2,530,000, capitalized landfill expenditures of $281,000, and capital expenditures of $59,000.($1,303,000).

Working Capital. During the first ninesix months of 2008,2009, current assets decreased $844,000$1,412,000 to $10.9$8.1 million, and current liabilities decreased $149,000$120,000 to $2.1$1.9 million. The decrease in current assets was the net result of a decrease in short-term investments of $830,000; a decrease$1,869,000; an increase in accounts and other receivablereceivables of $32,000 which relates primarily to accounts receivable trade and$51,000; an increase in restricted cash and investments of $18,000$59,000 and the increase of $347,000 in cash and equivalents as discussed above. The decrease in current liabilities is the net of a $22,000$20,000 decrease in accounts payable; a $156,000$101,000 decrease in accrued liabilities as a result of Business Staffing Inc. (a subsidiary of the Company) payments of accrued bonuses, unit grants and income taxes;liabilities; and a $29,000$1,000 increase in taxes payable. As a result, working capital decreased during the first ninesix months of 20082009 by $695,000$1,292,000 to $8.8$6.2 million at SeptemberJune 30, 2008.2009.

KAISER VENTURES LLC AND SUBSIDIARIES

Accounts Receivable and Other (Net). During the first ninesix months of 2008,2009, accounts receivable and other (net) decreasedcurrent net assets increased by $32,000$51,000 which is primarily a reductionan increase in Accounts Receivable Trade.prepaid insurance.

Short-Term Investments. During the first ninesix months of 2008,2009, short-term investments decreased by $830,000.$1,869,000. This is the net result of the sale of a portion of the Company’s investments to provide cash for operations and for additional funds required to maintain our investment in Mine Reclamation, LLC, and the adoption of FAS 159.operations. At SeptemberJune 30, 2008,2009, the Company had $7.2$4.5 million of its excess cash reserves invested in such investments. As of January 1, 2008, the Company has adopted (SFAS) No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. Investments are marked to market and unrealized earnings or loss are reflected in the value of the investment and in income for the period for which they are earned. As of September 30, 2008, the adoption of FAS 159 decreased the value of short-term investments by $266,000.

Investments. The Company’s equity share of income from the investment in the West Valley MRF, for the first ninesix months of the year was offset by the receipt of cash distributions totaling $2.0 million$311,000 resulting in a $129,000 decrease inan increase the Company’s investment in the West Valley MRF. Our investment in the Landfill Project increased $281,000$143,000 during the first ninesix months of 20082009 due to continuing landfill development activities which were capitalized. Additionally, in June 2007 the Company approved a subscription agreement with MRC to provide, at a minimum, an additional $990,000 in working capital for MRC. The first installment of 60% ($594,000) of the minimum subscription amount was paid during the second quarter of 2007, the second and final installment was paid during the first quarter of 2008. Since all the owners of MRC did not purchase their respective pro rata interest in the private placement, we purchased the balance of such units, resulting in an additional investment. Accordingly, as a result of the last private placement our additional investment in MRC was a total of $1,057,000. As a result of the private placement, our ownership interest in MRC increased from 82.48% to 83.13%.

Other Assets. For the first ninesix months of the year there was a decrease in other assets of $772,000$308,000 which is primarily the result of the amortization of the environmental insurance policy of $225,000,$150,000, an increase in accumulated depreciation as of SeptemberJune 30, 20082009 of $278,000 and the reversal of a deferred tax asset of $328,000,$183,000, which was previously anticipated to be refundable. These decreases were partially offset by the capitalizationcapital expenditure to purchase a new computer server and related equipment and software for the corporate office of building and water system repairs of $59,000.$25,000.

Environmental Remediation. The Company purchased, effective June 30, 2001, a 12-year $50 million insurance policy, which is expected to cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company. As of June 30, 2008,2009, based upon current information, we estimate that our future environmental liability related to certain matters and risks not assumed by CCG Ontario, LLC, a subsidiary of ProLogis, in its purchase of the Mill Site Property August 2000 would be approximately $2.8 million for which a reserve has been established. In the event a claim for damages is filed against the Company that relates to this reserve, management believes that the claim may be covered by insurance depending upon the nature and timing of the claim.

KAISER VENTURES LLC AND SUBSIDIARIES

Minority Interest. As of SeptemberJune 30, 2008,2009, the Company has recorded $5,322,000 of minority interest relating to the approximately 17.0% ownership interest in MRC the Company does not own.

Contingent Liabilities. The Company has contingent liabilities more fully described above and in the notes to the financial statements.

Critical Accounting Policies

The Company’s accounting policies are more fully described in the Notes to the Financial Statements included in the Company’s Annual Report on Form 10-KSB10-K for the year ended December 31, 2007.2008. As disclosed in the Notes to the 20072008 Annual Financial Statements, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the financial

KAISER VENTURES LLC AND SUBSIDIARIES

statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty and therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The Company believes the following critical accounting policies are important to the portrayal of the Company’s financial condition and results.

Investments. The Company accounts for investments under the provisions of Statement of Financial Accounting Standards (SFAS) No. 115,Accounting for Certain Investments in Debt and Equity Securities. The Company invests its’ excess cash reserves in high grade commercial paper (Standard & Poor’s rating of “A” or above), and U.S. government bonds which it classifies as “available-for-sale” and which are recorded at the purchase price of the security plus or minus the discount or premium paid. As of January 1, 2008, the Company has adopted (SFAS) No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Investments are marked to market and unrealized earnings are reflected in income for the period in which they are earned. Due to the current U.S. credit crisis, the fair value of the Company’s commercial paper investments have fluctuated significantly. However, the Company expects to hold these investments to maturity, thereby mitigating any unknown fluctuations in fair value.

