18 Regulatory Agency Inspections

“An auditor is not bound to be a detective, or, as was said, to approach his work with suspicion or with a foregone conclusion that something is wrong.”

• National Financial Reporting Association[1]

I started out my career conducting surprise inspections for the Environmental Protection Agency (EPA).  At the time I did not understand how upsetting this was for the facility personnel.  I remember inspecting one site and having to wait for an Occupational Safety and Health Administration (OSHA) inspection to finish before we could start our inspection.  I cannot fathom how disruptive this must have been to that EHS manager.

The regulatory agency inspection will likely be troubling enough without planning and preparation.  That is why some companies prepare guidelines and coach employees on how to handle the inspection.  The following sections will hopefully assist you in this endeavor.

18.1 What Causes EHS Regulatory Inspections

EHS regulatory agencies and EHS regulatory inspectors (hereinafter referred to simply as an inspector) have numerous reasons for conducting inspections as discussed in the following sections.

18.1.1 Occupational Safety and Health Administration (OSHA)

Occupational Safety and Health Administration (OSHA) prioritizes their inspections using the following drivers:

1. Imminent Danger
2. Fatality/Catastrophe
3. Complaints/Referrals
4. Programmed Inspections[2]

Additionally, the Occupational Safety and Health Administration (OSHA) has National Emphasis Programs (NEP) that are temporary programs that focus Occupational Safety and Health Administration’s (OSHA) resources on hazards and high-hazard industries throughout the United States.[3].  The Occupational Safety and Health Administration (OSHA) also has Local Emphasis Programs (LEP) that are like National Emphasis Programs (NEP), but they focus on hazards specific to certain regions[4]. The emphasis programs change from year to year and can be found on this website: http://www.osha.gov/dep/neps/nep-programs.html.

18.1.2 Environmental Protection Agency (EPA)

18.1.2.1 Inspection Priorities

The Environmental Protection Agency (EPA) inspection and enforcement priorities also change from year to year, and they have a specific enforcement emphasis:

“EPA focuses its enforcement and compliance assurance resources on the most serious environmental violations by developing and implementing national program priorities, called National Compliance Initiatives (NCIs).”[5]

You can find the Environmental Protection Agency’s (EPA) National Compliance Initiatives (NCI) here: National Compliance Initiatives | US Environmental Protection Agency (EPA)

18.1.2.2 Complaints

Like the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA) and state environmental regulatory agencies also respond to complaints.  At one company I worked for, if we had a complaint, we had a 75% chance of getting an inspection.  This number might overestimate the likelihood since we do not always know about all complaints, but I found it alarmingly high.

18.1.2.3 Spill Reports

Reporting a spill or release may also result in an inspection even after the spill has been cleaned up.  When I conducted Spill Prevention Control and Countermeasures (SPCC) inspections for the Environmental Protection Agency (EPA), they would use spills to help compile some of their inspection list.  This sometimes led to some confusion like when I would show up to a spill site that was a truck accident on a highway and the reporting/transporting company was not located anywhere near the spill address.

When I was conducting process safety audits for the Environmental Protection Agency (EPA), we identified a petroleum refinery that was responsible for many of the United States sulfur dioxide releases.  During the audit, we determined that they had a sophisticated and robust reporting system, and the high number of reports were not due to poor operation, but instead because they truly understood what was happening at their refinery and had a detailed understanding of the reporting requirements.   For the next audit, we identified a refinery that had not reported any sulfur dioxide releases.

18.1.2.4   Failure to Report

The sulfur dioxide release issue above (i.e., the refinery that had never reported a release) is an example of prioritizing inspections based on potential missed reports.  Missing a reporting deadline or failing to submit required paperwork could also get a company on an inspection list.  Other than the example above, I have not seen or heard that EHS regulatory agencies use this to identify inspections, but I have seen this from other government agencies.

18.2 Issues to Discuss Before You Ever Get Inspected

Evaluating your company’s general stance towards inspectors may take some time and input from multiple personnel in your company.  Therefore, I would conduct this evaluation upfront and not wait until an inspector arrives at one of your facilities.  Issues to discuss include:

• Will you refuse a compliance inspection and/or require a warrant?
• Will you refuse a criminal investigation and/or require a warrant?
• What parts of your operation are considered confidential?
• Will you attempt to correct items during the inspection or wait until the regulatory agency forces you?
• Will you shut down operations during the inspection?
• Will you request inspectors come back at a more convenient time (e.g., key personnel are not available)?

A company’s stance may change due to an incident (e.g., fatality, major spill) or circumstance (e.g., Covid-19 pandemic) and the timing. 

Regulatory agency inspections are not limited to environmental health and safety regulators.  Numerous other agencies may conduct inspections depending upon your industry (e.g., Food and Drug Administration, Internal Revenue Service, etc.).  Having this discussion and guidance for inspections could benefit outside of EHS.

18.2.1 Refusing Inspections and/or Requiring Warrants

You have the right to refuse an inspection and request a warrant.  Some companies establish an inspection policy that identifies whether they will require warrants or allow warrantless inspections.  Because of the potential legal implications, I would discuss this issue and establish a stance, even if undocumented.  You should consider your stance to compliance inspections and criminal investigations.

