October 12, 2011 Meeting Minutes

  MINUTES
 

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

WYNDHAM HOTEL LISLE/CHICAGO
LISLE, ILLINOIS

OCTOBER 12, 2011

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:00 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
Young B. Kim
Paul Kwak
Jerry Lewicki
John Polak
(via telephonic conference)

Also present were:
H. Patrick Eriksen, Program Administrator's Office
John McCarthy, Program Counsel
Yong Kim, Program Administrator's Office

PRELIMINARY BUSINESS

The minutes from the September 1, 2011 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the minutes were approved by a vote of 5-0.

  APPEAL OF CIVIL PENALTY FOR DELIVERING SOLVENT TO AN UNLICENSED DRYCLEANER
  A.

H.H. Coleman Company, St. Charles, MO:

   

Mr. Eriksen provided background information to the Council regarding this appeal noting that H.H. Coleman Company, headquartered in St. Charles, MO was assessed civil penalties totaling $10,500 on March 8, 2011 by the Administrator for delivering solvent to unlicensed drycleaners in January and February 2010, prior to the drycleaning facilities being licensed. Enclosed in the Council packet was a copy of the assessment of the civil penalties and the supporting documentation. Two (2) of the civil penalties involved deliveries to a single drycleaner and the third penalty involved delivery to a different drycleaner. H.H. Coleman appealed the civil penalties on June 22, 2011 and Mr. Mark Brockling, president of H.H. Coleman was in attendance to address the civil penalty assessments.

Mr. Brockling addressed the civil penalty involving Pride Cleaners. He noted that 30 to 35 deliveries are loaded on each truck that leaves their plant and an individual truck will make a run to the Springfield/Decatur area each week. He noted the Administrator had made an assumption that the invoice date is the delivery date. He stated that is not correct. The invoice date would reflect the date the truck was loaded and the delivery date is typically a different date. H.H. Coleman does not maintain a delivery log and does not issue bill of ladings for their deliveries. Mr. Bredenkamp noted that he handled his invoicing the same way that Mr. Brockling did and states it is not unusual to load a truck the night before and send it out on deliveries the next day.

After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Kim, the Council voted 4-0-1, with Mr. Bredenkamp abstaining, to waive the civil penalty assessment to H.H. Coleman regarding the January 2011 solvent delivery to Pride Cleaners.

Mr. Brockling addressed the Council regarding the two (2) civil penalties assessed for deliveries to Jim’s Formal Wear. He stated Jim’s Formal Wear does not have a “drop off” counter and they do not operate a retail drycleaning facility. They do drycleaning for employees and they do fire restoration work. Mr. Eriksen commented the statute simply states that “drycleaners doing drycleaning for the general public must be licensed” and Jim’s Formal Wear meets that criteria. Having a retail counter or a retail facility is not part of the licensing requirement.

After additional discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kwak, the Council voted 4-0-1, with Mr. Bredenkamp abstaining, to deny waiver of the $5,500 in civil penalties assessed to H.H. Coleman for two (2) deliveries to Jim’s Formal Wear prior to them being licensed in 2010.

Mr. Eriksen informed Mr. Brockling he would receive written confirmation of the Council’s denial of his appeal request and he can appeal the Council’s decision to an Administrative Law Judge..

  APPEAL OF LICENSE LATE PAYMENT FEES
  A.

Site #0001376 – Mr. Snappy Cleaners, 1925 Roosevelt Rd, Broadview, IL

   

Mr. Eriksen reviewed background information with the Council noting Mr. Min W Lee is the owner/operator of Mr. Snappy Cleaners located at 1925 Roosevelt Rd, in Broadview, IL. Mr. Lee has operated the drycleaning facility since 2000 and the facility has been licensed through 2010.Mr. Lee paid his 2011 license fee on June 7, 2011 and was assessed late fees of $785. The Administrator received via email on June 14, 2011, a letter asking for the late fees to be waived since Mr. Lee’s financial situation has been “rough.”

The Administrator responded he was unable to waive the late fees but Mr. Lee could appeal the late fees to the Council if he appealed within 60 days of the date of the denial letter. Mr. Lee did not appeal to the Council within the 60-day timeframe as set forth in the Council’s administrative rules.

