January 18, 2012 Meeting Minutes

  MINUTES
 

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

WYNDHAM HOTEL LISLE/CHICAGO
LISLE, ILLINOIS

JANUARY 18, 2012

John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:13 a.m. A quorum was present. Roll call was taken with the following members present:

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

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

Yong Kim, Program Administrator's Office

PRELIMINARY BUSINESS

The minutes from the November 30, 2011 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Kim, the minutes were approved by a vote of 6-0.

Due to time constraints for one of the Council members, Mr. Polak stated that the agenda order would be changed, with the next topic being Approval of Program Billings.

  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  $54,516.00  
    Standard flat fee billing for November 2011, licensing, underwriting, claims processing and site inspections.  
  2. John J. McCarthy  $2,499.80  
    Professional legal services to the Council for the period of November 18, 2011 through January 6, 2012.  
  3. Johnston, Greene, LLC  $1,060.50  
    Professional legal services provided by Iain Johnston as administrative law judge for November 2011.  
  4. Williams & Company Consulting, Inc  $12,036.00  
    Standard flat fee billing for December 1-7, 2011, licensing, underwriting, claims processing and site inspections.  
  5. Williams & Company Consulting, Inc  $50,117.00  
    Standard flat fee billing for December 8-31, 2011, licensing, underwriting, claims processing and site inspections.  
  6. Johnston, Greene, LLC  $1,060.50  
    Professional legal services provided by Iain Johnston as administrative law judge for December 2011.  
 

Mr. Eriksen noted that the Williams & Company and the Johnston, Greene, LLC bills for November 2011 were verbally approved by the Council members on December 15, 2011 and have already been paid.

Regarding the Williams & Company bills for December, Mr. Eriksen noted that the contract billing terms end as of December 7th of each year and the billing for December 8th through the 31st reflects the rate adjustment per Williams & Company’s contract.

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 ACTIVITY REPORT AND FINANCIAL STATEMENTS
 

Mr. Eriksen noted for calendar year 2011, there were 1,101 licensed drycleaners and 524 insured facilities. As of January 16, 2012, there are 442 licensed facilities compared to 505 licensed facilities a year ago. Thirty-six (36) plants that were licensed in 2011 have confirmed they are closed and will not need a 2012 license.

Financial statements as of December 31, 2011, reflect a Fund balance of $2,164,832; year-to-date claim payments total $1,371,432.

  CLAIM PAYMENTS IN EXCESS OF $75,000  
 

Mr. Eriksen noted there were five (5) claim payment requests in excess of $75,000 requiring Council review and approval.

 
  A.

Tuggles Orchid Cleaners, Belevidere, IL; Claim #50224;
Site #2157:

 
   

Mr. Eriksen reviewed background information on the facility with the Council, noting this is a facility that is close to getting a No Further Remediation (NFR) letter. Tier 3 modeling was used to substantiate that the existing contamination would not migrate offsite and create environmental issues. The consultant has indicated that an NFR should be able to be obtained through a limited groundwater ordinance at the facility. Estimated cost, including contingency costs for drafting and obtaining the ordinance is $6,560.

On a motion by Mr. Lewicki and a second by Mr. Kwon, the Council approved the $6,560 request by a vote of 6-0.

 
  B.

Village Cleaners, Wheaton, IL; Claim #50432; Site #0002245:

 
   

The Administrator is requesting budget approval for $150,000 in remedial action costs to implement an in-situ chemical oxidation and enhanced biodegradation process at the facility. The remedial action method is primarily to address the contaminated soil as the city has an existing groundwater ordinance, which eliminates the groundwater pathway. The Administrator is requesting waiver of the two (2) bid process for consulting services as the consultant has extensive knowledge of the site through the site investigation process.

On a motion by Mr. Lewicki and a second by Mr. Kim, the Council voted 6-0 to approve full-scale remedial action costs in the amount of $150,000 and waive the two (2) bid requirement for the environmental consultant.

 
  C. Rockland Cleaners, Libertyville, IL; Claim #50431;
Site #0001920:
 
   

The Administrator is requesting budget approval for $147,788 in remedial action costs. The proposed remedial action method is in-situ soil blending combined with chemical oxidation treatments. This technology will address the on-site and off-site soil contamination at the facility.

