Violation Scoring Procedure Tier Assignment Challenge - Western Digital Technologies - July 21, 2021
[Tammy Pickens]: Good evening, everyone. Thank you for attending the Violation Scoring Procedure Tier Assignment Challenge Public Meeting for Western Digital from formerly HGST. Next slide. I am Tammy Pickens, the Public Participation Specialist for the Department of Toxic Substance Control.
Next, next slide. To support the language and captions this evening, simultaneous audio interpretation is available for this meeting. Click the interpretation icon at the bottom of your web or application screen to select the language. For Spanish only audio by phone, please call 1-877-679-1440 and enter the code 2782045# or hashtag. The phone number and link will
be posted in the chat box. Automatic closed captions have been turned on for this meeting, you can turn them off by clicking the CC icon at the bottom of your screen or moving the caption box. Please note that these captions are provided for convenience only and are not the official transcript for this meeting. Next slide. Today's meeting agenda includes the DTSC presentation, the Western Digital presentation, questions and answers, a five minute break, followed by public comments. Next slide. By participating in this meeting,
you understand that this meeting is being recorded, and you may be more muted for background noise. The recording will be available on EnviroStor. During the question and comment section, we will focus on answering questions related to this evening's presentation. As always, we will do our best to listen and address all comments and questions so that everyone has the opportunity to participate. Additionally, we ask that you limit your comments or questions to make room for others who may not have had a chance to participate yet. Again, we thank you for your patience and understanding as we navigate this collaborative space together. Next slide.
Meeting materials are available in English and Spanish at www.envirostor.dtsc.ca.gov type Western Digital Technologies, see the community involvement tab. Links and emails will be posted in the chat. For members of the media, please contact Sanford Nax in the DTSC Office of communication at Sanford.Nax@dtsc.ca.gov. Next slide. The mission of DTSC is to protect California's people and the environment from harmful effects of toxic substance by restoring contaminated resources, enforcing hazardous waste falls, reducing hazardous waste generation and encouraging the manufacturer of chemically safer products. Next slide. At this time, I would
introduce our DTSC presenter, Nadine Doughman. Nadine. [Nadine Doughman]: Hi, I am Nadine Doughman the project manager in the Permitting Division at the Department of Toxic Substance control. Today I will be presenting an overview of the violation scoring procedure. The violation scoring procedure
regulations are found in the California Code of Regulations. Title 22 sections 6627 1.50 through 66271.57 and took effect on January 1st, 2019. The VSP regulations apply to all operating permitted hazardous waste facilities which are inspected periodically. During the inspections,
facilities may receive violations. The violations are scored and added then divided by the number of inspections over 10-years. I will also discuss the basis of the 2019 and 2020 year assignment for Western Digital. Slide nine please. Here are the steps of the violation scoring procedure. Step one. DTSC enforcement calculated the VSP score for each violation, based on potential for harm, the extent of deviation and frequency. Step two, a provisional's VSP score is issued to the permittee. The permittee has an opportunity to dispute
it. Step three. A final VSP score is released by the dispute resolution officer. The compliance tier assignment is determined from the final VSP score and the permittee is notified. The permittee has an opportunity to challenge the
unacceptable compliance to tier assignment within 60 days. Step Four. Within 60 days of the challenge submittal, DTSC schedules the public meeting and mails a public notice. DTSC holds a public meeting. DTSC presents the reasons for the tier
assignment. The permittee presents its opposition to the tier assignment. Public comments are accepted. Step Five. DTSC considers public comments and the facilities challenge to make a decision or the final tier assignment within 60 days of the public meeting. Slide ten please. These are the VSP scores for each type of compliance to your assignments.
The acceptable tier is assigned to a VSP score of less than 20. The conditionally acceptable tier is assigned to a VSP score equal to or greater than 20 and less than 40. For the conditionally acceptable tier assignment, the facility must schedule compliance audits. Oh, the unacceptable tiers assigned
for a VSP score equal to or greater than 40. And for the unacceptable assignment, DTSC shall initiate the permit denial or revocation process. DTSC may issue a permit with a term of five years or less and may impose other compliance provisions and mitigation measures. For the conditionally acceptable tier assignment facility must schedule compliance audits. DTSC may impose other requirements to mitigate potential harm or non compliance.
