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Chairman McNutt called the meeting to order. He thanked appellants for coming to the meeting and apologized for having to postpone their appeals when the July 2011 meeting was cancelled |
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| Trustees Present: |
Absent: |
Don McNutt, Chairman
John Albert
Harry Bozoian
Tom Kolb
Ski Mariea
Danny Opie
Melvin Schebaum
Renee Slusher |
Jim Ford, Vice Chairman
Tom Pfeiffer |
| Staff Present: |
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Dan Atwill, Atwill and Montgomery
Bob Clarke, PSTF Claims Manager, Williams & Company Consulting, Inc.
Tim Duggan, Assistant Attorney General
Carol R. Eighmey, Executive Director
H. Patrick Eriksen, President, Williams and Company Consulting
Dan Henry, Williams & Company Consulting, Inc.
Patrick J. Vuchetich, PSTIF General Claims Manager, Williams and Company Consulting |
| Others Present: |
Tracy Barth, MFA Petroleum Company
Linda Bianchi, Vice President, Thoele Inc.
Lee Bowron, Kerper and Bowron
Ken Koon, Chief, Tanks Section, Hazardous Waste Program, DNR
David Lamb, Director, Hazardous Waste Program, DNR
David Pate, Midwest Environmental Consultants
Heather Peters, Compliance/Enforcement Section, Hazardous Waste Program, DNR
Jerry Prewett, Program Director, Geological Survey, DNR/DGLS
Paul Scheetz, Industrial and Petroleum Environmental Services, Inc.
Judd Slivka, Director of Information Services, DNR
Lisa Stuecken, Accounting Program, DNR
Mike Thoele, Thoele Inc.
Michael Tripp, Attorney for MFA, Smith Lewis, LLP
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Claim Appeal – MFA BreakTime – Claims 62067 and 70032
Chairman McNutt introduced Michael Tripp, Smith Lewis, and Tracy Barth, MFA Petroleum Company, and asked them to join the Trustees at the table to explain their appeal. Mr. Tripp reviewed the appeal with Trustees. He distributed a highlighted copy of the PSTIF Participation Agreement and called Trustees’ attention to various provisions. He emphasized the key issue involved in the appeal is whether the PSTIF is obligated to pay for repair and/or replacement of remediation equipment as part of its obligation to pay for “corrective action,” and said that, in his view, the Fund is obligated to pay the approximately $19,000 cost.
Chairman McNutt then asked Pat Vuchetich, Williams and Company Consulting, to comment on the decision to deny this cost. Mr. Vuchetich explained that remediation equipment may be either leased or purchased by a tank site owner; in the case of a lease, the lease agreement typically addresses the question of repair/replacement if equipment is damaged by lightning. In this case, he said, MFA chose to purchase the remediation equipment and was therefore liable for repair or replacement when it was damaged by lightning. He noted that when the PSTIF pre-approves costs for purchase and installation of a remediation system, there is normally a cost included in the initial estimate for routine equipment maintenance, and the PSTIF recognizes that expense. However, he noted that in this case, lightning had apparently damaged the equipment to the point it was no longer operational and said he did not think the PSTIF should have to pay for the same piece of equipment twice.
Considerable discussion followed. Trustees asked who owned the equipment; MFA concurred that it is the owner. Mr. Kolb asked whether there had ever been any discussion about who should insure the equipment; Mr. Vuchetich said he knew of none in this case, although the PSTIF had agreed in other cases to pay the extra insurance premium for some owners who added coverage for their remediation system to their business insurance policy. MFA was asked whether it carries property insurance; Mr. Tripp responded that it does but this expense is less than MFA’s deductible.
Dan Atwill asked whether there was any documentation, such as an engineer’s report, verifying that the equipment had been damaged by a lightning strike. Mr. Barth responded that the only verifiable fact is there were storms in the area that day and a transformer that provides electricity to the site had to be replaced.
Chairman McNutt thanked Mssrs. Tripp and Barth for coming. He advised them that the Trustees would discuss this issue in closed session later and that the Executive Director would communicate the Board’s decision to them.
