January 18, 2006 minutes

January 18, 2006 Meeting Minutes

MINUTES

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

HOLIDAY INN SELECT - NAPERVILLE
NAPERVILLE, ILLINOIS

JANUARY 18 , 2005

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:07 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
David Gibson
Paul Kwak
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 November 16, 2005 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the minutes were approved by a vote of 6-0.

OPERATIONAL ISSUES

A. Legislation:

Mr. Eriksen reviewed with the Council that he is prepared to work with legislators on behalf of the Council to introduce language that would enhance the enforcement actions against unlicensed drycleaners and solvent distributors selling to unlicensed drycleaners. This draft legislation has previously been approved by the Council, the Illinois Department of Revenue and the Illinois Attorney General's Office. At this time Mr. Eriksen could not speak definitively on who would be sponsoring the legislation but he felt confident it would be introduced and acted on this legislative session.

Mr. Eriksen briefed the Council that a drycleaning solvent distributor has discussed seeking a legislative exemption for CO2 from the solvent tax and/or licensing requirement. He asked the Council if they wished to support or oppose such legislation, if introduced, exempting CO2 from the solvent tax and/or licensing fee. Mr. Gibson stated he felt that it was necessary that there be at least a minimum license fee for CO2. Mr. Lewicki commented he needed to know more information about the product, i.e., how much is used in the normal drycleaning cycle, how the product is handled, etc., before feeling he would be competent to make an appropriate decision.

After additional discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council voted 6-0 to table taking a position supporting or opposing legislation exempting CO2 from the solvent tax and/or licensing fee. The Council directed Mr. Eriksen to obtain more information about CO2. It was suggested he contact Tom Ustanik and ask him to make a presentation at a future Council meeting.

Mr. Eriksen asked if there were any other legislative issues for consideration. David Gibson commented that he has received input from two (2) drycleaning solvent distributors in the last several weeks stating there needs to be a 30-45 day timeframe between when a drycleaner calculates their solvent purchases for determining their license fee and the time they pay their license fee for the upcoming license year. Distributors are being caught in the middle between the Fund and the drycleaner who needs solvent but has not yet received his license. Mr. Eriksen reviewed with the Council that the Administrator has been authorizing one (1) delivery of solvent upon verification the license fee has been paid to the Illinois Department of Revenue and that the Administrator's Office has received the renewal application and related paperwork. The Council conducted a lengthy discussion regarding whether the licensing payment period should change or the solvent reporting period change in order to facilitate the licensing process.

At the conclusion of the discussion, on a motion by Mr. Bredenkamp and a second by Mr. Gibson, by a vote of 6-0, the Council delegated authority to the Administrator's Office to make exceptions to the licensing requirements during the month of January. The Council gave the Administrator discretion to authorize one (1) delivery of solvent based upon the verbal representation of the drycleaner that they have paid their license fee and they commit to send in all necessary paperwork by the end of January.

B. Compliance Program Issues:

Mr. Eriksen reviewed with the Council that they had reviewed and revised the compliance program requirements in February 2004 in an attempt to clearly and succinctly define the expectations and requirements all drycleaners must follow to successfully participate in a Council approved compliance program. Since then there have been several policy issues further clarifying those guidelines. He noted he had two (2) additional issues for Council review and discussion.

Issue #1:
If a drycleaning facility is now subject to an annual site inspection for failure to obtain the necessary CEUs in a given calendar year, is this drycleaning facility subject to an annual inspection going forward forever or does the facility revert to a bi-annual inspection in the event the current drycleaner owner sells it to an unrelated drycleaner owner/operator?

The Council discussed the issue and on a motion by Mr. Kwak and a second by Mr. Gibson, the Council voted 6-0 to allow the facility inspection revert to a bi-annual inspection in the event the current drycleaner owner sells it to an unrelated drycleaner owner/operator.

Issue #2:
Does the Council's July 20, 2005 decision, which gave all insured drycleaners who had failed to obtain the necessary CEUs in 2004 an additional 90 days to obtain those CEUs in 2005, apply to calendar year 2005 and beyond?

The Council discussed the issue and on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, voted 6-0 to give every facility a one-time exception if they fail to obtain the necessary CEUs in any given calendar year. Mr. Eriksen stated the compliance program were to provide detailed reports as to the CEUs and inspections that were conducted for each facility during 2005. This information is due by February 1, 2006. He hopes to have an updated report for the February Council meeting.

C. Payment of $700 Semi-Annual Insurance Premium in Installments:

Mr. Eriksen reviewed with the Council that recently he was contacted by a drycleaner who was evicted from the building he was renting prior to the expiration date of his Fund issued pollution liability remediation policy. The drycleaner still owed $700 on the annual insurance premium, which is fully earned on day one (1) of the policy. The drycleaner indicated that he has limited current income and was requesting to pay the $700 insurance installment in four (4) payments. Mr. Eriksen informed the drycleaner this issue would require Council review and action. The drycleaner has already remitted $100 of the $700 premium.

