April 23, 2014 Meeting Minutes

  MINUTES
 

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

CHICAGO MARRIOTT NAPERVILLE
NAPERVILLE, ILLINOIS

APRIL 23, 2014

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:03 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
Sung Do Kang
Daniel Kim
Paul Kwak
Jerry Lewicki
John Polak (via telephonic conference)

Also present were:

H. Patrick Eriksen, Program Administrator’s Office
John J. McCarthy, Program Counsel
Dr. Juho So, Program Administrator’s Office
Yong Kim, Program Administrator’s Office

 

PRELIMINARY BUSINESS

The minutes from the March 12, 2014 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the minutes by a vote of 6-0.

  APPEAL OFCANCELLATION OF INSURANCE COVERAGE
  A.

Lion II Cleaners, Chicago, IL; Site #0001914:

   

Mr. Eriksen reviewed background information with the Council noting the drycleaning facility has been insured with the Fund since June 29, 2000 and has an open remedial claim with the Fund. The current owner is DWL Corporation, which assumed ownership of the facility on December 12, 2012. Lucia Chiao is the designated contact person for this corporation and drycleaning facility.

The semi-annual insurance premium installment notice was sent on November 4, 2013, stating the premium was due by December 28, 2013. A 30 day cancellation notice for non-payment of premium was sent on December 30, 2013 via certified mail. A subsequent telephone call was made on January 8, 2014, reminding the drycleaner the installment payment was due on January 29, 2014 or insurance coverage would cancel. The drycleaner failed to mail the installment premium to the Fund by January 29, 2014 and the coverage cancelled.

On February 3, 2014, the Fund received a check for the $550 installment premium. The check was dated January 30, 2014 and the envelope was postmarked February 1, 2014. On February 26, 2014, Ms. Chiao sent a letter to the Administrator requesting the insurance policy be reinstated. The Administrator denied the appeal on March 10, 2014 and Ms. Chiao appealed the Administrator’s decision to the Council on March 20, 2014.

Ms. Chiao addressed the Council acknowledging she was late making the installment payment as she had been out of the country during the period of time when the installment notice was received at the drycleaning facility. Mr. Polak asked the Administrator if Ms. Chiao had been timely with her other payments and he replied that she had.

After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 6-0 to reinstate the insurance coverage back to January 29, 2014 without a lapse in coverage and reinstate the remedial program benefits.
  OPERATIONAL ISSUES
  A.

Review of Semi-Annual Projections:

   

Mr. Eriksen reviewed with the Council the updated set of projections included in the Council packet. He noted the only changes in the projections as compared to those at the August 23, 2013 Strategic Planning meeting were:

  • A $283,500 reduction in license fee revenue due to continuing downward trend of licenses moving to lower fee categories. Approximately 70 additional drycleaners moved to the lowest license fee category for calendar year 2014.

 

  • $40,000 reduction in solvent taxes based on actual data for calendar year 2013 and a $20,000 increase in administrative expenses associated with projected increased legal fees. Increased legal fees are directly related to the administrative hearings involving civil penalties assessed against drycleaning solvent distributors.

The net financial impact of these changes is a projected $345,000 increase in the Fund deficit as of the January 1, 2020 sunset date. In addition, he noted 844 drycleaning licenses have been issued, with 27 pending review, for a total of 871.

The Council conducted a general discussion regarding the estimated cost to clean up the remaining 203 open claims which is approximately $26 million. It was noted that the introduction of the new TACO regulations effective July 15, 2013, has a negative impact on the potential future costs. The Administrator has been factoring these costs into the updated projections over the past 18-24 months as we were aware the regulations were in process. Dr. So gave a detailed analysis of how the air regulations impacted the TACO calculations and noted that these regulations are applicable not only to drycleaning sites but to all sites that have VOCs.
  B. Update on Drycleaner Fund Task Force:
   

Mr. Eriksen noted he is not certain when the final appointments to the Drycleaner Task Force will be made. Based upon the legislature’s busy schedule, it would be his best estimate that it would occur sometime after the conclusion of this spring’s legislative session.

He stated once he had more information, he would keep the Council up to date on the status of the task force appointments.
  C. Legal Representation:
   

Mr. Eriksen noted that Mr. McCarthy’s fiscal year 2014 contract with the Council for the provision of legal services expires June 30, 2014. His contract was a one (1) year contract for total costs not to exceed $29,999. To date, the Council has paid Mr. McCarthy $25,512.87, which includes the invoice in the current Council packet.

Mr. McCarthy currently charges the Fund $170 per hour for professional services and $100 per hour for travel time and these rates have not changed for the past three (3) years. Mr. McCarthy is requesting an increase in his rates to $190 per hour for professional services and $110 per hour for travel time. Mr. Eriksen noted that Mr. McCarthy’s expertise and understanding of issues associated with the Fund have been very beneficial and that the rates he is requesting are substantially below those charged by attorneys in the Chicago area and in the larger population centers such as Springfield.

