MAY 5, 2016 Meeting Minutes

 

MINUTES
DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

CHICAGO MARRIOTT NAPERVILLE
NAPERVILLE, ILLINOIS

MAY 5, 2016

John Polak, chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:01 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp
Sung Do Kang
Daniel Kim
Young B. Kim
Paul Kwak (arrived at 10:02 a.m.)
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

Mr. Kang informed the Council his attorney, Mr. Mark Sargis, would be seated behind him during the meeting to confer with and assist him in understanding Council discussion of agenda items.

The minutes from the March 31, 2016 Council meeting were reviewed. Mr. Polak requested the first sentence of the second paragraph under Public Comment Period be amended to read “photo inspection dates” instead of “inspection date”.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the minutes as amended were approved by a vote of 7-0.
  OPERATIONAL ISSUES
  A. Draft Compliance Program Rules
 

Mr. Eriksen stated a copy of the draft rules were emailed to the compliance programs and industry associations. They were asked to provide comments on the draft rules and also state if they felt public meetings were necessary at this time to discuss the draft rules. He noted Mr. Henry Parker of S&ECC provided additional written comments on the draft rules. Mr. Charles Kwon of Environmental Drycleaners Compliance Program and the Korean American Drycleaner Association (KADA) indicated the draft rules were acceptable and an industry meeting to discuss the draft rules was not necessary. Ms. Sue Kratz, Executive Director of the Illinois Professional Drycleaners and Launders stated an industry meeting was not needed.

Mr. Sargis stated Mr. Kang is of the opinion an industry meeting should be held to allow drycleaners to comment on the draft rules.  

Mr. Bredenkamp made motion to approve the draft rules as presented. The motion was seconded by Mr. Lewicki. On a roll call vote the draft rules were approved as presented with Mr. Bredenkamp, Mr. Daniel Kim, Mr. Young Kim, Mr. Kwak, Mr. Lewicki and Mr. Polak voting in favor of the motion and Mr. Kang voting in opposition.
  B. Legislative Update
 

Mr. Eriksen reported he testified on April 21, 2017 before the Senate Appropriation II Committee regarding the Council’s FY17 appropriation request of $4.1 million. The Council still does not have an approved appropriation for FY16.  He is unaware at this time of any other pending legislation that will materially impact the Fund.

  C. Review of Fiscal 2015 Audit Report
 

Mr. Eriksen reviewed with the Council the Auditor General’s Compliance Examination of the Drycleaner Environmental Response Trust Fund Council for the year ended June 30, 2015. He noted the audit is a compliance examination of the Council’s compliance with applicable laws and regulations in its financial and fiscal operations. The schedule of findings contains one (1) finding which is a repeat from the past eight audits and references the timeliness of Council member appointments, which is outside of the Council’s control.

Mr. Polak complimented the Administrator and staff on a favorable compliance examination. Mr. Kang asked why the Management Assertion Letter was not presented to the Council for their review and approval before it was signed by the Chairman and Administrator?  Mr. Eriksen responded this is a “standard” audit requirement that has been reviewed and signed by the Chairman and Administrator since the Fund’s inception. Mr. Sargis commented the Management Assertion Letter and draft audit report should have been reviewed by the Council before being approved by the Chairman and Administrator. He said most entities have an audit committee that reviews and approves such letters and draft reports. Mr. Polak disagreed citing his CEO experience with public and private entities and noted the audit report did not have any findings attributable to the Administrator’s operation and management of the Fund nor the Council’s oversight of the Fund. Such review would have delayed the release of the audit report without benefiting the audit process.

Mr. Kwak asked Mr. Kang what changes he wanted? Mr. Kang replied he would like all future assertion letters and draft audit reports presented to the Council for their review and approval before the letters are signed and the audit reports are issued.

Mr. Kang made a motion that management assertion letters and the draft audit report be brought to the Council for their review and approval. The motion was seconded by Mr. Young Kim. On a roll call vote, the motion failed by a vote of 2-5 with Mr. Kang and Mr. Young Kim voting in favor of the motion and Mr. Bredenkamp, Mr. Daniel Kim, Mr. Kwak, Mr. Lewicki and Mr. Polak voting in opposition.
 

D.

