July 20, 2016 Meeting Minutes
Michael L. ParsonGovernor

July 20, 2016 Meeting Minutes

The University Club,
University of Missouri Campus,
Columbia, MO

Start Time:  9:30 a.m.

Chairman McNutt called the meeting to order.

Trustees Present:

Don McNutt, Chairman
Jim Ford, Vice Chairman
John Albert
Tom Kolb
Ski Mariea
Marty Miller
Danny Opie
Kristen Paulsmeyer
Tom Pfeiffer

Absent:

James Greer

Staff Present:

Jeff Blaylock, Ford, Parshall & Baker
Carol R. Eighmey, Executive Director
Thais Folta, Assistant Attorney General
Dan Henry, Williams & Company Consulting
Diane James, Executive Assistant
Patrick J. Vuchetich, Williams & Company Consulting
David Walters, Williams & Company Consulting

Others Present:

Conor Barnes, U.S. Environmental Protection Agency
Ray Bosch, U.S. Environmental Protection Agency
Dan Creek, MFA Oil Company
Doug Drouare, U.S. Environmental Protection Agency
Ken Koon, Tanks Section, Hazardous Waste Program, DNR
Laura Luther, Tanks Section, Hazardous Waste Program, DNR
Heather Peters, Compliance/Enforcement Section,
Hazardous Waste Program, DNR
David Powell, Sunbelt Environmental Services
Chris Schaefer, Sunbelt Environmental Services
Steve Sturgess, Hazardous Waste Program, DNR

Chairman McNutt introduced Conor Barnes, Ray Bosch, and Doug Drouare from EPA and Dan Creek from MFA Oil Company.

Approval of Minutes

Jim Ford moved to approve the minutes from the May 25, 2016 open meeting. Ski Mariea seconded. Motion carried.

Monthly Reports

The Trustees reviewed the draft June financial statements and monthly reports.

Ms. Eighmey noted transport load fees fluctuate significantly from month-to-month because the Department of Revenue uses cash-basis accounting. She suggested when she sends the annual letter to the Department, asking for their FY18 funding request, she could ask if they would use an accrual accounting approach to recording the transport load fees. The Trustees expressed support for this idea.

In response to a question from Jim Ford, there also was a brief discussion about the large-loss claims.

Approve Annual Budget for Income Statement

Chairman McNutt asked Trustees to review the FY17 budget information distributed at the start of the meeting.

Marty Miller asked if the Board could wait until its next meeting to approve the budget, since it had not been distributed prior to the meeting. Ms. Eighmey responded the purpose of the document is to have a budget to present on the monthly income statement and suggested the Trustees not wait two months to approve it. Tom Kolb asked if transport load fee revenues should be expected to increase in FY17; Ms. Eighmey suggested the petroleum marketers on the Board probably have a better idea whether that will occur and said she’d be happy to insert a different figure in the budget if they wished. No one suggested doing so.

Jim Ford asked why there was a FY16 figure for pension expense, but nothing budgeted for FY17. Ms. Eighmey reminded him that is a year-end accounting entry provided by MOSERS as a result of GASB 68 and is not an expenditure the Trustees directly control, nor is it a cash outlay they make through the year.

Marty Miller moved that approval of the budget be postponed; Jim Ford seconded. During discussion, the Trustees agreed to approve it via an email vote in the next two weeks, so budget figures would be available for use on the July income statement. Motion carried.

Legislative Report

Chairman McNutt noted the final legislative report for the 2016 session was provided and asked if there were any questions or comments; there were none. John Albert noted his agency would likely initiate steps to raise the petroleum inspection fee fairly soon.

Tank Demographics and Action on Incompatible Fiberglass USTs

Chairman McNutt invited Ms. Eighmey to summarize the information provided in their notebooks. Ms. Eighmey explained that the PSTIF is insuring a few fiberglass tanks that are incompatible with the ethanol-blended gasoline being stored in them; she recommended approval of a plan for alerting these owners and phasing out coverage by 2019.

