Administrative failures result in $1.1 million fine

October 4, 2012

After about six hours of deliberations, the Central Coast Regional Water Quality Control Board determined that because a 2010 raw sewage spill in Oceano was due to careless and improper maintenance the South San Luis Obispo County Sanitation District will be fined $1.1 million.

Water board members agreed with officials from the plant who argued that the spill amount should be lowered to 674,400 gallons. However, the water board then increased the harm factor because of the plant’s administration’s failures to provide adequate protection, operate according to proper standards and repair faulty equipment.

After the increase in culpability and the lower spill amount were calculated, the fine was lowered by about $279,000.

Prosecutors said several times during the hearing that a lawsuit filed on behalf of the rate payers could result in The Wallace Group being responsible for the fines as opposed to the rate payers.

In their 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.

At last nights South San Luis Obispo County Sanitation District board meeting, members voted 2-1 to appeal the regional water board’s decision to the state water board with Matt Guerrero dissenting.

The districts cost for defending itself could run more than the fine amount with just this month’s payment leger showing legal and witness consultant costs of more than $137,000.




  1. MaryMalone says:

    QUOTING THE ARTICLE: “Prosecutors said several times during the hearing that a lawsuit filed on behalf of the rate payers could result in The Wallace Group being responsible for the fines as opposed to the rate payers.”

    Well, why don’t they move forward on it?

    (-1) 1 Total Votes - 0 up - 1 down
  2. GARAGETOOLS says:

    Well now that Wallace “studied” the South San Luis Obispo CSD into its current state of financial ruin, it appears that he has now moved on to do the same thing to the Avila Beach CSD. There is about $500,000 worth of “studies” approved for in the current budget.

    Perhaps the board should require that any future “studies” be performed by a different engineering company other than the one who prepared and sold the budget to the board members.

    How about it Pete Kelly?

    (2) 2 Total Votes - 2 up - 0 down
  3. Cicero says:

    Regional Water Quality Board fines, once collected, are used in part for issuing grants to projects that improve water quality. Those grants take can take years to obtain.

    Sad as it is that the South San Luis Obispo County Sanitation District declined to spend the money over the last 10 years needed to upgrade systems and prevent the sewage release leading to this million dollar fine, now would be the time to start working on plans and making an application to get the money back for upgrades to the water treatment plant.

    (0) 0 Total Votes - 0 up - 0 down
  4. MaryMalone says:

    I think this goes beyond just the costs of having Doosh-bag, Inc. in charge of the plant, and Suckem Dry, Attorney at Large enabling doosh to make $$$millions while not doing his job.

    I cannot be the only person who feels TERRIBLE that the sewer plant that serves my home dumped *hit all over homes in Oceano!

    I am EMBARASSED to know that it is highly possible at least some of my own *hit ended up in another person’s home!

    I am sick at heart to know how terribly the honest employees at SSLOCSD were treated by doosh-bag, Inc. They suffered harassment, abuse and wrongful termination, as well as stress injuries, while working for the plant that provides services to my home.

    I wish I could personally apologize to each and every one of the victims.

    I know I am not the only person who feels this way.

    It makes me angry to know that the person who has made $$$millions while doing all of these terrible things could not care less. Indeed, he wants to harm the ratepayers MORE by saddling us with MORE legal bills for HIS doosh-bag failures.

    This has gone on for too long. We have to get this issue resolved.

    (15) 17 Total Votes - 16 up - 1 down
  5. AZ CRAIG says:

    Well it’s sounds to me like the door is open for the rate payers of the sd to sue the wallace group and the board for their failure to take care of maintance issues. I only hope that the lawers for the rate payers don’t leave enough money for the wallace group ( that milked the sd for years) to buy a roll of TP to wipe their arse.

    (9) 9 Total Votes - 9 up - 0 down
  6. Victoria says:

    What about the rumor that there was another significant spill that occured earlier this week? Any word out there about that?

    (15) 15 Total Votes - 15 up - 0 down
    • Cindy says:

      I heard about it too. Apparently a load of gross sewage has graced the public once again, compliments of the Wallace Group. Wonder what the fine will be this time and which employee will get fired for telling the truth about how much poop went down the wrong drain.

      (10) 10 Total Votes - 10 up - 0 down
      • MaryMalone says:

        Who has the documentation or evidence for it?

        I hope Wallace and his three jump mares DO decide to appeal.

        Perhaps that will be enough for the water board to refer Wallace on up to the State AG’s office.

