Oceano sewage spill has cost wastewater treatment district nearly $700,000

The South County wastewater treatment district serving Arroyo Grande, Grover Beach and Oceano has spent nearly $700,000 in legal fees and engineering costs since a massive sewage spill following heavy rains in December 2010.

That amount doesn’t include the $1.1 million fine issued against the South San Luis Obispo County Sanitation District last October, nearly two years after hundreds of thousands of gallons of untreated sewage mixed with floodwater overflowed from the Oceano facility.

The three-member sanitation district board will receive an update Wednesday on the legal costs during a mid-year budget review. Legal fees were budgeted to cost about $200,000 this fiscal year, which runs from July 2012 through June 2013.

However, as of December, legal fees had already run 159 percent of budget, totaling $317,175. The district’s interim administrator, Paul Karp, will ask the district board Wednesday to increase the budget for outside legal counsel to $320,000, and to again review the costs at the end of the third quarter.

“I think it’s going to be a surprise to the general public to see how much this litigation has cost,” said district board member Matthew Guerrero of Oceano. He added that the board and the public have been asking for the totals for some time.

The district is insured through the Special District Risk Management Authority, a not-for-profit public agency, but the carrier has not yet provided coverage for legal expenses related to the spill, Guerrero said.

Money to cover the cost has come from the district’s operating funds as well as its reserves. According to the staff report, the legal expenses and engineering costs related to the spill total $691,322.

The district’s staff report breaks down costs billed by various legal and engineering firms, including the amount paid to Wallace Group for services including assessing the spill volume and responding to a notice of violation and penalty issued by state water board regulators.

According to the staff report, $374,797 was spent in litigation expenses related to a nearly $1.4 million penalty proposed by the State Water Resources Control Board’s Office of Enforcement. The Central Coast Regional Water Quality Control Board reduced the fine to $1.1 million.

Of that, $251,503 went to law firm Downey Brand, which was first retained in September 2011 and represented the district at a regional water board hearing to fight the proposed fine.

San Luis Obispo-based law firm Shipsey & Seitz, which serves as the district’s legal counsel (primarily attorney Michael Seitz), received $68,391 for expenses incurred responding to the penalty as well as the notice of violation.

Wallace Group, which provides engineering services to the district while its founder, John Wallace, served as the district administrator from about 1986 to this past February, received $275,758 in engineering costs related to the notice of violation and fine.

Karp said he will present recommendations to the board in April on how to improve operations and decrease problems at the plant. The board has also retained two engineers with experience working at wastewater treatment facilities to assist Karp.

Shannon Sweeney, a civil engineer who works as Santa Maria's water resources manager, and her husband, Eric Sweeney, a mechanical engineer, will help Karp study the district's operations and facilities and formulate recommendations to the board.

Their monthly compensation is anticipated to be $16,200, according to the minutes of a closed-session board meeting held Feb. 28.

The district board meeting starts Wednesday at 6 p.m. at 1655 Front St. in Oceano. The agenda packet can be viewed at http://sslocsd.org/.

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