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February
28, 2003 Meeting Minutes
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MINUTES
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DRYCLEANER
ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS
HOLIDAY INN
NAPERVILLE, ILLINOIS
FEBRUARY
28, 2003
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| John
Polak, Chairperson, called the Drycleaner Environmental Response
Trust Fund Council of Illinois meeting to order at 9:16 a.m. A quorum
was present. Roll call was taken with the following members present:
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John Bredenkamp
(via telephone)
Andrew Chweh
Augustine Chung
David Gibson
Young B. Kim
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
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Mr. Polak
indicated that the sole purpose of this meeting was to finish
discussion of potential legislative issues and make a final determination
of what the Council would like to include in a legislative package
for the current year. He noted that the Council is under a time
constraint as any Council proposed modifications to the Act need
to be submitted to Rep. Smith by next week. Mr. Polak noted that
Mr. Eriksen has prepared a listing of key issues from SB1069 and
suggestions from the Council's February 18, 2003 meeting that
the Council should give consideration to include in HB1553. A
fiscal impact statement is listed under each legislative option
and they are summarized on the attached spreadsheet. Mr. Polak
stated that Mr. Eriksen prepared this document at the request
of the Council and he would like to go through each of the items
one-by-one and have the Council determine if they wish to take
action and include each item in the proposed legislation.
Mr. Polak
commented for the record that a recent article published in one
of the Korean newspapers stating that the Council has increased
the license fee to $6,000 annually and increased the solvent tax
on chlorinated solvents to $45 per gallon was erroneous. He stated
the Council has made no such determination.
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| Council |
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Mr. Polak
noted this section included three (3) options:
1. Increase Council from 7 to 9 members.
2. Remove requirement that 2 members of the Council must be members
of the Illinois State Fabricare Association (ISFA).
3. Require that 2 new members added to the Council be owners or
operators of a drycleaning facility.
Mr. Polak
indicated concern in the past with the previous governor filling
Council vacancies in a timely manner and an increase in Council
members would only compound that problem. Mr. Bredenkamp stated
that if you increase the Council to 9 members, you would then
increase the majority needed for a quorum from 4 to 5, which could
make it difficult for the current Council to operate if terms
expire and new appointments are not timely made. Mr. Chung commented
that it is not necessary to have additional members but to eliminate
the requirement that 2 members of the Council must be members
of ISFA and change the designation of one of the insurance/financial
members to be an owner/operator of a drycleaner. Mr. Lewicki concurred
that it would be fair to have drycleaners represent a majority
of the Council.
Dr. Chweh
made a motion to increase the Council from 7 to 9 members. The
motion died for lack of a second.
Mr. Chung
made a motion to keep the number of Council members at the current
number of 7 but change the requirement of 2 financial/insurance
to 1 and make that position a drycleaner owner/operator position.
The motion was seconded by Mr. Bredenkamp and passed by a vote
of 6-1.
Mr. Lewicki
made a motion to remove the requirement that 2 members of the
Council must be members of the Illinois State Fabricare Association,
which was seconded by Mr. Chung. The motion passed by a vote of
7-0.
Mr. Chang
Lee, representing the Illinois Drycleaner Environmental Response
Committee, asked to address the Council, noting that his committee
met last evening and conducted a survey of drycleaner attendees,
which he distributed to the Council. Mr. Polak thanked Mr. Lee
for the survey and returned to the meeting agenda.
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| Licensing
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Mr. Eriksen
noted that the first item listed was to permit adjustment of the
annual license fee only through rule making procedure by the Council,
including legislative approval by the Joint Committee on Administrative
Rules (JCAR). The process would be very similar to the current
process in which any changes in license fees are subject to public
hearings with a final decision made by the Council. If JCAR was
involved, the Council would take action to make the necessary
adjustment. JCAR would conduct the public hearings and make the
final determination whether to allow the Council proposed change
to go into effect. Several of the Council members expressed concern
with having JCAR make that decision as they felt the Council has
a better understanding of the issues impacting the Fund and the
drycleaners.