Discussion followed, with some Trustees expressing surprise about the situation. Heather Peters commented the DNR has long known about the compatibility issue, but had not compelled action by these tank owners because there were no indications the tanks were failing; however, she noted in recent years there have been fiberglass tank failures, raising concerns about the issue. She confirmed the Department supports Ms. Eighmey’s recommendation.

The Trustees suggested initial communications to these tank owners should make it clear the PSTIF will no longer insure the tanks after the 2019 renewal date. They also suggested any locations that also have pre-1981 fiberglass piping be required to replace the piping also.

Marty Miller moved to approve the plan for phasing out coverage for incompatible fiberglass tanks. Jim Ford seconded. Motion carried.

Cleanups and Claim Closures

Chairman McNutt invited Ken Koon to discuss the information provided in the meeting materials regarding the Department’s efforts to accelerate the pace of cleanups.

Mr. Koon first reviewed outcomes of the Backlog Plan jointly implemented by the DNR and the PSTIF in 2014-2015. He noted some cleanups stall when the tank owner/operator goes out of business, files bankruptcy, or passes away; in response to questions from Trustees, he confirmed his staff does try to persuade the property owner to complete these cleanups, but said some landowners refuse.

The Trustees noted that at PSTIF-eligible sites, once the deductible has been met, there is no lack of funding for completing the cleanup and asked whether there are actions the Department can take to compel the property owner to complete the required work, or if the Board could engage a contractor to complete cleanup. Marty Miller observed the Department or the AGO can compel action if there is a clear public health threat, but absent those circumstances, the Department’s authority is limited.

Ms. Eighmey noted the PSTIF Board currently has no procedure for directly hiring a contractor to complete these cleanups, but that is an option that merits further consideration; she suggested Ms. Folta be included in those discussions. She said gaining legal access to the property could be an obstacle in some circumstances.

Ms. Eighmey clarified the 52 claims referenced in Mr. Koon’s presentation were all ones where a viable, insured person or entity existed at the time the petroleum release was discovered. That party took initial actions, but as the projects stretched out over many years, some of the owners passed away and/or the businesses dissolved. In some cases, DNR or PSTIF staff successfully persuaded the landowner to continue the cleanup, but in nine cases, that effort was not successful. She said two lessons learned from this aspect of the Backlog Plan are: (1) It’s important for DNR to assure the cleanups continue moving forward at a reasonable pace, especially in the later years of a project, and (2) For situations where the responsible party “disappears,” there needs to be further analysis of whether lenders who may still have a financial interest in the property or the PSTIF itself can contract with an environmental consultant to complete action.

Mr. Koon added the Department has identified 190 cleanups for which there is no viable responsible party; a few, (like the nine identified on his slide), are cleanups originally initiated by a PSTIF-insured person or entity; others were “remedial claims;” and some are not PSTIF-eligible.

Mr. Koon then discussed improvements made by the Tanks Section to identify and take action on files for which no plans or reports have recently been received. He noted the Backlog Plan had prompted the Department to identify 487 cleanups for which no incoming mail had been received for at least one year. He said subsequent analysis of these files indicated about 190 files where there is currently no viable responsible party; these files have been coded in DNR’s database as “abandoned.” About two hundred files were found where a viable party did exist; the Department sent letters compelling action to those persons, and a new procedure has been implemented to assure action by his staff if a project stalls in the future.

He reported a positive outcome of the Backlog Plan was improved communications between DNR and PSTIF staff members, crediting David Walters for assistance fostering that. He acknowledged Mr. Walters has challenged him and his staff to make more site visits and said the Tanks Section is working toward that goal; he indicated his expectation for the future is that each Tanks Section employee will make at least one site visit per month.

Graphs showing trends in new releases reported, number of cleanups completed, volume of mail received, and enforcement actions taken were reviewed. Mr. Koon noted about 200 plans and reports are received each month for review by his 14-15 employees.

