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April
2003 Meeting Minutes
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MINUTES |
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DRYCLEANER
ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS
HOLIDAY
INN
NAPERVILLE, ILLINOIS
APRIL 28,
2003
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John
Polak, Chairperson, called the Drycleaner Environmental Response
Trust Fund Council of Illinois meeting to order at 9:47 a.m. A quorum
was present. Roll call was taken with the following members present:
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Andrew Chweh
Augustine Chung (arrived at 10:00 a.m.)
David Gibson
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
Juho So, Program Administrator's Office
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PRELIMINARY
BUSINESS |
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The minutes
from the March 27, 2003 Council meeting were reviewed. On a motion
by Mr. Lewicki and a second by Mr. Gibson, the minutes were approved
by a vote of 5-0.
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LICENSE
LATE PAYMENT PENALTY APPEAL |
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Mr. Eriksen
reviewed with the Council background information regarding the
license late payment penalty appeal for Site #0002602, Bavaros
Cleaners in Elk Grove, IL. He noted that Mr. Dong H. Yom is the
owner/operator of Bavaros Cleaners and has operated the facility
since December 1986. Prior to 2003, this facility had been licensed
with all the annual license fees being paid when due except for
calendar year 2000, in which a late payment fee of $190 was assessed
and paid by Mr. Yom.
Mr. Eriksen
noted that for calendar year 2003, the license fee for this facility
was not paid until February 21, 2003, resulting in a late payment
fee of $255. On March 29, 2003, the Administrator received a letter
from James Yom, son of Dong Yom, writing on his father's behalf
because his father's ability to write was impaired due to poor
health.
Mr. James
Yom was present at the meeting to represent his father in the
appeal. Mr. James Yom addressed the Council and stated that his
father was late with the 2003 license fee because he is suffering
from cancer and because of his battle with cancer, purchasing
the 2003 license from the Fund had slipped his mind. He commented
that his father tries to take care of the administrative aspects
of the drycleaning business since his mother and he were unfamiliar
with running a drycleaning facility. Mr. Yom asked the Council
to grant the waiver of the license late payment fee as the delinquency
was due to illness and not an intentional act to not pay the license
fee when due.
After discussion
by the Council, on a motion by Mr. Polak and a second by Mr. Gibson,
the Council voted of 5-0 to waive the $255 license late payment
fees for Mr. Yom.
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OPERATIONAL
ISSUES |
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A. |
Legislative Update |
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Mr. Polak
addressed the Council, stating that several Council members and
Mr. Eriksen had a meeting on March 28, 2003, with Rep. Mike Smith
and a representative of the Governor's Office to update them on
the status of Trust Fund activities. The Governor's representative
indicated that there would be no general revenue funds available
for the Drycleaner Trust Fund due to the substantial deficit the
state is currently facing. The Governor's representative indicated
that it would be the responsibility of the Council to appropriately
address the Fund's projected program deficits.
Mr. Polak
reported that HB1553, which is the shell bill the Council is utilizing
to make their proposed changes to the Trust Fund Act, was passed
by the House on March 28, 2003 by a slim margin. However, Speaker
Madigan, co-sponsor of the bill, requested a reconsideration vote,
as he had concerns dealing with the proposed makeup of the Council
and the extension of the program sunset date. The Speaker is currently
having his staff further review these issues and has not set a
date for reconsideration of the bill by the House.
Mr. Polak
noted that he had received a telephone call the previous afternoon
from Mr. Sung Do Kang, president of the Korean American Drycleaners
Association (KADA) stating that they have reversed their previous
decision to oppose HB1553 and that the KADA Board of Directors
now supports HB1553. This was welcome news that would be passed
on to Rep. Smith as a further show of support by the industry
for HB1553. (Mr. Augustine Chung joined the Council meeting at
10:00 a.m.) Mr. John McCarthy noted that the Speaker had indicated
he would like to wait until closer to the sunset date of the program
to consider extending the program. He had commented to Rep. Smith
that it is somewhat unprecedented to extend the sunset date of
a program more than one (1) or two (2) years prior to the established
sunset date. Rep. Smith had explained to the Speaker that the
extension was necessary to minimize the financial impact to the
drycleaners in increased fees, assure drycleaners that they had
appropriate time to test their sites and that adequate funds would
be available for cleanup.
