March 19, 2014 Meeting Minutes - Missouri Petroleum Storage Tank Insurance Fund
Michael L. ParsonGovernor

March 19, 2014 Meeting Minutes

Governor Office Building
Room 470

Jefferson City,
Start Time:  9:34 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
Tom Pfeiffer
Melvin Schebaum
Renee Slusher

Danny Opie

Staff Present:
Dan Atwill, Atwill & Montgomery
Tim Duggan, Assistant Attorney General
Carol R. Eighmey, Executive Director
H. Patrick Eriksen, President, Williams & Company Consulting
Dan Henry, Williams & Company Consulting
Diane James, Executive Assistant
Jim Layton, Solicitor General, Attorney General’s Office
Patrick J. Vuchetich, Williams & Company Consulting
David Walters, Williams & Company Consulting

Others Present:
Ken Koon, Tanks Section, Hazardous Waste Program, MDNR
Heather Peters, Compliance/Enforcement Section,
Hazardous Waste Program, MDNR

Claim Appeals – Morris Oil – Claims 63180/63181
Ms. Eighmey distributed an email that had arrived the day before from Morris Oil’s consultant, indicating they would not be able to attend Board meeting and asking if they could postpone their appeals to the May meeting.  Chairman McNutt asked the Trustees whether they wanted to postpone the agenda item or proceed with the discussion now.

Tom Kolb moved to postpone discussing these two claim appeals until the May 28 Board meeting.  Tom Pfeiffer seconded.  Motion carried.

Review and Approval of Minutes – November 20, 2013 Open Session Meeting
Melvin Schebaum moved that the minutes from the November 20, 2013 Board meeting be approved.  Renee Slusher seconded.  Motion carried.

Monthly Reports
Chairman McNutt invited questions or comments from the Trustees about the financial statements, monthly activity reports, or large-loss claims.  Tom Pfeiffer noted the standard for free product recovery removal seems subjective and asked how one achieves the standard and whether doing so contributes to the delay in closing large-loss claims.  Ms. Eighmey affirmed it often is a problem and said the standard emanates from EPA’s 1986 rules, so every state has had to wrestle with this question; she noted there has been considerable research and scientific advancement in this area in recent years and that the DNR has agreed to work with PSTIF and others in the coming months to try and clarify this.

DNR Issues
Mid-Year Expenditure Report – Chairman McNutt asked if there were any questions about any of these items; there were none.

Joint DNR/PSTIF Backlog Plan – Chairman McNutt commended the DNR and PSTIF staff for the plan and said he looks forward to hearing the results.  Tom Pfeiffer observed that some of the timeframes in the plan seem to reflect a lack of urgency; he suggested quicker follow-up by the DNR when persons responsible for cleanups fail to take timely actions.

[Jim Ford arrived at the meeting.]

Air Pollution Rule – St. Louis – Ms. Eighmey reminded Trustees that this rule is being amended to eliminate the Stage II vapor recovery requirement and that this provides an opportunity to address some other aspects of the rule that have been a problem for tank owners/operators.

Approve FY15 CSCAP Expenditure
Chairman McNutt noted this annual cost for “central state services” has been reduced from the previous year’s request.  Tom Kolb moved to approve expenditure by OA of $74,629 for central state services in FY15.  Tom Pfeiffer seconded.  Motion carried.

Financial Projections
Chairman McNutt introduced Pat Eriksen from Williams & Company Consulting to present the Fund’s semi-annual financial projection to Trustees.  Using a presentation, (filed with these minutes), Mr. Eriksen explained the latest cash flow projection for the Fund, highlighting changes from the prior projection.  For the first time, he included an estimate of reserves that would be necessary to have on hand at 12/31/20 to pay runout claims.

Discussion followed, including comments about whether the Trustees should lower the transport load fee because the Legislature wants to see the fund balance decline, or increase the fee to assure adequate reserves are available at the Fund’s “sunset date” to pay runout claims.  Trustees noted the ongoing efforts by the DNR and the PSTIF to accelerate the pace of cleanups will be important as the Trustees consider this question in the coming months and years.  It was noted private insurance is available, but favors larger businesses who tend to have newer equipment and would be a burden for small businesses and owners whose equipment is older.

Trustees asked Mr. Eriksen questions about his projected liability figures compared to those on the balance sheet.  There was discussion about whether the Trustees have any means to protect the PSTIF from a legislative decision to use the cash reserves for other purposes.  Trustees talked about when and how to initiate discussions about whether the program should “sunset” in 2020 or not; it was noted the petroleum industry will likely be heavily involved in that discussion.

Legislative Update
At the Chairman’s request, Ms. Eighmey briefly reviewed the various appropriations bills and other legislation of interest; she committed to keeping the Trustees informed of any legislative developments on issues affecting the PSTIF.

Petroleum Equipment, Sulfur, and EPA
Chairman McNutt cited the Board’s concern about corrosion of equipment insured by the PSTIF and asked Heather Peters to review the issue.  Ms. Peters used a power point presentation to review the problems being seen across the country, particularly since the introduction of ultra-low sulfur diesel (ULSD).

Discussion then followed, focusing on EPA’s recent rule mandating the near-elimination of sulfur from gasoline by 2017.  The lack of research or information on whether this may also trigger accelerated corrosion of gasoline storage and dispensing equipment, as it appears to have done in diesel systems, was discussed.

Tom Kolb moved to send the letter included in the meeting materials to EPA.  Renee Slusher seconded.  After additional discussion, motion carried.

Administrative Issues
Sale of E15 in Missouri – Chairman McNutt asked if there were any comments or questions on this issue; there were none.

Advisory Committee Meeting – Chairman McNutt announced an Advisory Committee meeting scheduled for Friday, April 11 and said the meeting would focus on upcoming rule changes.

AGO/PSTIF MOU – Chairman McNutt asked for a motion to approve the proposed MOU.  Jim Ford moved to approve the MOU with the understanding that it will become effective only if the Legislature appropriates the additional PSTIF funds for the AGO.  John Albert seconded.  Motion carried.

LUST and State Fund – FR Workshop, May 19-21, 2014 – Chairman McNutt asked for approval for the Executive Director to travel to this workshop in Florida, noting her travel costs are expected to be fully reimbursed with federal money.  Ski Mariea moved to approve the Executive Director’s out-of-state travel to Florida for this workshop.  Tom Kolb seconded.  Motion carried.

Billings – Chairman McNutt asked if there were any questions about the billings; there were none.

Chairman McNutt thanked those in attendance for coming and reminded all present that the next Board Meeting would be at this same location on May 28, 2014.

Chairman McNutt then stated that the Board needed to go into closed session to approve the minutes from two prior closed session meetings, hear from counsel and make decisions on several lawsuits, hear a report from Ms. Eighmey on fraud investigations, and make decisions on contracts.

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 open session meeting at 11:03 a.m.

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