The Administrator is also requesting the Council waive the two (2) bid requirement for the environmental consulting work. The current consultant has conducted extensive site investigation at the site and is familiar with the site specific conditions, which are important to the successful implementation of the remedial activities.

On a motion by Mr. Lewicki and a second by Mr. Kwak, the Council approved the $147,788 in remedial action costs and waived the two (2) bid requirement for the environmental consultant by a vote of 6-0..

 
  D. The Normal Laundry & Drycleaners, Decatur, IL; Claim #50007; Site #0001585:  
   

The Administrator is requesting budget approval for $15,000 for additional site characterization activities at the drycleaning facility.

The drycleaning facility has been released for full funding but site investigation activities have not taken place at the facility since 2003. The proposed scope of work is to install eight (8) soil borings and sample the existing monitoring wells for the purpose of confirming the current levels of soil and groundwater contamination.

On a motion by Mr. Lewicki and a second by Mr. Kwon, the Council approved the budget request of $15,000 by a vote of 6-0.

 
  E.

Signature Cleaners, Chicago, IL; Claim #50777; Site #0002301:

 
   

The Administrator is requesting Council approval to reimburse the environmental consultant for costs of $1,246.25 for monitoring well abandonment without the claimant’s signature on the reimbursement request. Mr. Eriksen noted the only remaining activities to be completed at the facility were well abandonment activities. The claimant has refused to sign the reimbursement package, citing the work costs too much. The second time the claimant was presented with the reimbursement request, he stated he did not believe the environmental consultant “did something there.” The Administrator’s staff has verified the wells have been properly abandoned and it was his recommendation the Council approve reimbursement of the well abandonment costs to the consultant without the claimant’s signature. This is the first time such a request had come before the Council.

After additional discussion by the Council members, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 6-0 to reimburse the well abandonment cost of $1,246.25 without the claimant’s written approval/request.

 
  OPERATIONAL ISSUES
  C.

Audit of Compliance Programs:

   

The audit of the five (5) compliance programs is tentatively scheduled for Wednesday, April 4, 2012, as part of the Council’s regularly scheduled meeting. Included in the Council packet was a document outlining the criteria and procedures for auditing the compliance programs. This is the same document used for the February 2010 audit except for the requirement that all files selected for audit must contain paper copies of all required documents.  The compliance programs would be notified by March 1, 2012 of the files selected for audit. Approximately 15% of the compliance programs’ files would be requested to be provided at the April 4th meeting with approximately 10% of the total files actually reviewed that day.

Mr. Polak stated the procedures were acceptable with him as they would be applied consistently across all compliance programs and were approved by a consensus of the Council.

  D. NDI Inspection Form:
   

In February 2004, the Council mandated all compliance programs use the Council’s site inspection form for all compliance program inspections. This requirement was to ensure compliance programs were reviewing and capturing all data for each facility as required by the Council.

On November 15, 2011, NDI emailed to the Administrator, the site inspection form they are using for their compliance program site inspections. The Administrator’s memo outlined the differences between the NDI inspection form currently in use and the Council’s form mandated in February 2004. Mr. Eriksen reviewed the differences in detail with the Council. Initial discussion by the Council is that it should include all the information the Council requires and if it does not, it needs to. Ms. Heidi Kang, representing NDI, stated the paper copy form was converted to a computer generated form to save paper. Mr. Polak asked why the form was not identical and did not have the same look as the Council’s mandated form? Ms. Kang replied that the NDI form was more organized and easier to read for the inspectors and the drycleaners. In addition, she stated she was concerned the form provided by the Administrator was copywrited and could not be reproduced. Mr. Eriksen assured her the form was not copywrited and it was initially provided to them in a Microsoft “Word” document format.

Mr. Lewicki’s initial impression was that it was okay for NDI to have their own computerized form provided it included all the information on the Council form. Mr. Polak raised the concern that during the compliance program audits, does the Council want to be looking at different forms with different formats. Mr. Kwon concurred with his comments. Mr. Polak presented an analogy using the IRS, that although you may report the same information to them regarding your taxable income and expenses, they mandate that it be on their forms so the format is the same.