Slide 11 please. These are DTSC's required responses. DTSC will send a notice of the tier assignment within 60 days of the public meeting. If the unacceptable tier is upheld, the notice will include DTSC decision to initiate process to deny, suspend, or revoke the facility permit or DTSC may issue a limited term permit. DTSC may grant a conditional permit to a facility within unacceptable tier demonstrates the following. One, DTSC finds the operations will not pose a threat to human health safety environment. Two, the owner
operator implemented enforceable improvements to operations. Number three, operation of the facility provides substantial overriding benefits to the people of California. Number four, permit term may not exceed five years. Five, permit
must include enhanced compliance terms, including audits. Six, the permit must include mitigation measures for all potential harm associated with non compliant activities. If DTSC changes the compliance tier to conditionally acceptable the facility must meet the associated requirements such as audits. Slide 12, please. Western Digital Technologies is
a computer manufacturing company that is located at 5601 great oaks Parkway in San Jose, California. 95119-1003. The facility is in an area zoned for general industrial land use. The surrounding area consists of industrial, commercial, and residential properties. Western Digital has
hazardous waste tanks on-site wastewater treatment system, and a building designated for hazardous waste container storage. Slide 13 please. The VSP score and tier assignment are determined annually. The 2019 final VSP score was 40, with a final VSP compliance tier assignment as unacceptable. The 2020 final VSP score was 40, with a final VSP compliance tier assignment as unacceptable, an agreement between DTSC and Western Digital. This meeting covers Western Digital challenges to the 2019 and 2020 compliance tier assignments. Slide 14 please. For the Western Digital 2019 VSP timeline, on
September 27th, 2019, DTSC, issued a provisional 2019 VSP score. On December 5th, 2019, Western Digital disputed the provisional 2019 VSP score. On September 25th, 2020, DTSC ruled on the challenge to the 2019 VSP score. On December 15th, 2020, Western Digital submitted a challenge to the 2019 tier assignment. On December 30th, 2020, DTSC issued the final 2019 VSP score and tier assignment. Today is the tier challenge public meeting. Within 60 days, DTSC will make a decision on Western Digital tier challenge. Slide 15 please. For the Western Digital 2020 VSP
timeline, on September 30th, 2020 DTSC issued the provisional 2020 VSP score. On December 15th, 2020, Western Digital challenge the 2020 VSP score. On March 5th 2021, DTSC see ruled on the challenge to the 2020 VSP score. On March 8th, 2021, DTSC issued the final 2020 VSP score and tier assignment. On April 1st, 2021, Western Digital resubmitted their challenge to the 2020 tier assignment. There is a tier challenge public meeting. Within 60 days, DTSC will make a decision on Western
Digital's challenge. Slide 16 please. This is a summary of Western Digital's compliance history over time. Class one violations are the most severe and involves significant risk to human health or safety of the environment. For inspections did not have class one violations
including the 2019 inspection. 2016/17 inspection 17 class one violations 2009/10 inspection was included in the 2019 VSP score. The 2019 inspection was included in the 2020 VSP score. Slide 17, please. For the VSP calculation
methodology, compliance evaluation inspection or focused compliance inspection is combined with the financial records review. A total of four inspections were each considered in the calculation of both the 2019, 2020 VSP scores. 2019 and 2020 VSP scores do not consider the same for inspections due to the timing that the inspections occurred. Slide 18, please. Here is a summary of the class one violations over the course of 10 years. There were 14 class one violations for tank assessments that were missing required information. There were 2 class one violations are not meeting financial assurance requirements. There was one class one violation or illegal
treatment in three tanks. These violations resulted in a final VSP score of 40 with an unacceptable compliance tier. Slide 19 please. Tank assessment violations. There are regulations that require tank storing hazardous waste to periodically be certified to ensure that they're fit for use.
Tank certifications are required to be performed by an independent qualified professional. DTSC determined that the tank assessments performed on behalf of Western Digital did not satisfy regulatory requirements and that some tanks required repairs. The tank assessment violations have since been corrected by Western Digital. Slide 20 please. Financial
Insurance violations. The regulations that require hazardous waste permit holders to provide a financial guarantee that funds will be available to close the hazardous waste management units. Western Digital not satisfy the financial insurance regulations for a period of time. Facility has indicated that the issue arose as a result and a change in ownership the facility. Financial assurance violation have since since been corrected by Western Digital. Slide 21, please. Treatment violation. There are regulations that require
authorization to conduct treatment of hazardous waste. Western Digital performed treatment of hazardous waste water by adding treatment reagents to three tanks. Treatment methodology was not specifically described in the permit application submitted by the facility. Treatment
violation has since been corrected by Western Digital. Slide 22 please. DTSC will consider all public comments and [inaudible] presented today for making a final decision on the compliance tier assignments. DTSC will review the challenge basis items in the California Code of Regulations sections 66271.57 (d), one through five. Facility must demonstrate that: One, owner is able to operate in compliance. Two, facility as constructed is able to operate in compliance. Three,
continued operation is unlikely to adversely affect human health safety, or the environment. Four, clients with financial assurance and liability requirements. Five, Audit report which includes the ongoing pattern of the plants with all applicable requirements. Also full implementation of actions, correct deficiencies, address findings of our audit. Slide 23 please. At this time, I would like to give the presentation