There was discussion about whether consultant training efforts have been effective; it was noted participation by consultants has been low. Designing training to provide continuing education credits was suggested; it was noted registered geologists are not required to undergo continuing education, though engineers are. Ms. Eighmey expressed skepticism that a new certification program or continuing education credits would trigger more participation.

Mr. Koon then summarized the dispute resolution process implemented by DNR and PSTIF as part of the Backlog Plan. Mr. McNutt encouraged Mr. Koon to assure that, when a path forward is agreed-upon, it should be all-inclusive and well-documented, noting some owners and consultants have thought they had an agreement with the Department, only to have the Tanks Section subsequently raise new issues.

Discussion returned to the 190 cleanups identified as “abandoned,” meaning no viable responsible party currently exists; it was noted state law will make the property owner liable for some of those cleanups after December 31, 2017. It was agreed the DNR and PSTIF should identify which cleanups are subject to this statutory provision and alert the property owners well in advance of that date. Mr. Koon reported his staff has already sent at least one letter to the landowner for all 190 of these files.

Mr. Koon then moved to discussion of a second group of cleanups identified by PSTIF after the initial Backlog Plan was completed; these cleanups involve releases identified many years ago, prior to being insured by the PSTIF, at locations which have continued operating as fuel storage facilities ever since. (I.e., The “List of 27” discussed at prior Board meetings.) He noted 22 of these remain to be finished and said the consultants for 18 of them have projected their projects will be complete by the end of 2017. Questions were raised about whether the Department can or will make that happen; it was clarified most of these cleanups are being voluntarily done by someone who is/was not the legally-responsible party, so a lack of enforcement is not the issue. Ms. Eighmey asked Mr. Koon whether he concurs with the consultants that it is feasible to get at least 18 of these files closed by the end of 2017; he responded affirmatively, barring unforeseen circumstances. Mr. Pfeiffer requested regular updates on whether the targeted completion dates are being met for these files.

Mr. Koon also reviewed his plans for future actions, as outlined in the Trustees’ notebooks, including continuing several initiatives undertaken as part of the Backlog Plan, improving enforcement efforts, developing more guidance documents, working with PSTIF and others to solve problems related to “plume stability,” and transferring responsibility for review of restrictive covenants from the Department’s legal staff to the Tanks Section.

Ms. Eighmey asked when the latter item can occur, noting it has been discussed for quite some time; Mr. Miller responded this change can be implemented within two weeks.

Chairman McNutt thanked Mr. Koon for the information and for engaging in discussion with the Trustees.

Steve Sturgess then asked Ms. James to load a different presentation onto the AV equipment; he apologized for not providing it in advance and said he’d provide copies after the meeting. He announced he wanted to provide additional information on the Department’s perception that the PSTIF is an impediment to getting cleanups completed; he emphasized his remarks would reflect only conversations he’d had with DNR staff and management, and that he had not sought information or perspectives from PSTIF staff or others. He also commented his remarks would not be “quantitative,” as the Department does not “track” the frequency of the problems he intended to describe.

Mr. Sturgess reviewed the missions of the Department and the Tanks Section, quoted from a 2009 publication identifying the PSTIF’s responsibilities, and reviewed an excerpt from the statutes governing the PSTIF.

He then reviewed historical challenges DNR staff has faced, including a “massive workload,” inadequate staff and funding, staff turnover, lack of registered geologists and professional engineers, and lack of adequate follow-up by Tanks Section staff. He said during its recent review, EPA had concluded the Tanks Section was understaffed and needs at least four additional employees. He noted DNR shares culpability for cleanups not getting completed in a timely way, noting the Department had not always taken timely enforcement actions, its policies and procedures had evolved over time, technical guidance documents were lacking, decision-making was not always timely, and it’s been a longstanding challenge to decide what cleanup standards should apply to groundwater. He commented that, “before MRBCA,” DNR required most tank site cleanups to meet drinking water standards. Ms. Eighmey interjected that was not accurate.