Mr. Lee was notified on August 19, 2011 the appeal deadline to deny waiver of the late payment penalty fees had expired and he needed to submit the late payment penalty fees in the amount of $785 by October 19, 2011 or else have his pollution liability insurance coverage cancelled. Subsequent to the August 19, 2011 letter, the Administrator received several letters from Mr. Lee requesting the ability to appeal the late fees to the Council. Mr. Eriksen noted Mr. Lee was late in paying his license fees for 2004, 2007, 2008, 2009 and 2010. In October 2010, the Council reduced Mr. Lee’s late payment fees from $515 to $100.

Mr. Eriksen stated there are two (2) issues for the Council to discuss. The first is does the Council wish to waive the 60-day notification period for appealing the Administrator’s decision to deny waiver of the license late payment fees and if the Council does grant such waiver, does the Council wish to waive or reduce the $785 in license late payment fees for 2011?

Mr. Lee addressed the Council via telephonic conference noting his family had experienced various personal problems during the year, including his father-in-law falling down a flight of stairs and subsequently passing away from his injuries and poor business conditions. Due to these issues, he was not able to timely pay the license fee. Mr. Lee stated there were too many things going on at once in his life in order to address them all at one time.

Mr. Polak asked the Council if they wished to waive the 60-day notice period for appealing the Administrator’s denial of waiver of the license late payment fees. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to waive the 60-day notice period.

Mr. Polak commented the Council needed to address whether they wish to waive or reduce the 2011 license late payment fee. Mr. Bredenkamp noted the Council has consistently provided a one-time waiver or reduction but has typically not waived or reduced the late fees for a second or subsequent late payment. Mr. Polak stated he felt sorry for Mr. Lee but to reduce the fee a second time simply based on the business environment that everyone is finding difficult at this time would be unfair to the other businesses that timely pay their license fee.

After additional discussion, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to deny waiver of the license late payment fees.

  OPERATIONAL ISSUES
  A.

Administrative Rule Amendment:

   

Mr. Eriksen reviewed with the Council proposed administrative rule amendments to implement HB1953 and HB2777 that were passed by the Illinois legislature in May 2011 and signed into law on August 15, 2011 by Governor Quinn.

The amendments proposed incorporate statutory revisions to civil penalties for late payment of license fees, required financial assurance for environmental liability coverage for active drycleaning facilities who have received remedial program benefits, and remedial claim eligibility for drycleaners who file for bankruptcy protection.

Mr. Eriksen reviewed each of the changes in detail with the Council and noted that they had also been reviewed by Mr. McCarthy.

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the proposed rule amendments were adopted by the Council by a vote of 5-0.
  B. Release of Funding for Prioritized Claim Payments:
   

The Council at their September 1, 2011 Council meeting released for full funding all prioritized claims with a priority ranking score ranging from 90 to 110. This enabled the Council to immediately reimburse pending claim payments of $53,941.16 for remedial action work that had previously been performed on these prioritized sites.

Currently, there are three (3) claims in which the claimant has moved ahead and done remedial action at the drycleaning facility without release of monies by the Council. The prioritized payments on the three (3) claims totaled $22,239.84. The Administrator is requesting the Council approve immediate funding of this $22,239.84, as payment of these approved claim reimbursement requests helps further reduce the Fund’s exposure to future loan/fund sweeps.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council voted 5-0 to release funding of the three (3) prioritized claim payments totaling $22,239.84.

  C. Fund Solvency-Financial Projections Reflecting 10 Year Extension of Fund Program Sunset Date:
   

The Council requested at their September 1, 2011 Strategic Planning meeting that the Administrator prepare a set of financial projections based on extending the program’s sunset date by ten (10) years. Those projections were included in the Council packet. In reviewing the projections, Mr. Eriksen noted that assuming the number of licensed drycleaners remain constant at 1,050 and the average number of insureds remains static, the Fund would be looking at a potential surplus as of January 1, 2030 of $15.7 million, assuming that the anticipated cleanup costs on known claims remains constant. Each license fee category could be reduced by approximately $450, effective January 1, 2013, if the Fund program was extended by ten (10) years.