back to Tammy. [Tammy Pickens]: Thank you Nadine. Following documents are available in the information repository on EnviroStor or at DTSC Sacramento Regional Office located at 8800 Cal Center Drive, Sacramento, California 95826. You may phone (916) 255-3758 for an appointment Monday through Friday 8am to 5pm. Next slide. DTSC has concluded their presentation. We would now like to invite Western Digital Technologies to present their opposition to the tier assignment. Next slide. [Deborah Schmall]: Hello,
thank you Tammy. Can you hear us? [Tammy Pickens]: Yes, ma'am. [Deborah Schmall]: Okay, thank you. Good evening. Again. I am Deborah Schmall. I'm an environmental lawyer with the law firm of Paul Hastings. I'm here tonight with my colleague, I reclined. Also Paul Hastings
and together we represent Western Digital in its effort to obtain a renewal of its hazardous waste facilities permits for its San Jose manufacturing facility. And that includes representing the company and its challenge to the compliance tier assignments for 2019 and 2020, under the department's DSP program. With us today for this webcast are also Dr. Rene Van dobrin of Ramboll Consulting. She is a recognized expert in the auditing of facilities and companies for California hazardous waste, regulatory compliance. And we also have Denise Lloyd, who is a Western Digital's senior PHNS, manager for the facility. And all of us
are available to answer questions regarding the facility after my presentation. So today, and Tonight, I'll be presenting on a number of issues that are relevant to Western Digital tier challenge. I'm going to start with who is Western Digital, and what do they do and what is their place in their community. I'm going to talk a bit about Western Digital's hazardous waste facility permit although Nadine just spoke about that briefly too. And our view of how we got to where we are today, I will present how Western Digital satisfies the five criteria that Nadine just outlined for a successful tier challenge and for DTSC to consider in changing tier. And then I'm going to have some comments about the
financial assurance violation. Some comments that was five years ago, some comments about the tank assessment certification alleged violations from the same vintage five years ago. I will also explain the situation regarding one inspection that we believe was improperly excluded from the company's 2020 VSP score, and the impact of that exclusion on Western Digital. And finally, I will summarize and conclude why DTSC should in our view, change Western Digital tier to acceptable or conditionally acceptable. First, who or what is Western Digital, I'm going to show you a map very close to Nadine's map in just a moment, but some background facts about this facility in San Jose on Great Oaks Boulevard. It is the company's primary manufacturing campus. The facility is 158
acres. It's been located at that location in San Jose since 1956. The facility has over 2700 employees, and an additional about 1600 contract employees. They're in manufacturing, operations, engineering, administration and support services. Now at this facility, Western Digital develops engineers and manufactures critical components of hard disk drives. The manufacturing of hard disk drives is designated by our country as part of the critical infrastructure of the country.
And the company is the world's second-largest manufacturer of hard disk drives and provides approximately 40% of the world's supply of hard disk drives. I would add that the facts from this slide and some of the financial facts that I mentioned later, are all confirmed in a declaration of a company officer that was submitted to DTSC prior to this public hearing, and is part of the public record for this matter. So a little more about the facility. This map in the middle looks very close to what Nadine presented. But let's start with the map the
smaller map on the left, because that shows where the facility is located in the larger community. The facility, of course, is the Green Star. You'll see it's located roughly at the confluence of highway 101 and highway 85. The surrounding community is sometimes called part of a transit village. Because not only is it at the confluence of those two major highways, but it also as you can see on the middle picture, the facilities immediately adjacent to the Caltrain line, the light rail line and in fact there's a Cal train station there which is the red rectangular box. There are a variety of
buildings on-site, you'll see that I think Nadine mentioned, there's an administration building because the picture of that there is an engineering building in the lower right and there are two larger manufacturing buildings. little blender and design and, and a number of ancillary support buildings. Little more about that community and I know Nadine talked about it a bit, that if you look back at that map, the facility is really adjacent to residences and some light commercial retail stores on three of its sides. It's fairly called a middle-class community. And the reported
median income in that neighborhood is just about under $100,000 annually. What's interesting about that community and the immediate surrounding community is the company was instrumental in creating that community. Because over a decade ago, it partnered with the City of San Jose in redeveloping it. And the way that happened is the facility was originally took up twice the real estate that it does now. The facility consolidated operations to less than one half of its former campus. And then the company oversaw the sale and development
of the vacated land into over 2900 residential units, and associated retail stores. And the company as part of that redevelopment also built and dedicated soccer fields and parks and other services and features to the community. Well as Nadine indicated, the facility's manufacturing of these critical components of hard disk drives generates wastewaters. And these are dilute wastewaters that need to undergo pH adjustment and or metals recovery. They're stored in numerous tanks on-site and the dilute wastewaters are then treated on-site. And they're then discharged pursuant to a
permit to the POTW, the publicly owned treatment works, which is the sewer authority. And that is why the facility needs a hazardous waste facility permit. It needs it for treatment and storage. And in fact, it's had a permit that
hazardous waste facilities permit for decades since the inception of the hazardous waste control law. Currently, the facility is undergoing its renewal process for its 10-year permit. DTSC technical review of the company's Part B permit application was completed in January of 2021.
