Michael L. ParsonGovernor
Stoney Creek Hotel and Conference Center
Columbia, MO
Start Time: 9:32 a.m.
Chairman McNutt called the meeting to order.
Trustees Present:
Don McNutt, Chairman
Jim Ford, Vice Chairman
John Albert
James Greer
Tom Kolb
Ski Mariea
Marty Miller
Kristen Paulsmeyer
Absent:
Danny Opie
Tom Pfeiffer
Staff Present:
Carol R. Eighmey, Executive Director
H. Patrick Eriksen, Williams & Company Consulting
Thais Folta, Assistant Attorney General
Diane James, Executive Assistant
Patrick J. Vuchetich, Williams & Company Consulting
Others Present:
Linda Bianchi, Thoele Oil
Ray Bosch, U.S. Environmental Protection Agency
Doug Drouare, U.S. Environmental Protection Agency
Lynn Graves, Graves and Associates, CPA’s
Ken Koon, Tanks Section, Hazardous Waste Program, DNR
Angie McMichael, Department of Natural Resources
David Pate, Industrial and Petroleum Environmental Services
Heather Peters, Compliance/Enforcement Section,
Hazardous Waste Program, DNR
Paul Scheetz, Industrial and Petroleum Environmental Services
Steve Sturgess, Hazardous Waste Program, DNR
Jane Taylor, Taylor & Mulder
Review and Approval of Minutes
Jim Ford moved to approve the minutes from the July 20, 2016 open meeting. Ski Mariea seconded. Motion carried.
Ski Mariea moved to approve the minutes from the July 29, 2016 open session vote via email with Marty Miller’s edit to end the sentence after “budget.” Jim Ford seconded. Motion carried.
Claim Appeal – Thoele Oil – Claim 50880
Chairman McNutt asked David Pate and Paul Scheetz to join Trustees at the table to discuss this claim appeal and asked that they limit their comments to twenty minutes due to the full agenda.
David Pate reviewed the history of activities at the site, including the operation of USTs since 1974, the discovery of petroleum impact in 1994, removal of USTs in 2015, and the discovery of “orphan tanks” at that time. He also questioned how the Board’s administrator had calculated reimbursement for clean fill brought to the site to replace impacted soils. He requested additional reimbursement of $91,302.92.
Discussion followed. Trustees asked whether the piping had ever been replaced; Mr. Pate and Mr. Scheetz did not have specific information on that. Mr. Scheetz noted two sets of old steel lines had been found in the vicinity of the orphan tanks, and that the insured USTs had fiberglass piping.
There was discussion about the consent judgment entered into between Thoele and the AGO related to the 1994 release, and about the reasons for the three-week lapse in coverage in 1998 that triggered loss of benefits for pollution from the tanks in operation at that time.
Mr. Scheetz urged the Trustees to conclude all pollution originated from the orphan tanks, which would mean the claim is a “remedial claim” and the 1998 lapse in coverage would have no bearing on benefits. Ms. Eighmey pointed out doing so would mean there is no PSTIF coverage for third-party damages and asked if that was Thoele’s desire. Ms. Bianchi demurred, saying she would have to review whether Thoele has other coverage for third-party claims.
Chairman McNutt thanked everyone for their information and said the Trustees would discuss the matter in closed session, after which time the Executive Director would notify Thoele of their decision.
Monthly Reports
Chairman McNutt invited questions or comments about the financial statements and activity reports. Marty Miller asked Ms. Folta whether it is advisable to remove the contingent liability related to the lawsuit for which the Supreme Court had ruled; Ms. Folta responded the Supreme Court’s ruling is unclear.
DNR FY16 Year-End Report
Chairman McNutt asked if there were any questions or comments on this report. Marty Miller noted the cover page in the Trustees’ notebooks overstates the actual amount spent by the Department, but the enclosed report contains the correct figure.