On a motion
by Mr. Lewicki and a second by Dr. Chweh, the Council voted 7-0
to leave the current process of adjusting the license fee as is
and not include JCAR as a part of the adjustment process.
Mr. Eriksen
commented the second item under licensing was to require solvent
distributors to report annually the volume of drycleaning solvent
sold to each licensed drycleaner. The Council has previously adopted
this technical correction as part of the legislative package and
that there would be no need to take another vote on this issue
unless the Council wanted to rescind the previous decision. Mr.
Polak asked if there was any additional discussion on this topic.
There was none.
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| Solvent
Tax |
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Item 1 allows
adjustment of solvent taxes only through the administrative rule
making procedure, which includes legislative approval by the Joint
Committee on Administrative Rules (JCAR). Mr. Polak indicated
that if the Council did not believe it was necessary to have licensing
changes approved by JCAR, it would probably not be necessary to
have JCAR approve the changes in the solvent tax.
On a motion
by Mr. Bredenkamp and a second by Mr. Lewicki, by a vote of 7-0,
the Council voted to leave the current procedures in place for
adjusting the solvent taxes.
Mr. Eriksen
noted that items 2 through 5 focus on issues associated with "green"
solvents or alternative solvents. He noted that green solvents
would need to be defined but typically are referenced to include
Rynex, GreenEarth and CO2 and do not include hydrocarbon solvents.
Illinois EPA has indicated that hydrocarbon solvents would be
treated for regulatory purposes the same as petroleum solvents.
The current Act categorizes hydrocarbon solvents as petroleum
solvents for taxing purposes.
Mr. John
Spomar, representing the Alternative Solvents Coalition, addressed
the Council and passed out additional information, referencing
emails to Illinois EPA, asking them to consider exempting hydrocarbon
solvents from the regulatory process. He noted that this has been
taken under advisement by IEPA and no decision has been made at
this point in time. Mr. Eriksen reported in a recent conversation
with IEPA officials, they view a hydrocarbon solvent the same
as a petroleum solvent for the application of their regulatory
requirements. Mr. Bredenkamp interjected that he sees no difference
in the major compounds of a hydrocarbon solvent versus a petroleum
solvent. Mr. Spomar replied that there should be a designation
of difference between petroleum and hydrocarbon as hydrocarbon
contains paraffins that are less volatile than the petroleum solvent.
The Council
focused their discussion on creating a new category of solvents
involving green solvents that allow them the flexibility to analyze
and classify solvents as green solvents. Mr. Chung stated that
he would like to add another licensing category for the petroleum
solvents. The new classification would involve the segregation
of petroleum users that have a reclaimer on their drycleaning
machine and those using petroleum solvents without a reclaimer.
Concern was expressed with handling multiple solvents and the
confusion that it may create for the drycleaning community.
After additional
discussion, on a motion by Mr. Bredenkamp and a second by Mr.
Lewicki, the Council, by a vote of 7-0, approved the creation
of a new solvent category defined as other or green, in which
the Council, through the administrative rule process, could define
what constitutes a green solvent. The definition of a green solvent
should include reference that it has IEPA approval as "non-polluting"
or has "no environmental impact."
