Greka’s Monkey Business

Who's to Blame for Letting California's Top Polluter Destroy Santa Barbara's Backyard?

Taking a substantial toll on plant and wildlife, not to mention water-table supplies, leaked oil makes its way down a seasonal creek on Greka's Zaca lease, also owned by the Firestone family, in early January.

This weekend, with solar-powered pomp and eco-minded circumstance, Santa Barbarians of all ages will once again celebrate Earth Day, a holiday as ingrained in our city’s DNA as red-tiled roofs, Fiesta, and mountain-flanked views of the Pacific. It’s been 39 years since Union Oil’s Platform A spewed more than one million gallons of crude oil into the Santa Barbara Channel, the historical hemorrhage that prompted a powerful grassroots upwelling of save-the-Earth consciousness, inspired the creation of Earth Day, and is widely credited for kick-starting the modern environmental movement. In the decades since, our community has worn this catastrophe like a red badge of courage, famously fighting against development, fundraising millions for open space, taking on Earth-damning agendas no matter how slim the odds of success, and struggling relentlessly to keep our creeks, rivers, oceans, and forests pollution-free.

A Federal Environmental Protection Agency-run clean-up effort tackles an oil-choked storage pool-caused by a busted pipe-just off Palmer Road, a few miles north of Los Alamos.
Paul Wellman

But hiding among the decades of victories and vigilance, a small energy company-which bought its way into the county in 1999 by snatching up half-dead, run-down oil and gas leases-has been quietly earning a reputation as California’s number-one inland oil polluter with little to no fanfare from the media, environmentalists, or county officials. Despite racking up more than 200 documented spills that leaked at least 500,000 gallons of oil, violating county air quality standards more than 300 times with releases of potentially deadly natural gases, and provoking a visit from the county’s hazmat teams 400 times in fewer than nine years-not to mention being successfully prosecuted by the federal government for violating the Safe Drinking Water Act-it wasn’t until four months ago, after a publicly visible spill just south of Santa Maria, that anybody in Santa Barbara County wanted to give Greka Oil and Gas Corporation the attention its track record demanded.

Now, with its checkered past and financially lucrative connections to former and current county supervisors laid bare, all eyes-including the national media-are on Greka. But even as everyone works to make sure this type of chronic polluting doesn’t happen again, one can’t help but wonder, in a community that so rightly and righteously hangs its hat on a celebrated environmental legacy, what took us so long to wake up?

Several hundred gallons of crude oil and highly toxic produced water seep from an aged Greka storage tank earlier this year on property owned by Santa Barbara County Supervisor Brooks Firestone's family.

The Eyes Begin to Open

It was a 911 call from an early-morning commuter on December 7 that alerted everyone to the massive oil spill at the Palmer Road processing facility just north of Los Alamos. Four hours later, the flow was finally turned off, but not before 86,000 gallons of crude escaped into the wild, according to the state’s Fish and Game estimates, thereby choking a seasonal tributary to the Sisquoc River and prompting a stop-work order from the county’s fire department.

Alarmed by the size of the spill and already chewing on Greka’s less-than-stellar track record due to her role on the Air Pollution Control District (APCD) board, 2nd District County Supervisor Janet Wolf considered the incident both an “environmental emergency” and a “very, very serious health and safety issue.” Four days later at the next Board of Supervisors’ meeting, Wolf, with the support of 1st District Supervisor Salud Carbajal, did the bureaucratic equivalent of a 911 call by requesting an impromptu discussion of the accident.

However, despite the magnitude of the spill, which rivaled the San Francisco Bay oil barge mishap that garnered international attention late last year, the board’s North County majority killed the discussion before it started, a move that “shocked and awed” Wolf. The stonewalling happened after an impassioned speech from 3rd District Supervisor Brooks Firestone, who chastised the media for “overreacting” to the Greka spill. Instead, a hearing was scheduled for mid January to be both more comprehensive and fairer to Greka.

In a bizarre, some might say poetic, coincidence, Greka spilled another 200,000 gallons of oil and produced water before that meeting could happen, this time near Zaca Station Road on land leased to Greka by Supervisor Firestone’s family, which led to some fairly obvious conspiracy theories. Shortly thereafter, Firestone recused himself from all future Greka decisions and declined to be interviewed for this story. At the time, however, when asked if this was the first spill on the property, Firestone responded, “Oh, no. There have been quite a few over the years.”

