Sanitation district served notice for violations

May 10, 2011


The South San Luis Obispo County Sanitation District has been slapped with a notice of violation for the 12-hour raw sewage spill that occurred in December, 2010, according to an April 18 enforcement action that CalCoastNews received through a Public Records Act request.

California water pollution enforcement officials can levy fines of up to $10 a gallon, or in this case as much as $30 million, for sanitation plant sewage spills as well as financial penalties for failing to comply to testing and management requirements of the State Water Resources Control Board.

The state board is requiring the sanitation district to put together a lengthy technical report about the sewage spill, the operations of district and the adverse impacts the untreated sewage that spilled into the community of Oceano and the Pacific Ocean has had and is having on the local environment.

The bulk of the 36-page notice of violation, a total of 34 pages, is filled with questions the district needs to answer by May 31 before the state levies fines or takes further regulatory action.

John Wallace is the chief administrator of the district that provides services to about 38,000 customers in Arroyo Grande, Grover Beach and Oceano. He is also owner and president of the Wallace Group, a private engineering consulting firm located in San Luis Obispo that receives from $50,000 to $80,000 a month for plant administration and engineering services.

The district is overseen by a board comprised of Arroyo Grande Mayor Tony Ferrara, Grover Beach Councilman Bill Nicolls and Ocean Community Service District Board Member Lori Angelo.

Failure to comply or accurately respond to the state mandated report by late May could result in criminal action to be taken by the San Luis Obispo County District Attorney’s office or the State Attorney General against Wallace or board chairman Nicolls, according to the notice.

The district faces a cease and desist order and fines of up to $1,000 per day if it does not complete the report by the end of May, the notice says.

The technical report requires the district to attach documents or provide answers to 223 questions.

Wallace and Ferrara have repeatedly claimed at public meetings, either at City Council sessions or sanitation district meetings, that allegations that the spill was inaccurately reported or the plant is mismanaged were rumors being allegedly spread by CalCoastNews and former “disgruntled employees.”

Tony Ferrara

Wallace and Ferrara claim that there are no problems in the operations of the plant.

In an odd twist, Wallace hired his own firm, the Wallace Group, to prepare the bulk of the report with some technical reports being provided by interim plant manager Bob Barlogio and outside qualified professionals, Barlogio told CalCoastNews.

State laws require any expenditure of more than $5,000 to be approved by the district manager and expenditures of more than $25,000 to receive district board approval.

However, in the case of this report, it appears Wallace has given his private firm the job of putting together the mandated technical report without board approval.

Angelo, a sanitation district and Oceano Community Service District board member, said she was aware of the notice of violation and order for further information, but did not know how the expenditure for Wallace Group to prepare the report had been approved.

“We did not discuss it in closed session,” Angelo said.

In addition, the board members and Wallace have been accused of keeping the public in the dark about the April 18 notice by not mentioning the state enforcement action to their fellow board and city council members or the public.

Wallace, Nicolls, Ferrara and the attorney for the district Michael Sietz did not return calls asking how the cost of doing the report was approved or if the Wallace Group agreed to prepare the report for under $25,000.

At a news conference on Monday about another issue in Arroyo Grande, Ferrara encountered a CalCoastNews reporter, whom he called “illegitimate.”

He added: “You have lied and twisted things in the past and I have nothing to say to you.”

Meanwhile, plant manager Appleton has been out on sick leave since January when state regulators determined he operated the plant “using fraud and deception,” according to a letter of proposed disciplinary action. Appleton contends he was following Wallace’s direction.

Following the December spill, Wallace argued with Appleton over the amount of the spill and who would sign the reports, according to emails between Wallace and Appleton obtained by CalCoastNews. Multiple reports put the spill anywhere from 50,000 gallons to more than three million gallons.

Following a report by Appleton that was supported by computer readouts that placed the spill at about three million gallons, Wallace elected to hire staff at the Wallace Group to reevaluate the spill amount using an approach that focused on the height of sewage spewing out of manhole covers throughout the community.

It did not take into account the amount of sewage shooting up through toilets, bathtubs and showers in homes near the plant, according to Wallace’s methodology.

Two district employees, who complained to state and local regulators that the district had been violating laws meant to protect the public and the environment, were terminated during the past year.

