Connecticut Cleanup Crisis

Half of state's stations in danger of closing over UST cleanup program troubles

HARTFORD, Conn. -- The Connecticut state government is facing a deadline this spring to resolve an $80 million backlog in a fuel cleanup program or risk hundreds of gas stations going out of business, reported the Connecticut Mirror.

A state Department of Energy & Environmental Protection spokesperson told the newspaper the department already is mobilizing industry representatives, state legislators and the U.S. Environmental Protection Agency (EPA) to craft a long-term solution for the Underground Storage Tank Petroleum Cleanup Program.

Plagued by backlogs stretching back nearly a decade, the program owes $17 million in aid already approved for Connecticut businesses--primarily gas stations--that faced leaking underground tanks.

The program also has $81.6 million worth of backlogged applications that haven't been processed yet, DEEP spokesperson Dennis Schain told the Mirror.

Typically, about 70% of the applications have been approved. If that ratio were to hold with the backlogged cases worth $81.6 million, the state would likely have to pay another $57 million in aid.

Since Congress toughened regulation of leaking underground tanks in 1984, state cleanup programs became a crucial alternative nationwide for stations often unable to get private insurance to cover their liabilities, said the report.

For more than two decades, Connecticut funded its cleanup assistance program by dedicating a portion of receipts from its wholesale fuel tax. Between 1990 and 2009, the state's transfer averaged $9.7 million per year, according to budget records cited by the paper.

As the last recession hit and state officials raided a host of programs to avoid deficits, the annual transfer was cancelled. In its place, legislators and former governor M. Jodi Rell allocated $4.7 million for the program in 2010 and $3.2 million in 2011.

This past spring, Governor Dannel P. Malloy and the legislature approved just $1.3 million for the program, both for the current year and for 2012-13. And of that $1.3 million, only $250,000 is available to help businesses, with the remainder to cover administrative costs.

But federal officials in the EPA's Boston regional office warned state officials in July that it might stop recognizing the Connecticut program as an alternative to insurance, given the huge discrepancy between pending awards and applications, and available assistance funds.

"At current funding levels, most owners and operators will not receive reimbursement in their lifetime," James T. Owens III, director of the EPA's Office of Site Remediation & Restoration, wrote to state Environmental Protection officials, according to the report. "Clearly, in its current condition, the use of the state fund as a means of financial responsibility does not encourage--or in some cases enable--releases to be addressed promptly."

Without federal endorsement of the state program, most stations, particularly those with any history of tank leakage, would be forced to self-insure, Michael J. Fox, executive director of the Gasoline & Automotive Dealers Association of America, told the paper.

Fox, whose group represents more than a third of Connecticut's nearly 1,200 licensed gasoline stations, said he thinks close to half of all stations would have to close.

Those large enough to self-insure would have to raise retail prices drastically.

"I think the EPA is 100% dead serious about this issue," Fox added. "We have to deal with it this year."

State officials have asked for more time.

Eugene Guilford, director of the Independent Connecticut Petroleum Association, said the Malloy administration "has shown it thoroughly understands the necessity of putting this program back into a position where it can do what it is supposed to do."

Key state legislators said Tuesday that they also believe they are facing a May deadline to resolve the backlog to the satisfaction of federal officials.