Investment in West Valley MRF, LLC. The Company accounts for its investment in West Valley MRF, LLC, the owner of West Valley MRF, under the equity method of accounting because of the Company’s 50% non-controlling ownership interest.

Landfill Permitting and Development. Through its 83.13% interest in MRC, the Company has been developing, for sale to a municipal entity or operating company, its property known as the Eagle Mountain Site in the California desert for use as a rail-haul municipal solid waste landfill. Pursuant to SFAS No. 67,Accounting for Costs and Initial Rental Operations of Real Estate Projects,capitalizable landfill site development costs are recorded at cost and will be expensed when management determines that the capitalized costs provide no future benefit.

Environmental Insurance and Environmental Remediation Liabilities. The Company’s $3.8 million premium for the prospective insurance policy, which was reduced by a refund from the insurance carrier, is capitalized as a long-term asset and is being amortized on a straight-line basis over the twelve (12) year term of the policy. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Company’s consolidated financial statements pursuant to FAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are recorded as insurance receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated.

Revenue Recognition. Revenues are recognized when the Company has completed the earnings process and an exchange transaction has taken place.

KAISER VENTURES LLC AND SUBSIDIARIES

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Uncertain Tax Benefits.The Company adopted Financial Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement 109 (“SFAS 109”) effective January 1, 2007. Because the Company is a limited liability company, it has no

KAISER VENTURES LLC AND SUBSIDIARIES

unrecognized tax benefits and the adoption of FIN 48 had no impact on the Company’s financial statements.

Conditional Asset Retirement Obligations. In March 2005, the Financial Accounting Standards Board issued, Interpretation No. 47. “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”) clarifying and interpreting the legal obligation to perform an asset retirement activity in which the timing and/or settlement are conditional on a future event that may or may not be within the control of the Company. The Company adopted FIN 47 effective as of December 31, 2005. Based upon currently available information, the Company estimated that the conditional asset retirement obligations related to possible future abatement for asbestos-containing products in certain of the viable structures at Eagle Mountain would approximate $1.2 million. Pursuant to the requirements of FIN 47, the Company increased its environmental reserve as of December 31, 2005 by $1.2 million to account for these conditional obligations and increased the carrying amount of the associated structures at Eagle Mountain by a comparable amount. This increased cost basis is being depreciated over the remaining estimated time that such assets will be owned by the Company, which is currently estimated to be approximately 4 years beginning as of January 1, 2006.

Long-Lived Assets. In accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-lived Assets, long-lived assets are evaluated for potential impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

BUSINESS OUTLOOK

The statements contained in this Business Outlook, as well as in “Part I - I—Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - OPERATIONS—BUSINESS UPDATE”, are based upon current operations and expectations. In addition to the forward-looking statements and information contained elsewhere in this Report on Form 10-Q, these statements are forward-looking and, therefore, actual results may differ materially. See the Company’s disclosure regarding forward-looking statements in the section entitled “Forward-Looking Statements” above.

Ongoing Operations. As noted above, our revenues from ongoing operations have, in the past, generally been derived from the performance of our major long-term development projects and investments. We have previously sold most of our projects and investments. Our principal remaining assets and projects, other than cash and securities, are: (i) our ownership interest in the MRC Landfill Project; (ii) our 50% equity ownership of the West Valley MRF; (iii) miscellaneous property at or near the Eagle Mountain Townsite; and (iv) the millions of tons of rock stockpiled at the Eagle Mountain Site on our fee owned property that is not a part of the Landfill Project. We have no material ongoing operations except in connection with such assets and projects. Our principal sources of ongoing income are derived from the West Valley MRF, our investments and our investments.from miscellaneous income generated at the Eagle Mountain Site. We will continue to evaluate our remaining assets and investments in light of how to best provide maximum value to our members.

In regard to the West Valley MRF, the most significant factors affecting our future equity income will continue to depend upon: (i) on the ability of the West Valley MRF to retain customers and waste volumes at attractive processing rates; (ii) recyclable commodity prices; (iv) the ability to increase prices to reflect increases in such items as transportation,

KAISER VENTURES LLC AND SUBSIDIARIES

labor and disposal costs and (iv) future competition from competing facilities. With regard to retaining customers, a major municipal waste contract, accounting for approximately one-third of the West Valley MRF’s gross revenues, is currently set to expire on December 31, 2008. West Valley MRF is bidding to retain the municipal waste stream represented by such contract but there can be no assurance that West Valley MRF will be successful in retaining such waste stream or that the current financial terms will remain in effect. Commodity prices have fluctuated dramatically and this volatility impacts the West Valley MRF’s revenue both positively and negatively. During the first quarter of 2008 the West Valley MRF adopted and implemented a new commodity rebate program for municipalities utilizing the West Valley MRF. As commodity prices

KAISER VENTURES LLC AND SUBSIDIARIES

achieve certain price levels, the participating municipalities will participate, via a bonus rebate, in the increase in commodity prices above established levels. However, dueDue to the current world-wide economic conditions and other factors, commodity prices, starting in the third quarter of 2008, declined dramatically. Over the last 120 days we have begunseen a modest improvement in commodity prices but such prices are still well below the prices at which commodities were being sold during the first half of 2008. This material decline in commodity prices along with reduced waste volumes due to decline dramatically. If this decline continues itthe current economic recession will have a material negative impact on the WVMRF’s profitability.West Valley MRF’s profitability and on distributions to the Company. Additionally, the West Valley MRF is continuing the process of evaluating possible waste-to-energy and composting projects that might be capable of utilizing a portion of the municipal solid waste received at the facility. During 2008 capital improvements were made to the West Valley MRF costing $812,000.