The issue for Council consideration is does the Council wish to allow drycleaners who are no longer operating active drycleaning facilities to pay their final $700 in installments? Mr. Eriksen stated it was his recommendation that drycleaners who cease drycleaning operations at their facility be allowed to pay their final $700 insurance premium in monthly installments not to exceed six (6) months.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kwak, the Council voted 6-0, to accept the Administrator's recommendation to allow drycleaners who cease drycleaning operations at their facility to be allowed to pay their final $700 insurance premium in monthly installments not to exceed six (6) months.

D. Fund Recognition of Powers of Attorney Granted by an Eligible Claimant to a Real Estate Management Company and/or Real Estate Owner:

Mr. Eriksen noted for the Council that the Illinois Drycleaner Environmental Response Trust Fund Act (Act) provides remedial program benefits for eligible drycleaner owner/operators who comply with the eligibility requirements. The Act does not provide for anyone such as the real estate owner or subsequent facility owner to assume or apply for remedial program benefits unless the individual and/or organization has actively operated the drycleaning facility at some time during its history as a drycleaning facility. He noted that he was recently approached by a realty management company who represents small real estate owners inquiring if they could utilize a power-of-attorney to “step into the shoes” of the eligible remedial program claimant and complete the cleanup in the instance where the eligible claimant leaves the country or no longer wishes to participate in the cleanup. He reviewed the issue with John McCarthy and from a legal perspective it would be possible for the eligible remedial program claimant to execute a power-of-attorney allowing a realty company and/or real estate owner to proceed with the cleanup on their behalf, but it is really a policy issue of whether the Council would wish to allow such a voluntary power-of-attorney to be granted.

The Council conducted a lengthy discussion regarding the pros and cons of allowing a voluntary power-of-attorney to be granted. Concern was expressed by the Council members that it could be used unfairly against the drycleaner owner\operator. Mr. Eriksen noted the legislation specifically exempted the real estate owner from obtaining eligibility for remedial benefits on the fear that once the real estate owner had eligibility, they would evict the drycleaner from the facility thereby depriving the Fund of needed revenue to clean up the contaminated facilities. Mr. Gibson commented to allow use of a power-of-attorney would have to be voluntary in nature and he wasn't certain how that could be effectively handled.

The Council adjourned for a brief break at 12:13 p.m. Mr. Polak reconvened the meeting at 12:20 p.m.

Mr. Polak briefly summarized the pros and cons of allowing such an action. Two (2) gentlemen, Mr. Laurance Cohen and Mr. John Boveri from Affiliated Realty & Management Company, reviewed with the Council that they felt it would be in everyone's best interest to allow such a power-of-attorney. They represent small real estate owners that have 22 different drycleaning facilities on their property. The realty companies have worked closely with the drycleaners in assisting them in paying their $5,000 or $10,000 deductible and allowing them access to the property to do testing. In several cases they have had the drycleaners vacate the facilities, leave the country, and not provide them with any financial avenue to complete the cleanup that has begun.

Mr. Peter Marberry, a drycleaner owner/operator, addressed the Council stating allowing such an activity would be unfair to the drycleaner owner/operators. The program was set up specifically to protect and assist the drycleaner owner/operators in their cleanup. Allowing real estate owners and/or realty companies to assume the benefits and responsibilities of eligible claims would end up costing drycleaners like him substantially more money. He noted the program is still substantially under funded. The Council further discussed the issue and after additional discussion, it was the consensus of the Council there was not a compelling reason to allow Fund recognition of such a power-of-attorney and absent a compelling argument, informed the Administrator they did not wish to have this issue brought back for further discussion.

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 $61,203.00
Standard flat fee billing for December 2005, licensing, underwriting and claims processing.

2. John J. McCarthy $ 1,670.50
Professional legal services to the Council for the period of November 5, 2005 through December 22, 2005.

On a motion by Mr. Lewicki and a second by Mr. Kwon, the Council approved the above bills by a vote of 6-0.

Mr. Eriksen noted for the record that Williams & Company's November 2005 bill was verbally approved by each Council member and the warrant voucher was signed by the Chairman.

REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS

Mr. Eriksen reviewed the December 31, 2005 monthly activity report with the Council noting that as of the end of the year, there were 1,357 licenses in force with 823 drycleaners participating in the insurance program. There are currently 518 open remedial claims which means there are over 200 drycleaners who have not yet tested or have not submitted their test results to the Council. He noted the deadline for completing the intrusive testing and submitting those results to the Council is June 30, 2006. Claims paid to date total $11.3 million. There are currently outstanding budgets of approximately $4.9 million and the Fund balance as of December 31, 2005 is $4.4 million. The Administrator's Office has approved $2.3 million in new budgets during the first 6 ½ months of fiscal year 2006 which means there is only approximately $900,000 in additional budgets the Administrator's Office can comfortably approve for the balance of FY06 and not run into a potential cash crunch. This means the Council will need to begin prioritization sooner rather than later. The Council will need to discuss the prioritization process at the February 22, 2006 Council meeting.

