By KEVIN McCALLUM
THE PRESS DEMOCRAT
Downtown, on the north bank of Santa Rosa Creek, a large mural of a fish graces a concrete retaining wall along the Prince Memorial Greenway.
The colorful artwork is meant to celebrate one of the key goals of the $25 million public works project — the restoration of the creek’s aquatic habitat.
But the health of the creek remains threatened by what lies hidden behind that retaining wall — soil and groundwater contaminated with a toxic brew of oil and other poisonous byproducts left behind at a former manufactured-gas plant.
Pacific Gas & Electric Co. closed the plant in 1924 and now is spending tens of millions of dollars to clean the site at First and B streets, now mostly covered by the parking lot of the Westamerica Bank building.
But 26 years after regulators ordered the property cleaned up, it still hasn’t been and won’t be for years.
Finger-pointing by property owners. Failure to disclose the true conditions of the site. Lapses in regulatory oversight. Threats or fears of lawsuits. Complex engineering challenges. All have conspired to make the cleanup one of the longest, most-complicated and expensive such projects on the North Coast.
Regulators have called the site “gnarly” because of the severity of the contamination, its proximity to the creek and the presence of underground utilities.
After several years of studies and work at the site, PG&E now says it’s going to take up to a year to rethink a key piece of the plan — installation of an underground cutoff wall to prevent contamination from ever reaching the creek.
That strikes Santa Rosa City Councilman Jake Ours, who has experience with a similar PG&E site in San Rafael, as foot-dragging. The longer the contamination remains in place, the greater the chance it will migrate toward the creek, Ours said.
“It’s a toxic dump in the middle of our city. Do I want that cleaned up? I sure do,” Ours said. “I think the story needs to be told.”
Source of light, heat
That story begins in 1876, when Santa Rosa was a dusty farming town and home to fewer than 4,000 people. The Santa Rosa Gas Light Co. was established that year to produce and distribute gas to light city streets and heat cooking stoves.
Unlike the natural gas used today, the gas of the late 1880s had to be produced locally, and it was a dirty business. Coal was heated, releasing a volatile gas that was collected, cleaned to remove impurities and stored on the site in large tanks before being piped to customers.
Such manufactured-gas plants, often referred to as gasworks, were very common in the United States in the 1800s and early 1900s. Some estimates put the number of former gasworks sites at 50,000. Seattle turned a gasworks site into a popular park.
The main waste products were coal tar and lamp black, materials that typically were reused or disposed of on-site. Large volumes of both have been discovered at the Santa Rosa site.
Coal tar in particular contains polynuclear aromatic hydrocarbons, a family of chemicals that includes known cancer-causing agents.
Without a readily available supply of coal nearby, in 1904 the plant was converted to burn oil. Several oil holding tanks were installed, some underground. PG&E purchased the plant in 1908.
Demand for gas increased rapidly as Santa Rosa grew and more residents sought the modern convenience of gas. But the plant was hemmed in, bordered by the creek to the south, First Street to the north, a junkyard to the east and a laundry to the west.
During this period, as PG&E was expanding its distribution network, the utility opted to build a larger gas plant in San Rafael and pipe the gas to Sonoma County. It closed the Santa Rosa gasworks in 1924, using the property as a gas distribution facility until 1969.
But how PG&E closed the plant in 1924 has come back to haunt it. Workers apparently dumped huge volumes of coal tar into a massive underground redwood vat. Tanks full of heavy fuel oil were left in the ground and forgotten.
For years the property remained vacant. Then in 1978, the nation was horrified by the discovery that an entire neighborhood in Niagara Falls, N.Y., had been built on a toxic waste dump. Love Canal inspired stricter hazardous-material regulations, and by 1984 the federal Environmental Protection Agency began to focus on pollution left behind at former gas plants.
PG&E identified 74 sites in its service area, 31 of which it still owned. It began cataloging the sites and informing regional water boards how it planned to handle them, a massive undertaking. The company informed the North Coast Regional Water Quality Control Board of several sites in its jurisdiction, including two in Santa Rosa and others in Healdsburg, Ukiah, Eureka and Yreka.
