Court opens door to criminal charges in South County sewage spill

August 21, 2012

John Wallace


A Superior Court judge’s ruling Wednesday has left the door open to criminal prosecution of South San Luis Obispo County Sanitation District officials over a massive spill of raw sewage in December 2010.

The sanitation district is facing civil penalties over the spill that sent up to three million gallons of raw sewage into homes and ocean waters.

The district tried to halt the civil prosecution claiming that state authorities illegally withheld records in the investigation, which would have resulted in the dismissal of any claims in connection with the spill. But, on Wednesday, Sacramento County Superior Court Judge Michael Kenny ruled that the investigatory records were exempt from disclosure because of “a concrete and definite prospect of criminal enforcement.”

Bill Nicholls, Grover Beach councilman and sanitation district board member

Regional Water Resources Control Board prosecutors are expected to ask law enforcement agencies to prosecute South San Luis Obispo County Sanitation District Administrator John Wallace. District board members also may be prosecuted. The district serves about 38,000 customers in Arroyo Grande, Grover Beach and Oceano.

Regional Water Resources Control Board prosecutors accuse Wallace of not properly maintaining or operating the plant and failing to properly report incidents to regulators. In addition to serving as the chief administrator, 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.

A civil liability hearing on the spill is set for Sept. 7. Sanitation district officials will have an opportunity to argue against the water board’s proposed $1.4 million fine. Following the hearing, the regional board is expected to contact law enforcement to seek criminal prosecution.

Tony Ferrara, Arroyo Grande mayor and sanitation district board member

Sanitation district officials claim that extremely wet weather in conjunction with a tripped electrical breaker in a supposedly waterproof housing caused the plant’s intake pumps to fail and sewage to pour out. In addition, a valve that inadvertently was closed could not be opened because it was submerged in water, slowing attempts to control the spill.

Sanitation district legal counsel contends there is no evidence of mismanagement or improper maintenance, which according to case law would mean they are not liable for the proposed fines.

On the other side, water board officials allege that Wallace’s failure to properly maintain the plant caused the spill.

In their complaint, water board investigators contend that Wallace was aware of the electrical issues in the intake pump, but failed to make repairs.

In 2003, the district paid the Wallace Group to examine the plant’s outdated electrical system and engineer repairs. The engineering firm determined that the wiring was in dire need of replacement. Wallace scheduled the repairs to occur in the 2004/2005 fiscal year at a cost of $200,000. The work was never done.

In 2006, plant operator Jeff Appleton sent a Wallace Group employee an email voicing his concerns about the repairs that had not taken place.

“Of immediate concern is the fact that the damage to the wiring for the headworks lights has not been repaired,” Appleton says in the email. “I did not realize, until I was doing the rounds this weekend, that the damage to the wiring has also disabled the influent pump room lights.”

In 2009, the district board which includes a representative from the Arroyo Grande and Grover Beach city councils and the Oceano Community Services District approved another payment to Wallace Group to engineer an electrical system upgrade. The repairs, this time slated to run $500,000, were placed as capital improvements to be done in the 2010/ 2011 fiscal year. And again, the work was not done.

The water board also points at problems with the grading of the land at the plant resulting from the Wallace Group’s engineering plans. The grading, they contend, made the electrical boxes the low point at the plant.

A third factor in the 2010 sewage spill, according to the water board, had to do with Wallace’s purchase of an emergency pump. Investigators have evidence Wallace was informed that purchasing a second-hand pump was a bad idea. Wallace argued that it was a good deal and purchased the pump, which had been rehabilitated, according to court documents.

During the 2010 intake pump failure, plant staff attempted to use the emergency pump to avoid a spill. Within five minutes of the pump being turned on, it failed, according to the timeline of the spill event.

As a result, sewage flowed into approximately 40 homes in Oceano. Unaware of allegations of mismanagement and fraud, none of the residents filed suits against the district before the statute of limitations to make a claim against the public agency ran out. However, if the hearing results in charges of mismanagement, those homeowners would have an opportunity to seek restitution from Wallace and possibly sanitation district board members.

During the Sept. 7 hearing, homeowners will have an opportunity to discuss their losses and give their recommendations for civil liabilities. Homeowners unable to attend the hearing can submit letters to South SLO County Enforcement Issue, 895 Aerovista Place, suite 101, San Luis Obispo, CA 93401. In order to be considered during the hearing, letters must be received by 5 p.m. on Aug. 27.


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US CODE Title 33 Chapter 26 section 1311(a) makes it is unlawful to discharge pollutants off your property before “pretreatment” (1317(b)) to remove toxic disease carrying and cancer causing pollutants.