So how we got here? Sometimes the company itself asked that question, because there were no spills or releases of hazardous waste or its constituents into the environment during Western Digital's tenure or even before that. And I should add that Western Digital has owned this, this site since 2012. And even on Hitachi's ownership in the years before that. No spills or
releases of hazardous waste or hazardous waste constituents in the environment. And it has a near-perfect exemplary we would call an exemplary compliance record some of which Nadine showed you. There were no violations classified as Class one, except for DTSC inspections in a series of inspections in the years 2016 and 2017. So let me show you what we mean is a little bit different than what Nadine showed, it goes back a little bit earlier. So you can see there that the 2016, 2017
series of inspections yielded by DTSC reclassification 15 violations. I know Nadine's chart showed 17. But the dispute resolution official gave zero score and seem to change that to 15. And that's why we have 15 here, but there were five compliance evaluation inspections and five financial records review before that, as you can see, all using zero class one, and there's been one after that also yielding class one. So how we got here is based upon those scores from the series of inspections in 2016 to 2017 DTSC cited the company for two types of class one violations from that series of inspections. Number one, as Nadine indicated, there was a one time failure to maintain proper financial assurance for closure post-closure costs and liability coverage by using was a failure to maintain the required amount for using the self-insured financial test. And the second bucket of violations were the
alleged failure to have proper tank assessments and certifications according to DTSC. And those alleged deficiencies arose from a single 2016 report prepared by a professional engineer. And based on that DTSC allege 13 violations coming out of one inspection, one for each waste vault or tank area. Nadine mentioned treatment as well, we
know the reason we do not have that here is the dispute resolution official analyze that, we submitted it was not a violation and the dispute resolution official change the score to zero, we believe that that's no longer in play as one of the sources of the score, which I will get to instead is the two on the screen. Well, what that lead to now is those two violations five years ago, as the company caught up in DTSC, VSP program of scores in tiers, and specifically DTSC, has subscribed to the company, the score 40 for 2019. And that's after the company challenged successfully a number of alleged violations and scores. It is the same scores Nadine indicated in 2020 score 40. Because one inspection was added most recently, and therefore included in the 10-year look back for purposes of scoring. And one of the earliest ones was
brought out, we submit erroneously dropped out. So it just so happens, that a score 40 is the lowest score that forces a company into the unacceptable compliance tier. And what that means is that a reduction of only a fraction of a single point, a fraction of a single point would improve the tier to conditionally acceptable and would allow the company to get its renewal of its hazardous waste permit. So that brings us
to where we are today. And the purpose of this meeting, the overall purpose stated in the regs is DTSC is allowed to change the company's compliance tier to conditionally acceptable or acceptable, regardless of the score. DTSC view on that, and you heard it again from Nadine is though the relevant issues for the department's determination about whether to do that or not, where the five criteria that she's listed in that I'll list on the next slide the five criteria, which emphasize current ongoing compliance. When light of that I will convey right now that the very, very good news is that, it's good news for the company and the community and the department is that we will demonstrate how Western Digital satisfies those five criteria. And we don't think there should be any reasonable dispute about that.
But we're also going to comment a bit on some of the violations and alleged violations. And that is because the regulations direct DTSC to issue its decision after this public hearing, considering many things, not just the five criteria, but considering many things. And we put the regulation right here on the slide. So you can see the department must consider the evidence to support the facility's VSP score. So whether or not the department technically changes that score, the evidence underlying the score is relevant, and therefore, we will still comment on some of that. So let's turn to the five criteria and Western
Digital's demonstration about how it satisfies those five criteria and why it warrants improvement of its compliance tier assignment. These are the five criteria by regulation that Nadine is already gone over. The first about the owner operator can operate in compliance. Two, the facility as constructed can be operated in compliance. Third, there's no unlikely to be an adverse impact on unlikely to affect human health of the environment. Four, the facility complies with
financial assurance and then five, the audit report demonstrating an ongoing pattern of compliance. So we're going to go through each one of these criteria. And we're going to do with the benefit of my summary of two, not one but two facility hazardous waste compliance audit. They both were led by Dr. Renee Vander grin of Ramboll consulting, whom I already mentioned is a leading expert in the field of hazardous waste compliance auditing. One of those audits was conducted in
last year in November 2020. And it was submitted together with our compliance tier challenge and the papers and is already part of the proceeding. The second audit was a compliance confirmation audit that was conducted three months ago. And we submitted hardcopy of that compliance confirmation audit report to DTSC last week, it is also part of this record. So each of these two audit reports are fairly detailed. And they have their reports detail their full scope, their findings and their conclusions. What I want to do is just give you a very
quick overview, and then list their conclusions. Of course, the reports themselves are available for review. So Ramboll consulting conducted the first hazardous waste facility audit in November of 2020. The overall scope of the audit was that it reviewed all aspects of of the facilities compliance with the hazardous waste facility permit. And of course,
there are many regulatory requirements that pertain to that. So to review that Ramboll did included the following they reviewed a number of records, they conducted staff interviews of 11 Western Digital employees, and of course, they inspected the hazardous waste management, storage and treatment areas. Because the facility has these tanks that store dilute hazardous waste wastewaters. Because there had been an issue raised by DTSC, five years ago about that. Ramboll
brought on board Solutions Recovery international or SRI to assist them in inspecting and auditing the facilities hazardous waste tank systems. SRI is an engineering firm, they also have structural engineers, and they also performed ultimately here the tank assessments that DTSC has said are now compliant. These were both highly experienced audit teams, the lead auditor from each firm had over 30 years experience in auditing. So, the first audit report, again was based upon the November 2020 audit, the report is dated December 2020. And we decided that the conclusions it's probably best to quote the conclusions even though it lead to a lengthy side, rather than summarizing them. And they're here on the screen. As you can see, the first conclusion in the conclusion section of the audit report is that its audit its observed operations and the adequacy and completeness of the records demonstrate an ongoing pattern of compliance with applicable Hazardous Waste Management requirements. That's critical. That is that is what
the standard that we need to meet. Secondly, there were some findings by Ramboll there were there were a number of things like there was a label that was not completely filled out. There were some training records that didn't reflect the training of one of the folks who handles hazardous waste at the facility that needed to be corrected. Number of things like that. And