Businessman steps in
PG&E knew it had a particular problem with its downtown Santa Rosa site, but it thought it found a solution in Harrell “Hal” Musco.
The owner of Petroleum Engineering Co., a Santa Rosa gas station services firm he founded in 1958, Musco was one of the city’s movers and shakers. By the mid-1980s his firm had grown to a $20 million network of eight companies, and he was rapidly expanding into banking and land development.
Musco was the driving force behind the formation in 1985 of National Bank of the Redwoods, and by 1987 was involved in several partnerships pursuing downtown developments.
One proposal was to build a four-story office building on the southwest corner of First Street and Santa Rosa Avenue. The partnership included Musco, builder and fellow bank board member Richard Colombini, and architects George Lawry, Ken Coker and Joel DeSilva, who designed the building and later moved their architecture firm into its third floor. The fast-growing National Bank of the Redwoods took over the first two floors.
Needing PG&E’s property to the west for parking, the partnership, called 137 Santa Rosa Group, in March 1987 struck an extraordinary agreement with the utility. The group, headed by Musco, agreed to buy the land for $673,000 “as is,” and spend up to $407,000 to clean it up.
PG&E made it clear that the property was the site of a former manufactured-gas plant with contaminated soils. The purchase contract states: “it is likely the property contains subsurface deposits of residues from the manufacturing of gas, including coal tar and lamp black, which may contain lead, arsenic polynuclear aromatic hydrocarbons and other constituents.”
In addition, the group agreed to assume “any and all liability and responsibility for the property including that which arises out of the presence of hazardous material or other contaminants on the surface or buried, at the property,” according to the contract.
Nonetheless, responsibility would become the subject of two decades of legal wrangling.
News of the pending sale unsettled water board staff members when they learned of it in 1987. Internal memos show they “expressed surprise and concern” that Musco was “pursuing an unauthorized cleanup of the property” under the supervision of the Santa Rosa Fire Department.
The regional board asserted jurisdiction and on July 31, 1987, issued the first of several cleanup and abatement orders, citing the presence of heavy metals, including lead, arsenic, mercury and cyanide, as well as polynuclear aromatic hydrocarbons. The board stressed that the order “is being issued to ensure that the contamination at the site is cleaned up in a timely fashion.”
From the beginning, the issue of responsibility was contentious. Board staff members insisted the new reports they sought detailing the conditions at the site come from PG&E, not Musco, who did not yet own the property.
PG&E tried to assuage regulators’ concerns about the sale, assuring them it “would not relinquish control of this property if we were not absolutely satisfied that the buyer will responsibly address any environmental mitigation issues” and restrict future uses of the site.
The transaction closed in late 1987, but the environmental headache for the new owners was just beginning.
“These poor folks had made an investment that they thought would help them in retirement, and of course it turned very badly on them very quickly,” said Doug Bosco, the Santa Rosa attorney and former congressman who represents the surviving members of the partnership.
Almost immediately, further test results showed “significant diesel contamination of groundwater” and possible contamination of groundwater on the property to the west. Only later would they come to realize they had purchased and developed a building on “the granddaddy of all toxic waste dumps,” Bosco said.
“And not only that, they were right next to a creek, which of course made it 50 times more sensitive,” said Bosco, an investor in Sonoma Media Investments, which owns The Press Democrat.
Musco did some cleanup work on the property in 1988, but regulators expressed “serious reservations” about its adequacy. Nevertheless, the construction moved forward and the building and parking lot were completed in 1989.
Musco didn’t have long to relish his accomplishment. In 1991, he resigned as the vice chairman of National Bank of the Redwoods after overdrawing his business accounts by $470,000, triggering an FBI investigation. His companies went bankrupt in 1993, seeking protection from Internal Revenue Service efforts to collect back taxes. He died later that year.
‘Fell through the cracks’
Once the building was up and the site paved, efforts to press for a fuller cleanup of the property appear to have waned.
Susan Warner, the water board staffer assigned to the case about six years later, speculated that enforcement “fell through the cracks” after Musco’s death, according to the agency’s file, which is several feet thick. But new information surfaced around 1994 that forced the board to renew its push for a full cleanup.
