The presence of the tank farm was hardly a secret to the 670 residents of this small Eastern Shore community. For eight years, the 39 tall cylinders had been standing along the Nanticoke River, just across the street from Don Spicer's house.

But no one in town knew, until recently, that the rusting remnants of a defunct oil reprocessing plant contained not just used oil, but a variety of deadly chemicals, some highly flammable and others known as powerful cancer-causing agents, including PCB and benzene.

That discovery brought a parade of federal and state officials, chemical analysts and five control experts to the one-acre site where Grigco Oil of Maryland Inc. once operated. After analyzing samples from the tanks, everybody agreed: the contents should be removed -- quickly.

The problem is, no one will take responsibility for doing the job.

The Coast Guard, which is empowered to clean up both oil pollution and potential sites of pollution, says it cannot handle this case because another federal agency -- the Small Business Administration -- controls the property involved.

The Small Business Administration, which took control of the property when the builder of the tank farm defaulted on an SBA-insured loan, says it cannot handle the disposal because it sold the property at auction earlier this year.

Warren Klawans, a Baltimore realtor whose firm purchased the property from the SBA, is scheduled to go to federal court in Baltimore Wednesday to contend that the disposal of the chemicals is not his job, either.

Meanwhile, the Environmental Protection Agency and the Maryland Department of Natural Resources continue to analyze samples to determine what else is in the tanks. The state fire marshal's office is lecturing the Sharpstown volunteer fire department on how to fight chemical fires, and Mayor Ralph Cordrey is putting the finishing touches on the town's new Disaster Evacuation Plan.

"Everybody's nervous, everybody's nervous," said the 35-year-old Cordrey who, like many men in this one-time shipbuilding town, works at the nylon fibers plant run by the E. I. du Pont de Nemours Co. a few miles away in Seaford, Del.

"People are staying pretty calm, though," he added.

Three weeks ago, the first chemical analysis showed the tanks held some dangerous materials. But there has been no attempt to remove them.

For one thing, no one is sure exactly what other chemicals may be in the tanks along with the waste oil. For another, it is also not known exactly how many gallons of the various materials are in the tanks.

It was in mid-September that Cordrey first heard that the Coast Guard laboratory had detected the presence of substantial amounts of xylene, a highly flammable chemical solvent, in tank No. 23. Since then, he has been calling everybody he can think of who might help get the chemicals out of town.

He also has pored over the skimpy records down at the one-room city hall, trying to figure out how a man named William Grigsby first came to ship 39 old tanks down from Braintree, Mass., in 1971 and put them up at the site near Little Water Street in Sharptown.

Back then, Cordrey said, Grigsby promised the five town commissioners that his proposed plant would employ 14 people and give a boost to the local economy. Almost one-third of Sharptown residents are retired, Cordrey said, and most of the younger men work miles away in the pockets of industry scattered among the soybean fields of the lower Eastern Shore.

On that point, Cordrey and former Mayor Ernest Bailey agree with Grigsby, who now works not far away, across the state line in Delaware. They don't agree on much else.

Cordrey and Bailey say that Grigsby delivered on none of his promises. The plant seldom operated, employed no one from around town and, according to Bailey, "never produced enough oil to change the oil in a car's crankcase."

Grigsby says that he did employ several local residents during the construction and operation of the plant and that he produced 667,000 gallons of recycled fuel oil which he sold to the Delmarva Power & Light Co.'s nearby Vienna, Md., plant.

"I ran a million gallons of oil through that plant . . . I maintained it for five years, and I wasn't obligated to," Grigsby said in a telephone interview yesterday.

Grigsby said the Sharptown plant was "the first of its type in the world" and operated under a revolutionary recycling principle which he developed. He denied that any benzene, xylene or PCB in the tanks when he closed the plant in 1978.

Almost from the moment he first received a state license to operate in 1974, Grigsby had trouble with town officials, state officials, and the Small Business Administration, which had guaranteed 75 percent of a $270,000 loan Grigsby obtained from the Union Trust Bank of Cambridge.

