February 28, 2005 minutes

February 28, 2005 Meeting Minutes

MINUTES

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

HOLIDAY INN - BOLINGBROOK
BOLINGBROOK, ILLINOIS

FEBRUARY 28, 2005

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:16 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
David Gibson (via telephone until 10:35 am, at which time he arrived at the meeting)
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

PRELIMINARY BUSINESS

The minutes from the January 19, 2005 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewickip, the minutes were approved by a vote of 4-0.

OPERATIONAL ISSUES

A. Review of Illinois Environmental Protection Agency Reports on “Green Solvents”:

Mr. Eriksen noted for the Council that enclosed in their packet was an initial report provided by the Illinois Environmental Protection Agency (IEPA) on the following drycleaning solvents:
1) Tetrachloroethylene (perc)
2) Stoddard Solvent (petroleum)
3) Rynex
4) Green Earth
5) CO 2
6) High-Flash Hydrocarbons (Ecosolv)

In addition, he noted IEPA completed a review of another proposed “green solvent” called Propylene Glycol Ether DPnB. Enclosed in the Council packet was the supplemental report that addressed this solvent.

The Council's administrative rules defines “green solvent” as a drycleaning solvent evaluated and classified by the Council with assistance from IEPA to be biodegradable that if released into the environment, would not require remedial action per the IEPA or per the United States Environmental Protection Agency. Mr. Tom Hornshaw of IEPA was in attendance to discuss IEPA's report and recommendations on which drycleaning solvents should be classified as “green.” Mr. Ron Benjamin of Green Earth was in attendance to provide additional information to the Council and IEPA's toxicologist regarding Green Earth solvent.

Mr. Polak asked Mr. Hornshaw if in the event of a spill of these solvents, would a cleanup be required by IEPA or the Federal Environmental Protection Agency. Mr. Hornshaw indicated that he could not guarantee that there would not be the need to conduct a cleanup of the solvents that IEPA designated as being “green”. Final determination would be based on the level of the solvent that was found in the soil or the groundwater. Mr. Hornshaw noted that IEPA's order of concerns focused on exposure within and without the building and effects on the environment.

Mr. Ron Benjamin of Green Earth stated that he had the opportunity to informally visit with Mr. Hornshaw prior to the start of the meeting and would like to provide additional information to IEPA regarding additional toxicity studies that have recently been conducted on Green Earth. Mr. Hornshaw suggested that Green Earth submit similar information that was provided by R.R. Street for Propylene Glycol Ether DPnB. Mr. Eriksen stated that he would get Mr. Benjamin a copy of that information to assist him in assimilating similar information on Green Earth. Mr. Hornshaw stated IEPA would review that information and provide an update as needed to the Council as to their findings.

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council adopted CO 2 and Propylene Glycol Ether DPnB as “green solvents.” The motion passed by a vote of 4-0.

Mr. Polak thanked Mr. Hornshaw and IEPA for their time spent in reviewing the evaluation of the drycleaning solvents.

B. Review of Updated Financial Projections and Claim Payment Classifications:

Mr. Eriksen reviewed with the Council the updated financial projections for the Fund for the period of July 1, 2004 through the Fund's sunset date of January 1, 2020. He noted the following changes in these projection assumptions as compared to the projections reviewed at the November 3, 2004 Council meeting:

1) The annual licensing fee receipts were reduced by $187,500, based upon actual collections received by the Illinois Department of Revenue (IDOR) through January 31, 2005.
2) The annual solvent tax on chlorine-based solvents was reduced by approximately $185,000, based upon solvent tax receipts for the first three (3) quarters of calendar year 2004 and the estimated solvent tax collected for the fourth quarter of 2004.
3) The annual solvent tax on petroleum-based solvents was reduced by approximately $23,600, based on actual solvent receipts for the first three (3) quarters of calendar year 2004 and the estimated solvent tax collected for the fourth quarter of 2004.
4) The number of projected active remedial claims was reduced by 30 from 900 to 870, to reflect the current number of insured drycleaning facilities.
5) The estimated average cost of conducting minor remediation and/or long term monitoring at a facility was increased by $15,750 per claim.

The net effect of the above changes results in an increase in the projected program deficit of approximately $7 million. Based on the re-evaluation of the average cost, the new average cost per claim is approximately $103,900. The current reserves on the 359 open eligible remedial claims total slightly more than $26 million, which is a $72,500 average.