Soil samples collected in the creek bank as part of the city’s Prince Memorial Greenway project showed evidence of polynuclear aromatic hydrocarbons.
“This new information increases the priority of this site, as the soil contamination represents a threat to the beneficial uses of water,” Warner informed PG&E.
PG&E pointed a finger at the local ownership group, claiming responsibility for the cleanup had fallen to the partners and Musco’s widow, Madeline. PG&E essentially had taken the position that “it’s the widow’s problem now,” Warner wrote in an internal memo to colleagues.
The partnership tried to shift the burden back to PG&E, noting that the utility was the one with experience with such sites. The investment group claimed that PG&E had failed to fully disclose the site conditions.
But the water board didn’t care. It held all parties responsible, including the investment company that bought the office building from 137 Santa Rosa Group in 1997, Upway Properties of Fremont. It named them all individually as “dischargers” responsible for the cleanup, which they remain today.
Not only contaminated site
The 1.5-acre property is far from the only one in Santa Rosa to become contaminated by petroleum products. There were once more than a dozen gas stations downtown, many of which faced significant cleanup costs. Nor is it the only problem property along Santa Rosa Creek. Directly across the creek, the former Boyett Petroleum station needed significant cleanup before it could become Prince Memorial Greenway Park.
And the current site of the Hyatt Vineyard Creek Hotel in Railroad Square, once the home of Grace Brothers Brewery, was contaminated by fuel oil and car batteries dumped years earlier.
But the legacy of the contamination at the PG&E site is unique, something that became clearer in 2002 when Santa Rosa began building the pedestrian and bicycle path known as the greenway.
The section of the creek west of Santa Rosa Avenue had been encased in concrete decades earlier as part of a flood-control effort. The lack of trees and the flat concrete bottom created summer flows that often were little more than “a couple inches of slow, hot water,” conditions juvenile fish species like endangered steelhead can’t survive in, said Steve Brady, the city’s environmental specialist.
Restoring that section of creek to a more natural state required ripping out much of that concrete. But when workers did, they discovered soils laden with coal tar, a thick black sludge and lamp black, a sooty black powder.
Photos of the site also show black oily material oozing out of the excavated creek bank and floating in holes drilled for the footings of the future pedestrian bridge.
Strong smell of mothballs
During the excavations, the area smelled strongly of mothballs, said Dave Montague, supervising engineer for the city. “It was repugnant enough to keep you away from it,” he said.
Hoping to clean up as much of the contamination as possible, the city agreed to dig out far more soil than it had planned, hauling it to a hazardous material landfill and replacing it with clean fill. Acknowledging that its former plant was likely responsible for the contamination in the banks and beneath the creek, PG&E paid the city about $1 million for the extra work, Montague said.
The fact that the site is covered by a parking lot and no drinking-water wells are located in the immediate area means the human health risks from the contamination likely are low, people familiar with the site say.
But the retaining walls and sheet pilings built to support the greenway were not designed to ensure contamination from the PG&E site would never reach the creek, said Joan Fleck, a retired water board regulator who worked on the case for more than a decade.
That means the material has the potential to pollute the groundwater and reach the creek, Fleck said recently. “Based on the available information, Santa Rosa Creek remains threatened from future discharges,” she said.
Delays, noncompliance cited
Even as the greenway work proceeded, the slow pace of cleanup on the rest of the site continued to frustrate water board staff, who documented “years of delays and noncompliance with regional board directives.”
In 2004, regulators documented an array of contaminants on the property, including heavy petroleum hydrocarbons in soil and groundwater; lead-contaminated soil; “a significant amount of separate phase oil” behind the north wall of Santa Rosa Creek; “significant levels” of polynuclear aromatic hydrocarbons in the area of the “coal tar pit;” contaminated soil around the underground storage tank; and “petroleum hydrocarbons and PAHs in sediment and water in Santa Rosa Creek.”
“Human and aquatic life exposure and nuisance conditions may be significant,” regulators wrote.
They threatened to fine the owners $75,000 and then $575,000 more if they didn’t perform. That got people’s attention.
The three groups — PG&E, the local partnership and Upway Properties — appeared before the full board in 2005 to ask that the fine be reduced.
