June 13, 2007 minutes

June 13, 2007 Meeting Minutes

MINUTES

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

HOLIDAY INN SELECT - NAPERVILLE
NAPERVILLE, ILLINOIS

JUNE 13 , 2007

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:05 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
David Gibson
Paul Kwak
Jerry Lewicki
John Polak
Young B. Kim

Also present were:
H. Patrick Eriksen, Program Administrator's Office
John J. McCarthy, Program Counsel
Dorcee Lauen, Program Administrator's Office
Juho So, Program Administrator's Office

PRELIMINARY BUSINESS

The minutes from the April 24, 2007 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Kwon, the minutes were approved by a vote of 7-0.

CLAIM PAYMENTS IN EXCESS OF $75,000

A. Rockland Cleaners, Libertyville, IL; (claim #50431, site #0001920)

Dr. Juho So addressed the Council noting this facility is before the Council for review as any future budgets will exceed the Administrator's $75,000 reimbursement authority. He noted the drycleaning facility is subject to the prioritization ranking process.

According to the environmental consultants, the site investigation at the facility is complete and the focused site investigation report and remedial objective report have been approved by the Illinois Environmental Protection Agency (IEPA) and the facility will require active remediation in order to obtain a No Further Remediation (NFR) letter from IEPA.

The Administrator has received and reviewed three (3) proposals for cost estimates for preparing the Remedial Action Plan (RAP) for the facility. The bids range from a low of $5,500 to a high of $7,500. Dr. So requested the Council approve consulting costs in the amount of $7,500 for the preparation of the RAP and correspondence with necessary parties such as the IEPA, the Fund, the landlord, etc.

On a motion by Mr. Lewicki and a second by Mr. Kwak, the RAP preparation budget in the amount of $7,500 was approved by a vote of 6-0.

B. Family Pride Cleaners, Cary, IL; (Claim #50431; Site #0001191)

Dr. So reviewed with the Council this is a facility where the total approved costs have exceeded $75,000 and future expenditures need Council approval. This drycleaning facility is subject to the prioritization process.

The Administrator was contacted in May by the consultant regarding immediate abandonment of monitoring wells on the adjacent property. The adjacent property owner had agreed to the installation of the monitoring wells several years ago but now wanted them removed due to potential safety concerns and the need to resurface his parking lot by May 31 st . Failure to abandon the wells by May 31 st would result in additional project costs to the claimant and no future cooperation by the adjacent property owner in addressing the offsite contamination. Due to the time constraint of the project and the need to avoid additional costs and possible litigation, the Administrator approved the scope of work on May 22, 2007. The scope of work was for abandonment of twelve 2” monitoring wells for a cost not to exceed $3,000. Dr. So noted the additional budget request of $3,000 would bring the total approved amount at this facility to $85,233.48. The Administrator is requesting Council approval of the $3,000 in well abandonment costs on the adjacent property that the Administrator initially approved on May 22, 2007 to facilitate the adjacent property owner's request and avoid additional project costs.

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the budget request by a vote of 6-0.

Mr. Polak noted the appellant had still not phoned in and directed the Council begin discussion of “Operational Issues”.

OPERATIONAL ISSUES

A. Review of Fiscal 2006 Audit Report:

Mr. Eriksen reviewed with the Council the 2006 Audit Report that was released by the Auditor General's Office on April 24, 2007. This was a compliance audit in which the Auditor General's Office not only reviewed the financial statements for accuracy of the financial information presented but more importantly focused on the Council's compliance with the statute and the regulations.
There were two (2) material findings noted by the auditor for fiscal year 2006. The first is the Council did not require owners/operators of drycleaning facilities to submit invoices and bills within 30 days of completion of the remediation work as required by statute. Mr. Eriksen stated this issue was discussed at the April 24, 2007 Council meeting and it was pointed out to the auditors that this was impractical to implement in as much as most consultants are not able to issue invoices within 30 days of completion of the work due to the nature of the work and the results that are needed for reimbursement approval. At the April 24, 2007 Council meeting, the Council voted to request a legislative change eliminating the 30 day invoice submittal requirement. Mr. Eriksen said he would discuss this issue on his update regarding pending legislation.

