LUSTy Accusations

An accounting firm hired to administer a state fund to clean up leaky underground fuel tanks has been padding its pockets at taxpayers' expense, according to a woman who until earlier this month was charged with overseeing the cleanup effort.

Tara E. Roesler made the allegation in a four-page September 16 letter to state Representative Rusty Bowers, Republican of Mesa, who chairs the House Environment Committee.

Bowers and some unlikely allies believe Roesler's allegations warrant investigation.

Roesler, a certified public accountant, was appointed to oversee the leaking underground storage-tank (LUST) cleanup in 1994 by former Department of Environmental Quality director Ed Fox. A longtime state employee, Roesler quickly won praise from legislators for bringing the once-moribund cleanup project online.

Three weeks ago, though, Roesler and DEQ ombudsman Royce Flora were placed on paid administrative leave and escorted from their offices amid allegations that they had funneled cleanup jobs to a favored clique of contractors.

In her letter, Roesler says the opposite is true. She says she and Flora were ousted because they were unwilling to ignore the fund's mishandling by the accounting firm.

"I believe that the actions taken against my colleagues and myself by Russell Rhoades, Director of DEQ, represent a reprisal, a prohibited personnel practice against employees for disclosure of information of a matter of public concern," Roesler wrote.

DEQ spokesman Jim Norton said September 20 that Rhoades could not comment on the ongoing investigation, which is being conducted by the state Department of Administration.

Likewise, neither Roesler nor Flora would comment on the advice of their attorney. Sources close to the two ousted employees say they have not yet been formally told why they were suspended.

In her letter to Bowers, Roesler outlines three areas that represent a "gross waste" of tax dollars.

At the top of the list is Peterson Consulting Limited Partnership, a Chicago-based accounting firm that cuts checks to scores of contractors who specialize in cleaning up underground leaks.

According to Roesler, Peterson, which was paid more than $4 million last year (almost 20 percent of the fund's annual take, which comes from a penny-per-gallon gasoline sales tax), was overcharging the state for processing contractors' claims. A source tells New Times that Peterson Consulting may have forced contractors to repeatedly reapply for payments, thereby driving up administrative costs and, hence, Peterson's revenues.

It was in the best interest of several of Peterson's Phoenix employees, Roesler writes, to keep word of problems at the office from reaching company headquarters in Chicago.

Dave Benkert, who heads the Phoenix office, said Monday he had been instructed to refer all inquiries to Norton, the DEQ spokesman. Calls to Peterson's Chicago office on Monday were not immediately returned.

In her letter, Roesler states that she negotiated with Peterson to reduce its rates by 38 percent. A further audit revealed that Peterson's rates were still too high, and Roesler again badgered the firm to lower its costs, she writes.

She states that on September 3, after receiving assurances from Peterson that costs would be reduced even more, a copy of the new agreement was faxed to Robert Stephenson at the state Procurement Office, which oversees all state contracts. A few hours later, Roesler and Flora were placed on leave.

Roesler writes that Stephenson "ignited" when he learned of the lower rates Roesler had negotiated. Stephenson called the statement "ridiculous."

"How are you supposed to respond to something like that?" Stephenson asks, refusing to comment further.

Stephenson, along with everyone else named in the letter, may soon have ample opportunity to respond. On September 18, Representative Bowers said he would seek hearings to find out exactly what has gone wrong with the fund.

Calling Roesler "the only bureaucrat I've ever liked," Bowers said he found it hard to believe that someone with her reputation for honesty would run afoul of state contracting procedures.

Bowers' opinion is shared by Democratic Representative Elaine Richardson of Tucson, a longtime supporter of the cleanup effort. The irony of a pro-environment Democrat siding with the conservative Bowers--a booster of last year's ill-fated "polluter protection act"--is not lost on Richardson.

"I'm not trying to put in a plug for Rusty [Bowers]," Richardson said, "but on this issue, at least, he's right on."

In her letter, Roesler also writes that she ran afoul of DEQ's enforcement division.

"She was always more willing to work with people than to punish them," says a source close to the investigation who spoke on condition of anonymity. "Well, that put her at odds with some of the guys in enforcement."

The timing of Roesler's ouster has raised eyebrows--Bowers' included--because it coincided roughly with the renewal of Peterson's state contract last week. With Roesler out of the way, some of her allies have said, Peterson was guaranteed smooth sailing.

As for the allegation that Roesler and her compatriots tried to steer work toward certain contractors, sources say that Roesler made waves by advocating a new type of cleanup called bioremediation. In bioremediation, microbes that consume hazardous wastes are injected into the soil. The process is generally regarded as much cheaper than other cleanup techniques, such as removing the leaking tank altogether and treating the soil.

That put her in direct conflict with the contractors who were using older, more expensive techniques, the source says.