Agency Inspections in the Enforcement Process

Walter D. James III
walter.james@strasburger.com

While the U.S. Environmental Protection Agency (EPA) under the Bush administration has not yet reached the enforcement levels of past administrations, the EPA and the Department of Justice (DOJ) enjoy high rates of return on the enforcement budget. The 1990s saw record levels of civil enforcement, criminal charges and administrative actions. As enforcement budgets for administrative bodies are typically determined in part by enforcement initiatives (read dollars collected in fines), the more activity, the larger the budget. As a result, one can anticipate that the regulators will be stepping up both civil and criminal enforcement activities with greater emphasis being placed on enforcement as a whole. As a commentator once observed, oftentimes the only difference between a civil and a criminal investigation depends on who gets to your door first. Current Developments, BNA 1255, Nov. 2, 1990.

So what do you do when the inspector shows up at your facility? There are steps that can be taken, whether civil or criminal, to protect individual and corporate rights in an agency investigation and there are steps that can be taken to minimize any inconvenience to individuals, corporate operations, and even the agency investigator. It is a fact of life in the regulated industries that inspections will occur. In order to protect individual and corporate rights and minimize any inconveniences, preparation for the inspections is absolutely necessary. Knowledge of the policies and procedures utilized by the administrative agencies in conducting inspections and the agency perspective for the reasons behind audits and inspections is a necessity and will help minimize the risk to the individual and corporate well being. This is done through preparation and training. Knowing your rights will allow better preparation, reaction, and interaction with the inspectors during the inspection process.

The EPA conducts administrative inspections primarily under the federal environmental laws, including the Clean Water Act, the Resource Conservation and Recovery Act (RCRA), the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), and the Toxic Substance Control Act (TSCA). Each statute provides the agency inspector (or authorized independent contractor) the right to enter the facility upon presentation of appropriate credentials. Each statute provides authority for access to records and monitoring equipment. Each statute authorizes the investigator to take samples as desired. Any request for entry must be at reasonable times and must be commenced and completed with reasonable promptness. The reasonable promptness standard is only set out in RCRA, CERCLA and TSCA; however, the EPA policy sets out that all inspections conducted under the Clean Air Act and the Clean Water Act also must be commenced and completed with reasonable promptness.

Inspections are performed for a number of purposes which include routine assessment of statutory and regulatory compliance, review of facility activity and status with respect to a previously filed administrative enforcement action, review of the facility’s compliance with its permits and permit deadlines within the regulatory scheme, and as a response to tips from neighbors of the facility, disgruntled employees at the facility, or even former employees.

Since most, if not all, inspections are unannounced, preparation is paramount. There should be policy and procedure covering corporate protocol as to the inspection. For instance, what type of identification process should be in place, who should be involved in the inspection, should access be denied, should the company require opening and closing conferences, and should the company require search warrants and subpoenas. All of this should be determined well in advance of any inspection.

Upon arrival at the facility, the inspector should not be allowed to just enter and begin the inspection. Upon arrival, proper identification must be presented by the inspector, the proper corporate people responding should be located and notified, and the date, time, name, and title of the inspector written down in a log book. You may request the inspector to sign a log, passbook, or other form prior to entering a facility. Inspector may sign logs or passbooks, as facilities keep record of visitors to the facility and they are useful in the event of a fire or other emergency. Inspectors will not sign waivers, however. See United States Environmental Protection Agency Memorandum, Visitors Release and Hold Harmless Agreements as a Condition to Entry of EPA Employees on Industrial Facilities, (Nov. 8, 1972). After presentation of proper identification and credentials, the inspector should seek the consent to enter the facility to conduct the inspection. The appropriate company official should be designated in advance for purposes of consenting to the inspection of the premises. The consent to inspect may be withdrawn at any time. Any segment of the inspection completed before such withdrawal remains valid. Withdrawal of consent is equivalent to a refused entry. Under the “Open Field” doctrine, consent to inspect the facility is not required for an inspector to observe and report on things in plain view and includes observations made while on private property in areas not closed to the public such as parts of the facility observed while the inspector presents identification. Air Pollution Variance Board v. Western Alfalfa Corp., 416 U.S. 861 (1974).

After presentation of credentials have the inspector give you a statement regarding what he wants to accomplish, whom he wishes to talk with, and what he wants to obtain in regard to records and documents. Agreement should be reached covering such things as a witness interview schedules, documents to be produced, sampling protocols, confidentiality issues, and the return of documents. The agreement should then be reduced to writing and provided to the inspector.