Claim Appeal – 94 North Citgo, Thoele Oil – Claim 61526
Chairman McNutt asked representatives from Thoele Oil to join Trustees at the table to explain their appeal. Linda Bianchi and Mike Thoele, both from Thoele Inc., and Paul Scheetz, IPES, introduced themselves. Mr. Scheetz distributed a lengthy document and reviewed the complex circumstances surrounding the replacement of the tank system, the unusually high water table and large volume of water, and the need to construct a coffer dam. He noted that there had been excellent communication with the PSTIF claims staff throughout the process, and the PSTIF adjuster had made it clear that the cost for building the coffer dam would not be reimbursed. He explained that he thought the Board should overturn this decision because construction of the coffer dam had avoided considerable additional expense for hauling off petroleum-impacted soil that would have sloughed off into the excavated area.
Chairman McNutt then asked Pat Vuchetich to comment on the Fund’s decision on this appeal. Mr. Vuchetich agreed that it was an unusual project and that there had been good communication between the contractor and the PSTIF claims adjuster, noting that meetings held prior to the project had resulted in a more efficient plan for the tank removal and construction of the new store. However, he stated that Williams and Company denied the cost because it was a construction expense associated with installation of the new USTs, and therefore was not reimbursed as a corrective action expense.
Trustees clarified a few points with each party. Chairman McNutt then thanked Ms. Bianchi and Mssrs. Thoele and Scheetz for coming. He advised them that the Trustees would discuss the appeal in closed session later and that the Executive Director would contact them in the next few days with the Board’s decision.
Review and Approval of Minutes – May 25, 2011 -Open Session
Ski Mariea moved that the minutes from the May 25, 2011 Board meeting be approved. Harry Bozoian seconded. Motion carried.
Monthly Reports
Chairman McNutt gave Trustees a few minutes to review the monthly financial statements. He noted that the financial statements were still marked “draft” because the year-end audit wasn’t quite done yet, but that Ms. Eighmey indicated no major changes are expected. He asked if there were any questions or comments on the financial statements; there were none.
Chairman McNutt asked Trustees if there were any questions or comments on the monthly activity reports or the information on large-loss and third-party claims; there were none
FY12 PSTIF Budget and DNR Funding Requests
Chairman McNutt asked Ms. Eighmey to review the decisions that the Board needed to make regarding the FY12 budget. Ms. Eighmey said the Trustees need to approve a budget for use on the PSTIF’s financial statements for FY12. She suggested that, before doing that, decisions needed to be made on two requests from the DNR.
She explained that the first decision is a request from the DNR to pay for development of software to allow monitoring wells to be certified and registered online. She noted this follows a lengthy discussion with the Wellhead Protection Section of DNR concerning changes to its rules governing monitoring wells, and said the PSTIF reimburses costs for many consultants and drillers to prepare and send paper forms to the DNR; she said that online access should save time and therefore save the PSTIF some money. Ms. Eighmey noted she had hoped to be able to recommend unconditionally that the Board approve an expenditure of up to $80,000 to develop this software, but that two issues remained to be resolved, so she was instead recommending that the Board approve the expenditure contingent on these last two issues being satisfactorily worked out. She noted that if the Board approves the cost, the money will be spent from the Board’s appropriation, not the appropriation that the DNR receives that allows it to spend money directly from the PSTIF.
She introduced Judd Slivka, Director of Information Services for DNR, and Jerry Prewett, DNR’s Geological Survey Program Director, and commented that both had been very helpful in bringing this recommendation to the Board.
Chairman McNutt asked Trustees what questions, if any, they have about spending $80,000 for this Internet interface.
Renee Slusher moved to approve spending up to $80,000 for this Internet interface on monitoring wells on the condition that the final two issues are resolved to Ms. Eighmey’s satisfaction. Danny Opie seconded. Motion carried.
