| Chairman Abernathy called the meeting to order. |
| Trustees Present: |
Absent: |
Robert L. Abernathy, Chairman
John Albert
James Ford
Tom Kolb
Don McNutt
Danny Opie
Tom Pfeiffer
Dan Schuette (Designee for Steve Mahfood) |
Judy Baker, Vice Chairman
Joyce Murphy
Gary O'Neal |
| Staff Present: |
|
Carol R. Eighmey, Executive Director
Diane Wallace, Executive Assistant
Tim Duggan, Assistant Attorney General
Pat Vuchetich, General Claims Manager
Ray Lentz, Operations Manager
Dave Pate, Claims Manager |
**Claim Appeal– Rice's Auto Repair, Claim 40911
Cheryl Lovell, St. Louis Housing Authority, and Bob Louden, Professional Environmental Engineers, Inc., presented the appeal. They distributed and discussed additional information about the redevelopment of this site and the surrounding area; copy attached hereto. Mr. Louden indicated some costs had already been incurred for removal of the underground tanks and piping, and presented an estimate of costs which may be incurred for cleanup.
Trustees asked several questions. Tom Kolb asked if the cleanup done to date had been done according to DNR's February 2004 risk-based guidelines for tank sites. Mr. Louden indicated his firm had used previous requirements published by DNR's Voluntary Cleanup Program instead. Mr. Kolb asked who currently owns the property; Ms. Lovell explained that the Housing Authority owns it, which is a municipal corporation under state law. Don McNutt asked why the consultant was choosing to utilize a more expensive approach to the cleanup than required; Mr. Louden indicated the primary investor, AIG, had selected that approach. Mr. Louden and Ms. Lovell emphasized her contention that this property was not identified by DNR staff in 1995-97, when tank sites which were identified were put on a list of properties eligible for PSTIF funding, because staff members were unwilling or afraid to survey certain parts of the city. Mr. Kolb asked whether any tank sites in “rich neighborhoods” are ineligible, due to the fact that they were not identified by DNR staff during that period of time. PSTIF staff answered yes.
Chairman Abernathy thanked Ms. Lovell and Mr. Louden for their presentation and information, and indicated the Board would discuss the appeal and make a decision in closed session.
Approval
of Minutes
Dan Schuette noted that the minutes from the September 29 meeting need to be changed to clarify the Board's intent that its approval of FY06 funding for the Attorney General's Office includes salary increases that may be enacted by the General Assembly. With that change, he moved that the minutes from the September 29, 2004 Board meeting be approved. Jim Ford seconded. Motion carried.
Monthly
Reports
Chairman Abernathy invited Trustees to review the monthly reports and ask questions.
Dan Schuette moved that the Board release funding for ten new remedial claims. Don McNutt seconded. Motion carried.
FY
04 Audit - KPMG
Keith Hyder, Engagement Manager, KPMG, gave an overview of the FY04 Audit Report. He noted that KPMG had included certain items on the balance sheet, including a capital lease, at the request of Office of Administration (OA). Jim Ford asked if the liability for lease payments is related to the number of DNR employees who receive compensation from the PSTIF; Mr. Hyder said he believes that is the basis used by OA to calculate lease liability.
Tom Kolb moved that the Board approve the FY04 Audit Report. Tom Pfeiffer seconded. Motion carried.
Report on Inspections - DNR
Chairman Abernathy invited John Balkenbush to comment on the report contained in the Trustees' notebooks. Mr. Balkenbush said a more detailed presentation on inspections will be made by other DNR staff at the Board's next meeting, and noted the report in the Trustees' notebooks contains a list of sites inspected to date in FY05. He observed that the regional offices had conducted 90% of the inspections scheduled for the first quarter, and that additional improvements are being made to improve the quality and timeliness of the inspection data.
Several questions were raised by Trustees; the Board asked that additional information be included in the January report. Tom Kolb noted the report does not indicate what violations were being observed most frequently by DNR inspectors. He also asked how many of the problems noted by the inspectors have been resolved by the tank owners/operators. Jim Ford asked what timeframe is typically allowed for owners/operators to get back into compliance. John Albert mentioned that the severity of various violations varies widely, and he suggested that more detail on significant operational deficiencies be included in the next report, including information on how and when PSTIF underwriting staff are informed of significant unresolved problems.
