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MINUTES |
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DRYCLEANER
ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS
HOLIDAY
INN SELECT - NAPERVILLE
NAPERVILLE, ILLINOIS
JANUARY 17, 2007
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John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:17 a.m. A quorum was present. Roll call was taken with the following members present: |
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John Bredenkamp
David Gibson
Young B. Kim
Paul Kwak (arrived at 10:18 a.m.)
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
Juho So, Program Administrator's Office |
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PRELIMINARY
BUSINESS |
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The minutes from the December 6, 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. Kwak joined the meeting at 10:18 a.m. |
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APPEAL-LOSS OF REMEDIAL PROGRAM BENEFITS |
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Mr. Eriksen updated the Council on the current status of incurred remedial claim costs for Care Cleaners. Eligible costs incurred prior to cancellation of Care Cleaners' pollution liability insurance coverage on July 9, 2006 are as follows:
Environmental consultant |
$980.00 |
Illinois Environmental Protection Agency Review fees |
$366.04 |
Total |
$1,346.04 |
Staff is estimating the remaining cost to receive a No Further Remediation (NFR) letter for this facility would total between $2,500 to $4,000. Several Council members expressed concern if they approved reinstatement of the insurance coverage allowing the remedial claim to remain eligible, would they set a precedence for future appeals? The dollar amount in this appeal is small but what if the estimated future cost was $100,000? Mr. Polak stated the Council should evaluate each appeal on the basis of the circumstances versus the dollar amount of the appeal.
Mr. Lewicki made a motion to disallow the appeal. The motion was seconded by David Gibson .
Mr. Oh's daughter addressed the Council on behalf of Mr. Oh as his English was limited. She recapped the rationale for allowing the pollution liability insurance coverage to lapse. She noted the drycleaning business was losing money and they had planned to relocate the facility to a new location once the existing facility had received a No Further Remediation (NFR) letter from the Illinois Environmental Protection Agency (IEPA). Their consultant had indicated everything was completed and a request had been made to IEPA for the NFR letter and there should not be any problem in timely receiving the NFR letter. The lapse was not due to negligence on their part and she requested the Council use their discretion to assist them in this misunderstanding with their consultant.
Mr. Lewicki withdrew his motion with concurrence by Mr. Gibson.
After additional discussion by the Council, on a motion by Mr. Kwak and a second by Mr. Kim, the Council voted 6-1 to grant the appeal reinstating remedial benefits for Care Cleaners, subject to the owner renewing his insurance coverage and being in compliance with the CEU and site inspection requirements of the Fund. |
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OPERATIONAL ISSUES |
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A. |
Legislation: |
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Mr. Eriksen reviewed the pros and cons of moving ahead with draft legislation to strengthen the Illinois Department of Revenue's enforcement action authority against unlicensed drycleaners and solvent distributors that sell to unlicensed drycleaners. This draft legislation has been reviewed several times by the Council and it was drafted jointly by the Administrator and staff of the Illinois Department of Revenue in May 2005.
In visiting with several legislators, it was determined that this may be a good year to introduce the bill. There is nothing in the bill that should be controversial neither to members of the drycleaning industry nor to the Illinois Department of Revenue.
On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council voted 7-0 directing the Administrator to work on getting the legislation introduced during the current session. |
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B. |
Revisions to Insurance Application: |
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Mr. Eriksen reported with the passage of the June 30, 2006 deadline requiring Phase I and Intrusive Phase II testing of all insured drycleaning facilities, the Administrator is recommending several changes to the insurance application.
There are six (6) changes and they were highlighted in red for the Council's review. He reviewed each one with the Council emphasizing the changes involving intrusive testing at the facility prior to applying for insurance coverage.
On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the changes by a vote of 7-0. |
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C. |
Review of Assignability of Insurance Policy: |
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During the Public Comment period at the Council's December 6, 2006 meeting, an attorney raised the question of whether the Council has determined if a drycleaner who is receiving benefits from the Fund has the ability and the obligation to assign their rights and benefits in their Comprehensive General Liability insurance policy to the Fund in return for receiving cleanup benefits from the Fund. The attorney believes the Fund should be able to “step into the shoes” of the Fund claimant and assist the drycleaner or seek monies from the drycleaner's Comprehensive General Liability insurance carrier for a portion of the cleanup.
The Council had instructed Mr. McCarthy to review the assignability issue raised by the attorney. Mr. McCarthy and the Administrator have discussed the issue at length and feel it would be more appropriate to have Mr. Iain Johnston of Holland & Knight (who currently serves as the Council's Administrative Hearing Officer) review the assignability issue due to his extensive background and knowledge of insurance law, including having worked for the State of Illinois' Division of Insurance. Mr. McCarthy commented he would spend considerably more time on this project just due to his lack of familiarity with insurance law versus the time Mr. Johnston would spend.