The town wrote Grigsby letters asking him to clean up the site and received caustic replies threatening legal action. At the same time, the state Department of Natural Resources was telling Grigsby to build a dike around the site, a required safety precaution to prevent oil from leaking out in the event of a spill and endangering other tanks or the surrounding area.

Finally, in June 1978, the state revoked Grigsby's license. At about the same time, he defaulted on his SBA loan. The plant was sold at an SBA auction in August 1978, but that buyer defaulted, too. Last June, Baltimore real estate dealer Klawans bought it.

"To my knowledge," Grigsby said, no substantial amounts of xylene or benzene were dumped in the tanks while he operated the plant. He did get a load of oil contaiminated with polychlorinated biphenyls (PCB), virtually indestructible environmental pollutants. But Grigsby said that shipment of 5,000 gallons of waste oil was "in and out in a day" on its way to New Jersey.

Although Grigsby denied knowing of any other hazardous wastes remaining in the tanks while he was in control of them, a natural resources official says it was Grigsby who called them to warn officials that the tanks contained more than old oil.

In a phone call last March, DNR official Thomas Boone said, "(Grigsby) indicated solvents, phenyl compounds, zinc, copper and other things might be found throughout the facility . . . He said he wished to remain anonymous in this matter."

At that point, no tests had been run to determine exactly what was in the tanks. It was not until September that the Coast Guard, working with state natural resources officials and the federal EPA, first sent samples from the tanks to its laboratory in New London, Conn., and detected the presence of xylene.

Subsequent tests in late September at DNR laboratories in Annapolis revealed the presence of benzene, a known cause of leukemia in humans; and PCB, which can be lethal to marine life.

With this information coming in, Mayor Cordrey called a town meeting Sept. 18 and told the residents everything he knew about the situation. EPA tests had shown that no toxic fumes were leaking from the tanks, and the Coast Guard had turned off leaky valves and repaired the chain link and barbed-wire fence around the tanks.

There is still the danger of fire. Capt. J. William Kime of the Coast Guard said the chemicals stored in the thirty-nine 10,000-gallon tanks are "equivalent to having the same amount of gasoline down there."

But while the town's 140 volunteer firemen have been given extra equipment, including oxygen tanks and chemical foam, to contain a blaze, and while the townsfolk have been told to evacuate the immediate area if they hear a three-minute wail from the firehouse siren, officials say they can't predict how much waste oil and contaminants could spill into the Nanticoke if a blaze erupted.

The Nanticoke, home in the 19th century of a shipyard where four-masted schooners were built, flows into the Chesapeake Bay, one of the richest fish and shellfishing areas in the world.

To help accelerate the process of getting the chemicals out of town, Cordrey has enlisted the aid of Rep. Robert Bauman (R-Md.), whose district includes all of the Eastern Shore, and Sen. Charles McC. Mathias (R-Md.).

Despite frequent phone calls, however, Bauman aide Mike Wilkinson said he has been able to accomplish little to resolve the impasse over who should dispose of the waste. The Coast Guard says that, as long as the SBA controls the property, federal regulations forbid the agency to use any of its $20 million oil cleanup fund to remove the Sharptown waste.

The Coast Guard estimates the cost of the removal at more than $100,000. Capt. Kime said several waste disposal contractors have been contacted and preliminary inquiries indicate few potential problems in carrying out the disposal operations.

The SBA insists that it doesn't own the property, that Warren Klawans does, that the agency cannot be responsible for waste disposal, nor can it answer a state order to clean the plant out.

Some residents are taking the whole business with equanimity, however. Pat nixon, who lives within 200 yards of the plant, said yesterday, "I think it's kind of late to be worrying about something that's been there for all that time."

His neighbors, Mona and Don Spicer, are not so sure. "We've got two boys, 9 and 5," Mona Spicer said yesterday. "Now, when they hear that fire siren, they think it's time for the evacuation."

The Spicers, who have lived in town five years, and talked of selling the house even before the revelations about the chemicals, but "who'd buy the house now?" Mona Spicer asked.