November 16 , 2005 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT - NAPERVILLE NAPERVILLE, ILLINOIS NOVEMBER 16 , 2005
	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 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
	PRELIMINARY BUSINESS
	The minutes from the September 30, 2005 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the minutes were approved by a vote of 7-0.
	APPEAL-CANCELLATION OF INSURANCE COVERAGE
	Mr. Eriksen noted that there was one (1) appeal regarding the cancellation of insurance coverage for Kingsgard Cleaners located at 8800 South Ashland Avenue in Chicago , IL . Mr. Eriksen noted the owners are Irv and Jeff Markus and they are present at today's meeting to present their appeal . Mr. Eriksen reviewed with the Council background information regarding cancellation of the insurance coverage at the facility. The insurance was cancelled for failure to pay the late payment penalty fee assessed for calendar year 2005. The late payment penalty invoice was sent to the Markus' requesting payment by July 21, 2005. It was requested the payment be made no later than September 1, 2005. Fund staff had contacted Mr. Markus to explain that the license late payment fee must be received by September 1, 2005 or insurance coverage would cancel and the facility would no longer be eligible for remedial program benefits. Mr. Jeff Markus addressed the Council on behalf of Kingsgard Cleaners stating they have been one of the earlier participants in the Fund's insurance program and have always kept their insurance coverage current and have always paid their license fee. He noted they are a Silver Star drycleaning facility and always followed the regulations as outlined by the Fund. Mr. Markus reviewed with the Council a variety of substantial financial setbacks the cleaner had encountered, going back over four (4) years and culminating with the bankruptcy of United Airlines. Kingsgard had a major contract with United Airlines to clean their staff uniforms. The bankruptcy resulted in them not collecting a substantial amount of money from United. Mr. Markus stated he had received the 60-day Cancellation Notice dated July 1, 2005. On September 12 th , he received a notice stating the late fees were still owing and needed to be paid by October 3 rd . He thought this was an extension of the September 1 st date. Mr. Eriksen informed the Council this letter was sent 11 days after the policy had cancelled and was a standard follow-up letter stating that even though the insurance had cancelled, the monies were still owed the Fund. Mr. Markus reiterated that he felt this letter gave Kingsgard Cleaners until October 3 rd to pay the license late payment fee and maintain their insurance coverage. After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council voted 7-0 to reinstate the pollution liability insurance coverage as of September 1, 2005 without a break in the retroactive date of coverage which was December 1, 1999.
	APPEAL-LICENSE LATE PAYMENT FEES
	Mr. Eriksen noted there was an appeal of the license late payment fees for O'Fallon Cleaners located at 313 N Lincoln Avenue in O'Fallon, IL. He briefly reviewed with the Council background information regarding the license late payment fees noting the facility is owned and operated by Mr. Pak N. Kim. Mr. Kim began drycleaning operations at the above referenced location in 1996 and the facility has never been licensed by the Fund. Mr. Eriksen reviewed the numerous dates the Fund had contacted Mr. Kim about becoming licensed. Licensing information was finally received on May 26, 2004. A review of the information indicated all of the prior license fees had been paid in a timely manner except the license fees for 1998 and 1999, which were paid on August 19, 2004. This resulted in combined license late payment fees for the two (2) years of $17,575. Mr. Kim is appealing these late fees, claiming that he was not notified of the license requirements until some time in calendar year 2000 and since he speaks limited English, did not understand the license process. Mr. Eriksen noted that due to Mr. Kim's health, his daughter was in attendance and would represent him. Miss Young Kim, daughter of Mr. Pak Kim, addressed the Council and reviewed the timeline for the payment of the license fees and reiterated that her father was not aware license fees had to be paid for 1998 and 1999 as he did not become aware of the licensing requirements until sometime in 2000. Miss Kim indicated the license fees and late payment penalties were excessive and that her father had tried very hard to comply with the program's licensing requirement which was substantiated by the timely payment of calendar years 2000 through 2005 license fees. Miss Kim asked the Council to waive or substantially reduce the license late payment fees. The Council discussed the late payment fees and on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, voted 7-0 to assess the late fees from the time that they were due for 1998 and 1999 (which was July 1, 1999) to December 31, 1999. They directed Mr. Eriksen to calculate the new amount of the late fees and present those to Mr. Kim for his review and payment. The Council agreed that since the license late fees would still be in excess of $1,000 they could be paid via a 12 month installment agreement.
