CALIFORNIA ALBUM : One-Two Punch Brings a Town to Its Knees : Lindsay is left reeling after an olive firm shuts down. It is the latest in a series of economic and environmental blows to hammer the Central Valley community.

This was to be the season Lindsay snapped back from the 1990 freeze that ravaged crops. The oranges and olives bloomed abundantly. The packinghouses and canneries hummed again.

Then this Central Valley town’s third-largest employer, General Cable, shut down. And on Sept. 18, the eve of the olive harvest, Lindsay was hit with the worst news of all.

Lindsay Olive, founded in 1916 and once the world’s largest olive processor--the company in this company town--had pulled the plug for good. To cover a huge debt, the cooperative sold the “Lindsay” brand name itself to a rival firm.

“It hit us like a bolt of lightning,” Mayor John Maynard said. “First we get whacked by the freeze. Total paralysis for a year. Then General Cable. Now this.

“Lindsay Olive gave us national and international prominence, 500 good jobs. It was part of our identity. . . . How many blows can one community take?”

With the freeze, there was always the promise of next year’s crop. But now this town of 8,500 must not only cope with a 35% unemployment rate but confront a legacy of pollution the full dimensions of which may never be known.

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On the outskirts of town, four miles from the Lindsay Olive plant, 200 acres of ponds reek with the noxious discharge from decades of olive processing. Operated as part of the city’s waste-water treatment system, the ponds have leaked millions of gallons of brine into the ground water over the years.

Removing the salt that cakes the surface of the ponds, and providing clean drinking and irrigation water, will cost the city at least $30 million, officials say. That doesn’t include the $2.6-million court judgment awarded farmers whose land was found to be irreparably damaged by the ponds, or the numerous lawsuits still pending.

Last week, state water regulators slapped both the city and Lindsay Olive with a cleanup and abatement order. With the olive processor now just a label on a can, the city may be left holding the bag.

“We don’t have the money. It’s that simple,” said City Atty. Walter McCormick. “If the state persists in making us clean this up, they’re going to turn Lindsay into a ghost town.”

Halfway between Fresno and Bakersfield, where the Sierra begin their climb, Lindsay has a dual personality--part north, part south. One former school principal, a die-hard Dodgers fan, caught the Giants faithful asleep in 1977 and wheedled the school board into painting the junior high school Dodger blue and renaming it “Steve Garvey.” The star first baseman had never set foot here.

None of the growth remaking nearby Visalia has spilled over into Lindsay. Downtown, the wooden Chop Suey House still leans precariously as it did at the turn of the century.

On Honolulu Street, across from a City Hall that resembles a Spanish mission, Elsa Kane stood inside the Good Neighbor Pharmacy and surveyed the empty shelves. About the only thing keeping the business going, she said, is the high demand for Prozac and other antidepressants.

“My husband’s got it (the pharmacy) up for sale,” Kane said, “but who’s going to buy it?”

The economy of Lindsay was built almost entirely on the orange and the olive. The first groves were planted in the 1890s, and by World War I the olive growers had formed a cooperative to process, can and market Lindsay’s high-quality harvest.

The town lived by a simple creed: What was good for Lindsay Olive was good for Lindsay. You couldn’t always tell the two apart. A top company official moonlighted as mayor. The secretary was married to the city manager.

“Lindsay had no industry to speak of,” said Lee Clearman, a retired community college professor. “There was only Lindsay Olive and it came to dominate the world market after World War II.

“The plant grew tenfold, and the town rode the boom. There was just one problem. What to do with all that brine?”

The salty discharge was shunted to makeshift ponds where it percolated into the ground water. State water regulators recognized the potential for widespread contamination as early as 1951 but did little to stop it, according to official records and interviews.

In 1967 the state Regional Water Quality Control Board demanded that the bottom of the brine ponds be made impervious to seepage. The city took six years to complete the improvements, only to install plastic liners that leaked.

“The city hired a private engineer who was also working for Lindsay Olive,” said McCormick, the city attorney. “He stood up and announced to the City Council, ‘Those ponds do not leak.’ And they believed him. They wanted to believe him.”

In 1985, a city employee blew the whistle on holes in the liner and forced the state to test wells in the area. The results confirmed extensive ground-water contamination. And yet the city continued to flout state orders to shore up the ponds.

“This is one of the most difficult cases I’ve been involved in,” said Loren Harlow of the state regional water board. “Here was this city protecting a polluter. Do you shut down the polluter, the biggest employer in town? Do you force the city with a budget of ($1 million) into a $30-million cleanup?”

The state waited, hoping the city and the plant would agree on a cleanup. Then Campbell Soup entered the canned olive market and drove prices so low that Lindsay Olive couldn’t compete. The cooperative lost $24 million in three years and decided to sell.

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Patty Tienken, whose husband manages 1,500 acres of citrus and olives for investors in Malibu, said Lindsay Olive owes them $160,000.

“We’re going to have to eat that loss,” she said. “And we’re the lucky ones. How about the families where both husband and wife worked at the plant? Everyone is scared here.”

Jack Gurrola, 33, and his wife went to work that Friday not knowing that a San Francisco-based company about to take over the Lindsay Olive plant backed out at the last minute, citing declining business and uncertainty over the cleanup.

“We got to work and it was bam!” said the lifelong Lindsay resident. “No two-week notice. You’re finished.”

Gurrola’s mother, a packinghouse employee, had been laid off by the freeze. His father worked for the telephone cable manufacturer that closed shop in July. He joined them last week in the unemployment line.

“If something doesn’t happen quick, we’re moving to San Diego where my wife’s family lives. . . . There’s nothing left for us here.”