December 17, 2003 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT NAPERVILLE, ILLINOIS DECEMBER 17, 2003
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 9:37 a.m. A quorum was present. Roll call was taken with the following members present:
	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 November 4, 2003 Council meeting were reviewed. Mr. Polak noted that under the Public Comments there was a missing name and asked that the minutes be amended to reflect that the drycleaner referenced was Mr. Sung Do Kang, President of the Korean/American Drycleaners Association. On a motion by Mr. Lewicki and a second by Mr. Kim, the minutes were approved as amended by a vote of 4-0. Mr. Polak noted that due to scheduling conflicts for members of the public, he wished to move the Public Comment Period up on the agenda to the next item of business.
	PUBLIC COMMENT PERIOD
	Mr. Sung Do Kang, President of the Korean/American Drycleaners Association of Chicagoland (KADA), addressed the Council and presented a memorandum asking for consideration to decrease the perc tax to $7 per gallon. His presentation was in Korean and Mr. Dae Kim presented it in English. He stated that a number of KADA members complained about the increase of the tax to $10 per gallon, as it created an additional financial burden in tough economic times. They would like the Council to take a look at the impact of reducing the tax to $7 per gallon. They estimated that it would only cost the Fund $400,000 annually. In addition, KADA is working with consultants to come up with a preferred consultant program with the expectation of reducing cleanup costs. Mr. Eriksen noted that to date only 47 applications for purchase of back insurance coverage have been received. After additional discussion by the Council, on a motion by Mr. Polak and a second by Mr. Lewicki, the Council directed the Administrator to update the financial projections based upon the latest estimate of potential remedial claims. The motion passed by a vote of 4-0.
	APPEAL OF LICENSE LATE PAYMENT FEES
	Mr. Eriksen noted that the appeal was a license late payment fee for Burke Cleaners, located at 3024 23rd Avenue in Moline, IL. Mr. Dan Burke, owner of the drycleaning facility, was in attendance at the Council meeting via telephonic conference. Mr. Eriksen noted that Mr. Burke has operated this drycleaning facility at this location since 1954. The facility has been licensed since 1998 and all the previous years' license fees timely paid. He noted Mr. Burke paid his 2003 license fee on January 24, 2003, incurring license late payment penalties of $115. Mr. Eriksen stated that included in the Council packet was correspondence between Mr. Burke and the Fund. Mr. Burke addressed the Council stating "How do you pay your license fee by December 31st of a given year when you have to base your license fee on purchases through December 31st?" He noted it was impossible to do at year end and that he had previously never been late in paying his license fee and felt that it was unfair to try and determine your annual solvent usage as of December 31st and pay the fee on the same day. Mr. Polak asked Mr. Burke if he was aware that the license fee was due by the end of the year. Mr. Burke replied yes, but he was not aware that there was a late payment penalty associated with an untimely payment. Mr. Burke went on to reiterate that it was impossible to determine his annual solvent usage until December 31st and that there needed to be a gap from the time period that the purchases had to be reported, i.e., December 31st and the time the license fees should be due, for example, January 31st. Mr. Eriksen explained to Mr. Burke how this has not been an issue with other drycleaners, that most of them have estimated their usage and have either purchased the solvent prior to year end so that they can make the appropriate calculation and pay the fee timely, or else have made the calculation and deferred purchases until the first of the year. Mr. Burke replied that he operates several plants and has managers who make those purchasing decisions and it would be difficult for him to track and coordinate those purchases towards year end and still timely pay the license fee. Mr. Eriksen noted that the DS-3 form indicates that there is a $5 per day penalty if the license fee is not timely paid. Mr. Burke's correspondence indicated that it was not on the front of the DS-3 form and Mr. Eriksen noted that it was listed on the back of the DS-3 form. After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Gibson, the Council voted 4-0 to deny Mr. Burke's appeal and reaffirmed the Administrator's denial to waive the late payment penalty fee. Mr. Burke was verbally informed of the decision by the Council and will also be notified in writing by the Administrator of the Council's decision and his right to appeal the decision to an administrative hearing officer.
