Wallace found responsible for sewage plant deficiencies

July 5, 2011

John Wallace


Penalties against the chief operator at the south San Luis Obispo County sewage plant for failing to properly oversee the treatment facility have been reduced following an appeal that blamed administrator John Wallace for much of the plant’s problems.

Following reports by several employees that the chief plant operator and the administrator at the South San Luis Obispo County Sanitation District were failing to follow state and federal laws in place to protect the environment, the state issued the plant a notice of violation in July 2010.

In January, the State Water Resource Control Board determined Jeff Appleton, South San Luis Obispo County Sanitation District’s chief plant operator, operated the plant “using fraud and deception,” according to a letter of proposed disciplinary action.

Specifically, the state found Appleton had failed to update the operations manual, keep required records and had ordered staff to dump samples that showed the plant was not in compliance.

The state proposed that Appleton’s plant operator certificate be downgraded, which would have made him ineligible to manage the plant.

Appleton appealed, claiming that Wallace refused to allow him to update the operations manual because it was “too expensive.” The manual provides directives in case of emergencies and is required by law to be updated when the plant is modified.

The manual, written in 1992, did not describe operating procedures for the chlorine tanks or the effluent pumping stations which were installed after 1992.

In the state’s response to Appleton’s appeal, it says that emails provide evidence that in 2004, 2007 and 2009, Wallace was informed of problems with operating procedures but refused to fund the cost of updating procedures until the state issued a notice of violation against the plant in July 2010.

“While having an outdated and incomplete operating manual no doubt made it more difficult for the operators to perform their duties, it appears that you took reasonable steps to inform your superiors of the need to update it,” the state says in its response to Appleton’s appeal. “Although you might be faulted for not pursuing more forcefully the funds to update the operating manual, your responsibilities as the chief plant operator was to operate the facility and ensure that your subordinates performed their operational duties correctly.

“You did not have an obligation to perform engineering work for which you were not qualified.”

Wallace is the chief administrator of the district, which 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 about $50,000 to $80,000 a month for plant administration and engineering services.

In June, the San Luis Obispo County Grand Jury validated allegations that Wallace as the plant administrator has been funneling millions of dollars to his private engineering company without proper oversight and that a conflict of interest exists because Wallace is the plant administrator while his firm retains the engineering contract.

The Grand Jury recommended that the sanitation district board consider hiring a new administrator and that the county auditing division should consider doing an audit.

In July 2010, a few days after the state hit the plant with a notice of violation, Appleton applied for stress leave. He went back to work in the early part of December 2010.

On December 18, as the result of influent pump failures, as much as 3 million gallons of raw sewage was dumped into Oceano neighborhoods, beaches and the Pacific Ocean.

In January, the state proposed disciplinary action against Appleton which would have resulted in a one year downgrading of his operator’s license.

A few days later Appleton again applied for sick leave.

As a result of Appleton’s appeal, the state reversed its decision to modify Appleton’s license and instead issued a letter or reprimand. The state found Appleton had willfully or neglectfully violated sampling procedures.

Appleton has 30 days to object to the state water board’s decision.

Meanwhile, the district was served another notice of violation in May because of the December spill. Wallace responded to the violation last month and is awaiting the state’s response which could include fines of up to $30 million that would fall on the communities and the rate payers.

If the state determines Wallace failed to accurately respond to the mandated report he could face criminal action, according to the notice.

At an Oceano Community Service District Board meeting, Wallace said he expects the state to level fines and that the district along with the communities would be responsible for covering the costs.


In addition, the district is battling lawsuits from two former employees who claim they were fired for whistle blowing. According to the July 6 agenda, the district is slated to discuss a liability claim by Appleton against the district in closed session. Last month, on top of fees paid to Wallace, the Wallace Group and the sewage district’s attorney, the district reimbursed Wallace $12,522 for legal fees he paid to the San Luis Obispo-based attorney firm Andre, Morris and Buttery for legal fees for battling lawsuits.


John Wallace is a very bad man. So is his “good buddy” in Grover Beach!


His “good buddy,” the mayor of Arroyo Grande, seems to keep John Wallace and The Wallace Group very busy with AG projects.

We all know now that Ferrara is so stupid and inept that he doesn’t know what “conflict of interest” is, he doesn’t know how to read or review a contract, and he certainly does not know how to find major glaring corrupt billing practices.

With Ferrara’s incompetency, there is no telling how much money is getting ripped off from AG via Ferrara and his joined-at-the-hip pal, John Wallace.