As part of our strategy, we intend to evaluate any potential offers to purchase our interest in West Valley or other alternatives in light of our primary objective of maximizing value. West Valley currently generates more than sufficient cash flow to fund its cost of operations and does not require additional investment by us. Furthermore, West Valley should continue to generate sufficient cash distributions to cover a significant portion of Kaiser LLC’s foreseeable general and administrative costs.

Pending Sale of Eagle Mountain Landfill Project. As discussed in more detail in “Part I - I—Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - OPERATIONS—BUSINESS UPDATE - UPDATE—Eagle Mountain Landfill Project and Pending Sale.” In August 2000, MRC entered into that certain Agreement For Purchase and Sale of Real Property and Related Personal Property In Regard To The Eagle Mountain Sanitary Landfill Project and Joint Escrow Instructions (“Landfill Project Sale Agreement”) with the District. In summary, the landfill project (which includes our royalty payments under the MRC Lease) is under contract to be sold to the District for $41 million plus an estimated approximate $8.3$8.5 million in accrued interest from May 2001 to the date of this Report on Form 10-Q. The exact future timing of any initial closing is currently unknown and there are a number of risks associated with the project and certain conditions that must be satisfied before the sale of the District, including resolution of the outstanding federal land exchange litigation discussed below. Kaiser’s equity interest in MRC is currently 83.13%.

Assuming there is a sale of the landfill project, $41 million of the total purchase price will be deposited into an escrow account and will be released when any litigation contingencies are fully resolved. As of the date of this Report, the only litigation contingency is the federal litigation challenging the completed federal land exchange. In September 2005 the Company received an adverse U.S. District Court decision in the land exchange litigation that may materially impact the validity of the Landfill Project. The decision was adverse to the landfill project in that it set aside the land exchange completed between the Company and BLM as well as two BLM rights-of-way. The Company and the Department of Interior appealed the decision. Oral argument on this case was held on December 6, 2007. TheWhile the U.S. 9^th Circuit of Appeals usually announces its decision six to twelve months following oral argument. However,argument, on occasion the announcement of a decision may take substantially longer. It has been over 19 months since oral argument was held and thus, the decision could be announced at any time. If the decision is fully affirmed on appeal, the decision would jeopardize the viability of the landfill project. In addition, the decision could adversely impact the agreement to sell the Landfill Project to the District, including termination of the Landfill Project Sale Agreement. For a more detailed discussion of this litigation and the risks associated with this litigation, see “Part I - I—Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - OPERATIONS—BUSINESS UPDATE - UPDATE—Eagle Mountain Landfill Project and Pending Sale.” Although closing has not occurred, interest began to accrue on this portion of the purchase price in May 2001.

Mill Site Property. The only remaining Mill Site Property owned by the Company is an approximate five acre parcel referred to as the Tar Pits Parcel. CCG Ontario, LLC substantially completed theall material environmental remediation of this parcel pursuant to the terms of its agreement during 2002. CCG Ontario does have ongoing operations and maintenance obligation with respect to the Tar Pits Parcel. West Valley has the right to purchase the Tar Pits Parcel for $1.00.

Sale of Miscellaneous Properties, Eagle Mountain Townsite, and other Possible Opportunities. We are continuing to seek buyers for our miscellaneous properties, most of which are located at or near our Eagle Mountain facilities and we are continuing to seek tenants and other uses for the private prison

KAISER VENTURES LLC AND SUBSIDIARIES

facility in the Eagle Mountain Townsite. However, the September 2005 adverse U.S. District Court

KAISER VENTURES LLC AND SUBSIDIARIES

decision involving a completed land exchange between Kaiser and the BLM may hinder our efforts at Eagle Mountain. Additionally, due to the passage of time and the impacts of weather, a number of buildings and old houses at the Eagle Mountain Townsite are deteriorating at a faster rate than anticipated and may not be salvageable. Accordingly, we may need to demolish or rehabilitate a number of structures over the next several years.

In addition, we are exploringcontinue to explore possible opportunities at the Eagle Mountain Site including, military and law enforcement training, the temporary use of water resources and opportunities for the sale of rock from our fee owned land at Eagle Mountain. As a result of past mining activities, an estimated 150+ million tons of rock of various sizes were stockpiled near the Eagle Mountain Townsite on our fee owned land that is not a part of the Landfill Project. Sales of rock would be from property that is not a part of the Landfill Project. Rock sales are subject to market conditions and the Company having all required permits.

We willThe Company’s Board of Managers in its April 2009 meeting decided not to continue to explorepursuing the further development and use of our property at Lake Tamarisk and at Eagle Mountain for other purposes. For example, at Lake Tamarisk we currently have certain lots listedalthough such property still remains available for sale. With regard to the Eagle Mountain Site, military and law enforcement training exercises have taken place in the past on portions of our fee owned property. However, noA small military training has occurred since January 2007 because of the uncertainty associated with the federal land exchange litigation.exercise was held at such site in late July 2009. We continue to explore and pursue these types of opportunities.

Tender Offers. As previously discussed under “Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS - BUSINESS UPDATE - Tender Offers” in late September 2008, affiliates of MacKenzie Patterson & Fuller, LP launched a tender offer to the Company’s unitholders offering to purchase up to 1,400,000 of the Company’s Class A Units at $.50 less certain transfer costs. The MacKenzie tender offer terminated on October 30, 2008. MacKenzie terminated its offer without purchasing units. Under the terms of its Member’s Operating Agreement, the Company is to be reimbursed for costs associated with any proposed transfer which would include the costs associated with responding to the MacKenzie Offer. Since these costs are not likely to be reimbursed by MacKenzie, the Company will ultimately bear the burden for such costs. Similarly, the Company has incurred and will continue to incur costs associated with the Company Offer and the transfer of units purchased as well as the $.90 per unit purchase price. This will impact the amount of our cash balances.

