MINUTES DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL OF ILLINOIS HOLIDAY INN SELECT NAPERVILLE, ILLINOIS

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1 MINUTES DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL OF ILLINOIS HOLIDAY INN SELECT NAPERVILLE, ILLINOIS JUNE 16, 2004 John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:04 a.m. A quorum was present. Roll call was taken with the following members present: John Bredenkamp Augustine Chung (via telephonic conference) Andrew Chweh David Gibson (joined the meeting (via telephonic conference) at 10:09 a.m.) Young B. Kim Jerry Lewicki John Polak Also present were: H. Patrick Eriksen, Program Administrator s Office John J. McCarthy, Program Counsel C. Michael Perkins, Program Administrator s Office Juho So, Program Administrator s Office PRELIMINARY BUSINESS The minutes from the May 6, 2004 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the minutes were approved by a vote of 6-0.

2 APPEAL OF DENIAL OF REMEDIAL/INSURANCE CLAIM BENEFITS Site # Scott One Hour Cleaners, 49 Green Bay Rd, Winnetka, IL Mr. Eriksen reviewed with the Council his memorandum included in the Council packet, outlining background information and a chronological listing of events surrounding the application for clean-up benefits from the Fund and the Administrator s subsequent denial of those benefits. Mr. Gibson joined the meeting at 10:09 a.m. Mr. John Brom, attorney for Mr. Hanus, trustee for the real estate owner and a listed additional insured on the policy, addressed the Council. His presentation focused on his belief that his client was eligible for both remedial benefits as the owner of an inactive drycleaning facility, and insurance benefits as a named additional insured on the environmental pollution liability policy issued by the Fund. Mr. Brom noted that there was contamination discovered at the facility but it was not known when the release occurred at the facility. He indicated that his research determined that the onus of determining when the release occurred was the responsibility of the insurer and not of the insured. Mr. Polak reminded Mr. Brom that the Fund was not an insurance company. Mr. Brom responded that although he was aware of that, his comments were based on common law not state insurance regulations or insurance law. Mr. Kenneth Anspach, representing drycleaner owner/operator claimant Mr. N.S. Han, addressed the Council. His presentation focused on the insurance policy and that the Council had the duty to defend the insured against a claim (which he represented was the lawsuit initiated by Mr. Brom s client against Mr. Han) and that the burden of proof on determining when the release occurred was on the Fund and not on his client. Mr. Anspach admitted that he was not certain if his client was entitled to remedial benefits but he felt he was definitely entitled to benefits under the insurance policy. He argued the Administrator erred in providing additional reasons for denying the claim. Mr. Polak disagreed with his estoppel argument and noted that both appellants failed to provide 24-hour notice to the Fund as required under the policy once the contamination was discovered. Mr. Anspach argued that the notice period was not significant to the eligibility of the claim and again invoked violation of the estoppel argument as the Fund did not issue a reservation of rights letter when the claim for benefits was filed. Mr. Eriksen replied that the initial claim was assumed to be a remedial claim based on the information provided by the claimant. He reminded the Council that Mr. Han had never contacted the Fund prior to the intrusive testing nor inquired about the Fund s policies and procedures in applying for benefits. Mr. Eriksen noted that all insureds at the time they had received their initial insurance policy received a claim kit from the Fund, which would have provided guidance to Mr. Han in the event that contamination was discovered at the drycleaning facility. After additional discussion, the Council concurred that they would not make a decision on this appeal today and remanded the appeal to legal counsel for additional review of all the information presented at today s hearing and stated that they would continue discussion of the issue at a future Council meeting. 2

3 OPERATIONAL ISSUES A. TACO Presentation by the Illinois Environmental Protection Agency: Mr. Greg Dunn, of the Illinois Environmental Protection Agency, made a detailed presentation to the Council on the framework of the Tiered Approach to Corrective Action (TACO). The presentation covered misconceptions about TACO, site investigation objectives, remedial action objectives, approaches to implementing TACO, as well as a detailed discussion of exposure pathways and their impact on the application of TACO. Mr. Polak thanked Mr. Dunn for an enlightening and informative presentation. B. Review of Historic Site Investigation Budget Approvals: Mr. Polak noted that due to the limited time available to the Council today that he would like to defer discussion of these statistics until the strategic planning session next month. The memorandum from Mr. Perkins and Dr. So indicated that there has been a reduction of the average cost per facility since the program s inception. The Council recessed at 11:38 a.m. and reconvened at 11:43 a.m. C. Update on Administrative Rules: Mr. Eriksen reviewed with the Council that JCAR had formally objected to the Council implementing the changes to the license fee and solvent taxes prior to incorporating the changes in administrative rules. As he had individually discussed with each of the Council members, this objection was filed with the Council less than 24 hours prior to the initial rules hearing on May 18, JCAR indicated their primary concern is that the general public did not have sufficient notice and awareness of the proposed fees and taxes changes. JCAR filed a recommendation regarding the calculation of solvent usage for determining the annual licensing fees, stating the Council should seek legislative authority to use solvent purchases for calculating the annual license fee in the event annual usage cannot readily be determined. Mr. Eriksen attended the JCAR meeting on June 15, 2004 and was allowed the opportunity to address JCAR and outline in detail the actions the Council had taken in regards to public hearings, notifications, etc., prior to changing the licensing fees and solvent taxes. In addition, he noted that only one (1) comment had been received during the JCAR public hearing period, and that was from a drycleaner who had already commented directly to the Council on the proposed changes. JCAR acknowledged the efforts made by the Council but voted to file notice that the Council failed to remedy JCAR s Notice of Objection. 3

