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Problems Plague California’s Hazardous Waste VSP System

April 29, 2021, 8:01 AM

California is entering year three of the California Department of Toxic Substances Control’s (DTSC) Violations Scoring Procedure (VSP)—a novel permitting and enforcement scheme impacting all permitted hazardous waste facilities in the state.

Problems with the process range form the inclusion of disputed violations in facilities’ scores to delays that have plagued DTSC’s issuance and administrative review of scores. In addition, a number of facilities have sued DTSC, challenging their VSP score or challenging the regulations as a whole. Efforts are now underway to make the system more equitable.

VSP System and Scoring

The VSP regulations provide for a process in which each permitted hazardous waste 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.

A facility’s VSP score is calculated by summing all scored violations for compliance inspections over a rolling 10-year period and then dividing the sum by the total number of inspections.

A facility’s VSP score determines its VSP compliance tier. Facilities with scores below 20 are “acceptable” and do not immediately face permit-related consequences. Facilities with scores equal to or greater than 20 and lower than 40 are deemed “conditionally acceptable” and face permitting consequences, including the requirement to implement a third-party audit program (and such scores trigger the added discretionary authority of DTSC to impose new 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 that facility’s permit. Scores are recalculated and fluctuate annually.

Key Challenges

While the VSP regulations are well-intentioned, their implementation has proven challenging. Key issues encountered to date include:

  • Difficulty Applying VSP Process to Historical Violations Under 10-Year Look-Back. The VSP regulations apply retroactively to violations that were issued (and resolved) long before the VSP regulations originated (let alone were finalized). Conflicts that exist between the VSP regulations and settlement agreements for historical violations, along with a lack of adequate records (and with fading memories), have created headaches for all parties.
  • VSP Scores’ Inclusion of Disputed Violations. When informing a facility of an alleged violation via an inspection report, DTSC must also now assign such violations a VSP score. Because facilities frequently exercise their rights to dispute alleged violations, VSP scores frequently include disputed violations. Such disputes can take many months—if not years—to formally resolve, meaning that facilities can face significant VSP consequences based on disputed violations that may ultimately be dismissed.
  • DTSC Delays. From day one, DTSC’s implementation of the VSP regulations has been plagued by delays. Most notably, while the VSP regulations specify that a final decision on a facility’s VSP scoring dispute “shall” be issued within 90 days of DTSC’s receipt of such dispute, DTSC’s dispute resolution process has, in practice, taken much longer—nearly a year in many instances. These delays, and the ensuing unresolved disputes, were not anticipated during the VSP rulemaking process, leading to regulatory conflicts and uncertainty regarding facilities’ current VSP scores and tier assignments.
  • Inadequate Dispute Resolution Process. While the VSP regulations created an administrative dispute process, DTSC employees oversee the process, which has proven to be highly deferential to initial VSP decisions. Available appeal decisions show that initial scoring decisions have been overturned only where DTSC’s conclusions are entirely unsupported by evidence or reveal a severe misapplication of law.

VSP Lawsuits Are Pending

Given these programmatic flaws, and the severe permitting consequences that can result, it is unsurprising that facilities are challenging the VSP regulations in court. At the time of publishing, over 10 active lawsuits related to the VSP regulations have been filed against DTSC. The claims against DTSC range from challenges to an individual facility’s VSP score to facial challenges against the VSP regulations as a whole.

Both DTSC and lawmakers are discussing efforts to modify the VSP regulations. DTSC has begun discussing potential modifications to address stakeholder engagement, seeking to make the VSP scoring process more equitable and to—one would hope—address the above issues.

The legislature has also become involved in these discussions with the introduction of SB 575, which, while well-intentioned, would modify the VSP score calculation process in a manner that would penalize facilities that undergo frequent inspections, an unintended consequence that would make the VSP scoring process more, not less, unfair.

The original aim of the VSP regulations—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”—was compelling.

Unfortunately, the significant issues that have arisen with the VSP regulations during implementation are undermining that original aim. Any modifications to the regulations must be designed to ensure a return to the original intent.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Matt Williamson is a litigation partner in Manatt’s Orange County, Calif., office whose practice focuses on environmental matters, including compliance with federal, state, and local environmental laws and regulations.