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TAINTED-FUEL PROBE HAMSTRUNG BY LACK OF TESTING

The evidence may have gone up in smoke, but federal officials say some Buffalo oil companies have sold fuels spiked with toxic wastes and could do so again.

A lack of routine testing and monitoring makes such a scheme difficult to detect, investigators say, and does little to deter would-be offenders attracted by the easy money.

"We do feel we have a criminal problem here, and if there are people out there that know about (it), we need to have that information," G. Robert Langford, special agent in charge of the Buffalo office of the FBI, said Wednesday.

No safeguards are in effect now, although U.S. Attorney Dennis C. Vacco has proposed a joint U.S.-Canadian response team to act on tips received about contaminated fuels.

Vacco was responding to reports in the Toronto Globe & Mail two weeks ago that Buffalo organized-crime figures were lacing fuel with toxic wastes and selling the mixture to unsuspecting customers on both sides of the border.

Border spot checks apparently are inadequate to stop such a scheme. They have detected no contamination, despite tips going back to 1987.

"Our men have gone over with the Canadians while they have been doing their checks," one U.S. agent said. "As soon as the first truck is stopped, the CB radios begin to crackle, and that's the last truck you see for a long while."

ck of testing
The Buffalo News recently traced millions of gallons of oil and gas sold locally to area schools, industries and governments. While some customers had problems with fuel, no proof was found that it was tainted with toxic materials.

Although they have no proof, U.S. officials still say they believe the Globe & Mail reports.

Buffalo oil dealer Bill Barnes, one of those named in the Toronto reports, agreed that such a scheme is plausible: "Sure, it would be pretty easy. . . . All you would have to do is take a five-gallon pail of wastes and dump it into a tank of oil. People in autos could be doing it and making a few bucks."

Barnes, owner of American Continental Oil Co., has emphatically denied reports that his company blended polychlorinated biphenyls, or PCBs, and other wastes into fuels. But he described the U.S. fuel-supply network as "an honor system."

Federal agencies and lawmakers are taking the reports seriously.

Rep. Bill Paxon, R-Williamsville, is planning a hearing before a congressional committee. "Tainted fuel crossing the border is frightening, but it's just the tip of the iceberg," he said.

Paxon met last week with federal Environmental Protection Agency officials, urging them to lead an investigation into the safety of the nation's fuel supply.

The victims of such a scheme are those who buy contaminated oil and gas, as well as anyone who breathes the exhaust from tail pipes and smokestacks. Burning tainted fuels releases dioxin and other toxins into the air.

There is no way for anyone to know with certainty whether Western New Yorkers were exposed to tainted fuels, according to investigators and industry sources.

What is known is that same companies accused in the Globe & Mail reports -- Welch Energy, American Continental and Erie Petroleum Transfers -- also sold large amounts of fuel oil to customers in Western New York. Buffalo schools used some for heating; local industries such as the Harrison Radiator Division of General Motors burned loads from tanker trucks, and buses in Buffalo and Rochester ran on fuel from the Buffalo companies.

The News has learned that:

In January, after receiving a tip from a federal source that the company might have PCBs in its fuel tanks, Harrison Radiator tested 500,000 gallons of heating oil but found no PCBs.

In 1986, heating oil supplied by one of the companies named in Globe & Mail reports twice forced shutdowns of the main boilers in Olean General Hospital. Hospital officials said that the oil contained water, metals and sodium but that they never tested it for PCBs.

Officials and reporters received repeated tips that PCB-laden oil was used in blacktop pavement during a recent Buffalo-area construction project. Tests commissioned by The News showed no sign of PCBs.

Bankruptcy records filed by Welch Energy show ties among the three companies. Welch, owned by minority businessman Robert O. Welch, often paid American and Erie to supply and deliver its products, especially No. 6 oil, which is used in large industrial boilers.

A supplier familiar with No. 6 oil -- a thick, black material that must be heated to make it flow -- described it as "Hamburger Helper" because it conceals other petroleum, including waste oils, when they are blended.

As a minority-owned business, Welch Energy qualified for special preference in obtaining government contracts, including pacts with Buffalo Public Schools, the Niagara Frontier Transportation Authority and the Rochester-Genesee Regional Transportation Authority. It also attracted business from private companies that seek to work with minorities.

Records show that Welch sold Harrison Radiator millions of gallons of No. 6 oil from 1985 to early 1987.

Other major customers included the Chevrolet Motor Division, the Saginaw Division of General Motors, General Mills, Pratt & Lambert and Erie County.

Two of the companies -- Welch and American Continental -- stopped selling fuel last year. Welch is in bankruptcy, and American Continental expects to reopen after reorganizing.

Welch could not be reached to comment. Norman Dobiesz, who helped finance Welch's company, denied being involved in supplying contaminated fuels.

Erie Petroleum's owner, Robert L. Broskin, also denies the accusations.

American Continental's Barnes said that even though the law does not require it in all cases, he demands proof from his suppliers that none of the fuel he sells is contaminated with illegal wastes.

Barnes said that blending lighter waste oils into heavier oil is common in the oil business and that he often recycled waste oils that have been reclaimed -- some containing small, legal amounts of PCBs -- by mixing them with No. 6 oil to dilute the amount of sulfur in the heavy oil, not to hide wastes.

Some of the blended fuels went to Welch for sales to major industrial users.

"This is where people started pointing the finger at us that we were putting PCBs in the oil," Barnes said, "and that's all a bunch of malarkey."

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