December 15 , 2004 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT NAPERVILLE, ILLINOIS DECEMBER 15, 2004
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 9:35 a.m. A quorum was present. Roll call was taken with the following members present:
	John Bredenkamp David Gibson (via telephonic conference) Augustine Chung (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
	PRELIMINARY BUSINESS
	The minutes from the November 3, 2004 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the minutes were approved by a vote of 6-0.
	OPERATIONAL ISSUES
	A.	Review of Compliance Program Issues:
		Mr. Eriksen noted that there were several issues involving the compliance program requirements that needed review and discussion by the Council. The first involved the bi-annual site inspections. The Administrator received a joint letter from three (3) of the compliance programs in late October asking for clarification regarding the bi-annual site inspection requirement. It was their understanding that the bi-annual site inspection needed to be completed within two (2) years of the adoption of the revised compliance requirements, which would be by February 2006. It was the Administrator's interpretation that the Council was requiring the length of time between the most recent inspection and the next future inspection to be no more than two (2) years, i.e., if the last site inspection for the drycleaning facility was on July 1, 2003, the subsequent bi-annual inspection needed to be completed by July 1, 2005. Or, if the last site inspection was July 1, 2001, the bi-annual site inspection needed to be completed as soon as possible as it has been more than two (2) years since the date of the most recent site inspection for the facility. Mr. Eriksen reported that he had asked the compliance programs to provide him with the number of site inspections that they have performed since February 2004 through November 2004. Mr. Henry Parker verbally represented that he has visited all of his compliance program members, which total approximately 56, within the past two (2) years. National Drycleaners Institute (NDI) submitted a letter that Mr. Eriksen received late on Monday, December 13, 2004, commenting that based on their informal survey, 90% of the drycleaners surveyed do not know when or even if they have had third party inspections. NDI commented the drycleaner should not be penalized for improper work by the compliance programs, rather the compliance programs should be held accountable for the work that they did not perform. NDI's letter stated “We do not recommend an extension of the completion of the third party inspections based on the information provided to any of the compliance programs.” The Council conducted a lengthy discussion about what type of an extension, if anything, would be appropriate. Mr. Polak made a motion that all facilities participating in a compliance program must be inspected within the next six (6) months or within two (2) years from the date of their most recent inspection, whichever date is later. The motion was seconded by Mr. Bredenkamp. Prior to the vote, Mr. Harry Cho, representing the Enviro-clean program, joined the meeting. The Administrator updated Mr. Cho on the Council's discussion and asked him how many of his compliance program members would need inspections. Mr. Cho indicated that approximately 60% of his compliance program members had not been inspected since the initial inspection. Mr. Polak asked Mr. Cho how often their compliance programs required site inspections. Mr. Cho replied every two (2) years. Mr. Polak inquired why only 60% of the sites have had an initial inspection. Mr. Cho replied that it was his understanding based on the new Council guidelines adopted in February 2004, that all drycleaners, regardless of when their last inspection was, would have two (2) years from February of 2004 to get their next inspection. After the discussion with Mr. Cho, the motion was passed by a vote of 6-0. Mr. Eriksen reviewed with the Council the several recent inquires from the compliance programs and a limited number of inquiries from drycleaner owner/operators asking for further clarification of who is eligible to obtain the required four (4) annual CEUs for an insured drycleaning facility. He noted that the Administrator's interpretation is that four (4) CEUs must be obtained by the owner/operator of the drycleaning facility. This means that if “John Doe” who owns “Doe Custom Cleaners” is the owner and operator of the facility, he is the individual that must obtain the four (4) CEUs. The Council has stated that in the event an owner/operator owns more than one (1) drycleaning facility, they may designate an individual (this should be the manager of the facility) to obtain the four (4) CEUs for that insured drycleaning facility. Mr. Eriksen stated that as a result of these questions, he revisited the topic with the Chairman, who requested the Administrator prepare a detailed matrix of potential individuals who could be eligible to obtain CEUs for an insured drycleaning facility. Mr. Eriksen reviewed the matrix in detail with the Council. Mr. Bredenkamp commented on the requirements for the owner/operator who only owns one (1) drycleaning facility that an additional category should be added that states if there is no manager at the facility at the beginning of the calendar year but one is hired during the year, the owner/operator can designate that manager to receive CEUs on behalf of the facility. On a motion by Mr. Bredenkamp and a second by Mr. Polak, the Council adopted the matrix for owner/operators who only own one (1) drycleaning facility by a vote of 6-0. The Council then reviewed the CEU criteria for owners/operators who own two (2) or more drycleaning facilities. After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kim, the Council approved the matrix by a vote of 6-0. Mr. Eriksen noted that on January 31, 2005, each compliance program is to provide the Council with a current listing of their program participants as well as a listing of seminars and attendees that they conducted during 2004.
