Fifteen miles from downtown Portland, Ponzi Vineyards sits on the banks of the Tualatin River.

Established in 1970, Ponzi was one of Oregon's first wineries and is a standard bearer for a regional industry that has earned worldwide acclaim and brings hundreds of millions of wine-tourism dollars to Oregon annually.

Right next to Ponzi's original 12-acre vineyard of pinot noir, pinot gris, chardonnay and riesling grapes is an unlined dump that last year gobbled up about 180 million pounds of trash.

The dump, called Lakeside Reclamation Landfill, is so close to Ponzi that visitors to the vineyard can smell it, taste its dust and feel the vibrations of its earthmovers.

While the dump has been operating for five decades, neighbors say the noise and stench have worsened dramatically in the past few years.

In a letter last month to Tom Brian, chairman of the Washington County Board of Commissioners, Ponzi marketing director Maria Ponzi Fogelstrom says she has had to curtail the tours that bring wine writers and visitors from all over the world.

"The strong odors, noise and disgusting sight of the dump are major distractions to guests," she wrote to Brian. "The constant flow of trucks, loud sounds of dumping, equipment running and trucks constantly backing up, makes it nearly impossible to focus and be heard."

The dispute between Ponzi and Lakeside owner Howard Grabhorn is not a case of two businesses, both operating legally, that happen to conflict with each other.

Instead, a review of public records and interviews with the three agencies that regulate the dump make clear that for decades Lakeside has been operating in defiance of a variety of land-use and environmental rules.

Neighbors say Lakeside is illegal because it never received the proper land-use and building permits.

"Up until 2001 when Grabhorn applied for a land-use permit, I assumed the dump was just a nuisance," says Art Kamp, 60, a retired chemical engineer who lives nearby. "Then I connected the dots and realized it's a nuisance and illegal."

Grabhorn and his attorney, Wendie Kellington, dispute that characterization, saying Lakeside has made good-faith efforts to comply with all regulations.

Lakeside has regularly violated Oregon Department of Environmental Quality standards, and DEQ reports say the dump is leaking contaminants—some of which are pretty nasty—into the groundwater and the Tualatin River.

"Low levels of several human carcinogens including tetrahydrofuran, benzene and arsenic have been intermittently detected in groundwater," says a 2007 DEQ report.

So here's the puzzle: Why do public agencies that tout their environmental stewardship allow an archaic dump on prime farmland near Ponzi Vineyards and just upstream of the Tualatin River National Wildlife Refuge to remain in operation?

Lakeside's case illustrates that Oregon's vaunted environmental protections and stringent land-use laws are no match for a determined operator, especially one with a high-priced legal and lobbying team befitting a far larger company.

"Grabhorn has gone as far as anybody would let him for as long as he can," says Mark Riskedahl of the Northwest Environmental Defense Center at Lewis & Clark Law School. "The fault lies with those who have let him get away with it."

Five decades ago, according to DEQ records, Howard Grabhorn started dumping debris from his demolition business on his land in the Scholls area of Washington County (see map, page 27).

Over time, according to DEQ files, the dump began taking trash from all comers and grew from about a quarter-acre to more than 40 acres today.

The landfill has grown vertically as well as horizontally. In 1983, Grabhorn told DEQ and Washington County that the landfill would not exceed the height of adjacent farms, the highest of which is 209 feet above sea level.

Grabhorn then proceeded to pile trash up to 259 feet above sea level. Though neighbors complained, a Washington County hearings officer ruled in 2004 that to force Grabhorn to lower the dump's height "would be unreasonable."

Today, Grabhorn's mountain of debris towers over the surrounding farmland like a real-life version of Mount Trashmore, the fictional dump on The Simpsons.

"He breaks the law and then asks the regulatory bodies to change the law to fit his lawlessness," wrote Dr. Richard Thoresen, a veterinarian who lives near the dump, in a May letter to Metro. "The truly sad thing is, he gets away with it."

Grabhorn has not simply violated his agreement to limit the size of his dump.