Request for Appointment of Special Assistant Attorney General for Administrative Hearings for FY16 and FY17

 

Mr. Eriksen noted if the Council would like Mr. McCarthy to represent the Council in contested case hearings, they would need to request the Attorney General’s Office appoint Mr. McCarthy as a Special Assistant Attorney General. Discussions with the Attorney General’s Office indicated they were supportive of such a request and Mr. Christopher Grant, Assistant Attorney General, was in attendance and could address Council questions.

Mr. Bredenkamp made a motion requesting the Attorney General’s Office appoint Mr. McCarthy as Special Assistant Attorney General for the Council for FY16 and FY17. The motion was seconded by Mr. Lewicki. Mr. Kang distributed to the Council members a 3 page memorandum of questions he had on Council contracts for legal representation, conflict of interest issues, compliance program rules, audit report review, etc.  Since Mr. Polak was not provided a copy of the memorandum, Mr. Eriksen read the memorandum aloud.

A general discussion ensued.  Mr. Daniel Kim requested Mr. McCarthy provide the Council a breakout of how much of his legal fees for FY16 pertain to the various NDI appeals. Mr. McCarthy replied the amount is a significant portion of his year-to-date fees and he will provide this information to the Council at the next Council meeting.

On a roll call vote, the motion passed by a vote of 6-1 with Mr. Bredenkamp, Mr. Daniel Kim, Mr. Young Kim, Mr. Kwak, Mr. Lewicki, and Mr. Polak voting in favor of the motion and Mr. Kang voting in opposition.
  E.   Legal Representation      
 

Mr. Eriksen reviewed his memo with the Council noting one correction and one clarification. The hourly rate for travel time was incorrectly listed as $100 per hour; it is actually $110 per hour. The summary of year-to-date billing includes the bill listed in this Council packet for approval. Mr. McCarthy is requesting his billing rates for FY17 remain the same as FY16.

Mr. Kang stated he wanted to see and review the contract before voting on it. Mr. Eriksen responded the contract will be identical to Mr. McCarthy’s previous contracts with the Council. He noted the state’s standard professional and artistic services contract is used. The only year-to-year changes are those mandated by the state’s procurement regulations.

Mr. Christopher Grant, Assistant Attorney General, informed the Council to his knowledge all state agencies contracted for day-to-day legal counsel (as the Council currently does) or else has full time attorneys employed as staff.

Mr. Bredenkamp made a motion the Council enter into a contract with Mr. McCarthy for professional legal services for FY17 at the current FY16 hourly rates for a cost not to exceed $29,999. The motion was seconded by Mr. Lewicki. On a roll call vote, the motion passed by a vote of 6-1 with Mr. Bredenkamp, Mr. Daniel Kim, Mr. Young Kim, Mr. Kwak, Mr. Lewicki, and Mr. Polak voting in favor of the motion and Mr. Kang voting in opposition.
  F. Administrative Law Judge Contract      
 

Mr. Eriksen reviewed the Council packet memo noting Mr. Wagner is willing to continue providing professional legal services as the Council’s Administrative Law Judge for FY17.  Mr. Wagner is requesting a $25 per hour rate increase.

Mr. Bredenkamp made a motion the Council enter into a contract with Mr. Wagner for professional legal services for FY17 at the rate of $350 per hour for a cost not to exceed $29,999. The motion was seconded by Mr. Lewicki. On a roll call vote, the motion passed by a vote of 7-0.
  APPROVAL OF PROGRAM BILLINGS
 

Mr. Eriksen noted that there were three (4) bills before the Council for their review and approval. They were as follows:

 

1. Williams & Company Consulting, Inc                               $58,477.00
Standard flat fee billing for March 2016, licensing, underwriting, claims processing and site inspections.

  2. John J McCarthy                                                                   $5,790.00
Professional legal services to the Council for the period of March 17, 2016 through April 22, 2016.
  3. Hinshaw & Culbertson                                                          $2,333.51
Professional Legal Services to the Council for the month of March 2016 regarding the NDI appeal.
  4. Williams & Company Consulting, Inc                               $47,477.00
Standard flat fee billing for April 2016, licensing, underwriting, claims processing and site inspections.
 

Mr. Eriksen noted Williams & Company’s April bill had been emailed to all Council members on May 3, 2016 and a hard copy had also been distributed today to each Council member.