A motion was made by Mr. Lewicki and seconded by Mr. Bredenkamp to approve the contract as outlined by the Administrator.

Mr. Kang commented that he had met with Mr. McCarty and Mr. Eriksen last month to get a better understanding of the procedural issues associated with the Council meetings. He stated he still did not have a clear understanding and had asked his personal attorney to review some of the information and had just received a response that morning from his attorney on the questions he had raised and had not had a chance to review them and would prefer the Council not take action on Mr. McCarthy’s contract until he has had a chance to review and understand his attorney’s responses regarding Council procedural matters.  Mr. Polak stated he did not understand the relevance of Mr. Kang’s comment as it relates to Mr. McCarthy’s contract. A general discussion of the contract ensued and Mr. Kang was asked if he was against the contract. Mr. Kang replied that “no”, he was not against it but wanted to be clear on the understanding. Mr. Kang was then asked if he had a back-up plan for legal services or if he was suggesting someone else provide them as Mr. McCarthy’s contract expires at the end of June. Mr. Kang stated he did not but just felt he needed to have a clearer understanding of this issue before the Council voted on it.

After additional discussion by the Council, on a roll call vote, the Council voted 5-1 to approve the new contract as outlined by the Administrator for Mr. McCarthy with Mr. Bredenkamp voting yes, Mr. Daniel Kim voting yes, Mr. Lewicki voting yes, Mr. Kwak voting yes, Mr. Polak voting yes, Mr. Kang voting no.

  D. Administrative Law Judge Contract:
   

Mr. Eriksen reviewed that Mr. Robert E. Wagner’s fiscal 2014 contract to provide Administrative Law Judge services to the Council expires June 30, 2014. His current contracted hourly rate is $300 and his contract was a one (1) year contract with total costs not to exceed $29,999. To date the Council has paid Mr. Wagner $8,780.91, which includes the invoice in the current Council packet. Mr. Eriksen commented that he and Mr. McCarthy are pleased with Mr. Wagner’s knowledge of the Trust Fund Act, regulations and insight into the issues presented at the administrative hearings. It is our recommendation to the Council to enter into a new contract with Mr. Wagner at the same hourly rate of $300 for fiscal year 2015. The total amount of the contract shall not exceed $29,999.

Mr. McCarthy noted the amount spent to date for Mr. Wagner was associated solely with the H.H. Coleman appeals of civil penalties assessed for selling solvent to unlicensed drycleaners in the state.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the fiscal year 2015 contract for Mr. Wagner by a vote of 6-0.

  APPROVAL OF PROGRAM BILLINGS
 

Mr. Eriksen noted there were three (3) bills before the Council for their review and approval. They were as follows:

 

1. Williams & Company Consulting, Inc         $72,792.00
Standard flat fee billing for March 2014, licensing, underwriting, claims processing and site inspections.

 

2. John J. McCarthy                                      $3,856.49
Professional legal services to the Council for the period of March 4, 2014 through April 11, 2014.

 

3. Hinshaw & Culbertson, LLP                                     $4,924.42
Professional legal services to the Council for the period of March 2014 through December 18, 2014.

 

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the bills as presented by a vote of 6-0.

  REVIEW OF MONTHLY ACTIVITY REPORT AND FINANCIAL STATEMENTS
 

Mr. Eriksen reviewed the monthly activity reports for March 31, 2014 noting 804 licenses were in effect at the end of the month. Open claims totaled 204, with estimated reserves of $23.9 million.

The March 31, 2014 financial statements reflect a fund balance of $2,419,487; year-to-date claim payments total $1,817,258. He noted the legal expenses exceed the initial projected costs for fiscal year 2014. This is due to the additional costs related to the Administrative Law Judge hearings involving solvent distributor civil penalties.
  CLAIM PAYMENTS IN EXCESS OF $75,000
 

Mr. Eriksen noted there were eight (8) claim payment requests for Council review and approval. One (1) will not be heard inasmuch as the consultant contacted the Administrator’s office as the consultant had done a site visit and found some of the monitoring wells had been destroyed and the scope of work needed to be modified. .

 

A.

Martin Luther Cleaners, Chicago, IL; Claim #50083, Site #0001587:

   

Dr. So reviewed background information noting active remediation is required due to the high level of contamination in the soil. He noted the depth of contamination exceeding the Csat limit is 20 ft-36 ft below ground surface. Due to the degree and extent of contamination combined with the new indoor air regulations, immediate remedial action is likely required. IEPA has been informed by the consultant that active remediation will be conducted at the facility. The proposed remedial action plan is the construction of chemical oxidation retention ponds combined with limited excavation and soil mixing. The Administrator is asking for budget approval of $214,650 and waiver of the two (2) bid requirement for environmental consulting services. It is anticipated at this time the cleanup can be completed for less than $300,000.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kang, the Council approved the budget request of $214,650 and waiver of the two (2) bid requirement by a vote of 6-0.
 

B.