4 Mr. Eriksen reported that JCAR has given approval for the Council to adopt and file with the Secretary of State, the adopted rule amendments as soon as possible. The Council reviewed the changes proposed by JCAR. Most of those were corrections of terminology that would create conflict within the rules and the definition of Council approved criteria for waiving the licensing late payment fees. After brief discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the amended rules by a vote of 7-0 and directed the Administrator to file them with the Secretary of State. Mr. Chung left the meeting. D. Legal Representation: Mr. Eriksen reported that Mr. McCarthy s fiscal year 2004 contract with the Council for the provision of legal services expires June 30, The contract is for an amount not to exceed $20,000 and to date the Council has paid Mr. McCarthy $14, He noted that Mr. McCarthy s knowledge of the Fund and legal expertise have been beneficial to the program and it is the Administrator s recommendation that the Council enter into a contract with Mr. McCarthy to continue providing legal services to the Council for fiscal year 2005, for a cost not to exceed $20,000. Mr. McCarthy currently charges the Fund $135 per hour for professional services and $80 per hour for travel time and these hourly rates would remain the same for fiscal year Dr. Chweh asked if the Council is required to obtain public bids for these legal services. Mr. Eriksen replied no, as this is a professional and artistic contract and contracts in the amount of $20,000 or less do not have to be publicly bid per the State s purchasing regulations. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved by a vote of 6-0, entering into a contract with Mr. McCarthy for fiscal year 2005 for an amount not to exceed $20,000. The hourly rates would remain unchanged. E. Review of Compliance Program Continuing Education Courses: Mr. Eriksen noted that there were two (2) continuing education issues for review by the Council. He commented that the Council had previously designated the Administrator to do the initial review and certification of continuing education credits for Council approved compliance programs based on the criteria outlined in the Council s revised compliance guidance document (February 3, 2004). He 4

5 noted that in the event the continuing education course sponsor/presenter disagreed with the Administrator s determination of eligibility or the number of hours of continuing education to be awarded, the Council would review the information and make a final determination. Mr. Eriksen stated the first course for review was one presented by Mr. George Vaselakos on April 1, 2004 to the Chicagoland Cleaners Association. The focus of his presentation was on OSHA compliance and recordkeeping. He noted Mr. Vaselakos indicated that his presentation included Power Point presentations covering respirators, chemical handling and the environmental impact complacency can have when handling chemicals. Mr. Eriksen stated that the Administrator is asking for Council review and determination if a CEU credit should be given for this course in as much as the Administrator did not receive the required course material, biography on the presenter, etc., prior to the April 1, 2004 meeting. Mr. Vaselakos verbally represented to the Administrator that he had mailed the information prior to the April 1 st meeting. He subsequently ed the necessary information on May 2 nd. Mr. Bredenkamp indicated that he felt that the Council had established requirements and that to waive the requirements would set a bad precedence for the future. Mr. Vaselakos addressed the Council stating that the Administrator should have sent a letter acknowledging the receipt of the material. Mr. Bredenkamp replied that that was not possible as the Administrator did not receive the material. Mr. Henry Parker of S&ECC indicated that Mr. Vaselakos had filled in on his behalf as he had initially been asked to do the presentation but had an out-of-town commitment that could not be rescheduled. Mr. Parker questioned if Mr. Vaselakos had the appropriate credentials to speak on OSHA and Fund issues. Mr. Vaselakos rebutted that he was qualified as he had attended OSHA training and had advanced degrees in biochemical engineering. Mr. Polak noted there were two (2) issues raised and the primary issue is the timely filing of the required information with the Administrator and the second is regarding whether the course instructor met the Council s criteria. Mr. Parker noted that he had received comments from six (6) of the drycleaners that attended and that the presentation had only lasted 20 minutes, that the video projector was inoperable and the Power Point presentation was not shown. Mr. Vaselakos acknowledged that the video projector was inoperable but that the seminar had lasted for approximately 50 minutes and noted that Mr. Jeff Diver, who was in attendance at the Council meeting, was also in attendance at that meeting. Mr. Diver stated that although he could not recall the exact length of the presentation, the presentation and question and answer session would have encompassed approximately 50 minutes. Mr. Bredenkamp made a motion and Mr. Gibson seconded the motion to deny any CEUs for this course as the required information was not timely received prior to the course being offered. On a roll call vote, the motion passed by a vote of

