December 6, 2006 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT - NAPERVILLE NAPERVILLE, ILLINOIS DECEMBER 6 , 2006
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:15 a.m. A quorum was present. Roll call was taken with the following members present:
	John Bredenkamp David Gibson (arrived at 10:18 a.m.) Young B. Kim Paul Kwak Charles Kwon Jerry Lewicki John Polak Also present were: H. Patrick Eriksen, Program Administrator's Office John J. McCarthy, Program Counsel C. Michael Perkins, Program Administrator's Office
	PRELIMINARY BUSINESS
	The minutes from the October 18, 2006 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Bredemkamp, the minutes were approved by a vote of 6-0. Mr. Gibson joined the meeting at 10:18 a.m.
	APPEALS
	Mr. Eriksen reported there are several appeals for review by the Council.
	A.	Appeal of Cancellation of Insurance Coverage:
		1)	Austin Cleaners, Oak Park , IL - Site #0001637
			Mr. Eriksen reviewed with the Council background information on this appeal noting that Mr. Kwang Kim was the owner/operator of Austin Cleaners located at 430 N Austin Blvd in Oak Park , IL . The facility initially purchased pollution liability coverage from the Fund effective June 21, 2000. The coverage cancelled on September 7, 2005 for failing to provide copies of the past 12 months of the inspection and repair logs for the drycleaning machine at the facility. A 60-day cancellation notice had been issued on July 7, 2005. On August 24, 2005, the Administrator's staff called the facility twice to follow-up on the cancellation notice and no one answered at either time. A subsequent telephone call was made on August 26, 2005 in which the telephone again was not answered. Another telephone call was made August 31, 2005 and no one answered. An independent check of the Yellow Pages listing confirmed the telephone number the Administrator's staff was calling was correct. A representative of the Korean American Drycleaners Association placed a call on Thursday, September 1, 2005 to Austin Cleaners but was unsuccessful in having anyone answer the telephone. On August 1, 2006, the Administrator received a letter from Mr. Kim stating in mid-August 2005 he sent a fax containing the inspection and repair log to the Fund from Currency Exchange. The Fund did not receive the fax and requested Mr. Kim provide a receipt from Currency Exchange that would support his representation that he faxed information to the Fund. Mr. Kim replied Currency Exchange was unable to provide him with another receipt because he could not remember the exact date the information was faxed to the Fund. Mr. Kim used the assistance of a friend to translate his comments to the Council as his English was quite poor. Mr. Kim addressed the Council stating that he had sent a fax in 2005 from Currency Exchange to the Fund with the inspection and repair log for his drycleaning facility. He did not understand that his insurance had been cancelled and that he had lost remedial program benefits for his drycleaning facility because he does not read English. When a representative of the National Drycleaner Institute did an inspection of his facility in the summer of 2006, they made him aware that his insurance coverage had cancelled and instructed him to send a letter to the Administrator asking for his coverage to be reinstated. He informed the Council that he is a very small drycleaner who does the majority of the work himself and due to the language barrier it makes it difficult for him to handle the administrative issues associated with his drycleaning business. He believes this cancellation was a miscommunication error that has been rectified and is requesting that the Council reinstate his coverage back to September 7, 2005. The Council asked several questions of Mr. Kim including why he did not answer his telephone or respond to the written notices sent by the Administrator's office. After additional discussion, on a motion by Mr. Gibson and a second by Mr. Bredenkamp, the Council voted 7-0 to deny Mr. Kim's appeal for reinstatement of his insurance coverage as it took him over one (1) year to provide the Fund with the required documents they had requested. Mr. Eriksen informed Mr. Kim that he would be receiving a letter with the Council's decision in the mail that would also outline his rights to appeal the Council's decision to an Administrative Hearing Officer.