Ms. Eighmey then explained that DNR’s second request is for approval to spend an additional $23,384 during FY12 for inspection of non-PSTIF-insured sites. Unlike the first request, this expenditure would be from DNR’s PSTIF appropriation. She introduced David Lamb, DNR’s Hazardous Waste Program Director, to answer any questions the Trustees might have. Chairman McNutt noted that Ms. Eighmey has recommended that the Trustees not approve this request and asked her to explain. Ms. Eighmey said she knows of no basis in state law that allows the Trustees to spend money from the Trust Fund for regulatory oversight of tank owners who choose not to participate in the Fund, emphasizing that the Fund exists for the benefit of Fund participants. She noted that DNR receives money from the EPA for its UST and LUST regulatory responsibilities; that the PSTIF is already directly paying for inspection of 80-85% of operating UST sites that the DNR would otherwise have to pay for, including the incremental additional cost in FY12 caused by EPA’s new requirements; that the additional money being requested by the DNR is needed because of EPA’s new inspection requirements; and that she had previously advised Mr. Lamb that PSTIF money could not be used to inspect non-PSTIF-insured UST facilities.
It was noted that – because DNR’s appropriation in the budget for FY12 was greater than the amount approved by the Board, DNR can spend the additional $23,384 from the PSTIF if the Board approves without seeking a supplemental appropriation from the Legislature.
Tom Kolb moved that the Board not approve additional funding of $23,384 for the Department of Natural Resources for FY12. Ski Mariea seconded. A brief discussion followed, during which Tim Duggan was asked if he concurred with Ms. Eighmey’s view that this expenditure is not authorized by state law; Mr. Duggan responded that the expenditure would seem to go beyond the scope of what the statute envisions the Trustees can spend money on. After discussion, Chairman McNutt called for a vote. The motion carried 6-1 with Ms. Slusher abstaining.
Chairman McNutt then asked for a motion to adopt a budget for use on the Monthly Income Statements for FY12. Renee Slusher moved to approve the FY12 PSTIF budget as presented. Ski Mariea seconded. Motion carried.
Actuarial Report
Chairman McNutt introduced Lee Bowron, Kerper and Bowron, to present the results of his actuarial analysis. Mr. Bowron used a Power Point presentation to review his findings.
Chairman McNutt then invited questions from the Trustees. There was a brief discussion about whether the Trust fund is “underfunded” by industry standards. Mr. Bowron responded that industry standards don’t really exist for a state insurance fund like the PSTIF, noting that were it a private insurance company, it would be insolvent; however, given the Board’s ability to impose a fee to generate revenue, he didn’t believe an insurance company standard is appropriate for the PSTIF. He said, from an actuarial standpoint, it is his view that the Trustees are prudently managing the Fund’s finances.
There was also discussion about the need to plan ahead as the 2020 sunset date approaches; Mr. Bowron said he could envision a need to have approximately $30 million in reserve at the December 31, 2020 sunset date, but that figure could be larger if there is a surge of claims that come in just prior to the sunset date. Ms. Eighmey suggested the Trustees will need to begin planning ahead toward that date a few years from now. Mr. Schebaum noted that if the deductible were waived for a period of time, it would encourage tank owners to make claims prior to the sunset date.
Chairman McNutt thanked Mr. Bowron for coming to the meeting and presenting the report.
Review of FY11 UST Losses
Chairman McNutt introduced Bob Clarke, Williams and Company Consulting, who reviewed the leaks that had occurred from insured, operating UST systems during FY11. He showed pictures and described each claim.
FY13 Budget Requests
Chairman McNutt asked the Trustees to turn their attention to the requests for FY13 funding and noted each would be presented, discussed, and voted on individually.
Department of Revenue – Ms. Eighmey reported that DOR was again requesting funding for one FTE. Melvin Schebaum moved to approve the Department of Revenue’s request for
$27,564 for salary, expenses, and equipment, plus associated fringe benefits and any COLA added by the Legislature, for an estimated total of $40,949. John Albert seconded. Motion carried.
Attorney General’s Office – Ms. Eighmey noted that no letter response had been received but the AGO called the PSTIF office to say they intend to request the same funding for FY13 as in previous years. Tom Kolb moved to approve $25,107 for salary (0.5 FTE), plus fringe benefits and any COLA added by the Legislature, and $4,851 to support office building expenses, for an estimated total of $42,543. Ski Mariea seconded. Motion carried.