Regarding site investigation costs, based on approved budgets, the cost is less than $28,000 per claim. The anticipated average site investigation cost per claim is estimated to be $48,125. A recent survey of states finds that Florida continues to spend approximately $100,000 on their site investigation costs; Tennessee spends approximately $120,000 per site, with the cost ranging from $12,000 to $306,000; Kansas spends between $40,000-$50,000 per facility.

At this time, of the 359 eligible remedial claims, 23 have estimated reserves that exceed $250,000 and it is the Administrator's opinion, based on the site specific data that they have for these claims, that 6 will probably not be able to be cleaned up for the $300,000 cap.

Currently the Fund reimburses claim requests on a “first in, first out” basis and there is no policy or procedure in place to require current drycleaners to provide evidence of the ability to pay any cleanup costs that exceed $300,000. The Council's administrative rules on claims prioritization notes that if a claim is anticipated to exceed $300,000, the claimant must provide some form of financial assurance that the financial ability exists to pay for any costs in excess of $300,000. Mr. Eriksen noted prioritization may become necessary towards the end of calendar year 2005 or in early 2006, depending upon how quickly drycleaners move ahead with remediation at their facility.

Mr. Eriksen reviewed with the Council a summary by invoice type of the remedial claim reimbursement payments since the inception of the program through January 31, 2005. Also attached was a complete listing of invoice type descriptions that the Administrator established as part of the internal accounting system. He noted that site characterization costs and laboratory fees associated with site characterizations encompass 88.6% of the total remediation costs reimbursed to date by the Fund. When you include the Illinois EPA SRP review costs, the total percentages increase to 94.6% of all reimbursements. This percentage is much higher than it will be at the conclusion of the program as the focus has been to get the drycleaning facility's initial intrusive testing completed followed by defining the plume of contamination.

He noted 38 sites have received a No Further Remediation (NFR) letter from the Illinois EPA. All 38 of these sites were closed using institutional controls under the IEPA TACO regulations. This meant the contamination could be left in place but any potential exposure pathways between the contamination and human contact were addressed and eliminated. Three (3) other facilities have received NFR letters; two (2) had substantially completed their cleanup at the time of application to the Fund and one (1) had lost its Fund eligibility at the very end of the NFR process. This brings the total Fund eligible facilities that have received NFR letters to 41.

Currently there are seven (7) facilities that are in remediation and 10 facilities are preparing their remedial action plan. As of January 31, 2005, 709 facilities have either tested their facilities and submitted their test results or have obtained budget approval to conduct the testing. This leaves approximately 160 drycleaners that need to submit a request for budget approval by June 30, 2005 or lose their remedial program benefits.

Mr. Eriksen noted he has contacted the Illinois EPA and they will attend a future Council meeting to explain their requirements for plume delineation, elimination of exposure pathways and remediation of contaminated soil and/or groundwater in order to receive an NFR letter.

Mr. Polak stated that he would like the Administrator's staff to look in greater cost detail at a limited number of sites, some that have high site investigation costs, some with low site investigation costs and some that are more in the middle. Mr. Eriksen stated that they should be able to look at a representative sample of approximately 20 facilities and provide the Council with greater cost detail for review at a future meeting. He indicated the main differential in the overall site investigation costs should not be so much the unit cost of the services but the volume that was needed to effectively and appropriately delineate the contamination of the facility in accordance with IEPA regulations.

C. Compliance Program Issues:

Mr. Eriksen stated that there are three (3) compliance program issues outlined for the Council's review and consideration. They are as follows:

1) Extension of time for completing compliance program site inspections from June 30, 2005 to December 31, 2005; and
2) Expansion of compliance program CEU criteria; and
3) Review of video courses for CEU credits

Mr. Polak stated that he would like to discuss and take any necessary action on these issues on an item-by-item basis.

Issue 1: Extension of the Compliance Program Inspection Deadline from June 30, 2005 to December 31, 2005:

Mr. Eriksen reported one of the drycleaner trade associations has made the request of the Chairman to extend the deadline for completing the compliance program site inspections from June 30, 2005 to December 31, 2005. This request is being made to accommodate the large number of their members who belong to various compliance programs and have not had a compliance program site inspection conducted within the past two (2) years. The association indicated the extension of the date to December 31, 2005 would ensure the various compliance programs can have properly trained inspectors visit each facility and spend the necessary time reviewing compliance and pollution prevention issues with each drycleaner.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the extension of the compliance program inspection deadline from June 30, 2005 to December 31, 2005, by a vote of 4-0.