Additional challenges identified by Mr. Sturgess included cleanups being incomplete and files having to be reopened, cleanups stalling due to lack of a viable responsible party, the $10,000 deductible applicable to PSTIF-eligible cleanups not being met by the responsible party, difficulties with consultants, and “PSTIF issues.” The remainder of Mr. Sturgess’ presentation was focused on “PSTIF issues.”

He alleged PSTIF sometimes refuses to acknowledge a release has occurred, thereby preventing project initiation.

He alleged PSTIF often refuses to fully fund site characterization, labeling this the “biggest issue.” He alleged PSTIF “revises or reduces” a work plan previously approved by the Department, who does not know about the changes until the site characterization report is received. He said he thinks PSTIF adjusters are revising the work plans “in the field.” He then said when his staff is in the field and it’s apparent a few additional borings or wells will complete delineation and eliminate the need for future mobilizations, PSTIF adjusters are refusing to allow the work to be done because costs for it were not pre-approved.

Upon questioning, Mr. Sturgess confirmed his understanding is this is occurring when DNR staff are present on site while the work is being done; he asked Laura Luther to verify that. She corrected Mr. Sturgess, acknowledging that her staff is rarely onsite, and said the allegation is based mostly on what she and her employees hear from consultants.

He alleged PSTIF sometimes refuses to address offsite impacts, mentioning there can be disagreements about what the “reasonably anticipated future use” of adjacent properties is, and that PSTIF has refused to address “third party issues” like vapor intrusion and current or future drinking water impacts.

He said his staff sometimes hears “second-hand” that field data is being collected, but is not being provided to the Department, and this failure to “share data” impedes progress.

He alleged PSTIF sometimes “challenges DNR’s technical standards” and, since PSTIF is paying for the work, this puts consultants “in the middle.”

He concluded these problems result in incomplete or poor work products, multiple site characterization mobilizations, and deadlines not being met.

He alleged PSTIF opposes the development and use of standardized guidance documents, preferring short fact sheets.

He then presented a chart, estimating differences of opinion over whether the groundwater must be cleaned up to drinking water standards is impeding progress for 11% of DNR’s open cleanup files; differences about risks to surface water are impeding progress for about 1% of its files; differences over whether free product has been recovered to the extent practicable is a problem on 12-19% of the files; and PSTIF disagrees with DNR on “plume stability” on about half of DNR’s files. He reiterated these are estimates, not based on actual data.

He then expounded on his previous discussion about site characterization.

Next, he alleged PSTIF asks DNR to issue “No Further Action Letters” when there is a “lack of data or technical concerns,” which results in the file sitting idle while the two agencies attempt to resolve their differences. He alleged there is no agreed-upon dispute resolution process.

Mr. Sturgess then quoted excerpts from the 2012 EPA review of Missouri’s LUST program and from a March 2016 letter the Trustees had received from EPA.

Finally, he presented his ideas for improvement, suggesting DNR and PSTIF should review their respective roles; PSTIF should rarely question DNR’s decisions and only when it believes costs are excessive; and DNR should “continue pursuing” the Backlog Plan, seek other ways to hasten the pace of cleanups, and if possible, increase its staffing, including hiring more geologists and engineers.

He said when consultants fail to meet their deadlines, more meetings should be held. He said consultants’ reports are often incomplete or poorly written and suggested “template reports and checklists” be developed. He suggested where there is a reasonable concern about offsite impacts, DNR and PSTIF should work together to standardize procedures for access to offsite properties, for characterization, and for response to “third-party exposure issues.” He recommended the Department develop more “how-to” documents and more guidance documents on free product recovery, plume stability, and vapor intrusion.