FY16 Actuarial Analysis
Chairman McNutt introduced Jane Taylor from Tayler & Mulder to present the actuarial report. Ms. Taylor reviewed the scope of work and the conclusions reached, noting the Trustees’ reserves are slightly above the projected undiscounted claims liability. She reviewed losses by year, then discussed projected future liabilities and cash flow, noting their most likely scenario projects a cash balance at December 31, 2020 of $31 million and a runout claim liability, net of operating expenses, of $66 million. Finally, she reviewed large-loss claims, noting on average, it takes 7.7 years for a claim to develop to “large-loss level.”
[Ms. Taylor’s remarks were supported by several slides that are filed with the meeting materials.]
Mr. Kolb asked whether it is common among tank insurers to have so many claim files open for ten years or more. Ms. Taylor said other states’ tank funds operate somewhat differently than does the PSTIF and she did not have that information readily available; she said she would check to see if a comparison can be easily made with other states.
James Greer moved to accept Taylor & Mulder’s FY16 actuarial report. Ski Mariea seconded. Motion carried.
FY16 Financial Audit
Chairman McNutt introduced Lynn Graves from Graves and Associates, CPA’s, to present their audit report. Mr. Graves reviewed the report, highlighting changes from the prior year. He reported the audit had not identified any concerns.
A brief discussion followed. Tom Kolb asked what would happen to the GASB 68 liability if the Fund sunsets in 2020; Mr. Graves responded the other agencies whose employees’ retirement funds are managed by MOSERS would have to pick it up.
Ski Mariea moved to accept Graves and Associates’ audit report. Marty Miller seconded. Motion carried.
FY18 Budget Requests
Chairman McNutt asked the Trustees to take up each agency’s FY18 budget request individually.
Department of Revenue – The chairman announced the Department is again requesting funding for one person to collect the transport load fee and commented it appears the Department will continue using cash accounting, so the Fund’s revenues will continue to fluctuate month-to-month.
Ski Mariea moved to approve the Department of Revenue’s funding request for FY18 of $29,462 for salary, expenses and equipment, plus payroll taxes, fringe benefits and any COLA added by the Legislature. Marty Miller seconded. Motion carried.
Attorney General’s Office – Chairman McNutt reminded the Board they have been funding an extra person for the last three years to handle the double dip cases and announced since the Trustees would be discussing that project in closed session later in the meeting, the AGO’s FY18 budget request will be tabled until the next meeting.
Department of Natural Resources – The chairman then referenced a letter from Steve Sturgess requesting an increase in funding to pay for additional DNR personnel. He announced this request is also being tabled until the next meeting, since the EPA’s review of DNR’s Tanks Section should be completed by then, suggesting it would be wise to wait for that report before making any decisions. He also said some Trustees had questioned whether there is a legal basis for the Trustees to provide funding to the DNR; he asked Thais Folta to look into the history of the matter and analyze state law as well, and to be prepared to give Trustees an opinion at their next meeting. Ms. Folta agreed to do so.
PSTIF Board of Trustees – The chairman then invited a motion regarding appropriations for the Board’s operations in FY18. Jim Ford moved to request $127,550 for salaries, plus associated fringe benefits and any COLA enacted; $2,095,354 for expense and equipment; and $20,070,000 for claims and refunds of participation fees, for an estimated total of $22,292,904. James Greer seconded. Motion carried.
Risk Management Challenges
Chairman McNutt asked Ms. Eighmey to take them through this information.
Pre-1981 Fiberglass Tanks Storing Ethanol Blends – Ms. Eighmey noted there is no coordinated national effort to collect the data needed to analyze risks associated with storing and dispensing petroleum products; EPA and the States do not maintain or make available records on such things as the frequency and severity of leaks from operating USTs, or whether releases from the inner wall of double-walled systems are detected and successfully addressed, thereby mitigating environmental impacts. She said she regularly raises this issue with EPA and state colleagues, but is aware of no plans to improve regulatory record keeping.
She reported letters had been sent to insured owners/operators of fiberglass tanks manufactured prior to 1981, and that follow-up phone calls had been made to all such owners. To date, most express surprise to learn of the compatibility issue but have not objected to the PSTIF’s announcement, and many expressed appreciation at being alerted to the risk.
