February 3, 2004 minutes

February 3, 2004 Meeting Minutes

MINUTES

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

HOLIDAY INN SELECT
NAPERVILLE, ILLINOIS

FEBRUARY 3, 2004

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:04 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp (via telephonic conference)
Augustine Chung (via telephonic conference)
David Gibson
Young B. Kim
Jerry Lewicki
John Polak

Also present were:
H. Patrick Eriksen, Program Administrator's Office
John McCarthy, Program Counsel
C. Michael Perkins, Program Administrator's Office
Juho So, Program Administrator's Office

PRELIMINARY BUSINESS

The minutes from the December 17, 2003 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Gibson, the minutes were approved by a vote of 6-0.

OPERATIONAL ISSUES

A. Modification to Compliance Program Requirements:

Mr. Eriksen stated that based on the Administrator's audit of the five (5) Council approved compliance programs, the Council had directed the Administrator to look at and propose modifications that could strengthen the compliance programs and make their application more uniform for all drycleaners.

Mr. Eriksen reviewed the recommended changes enclosed in the Council's packet. Additional requirements are highlighted via red lettering for ease of review. Deletions are denoted via a strikethrough. Also reviewed were the responses received from the drycleaner compliance programs in response to Mr. Eriksen's November 21, 2003 letter requesting their input and suggestions to improve the compliance programs. Mr. Eriksen noted changes that dealt with the issue that each compliance program site inspector must complete a detailed checklist at the time of the site inspection. Deficiencies must be clearly noted on the form and reviewed with the drycleaner owner/operator or plant manager. The section outlined how resolution of the deficiencies must be documented. The compliance program must inspect each facility participating in their program, a minimum of once every two (2) years (bi-annually) and the site inspector must document the conditions at the drycleaning facility via photographs. It was requested by the compliance program administrators in attendance and agreed to by the Council that the Administrator would provide a standardized checklist inspection form for the compliance programs to use.

Mr. Eriksen reviewed the proposed changes on employee training, noting that the compliance program site inspector must review the employee training logs since the last bi-annual site inspection and determine if the training has met the requirements as defined by the Council. Mr. Chung inquired what should employee training consist of. Mr. Eriksen responded that it needed to entail best management practices as they relate to compliance with the insurance program so that the employees would know what to do in the event of a release, how to inspect the equipment to minimize the likelihood of a release, etc.

Mr. Eriksen stated the section with the most substantial revisions involved continuing education. He proposed that effective April 1, 2004 all continuing education courses must be submitted to the Council and approved by the Council and/or Administrator prior to them being eligible for continuing education credits. He reviewed at length the requirements that needed to be submitted for each course, including a profile on the instructors, and suggested that copies of Power Point or other materials to be used by the instructor would be helpful. Mr. Parker noted that that may be difficult for a presenter to give to the Council a copy of their seminar via Power Point, overheads, etc., due to copyrighted material or unwillingness to share their intellectual capital. It was the consensus of the Council that an outline of the contents of the seminars would be sufficient.

Mr. Eriksen reviewed acceptable seminar topics, noting that others not listed could be approved by the Council upon submission and review of the respective material. He proposed that by April 30, July 31, October 31 and January 31 of each year, each compliance program must provide the Council a listing of seminars they offered during the preceding calendar quarter, including the name, address and drycleaning facility name of each attendee. Based on Council discussion, it was their concurrence that annual reporting would be adequate. Mr. Eriksen noted that one (1) continuing education hour shall include as a minimum, 50 minutes of actual seminar/class time, exclusive of time devoted by participants to prepare for the seminar/class. He proposed that the initial site inspection shall qualify for one (1) hour of continuing education credit. Mr. Parker felt that based on his experience, every inspection typically would take at least two (2) hours to complete and was an excellent time to stress to the drycleaner owner/operator best management practices. He suggested that the Council consider giving two (2) hours of continuing education credits for each bi-annual inspection. Upon discussion by the Council, they concurred with Mr. Parker's recommendation to allow each bi-annual site inspection to qualify for two (2) hours of continuing education credit.

Mr. Eriksen noted that it is the responsibility of the drycleaner owner/operator participating in the compliance program to track and verify that annually they have met the continuing education requirement. The compliance program must maintain, by facility, a record of continuing education. Correspondence or online courses will be considered for continuing education, subject to a review of the course content.

The next section for revision was the third party compliance audit. Mr. Eriksen stated that all compliance program site inspectors must be approved by the Council and should submit a brief biography or current vitae for the Council's review.