Mr. Eriksen
reported that at Rep. Smith's request, he had provided a position
paper to Speaker Madigan's general counsel to review regarding
the makeup of the Council and the program sunset date.
After discussion
by the Council, it was their opinion that they continue to maintain
contact with the Speaker's office and see if there are any further
issues that they would like clarified on the Council's position
relative to HB1553.
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B.
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Analysis of Site Investigation Statistics |
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Mr. Eriksen
stated that enclosed in the Council packet is a listing of boring
depths at which drycleaning solvent in excess of TACO Tier I levels
was discovered for 20 drycleaning facilities that have eligible
remedial claims. He noted these sites were randomly selected from
the existing 162 eligible remedial claims.
Mr. Mike Perkins
reviewed with the Council the statistics, noting that based on
20 random samples, that if soil borings were only installed to
a depth of 8 ft. below ground surface, approximately 10% of the
impacted sites would be missed; if soil borings had been installed
to a depth of 13 ft. below ground surface, approximately 7.5%
of the impacted sites would be missed; and if only 3 soil borings
were advanced, approximately 15% of the impacted sites would be
missed; if only 3 soil borings were advanced to 8 ft. below ground
surface, approximately 20% of the impacted site would have been
missed. He noted that this data supported the environmental consultants'
and the Administrator's position that the number of borings and
the associated depth of the borings was critical and required
the professional judgment and expertise of the environmental consultant
in order to make certain that the drycleaning facility is appropriately
tested and that if contamination exists at the facility, that
it is likely to be discovered during the site investigation phase.
Dr. Chweh
asked why the Administrator did not do a testing of all 162 eligible
claims. Mr. Eriksen stated that the 20 random samples were taken,
as they are a representative and statistically valid sample size
for this type of testing. Dr. Chweh disagreed and stated that
the Administrator should review all 162 claims and present that
information to the Council in order that they can make a final
determination if the trends as presented by the Administrator's
office are valid. After further discussion, the Council agreed
that the Administrator's office should review another 40 files.
This would result in a sampling of approximately 40% of the total
and was agreed that this would represent a sufficient sample upon
which to base conclusions. Mr. Eriksen agreed that the Administrator's
office would do another 40 samples and provide the results at
a future meeting.
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C. |
Payment of Eligible Remedial Expenses to Environmental Consultants
and the Illinois Environmental Protection Agency |
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Mr. Eriksen
noted that there were two (2) issues associated with this topic:
Issue 1: This issue involves the payment of eligible remediation
expenses to environmental consultants. He noted that both the
remedial and insurance programs are reimbursement programs to
the eligible claimant, which is the drycleaner owner/ operator.
The Council has previously adopted in their policies and procedures
to allow for reimbursement warrants to be made jointly payable
to the claimant and the environmental consultant where it has
been documented that the environmental consultant has not been
paid for their services. Since the Fund's inception, it has been
the prevalent practice by most of the environmental consultants
involved with the Fund, to wait for their payment until the drycleaner
owner/operator receives reimbursement from the Fund. This has
resulted in a majority of the warrants being made jointly payable
to the claimant and the remedial consultant.
Mr. Eriksen
noted that Mr. Bob Soni, of Northern Environmental, is requesting
Council consideration that once the drycleaner's appropriate deductible
has been paid that the jointly payable warrant be made directly
to the consultant who would obtain the necessary endorsement from
the eligible claimant. This would minimize the collection time
involved and eliminate the chance of the drycleaner cashing the
warrant without obtaining the consultant's endorsement. Mr. Eriksen
stated that it is his understanding that the situation has recently
occurred in which the claimant cashed the warrant without the
environmental consultants' endorsement.