The second finding was the Council did not adopt statutorily required rules for prescribing record retention requirements for drycleaning facilities. Mr. Eriksen noted this has not been a functional issue for the Council in administering the program and noted the records that are required on an annual basis are set forth in the attached forms and applications that are currently a part of the regulations under 35 IL IAC Chapter 35, Section 1500.70. Mr. Eriksen stated this issue would be discussed further under the topic of New Administrative Regulations later in the Council meeting.

Mr. Eriksen noted there was one (1) immaterial finding which was one (1) of the Council members had only submitted their travel and expense reports on an annual basis rather than within 60 days of the date of the Council meeting. The Council was not aware of that requirement and has subsequently adjusted their procedures so that all expense reports are to be submitted within 60 days of the date of the meeting.

B. Revisions to the Administrative Rules:

Mr. Eriksen referenced the recent FY 2006 audit report dealing with the Auditor General's findings that the Council failed to adopt rules describing record retention requirements. The Administrator recommends the Council adopt a record retention policy for all documents associated with the licensing process requiring them to be maintained for a period of three (3) years from the effective date of the license. This would be specifically applicable to solvent purchase logs, solvent purchase invoices, license application and DS-3 forms.

Regarding records retention for insurance documentation and claim documentation, the Administrator also recommends a retention period of three (3) years. He noted this would correspond with federal and state tax regulations where business owners and operators must maintain those financial records for a minimum three (3) year period to substantiate their federal and state tax returns.

Specific information that needed to be maintained for the insurance process was the insurance application, solvent purchase log, drycleaning machine inspection log, drycleaning machine repair log, Phase I and/or Phase II site investigation report(s), compliance program certificate and CEU certificates.

For books, records, documents or other evidence relating to an appeal, litigation or other dispute or claim, the records must be maintained for a period of three (3) years after the date of the final disposition of the appeal litigation or other dispute of claim. The Council discussed the Administrator's recommendation, noting the three (3) year retention period appeared reasonable. Mr. Gibson stated there should be some requirement for the compliance programs to maintain documentation regarding the program participants. He suggested compliance programs must maintain all required information for a period of up to three (3) years after the expiration of the compliance program certificate. Mr. Eriksen noted that due to the potential legislation, there may be other regulatory rule changes that may be necessary and stated he would be coming back to the Council in the fall of 2007 with definitive wording for the records retention regulations that would be submitted to JCAR for their review and action.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, by a vote of 6-0, the Council approved the Administrator's recommendations for records retention regarding documents affiliated with the Trust Fund program.

C. Legislative Update:

Mr. Eriksen noted an amendment to an existing House Bill has been drafted. However, it is looking unlikely the amendment will get attached and passed yet during this legislative session. He stated the primary focus of the legislature at this time is to hammer out a budget agreement prior to July 1, 2007.

Mr. Polak noted the first appellant, Verlare Cleaners had not phoned in and therefore the Council would move on to the second appeal.

APPEALS

1. Appeal of License Late Payment Fees for Wilton Cleaners - Facility #0003024

Wilton Cleaners is located at 1815 N Western in Chicago, IL. In attendance were Rosa Macedo, daughter of Domingo Hernandez, and Roger Roman, CPA, who has been working the past several years with Mr. Hernandez to get the facility licensed. Mr. Eriksen reviewed background information with the Council and noted by year the total late payments due. Based on the current calculation, the outstanding balance of late fees due from 2002 through 2006 total $11,395.