A new section dealing with general compliance program requirements was added. The compliance certificate lists the name and address of the facility and includes an expiration date. No certificate may be valid for more than a one (1) year period. Based upon comments from the compliance program administrators in attendance at the meeting, the Council determined that the certificate should not be valid for more than a two (2) year period and annually, at the close of the calendar year, each compliance program must submit a letter to the Council detailing all of their participants that met the four (4) hours of continuing education. In addition, a new general requirement is that the compliance program must keep all site inspection forms, photographs, continuing education documentation, program application, site diagrams, general correspondence, etc., in a file labeled by facility name.

Mr. Parker asked if the Council could provide the compliance program a listing of insured sites. Mr. Eriksen noted that it could be generated and posted on the Fund's web site monthly in the same format as a list of licensed drycleaners currently are. The Council directed Mr. Eriksen to post monthly on the Fund's web site, a list of insured drycleaning facilities.

The Council conducted a lengthy discussion of the compliance program requirements. Mr. Chung asked the compliance program administrators in attendance if the new guidance document would add additional costs for drycleaner members to participate in their programs. The response by several of the administrators was yes. Mr. Chung asked why there should be increased costs when the compliance program requirements were the same as previously authorized, the only change is the Council has further delineated the record keeping requirements. Mr. Lewicki suggested that drycleaners attending a complete Council meeting be eligible for one (1) continuing education credit. He noted a wide range of topics involving the Fund program and pollution prevention are typically covered at a Council meeting. It was the consensus of the Council members that one (1) hour of continuing education be issued for each complete Council meeting attended.

Mr. Eriksen stated that the Administrator would draft a letter outlining the new compliance program requirements and send to all insured drycleaners. The letter would be in both English and Korean, with a copy being forwarded to the compliance programs and respective drycleaning associations.

On a motion by Mr. Lewicki and a second by Mr. Gibson, the Council approved the amendments to the compliance program, including those changes agreed upon during the Council's discussion and review of the draft document, by a vote of 6-0. Mr. Eriksen stated that he would make changes to the compliance program document and distribute it to the compliance programs and the Council members.

Mr. Polak recessed the Council meeting at 11:50 a.m. for a 10 minute break. The meeting reconvened at 12:00 noon.

B. Updated Financial Projections for the Period of July 1, 2003 to January 1, 2020:

Mr. Eriksen reviewed with the Council the enclosed financial projections for the Fund for the period of July 1, 2003 through the Fund sunset date of January 1, 2020.

He noted that the Administrator reviewed the remedial claim cost components and has made minor modifications which resulted in a lowering of the average cost per claim from $92,500 per facility to $91,500. In addition, the projections reflect anticipated solvent tax revenue based on actual solvent gallonage taxed for the first, second and third quarters of 2003. 2003 is the first year since calendar year 2000 that shows a substantial decrease in gallons of taxable solvent and he reviewed a summary of those decreases.

Based upon the reduced gallons of solvent taxed in calendar year 2003, the solvent tax revenue for 2004 was reduced by an appropriate amount. In addition, the maximum number of claims anticipated to be filed during the life of the program is 980 versus 1,300 used in the July 2003 projections. He noted that it appears that approximately 930 drycleaners participating in the Fund insurance program will be eligible for remedial benefits with the assumption that another 50 sites will meet the eligibility requirement through their participation in private insurance coverage. The projections reflect a deficit at the sunset of the program of $31.7 million. This is assuming that the solvent usage remains constant and the license fee and solvent taxes are not adjusted in the future. Mr. Eriksen reiterated that more accurate data would be available after June 30, 2005, as that is the deadline for anyone wishing to test their site and participate in the remedial program to have contacted the Fund and submitted a budget for testing.

Mr. Polak noted that due to the sensitivity in adjusting fees to keep the Fund solvent, he recommends that the Administrator, for the next 18 months, update the projections quarterly to make certain that the Council does not end up in a position where they overcharge the drycleaners for either their solvent tax or license fee.

C. Policy Issue - Acceptance of a Late Filed Insurance Application for Buy Back of Insurance Coverage:

Mr. Eriksen reviewed with the Council that SB1000 created a window of opportunity for drycleaners who had not obtained insurance coverage from the Fund to buy back insurance coverage on their active drycleaning facility to June 30, 2000 in order for the facility to be eligible for remedial program benefits. He noted the Administrator's office did two (2) separate mailings to all active drycleaning facilities not insured by the Fund, notifying them of the buy back option and the January 1, 2004 deadline for making application. As of today's date, 133 drycleaners have made application to buy back insurance coverage to June 30, 2000, or else buy back lapses in their insurance coverage from the period of June 30, 2000 to January 1, 2004.