Former shift supervisor Scott Mascolo and former lab technician Devina Douglas began reporting incidents of suspected misuse of public funds and problems with the plant complying with safety and health requirements to local and state regulators more than a year ago. Douglas has since filed a wrongful termination lawsuit against the district, Wallace and Appleton.

The ex-employees accused Wallace of using his position as administrator of the district to funnel hundreds of thousands of dollars to his Wallace Group while concealing environmental violations.

For example, Wallace Group has been paid to do studies about plant inefficiencies, in several cases every five to eight years, and then placed the item on the plant’s list of needed repairs.

The state’s notice of violation orders Wallace to provide information about all proposed improvement projects and what type of funding was to be used since 2000.

The Dec. 19 sewage spell occurred because storm water flowed through electrical conduits at the sanitation plant into pump motors which shorted out the plant’s electrical system, shutting down the plant’s intake pumps forcing untreated sewage to leak out into homes, roadways, rivers and the ocean.

A sewage spill several former and current employees said could have been avoided if Wallace managed the plant for the benefit of the public and not to provide work for the Wallace Group.

In 2004, the district paid the Wallace Group to conduct a study on the plant’s electrical system. It noted that the bulk of the plants electrical system was more than 40 years old, according to district reports.

The report goes on to say wiring “has begun to deteriorate due to being submerged by groundwater. . . .As a result, there have been several instances where the wiring has failed and either caused an electrical fire or a loss of power.”

However, while the Wallace Group had been paid for the study, the repairs, which Wallace Group could not do, were never started, Mascolo told CalCoastNews.

According to the 2010 major budget items report, Wallace would put a bid out for subcontractors to do the job early in the 2010 fiscal year.

And as every year since the study was completed, the repairs were not done and the capital improvement project was moved over to the next year’s major budget items report.

The state is also asking Wallace to provide copies of the plants operating and fiscal budget reports along with how major budget items are included in the budget as part of the mandated technical report.

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Karen, has done a great job is showing us what our local Government is up to. show the community of Oceano, that the County thinks of Oceano!

Great report. If there were more investigative reporters doing what you’re doing, the county would cease looking like one big “Chinatown, Jake.” Good job.

You’re so right and I hope that people who appreciate Karen’s years of hard work and meager pay are supporting the CCN advertisers. I have supported two of them. I recently visited Health Works for a condition that I was concerned about because I didn’t feel I was getting my questions fully answered from my doctor. I have decided that I am going to keep Health Works as my permanent caregivers.

I also tried out the hair stylist George Braddy. After two years of never achieving the natural color I was aiming for, I finally have it along with unexpected beautiful highlights. He used a technique that I haven’t seen before and this is the first time that my color looks 100% natural. The color didn’t contain any peroxide either but it is foreign and I didn’t get the name of the line. The best part was the haircut, I love it and he did exactly what I asked for. Anyone who visits him will probably be as happy as I am and I actually paid less than I had been paying.

I’ll be looking into solar panels next, can’t guarantee I’ll use the current advertiser from this site but I’ll definitely visit them for a consultation and bid.

Thank You Karen and thank you to all the advertisers who are supporting this valuable news source.

Documentary – “Flush It” – investigates toilet history and proposes serious development in water provision for the developing world. The 2008 anniversary of the 1858 Great Stink, when levels of excrement “backed up” on the tidal Thames forcing parliament to adjourn up river, may seem a strange event to commemorate. Yet in the West, the grand plans that solved the stench mean we no longer worry about death from cholera and water-borne diseases.

To watch please visit –

I came into this feces-colored soap-opera within the last 6 months or so, so I don’t know the history going back to the Byzantine period…

But I remember Nicolls being the one that voted for investigation of Wallace, and the one who seemed to be more interested in accountability.

I beg to differ. I think it was Hill.

[SMACKS SELF IN HEAD] Sorry, got the names confused. My bad. Yes, it was Hill.

There is information from credible sources that would suggest Nichols knew about the plants staff expressing concerns long before any of this came to light or anybody was fired. Sources say one of the staff knows Nicols personally and expressed his coworkers concerns ,yet Nicols refused to act on the information provided to him.