He has also repeatedly violated the terms of his DEQ permit, which says the dump is supposed to accept only what's called "non-putrescible" or "dry" waste, such as construction debris, cardboard and wood from ground clearance.

Among the numerous substances Lakeside has accepted over the years, according to DEQ records, are "non-hazardous industrial waste sludge from the Tektronix wastewater treatment plant," as well as prohibited substances: cafeteria wastes, household garbage, paint cans, oil filters and jugs of used motor oil, "baghouse dust and chromium-containing sludge ash." The dump also accepted sands from a company called Western Foundry that DEQ records say "are known to have contained zirconium which has low level nuclear radiation. Dusts associated with Western Foundry operations have contained elevated concentrations of arsenic, cadmium, chromium, copper, lead, and zinc."

Occasionally, DEQ has penalized Grabhorn. In 2002, the agency caught Grabhorn accepting 630 tons of "contaminated soils and chromium-treated animal hides." He was forced to send them elsewhere.

Last year, Lakeside got caught accepting 60 large bags containing "friable" asbestos (which is easily released into the air, distinct from asbestos sealed in building materials), which it was not allowed to do. DEQ forced Lakeside to remove the materials.

Grabhorn tells WW that DEQ knew about the various industrial wastes he accepted from Tektronix and that the asbestos was the fault of a rogue contractor.

Since there is little day-to-day monitoring of the dump trucks entering Lakeside, it is easy for the dump to accept whatever contractors want to leave there.

"There are inadequate measures in place to assure that the landfill routinely operates legally," says the NEDC's Riskedahl.

Audrey O'Brien, DEQ's solid waste manager for the Northwest region, acknowledges the agency has been less effective than it should have been in overseeing Lakeside in the past.

She says the agency has recently made Grabhorn's dump a "high priority" and is requiring better monitoring of incoming loads.

Lakeside's history of accepting prohibited substances is particularly troubling because, unlike any other publicly accessible dump in the metro area, it is unlined.

"A landfill is supposed to be lined and capped so nothing gets out," says Henning Larsen, a DEQ senior hydro-geologist. "That's not the case at Lakeside."

Larsen says federal and state laws prohibit the opening of an unlined landfill today, but Grabhorn's dump is grandfathered in because it was operating before current laws took effect.

Neighbors worry that the absence of a liner allows water washing through the facility to pollute groundwater and the Tualatin River.

In 2005, a DEQ report found that "groundwater has been contaminated with concentrations of nitrates and arsenic that have periodically exceeded drinking-water maximum contaminant levels."

So far, the DEQ report says, the leachate has not harmed humans, but "site groundwater contamination could represent a significant threat to local well water users and to aquatic life in the Tualatin River."

"[Lakeside] is definitely a known source of landfill leachate. There's no question about that," DEQ's Larsen says. "They have exceeded their permit-specific concentration limits for a number of hazardous and non-hazardous substances."

Grabhorn disagrees that leachate is entering the Tualatin. "Nothing to our knowledge is going into the river," he says.

Currently, DEQ is trying to determine whether discharges from the dump are harming aquatic life in the Tualatin.

The agency expects results of an investigation into that question by October.

In a recent email to DEQ, Kamp, one of Grabhorn's neighbors, wrote, "I have just been informed of your decision to abdicate responsibility for assuring that Lakeside complies with land use laws as is required by your regulations.... You can trust that we [Grabhorn's neighbors] will do everything within our powers to correct this and other injustices to continue to occur because of his exercise of financial and political power."

Grabhorn doesn't look like a powerful figure. Slight, red-faced and homespun, Grabhorn, 72, appears more like a Christmas-tree farmer—which he also is—than the environmental bandit his neighbors consider him.

But his retinue tells a different story. Grabhorn's lobbyist is Paul Phillips, CEO of Pac/West Communications.

Pac/West is no mom-and-pop operation. Among the firm's clients are Georgia Pacific, the international engineering giant Bechtel, and the coalition pushing to open the Arctic National Wildlife Refuge for oil drilling—and Grabhorn.

So how does a Christmas-tree farmer afford Bechtel's lobbyist? Simple.

"The money in garbage is huge," says Metro Councilor Rod Park.