	B.	Legislative Issues for 2005:
		Mr. Eriksen reviewed with the Council that he is aware of one (1) issue that the Council has discussed and agreed to move forward with during the 2005 legislative session. This issue is changing the Trust Fund Act to require that once a drycleaner uses the “purchases” method to determine their annual solvent usage for licensing, that this method be continued for each subsequent licensing year that the facility is in operation. This is a request that the Joint Committee on Administrative Rules (JCAR) recommended this past summer when they approved the Council's revised administrative rules. The Council's administrative rules incorporate the “purchases” method for licensing purchases. Regarding whether this legislative session was appropriate for defining how excess monies, if any exist, would be distributed at the sunset date of the program, which is January 1, 2020, Mr. Eriksen reported that he has spoken with several legislators who felt that it would be premature at this time to look at defining how excess monies would be distributed. Mr. Eriksen reported that Mr. McCarthy and he had been involved in discussions with the Illinois Department of Revenue (DOR) regarding language changes that the Department of Revenue feels are necessary to enhance their enforcement capabilities against solvent distributors. Mr. Eriksen noted he would keep the Council updated on those discussions.
	C.	Reimbursement of Remedial Benefits Where the Claimant Cannot be Located:
		Mr. Eriksen reviewed background information with the Council noting that current Council policies and procedures require that all remedial program reimbursement requests be signed by the eligible claimant and be made payable to: •  the claimant, or •  jointly payable to the claimant and the environmental consultant, or •  payable only to the environmental consultant per written authorization from the claimant. He noted that these procedures are in place to make certain only eligible and appropriate parties involved in the remediation process are reimbursed by the Fund. To date, most of the payment warrants issued on behalf of the Fund are made jointly payable to the claimant and the environmental consultant. The Administrator recently received a reimbursement request that was not signed by the claimant. The invoices submitted by the environmental consultant were for final remedial costs incurred in obtaining a No Further Remediation (NFR) letter for a drycleaning facility. Subsequent to the final work being completed at the facility, the eligible claimant sold the drycleaning facility to a new drycleaner owner/operator. The remedial benefits were not transferred from the eligible claimant to the new owner/operator as the facility was in the final stages of receiving an NFR letter. The environmental consultant had prepared the reimbursement request and attempted to contact the claimant to have them sign the reimbursement request so that it could be submitted to the Fund for review and reimbursement. The environmental consultant discovered that the claimant had left the country and cannot be reached. The issue before the Council is does the Council wish to reimburse the environmental consultant for the eligible remedial activities even though the claimant cannot be located and therefore cannot sign the reimbursement request? The Administrator offered the following options for Council review and consideration: 1) Process the reimbursement request and have the state issue the reimbursement warrant made payable to both the claimant and the environmental consultant. It would then be the environmental consultant's problem to obtain the claimant's signature in order to cash the warrant; or 2) Issue the reimbursement warrant payable solely to the environmental consultant. The environmental consultant would need to provide a written statement to the Fund that they have not been reimbursed for the services invoiced on the reimbursement request and submit in writing their attempts to contact the claimant. Mr. Eriksen stated it is the Administrator's recommendation that the Council adopt option #2. Although he stated this scenario should happen very infrequently, it does provide a level of protection to the environmental consultant that they will get reimbursed for work incurred with budget approval issued by the Council on eligible sites. This position would be consistent with the Council's position on the transfer of licenses and insurance policies where the Council has authorized the Administrator to transfer the license and insurance policy from the existing insured or licensee to the new licensee upon documentation that attempts have been made to obtain the previous owner's signature on the transfer papers. Mr. McCarthy suggested that a written “hold harmless and indemnification agreement” also be signed by the consultant in the event that the claimant was located at some future date and disputed the payment request. After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted to adopt the Administrator's recommendation of option #2 by a vote of 6-0, with the inclusion of a “hold harmless and indemnification” agreement from the consultant.