as to that, that's the second conclusion. Ramboll concluded that the findings pertaining to the management of containers and tanks, and do all those administrative record-keeping requirements are considered to be minor, minor, both individually and in the aggregate, especially in the context of the number of day to day compliance obligations associated with the facilities permit. And I think those of you have experienced with hazardous waste facility permits know there are many hundreds of requirements that pertain to it by cross-references of the permit into other laws. Finally,
SRI again was a subcontractor to Ramboll and recall they audited and inspected the tank systems. They had some findings mean they found mainly minor rust but some rust conditions on piping in the like. They found some other things on some backup leak inspection systems, and they list them in the audit report, but their conclusions and Ramboll's conclusions having worked with them and reviewing their findings where the findings mainly pertained to the physical condition of the tank systems and they reflect primarily routine maintenance issues associated with that equipment in contact with acidic and alkaline wastewaters and are exposed to the elements. And the conclusion was that the company overall continues to operate the facility in an ongoing pattern of compliance. There were these findings. And so these third party auditors went back to the facility. So they returned. A month later, this was conducted
these audits were conducted three or four months ago. So in March and April of 2021. The good news is it's the bottom conclusion here. They've confirmed through the compliance confirmation audit, that all of the prior findings were satisfactorily addressed. Basically a clean bill of health with its follow-up audit. And so I quote, some of the conclusions again, the conclusions were, quote, the facility has fully implemented appropriate actions to correct the minor deficiencies. And to address the findings from the 2020
compliance audit. The second conclusion went further, because on this second audit, they interviewed seven facility personnel. And the conclusion was that the company demonstrates an exemplary commitment to meeting regulatory requirements for hazardous waste operations. And in part and this is quoted the personnel interviewed were knowledgeable about their hazardous waste program responsibilities, and showed a clear and thoughtful approach to implementing permit requirements. And I think that you know, part of a facility's compliance is not only knowledge and educated and training folks, but also culture. And that comes through from this conclusion. And finally, importantly, the
conclusion was the company demonstrates a continuing ongoing pattern of compliance with applicable Hazardous Waste Management requirements. So the facility with that clean bill of health actually has gone further. And in the letter that we submitted by Denise Lloyd to DTSC, before this meeting, this was outlined, the company has done something that underscores its strong commitment to compliance with the new enhanced maintenance program. So in December, the company retained a third party tank environmental engineering contractor happens to be named all clean, and it's to conduct some special semi-annual twice a year inspections of all hazardous waste tanks and vaults the first of such inspection was in May of this year. That of course, is in addition to what DTSC requires by regulation, which is daily hazardous waste Compliance Inspections. So the purpose of this new enhanced
maintenance program is to inspect for early signs of rust, or Leak Detection and spill prevention equipment and promptly address all observations which they're empowered to do. In a way it's sort of a form of a focused structural audit on the tank systems. Again, the goal is to identify and to address normal wear and tear before maintenance or compliance issues arise. So we'd say it's an extra layer of third party independent scrutiny that is voluntary and above and beyond regulatory requirements. So let's go to some of the other criteria on the list of five. The fourth criterion is that the facility must demonstrate it's an ongoing compliance with financial assurance. I'm going to talk a little more about this
later. The facility did have a one time lapse in qualifying for its self-insured financial test, and that was in 2016. Due to a corporate acquisition, that entails taking on some long term debt. DTSC sided the facility in 2017, and the facility took immediate steps to correct it by obtaining a surety bond and standby trust. Since 2017. Since that episode, the facilities use
the same mechanism, the surety bond the standard standby trust and liability insurance coverage. The subsequent DTSC financial records review in 2019 confirm compliance and perhaps most importantly, Nadine today said the facility is currently in compliance. So and there's no question about that. The fifth criteria, which is the facility operations are unlikely to adversely affect human health and the environment. The wastewaters are very dilute. Many are non-hazardous, but conservatively managed this hazardous waste we believe. The waste storage areas involved have appropriate secondary and occasionally tertiary containment. The facility has a
high level of compliance, you saw the record. So the results of the audit and the commitment to compliance performance. And the facility has not had releases or threatened releases of hazardous waste to the environment for a number of years for over 15 years. And in fact, none of the DTSC citations involve allegations or violations that allege actual releases to the environment, or lack or even lack of tank integrity is as Denise mentioned, there were some according to DTSC, some missing elements. In short, we believe Western Digital satisfies this fifth criterion. So the five criteria we ordered we believe that the audit the two audits we presented demonstrated the ongoing pattern of compliance with all applicable regulatory requirements. They
fully implemented and addressed all prior findings, the company is able to operate in compliance in terms of its permit, because it is and you know that from the audit, three, the facility as constructed is able to operate in compliance, because it is doing so. And you saw that from the audit, and even the most recent record compliance history of DTSC inspections. The facilities operations are unlikely to adversely impact human health of the environment. And of course, the facility complies with all applicable financial assurance requirements. These were not only attested to by the company, but also by the third party audit and DTSC's own inspection. We submit that justifies a change in the
compliance tier for Western Digital and granting Western Digital a renewal of its permit. So I said I would comment a bit about some of the violations. And I'm going to do that now. And explain a bit more. So this is about financial assurance, which is one of the two buckets of violations that lead to where we are today, right from the 2016, 2017 series of inspections. From 2003 to 2017,
the facility met DTSC requirements by the self-insured financial test. Then in September of 2016, Western Digital's Chief Financial Officer submitted to DTSC its annual financial tests for self insurance, and it's either using the DTSC form, the pre-printed form, and filling out the blanks. The submittal showed a net worth of the company of $11.145 billion as compared to the closure post-closure liability cost estimate of approximately 30 million. But
DTSC financial assurance requirements have many subsets many requirements regarding your finances, and one of them is that you must show that there is a tangible net worth tangible net worth of over $10 million. And the facility's balance sheet did not show that on the face of it. It did not show a tangible net worth over $10 million. That's because the company in that had recently acquired SanDisk acquired it for $19 billion. And there was some long term debt that was part of that and that affected the balance sheet. There's nothing hidden about it was right there on the basis in the face of the submittal of the DTSC. So there's no disputing It was a
violation. In the same month that it was called to the attention of the company, and DTSC issued to settle V in February 2017. The company almost immediately corrected it by obtaining, obtaining a bond throughout that time, and that's here on the slide. Not only was the net worth not tangible, the net worth $11 billion, but the company's cash assets during a whole run of years. And we pick run of years both before and after the financial assurance laps was never less than $4.3 billion in cash. So we ask DTSC today to consider this.