Issue 2: Expansion of CEU Criteria:

Mr. Eriksen stated Mr. Polak and he had met with members of several of the drycleaner associations at the end of January to discuss various aspects of the Fund program. Executive committee members and\or directors of the associations that they met with were in favor of expanding the CEU criteria to cover more relevant drycleaning industry topics other than just pollution prevention. Based on this input, the Administrator presented the following as a listing of possible expanded continuing education courses:

a) General business information encompassing marketing, accounting and pricing of drycleaning services;
b) Spotting classes;
c) Machine guarding classes;
d) General legal issues associated with operating a drycleaning business.

Currently the drycleaner owner/operator and/or designated manager(s) must obtain four (4) CEUs in a calendar year. Two (2) of the continuing education credits can be obtained through the compliance program site inspection. It is the Administrator's recommendation that the Council expand the CEU criteria to encompass the topics just mentioned but limit CEUs from the above topics to count for no more than two (2) CEUs in any given calendar year. Mr. Eriksen then reviewed two (2) examples of how a drycleaner can meet their four (4) CEUs.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved, by a vote of 4-0, the Administrator's recommendation to expand the CEU criteria to encompass a wider range of drycleaning business industry topics. All courses would continue to be pre-approved by the Administrator.

Issue 3: Review of video programs for CEU credit:

Mr. Eriksen noted the Land of Lincoln Drycleaners Association videotaped several seminars that they had sponsored during the past year. The live seminars were approved for CEUs by the Administrator. At each of these seminars, the instructor prepared a short questionnaire to be completed by the drycleaner owner/manager at the completion of the presentation.

Land of Lincoln would like to offer drycleaners the opportunity to view the video and take the test to obtain CEU credits. Tests would be administered to the owner/manager over the telephone by Sue Kratz, Executive Director of Land of Lincoln , and they would not receive the CEU until they had been able to answer the questions on the test. Ms. Kratz reviewed with the Council how Land of Lincoln has been utilizing the videos to date and felt that it would provide downstate drycleaners (who are unable to take the time away from their businesses to travel long distances to obtain CEUs) the opportunity to get the necessary training without impacting their drycleaning business. Mr. Polak indicated that he had a concern in the effective administration of such a program to ensure the drycleaners reviewed the video and received enough training so they could effectively answer a set of questions. He asked the other compliance program members in attendance if they thought that this type of program was a good idea. Ms. Barbara Boden, representing the STAR Program, stated that there could be problems in administering such a program, but it appears to be a reasonable option, but possibly there should be some geographic requirements put in place. She also expressed concern that it may be necessary to get a disinterested third party to develop the questionnaires. Mr. Ken Sink addressed the Council stating deadlines have been established in the past by the Council, guidelines have been revamped, and definitive policies and procedures regarding all of these issues need to be put in place and adhered to moving forward so that the effectiveness of the compliance programs could be determined.

Discussion focused on who should prepare and administer the questionnaires. There seemed to be a general consensus of members of the public in attendance that the seminar presenter should come up with a list of questions and it may be appropriate for the Administrator to administer the questions to the people who watch the video training. Mr. Eriksen asked if the Council wished to incorporate some other such criteria if someone developed web-based interactive training. After additional discussion, the Council requested that the Administrator put together a proposal outlining options and recommendations for allowing for the presentation of CEU seminars via video or the internet along with safeguards for ensuring that these programs are not abused.

Mr. Harry Cho, representing the EnviroClean Compliance Program, stated these presentations need to be made in English and Korean and feels specific guidelines should be in place if videos are made, i.e., are they made in the office of one of the compliance programs or must they be a tape of an actual seminar; should they be held in public locations or non-public locations?

Mr. Bredenkamp replied Mr. Cho's questions were valid concerns and must be addressed in developing the criteria for the Council's review.

