September 19, 2012 Meeting Minutes - Missouri Petroleum Storage Tank Insurance Fund
Michael L. ParsonGovernor

September 19, 2012 Meeting Minutes

Capitol Plaza Hotel
Lincoln Room
Jefferson City, MO
Start Time:  9:33 a.m.

Chairman McNutt called the open session meeting to order.

Trustees Present:
Don McNutt, Chairman
Jim Ford, Vice Chairman
John Albert
Harry Bozoian
Tom Kolb
Danny Opie
Tom Pfeiffer
Melvin Schebaum
Renee Slusher

Ski Mariea

Staff Present:
Tim Duggan, Assistant Attorney General
Carol R. Eighmey, Executive Director
H Patrick Eriksen, Williams & Company Consulting, Inc.
Dan Henry, Williams & Company Consulting, Inc.
Diane James, Executive Assistant
Pat Vuchetich, General Claims Manager, Williams and Company Consulting
Dave Walters, PSTIF Claims Manager, Williams and Company Consulting

Others Present:
Steve Cook (for Cork N Bottle Appeal)
Christina Gardner (for Cork N Bottle Appeal)
Marvin Gibson (for Cork N Bottle Appeal)
Sande Gibson (for Cork N Bottle Appeal)
Ken Koon, Tanks Section, Hazardous Waste Program, MDNR
David Lamb, Director, Hazardous Waste Program, DNR
David Pate, Midwest Environmental Consultants
Heather Peters, Compliance/Enforcement Section,
Hazardous Waste Program, MDNR
Keith Piontek, TRC
Alan Reinkemeyer, Acting Director, Division of Environmental Quality, DNR

Claim Appeals
Former Eicher’s Auto – Claim 40173 – Chairman McNutt introduced Keith Piontek from TRC to provide more information about this appeal and asked him to join Trustees at the table.  Mr. Piontek distributed a summary, (filed with the Board materials for the meeting), and explained why he believes the consulting charges were reasonable.  He indicated the cost estimate for design, bidding, permitting, installation and operation of the remedial system anticipated higher costs than were ultimately charged, and noted Williams and Company never indicated it thought the proposed charges were too high.  He noted the system was the second to be installed at the site and had to be designed to work with the first system already on site.

Chairman McNutt then asked Pat Vuchetich from Williams and Company to review its decision on this appeal.  Mr. Vuchetich acknowledged that it is a judgment call as to how much cost is reasonable for designing and managing a project like this; he distributed a chart showing comparable costs for other sites where SVE systems have been installed, (which is also filed with the Board materials).

Trustees then asked several questions of both parties, focusing on whether the consulting costs were higher than normal because of the urgency of completing the project.  Mr. Piontek said the only task affected by the expedited timeframe was the design costs; however, he pointed out that had there not been such urgency to get a “No Further Action Letter,” the SVE system would have operated longer and the PSTIF would have reimbursed considerably more in operating costs.  He emphasized his view that the overall cost was reasonable and less than total costs would have been, absent the urgency.

Mr. Vuchetich noted TRC’s projects tend to have higher consulting and management costs than some other firms, but that TRC’s work is excellent and Mr. Piontek has been successful in satisfying DNR’s requirements and getting NFAs for his clients.

Chairman McNutt thanked both parties for their information and said the Trustees would discuss the matter in closed session, and that a letter would be sent in the next few days, informing all parties of the Trustees’ decision.

Cork N Bottle – Claim 62881 – Chairman McNutt noted this appellant had asked to delay discussion on the appeal until later in the meeting, as a representative is traveling from Springfield.

Review and Approval of Minutes – July 25, 2012 Open Session Meeting
Jim Ford moved that the minutes from the July 25, 2012 Board meeting be approved.  Tom Pfeiffer seconded.  Motion carried.

Monthly Reports
The Trustees reviewed the monthly reports.  Chairman McNutt thanked Ms. Slusher for the help OA is providing on the issue involving “estimated appropriation” for refunds.

Cash Flow Projections
Chairman McNutt then welcomed Pat Eriksen of Williams and Company and invited him to present his biannual cash flow projection. Mr. Eriksen used a power point presentation, (filed with the Board meeting materials), to discuss the Fund’s financial situation.  He noted the current projection anticipates a slightly lower deficit than predicted six months ago, although additional revenues will be needed if the Fund sunsets in 2020.  He suggested the Trustees may need to consider an increase to the transport load fee in 2016 or 2017.

After a short discussion, the chairman thanked Mr. Eriksen for helping the Trustees monitor the Trust Fund’s financial situation.

