Is California’s Toxic Waste Regulator Letting Oversight Slide?

Reporting for this series of stories received financial support from the Fund for Investigative Journalism.

California generates an average of 1.7 million tons of hazardous waste each year. That ranges from industrial pollution to discarded household products. It includes liquids, solid, or gases that science has determined pose a threat to human or other life.

The state agency charged with protecting California’s people and environment by making sure these substances are handled safely is the Department of Toxic Substances Control (DTSC). The DTSC regulates thousands of businesses and institutions and completes some 125 cleanups a year.

In recent years the department has faced criticism from environmentalists, neighbors of industrial sites and state legislators. They accuse the department of allowing some cleanup projects to drag on, sometimes for decades. They point to fiscal mismanagement, sloppy record keeping and an opaque institutional culture that makes it hard to find out when the public is in danger or what’s being done about it. Some of these critics say state regulators have been indifferent to the public, cozy with polluters and slow in enforcing regulations.

Responding to the critiques, DTSC executives published a reform plan five years ago called Fixing the Foundation: Restoring Public Trust in the DTSC. The plan called for improving communication with the public and identified ways to shift cleanup costs from taxpayers to polluters. It also laid out strategies to make enforcement actions more consistent and transparent.

More recently, the department has set up a branch specifically assigned to investigate and correct environmental problems in poor minority communities plagued with the worst pollution.

To encourage progress, state lawmakers established an  Independent Review Panel  -- currently consisting of an environmental attorney, a former San Diego County environmental regulator and a toxicologist  -- to make recommendations on the department's performance.

The panel's suggestions have ranged from bookkeeping improvements to better public notice on how a factory’s emissions might threaten neighbors’ health.

The DTSC director, Barbara Lee, says she's committed to transforming her department.

Lee's staff turned down requests over two years for an interview. But in a letter to the review panel last September, Lee described actions the department has taken to improve its programs and policies. These include including hiring seven new executive leaders over the past year; giving the department's public participation office more authority and resources; creating the Office of Environmental Justice and Tribal Affairs; and starting an Organizational Excellence Initiative to make the DTSC more diverse and inclusive.

Lee also said she's changing the permitting process for hazardous waste sites so they will be more protective, more enforceable and better explained to the public. The letter included a site-by-site description of DTSC actions and how the department has responded to neighbors' and environmentalists' concerns.

Department executives point to the department's oversight at the Chemical Waste Management landfill in Kettleman Hills as an example of the DTSC's new focus on environmental justice.

Kettleman Hills neighbors have long fought for tougher regulation. They blame the landfill's polychlorinated biphenyls, or PCBs, for serious illnesses and birth defects in the surrounding communities.

In August, the DTSC settled a federal civil rights complaint filed by Kettleman Hills neighbors after the department gave permission for the landfill to expand.

The agreement includes the department's promise to support a health assessment that analyzes the  health effects in Kettleman City from exposure to pollution, including air pollution, hazardous waste and other contaminants. It sets standards for air monitoring.

For the next three years, the agreement requires the DTSC to consider a list of factors related to environmental justice in reviewing applications to expand the landfill or renew its operating permit.

"The settlement is groundbreaking," said Maricela Mares-Alatorre, a Kettleman Hills neighbor and community organizer for the environmental group Greenaction.

"Before this, it wasn't in (the department's) nature to respond to civil rights complaints," she said. "We've filed complaints where it took them 18 years to respond. But this agreement is court-enforceable. We have access to agency heads that we've never had before. We're hoping this will be a model not only for our community, but throughout the state."

Environmental activists say the DTSC's recent record elsewhere in California is far less promising.

Responding to Lee's reports of progress on DTSC improvements, a coalition of activists from hazardous waste sites throughout the state reported last October that the department has neglected its promises to reform. In January, a follow-up report from the Environmental Justice Alliance gave the department poor marks for meeting principles of environmental justice such as communication. In some cases DTSC decisions taken behind closed doors have made situations worse, the report states.

Gideon Kracov is chairman of the Independent Review Panel. In his  annual report to state legislators in February, he, too, described some of the reform efforts as falling short.

Backlogged Permitting Process Weakens Enforcement Efforts

Permitting facilities is an area where the department struggles.

Regulators at the DTSC are responsible for issuing what's called "Tier 1" permits to the 118 facilities that store or handle the most hazardous waste. These permits are like company-specific regulation books, issued for 10-year terms, with operators required to seek renewal six months before their permits expire.

If an operator meets that deadline, the facility may continue to operate under a "continued" permit. While the original conditions still apply, there’s no way to require improved safeguards, technologies and practices that may have been developed since the original one was issued. Further, the old permit won’t address changes that have occurred near the facility, such as new housing construction.

In his legislative report, Kracov said the DTSC continues to let some companies operate for years on expired permits. Seven years from now, in 2024, the department still expects to have 30 of the facilities it oversees operating on permits that are more than five years past their expiration dates.

A legislative hearing included several exchanges about the funding the department might need to process permits faster. But Shawn Martin, an analyst at the nonpartisan Legislative Analyst’s Office, noted that the DTSC had failed to provide a scheduled report on its funding needs.