The Council
asked the Administrator if this issue would be difficult to implement.
The Administrator said no, that they would be able to continue
to make the warrants jointly payable but would list on the warrant
that the warrant be sent to the address of the consultant. The
consultant would need to get the appropriate endorsement in order
to receive payment for services rendered.
After discussion
by the Council, on a motion by Mr. Polak and a second by Mr. Lewicki,
the Council authorized that the Administrator can make joint payable
warrants and send the warrant to the consultant who would then
obtain the necessary endorsement from the claimant.
Issue 2:
Mr. Eriksen stated that Mr. Joseph Caldwell, president of TailorRite
Cleaners in Chicago, IL, had expressed his concern in a letter
that drycleaners must pay out of pocket, the fees charged by the
Illinois Environmental Protection Agency (IEPA) associated with
participation in IEPA's Voluntary Site Remediation Program (SRP).
Mr. Caldwell has indicated to the Administrator that he would
like the Fund to directly pay IEPA for those fees to minimize
the drycleaner's out of pocket expenses. Currently, the drycleaner
owner/operator pays the fees to IEPA and then upon submission
of a cancelled check and/or verification of payment with IEPA,
the Fund reimburses the drycleaner for these fees. He stated that
typically this timeframe for reimbursement is less than 30 days,
once the Administrator has received the appropriate documentation.
Mr. Eriksen
commented the Administrator's main concern with any direct payment
of IEPA's fees would involve the initial enrollment fee to enter
into the SRP program. Without IEPA having the site enrolled in
their program, there is no document number for billing or tracking
that could be invoiced to the Fund. In addition, there is a chance
that the Fund would issue a check to IEPA and the drycleaner would
never enroll in the program. Discussions with IEPA staff have
indicated that they have no refund capabilities for this line
item in their budget appropriation. Ms. Marsha Fanale, IEPA representative
to the Council, confirmed that this was the case. Mr. Eriksen
stated another potential concern was double payment of the fee
by both the drycleaner and the Fund to IEPA but he felt that this
could be mitigated provided that the drycleaner signs a letter
authorizing the Council to directly pay IEPA for the SRP fees
and provided the claim is eligible at the time the invoice is
submitted and that the payment does not exceed the claimant's
remedial benefit cap. He noted that there still would need to
be further discussion with IEPA to make certain that there would
not be an issue or problem in terms of paperwork and documentation
in the event that a bill was submitted by IEPA for payment and
the Fund refused to pay it on the basis that the claim is no longer
eligible.
After discussion
by the Council, they tabled further discussion on the issue until
the Administrator's staff and IEPA staff can further research
the issues and potential problems and solutions associated with
the direct billing and payment of IEPA's SRP fees by the Fund
on Fund-eligible sites.
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D. |
Payment of Environmental Consultant's Markup on Subcontractor's
Invoices |
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Mr. Bob Soni,
of Northern Environmental, had asked the Council to consider paying
a markup percentage on subcontractor work at the March 27, 2003
Council meeting. He noted the markup of subcontractor invoices
is consistent with industry practices and markups were allowed
and reimbursed by the Illinois Environmental Protection Agency
in their management of the leaking underground storage tank program.
Mr. Eriksen
commented that the Council, in establishing their initial policies
and procedures for reimbursement of remedial costs for insurance
and remedial claims, decided not to pay for markup of subcontractor
costs. The Council noted that typically the markup percentages
do not represent the consultant's actual cost in managing these
services and it would be more appropriate for the environmental
consultant to include time in their budget requests for hiring
subcontractors, supervising their work, etc. He noted the issue
before the Council is do they wish to revise their current policies
and procedures and allow for the environmental consultant to charge
the Fund for a markup of subcontractor invoices?