        (6) 8 Total Votes - 7 up - 1 down
      • doggin says:

        The authorities have the proof, and its unfortunate anybody taking a swim a few days ago was graced to another human waste bath. The Fecal coliform result for the day was MPN of 50,000 resulting from a failure in the disinfection system, their permit limit is 2000mpn. This ORP system was installed in 06 as part of the Chlorine Contact chamber project that cost us $2.3 Million. Here is a direct quote from a Wallace Group letter prepared Dec 21st 2010. “Since its installation, the chemical dosing, both chlorination and dechlorination have been inconsistent in maintaining the ORP set point.
        This Fecal coliform violation was last week and caused by a still malfunctioning ORP system. This sound familiar? 6 years later and things still aren’t addressed with Wallace as Administrator and engineer.
        BTW, the presence of fecal coliform in aquatic environments may indicate that the water has been contaminated with the fecal material of humans or other animals.
        Just what will it take for a lynch mob to show up at the next SSLOCSD board meeting and demand Wallace and the Wallace Group and Seitz are removed from service to the tax payin public.
        It is a fact Nicolls was sent a letter created by several of the Districts staff years ago and long before things became what they were today. A District operator knew Nicolls personally and believed he might be an upstanding public servant who gave a shite about doing the right thing, were they ever wrong.
        Nicolls took the letter to Wallace who directly went head hunting at the plant for its authors with the intent of terminating them. The Districts MOU created by Wallace states NOBODY employed at the District will go above or around Wallace seeking outside assistance. This act is a violation and worthy of termination. Nicolls is a liar, a cheat and just another worthless DB good old boy who wants only to protect his buddies best interests.

        (7) 7 Total Votes - 7 up - 0 down
        • MaryMalone says:

          Great post, Doggin. Thanks for the info, and for making the connection between the latest violation notification and the violations that lead to the $1.1million file, which also was due to longstanding problems that should have been fixed–indeed, which had been budgeted and paid for, but not performed–years ago.

          (0) 0 Total Votes - 0 up - 0 down
  7. Toadstomper says:

    I see it is business as usual with the Sanitation District board. Ferrara and Nicholls voted to appeal the fine. As always, total denial every time yet another problem must be addressed.

    The bottom line with Ferrara and Nicholls is always “We have the lowest customer rates in the County”. And as long as their rates are low what incentive is there to get concerned enough to make any real change? Do customers stand in line to complain about low rates?

    Do you want to know why the SD rates are low? In 2011 the County Auditor took a look at the District’s books at the request of the Grand Jury. In a letter dated October 21, 2011 the County Auditor pointed out to the SD board that they had been operating at a cash deficit for each of the 3 years reviewed. He also pointed out these deficits were being financed by drawing down the SD’s cash reserves.

    The Auditor recommended that the board reduce expenses or increase revenue, and he pointed out some of the dangers if they didn’t. Among these dangers was that they might not have the money to pay for “significant capital projects”. Oh really?

    In plain English, the SD Board has been consistently charging customers less than the cost to serve them. By keeping customer rates artificially low it has until now helped blunt any serious effort to make changes to the SD board and management.

    The City Councils at Arroyo Grande and Grover Beach have allowed Ferrara and Nicholls to monopolize representation on the SD board and protect Wallace. That needs to change right now. If a $1.1 million dollar fine isn’t enough to get our City officials to protect the public interest, what is?

    (20) 20 Total Votes - 20 up - 0 down
    • MaryMalone says:

      The rates won’t be low for long, what with the fines and legal costs.

      Penny wise, pound foolish.

      (4) 6 Total Votes - 5 up - 1 down
    • MaryMalone says:

      They cannot be charging less than it costs to serve them. Not with the huge bundle of assets they have piled up.

      (0) 4 Total Votes - 2 up - 2 down
      • Toadstomper says:


        You state that “They cannot be charging less than it costs to serve them”. Every year, for many years, the SD has had a bigger cash outflow than inflow. They have been making up the shortfall by going through the District’s cash reserrves with a chainsaw.

        This is a matter of public record. Anyone can look it up. Look at their public financial statements for the last 8 or 10 years and you will see negative cash flow every single year with a corresponding decrease in the SD’s reserves.These financial statements show reserves have decreased from $12 million to currently less than $4 million. Look at Gere Sibbach’s letter giving the board his concerns about this issue, although he only examined a 3 year period.

        Sibbach also recommended that the board look at the possibility of hiring a different district administrator, but nobody noticed that either.

        (4) 4 Total Votes - 4 up - 0 down
  8. MaryMalone says:

    Since they were found to be guilty as charged, Wallace and the SSLOCSD board should be forced to pay all costs for the trial and their decision to appeal.

    THEY screwed up. THEY failed in their roles as administrator and oversight board.

    Wallace and the SSLOCSD oversight board have been, sometimes literally, *hitting on its customers for decades. It’s time for them to man-up and pay for their own failures.

    (28) 32 Total Votes - 30 up - 2 down
    • kayaknut says:

      Just like PG&E and their pipeline maintenance, they will try to avoid responsibility and put the cost of this fine onto the ratepayers

      (20) 20 Total Votes - 20 up - 0 down

Comments are closed.