	D.	Responsible Party for Payment of the Second Semi-Annual Installment Insurance Premium After the Insurance Has Been Transferred:
		Mr. Eriksen reviewed with the Council that the Council's current policies and procedures allow for the payment of the annual insurance premium in two (2) semi-annual installments. Currently the annual premium is $1,400, with $700 due at the inception of the insurance policy and the remaining $700 due six (6) months after the inception date. He noted the majority of the Fund's insured drycleaners pay their insurance premium using the semi-annual installment method. The Fund's policies and procedures also allow for the transfer of the Fund's insurance policy from the seller to the purchaser of the facility. The transfer is completed once both of the appropriate parties have signed the necessary transfer form. The issue before the Council is if the insurance policy transfers from the insured to a new owner of a drycleaning facility within the first six (6) months of the insurance policy, who is responsible for making the second installment insurance premium payment when it is due, the initial insured on the policy or the new owner? 1) The installment notice is sent to the insured (in this case it would be the new owner) in the normal course of business and it is the responsibility of the new owner to make the insured's payment; 2) At the time the paperwork is being completed for the transfer of the insurance policy from the old owner to the new owner, both parties are notified that there is one (1) remaining installment payment due in the future and that once a policy is transferred, this premium will be assumed to be owed by the current policy holder who is the new owner; or 3) When obtaining all the necessary paperwork for the transfer of the insurance policy from the old owner to the new owner, require that the installment payment be made before the policy is transferred. The payment could be made by either the old owner or the new owner of the policy. fter general discussion by the Council, on a motion by Mr. Chung and a second by Mr. Bredenkamp, the Council adopted option #3. The motion passed by a vote of 6-0.
	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.	State Coalition for Remediation of Drycleaners Update:
		Mr. Eriksen gave a general update regarding the semi-annual State Coalition for Remediation of Drycleaners (SCRD) conference held September 27-30, 2004 in Kansas City, MO. He noted 1 ½ days of the session was focused on detailed training on the use of geo-probe equipment to do intrusive testing at drycleaning facilities. The administrative group focused their discussions on resource allocation issues involving money, people and internal policies and a sharing of ideas on how to approve the program efficiencies. Case studies focused on various remedial technologies. Unfortunately, there were no new technologies that were shown to be particularly successful at drycleaning sites around the country.
	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 $ 66,753.00 Standard flat fee billing for October 2004, licensing, underwriting, claims processing and site inspections.
	2. John J. McCarthy $ 1,357.50 Professional legal services to the Council for the period of October 22, 2004 through December 7, 2004.
	3. Williams & Company Consulting, Inc $ 64,412.00 Standard flat fee billing for November 2004, licensing, underwriting, claims processing and site inspections.
	On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the bills were approved by a vote of 5-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen noted that at the end of November 2004, there were 1,400 licenses in effect and 885 insurance policies. Open active remedial claims totaled 332, with estimated reserves for these claims of $24,211,446. Approved budgets for remedial and potential remedial claims totaled $3.5 million. The Fund balance as of November 30, 2004 was $5,360,162. Year-to-date expenditures exceed revenues by a total of $852,967, with $1,208,505 in remedial claim payments made for the first five (5) months of fiscal year 2005.
	REVIEW OF CLAIM BUDGETS IN EXCESS OF $75,000
	Mr. Eriksen noted that there were three (3) claims requiring Council review and action as the budget approval requests for costs in excess of $75,000.
	1.	AB Leather Cleaners in Oak Park , Illinois
		Mr. Perkins reviewed with the Council the background information on the facility, noting that the Focused Site Investigation (FSI) and Remediation Objectives Reports (ROR) have been completed for the facility. The budget request is for an additional $11,900 to prepare the Remedial Action Plan (RAP). To date, approved budgets total $70,305.10; expenditures from the Fund have totaled $67,705.45. On a motion by Mr. Bredenkamp and a second by Mr. Kim, the budget of $11,900 was approved by a vote of 6-0.