	OPERATIONAL ISSUES
	A.	Updated Financial Projections for the Period of July 1, 2005 to January 1, 2020:
		Mr. Eriksen reviewed with the Council updated financial projections for the Fund for the period of July 1, 2005 through the Fund's sunset date of January 1, 2020. He noted there had not been significant changes in the assumptions used to prepare the most recent projections which were reviewed at the July 20, 2005 Strategic Planning meeting. The only significant change was a decrease in the assumed percentage of facilities requiring active remediation from 45% to 42%. This reduction is based upon the intrusive test results received by the Fund. It was noted the projected Fund deficit as of January 1, 2020 would be $37,217,422. This assumes the current revenue stream remains static with no increases or decreases through the remaining life of the program and that 825 active remedial claims are filed along with 10 inactive remedial claims. Mr. Eriksen reviewed with the Council the total approved budgets as compared to the current cash balance, noting that for the first time ever, the total of outstanding budgets have exceeded the available cash on hand. The difference is approximately $500,000. The Fund will be receiving a significant amount of revenue between now and the end of the year with the payment of the annual licensing fees. He reiterated the need to prioritize claims by the summer of 2006. In addition, he noted that the solvent tax receipts for the first and second quarter of 2005 are consistent with the prior years. These projections reflect a reduction in the overall deficit of approximately $300,000 from those reviewed at the July 20, 2005 meeting.
	B.	Report on Updated Compliance Inspections:
		Mr. Eriksen reviewed with the Council progress updates on the compliance program inspections provided to him by the various compliance programs. He recently received an update from Henry Parker of S&ECC which he handed out to the Council members. At this time all of the compliance programs are anticipating completing the necessary site inspections by December 31, 2005. Mr. Eriksen referenced the Enviro-Clean Compliance Program is having a change of administrators effective November 1, 2005. The Korean-American Drycleaners Association (KADA) is taking over the administration of the Enviro-Clean Compliance Program from Mr. Harry Cho. Mr. Steve Kim, president of KADA, explained to the Council that KADA will perform all of the necessary compliance program requirements within the given timeframe established by the Council, including offering of CEU courses and completion of site inspections. The various compliance programs are estimating 1,150 inspections to be completed during calendar year 2005. Currently the Fund insures only 826 facilities, which means that there are over 325 inspections that more than one compliance program is including in their inspection count. Mr. Eriksen noted the compliance programs will have to provide to the Council a formal report of their site inspection activities and CEU results by February of next year.
	C.	Legislation:
		Mr. Eriksen reviewed with the Council the draft legislation prepared last spring had focused on enforcement mechanisms of licensing provisions and solvent tax collections. This draft legislation was not agreed to by the Illinois Department of Revenue until too late in the spring legislative session to be considered and it was not addressed in the recent fall veto session. Mr. Eriksen asked the Council if they had any additional legislative issues to include with last spring's draft legislation. The Council indicated that they did not have any at this time. Mr. Eriksen reported it was not necessary to seek legislation in the veto session to remove the transfer of monies from the Drycleaner Trust Fund to the General Revenue Fund as outlined in SB661. Per a recent discussion with a representative of the Governor's Office, the Administrator was assured the transfer would not occur and was being handled administratively. Recently he had been contacted by a solvent distributor who has two (2) customers who are purchasing CO2 machines. Based upon the information provided by the solvent distributor, the annual solvent tax cost for operating the CO2 machines would be in excess of $4,000 per year. The solvent distributor noted that combined with the substantially higher initial machine costs, this makes the utilization of such machines economically unfeasible. Mr. McCarthy and Mr. Eriksen reviewed the Trust Fund Act and determined that to exempt a specific solvent, i.e., CO2, from the solvent tax and/or license fee would require a legislative amendment. The issue for Council discussion is does the Council wish to exempt or establish legislatively a new solvent tax rate or license fee structure for CO2? The Council conducted a general discussion of the pros and cons of carving out one of the “green” solvents and providing a special solvent tax rate or license fee structure. It was the consensus of the Council members that at this time they would continue to recommend to the legislature that all green solvents be treated the same and taxed and licensed in accordance with the existing fee structure. They indicated they would continue to monitor this issue and if needed, would address it at a future Council meeting.
