Governor plays hardball with defiant fuel-tank board

The battle to fix Connecticut’s debt-riddled, underground storage tank cleanup fund took a new twist last week. Unable to persuade its board to stop pledging aid from a near-bankrupt fund, Gov. Dannel P. Malloy shut it down by making sure it won’t have a quorum at its next meeting.

With the help of a legislative ally, Malloy was able to ensure that eight of 14 seats on the Underground Storage Tank Petroleum Clean-Up Fund Review Board will remain empty.

As the board fell into legal limbo, advocates for hundreds of Connecticut gasoline stations, municipalities and others struggling to pay to fix fuel spills warned that the state could be headed for a legal battle.

“It does not seem appropriate or helpful to add to taxpayers’ costs when we are pursuing legislation to reduce those costs,” said Gian-Carl Casa, a spokesman for Malloy’s budget agency, the Office of Policy and Management, explaining why three board members’ appointments were revoked Friday.

Malloy canceled two appointments: Timothy DeCarlo of Waterbury, a representative of a municipality with a population of greater than 100,000; and Frederick Johnson of Coventry, an engineer and geologist.

House Majority Leader J. Brendan Sharkey, D-Hamden, an ally whose office controls one appointment to the board, canceled the term of Paul McCullough of Stamford, the panel’s chairman.

Four more spots on the 14-member board belong to administration members — who are not attending meetings while the fund deficit is pending before the legislature. And another seat is vacant.

All totaled, eight of the 14 seats would be empty at any future meetings. And with a majority unable to attend, the board cannot constitute a quorum and conduct official business.

At issue is a program that has been plagued by backlogs stretching back nearly a decade. It entered the calendar year owing more than $16.8 million in aid — and funds to cover less than 2 percent of that. That money is owed to Connecticut businesses, particularly gasoline station owners facing leaking underground fuel tanks. The program also had nearly $82 million worth of backlogged applications that hadn’t been processed yet.

And the U.S. Environmental Protection Agency warned the state on Jan. 26 that it would de-certify the program if state policy-makers failed to craft a solution before the General Assembly session ends May 9.

Hanging in the balance are hundreds of gas stations that industry officials say would otherwise go out of businesses.

Since Congress toughened regulation of leaking underground tanks in 1984, federal regulators have accepted state cleanup programs as a crucial alternative for gasoline stations unable to get private insurance to cover their pollution liabilities.

Malloy has proposed bonding $5 million to cover a portion of the approved claims. Municipalities and owners of individual gas stations and small chains would get most or all of these funds. The administration would negotiate with larger chains, which represent roughly three-quarters of pending claims, offering pennies on the dollar.

The administration is working to “make sure that Connecticut’s small businesses, municipalities and innocent landowners will be paid first,” Casa said. “Connecticut taxpayers can’t afford to bail out big oil companies.”

Some legislators have said the alternative would be to scrap the program entirely — a nightmare scenario for many gasoline stations.

The legislature’s Environment Committee has proposed an $8 million allocation, with additional relief for larger chains.

A compromise between the governor and legislature is expected to be negotiated before the May 9 session deadline. Malloy’s budget office asked the Underground Storage Tank review board earlier this spring to suspend business until a deal is wrapped.

But the panel met March 20 and approved another 51 claims, worth more than $1.4 million, lifting the state’s overall obligation now above $18.2 million, according to DEEP spokesman Dennis Schain. DEEP provides staffing assistance to the review board.

And another meeting was scheduled for this Tuesday.

Two of the removed review board members, McCullough and DeCarlo, could not be reached for comment Friday.

But the third, Johnson, said board members had no choice but to continue to meet.

“The board has a statutory obligation to review applications in a certain time frame, and that statutory obligation is still in place,” he said. “We can’t just throw the law away.”

Michael J. Fox, a board member and executive director of one of the state’s largest associations of gasoline station owners, also warned Friday that suspending board operations was a legal risk the state shouldn’t be taking.

“We need to meet our obligations,” said Fox, whose Stamford-based Gasoline & Automotive Service Dealers of America represents more than 400 stations. “I know people are trying to change things, but they can’t circumvent the board in the meantime.”

Casa added that the review board vacancies would be filled if the panel remains in place after a final fund repair bill is adopted. The governor proposed eliminating the board and allowing the commissioner of the state Department of Energy and Environmental Protection to administer the program.

“The board is dominated by people representing the industry and entities that benefit from the fund,” Casa said. “That is inappropriate and should not continue.”

Six of the 14 board seats belong to gasoline station or oil industry representatives.

Sharkey said he backed Malloy’s decision to stop board operations. “The administration has a direction they want to take and the board, frankly, was not working with the administration toward that end,” he said.