Over the past decade, for example, Grabhorn has taken in about 80,000 tons annually. At his dumping charge of $50 per ton (recently raised to $52.36), that means he has grossed close to $40 million over that period. (A little less than half of that goes to government fees; it's unclear how much is profit.)

In addition to Phillips, Grabhorn employs a squadron of lawyers, including land-use specialists at two of Portland's biggest firms, Schwabe, Williamson & Wyatt and Davis Wright Tremaine, as well as solo practitioners with more targeted skills. (Davis Wright Tremaine is WW's libel lawyer.)

Grabhorn's most revealing relationship may be with lawyer Mark Reeve. Grabhorn hired Reeve in 2004 after Reeve was appointed chairman of the state Environmental Quality Council. The EQC's five members are appointed by the governor to oversee DEQ.

Unlike other commissions, which are advisory, the EQC has the power to hire and fire the DEQ director. It also "establishes [DEQ] policies, issues orders [and] judges appeals of fines or other department actions," according to the agency's website.

Grabhorn hired Reeve in September 2004, shortly after Lakeside failed to notify DEQ of potentially serious contaminants it had detected.

On March 18, 2005, while still serving as EQC chairman, Reeve, acting as Grabhorn's attorney, wrote a letter to Larsen, the DEQ hydro-geologist, requesting that Reeve "be copied on any communication to or from DEQ" regarding Lakeside.

Grabhorn maintains that he did not hire Reeve because of the lawyer's EQC chairmanship. "I don't think it came up until after he joined the team," Grabhorn told WW. "The reason I hired him is he had a lot of experience with landfills."

Larsen, who has been at DEQ for 15 years, says Reeve met with him twice on Lakeside's behalf. Asked whether he'd ever before been contacted by a commission member representing a client, Larsen says "only once."

That contact also involved Reeve, he says, acting on behalf of another client.

The idea that the chairman of a board of a regulatory agency would simultaneously serve as the hired hand of a dump owner who has business before that regulator—and has a record of violating that organization's rules—strikes some as outrageous.

"It is, at the very least, remarkably imprudent for a member of an independent oversight board to simultaneously represent a member of the very same community the board is charged with impartially regulating," says NEDC's Riskedahl.

Jeremiah Baumann of Environment Oregon (formerly OSPIRG), agrees. "It's problematic to have an EQC chair representing somebody who is violating DEQ rules," he says.

"There's certainly the appearance of conflict of interest on the issue of water quality, which is one that requires great public trust," says Sen. Brad Avakian (D-Bethany), chairman of the Senate Environment and Natural Resources Committee.

Reeve strongly disagrees with the critics. "I operated under the standards that were applicable," he says. "I think what I did was entirely appropriate."

For her part, DEQ director Stephanie Hallock says she sees no problem with Reeve's representation of Lakeside, because the EQC was never involved in Lakeside matters. "It's a matter of no consequence," Hallock maintains.

In 2004, Kamp and another neighbor filed a complaint against Reeve with the Oregon State Bar. The Bar dismissed that complaint in August 2005, saying that because Lakeside's issues with DEQ never rose to the EQC level, Reeve had no conflict of interest.

While DEQ is the principal agency that regulates Lakeside, Washington County also plays an important role because it has authority over land-use issues.

Whether Lakeside holds a valid county land-use permit is a matter of great dispute.

Lakeside went through a 1991 process called a "land use compatibility study," which found that the landfill did not need a permit because it was grandfathered in as a "non-conforming use."

Neighbors say, however, that Grabhorn misled county officials in that 1991 process, stating that he had no plans to expand his operation—and then promptly did so. They also argue—and Washington County agrees—that he needs but never obtained permits for two of the buildings associated with Lakeside.

Washington County Chairman Brian says the dispute is one of mind-bending complexity. "If there were a clear answer, we would have settled it years ago," he says.

At times, the rapidly growing county has been friendly to Grabhorn, who provides a cheap and convenient place for the homebuilding industry to dump its waste. In 2001, the county even agreed to pave a road to Lakeside and maintain it for 15 years for free. In exchange, Grabhorn agreed to allow the county to dump waste in his landfill for free for the same period of time.