Corporate Overhead. Given our current assets and projects, it is unlikely that we will be able to further reduce personnel and corporate overhead in the near future. However, as we divest our remaining assets, we intend to further reduce corporate staffing and overhead to reflect the reduced requirements of our remaining operations and projects. The costs of such reductions shall be recorded at the time the decision to make such reductions is made by the Company.

Capital Resources. The Company initiated a self-tender offer in the fourth quarter of 2008 in response to a tender offer commenced by a third-party. While the Company’s Board of Managers recommended against the acceptance of either tender offer, the Company ultimately purchased 841,544 Class A Units as a result of its tender offer. The purchase of the units together with the expenses associated with both tender offers reduced our available cash by approximately $1 million. Even with the expenses associated with the tender offers and the cost of purchasing anythe units tendered Kaiser LLC expects that its current cash balances and short-term investments together with cash generated from the West Valley MRF, note receivables and any future asset sales as well as expense reductions will be sufficient to satisfy the Company’s ongoing projected operating cash requirements overfor the next several years.

Cash Maximization Strategy

We have been developing our remaining assets and then selling them at such times and on such terms as we believe optimizes the realizable value for a particular project or asset. During 2000 and 2001, we: (i) sold the balance of our real estate at the former KSC mill site near Fontana, California, except for an approximate five acre parcel, the Tar Pits Parcel; (ii) entered into an agreement to sell the landfill project to the District for an aggregate of $41 million plus accrued interest, with MRC and the District working toward a closing on such transaction; (iii) sold our interest in Fontana Union to Cucamonga; and (iv) paid a total of $12.00 per share in cash distributions to Kaiser Inc.’s stockholders. In continuing this strategy, our current plans include:

KAISER VENTURES LLC AND SUBSIDIARIES

KAISER VENTURES LLC AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - BUSINESS UPDATE - Eagle Mountain Landfill Project and Pending Sale”;SUBSIDIARIES

The Company currently expects to terminate operations and distribute substantially all available cash to its members once the cash maximization strategy is completed. The September 2005 adverse U.S. District Court decision concerning the Landfill Project will affect the completion date for, and may ultimately alter this strategy. The Company currently does not expect completion of this strategy until 2009 at the earliest.for several years.

Conversion. In November 2001, the stockholders of Kaiser Inc. overwhelmingly approved the conversion of Kaiser Inc. into a newly-formed limited liability company pursuant to a merger between the Kaiser Inc. and Kaiser LLC. In this conversion, Kaiser Inc.’s stockholders received $10.00 in cash plus one Class A Unit for each share of common stock in Kaiser Inc. The conversion to a limited liability company and the resulting cash payment to stockholders was an important step in the implementation of the cash maximization strategy.

Insurance. In furtherance of the cash maximization strategy, we purchased an insurance policy in 2001 that is designed to provide broad commercial general liability, pollution legal liability, and contractual indemnity coverage for our ongoing and historical operations. The aggregate cost for this policy was approximately $5.8 million, of which KSC Recovery paid $2.0 million and the Company paid $3.8 million.

Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.

Based on its review of the Company’s disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its subsidiaries) that is required to be included in the Company’s periodic Securities and Exchange Commission filings. Specifically, in 2008, the Company requested that all of the critical employees, officers and Members of the Board of Managers of the Company complete an extensive internal control and risk management questionnaire; and internally reviewed and tested its internal controls against its written procedures. The above conclusions are based upon the work performed. Additionally, during the first quarter of 2009, the Company further reviewed its controls and procedures and made modifications to provide additional checks and oversight as a part of the controls and procedures. There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

FINANCIAL STATEMENTS

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

as of

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

as of

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

as of

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

for the Three Months and NineSix Months Ended SeptemberJune 30

(Unaudited)

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the Six Months Ended June 30

(Unaudited)

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the Nine Months Ended September 30

(Unaudited)

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

for the Nine Months Ended September 30, 2008

(Unaudited)

At September 30, 2008 and December 31, 2007, Kaiser Ventures LLC had 751,956 Class B Units; 872 Class C Units; and 128 Class D Units outstanding.

The accompanying notes are an integral part of the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The unaudited consolidated financial statements of Kaiser Ventures LLC and Subsidiaries (the “Company”) as of June 30, 20082009 and 2007,2008, as well as related notes, should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2007,2008, included in the Company’s Annual Report on Form 10-KSB.10-K. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary (all of which are normal and/or recurring in nature) to present fairly the Company’s financial position at SeptemberJune 30, 2008,2009, and results of operations for the three and six months and cash flows for the threesix month period ended June 30, 2009 and nine month periods ended September 30, 2008 and 2007.2008.

The Company’s consolidated financial statements include the following significant entities: Lake Tamarisk Development, LLC; Kaiser Eagle Mountain, LLC; Kaiser Recycling LLC; Business Staffing, Inc. all of which are 100% owned; and Mine Reclamation, LLC, which is 83.13% owned.

Kaiser is the reorganized successor to Kaiser Steel Corporation, referred to as KSC, which was an integrated steel manufacturer that filed for bankruptcy protection in 1987. Since KSC’s bankruptcy, we have been developing assets remaining after the bankruptcy and have realized substantial value from certain of those assets. Currently, our principal remaining assets are: (i) an 83.13% ownership interest in Mine Reclamation, LLC, (referred to as MRC), which owns a permitted rail-haul municipal solid waste landfill at a property called the Eagle Mountain Site located in the California desert (the “Landfill Project”). This landfill is currently subject to a contract for its sale to County District No. 2 of Los Angeles County (which we refer to as the District) for approximately $41 million plus accrued interest, which sale is subject to a number of conditions, several of which remain to be fully satisfied; (ii) a 50% ownership interest in the West Valley Materials Recovery Facility and Transfer Station, a transfer station and materials recovery facility located on land acquired from Kaiser, which we refer to as the West Valley MRF; and (iii) approximately 5,400 additional acres owned or controlled by Kaiser at the Eagle Mountain Site that are not included in the pending sale to the District. However, a September 2005 adverse U.S. District Court decision involving a federal land exchange may impact the viability of the Landfill Project and its planned sale to the District.