EPA clean-up coordinator Robert Wise is no stranger to Greka or Santa Barbara. After spending a fair bit of time in town overseeing the clean up of Greka spills in 2004 and 2005, Wise has been onsite since late last year, overseeing the clean-up activities at several Greka mishaps.
Paul Wellman

The conspiracy flames were fanned even higher when it was revealed in the wake of Firestone’s recusal that former 3rd District supervisor Willy Chamberlain and his family also lease land to Greka. In a typical mineral-rights leasing arrangement, the oil company pays the landowners on a per-barrel basis. In fairness to Chamberlain, who also declined to comment for the story, conflict-of-interest accusations are weak when considering he left office before Greka ever came to town. On the other hand, he does continue to serve in land-use advisory roles. While not commenting specifically on Firestone or Chamberlain’s pay-outs, Keith Taylor-the county’s top number-cruncher for taxing mineral leases-said, with a laugh, “Oh, it’s safe to say [mineral-rights owners] are making out pretty good.”

Wolf and Carbajal weren’t the only ones who raised an eyebrow on the Palmer Road spill. State Assemblymember Pedro Nava, upon reading about the accident and learning about Greka’s laundry list of violations, called for his own multi-agency, fact-finding hearing. Held in Santa Barbara on January 4-less than 24 hours before the Firestone spill-Nava gathered folks from County Fire, the APCD, the California Department of Fish & Game, and the federal Environmental Protection Agency to compare notes on Greka and get to the bottom of why the company’s been able to misbehave for so long. When the smoke cleared at the end of Nava’s standing-room-only hearing, it was obvious that Greka had been a problem for a long, long time and that the County of Santa Barbara-at least at the departmental level-knew all about it.

“I was stunned that this was going on in Santa Barbara County, of all places,” recounted Nava last week from Sacramento. “It is clear that somebody is not taking care of business down there. That is the bottom line.”

Greka owner Randeep Grewal, a former Montecito resident, is an international billionaire but known throughout the oil and gas industry for being tight on the purse strings when it comes to operational costs-a fact that many feel is responsible for Greka's chronic spilling.

Getting to Know Greka

Greka is owned by billionaire Randeep Grewal, a one-time Montecito resident who’s known to be stingy despite an impressive international portfolio. Since 1999, the company has been buying old oil and gas leases-and their aging facilities-from industry giants like Shell and Unocal. The low-grade oil extracted by most of these leases is used for asphalt, which makes good economic sense for Greka because the company also produces the road-paving material. Whereas other asphalt companies suffer falling profit margins with rising oil prices, Greka makes money constantly.

Additionally, Grewal has broken the company into smaller subcompanies, allowing the financial independence for one wing to file for bankruptcy, as the company did after a lawsuit in 2005, even when the other wings remain profitable. One longtime Greka observer called the plan “really remarkable and sound,” and a former county official was quoted in a 2004 news story as saying the model was “absolutely brilliant.”

At last count, Greka owned 67 facilities, 11 stations, and several hundred wells in Santa Barbara County, though many of the latter currently are not in use. But despite a creative business model and impressive numbers, the company’s not making headlines for being a profitable, tax-paying neighbor.

Rather, at the January 4 hearing organized by Nava, the APCD’s head honcho Terry Dressler testified that Greka is “the most challenging source we regulate.” The S.B. County Fire Department’s Tom Franklin, whose agency is the first line of defense when inland oil-pumping goes bad, said that of the 20 onshore operators, “It is Greka that again and again takes up our time and resources.” He then held up a folder of incident reports that was several inches thick. The state also chimed in, as Fish & Game’s assistant enforcement chief Steve Edinger called the volume of Greka spills “extraordinary and well outside the norm” and explained, “Often, we would go out on one Greka event and find out another event is going on, too. : It’s good business practice to not spill, and other operators seem to get this message.” And although Greka purchased some antiquated equipment, other companies such as BreitBurn Energy are able to utilize old facilities and maintain relatively good environmental records, explained EPA clean-up coordinator Robert Wise recently. “Just because you have inherited a 100-year-old field is no excuse,” he said. “I mean, go and look at places like BreitBurn Energy, who’s a new operator but on old leases; those places are immaculate.”

The hearing showed Nava that, in a “very concerning” case of the left hand not knowing what the right hand is doing, it had been a very long time since regional, state, and federal agencies met with the petroleum industry-perhaps as far back as the Avila Beach oil disaster of the 1990s, and that was in San Luis Obispo County. But even worse to him was the implication that the office of Santa Barbara County’s powerful CEO Mike Brown did not regularly brief the Board of Supervisors about Greka and any other habitual environmental evil-doers. “I’m absolutely shocked that did not or does not take place,” said Nava. The state assemblymember’s suspicions about questionable behavior within the county ranks were reiterated by both elected representatives and several county staffers, with more than one suggesting there were informal efforts to squash the sharing of information about Greka.