Paul Anthony

You all want Karen to do her job and expose atrocities and problems in government and elsewhere.

You get upset when the Tribune refuses to publish information the public ought to know.

You get upset when the likes of Ferrera, Shea, etc etc do not stand up for what is right but either participate or silently allow these problems.

You want the government to stand up and deal with it.

Then, when Adam Hill speaks up (incredibly poor approach to his speaking, but he spoke up!), you all tell him it’s none of his business and divert your attention to him rather than the concerns he points out.

Think this through


The difference is that Karen reports well documented facts. Adam Hill made a blanket, faulty accusation against a group of individuals.


Hasn’t Wallace for the last 25 years been in control of the reserve account? These funds seem to be at a minimal level at this time, does anyone out there have access to the reserve studies and expenditures going back 20+years?


You are correct as Wallace built up a cash pot that his company would later capitalize upon. Look at the facts and you’ll see there isn’t a singe project Wallace or his company has provided that has improved the actual effluent quality being discharged to our ocean. Fast forward 25 years and the District is in a position they are violating and the management is caught lying about test results to cover the truth. Government agencies are “not for profit” yet the San Dist, at one point, had over $12 million in reserves to provide funding for actual plant expansions not Wallace sugar coated pointless jobs with no value to the environment or actual need for their involvement. When you can simply order a valve or pump based of actual part numbers why is their a need to “engineer” or spec out the part again?. Now with these reserves around $5 Million, and having told the Dist he would reduce his own charges to help pitch in during these tough economic times, Wallace still charging the Dist in upwards of $80,000 monthly. Nothing has changed effluent quality wise other than dumping hundreds of thousands of dollars worth of Ferric Chloride, Polymers, Chlorine, Sodium Bisulfite into the ocean to cover a outdated, ineffective archaic biological treatment process, and the termination of, likely, the two most ethical employees at the plant.

Ferrara, our Village idiot and now a self proclaimed expert on the plant because he’s been there so many times, according to his words, and blind devotion to Wallace is pitiful. Ferrara refuses to acknowledge every legitimate agency who has investigated the District finds conflict, ethics or outright corruption, yet he insists Wallace is doing a wonderful job and theres no need to question anything. Look back at the multiple documents exposed thru this ordeal and recall Appleton’s former statement of “Wallace is one of the most ethical men I know.” If thats the case, why does Appleton have a lawsuit against Wallace and the District?

Who’s pulling the wool over who’s eyes people? Its time to clean house and get the public back on track with a governing body who understands integrity and public service.


Very good synopsis, Newsie. My concerns about Ferrara are the same, but I can’t tell if he is completely corrupt, completely incompetent, or both.

One thing is for sure: when John Wallace snaps his fingers, Ferrara is on his knees in a second.


As long as Bill Nicolls AND Tony Ferrara are on the SSLOCSD Board of Directors, there is no point in questioning what they’re doing and why they’re doing it. That’s a 2-headed coin. My recommendation is that you SKIP the Sanitation District meeting this week, and attend the Oceano CSD meeting next week instead. Discussion about the district and Wallace Group is on the agenda. Wednesday, July 13, meeting starts at 6:30… check the agenda on-line to get an idea when the item will be discussed (it’s not out yet).


Thanks, Snookie.


Wallace is NOT elected!

Wallace is merely an employee of the district.

During public comment at meetings of the board the lowly rate payers have communicated they are not happy with the way Wallace is not handling things.

The SLO County Grand Jury has found Wallace should be replaced as administrator.

Now the State of CA has also found Wallace remiss in his duties!

The board stands behind Wallace’s non negotiated 25 year old employment contract, makes an argument that the Grand Jury is wrong, and probably could care less if the State fines 30 million to the distrct… it’s not their money so who cares.

Ferrara publically applaudes Wallace for NOT using a competive bid process, ONLY SINGLE SOURCE, for very expensive maintenance items… says it saves money (not his).

Wallace probably makes more money just off the South County Sanitation District alone than ALL the incorporated city managers in SLO County COMBINED!




LOL—the way Wallace acts, you’d think he was coronated.


Can the SSLOCSD Board be recalled?

CA Native

Why no perp walk?


Can you say SHEA?


Apathy, the SLO County DA’s office needs to be thoroughly investigated…The things they’re getting away with is outrageous. Hiring a husband & wife to work in the SAME OFFICE…have you EVER heard of THIS happening anywhere but San Luis Obispo???