Potential advantages of requiring a warrant:

• The EHS regulatory agency may decide not to conduct an inspection
• Allows time to prepare for the inspection such as making personnel available, managing work schedules and potentially correcting deficiencies, if any
• Limits the inspection to areas and programs identified in the warrant

Potential disadvantages of requiring a warrant:

• Presents an uncooperative tone
• Perturbs the inspector because it requires them to change their original schedule and they may have to expend additional time and resources obtaining a warrant
• Gives the impression that the company is hiding something
• The inspector may investigate further than normal to find what may have been corrected before they were able to conduct the inspection
• If the EHS regulatory agency finds something that was corrected before they were able to conduct the inspection, they may be more likely to cite you for this violation
• The lack of cooperation my result in larger fine (i.e., the Environmental Protection Agency (EPA) takes cooperation into account when adjusting fines)[6]

Another option is to ask if the inspector can come back at a different time if you have good reason:

• The company is extremely busy
• Appropriate personnel are not available or your short-staffed
• You are not at the site

You may have more success if you can provide a specific reason for delaying the inspection and time for reinspection that is not far out from the distant future.  Despite what some may think, inspectors are humans too and may be able to delay the inspection.  Regulatory inspection manuals even address diplomacy and discussion in lieu of warrants[7].  However, sometimes this is not an option for the inspector especially if the inspected facility is not located near their office since they may have a limited travel budget.  I once asked for a federal regulatory inspection agency to hold off on the inspection until a management representative could drive from a nearby site and the representatives refused to wait the 30 minutes, so you may not always receive cooperation.

18.2.2 Confidential Business Information

Inspectors, including designated contractors who are not EHS regulatory agency personnel, have the right to view, observe and ask questions about confidential business information[8].  Therefore, you cannot limit the inspection to non-confidential areas and information.  However, you have the right to prevent confidential business information from public disclosure[9].  To protect your company, you need to identify confidential business information to the inspector.  Because of the additional constraints associated with confidential business information, inspectors may limit documentation, including photos, of confidential business information.  If the inspector thinks you are using the cloak of confidentiality to hide a violation, they may not be deterred.

18.2.2.1 Definition

The EHS regulations define confidential business information, and it is often more limited than most companies would like.  The Environmental Protection Agency (EPA) defines reasons for holding business information as confidential in 40 Code of Federal Regulations (CFR) Part 2, Subpart B. 

(e) Reasons of business confidentiality include the concept of trade secrecy and other related legal concepts which give (or may give) a business the right to preserve the confidentiality of business information and to limit its use or disclosure by others in order that the business may obtain or retain business advantages it derives from its rights in the information.

Occupational Safety and Health Administration (OSHA) uses the term confidential commercial information and refers to the Freedom of Information Act exemption 4[10] which simply states:

“Trade secrets and commercial or financial information obtained from a person and privileged or confidential.”[11]

Using these definitions, I would identify those areas of your business that meet confidential business information definition and document this.  Providing this documentation up-front would typically be viewed with more validity and is not likely to be considered a disguise for violations.

1.2.2.2   Penalties for revealing confidential business information

An inspector who reveals your confidential business information can face a monetary penalty and prison time.  For example, the Clean Water Act (CWA) states:

“Any authorized representative of the Administrator (including an authorized contractor acting as a representative of the Administrator) who knowingly or willfully publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by law any information which is required to be considered confidential under this subsection shall be fined not more than $1,000 or imprisoned not more than 1 year, or both.”[12]

18.2.3 Correcting Items During and Inspection

During the inspection, you may have the opportunity to correct a potential violation.  In my experience, these are typically potentially minor violations (i.e., if you can correct it that quickly, it is usually not associated with a large expense or major issue).  In the unlikely event that an easily correctable potential violation could cause serious harm to workers or the environment, I would correct it immediately: The potential negative consequences of correcting the potential violation (i.e., see below) would be greatly outweighed if someone got injured or you damaged the environment.

Due to the potentially short inspection timeframe, you have limited opportunity to correct something while the inspector is present.  Therefore, you should decide up-front if your company will correct items during an inspection.

Potential advantages of correcting potential violations during an inspection include:

• You might avoid a citation
• You show a good faith effort, which can impact potential fines (i.e., this is a factor in Environmental Protection Agency (EPA) fines)
• You avoid having to provide follow-up information such as abatement verification

Potential disadvantages of correcting potential violations during an inspection include:

• Correcting the violation may be construed as an admittance of guilt
• It may turn out to not be a violation and you could have wasted some time and effort and potentially interfered with your operations

Even if you correct a potential violation, you do not necessarily need to verbally, or in written form, admit the issue is a violation.