Western Digital always had sufficient financial resources to pay for its closure and post closure costs and liability coverage. DTSC's VSP regulations say this about looking at potential for harm. The potential harm for violations of financial requirements shall be determined by considering the costs for which there is no financial assurance or liability coverage. And the likelihood that injury or damages if they occur, will not be compensated. But as I've said Western Digital was and is a large, well established and well-capitalized corporation can always have the assets sufficient assets to cover closure costs and liability. And
again, when the financial assurance oversight was call to its attention, if the problem was corrected within weeks, we submit that there was no risk that the costs or damages would not be covered by Western Digital. And the potential for harm on this should be viewed as minimal, not major. And remember, only a reduction of only a fraction of a point moves the compliance tier to conditionally acceptable and would allow Western Digital to receive a renewal of its permit. So I have a few comments. Also on the tank assessments. I think it's helpful to refresh a bit on the tank certification history. The final
VSP score was based on allegations of 13 violations 13 violations of quote failure to have adequate certification that the tanks met standards. DTSC assess the violation for each one violation for each set of tanks ended up with 13. They classify classified all of them as class one. All 13 were based on a single tank assessment certification before prepared by Western abatement, Western abatement engineers on September 30th, 2016. After the challenge DTSC reclassify the extent of deviation for the tank of tank classifications from major to moderate and after the same challenge DTSC reclassified the dispute resolution officer reclassify the potential for harm from major for everything to instead major, moderate or minimal, depending on what the looking at each set of tanks and on the capacity and volume that was authorized under the permit. So Western Digital challenge the tank assessment violations, the score the tier on many grounds and I, I just wanted to check them a few of them off. They we've
posited that the tank assessment alleged violations do not qualify properly as class one violations. We submitted that the facilities tank assessment history with DTSC undermines viewing it as a violation classification as class one. We believe that DTSC continues to overstate the extent of deviation. We believe that DTSC continues to overstate potential
for harm. All the papers and the 13 alleged violations arising from the one engineer's report we submitted should be at most one violation. And that would have been consistent with DTSC's approach to other facilities with tank assessments viewed as inadequate. Those are all in detail and several rounds of challenge papers. And I'm not going to repeat those today with this challenge today, but I am going to comment on two of our positions. The first is something that they talked about
the tank assessment certification. So the facility in the past decade has performed its assessments more frequently than required. They were performed. And there were written reports in 2005, 2011, 2013, and 2016. So until DTSC's NOV, notice of violation in 2017. It's
scope and the format of these tank assessments was always the same. It was always conducted by third party Professional Engineers with hazardous waste tank inspection experience. And I would submit that these are the type of third party engineering consultants that reputable companies reasonably relied upon for such certification. All of those assessments that I've listed there, the prior ones had concluded including the one that has in 2016 had concluded that the tank systems and secondary containment, were in good condition and sufficient to safely hold chemical waste. The
DTSC never commented or raised concerns about those reports before. And then came 2016. And here's what happened DTSC in 2016 has had its engineering and special projects office sometimes abbreviated as ESPO, reviewed the assessments, the single report and ESPO and they also hired an engineering firm outside engineering firm. ESPO had a different more stringent view. And they decided among other things, that there needed to be a seismic evaluation, which is not specified as mandatory in the regulations. So based on that
shortcoming of that single assessment DTSC sided the company for the what we have now the 13 class one violations. So, the company did not dispute whether the regs required this. They very quickly retained another third party engineering firm with structural engineers to prepare the assessment with the content and format just as requested by DTSC. And, and the final tank certification report, there's back and forth with comments was approved by DTSC in February of 2020. Western Digital tank assessments currently comply
with the department's view of the regulatory requirements for tank assessments and I believe Nadine Doughman confirmed that in her presentation. We offer this for DTSC's consideration. In light of this history, citing the company for 13 class one violations was harsh. And going beyond that, to prevent the company from having a renewal this permit is we submit wholly inappropriate. The final thing I want to comment on about the tank assessment was the potential for harm and how the score. So that's beyond the
backdrop that I just mentioned. The potential for harm is in the regs. The VSP regs stated that when you're looking at a substance, you look at its characteristics of the substance and the amount of the substance involved for the reg says, We believe that should be the amount of the substance actually involved, not theoretically involved. So the VSPs final VSP score following the dispute resolution officials decision was based on the volumes and characteristics of the waste authorized by the facilities permit, not on the typical or intended volumes of waste identified by the facility. So based on authorized volumes, the dispute resolution official scored depending on the volume authorized and capacity major, moderate or minimal. We submit that the potential for harm was minimal. Given the actual volumes involved, we
believe DTSC should have considered the minimum actual potential for harm based on the amount and characteristics of the materials actually handled not just on the day of the DTSC inspection, but for the past two decades. Again, the facilities wastewaters are very dilute. And at the time of the scoring, over half, the tanks were empty, completely empty. And that has been how the facility has operated. For the past 20 years, it hasn't used over 50% of its capacity. We also asked the
