November 3 , 2004 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT NAPERVILLE, ILLINOIS NOVEMBER 3, 2004
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:08 a.m. A quorum was present. Roll call was taken with the following members present:
	John Bredenkamp David Gibson (via telephonic conference) 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 September 2, 2004 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Kim, the minutes were approved by a vote of 4-0.
	OPERATIONAL ISSUES
	A.	Selection of Administrative Hearing Officer:
		Mr. Polak noted that Mr. McCarthy had contacted several potential administrative hearing officers to work on behalf of the Council and invited Mr. Iain Johnston to meet the Council. Mr. McCarthy noted that Mr. Johnston was senior counsel for Holland & Knight, LLP in Chicago , IL , with a background in insurance law. Mr. McCarthy received Mr. Johnston's name from the Attorney General's Office. Mr. Johnston addressed the Council and reviewed his background with them stating that he has spent a good portion of his career either working for the government or working on governmental issues, as he started his career with the Illinois Attorney General's office. Currently he works extensively with municipalities and other governmental entities. He noted he has represented the Illinois Department of Insurance in various legal matters since 1999. Mr. McCarthy noted that Robert Wagner of the Division of Insurance highly recommended Mr. Johnston. Mr. Eriksen noted there are two (2) pending appeals of decisions involving insurance issues. The first is Mr. Guller's appeal of the cancellation of insurance coverage on his two (2) drycleaning facilities and the second is Mr. Han's appeal of the denial of his remedial and insurance benefits. Mr. Kim inquired as to why it is necessary for the Council to hire an administrative hearing officer and asked why Mr. McCarthy can't be the administrative hearing officer. Mr. McCarthy responded that he could not serve as the administrative hearing officer as he represents the Council in such hearings and it would be a conflict of interest. Mr. Johnston's hourly rate to the Council for such work would be $265.00 per hour. Mr. Johnston stated that he was trying to get his firm to agree to a $250.00 hourly rate which is what his law firm typically charges other governmental agencies. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, by a vote of 4-0, the Council approved entering into a contract with Mr. Iain Johnston to provide administrative hearing officer services to the Fund for an hourly rate of $265.00 per hour.
	B.	Extension of December 31, 2004 Compliance Program CEU Requirements to March 31, 2005:
		Mr. Eriksen addressed the Council noting that enclosed in the Council packet was a copy of a fax that he received on September 20, 2004, from the National Drycleaners Institute (NDI). NDI is requesting an extension of time for compliance program registrants to complete their four (4) CEUs from December 31, 2004 to March 31, 2005. They are requesting that this be a one-time extension for the completion of the four (4) CEUs for calendar year 2004. He reported that at the chairman's direction, he had verbally polled the other compliance programs. It was their response that they felt their members will have had sufficient opportunity to obtain the necessary four (4) CEUs for calendar year 2004 by December 31, 2004 and an extension of this requirement is not necessary. Mr. Gibson joined the meeting via telephonic conference at 10:20 a.m. Mr. Polak inquired of the NDI representatives in attendance at the Council meeting why they felt the extension was necessary. Mr. Donald Park, representing NDI, stated at the time of the request, there appeared to be a lack of seminars available to the drycleaning community. He noted if the objective of the Council is to have these CEUs educate people, there needs to be smaller seminars where questions and issues can be dealt with in a “hands on” environment rather than a large seminar setting. It was his opinion that some of the presentations being conducted by other compliance programs were not doing a quality job of training. Mr. George Vaselakos stated that everyone should be aware of the continuing education requirements as the Council sent a letter to all insured drycleaners informing them of the new requirement. He believes that it would be a bad precedent to extend this requirement. Mr. Polak expressed a concern that if the Council granted an extension at this time that it would impact the drycleaners' expectations of the Council in the future. He was not certain there was any benefit to extending the deadline. Mr. Lewicki inquired how many drycleaners may be affected by this. Mr. Polak replied he did not know. Mr. Gibson asked if the NDI members had received any CEUs to date. Mr. Park responded that their members have attended seminars that have gained them at least two (2) CEUs and he noted that since the letter was written in September, there have been a number of seminars scheduled, however, very few have been offered in Korean. Mr. Bredenkamp stated that he feels it would be counterproductive to change the CEU requirements or the requirement deadline. Mr. Lewicki stated that he was in agreement with Mr. Bredenkamp. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council, by a vote of 5-0, voted to deny NDI's request to extend the December 31, 2004 CEU deadline to March 31, 2005.
