Sanitation district flips, seeks settlement with the state

December 19, 2014
John Wallace

John Wallace

After picking a multi-year legal fight with state officials, the South San Luis Obispo County Sanitation District is now seeking to settle a $1.1 million fine levied against it.

In 2010, 384,000 gallons of raw sewage flowed in Oceano homes and the ocean, and the Central Coast Regional Water Quality Control Board later determined the spill was the result of mismanagement. After the regional water board reached its determination, it offered the district a settlement.

At the suggestion of plant administrator John Wallace, the district declined the settlement. The district then paid about $750,000 to Wallace’s engineering firm and a team of lawyers to battle the fine and allegations of mismanagement.

On Oct. 24 of this year, the state water board rejected the sanitation district’s petition for an appeal of the fine. In turn, the district board voted to file a lawsuit against the state.

But, following the November election, the makeup of the board changed. On Wednesday, current board members Arroyo Grande Mayor Jim Hill, Grover Beach Mayor John Shoals and Oceano district board member Matt Guerrero voted in closed session to pursue a settlement of the fine with the state.

“The board unanimously voted to direct staff to proceed forthwith to seek a mitigated settlement with the state water board,” Hill told CalCoastNews.

District legal counsel Mike Seitz announced the news Wednesday in a report on closed session action.

Seitz, who formerly worked as an attorney for the Wallace Group, said that the district had not been offered the $300,000 settlement from the regional water board. Seitz claimed a higher amount came up during past closed session discussions.

He also said he did not know how the settlement offer became public, and that the disclosure violated closed session rules.

Though the district is now pursuing a settlement with the state, its lawsuit is still effectively in place.

Big Tony

Hi Everybody!

Ummm….at this point….I’d just like to say that I never did really trust that Wallace character…..yeah, that’s the ticket! It’s his fault!

I’m Big Tony, and I endorse this message.


Now if we can just get an audit, Mary Lucey the new president of the OSCD is going to oppose an audit.

She wants to sit on the san dist here and there, she thinks that Oceano does not have to follow the health and safety codes all the other city follow. So she seems to want to pick and choose when she puts her two cents worth in.

The other night at the meeting she sat in the audience and she smelled like pot. Someone explained she has a medical marijuana card, and maybe I am old fashioned, but i don’t want someone making decisions that effect me while they are high. I used to smoke it and so I know I could not have made the best decision while high, and that only effected me, she effects what happens to others.

I urge people to come to the san dist meetings if you want to get to the bottom of the issue and keep pressure on the board. As someone mentioned, How are you going to keep the problem from reoccurring, if you don’t know what caused it the first time.

Sietz and Shoals are friends of Tony Ferrara, and so I think they will fight the audit in the long run. We have to keep the pressure on them to make them do the right thing.I would like to see new faces at some of these meetings.

No one thought Jim Hill would get elected but he did, so we have the power to make change. I urge residents to get involved.


Just wondering, dog, if she was in the AUDIENCE, why it matters if she had smoked marijuana? NO decisions, just part of the audience.. I’m afraid your prejudice is showing… What she does on her own time is her own damn business! (BTW: Not knowing her, I have no opinion of her.)


As President of the OCSD, Mary Lucey was appointed to the SSLOCSD on Wed. Dec. 10; Matt Guerrero is her alternate. Someone please explain why if she’s the appointee and sitting in the audience why wasn’t she serving at the dais? Who enforces the law that says the “presiding officer” from each agency is suppose to serve?


Does the law actually say: “each agency” ? My understanding is that it applies to cities. Like a municipality which is a general-purpose administrative subdivision, as opposed to a special-purpose district. It’s quite possible that the district may not fall under the law that says: “presiding officer” ? If, in fact, the law even actually says that? I wouldn’t know, because I am not an attorney. Apparently Julie IS an attorney. (Judge, jury, & sherif) So, are you just the “Hall Monitor”? What is your point?