Maybe he works at SLO FD on the side.


This doesn’t surprise me at all. It makes me irate, however. The State acknowledges that Appleton INTENTIONALLY avoided sampling when the plant wasn’t running well, a HUGE violation of regulations, and they don’t downgrade his certificate? WTF?

How is Wallace still in business? Why is anyone still working with him/them?

Please, please, please citizens of this area, go to the next board meeting a demand a change is made in the management. No one on that board, barring Angelo, seems to give a rat’s @$$ about the public’s best interests, which (which might actually come as a surprise to these idiots,) IS ACTUALLY WHAT WE ARE PAYING THEM FOR.

As sad as it may be, i think this is why no one has faith and/or trust in our government anymore. This is why no one stands up for what’s right anymore, because it doesn’t farging matter. The Wallace’s of the world just buy their way out of trouble.

Idiots… All of them. And while that is bad, any of the area residents who are sitting back and doing nothing are getting exactly what they deserve. STAND UP residents. Go to this next board meeting. It’s Wedsnesday, at 6, at the OCSD building at 1655 Front Street, Oceano. OCSD is directly across the street from the Oceano Depot, with parking in the rear.


Over the last decade or so, I’ve seen a shift of the responsibility of the politicians we elect and the regulatory agencies we pay to oversee operations of facilities such as the SSLOCSD to the citizens.

It seems like it is assumed that hired and elected oversight personnel and agencies are going to be corrupt and, on top of paying for the regulatory agencies and politicians, citizens have to end up doing the oversight for operations, like SSLOCSD, anyway.

So why bother with electing politicians, having Grand Juries, and paying for the formation and operation of monitoring agencies? If all they are going to do is embezzle and commit fraud, then we might as well not even bothering employing them in the first place.

This acceptance of corruption and sleeze as being normal is pervasive.

It is time we hold the regulatory agencies and our elected politicians responsible for doing their jobs and doing the oversight they are supposed to be doing to keep us safe.

That means the County needs to stop doing business with John Wallace and the Wallace Group NOW, and they need to start doing their jobs and providing the oversight and safety they are supposed to be doing.

It is not our jobs to do our own jobs AND their jobs, too.


Also check out the meeting agenda….


You will find the Wallace discussion is the LAST item on the agenda. And AFTER closed session.

No other public board meeting puts public issues AFTER closed session. It has been suggested that the board ‘hides out’ in closed session to wear out the wating public (and the press if they show up at all, except for CCN) and hopes most will go home before they reappear.

And if you wat them out the public cannot comment until the NEXT meeting which may be rescheduled and sometimes moved to a different venue at the last minute (but still under legal guidelines).

So if you really want to attend the meeting be prepared to have your comments strictly adhered to within the 3 minute guideline and bring plenty of water, maybe a cot, and a whole lot of PATIENCE!

These ‘good ole’ boys’ have been making millions for years and they are NOT about to give that up!



Oh, for the love of pete. I’m not going to suggest ways to deal with this, because I’m sure you all are much more experienced dealing with these nincompoops than I am…so let’s just cut to the chase. What is the best strategy. Oh, wait. I’ll have to call someone because if we post it here they will just change to another meeting place.


Congratulations, Karen! Well done! Let’s see if the County will move on that audit now.

Wallace and the cronies he runs with, including the Seitz brothers, has caused so much harm to SLO County. I cannot believe that the County still does business with him.


It sounds to me like you enjoy casting blame on the citizens when those they employ and elect screw up and commit fraud.

This is the fault of Ferrara, Wallace, et al. They were elected in good faith, and they were negligent and committed fraud.

It is true that this has been a problem for a long time, that does not mean that it is the fault of the people who elect and hire these corrupt excuses for human beings because the people do not have the time, knowledge, or resources to run the WWT facility themselves.

Would you blame the people who died in the huge explosion of the gas main up north for PG&E’s negligence and corruption?

Kevin Rice

I will ignore your exaggerations and will let you make up your own mind:

Would you blame/fine a corporation that–through good faith, good intent, and reasonable practice and prudence–employs a manager that commits sexual harassment on a subordinate?

Let us also examine California Law (pre-text of the Brown Act):

“The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.

This statute, which the people enacted, declares:

The people have delegated authority

The people retain control

Te people have created these instruments (agencies)

Who do YOU THINK is ultimately responsible? Does your answer match your answer to the corporate sexual harassment question? Can you articulate your position without rhetoric and attack?

