Understanding and Preparing for an Inspection



Regardless of the size of your operations, the products manufactured, and the applicable regulations, it is reasonable to expect that at some point your facility will be inspected. Inspections by regulatory agencies are one of the most feared events by environmental managers. These inspections usually happen unexpectedly or with little time to prepare, and carry with them a high level of uncertainty about what will be inspected and the outcome of the process. By understanding the process, facilities will be better prepared to tackle inspection events.

An inspection may result due to a myriad of triggers including public complaints, enforcement initiatives, or prior inspections. Public complaints or events that represent public endangerment (i.e., notable and substantial spills or releases of hazardous substances) can raise visibility for the regulatory agency often leading to an extensive inspection at the suspect facility.

Inspections can be carried out as single-media or multi-media efforts. Single-media inspections focus on specific aspects of one media (i.e. air, water, solid wastes) and are usually brief. Multi-media inspections encompass all media and may span several days, depending on the size and complexity of the facility. Note that city or county representatives may “tag along” for a multi-media inspection and request records not directly related to environmental aspects (i.e., building and occupation permits, fire and health inspections).

Generally, inspections consist of the following:

  • Entry rights and presentation of credentials
  • Site walk-through
  • Request for records
  • Inspection results
    • Notice of Violation (NOV)
    • Administrative Order (AO)
    • Supplemental Environmental Projects (SEPs)

Each of these elements is described in more detail in this article.

Inspection Process: Entry Rights

The inspection process usually begins with the arrival of a representative (or representatives) from a regulatory agency. Environmental staff may question whether to grant access to an unannounced inspector. There may be reservations due to staff constraints (i.e., the environmental manager is not on-site or the person who knows where all the records are filed is on vacation), or just general consternation about granting access to the facility to an unknown person. However, it is important to note that agency representatives have rights to access any regulated facility. These rights and access provisions are granted by applicable laws and regulations, and are also commonly found as permit clauses or conditions on most air quality and water quality permits.

It is mandatory for any agency representative to show proper identification prior to engaging in the inspection. Agency representatives are accustomed to being asked for proof of identification, so staff should not feel any hesitation to ask. After the appropriate proof of identification has been provided, access should be granted and inspectors should be made aware of any special circumstances, such as availability of responsible personnel.

Site Walk-Through

The next step of the inspection usually involves a walk-through. Agency representatives should be asked to follow all required health and safety guidelines and be required to wear any personal protective equipment needed to access hazardous areas. Depending on the type of inspection, the agency representatives will ask questions according to the scope of their inspection and may even interview personnel and equipment operators. Proper signage and identification of processes, storage areas, and equipment is critical during this stage. For instance, an area containing scrap metals identified with a sign that reads “Materials for Recycling” provides a clear indication to the inspector about the nature of the “scrap” within the area. Also, clearly identifying segregated waste storage areas (hazardous vs. non-hazardous) helps to provide indications about the identity of substances stored in the area. A simple sign might prevent a question, which is often followed by additional inquiries.

Request for Records
Inspections_NEI Text Box

The walk-through is usually followed by a request for records. Although some records might be reviewed during the actual walk-though (i.e., CEMS/DAHS records kept in control rooms, copies of permits, etc.), the records review is generally done in an office setting. The key for success during this stage of the inspection is that all records should be readily available. The staff should be able to readily produce copies of permits, results of any permit or regulatory required monitoring, charts, calculations or inventories required for demonstrating compliance, records of inspections required by permits or regulations, results of performance tests, operational parameters, and evidence of compliance with reporting requirements among others. For facilities that have a digital recordkeeping system, the availability of the information becomes a critical issue; more so when the facility is in the midst of the transition from paper-to-digital. Inspectors will typically allow some time for facilities to provide copies of records not readily available during the inspection. As before, a sound recordkeeping system that allows expedited retrieval of data can reduce additional inquiries.

After the Inspection

After the inspection is completed, the agency representatives will provide feedback on their findings. Depending on the depth and nature of the inspection, comments will span from “everything looks normal” up to a formal closing meeting in which preliminary findings are discussed. For cases in which the inspection reveals an imminent threat to human health or the environment, other measures, including injunctive reliefs and orders to cease and desist might be employed.

For inspections that result in agency findings of non-compliance, the next step usually involves a Notice of Violation (NOV). The NOV is an official communication from the agency which states that the results of an inspection have revealed violations of one or more statues or regulations. The NOV will include all background information collected by the inspector, as well as the alleged violations. The NOV will also indicate the administrative “due process” such as the time allowed for a response and where to file the response. It is important to note that an NOV is still part of the data gathering effort. At this stage, it can be valuable to engage technical consultants in order to assure that an adequate response is being prepared to address all aspects of the NOV.