	2.	Perfect Cleaners in Chicago, Illinois
		Mr. Perkins reviewed with the Council background information on the claim, noting that there are two (2) issues requiring Council review and action. The first involves the three (3) bid requirement. He noted that the claimant's consultant had attempted to obtain bids from seven (7) companies regarding the remedial activities at the facility. Only one (1) submitted a bid. This bid was based on the assumption that Northern Environmental would be the environmental project manager and the consultant would act as the vendor and perform the field remediation option. Mr. Perkins reviewed three (3) options for the Council, noting that the Administrator recommends that the Council require claimant's current environmental consultant to obtain bids from three (3) remedial contractors that can perform the field construction/excavation activities. In addition, the Administrator is asking for budget authority to do the remediation at the facility for a cost not to exceed $180,000. Mr. Perkins reviewed the scope of work with the Council, noting that proposed remedial action involves excavation and disposal of contaminated soil and injection of permanganate into the soil where excavation is not feasible due to building structures. Mr. Perkins noted that to date, budgets have been approved totaling $49,437.92 and payments have been made on this facility totaling $48,890.82. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the remediation budget of $180,000 and also option #3 as recommended by the Administrator regarding the three (3) bid requirement. The motion passed by a vote of 6-0.
	3.	Sanders Cleaners in Northbrook, IL
		Mr. Perkins reviewed background information with the Council and provided a summary of current remedial activities to date. He noted that Northern Environmental and Carus Chemical Company have done some additional bench test studies at the facility at their own cost to try to determine why the effectiveness of the potassium permanganate has not performed as initially anticipated. The Administrator is asking for Council authority to approve a budget amendment in the amount of $15,070 to complete a pilot study at the facility based upon the results of the bench test. Cost of the pilot study will be included as part of the facility's overall remedial benefits. Mr. Perkins outlined that if the pilot study is not successful, one of the remaining potential options may be for the facility to shut down for several weeks and the remaining soil impacted be excavated and disposed at a hazardous waste landfill. On a motion by Mr. Lewicki and a second by Mr. Kim, the Council approved the budget request of $13,070 by a vote of 6-0.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen noted that he has received from Illinois Environmental Protection Agency (EPA) their report on green solvent, which he will distribute to the Council in the near future for review at a future Council meeting. The Administrator has received a preliminary report on the fiscal 2004 audit, noting that there were no material findings in the audit. In addition, Mr. Eriksen noted that a preliminary fiscal year 2006 budget has been developed and the Governor's Office is requesting that all agencies reduce their budget request by 5% from the fiscal 2005 level.
	PUBLIC COMMENT PERIOD
	Mr. Harry Cho of Enviro-clean addressed the issue of the extension of the required inspection date by the compliance programs. He commented that there are too many dates floating around and the various dates make it confusing for the drycleaners to understand what they need to do. He suggested that all of the compliance programs complete their site inspections by June 30 th rather than six (6) months from the current date, which would be June 15 th . Mr. Kim excused himself from the meeting. After brief discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Bredenkamp, by a vote of 5-0, the Council amended their initial motion regarding the compliance site inspection date to state that the inspections need to be completed by June 30, 2005, or two (2) years from the date of the last site inspection, whatever date is later. Mr. Ken Sink addressed the Council stating that he believes the Council should take a look at what is a worse case and/or best case scenario in terms of projected total program costs and that this projection be done as early as February 2005 so drycleaners would have plenty of time to plan for any fee increases for calendar year 2006. The Council conducted a discussion of this issue and Mr. Sink noted that his comments were based on the assumption that the Council would be increasing the fees sometime during the year. Mr. Peter Marberry addressed the Council asking for clarification of the $272,856 transfer from the Trust Fund to the General Revenue Fund that was discussed at the November 3, 2004 meeting. Mr. Eriksen told him that it was a transfer to cover other general administrative expenses of state government. There being no further business, the Council meeting adjourned at 11:40 a.m.
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