No, Health & Safety Code 4730 doesn’t say “each agency”, it is specific to the cities presiding officers and says that a member of the Board of Supervisors should serve to represent the unincorporated area…which would oust any OCSD rep. if adhered to. So, if OCSD were to follow the letter of the law, they wouldn’t be on that board at all.

Maybe biteMe would prefer the letter of the law be enforced?


Good stuff from biteMe, Julie. There are lots of questions, some Legal and some Operational, which remain unanswered at the Sanitation District. The present board can chose whether to leave these many questions unanswered and selectively validate the policies of previous boards. Or, the new board can recognize that the conflicts of interest, which effected Legal and Operational decisions of the District for many years (with sometimes disastrous results), were not properly mitigated and if thoroughly and appropriately investigated may lead to the District’s ability to recover lost resources.

The new board doesn’t have to support the failed policies of its predecessors. But, if they choose to, the public has the right to ask, “Why?”

See you all at the Sanitation District meeting!


Yes Snooky, biteMe makes some great points. Too bad Mary Lucey doesn’t make the same arguments.


Mary Lucey, glad Mary will be drawn into the spotlight of public opinion.She has hidden in the dark shadows of the OCSD for far too long. Just watch and listen to her and you will sadly see her erratic behavior and disconnected comments.

If you look at her documented record, you will find how she wasted ratepayers increases over the last five years on 250,000 pay for GM in a small district, legal costs, failed audits, purchased equipment that was not needed,payouts to employees, brown act violations,supported five cities fire tax increase, and will attempt to limit or stop public comments at meetings that disagree with her point of view. Audits by the state, federal government,or the public district, or Grand Jury investigations is the last thing she wants or needs.

Just look at the OCSD budget of record ,and then Watch and Listen to Mary Lucey.


Perhaps she knows she’s as dumb-as-a-rock and has no business sitting on the Board. Her involvement in buying the OCSD service truck ended up in disaster, so maybe she doesn’t want a repeat of her exhibiting poor judgement.


I feel when you are an elected person such as President for the OSCD you are representing your constituents, and personally I don’t think you should show up high. I don’t care if it is prescribed or not,that is just part of being an elected official.

Please explain what prejudice I am showing. I don’t think it would be right if one of my council members showed up at a OSCD meeting drunk even if they are just sitting in the audience. She did talk to others as the president of Oceano and so she was representing them, and she was impaired.


I wonder why Mayor Shoals thought Barbara Nicolls would be the best alternate for him on the Sanitation District? Usually, it takes a while for a representative on a Council to work themselves up to alternate. Karen Bright has been on the council for many years, has been Sanitation District alternative, and has always been interested in doing serve.

I also wonder how much information from closed session will be shared with his alternate?



I suppose that is quite curious. Mmm? I do believe their is some deep rooted corruption going on here. But, seems to me that the current Board members will rectify the situation (eventually, hopefully, & w/least harm to the people.)


I believe just like employees, the Directors should have voluntary drug tests.

Mary Lucey, brings a lot drug issues to both the South County and Oceano Districts.

Over the years her behavior has been very erratic at meetings.

When you look at the OCSD, she has been a senior leader who has driven the budget into the red, with little regard to the ratepayers.

Her past record makes her a problem. Just watch and listen to her and you will see a very irrational board member.

Mr. Holly

How long is it going to take Big Tony to come out and condemn this? Or has he maybe realized it’s over for him?


I recently saw the “In Bloom” trailer in his driveway so he is busy but it likely won’t be long.