Should you deny access? This issue must be decided in advance of the inspection. You are well within your rights to require a warrant for all inspections. If the refusal to allow entry is solely based on the lack of a warrant, and it is not an emergency situation, the refusal to allow entry will not generally result in civil or criminal penalties. United States Environmental Protection Agency Memorandum, Conduct of Inspections After the Barlow’s Decision, (April 11, 1979) (Barlow’s Memorandum). You should deny access only for valid reasons such as: the inspector does not have the safety equipment required by the facility under OSHA or NIOSH requirements; the inspection is not taking place during working hours. Not many valid reasons exist for not allowing access. You should not deny access if there is a valid search warrant, you may end up in jail. Invalid reasons for denying access include the inspectors’ use of camera or video-recorder, strikes or plant shutdowns, and the inspector’s refusal to sign a waiver restricting liability or obligations of the owner/operator.

If a search warrant is presented, the rules change somewhat. For an excellent synopsis for search protocol, see Aufhuaser, Search – What Do You Do When They Don’t Bother to Knock, ABA SONREEL News at 4 (January/February 1993). There are several “must do’s”: Get a copy of the search warrant. Read it. Ascertain the scope or limits of the warrant as the investigator is bound to the warrant. Make sure the warrant has been signed by a magistrate or judge. Ask for copies of affidavits filed in support of the warrant. (You do not have an absolute right to the affidavits; however, your privacy is being violated, you do not have to be shy.) Call your lawyer.

The inspection process itself requires preparation. While each investigation/inspection is unique, the inspector will probably walk the facility, ask lots of questions, take lots of notes, take formal statements (since the inspection is not a custodial situation, no Fifth Amendment warnings against self-incrimination are required. United States v. Mitchell, 966 F.2d 92 (2d Cir. 1992)), take samples, review documents/permits, take photographs/videotape, prepare inspection checklists; and tape record statements. You should do the same. During the inspection you should: accompany the investigator at all times and insist on being present during employee (witness) interviews (if you are denied the right to be present, schedule separate interviews to find out what was discussed). Civil inspectors do not have to be given free access to talk with employees. Criminal investigators, when serving a search warrant, have no right to interview employees; however, both civil inspectors and criminal investigators frequently push the issue and succeed in talking to employees. Criminal investigators will usually have a specific agenda for witness or employee interviews. You cannot prevent employees from talking to the investigators. Do not forbid employees from talking to investigators or you may be charged under 18 U.S.C. Section 1612 for obstruction of justice; however, employees do not have to talk to investigators. An alternative available is to give the employees the rest of the day off.

Other things you need to do during the inspection are: take notes, if possible, videotape the entire inspection and the investigator (if the inspector takes videotapes or pictures you are entitled to copies, so ask for them). If samples are collected make sure that they are collected properly. You should even take your own samples and always request a sample split and have your own analysis done. You do not have an absolute right to split samples; however, agency policy is to provide a split sample when a request is made. When asking for a split sample, specifically ask for the following: a split sample equal in weight and volume, written receipts describing the sample, a description of the tests to be performed on the sample, and the sample analysis results.

If documents are requested by the inspector, request a written list of documents sought as you can provide documents at a later date after they have been reviewed for privilege and/or confidentiality. If documents are seized pursuant to a search warrant, you are entitled to an inventory.

At the close of the inspection, the investigator should give you receipts for samples, provide receipts for documents seized, discuss preliminary findings (however, he may not), advise of the availability of the sample analysis. Investigator will not: discuss compliance status, discuss legal effects, discuss enforcement consequences, recommend consultants, advise of the availability of the follow-up report.

After the inspection, make a written request for copies of photographs, videotapes, sample analysis, field report filed by investigator; and if necessary, a return of seized documents. Be persistent. Review any field report carefully. If any problems are found, major or even minor ones, seek legal assistance and advice. Finally, take steps to correct the problems identified. If there is no evidence of non-compliance you will probably not hear a thing; however, if you do not hear a thing to not assume no action is being taken. If a search warrant was served, call the prosecutor to find out what you can.

You can take steps to minimixe the potential for liability exposure through pro-active steps. Set up programs for waste reduction and/or recycling. Report non-compliance promptly; however, do not volunteer extraneous information. Train your employees – environmental and safety training must include all personnel with special emphasis on operations personnel. Hire help, including lawyers and consulting firms. Get to know the regulators. Conduct your own audits. Doing nothing can and will get you in trouble and may result in criminal action.

Prepare for inspections. Make sure facility records are in order. Establish procedures for document retention, document destruction and facility access by agency personnel. Make sure your personnel know how to react, including the receptionist, the security guards, the environmental compliance personnel, the facility managers, and the field/operations personnel. Buy a handheld video camera and videotape all inspections. If you can, limit, as best you can, the opportunities for investigators to talk to employees. Institute a confidential suggestion box for environmental compliance and follow-up on each suggestion. Make sure the facility has a firm environmental employee compliance policy; follow it and enforce it. Designate a point person for inspections. That person should be knowledgeable, low key, unflappable, congenial, and should also attempt to establish a continuing relation with the agency personnel.

If you remember that the only difference between a criminal and civil offense depends on who discovers the problem first, you will, with proper preparation, training and follow-up, find yourself on the right side of the law.