D. Legislative Update:

Mr. Eriksen reviewed with the Council that they had previously approved submitting legislation as requested by JCAR to clarify the calculation for determining the annual license fee. He noted this proposed legislation would hopefully be incorporated as part of a bill by the end of the month. In addition, he reported that Mr. McCarthy and he have been in discussions with the Illinois Department of Revenue (IDOR) regarding possible legislative changes to further strengthen the IDOR and the Fund's enforcement action against solvent distributors that sell to unlicensed drycleaners and to get solvent distributors to provide detailed sales information for each licensed drycleaner. Two (2) options for the Council's consideration are:

1) That the Council endorse, in concept, legislative language similar to that which is contained in the Retailers Occupation Tax Act, which would provide the IDOR a more definitive approach on enforcement to obtain solvent distributors' compliance in not selling drycleaning solvent to unlicensed drycleaners. IDOR currently believes they need more definitive language on how they go about the enforcement action against solvent distributors. Mr. Eriksen stated this issue has also been brought to the attention of the Attorney General's Office and a ruling should be forthcoming shortly on whether they feel sufficient statutory authority exists for them to assist the Council in direct enforcement against solvent distributors selling to unlicensed drycleaners.

2) The solvent distributors have not been diligent in providing to IDOR a listing of taxable gallons of drycleaning solvent sold to each licensed drycleaner. In order to enlist their cooperation, it is the Administrator's recommendation to the Council that they consider legislation which would provide a tax credit to the solvent distributor of one and three quarters percent (1¾%) of the solvent tax they collect. This is to reimburse them for their effort in collecting the tax and reporting the solvent purchases by each individual licensed drycleaner. The legislation would state that failure to provide the detailed information required would result in forfeiture of the one and three quarters percent (1¾%) tax credit. This is the same percentage tax credit that all businesses receive for collecting and remitting the retailers' sales and occupation tax to the IDOR.

Mr. Bredenkamp stated he is in favor of reimbursing the solvent distributors in the same manner that they are reimbursed for the sales tax, but indicated he did not know that it would impact the honesty of the solvent distributor in collecting the solvent tax and not selling to unlicensed drycleaners.

After additional discussion by the Council, on a motion by Mr. Polak and a second by Mr. Bredenkamp, the Council voted 4-0 for the Administrator and Mr. McCarthy to continue working with IDOR in drafting additional legislation to strengthen enforcement actions against solvent distributors. Regarding item #2, the 1¾ % payment to the distributors for the collection of the solvent tax and the reporting of the detailed information, a motion was made by Mr. Bredenkamp and seconded by Mr. Lewicki directing the Administrator to incorporate such proposed legislation into a bill for review and action by the legislature during this session. The motion passed by a vote of 4-0.

E. Potential Meeting Dates for Calendar Year 2005:

Mr. Eriksen presented the Council with a listing of potential meeting dates for calendar year 2005. The Council concurred with the proposed dates but indicated it would remain flexible in the event that it needed to change the dates to accommodate Council members' schedules. Mr. Eriksen stated that he would have the dates posted on the Fund's web site. The dates proposed are:
January 19, 2005
February 23, 2005
March 30, 2005
April 27, 2005
June 1, 2005
July 20, 2005 - Strategic Planning
September 14, 2005
October 26, 2005
November 30, 2005
December 21, 2005

F. Fiscal Year 2004 Audit Report:

Mr. Eriksen reviewed with the Council the Auditor General's report on the compliance examination conducted for the year ended June 30, 2004. The Auditor General reported there were no material findings of non-compliance disclosed during the examination and commended the Council for maintaining an effective system of internal controls. Mr. Eriksen noted the compliance examination focus is to make certain the transactions the Council enters into each year are in compliance with the applicable statutes and administrative rules and although it does not encompass a full scale financial audit, a random testing of transactions throughout the year covering all the various types of transactions encompassed by the Council are reviewed for accuracy and compliance. Material financial changes from the prior year are reviewed in detail and appropriately documented. Mr. Eriksen noted there was one (1) immaterial finding. This finding related to the fact that the Fund had not posted an Internet privacy policy on its web site. This was an issue the Auditor General was scrutinizing all state agencies for and they recommended that one be implemented. He reported the Administrator developed a privacy policy and it was implemented by January 1, 2005.

Mr. Polak commended the Administrator and staff for the excellent audit report.

APPROVAL OF PROGRAM BILLINGS

Mr. Eriksen noted that the following bills were before the Council for their review and action:

1. Williams & Company Consulting, Inc $ 107,198.00
Standard flat fee billing for January 2005, licensing, underwriting, claims processing and site inspections.

2. John J. McCarthy $ 2,651.77
Professional legal services to the Council for the period of January 12, 2005 through February 15, 2005.