18.3 EHS Regulatory Agency Inspection Rights

I am not aware of an EHS regulatory agency that must provide advance notice of an inspection.  In fact, the Federal Occupational Safety and Health Administration (OSHA) regulations prohibit Federal Occupational Safety and Health Administration (OSHA) regulatory agency inspectors from providing advance notice except under certain circumstances[13].  Some Environmental Protection Agency (EPA) acts require written notice be provided, but this can be given at the beginning of the inspection and does not require advance notice[14].  Therefore, the inspection may be a surprise, or they might call and schedule the inspection.  In my experience, most of the inspections are unscheduled for the obvious reason that the inspector can see the facility “as is”.  When I conducted process safety audits for the Environmental Protection Agency (EPA), we would schedule the audit and I could tell that they had recently cleaned up portions of the site (e.g., I could push fresh gravel aside and see signs of spills underneath, the roadways had bristles from recent street-sweeping).

EHS Regulatory Agency’s generally have the right to do the following:

• Gain access to inspect your facility during reasonable timeframes (i.e., your normal work hours)
• View facility records
• Collect physical evidence of violations
• Interview employees[15]

Occupational Safety and Health Administration (OSHA) grants Compliance Safety and Health Officers of the Department of Labor the right to conduct inspections[16]. The Environmental Protection Agency’s (EPA) right to conduct inspections is found in individual statutes (i.e., Clean Air Act Section 114 Inspections, Monitoring, and Entry, Resource Conservation and Recovery Act)[17].

I would work with your legal counsel to determine if the EHS Regulatory Agency does not have these rights.  As part of a regulatory settlement, I did negotiate that the regulatory agency ceases conducting inspections during the settlement agreement (i.e., except in the case of a complaint or reported injury).  I was able to successfully use this to kick an inspector off or one of our sites.

18.4 Inspector Credentials

When I was conducting regulatory inspections as a contractor for the Environmental Protection Agency, I had a facility manager inform me, in an intimidating manner (i.e., leaning over me with an angry look), that he was aware of people pretending to be inspectors.  He questioned whether I was a valid inspector.  Although it may have been an unsubstantiated rumor, it could have been imposters were identifying problems and either trying to sell something or solicit payment or bribes.  A valid inspector will not solicit payment during the inspection, and they should not be selling anything.  If this occurs, I would contact the EHS regulatory agency using a phone number and contact that you gather independently from the purported inspector.

The Inspector should present valid identification upon arrival (e.g., badge, worker identification card, documentation on the EHS regulatory agency letter noting their authority).  For example, the Clean Air Act section 114 specifically says:

“…the Administrator or his authorized representative, upon presentation of his credentials— (A) shall have a right of entry to, upon or through any premises…”[18]

The Occupational Safety and Health Administration (OSHA) regulations state:

“At the beginning of an inspection, Compliance Safety and Health Officers shall present their credentials to the owner, operator, or agent in charge at the establishment…”[19]

However, not all acts contain this language (e.g., the Resource Conservation and Recovery Act).

If the inspector does not have valid identification, you have the right to refuse the inspection: politely request that they return with proper documentation of their authority.  When I worked as a consultant to the Environmental Protection Agency (EPA), I carried a letter with me from each Environmental Protection Agency (EPA) Region that noted my authority to conduct inspections on their behalf as well as an Environmental Protection Agency (EPA) contractor identification badge. 

18.5 Opening Conference

Request an opening conference with the inspector prior to which you and your employees should not answer questions or allow the inspector to tour the facility.  Decide who you want to listen to the opening conference (e.g., legal counsel, management representatives, etc.).  If an EHS department representative is not at the site, you can set up a conference call so you can listen.  Key items to establish during the opening conference with the inspector should include:

• Reason for the inspection
• Focus areas of the inspection
• Scope and route of the walk-around inspection
• Estimated timeframe for inspection
• Designated trade-secret areas or processes
• Procedure for conducting employee interviews and producing documents
• Schedule of interviews
• Documents for review
• Anticipated photographs and samples to be taken
• Procedure for requesting copies of any employee complaints
• Facility’s rules and procedures we expect the inspector to follow

18.6 Walk-Around Inspection

Prior to a walk-around inspection or site tour:

• Provide requisite safety and health training for the inspectors
• If you do not have to operate during the walk around inspection, stop operations and have the employees take a break.  This limits potential unsafe acts or other activities that might be construed as violations.
• Ensure that the inspectors wear necessary personal protective equipment and follow applicable safety and health policies.  Inspectors are subject to your visitor policies and are not exempt from your requirements.  However, it is important to evaluate the potential hazards that the EHS regulatory agency inspectors might be exposed to and apply the rules accordingly.

Ideally, you should have several company personnel accompany the inspector during the walk around inspection.  This allows one person to take notes and another to answer questions or address issues.  During the walk around inspection, you should do the following:

• Always remain with the inspector
• Limit the walk around inspection to the areas discussed during the opening conference and avoid walking through areas of the facility that are not required (i.e., go around the non-required operational areas).  If the purpose of the inspection is to view something (e.g., equipment) that is portable, bring it to the inspector and let them view it in a conference room or the company parking lot.
• Do not volunteer information, make admissions, or agree with the inspector about an assumed violation
• Take notes about everything the inspector discusses
• If the inspector points out an issue that you can correct while they are on-site, attempt to have it corrected, but do not admit that something is wrong or out-of-compliance.

