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Sanitation district and regulators at impasse

June 8, 2012

John Wallace

By KAREN VELIE

Regional water resources control board officials have pulled the plug on settlement negotiations with the South San Luis Obispo County Sanitation District over a December 2010 raw sewage spill, and called an impasse.

As a result, a complaint is slated to be filed in the next few weeks to be followed by a hearing in which the details of the questionable spill and alleged administrative inadequacies will become public. The district, which serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach, faces a fine of up to $30 million.

Documents attached to emails obtained by CalCoastNews indicate that about 3 million gallons of raw sewage were released into Oceano neighborhoods, beaches and the Pacific Ocean at more than 30 times what was originally reported by district officials.

Shortly after the spill, which was caused by an electrical shortage of outdated wiring that had been slated to be replaced for years, district administrator John Wallace reported to health officials that the spill dumped 110,000 gallons of sewage into the community. A few weeks later, he estimated the spill at 384,000 gallons.

However, a series of emails between Wallace, Wallace Group staff and sanitation plant manager Jeff Appleton reveal that those involved in calculating the amount of sewage spilled argued amongst themselves on how many gallons they should report and who would sign state-mandated accounting forms.

Wallace is the 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.

In April 2011, the regional water resources control board slapped the sanitation district with a notice of violation and ordered district officials to respond to the allegations. Wallace and district board member and Arroyo Grande Mayor Tony Ferrara have repeatedly claimed that allegations that the spill was inaccurately reported or the plant is mismanaged are untrue.

About a year and a half ago, the water board and district representatives entered into confidential negotiations. However, district officials appear to have broken confidentiality and asked legislators to step in on their behalf in an attempt to keep penalties at a minimum.

Representing the board, Ferrara asked Sen. Sam Blakeslee and Assemblyman Katcho Achadjian to speak to the water board on the district’s behalf. Both legislators wrote letters asking the board to  consider the communities’ ability to pay while leveling fines.

In his letter, Achadjian said that he believed the district is well run and he noted concerns that fines could impact the fiscal health of the district.

“When they fine, I don’t want them put out of business,” Achadjian said to CalCoastNews. “I am worried about the communities.”

In his letter to the water board, Blakeslee requested that the impending “fine be reasonable, fair and based on the most accurate information available.”

“The SSLOCSD (district) has represented to me that they have been forthcoming and cooperative with both the community and the State Water Resources Control Board in response to the spill,” Blakeslee said in his letter to the board.

Nevertheless, water board officials contend district representatives have not been forthcoming and willing to negotiate a fair settlement.

The district’s attorney, Michael Seitz, contends it is standard practice for local government agencies to ask legislators to assist them in dealing with state agencies, and that the district’s representatives did not break confidentiality.

“Katcho did not participate in actual negotiations and at no time did Katcho indicate that there was anything confidential disclosed,” Seitz said. “However, Katcho did indicate that he assumed any information provided to him would be kept confidential as between all parties.”


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I don’t know who DOGGIN is but his/her posts are so very accurate as to the situtation at South San that we all should read VERY CAREFULLY what is stated.


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QUOTING ARTICLE: ““The SSLOCSD (district) has represented to me that they have been forthcoming and cooperative with both the community and the State Water Resources Control Board in response to the spill,” Blakeslee said in his letter to the board.


I don’t know why both Katcho and Blakeslee are parroting John Wallace’s self-serving (and completely void of truth) claims about anything that has to do with the SSLOCSD and their flat-out lies to everyone, including the press, the public, the customers of the WWT facility, and the water board…but they are tarnishing their reputations and futures by doing so.


It indicates they are either woefully uninformed or willing to support Wallace and the Ferrara-led corrupt gang which has ripped off its customers of $$$millions, while running the WWT facility into the ground. Neither is a good reflection of their ability to participate as leaders in SLOCounty.


As my mother used to say, “When you lay down with dogs, you get up with fleas.”


And if the fleas are from John Wallace, they are probably carrying the plague.


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The SSLOCSD is just about broke but the State is still going levee fines for the spill, as it should be. But, what about the Whistle Blower lawsuits? Any forward motion on those? These, as well, will cost the district.


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Anyone know why the Trib isn’t covering this story yet?


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Fear of losing advertising dollars?


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Like KSBY they only ask those hard questions that make folks uncomfortable…LOL.


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Hey, I know… why doesn’t the water board fine the District $12.5 billion then Gov. Brown could claim that the state budget is balanced!

A $30 million fine is totally out of line, considering that the spill — no matter how larger it was — was created due to an incredibly heavy rain storm. Doesn’t Act of God play some part here? Or is that only reserved for private citizens when dealing with their insurance companies?

