The Regional Water Quality Control Board (RWQCB) and the Los Osos CSD will meet in San Luis Obispo this afternoon for a preliminary hearing to address the proposed $11.9 million in fines against the wayward seaside hamlet. The hefty fines come as no great surprise to the community. Former CSD members - recalled in September's white-knuckle election - and their supporters have warned for months that the state would levy fines if sewer construction did not proceed at the contentious middle-of-town location.

CSD President Lisa Schicker feels less than optimistic about Thursday's court proceedings. After reading e-mail correspondence between water board representative Roger Briggs and pro-sewer Save the Dream organizer Pandora Nash-Karner that took place within days of the recall election, Schicker feels sure that the water board is determined to fine the new CSD.

In a telephone interview, the CSD director sounded worn out from the storm of controversy, personal attacks, and financial flogging.

"We have no illusions about getting a fair shake," Schicker said. "They're trying to fine us out of existence."

While the water code states that these fines cannot be punitive, Schicker believes that the water board is not doing anything to improve the situation in Los Osos. As of press time, Briggs was unavailable for comment.

"They're not helping water quality by being punitive," Schicker said.

A CSD is created by a vote of the community and can only be dissolved through an election, not through fines. In that vein, a Los Osos citizens group called Eye On Government - which appears to be a spin-off of the anti-recall Save The Dream committee - has already announced plans to circulate a petition for the expressed purpose of dissolving the five-member body of local government.

The RWQCB fines will come on the heels of news that Los Osos has defaulted on its $135 million low-interest loan from the State Revolving Fund, making it the only community in the state ever to have turned down such funding. Schicker, however, insists that her board did not turn down the state money, but that the state's terms made the loan impossible to accept. The water board is expected to terminate the loan at a Dec. 9 meeting.

The CSD, as committed as ever to building the treatment facility outside of town, will now have to seek alternative funding for the state-mandated sewer project. Those alternatives could include seeking grants, raising bonds, and selling CSD land and equipment.

Schicker, CSD director John Fouche, and General Manager Dan Bleskey met with representatives from construction companies on Monday. Contractors at the inconclusive meeting, held at Assemblyman Sam Blakeslee's office, offered to help salvage the loan in order to resume their work for the CSD.

All five CSD members were elected on the platform of moving the sewer out of downtown. Throughout the September recall election, they described their opponents' warnings as scare tactics.

The water board maintains that outdated septic tanks throughout Los Osos are leaking hazardous waste into the groundwater and polluting the pristine Morro Bay estuary. Many Los Osos residents disagree with the RWQCB's conclusions and believe that high nitrate levels in the bay have as much to do with agricultural runoff from Los Osos valley as with aging septic tanks in the bedroom community of 14,000.

Many pro-septic sewer skeptics have also pointed out that for $300 a month - the latest estimate for the rising cost of installing and maintaining the wastewater treatment facility - each household could have its septic tank pumped every month. Responsible residents generally pump their tanks every three to four years.

Jeff Hornaday can be reached at [email protected].