After additional discussion by the Council, on a motion by Mr. Kwon and a second by Mr. Lewicki, the Council voted 6-0 to defer action on approving or rejecting the NDI site inspection form until after the April 4, 2012 compliance audit to determine if there are other issues that need to be addressed at that time.

  E. Review of Requirements to Document Conversion From an Active Drycleaning Facility to a Drop Store:
   

In January 2007, the Council adopted a policy stating a facility that is active and is converting to a dry/drop store must be a drop store by December 31 in order to not be subject to the following year’s license requirements.  In addition, the drycleaning machine(s) must be rendered inoperable and must have all solvent removed in a proper and legal manner prior to January 31st of each year or else be subject to the licensure requirement for the next year. The Council has given the Administrator discretion on a case-by-case basis for what documentation is necessary to show the drycleaning machine is not capable of immediate operation.

Mr. Eriksen noted that included in the packet was a flyer that was sent annually with the license renewal application detailing the requirements to document conversion from an active drycleaning facility to a drop store.

Council member Young B. Kim requested the Council review these requirements as he is concerned that removal of the machine pump, disconnection of the utilities or boiler to the drycleaning machine are steps that can easily be reversed by the drycleaner. He indicated to the Administrator he would like the Council to consider replacing the current options with only one, which is removal of the drycleaning machine within one (1) month after drycleaning operations are represented to have ceased at the location. Mr. Young B. Kim addressed the Council and referenced a situation where a drycleaner had closed his facility, removed the pump while he was looking for another tenant. He noted it would take only 10-15 minutes to reinstall the pump.

After a lengthy discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kwon, it was their consensus not to modify the existing requirements for converting an active drycleaning facility to a drop store. The motion passed by a vote of 6-0.

 

Mr. Kwon left the meeting at 12:02 p.m.

  A. Review of Semi-Annual Financial Projections:
   

Mr. Eriksen reviewed the updated set of financial projections as of December 31, 2011, noting the projected Fund deficit of approximately $10.9 million has not changed as compared to those reviewed at the September 1, 2011 Strategic Planning meeting. The Illinois Department of Revenue has not provided reconciled solvent data for the 2nd and 3rd quarter of calendar year 2011. Projected solvent usage is based on calendar year 2010 data.

Based on discussion with industry representatives on November 29, 2011, Mr. Eriksen prepared three (3) sets of financial projections for discussion purposes. The assumptions are the same used in the semi-annual projections referenced in the Council packet with the following changes in the number of licensed drycleaners:

  • FY 13 - 950
  • FY 14 - 850
  • FY 15 and all future years – 750
· Scenario One reflects that by increasing the license fee to $2,800 per year per license fee category beginning in FY14 through the current program sunset date of January 1, 2020, the Fund will be in a break even position as of the sunset date on January 1, 2020.
·  Scenario Two reflects increasing the sunset date by 5½ years to June 30, 2025. License fees must be increased by $300 per year per license fee category beginning in FY14 to put the Fund at a break-even position as of June 30, 2025.
· Scenario Three reflects increasing the Fund sunset date by 10½ years to June 30, 2030. License fees could decrease by $450 per year per category beginning in FY14 to put the Fund in a break-even position as of June 30, 2030.

Mr. Eriksen noted that hopefully insurance claim payments would be less than that projected and would offset any inflation that could be anticipated between now and the sunset date of the program on claim payments and administrative costs. Mr. Peter Marberry addressed the Council stating he is not supportive of extending the program sunset date. Mr. Sung Kang, of NDI, concurred and indicated that at this time his members are not supportive of extending the program sunset date.

Mr. Eriksen stated he planned on developing additional scenarios and sharing them with the industry sometime in February or March. He noted it is very difficult to estimate what the future number of licensed drycleaners will be but that the numbers used in these three (3) scenarios were ones that were agreed upon by the industry representatives at the November 29, 2011 meeting.

Mr. Eriksen stated he would keep the Council updated on future discussions with the industry on these financial projections and their impact to the individual drycleaners.