Metro also has some authority over Lakeside, and based on a proposal put forward last week, that agency may be taking the harshest line with Grabhorn.

Lakeside is actually located just outside Metro's jurisdictional boundaries. But in 1993, the agency granted Grabhorn a contract allowing him to accept trash from inside Metro boundaries. That waste stream now accounts for about 85 percent of the waste dumped at Lakeside.

What Grabhorn's neighbors only recently came to realize is that Metro requires Lakeside to comply with "all federal, state, regional and local laws." Recently, neighbors have asked Metro to cancel his contract on that basis.

"Grabhorn's never had a valid land-use permit, and he's broken a lot of DEQ rules," says winemaker Dick Ponzi.

Like Washington County, Metro must manage conflicting agendas. The agency that supplies Grabhorn with trash previously designated the nearby Tualatin River a "greenway" and last fall successfully asked voters to give Metro $220 million to buy more greenspaces.

Ultimately, a proposed new Metro recycling policy may be the hammer that shuts Lakeside down. Metro wants Grabhorn to recycle more, but he says the cost is prohibitive. If he doesn't comply, Metro can cancel his contract, cutting off the dump's lifeblood.

Last week, Metro told Grabhorn that if he agrees to close Lakeside by July 1, 2012, it will exempt him from recycling between now and then. Neighbors are wary of the proposal. On one hand, Kamp says, it could give them what they want—closure—albeit in five years, during which time anything could end up in the dump. On the other hand, exempting Grabhorn from a recycling policy with which others must comply perpetuates his ability to evade the rules.

Metro Council President David Bragdon says his agency is attempting to be responsive to neighbors' concerns.

"Lakeside wasn't really a priority issue for us until recently because the other agencies have far more control," Bragdon says. "But our contract does give us some leverage."

Closing the dump, of course, is what neighbors want. But for decades, records show, closure has been a moving target.

In 1973, for instance, Grabhorn said in a document the facility had only five years of operation left. Last year, one of his attorneys wrote that Lakeside would close in 2017.

In recent negotiations with DEQ, Washington County and Metro, however, Grabhorn's representatives have raised the threat that a recycling mandate or forced premature closure could imperil his ability to pay for clean-up costs and the 30 years of post-closure monitoring that are by law his responsibility.

That has led to a series of proposals, including one from Metro that the public take over his mess and create a memorial to him.

A written proposal circulated in early June suggested that Metro "consider purchase of [Grabhorn's] Tualatin Riverfront property for the purchase of a Metro open space." Grabhorn would then put those Metro dollars—approved by taxpayers last November—toward his obligation to clean up the dumpsite.

And what would become of the waterfront land? "Metro will consider offering naming rights of the parcel to Howard Grabhorn," the proposal said.

Maria Ponzi Fogelstrom, the vineyard's marketing manager, recoils at the prospect of a "Grabhorn Park" next to her family's winery. "That is appalling and frankly just a tad humorous," she says. "I don't know of anybody in this community who would want to go to a park with his name on it."

In addition to his dump, Howard Grabhorn also has a composting facility that grinds woody debris into chips for net "bio-bags" used for stormwater control.

In addition to their wine business, Dick Ponzi and his wife, Nancy, founded Oregon's oldest microbrewer, BridgePort Brewing, in 1984.

The proposed recycling policy Metro wants Grabhorn to comply with is part of an attempt to raise the region's overall recycling rate from 59 percent to the state-mandated 64 percent.

Metro Councilor Rod Park says alternatives to Lakeside exist. "There is a tremendous amount of capacity in Arlington and a lot in Hillsboro," Park says. "But he's the lowest-cost option, and that subsidizes the construction and development industry."

Lakeside is popular with contractors because, according to Metro, it is the cheapest place to dump construction debris in the region—about 20 percent less than Hillsboro's landfill.

Last November, Washington County voters agreed to raise the county lodging tax from 7 percent to 9 percent to promote tourism, especially wineries and natural recreation sites such as the Tualatin National Wildlife Refuge.