Cicero Cleaners, Cicero, IL; Claim #50516, Site #0002143:

   

Dr. So reviewed background information noting active remediation is required at the facility due to the high level of contamination (i.e. up to 6,700 ppm). The area of contamination exceeding the Csat limit ranges from 1,400 - 1,800 sq. ft . The depth of the contamination appears to be isolated at 12 ft. below ground surface.
 
The environmental consultant is recommending the construction of Chemical Oxidant Retention Ponds (CORPs) combined with limited soil excavation and soil mixing. Projected total cost is $196,600 and the Administrator is also requesting waiver of the two (2) bid requirement for environmental consulting services. It is not anticipated at this time that the total cleanup costs will exceed the $300,000 remedial benefit cap.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kang, the Council approved the budget request of $196,600 and waiver of the two (2) bid requirement by a vote of 6-0.
  C.

Scot Cleaners, Glenview, IL; Claim #50618, Site #0001514:

   

Dr. So reviewed background information noting remedial activities had been conducted at the site involving in-situ chemical oxidation and limited soil excavation. The soil contamination has been addressed and now the proposal is to reduce the PCE in groundwater to below concentrations protective of the surface water quality standards for the adjacent Chicago River.  The estimated cost is projected to be $149,644.97, which places it at the remedial cap benefit of $300,000. Based on discussions with the consultant, we believe at this time an NFR can be obtained without exceeding the $300,000 remedial cap.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the budget request of $149,644.97 by a vote of 6-0.

  D. Sanders Cleaners, Northbrook, IL; Claim #50059, Site #0001649:
   

Dr. So reviewed background information noting that soil contamination exceeds the applicable Csat limit for the site. Permanganate injections occurred in 2006 but the remedial goals were not achieved and concentrations of up to 6,300 ppm of PCE remained near the source area. Since 2007 no significant remedial activity has occurred at the site. The new consultant has done some additional sampling and believes the cleanup can be completed for a projected cost of $122,000, which includes excavation of the contaminated soil and implementation of a vapor mitigation system. In addition, the Administrator is requesting the Council waive the two (2) bid requirement as the current consultant has extensive knowledge of the site. It is not anticipated at this time that the cleanup will exceed the $300,000 remedial cap.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kang, the Council approved the budget request of $122,000 and waiver of the two (2) bid requirement for environmental consulting services by a vote of 6-0.
  E. Inverness Cleaners, Palatine, IL; Claim #50498, Site #00018257:
   

Dr. So reviewed background information noting that remedial activities involving chemical oxidation have been conducted at the facility since July 2011. Although there has been significant reduction in the concentration of the contamination, vinyl chloride remains above the acceptable levels. The consultant is proposing additional BIOX injection events to reduce the vinyl chloride to an acceptable level. Total projected cost is $42,500.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the budget request of $42,500 by a vote of 6-0.

  F. Concord Custom Cleaners #082, Springfield, IL Claim #50631, Site #0001122:
   

Dr. So reviewed background information noting BIOX injections have been conducted at the facility but additional injections are necessary to reduce the levels of contamination at the facility. At this time, it is projected that $46,000 in additional injection costs should hopefully reduce the contamination to a level to obtain an NFR letter.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kang, the Council approved the requested budget of $46,000 by a vote of 6-0.
  G. Village Cleaners, Wheaton, IL; Claim #50432, Site #0002245:
   

Dr. So reviewed background information noting additional remediation is necessary at this facility to reduce the contamination to an acceptable level. Previous remedial activities have included the injection of chemical oxidant. The consultant is proposing an additional BIOX injection event and post injection soil and groundwater sampling for a cost not to exceed $81,500. Dr. So noted the requested budget amount would put the claim close to the $300,000 benefit cap but at this time the Administrator believes the cleanup can be completed for less than $300,000.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the budget request of $81,500 by a vote of 6-0.

  OTHER ISSUES AS PRESENTED
 

Mr. Eriksen noted the next Council meeting is tentatively scheduled for Wednesday, June 18, 2014. The Council members in attendance indicated that at this time the meeting date was still acceptable with their schedules.

Mr. Eriksen reported that a draft audit report had been received and the final report should be forthcoming in the near future.

Mr. Kang addressed the Council noting that at the last October and December meetings he was not prepared to discuss a number of issues with the Council based on his lack of understanding of Council procedural issues. He commented that he discussed these issues with his attorney and has just received a response from his attorney and hopes to review that response prior to the next meeting and share that response with the other Council members.

  PUBLIC COMMENT PERIOD
 

Mr. David Kay, an environmental consultant, stated he would like the Council to consider a situation where when the drycleaner has gone bankrupt, can the landlord pay the remedial deductible and step into the “drycleaner’s” shoes, cleanup the facility and be reimbursed by monies from the Fund? Mr. Eriksen and Mr. McCarthy stated that they believe the Council has addressed this issue previously but they would do further research.

  CLOSED SESSION
 

Mr. Polak asked if there were any issues for Closed Session. Mr. Eriksen reported there were none.

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