3. Iain D. Johnston, Holland & Knight, LLP $ 980.50
Professional services acting as Administrative Hearing Officer for Koch and Plaza Cleaner appeals for the period of January 1, 2005 through January 31, 2005.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the bills were approved by a vote of 4-0.

REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS

Mr. Eriksen reviewed the January 31, 2005 activity report with the Council, noting that there are currently 763 drycleaners licensed as of the end of January. Currently, there are approximately 1,000 drycleaners who have obtained their 2005 license; 869 facilities are currently insured with the Fund and claim payment reserves on outstanding open claims is estimated to be $26 million.

The Fund balance as of January 31, 2005 was $6,282,765.

REVIEW OF CLAIM BUDGETS IN EXCESS OF $75,000

1. Niles Finest Cleaners in Niles , Illinois

Mr. Eriksen reviewed background information on the claim with the Council, noting the initial remedial costs were estimated to be $31,285 and involved chemical oxidation of the contaminated soil. Confirmatory site investigation showed the remedial activities did not meet the remedial objectives and additional remediation is required to meet IEPA's requirements for obtaining an NFR letter. Due to the limited success of the chemical oxidation at the facility, the consultant is requesting an additional budget in the amount of $114,535 to excavate and dispose of the contaminated soil.

Mr. Eriksen stated typically the Council requires three (3) bids for each phase to proceed. The initial remedial phase did not have the required three (3) bids, as the estimated cleanup cost was under $35,000. He noted since August 2004, when it was first learned that the first remedial attempt using chemical oxidation did not meet the cleanup goals, the Administrator and the consultants reviewed all of the remedial technology such as soil vapor extraction systems, chemical oxidation with other oxidants, etc. Based on recent experiences with remedial technologies, review of other technologies, and hydro-geological settings at the facility, it was the opinion of both the consultant and the Administrator that excavation of the contaminated soil seemed to be the most effective in terms of time and costs. With the excavation option, it was expected that about 145-175 tons of soil needed to be removed. Mr. Eriksen stated the cost variation between excavation bids is expected to be minimal, therefore, the Administrator is requesting the Council to allow the project to proceed without obtaining three (3) bids.

The Administrator is asking a total spending of up to $141,700, which includes a contingency cost of $30,000 for potential additional soil removal and IEPA review costs.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved a budget request in the amount of $141,700 and waived the three (3) bid requirement for each phase of the remediation. The motion passed by a vote of 4-0.

2. Fox Valley Cleaners

Mr. Perkins reviewed background information with the Council, noting that Fox Valley Cleaners has been operating out of three (3) buildings that were located on site since the 1930s. Multiple site investigations have been performed to date for the purpose of identifying the extent of soil and groundwater impact at the facility. However, the area of impact will require further delineation prior to remediation because bedrock was found to exist at a depth of seven (7) to eight (8) feet below ground surface. Mr. Perkins noted the Fund is requesting an additional budget approval of $10,000, which includes $2,285 of contingency costs. He noted that if this site investigation identifies groundwater impact in the proposed bedrock monitoring well, an additional bedrock investigation will be necessary that could exceed $30,000. If groundwater impact is identified within the bedrock aquifer, it is highly likely that the total cost to remediate the facility will exceed the $300,000 remedial benefit cap.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Polak, the Council approved the additional $10,000 budget by a vote of 4-0.

OTHER ISSUES AS PRESENTED

Mr. Eriksen noted the next Council meeting is tentatively scheduled for March 30, 2005. The Council members in attendance indicated that meeting date still worked with their schedules.

Mr. Eriksen reported Mr. McCarthy and he had just received the Administrative Hearing Officer's decision regarding Walt Guller's appeal of insurance cancellation for Plaza Cleaners and Koch Cleaners. He noted the Administrative Hearing Officer upheld the Council's decision to enforce the cancellation of the insurance coverage.

Mr. Eriksen stated he recently had received requests from one of the drycleaning associations asking if the Council could do a mailing to the landlords to encourage their drycleaners tenants to get into the remedial program. After discussion by the Council, it was their consensus that it would not be appropriate for the Council to directly contact the landlords at facilities where the drycleaners have opted not to take advantage of the remedial program benefits.

PUBLIC COMMENT PERIOD

Mr. Polak asked if there were any comments from the public. There were none. There being no further business, the Council meeting adjourned at 12:45 p.m.

Back to Top