Mr. Johnston has indicated he can complete the review and issue an opinion to the Council on the issue of assignability and subrogation for a cost not to exceed $4,000.
After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Gibson, the Council voted 6-0 to have Mr. Johnston review the assignability and subrogation issue. Mr. Polak abstained from voting. |
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D. |
Disposal of Drycleaning Solvent Remaining in Machines when an Active Facility Converts to Drop/Dry Store: |
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Mr. Eriksen reviewed with the Council that throughout the year the Administrator's office is often notified when an active drycleaning facility is converted to a drop store. Historically, the number of facilities that have converted to a drop/dry store has been minimal for any given year. Based on licensing information received in the past several weeks, it appears the number of active drycleaning facilities converting to a drop/dry store may be significantly higher in 2007.
Currently, when an active facility converts to a drop/dry store, the Administrator's staff has requested a signed statement from the drycleaner owner/operator indicating:
• the date they ceased operations; and
• if they have disposed of the drycleaning machine; or
• plans for disposing of the machine and disposal of the remaining solvent that is left in the machine.
Upon receipt of the information, the Administrator will code the site as no longer needing a license. In most cases, the drycleaner has at a minimum disposed of the solvent in their machine or has disposed of the machine and the solvent. Staff has received several responses from drycleaners who reported they are converting their active facility to a drop/dry store and they have no immediate plans to remove the machine nor do they intend to remove the solvent from the drycleaning machine. This means the machine could be operated at any time.
The issued for Council discussion and consideration is do they wish to impose new requirements for conversion of an active facility to a drop/dry store in order to mitigate the possibility of drycleaners operating their drycleaning machine without being licensed by the Fund?
Mr. Eriksen listed three (3) different options for the Council's review with a recommendation the Council adopt option B whereby the drycleaner must remove all solvent from the drycleaning machine and provide proof the solvent was disposed of in a proper and legal manner. Failure to do so would result in the facility being required to be licensed. He recently received a call from a drycleaner recommending the Council require the drycleaner owner/operator to remove his machine within a six (6) month period or be subject to the licensure requirement.
The Council discussed the pros and cons of requiring just the removal of the solvent from the machine or requiring the removal of the solvent and the machine. Several of the Council members indicated the equipment should be removed within a reasonable timeframe. Mr. Kim asked if machine removal was necessary in as much as the drycleaner cannot buy solvent if not licensed. Mr. Eriksen replied that in theory it is true that an unlicensed drycleaner should not be able to buy solvent but unfortunately history has shown drycleaners have been able to obtain access to solvent even if they are not licensed. Mr. Gibson believes the machine should be removed within a couple of month's time after they have ceased operation. Discussion focused on the cost of removing the machine and it was noted on average removal would cost between $1,000 to $3,000 per machine. After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Gibson, the Council voted 7-0 for facilities converting from active status to a dry/drop store, they must have removed the drycleaning machine(s) and all solvents in a proper and legal manner prior to January 1 st of each year or else be subject to licensure requirements for the following year, i.e., all drycleaning machines must be removed from the facility by January 1, 2008 or the facility must be licensed for 2008. For calendar year 2007, the Council recommended all operators be given 30 days to remove the machine and the drycleaning solvent. Failure to do so would result in the Council requiring licensure of the facility.
It was noted the solvent would have to be either removed by a licensed hazardous waste hauler or by a solvent distributor. Failure to dispose of the solvent properly would result in the Council referring the drycleaner's name to the proper state agency for enforcement action. |
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APPROVAL OF PROGRAM BILLINGS |
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Mr. Eriksen noted that there were two (2) bills for the Council's review and approval. |
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1. |
Williams & Company Consulting, Inc |
$48,579.00 |
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Standard flat fee billing for December 2006, licensing, underwriting and claims processings. |
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2. |
John J. McCarthy |
$1,815.00 |
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Professional legal services to the Council for the period of November 23, 2006 through January 9, 2007. |
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On a motion by Mr. Gibson and a second by Mr. Kwon, the bills were approved by a vote of 7-0.
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REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS |
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Mr. Eriksen reviewed the December 31, 2006 monthly activity report for the Council noting at the end of the year there were 1,338 licensed drycleaners in the state; 733 of those licensed facilities had pollution liability insurance coverage with the Fund. There were 586 open remedial claims with estimated reserves of $42 million. Current outstanding budgets on those 586 remedial claims totaled $3,025,000.
