Sanitation district smacked with $1.4 million proposed fine

June 19, 2012

John Wallace


Ratepayers in the communities of  Arroyo Grande, Oceano, and Grover Beach are facing increased utility bills to cover a $1,383,007 proposed fine for a raw sewage spill that occurred because of alleged mismanagement of the South San Luis Obispo County Sanitation District, according to a complaint lodged Monday by the Regional Water Resources Control Board.

In the complaint, prosecutors accuse district administrator John Wallace of not properly maintaining or operating the plant and failing to properly report incidents to regulators. 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.

“The water board’s enforcement team is proposing a reasonable penalty in this case based on the evidence, the law, and previous cases,” said Michael Thomas, assistant executive officer for the Regional Water Board.

“A preventable sewage spill of more than a million gallons is a serious issue, and one of the main purposes of enforcement is to deter future violations,” Thomas said. “Unfortunately, we were unable to reach a negotiated settlement with the sanitation district because, based on the facts and our experience, the district’s spill amount calculations weren’t reasonable. So we scheduled this matter for a public hearing, where the water board itself will decide the outcome.“

In addition, regulators accuse Wallace of using a methodology to estimate the 1,139,825 gallon spill that is “inaccurate and unreliable.” Instead of relying on approved spill calculation methods such as using computer graphs of influent at the time of the electrical failure and historical data, Wallace used eyewitness accounts of  sewage pouring out of manhole covers.

Shortly after the Dec. 19, 2010 spill, which was caused by an electrical shortage of outdated wiring that had been slated to be replaced for years, Wallace estimated 110,000 gallons of sewage had spilled into the community of Oceano, local waterways, and the Pacific Ocean.

Three days later, plant operators reported a 894,600 gallon spill to regulators. By Jan. 3, 2010, Wallace, using a  method created by his staff at the Wallace Group, reported the spill at 383,200 gallons. In 2011, following a notice of violation from state regulators, Wallace increase the reported sewage spill amount to 417,298 gallons.

In arriving at 1.4 million gallons, regulators took the approximately 3 million gallons of raw sewage entering the plant during the failure and subtracted almost 2 million gallons of sewage that bypassed the failed pump and entered the treatment plant (based on an effluent meter that operated correctly during the failure), according to the water boards’ technical report of the spill.

Regulators have set a tentative public hearing on the complaint for Sept. 6 at the water board office in San Luis Obispo. At the hearing, sanitation district officials will have an opportunity to argue against the complaint.

The district, which serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach, is governed by a three person board consisting of one representative from each community.

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I have never understood how one Gov’t agency fining another Gov’t agency does any good. If they don’t have the money to fix things before they are fined, how will they have the money to fix them after? I think a certain level of Government goes behind closed door and laughs their asses off at the public.

I distinctly remember that they stated the EFFLUENT METER WAS NOT WORKING and that’s why they used the “very scientific” method of measuring the spillage by EYEBALLING the amount of effluent coming out of MANHOLE covers.

Yet the above article clearly states:

“based on an effluent meter that operated CORRECTLY during the failure”.

This is all about the NUMBER of gallons of sewage spilled.

Maybe they should hook up that effluent meter to Wallace’s mouth and measure that SPILLAGE!

This can not be repeated enough. The citizens need to go to the next SSLOCSD board meeting and demand that John Wallace be removed from his position there.

It seems to me he is nothing but a blight on that District.

I urge anyone with ANY political clout to start speaking up on behalf of the citizens they are supposed to represent and put whatever pressure they can on that Board to wake the heck up, pull their heads out of the sand and do the right thing.

AGAIN, SHAME ON YOU JOHN WALLACE, AND SSLOCSD BOARD. And shame on all those employees there that weren’t standing up to these turds and let those two whistleblowing employees suffer for simply being brave. Which reminds me, thank you again to those two employees (and of course CalCoastNews,) for bringing all this to light.

LISTEN TO SLOCHUCK people !!!!!!!!!!!!!!!!!! Nicholls claims the District cant pay the fine because their broke paying out legal fees and bogus lawsuits from former employees. What a lie, if Wallace wasn’t the incompetent administrator he is NONE of this would have happened and zero in tax dollars would be spent. EVERY AGENCY that has investigated the Sanitation District under Wallace has dinged them for something because of Wallace’s incompetence. Who’s screwing who Nicholls? time for you and Ferrara to disappear from public service as your both solely responsible for this matter plain and simple.

I’d like to address notions that ratepayers are not responsible…

Like any district, city or county, the South SLO Sanitation District is a body corporate and politic, which means, “A politically organized body of people under a single government.”

Being organized by the people of the district, it is those residents who elect representatives, and those representatives who appoint, employ and contract persons and entities under the authority delegated by the people.

There is a good argument for individual negligence or malfeasance which may or may not prevail. If such an argument fails to prevail then it is legally impossible to disclaim responsibility for those put in place under your own authority.