	C.	Updated Financial Projections for the Period of July 1, 2004 to January 1, 2020:
		Mr. Eriksen reviewed with the Council that there were two (2) major changes in the projection assumptions used as compared to the projections reviewed at the July 22, 2004 Council meeting. They are as follows: 1) The estimated number of active sites eligible for remedial program benefits was decreased from 950 to 900. This is based on a reduction in the number of Fund insured drycleaning facilities. 2) The estimated taxable gallons of perc and petroleum drycleaning solvent were reduced by 25%. This is based on the first two (2) quarters of calendar year 2004 solvent tax collection reports which reflect a 32% reduction in taxable solvent gallons. He noted the net effect of the above changes results in an increase in the projected program deficit of approximately $2 million for a total of $33 million for the remaining life of the program. Mr. Eriksen stated it is probably premature to make any adjustment of the solvent tax rates at this point in time as he would like to see if the solvent usage trend for the first two (2) quarters of calendar year 2004 continues through the balance of the year. He stated it is possible, based on the review of the fourth quarter 2003 solvent purchase numbers that there was an increase in purchases in December 2003 as people stocked up on solvent prior to the implementation of the new increased solvent taxes. He noted it was not possible to adjust the license fee until sometime next year that would impact the license fee for calendar year 2006. He distributed to the Council an email from Mr. Peter Marberry, requesting the Council to revisit the solvent tax structure between petroleum and perc. Mr. Marberry's email reflected the usage and the number of licensees for 2003 and reported that the ratio of 5:1 is unfair and the original ration of 10:1 between petroleum and perc solvent should be restored. Mr. Polak stated that since the Council will have a much more definitive idea of the potential number of remedial claims as of June 30, 2005, that the Council should plan for the first part of July 2005 to review the projections in more detail. Mr. Lewicki agreed and stated that he did not feel it would be wise for the Council to rush into changing the fee structure at this time. Mr. Bredenkamp concurred and felt that the increases put in effect January 1, 2004 are satisfactory for the time being. Mr. Eriksen reviewed in detail the current status of the claims noting that just over 600 drycleaning facilities have either filed a claim for remedial benefits or have sought budget approval to do the intrusive testing at their facilities.
	D.	Update on Enforcement Action Against Unlicensed Drycleaning Facilities:
		Mr. Eriksen reviewed with the Council his memorandum of October 27 th , summarizing the activities that have taken place since the Illinois Attorney General's Office conducted a mailing in early August 2004 to drycleaning facilities that were unlicensed but thought to be active. He noted the total number of facilities thought to be active were 148; the total number of letters sent were 170, with 33 letters returned. Of the letters returned, 4 were refused or unclaimed but the Administrator has strong reason to believe the drycleaning facility is still active. Over the past two (2) months, the Administrator received information on 38 sites to remove them from the list; 29 of those facilities have either become licensed or are in the process of becoming licensed and nine (9) have certified that they are a drop-off facility or no longer in business. The Administrator will verify the status of these nine (9) facilities by a drive-by visit. Based on the responses, the Administrator is estimating that as of today, 66 of the 184 facilities have presented information to verify that they are not an active drycleaning facility requiring a license, facility is vacant, or no forwarding addresses exist. This leaves 82 drycleaning facilities eligible for further review and possible enforcement action by the Attorney General's Office. The Administrator is working in conjunction with the Attorney General and legal counsel to provide information and an estimate of potential license fees and late payments due so the Attorney General's Office can begin enforcement action. Enforcement action will most likely result in the filing of a lawsuit against the unlicensed drycleaner by the Attorney General on behalf of the Fund.