The road is long

With many a winding turn

That leads us to who knows where

Who knows when

But he’s strong

Strong enough to carry us

He ain’t heavy, he’s our mayor

So on we go

Our welfare is of his concern

No burden are we to bear

We’ll get there

For we know

We would not encumber him

He ain’t heavy, he’s our mayor

If he’s laden at all

He’s laden with sadness

That everyone’s heart

Isn’t filled with the gladness

Of love for one another

It’s a long, long road

From which there is no return

While we’re on the way to there

Why not share

And the load

Doesn’t weigh him down at all

He ain’t heavy, he’s our mayor

He’s our mayor

He ain’t heavy, he’s our mayor…


Way to go Babe! Out of the park again….(((HOME RUN))) (((HOME RUN))))

Now, sue Wallace to recover not only the amount in fines, but all that was paid for the mismanagement of the district.


Hill is batting 1000!!!


Thank goodness a write-in candidate can prevail!


Write in Jim Hill

AG Mayor

Fill in the Bubble!

What a story!


It was a good decision not to throw more bad money after bad money.

If this is the governing style Jim Hill brings to the table then it is definitively a good sign of

things to come. He definitely appears to be a man of good conscious and action.

I still think an audit is appropriate and if their was any criminal conduct exposed, then I would hope the matter would be turned over to the atty general or feds for investigation and potential prosecution.

I am a little irritated with Seitz comment about the settlement amount becoming public. I am sure he, like Wallace, would have loved for certain information to remain under the carpet (so

to speak).

Now that Wallace has been given the heave ho I think that the district board should take a

hard look at their relationship with Seitz


The multiple conflicts of interest which were evident to so many for all those years were not so obvious to Seitz. Why wasn’t he repeatedly warning the Board of Directors, particularly Nichols and Ferrara, that if their decisions didn’t lead to immediate and favorable results they would be held up to considerable public scrutiny. Seitz should have recognized the risk to the Board and the District the conflicts of interest represented and he should have counseled the Board to take alternative actions. But, he didn’t. In fact, he chose to become one of the Wallace Group cheerleaders instead,

In 2011, when whistleblower lawsuits were emerging and before the Plant Supervisor testified against the District at the Regional Water Board hearing regarding the December 2010 sewage spill, Seitz signaled to the community that he was part of the problem. The press headlines in the following days called the meeting “Contentious”, which it was, and he was part of the reason the meeting was contentious. But, it didn’t have to be, and since then the only reasons the District has been successful is because of outsiders like Debbie Peterson and because Jim Hill has come back to the Board. The District’s successes have NOTHING to do with Seitz.

I think it’s a discussion worth placing on the District’s agenda. Should the District replace Seitz and seek alternative legal Counsel? What is good about having Seitz around? What is the value of bringing on a new set of eyes to help direct the new Board of Directors? I’d say there is zero risk in making the change. There is tremendous upside to his immediate dismissal.


You are absolutely correct. Seitz is Toxic, much like Ferrara and Wallace its time for change. How could the former Plant Supervisor be part of the problem when Wallace was holding the strings and disallowing the staff to do their job. The Staff warned Wallace the newly aquired emergency pump was junk, testimony will prove this. During the whistle blower hearings why is it Seitz and Wallace showed up in the same car, why was Seitz Counseling Wallace during these matters? Why didn’t Seitz who is paid as a public servant for the District, not Wallace’s right hand man, taking the staffs side in hearing the allegations they were making against Wallace and backing them? We witnessed this man verbally harass members of the public, the staff and legal assistance with snotty, unprofessional, unethical insults and personal attacks. He is unfit for public service and should be stripped of his credentials allowing him to act as an attorney. It is his fault and his fault alone hundreds of thousands have been wasted on legal fees trying to protect Wallace from being fingered in his part in the SSLOCSD legal circle jerk.

Big Tony

Listen up Snoid,

If you don’t settle down I’ll call in my legbreakers and have you escorted to the back of the room where you and Otis will have restrain yourselves to slowly and quietly waving your hands if you want to protest.

Geesh, you need a snickers man.


Spot On !

Mr. Holly

Maybe there is hope after all. Good job Jim and nice to see John Shoals co-operating with common sense.


Yes. Maybe there is hope after all. As long as we stay focused on the issues and not the gossip, there is still hope. A community United is a beautiful thing.