The department’s grasp on its own finances has sometimes been weak. In August 2014, the state auditor issued a withering report on the DTSC’s failure to collect an estimated $194 million in cleanup costs from polluters since 1987. The department failed to send out nearly $142 million in bills. For $52 million in assessments the DTSC did mail, it never collected, the report found.

During his presentation to the Legislature, Kracov said the department originally thought it should be able to collect $90 million in unpaid costs. With data corrections, write-offs and settlement agreements, it actually took in $7 million, Kracov said.

Changing the Department's Culture Isn't Easy

Such lapses have drawn criticism from legislators, neighbors of contaminated sites and environmental activists.

Phil Chandler, a veteran DTSC engineering geologist, says he’s seen several reform programs like the current one come to nothing over the years.

He says his superiors have sometimes taken him to task for criticizing department decisions or policies, telling him that such public comments by a DTSC employee might make it appear that he's speaking for the department. Today, when he questions something the DTSC does, he stresses that he's speaking as a private citizen.

"I’ve worked for some bright people," he says. "I didn’t like the way we did business, but that didn’t stop them from having a high IQ."

He describes what he sees as a disconnect. "I'd sit in these (reform program) classes and listen to them answer the questions perfectly. Then I’d watch them come back in the office and do exactly the opposite, in everyday practice, to what we’d just been taught."

Chandler acknowledges that Lee has made a number of appointments from outside the DTSC, trying to bring in fresh ideas. Still, he says the department's entrenched culture is very difficult to change.

Chandler appears to be a rarity in his willingness to be publicly identified as a department critic.

Other DTSC employees, who asked not to be named for fear they could face retaliation at work, describe a department long demoralized by inadequate budgets, tripped up by its own bureaucracy and confused by frequent changes in leadership and mandate.

The official designation for project directors, Career Executive Assignment positions (CEA), has a parody title: Career Ends Abruptly, reportedly because it’s easy to be stripped of authority for antagonizing  influential people.

One longtime employee has published a satire, "The Toxic Mismanagement of Freedonia," that pokes fun at regulators bowing to corporate pressure.

Concerns about the DTSC’s culture -- and its commitment to change -- were redoubled late in 2015 after an advocacy group published departmental emails in which a pair of high-ranking regulators exchanged crudely racist jokes, sometimes about the communities they were assigned to protect. Lee has told lawmakers she disciplined and reassigned the offenders and plans extensive training in issues of environmental justice, race and cultural sensitivity.

Gale Filter, the former deputy director for enforcement and emergency response at the department, remembers running into a colleague at the grocery store.

"And she says, ‘You know, your environmental justice program that you started while you were there, Gale, do you realize how hard it is to work with these people?' " Filter recalled.

"And what was going through my mind, 'Well, how could it be any harder working with those people than the industries that have captured you?' "

Filter believes the problems are pervasive.

"This organization has a lot of pathologies. And one of those pathologies is a culture that is antagonistic or at least removed from those people that it’s supposed to serve, i.e., the public," he said

State Senate President pro Tempore Kevin de León also sees a broad failure.

"When you have a department that has 10 new directors in the last 20 years, that speaks volumes of the internal dysfunction of this department," he said.

Filter pointed out that in such an uncertain atmosphere, what often counts most is friendship. Where the public is seen as a demanding stranger, the lobbyists of industries subject to DTSC regulation often have plenty of friends at the department.

“Isn’t it easier to work with people that you know?” Filter asks.

Auto Recycling Methods Under New Scrutiny

Filter points to California’s long-standing policy regarding the disposal of auto shredder waste as an example of industry getting too much of a say in decisions.

When auto recyclers recover metals from wrecked cars, they also have to figure out what to do with leftover engine fluids, rubber, plastics and dirt. The material is toxic and hard to dispose of safely.

Ordinarily, such waste, known as "auto fluff," would be buried in landfills that are specially lined to contain any poisons and protect underground aquifers from contamination. That could be a big problem for the auto recycling industry, because it produces a lot of waste and these lined landfills charge high disposal fees.

In 1988, state regulators quietly approved a recycling industry solution: coat beads of waste with a concrete sealant, kind of like heavy metal M&Ms.

Policy and Procedure 88-6 declared auto fluff safe and regulators granted recyclers special exemptions, called "F Letters," that gave them permission to send their waste to less protected -- and, therefore, less expensive -- landfills.

Even better for the auto recyclers, landfill operators often discount their disposal fees for industrial materials approved for use as "alternative daily cover," used to bury rotting garbage.

In 2001, the department's own legal department declared the F Letters "outdated and legally incorrect" because they were enacted in violation of the state’s Administrative Procedures Act, which mandates public participation when a state agency seeks to implement a new regulation.

It labeled the DTSC policy an illegal "underground regulation."

The following year, senior DTSC scientist Peter Wood filed a report that said both the treated and untreated shredder waste exceeded state regulatory thresholds for lead, zinc and cadmium.

Wood’s laboratory model cast doubt on how well the auto fluff’s industrial lime coating could withstand the highly corrosive sludge found inside landfills. Since most landfills accepting municipal garbage are either unlined or have only a clay liner, the concern is that toxic waste could leach into local water supplies. Wood urged that, pending further investigation, the department rescind Policy and Procedure 88-6 and revoke the F letters.