DNR FY06 Budget Request and Reporting
Jim Ford reported on the Budget Subcommittee's recent discussions, and distributed a written report*, which is attached hereto and made a part hereof. He noted that compensation increases, such as rising costs for fringe benefits, had not been factored into the Board's FY05 decisions, but are being considered for the FY06 budget. He noted the Subcommittee is not yet ready to present a recommendation to the full Board and plans to present such at the January 26, 2005 Board meeting. Chairman Abernathy agreed to postpone Board action until the January meeting.
*Report from the Budget Subcommittee
Recommended Changes to UST Participation Agreement
Carol Eighmey introduced Robin Melton, Chairman of the PSTIF Advisory Committee; she and Ms. Melton then explained the proposed changes to the UST participation agreement. Ms. Eighmey noted the first change, which would mean legal defense costs would be paid as an addition to the coverage limit of $1 million per occurrence, is being recommended to assure that PSTIF coverage meets the requirements of federal regulations for financial responsibility applicable to UST owners. She pointed out a memorandum from Tim Duggan on this topic in the Trustees' notebooks. The second change highlighted by Ms. Eighmey would make the Fund liable for the “first dollar” of expense for third-party damages. She gave an example of why this is being recommended.
Discussion followed. Don McNutt questioned whether the Board should make the first change, noting that paying legal defense costs as a part of the policy limits can serve as a tool to persuade third-party claimants and tank owners to settle cases. Ms. Eighmey noted that the proposed change does not limit legal defense costs, except that the PSTIF's liability would end when the $1 million policy limit was paid out for cleanup and/or damages. Jim Ford asked whether this change would apply retroactively to existing claims, or only to new ones; Pat Vuchetich responded that the intent is to make the change prospectively, and not retroactively, and he would review the language to assure that. Ms. Melton was asked whether the Advisory Committee felt strongly that both changes should be made; she indicated there was no overwhelming impetus for either one. Dan Schuette asked whether the participation agreement needs to be promulgated in the Code of State Regulations as a “rule.” Ms. Eighmey and Mr. Duggan explained why they do not believe that is necessary
Don McNutt moved that the Board approve the second recommended change, that being payment of “first dollar” for third-party claims. Jim Ford seconded the motion. After further discussion, the motion carried. Ms. Eighmey agreed to provide a final version of the agreement for final approval by the Board at its January 2005 Board meeting.
Update on RBCA
Chairman Abernathy invited Trustees to review the memorandum from Ms. Eighmey in their notebooks, and introduced Jim Werner, Director of the DNR's Air and Land Protection Division. Mr. Werner made comments about risk-based corrective action and assured the Trustees he is committed to maintaining a flexible and timely regulatory program. He expressed disagreement with the last paragraph of Ms. Eighmey's memorandum and mentioned that the Department's consistent position is that future property owners need to have easy access to information about prior cleanups.
Don McNutt said he expects there will be disagreements concerning future land-use assumptions and asked if a process for resolving these disputes had yet been established by the Department; Ms. Eighmey said it had not. Mr. Werner commented that he does not want a rigid process, and wants a process that readily identifies problems needing resolution. Bob Abernathy noted there have been few problems with the many tank site cleanups done to date. Mr. Werner suggested that unnecessary costs for excavation had been incurred in the past, and it is the intention of the Department's new risk-based corrective action requirements to avoid that.
**Administrative
Issues
Ray Lentz gave a PowerPoint presentation on the new Internet-based process which Fund participants may use to apply for insurance coverage and/or renew their policies. He noted the system will be available on January 1, 2005, and that an announcement will go out in the PSTIF newsletter in December. He said a mailing will also be sent to all participants. A copy of his presentation is attached hereto.
Carol Eighmey reminded the Board that its contract with Williams & Company Consulting, Inc., contains an annual renewal option, and recommended renewal for a second year. Jim Ford moved that the Board approve renewal of the contract for the period January 1, 2005 through December 31, 2005. Don McNutt seconded. Motion carried.
Chairman Abernathy called the Trustees' attention to the recent bills in their notebooks.
Don McNutt moved that the Board go into closed session to discuss and vote on matters related to legal actions, causes of action, litigation and/or personnel issues pursuant to Section 610.021, RSMo. Tom Pfeiffer seconded. Motion carried.
If
such action is approved a majority vote of a quorum of the Board,
the Board of Trustees of the Petroleum Storage Tank Insurance Fund
may go into closed session at this meeting to discuss legal, confidential
or privileged matters pursuant to Section 610.021, RSMo.
**For a copy of either of the presentations mentioned in these minutes, please contact the PSTIF Office. Please note, if presentation(s) are in electronic format, they will be sent to you as an email attachment per your request. However, as some presentations may be in hard copy only, please provide your mailing address at the time of your email request.
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