Ferrara was appointed by the A.G. City Council to serve on the sanitation district board and could have been removed at any time. Apparently, no one in A.G. has been following this issue or realizes that it is hitting them in their pocketbooks. At this point it “almost” seems pointless to protest at the sanitation district meetings because the district is corrupted to it’s core. Better to replace Ferrara with someone honest, and do this by bringing pressure to the Arroyo Grande City Council. No sense in waiting for a local enforcement action from D.A. Shea’s office. Nobody lives that long.

The deal is, as long as the SSLOCSD is run by corrupt folks, someone honest will not be appointed.

I think it is vitally important that the meetings continue to be packed. At this point, it is the public pressure that will drive continued coverage, and, hopefully, bring it to the attention of a media source that has wider coverage.

This isn’t just a “local” issue. It’s like the Fukushima nuclear power plant issue in Japan (albeit, on a smaller level). The moment the contamination went beyond Japan’s boundaries, into the ocean and air, it became an international issue.

In December 2010, when–thanks to John Wallace’s criminal operation of SSLOCSD–raw sewage entered the ocean, this local issue became a California and international issue.

This IS already a California and international issue. We just have to apply pressure on local and regional sources to gain media interest. This will also apply pressure to governing bodies to fine Wallace and bring him up on criminal charges.

Something most people don’t seem to want to talk about is this: certainly, this was not the first time raw sewage entered the ocean from the WWT plant. It’s just the first time it was big enough so that it go caught and became an issue for the water board.

We can’t look the other way, just like Japan can’t lookt he other way with Fukushima, because, at the present time, the most important thing to the SSLOOCSD board is smooching kiester to John Wallace and shielding him from the just fruits of his years of corrupt management of the plant.

People are not appointed to the SSLOCSD board. How dense can you be?

Thanks for the clarification. It was my understanding one from each of the three cities/district was appointed.

Also, can your attitude and your personal attacks.

The Congalton Show always has more listeners during drive time. Why has he started putting Velie on after 6? We always used to listen at 5 or 5:30 and the show was always swamped with callers from their cars on their way home from work. It was still a good show, but he needs to put this stuff on at drive time, that used to be fun.

People listen to the show throughout the afternoon, Nancy. No need to get so indignant over the only local media source supporting Karen’s work. Why don’t you direct your frustration towards KSBY, New Times, and The Tribune for not doing more?

Wow, Nancy gives her opinion then compliments the show’s content with “It was still a good show” and Dave calls her indignant?

Cut her a little slack Dave, you’re beginning to sound a little like Adam Hill, our elected Prince of Petulance.

His reply didn’t go unnoticed, I think Dave became indignant and then projected himself at poor Nancy. I can only guess that he was having a bad day. I’ve had those kinds of day’s myself lately. I listen to KVEC everyday during my commute but over the last 3 years, some of my best drives home after a hard day have been when I could tune in and take some satisfaction listening to these crooks get what’s coming to them, for me, it just doesn’t get much better than that.

Aside from the all the political hoopla, the article states that $10/gal, up to $30 million in fines can be levied.

Who gets the money? Nothing’s left to clean up. The poo is gone so is the agency that collect the fine the only benefactor to all this coin?

Just another governmental regulatory agency that produces nothing at the expense of the taxpayers (where the fine money comes from). A lot like our APCD and a myriad of others.

Hopefully the RWQCB will agree that the majority of the fine money should remain in the County/Region. These projects are called Supplemental Environmental Projects (SEPs). RWQCB staff and board can use these fines to fund these projects. See the waterboards web site at: for more information. If you have a specific project in mind, now may be a good time to submit it to the RWQCB.

Dang. I was hoping it would go towards the funding needed to prosecute John Wallace.

Your right in that the tax payers suffer sometimes but wheres the best place to hit somebody to wake them up and listen, their wallet. In the recent suit against ECO/SOCI/ United water or whoever it was using several names over the years the contract company was nailed not the city or district they were illegally operating. Perhaps this will be tha case here if the facts add up to neglegence on Wallaces part. The total fines against US water were in the hundreds of millions,but if somebody dosent protect us who will because apparently our elected officials aren’t as were learning here.