Instead, the DTSC shelved the report.

Department spokesman Russ Edmondson refused repeated requests for an interview with Wood. The scientist’s report has remained a subject of contention in the DTSC and the auto recycling industry.

In 2008, then-department director Maureen Gorsen revived the issue, notifying recyclers that she planned to carry out Wood’s recommendations.

Margaret Rosegay, whose legal and lobbying firm represents the West Coast Chapter of the Institute of Scrap Recycling Industries, wrote back fast, saying that removing the auto fluff exemptions would severely injure auto recycling companies.

Filter says what came next was an intense lobbying campaign, with Rosegay and Robert Hoffman, the former chief counsel for the DTSC, pressing legislators to keep the exemptions in place until the state Environmental Protection Agency had reported on the issue. At the time, Hoffman’s firm represented several recycling businesses, as well as an industry trade group. Neither Rosegay nor Hoffman responded to interview requests.

The DTSC extended the deadline three times. In September 2009, six months after Gorsen resigned, the department relented on steps to revoke the special permits. But they would stay in place until the department approved some substitute for the existing formula that was safer.

The department had quietly reversed course. And no new standards for a safer substitute were forthcoming.

To this day, the DTSC continues to let the recyclers send at least 400,000 tons of treated auto fluff to landfills annually, where it is used as an acceptable material to bury trash.

State legislators intervened, and in 2014 the governor signed a state law aimed at making the disposal safer. It calls on the DTSC to set standards by next year that will ensure the shredder waste is not harmful.

Alice Sterling says the department waited far too long to act.

Ten years ago, Sterling started compiling public records on auto fluff as part of her research into a proposed landfill expansion near her Simi Valley home. She’s developed a reputation among DTSC whistleblowers as a relentless investigator on shredder waste.

"I'm not a scientist, but I would think any armchair scientist would be able to look at this and think, 'Here's a lot of questions that haven't been answered, but that can be answered. How much lead is in this stuff? What are the components? Is it safe to breathe? Can it migrate offsite? Does it leach?' And we have these horrific winds in Simi Valley, and day after day, year after year of this stuff circulating in our air. It's landing on things," Sterling said.

"They don't seem to run the department like a tight ship."

Sterling believes that if DTSC would only get the answers to the questions about auto fluff, it would be logically compelled to enforce appropriate regulation.

Records show when the department has such detailed information -- even when its own investigators log allegedly criminal actions by a polluter -- it sometimes fails to act.

Lead From Battery Recyclers Contaminates Homes

In March 2015, as public protests mounted against the East Los Angeles battery recycler Exide Technologies for poisoning its neighbors with lead and arsenic, the company struck a deal with the federal Justice Department to avoid felony prosecution. In the agreement, Exide admitted that for two decades, it regularly violated federal law by illegally storing and transporting lead and acid in leaky truck trailers, and that those actions could have been treated as felonies.

The company agreed to close, level and clean up its plant, and to remove lead contamination from surrounding homes.

Records show that well before the period covered by the federal agreement, regulators knew Exide was operating illegally.

For instance, in 1990, an inspection report alleged that plant operators were using an unregistered trucking company to ship hazardous plastic waste to a recycler that didn't have the proper permit.

“(DTSC’s predecessor agency, the Department of Health Services) has twice sampled polypropylene loads en route and have found hazardous levels of lead leaking on to Interstate 5," the report states.

Twenty-three years later, another inspector added a handwritten note to a "notice of violations" following a plant visit.

"DTSC is concerned that leaking from the containers while on public roads is an on-going problem, and this issue needs to be addressed immediately. Leaking of hazardous waste is considered illegal disposal,” the note warns.

The department let the Exide plant operate without a fully approved hazardous waste permit for 33 years.

In all that time, Exide didn’t satisfy regulators that it fully met California’s rules for the safe operation of such toxic sites.

In 2014, the department issued its third “notice of deficiency” on Exide’s permit application, acknowledging that the DTSC didn’t have complete information about how much lead-contaminated waste was on the factory site. In a press release, DTSC officials pointed out that Exide's three deficient applications required them to start proceedings for denying the company a hazardous waste permit.

It never came to that. Exide, which had operated for so long on what was supposed to be a temporary permit, capitulated to federal prosecutors nine months later.

Today, the department is working on a plan to clean up some 10,000 lead-contaminated homes near the Exide plant. Yet all but the most severely polluted will have to wait until after the department finishes an environmental review this summer.

In an email, DTSC spokeswoman Rosanna Westmoreland writes that the department needs to assess health risks for each house. The analysis will consider factors such as the amount of contamination on a property and how it is distributed, whether it is exposed in bare dirt, and whether there are pregnant women and children there, the email states.

Exide neighbor Terry Cano is frightened and doesn't want to wait. She says soil tests at her home already show high lead levels.

“I had a flashback of me playing with the kids. 'Get some fresh air. Get some exercise,' " she recalled recently, sobbing and gasping for breath.

"And I made them go outside and play in dirt. And now they’re sick."