Recently Adopted Accounting Standards

SFAS No. 157. On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 provides a definition of fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States (“GAAP”), and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does not expand the use of fair value in any new circumstance.

SFAS No. 159. On January 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. Subsequent changes in fair value for designated items are required to be reported in earnings in the current period. SFAS 159 also establishes presentation and disclosure requirements for similar types of assets and liabilities measured at fair value. The Company elected to measure at fair value short-term investments classified as available-for-sale. The cumulative effect to beginning retained earnings was a decrease through a cumulative effect of a change in accounting principle of approximately $27,000 on January 1, 2008. Refer to Note 3 to the Condensed Consolidated Financial Statements for further detail.

Reclassifications. In the first quarter of 2008, in an effort to provide our investors with a clearer identification of our revenues and expenses we have removed the heading “Resource” from our revenue and expense categories and re-titled our interim revenues and expenses as Eagle Mountain revenues and expenses. This re-titling has had

KAISER VENTURES LLC AND SUBSIDIARIES

no impact on revenue, gross margin, net loss, assets or liabilities in the periods presented and has no impact on previously reported results.

The Company purchased an insurance policy effective June 30, 2001 that is designed to provide broad prospective commercial general liability, pollution legal liability, and contractual indemnity coverage for the Company’s ongoing and historical operations. The policy has a twelve (12) year term and limits of $50 million in the aggregate for defense and indemnity, with no deductible or self-insured retention. The policy is designed to provide coverage for future claims in excess of the Company’s existing and historic insurance policies; however, to the extent that these other insurance policies are not responsive to a claim, the policy will provide first dollar coverage for a claim resulting from property damage, personal injury, bodily injury, cleanup costs or violations of environmental laws. The policy also provides for a broad defense of claims that may be brought against the Company. The policy is specifically intended to provide additional coverage for potential liabilities arising from pollution conditions or known and/or potential asbestos-related claims. The policy also provides contractual indemnity coverage for scheduled indemnity obligations of the Company arising from, e.g., prior corporate transactions and real estate sales. The Company expects this policy will cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company.

The aggregate cost for this policy was approximately $5.8 million, of which, based upon discussions among the respective members of the Boards of Directors, KSC Recovery paid $2 million and the Company paid the balance of approximately $3.8 million. The portion of the policy paid by KSC Recovery was expected to cover

KAISER VENTURES LLC AND SUBSIDIARIES

known and/or potential asbestos claims; while the portion of the policy paid by the Company was expected to cover future potential claims arising from the Company’s historical operations.

In June 2005, the Company was notified that it was to receive a refund of a portion of the cost of the policy relating to other commissions. The refund, totaling $106,000, was recorded as a reduction in the cost of the policy and the future amortization of the policy cost has been adjusted accordingly as described below.

The Company’s original $3.8 million premium for the prospective insurance policy was capitalized as a long-term asset and wasis being amortized on a straight-line basis over the 12 year term of the policy; approximately $80,000 per quarter or $320,000 per year. After recording the refund described above and an adjustment to standardize the monthly expense, the quarterly amortization is approximately $75,000 per quarter or $300,000 per year.policy. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Company’s consolidated financial statements pursuant to SFAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are recorded as insurance receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated. Generally, unless previously accrued, the liability and the receivable relating to claims covered by this policy should occur in the same accounting period, thereby having no adverse or beneficial impact on the Company’s operating results for that accounting period.

The Company has an Investment Policy which provides for the investment of excess cash balances primarily in bond funds, commercial paper, and debt instruments. At SeptemberJune 30, 20082009 the Company had investments in high grade commercial paper (Standard & Poor’s rating of “A” or above) which is classified as “available-for-sale.” The classification of investment securities is reviewed by the Company as of the end each reporting period.

TheEffective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) as it relates to recurring financial assets and liabilities. This new standard addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. Effective January 1, 2009, the Company adopted SFAS 157 on January 1, 2008, which provides a definition of fair value, establishes a framework for measuring fair value,nonfinancial assets and requires expanded disclosures about fair value measurements. The

KAISER VENTURES LLC AND SUBSIDIARIES

standard applies when GAAP requiresnonfinancial liabilities that are recognized or allows assets or liabilities to be measureddisclosed at fair value and therefore, does not expandin the usefinancial statements on a nonrecurring basis in accordance with the deferral provisions of fair valueFASB Staff Position FAS 157-2. The adoption in any new circumstance.

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 clarifies that fair value should be based2009 had no impact on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). Additionally, SFAS 157 requires an entity to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring fair value of a liability.financial statements.

SFAS 157 establishes a three-level hierarchy to be used when measuring and disclosing fair value. An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. Following is a description of the three hierarchy levels:

The carrying value of cash and cash equivalents, accounts receivable and trade payables approximates the fair value due to their short-term maturities.

Following is a description of the valuation methodology used to measure short-term investments at fair value.