Mr. Eriksen noted remedial claim payments for FY06 totaled $2,006,583.

CLAIM PAYMENT IN EXCESS OF $75,000

A. Request to Fund Remedial Action Activities :

Mr. Mike Perkins reviewed with the Council that the Council's current policy prior to approving a budget for the performance of remedial action requires the following actions be completed:

1. The Remedial Action Plan (RAP) be approved by the Illinois Environmental Protection Agency (IEPA) Site Remediation Program (SRP);
2. No reimbursement of remedial action costs will occur for sites not currently undergoing remedial action as of June 9, 2005 without specific Council approval; and
3. Three (3) vendor bids are to be submitted for the performance of the Remedial Action Plan.

Elmhurst Cleaners is requesting Council action to move ahead with cleanup in as much as the facility has recently been sold to the Village of Elmhurst and the facility owner is required by early 2007 to complete the cleanup of the property or incur penalties. Mr. Perkins reviewed the background of the site with the Council noting at this time it appears the most cost effective way to remediate the site would be to demolish the building and do thermal desorption of the soil that has contamination exceeding the Csat limits. The cost to remediate the site with the building in place would exceed the cost to remediate the site if the building is demolished by approximately $75,000.

Based on the information, the Administrator is requesting Council action on the following:

1. Approve the claim to receive reimbursement of approved remedial action costs when incurred, and
2. Approval of a remediation budget in the amount of $40,000 to obtain building demolition bids and to perform the building demolition without IEPA approval of the RAP.

Mr. Perkins stated recently received proposals estimate the demolition cost to be approximately $15,000.

After discussion by the Council, on a motion by Mr. Gibson and a second by Mr. Bredenkamp, the Council approved the Administrator's two (2) recommendations by a vote of 5-0 with Mr. Lewicki abstaining.

OTHER ISSUES AS PRESENTED

Mr. Eriksen stated he had several other issues to review with the Council. He has received a draft of the audit report and the final report should be completed in time to be discussed at the February 22, 2006 Council meeting.

IEPA will be issuing rules within the next week that are needed to implement the “Right to Know” legislation that was passed in 2005 by the Illinois legislature. A review of the legislation and one (1) initial draft of the regulations indicate drycleaners who have impacted groundwater will probably have to notify adjacent property owners of the contamination if there is not a groundwater ordinance in place. There is a concern this acknowledgement and notification could trigger lawsuits against the drycleaner owner/operator.

Mr. Eriksen reported the Federal EPA has submitted proposed rules to amend the NESHAP air regulations which were last amended in 1993. The provisions would require most perc drycleaners to do increased air monitoring at their facility. The cost of the monitoring device was projected to be approximately $250. In addition, the law stated the third generation machines, when they need to be replaced, must be replaced with a fourth or fifth generation machine. The regulations also address perc facilities which have residential living quarters within the same facility.

Mr. Eriksen stated that subsequent to the Council packet being mailed out, he had been routed a file where a drycleaner had gone over his anticipated license fee category by approximately two (2) gallons. This is because the solvent distributor had listed on the invoice the perc gallonage as 19 gallons rather than 19.2 or 20 gallons. This issue is identical to the issue they addressed at their June 9, 2005 Council meeting whereby the Council had waived the additional fee. Does the Council wish to assess the drycleaner the additional $500 license fee or is the Council willing to waive the additional $500 license fee for calendar year 2006?

On a motion by Mr. Bredenkamp and a second by Mr. Gibson, the Council voted 6-0 to waive the additional $500 license fee.

Mr. Eriksen presented to the Council a tentative settlement agreement for Wayne Spiwak. He has been working with the Attorney General's Office who has filed suit against Mr. Spiwak. Mr. Spiwak previously took bankruptcy but failed to list the Council as a creditor. The proposal is for $150 per month in payments until the remaining license late payment fees of $3,276 are paid in full. Mr. Eriksen stated the Attorney General's Office has signed off on the settlement agreement.

On a motion by Mr. Gibson and a second by Mr. Lewicki, the Council voted 6-0 to authorize the Administrator to enter in to the proposed settlement agreement with Mr. Spiwak.

The next Council meeting is tentatively scheduled for February 22, 2006. Mr. Kwak commented he would prefer if possible, to have the Council meetings in the afternoon to accommodate the work schedule at his drycleaning facilities. It was the consensus of the remaining Council members to keep the meeting at 10:00 a.m.

PUBLIC COMMENT PERIOD

Mr. Polak asked the public in attendance if they had any comments. There were none.

There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Kwak, the Council, by a vote of 6-0, adjourned the meeting at 12:48 p.m.

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