Mr. Soni stated
that with the Council's change in position in which they are encouraging
that only three (3) or four (4) borings and approximately one
(1) monitoring well be installed during the initial budget and
investigation phase, the Administrator's office has reduced the
hours and appropriate budget for consulting time, which has reduced
their profitability to a level that is no longer acceptable. Markup
of subcontractor invoices would allow consultants to recoup some
of their time and costs incurred in lining up the subcontractors
and overseeing their work. Mr. Eriksen replied that the current
policy provides for the consultant to include time in their budget
for subcontractor oversight activities, which would include hiring
of the subcontractors. Mr. Soni agreed but stated that because
of the reduced scope of work, the amount of consulting time being
allowed by the Administrator's office in their budget review had
been significantly reduced based on the reduced scope of work,
and most consultants felt that they were no longer being provided
adequate time and compensation for their oversight of the subcontractor's
work. Mr. Ken Bacus of Envirogen, echoed Mr. Soni's concerns,
stating that the reduced scope had reduced their profit level
to a marginal level. In addition, the consultants noted that with
any delays in receiving payment due to questions on the invoices
or lack of timely filing by the claimant results in them acting
as banker for the claimant, which further costs them money and
reduces their profit margin.
After additional
discussion, Mr. Eriksen suggested that to make certain that the
contractors are compensated for their time in subcontractor oversight,
that they submit in their budget proposals a separate line breaking
out the hours and associated costs for subcontractor time. Mr.
Soni and Mr. Bacus agreed that this should help alleviate the
problem.
Mr. Polak
indicated that if this continued to be an issue that the Council
could revisit it at a later time but suggested that the consultants
implement Mr. Eriksen's suggestion and see if that would resolve
their issue.
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E. |
Legal Representation |
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Mr. Polak
noted that Mr. McCarthy's contract for fiscal year 2003 will expire
June 30, 2003 and that the Council will need legal counsel for
the upcoming fiscal year. Mr. Eriksen reported that to date, Mr.
McCarthy has been paid $15,600.22 and it is his recommendation
that the Council enter into a contract with Mr. McCarthy to provide
legal services to the Fund for a cost not to exceed $20,000, at
the current hourly rates of $135 per hour for professional services
and $80 per hour for travel time.
Mr. Polak
stated that Mr. McCarthy's expertise has been very beneficial
to the Council, as they deal with a wide range of issues in the
management of the Fund and stated he was supportive of giving
Mr. McCarthy a new contract for fiscal year 2004.
On a motion
by Mr. Lewicki and a second by Mr. Chung, the Council, by a vote
of 6-0, authorized the Chairman to enter into a contract with
Mr. McCarthy to provide legal services to the Council for fiscal
year 2004, for a cost not to exceed $20,000, at the current hourly
rate of $135 per hour for professional services and $80 per hour
for travel time.
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F. |
Review
of Fiscal 2002 Program Audit Report |
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Mr. Eriksen
noted for the Council that enclosed in their Council packet is
a copy of the program audit for fiscal year 2002 that had been
recently received from the Auditor General's office. He commented
that the audit was a compliance audit with a focus on a review
of internal controls and compliance with state regulations rather
than a financial audit that focuses solely on the validity of
the financial numbers. In conducting the compliance audit and
the evaluation of internal controls, the auditors did substantial
testing of financial transactions and did an analytical review
and tieback of information to satisfy themselves that the financial
numbers were accurate. Regarding the review of internal controls,
as noted in the report, there were no material findings of non-compliance
disclosed during the audit test and the Auditor General commended
the Council for maintaining an effective system of internal controls.
Mr. Eriksen commented this audit report becomes a part of the
overall state's general financial report and this is the third
year that the Fund has been audited. He stated the cost of the
audit is approximately $19,000 and any contracting of services
associated with the audit is handled by the Auditor General's
office and not by the Administrator or by the Fund Council.
Mr. Polak
commented this is one item of the anonymous letter of late-March
that was totally invalid in that it referenced that a true audit
of the Fund was not conducted. Mr. Eriksen stated that there has
been one (1) request for the complete audit report since Mr. Polak's
letter stating that the audit report was available from the Council.
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G.
