April 26 , 2005 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT - NAPERVILLE NAPERVILLE, ILLINOIS APRIL 26, 2005
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:03 a.m. A quorum was present. Roll call was taken with the following members present:
	John Bredenkamp David Gibson (arrived at 10:12 am) Young B. Kim Charles Kwon 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 March 30, 2005 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the minutes were approved by a vote of 5-0. Mr. Polak noted that since Mr. Gibson was en route to the meeting and the attorney for the insurance appeal claimant was not yet present at the meeting, he would move off the agenda to item #4, Approval of Program Billings.
	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 $ 75,202.00 Standard flat fee billing for March 2005, licensing, underwriting, claims processing and site inspections.
	2. John J. McCarthy $ 1,627.50 Professional legal services to the Council for the period of March 18, 2005 through April 18, 2005.
	3. Iain D. Johnston, Holland & Knight, LLP $ 1,945.31 Professional services acting as Administrative Hearing Officer for the Han appeal for the period of March 1, 2005 through March 31, 2005.
	On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the bills were approved by a vote of 5-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed with the Council the March 31, 2005 monthly activity report noting that there were 1,201 licenses in effect, with 869 drycleaners insured by the Fund. Claim reserves for both active and inactive remedial claims total almost $30 million and there are outstanding approved budgets for site investigation and remedial work totaling $4.3 million. This indicates claim prioritization may need to occur before the end of calendar year 2005. Remedial claims paid to date total $2,300,000. Mr. Gibson arrived at the meeting at 10:12 a.m.
	OPERATIONAL ISSUES
	A.	Claims Prioritization :
		Mr. Eriksen noted Dr. So would be making a presentation further discussing the issues and questions covered by the Illinois EPA at the last Council meeting and would also begin addressing some of the issues associated with the prioritization process. The presentation will include examples of how sites will be scored and ranked under the prioritization process. Dr. So presented the Power Point presentation to the Council, outlining in basic concepts of how TACO will impact and play a role in the prioritization process. The presentation included examples of three (3) specific claims and how they would be ranked under the current prioritization matrix. Mr. Eriksen noted the prioritization regulations adopted by the Council over a year ago reflect that money will be spent on sites that present an emergency risk to human health and public safety. Funds would also be set aside to complete site investigations and for those sites in the remediation process. Mr. Eriksen presented to the Council a spreadsheet indicating that based on the current Fund balance and the outstanding approved budgets the Council would have, at most, $4 million to approve for new budgets associated with additional site investigation and/or remediation for the period beginning April 1, 2005 through June 30, 2006. Total Fund revenue is approximately $4 million, which is almost $1 million less than what was anticipated two (2) years ago when the Council began discussions for increasing the solvent tax and license fees. License fees for calendar year 2004 were almost 45% less than what was projected in the summer of 2003. He felt this was attributable due to current economic conditions, drycleaners buying solvent from out-of-state suppliers who do not charge the solvent tax, and possible misreporting of solvent usage by the drycleaning community. The Council conducted a general discussion of the current prioritization regulations including the ranking process. Mr. Eriksen stated that further clarification in administrative rules may be necessary if a drycleaning facility is ranked as a priority to receive funding but the drycleaner fails to move ahead with the remedial action activities. What would be a reasonable period of time for such notice? In most cases, it may be 90 days. Current regulations do not stipulate a timeframe in which the drycleaner must act in order to not have his facility reprioritized. Mr. Eriksen indicated the most equitable manner would be for top ranked sites eligible for prioritized benefits be notified that they have 90 days to move forward with their cleanup plans. Failure to move forward within those 90 days would remove them from the prioritization pool and the next highest ranked site would join the pool. The next time the Fund prioritizes sites, the drycleaner who had declined to move forward would be once again included in that pool and his site would be ranked accordingly. It may mean he would be eligible for Funding in that prioritization pool or it may be possible that other sites would end up being ranked higher and funds would not be immediately available for remediating his drycleaning facility. Mr. Eriksen noted drycleaners would be able to go ahead and conduct their work but would have to understand that they would not be immediately reimbursed by the Fund. Mr. Polak indicated he would like continued discussion at the upcoming Council meetings as to the timing and procedures for implementing the prioritization process.