Also discussed during Nava’s January 4 hearing-and then addressed in much greater detail at the county’s Board of Supervisors’ hearing a few days later-were the shortcomings of the county’s recently updated onshore petroleum codes and the piecemeal enforcement guidelines from various agencies. But Nava still feels the county should be able to pull the plug on Greka.

Why hasn’t that happened yet? “I really have no idea,” said Nava over the phone last week. “And I think a lot of people are starting to scratch their heads and ask that very same question.”

After an approximately 86,000-gallon spill of crude oil at a Greka facility near Santa Maria late last year got his attention, State Assemblymember Pedro Nava, pictured above on the steps of the Santa Barbara County Courthouse during a Greka-inspired press conference last month, has been working to strengthen petroleum codes at the state level to provide stiffer penalties for repeat offenders.
Paul Wellman

The Blame Game

It’s not just the hefty paper trail that suggests the county was well aware of Greka’s grimier side. Just ask Jerry Lulejian, senior deputy district attorney in the North County. From 2003-2005, Lulejian was the point-man on the successful civil prosecution of Greka and the criminal prosecution of a former Greka employee for perjury or, as he puts it, “hoodwinking the APCD.” As he recalls, there was widespread knowledge about the ongoing violation issues with Greka throughout the county.

After nailing Greka for nearly burning to death two strawberry-field workers after one of the company’s tanks exploded in 2003, Lulejian approached Judge Rodney Melville in 2004 wanting to stop the company’s operations due to problems with underground piping and related mandatory alert systems. Though not saying the desired preliminary injunction was out of line, Melville denied the move because, according to Lulejian, the judge did not want the court to “become a second layer of enforcement over County Fire and the APCD.” In the end, Lulejian got about $675,000 in an out-of-court settlement with Greka for the alert failings and the manager who lied to the APCD got a plea deal. Around the same time, the EPA fined Greka $1.1 million for illegally putting highly toxic produced water-a byproduct of crude oil extraction-back into the Earth by injecting it into dried-up wells.

Though he wouldn’t say whether it directly affected the scope of his prosecution, Lulejian does recall that he and County Fire were frustrated by the amount of funding given to them by the county for their regular inspections of onshore oil and gas facilities. Lulejian believed that having an actual petroleum engineer make the rounds with County Fire’s hazmat inspector would catch a lot of the problems that Greka and other operators had long before they ever occurred. But the necessary funding never came.

The County Fire HazMat crew works to clean up a Greka oil spill in a creek earlier this year. The energy company has spilled 20 more times since an emergency Supervisor hearing was held about their nasty habits less than two months ago.

“It would be nice if County Fire had the resources to put the right type of people in place,” said Lulejian. “Things get missed and it’s not the inspector’s fault. They just don’t know the oil industry the way an engineer would.” County Fire spokesperson Eli Iskow recently concurred that, while the standard hazmat inspector does “a very good job and catches about 90 percent of everything going on,” an actual engineer “without a doubt sees farther and deeper than our guys.”

Lulejian explained that an engineer from the county’s Planning & Development Department did actually make the rounds on at least one Greka inspection in 2004. Ironically, the engineer got sick from potentially fatal levels of hydrogen sulfide gas that were leaking on-scene. Later, when the county tried to bill Greka for the engineer’s service, it was denied and taxpayers wound up having to eat the substantial bill.

This apparent unwillingness to adequately fund inspections, especially when the county’s own firefighters and prosecutors see the need, may be the simple result of financially trying times. But there may be other financial motivations at play, as the county uses a complex tax scheme for oil operators that charges newer companies, such as Greka, substantially more money per barrel than those who’ve been in the county longer. Plus, if Greka were to be shut down, the clean-up fees would likely fall on the county, which means less tax revenue, more environmental expenses, and little incentive to go after Greka. Throw in the connections to county powerbrokers such as Firestone and Chamberlain, and there’s plenty of speculation that the lack of hard-line enforcement on Greka during the past decade has been more intentional foot-dragging than accidental ball-dropping.