		2)	Pure Cleaners, Mundelein , IL - Site #0001744
			Mr. Eriksen reviewed background information with the Council noting Mr. Tae Wung Um is the owner and operator of Pure Cleaners located at 1142 West Maple Avenue in Mundelein , IL . He has owned and operated the facility since August 1997 and the facility has maintained pollution liability coverage with the Fund since June 27, 2000. His insurance coverage with the Fund cancelled on September 25, 2006 because Mr. Um failed to conduct a Phase I and a focused Phase II site investigation on the drycleaning facility. Mr. Um was sent a variety of notices from the Fund over the past several years regarding the testing requirements and associated deadlines. On February 15, 2005, Dr. Juho So had a lengthy conversation with the facility owner's son (Stephan) regarding the site investigation requirements. The owner's son stated a site investigation had been conducted every year by the landlord but so far no contamination had been found out of more than ten (10) soil borings. The Administrator's review of the site investigation results from 2002 indicated limited borings at a limited depth that did not meet the Fund's intrusive testing requirements. The Administrator received a telephone call from Stephan Um on July 6, 2006. He was informed that remedial benefits were no longer available for the facility because they had missed the June 30 deadline for filing a claim form and submitting intrusive testing results. He indicated the landlord had done prior testing. The Administrator informed him that if he submitted the prior testing immediately, he may be able to maintain the Fund issued insurance coverage on the facility. It was reviewed at length with him the difference between remedial program benefits and insurance benefits and he stated he understood the difference. A 60-day cancellation notice was issued on July 24, 2006, requesting an updated compliance program certificate and adequate Phase I and intrusive Phase II site investigations. A follow-up telephone call was made by the underwriting staff on September 13, 2006. The requested site investigation reports were not received and the insurance cancelled on September 25, 2006. Mr. Um utilized a translator to address the Council as his English was very limited. Mr. Um addressed the Council stating he was requesting additional time to conduct the Phase II intrusive testing at his facility in order to maintain insurance coverage with the Fund. He believed his facility was clean and did not have contamination. Mr. Kwak and Mr. Kim assisted in dialog with Mr. Um asking did he realize that he was not eligible for remedial program benefits and did he truly want to maintain Fund insurance coverage which required intrusive testing or did he want to obtain pollution liability insurance coverage from a private insurance carrier who most likely would not require intrusive testing? After additional discussion, Mr. Um addressed the Council stating that he wished to withdraw his appeal and would try to find private pollution liability insurance coverage for his drycleaning facility.
	B.	Appeal of Loss of Remedial Program Benefits:
		1)	Care Cleaners, Oak Park , IL - Site #0001080
			Mr. Eriksen noted Mr. Chan Oh is the owner and operator of Care Cleaners located at 242 ½ Chicago Ave in Oak Park , IL . The facility had an eligible remedial claim with the Fund and pollution liability coverage with the Fund since June 28, 2000. The insurance coverage for the facility expired on July 9, 2006 as Mr. Oh failed to renew the coverage as of June 28, 2006. On August 24, 2006, Mr. Oh sent the Administrator a letter explaining that he thought his cleanup had been completed in early March 2006 based on his understanding of the cleanup process. Mr. Oh indicated Hydro Dynamics, his environmental consultant, told him that “there was nothing more for me to do and that I would receive the No Further Remediation (NFR) letter in approximately four (4) months.” He subsequently found out this not to be the case and additional costs need to be incurred in order to obtain the NFR letter. Mr. Oh, with the assistance of his daughter, addressed the Council. He stated that Mr. Han of Hydro Dynamics, indicated to him in early March that everything was okay at his facility and based upon the testing that they had done, he should be able to get a NFR letter in approximately four (4) months. He did not renew his insurance policy as he was wanting to vacate the current location and move to a new location. He thought the NFR letter would come in June which would be prior to the expiration date of the policy. He still does not have the NFR letter and there is 2 ½ years remaining on his lease. He reiterated he was ready to close the store once he had the NFR letter and relocate but unfortunately, the loss of remedial benefits has put all of his future plans on hold. The Council asked several questions of Mr. Oh. Mr. Polak asked if the operations of the facility have closed and Mr. Oh replied “No.” A statement was made by one of the Council members that it appeared he has more of an issue with his consulting firm than with the Fund. The Illinois EPA had responded to the NFR letter request with a request for some additional work at the facility in July of this year. After additional discussion, Mr. Polak asked the appeal be deferred until the next meeting and requested the Administrator get an accounting of all of the expenditures that were incurred prior to expiration of the insurance policy. On a motion by Mr. Lewicki and a second by Mr. Kim, the Council, by a vote of 7-0, requested to defer acting on the appeal until the invoices for the work prior to July 9, 2006 could be obtained and reviewed by the Administrator's office.