	OPERATIONAL ISSUES
	A.	Information for Approval of Budgets in Excess of $75,000
		Mr. Eriksen noted that the current statute requires that all Fund contracts/budgets in excess of $75,000 must have Council approval. The Administrator has been presenting remedial claim budgets to the Council for approval in which the requested budget approval would make the total budgets approved to date exceed $75,000. At the November 4, 2003 Council meeting, one Council member had several questions regarding the specific nature and location of borings required regarding an additional site investigation that was proposed to be conducted at a facility. The Council member indicated he was not supportive of approving the budget without knowing the exact location of each of the soil borings. In order to make certain that the Council has sufficient information to evaluate budget requests being recommended by the Administrator's office, the Administrator recommends that the following information be included in each of the budget summaries presented to the Council: 1. Background information, including a brief summary of the current status of the claim reflecting the work that has been conducted to date at the facility. If remediation has occurred at this facility, the summary will include a summary as to the effectiveness of the remediation. 2. A summary of dollars approved and paid to date by the Fund broken out by major activity, i.e., site investigation, remedial action design and remedial action plan implementation. 3. A summary of deductible paid to date by the claimant. 4.A summary of additional budget requests broken out by activity with accompanying narrative as needed to effectively describe and explain the budget request. 5. A summary of what the total project budget approved to date would be if the proposed request is approved by the Council. Mr. Kim asked what line item detail is provided in budget approval letters for site investigations. Mr. Eriksen reviewed with Mr. Kim the line items of consulting time, lab analysis, boring costs and miscellaneous costs. Dr. So further clarified the exact activities that take place during a site investigation. Mr. Eriksen noted that if it appears that based on available data the claim will exceed the remedial benefit cap of $300,000 for an active claim or $50,000 for an inactive claim, the approval request would include a summary of discussions that occurred between the claimant, the consultant, and the Fund as to the claimant's ability to fund costs in excess of the cap and a relook at alternative remedial action procedures. He stated that as part of the remedial action plan review, the proposed technologies are all evaluated for cost effectiveness in the likelihood that they will successfully remediate the facility on a timely and cost effective basis. He noted that in most cases, a relook of the technology will not result in any cost savings unless additional data has been compiled in terms of the extent of contamination since the review and acceptance of the remedial action design plan. On a motion by Mr. Polak and a second by Mr. Gibson, the Council, by a vote of 4-0, approved the Administrator's recommendation of information to be included in cost proposals that exceed $75,000.
	B.	Assessment of License Late Payment Penalty Fees
		Mr. Eriksen noted that the current statute states that if a drycleaner owner/operator fails to pay the annual license fee by December 31st of each year, a $5 per day license late payment penalty shall be assessed for every day that the license fee is unpaid. Legal counsel and the Attorney General's office have indicated that the statutory wording gives the Council minimal leeway in waiving license late payment penalties. SB1000, which is effective January 1, 2004, modified the current statute, stating that a $5 per day license fee "may" be assessed rather than "shall" be assessed. The Council has previously made two general exceptions to the assessment of the license late payment penalty. The first was that the Administrator could waive the license late payment penalty for calendar year 1998, 1999 and 2000, in the event the drycleaner owner/operator was not included on one of the initial mailings sent out by the Illinois Department of Revenue or the Fund during the period of 1997 through 1999, with the exception that the waiver would not be valid for any late license fee payments made after June 30, 2000. The Council made a second waiver of policy of license late payment penalties when it was indicated that if the drycleaner paid the license fee timely but upon review of solvent purchase information it was determined that the license fee paid was incorrect, the license late payment penalty could be waived. The Council further defined that this would be a "one-time only" waiver and should not be granted if the solvent volume used for calculating the initial license fee was not significantly understated. Mr. Eriksen asked if the Council was aware of any other general circumstances in which it wishes to provide the Administrator authority to waive the license late payment penalty? Also, does the Council wish the Administrator to review the merits of the appeal and apply reasonable judgment based on the information presented on all appeals received after January 1, 2004? Mr. Eriksen referenced a recent email that he had sent to the Council members in which the current drycleaner owner/operator had taken over operation of the facility approximately one year ago from his father who had passed away. The drycleaner owner/operator had indicated that he thought the new license fees would be effective one year from now and had recently installed a new drycleaning machine that had forced him to take a bank loan and deplete his surplus cash. He is now faced with a $4,500 