Keeping the EHS regulatory agency inspectors engaged during the walk-around inspection is another strategy for limiting potential violations.  Engagement serves several purposes:

• It may endear the inspector to you and make it more difficult to cite your company
• By talking to the inspector, it makes it more difficult for the inspector to think through the regulations and identify potential violations
• You can ask questions and use the information to improve your compliance and at the same time, make the inspector feel important, which may make them like you more[20].

I like to engage the inspector on professional and even personal questions, on an appropriate level, such as:

• Number of inspections they are conducting on this trip,
• Typical issues they see during inspections
• How long they have worked for the EHS regulatory agency
• Where they are from
• What are their hobbies, activities, favorite sports teams, etc.

Some of this may seem odd or even unprofessional, but if that inspector will routinely conduct inspections, I want to have a good rapport.

18.7 Photographs, Samples and Monitoring

18.7.1 Photograph

I have not run across a situation where a company prohibited an inspector from taking photographs.  The Occupational Safety and Health Administration (OSHA) regulations specifically mention photographs if the photographs relate to the inspection[21].  I have assumed the Environmental Protection Agency (EPA) has the legal right to take photographs (i.e., I have taken them on their behalf), but have not identified specific language mentioning photographs.  General rules to follow if the Inspector takes photographs include:

• Identify areas or objects that may be confidential business information prior to the walk-around inspection and warn the inspector a head of time
• Request the inspector tell you when they are taking photos
• If you do not have a camera available, request copies of the photos from the inspector
• If you have a camera available, take photographs as similar as possible to those taken by the inspector and take photographs of the subject from alternative views
• If you are not sure why the inspector is taking a picture, ask

It is important to note that inspectors can take pictures of your facility from public property without asking permission or informing you.

18.7.2 Samples

General rules to follow if the inspector takes samples include:

• If you do not have a safe or reasonable location and method to gather the sample, ask them to use another method or location
• Request a split sample, which is a composited sample that the inspector takes half of their sample and provides it to you so we can have it analyzed independently.  If the inspector will not provide a split sample, take a sample attempting to duplicate the procedures followed by the EHS regulatory agency inspector.
• Identify and document the sampling procedure and technical instruments or equipment the inspector is using.
• Determine when and by what procedures the equipment was last calibrated
• Record the number of samples taken and the operations and locations sampled
• Ask for a copy of the chain-of-custody and/or calibration documentation, if applicable.  You should expect the inspectors to use the same procedures and quality assurance as industry.  If they do not, you can use this to question the validity of any data.

18.8 Interviews

If the inspector would like to interview employees, you should set up a room for the employee interviews and try not to conduct the interviews in operational areas of the facility.  Operational areas are not conducive to interviewing because of potential noise, dust, etc. and I am always concerned that the inspector will see something, or something will happen while they are in the operation areas.  However, you may not have a choice since the inspector may want someone to demonstrate the operation.

EHS regulatory agency inspectors typically have the following interview authorities:

• Inspectors typically have the right to interview employees privately except where a union represents an employee in which case a union representative may be present[22].
• If you cannot reasonably remove an employee from their work, you are not required to do so.  You can make accommodations for the employee interview at a mutually agreeable time.

Employees have the following interview rights:

• Employees have a right to refuse to talk to the inspector[23], but I would request the employee inform the inspector that they do not want to be interviewed (i.e., it needs to be clear that you did not influence their decision).  EHS regulatory agency inspectors can get a subpoena to interview an employee.
• Employees have a right to have a union representative present if they choose to talk to the inspector[24].  Employees can also request another employee attend an interview, but the inspector can refuse to have the other employee present[25].
• Employees have the right to end the interview at any time[26].
• Employees have a right not to be tape recorded without their consent[27].
• Employees have a right to refuse to sign paperwork the inspector asks them to sign[28].  You may want your legal counsel to review and approve the paperwork signature.

Companies have a right to have others present if the Occupational Safety and Health Administration (OSHA) wants to interview a supervisor (anyone who directs other employees) because Occupational Safety and Health Administration (OSHA) treats supervisor knowledge as imputed to employer[29].

18.9 Records review and request

My EHS colleagues and I like to use the mantra:

“If it is not written down, it did not happen.”

In other words, you need to prove that you met an EHS regulatory requirement typically through written documentation.  That is why a record review is a common EHS inspection task.

The inspector typically has the right to review certain required records.  General rules to follow regarding records reviews and requests include:

• Do not let the inspector look through your filing cabinets and/or file storage area or computers: Instead, bring the specific records to the EHS regulatory agency inspector (e.g., in the conference room).
• Keep a log of records reviewed by the EHS regulatory agency inspector
• If the Inspector requests copies of records, ask for the request in writing and inform them that we will make copies and send them to the inspector
• You are not typically required to provide copies of your notes and photographs taken during the inspection

I think it is a good idea to designate who will be compiling and sending the records to the inspector.  I have made it a policy that the EHS department will submit all records requests specifically because I want to look through everything, we are submitting so I know if there might be issues.  Whenever you submit a required item to a regulatory agency (i.e., inspection record request, Tier 2 form, air emissions inventory, 300 log, etc.) I would send it in a manner that you can confirm receipt such as certified U.S. mail, or a private delivery company that provides receipt documentation.  For e-mails, your system may have the option of delivery and read receipts.

