Little Oil Company Creates Big Problems

Thursday, March 27, 2008

By NOAKI SCHWARTZ, Associated Press Writer


LOS OLIVOS, Calif. — 

When a Firestone Vineyard employee discovered oil trickling down a creek in January in this wine country town, the source of the contamination was no surprise to firefighters.

Of 21 refineries in California, Greka Oil & Gas Inc. is the fourth-smallest producer, but the state's biggest inland oil polluter, according to state officials.

Broken pumps, busted pipes, overflowing ponds and cracked tanks at Greka installations have spilled more than a half-million gallons of oil and contaminated water since 1999, fouling the water, soil and air in the Southern California county many consider the birthplace of the nation's environmental movement.

Over the past nine years, the Santa Barbara County Fire Department has responded at least 400 times to oil spills and gas leaks at Greka, resulting in fines, citations, federal and local prosecutions and investigations by the Environmental Protection Agency and state Fish and Game.

"I've been in the hazardous materials business for 20 years and this is the worst oil company I've ever seen," said Robert Wise, who works at EPA's Superfund division.

The company says it is a victim of sabotage _ a claim local and federal authorities dispute _ and overzealous regulators.

"To say that Greka is a major polluter is a joke," said President Andrew deVegvar. "To the extent to which we're being portrayed as some kind of Darth Vader of the oil industry is not appropriate."

While the company has been fined more than $2.5 million over the years, authorities are losing patience with Greka. This winter the county Fire Department hit the company with stop-work orders against most of its operations.

Some conservationists and others suspect Greka's political connections _ along with piecemeal regulation by overlapping agencies and weak inland oil spill laws _ have allowed it to continue operating. Greka leases land from current and former county supervisors; another former supervisor is on the Greka payroll.

That the spills are happening in Santa Barbara County is perhaps the cruelest twist for environmentalists.

The mountainous coastal area dotted with boutique wineries and the ranches of President Reagan and Michael Jackson was a catalyst for the environmental movement. A disaster at a Union Oil Co. platform in 1969 coated miles of beaches with oil, killed thousands of birds and helped lead to the Clean Water Act and a moratorium on offshore drilling.

Greka set up shop in Santa Maria in 1999, taking over aging facilities from major oil companies and turning crude into asphalt and other products.

From 1999 to 2007, the Santa Barbara Air Pollution Control District inspected Greka facilities 855 times and issued 298 violations. During that period, 203 Greka spills threatened or polluted state waters 20 times, according to Fish and Game.

"Right now I can't think of anybody that is worse than Greka," said Steve Edinger, assistant chief of Fish and Game. "They are the biggest inland oil pollution problem we are dealing with across California. Nobody has our attention like Greka does."

Authorities say Greka employees have been spotted covering up oil contamination with fresh dirt and were once caught plugging a corroded storage tank with a tree branch _ accusations the company rejects. The district attorney cited Greka for 104 violations in 2004 after employees were allegedly caught trying to tamper with old pollution-belching engines. Greka settled with the county for $675,000.

DeVegvar has said the number of incidents is not out of line with those of other producers when looked at on a per-well basis. But the EPA's Wise said that is true only if Greka wells that aren't in use are counted, too.

Greka has spent tens of millions of dollars in upgrades, deVegvar said. The company recently said it was tightening security, and in January announced an environmental initiative dubbed Greka Green. But just a day later, it was hit with an 8,400-gallon spill.

Brooks Firestone, whose family leases land to Greka, was one of two members of the county Board of Supervisors who blocked an emergency hearing on Greka in December. He said the staff needed more time to prepare, and warned board members not to become hysterical.

"To me, a huge event involving oil was the Kuwaiti oil fields that were fired by the Iraqi army in the first Gulf War, the 1969 oil spill in the channel, the Valdez tanker and the Normandy tanker," Firestone said at the time. "What is the meaning of this incident?"

Days later, on Jan. 5, Greka spilled more than 190,000 gallons of oil and contaminated water on the land it leases from the Firestone estate. Since that spill, Firestone has withdrawn from deciding matters related to Greka.

Firestone, an heir to the tire fortune, said it would be too difficult to calculate how much income he receives from Greka. On political disclosure forms, he said he owns only 9 percent of the vineyard land on which the Greka installation sits. Officials have to own at least 10 percent of a business to disclose income from it.

A former county supervisor, Mike Stoker, has served as a Greka spokesman and said he was hired last year as a consultant to improve the company's relationship with local regulators and help Greka become a "better corporate citizen." He would not say what Greka pays him. Stoker is also the $60,720-a-year district representative for state Sen. Tom McClintock.

After a series of spills, including the incident at the Firestone estate, the fire department issued its stop-work orders; the EPA launched an investigation and threatened Greka with tens of thousands of dollars in fines per day; a state lawmaker began working on legislation that would beef up enforcement, impose higher penalties and provide more resources to clean up inland spills; and the county government, which issues various permits, began looking into increasing its penalties, too, and making companies reimburse emergency cleanup costs.

"I believe in giving people and businesses more than one chance, a number of chances if they're trying to make things right, but I don't believe in 400 chances," said Doreen Farr, a former planning commissioner running for a seat on the board.

Greka officials have mounted an aggressive defense, threatening to sue the county for $100 million if it isn't allowed to reopen and offering a $25,000 reward for information leading to the arrest of saboteurs.

Meanwhile, even with operations largely shut down, firefighters responded to five incidents at Greka installations last week.

(This version CORRECTS amount in fines.)

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