	Mr. Polak noted that Mr. Sung Noh, the appellant of Center Cleaners, was in attendance at the meeting along with his attorney, Mr. Peter Lee, and would like the Council to next address the appeal of the cancellation of insurance coverage for site #0002160, Center Cleaners, located in Willowbrook, IL.
	APPEALS
	A.	Appeal of Cancellation of Insurance Coverage – Center Cleaners
		Mr. Eriksen reviewed summary information with the Council that was provided in the packet noting that Mr. Sung H Noh is the owner/operator of Center Cleaners located at 7524 Clarendon Hills Rd in Willowbrook , IL . The facility had maintained pollution liability insurance coverage with the Fund since June 30, 2000. Mr. Noh failed to pay the second semi-annual installment premium that was due December 30, 2004. The 10-day Cancellation Notice for failure to pay the installment payment of $700 was sent out via Certified Mail on January 4, 2005 and was received by Mr. Noh on January 6, 2005. In addition, a telephone call was made to Mr. Noh on January 6, 2005, informing him that if his insurance premium was not paid by January 14, 2005, his pollution liability insurance coverage issued by the Fund would lapse and his facility would no longer be eligible for remedial program benefits. Mr. Noh failed to pay the insurance premium and the insurance cancelled on January 14, 2005. The Administrator sent a certified letter on January 26, 2005 to Mr. Noh stating that even though his insurance had cancelled, he still owed $700 of the $1,400 annual insurance premium. Mr. Noh sent a check in the amount of $700 for this semi-annual premium that was received by the Administrator's office on February 7, 2005. The Administrator sent, via Certified Mail, a letter to Mr. Noh on February 10, 2005, acknowledging receipt of the $700 semi-annual insurance premium installment and informing him once again that his insurance coverage had lapsed due to the non-payment of the premium by January 14, 2005. The Fund received a fax on April 13, 2005 from Mr. Richard Kim of Environmental Safety Marketing, Inc., appealing on Mr. Noh's behalf the Administrator's decision to cancel the insurance coverage on the above referenced facility. On April 15, 2005, the Administrator received a formal appeal from Mr. Peter K. Lee, attorney for Mr. Noh, appealing the cancellation of Mr. Noh's insurance. Mr. Lee addressed the Council, noting that the dates of notice regarding cancellation of the insurance policy were important. He indicated that his client had initially received Mr. Eriksen's letter of January 26, 2005 informing him his insurance had cancelled. Mr. Noh promptly paid the $700 insurance premium and subsequently received a letter dated February 10, 2005 from Mr. Eriksen, informing him even though he had paid the premium, the insurance had cancelled. Mr. Lee referenced the insurance policy, stating a 10-day Cancellation Notice needed to be given in order to cancel the insurance and nowhere did it note that the insurance premium was fully earned on day one. Mr. Eriksen clarified mailing dates for the Council, noting that a 60-day billing notice went out approximately November 1, 2004, followed by the Certified Mail of January 4, 2005 and the telephone call of January 6, 2005, reminding Mr. Noh of the need to immediately pay the insurance premium to avoid cancellation of his insurance policy. Mr. Noh addressed the Council, noting that business had been bad and that Cleaners Depot had opened a facility near his on January 2, 2005. He did acknowledge he had received a Certified Letter from the Administrator's office but had not opened it for some period of time. Mr. Lee further questioned the mailings by the Administrator. Mr. Eriksen showed the original documents and the certified receipts signed by Mr. Noh to Mr. Lee. Mr. Lewicki indicated he had concerns with canceling the insurance coverage since the Fund did receive the late premium of $700 in February. He referenced most insurance policies, if you are late, would accept payment and reinstate coverage. Mr. Polak stated the Council does not necessarily have that leeway or authority and that conditions are much different and the statute states that the policy is fully earned on day one. Mr. Lee further argued that the Council was asking for legal problems by failing to not list in the policy that the premium was fully earned on day one. Mr. Eriksen noted the policy clearly states that if there were any ambiguity or questions that the statute governs and that nowhere in the policy was it necessary that it be stated when the premium was earned. The policy clearly stated the Council could cancel the policy for non-payment of premium or non-compliance upon appropriate notice as defined in the policy. After additional discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kwon, the Council voted 6-0 to deny reinstatement of the insurance coverage for Mr. Sung Noh at Center Cleaners in Willowbrook , IL . Mr. Polak noted Mr. Noh could appeal the Council's decision to an administrative hearing officer.
