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Chairman
Creech called the meeting to order at 9:30 a.m. Trustees present:
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| Trustees
Present: |
Absent: |
William "Bart" Creech III, Chairman
Judy Baker
James Ford
Neal Gibbons, Sr.
Ron Hooker
Robert Jackson
Joyce Murphy
Dan Schuette (Designee for Steve Mahfood) |
Bob Abernathy
Gary Collins
Don McNutt |
| Staff
Present: |
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Carol
R. Eighmey, Executive Director
Tim Duggan, Assistant Attorney General
Terry M. Nichols, Administrative Assistant
H. Patrick Eriksen, Director of Operations
Pat Vuchetich, General Claims Manager
Mike DePaemelaere, Operations Manager
David Pate, Claims Manager
Dave Taylor, Litigation Manager |
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Claim
Appeal - X-Press Truck Stop, Claims 60437 & 61321
Warren Foskett presented the appeal on behalf of the owner, Sta-Lo
Oil Company. He explained the history of operations at the site, when
contamination had been discovered, and why he did not think the owner
should be assessed two deductibles. He stated that he thought all
contamination at the site was from historic operations, and that there
had not been a release at the site since PSTIF issued insurance coverage.
Carol
Eighmey noted that if the contamination was treated as one historic
release, or a "remedial claim," there would be no third party liability
coverage, and the Fund's total obligation would be $1 million, rather
than $2 million. Mr. Foskett acknowledged his understanding of those
facts, and stated the owner was willing to accept those conditions.
There
was additional discussion about the physical layout of the tanks at
the site.
Approval
of Minutes
Bob Jackson made a motion to approve the minutes from the July 19
meeting. Ron Hooker seconded; motion carried.
Monthly
Reports
Chairman Creech invited questions from Board members. Bob Jackson
inquired about Section 107 claims; Ms. Eighmey explained these are
payments made to an underground tank owner when the Department of
Natural Resources requires the owner to conduct special tests and
his tanks are not found to be the source of contamination detected
in the environment. She noted there is no deductible on these payments,
which are rare.
It was
reported that 41 remedial claims are "on hold."
Ms. Eighmey
noted a slight drop in recent months in the number of insured underground
tank sites, and observed considerable financial stress exists in the
petroleum marketing industry at present.
Updated
statistics from the Department of Agriculture's Division of Weights
and Measures were distributed; a copy is attached hereto.
FY02
Year End Report from DNR
The Trustees reviewed the year-end statistics summarizing work done
by DNR. There were no questions. Ms. Eighmey complimented Ed Galbraith
on his monitoring of outputs and budgets.
Risk-Based
Decision-Making
It was reported that the Stakeholders' Committee which has been working
to draft a "Risk-Based Decision-Making" rule has been meeting regularly,
and had divided into subcommittees to discuss specific issues. A consultant
who is knowledgeable about other states' RBDM programs has been assisting
with the process.
Ms. Eighmey
referenced the report in the Trustees' notebooks, which was recently
provided to the Clean Water Commission, and noted it anticipates completion
of the rule by year's end. She expressed some doubt that the deadline
would be met, but indicated she and David Pate were participating
fully in the process on behalf of the PSTIF.
Ed Galbraith
agreed that the process had been lengthy and time-consuming, and noted
it had taken considerable time for the participants to come to a mutual
understanding of basic concepts and terminology.
Bob
Jackson expressed some concern about the impact the rule will have
on urban areas, and questioned whether consensus among all parties
can ever be achieved.
Ms. Eighmey
said she remains optimistic the rule will be completed, but cannot
predict when.
Cash
Flow Projections
The chairman called on Pat Eriksen to present the updated projections;
Mr. Eriksen's presentation is attached hereto. He noted a key question
has always been how many out-of-use tank sites will request benefits
from the PSTIF, and reported recent computer queries had been done
to better estimate that number.
He reviewed
the first projection, which assumes no additional remedial claims
are funded, and produces a projected fund balance in 2016 of about
$21 million. He also reviewed a second projection, containing an additional
1,200 remedial claims, which is the most recent estimate of additional
claims for out-of-use tank sites. It showed a projected deficit of
$48 million.
Data
showing the life span of claims was reviewed. Ms. Eighmey noted the
actuary to be hired by the Board will be asked to review and comment
on this data.
Mr. Eriksen
discussed categories of claims by size of payments, noting the number
of claims costing $75,000 or more continues to rise faster than total
claims. He reported the average cost of a cleanup is also continuing
to rise.
Trustees
asked several questions. It was noted that the number of sites where
there is no active cleanup underway but contaminants are slowly degrading,
and PSTIF is paying to sample wells two-four times annually, continues
to grow and there is presently no way to cap those costs. Ed Galbraith
noted the Risk-Based Decision-Making rule, once completed, should
help alleviate that situation. Jim Ford asked how long it is necessary
to monitor such sites; Ms. Eighmey said that issue is under discussion
by the Stakeholders' Committee. Mr. Schuette noted the Clean Water
Law requires that water being used for drinking be cleaned up so it
is safe to drink, and suggested action in such situations should include
more than simply providing alternate water supplies.
