Sanitation district discharging fecal matter into the ocean

October 5, 2012

John Wallace


Shortly after a hearing that determined the South San Luis Obispo County Sanitation District had to pay a $1.1 million fine for spilling sewage into the environment, water board prosecutors said the district is facing further fines for again violating its permit requirements.

On Sept. 28, plant employees sent a sample of effluent being released into the Pacific Ocean to a lab which reported it had a fecal coliform content of 50,000 MPN (most probable number of fecal coliform per ml). Anything over 2,200 violates the district’s operating permit and requires a mandatory penalty.

Last week’s event was the second time in less than 90 days that effluent testing showed fecal coliform levels at more than 30,000 per MPN.

Surfing and swimming in waters with high levels of fecal coliform increases the chance of developing illness from bacteria entering the body through the mouth, nose, ears or cuts in the skin. Diseases and illnesses caused by contact with water high in fecal coliform counts include pneumonia, hepatitis, gastroenteritis, dysentery and ear infections.

In the past, high coliform levels at the plant have primarily been blamed on issues with chlorination equipment malfunctioning. However, in this case, the levels of chlorine residue in the sample were unusually high, which means that the effluent contained fecal chunks the chemical was unable to penetrate.

On Wednesday, the Central Coast Regional Water Quality Control Board determined that a 2010 raw sewage spill in Oceano was due to careless and improper maintenance at the plant. At the end of the hearing, water board prosecutor Julie Macedo said that while an investigation into last week’s violation was being launched, the board did not consider it when rendering their decision.

“This information was not considered by the board when making its decision,” Macedo said.

Former sanitation plant employees Devina Douglas and Scott Mascolo said in 2010 a plant supervisor instructed staff to manipulate effluent release numbers by dumping bad samples or testing incorrectly in order to keep the public from knowing the aging plant was in need of a complete upgrade.

“In the past, the plant only tested to 1,600 MPN though the permit said they had to test to 16,000 MPN,” Mascolo said. “Jeff Appleton, the former plant superintendent, told me it gave us wiggle room because if you didn’t perform the test correctly it couldn’t be used to give an accurate number. And you would just do the test the next day because it didn’t have to be tested every day then.”

After discovering the employees had filed regulatory complaints, plant administrators terminated both Douglas and Mascolo. Both have filed suits for wrongful termination. Douglas received a settlement while Mascolo’s case continues to make its way through the system.

Mascolo contends that John Wallace, the chief administrator of the district that provides sewer services to Arroyo Grande, Grover Beach and the unincorporated town of Oceano, has been funneling thousands of dollars to an engineering company he owns while concealing environmental violations.

Wallace is the owner and president of the Wallace Group, a private engineering consulting firm located in San Luis Obispo, that the district pays between $50,000 and $80,000 a month for engineering, consulting and administrative work.


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Uh-oh, fecal coliform in the water, time to go out and murder some more pigeons!

A quick review of the District’s warrants registers for the past month (starting with the Sept 5th warrant register) reveals that

$280,863 have been paid to Wallace, Seitz, outside lawyers and consultants.

Over a quarter of a million dollars of ratepayer money has been spent in the last month alone. These facts are easily verifiable by reviewing the District’s Board Packets at:

Also, when looking at warrant information (from which checks are dispersed), keep in mind that what is listed in the warrants may not be the total amount of the money spent on outside attorneys.

A practice used in the past (for another organization for which Seitz was the attorney) was apparently to pay the corporation’s regular attorney (Seitz) for the work of a specialist attorney used for the organization. I believe this is so because during the time–and months before and after–the specialist attorney (who actually was the attorney used for this organization at a hearing) was not listed in the warrants. However, Seitz’s checks rose CONSIDERABLY.

So unless you know the names of all the outside attorneys Seitz may have used for SSLOCSD, some of the attorney charges may have been run through Seitz.

On page 3 of the posts is info which may prove useful in filling out the engineering license complaint form, and writing a cover letter:

If anyone got sick in the past few days while swimming, surfing, or just playing in the surf, better file that law suit now – against Wallace.

Has anyone reported Wallace to the State engineering licensing board? He has an engineering license.

An excellent idea. In additon to filing a State Attorney General complaint, specific complaints against licensed engineers can be made with the Calif Dept of Consumer Affairs. Here is the link:


Please do the same to the California BAR association against Shipseys & Seitz’s, Mike Seitz. He is as guilty as sin like the rest as a public figure for so arrogantly taking Wallace’s side and wasting hundreds of thousands of dollars in our tax money to defend his friends, not the public’s best interest. This man is a PUBLIC figure using OUR money not his to screw us day after day thru this ordeal.

Another excellent idea! Complaints against Mike Seitz can be filed at the California State Bar Website:

Why are Andrew Christie and the Sierra Club silent? They were all upset over one small boat and possible gasoline contamination in the ocean, yet they can’t muster a complaint about massive sewage spillages going into the ocean? Any doubt that the Sierra Club is a political group and no longer an environmental group?

Here’s their email address. Why don’t you find out what they have done by directly contacting them instead of trying to spread innuendo & disinfo in a public forum?

Get back to us on what you find out. Your troll rating might just drop a notch.


It is a valid question, and a message board where the Wallace fecal matter AGAIN polluting our beaches is a valid place to raise the question.

It certainly isn’t the norm for every internet poster to do full research before they raise a valid, topic-related question to the other board readers.

I commented earlier, but should have looked into the claims of this article first.

John Wallace and his company are paid consultants for the district. They would not be able to “funnel” money to themselves. The board of directors of the district could only pay Wallace Group for engineering services and the contracts are a matter of public record. The hiring of consultants can be a cost effective way for the district to provide for their engineering needs, that way they don’t have pay for full time staff.

