Sanitation district attorney misled ratepayers

January 30, 2015
Matt Guerrero

Matt Guerrero


Confidential documents obtained by CalCoastNews reveal a long-term plan by South San Luis Obispo County Sanitation District officials to delay fines and findings of mismanagement by mounting a legal battle against the state — a fight they did not expect to win.

In 2010, failures at the sanitation district resulted in 384,000 to 3 million gallons of raw sewage flowing into Oceano homes and the ocean. The Central Coast Regional Water Quality Control Board then determined the spill was the result of mismanagement.

In March 2012, the sanitation district sent a confidential settlement offer of $50,000 along with an agreement to spend $100,000 on repairs to the state water board. The sanitation district serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach and is governed by a three-person board consisting of one representative from each community.

On April 20, 2012, the state rejected the district’s settlement offer. Instead, the state proposed a settlement that included a $400,000 fine and the requirement for the district to spend $375,000 on specific plant upgrades.

On May 16, 2012, the three sanitation district board members, Oceano Community Services District President Matt Guerrero, Grover Beach Councilman Bill Nicolls and Arroyo Grande Mayor Tony Ferarra, rejected the state’s settlement offer in closed session.

On June 6, 2012, in a sanitation district closed session meeting that wasn’t properly noticed on the agenda, the board discussed an anticipated timeline and a proposed strategy developed by then district administrator John Wallace, district legal counsel Mike Seitz, and outside legal counsel Melissa Thorme.

In their timeline, Wallace, Thorme and Seitz do not consider winning their battle against the state.

The timeline notes that after the district loss of a hearing in Sept. 2012, the district can appeal to the state water board in a process slated to take about a year. After the district loses the appeal against the state it can then file a lawsuit in San Luis Obispo County Superior Court, which will take up to two years, the timeline says.

“The district does not have to pay fine until matter is settled in Superior Court,” the timeline says.

The district then paid about $750,000 to Wallace’s engineering firm, the Wallace Group, and a team of lawyers to argue against the allegations of mismanagement and the proposed fine. And as predicted in the timeline, the sanitation district lost the case and appealed to the state.

On Oct. 24, 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 in superior court, again as predicted in the sanitation district’s timeline.

State and federal laws provide for sanctions against firms and attorneys affiliated with legal actions that are taken primarily to “cause unnecessary delay or needless increase in the cost of litigation.”

During a Dec. 17 district board meeting, Seitz said that reports that the district had been offered a $300,000 settlement were untrue, and that the district had offered significantly more, a statement water board officials said is untrue. Several years ago, CalCoastNews reported that the state had offered the district a cash settlement of $300,000, an amount stated by Oceano Community Services District Director Mary Lucey.

“I can tell you that from my knowledge from those days that the water board never was below, well, let me back up, settlement discussions are confidential, so how anybody got information regarding a $300,000 proposed offer is kinda beyond me, but in terms of that, I can tell you that the district has never received an offer of $300,000 and the district has offered substantially more than $300,000 to try and settle it,” Seitz said during the taped meeting. “And having said that if the water board offered a settlement of $300,000 it would be my recommendation that the board take it.”

Sanitation district board member Guerrero, who was on the board during the 2012 closed session settlement negotiations, did not inform the public of the inaccuracies or challenge Seitz’ Dec. 17 statement.

Guerrero, a local attorney, recently applied to Gov. Jerry Brown to be appointed as a superior court judge.

SouthSLOCo Sanitation Settlement Offer

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“…the district has offered substantially more than $300,000 to try and settle it,” Seitz said …“And having said that if the water board offered a settlement of $300,000 it would be my recommendation that the board take it.”

QUESTION: What is “substantially more than $300,000”?

ANSWER: Say, maybe, $400,000?


Instead, the district is spending $1M to litigate? And if they lose? Then you’re out $1M in legal fees PLUS the $1.1M fine, PLUS play the other side’s $1M legal fees! (about $3M instead of $400K).

The district should have settled for $400,000. Except they want to keep using public money to cover up Wallace’s failures (major sewage spill).