	OPERATIONAL ISSUES
	A.	Licensing of Drop Stores:
		Mr. Eriksen reviewed with the Council two (2) financial scenarios he had developed at the Council's request to reflect the potential financial impact if drop stores were licensed by the Fund. Scenario A was based on the licensing of drop stores only in Chicago and Scenario B was based on licensing drop stores throughout the state. He attempted to get the number of drop stores that were licensed to do business in the city of Chicago from the City but had been unsuccessful in getting any useful information. For the financial projection purposes, he assumed that for every operating plant in Chicago , there would be three (3) operating drop stores. For estimating the number of drop stores throughout the state he used the formula of 3 drop stores in Chicago for every active plant and 1 drop store per active plant for all other locations in the state. For Scenario A, this resulted in a projected total of 636 drop stores and for Scenario B a total of 1,800 drop stores. Mr. Eriksen reiterated the Council cannot act on their own to license drop stores in the state. Licensing of drop stores would require legislation. Mr. Peter Valessares, chairman of the Illinois State Fabricare Association (ISFA), noted if the Council wants to explore licensing of drop stores, it should reopen discussion on the overall licensing process and give consideration of a flat rate license fee for drycleaning plants as well as drop stores. Mr. Polak replied the Council would be open to such discussions provided they had the support of the drycleaning industry. Mr. Eriksen stated that without unanimous support of the drycleaning industry, it would be extremely difficult to pass legislation requiring licensure of drop stores. Various scenarios were discussed among the Council members and the public in attendance. Mr. Kwak indicated that he is aware of several drycleaners that are looking at acquiring one plant and converting their active drycleaning facilities to drop stores. If this became a common practice, it would have a significant financial impact on the Fund as the largest share of the Fund's revenue comes from the licensure of active drycleaning facilities. It was the consensus of the Council that if the ISFA and the Korean American Drycleaners Association (KADA) wished to form a task force to explore licensing of drop stores and any other licensing alternatives, the Council would have the Administrator and his staff provide support resources to such a task force. It was reiterated if such task force met and proposed any changes in the legislation regarding the licensure process such changes would need consensus support from the drycleaning industry to have any hopes of being enacted by the legislature. Mr. Polak said he would send a letter to both associations outlining the issues of forming a task force. Mr. Polak adjourned the Council for a brief recess at 12:42 p.m. The meeting reconvened at 12:58 p.m.
	B.	Report on SCRD Conference:
		Mr. Eriksen reported Dr. So and he had attended the annual meeting of the State Coalition for the Remediation of Drycleaners. Currently there are 13 states with specific drycleaner programs and three (3) represented member states who do not have specific drycleaner programs but are active in the remediation of drycleaner sites under some other authorization within their state. Most states continue having financial problems with the exception of North Carolina which is sitting on approximately $26.7 million in fund money and has a revenue stream of almost $10 million per year. Their state statute allows them to receive a lion's share of the sales tax charged on drycleaning services. Throughout the country, cleanups are moving along very slowly. Illinois initiated the most site investigations of any state in the country. The cleanups are progressing slowly due to the lack of funding. The state of Oregon is looking to old general liability insurance policies as a source of funding for their program. They have been working with various insurance brokers in identifying old insurance policies for facilities in seeking recovery of benefits from these policies. Members attending the SCRD conference participated in one (1) day of technical training. The focus was on indoor air intrusion which is becoming a major issue in the drycleaner arena. Final regulations regarding testing for indoor air intrusion will probably be completed in the spring of 2007. Currently various individual states are developing their own indoor air guidance and the criteria for testing and reporting is fairly broad. The state of New York has done a substantial amount in the area of indoor air intrusion and has found that it is costly to test for indoor air intrusion. Mitigation systems are currently running approximately $2,000 to $3,000 per system.
	C.	Overview of National Emission Standards for Hazardous Air Pollutants (NESHAP Revisions):
		Mr. Eriksen reviewed with the Council the new regulations that went into effect July 27, 2006 regarding National Emission Standards for Hazardous Air Pollutants at drycleaning facilities. These regulations specifically relate to the emission of perchloroethylene (PCE) from drycleaning facilities. This is the first update to the regulations since their inception in 1993. The most significant impact to most drycleaners in the state of Illinois focuses on an enhanced leak detection program. Most drycleaners will need to begin monitoring their drycleaning machines on a monthly basis using a halogenated leak detector. The cost of the leak detector is estimated to be approximately $250. The facilities will also be required to continue to inspect for leaks bi-weekly for small area sources and weekly for large area sources as required by the existing NESHAP regulations. Transfer machines will be banned as of July 28, 2008 and new requirements will be put in place for co-residential resources. Perc drycleaning machines installed prior to December 21, 2005 in co-residential facilities are prohibited from being used in those facilities as of December 31, 2020. New PCE machines cannot be installed in co-residential sources after December 21, 2005.
	D.	Update on Attorney General's Assistance in Bringing Unlicensed Drycleaners into Compliance:
		Mr. Eriksen reviewed with the Council the status of action taken against drycleaning facilities operating illegally without a license issued by the Fund. He noted that seven (7) of the 36 facilities that had been referred to the Attorney General's Office for enforcement action have not been licensed for two (2) or more years. Unfortunately, only one (1) of the drycleaners is working with the Fund to come back into compliance. The Attorney General's Office is in the process of drafting a formal complaint against another facility and doing further research on the remaining five (5) facilities. Of the 29 facilities that were licensed for calendar year 2005 but failed to renew their license for 2006, six (6) met the licensing requirements for calendar year 2006 and a license has been issued; 13 responded to the Attorney General's initial letter and are working with the Attorney General's Office and the Fund to come back into compliance; seven (7) received a second notice letter but have not responded; 3 drycleaners did not respond to the initial letter and have not been served a second notice pending further research by the Attorney General's Office. The Administrator's staff has conducted 12 drive-by inspections of the 55 that were needed to determine if the facility is operating. Of the 12 drive-by inspections, 9 are operating plants.