Office of Administration – Chairman McNutt reminded the Board that this money supports the Governor’s office, Treasurer’s office, Legislature, etc., and since the Fund is part of state government, it needs to help with their operating costs. Ms. Eighmey said the initial figure provided by OA was considerably higher than in previous years, and that she had not received a response to her email inquiry as to why. Tom Kolb suggested that the Trustees wait until the November meeting to vote on OA’s funding request to allow additional time for clarification. Renee Slusher said that would be fine.
Department of Natural Resources – Chairman McNutt introduced David Lamb again to present DNR’s budget request for FY13. Mr. Lamb requested an increase of $23,384 for inspections of non-PSTIF-insured sites and an increase of $165,000 to pay contract workers to oversee cleanups. Ms. Eighmey again recommended against approving funding for the inspections, for the same reasons discussed earlier. As to the second part of Mr. Lamb’s request, she observed that the Department’s LUST workload continues to shrink and asked what DNR’s plan is for downsizing its LUST staffing levels, suggesting the Board should put the Department on notice that PSTIF funding of DNR’s regulatory efforts should begin decreasing in FY14. Mr. Lamb said the Department is trying to improve its turn-around time for reviewing consultants’ reports, and suggested that the additional funding would assist with that effort. Ms. Eighmey questioned that, pointing out that the same argument was made two years earlier when the Department obtained $165,000 from the EPA, but the additional resources had not resulted in timely service or a reduction in the backlog of unaddressed LUST sites.
Renee Slusher moved to approve the Department of Natural Resources’ request as presented. Harry Bozoian seconded. Chairman McNutt called for a roll call vote. Voting in favor were Harry Bozoian and Renee Slusher. Voting against were John Albert, Tom Kolb, Ski Mariea, Don McNutt, Danny Opie, and Melvin Schebaum. Motion failed.
Tom Kolb moved to approve $939,333, plus fringe benefits and any COLA added by the Legislature and Governor, for DNR for FY13. Melvin Schebaum seconded. After a short discussion, a roll call vote was taken. Voting in favor were John Albert, Tom Kolb, Ski Mariea, Don McNutt, Danny Opie, and Melvin Schebaum. Voting against were Harry Bozoian and Renee Slusher. Motion carried.
Petroleum Storage Tank Insurance Fund – Ms. Eighmey then recommended that the Board submit a budget request for FY13 that includes a reduction in its appropriations for claims from $19 million to $18 million, with all other figures the same as in FY12.
Tom Kolb moved to approve PSTIF’s FY13 budget request as recommended, to include $190,351 for salaries, plus associated fringe benefits and any COLA enacted; $2,101,000 for expense and equipment; $18,000,000E for claims; and $10,000E for refunds of participation fees, for an estimated total of $20,396,755. Ski Mariea seconded. Motion carried.
Plan for Implementing SB135 re: UST Operator Training
Chairman McNutt asked Ms. Eighmey to review the plan and schedule for operator training contained in the meeting notebooks. Ms. Eighmey gave a brief overview and noted that Heather Peters from DNR has agreed to assist in implementing the plan.
Updates - Regulations
Chairman McNutt asked Trustees if they had any questions or comments about the report on DNR’s UST operating rules or RBCA rules; there were none.
Administrative Issues
Meeting Dates for 2012 – Chairman McNutt asked Trustees if anyone wanted to suggest a different date for any of the meeting dates listed for 2012; no changes were suggested. Ms. Eighmey remarked that with one member having resigned, another living in another state much of the time, and no new members appointed by the Governor yet, Trustees’ attendance at future meetings would be important to assure having a quorum at each meeting.
Inspections – Chairman McNutt asked if there were any questions or comments about inspections; there were none.
Billings – Chairman McNutt asked if there were any questions regarding the billing information provided; there were none.
Chairman McNutt reminded all present that the next Board Meeting would be in Columbia on November 16, 2011, at The University Club on MU’s campus.
Tom Kolb 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. Melvin Schebaum seconded. Motion carried.
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