FY04
Budget Requests
Attorney General's Office -- A letter from the
Attorney General's Office was distributed; copy attached hereto. It
requested funding from the PSTIF for ½ FTE for FY04. Ms. Eighmey recommended
approval by the Board.
Bob
Jackson moved that the Board approve the request. Jim Ford seconded.
Motion carried.
Department
of Revenue - Ms. Eighmey reviewed the information in the Trustees'
notebooks and recommended the Board not approve the request from Department
of Revenue until or unless a commitment is received from the Office
of Administration that the PSTIF will not be charged twice for the
same services.
Bob Jackson
asked why the Fund is being charged twice for the same services. Ms.
Eighmey said she had not received an adequate explanation. She noted
the duplicative appropriations had been granted by the Legislature
for FY02 and FY03, and the money had been transferred out of PSTIF
by the Office of Administration, without the Board's approval.
Judy
Baker moved that the Board refuse the request from Department of Revenue,
subject to receiving the requested commitment from OA. Bob Jackson
seconded.
Joyce
Murphy noted she has no authority over the Budget Division of OA,
and suggested she and Ms. Eighmey meet with the new budget director
to attempt to resolve the situation. Ms. Eighmey agreed.
Chairman
Creech called for a vote. All trustees present voted in favor, except
Dan Schuette and Joyce Murphy abstained.
Department
of Natural Resources - It was noted the initial request from
DNR had been reviewed and discussed by the committee of trustees appointed
by the Chairman, and the committee had asked DNR to reduce its request
to a level 5% below the FY03 appropriation. Ms. Eighmey noted she
and the committee had met with Dan Schuette and other DNR staff, and
the Department had agreed to accommodate the committee's request.
Bob Jackson
complimented the committee on its work and moved that its recommendation
be approved. Judy Baker seconded the motion.
It was
noted that the committee and Departmental staff had agreed to continue
discussions throughout the fiscal year to better prepare for any future
changes in funding levels from PSTIF. Chairman Creech agreed that
would be prudent, and recalled previous commitments from the Department's
Director to reduce reliance on PSTIF for the tanks regulatory program.
He asked the committee to continue functioning as needed to participate
in further discussions with DNR. It was agreed that Ms. Eighmey would
meet with Dan Schuette and Ed Galbraith to initiate discussions on
long-term planning, then the committee could be brought into the discussions
as needed.
Chairman
Creech called for a vote on the motion. All trustees present voted
in favor, except Dan Schuette, who abstained.
PSTIF
Board of Trustees - Ms. Eighmey distributed a recommendation
regarding the Board's appropriations, which is attached hereto. She
summarized it as follows: (a) It would give the Board the option of
consolidating the office space and costs for its employees and its
contract staff; (b) It would give the Board enough additional appropriation
authority to fill its vacant staff position; (c) It would give the
Board additional flexibility for paying claims processing costs as
claim costs rise and fall, and would accommodate any claims processing
cost increases which might be incurred as a result of rebidding the
third-party administration contract; and (d) It would shrink the total
appropriation requested by the Board as part of the state's budget.
Judy
Baker moved that the Board approve the Executive Director's recommendation.
Bob Jackson seconded the motion. Discussion followed.
Joyce
Murphy noted there was some question whether any "expansion items"
would be included in the Governor's budget, due to the budget problems
the state is facing. She expressed reservations about whether the
Board should ask for any increases in its appropriations. Ms. Eighmey
responded that she understood that concern, but that the budget problem
is with general revenues and she believed the Board has an obligation
to request adequate appropriation authority to operate the program.
She also noted the total request recommended for FY04 was less than
for FY03.
Chairman
Creech asked for a roll call vote on the motion. Trustees Creech,
Gibbons, Baker, Jackson and Hooker voted in favor. Trustees Ford,
Schuette and Murphy voted against. Motion carried 5-3.
Administrative
Issues
It was recommended that the Board appoint Sonny Underwood, President,
Mid-South Steel, to its Advisory Committee. Neal Gibbons moved the
Board approve the appointment; Ron Hooker seconded. Mr. Hooker noted
Mr. Underwood is well-known as an expert in the manufacture and installation
of tank systems and has served in leadership positions in various
national organizations. Motion carried.
Ms.
Eighmey reported the field work for the audit of FY01 and FY02 was
nearly complete.
Dan Schuette
asked for additional information about the bills for the special project
undertaken by Williams & Company. Ms. Eighmey agreed to send him additional
details.
Judy
Baker 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. Bob Jackson
seconded, and the 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.
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