EPA Report on ULSD Corrosion – Ms. Eighmey briefly reviewed the recent research completed by EPA seems to confirm the long-standing hypotheses about this problem.
Pipe Failure Investigation – With the chairman’s consent, Ms. Eighmey asked Heather Peters to summarize information related to an unusual incident involving a piping failure at a truck stop. Ms. Peters explained the incident and the investigation undertaken by the truck stop owner; she showed a video provided by the owner and said evidence supports the hypothesis that electrostatic discharges caused by high flow rates were burning tiny holes in the piping, although she said both DNR and the owner are continuing to monitor the situation.
Both Ms. Eighmey and Ms. Peters complimented the truck stop owner for taking proactive steps to investigate and address the situation. Jim Ford suggested PSTIF underwriting/compliance staff should be alert to the problem at other facilities with similar equipment.
Reuse of Tanks Empty for 5+ Years – Ms. Eighmey indicated DNR’s rules do not allow a UST that has been empty for five years to be put back in service, but said both the DNR and the PSTIF’s underwriting/compliance staff had been contacted by owners wishing to do so. She commented such tanks pose a high risk, but staff are sympathetic with small business owners and try to work with them when possible to make the state’s regulations less onerous. She invited feedback from the Trustees on the issue.
Chairman McNutt asked Ms. Peters to clarify what the DNR’s rules say, noting it was his understanding that owners were required to remove such tanks. Ms. Peters concurred that’s what the Department’s rules say, but said her agency has not been strictly enforcing that requirement.
Discussion among the Trustees followed. Ms. Eighmey offered to assemble information on the number of sites and owners who are in this situation, noting it is not a large number, but these situations do pose a higher risk to the Trust Fund. Several trustees expressed surprise that the rule was not being strictly enforced.
Jim Ford moved that the Board neither insure nor issue coverage for underground storage tanks that have not been in use for five years or more. James Greer seconded. Additional discussion ensued, during which it was noted the Board might be insuring a few sites like this already. Mssrs. Ford and Greer withdrew their motion. Jim Ford then amended his motion to say coverage will not be issued for underground storage tanks that have been out of use for five years or more. James Greer seconded the amended motion. Motion carried.
Proposed New UST Rules
Chairman McNutt reminded those present of the numerous discussions about DNR’s proposed new UST rules over the last few years. He invited Trustees to look through the published version to get an idea how extensive the proposed changes really are. He said Ms. Eighmey had requested a subcommittee of the Board to help her and Dorcee Lauen prepare comments on the proposed rules and asked Tom Kolb and James Greer to serve in that capacity, since they have more interest in these new rules than other Trustees. They agreed to do so. Chairman McNutt thanked them and said the final version of the comments would be distributed to all Trustees.
Administrative Issues
Board Meeting Dates for 2017 – Chairman McNutt asked that the May 24, 2017 meeting be moved to the week before, May 17. He then asked if the Trustees wanted to change any of the other proposed 2017 meeting dates.
Jim Ford moved to approve the meeting dates for 2017 with the amended May date. James Greer seconded. Motion carried.
MDA Biofuels Grants – The updated list of Biofuels Grants awarded by the Department of Agriculture was briefly noted. Chairman McNutt commented it appears there is more money available than there is a demand for, although someone will presumably eventually be able to use it all. Mr. Albert said additional grant money will be available next year.
ASTSWMO Annual Meeting – October 27-28, 2016 – Washington, DC – Chairman McNutt indicated Ms. Eighmey might attend this meeting and she has asked for approval of her out-of-state travel, which would be federally funded.
John Albert moved to approve the Executive Director’s out-of-state travel to the ASTSWMO Annual Meeting in Washington, DC. Ski Mariea seconded. Motion carried.
Billings – There were no questions or comments on the recent billings.
Chairman McNutt reminded those present that the next Board meeting is scheduled for November 30 at The University Club on MU’s Campus in Columbia. He then asked for a motion to go into closed session to:
• Approve the minutes from the July 20 closed session; 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. Ski Mariea seconded. A roll call vote was taken; motion carried without dissent.
Chairman McNutt adjourned the meeting at 11:31 a.m.