Once the response to the NOV has been submitted, the agency will review the information provided and make a final determination of compliance. If the agency determines that violations still exist, it will move forward to the next step in the administrative process. This step usually involves the issuance of an Administrative Order in which all alleged violations are stated and supported by the agency. (In some cases a NOV is not issued prior to the Administrative Order. In some states a Notice of Enforcement might precede or substitute an Administrative Order.) As with the NOV, an explanation of the “due process” will be provided, including options to seek appeals, alternative resolutions (mediation), and judiciary reviews. At this stage, the organization should consider engaging not only technical consultants but also legal counsel. Particular care should be given while phrasing responses to the AO in order to avoid initial admission to any of the allegations.

The AO will also include a penalty assessment related to the alleged violations. The penalties assessed vary depending on many factors such as risk and economic benefit among others. Agencies have published penalty policies that provide specific guidelines on how penalties are calculated and which include aggravating (willful neglect, repeat violators) and mitigating factors (facilities with solid compliance programs in other areas, facilities with established ISO14001 EMS programs, etc.).

Inspections_inspector at plant

The next steps will vary depending on the complexity and validity of the allegations. Since the burden to prove compliance falls upon the facility, agencies sometimes include broad based allegations in AO’s. Since the AO is drafted by the agency’s legal counsel and based upon the inspector’s notes and findings, these allegations must be fine-tuned and tailored to the specifics of the facility in order to contest them. For example, the wording of an allegation in an AO about the presence of a hazardous waste might be as follows; “500-ml plastic container with unknown hazardous waste.” In this case, the container was not labeled and was found among other containers labeled as hazardous waste. The inspector assumed its contents to be hazardous waste and transferred his assumption to the AO.

If some of the allegations persist after the response to the AO, the facility and the agency will enter into negotiations related to the remaining violations and the assessed penalties. These negotiations can be held directly between the parties (agency and facility) and their representatives (inspectors and agency counsel, and consultants and facility counsel). If negotiations stall, agencies offer alternative dispute resolution (mediation) processes to attempt prompt and fair resolution.

After a settlement has been reached, the agency will gather all elements of the settlement into a written document. The document issued will depend on the agency, nature of violations and other aspects but will usually have two components— a final order and a consent agreement. The settlement might include administrative requirements (i.e., begin recordkeeping as soon as possible, begin recording fuel used, etc.) and will most likely have an economic penalty component. The administrative requirements will be addressed through a compliance schedule (with actions required at different times during a specific time period). Economic penalties might be addressed through direct payment of the penalty (including payment plans if allowed by the agency) or through the execution of a Supplementary Environmental Project (SEP). It is important to note that if a facility decides to prepare a SEP as fulfillment of an assessed penalty, the SEP may only be used to offset only a part of the economic penalty (i.e., the facility will most likely still have to issue a payment and implement the SEP). The purpose behind the SEP is to re-route expenditures, otherwise used to satisfy economic penalties, toward some sort of environmental benefit.

In order to be considered, a SEP must demonstrate “adequate nexus” through adherence to the following guidelines:

  • The SEP must advance various objectives of the environmental statutes that are the basis of the enforcement action
  • The SEP is indeed designed to reduce the likelihood that similar violations will occur in the future
  • The SEP will reduce the overall risk to public health or the environment
  • The SEP will be implemented within an immediate geographic area and will positively affect a highly sensitive population

The geographic component aspects are usually envisioned in terms of watersheds (for water related enforcement actions) and air quality regions (for air related enforcement cases), but can be broader in terms of area coverage for other programmatic areas.

Once an SEP is approved, it must be implemented according to the proposed procedures until its completion. Once an SEP is completed, administrative actions are completed, and penalties are fulfilled, the agency will usually close the enforcement action case.

Conclusion

It seems that more facilities than ever are experiencing agency inspections; from both local inspectors as well as EPA. Whether driven by public interest or by EPA’s National Enforcement Initiative, being prepared for an inspection can save time and trouble later on. While the precise steps outlined in this article may vary from state to state and among different regulatory agencies, it is cleary important to be prepared for an inspection by obtaining assurance that your facility’s compliance status is solid and that your recordkeeping and reporting requirements are being satisfied in accordance with your permits and any applicable requirements.

To learn more about preparing for an inspection, register at trinityconsultants.com/training for Trinity’s complimentary webinar, What to Expect When You’re Inspected on Feb. 27, 2013 or contact your local Trinity office at (800) 229-6655.

1 National Enforcement Initiatives for Fiscal Years 2011 through 2013, http://wwwepa.gov/oecaerth/data/planning/initiatives/initiatives.html