The record reviews typically vary depending upon the EHS regulatory agency inspector, the reason for the inspection, and the program inspected.  In my experience, Occupational Safety and Health Administration (OSHA) inspectors typically request the previous three years of Log of Work-Related Injuries and Illnesses (300 log) and Summary of Work-Related Injuries and Illnesses (300A logs).  The reasons for doing this may include:

• They can investigate the cause of the injury and determine if it was due to regulatory deficiencies
• They can interview employees and determine if an injury was not reported

18.10 Closing conference

You can request a closing conference where the inspector hopefully provides you with their findings and discusses the next steps.  I am not aware of a requirement to have a closing conference, but typically the inspector is willing to participate.  The advantage of the closing conference is to clarify misconceptions (i.e., both the EHS regulatory agency inspectors and yours) and prepare you for the number and type of the potential violations.

In my experience, the inspector may not know all potential violations that they might issue, but they will know some.  Sometimes the inspector needs to evaluate the potential violations further. If they are uncertain, they may not be comfortable discussing the potential violation.  Also, they may not want to provide details because it might single out an employee that, whether intentionally or unintentionally, divulged the violation.

During the closing conference, you should:

• Take notes of everything the inspector discusses during this time. If you do not understand what the inspector is talking about, ask them to explain in more detail.
• Primarily listen to the inspector’s information, and do not argue or debate the initial proposed findings.  However, if you can provide clarification on an issue, do so in a non-argumentative manner.
• Request a timeline for the next steps (e.g., when you need to provide requested information, when to expect additional communication, etc.).
• Review the list of requested information, if any.
• Provide the inspector with the name, title, full address, and phone and fax numbers of the person to whom correspondence should be directed.

As mentioned above, if you can tactfully provide clarification to a potential violation, you should.  Of course, you need to strike a balance: If you argue with the inspector you risk angering them and potentially worsening the results of the inspection: Although an inspector should be unbiased, they are like everybody else.  However, I have found the optimum time to address a violation is before the inspector issues a formal notice of violation or citation.  Once the inspector formally issues the citation, you and the EHS regulatory agency will have to exert more effort to get the violation rescinded, redacted, or deleted.

I conducted an inspection at a refinery and noted a potential deficiency in the training curriculum: the available documentation did not address one of the required topics.  I informed the refinery’s EHS contact of this deficiency during the closing conference.  During our conversations, the refinery’s EHS contact had cleverly asked me where I was staying while I was in town (i.e., he had established a good rapport).  When I returned to my hotel, the refinery’s EHS contact had faxed me the narrative from the training video that noted the required topic.  I deleted the potential deficiency.  If I had cited the refinery, they should have been able to avoid any penalty, but I feel it is easier to address this before it is identified in a formal document.

18.11  After the Inspection

I like to escort the inspector off the property to ensure that they do not talk to other employees, take additional pictures, or visit other areas of the facility.  You may find it informative to see what the inspector does afterwards such as:

• Observing your operations from a public location
• Taking photographs of your operations from a public location
• Visiting (inspecting) a neighboring facility.

18.12 How Long Till I Know If We Will Get a Citation

18.12.1 Occupational Safety and Health Administration (OSHA)

The Occupational Safety and Health Administration (OSHA) cannot issue a citation if the alleged violation occurred more than six months ago[30].  If six months pass since the Occupational Safety and Health Administration (OSHA) inspection, you should not receive a citation.

18.12.2 Environmental Protection Agency (EPA)

The Environmental Protection Agency’s (EPA) limitation of citation issuance timeframes is more complicated than Occupational Safety and Health Administration’s (OSHA) and you should seek legal counsel if you are using this a defense against citations.  The United States Code Title 28 Judiciary and Judicial Procedure provides a 5-year statute of limitations:

“Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon.”[31]

If the violations represent a continuing event, rather than a single incident, the Environmental Protection Agency (EPA) can extend the five-year statute of limitations back to the start of the event.  

18.13 Estimating the Penalty

You and others at your company will likely want to know the outcome of the inspections (i.e., how much it will cost).  The following sections identify methods for estimating penalties.

18.13.1 Civil Versus Criminal

If your case involves civil citations, sections 18.13.2 and 18.13.3 may help you estimate the potential penalties.  If your case involves potential criminal citations, you should discuss potential citations with your legal counsel since these cases seem to have a broader range of outcomes.

18.13.2 Regulatory Penalties

If you know the potential citations that you will receive, you can estimate the results by looking up maximum allowed penalties under the applicable regulatory programs.  This provides a worst-case estimate.  For Environmental Protection Agency (EPA) citations, the maximum amount may be limited by how they handle the citation: Using administrative [40 Code of Federal Regulations (CFR) 22] or judicial proceedings [40 Code of Federal Regulations (CFR) 23].  Administrative penalties are capped, which limits the maximum penalty for a given Notice of Violations, but judicial penalties are only limited by the individual penalty amounts.  Penalties for individual violations vary by program and they vary over time to account for inflation.  40 Code of Federal Regulations (CFR) 19.4, Table 1 of Section 19.4—Civil Monetary Penalty Inflation Adjustments identifies the specific limits for each program.  Additional information on the Environmental Protection Agency’s (EPA) options are available on the Environmental Protection Agency’s (EPA) Compliance and Enforcement webpage.