	E.	Collection of Installment Insurance Premium Upon Cancellation of Insurance Coverage:
		Mr. Eriksen reviewed with the Council that approximately two (2) years ago the Council modified their underwriting policies and procedures to allow drycleaners to pay their annual insurance premium in two (2) equal installments. The first installment is due at the inception of the policy and the second installment is due six (6) months after the inception date. Most of the drycleaners who are insured by the Fund have opted for the installment method of paying their annual insurance premium. In the past two (2) weeks, he noted that the Administrator had two (2) insurance policies cancel for lack of compliance with the Fund's underwriting requirements. Each of the insureds utilized the installment of method of paying their premium and therefore had paid $700 of the total $1,400 due. The second installment of $700 is due in approximately three (3) months. Since the insurance is cancelled and the premium was fully earned by the Fund on the inception date of the policy, does the Council wish to immediately bill these drycleaners for their second installment of $700 or do they wish to bill them at such time that the second installment would have been due if the insurance coverage had remained in effect? Mr. Eriksen stated that the Administrator recommends that the Council accelerate the due date of the second installment payment in as much as the premium was fully earned on day 1 and to further delay billing on the second installment will reduce the likelihood of the Fund being able to collect the insurance premium. After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to accept the Administrator's recommendation that the Council accelerate the due date of the second installment payment in as much as the premium was fully earned on day 1 of the policy.
	APPROVAL OF PROGRAM BILLINGS
	Mr. Eriksen noted that the following bills were before the Council for their review and approval.
	1. Williams & Company Consulting, Inc $ 52,887.00 Standard flat fee billing for August 2004, licensing, underwriting and claims processing.
	2. John J. McCarthy $ 1,897.50 Professional legal services to the Council for the period of August 25, 2004 through September 21, 2004
	3. Williams & Company Consulting, Inc $ 57,742.00 Standard flat fee billing for September 2004, licensing, underwriting and claims processing.
	On a motion by Mr. Lewicki and a second by Mr. Kim, the bills were approved by a vote of 5-0.
	Mr. Polak requested of the Council that in the event that the Council does not have a regular monthly meeting that they grant him the authority to review and approve all administrative bills. The Council could then review and comment on the bills at their next regularly scheduled meeting. Mr. Bredenkamp thought that this was an agreeable approach but requested that the Administrator mail a copy of the administrative bills to all the Council members prior to the chairman approving the bills. On a motion by Mr. Lewicki and a second by Mr. Kim, the Council, by a vote of 5-0, authorized the chairman to approve administrative bills in the event that the Council does not have a meeting scheduled for a month, subject to the mailing of the bills to all the Council members prior to the chairman's approval.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed with the Council the August and September 2004 activity reports, reviewing the number of insured policies in effect and outstanding remedial claims as of the given dates. He noted that the reserves for eligible claims as of September 30, 2004 exceed $23 million. In reviewing the September financial statements he reported that there was a charge back item from the Fund to the General Revenue Fund in the amount of $272,563. This was part of last year's budget bill and provides the Governor the authority to transfer monies from the Fund to the General Revenue Fund to cover administrative expenses incurred by the State on behalf of the Fund. Mr. Eriksen stated that he has reviewed this issue with the Comptroller's Office as well as several legislators and is reviewing possible options to minimize the impact of this transfer on the Fund.