Your turn.


There is a difference between being informed as a citizen and being blamed because, despite your being informed, those who you elect to serve you and administer your local government embezzle, commit fraud and harass the employees with whom you have entrusted them.

Kevin Rice

You misconstrue and misrepresent my original post. You entirely avoid each and every one of my questions.


your tautologies and sophistry like your life are filled with deception of self and others. How could anyone misconstrue, avoid, and fail to answer questions–except to deny regardless of evidence at hand. Remember 2:10-cv-03258 in USDC CDC SD Santa Ana, CA. How many times did you write Deny to an attorney’s charges substantiated with documentation? The judge called your behavior a “sham.” You are a poor, misunderstood, misguided, individual who can’t seem to make their point without or threatening to sue or putting up their criminal actions on the internet and garner a prize for their efforts.


I think we are just coming at it from different angles.

I guess the issue for me is that, since I’ve been posting here, all too often when some elected official, contractor, board member, or whatever, who the public has elected, nominated, or paid to do a job, and the job gets overbilled or not done at all, I read/hear “When will the people of [INSERT CSD/CITY/REGION] start taking responsibility for their community and [INSERT SOME ACTION THAT TAKES MONEY, RESOURCES, TIME, KNOWLEDGE THAT MOST DO NOT HAVE] and bring this to a halt?”

Or, my favorite, “You get the government you deserve.”

Screw that. There’s only so much citizens can do on a regular basis. Sure, there are occasions when a great outpouring of effort and involvement accomplishes a big thing in getting the corrupt politician/contractor/whatever brought to justice (like the Tammy Rudock fiasco). But this should not be seen as something the community is responsible for doing ALL THE TIME. When we put these people in positions of power, we entrust them with doing the job for which they got the position.

It’s gotten so it’s some kind of sick game–we elect/hire/appoint somone and they screw us over then we lose money, they don’t suffer in any way and are free to go on to do it again, AND we get blamed for not doing the extraordinary: making a corrupt person honest.

In SLO Co we are apparently saddled with a DA, major newspaper, and regulatory boards who think getting elected/appointed/whatever is a license to scam and rob the citizens of as much as they can, and that the job of the DA, major newspaper and regulatory boards are to do just enough to make the people think they are doing something, but stop short of USING THE POWER WE GAVE THEM to put the fear of the Lord and 20 years in prison into these filthy frauds.

We might as well not have a newspaper if what we get is the Tribune. I buy the SF Chronicle and exchange it with a friend who buys the LATimes. I scan the trib if its free. I’m not going to give one cent to a publication that spends more time covering up for the people who are harming their subscribers than it does letting us know what is really going on so, when we do have time to be political activists, we can do so effectively.



I don’t think most civil servants are not aware or not orientated to this.

I wish they were just as a reminder to avoid arrogance or officious demeanor to its customers.

I think many young people are sold the opposite.

It is good you post this.


It seems like Wallace would have E&O insurance to cover fines. If not, why do the rate payers have the responsibility to pay if it’s shown wallace was at fault? I guess we hire people to do our business, and if they fail, we ALSO pay for that. I know someone can explain this to uninformed me.

Kevin Rice

Sounds to me that any fine would be directly against the district. Yep, I think you’re right—the district is responsible ultimately. Sorta like suing a corporation when one boss down the chain sexually harasses someone…

I don’t think any of this is “new”. Lots of people have been aware for a long time, so maybe the community is “at fault” for letting it happen? Weird part is there are three people on the sanitation district—two of them get elected in two other cities you don’t vote in and have a majority say. Maybe citizens should pay attention to other cities’ elections as well.


Suing a corporation for lewd acts of a management type happens all the time. It’s called “deep pockets.”


Well, I think Maria Kelly and Pavvo Ogren would qualify for the charges of lewd acts in deep pockets, if you get my drift.


E & O insurance applies for only UNINTENTIONAL acts…errors and omissions. To make a mistake or forget something is E&O. To intentionally commit the act, now that’s, well, intentional.


Good point, danika.



Is there some type of insurance that is usually carried that pays in cases like these?


I would think that a form of Malpractice insurance could. Covers quite a lot, but is very expensive. Assuming such coverage is available for him. I doubt it, as he likely does not make enough, embezzling or not.


Sorry, meant to supply a link to malpractice info. It’s not just for medical and legal folks, btw.