6 The Council discussed the request of the Land of Lincoln Drycleaners Association to receive additional continuing education credit for the watershed presentation and tour that would be conducted at their June 2004 meeting. Mr. Eriksen noted that he has allowed one (1) hour of CEU for the presentation to be conducted by Mr. Henry Parker and Mr. Bob Soni regarding paperwork and program compliance requirements. The remaining 1 ½ hours of the meeting is to be a presentation and tour of a watershed project presented by Ms. Emily Kinney. Mr. Eriksen stated that he had reviewed the content of the watershed presentation and did not believe it met the compliance program criteria as defined by the Council in February Mr. Ken Sink, Vice President of Land of Lincoln Drycleaners Association, felt that the watershed tour was a benefit as it shows drycleaners what could happen to their groundwater if they do not closely adhere to compliance program requirements and he referenced the recent contamination that had been discovered in Downer s Grove. The Council discussed the issue in detail. On a motion by Mr. Lewicki and a second by Mr. Kim, the Council, by a vote of 4-1, approved one-half (1/2) hour of additional CEU credit for the presentation and tour of the watershed project by Ms. Kinney. Dr. Chweh made a motion to allow 1 ½ hours of CEU for the watershed presentation. It died for a lack of a second. F. Strategic Planning Topics: Mr. Eriksen reviewed with the Council the tentative listing of Strategic Planning topics and asked if they had any additional topics they would like discussed at the meeting that they provide them to him as soon as possible. The Council reconfirmed that the meeting would be Thursday, July 22, Mr. Polak offered the use of his employer s facility in Peoria, IL for the meeting. It was the concurrence of the Council that the Strategic Planning meeting would be held at Argonaut Great Central Insurance Company in Peoria on July 22, G. Legislative Update: Mr. Eriksen updated the Council that since the last Council meeting there was a new piece of legislation introduced that would have a significant impact on the Fund. It is HB7181, which was amended by the Senate on May 31, 2004, and would transfer $5,457,000 from the Illinois Environmental Response Trust Fund into the State s Budget Stabilization Fund. This is a fund that the Governor and legislature have used to improve stability in the General Revenue Fund. The proposed bill states the money would be transferred as of July 1, 2004 and that if the Fund should have insufficient cash to satisfy expenditure obligations on a timely basis, funds could be transferred back to the Drycleaner Trust Fund for the 6

7 Council s use. Mr. Eriksen noted that the House has not approved this bill and that there is still significant disagreement between the Governor, the Senate and the House on a comprehensive budget bill. Ms. Dorcee Lauen is in attendance at an Appropriation Hearing that Speaker Madigan called for today and Thursday. His request is for each agency to review their budgets and to determine if they could pare back any funds. Mr. Eriksen stated that he would closely monitor this legislation and keep the Council updated if there are any significant changes. APPROVAL OF PROGRAM BILLINGS Mr. Eriksen noted that there were two (2) bills requiring Council review and action. The bills for Council review are as follows: 1. Williams & Company Consulting, Inc... $ 64, Standard flat fee billing for May 2004, licensing, underwriting, claims processing and site inspections. 2. John J. McCarthy... $ 1, Professional legal services to the Council for the period of April 28, 2004 through June 9, On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the bills were approved by a vote of 6-0. REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS Mr. Eriksen reviewed with the Council that currently there are 1,323 licensed drycleaners. Staff continues to determine the status of the 133 drycleaners that have not renewed their license for In addition, he just received word from the Attorney General s Office that they are willing to send out a letter informing unlicensed participants that they need to be licensed within a 60-day timeframe or subject themselves to civil litigation, including the shutdown of their facilities. He noted that there are 898 insurance applications currently in force, with a number of buyback policies still in the review process waiting for needed information. Remedial claims total 276, with estimated reserves of $15.5 million. The Fund balance as of May 31, 2004 was $6,305,088. Claim payments to date total $2 million, with the months of March and April reflecting almost $400,000 of payments for each of those months. 7

8 OTHER ISSUES AS PRESENTED Mr. Eriksen reported that he has been in contact with the Illinois Department of Revenue and that they should be providing in the near future, the first quarter solvent numbers. He plans to report to the Council those numbers at the July 22, 2004 Strategic Planning meeting. In addition, he noted that the Council needed to complete their expense reports as soon as possible as we are coming up on the cutoff for the fiscal year end payment processing. PUBLIC COMMENT PERIOD Mr. Ken Sink had several questions regarding the JCAR hearings and the notification of the hearings. Mr. Eriksen clarified for him that the only parties who can provide oral comments at JCAR hearings are state agencies and they only speak when called upon by the committee. Mr. Parker addressed the issue of a letter from Mr. Eriksen stating that all hazardous waste containers must have secondary containment even if they are not in the general proximity of the drycleaning machine. Mr. Eriksen reviewed in detail his decision. Mr. Parker said that he would communicate the Administrator s decision to his compliance program members. There being no further business, on a motion by Mr. Gibson and a second by Mr. Lewicki, the meeting adjourned at 12:40 p.m. by a vote of 6-0. Respectively submitted, H. Patrick Eriksen Administrator 8