He suggested the Trustees should eliminate the requirement for responsible parties to pay the first $10,000 of cleanup costs and said the Department’s attorneys have concluded this can be done; for example, PSTIF could fund the first dollar of a cleanup and recover the deductible when the property is sold. He suggested this would get cleanups underway for some “abandoned” sites.

He indicated he wants to improve the Department’s tanks program and said a trained facilitator will conduct an “E3” event, designed to “Enhance Effectiveness and Efficiency,” with tanks staff later in 2016.

Chairman McNutt thanked Mr. Sturgess for his presentation, noting he had acknowledged it was a “one-sided presentation,” and said dialogue between the Department and the Board’s staff about the presentation needed to occur. He asked that Mr. Sturgess’ presentation be sent to the Trustees and Ms. Eighmey and emphasized it is important for both sides of these issues be presented and discussed.

Ms. Eighmey commented there was much in Mr. Sturgess’ presentation she would like to discuss with him and asked if he was willing to meet with David Walters and her to start the needed dialogue; he said he was. She asked if he was available later that week; he was unsure but agreed to send Ms. Eighmey some dates he would be available.

Mr. Miller remarked he recognized PSTIF staff may have been unhappy about some of Mr. Sturgess’s remarks. Ms. Eighmey responded her “unhappiness” arises from the fact that she and Mr. Walters have both had an “open door” for many years and have repeatedly invited DNR to bring any problems or concerns to their attention, but DNR managers never contact either of them with specific concerns or examples of files where DNR believes PSTIF is impeding progress.

Rules Update

DNR UST Rules – Chairman McNutt briefly reviewed the status of and DNR’s UST rule changes and the schedule for finalizing them. He mentioned he had attended the PSTIF Advisory Committee Meeting, where there was a good discussion of the proposed changes; he also noted DNR has invited tank owners, equipment companies, and others to a workshop on the rules at its office the following day. He expressed appreciation to Ms. Peters for her efforts to inform folks about the rule changes and asked if Trustees had any questions. Jim Ford affirmed Mr. McNutt’s compliment of Ms. Peters’ efforts.

MDA Labeling Rule – Chairman McNutt noted the new labeling rule is going into effect soon, but as has been discussed, will only affect a small number of retail locations where higher blend biofuels are sold.

Five-Year Rules Review – Chairman McNutt referenced the notice published in the July 1 Missouri Register, inviting comments on the Board’s rules. He asked Marty Miller to forward any comments on the PSTIF or the Board’s rules to Ms. Eighmey; Mr. Miller agreed to do so.

Administrative Issues

Draft Payment Guidance – Chairman McNutt asked Ms. Eighmey to explain the proposed payment guidance. Ms. Eighmey noted there had been questions about what is or isn’t eligible for reimbursement for certain kinds of claims. She and her staff concluded written guidance would be helpful, both for internal use and to help tank owners and consultants. Mr. Miller said the Department supports issuance of the guidance.

Jim Ford moved to approve the payment guidance document as presented. Tom Pfeiffer seconded. Motion carried.

Update – Operator Training – Chairman McNutt mentioned there had been an excellent response to the Operator Training mailing and even more responses have been received since they were tallied for the Trustees’ notebooks. He said compliance documentation still is needed for fewer than 700 sites and opined this again demonstrates Missouri tank owners’ outstanding record of complying with UST rules.

PSTIF Website Design – Chairman McNutt noted a contractor has been engaged to redesign the PSTIF website.

Billings – There were no questions or comments on the recent billings.

Chairman McNutt reminded those present that the next Board meeting would be on September 21 at Stoney Creek Inn in Columbia. He then asked for a motion to go into closed session to:

• Approve the minutes from the two previous closed sessions; and
• Discuss ongoing and threatened litigation.

Jim Ford moved that the Board go into closed session to discuss the matters identified by the Chairman, as authorized by Section 610.021, RSMo. Tom Pfeiffer seconded. A roll call vote was taken; motion carried without dissent.

Chairman McNutt adjourned the meeting at 11:20 a.m.

 

 

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