For calendar year 2007, 390 licenses had been issued as of January 16, 2007 versus 375 issued for the previous year. License renewal applications received to date totaled 621 versus 668 received at the same time last year.
He reviewed the December 31, 2006 financial statements with the Council noting the Fund balance at the end of December totaled $3,311,412. Year-to-date claim payments totaled $1,705,938. |
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CLAIM PAYMENTS IN EXCESS OF $75,000 |
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Mr. Eriksen noted there are three (3) claims for review and action by the Council. Two (2) of the claims' background information was included in the Council packet. The third one was hand-delivered to the Council this morning as the information came in after the packet had been mailed to the Council members. Mr. Eriksen noted Mr. Perkins would review the information with the Council. |
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A. |
Family Pride Cleaners – Site #0001191 |
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Mr. Perkins reviewed background information on this claim with the Council noting if this request is approved, it will be subject to the prioritization process and funding will be deferred accordingly. The additional budget request is for $9,385 for additional site investigation activities at the facility. If approved, it will bring the total approved budget to $81,723.44. To date, payments have been made on the site of $71,667.91.
On a motion by Mr. Lewicki and a second by Mr. Kwon, the Council approved the budget request by a vote of 7-0. |
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B. |
Fink's Cleaners – Site #0002389 |
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Mr. Perkins reviewed with the Council background information on this facility. He noted it is one requiring remediation. Budget requests were made of three (3) firms for the remediation at the facility. Only two (2) of the three (3) firms submitted a quote. Mr. Perkins noted the estimated remediation cost of the facility was $234,925.99, which takes the facility up to the maximum benefit limit of $300,000. In addition, the Administrator is asking an exception to the three (3) bid requirement in as much as one (1) environmental consultant declined to bid. He reviewed in detail the budget request noting the chemical oxidation treatment should be successful in remediating the facility.
On a motion by Mr. Lewicki and a second by Mr. Gibson, the Council approved the budget request and made exception to the three (3) bid requirement by a vote of 7-0. |
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C. |
Rose Bright Cleaners – Site #0001501 |
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Mr. Perkins reviewed background information with the Council, noting three (3) bids were received for the remediation of the facility. The Administrator is asking for remediation budget approval of $160,950. The selected remediation would be the injection of a chemical oxidant into the soil and groundwater. Mr. Perkins noted three (3) different technologies were reviewed and evaluated with chemical oxidation being the least expensive.
After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the budget request was approved by a vote of 7-0. |
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OTHER ISSUES AS PRESENTED |
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Mr. Eriksen noted the next scheduled Council meeting date is February 21, 2007. The Council will be conducting an audit of the compliance programs. Since this is the primary agenda item of the meeting, it was determined normal agenda items would be handled at the beginning of the meeting followed by the audit of the compliance programs. It was suggested the meeting start at 9:00 a.m. to allow for the additional time anticipated for the audits.
Mr. Eriksen reported Mr. Perkins is leaving Williams & Company as of the end of January. He thanked Mike for his contribution to the Trust Fund program. Council members expressed appreciation to Mike for his work on Trust Fund issues.
Mr. Kim encouraged the Administrator to visit with EPA to see if they can accelerate their reviews at facilities that are in line to get a No Further Remediation (NFR) letter without remediation. Mr. Eriksen replied he would review the issue and report back at a future meeting. |
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PUBLIC
COMMENT PERIOD |
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Mr. Peter Marberry addressed the Council stating he had two (2) issues he wished the Council to consider addressing. The Fund continues to face revenue erosion, which was a big problem in 2006 and will probably remain a problem in 2007. It is his recommendation the Council consider requiring those drycleaners receiving remedial program benefits from the Fund to pay the highest license fee level in order to receive those benefits. That way drycleaners who are receiving no benefits from the Fund will not be paying any more that those who are receiving benefits. Secondly, he suggested the Council look at recouping profits from the sale of property or drycleaning operations that receive remedial benefits from the Fund and subsequently sell their business and/or real estate. For example, if the drycleaner is receiving remedial program benefits from the Fund and the facility is cleaned up and is subsequently sold at a profit, the profits should be returned to the Fund to offset the remedial claim payments. He said this mirrors many grant programs he is familiar with.
Mr. McCarthy noted either option would require legislative changes. He expressed concern regarding the payback of profits upon the sale of the facility as he is uncertain whether the Fund would have legal rights to obtain such information to calculate the payback.
Mr. Polak stated that the Council would take Mr. Marberry's recommendations under advisement.
There being no further business, on a motion by Mr. Kim and a second by Mr. Lewicki, by a vote of 7-0, the Council meeting adjourned at 2:28 p.m. |
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