department to consider that the Facilities Management underscores a lack of potential harm because of the lack of releases of hazardous waste to the environment. The good audit results, the closure of many tanks that I'm gonna mention in a second. For all of that we submit the potential for harm should be viewed by DTSC as minimal. So I want to say a few things about this 2020 score. This public meeting is now being said is for both 2019 and for 2020. And the evidence supporting the VSP score for each and the basis for challenge is the same, except for one thing, I want to explain. So the 2020 facility VSP score 2020 was the
same as 2019, which is 40, the lowest of the unacceptable tier. And the reason is because DTSC for 2020 added was able to include a more recent set of inspections in the 10-year look back. But it also dropped we believe in correctly in inspection for 2010. The incorrectly dropped inspection for the 2020 score looking back 10-years was a financial records review that was conducted in January of 2010. That was within the 10-year look back. Now we've heard DTSC
position that they believe it is all of a hole that the compliance evaluation inspection conducted in November and December is the same it was one is the one that was in January, and their position is DTSC position written position as they have the discretion to consider it earlier. But we submit that the financial records review is conducted in 2010, not 2009. Each report was issued in 2010, not 2009. And in fact, the entire compliance inspection overall report was issued in 2010. It referred to an upcoming separate financial records review. To us all of that activity, the
primary locus of activity is in 2010. So our belief, our conclusion is either the financial records review should have been included in the 10-year look back by itself, or the entire grouping should have been in 2010 rather than in 2009. And if that was the case, then adding there'd be one more inspection or number of inspections depending on how you count them. That would have been included in the 2020 score, and it would have reduced the score and it would have reduced it to conditionally to less than unacceptable. interestingly, the dispute resolution official in their written response to our challenge that specifically calls out these grounds, failed to mention it at all. And that's interesting because this challenge, this particular issue could only have been objected to by the company in its challenge in the 2020 score. Resolution of
this single issue alone would change the company's compliance tier. So with that, I want to summarize Western Digital permittee is responsibly managing hazardous waste at its facility. It has an exemplary compliance record, both before and after the 2016/2017 series of inspections. The facility
promptly corrected decided violations and restored its good compliance record. The company secondly has a continued commitment to compliance and one example of that is the enhanced maintenance program. The company has not had releases of hazardous waste or hazardous waste constituents, nor has it been alleged that such things that's violent such releases have happened at least for the past 15 or so years. The company, moreover, continues to voluntarily reduce its hazardous waste footprint. And it's doing this as part of good waste management. Recently, you've heard a few minutes ago that I said the company hasn't used more than 50% of its tank capacity in over 20 years. Well, the facility move forward some
time ago, just the process of closing out those hazardous waste tanks. And they have recently closed more than 50% of its hazardous waste storage tanks. That's 25 of the 49 tanks, and it has obtained DTSC approval of the tank closure, which is you know take some time, they've reduced the storage capacity by over 99,000 gallons. They've also closed six waste storage vaults with DTSC approval, and the last one is undergoing review. Our request in light of all of these reasons is that the company's compliance tier should be acceptable or conditionally acceptable. We believe the inspection scores for 2016, 2017 should have been lower. And we've mentioned a
number of the emphasize a number of bases today, including the financial assurance violation potential for harm should have been minimal. The 2020 score compliance tier we think should be conditionally acceptable when all inspections in the 10-year period of properly included. And then perhaps most importantly, certainly in DTSC view, the facility satisfies and accompany as well satisfies the five criteria for improving its compliance to your assignment. The two audits demonstrate the company has an ongoing pattern of compliance at that facility, and an exemplary commitment to meeting regulatory requirements. So we submit DTSC should adjust the compliance tier to acceptable or at least conditionally acceptable and the company be allowed to reduce permit. And that is all
requests. With that, I've concluded my presentation and I could stop sharing and hand this back to you Tammy. [Tammy Pickens]: We are now at the Q&A portion of this presentation. This slide provides an overview of the three ways you can ask a question or make a comment. The first one is to use some audio, the raise hand feature at the bottom of your screen. When we
call on you, you will be invited to unmute your audio. Number two. For anyone calling in by phone, press *9 to raise your hand. I will say the last three digits of your phone number when it is your turn. You then press *6 to unmute your audio. If you have a question in Spanish, the interpreter will ask your question for you. Number three, to have your question read by myself. Please use the Q&A feature at the bottom of
your screen. For those who are listening in Spanish please notify the interpreter when you have a question or comment. Next slide. Slide shows how to use each feature on your screen on your smartphone. This points to the Q&A on your phone. It has the *9 circled. On your computer pad you can use Alt Y. Next slide. To ask a question, use the Zoom audio, use
the raise hand feature and you will be invited to unmute your audio when is your turn. Or number two, press audio phone audio plus *9 to join the phone queue. I will say the last three numbers of your phone number when it's your turn. Press *6 to unmute your line. And for text
only have your comment read by myself, please use the Q&A feature. We will now go to the Q&A feature. Raise your hand. Hey. Right now I don't see any hand race or any questions. So we'll go into a five minute break.
