When a winter storm blew through the Bay Area Jan. 3 and 4, dropping several inches of rain on Gilroy, storm water runoff flowed from the 43-acre site, carrying large but unknown quantities of sediment into the Lions and Day creeks, tributaries of the Llagas Creek and Pajaro River, according to a complaint from the Central Coast Regional Water Quality Control Board.

Inspectors from the Santa Clara Valley Water District saw the muddy water gushing into the creek and notified the regional control board, the complaint said. Upon further inspection, the control board found that the pollution prevention plan designed by the Gilroy Unified School District's general contractor, Gilbane, was not up to par.

"Our contention is that they were not prepared for that storm and they should have been," said Harvey Packard, enforcement coordinator with the control board, Central Coast Region.

By law, any entity building on a site that's more than an acre in size has to obtain a permit issued by the state under the federal Clean Water Act and devise a plan to control storm water runoff, Packard said. GUSD applied for a permit and assumed responsibility for preventing excess storm water, and the pollutants it can carry, from leaving the site. They were not required to submit the plan but they were required to have an adequate program in place, Packard said.

But the school district and Gilbane didn't hold up their end of the deal.

"Their plan was deficient," said Phil Wyels, assistant chief counsel with the State Water Resources Control Board.

Typically, sediment basins - small ponds of varying size dug out of the ground - are used to gather storm water and allow dirt to settle out, Wyels said. The contractor's pollution prevention plan did not include these basins.

The school district and Gilbane faced a maximum $2.4 million fine for the 122 days they were in violation of waste discharge requirements at the CHS site between Nov. 4, 2007 and March 4, but the regional water board's prosecution team only recommended a $250,000 fine.

"We looked into whether the violation was egregious enough to warrant enforcement action and it was," Packard said.

However, the school district, Gilbane and the water board reached a $170,000 settlement after a number of factors were taken into account, including the district's budget, "which was not in good shape," Packard said. "It doesn't really matter to us who pays how much. They're both equally liable for the total."

The water board still has to formally vote on the settlement, which it will do after the public has 30 days to weigh in.

In the meantime, the construction site has been brought up to standards, Packard said.

Deputy Superintendent of Business Services Enrique Palacios said Gilbane will pay the fine.

"Based on the water district's opinion, this could have been managed differently," Palacios said of the construction site. "Gilbane's opinion is different. But Gilbane will cover the fines. They're the ones doing the work. They're the ones responsible."

Palacios would not say whether the litigation had been discussed in closed session with the school board. School district Superintendent Deborah Flores did not return phone calls Tuesday.

Packard said the money collected in fines will go into a state fund used for emergency pollution clean up. Although the runoff from the CHS site didn't contain chemicals or toxins, the dirt that washed into the creek can clog the connecting rivers and streams and threaten the wildlife, including the endangered steelhead trout.