In 2019, the California Department of Toxic Substances Control (DTSC) began implementing the Violations Scoring Procedure (VSP), ushering in a novel permitting and enforcement scheme for permitted hazardous waste facilities throughout California.
The DTSC’s aim in adopting the VSP regulations was to “encapsulate the totality of the criteria and steps that govern the consideration of a facility’s compliance history by DTSC in making specified permit decisions and the remedies available to an owner or operator in response to decisions proposed or made by DTSC.”
The VSP regulations were partially driven by criticism of DTSC’s historical enforcement practices—particularly how those actions impacted past permit decisions. However well-intentioned the VSP regulations may be from a permitting perspective, they represent a fundamental (and, it appears, unintentional) shift in the landscape underlying how permitted facilities respond to DTSC enforcement actions.
The VSP regulations upend DTSC enforcement proceedings and impact permitted hazardous waste facilities in California.
Violations Over Past 10 Years Included in VSP Scores
Broadly speaking, the VSP regulations provide for a process in which each facility receives a score reflecting its previous 10-year compliance history. DTSC assigns a score to each Class I violation based on (1) the extent of deviation from the applicable requirement and (2) the potential harm to public health and safety or the environment arising from the violation.
The facility’s VSP score is calculated by summing all scored violations for compliance inspections over a rolling 10-year period and then dividing the total score by the total number of compliance inspections.
A facility’s VSP score is then used to assign each facility to a VSP compliance tier. Facilities with scores of less than 20 are “Acceptable” and do not immediately face permit-related consequences.
Facilities with scores equal to or greater than 20 and less than 40 are deemed “Conditionally Unacceptable” and face a number of permitting consequences, including a requirement to implement a third-party audit program (with potentially broad discretion DTSC may take to impose other permit requirements).
Facilities with VSP scores equal to or greater than 40 are deemed “Unacceptable” and face significant permitting consequences, including the initiation of proceedings by DTSC to deny, suspend or revoke the facility’s permit. Scores are recalculated and will fluctuate annually.
Given the severity of consequences accompanying an Unacceptable (or even Conditionally Unacceptable) tier assignment and the fact that violations impact VSP scores for a period of 10 years, the VSP regulations significantly alter the future landscape in which DTSC and permitted facilities work to resolve DTSC enforcement actions.
Increased Difficulty in Resolving Violations
Most notably, the long-term negative impacts alleged violations have on a facility’s VSP score make it much more difficult (if not impossible) to informally resolve such violations with DTSC. Instead, facilities will be forced, in many instances, to file litigation to formally challenge DTSC enforcement actions.
This is because the regulations require that every Class I violation alleged by DTSC be included in a facility’s score, unless the violation has been “cancelled, retracted, withdrawn or successfully challenged in an administrative or judicial proceeding.” But DTSC rarely agrees to cancel, retract or withdraw alleged violations, a position that has not changed since implementation of the VSP regulations.
Therefore, a permitted facility must formally challenge DTSC’s allegations through litigation if it wants to avoid including those violations, and DTSC’s calculations regarding those violations, in its final VSP score. A number of writ petitions have already been filed against DTSC on this basis and we expect many similar lawsuits to follow.
And while the VSP regulations provide an administrative “dispute” process, the utility of this process is, at the time of writing, largely unknown. Not only is this administrative process essentially a black box to the regulated community, until now the process has been plagued by significant delays. And because the dispute official sits within DTSC, it is difficult to imagine this internal dispute process providing much relief to permitted facilities challenging their VSP scores.
Such litigation is also likely to raise numerous facial challenges to the VSP regulations themselves. A preliminary issue facing all permitted facilities following the release of provisional VSP scores in September 2019 is the fact that the VSP regulations reviewed each facility’s previous 10 years of compliance history.
This 10-year lookback makes the VSP regulations apply retroactively to violations that were issued (and resolved) long before the VSP regulations were proposed (let alone finalized). This retroactive application also prejudices the ability of permitted facilities to raise defenses against these historical allegations due to lost evidence, fading memories, departed employees and similar issues.
In requiring a 10-year retroactive application of the VSP regulations, DTSC created a system that is ripe for due process challenges—an issue likely to be heavily litigated in the coming years.
As permitted facilities move forward with enforcement actions under the cloud of the VSP regulations, it is critical that they preserve their rights by timely submitting administrative dispute documents and then challenging adverse final VSP decisions from DTSC through the timely filing of litigation.
Because VSP scores remain on a facility’s tally for 10 years, even small increases over time can lead to materially adverse permitting consequences. Challenging each score at the time of issuance is the only way, under the current regulatory framework, to avoid the long-term consequences that arise under the VSP regulations.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Matt Williamson is a litigation partner in Manatt’s Orange County office whose practice focuses on environmental matters and white collar criminal defense. He has extensive experience advising clients on matters relating to compliance with federal, state and local environmental laws and regulations.
David McGrath is an associate in Manatt’s Orange County office and a member of the environment practice. His practice focuses on an extensive variety of regulatory and transactional matters involving hazardous waste, air quality and climate change, energy projects, land use and development, water quality, and related government compliance issues.