Occupational Safety and Health Administration’s (OSHA) penalty amounts are in the current Occupational Safety and Health Act, Section 17, Penalties. 

18.13.3 Example Cases

Another method of estimating the potential outcome of an inspection is to look for similar cases.  Example cases may provide a more accurate estimate since, in my experience, you will not typically settle on the maximum penalty amounts unless your violations are related to a severe issue such as a fatality or visible environmental damage or impact.  It is unlikely that you will be able to find an exact case, but you can often find results of other similar cases on EHS regulatory agency websites.  Occupational Safety and Health Administration’s (OSHA) website (http://www.osha.gov/oshstats/index.html) allows you to search for citations by Standard Industrial Classification (SIC) code, company name and regulation.  You can use these search features to identify similar citations and find the type, classification and penalty amounts.  For settled cases, you can also identify the final classification and penalty amounts.

The Environmental Protection Agency’s (EPA) Enforcement and Compliance History Online (http://www.epa-echo.gov/echo/index.html) also allows you to search for citations by industry type, industry name, location, etc.  The Environmental Protection Agency (EPA) Regions also have an Enforcement and Compliance website that provides specific cases you can search for and view.

Unfortunately, state regulatory agencies vary on what they have available publicly.

18.14 What Do You Do When You Receive the Citation

18.14.1 Document the Date of Receipt

When the citation, notice of violation, notice of deficiency, notice of proposed penalty (hereinafter referred to as a citation) arrives, document the date of arrival since you will have deadlines predicated on this date.  Regulatory agency citation or notice of violations typically come via certified mail.  Ideally the letter contains the certified mail tracking number, but I like to keep the envelope just in case. 

Sometimes the EHS Regulatory Agency mails it to the inspected site and sometimes it comes to the corporate office.  Since time may be a factor, it is important to request during the exit interview that they send correspondence to the appropriate location.  If you do not know when the letter arrived (e.g., you’re a large company that has a mail room, the letter went to a different site, etc.) you can look up the certified mail arrival date on the United States Postal Service website.

18.14.2 Scan the Citation

I like to make a high-quality scan of the envelope and the original citation in Adobe® Acrobat® and then use the optical character recognition (OCR Text Recognition) feature.  This allows you to copy and paste the language in the citation.  This may seem trivial, but in the various correspondences, internal and external, I often must re-write the citations.  Cutting and pasting the language saves me valuable time and effort.

For Occupational Safety and Health Administration (OSHA) citations, if you are not located at the same site as the citations, you can e-mail the scanned copy to a facility representative for posting (Section 14.14.3).

18.14.3 Post the Occupational Safety and Health Administration (OSHA) Citations

The Occupational Safety and Health Administration (OSHA) requires you to immediately post an unedited copy of the citations at or near the location of the citations[32].  A bulletin board in an employee break room is a common posting location.

• You do not need to post de minimis violations
• You need to keep the citations posted for 3 days or until you abate the citation, whichever is less
• If the posted citations are defaced, you should replace them with a new copy and extend the posting timeframe applicably.
• You must post the citations even if you are contesting, but you can also post information indicating that you are contesting the citations or have abated the citation[33]. 

Some companies will take dated photos of the posting for verification that it was posted as required.

18.14.4 Potential Mitigation

Determining how you will mitigate, correct, or abate the compliance issue is key to closing out the inspection.  Even if you do not agree with the citation, you should be discussing how you would address the issue before you meet with regulators.  If you cannot identify a suitable mitigation measure, you may want to ask the regulatory agency what others have done to address this issue during potential upcoming meetings.

18.15 EHS Regulatory Agency Options

The Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA) have significantly different manners and methods for issuing citations discussed below.

18.15.1 Occupational Safety and Health Administration (OSHA) Options

Occupational Safety and Health Administration (OSHA) has three options for addressing citations:

• Hold an informal conference
• Settle the citations
• Contest the citations

18.15.1.1 Informal Conferences

The Occupational Safety and Health Administration (OSHA) allows cited companies to have a discussion with the Occupational Safety and Health Administration (OSHA) Assistant Regional Director.  Some of the informal conference details include:

• You do not need to have legal representation
• You do not have to respond to allegations
• You can conduct the informal conference in person or over the phone
• The Occupational Safety and Health Administration (OSHA) inspector may be present
• The Occupational Safety and Health Administration (OSHA) Assistant Regional Director may request that affected employees are present[34]

Although the Occupational Safety and Health Administration (OSHA) does not list a time limit for having an informal conference, you will have an advantage if you use the informal conference to gather information prior to the 15 business-day time limit to contest the citations.