	OPERATIONAL ISSUES (cont)
	B.	Legislative Update:
		Mr. Eriksen reviewed with the Council that he has been working with the Attorney General's Office and the Illinois Department of Revenue (IDOR) in drafting legislation to further strengthen enforcement action against unlicensed drycleaners and solvent distributors who are not complying with the Trust Fund Act. In the Council packet was a draft of the proposed legislative changes that have been agreed to by the Attorney General's Office and are under review by the Department of Revenue. Mr. Eriksen reviewed the changes in detail, noting specifically the addition of a new civil penalty applicable to a person who is selling drycleaning solvents in Illinois but fails to register as a solvent distributor would be subject to a $100 per day civil penalty for each day the person is not registered to sell drycleaning solvents. Mr. Eriksen stated this was focused specifically at out-of-state solvent distributors who are knowingly selling and delivering solvent into Illinois but have failed to register with the Department of Revenue even after they have been provided the registration documents by the Fund. The Council conducted a brief discussion of the proposed legislation and on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council approved the draft legislation by a vote of 6-0.
	C.	Classification of New Drycleaning Solvents:
		Mr. Eriksen noted at the March 30, 2005 Council meeting, the Administrator presented for classification purposes, three (3) potential new drycleaning solvents currently being used in Illinois . Based on discussion by the Council, concern was expressed that two (2) of the solvents were not actually drycleaning solvent but were detergents used in the drycleaning process. Mr. Eriksen stated further research regarding Hydroclene indicates it is a petroleum solvent that is being used and distributed as a drycleaning solvent. The Administrator has identified several distributors who are selling this solvent and the MSD sheet indicates that it is a hydrocarbon solvent with the material use listed as a drycleaning solvent. He recommended this solvent be classified as a hydrocarbon solvent for purposes of calculating the annual licensure fee and the applicable solvent tax. Regarding 105° Solvent (Crystal Soltex), he noted it is manufactured and distributed by Laidlaw. In reviewing the product with a Laidlaw distributor, it was verified this product is a drycleaning detergent consisting of a 25% hydrocarbon mixture. Based upon this additional information, it is his recommendation this product not be classified or treated as either a chlorine-based or a hydrocarbon-based solvent for purposes of the Trust Fund Act. The Council conducted a brief discussion of the information presented by the Administrator and on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, approved the Administrator's recommendation regarding Hydroclene and 105° Solvent (Crystal Soltex) by a vote of 6-0.