license fee and noted that he did not have the available cash to pay the license fee and wondered if he would be assessed the license late payment fee if he did not make the payment on a timely basis. Mr. Eriksen replied that he could not make a decision in advance but would present the issue to the Council and get their direction. Mr. Eriksen stated that based upon the facts presented to him, this would be a case where it may be appropriate to waive the license late payment fee based upon the circumstances and the short period of time that the owner had been operating the facility. Mr. Polak stated another instance would be a situation where there was a clear and material error in processing by the Illinois Department of Revenue in recording the license payment fee. A member of the public commented that based upon the substantial changes in the license fee categories and increased fees, it could be anticipated that there would be a number of drycleaners that inadvertently paid the incorrect fee for 2004 and would owe an additional license fee and therefore a license late payment penalty. Mr. Eriksen stated that if the Administrator sees this trend and a number of drycleaners meet this criteria, he would bring this issue back to the Council for a general policy decision. After additional discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kim, the Council voted 4-0 to give the Administrator the authority to waive the license late payment penalty in accordance with their previous criteria and should apply reasonable judgment based on the facts presented. The motion passed by a vote of 4-0.
	C.	Review of Revised Program Administrative Rules
		Mr. Eriksen reviewed in detail with the Council, revisions to the program administrative rules. He noted the majority of the revisions are based on statutory changes included in SB1000, which goes into effect January 1, 2004. Additions to the rules are underlined and deletions are highlighted by a strikethrough. He noted that based on Council comments, rules will be submitted to JCAR at the first of the year. After publication, the first notice period must be at least 45 days from the date published, followed by a second notice period which is at least another 45 days. The rule making process will typically take six months to complete. During the review of the administrative rules, it was noted in the licensing section where the term "purchased" and "used" was not consistent. Mr. Eriksen indicated that he would review that section in more detail and correct the inconsistency prior to submitting the rules to JCAR for review. On a motion by Mr. Gibson and a second by Mr. Lewicki, by a vote of 4-0, the Council approved the revised changes to the administrative rules as presented by the Administrator.
	D.	Revised Contractor's Claim Kit
		Mr. Eriksen noted that enclosed for the Council's review and comment was a copy of the contractor's claim kit which has been revised to take into account the statutory changes per SB1000 and revisions to Council operating policies and procedures since the claim kit's inception. Mr. Eriksen reviewed the detailed changes for the Council. On a motion by Mr. Lewicki and a second by Mr. Kim, by a vote of 4-0, the Council approved the Administrator's changes to the contractor's claim kit.
	E.	Report on State Coalition for Remediation of Drycleaners Conference
		Mr. Eriksen noted that Dr. So and he had attended the semi-annual State Coalition for Remediation of Drycleaners Conference in New Orleans during the month of November. The conference focused on an update of the current status and recent changes to the existing 12-state programs and two days of technical training sponsored by the National Groundwater Association. Mr. Eriksen highlighted some of the key changes to the various state programs, noting that California had drafted a bill to create a drycleaner trust fund but it had not passed during their legislative session due to funding shortfalls. It was noted that several lawsuits are in progress against drycleaners for contamination of city water supplies. Florida has completed 79 site closures and is looking at using the remediation method of natural attenuation to close sites when levels fall to within 100 times of the MCLs for that specific site. Missouri has a fund balance of $1.6 million, with anticipated annual revenue of $700,000 and is working on their administrative rules. They have recently exempted CO-2 from the solvent tax. North Carolina, which started receiving 4% of the sales tax on all drycleaning in their state, has a concern that their fund may be raided by the legislature to fund other programs. Oregon is still having financial difficulties. They have a 1% gross revenue fee and recent legislation eliminated their sunset date of 2006. Tennessee has 55 sites enrolled in the fund, including facilities using CO-2. They switched their calculation of the annual registration to solvent usage from the number of full-time employees as they were not able to accurately track the number of full-time employees at the drycleaning facilities. Texas has a new program that will go into effect January 1, 2005. They indicated there could be as many as 4,500 drycleaners. Their initial solvent tax on perc will be $15 per gallon and $5 per gallon on all other solvents. They are estimating annual revenue between $6.1 million to $8.7 million per year. Wisconsin is looking at a deadline for submission of claims on August 30, 2008. Dr. So updated the Council on technologies, noting that there have not been any really new technologies brought forward in the recent past. Some of the technologies have shown to do a reduction of 70-80% of the contamination over a short period of time but the remaining contamination is taking a longer period to remediate.