Or is the district being punished for the perceived misreporting of the spill size? If so that would seem to be a criminal matter — i.e. perjury — which would require proving it in a court of law beyond a reasonable doubt. Quick, get the Attorney General on the phone.

The water board likes to flex its muscles and force agencies to their knees with threats of outrageous fines, like $30 million for a spill caused by a raging storm and flooding. And wouldn’t the Oceano CSD share some responsibility for the flooding due to its inadequate storm drainage system? Or is the storm water system still managed by the County of SLO? Is there even a storm drain system in Oceano?

And speaking of insurance companies, I would bet a Wall Street bonus that the District’s insurance carrier will reach or force some kind of settlement with the water board and cover the a** of everyone involved.

I’d expect it to be around $5-$6 million, accompanied with a settlement agreement to make repairs and upgrades in a timely manner and provide proper training for personnel to prevent it from happening again.

In that case, the fine would probably be held over the CSD’s head like an anvil, to be dropped only if the district reneged on the deal. Otherwise the fine would be forgiven, minus administrative costs of course. So you’re looking at a few $100G’s not tens of millions.

And if you want to get rid of Mr. Wallace and his company’s involvement with the district, the board members have to do it, and that means citizens pounding their fists on the podium at public meetings and demanding a change be made.

Time for Democracy to get into action. If you residents of the district don’t speak up, and speak up loudly, nothing will ever change, at least until Wallace retires on his own.

The time to act is now, before even more shenanigans are discovered and the situation worsens. Get rid of Wallace and anything that comes to light in the future could be blamed on him.


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Here are the facts of the spill and it wasn’t caused by an act of god. It was an act of negligence and failure to peform. Following various natural occurrences, rain,squirrel damage,the S/S Quake the Levee next to the plant was compromised and became questionable to its ability to hold up, it also dropped along the area adjacent to the plant. The plant being next to the creek was subject to obvious flooding in the event the levee failed. Wallace jumped on the opportunity to make pay on various flood prevention projects the plant just had to have. New flood gates, a mega diesel stand by pump to push sewage through the plant regardless of electrical service or not. This power loss of both PG& and stand by power actually happened for some time as a result of the SS Quake. Hundreds of thousands in Wallace engineering and equipment purchases were made but NO real emergency plan of action if a flood or Tsunami really happened. Employees asked just how deep could it get, they were told over a foot of standing water. Employees asked hey what about all those ground level unsealed electrical pull boxes who’s unsealed conduits lead under ground to pump stations. Wallace’s people responded with a well it will probably never really happen and that was the end of things as far as proactively correcting the reality of a disaster waiting to happen.

It rained hard, the pull boxes filled with water ,the water followed the conduits into the pecker heads of the 3 phase influent pump motors 2 levels under ground and that’s what caused the spill.

Keep in mind Wallace started charging tax payers thousands in engineering starting in 2004 to replace faulty wires,seal conduits etc and like everything else Wallace does it got milked for almost a decade with no repairs but plenty of charges to tax payers. So… no excuses people, Wallace is personally responsible for the failure and should be held responsible financially or otherwise. He is general manager and his own company provides engineering,admin and construction management.


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Not being in south county, does anyone know if the board voted to finish the projects, or did they just approve the engineering? Wallace may be culpable for some of this, but the board has to approve all of it. Generally, he would not be able to do anything of large scope without their approval.


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Wallace to date has been free of responsibility for over charges,screw ups or a general piss poor job because like you point out the Board gives Wallace cart blanch on everything. Ferrara is Wallace’s long time buddy from Los Angeles, his x wife a Wallace employee at one point. Ferrara is the Chairman of the Board. The public asked some time ago during the conflict of interest concerns and Nichols who is Ferrara’s and Wallace’s puppet told the public when asked if they EVER went to open public bidding for jobs and Nichols told the public the District could not afford to go thru the process of advertising and the rest related to government job bidding. A absolute joke of an answer indeed. Wallace claims to offer services at such a low rate they couldn’t find a better deal. Perhaps per hour that’s true but when the hours to complete any given job total 20 to 30 times what a confident and competent engineering company would charge its no deal. Do you find it acceptable that Wallace co through their negligence and questionable directives to staff created the mess over the last 2 decades and now Wallace is making bank on the corrective actions he didn’t do that got them in hot water? This is in the form of reports,investigations, facility upgrades, document updating, operations manuals etc,etc. Where else can a public official not do the job hired for, bill the public handsomely for it, get caught for not doing it by regulatory agencies and then help yourself and your personally owned company to more of our tax dollars to do what you didn’t do to start with.