George Lawry, who by then had retired as an architect but had taken over for Musco as managing partner for the group, explained that the partnership’s members were “people of modest means” who had sold the building in 1997 for a “substantial loss.” He said the group could not afford what was then a $5 million cleanup cost.
The partners were aware when they bought the land that the site was a former gas plant, Lawry told the board. But they “were not aware of the volume and extent of the contamination, including the fact that prior owners had actually buried several underground tanks, one enormous redwood tank, two railroad tanker cars, and various other items that we are only recently discovering.”
The board later lowered the fine to $30,000.
Around this time, Bosco began trying to persuade PG&E officials that his clients didn’t have the resources or expertise to take care of the problem and that all parties had better get it cleaned up “before it created any more damage than it already had,” he said.
Soon thereafter, major cleanup work began in earnest. In 2006, the partnership removed two leaking underground storage tanks near the entrance to the building. Colombini estimates the partnership spent more than $1 million on studies and cleanup efforts, for which it has been reimbursed about $530,000 from a state underground storage tank cleanup fund.
Redwood ‘coal-tar pit’
A third tank on the property proved far more difficult to deal with. On the northwest corner of the site a 47-foot-diameter underground redwood tank remained filled with a mixture of soil and coal tar to a depth of 22 feet. This is what regulators referred to as the “coal tar pit.”
As best as PG&E can determine, when workers dismantled the plant in 1924, they dumped or abandoned large volumes of the tar into the redwood-lined pit and covered it up, spokeswoman Brittany McKannay said.
More than 80 years later, the sludge was considered so potent that digging it out wasn’t an option because of the noxious vapors that would have been released into a highly trafficked area of downtown.
So PG&E spent millions on a high-tech system that essentially boiled the volatile chemicals out of the ground. The process involved installing a series of large electrical probes, much like massive soldering irons, deep into the ground to heat the soil to more than 212 degrees Fahrenheit.
The vapors were captured with a special disposal system that removed the dangerous chemicals, allowing the work to take place largely unknown to the general public for more than two years, four times longer than anticipated.
Ultimately the process removed more than 600,000 pounds of coal tar and other contaminants, McKannay said.
About 210 tons of soil contaminated with lead and petroleum products were also removed in 2011 from an area near the bank’s drive-thru.
More recently, workers last month finished injecting cement slurry into the ground around the pit to stabilize the area and prevent remaining contamination from moving toward the nearby creek.
Decisions yet to be made
But much work lies ahead. Significant contamination remains around an 11,000-gallon steel tank buried close to the greenway. Extensive analysis has gone into figuring out how to safely remove the heavy tank, including freezing it to immobilize the coal tar inside. No decisions have been made about how to handle that job.
The construction of a wall to prevent more contamination from reaching the creek also remains up in the air. PG&E agreed in 2010 to build an impermeable wall hundreds of feet long that would funnel groundwater to where it could be cleaned before reaching the creek.
Regulators agreed the plan was the best option for the environment. But PG&E now says it is rethinking how to move forward. Such a wall would be a major engineering challenge, taking two to three years and costing more than $9 million to construct, McKannay said. The project likely would require diverting the creek, closing a section of the popular greenway and perhaps causing significant disruption to surrounding businesses, triggering lawsuits.
Les Perry, attorney for the group that owns the office building immediately to the west of the property, sent a letter to PG&E objecting to the plan, saying the “scope of work contemplated for our property will have a devastating impact on the ability for all business in our building to function.”
PG&E working on plan
PG&E is not backtracking on its promise to clean up the site, McKannay said. Rather, it hopes the extra review will help identify the most appropriate plan.
“PG&E is committed to putting into place a remediation plan that is best for the environment and the community,” McKannay said.
She declined to compare the degree of contamination compared to other PG&E sites, but acknowledged the Santa Rosa site is unique.
“The fact that it’s right next to a creek and a greenway that people utilize recreationally, these two things are fairly unique in the 40-plus projects we are working on,” McKannay said.
She said groundwater monitoring has not shown significant migration of the pollutants, and that materials like coal tar are thick and largely “immobile.”