This never would have happened if the RWQCB (Regional Water Quality Control Board) enforced the Public Health Code and Public Law 92-500 aka THE CLEAN WATER ACT of 1972. It is a “Congressional Mandate of the highest priority” to implement the “best available demonstrated control technology” to remove all pollutants from our discharge AT OUR PROPERTY BEFORE IT GOES INTO A SEWER, as to “PREVENT SAID POLLUTANTS FROM MIGRATING into our drinking water, rivers and oceans just as it did here and has done so many times before.

It is the RWQCB’s SPECIFIC RESPONSIBILITY to promulgate this technology which has existed for decades to assist in the implementation to remove 100% of ALL POLLUTANTS and then recycle that water to be used over and over to stop our water shortage problems.

So think about it…the RWQCB is suing Wallace when they are GUILTY for causing the problem in the first place! If the RWQCB enforced THE CLEAN WATER ACT there would NEVER be another sewer spill. Pollutants would be removed at everyone’s property and we would all be recycling our water ending our shortage or water…plenty to go around.

The RWQCB and The Wallace Group are GUILTY of not enforcing The Clean Water Act which by the way carry Federal fines of $25,000 per day and up to 3 years in prison per day of violation. Sad when your own “government agency” is the real criminal!

To appear as if they are doing their job they sue the Wallace Group…

Interesting article in the LA Times yesterday (see below)

Note that this is the City of Bell’s attorneys filing this lawsuit, but the State of California has been the big guns handling the suite of crimes committed by the City of Bell’s mayor, city council, administrators and police chief.

I believe this article is relevant to the SSLOCSD situation because the SSLOCSD is also a local government body with corrupt officials who have bilked its ratepayers out of $$$millions over the years and, in the process, have routinely mismanaged the facility, leaving all of us at risk for another ecological and expensive tragedy.

In addition, in this article it is now the (ex)police chief who is being sued by the City of Bell for his wages (another article indicated benefits, too) while employed at the City of Bell because the (ex)police chief observed events occurring that he knew were wrong and should have acted to stop them.

Wouldn’t it be lovely if the State stepped in and prosecuted Wallace and the oversight board for all of their back payments, reimbursements and payments to the Wallace Group and John Wallace? All of them were in a position to know what was going on, that it was wrong, and that it needed to stop, and all of them had the power to stop the behaviors, yet did not.

I continue to hope that each egregious act by the SSLOCSD and its corrupt administrator and oversight board, and each finding by another government agency (first, the SLO Grand Jury and now the Central Coast WRAC) further raises the potential for the state stepping in to deal with the SSLOCSD debacle.

Perhaps we need to remind the State that winter is just around the corner, and, since the administrator (Wallace) and the oversight board have not changed, it is likely there is the same potential for another Wallace-Group-engineered cluster-frack of a failure, dumping millions of tons of raw sewage into the ocean waters, right near State parks.



Bell sues former Police Chief Randy Adams

September 04, 2012 | By Jeff Gottlieb, Los Angeles Times

The scandal-plagued city says he owes it hundreds of thousands of dollars, alleging he looked the other way when confronted with evidence of corruption.

September 04, 2012|By Jeff Gottlieb, Los Angeles Times

When he was Bell’s police chief, Randy Adams was one of the highest-paid cops in the nation. Now the city wants it all back. After years of scandal that has left the city on the cusp of insolvency, Bell filed suit Tuesday, saying Adams owes his former employer hundreds of thousands of dollars.

Bell, a working-class city that paid outsized salaries to its top administrators, said Adams must repay the city his entire $457,000 annual salary and a portion of the $20 million the city estimates it lost as a result of a corruption scandal that led to the arrests of eight former civic leaders.

The lawsuit can be read as a pointed response to one the former police chief filed against Bell last month for severance pay. He previously sued the city for legal costs that he spent defending himself against a state attorney general suit that accused him and others of plotting to enrich themselves at city expense. The state suit has since been dismissed.

“A lot of people say, ‘Why aren’t you going after Randy Adams?’
That has been answered today,” said Anthony Taylor, an attorney for Bell.

The lawsuit alleges that Adams looked the other way when confronted with evidence of corruption in the small Los Angeles County city………..


Today, 8-29-12 the Tribune ran another article about the dispute over the spill size. Id like to point out a prime example of historical tactic’s used by Wallace and Seitz to fool the public into thinking this mess is a “Red Herring” and Wallace should not be held accountable for any part of the spill. In a declaration by Ed Thoma of Thoma electric, Thoma states that the wiring work would not have solved the problem that led to the sewage spill. Mr Thoma is partially correct in that only replacing the wiring would not have prevented the spill. This is where deception begins. Replacing the wires only was NOT the entire scope of the project Wallace had been engineering since 2005. Much like the Digester projects Wallace engineered and managed, much of the conduits were replaced with special conduit capable and designed to be sealed off to prevent gasses etc from following their paths. Part of the repairs in question were to seal off conduits and install upgraded wires intended for wet and potentially fire prone areas. Wire is designated as THW, XHHN ,THWN etc depending on the service location in question, the current and entire facility was wired with substandard conductors not capable of withstanding the constant submergence by high ground water issues..