KAISER VENTURES LLC AND SUBSIDIARIES

Available-for-sale securities are carried at fair value, which is based on observable market prices. The Company classified 100% of the available-for-sale securities reported at fair value as Level 1. Available-for-sale securities account for 100% of all assets reported at fair value at SeptemberJune 30, 2008.2009.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value option for Financial Assets and Liabilities.” This Statement permits entities to choose to measure many financial instruments and certain other itemsmeasured at fair value on a recurring basis include the following as of June 30, 2009:

On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. The objectiveEstimated fair value is to improve financial reporting by providing entitiesdetermined primarily using the anticipated cash flows discounted at a rate commensurate with the opportunity to mitigate volatility in reporting earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. The provisions of SFAS 159 are effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company adopted SFAS 159 as of January 1, 2008, which has no material impact on the Company’s consolidated financial statements. The following is a summary of the fair value of investment securities classified as “available-for-sale” as of September 30, 2008 and December 31, 2007:risk involved.

The Company has chosen to adopt FAS 159 for the measurement of short-term investments in an effort to more clearly identify the actual value of the investment and its earnings for the reporting period. At the end of a period the actual market value is compared to the actual cost and used to determine any gain or loss on the

KAISER VENTURES LLC AND SUBSIDIARIES

maturity or sale of each available-for-sale investment.

The current U.S. credit crisis has caused somefollowing is a summary of the Company’s commercial paper investments to decline infair value of investment securities classified as “available-for-sale” as of SeptemberJune 30, 2009 and December 31, 2008.

INITIAL ADOPTIONOF FAIR VALUE OPTION (FVO) For each item included in the table below the gains or losses from Fair Value reporting are included in income for the second quarter.

Effective June 19, 1997, Kaiser Recycling Corporation (“KRC”) (now Kaiser Recycling, LLC) and West Valley Recycling & Transfer, Inc. (“WVRT”), a subsidiary of Burrtec Waste Industries, Inc. (“Burrtec”), which are equal members of West Valley MRF, LLC, (a California limited liability company) entered into a Members Operating Agreement (“MOA”) which is substantially the equivalent of a joint venture agreement for a limited liability company. The construction and start up of the West Valley MRF was completed during December 1997.

Most of the financing for the construction of the West Valley MRF of approximately $22 million, was obtained through the issuance and sale of two California Pollution Control Financing Authority (the “Authority”) Variable Rate Demand Solid Waste Disposal Revenue bonds. The bonds are secured by an irrevocable letter of

KAISER VENTURES LLC AND SUBSIDIARIES

credit issued by Union Bank of California, N.A. (“Union Bank”). As of September 30, 2008,May 31, 2009, the total outstanding Authority debt is $7,710,000.

The current payment schedule as of May 31, 2009, for the California Pollution Control Authority bonds is summarized below.

The Company also remains responsible for any pre-existing environmental conditions on the land on which the WVMRF is located, which is covered by insurance.

The Company is accounting for its investment in West Valley MRF, LLC under the equity method.

Due to the time required to close the books of the West Valley MRF, LLC and in keeping with past practice, there is a one month delay in reporting the results of West Valley MRF, LLC. The condensed summarized financial information of West Valley MRF, LLC is as follows:

KAISER VENTURES LLC AND SUBSIDIARIES

The reductionincrease in Current Assets and Members’ Equity for the West Valley MRF between November 30, 20072008 and August 31, 2008,June 30, 2009, is due primarily to $3.0 million inthe fact that no cash distributions were made to eacheither of the West Valley MRF’s two members.

The Company recognized equity income from the West Valley MRF of $1,871,000$311,000 and $1,801,000$1,107,000 for the first ninesix months of 20082009 and 2007,2008, respectively. However, due to the current world-wide economic conditions and other factors, commodity prices starting in the third quarter of 2008, have begun to declinedeclined dramatically. If this decline continues it will have a material negative impact on the WVMRF’s profitability. As noted above, the Company received a $1 milliondid not receive any cash distributiondistributions from its investment in the West Valley MRF during the first quartersix

KAISER VENTURES LLC AND SUBSIDIARIES

months of 2008 and an additional $.5 million cash distribution in both the second and third quarters of 2008;2009; however only a $1$5 million dollar distribution was received forin July 2009. Although commodity prices have modestly increased over the last 120 days they still are significantly below the prices obtained during the first nine months of 2007.2008. Accordingly, the financial performance of the West Valley MRF in 2009 will be materially lower in comparison to its financial performance in 2008.

The Company reviews all long-lived assets on a quarterly basis to determine if the anticipated cash flows from the assets will equal or exceed their capitalized costs. Our reviews as of SeptemberJune 30, 2008,2009, concluded that no impairment of long-lived assets existed: (a) the Eagle Mountain Landfill Project is currently under a sale contract with County District No. 2 of Los Angeles County for $41 million (83.13% of which belongs to Kaiser) which exceeds its capitalized cost, however, the Company has evaluated and will continue to evaluate the impact of an adverse U.S. District Court decision involving the Landfill Project issued on September 20, 2005; (b) our 50% ownership interest in the West Valley MRF continues to generate significant net income and positive cash flow; and (c) our other real estate and building and equipment are recorded at the lower of cost or fair market values.

Environmental Contingencies. As discussed in Note 2, effective June 30, 2001, the Company purchased a 12-year $50 million insurance policy which is expected to cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Company’s consolidated financial statements pursuant to SFAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are recorded as insurance receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated.

KAISER VENTURES LLC AND SUBSIDIARIES

As of SeptemberJune 30, 2008,2009, the Company estimates, based upon current information and discussions with environmental consultants, that its future environmental liabilities related to certain matters not assumed by CCG Ontario, LLC in its purchase of the Mill Site Property, including a certain groundwater matter as well as potential matters at Eagle Mountain and at other historical locations, will be approximately $2.8 million. In the event that a future environmental claim for damages is filed against the Company such claim may be covered by insurance depending upon the nature and timing of the claim.