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Report
on the State Coalition for Remediation of Drycleaners (SCRD) Spring
2003 Conference |
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Mr. Eriksen
noted that Dr. Juho So and he had attended the semi-annual State
Coalition for Remediation of Drycleaners Spring 2003 meeting from
April 8-10 in San Francisco, CA. The conference focused on the
following:
• Technical
committee meeting with discussion on site investigation survey
data and remedial case studies;
• Program committee meeting with continuing work on a comprehensive
document outlining the various aspects of all state programs and
program considerations for states considering developing a fund
program;
• Remedial case studies presented by SCRD members and consultants.
Technologies reviewed included bioremediation, co-oxidation, dual
phase extraction, c-sparge system, site investigation methods,
thermal volatilization, hydrogen releasing compounds
• Indoor air intrusion. He noted this is becoming a significant
issue of concern. Several states have tested and consultants have
found that perc emissions in the indoor air are higher than the
Federal EPA recommended standards at this time. On the positive
side, it was noted that a simple ventilation system similar to
a radon ventilation could be installed inexpensively in a home
to resolve the issue. The biggest concern was the public perception
of a plume of contamination under their property that may be creating
indoor air contamination.
Mr. Eriksen
reported that there was a presentation by the Southern California
Air Quality Management District on their decision to phase out
perc use in Southern California. He noted that they had been providing
financial incentives for drycleaners to switch to hydrocarbon
machines and other alternative solvents such as Rynex, GreenEarth
and CO2, but had suspended payments for people converting to GreenEarth
due to a recent toxicology report released by Dow Chemical, stating
that the GreenEarth siloxane caused uterine cancer in female laboratory
rats.
Mr. Eriksen
stated that the coalition is a good source of technical information
that has been beneficial as the Administrator continues to evaluate
the cost effectiveness of technologies that can be utilized at
sites throughout the state.
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APPROVAL
OF PROGRAM BILLINGS |
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Mr. Eriksen noted that there were two (2) bills requiring Council
review and action: |
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1.
Williams & Company Consulting, Inc $ 54,353.00
Standard flat fee billing for March 2003, licensing, underwriting
and claims processing. |
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2.
Shari Dam $ 4,305.10
Professional legal services rendered as Administrative Hearing Officer.
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On a motion
by Mr. Lewicki and a second by Mr. Chung, the Council approved
the bills by a vote of 6-0.
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MONTHLY
ACTIVITY REPORT AND FINANCIALS REVIEWED |
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Mr. Eriksen
briefly reviewed with the Council, the status of the licensing,
insurance participation and remedial claims as of March 31, 2003.
The Council asked Mr. Eriksen to send a reminder to the appropriate
drycleaning associations, reminding them of the June 30, 2004
deadline for testing of sites for contamination to maintain insurance
coverage and file for remedial program benefits.
Mr. Eriksen
noted that the Fund currently has $6.8 million in cash, with $119,000
in current liabilities, leaving an unreserved Fund balance of
$6.7 million. For the month of March, expenditures exceeded revenues
by approximately $33,000.
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APPROVAL
OF CLAIM COSTS IN EXCESS OF $75,000 |
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Mr. Eriksen
noted for the Council that enclosed in their packet was a memorandum
from Mr. Perkins and Dr. So outlining the additional budget approval
request for Saunders Cleaners. He noted that total costs approved
to date, excluding IEPA SRP fees, was $71,740. Mr. Chris Lee from
Northern Environmental, the environmental consultant on this project,
reviewed with the Council his request for additional funds at
this facility. It was noted that this facility initially had a
budget for cleanup of just under $35,000, which did not require,
in accordance with Council policy, three (3) competitive bids.