On a motion
by Mr. Chung and a second by Mr. Gibson, the Council, by a vote
of 6-0, with John Bredenkamp abstaining, voted to create 4 solvent
categories for licensing purposes. They are chlorinated solvents,
green solvents, petroleum solvents used in a drycleaning machine
with a reclaimer and petroleum solvents used in a drycleaning
facility without a reclaimer. In addition, the licensing fees
will be based on the following gallonage summary:
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| License
Fee |
Chlorine
Based Solvents |
Green
Solvents |
Petroleum
w/reclaiming |
Petroleum
w/o reclaiming |
| $500
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Less
than 50 gal |
Less
than 50 gal |
Less
than 250 gal
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Less
than 500 gal |
|
$500 |
51-100
gal |
51-100 gal |
251-500
gal
|
501-1000
gal |
| $500 |
101-150
gal |
101-150
gal |
501-750 gal
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1001-1500
gal |
| $1,000 |
151-200
gal |
151-200
gal |
751-1000
gal
|
1501-2000
gal |
| $1,000 |
201-250
gal |
201-250
gal |
1001-1250
gal
|
2001-2500 gal |
| $1,000 |
251-300 gal |
251-300
gal |
1251-1500
gal
|
2501-3000 gal |
| $1,000 |
301-350
gal |
301-350
gal |
1501-1750
gal
|
3001-3500
gal |
| $1,500 |
351-400 gal |
351-400
gal |
1751-2000 gal
|
3501-4000 gal |
| $1,500 |
401-450 gal |
401-450
gal |
2001-2250
gal
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4001-4500
gal |
| $1,500 |
451-500 gal |
451-500
gal |
2251-2500
gal
|
4501-5000
gal |
| $1,500 |
501-550
gal |
501-550
gal |
2501-2750 gal
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5001-5500 gal |
| $1,500 |
551-600
gal |
551-600
gal |
2751-3000
gal
|
5501-6000
gal |
| $1,500 |
More
than 600 gal |
More
than 600 gal |
3001-3250
gal
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More
than 6000 gal |
| $1,500 |
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3251-3500
gal
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| $1,500 |
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3501-3750
gal
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| $1,500 |
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3751-4000
gal
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| $1,500 |
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More
than 4000 gal
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The Council
discussed the issue of a different solvent tax rate for green
or solvent used at virgin facilities. After discussion, on a motion
by Mr. Polak and a second by Mr. Lewicki, by a vote of 7-0, the
Council agreed that a lower solvent rate ($ .35 per gallon) for
a green solvent used on a virgin site would be appropriate.
Mr. Polak
recessed the meeting at 11:22 a.m. and reconvened at 11:37 a.m.
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| Penalties
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Mr. Polak
noted that the first item, change the wording that the Council
"shall" charge a $5.00 per day late payment penalty to "may" charge
a $5.00 per day late payment penalty, has already been adopted
by the Council in their technical corrections.
Mr. Eriksen
commented that items 2, 3 and 4 were part of SB1069 and allows
a grace period and sets a maximum on the penalties that would
be paid by drycleaners who have not previously been licensed.
The grace period was set at 90 days, with a maximum penalty of
$450 and any currently licensed drycleaner who has paid penalty
fees in excess of $450 would receive a refund from the Fund. Mr.
Chung stated that he was not in favor of adopting the wording
in items 2, 3 and 4 as it would provide a financial reward to
drycleaners who have been operating illegally by reducing their
late payment penalty to a minimal dollar amount.
Discussion
focused that the Council, through the administrative rule process,
could define what would be appropriate criteria for waiving penalties
for drycleaners who have not previously been licensed.
On a motion
by Mr. Chung and a second by Mr. Kim, by a vote of 4-1 with Mr.
Bredenkamp abstaining, the Council voted to reaffirm changing
the wording that the Council "shall" charge a $5.00 per day late
payment penalty to "may" charge a $5.00 per day late payment penalty
and denied including items 2, 3 and 4 in the proposed legislative
package.
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| Insurance |
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Mr. Eriksen
noted that the first item was to allow a grace period of 90 days
after the effective date of the Act in which an uninsured drycleaner
may apply for insurance benefits from the Fund without penalty
of losing remedial benefits. Currently in order to receive remedial
benefits, the drycleaner must have continuous financial assurance
coverage from July 1, 2000 forward. In addition, it was proposed
that uninsured drycleaners would pay back insurance premiums plus
a 20% penalty. Mr. Eriksen commented that this penalty would equate
to a 9 ½% effective interest rate if you assume that the drycleaner
had to finance his insurance premium each year.
After discussion
by the Council, on a motion by Mr. Lewicki and a second by Mr.
Chung, the Council, by a vote of 7-0, agreed to allow a grace
period after the effective date of the Act in which uninsured
drycleaners may apply for insurance from the Fund without penalty
of losing remedial benefits. Uninsured drycleaners would pay back
insurance premiums plus a 20% penalty.
Item 2 would
permit the Council to adjust the insurance premium only through
rule making procedures, including legislative approval by the
Joint Committee on Administrative Rules.