Just another argument to pay attention between elections and keep the fire hot.

This is a a big-time Mexican stand-off (I do not know the origin of the term and mean no ethnic disparagement or disrespect). “Fine me all you want, it just gets added to YOUR sewer bill, I still have the contract, and it’s all the water board’s fault”. Everything element of government indifference, just privately contracted (curious about the bid process, maybe try a company out of LA, no local connections?). Wallace has a majority on the BOS now so he’s feeling pretty good about his position.

ahem… Wallace donated to Adam Hill, so do you mean the lame duck Three Amigos?

Sorry, can’t use that term as it never fit better than for Ovitt, Lenthall & Achadjian when they pushed through the Santa Margarita Ranch development using special hearings during the holidays.

Try something else.

The Three Amigos fits Patterson/Hill/Gibson to a tee. Quacks like a duck.

Wallace will donate to any political candidate which may be winning. Wallace is a politician. How do you think he has managed to get so many contracts throughout the years, and keep them for so long.

Wallace found his man in Adam Hill. Amigo Hill received thousands from El Guapo and his insider friends.

How about these Three Amigos:

Ed Waage

Karl Rove

Kevin P. Rice

Muy bueno, “mi amigo”

Dunno. Never met with them privately before. Have you?

As if everybody doesn’t already know that you have an axe to grind, and are so driven to find a way to post it in every news item on CCN.

Ever hear the story about the little girl who cried “Wolf!” ?

Actually, the O.P. made an ignorant comment supposing a relationship with the incoming BoS, to which I posted a factual reply speaking to an actual relationship with a current supe.

As to axes, I have no quarrel with being known as opposing a public official who is well known to be abusive both publicly and privately.

Just because someone has a hot-button issue doesn’t mean what they post isn’t valid.

Well, you’re making my point. If Kevin’s got a case to make, he can write an article and Karen can publish it. If Kevin’s going to make oblique or direct digs at one or more of the Supes wherever he can, he ends up looking like a malcontent, exactly like one of the Los Osos gang that shows up each week at the board. They have no credibility any longer even though they have some valid arguments precisely because they’re pursuing their case without any creativity.

Everybody’s bored with them and they still think they’re serving the interests of the community. Well, they’re not. Not any longer. The Frankenstein Sewer Monster is going to walk the streets of Los Osos, and they can chase it with their sticks and stones from now until eternity, but it’s not serving anything more than their egos any longer.

Kevin’s doing the same thing, headed down the same road. I know he doesn’t like to hear it, but that’s the way I perceive it, and I’m not one of Hill’s buddies.

Some decent points, others not. I’ll take it under submission.

The question was asked if the affected cities could hold Wallace financially liable. As posted before Wallace’s contract as District administrator & engineer covers him by the Sanitation Districts Indemnity clause. BUT………if Wallace is found guilty of negligence in his performance as administrator or engineer the indemnity coverage is off the table. That being said It’s imperative Wallace is found guilty of negligence and held financially responsible, not us tax payers.

If you recall the two reports submitted to the State regarding the spill amount. One was prepared by Appleton the former plant super who was actually present during the event and reported close to 2.80 million using flow charts and various unquestionable facts. Then there’s Wallace who was not there, who ignored hard facts and used several untrained individuals guess of what was flowing out of pick holes or lifted manholes in hopes of down playing the magnitude of the spill. Who do you think is correct? Somebody facing possibility of jail time for lying on a report, that being Appleton, or Wallace a person who’s farts butterflies as the New Times put it and gets away with murder at the tax payers expense.

I urge those who’s homes were inundated with sewage and are tired of the same old crap good old boy BS to attend the W/Q hearing and speak out against Wallace,Ferrara and the Districts defiant of all that is ethical attorney Mike Sietz. Its high time to say goodbye to the three stooges.

How can Wallace be held responsible if he used a formula developed by his engineers? Even if there are errors of assumption in their model, how can it be proven that the errors were intentional? You would need a trail of evidence, such as emails, which could only be subpoenaed by a court. And if there aren’t any emails, it turns into hearsay. Either way, you’re looking at a lawsuit against Wallace, in addition to the fine.

Because neither Wallace nor his engineers are licensed wastewater operators and have no legal right to touch anything at the plant. W/Q clearly states in several documents hands off, let the plant staff do their job. There is a email in the authorities hands that unquestionably indicates Wallace is attempting to force the now former plant super to sign his name to a false report with the Wallace guesstimate spill amount. Wallace is an arrogant ass and a master at contorting facts who likes things one way, his way. The former super refused to sign that false report and now he to is gone from service like the others two who refused to act illegally in their profession. As far as formulas, the flow charts worked fine, however only reading up to some 8 million gallons at which point it stopped reading any higher. There is also a second chart recorder that never stopped working. Using either flow reading and the duration of the power loss to the pump station its pretty easy to see what didn’t go thru the plant. The state investigators are not dummies, they will have all of this come hearing time.