The Administrator received an insurance application that was postmarked January 2, 2004. Enclosed with the application was a copy of an envelope addressed to the drycleaner from the Illinois Department of Revenue in Springfield, IL, postmarked December 29, 2003. The drycleaner stated that he had inadvertently mailed his insurance application with his license fee payment to the Illinois Department of Revenue. He claims that the Illinois Department of Revenue returned his insurance application with his copy of the DS-3 payment form that he needed for renewing his drycleaner license.

Mr. Eriksen asked does the Council wish to give this individual the benefit of the doubt and accept his representation that he inadvertently mailed his insurance application to the Illinois Department of Revenue before December 31, 2003 and allow him to be eligible for the buy back of insurance coverage.

Mr. Lewicki stated that he felt the Council should accept the application as the intent of the Fund is to assist the drycleaners in cleaning up their contaminated facilities. It was his opinion that the drycleaner made an honest error in attempting to purchase the back insurance coverage prior to January 1, 2004. Mr. Chung asked Mr. McCarthy how much flexibility the Council had with respect to the statutory deadline of January 1, 2004 in accepting this application as being timely filed. Mr. McCarthy felt that the Council had the authority to make judgmental decisions on issues such as this where there appears to have been documentation to support the drycleaner's attempt to meet the deadline.

After discussion by the Council, on a motion by Mr. Kim and a second by Mr. Chung, the Council voted 6-0 to accept the insurance application that was postmarked January 2, 2004 that appeared to have been inadvertently mailed prior to January 1, 2004 to the Illinois Department of Revenue.

D. Replacement of Contaminated Solvents:

Mr. Eriksen reviewed with the Council that previously the Council has provided guidance to the Administrator on the determination of annual solvent usage and application of solvent taxes for replacement of contaminated solvents. The Council has provided an exemption to two (2) petroleum drycleaners who had solvent contamination as a result of equipment failures.

Enclosed in the Council packet is a letter from Courtesy Cleaners in Mt. Vernon, IL. Mr. Roberts, the drycleaner owner/operator, noted that in 2002 a leak in the copper coil in his drycleaning machine resulted in the contamination of approximately 150 gallons of petroleum solvent. He is requesting that the Council waive applying the replacement 150 gallons against the calculation of his purchases/usage for determining his 2003 license. He is not requesting a refund of the solvent tax paid. Mr. Eriksen noted that the Administrator has received documentation as to the solvent amount and the repair of the water coil. It is his recommendation that the Council agree to Mr. Roberts' request and not require the 150 gallons of replacement solvent to be applied to the annual solvent purchases/usage calculation for the 2003 license.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Chung, the Council voted 6-0 to honor Mr. Roberts' request and not require the 150 gallons of replacement solvent to be applied to the annual solvent purchases calculation for the 2003 license.

E. New Information Sharing Agreement with the Illinois Department of Revenue:

Mr. Eriksen noted that that enclosed in the Council packet for their review was a revised information sharing agreement with the Illinois Department of Revenue. This draft had been reviewed by Mr. McCarthy and Mr. Eriksen who concurred with the agreement. He noted the key changes to the agreement reflect the increased information that the Department of Revenue has to provide the Council per SB1000. The Department of Revenue will be providing the Council quarterly the gallons taxed by licensed drycleaners.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council approved the revised information sharing agreement with the Illinois Department of Revenue by a vote of 6-0.

APPROVAL OF PROGRAM BILLINGS

Mr. Eriksen noted that enclosed in the Council packet were two (2) bills for Council approval. In addition, he distributed to the Council Williams & Company's January 2004 bill. The bills for Council review are as follows:

1. Williams & Company Consulting, Inc $ 58,828.00
Standard flat fee billing for December 2003, licensing, underwriting and claims processing.

2. John J. McCarthy $ 1,560.00
Professional legal services to the Council for the period of December 5, 2003 through January 22, 2004.

3. Williams & Company Consulting, Inc $ 115,187.00
Standard flat fee billing for January 2004, licensing, underwriting and claims processing and site inspections.

Mr. Eriksen noted that the January bill was substantially higher than most monthly bills due to the large number of drycleaners that were licensed during January 2004.

There being no questions, on a motion by Mr. Lewicki and a second by Mr. Chung, the Council approved the bills as presented by a vote of 6-0.

REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS

Mr. Eriksen reviewed the December 31, 2003 activity report, noting that at the end of the year, there were 1,436 licensed drycleaners. He stated as of January 31, 2004, 750 drycleaners have renewed their licenses with 961 license applications received. He noted just over $4.1 million in claims have been paid since the inception of the program.