Mr. Roman addressed the Council stating he has been working with Mr. Hernandez and Ms. Macedo for approximately three (3) years trying to help them resolve the licensing issues they have with the Fund. Mr. Roman feels the crux of the problem relates to the change in facility locations in mid-2002. Prior to beginning operations in June 2006 at the current location at 1815 N Western in Chicago, IL , Mr. Hernandez operated a facility at 2112 N Western in Chicago, IL . That facility was vacated when he lost his lease. Mr. Roman felt the mis-communication between Mr. Hernandez and the Fund began during 2002 involving the movement of drycleaning equipment between the facilities. He also feels Mr. Hernandez better understands the licensing requirements of the Fund and believes once everything is straightened out, he will be able to comply with the licensing process and therefore he is asking the Council to waive the late fees. Mr. Roman produced solvent invoices from 2002 applicable to the two (2) facilities that the Administrator did not have in his file. Mr. Roman stated he would get that information to the Administrator. Mr. Polak stated if the license could be transferred because the facilities were not operating at the same time that would change the potential late fees for all of the years. He is recommending the Administrator go back through the math, review the documentation, determine if the license could be transferred and what the current late fees would be. Mr. Gibson stated he would like to see documentation from the drycleaner as to who was doing the drycleaning at the facility for approximately two (2) months, from the period of time when the 2112 N. Western location closed and when the existing location at 1815 N. Western began operations in June 2002. It was unanimous consent of the Council for Mr. Hernandez to try to produce additional documentation substantiating the start time for the existing location and the shut down date for the 2112 N Western location. In addition, Mr. Roman will submit the invoices to the Administrator for the 2002 solvent deliveries they do not have.

Upon receipt of the information, the Administrator will recalculate the license late fees and contact Mr. Roman to schedule a time for the late fee appeal to be brought back before the Council for their review. The Council also directed the Administrator to send a letter to Quality Cleaning Fluids, who initially supplied solvent to the unlicensed facility in 2002.

2. Appeal of Expiration of Insurance Policy – Site #0002337 – New-A Cleaners

New-A Cleaners is located at 1211 Maple Avenue in Lisle, IL. Mr. Eriksen reviewed background information with the Council noting the facility had pollution liability insurance coverage from the Fund from December 31, 2003 until January 13, 2007, when the insurance expired for failure to renew the insurance coverage and pay the first semi-annual premium installment. The insured was notified via certified mail, on January 3, 2007, which was received and signed for by Mr. Kwon on January 5, 2007. An initial telephone call was made on January 4, 2007 to Mr. Kwon regarding the renewal of the insurance policy and the 10-day cancellation notice. A subsequent telephone call was made on January 8, 2007 at which time Mr. Kwon was informed that his insurance was to have renewed as of December 31, 2006 and that a 10-day cancellation notice had been sent. He was informed that if the Fund did not receive the renewal application and the $700 premium by January 13, 2007, the insurance would cancel. On January 17, 2007, the renewal application and a check in the amount of $300 were received. Since the check was less than the full amount of the $700 semi-annual premium, it was voided and returned to Mr. Kwon. On January 29, 2007, a check in the amount of $400 was received. Since the insurance application and the $300 check had been returned and the policy cancelled, the $400 check was voided and returned to Mr. Kwon.

Mr. Kwon had an eligible remedial claim which was closed upon cancellation of the insurance coverage. Mr. Kwon addressed the Council stating that during the wintertime, his drycleaning business was down and it was his understanding that he could send in his insurance premium in partial payments. The Council asked several questions of Mr. Kwon.

Mr. Gibson made a motion to deny reinstatement of the insurance coverage for the facility. The motion died for lack of a second.

Mr. Kwon reiterated the Administrator's staff had told him that if he sent in $400 right after he sent in the $300, his coverage would not be cancelled, but due to health issues, he was not able to send the check immediately as requested. Mr. Bredenkamp asked Mr. Kwon if he had financial capabilities to pay the $1,400 at this time; $700 that was due by January 13, 2007 and the additional $700 that will be due July 1, 2007. Mr. Bredenkamp stated that if the Council reinstated the coverage, he wanted to make certain that Mr. Kwon would not be back before the Council later this year appealing the cancellation of his insurance coverage because he could not pay the July 1, 2007 insurance premium. Mr. Kwon indicated that right today he could probably not pay the $1,400, but he felt he could by July 1, 2007.