But Ours, the Santa Rosa mayor who was head of San Rafael’s Economic Development Department when it dealt with PG&E on a gas plant site in that city decades ago, said he doubts such claims. “If it’s there, it’s moving,” he said.
Construction of the wall strikes him as something the utility should have done first to protect the creek, not last, he said.
“It should be done as soon as possible. The longer it goes on the more it will migrate out,” he said.
Mystery surrounds old gas-plant tanks
When workers dug up two rusting steel storage tanks from beneath the parking lot of 111 Santa Rosa Ave. in 2006, Joan Fleck noticed something curious.
The experienced regulator for the North Coast Water Quality Control Board observed that the tanks appeared to have been “tucked in” with a bed of gravel and covered by a layer of sand.
It was as if someone had uncovered the tanks and piping while grading the site, covered them back up and built a parking lot on top of them.
“They were exposed at one point,” Fleck said. “Someone had to have seen them to drape this gravel blanket over the top of them.”
Whether anyone knew about those two tanks at the time of the development of the office building in 1989 may never be known.
Hal Musco, the managing partner of the group that developed the property, died in 1993. Richard Colombini, a partner in the group and local commercial builder who built the four-story office building, said he never knew about the tanks back then.
“Had we known they were there, we would have dealt with it,” Colombini said this week. “We had no idea in hell that all these tanks were in the ground.”
But he and others did know about a third tank, one that regulators believe wasn’t dealt with properly and continues to contribute to the contamination on the property.
Colombini recalls that during the excavation work for the parking lot, workers reported running into a long steel tank on the southern portion of the site, very close to a high-pressure gas line.
Records show that in February 1989, David Lampi, a son-in-law of Musco, requested a hazardous-waste permit from the Santa Rosa Fire Department to allow the tank to be abandoned in place.
Such requests are made when removal is not feasible and today are rarely granted, said Scott Moon, Santa Rosa’s fire marshal.
The section of the permit asking about the amount and nature of material in the tank reads “unknown.” Fire inspectors granted the permit with one condition: “abandon and fill with inert material (concrete/sand slurry).”
Colombini, a Santa Rosa native who at 81 still works in the dark-paneled Healdsburg Avenue office his firm Colombini Construction has occupied since the early 1960s, said he recalls that holes were cut into the tank and he believes the material inside was tested.
The work was likely done by Musco’s company, Musco Petroleum, he said. He understood the material had been determined to be sand, Colombini said.
“I didn’t personally test it,” he said.
Seeing no need to remove the existing material, a mixture of sand and slurry was pumped in to fill the rest of the tank and the parking lot was built as planned, Colombini said.
He insisted that all work was done “by the book” and approved by city officials. “Whatever the regulations were, we met them,” he said.
Musco long maintained the tank had been properly abandoned in place, something Fleck called “a story told repeatedly in the environmental documents prepared for the site,” she said.
There’s just one problem. Years later, the 11,000-gallon tank has been found to be “filled with coal tar,” a toxic residue of the coal-gas manufacturing process, according to a study by Terra Pacific, PG&E’s environmental engineering firm.
Shown the 2010 report, Colombini said he had never seen it and couldn’t explain how coal tar came to be in a tank that was supposed to have been filled with inert material.
PG&E officials said they don’t know either.
The removal of the tank and surrounding contaminated soils remains one of the biggest challenges for PG&E as it pursues the cleanup of the property.
It doesn’t surprise Hans Herb, an attorney who has worked on underground tank issues in Sonoma County for 25 years, that a former Musco development remains under environmental scrutiny two decades after his death.
Musco was very knowledgeable about contamination issues from a long career in the petroleum services industry, and someone in his position should have known the site would be challenging to develop, Herb said. But Musco didn’t have much regard for the stricter environmental regulations coming into play later in his career, often calling them “a bunch of hooey,” Herb said.
This may have led him to misjudge his firm’s ability to clean up the site or the resolve of regulators trying to ensure it was done so properly.
“He was the kind of guy who probably looked at that site and said, ‘This is not a big deal,’ ” Herb said.
(You can reach Staff Writer Kevin McCallum at 521-5207 or email@example.com. On Twitter @citybeater.)