Welcome back. We will now move forward to the formal comment section of tonight's meeting. Next slide. Comments may be submitted in tonight's public meeting by zoom Q&A or by audio. Comments may also be submitted by phone (916) 255-4905 or email to Nadine.firstname.lastname@example.org. All comments must be submitted by midnight tonight.
On July 21st, 2021. Next slide. We are now at the comment portion of this presentation. This slide provides an overview of the three ways that you may ask make a comment. Use the zoom audio, use to raise hand feature at the bottom of your screen. When we call on you, you'll be invited to unmute your audio. For anyone calling in by phone,
please press *9 to raise your hand. I will say the last three digits of your phone number when it's your turn. When you will then press *6 to unmute your audio. If you have a question in Spanish, the interpreter will ask your question for you. To have your question read by the facilitator, please use the Q&A feature at the bottom of your screen. For those who are listening in Spanish, please
notify your interpreter when you have a comment. Again, on your screen, you'll see the three ways to submit a comment, by your smartphone to raise hand Q&A, the star 69 on your phone and the alt Y on your computer pack. At this time, I'm not seeing any comments in the Q&A or any let me look at the raise hands. Phil Bloom is asking a question. Phil, you may answer ask your question.
[Phil Bloom]: Thank you Tammy. Listen, I'm typing a comment into the Q&A. It's a little lengthy I will have finished it as soon as I can and submit it so just bear with me for a sec here. [Tammy Pickens]: Interpreter Brittany at this time do we have any questions or comments in this on a Spanish line? Thank you, Brittany. There's no questions or comments from the
Spanish line. Okay, right now we're waiting for Phil to finish. Oh, here it is. Okay. Comment that we have from Phil Bloom states, the attorney for WDT suggests that the tank regulations do not require systemic review. And it's insinuate that DTSC, ESPO arbitrarily decided to require systemic evaluations of the tanks in 2016/2017, when systemic evaluations had not previously been required, but this is not correct, that that 22 CCR 66264.192(a), required DTSC, to review the design of tanks, including systemic considerations. And 66264.192(b)
requires owners and operators of new tank system to submit to DTSC at the time of submittal of the Part B permit application, a written assessment, etc. and Subsection B6 indicates that the assessment must include those designs requirements and factors last in the subsection a of this subsection, which of course includes the systemic consideration. So is WDT's attorney, therefore, mistaken in the assertion that systemic requirements are not required in the tank assessment? Phil, Bloom, you have another question or statement? [Phil Bloom]: yeah, you know, word is seismic. That was the entire violation that they were cited for those 13 times, seismic considerations, they were required to be submitted in the part B permit application from the very beginning. So it's not correct what she suggested that that seismic considerations are not required to be included in the tank assessments. That's my question. I just wanted to if I wanted to know if, if maybe
Nadine can confirm that. Thank you. [Tammy Pickens]: Thank you Phil. And thank you for correcting. [Deborah Schmall]: Tammy, can you hear me? [Tammy Pickens]: Yes. [Deborah Schmall]: Yeah, I just want to respond briefly to Phil. This is Deborah Schmall, Western
Digital. Of course, I suppose the law and the regulations speak for themselves. Number one, but number two, we do you have a different view. I mean, I do respect. And we know,
that distributes position within DTSC. I would note that what you cited is content of Part B permit applications, you know, and if there's a deficient permit application, then DTSC finds it to be incomplete, is the practice as opposed to issuing a violation for notice of violation. Our position is that the thing among the many things about the tank assessment violation is that requirement, if it exists, which to us still might be discretionary is part of a part B permit application as opposed to an ongoing requirement that it be there. And I respect the fact that Mr. Bloom has a different view about what does that mean in terms of how when did the seismic evaluation has to happen? So that's my response to that.
[Tammy Pickens]: Thank you, Deborah. Okay, right now, I'm not seeing any more questions or comments in the Q&A, or any hand raised nothing from interpretation. So we'll go with the next slide. This time, I'm going to say thank you for attending our meeting. On behalf of DTSC and thank you for joining us. Good night.