Mr. Kim made a motion conditionally reinstating the insurance coverage for Mr. Kwon 's drycleaning facility provided that he could pay the $1,400 insurance premium that was due by July 1, 2007. Failure to pay the full $1,400 would result in the non-reinstatement of the insurance coverage. The motion was seconded by Mr. Lewicki and approved by a vote of 6-0.

Mr. Polak recessed the meeting at 11:33 a.m. and reconvened at 11:45 a.m.

OPERATIONAL ISSUES (con't)

D. Review of Policy to Require Removal of Drycleaning Machines From Drop Stores by June 1, 2007:

Mr. Eriksen reviewed with the Council that this issue has been discussed twice by the Council, first at the January 17, 2007 Council meeting and subsequently at the April 24, 2007 Council meeting. The Council's current policy is to require the drycleaner to remove the solvent and drycleaning machine(s) from the facility by January 31st or require the facility to be licensed as an active drycleaning facility. For facilities that ceased drycleaning operations in 2006, drycleaners have until May 31, 2007 to remove the solvent and machine(s) and the Council gave the Administrator authority on a case-by-case basis to extend the removal timeframe by 30 days.

Since the Council's April 24, 2007 decision, two (2) drycleaners have appealed the Council's decision to the Administrative Hearing Officer because they could not complete removal of the machine by May 31st . Additional drycleaners that have been notified they must remove their machine(s) within 30 days have voiced their concerns of having to expend additional monies to remove the inactive drycleaning machine(s) from their facility in a drycleaning market that is already financially depressed. Mr. Eriksen recently completed drive-by inspections of approximately 27 facilities in the past several weeks and found four (4) plants in which the drycleaning machine existed but was not operating. Solvent contained in the machine(s) was minimal. Mr. Polak stated that at the time the Council set the policy to require the drycleaner to dispose of the equipment, the Council did not consider the financial hardship the drycleaner may incur in expending monies to remove the machine. It was not the Council's intent to create a stream of appeals to the Administrative Hearing Officer due to the financial burden of removing the drycleaning machine(s). Mr. Polak agreed the broader parameters as laid out by the Administrator would be reasonable. Mr. Eriksen requested the Council give him discretion in determining, on a case-by-case basis, whether the drycleaning machine(s) is not capable of immediate operation. Examples would be disconnection of power to the machine(s), removal of the boiler system from the plant, etc. If a facility converted to 100% wet cleaning, the Administrator would request notarized certification the facility is only doing wet cleaning. All facilities continue to be subject to a drive-by inspection to ensure the facility is not operating as an active drycleaning facility.

Mr. Gibson suggested the Administrator develop a form that could be used as a check off sheet to document the facility is no longer active. It could incorporate the Administrator's suggestions. Mr. Kwak suggested having them disconnect the pump from the machine and send a picture showing the pump has been disconnected. This can be done by the drycleaner without incurring financial expenditures.

After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kwak, the Council voted 6-0 to give the Administrator discretion in determining, on a case-by-case basis, what should be the documentation necessary to show the drycleaning machine is not capable of immediate operation.

E. Legal Representation:

Mr. Eriksen reviewed with the Council that Mr. McCarthy's fiscal year 2007 contract with the Council for the provision of legal services expires June 30, 2007. His contract was a one (1) year contract for total costs not to exceed $19,999. To date, the Council has paid Mr. McCarthy $12,362.50.