  B. Update on Compliance with Public Act 97-0377 (HB1953):
   

Mr. Eriksen noted that Public Act 97-0377 (HB1953), passed by the Illinois legislature in 2011, amended the Trust Fund Act to require any active drycleaning facility that received remedial program benefits from the Fund to maintain pollution liability coverage with the Fund or with a private insurance company until one of the following occurs:
1)  The sunset date of the Fund is reached; or
2)  The date the facility is no longer an active drycleaning facility

As of today, 24 out of an estimated 62 drycleaning facilities have applied for insurance coverage from the Fund in order to be in compliance with this new legislation. All insurance policies issued by the Fund to meet this requirement will have a policy effective date (retroactive date) no later than January 1, 2012 as the Trust Fund Act requires that coverage be in place effective January 1, 2012.

The Fund will not issue the annual drycleaner license until the drycleaning facility is in compliance with the Act.

  OTHER ISSUES AS PRESENTED  
 

Mr. Eriksen noted that a drycleaner had contacted him and felt the Council should offer payment of the insurance premiums in monthly installments to ease cash flow requirements on the drycleaning industry. Currently the Council allows for semi-annual installments; monthly installments would result in additional administrative costs for billing and collecting the insurance premiums. Mr. Eriksen asked the Council if they were inclined to put this topic on the agenda for discussion at a future meeting. There were no comments in support of revisiting monthly premium installments for the insurance policy.

Mr. Eriksen reviewed the current status of the perc ban legislation which last year was denoted as SB1617. Based on draft legislation provided to him by the Illinois EPA and conversations with Scott Philips, Director of the Bureau of Land, the IEPA is looking at pursuing the legislation but without a date that would ban using perc at some future date. The majority of the remaining provisions in the legislation would remain unchanged such as not allowing for the transfer or relocation of a third generation perc machine, requiring that all drycleaners go through training developed by the Trust Fund in conjunction with IEPA at least every four (4) years, and that IEPA would request data on new solvents from the drycleaning industry so it could be reviewed and they could attempt to make a determination if the solvent should be classified as a “green” solvent.

The next Council meeting is tentatively scheduled for February 29, 2012. Council members indicated at this time they had no conflicts with the date.

Mr. Eriksen noted there were no issues for discussion in Closed Session.

 
  PUBLIC COMMENT PERIOD
 

Mr. Polak asked if there were any comments from the public. Mr. Kang referenced the November 29, 2011 industry meeting in which he requested the Administrator look at reducing the administrative costs and the cleanup costs rather than considering increasing the fees or extending the sunset date of the program. Mr. Eriksen noted the administrative fees in the scenarios have decreased on an annual basis as the claim work is spread out over a longer period of time. The cleanup costs were not reduced as the Administrator updates those on a site specific basis each time new information is obtained that outlines the severity of the contamination. Approximately 40 of the facilities have not fully delineated the contamination at the facility. Those have a set reserve of $50,001 and once the sites are fully delineated, that reserve amount may change up or down, but at this point in time, the cost reflected in the reserves are the most accurate the Council has available at this time. Mr. Kang reported it is unfair for the Council and IEPA to look to the industry to continue to pay more into the Fund at the same time that they are looking at banning perc. Mr. Eriksen replied no, IEPA is not looking at banning perc and reiterated in detail the provisions of the revised SB1617 that IEPA is looking at introducing this legislative session.

Mr. Peter Marberry offered three (3) suggestions that he would like the Administrator to present to the industry to consider as they talk about adjusting the sunset date of the program. Mr. Eriksen stated he would convey Mr. Marberry’s comments to the group. Mr. Greg Wilson, an accountant, addressed the Council noting he would be supportive of having electronic forms available on the web site to assist the compliance programs and inquired if the insurance program currently has the correct balance between the premium being charged and the potential risk exposure at each facility. Mr. Eriksen addressed that the Fund has had several actuarial reviews and based on the last review, they did not have enough definitive data to establish a separate risk premium based on any other risk factors.

Ms. Jemma Jones, a drycleaner in Chicago, addressed the Council and wished they would consider shortening the process to get a license and also increase the grace period the Fund gives from 10 days to 30 days if a drycleaner does not promptly pay their insurance premium.

There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 5-0 to adjourn at 12:40 p.m.

   
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