Mr. Lee gave
background information on the site, including the levels of contamination,
the type of soil and the fact that they have utilized chemical
oxidation in which the chemical oxidation vendor had donated part
of the product cost along with reduced rates from the environmental
consultant in the hope that this pilot project would prove to
be successful and could be used as a model at other contaminated
drycleaning sites in the state. Mr. Lee stated that substantial
reductions had been made in the contamination through the initial
injection but during additional site investigation conducted at
the time the injection wells were installed, a new pocket of contamination
was discovered and it appeared to be from a recent release at
the facility. He then presented in detail the additional information
and cost that was needed, stating that they are requesting additional
budget approval in the amount of $32,000. This would probably
be more than enough money as hopefully one more round of injections
would reduce the soil contamination to a level in which the site
could get an NFR letter without further treatment. Groundwater
treatment is not necessary at this facility, as a groundwater
ordinance exists for this location.
The Council
had considerable questions for Mr. Lee regarding the level of
contamination and why the budget request was almost as much as
the initial bid for cleanup. After conclusion of this discussion,
on a motion by Mr. Gibson and a second by Mr. Chung, the Council
voted 6-0 to approve an additional budget of $32,000 for the remediation
of Saunders Cleaners.
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OTHER
ISSUES AS PRESENTED |
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Mr. Eriksen
noted that the Fund would have a booth at the upcoming KADA trade
show the first weekend of May, at the Rosemont Convention Center.
The Council
tentatively established June 11, 2003, as the next Council meeting
date and briefly discussed a location for the Strategic Planning
Meeting, which has been set for July 24, 2003.
Mr. Polak
stated that he would check into the Allerton House in Champagne,
IL, as a possible location for a downstate meeting in the future.
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PUBLIC
COMMENT PERIOD |
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Mr. Myungnam
Kim asked to address the Council and requested that Dr. So translate
for him. He owns Lee Cleaners in Westmont and is representing
the Illinois Drycleaner Solidarity Group that was established
in February 2003. He says they are a non-political group of approximately
250 members and stated up front that they appreciate the effort
that all parties have been involved in trying to come up with
viable solutions to keep the Fund solvent. They wanted to share
the following comments with the Council:
1. The current
KADA Board of Directors has not provided information to the Korean
drycleaners on the Trust Fund's proposed legislation.
2. KADA did not get opinions of the Korean drycleaners before
stating they supported HB1553, which created distrust among the
drycleaners.
3. Many Korean drycleaners feel the current procedures are not
fair and that is due to a lack of understanding of the issues
and again, deals with a lack of communication between the current
KADA directorship and their members.
4. KADA is not presenting Korean drycleaners with accurate information,
therefore, not allowing the drycleaners to make the appropriate
business decisions as needed. He reiterated that their group was
not trying to block the Council's legislation but simply was looking
at a forum to improve the current legislation. For example, they
believe:
·•
There should be a benefit paid if the site is clean and that the
drycleaner would only incur a $5,000 deductible, with the remaining
site investigation costs paid by the Fund.
·• The cleanup cap should be increased to $200,000 instead
of $300,000 to prevent depletion of Trust Fund's money.
·• They recommend delaying intrusive testing out for an additional
five (5) years versus the two (2) years proposed by the Council.
·• That the compliance program not be mandatory and only
be required after the site investigation is completed and that
if any problem occurs after a site is accepted in the compliance
program, the compliance program should be responsible for the
cleanup.
·• That the Council should provide additional information
on environmentally friendly solvents.
He thanked
the Council for their time in listening to his issues.
Mr. Kim asked
the question why these issues are only being raised by this group
at this time. Mr. Polak noted it was unlikely that the Council
would be able to take action on these issues as the legislation
package had already been submitted and time was running out to
make any modifications.
Mr. Hung Park
of One Hour Cleaners in Palatine, IL, stated that he has 20 years
of experience and has served on the KADA's Board of Directors
and at last Thursday's meeting, Mr. Kang got jurisdiction over
environmental issues and would be looking at additional information
in the future in order to try to avoid the Korean community being
split into two (2) organizations. He stated Mr. Kang would be
trying to form a new environmental committee that would hopefully
reach out to this new group.
Mr. Polak
thanked him for his comments. Mr. Rusciolelli then commented on
the status of HB1553 and thanked the Council for their support.
There being
no further business, the meeting adjourned at 1:17 p.m.
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