A classic example of Malversation if ever their was.

Fraudulent behavior, extortion, or corruption by a person who holds public office or a position of trust.


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Good insight, doggin. You sound like you have boots-on-the-ground experience, and that is a priceless commodity.


Also, bonus points for using the word “Malversation.” I have not heard that word in years.


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A more effective way to change the board may be to lobby the individual city councils to have the board representatives changed. This board appears especially tone-deaf to critical input.


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QUOTING THE ARTICLE:


“Representing the board, Ferrara asked Sen. Sam Blakeslee and Assemblyman Katcho Achadjian to speak to the water board on the district’s behalf. Both legislators wrote letters asking the board to consider the communities’ ability to pay while leveling fines.

In his letter, Achadjian said that he believed the district is well run and he noted concerns that fines could impact the fiscal health of the district.

“When they fine, I don’t want them put out of business,” Achadjian said to CalCoastNews. “I am worried about the communities.”


———–


If Achadijian is so concerned about the SSLOCSD WWT plant remaining in business, he might get off his dead kiester and work with the community–not with his cronies like Wallace and Ferrara–to drop-kick Wallace from any association with the SSLOCSD WWT plant, and get a qualified, responsible administrator to run the plant.


The issue isn’t the amount of the water board’s fine.


The issue is the fact that Wallace did such a pi$$-poor job of running the plant that there was a 3-million-gallon raw sewage spill into the community, including into people’s homes, as well as the local beaches. THEN Wallace lied about it, and continues to lie about it.


Katcho needs to get himself on the right side of the battle. His job is to represent the community–NOT using the power the voters gave him when they voted him into office to coddle the likes of John Wallace.


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This thing has dragged on for way too long, so the Water Board hearing can’t come soon enough. Civil litigation from 3 former employees, 2 sewage spills since Jan. 2010, multiple Notices of Violation, critical reviews from the Civil Grand Jury and an Independent Peer Review committee… And still, the citizens of AG and Grover have not changed their representation on the Sanitation District’s Board of Directors or in the multiple conflicted roles of the Wallace Group.


So, let’s just get to the bottom line of this thing. How much more will we pay for inadequate leadership?


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I sat on a CSD board about 10 years ago. For part of my term, due to influence from community power players, getting the board to approve repairs on an antiquated waste water treatment plant was like pulling teeth and voted against anything to do with the plant. Three of the board members had business relations with the biggest power player in town. Once one of them was removed, repairs actually got done for two years. Wallace was there for part of my term, never had any issues with his firm’s advice. The CSD is now on their third engineering/management firm since not renewing Wallace’s contract. Still have the old plant, still haven’t upgraded the infrastructure as was being proposed at the time. These improvements are still part of their master plan. They ran 17% in the red in 10-11; by far the largest expense was contracted operations management. Instead of biting the bullet and getting improvements done, they just keep bringing in new firms and paying the firms to reinvent the wheel. The CSD boards and manipulators from the community are sometimes the major contributors to apathy.


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It seems like the CSD with which you worked does not know how to adequately construct an RFP and analyze the bids for contracting for their WWT plant. In addition, I wonder why they didn’t hire a district enginner, who could not only provide oversight for the WWT plant operations, but could provide oversight for engineering-related contract processing. The best thing: as an employee, the district engineer would have a vested interest in NOT running up the charges for operating the plant, since part of what most managers’ are evaluated for, on their yearly evaluations, is how well they have been able to control costs associated with their operations and projects.


The reason the electrical (and other repairs) weren’t done at the SSLOCSD WWT plant was because John Wallace (administrator of the WWT plant) was not licensed to run a WWT plant. In addition, no one at The Wallace Group was licensed to operate the WWT plant. Wallace would have had to bring in someone who was licensed to operate the plant and, IMO, Wallace did not want a licensed outsider to see what a disaster Wallace had created in the 25 years he had “managed” the plant.


Wallace’s no-bid contracts direct to The Wallace Group had so many irregularities, and were so much more expensive than the norm. In addition, Wallace provided little in the way of financial details about TWG’s “work” at the WWT plant. Also, the SSLOCSD oversight committee (AG mayor Ferraro being a long-time member of that “oversight” group) actually provided no oversight). Wallace also fired one very competent bio tech who refused to sign off on JWallace’s bogus WWT sample tests, or to rig the testing process (i.e., taking the samples at certain times of the day/night so the sample would not show violations of state regulations). Wallace also harassed the plant’s manager into a workers’ comp/disability leave.