The informal conferences are a valuable tool for learning more about the citations.  Sometimes you do not have enough details to determine a course of action and the informal conference will assist in your understanding.  You do not have to spend money traveling to the Occupational Safety and Health Administration (OSHA) office (i.e., you can have the meeting over the phone) or on legal counsel.  The potential downside is if the Occupational Safety and Health Administration (OSHA) Assistant Regional Director requests to have an affected employee present, which could be awkward.  I have never had Occupational Safety and Health Administration (OSHA) make this request, but they have the right.

A few tips for the informal conference:

• Instead of taking an aggressive or argumentative stance, approach your questions from the stance that you want a better understanding of the citation so you can better protect employees and comply with applicable regulations.
• At the end of the informal conference, if you decide not to settle, simply state that you need to discuss the issue further.

18.15.1.2 Penalty types

Occupational Safety and Health Administration (OSHA) has four penalty types with corresponding penalty amounts:

• Willful: A willful violation is a violation where the company either knowingly failed to comply with a legal requirement (purposeful disregard) or acted with plain indifference to employee safety.
• Serious: A serious violation is when a workplace hazard could cause an accident or illness that would most likely result in death or serious physical harm unless the employer did not know or could not have known of the violation.
• Repeated: A repeated violation occurs when a company has been cited previously for the same or a substantially similar condition and, for a serious violation, within the past five years
• Other-Than-Serious: A violation that has a direct relationship to job safety and health, but is not serious in nature, is classified as ‘other-than-serious.’[35]

18.15.1.3 Contesting Citations

If you want the opportunity to fight the citation, you must contest within 15 business days[36].

18.15.2 Environmental Protection Agency (EPA) Options

The Environmental Protection Agency (EPA) and state environmental regulatory agencies have a variety of methods for addressing and settling penalties.  The enforcement mechanisms (e.g., civil versus criminal), penalty structure, enforcement results, etc. may be different from case to case.  Rather than try to explain all of the potential options, I will refer you to the Environmental Protection Agency’s (EPA) Basics of Enforcement page, which discusses their civil and criminal enforcement options and contains links to their enforcement data.

One enforcement program worth discussing is the Environmental Protection Agency’s (EPA) expedited settlement agreements, because this is a likely option you may encounter.  The Environmental Protection Agency (EPA) uses the expedited settlement agreement under some programs (e.g., Spill Prevention Control and Countermeasures (SPCC) and Chemical Accident Prevention Program (CAPP)) for:

“…easily correctible violations that do not cause significant health or environmental harm, and provides a discounted, non-negotiable settlement offer in lieu of a more formal, traditional administrative enforcement process[37].”

This program requires you to admit fault, but quickly settles a citation for low cost (e.g., you may not need to involve an attorney) and effort.

I also want to mention one key difference between Occupational Safety and Health Administration (OSHA) and Environmental Protection Agency (EPA) citations is the Environmental Protection Agency (EPA) penalties may be calculated per day of violation where Occupational Safety and Health Administration (OSHA) simply cites you for any single instance of a citation.  A company I worked for was cited every day, back to when we purchased the facility, since we could not find records that showed that we had conducted an inspection.  This calculation caused the penalty amount to grow substantially and illustrates the importance of recordkeeping: If we could have identified a few records, the penalty would have been substantially lower.

18.16 Settling

“Thus we may know that there are five essentials for victory: 1 He will win who knows when to fight and when not to fight.”

• Sun Tzu, The Art of War[38]

18.16.1 Meetings

18.16.1.1  Location

I prefer to meet in-person where feasible because I feel it is harder to deliver bad news face-to-face.  For small issues and where travel might be extensive, in-person meetings may not be practical or worth it.  EHS regulatory agencies typically have rooms where you can meet to discuss issues.  It is not typical to meet at a company’s office or facility, but it could be an option.  EHS regulatory agencies may have limited budgets, so if travel expenses are involved, this might not be an option.  I generally would not want to have the regulatory agency personnel visit my site for fear that they might seem something else they feel is not in compliance, but I could see where that might be an option: sometimes it is difficult to demonstrate or convey a concept using pictures or video and an on-site visit may be the best option.

18.16.1.2 Attendees

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

– Sun Tzu, The Art of War[39]

To this day I consider one of my biggest professional mistakes was not requesting that a vice-president of an operating group attend a meeting with an environmental regulatory agency over alleged violations. The environmental regulatory agency attendees were the most biased individuals I had encountered to this day.  When other operating personnel had attended similar meetings, with less-biased regulatory personnel, they recognized that the EHS staff personnel job is to help protect them and the company from EHS violations.  This can help counter the oft-perceived thought that EHS staff work to hinder production.

Having high-level operating personnel in attendance not only serves to help their perspective and understanding of EHS, but it also shows the company’s support for EHS requirements.  Attendance can be a good learning experience for other operating and company personnel.

It is a common convention to discuss if attorneys from your company or the regulatory agency will be present.  If the other party plans to have legal counsel, it is typical for you to bring counsel.  If they are not planning on have counsel present and you are, you should let them know.  I have had one regulatory agency that did not follow this convention (i.e., Obviously I am still bitter about it to this day), but others have been professional and respected this convention.  I have even been on a conference call where we had my legal counsel drop off because the other side did not have their legal counsel on the call. 