On a motion
by Mr. Lewicki and a second by Dr. Chweh, by a vote of 7-0, the
Council declined to include item 2 as part of their proposed legislative
package.
Mr. Eriksen
noted that item 3 is addressed in item 1 and is just further clarification
that it provides all drycleaners insured (as a result of an application
for insurance made before the conclusion of the grace period)
will be eligible for remedial benefits under the Act.
Item 4 would
allow the Council to purchase reinsurance coverage to reduce the
Fund's potential cleanup liability. Mr. Polak noted that this
is something that he has been researching and would give the Fund
additional flexibility to meet their liabilities if it was determined
to be cost effective.
On a motion
by Mr. Polak and a second by Mr. Lewicki, the Council, by a vote
of 7-0 voted to incorporate item 4 which will allow the Council
to purchase reinsurance coverage to reduce the Fund's potential
cleanup liability.
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Prioritization/Remediation |
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Mr. Eriksen
noted that items 1 and 2 have already been adopted and incorporated
by the Council in their technical corrections. Item 3 would permit
direct payment from the Fund to contractor performing remediation
after payment of all deductible amounts.
On a motion
by Mr. Polak and a second by Mr. Chung, the Council voted 7-0
to incorporate the first 3 items under Prioritization/Remediation
in their legislative package.
The Council
deferred taking action on item 4, increasing remedial benefit
cap to $300,000 and item 5, changing the remedial program deductible
flat rate to 10% of site investigation and remediation expenses
incurred until they completed their discussion on the Program's
sunset date.
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| Sunset |
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Item 1 extended
the expiration of the Program from January 1, 2010 to January
1, 2020 and the second item extended the intrusive testing requirement
for maintaining insurance coverage from June 30, 2004 to June
30, 2006. Mr. Eriksen noted that the second item would probably
be necessary from a practical standpoint, as the potential addition
of 525 facilities to the remedial program would create a shortage
of environmental consultants and drillers to complete intrusive
testing by June 30, 2004.
The Council
discussed if the intrusive testing date should be extended to
June 30, 2005 or June 30, 2006. KADA had proposed requiring all
testing to be completed by June 30, 2005. Mr. Eriksen noted that
may be a tight timeframe to realistically have all the testing
done but that it would be appropriate to have them file a claim
form or budget preapproval letter by June 30, 2005 indicating
their intent to participate in the remedial program.
On a motion
by Mr. Polak and a second by Mr. Bredenkamp, the Council agreed
to extend the Program sunset date from January 1, 2010 to January
1, 2020 and also extend the intrusive testing requirement for
maintaining insurance coverage from June 30, 2004 to June 30,
2006 with the stipulation that the drycleaner files notice of
a claim or budget preapproval letter no later than June 30, 2005.
The motion passed by a vote of 7-0.
The Council
discussed another suggestion proposed by KADA, which required
a balanced budget each year, or at a minimum, a review of the
financial solvency of the Fund and adjusting the revenue streams
accordingly to make certain that the Fund would remain viable.
Discussion focused on whether there should be a cap on annual
revenue adjustments.
After discussion,
on a motion by Mr. Polak and a second by Mr. Lewicki, the Council
voted 7-0 that annually they should review the projected Fund
solvency through the sunset date of the Program and take necessary
action within their authority to adjust revenues to keep the Fund
viable.
The Council
discussed increasing the remedial cap benefit to $300,000. After
discussion by the Council, on a motion by Mr. Chung and a second
by Mr. Gibson, the Council, by a vote of 7-0, voted to increase
the remedial benefit cap to $300,000 on active claims.
After Council
discussion, on a motion by Mr. Chung and a second by Mr. Kim,
the Council voted 7-0 to leave the remedial program deductible
as it is currently stated.
Mr. Eriksen
commented that he would summarize the changes and draft the appropriate
language and get it to Rep. Smith for incorporation into HB1553.
He is also working with Rep. Smith to set up a meeting with the
Governor's office to discuss the Fund's proposed legislative package.
The Council
tentatively set the next meeting as Tuesday, April 8, 2003. There
being no further business, the meeting adjourned at 1:38 p.m.
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