Landfill Project Litigation. Currently, the only pending litigation involving the Landfill Project concerns two lawsuits filed in U.S. District Court located in Riverside County challenging the completed federal land exchange. On September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued an opinion and order which concluded that that the land exchange be reversed and the case be sent back to the BLM for further action consistent with the opinion. The Company and the U.S. Department of Interior have appealed the decision to the U. S. 9^th Circuit Court of Appeals. Oral argument on the appeal was held on December 6, 2007. The 9^th Circuit Court Appeals usually announces its decision six to twelve months following oral argument. However, on occasion announcement on a decision may take substantially longer. If the adverse decision is fully affirmed on appeal, it would materially impact the viability of the Landfill Project in that it would prevent its development as currently permitted. In addition, the decision could adversely impact the agreement to sell the Landfill Project to the District, including termination of the agreement.

MRC Financing. Since Kaiser became an owner of MRC, MRC has been financed through a series of private placements to its existing equity owners. To cover the continuing costs of MRC such as the costs of the appeal, various anticipated closing matters and other similar items additional funding of up to $1.2 million payable in installments was completed in the third quarter of 2007 through a private placement to MRC’s existing members. The funding is payable in two installments with the first installment paid with a member’s subscription to the private placement and the second installment was paid in the first quarter of 2008. Since not all of the owners of MRC purchased their respective pro rata interest in the private placement, we purchased those interests. Accordingly, our additional investment in MRC totaled $1,057,000. As a result of theprevious private placement,placements, our current ownership interest in MRC increased from 82.48% to 83.13%. Even with the full $1.2 million being raised by the recent private placement, additionalAdditional funding maywill be required to complete the sale of the Landfill Project assuming MRC is successful in its appeal of the current federal land exchange litigation. There is no assurance that any such additional funding can be obtained or that it can be obtained on acceptable terms.

KAISER VENTURES LLC AND SUBSIDIARIES

Contingent Distributions on Class B, C and D Units. Upon the sale of certain of the Company’s assets at a price equal to or greater than certain minimum sales prices, distributions will be made on the Class B, C and D Units in accordance with their respective terms. For additional information, see “Note 1. Basis of Presentation Class B, C and D Units” above.

Tender Offers

A tender offer dated September 19, 2008,In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”) which establishes principles and amendedrequirements for how the acquirer of a business recognizes and restated by Amendment No. 1measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to Schedule TO filed September 26, 2008 (the “MacKenzie Offer”), was commenced by certain affiliates³ of MacKenzie Patterson Fuller, LP (“MacKenzie”)disclose to purchase up to 1,400,000 Class A Unitsenable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company at a purchase price equal to $.50 per Unit, less: (i) each Unitholder’s pro-rata shareadopted this standard effective January 1, 2009, which did not have an impact on its financial position, results of certain transfer costs describedoperations or cash flows as there have been no acquisitions that have been consummated after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 introduces significant changes in the MacKenzie Offerwithout any limit;accounting and (ii)reporting for business acquisitions and noncontrolling interest (“NCI”) in a subsidiary. SFAS 160 also changes the amountaccounting for and reporting for the deconsolidation of any distributions declareda subsidiary. Companies are required to adopt the new standard for fiscal years beginning after January 1, 2009. The Company adopted this standard effective January 1, 2009, which did not have a material impact on its financial position, results of operations or made with respectcash flows as the Company.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS 161”), which changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The Company adopted this standard effective January 1, 2009, which had no impact on its financial position, results of operations or cash flows as there were no derivative instruments or hedging activities after January 1, 2009.

In June 2008, the Units between September 19,FASB issued FSP Emerging Issues Task Force (EITF) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” Under the FSP, unvested share-based payment awards that contain rights to receive nonforfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. The Company adopted this standard effective January 1, 2009, which did not have an impact on its financial position, results of operations or cash flows as the unvested share-based awards do not contain rights to receive nonforfeitable dividends.

In April 2008, and October 30, 2008, or such later date to which the MacKenzie Offer may be extended. As required by applicable law, the Company’s Board of Managers met and carefully considered the MacKenzie Offer. It was the conclusion and recommendationFSP No. FAS 142-3, “Determination of the Board that unitholders should rejectUseful Life of Intangible Assets” (“FSP No. FAS 142-3”) was issued which provides for additional considerations to be used in determining useful lives and requires additional disclosure regarding renewals. The Company adopted this standard effective January 1, 2009, which had no impact on its financial position, results of operations or cash flows.

In April 2009, the MackenzieFASB issued the three new accounting standards which are required to be adopted no later than periods ending after June 15, 2009. The Company is currently evaluating the impact of the following:

i.FASB Staff Position FAS 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed” (“FSP FAS 157-4”) provides guidelines for making fair value measurements more

KAISER VENTURES LLC AND SUBSIDIARIES

Offer. The Board’s recommendationconsistent with the principles presented in SFAS 157. FSP FAS 157-4 provides additional authoritative guidance in determining whether a market is active or inactive, and whether a summarytransaction is distressed, is applicable to all assets and liabilities (i.e., financial and nonfinancial) and will require enhanced disclosures.

ii.FASB Staff Position FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” provides additional guidance to provide greater clarity about the reasons for its recommendation were communicatedcredit and noncredit component of an other-than-temporary impairment event and to improve presentation and disclosure of other than temporary impairments in a letterthe financial statements.

iii.FASB Staff Position FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments”, to unitholders dated October 2, 2008, andrequire disclosures about fair value of financial instruments in a press release of the same date.interim as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements.