Special Research Project on Free Product Recovery
Chairman McNutt re-introduced Keith Piontek from TRC and asked him to explain the special project being recommended by the Executive Director.

Mr. Piontek distributed a one-page summary, (filed with the Board meeting materials), and briefly explained the ongoing research into rates of natural biodegradation of free product.  He showed the device used to trap carbon dioxide and explained how the project would be conducted.  He said TRC is already using the device on a non-PSTIF-eligible railroad site, and explained how the Board’s funding would be used to gain additional Missouri site-specific data.

Ms. Eighmey explained how the project had come to her attention and said the PSTIF has numerous files where the DNR has agreed the remaining contaminants pose no unacceptable risk, but the file cannot be closed because it is unclear how to demonstrate that free product has been recovered “to the maximum extent practicable.”  She said it is not unusual for the PSTIF to spend tens of thousands of dollars on human “free product recovery” efforts, only to recover a gallon or two of petroleum product.  She suggested the research proposed by TRC could produce information that would save the PSTIF a significant amount of money in the future.

Harry Bozoian moved to approve funds for the proposed research project with the conditions that the traps would be installed on PSTIF-eligible sites and the final report would also include analysis and conclusions from the Missouri railroad site that TRC is working on for a different client.  Tom Kolb seconded.  Considerable discussion ensued.  Trustees asked for more detail on the proposed costs, as well as clarification of what the Colorado State University researchers have done, whether the suggested sample size of two sites would provide enough data to be useful, how seasonal variations would be studied, and other details.

Some trustees expressed support for the concept but indicated they wanted to see more information before deciding whether to fund the research.  Others supported providing the funding request as presented.

After discussion, Chairman McNutt called for a roll call vote.  Voting in favor were:  John Albert, Harry Bozoian, Jim Ford, Tom Kolb, Danny Opie, and Melvin Schebaum.  Voting against were:  Don McNutt, Tom Pfeiffer, and Renee Slusher.  Motion carried.

Ms. Eighmey thanked the Trustees for providing direction regarding the project and said a detailed contract will be developed between Williams and Company and TRC to implement the Trustees’ decision.  She said the PSTIF will coordinate with DNR on the project, as it will be important for regulators across the country and the EPA to be knowledgeable about the research.

A short break was taken, after which the meeting resumed at 11:15 a.m.

Claim Appeals
Cork N Bottle – Claim 62881 – Since the appellants and their representatives had arrived, Chairman McNutt asked them and Pat Vuchetich to join Trustees at the table to discuss this appeal.  Appellants were Marvin and Sande Gibson, Steve Cook, and Christina Gardner.

Mr. Vuchetich first outlined the history of the claim; he noted that several persons on site observed free product and expected the soil samples to indicate contamination.  However, because none of the laboratory results indicated the soil was contaminated at levels requiring off-site disposal, Williams had denied costs for transporting and disposing of soil.  He emphasized that the PSTIF claims adjuster who was onsite emphatically denies having directed the contractor to take the soil to the landfill, and instead had informed the consultant that reimbursement of costs for the soil would be dependent on lab results.  He noted the DNR representative onsite had confirmed this.

The Gibsons and Mr. Cook briefly described their view of events; Mr. Cook said the PSTIF adjuster had agreed that “the soil looked bad” and that he should continue excavating.

Christina Gardner summarized her experience with tank removal projects and said the real question is whether DNR would have allowed the soil to be placed back into the excavated area, given how it looked and smelled and given the fact that there was clearly free product floating on the water in the tank pit.

Discussion ensued.  Trustees clarified that it is the owner’s responsibility to meet DNR’s requirements and that owners typically delegate those decisions to their consultants.  Apparently, in this case, the consultant wasn’t making the decisions and there may have been miscommunications about who decided to incur the costs without getting the lab results first.

Trustees asked how long it took to get the lab data; Ms. Gardner said it took a long time, even though the Gibsons had paid the lab an extra fee for expedited results.  Harry Bozoian asked Ken Koon what DNR’s decision would have been regarding whether the soil could have been put back into the pit; Mr. Koon said if the lab data didn’t “match” field observations, DNR would likely have required a second round of sample analyses; had the second set of lab data confirmed the first, DNR would have allowed the soil to go back into the pit, regardless of field observations.

Chairman McNutt thanked all parties for the information and said a letter would be sent in the next few days, informing them of the Trustees’ decision.

DNR FY12 Year-End Report
Chairman McNutt called Trustees’ attention to the year-end information in their notebooks from the DNR and reiterated appreciation for the Department’s diligence in providing this information regularly.