	APPROVAL OF PROGRAM BILLINGS
	Mr. Eriksen noted that there were three (3) bills for Council review and action.
	1. Williams & Company Consulting, Inc $ 60,806.00 Standard flat fee billing for October 2003, licensing, underwriting and claims processing
	2. John J. McCarthy $ 1,640.00 Professional legal services to the Council for the period of October 27, 2003 through December 5, 2003.
	3. Williams & Company Consulting, Inc $ 47,917.00 Standard flat fee billing for November 2003, licensing, underwriting and claims processing.
	On a motion by Mr. Kim and a second by Mr. Lewicki, the Council approved the bills as presented by a vote of 4-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed the November 30, 2003 activity report with the Council noting to date 460 claims or potential remedial claims have been filed. Payments to date totaled almost $4 million with outstanding reserves on eligible claims totaling $13.8 million. He noted that the technical appropriation correction did not get introduced during the legislative veto session but the Office of Management and Budget had assured him that it would be introduced early in the January legislative session. Review of the November 30, 2003 financial statements indicated that the Fund balance as of November 30th was $5,603,250.
	CLAIM PAYMENTS IN EXCESS OF $75,000
	Mr. Eriksen noted that he was deferring action on the claim that was included in the Council's packet, as additional information has been provided by the consultant since the packet was mailed out that may change the funding request for this facility.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen noted that a request has been made of the Illinois Environmental Protection Agency (IEPA) to assist for the review and determination of green solvents. He feels it is important to involve IEPA in this process to make certain that the Council does not accept as a green solvent something that IEPA feels that if released into the environment, would cause environmental pollution. The Council then discussed meeting dates for next year. Mr. Polak asked Mr. Eriksen to try to put together a 10-month schedule for review at the next Council meeting which was tentatively set for January 27, 2004. Mr. Eriksen stated that the web site has been updated to reflect the SB1000 changes to the Fund but was still in the process of updating several of the Korean translations. Mr. Eriksen commented that the two major items for discussion at the next Council meeting would deal with compliance program revisions and updated financial projections as he will have a better feel of the maximum potential number of remedial claims in January as January 1, 2004 is the deadline for drycleaners to apply for and purchase back insurance coverage to June 30, 2000 or buy back lapses in insurance coverage. Regarding continuing education programs, he noted that one compliance program was trying to enforce the continuing education requirements. Mr. Eriksen stated that due to the lack of documentation and compliance with continuing education requirements by a number of compliance programs, he recommended that the Council suspend the continuing education requirement until the Council meets to further discuss revisions to the compliance program requirements. It was the consensus of the four Council members that Mr. Eriksen's suggestion be implemented and suspension of the CEU requirement continue in effect until the next Council meeting. Mr. Eriksen noted that he still had not seen a new draft agreement with the Illinois Department of Revenue nor any update on the draft of the fiscal year 2003 audit. In addition, SB2105 was introduced into the veto session which was referred to the Rules Committee. The bill is trying to redefine green solvents to include some form of hydrocarbon solvents and readjust the licensing fee for these solvents. Mr. Eriksen noted he would keep the Council updated as to their status. There being no further business, on a motion by Mr. Lewicki and a second by Mr. Gibson, by a vote of 4-0, the Council voted to adjourn at 11:58 a.m.
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