North Stonington - A tense debate over who owns 400 gallons of old heating oil and what to do with it continued at the Board of Selectmen meeting Tuesday night.

The issue began when Stephen Holliday, the town's public works director and highway foreman, went on his own time - apparently as an employee of contractor Richard E. White & Sons - to remove slightly more than 400 gallons of heating oil from an underground tank several weeks ago and transport it to his home.

The fire company received a $1,500 estimate from the contractor in 2011 for the removal of the tank itself - which is still in the ground - as part of its transition over to natural gas.

When Holliday informed the Board of Selectmen that he'd taken care of the oil himself, Selectman Bob Testa questioned whether the oil was handled appropriately.

With about a dozen members of the North Stonington Volunteer Fire Co. in attendance Tuesday night, First Selectman Nicholas Mullane read aloud a letter from town attorney Robert Avena, which echoed earlier statements from Mullane: The state of the oil and its disposal are matters between the fire company and the private contractor, and not a legal issue the town should become involved in.

However, Avena also called the use of a town employee as a subcontractor "ethically problematic" and "not an ideal situation," and suggested that the town follow up with Holliday to ensure the oil is properly stored and disposed of.

Fire/EMS Committee Chairman Mark Perkins Jr. suggested that the fire company's board of trustees conduct its own investigation, calling the use of selectmen meeting time a waste and "ridiculous."

"This problem is between the board of trustees and the contractor who we chose to do this work," Perkins said, later adding, "I'm not sure where the town gets involved when our lawyer says that as far as he's concerned, that oil is the property of the fire company, not the property of the town."

Testa responded that while he respects the separation of the fire company and the town government, he still has concerns over whether Holliday had the proper permits to move the oil. Even if it's waste, he said, someone would need to come and remove the oil - expenses the fire company shouldn't have to pay.

He added that if it does turn out there was a regulatory violation, the fire company could be liable.

Testa also returned to the gray area of where the responsibility ultimately lies. Though the fire company operates independently, it still presents its budget annually to the town and receives taxpayer funding. If the oil turns out to be usable - which Holliday said it was not - it should be returned to the town, he said.

"It's not a minor issue," he said.

Both the selectmen and representatives of the fire company said they would look into the issue further, leaving it unresolved Tuesday.

a.isaacs@theday.com