	E.	Potential Meeting Dates for Calendar Year 2007:
		Mr. Eriksen reviewed with the Council a listing of potential meeting dates for calendar year 2007. They are as follows: January 17 th Wednesday February 21 st Wednesday April 4 th Wednesday May 16 th Wednesday July 25 th Wednesday (potentially Strategic Planning) September 12 th Wednesday October 31 st Wednesday December 12 th Wednesday At this time, the Council members were not aware of any potential conflicts. The Administrator stated that he would post the dates on the Fund's web site.
	F.	Informal Opinion From Attorney General's Office Regarding the Illinois Drycleaner Environmental Response Trust fund Council's Ability to Seek Cost Recovery From Solvent Manufacturers/Distributors and General Liability Insurers of Drycleaning Facilities:
		Mr. Eriksen noted that at the Council's request, an informal opinion regarding cost recovery from solvent manufacturers/distributors and general liability insurers was requested from the Attorney General's Office. Enclosed in the Council packet is the Attorney General's opinion which mirrors the response and research provided by Mr. McCarthy. In essence, the Attorney General's Office found unless a third party is found to be directly responsible for causing the contamination, the Fund has no statutory authority to seek cost recovery from third parties such as solvent manufacturers/distributors and general liability insurers. Cost recovery against an insurer would be governed by insurance law and the rights of assignment and subrogation.
	APPROVAL OF PROGRAM BILLINGS
	Mr. Eriksen noted that there were three (3) bills for the Council's review and approval. Two (2) were included in the Council packet and one (1) was hand delivered today.
	1. Williams & Company Consulting, Inc $66,061.00 Standard flat fee billing for October 2006, licensing, underwriting, claims processing and site inspections.
	2. John J. McCarthy $1,670.00 Professional legal services to the Council for the period of October 10, 2006 through November 22, 2006.
	2. Williams & Company Consulting, Inc $52,385.00 Standard flat fee billing for November 2006, licensing, underwriting and claims processing.
	On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the bills were approved by a vote of 7-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed the monthly activity report as of November 30, 2006 which he hand delivered to the Council prior to today's meeting noting that there are 1,329 licensed drycleaners in the state. The Fund has 738 insurance policies in effect. Remedial claims total 583; reimbursements for remedial benefits are approximately $15.1 million and the reserves, which are the estimated amount of money the Fund will have to reimburse to close out these 583 claims totals $42.2 million. The October 31, 2006 financial statements reflect a Fund balance of $2,775,038. Year-to-date remedial payments total $1,074,462.
	CLAIM PAYMENTS IN EXCESS OF $75,000
	Foxy Cleaners – Site #0001204
	Mr. Perkins reviewed with the Council that there was one (1) budget approval request for their review and action. Mr. Perkins reviewed background information with the Council stating the Administrator was looking for budgetary authority not to exceed $156,400 for remediation of the facility. The selected remedial method would be excavation with disposal of the contaminated soil at a licensed hazardous waste landfill. This claim is subject to immediate funding and Illinois EPA has approved the Remedial Action Plan (RAP). On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the budget request in the amount of $156,400 by a vote of 7-0.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen noted the fieldwork on the fiscal year 2006 audit was completed on November 28, 2006. The auditors are providing the Administrator with some follow-up questions. He anticipates the completed audit report should be completed shortly after the first of the year. Mr. Eriksen reported the Council's proposed license fee increase and remedial action deductible increase was reviewed by the Joint Committee on Administrative Rules at their November 14, 2006 meeting. Questions from the committee focused on the issue of whether the Governor has swept monies from the Fund and what will keep him from sweeping money from the Fund in the future. Mr. Eriksen noted only one (1) member of the committee stated the percentage of license fee increase was too large. On a roll call vote, the committee voted 11-0 to not support the proposed increases but did not object to the Council moving forward with their rule filing and implementation of the increased license fees.
	PUBLIC COMMENT PERIOD
	Mr. Jeff Diver asked Mr. McCarthy several questions regarding the Attorney General's opinion. He believes the Fund as a matter of routine nature has the right of assignment of any insurance policy holder who is receiving cleanup benefits from the Fund to go against the insurance company providing CGL coverage to the drycleaner. He requested the Council further research this issue as he feels the Fund is not taking advantage of a potential revenue source that would be beneficial to the program's claimants. There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council adjourned the meeting at 1:29 p.m. by a vote of 7-0.
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