Id like to challenge Wallace to provide to the public a logical explanation to the Thoma declaration based on the floowing questions.

1. If the Wire was not necessary than why did you hire Woeste Electric, a former Sanitation District and FRM employee and to replace the wires to the pumps that failed?

2. Why did you order the plants staff to seal the conduits following the rain event to prevent another catastrophe from happening after the first one? (which BTW did, just not bad enough to spill)

3. Whys did you spec out water proof gates and not silt gates like the rest of the plant has to be installed around the headworks where the failed pumps were located?

4. Why if you installed water proof flood gates to prevent headworks flooding didn’t you address ground level electrical pull boxes with open conduits leading two stories under ground into the pumps electrical motors?

5. Why do you allow Seitz to continually lie about this being the Districts “first spill in 25 years”? You didn’t really forget the part where the District, under your direction was sited by the State for not performing Fecal and total coliform testing correctly. Utilizing only 3 of the 4 required sample sizes to provide Fecal and total Coliform MPN lower than required it gave you “wiggle room”to deceive the state. Did you already forget when that award winning lab director, Devina Douglas discovered this error amongst multiple others and in an attempt to bring the district into compliance was fired for speaking out against your ill intent as District Administrator.

You’ve indicated in recent board packs that the District will have to borrow money to stay solvent in coming years. I have great an idea…give back all you have screwed the tax payers out of in the last 25 years,plead guilty as you are to be charged in the coming months and we’ll all get on with our lives.

The onewhoknows is absolutly correct on all of the above. I worked in the wastewater industry for 18 years as an operator and the chief mechanic and electrician. All pull boxes at ground level should be water tight and the wire should be rated for H20 submersion.

I only hope that Wallace is brought to justice, and the tax payers and the courts hold him liable for the BILL coming down the pike !

Frankly, I thought this whole John Wallace mess was much-ado-about-nothing but I listened to much of Karen Velie’s interview today on KVEC (I un-shunned Dave’s show just for the occasion but re-shunned it afterward) and it all makes a bit more sense now.

Once again, CCN has followed this story through the years and I appreciate their investigative reports. I’ve grown to depend on this site for thorough, accurate reporting of stories that the Trib & other outlets just don’t seem to care about.

The SSLOCSD cluxter-frack is just the tip of the iceberg.

There are government agencies (example: Nipomo CSD and Oceano CSD) who continue to contract to Wallace/the Wallace Group, even after the details of Wallace’s failures and taxpayer rip-offs were outed.

Who at these government agencies are being paid to continue doing business with Wallace?

Wouldn’t it be great if Wallace flipped and his whole crony organization down with him?

I think it would be difficult to justify the high salaries of the GMs of these two CSDs, considering their fierce, cloying determination to continue to use The Wallace Group, no matter how much he rips them off for.

Mary Mallone says “There are government agencies (example: Nipomo CSD and Oceano CSD) who continue to contract to Wallace/the Wallace Group, even after the details of Wallace’s failures and taxpayer rip-offs were outed.

Who at these government agencies are being paid to continue doing business with Wallace?”

You have no idea what you are talking about. What gov agency has any choice? If the OCSD doesn’t want to use Wallace, who would they use? Who would you recomend MaryMalone?

What other sewage facilities are near these communities? And you think you have a choice on who you should do business with?

You are out of your mind!

You and your 11 likes (as of 7:22 pst) should actually try to understand what it takes to provide the water and sewer services that you have become to depend on..

And this doesn’t mean I like what I am hearing. I’m no John Wallace fan., but

Tell me what you are going to do about it, any of you…

Blacksmith, are you listening to yourself? This is the strnagest thing I’ve ever “heard” you say.

You may not have a choice as to which facilities you use, but we sure as $*** have a choice in who RUNS the facilities.

What we do about it is get Wallace out of OUR business (there ARE other engineering companies in the area, one already in the Fresno/Bakersfield office that would LOVE to get their foot in the Central Coast door,) and get these elected officials who blindly support him out of office.

Thank you.

This plant like all others has a fully trained and professional staff to provide lab,operations and mechanical services. Wallace offers nothing in the way of the above listed services nor can he because nobody is a certified operator,lab tech or mechanic at the w/g. As far as engineering any facility could hire their own in house engineering staff for pennies on the Wallace dollar and be far ahead of the game.