Doggin, I remember reading, shortly after the time of the spill, a report by Appleton which was basically a timeline of what went down when the spill occurred.

I know Appleton probably had enough experience to calmly deal with what was happening, but when one thing after another went wrong—it was really scary (for non-techno me) because it could have been so much worse.

I hope Appleton is doing okay.

Would a class action be appropriate in this situation?

If nothing else Wallace himself should reimburse every penny to the home owners who’s homes were flooded with sewage. Please somebody organize a whatever it takes to can Wallace, Seitz and have Ferrara and Nicholl’s removed as chair people to the Districts business matters.

The 1.3 million dollar question is…..What is the RWRCB going to do with the money? Is this like the Air Pollution Control Board, where the fines appear to be used to pay inflated salaries, and fund ridiculous retirement plans for bueraucrats? If you’ve got:(a) fining power and (b) to meet payroll and pension contributions with fines, then everyone is a target, and other governmental agencies that can spread the fine out amongst taxpayers are probably the best deep pocket targets. Maybe I’m wrong about this…..maybe the RWRCB actually spent 1.3 million cleaning up something as a result of the purported event……and, maybe the RWRCB is actually staffed entirerly by volunteers, who donate their time and energy because they care about the planet, the environment and the quality of our water supply for the benefit of all the rest of us………….or maybe it’s just S.N.A.F.U………I’m guessing situation normal.

How do we fine all the fish, and other aquatic or riparian life that keep relieving themselves in the local streams? I don’t even want to think about what a pod of whales is going to have to pay!! Get to it RWRCB, there’s some fining to be had!!

The Water Board has a program where the violating party (in this case the SSLOCSD) can allocate up to half of their fine money to be used in a Suppemental Environmental Project. The project has to be free of potential conflicts of interest and must meet other guidelines set by the Water Board. Surfrider SLO has asked the sanitation district to consider allocating half of the fine to help fund our county’s water testing program, which is being threatened by budgetary cuts from the EPA and elsewhere. When Surfrider testifies at the upcoming Water Board hearing in September, we will re-iterate our request for this to move forward. We will also share our experiences in dealing with the sanitation district’s Board of Directors, and their unwillingness to move toward meaningful reform.

Why do I feel that I am at the Mad Hatter’s Tea Party when I read this article?

Well that’s just great. As if the ratepayers had anything to do with this, but they WILL pay the bill. Is there any insurance coverage for this? How is fining the district (made of ratepayers) going to resolve the problem? It will only take money out of the community – money that could be used to FIX the problem. Let’s punish the taxpayers for a situation that they realistically had no control over. Running these CSDs as elected Board members is a thankless task and one that most people who aren’t masochists would avoid like the plague. I feel sorry for all of you. Given what has happened in San Luis Obispo, where employees in the Public Works Dept. dumped toxic chemicals into the corporation yard and creek, we are probably facing similar fines in the not too distant future.

Could the affected cities sue Wallace to recover the amount of the fines?

Absolutely not. Call him what you want but don’t call him stupid!

Of course they can sue. This is America.

I would like to see them try.

But the fact remains that each affected city appointed a rep to the SSLOCSD Board. And through news articles here (and, ok, some other news outlets,) they KNEW about the claims against Wallace. They knew that the whistleblowers had to say.

They knew what the Grand Jury found.

They knew what the results of an internal investigation revealed.

They knew that State Water Board found fraud and deception.

…And yet they stood by their man.

…And while it will not be a popular opinion here, the affected citizens didn’t do nearly enough to speak up and hold their elected officials accountable.

Sure, a handful of citizens DID speak up, but most of them figured it wasn’t really their problem. Well guess what, when that fine comes down, it WILL be your problem.

My question to you now is what are you going to do about it? You going to sit by and get Wallace and his merry band of thieves continue to rip you off and, in the words of the Water Board, not do their jobs -OR- are you going to rise up and get these whackjobs out of there?


I’ll second that, excellent post SLOChuck.

Thank you, doggin.

I don’t think the cities would sue Wallace. The oversight board has 3 members…one from each city.

The members of the oversight board have, for decades, allowed and enabled Wallace’s poor performance and illegal contracting methods to occur.

I doubt at this stage of the game that the oversight board is, in any way, going to inconvenience John Wallace.

Don’t you think Its political suicide for Ferrara and Nicolls if they continue to stand by their man?. Keep in mind Nicholls is going to run for Grover mayor. Stop him before Grover ends up like Oceano.

Obviously, the oversight board members don’t think it is political suicide. Ferrara thinks his b@lls are gold-plated, by the way he acts.

The SSLOCSD is not a Community Service District. Just in case there is any confusion…

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