Mr. Polak wondered if it would be possible to create an index based on the five (5) or ten (10) year projections, which would result in a methodical way to calculate the license fee for each year with a focus on operating towards a zero based budget. Mr. Eriksen noted that all proposed modifications to the license fees, whether they are an increase or a decrease, would need to be reviewed with the industry and approved by JCAR. Mr. Polak stated the Council should frame discussion with the industry and with the legislature looking at options of either extending the program by five (5) or ten (10) years. It becomes an issue of whether the drycleaning industry would rather pay less in the current annual license fee and have the program continue longer or have a higher up front cost and have the program terminated at the current sunset date of January 1, 2020. Mr. Kwak stated a big plus for extending the program ten (10) years is a potential reduction in the annual license fee, This would reduce some of the financial burden on drycleaners who have not received cleanup benefits from the Fund. Mr. Bredenkamp believes the Council should only discuss the ten (10) year extension projections based on the fact that if there is any deviation, i.e., shrinkage of the licensed drycleaner base below the 1,050 projected by the Administrator, the Fund could be looking at a potential shortfall at the end of the five (5) year extension.

After discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to look at beginning discussions with the drycleaning industry to discuss extending the sunset date by ten (10) years.

  D. Update on Illinois Department of Revenue Gen-Tax System:
   

Mr.  Eriksen provided an update to the Council on the Illinois Department of Revenue’s (IDOR) progress in revamping the identification system for drycleaners as well as for drycleaning solvent suppliers. IDOR has stopped using the Illinois Business Tax Number to track solvent suppliers in their database and has established two (2) new numbers, an account ID number and a license number, for each solvent supplier. The account ID is an 8-digit number and the license number has two (2) alpha characters of DS (designating the entity as a solvent distributor) followed by a 5-digit number. The same methodology was applied to licensed drycleaners in which the two (2) alpha characters are DC, which designates the entity as a drycleaner. Mr. Eriksen stressed the IDOR account number and the DC number issued by IDOR are not the license number the Trust Fund issues and prints on the annual license. The Administrator expects to receive the new DS-3 forms from IDOR within the next week. The DS-3 forms will be preprinted with the drycleaner name, address and the IDOR account and license number.

  APPROVAL OF PROGRAM BILLINGS
 

Mr. Eriksen noted the following bills were before the Council for the Council's review and action.

  1. Williams & Company Consulting, Inc   $49,737.00  
    Standard flat fee billing for September 2011, licensing, underwriting, claims processing and site inspections.  
  2. John J. McCarthy  $3,575.00  
    Professional legal services to the Council for the period of August 13, 2011 through October 3, 2011.  
 

On a motion by Mr. Kim and a second by Mr. Lewicki, the Council approved the bills as presented by a vote of 5-0.

  REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
 

Mr. Eriksen reviewed with the Council the August 31, 2011 monthly activity report noting there are currently 1,084 licensed drycleaners and 534 drycleaning facilities participating in the Fund’s pollution liability insurance policy. Open remedial claims total 262, with outstanding reserves estimated at $29.3 million.

The August 31, 2011 financial statements reflect a Fund balance of $2,119,467; year-to-date remedial payments for fiscal year 2012 total $468,075.

The July monthly activity report, financials and statements were enclosed for reference purposes.

  OTHER ISSUES AS PRESENTED
 

The next Council meeting is tentatively scheduled for November 30, 2011. There was additional discussion by the Council members regarding alternative dates. Mr. Eriksen stated he would poll all Council members and confirm with them in the near future the next meeting date.

Enclosed in the Council packet was a copy of Technology News & Trends issued by the US Environmental Protection Agency (EPA). Featured on page 3 and 4 of the article was a write-up on the gravity flow process as an alternative to pressurized injections of chem-ox. The article was authored by Dr. So and Greg Dunn of the Illinois EPA.

Mr. Eriksen reported Mr. McCarthy and he would be representing the Council in the appeal of three (3) solvent distributors of their civil penalties for delivering solvent to unlicensed drycleaners before the Administrative Law Judge.

  PUBLIC COMMENT PERIOD
 

Mr. Polak asked if there were any comments from the public. There being none, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to adjourn at 11:15 a.m.

   
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