Therefore, one can easily see why John Wallace did not want to bring in an outside licensed plant operator because the operator might start reporting the egregiously self-serving and public-health-damaging “management” Wallace had provided for the previous 25 years.


Wallace and his group have been subjected to a GJ investigation, which produced scathing findings about both the Ferraro-led oversight committee and Wallace’s “management” of the WWT plant. Currently pending is how much in fines the SSLOCSD will be socked with.


Will John Wallace pay those fines? No. The customers who use the plant’s facility will pay those fines.


I don’t know about other communities, but I don’t think the communities of AG, GB and Oceano can afford Wallace’s type of “management.” He charges for a Ferrari and delivers an old Gremlin.


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Bless your heart, MM for saying so eloquently and clearly what the people of the community need to know.

My opinion is that your opinion of these folks is right on the money.


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Think about MM, When Wallace took over the plant as general flunkee in 85 there was 0 in the general fund. years later into to the early 2000’s there was over $12 million in Rabo Bank reserves. Wallace saw peak time to kick things into high gear and started to engineer all there chrome plating of turd projects. Not one project improved the biological process or the quality of the effluent to the ocean. Look at the board pack statements in 2012, there’s less than $4 million in the bank and Wallace is $8 million richer. Finish polishing up the rest of the Wallace turd plating and there will be little left if any . Right about then it will be high time for the state to implement new discharge numbers that naturally the plant will be incapable of producing and also broke. This is when the Village idiot,Nichols and Wallace will lobby for federal loans to fix the ailing plant which will be designed by either KJ or Carollo as Wallace cannot bid on such a project of this magnitude as it wild be a obvious conflict and naturally Wallace is to incompetent to handle such a project.

As far as Sietz telling the public its common for politicians to lobby for reduced fines I call BS on you Seitz. The Districts employees told sources that in a meeting months ago Wallace tried to impress them with his legend in his own mind clout by telling them he planned on taking a couple of his good buddies with him to a upcoming hearing in Sacramento to pressure regulators out of the fines he was to face.


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Will John Wallace pay those fines? No. The customers who use the plant’s facility will pay those fines.

Wallace’s 1985 Contract with the District reads that they agree to defend,indemnify and hold harmless engineer from any and all claims, disputes, controversies or lawsuits arising from or relating to work or services performed by ENGINEER pursuant to the terms of this agreement while he is serving in the capacity of the consulting District Administrator except in the case of willful negligence.

The State Water Board is currently pursuing charges against Wallace for willful negligence as Engineer and administrator because of well….Wallace’s willful negligence related to a wiring upgrade project documented in the 04 MBI dating back to 2004 when Wallace started charging for his engineering and admin services to perform this upgrade @ $500,000 to us tax payers. No work was performed,Wallace like every other project they handle drug their feet billing endlessly year after year ( a Wallace specialty) to do nothing. Wallace admits and documents fires and power loss to equipment because of the bad wiring they never addressed. In 2010 Wallace’s incompetence bit him in the ass and admitted the wiring caused the sewage spill in Dec 2010. Throw in a few reports to the State Water Board inspectors compliments of District employees who’d like to see Wallace go away and Wallace is looking more like what he is every day..

Bottom line is if this story is true about the impasse then I suspect it goes to public trial. I also suspect District employees will be called to testify and they gladly will hang Wallace for his negligence….well every employee but the new back stabbing shift supervisor who refused to cooperate with the investigators even after he witnessed illegal activity taking place. That being said the District will be void of indemnity on Wallace’s part and Wallace and his company will be accountable to pay the fines levied by the state. Consider that the fines the State initially slapped on them were significant enough to, as Katcho put it “put them out of business” Katcho says he thinks the plant is run well..um sure that’s why there’s been a EPA audit, years long State Water resources investigation, three Notice of Violations, one calling the former plant supervisor Appleton a liar,committing fraud and misleading authorities. Three lawsuits against Wallace and the District, less that stellar Peer review report, The revocation of the Districts ELAP cert,loss of ability to perform in house NPDES permit required water quality testing and a Grand Jury Investigation to name some of the more important activities Wallace and his tactics have initiated all costing us tax payers hundreds of thousands in tax dollars to protect Wallace resulting from the actions of his buddy Ferrara the Chairman of Corruption INC. Tell me anybody where on sslocsd.org do you see anything factual about the above mentioned items and their results? Cant find them? You did see a happy little fib about Wallace’s wonderful relationship with regulators and that the NOV was nothing to worry about and they have it handled. Why? because they’ve managed to blindfold the public for 25 years and provide nothing in the way of public transparency while the public continues to foot the bill.