In responseMay 2009, the FASB issued SFAS No. 165,Subsequent Events. This statement provides authoritative accounting literature that was previously addressed only in the auditing literature. The objective of this Statement is to establish principles and requirements for subsequent events. In particular, this Statement sets forth the MacKenzie Offerperiod after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements and in recognitionthe disclosures that somean entity shall make about events or transactions that occurred after the balance sheet date. The Company adopted this standard during the second quarter of our unitholders may2009 and its adoption did not have a desire or an immediate need for liquidity, diversification, risk reduction, or other circumstance,material effect on the Company’s Board approvedfinancial position or results of operations.

In June 2009, the commencement of an offer by the Company (the “Company Offer”) to purchase for cash up to 700,000 Class A Units at a purchase price of $.90 per Unit, without interest and without any deduction for transfer costs, upon the terms and conditions set forth in the Company’s Offer to Purchase dated October 14, 2008,FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the related LetterHierarchy of Transmittal.Generally Accepted Accounting Principles” (SFAS 168), which is effective for interim and annual periods ending after September 15, 2009. SFAS 168 defines a new hierarchy for U.S. GAAP and establishes the FASB Accounting Standards Codification as the sole source for authoritative guidance to be applied by nongovernmental entities. SFAS 168 replaces SFAS 162, “The Hierarchy of Generally Accepted Accounting Principles,” which was issued in May 2008. The Company Offer expires at 3:00 p.m. Pacific Timeadoption of SFAS 168 will change the manner in which U.S. GAAP guidance is referenced, but it will not have any impact on November 14, 2008, unless extended by the Company.⁴

Like the MacKenzie Offer, the Company’s Boardour financial position or results of Managers also recommended that unitholders reject the Company Offer as neither offer represents fair value for the Company’s units at this time.

The MacKenzie Offer expired on October 30, 2008. MacKenzie terminated its tender offer and decided not to purchase any Kaiser Class A Units.

operations.

We have evaluated events and transactions occurring after the balance sheet date through August 11, 2009, which is the date that the financial statements are issued, and noted no events that are subject to recognition or disclosure.

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KAISER VENTURES LLC AND SUBSIDIARIES

PART II

As discussed in our Annual Report on Form 10-KSB10-K for 20072008 and in our 2009 first quarter Report on Form 10-Q we are engaged in certain claims and litigation. As of the date of the filing of this report, there have not been any material developments in the legal proceedings involving the Company from the date of the filing of our Report on Form 10-KSB10-K for the period ended December 31, 2007,2008 and from the filingas reported and updated in our 2009 first quarter Report on Form 10-Q for the period ended June 30, 2008, except as discussed below:

Land Exchange Litigation

In September 2008 the U.S. District Court ruled against a motion filed by the plaintiffs in the land exchange litigation and found that activities conducted on Kaiser’s fee owned land at Eagle Mountain that was not a part of the land exchange lands did not change the character and use of the lands received in the federal land exchange. Thus, for example, the U.S. District Court found that the military training conducted on Kaiser’s fee owned land did not violate the Court’s original order. As of the date of this report there still is no decision from the U.S. 9^th Circuit Court of Appeals on the land exchange litigation appeal. For additional information on the federal exchange litigation, please see: “Item 2. MANAGEMENT’S DICUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Business Update - Eagle Mountain Landfill Project Litigation.”10-Q.

Not applicable.

Not applicable.

Not applicable.

“Item 2. MANAGEMENT’S DICUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Business Update - Tender Offers” forThe Company repurchased 15,000 Class A Units in June 2009 at a discussions relatingprice of $.65 per unit.

As previously reported, effective April 15, 2009, the Board of Managers amended the Company’s Amended Operating Agreement to address the lack of an adjustment provision in the provisions addressing the terms and conditions of the Class C and D Units. Additionally, the Board of Managers authorized the issuance of restricted Class A Units to the tender offer made by MacKenzieofficers of the Company and to Mr. Fawcett as follows:

Such units vest concurrently with the tender offer madefirst distribution to unitholders provided the individual is still employed by the Company at the time of the distribution; provided, however, there shall be an acceleration of vesting if the individual’s employment is terminated for Kaiser’sany reason other than a termination for “cause” or such individual voluntarily terminates his employment.

Effective as of June 1, 2009, the assets and liabilities of the Business Staffing, Inc. Supplemental Executive Retirement Plan were transferred to and assumed by Kaiser Ventures LLC. This transaction did not alter the financial contribution or payment terms under such plans.

KAISER VENTURES LLC AND SUBSIDIARIES

Members of the Board of Managers, other than Mr. Stoddard, were each issued 5,000 Class A Units.Units of the Company in June 2009 in accordance with the Company’s equity compensation plan for its Board of Managers. The units will vest in January 2010.

Exhibit 31.1 - —Certificate of Richard E. Stoddard, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) filed with this Report.

Exhibit 31.2 - —Certificate of James F. Verhey, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) filed with this Report.

KAISER VENTURES LLC AND SUBSIDIARIES

Exhibit 32 - —Certificate of Richard E. Stoddard, Chief Executive Officer, and James F. Verhey, Chief Financial Officer, pursuant to Section 1350, filed with this Report.

Report dated September 18, 2008,April 15, 2009, announcing a Kaiser press release concerningan amendment to our Operating Agreement addressing the U.S. District Court forterms of the Central District of California ruling in favor of military trainingClass C and other activities that were conducted at Kaiser’s Eagle Mountain site.D Units.

Report dated September 24, 2008,June 1, 2009, announcing a Kaiser press release concerning the commencementassignment of a tender offer by MacKenzie Patterson Fuller, LPassets and certain entities it controls asking unitholders to take no immediate action in response to such tender offer.assumption of the liabilities of the Business Staffing, Inc. Supplemental Executive Retirement Plan effective June 1, 2009.

KAISER VENTURES LLC AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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