Mr. Eriksen is recommending the Council enter into a contract with Mr. McCarthy to provide legal services to the Council for fiscal year 2008 for a cost not to exceed $19,999. Mr. McCarthy is requesting an increase in his professional services from $145 per hour to $155 per hour and an increase in his travel rate from $85 per hour for travel time to $90 per hour. Mr. Eriksen stated Mr. McCarthy 's rates have not changed since July 1, 2005.

On a motion by Mr. Lewicki and a second by Mr. Polak, the Council, by a vote of 6-0, voted to enter into a contract with Mr. McCarthy for fiscal year 2008 for the provision of legal services to the Fund for an amount not to exceed $19,999.

F. Administrative Hearing Officer Contract

Mr. Eriksen reviewed with the Council that Mr. Iain D. Johnston's fiscal year 2007 contract to provide Administrative Hearing Officer services to the Council expires June 30, 2007. Mr. Johnston 's contracted hourly rate is $265 per hour. His contract was a one (1) year contract for total costs not to exceed $19,999. To date, the Council has paid Mr. Johnston $2,173.00.

The Administrator recommends the Council enter into a new contract with Mr. Johnston at the same hourly rate for fiscal year 2008. The total amount of the contract shall not exceed $19,999.

On a motion by Mr. Bredenkamp and a second by Mr. Kwak, the Council, by a vote of 6-0, voted to enter into a new contract with Mr. Johnston for fiscal year 2008 to provide administrative hearing officer services to the Council for an amount not to exceed $19,999.

G. Failure to Obtain Two (2) “Green” Compliance Program CEUs

Mr. Eriksen reviewed background information on this topic with the Council. The issue for Council consideration is that two (2) facilities did not obtain two (2) “green” CEUs in 2006. How does the Council wish to treat them for failure to meet this compliance program requirement? Mr. Eriksen outlined several options including:

1) Issuance of a 60-day cancellation notice regarding the Council issued pollution liability insurance policy. During the 60-day notice period, the drycleaner must obtain two (2) “green” CEUs. These “green” CEUs would not count towards their 2007 CEU requirements; or

2) The insured is notified in writing that he/she does not meet the “green” requirement and they must meet the requirement in future years or be subject to cancellation of their insurance policy.

Mr. Bredenkamp asked if classes were currently available for the drycleaners to get two (2) CEU courses within the next 60 days. Mr. Eriksen stated several of the compliance programs have scheduled CEU courses for the month of June and it is his assumption they would schedule some in July to assist drycleaners in meeting this requirement. Mr. Polak reiterated the concern if there would be any problem between now and year end for a drycleaner to get a total of four (4) CEUs, two (2) “Green” CEUs for 2006 and two (2) “Green” CEUs for 2007.

After additional discussion by the Council, Mr. Gibson made a motion to follow option #1 as laid out by the Administrator whereby a 60-day cancellation notice is issued on the Council issued pollution liability insurance policy. During the 60-day notice period, the drycleaner must obtain two (2) “green” CEUs. These “green” CEUs would not count towards their 2007 CEU requirements. The motion died for lack of a second.

After additional discussion, Mr. Bredenkamp made a motion similar to option #1 except the drycleaner would have until the end of the year to obtain their two (2) “green” CEUs for 2006 and their two (2) “green” CEUs for 2007. Failure to obtain those by December 31, 2007 would result in issuance of a 60-day cancellation notice and subsequent cancellation of the insurance policy. The motion was seconded by Mr. Lewicki and passed by a vote of 6-0.
Mr. Polak stated he would like to defer discussion of the review of individual compliance program deficiencies per the 2007 audit until later in the meeting as the Administrator's staff was still reviewing the individual files that had been brought to today's meeting by the compliance programs.

APPROVAL OF PROGRAM BILLINGS

Mr. Eriksen noted the following bills were before the Council for their review and approval.

1. Williams & Company Consulting, Inc $45,643.00
Standard flat fee billing for April 2007, licensing, underwriting and claims processing.

2. John J. McCarthy $1,960.00
Professional legal services to the Council for the period of April 18, 2007 through May 31, 2007.

