California hazardous waste facility permitting will get harder: cost… unknown

Environmental Alert

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Permitted California hazardous waste facilities (HWFs) take note: the California Department of Toxic Substances Control (DTSC), which regulates HWF activities, has proposed significant changes to the HWF permitting process.

On November 6, 2017, the comment period ended for what DTSC has titled "The Proposed Regulations on the Criteria for the Issuance of a Hazardous Waste Facility Permit of Permit Modification – Compliance History, Financial Responsibility, Training, and Health Risk Assessment." Note that these regulations do not apply to hazardous waste generators who do not exceed storage limits and send their wastes offsite for disposal.

The key changes to the existing permitting process include a potentially onerous risk assessment requirement and a new HWF rating schedule. These changes will increase the costs associated with permitting and operating in California. The significance of this cost increase, and whether the added costs will be passed through to generators, is currently unknown and depends on how DTSC ultimately implements the proposed regulations.

Based on concerns arising from major contamination from HWFs with temporary or poorly enforced permits, on January 1, 2016, a new law mandated the DTSC to "develop and implement programmatic reforms designed to improve the protectiveness, timeliness, legal defensibility, and enforceability of DTSC's permitting program, including strengthening environmental justice safeguards, enhancing enforcement of public health protections, and increasing public participation and outreach activities." The law specified seven criteria that DTSC must consider for inclusion in proposed regulations to modify the decision-making process for hazardous waste facility permitting. The current proposed regulations address five of the seven criteria: compliance history, data for a community involvement profile, financial responsibility amendments, training for facility personnel amendments, and a health risk assessment for hazardous waste facility operations. The remaining two criteria – vulnerability of and existing health risks to nearby populations, and minimum setback distances from sensitive receptors (eg, schools, hospitals, elder care facilities) – will be addressed in a separate rulemaking package.

Several of the new requirements under the proposed regulations could affect HWFs that currently have or anticipate applying for a hazardous waste permit.

  • HWFs will be required to prepare a Health Risk Assessment. Under the proposed regulations, applicants, whether new or with expiring permits, will need to prepare a Health Risk Assessment (HRA), which may include an HRA Questionnaire; a Screening Level HRA; and/or a Baseline HRA. As part of this process, the applicant may need to assess the toxicity of expected contaminants of potential concern, list known and foreseeable releases, describe potential pathways to human receptors, and prepare a conceptual site model. The cost and time required to complete this HRA process is unknown at this point. In a nod to cost concerns, DTSC commented that a "full-blown, comprehensive" HRA may be too burdensome for a facility in relation to the "benefits." Thus, applications "may be treated differently depending on the identified concerns."
  • New applicants will be required to file a Community Involvement Profile. Under the proposed regulations, this profile would publish information relating to the project, including description of the project, concerns raised, and nearby localities. DTSC contends that "[a]ddressing environmental justice concerns requires the early involvement of affected communities and other stakeholders – and that early public involvement is the initial step." This step may add material costs to the permitting process, including the time and expense of responding to public comments and concerns, and introduces additional uncertainty for applicants.
  • DTSC will have a new scoring system for hazardous waste violations. Under the proposed regulations, a scoring system called the Violations Scoring Procedure or VSP will calculate a score based on the type and number of Class 1 violations. Based on their scoring calculations, HWFs would be placed in three tiers: acceptable, conditionally acceptable, and unacceptable. The facilities' VSP score, along with their compliance history will be reviewed in making decisions "regarding the issuance, denial, modification, suspension, or revocation" of permits. For example, permits for HWFs with an "unacceptable" rating would be limited to five years and must include more stringent compliance provisions.
  • HWFs will have to rework existing trust accounts – or create new accounts – for site closure and provide specified, upfront funds for corrective action. The proposed regulations add requirements to the existing "Financial Assurance for Closure" section of the Code, requiring the establishment of a trust fund equal to 20 percent of the current closure cost estimate, created by depositing 2 percent of the closure cost per year until the 20 percent figure is achieved. The proposed regulations also add new requirements to specifically address financial assurance for corrective actions, by requiring an advance payment of "at least" 25 percent of the cost estimated by DTSC before corrective action is initiated. The proposed regulations also detail specific requirements regarding corporate credit ratings and excess or surplus insurance.
  • HWFs will be required to provide additional training for employees. The proposed regulations lay out additional training requirements, including training on emergency response, safety considerations, and procedures applicable to the specific job tasks. These new training requirements are monitored by requiring annual certification confirming that the training requirements have been met.

DTSC states that the proposed regulations will not materially impact HWFs in California and that "the range of additional direct costs that a representative business would necessarily incur is between $64,000 and $117,500 every ten years when permits expire." It is not self-evident that these estimates are accurate, and true costs could be much greater. DTSC does admit the proposed regulations would impact small business owners and/or operators of HWFs by requiring small businesses to incur "additional costs associated with preparing and submitting hazardous waste facility permit applications as well as yearly costs to submit training certifications and review their Violations Scoring Procedure score."

Regulators frequently underestimate the costs of compliance on businesses. The true effect of these proposed regulations in California will be seen once the proposed regulations are implemented. If the costs materially increase, HWFs in California may choose to pass the added costs onto generators who seek to dispose of hazardous waste in California, which could harm the competitiveness of HWFs with out-of-state HWFs – or the margins of generators with disposal needs.

The comment period for the proposed regulations closed as of November 6, 2017, and responses to comments are expected from DTSC in the coming weeks. DLA Piper will continue to monitor and track the progress of this rulemaking.

For more details on the proposed regulations and DTSC's position on same, please visit this page.

Find out more by contacting any of the authors.