As if the info above isn’t enough to fry you,

let’s not forget…

Seitz claims he does not have a conflict of interest

even though his wife works as a comptroller for…

you guessed it!


This article confirms what many of us expected.

With this documentation I think we should all call for the resignation of Mr. Guerrero.

In addition, when you look at the Budget in the red and Spending in the Oceano C.S.D. he clearly has abused his fudciary powers under the color of his office.

The O.C.S.D. is one of the smallest districts in the area, has one of the most economically disadvantaged populations,automatically has raised rates for the past four years, and has the highest paid general manager in the area 250,000 with benefits.

If Guerrero goes, Mary Lucey steps up.

We’re doomed.

Just because calcoast inquiry printed/posted it, doesn’t necessarily make it true! I find most of their stuff to be pure speculation & often false accusations.

They do what you say occasionally but not “most of their stuff.” The bigger problem with CCN is their biased reporting which often doesn’t give a complete or objective view of the situation by omitting any information that might mitigate their point of view in an article. They also frequently phrase things in sensationalistic terms. I tend to think of them as having a “60 Minutes” style but putting it on-line for a local and largely conservative readership. It is a pity that we don’t have a more responsible local alternative that works as hard as CCN to find the dirt being done by local government officials.

Really? What in this article is “speculation & false accusations”?

I would think someone who aspires to be a state judge would be able to, at the very freakin’ least, run a CSD board meeting without multiple Brown Act violations.

Personally, I think this is just the tip of the iceberg. In the weeks and months to come we are going to be made aware of many, many misdeeds and wrongdoings perpetrated by this bunch and their associates. Take my word for it.

Those SOB’s!

Wallace, Seitz and outside council actually PROPOSE a strategy

to screw the ratepayers and give Wallace a pass.

Guerrero, Nicolls and Ferrara agree to the deal.

How’s that for being well represented?

Time for Tony to start packing and he should take Steve with him.

This is the tip we were talking about all fall.

And Tony thought we were upset about his lame ass tree story


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Guerrero = SCHEISTER

excuse me…..SHYSTER.

Maybe you meant ‘sheisse’? German for ‘$hit’.

…or maybe (from Urban Dictionary):

a very British and therefore great way of saying $hit. ‘Shite’ sounds much more effective than ‘$hit’

‘Guererro looks like five kinds of shite today.’

How about “hosenscheisser”?

Guerrero past the BAR! Unlike your newly elected hero (J.Hill) – do you have a name for him?

Yes, honest.

I’ve “past” a bar, too….many times.

Well, well, well, Wednesday’s Sanitation District Meeting is sure to be a lot more interesting now!

So curious to hear what Guerrero and Seitz will have to say for themselves.

Very interesting that the Board knew they had little to no chance of winning the war, but wanted to battle with the State long enough to let the statute of limitations expire so Wallace could not legally be held accountable.

And Guerrero wants to be a judge?

The residents of Arroyo Grande, Grover Beach, and Oceano will be the judge of that!

Judging by Guerrero’s willingness to be a part of this outrageous cover-up for Wallace, he should step down immediately.

Seitz’ contract should be terminated, Guerrero knew he was lying and said nothing.

No wonder Ferrara is in hiding.

Cover up? – serious accusation. With no proof.

Well, lets see. Given the outstanding achievements of the former members of the sanitation district, I think the governor should appoint them to the following positions….

Guerrero…..Supreme Court Judge

Wallace……State Water Resources Board

Seitz………..State Attorney General

Nicolls……..Clam Festival Clean-up Chairman

Ferrara…….Dog Catcher

Sorry Pelican, I realize you’re being sarcastic,

but I can not in good conscience support Ferrara for dog catcher.

OK…how about he be appointed to the position of the guy at the end of the parade that sweeps up all the horse $hit?

I’ll consider it and let you know.

Dog catcher no, however there may be a position for him in the latest SLO Scoops POOP program. There is a desperate need for a good man to place little colored flags on all the piles of dog shit laying around in the park.

Are you people in Junior High School? Or what?

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