Though he doesn’t have any hard-and-fast evidence, EPA’s Wise, who is currently overseeing a number of Greka clean-up activities, said he’s been hearing rumors for years that there are efforts from “up on high” in the Santa Barbara County government not to pursue Greka. “I don’t know how true it is,” said Wise recently, “but I’ve repeatedly been told by county field supervisors that, ‘Hey, we want to go after [Greka], but they won’t let us.'” Wise, who first started hearing these rumors in 2005 while dealing with another Zaca Station Road spill on Firestone’s land, remembers issuing a stop-work order at a Greka pump facility during the 2004 Christmas season. When the EPA crew left town for vacation, Wise said the county lifted the order without warning. “I never got a real explanation as to why they did that,” explained Wise, “and believe me, I asked.”

No One’s Talking

At a time when the public’s right to know about Greka seems to be at an all-time high, the county is more tight-lipped than ever. After an Associated Press story a few weeks ago sniffed around the Firestone conflict-of-interest angle, the county issued a de facto gag order for both elected officials and hired hands. This is due to the fact that Greka has threatened the county with a $100 million lawsuit for singling out the oil operator in their current onshore oil code discussions, and any comments could be used in such a suit.

As such, requests for interviews with high-ranking County Fire officials and county petroleum inspectors simply were never answered and, in at least one case, granted and then quickly cancelled. In fact, the don’t-talk-about-Greka decree runs so deep that two county employees cited fear of losing their jobs as a reason for not talking on the record.

Instead, Santa Barbara County’s Communications Director William Boyer, a relative newcomer who began working directly under CEO Mike Brown’s office in 2006, has been offered up as the sole source of information. But Boyer has none and, even after multiple calls with specific questions, has proved little help, other than to say, “I don’t know. I’ll have to check on it,” and, perhaps understandably, “I don’t have the historical knowledge.”

To circumvent this lack of communication and help determine what took so long for the county to bring Greka to task after nearly a decade of spills, The Santa Barbara Independent filed a California Public Records Act request with the County of Santa Barbara seeking any and all documentation of correspondence between CEO Mike Brown’s office and any member of the county’s onshore oil and gas regulatory agencies. The county had not responded to the request as of press time, though according to sources, a reponse is expected by the end of next week.

A look at the Tuesday, November 13, oil spill at Greka Energy's Santa Maria facility.

Similarly intrigued by the communication breakdown, Gordon Hensley of the San Luis Obispo Coastkeeper, working in conjunction with the Santa Barbara Channelkeeper, filed a similar public records request with the county last month. In response, he was told that the associated documents would cost him at least $100,000.

“Basically, I am looking for who knew what and when,” said Hensley. “All I can say is that other sources of information around these spills have been a lot more cooperative.” After joking about how it appears that only the wealthy have access to public documents in Santa Barbara County, Hensley added, “This is the type of thing I do for a living, and the county’s reaction has, to say the least, certainly raised our interest in looking at them.”

But no matter what eventually comes out of these requests, the county cannot alone be blamed for the Greka legacy-the media, the public, and watchdog environmentalists have also been lulled into complacency. Here at The Independent, for example, years ago we began filling an ever-growing folder with press releases about Greka’s various spills and unwanted gas releases. Papers came in so frequently that it became sort of an office joke, and we would rarely write anything more than a small news brief.

One of the reasons for the media’s lack of attention-and, thereby, the public’s too-is that inland oil spills seem infinitely less newsworthy than ocean or beach spills. They’re usually not as visible since they happen on private land and they are, in general, much easier to clean up, both factors that keep such disasters out of the headlines.

It’s the same for Santa Barbara’s usually vigilant environmental community. Explained Nathan Alley, an attorney with the Environmental Defense Center, “It’s not that we didn’t know, it just wasn’t on our, or anyone else’s, radar screen as much as it should have been. I mean, look at the numbers [of violations] throughout the years. The reaction from people throughout the community doesn’t commiserate with them at all. That is, until now.”

But spend a few minutes chatting with Fish & Game’s Mike Connell at his Santa Barbara field office, and it’s pretty clear we should care. “The stretch of creek the oil gets in is always decimated and the produced water spills are just as dangerous,” explained Connell, who’s witnessed many of the Greka spills firsthand. Those who’ve seen the historic devastation report that the once pristine stretches of oak savannah and meandering stream ecosystems tucked into the rolling hills between Gaviota and Santa Maria are now wastelands of deprived soil and ravaged grass, covered with broken-down and rusted machinery. County Fire’s Iskow has seen some of the worst areas and earlier this year explained, “If you walk back through the Greka lease lands, places where they have had little spills throughout the years, you will see destruction, pollution, and oil everywhere.”