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the bills were approved by a vote of 7-0.

It was noted since the Council does not have an approved appropriation budget for FY16, these bills could not be paid at this time.
  REVIEW OF MONTHLY ACTIVITY REPORTS AND FINANCIAL STATEMENTS
 

Mr. Eriksen reviewed the monthly activity report for March 31, 2016 noting 756 licenses were in effect at the end of the month compared to 794 as of March 31, 2015.  Four hundred sixty nine (465) active dry-cleaning facilities had pollution liability insurance coverage with the Fund. Open claims totaled 186, with estimated reserves of $20.5 million.

The March 31, 2016 financial statements reflect a fund balance of $1,490,194. Year-to-date claim reimbursement requests approved for payment total $950,438.
  CLAIM PAYMENTS IN EXCESS OF $75,000
 

Mr. Eriksen noted there were two claim payment requests for Council review and approval.

  1.   Concord Custom Cleaners, Springfield, IL; Claim #50631, Site #0001122:      
   

Mr. Eriksen reviewed background information on the facility noting remediation is substantially complete but additional post remedial confirmatory site investigation consisting of two quarterly groundwater monitoring events is needed. The estimated costs to complete these activities total $6,300 including contingency costs.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the budget request of $6,300 by a vote of 7-0.
     
  2. Lee’s L&L Cleaners, Arlington Heights, IL; Claim #50262, Site #0001313:      
   

Mr. Eriksen reviewed background information on the facility noting remediation is complete but the existing monitoring wells must be properly abandoned for the facility to receive a NFR letter. The estimated cost to complete these activities totals $3,500 including contingency costs.

On a motion by Mr. Young Kim and a second by Mr. Bredenkamp, the Council approved the budget request of $3,500 by a vote of 7-0.

     
  OTHER ISSUES
 

Mr. Eriksen noted the next meeting date is Thursday, June 23, 2016. Mr. Lewicki stated he is unavailable that day.

Mr. Eriksen reported all but 2 insured drycleaners have moved from NDI’s Compliance Program to one of the other 4 approved programs.
  PUBLIC COMMENT PERIOD
 

Mr. Polak asked if there were any comments from the public.

Mr. Tae-Soo Jung, owner/operator of Fox Valley Cleaners distributed a handout to the Council listing 4 questions regarding the Mr. McCarthy’s’ contract with the Council and the cancelled April 1, 2016 NDI administrative hearing. Mr. Jung read his questions and Mr. Jeremy Yu translated for him.

Mr. Dae-Ho Yang, owner/operator of Alpha Cleaners distributed a handout to the Council listing three questions regarding the Council’s decision to not de-certify the ESM Compliance Program at the March 31, 2016 Council meeting and the de-certification of the NDI Compliance Program. Mr. Jeremy Yu translated for him. Mr. Eriksen responded the Council voted on two separate motions regarding the ESM Compliance Program and both motions failed. He noted the issue has been tabled until the NDI litigation is resolved. Mr. Yang directed specific questions regarding the NDI de-certification to Mr. Kwak who responded to the questions. Mr. Daniel Kim also addressed issues raised by Mr. Yang.

Mr. Steve Fermin, owner/operator of Four Season Cleaners distributed documents regarding the Council’s de-certification of the NDI Compliance Program stating the Council wrongly de-certified the program.

Mr. In Han Kim, owner/operator of Green Cleaners, distributed a two page handout to the Council asking for financial compensation of $1,000 from the Fund and Administrator regarding the licensing of his drycleaning facility for 2013 and 2014.  At the conclusion of his comments, Mr. Polak asked Mr. Eriksen to respond to Mr. Kim’s letter on behalf of the Council.
  CLOSED SESSION
 

Mr. Eriksen noted there were issues for discussion in closed session.

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 7-0 to go into closed session at 12:15 p.m. to discuss matters of potential litigation. The Council adjourned from closed session at 12:39 p.m. 

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council voted 7-0 to approve a six month payment plan for Granville Cleaners to pay the $1,172 owed the Fund.

On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council voted 7-0 to request the Attorney General’s Office cease collection efforts on civil penalties assessed Caled Industries, Inc.

There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council meeting adjourned at 12:41 p.m.

Respectfully submitted,

H Patrick Eriksen

Program Administrator
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