3. Iain D. Johnston, Holland & Knight, LLP $397.50
Professional legal services associated with insurance assignability issues for the month of April 2007.

4. Williams & Company Consulting, Inc $58,429.00
Standard flat fee billing for May 2007, licensing, underwriting, claims processing and site inspections.

In addition, Mr. Eriksen requested authority to pay Mr. Johnston up to the maximum of $4,000 as previously agreed by the Council for the insurance assignability issues. He stated he had just received an invoice from Mr. Johnston that was in error.

On a motion by Mr. Polak and a second by Mr. Bredenkamp, the bills were approved by a vote of 6-0, along with providing the Administrator authority to reimburse Mr. Johnston for review of his insurance assignability project up to a maximum of $4,000.

REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS

Mr. Eriksen reviewed with the Council that as of May 31, 2007, there are 1,208 licenses currently in effect; 151 drycleaning facilities did not renew their 2006 license. The Administrator's staff has been in contact with those drycleaners and there appears to be approximately 50 drycleaners who are in operation who have not renewed and the Administrator will continue working to bring them into compliance. There are 712 facilities that currently have Fund insurance coverage. Open remedial claims total 564 with outstanding reserves for estimated cleanup costs of $41.6 million.

The Fund balance as of May 31, 2007 is $4,949,682.

OTHER ISSUES AS PRESENTED

Mr. Eriksen noted the next meeting is the Council's annual Strategic Planning meeting that is currently scheduled for July 25, 2007 in Peoria , IL. Mr. Polak stated he has a conflict with that date. After additional discussion by the Council, July 31, 2007 was established as the Strategic Planning meeting in Peoria, IL. The meeting would start at approximately 11:00 a.m. and would be the same format as prior meetings. If the Council had any specific topics they wish to have discussed, they are to present that information to the Administrator as soon as possible.

Mr. Eriksen noted the subsequent meeting is scheduled for September 12, 2007. The Council members indicated they are available on that date.

PUBLIC COMMENT PERIOD

Mr. Wok Hu of Signature Cleaners addressed the Council stating he wanted to have them hear his appeal for cancellation of his insurance coverage. He stated he had talked via telephone to Mr. Eriksen several times and he had a problem with his landlord. The landlord needed the insurance coverage reinstated immediately. Mr. Eriksen stated he was not immediately familiar with the facts surrounding the Signature Cleaners appeal. Mr. Polak requested Mr. Eriksen contact staff. Mr. Eriksen did and indicated Mr. Hu had not responded in writing that he wished to appeal the Administrator's decision to cancel his insurance policy to the Council. In addition, Mr. Eriksen noted it was explained to Mr. Hu that he could reapply for insurance coverage, pay the $1,400 annual insurance premium and if he was successful in his appeal, the $1,400 insurance premium would be returned to him. Mr. Hu simply sent in $700 without the renewal application or any other documentation. The $700 was returned to him and he was instructed to follow the procedures as outlined by the Council.
Mr. Polak recessed the meeting at 1:22 p.m. and reconvened at 1:34 p.m.

REVIEW OF INDIVIDUAL COMPLIANCE PROGRAM DEFICIENCIES PER THE FEBRUARY 2007 AUDIT

Mr. Polak addressed the Council stating the Administrator's staff is completing the review of deficiencies for all six (6) of the compliance programs but is not in a position to fully evaluate the results for the Council to make a decision and would need approximately another 30 days to determine which program were reasonably well in compliance. He noted some programs have repeatedly fallen short in providing the necessary information. Some, as a matter of fact, were missing a year's worth of documentation. He stated it would be his preference to wait and finish the review process until the Strategic Planning meeting, at which time the Administrator would compile the results of the follow-up audit. The Administrator stated he would issue new report tables for each of the compliance programs based on this follow-up audit.

There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, by a vote of 6-0, the Council meeting adjourned at 1:40 p.m.

Back to Top