He reviewed the December 31, 2003 financial statements noting that the unreserved Fund balance is $6.3 million with just over $1 million in claims being paid for the first six (6) months of the fiscal year.

CLAIM PAYMENTS IN EXCESS OF $75,000

Mr. Eriksen noted that the Administrator had two (2) claims for Council's review and approval and that Dr. So would be reviewing the claims with the Council.

Saunders Cleaners - Northbrook, IL
Dr. So reviewed with the Council the background information on Saunders Cleaners in Northbrook, IL, noting that the chemical oxidation that had been injected at the facility was working in reducing the contamination but there was still an elevated level of contamination remaining that needed to be remediated prior to the Illinois Environmental Protection Agency (IEPA) issuing a No Further Remediation letter for this facility. The environmental consultant has requested additional budget approval to further delineate the plume and determine the exact hot spot. The Administrator is requesting budget approval in the amount of $31,480 to complete the site investigation and remediation at this facility. He noted budget approval to date totaled $127,624.64. If the Council approves the additional amount, the total approved budget would be $159,104.64.

Upon discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council voted to approve the additional budget request by a vote of 6-0.

Claim Approval - Meemun Enterprises - Chicago, IL
Dr. So reviewed with the Council that this is a highly contaminated facility. Due to the high contamination level at the facility and a close proximity of contamination to the neighboring residential property, the IEPA is requiring a further detailed site investigation at the facility. The Administrator is requesting Council approval for additional site investigation costs of $7,959, plus 15,000 in contingency costs, for a total project cost of $93,504. The contingency costs of $15,000 are for IEPA review cost and any additional site investigation or lab cost that IEPA may determine to be necessary. Dr. So stated that once the additional investigation is completed and the results are reviewed, the Administrator will be able to more accurately determine and update the Council regarding the potential "over the cap" project costs.

On a motion by Mr. Polak and a second by Mr. Lewicki, the Council approved the additional budget request in the amount of $22,959 by a vote of 6-0.

OTHER ISSUES AS PRESENTED

Mr. Eriksen noted that he had several informational issued for the Council. The first was the Council appropriation request for fiscal year 2005 was $8 million. In addition, the technical correction on the FY04 appropriation was proceeding through the legislature.

He stated that there was nothing new to report on SB2105. It is still sitting in the Senate Rules Committee. SB2105 changes the definition of green drycleaning solvents and eliminates the solvent tax on green solvents.

He noted that a draft of the audit report had just been received and that there were no reportable items noted in the draft.

Mr. Eriksen noted that there is at least one (1) petroleum drycleaner who is able to submit to the Fund sufficient data to determine their actual solvent usage by type of petroleum drycleaning machine. The facility has both petroleum machines with a reclaimer and without a reclaimer. He recommends that the Council provide the Administrator authority to review these licensing calculations on a case by case basis. If the Administrator feels that there is adequate documentation to support the alternative solvent usage calculation, he would allow the calculation. If not, he would deny it, with the drycleaner owner/operator having the right to appeal the decision to the Council.

After discussion by the Council, it was their consensus to have the Administrator handle all licensing issues in this manner.

Mr. Eriksen stated that he had put together, at the Chairman's request, a listing of potential meeting dates. The Council reviewed the dates in detail and established the following as the tentative meeting dates for the remainder of calendar year 2004:
March 18, 2004
April 20, 2004
June 3, 2004
July 22, 2004 (tentatively noted as Strategic Planning Session)
September 2, 2004
October 14, 2004
November 18, 2004
December 16, 2004

PUBLIC COMMENT PERIOD

Mr. Henry Parker inquired if the seminar that S&ECC sponsored on January 12, 2004 would qualify for continuing education courses. Mr. Eriksen stated that it would, as until April 1, 2004 discretion on continuing education credits rests solely with the compliance programs.

Mr. Bob Soni, of Northern Environmental, expressed his concern that in the upcoming months many remedial projects will exceed $75,000 and is concerned that the Council may not be meeting frequently enough to address the excess costs and to keep the remediation projects moving ahead. Mr. Eriksen stated that if that case develops, the Council can meet via telephonic conference to address specifically claim payments in excess of $75,000.

Mr. Harry Cho then introduced the new president of the Korean/American Drycleaners Association of Chicagoland, Mr. Steve Kim, who will be inducted into office on March 13, 2004. Mr. Kim briefly addressed the Council, stating that he looks forward to working with them in the future on drycleaner issues.

There being no further business, the Council adjourned at 1:12 a.m.

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