	D.	Payment of Remedial Claim Invoices Received Subsequent to Cancellation of Insurance Coverage:
		Mr. Eriksen reviewed with the Council the issue that was raised at a previous Council meeting regarding the treatment of remedial claim invoices that are submitted to the Administrator's office for reimbursement subsequent to the cancellation of the environmental pollution liability insurance coverage for the drycleaning facility. He noted the Trust Fund Act requires, as a condition of eligibility, the owner\operator of the facility maintain pollution liability insurance coverage in the amount of $500,000 as of June 30, 2000 continuously until such time as the facility has received a No Further Remediation letter and the remedial claim is closed. Failure to renew or cancellation of the insurance coverage for failure to pay the applicable premium or provide required documentation will result in forfeiture of remedial program benefits. The remedial benefits section of the Trust Fund Act also requires the drycleaning facility be licensed and be in compliance with the pollution prevention measures as outlined in 415 ILCS 135/40 (c)(5) and (6). These two (2) paragraphs address specific secondary containment requirements, discharge of waste water from the drycleaning machine, etc. The Fund has pended reimbursement of remedial claim invoices submitted at unlicensed facilities until such time the facility becomes licensed. Invoices are also pended if the facility is lacking secondary containment, until the secondary containment has been installed. He noted the Trust Fund Act provides that all invoice requests for reimbursement for remedial benefits must be submitted within 30 days of completion of the work. This 30 day requirement has not been enforced by the Council. Mr. Eriksen said the issue for Council consideration is should the Fund reimburse the drycleaner owner/operator for remedial action activities provided prior to cancellation of the pollution liability insurance coverage even though the invoices for reimbursement are submitted to the Administrator's office subsequent to the cancellation of the insurance policy? Mr. Eriksen outlined three (3) options for the Council's review and consideration: 1. At the time of processing of the invoices, if the insurance coverage at the facility has cancelled or lapsed, the reimbursement request is returned to the drycleaner owner/operator (claimant) as being denied. 2. As long as the claimant had pollution liability insurance coverage in effect since June 30, 2000 through the time the remedial action activities were provided, the Fund would reimburse the claimant for those eligible expenses regardless of the status of the insurance coverage as of the date of the remedial claim reimbursement request. 3. Reimburse the claimant for the eligible remedial action costs incurred provided that: A) Pollution liability insurance coverage has been in effect since June 30, 2000 and was in effect at the time the activities were rendered; and B) The invoices were submitted within 30 days of completion of the work regardless of when the pollution liability insurance coverage cancelled or expired at the facility.
		Mr. Eriksen noted the Administrator has been following Option #2 but states the Council may want to consider Option #3, which would bring into effect the 30-day timeframe for submission of the reimbursement request. Mr. Eriksen noted this would make the remedial consultants be more focused on timely completing the work and submitting the reimbursement request so not to jeopardize reimbursement benefits in the event the insurance is cancelled. The Council conducted a general discussion of the options. Mr. Polak indicated invoking the 30-day submission timeframe would probably provide very little additional leverage for the Fund and in some cases, may actually work against the Fund. After additional discussion by the Council, on a motion by Mr. Polak and a second by Mr. Lewicki, the Council voted 6-0 to adopt Option #2, which states that as long as the claimant had pollution liability insurance coverage in effect since June 30, 2000 through the time the remedial action activities were provided, the Fund would reimburse the claimant for those eligible expenses regardless of the status of the insurance coverage as of the processing date of the remedial claim reimbursement request. The motion passed by a vote of 6-0.
	E.	Legal Counsel Contract:
		Mr. Polak reviewed with the Council that Mr. McCarthy's fiscal year 2005 contract expires June 30, 2005. Mr. Bredenkamp stated Mr. McCarthy has done an excellent job in providing legal advice to the Council and recommended renewal of his contract. Mr. Eriksen noted Mr. McCarthy is requesting a cost of living increase in his fees, which would increase his rate to $145 per hour for professional services and $85 per hour for travel time. Mr. Lewicki seconded the motion and it passed by a vote of 6-0.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen stated the next Council meeting was tentatively scheduled for Wednesday, June 1, 2005. The day-long Strategic Planning Session is tentatively scheduled for Wednesday, July 20, 2005 in Peoria , IL . Mr. Eriksen referenced the article in the Council packet regarding the cost of a New York Super Fund cleanup involving a drycleaning facility. The enforcement action against the drycleaner was for $7.5 million. He reported Dr. So and he would be attending the semi-annual State Coalition for Remediation of Drycleaning Facilities meeting next week in Raleigh , NC and he would provide the Council an update of the seminar at the June 1, 2005 meeting.
	PUBLIC COMMENT PERIOD
	Mr. Polak asked if there were any public comments. There were none. There being no further business, the Council meeting adjourned at 12:358 p.m.
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