	REVIEW OF CLAIM BUDGETS IN EXCESS OF $75,000
	1.	Zephyr Cleaners in Oak Park , Illinois
		Mr. Eriksen noted that there were two (2) claim budget requests for Council review and action. The first was Zephyr Cleaners in Oak Park , Illinois . Mr. Perkins reviewed in detail with the Council previous Council approvals for Zephyr Cleaners and a summary of their remedial activities to date. The additional remediation budget request is divided in two (2) parts. The first is for two (2) rounds of sodium permanganate injection into the existing injection wells that had been installed into a small area where the soil cannot be excavated. The projected cost for this activity is $30,000. The second part is for the removal, disposal and replacement of the slurry wall backfill per the request of the adjacent property owner. The projected cost for this activity is $68,310. Mr. Perkins stated that the Administrator recommends the Council approve the budget request for the sodium permanganate injection in the amount of $30,000 but deny the request to remove the existing backfill from the adjacent property. The reason for the denial request is because the adjacent property owner had originally agreed to the proposed remediation activities, including the slurry backfill. The consultant had been in multiple meetings with her to keep her informed as to what was occurring, including the soil engineer's report that indicated that the material was more than adequate and was necessary to stabilize the drycleaner facility wall and foundation. The Council conducted a lengthy discussion regarding the issues surrounding the slurry wall. At the conclusion of the discussion, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved, by a vote of 5-0, the additional $30,000 budget for the sodium permanganate injection and denied the $68,310 request to excavate and replace the slurry backfill on the adjacent property owner's property. Approved budgets to date total $214,519.42.
	2.	World's Largest Laundromat & Drycleaner in Berwyn, Illinois
		Dr. So reviewed with the Council the background regarding this facility, stating that there are several issues requiring Council review and approval. The Facility has been eligible for remedial benefits since 12/02/2002. However, the Facility has been out of business since it burned down on 08/24/2004. Mr. Tom Benson (Claimant), who is also the property owner, informed the Administrator that he is planning to construct a new building at the current location within a few months since he cannot afford to be out of business for too long. The Administrator is requesting Council approval on the following three (3) issues: 1) In order to expedite the cleanup to allow the drycleaner to rebuild his facility, the Administrator is asking for approval of projected costs up to the remedial cap of $300,000 due to the severity of contamination found in both soil and groundwater at the facility. 2) Proceeding with the project, including the remedial action plan (RAP) and the remedial action (RA) without the three (3) bid requirement for the remainder of the project. 3) Proceeding with the project including the RAP and the remedial activities without Illinois EPA's approval. Dr. So reviewed in detail the status of the facility, the extent of the contamination and the severity. After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the Administrator's request as outlined, by a vote of 5-0.
	3.	Plum Grove Cleaners
		Mr. Eriksen noted for the record that Mr. Mike Perkins had contacted five (5) of the Council members on Monday, September 27, 2004, seeking emergency budget approval for Plum Grove Cleaners in the amount of $5,000 in order to immediately address an existing Illinois EPA violation notice. The motion was approved by a vote of 4-1.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen reported that the next meeting had tentatively been scheduled for December 16, 2004 but Mr. McCarthy had a conflict with that date. After discussion, the Council tentatively set the next Council meeting for December 15, 2004. Mr. Eriksen reviewed with the Council two (2) pieces of correspondence included in their Council packet. The first was an email received through the State Coalition for the Remediation of Drycleaners from an organization referenced as the Mid-Atlantic Association of Drycleaners. Mr. Eriksen noted that this Association believes that participation in voluntary site remediation programs results in cleanup costs being paid by someone other than the drycleaner. Mr. Polak stated that he would like the Administrator, at a future meeting, to outline in greater detail how the voluntary site remediation programs work. The second article of correspondence involved a joint letter from the STAR Program, S&ECC and the Enviro-clean Program, asking for verification on how soon the Council's requirement of bi-annual site inspections needed to be completed. It was their interpretation that all inspections needed to be completed by January 1, 2006. Mr. Eriksen noted that this item would be placed on the December 15, 2004 agenda for Council review and discussion.
	PUBLIC COMMENT PERIOD
	There were no public comments. Mr. Kim inquired about the current cost of a air permit fee for petroleum drycleaning facilities. Mr. Eriksen replied the cost is $1,000; $500 of the permit is for the initial construction of the facility and the second $500 is for the actual air permit. There being no further business, on a motion by Mr. Lewicki and a second by Mr. Kim, the Council meeting adjourned at 11:38 a.m.
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