Tiny Los Osos Faces Fines, Debt and Infighting Over Sewage Treatment Plant

Contaminants from the Central Coast beach town of Los Osos, which still uses septic tanks to treat sewage from thousands of homes, are fouling groundwater and seeping into the neighboring Morro Bay National Estuary, according to state officials.

Although groundwater pollution was discovered in the town of 15,000 more than two decades ago, state officials have not been able to stop it -- despite a ban on new septic tank hookups in most of the town.

“We don’t have anything like it in the region or probably anywhere in the state,” said Roger Briggs, executive officer of the Central Coast Regional Water Quality Control Board. “I have been dealing with this since the dawn of time.”

Now Los Osos is facing a proposed $11-million pollution fine by the regional water board and is in danger of losing a $135-million state loan for construction of the town’s first modern sewage system.

Fed up with delays and debate over the treatment plant’s location, the state Water Resources Control Board has given the town’s community services district until 5 p.m. Wednesday to abandon its efforts to move the plant from its approved location in the center of town.

If the district doesn’t comply, state officials say they will be forced to cancel the loan. That would undo years of planning for a new facility and dash hopes of stopping pollution anytime soon. It could cost the tiny town many millions of dollars.

It also would make the Los Osos sewer project the first default in a federal program that has provided states with money for low-interest wastewater infrastructure loans since the late 1980s, according to federal officials.

“This is a pretty small community ... that has postponed this day for decades, and now it is a problem,” said Alexis Strauss, regional water division director for the Environmental Protection Agency.

Other towns along the coast have wrestled with water quality and waste disposal issues. But the controversy of Los Osos, pitting residents against each other and regulators, is particularly intractable.

By fewer than 20 votes, residents decided in September that they wanted to relocate the proposed sewage plant to nearby farmland. The project was halted, although construction contracts had been signed and $6 million had been spent.

At a meeting here last week, the state water board threatened to cut off funding if the district did not take immediate steps to build the plant in town.

“This ... is a last, best and final offer,” board member and former state Assemblyman Richard Katz of Los Angeles said.

But residents said the plant does not belong in the center of town because of visual intrusion, odors and the potential for a sewage spill.

“This is a terrible project environmentally,” Los Osos resident Daniela Arnon told the board. “We don’t have enough green space in town and [the sewage plant site] is right above the bay.”

Septic tanks, with pipes carrying effluent into leach fields, are commonplace in homes and cabins in rural areas without sewer hookups. But Los Osos, which grew from a weekend retreat to year-round community, has hundreds of septic systems concentrated in a shallow, sandy basin sloping toward the estuary.

State officials say nitrates have turned up in the groundwater and could make their way into drinking supplies. During the rainy season, the water table rises and sewage-contaminated water puddles on the ground. In addition, coliform bacteria have been migrating underground and slowly seeping into the estuary.

Briggs said that, although no illnesses have been reported, there is a danger of contact by kayakers and beach strollers. “This is not good,” he said.

Some residents say the state is exaggerating the pollution problems caused by septic tanks.

“Birds, cattle and dogs are contributing most of the bacteria,” said community services district President Lisa Schicker, a biologist with the state Department of Transportation.

In 1983, groundwater pollution prompted the regional water board to block new septic system hookups in an area with about 5,000 homes. Testing a few years ago found bacteria from human waste in the estuary, state officials say.

In the 1990s, San Luis Obispo County wanted to build a treatment plant outside town, but residents succeeded in having the location moved into town -- with a park and treatment ponds.

When the plan evolved into a more visible facility with an above-ground treatment tank and more prominent buildings, opposition led to September’s election. In addition to deciding to move the plant out of town, voters recalled three sanitation district board members who supported the in-town location.

Ousted community services district President Stan Gustafson said he believes the real issue was that many residents did not want to pay $200 monthly sewer fees to repay the state’s loan.

“I had a goal of putting in a project because we’re polluting groundwater,” he said.

Shortly after the election, the new community services board halted construction and pushed the state to approve a plan to build another type of treatment facility in an agricultural area. They figured it would save $30 million, be more environmentally friendly and be less disruptive than the state-approved plant near a community center, library and church.

“They are asking our people to pay for a Lexus when a Toyota will do,” Schicker said.

The state water quality agency is not willing to substitute a new plan for one that has taken years for government agencies to review.

The Los Osos community services board is scheduled to meet tonight to decide whether to comply with the state’s demands, including a requirement that it obtain bonding for the state loan and resume construction.

But district officials said bonding will be difficult, and disregarding their own community’s vote may be illegal.

“I think they [the state board] want me to break the law,” Schicker said.

State officials said they can ill afford to jeopardize loan funds that other communities can use to improve water quality. But they concede that the Los Osos district will be in a fix if it loses funding -- with $6 million to repay the state, plus $7 million in construction delay costs and $11 million in proposed fines to date.

“They would be in a world of hurt,” Briggs said.