FY14 Funding Requests
Department of Natural Resources – Chairman McNutt introduced David Lamb to present the Department’s funding request for FY14.  Mr. Lamb briefly summarized the information in the meeting materials, explaining the requested increase of $105,000 for salaries and expenses would make up for a reduction in federal funds.  He confirmed that the additional funding would allow continued inspections of UST installations, as the Department has recently been doing.  Chairman McNutt noted Ms. Eighmey supports the request but has notified the Department that as the number of cleanups continues to decrease, funding needs are expected to also shrink.

Jim Ford moved to approve the Department’s funding request for FY14 of $1,051,174, plus fringe benefits and any COLA added by the Legislature and Governor.  John Albert seconded.  There was a brief discussion.  Mr. Kolb noted that the PSTIF has no obligation to cover cuts in the federal budget and asked the Department to remember this next year.  Motion carried.

Department of Revenue – Chairman McNutt asked the Trustees to take action on this request, noting it is the same as in previous years.  Tom Kolb moved to approve the Department of Revenue’s funding request for FY14 of $28,106 for salary, expenses and equipment, plus fringe benefits and any COLA added by the Legislature.  Melvin Schebaum seconded.  Motion carried.

Attorney General’s Office – Chairman McNutt referred to a letter distributed at the beginning of the meeting, noting it had arrived the same day the Trustees’ notebooks were sent.  He noted the AGO is requesting the same level of personnel funding as for FY13.  Ms. Eighmey confirmed that and mentioned they have agreed to delete a small amount for “leasing office space” that was traditionally paid from the PSTIF.  Jim Ford moved to approve the Attorney General’s Office funding request for FY14 for $25,610 for salaries (0.5 FTE), plus fringe benefits and any COLA added by the Legislature.  Renee Slusher seconded.  Motion carried.

Office of Administration – Chairman McNutt said action on this request would be postponed until next year, when OA can provide a more definitive figure.

PSTIF Board of Trustees – The chairman observed that the figures recommended by the Executive Director are equal to current year appropriations.  Melvin Schebaum moved to request $192,356 for salaries, plus associated fringe benefits and any COLA enacted; $2,100,245 for expense and equipment; $20,000,000 for claims; and $10,000E for refunds, unless a more realistic figure needs to be inserted into the budget bill, for an estimated total of $22,302,601.  Renee Slusher seconded.  Motion carried.

Status Report – EPA Issues
Chairman McNutt asked Harry Bozoian and David Lamb if they had heard any more from EPA about the money they owe the Department for the current fiscal year.  Mr. Lamb responded that he had not.

Chairman McNutt asked the Department to keep Ms. Eighmey informed of EPA’s communications on this matter, expressing his desire to help the Department persuade EPA that Missouri is complying with the Energy Policy Act and that there is no basis for withholding any funding.  He commented that the DNR, Department of Agriculture, and the PSTIF presented a strong and united front to EPA at their August meeting to discuss Energy Policy Act’s “FR” requirement, noting the three agencies are working together to assemble a thorough package of information to send to EPA in early October.  He said he hopes EPA would respond in a positive manner.

Chairman McNutt asked Trustees if there were any questions or comments about EPA issues; there were none.

Approval of Revised Insurance Applications and Software Changes
Chairman McNutt reminded Trustees that the revised application forms were briefly discussed at the last meeting, noting that subsequent changes had been made to address the problematic question about throughput.  He observed that Williams and Company has provided a “not-to-exceed” cost estimate for revising the PSTIF software to implement the revised forms.  He asked if there were any questions from Board members; there were none.

Tom Kolb moved to approve the revised applications and the expenditure, not to exceed $29,880, to modify the Fund’s software.  Tom Pfeiffer seconded.  Motion carried.

Administrative Issues
FY12 Audit – Chairman McNutt let Trustees know that the audit is nearly complete and will be presented at the November meeting.

PSTIF Rule Changes – The Board’s proposed changes to its Definitions and Participation Rules were published in the Missouri Register; copies were distributed at the beginning of the meeting.  The chairman reminded those present that the proposed changes also are available on the PSTIF web site and that the comment period ends October 17, so final action is expected at the Trustees’ November meeting.

E-Newsletter – The PSTIF’s new electronic newsletter being sent to consultants was briefly reviewed.

Meeting Dates for 2013 – Chairman McNutt asked if there were any objections from Board members on the proposed meeting dates provided for 2013; there were none.

Billings – Chairman McNutt asked if there were any questions regarding the billing information provided; there were none.

The Chairman then thanked those in attendance for coming and reminded all present that the next Board Meeting would be in Jefferson City on November 28, 2012, at the Governor Office Building in Room 470.

Jim Ford 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.  Tom Pfeiffer seconded.  A roll call vote was taken; motion carried without dissent.

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