On another subject I believe Wallace may be suffering mental issues at this point as I read The Wallace groups explanation on their website on how they stand behind their customers like the San Dist and will defend then to the bitter end. Wallace is the reason their in the position their in and the only thing Wallace is standing behind is millions of the public’s tax dollars and it will be proven in the hearing Sept 7th in SLO along with the criminal charges being persued by the AG.

Well they DID have a trained staff, before Wallace found a way to get rid of them all. “Layed off” the lab tech, fired the day shift supervisor, indefinitely suspended the plant manager. All that’s left are the people who lack the backbone to stand up to Wallace or who have been beated into submission for fear of losing their job.

I heard there is talk of the State Water Board coming in and taking over until the District gets back on track. I think that’s the best thing that could happen.

QUOTING DOGGIN: “On another subject I believe Wallace may be suffering mental issues at this point…”


I suppose Michael Seitz (SSLOCSD attorney) and the three-member board also have “mental issues”? They all are singing the same song.

Wallace and his cronies have been able to bully themselves out of other corruption scandals, but it seems this time the State is going to get involved this time–hopefully, do a “City of Bell” investigation on them.

Los Osos; I see your future!

Our facebook page is:

Mr. Moderator, please feel free to delete this link if it violates posting guidelines.

We’re a group of South County residents and ratepayers who feel the situation of our local sewer agency, the South San Luis Obispo County Sanitation District, has been mismanaged to the point of absurdity, and potentially increasing our sewer rates significantly.

We do not feel that we, the ratepayers, should be financially responsible for the errors and oversights of contract employers. We also feel that much of the information regarding the situation has not been appropriately presented at District Parent Agency Council Meetings. There has been no opportunity for public comment on a variety of documents that have been entered into evidence.

Mr. Wallace may now be facing criminal charges, but he continues to represent the District, as well as his own personal interest. Now he may find himself criminally, as well as financially responsible. As previously stated, it boggles the mind how anyone could not see the obvious conflict of interest.

We feel it is beyond time for change, and we will continue to provide updates on our Facebook in an attempt to provide “absolute transparency”.

Nice job Wallace. You started planning and charging the tax payers way back in 2005 to engineer a “reconductoring project” Must have been pretty complicated as the price went from $200K up to $500K. You flogged public for over five years thinking about how to pull it off and charged untold dollars as you wasted precious time and left the door open to numerous employee safety hazards. Your plant personnel warned of a disaster waiting to happen and still you did nothing but screw the tax payers some more to think about it. The day came when your bargain basement pump was put to the test and it failed like you were warned it would didnt it? Your engineer told the staff your just going thru the motions to appease the state and to make like your working towards compliance with the 100 year flood plan required when the new NPDES permit was issued years ago, but your people said nothing really was ever gonna happen, but it did. Then you shoved hundreds of thousands of dollars into the Wallace groups pocket only to have the plants untrained, non electrician staff make the repairs instead of qualified electricians do the work. Yeah, you saved the District money alright. 90% of the project cost went to the Wallace Group and 10% is used to hire cheap labor. Your a pile of work Wallace, we all hope jail tastes as sweet as the poo samich you been gnawing on lately.

What is baffling is that Wallace/Ferraro/Nicolls are still left in places of authority and allowed to make decisions regarding this matter.

With this most recent revelation of possible criminal charges against the three, how can anyone possibly claim that there is no conflict of interest?

Visit our facebook page to find out more about us and recent news regarding the issues surrounding the Sanitation District.

Inquiring minds want to know then why no one ran against Ferraro for mayor?

I detect the bittersweet scent of recall in the air

I would prefer a public flogging.

kayak: I’d like to ask the same thing about Paso’s bumbling Mayor Picanco.

Because he will do or say anything to distroy an opponent. He is a nasty nasty man who is power hungry. The way he gets around the brown act during council meetings is he goes to Steve Adams the city manager and has him contact council members on how Tony wants them to vote. During the last election it was so bad that Joe Costello and Tony Ferrara were always seen under the same pop up tent. All their political signs were side by side. They used to work together, and have stayed friends for years. So anything Tony want Joe gives him.

Steve Adams kisses Tony’s butt to keep his job. and it goes on and on. Brown is the ONLY council member who will not just go along with Tony and his ideas.

Notice AG’s credit rating went down yesterday, thanks Tony. He will continue to do no bid contracts with the Wallace group as long as he has power in the town. I wish he would have moved to South Carolina with his girlfreind like he said he was going to do a a few years ago.

Can you post a link to your FB page? Thanks!

Search the name on FB and you’ll find it.