The insinuation in this article is a cheap shot without more investigation. The reporter is doing a disservice to the readers for not investigating this further. Might there be collusion between the district and Wallace Group, maybe, but just throwing out an disgruntled employee’s claim is irresponsible.

They are not paid consultants as you say. Wallace is the Districts Administrator or General manager under one contract. He just also happens to own the Wallace group, a engineering firm who just so happens to end up doin 99.5% of the Districts engineering,contract administration and construction projects. These jobs are not advertised locally or elsewhere for purposes of open public bidding. They are not even discussed much of the time in a public forum, their just placed on the agenda or in the board packs for the board of directors to sign off on which they have done for 25 years. Doing so without a full understanding of the scope of the project,how long it should realistically take or a reasonable construction to engineering factor cost. Wallace tells his company to reinvest the wheel on every project they do and you and I pay a needless bill for their work. Reviews of billing practices,invoices and the like were made by the State investigators,the Grand Jury and Wallace’s own hired guns during a “peer review” and found a significant deficiency in these areas when it comes to transparency. Enough so that criminal charges are being perused by the AG. As far as whistle blowing? Consider this, 4 State certified employees, grades 2 or 3, and a Grade 4 lab manager who has State and National awards having 50+ collective years in operations that making $1/4 of what Wallace’s charges for one of his sloths to engineer a phone call, and are willing to risk their jobs to call bullshit on a Administrator who knows nothing about running a plant, other than he gets $80K a month doing it, who do you thing is full of shit?

That’s how the definition of “funneling” works in this article as well as previous articles and that you can take to the bank.

Does anybody know if the “Peer Review” was ever released to the public, or included in any of the Sanitation District Board Packs?

I’ve heard rumors that the Peer Review Board recommended getting rid of Wallace as District Administrator. If anyone knows where this review could be downloaded at it would be helpful.

Several, myself included have attempted to get their hands on the peer review. It is a document that is available under the Calif public records act and they have ignored all requests. I have heard it did not favor Wallace but we’ll never know the truth.

Does anyone know who the members of the Peer Review panel were? I believe the superintendent of the Morro Bay treatment plant was a member? Who were the others?

I’ll be making a Publics Records Request to the City of Morro Bay for whatever documents they have on file in regards to the Peer Review. If any knows who the other members were please post it to the South County Oversight Group facebook page and I’ll make requests to those individuals/agencies as well.

Bruce Kehoe of Morro Bay for sure and possibly the rep from Goleta Sanitary District or and unknow third party. Possibly a representative from Monterey CSD or perhaps Cambria CSD or Cayucos Sanitary Dist.


A few years ago the grand jury did a report that addressed this issue. The person who talked about “funneling” probably knew about this report. It described John Wallace as the contract Administrator for the district who routinely assigned the district’s contract engineering work to his own company. This was done over as period of more than 25 years. It was done without competitive bidding. In some years Wallace’s company was paid in excess of $800,000. It still continues to this day.

The grand jury thought this was a “conflict of interest” that was not in the best interest of the distict’s customers and that the board needed to address it.The board dissed the report, said there was no problem and refused to evaluate or consider alternatives to Wallace continuing to assign the district’s work to his own company.

In other words, the “more investigation” you refer to was done and ignored. If you are a customer of the district and are happy with this process and with the quality the quality of the work you are getting for your ratepayer dollars, then fine. But if you are not pleased with what you see, it’s time to pressure you city council for new representation on the district board.

Don’t just accept my description of this. Check it out for yourself .If you look at some of the earliest CCN articles about the grand jury report there is probably a link to the report. The SLO surfriders may still have a link on their site, or go to the Superior Court site to look at past grand jury reports.

I hope this helps.

I have most every document with the exception the peer review, and yes with the exception of Rich Thomas Investigations reports, who was hired internally and spoon fed what crap the 4 Banditos wanted him to hear none of them favor Wallace. In every outside investigation the 4 had no control over you will find the following. Poor management practices ( BMP’s) , poor billing practices, a lack of clarity in billing practices, Lying to investigators, falsifying data provided to the Water Board and a general conflict of interest. You can believe CCN or not, but the proof is in the pudding in these reports.

It is past time to start planning an upgraded waste water treatment plant for Oceano, Grover Beach and Arroyo Grande. But remember what happened to poor Morro Bay. Years of planning and permitting to arrive at a good cost effective funded plan, only to have the Coastal Commission staff shut down building the new plant that would have cleaned the water going into the ocean because they wanted to improve the view for a few. Be careful to site the new treatment plant out of the Coastal Zone.

And whatever happens, make sure the construction contract is put out to bid, instead of just being handed on a platter to the engineering firm that is also running the old facility.

Wow. Apparently the City of Arroyo Grande loves John Wallace so much that they want to hire him for additional consulting services. Item 8g of the Oct 9th Arroyo Grande City Council meeting is below.

After the imposition of a $1,109,000 fine against the AG ratepayers that was a direct result of mismanagement by John Wallace, contracting with him is direct evidence that our elected officials are not representing the PUBLIC’S best interest.

Anyone reading these comments should scan back and read all of the Lonegunman’s comments. The gunman has got it exactly right.

Ferrara and Nicholls are full partners with Wallace in the district’s mismanagement. If they fire Wallace it is a virtual confession to their own mismanagement, so it will never happen on their watch.

The buck stops with the Arroyo Grande and Grover Beach city councils. They must do their jobs, stop enabling Ferrara and Nicholls, and replace them with competent and responsible board members.

This gang of 3 survives on the apathy of the elected city councils in the ratepayer communities.