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QUOTING DOGGIN: Katcho says he thinks the plant is run well..um sure that’s why there’s been a EPA audit, years long State Water resources investigation, three Notice of Violations, one calling the former plant supervisor Appleton a liar,committing fraud and misleading authorities. Three lawsuits against Wallace and the District, less that stellar Peer review report, The revocation of the Districts ELAP cert,loss of ability to perform in house NPDES permit required water quality testing and a Grand Jury Investigation to name some of the more important activities Wallace and his tactics have initiated all costing us tax payers hundreds of thousands in tax dollars to protect Wallace resulting from the actions of his buddy Ferrara the Chairman of Corruption INC.


Doggin, thanks again for the short summation of the highlights of Wallace’s administration of the SSLOCSD WWT facility.


Wallace has been able to screw us over, as a city and county, for decades because he has had the support and cover of local government agencies and politicians.


It’s time to start isolating Wallace and The Wallace Group.


We can start with writing letters (both snail mail and email) to our two local politicians who endorse Wallace’s criminally corrupt administration of the WWT facility. Send a copy to AG Mayor Tony Ferrara, as well.


In the community where you live, if one of your elected politicians, city manager, general manager, etc., voices support for the Wallace Group, or continues to send work to such a demonstrated corrupt and fiscally irresponsible contractor, write them a letter, as well, and let them know you are not happy with putting your local government’s funds at risk by contracting with The Wallace Group.


Doggin has provided a good “short list” of Wallace’s failures, which can be used in letters.


Here are the contact addresses for Katcho and Blakeslee. I would send letters to both the local and Sacramento offices. Below the addresses are the quotes from these two politicians, in support of John Wallace.


Other info which might be of use for the letters starts (especially) at paragraph 9 of the article…. such as Ferrara’s request to Blakeslee and Katcho to use their power as elected politicians (which they get from us–those who elect them to office) to speak on Wallace’s behalf to the water board. Both politicians sent letters.


==============================================


SAM BLAKESLEE, State Senator, 15th District


LOCAL OFFICE (SLO)


605 Santa Rosa Street, Suite B

San Luis Obispo, CA 93401

Phone: 805-549-3784

Fax: 805-549-3779


CAPITOL OFFICE (Sacramento)


EMAIL FORM

http://lcmspubcontact.lc.ca.gov/PublicLCMS/ContactPopup.php?district=SD15&inframe=Y&


—————


KATCHO ACHADJIAN


LOCAL OFFICE (SLO)

» Vicki Janssen – District Director

» Kevin Drabinski – Field Representative

» Michael Madriaga – Field Representative

» Doug Coleman – Field Representative


1150 Osos Street Suite 207

San Luis Obispo, CA 93401

(805) 549-3381

(805) 549-3400 fax


CAPITOL OFFICE (Sacramento)

» Craig Swaim – Chief of Staff

» Ross Buckley – Legislative Aide

» Alex Tacket – Legislative Aide

» Katja Weisemann – Assembly Fellow


State Capitol Room 2016

Sacramento, CA 95814

(916) 319-2033

(916) 319-2133 fax


EMAIL FORM

http://www.arc.asm.ca.gov/member/33/?p=email


————————–


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Ooops…Blakeslees’ Sacramento Office contact info is:


State Capitol, Room 4070

Sacramento, CA 95814

Phone: (916) 651-4015

Fax: (916) 445-8081


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Katcho always had a cozy relationship with Arroyo Grande politicians. His businesses are located in Arroyo Grande and he was/is known for donating generously to the community. In return, the community has been generous to Katcho.


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Is this just a comment or is there a point? Are you suggesting that a businessman living in a community should not donate generously to his community? Perhaps that noone owning a business who donates generously to his community should be elected to any position? Maybe the only representative of a constituency should be one who leaches off that constituency?


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Not sure how you failed to recognize the comment AND the point ATWT made. I am certain if ATWT were “suggesting” all those things, ATWT would have just flat out suggested them, leaving little doubt.

Perhaps you need to work on your inner reflection before criticizing those who post here.


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srichison, you sound very defensive. One has to ask why you are so defensive about my statement? Is there something more to Katcho giving things to the community than we all know? “Me thinks He Doth Protest Too Much”


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I don’t care whether Katcho serves or not. I just can’t imagine how “donating generously to the community” somehow makes a representative suspect. I’d rather have one that does that (from either party) than someone who simply takes.


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how do you get from atwt’s comment that anyone is suspect? you do sound defensive.


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A little touchy there, pardner. What do you have invested in the outcome of Katcho and the outcome of the water board’s decision on fines?


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