	D.	Policy Issue-Treatment of Demolition Costs as Approved Remedial Activities:
		Mr. Eriksen reviewed background information for the Council noting the Fund can reimburse eligible claimants for remedial action costs up to the applicable program limits for costs to perform remedial action as defined in Sections 58.6 and 58.7 of the Environmental Protection Act and in accordance with the rules adopted by the Pollution Control Board under those sections. The Act does not specifically define what remedial activities are eligible or ineligible. Mr. Eriksen reviewed examples of costs the Fund will not pay for as outlined in the Fund's Claim Kit. These include: 1)  Removal of soil which is not contaminated 2)  Removal and handling/disposal of drycleaning systems 3)  Repairs and maintenance of the drycleaning systems 4)  Installation of new drycleaning systems Mr. Eriksen stated recently an eligible claimant contacted him and inquired if the demolition of his drycleaning facility would be considered an eligible remedial action cost. Specifically, this facility has soil contamination located directly beneath the building and the groundwater is contaminated. Demolition of the building and over excavation of the contaminated soil is estimated to cost less than treatment of the contaminated soil using any other treatment method, assuming the building is not demolished. Mr. Eriksen noted that there are two (2) issues for Council consideration. The first is does the Council want to recognize demolition costs associated with the razing of a drycleaning facility as an eligible remedial action cost if the demolition costs, combined with the over excavation of the contaminated soil, is cheaper than the treatment of the contaminated soil using any other remediation method? In the Council's discussion of this issue, it was noted that the Fund does not pay for the removal of any other types of contaminant that may exist on the property such as asbestos, PCBs, etc. After additional discussion, on a motion by Mr. Polak and a second by Mr. Chung, the Council voted 6-0 to approve demolition costs as eligible remedial action costs provided the demolition costs, combined with the over excavation of the contaminated soil is cheaper than the treatment of the contaminated soil using any other remediation method. Mr. Lewicki abstained from voting. The second issue for Council consideration was given that remediation of contaminated groundwater will be ongoing for several years at the facility and the Council has now chosen to recognize demolition costs as an eligible activity, do they wish to defer payment of the demolition costs until such time as the groundwater cleanup has been completed so as to be certain that adequate funds exist for the remediation of the contaminated groundwater or do they want to continue in the present manner where the Fund pays all eligible costs on a first in-first out basis? After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kwon, the Council voted 5-1 to pay all eligible remedial action costs in the order that they are received for processing by the Fund. Mr. Lewicki abstained from voting on the motion.
	E.	Potential Meeting Dates for Calendar Year 2006:
		Mr. Eriksen noted that enclosed in the Council packet was a list of eight (8) potential meeting dates for calendar year 2006. After discussion by the Council, it was their consensus the following dates be established as tentative meeting dates for calendar year 2006: January 10th Tuesday February 22nd Wednesday April 12th Wednesday May 17th Wednesday July 20th Thursday (Strategic Planning) September 13th Wednesday November 1st Wednesday December 13th Wednesday (if needed) Mr. Eriksen stated that at this time, he had no agenda items for the possible December 21 st meeting. He stated unless the Council felt differently, there was no need for that meeting. It was the consensus of the Council members that a December 2005 meeting was not necessary.
	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 $ 58,955.00 Standard flat fee billing for October 2005, licensing, underwriting claims processing and site inspections.
	2. John J. McCarthy $ 1,887.50 Professional legal services to the Council for the period of September 17, 2005 through November 4, 2005.
	3. Iain D. Johnston, Holland & Knight LLP $ 265.00 Professional legal services for September 2005 regarding Chang Su Hon/Scott One Hour Cleaners administrative hearing.
	Mr. Eriksen handed out a bill received from Mr. Johnston for October services totaling $909.37; $697.37 related to the Chang Su Hon/Scott One Hour Cleaners administrative hearing with the additional $212 for time spent reviewing the amended Trust Fund forms On a motion by Mr. Lewicki and a second by Mr. Gibson, the Council approved the bills by a vote of 7-0. Mr. Eriksen noted Williams & Company's September bill was distributed to all of the Council members who verbally approved the bill in October.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed with the Council there are currently 1,361 licensed drycleaners; 826 of these drycleaners have pollution liability remediation coverage with the Fund. There are 501 open remedial claims with outstanding reserves totaling $34.2 million. Approximately 277 drycleaners have yet to conduct their intrusive testing and submit their test results to the Fund. Total approved budgets are approximately $5 million. Licensing applications were mailed on November 7, 2005 and year to date claim payments total $1.2 million.
	OTHER ISSUES AS PRESENTED
	Included in the Council packet were finalized copies of the revised Trust Fund forms that were approved by the Council at their September 30, 2005 meeting. Minor changes were recommended by Mr. Iain Johnston on the insurance policy. Mr. Eriksen reviewed those with the Council, noting one (1) change Mr. Johnston recommended was including a provision that the Council has the right but not the obligation to defend a claim. Mr. Eriksen noted the audit fieldwork is complete for the FY05 audit. The audit is being conducted by the Auditor General's Office. It is their goal to have a draft report prepared by Christmas. Mr. Eriksen updated the Council on the informational meetings; two (2) were held last week, one at Fairview Heights, IL in which there were 15 attendees, the second in Bloomington, IL, where there were 11 attendees. Last night at The Purple Hotel in Lincolnwood there were 25 attendees. He reported there was a good dialog of questions and answers between the participants and himself. Mr. Eriksen updated the Council on a recent meeting that Dr. So, Mr. Perkins and he had with two (2) members of the Illinois EPA staff. Discussions focused on situations in which a facility could qualify for a No Further Remediation letter; actions necessary to reduce the C-Sat limit in soil at drycleaning facilities and new legislation involving “right to know” for contaminated properties. A draft rule on this topic should be released by Illinois EPA within the next month.
	PUBLIC COMMENT PERIOD
	Mr. Polak asked if there were any public comments. There were none. There being no further business, on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council, by a vote of 7-0, adjourned the meeting at 11:44 a.m.
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