Beyond obvious impacts to flora and fauna, Fish & Game’s Connell explained that there’s a long-term impact: When oil spills into waterways, it turns the dirt into a sort of asphalt, blocking rainwater from soaking in and increasing stream velocity, which leads to more erosion. “Even the clean-up process in creeks leads to more degrading effects,” he explained. “Eventually, if caught early and done right, it can be restored, but it doesn’t happen overnight. Sometimes it can take years.”

Is Justice on the Way?

Since the hearings in January, Greka has been suffering from a sort of corporate multiple-personality disorder. In many ways, it’s business as usual. There have been another 21 reported spills and 700-plus facility deficiencies. It has publicly claimed that sabotage was behind some of the spills. It has threatened to sue the county for $100 million for being unfairly targeted. It has warned that dozens of employees will have to be laid off.

But Greka has also gone on the defensive. It has brought in the big-money public relations firm Sitrick and Company, known in town for representing Santa Barbara News-Press owner Wendy McCaw when her newspaper’s employee turmoil began. The PR firm, which reportedly charges as much as $700 per hour and has also done the talking for Paris Hilton and the founder of Girls Gone Wild, has been relentless in countering each and every County Fire and EPA press release on Greka with its own version of events. The press releases have refuted everything from toxic gas leaks to the ins and outs of the EPA’s cost recovery protocols and even outright accused County Fire of causing a spill.

Wise, the EPA coordinator, is not amused by such propaganda. “Believe me,” he explained in a moment of frustration, “if Greka became a responsible corporate citizen of Santa Barbara County, they wouldn’t have to deal with us. I have no incentive to lie or make this stuff up. My 18-month-old is at home in Los Angeles wondering why Daddy isn’t around. The sooner I am done here with them, the sooner I can go home.”

Even when the EPA clean-up crews do go home, which may be as soon as May, their federal wrath may likely be stinging Greka for months, even years, to come. Already on probation with the EPA until 2010 for refinery issues from 2004 and 2005, Greka has been hit with four separate clean-up orders from the EPA since January alone. These orders levy fines up to $32,500 a day for not following proper clean-up procedures and tack on additional per-barrel fees for the spills themselves.

According to EPA attorney Mike Massey, they have yet to determine what fines, if any, Greka will be forced to pay. But with criteria that take into account the seriousness of a spill, a company’s track record, cooperation with regulatory agencies, and effectiveness of cleanup, a hefty fine seems all but certain, especially considering the EPA took the Palmer Road spill out of Greka’s hands due to alleged mishandling.

But then there’s Greka’s proactive and positive personality, one that appears to be holding an olive branch out to the community. The company brought in a new president, Andrew deVegvar, shortly after the January hearing and then launched a multimillion-dollar Greka Green infrastructure improvement plan aimed at removing literally tons of scrap metal, broken-down old tanks, and rusted-out pipes from its leased land. According to former county supervisor Mike Stoker-who was hired by Greka late last fall to “get them to do a better job doing what the county regulators want them to do”-this plan has already resulted in the removal of 400 tons of waste and was in place long before the crude hit the fan in December.

“It was obvious to them that they weren’t doing anywhere near as good a job as you have to do to be an oil and gas operator in Santa Barbara County, and they wanted to do something about it,” Stoker said. “This Greka frenzy has just expedited that process.”

Arguing that a bulk of Greka’s problems come from inherited liabilities from previous oil operators, Stoker also acknowledged the hard reality of the situation. “We didn’t get to this point overnight,” he explained, “and we’re sure not going get out of it overnight.”

Meanwhile, county staffers, under direction from the Board of Supervisors, are intensifying facility inspections for Greka and every other onshore oil operator and adding more teeth to their petroleum codes to recoup clean-up and inspection costs. “There has been a lot of progress in the past 60 days,” the county’s deputy CEO Ron Cortez told supervisors last month, “but there is still a lot more work to be done.” Another report will be presented on May 13.

It seems the more things change, however, the more they remain the same. In a press release from the county last week, communications director Boyer announced that the stop-work order at the Palmer Road facility had been lifted and a temporary work order had been granted just as long as Greka meets a wide range of requirements within 90 days. But in the same email, Boyer attached the actual letter from Fire Marshal Chris Hahn to Greka, which clearly states that all but one of these repairs had to be made no later than April 10 or the temporary permit would be revoked.

On Friday afternoon, an anonymous tipster informed The Independent that not all of the requirements were met on the April 10 inspection. Nonetheless, as of press time, the Greka facility remained open for business. Phone calls to Boyer, the only man the county is allowing to speak on the subject, had not been returned.


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