Where feasible, I like to have other EHS staff members attend for a couple of reasons: they get to experience meetings with regulatory agency personnel and it shows that we have a large EHS department, which helps demonstrates our commitment to EHS compliance.

Depending upon the situation, you may also want to have your EHS consultants attend that meeting especially where they are the subject matter experts and you do not have in-house personnel who are.

Of course, another option is to send minimal attendees with the intent of showing that this is not a big issue or concern to your company.  I have not been involved in many significant/long-term negotiations where that would be a strategy, so I cannot speak to its effectiveness.

If not included in the personnel above, you may want someone in your company with authority to agree on the settlement (e.g., the potential penalty amount and the proposed language in the agreement).  You may not come to a final agreement during the meeting, since this sometimes requires some back-and-forth on the language, but you may want to reach an agreement in principle.

18.16.1.3 Attire

As an engineer, I am probably the last person that should be providing advice on dressing for a meeting.  I also doubt the attendee’s attire ever had a positive or negative influence on the outcome of any negotiations I have attended. You can probably find several philosophies on this: dress down to show that this is not a big or important issue or that you are a small company that cannot afford to pay a fine; dress up to show it is important and/or that you are a big, well-funded company that can level its influence.  A third alternative, that has been my rule-of-thumb, has been to dress at least as well as you expect the EHS regulatory agency personnel to dress so you seem relatable and not disrespectful.

18.16.1.4 What to Bring

It may seem obvious, but you should have a copy of the documentation provided by the EHS regulatory agency (e.g., Notice of violation, inspection documentation, etc.).  Additionally, bring any items that you might want to show as part of the discussions including:

• Abatement verification
• Documents and records
• Maps
• Photos

I have prepared presentations for some meetings where we have a lot of information to show or discuss.  Inquire about the multi-media capabilities (e.g., computer, projector, web-access) prior to the meeting so you bring the correct format.  Where time allows, I would include discussions of items such as abatement conducted, or violations corrected: it provides a positive tone to the meeting and shows your willingness to cooperate.

18.16.1.5 Goals of Meeting

Establishing your goals is an important part of preparing for the meeting.  Included in developing these goals should be a discussion on what you are willing to pay, what alleged violations you can accept and whether this might just be one in a series of meetings because you are unlikely to reach an agreement in a single meeting.  Also, you may use this meeting for information gathering (e.g., so you can better understand the context of the alleged violations).  If you are considering proposing a supplement project, you may want one of your goals to be a discussion to assess their openness to supplemental projects (Section 18.16.2).   

Although you will have your agenda, strategically, you should think about what the regulatory agency wants to get out of the meeting.  When you meet with regulatory agencies, emphasize corrections of issues and prevention of future issues, which is often one of their goals.

18.16.2 Supplemental Projects

I inherited a series of environmental fines from a company that had divested an asset to us.  These environmental fines were precipitated by the outdoor storage of material that had rotted and then started giving off odors causing neighbor complaints.  The obvious solution was to not store this material outside, so we proposed the construction of a storage barn and off-set over 98% of the monetary penalty and the regulatory agency knew that they would no longer receive neighbor complaints (i.e., a win-win solution).

As illustrated above, some EHS regulatory agencies will allow you to off-set some of the penalty with a supplemental project.  In the environmental realm these are referred to as supplemental environmental projects (SEP).  I have not seen statistics, but most SEP that I have read about involve community improvements and not typically site improvements.  Supplemental projects do not have to be limited to off-setting environmental violations, but you should check with the EHS regulatory agency before expending resources identifying options.  For example, a recent policy change by the Department of Justice now prohibits payment to third parties as part of settlement negotiations, so federal SEP (e.g., with the Environmental Protection Agency (EPA)) may not be allowed unless this policy changes[40].  I have heard that the Environmental Protection Agency (EPA) under a new administration is looking to allow these again.

Each agency likely has their own specific criteria for supplemental projects, so you should familiarize yourself.  Even though you may not currently be able to have an Environmental Protection Agency (EPA) SEP, you can read the Environmental Protection Agency’s (EPA) criteria here: Supplemental Environmental Projects (SEPs) | US Environmental Protection Agency (EPA).  State environmental agencies may mirror the federal Environmental Protection Agency’s (EPA) SEP policy.

Although supplemental safety projects may not be as common, it cannot hurt to propose one.  Entering into Occupational Safety and Health Administration’s (OSHA) Strategic Partnership Program may be one option for a supplemental safety project.  Some out-of-the-box supplemental safety projects I have seen include bringing in outside trainers, and conducting workshops and exercises with local emergency responders.

Supplemental projects can have several advantages over regular settlements (i.e., simply paying a fine):

• You may be able to capitalize the project (i.e., the money could be used to improve your assets or operations)
• You can promote or get some positive publicity out of the project

I would identify potential supplemental projects prior to your settlement negotiations so you can propose them and get a feel for the EHS regulatory agency’s appetite, which may vary depending on the negotiation.

If you off-set the penalties with a supplement project or other item, add language to the agreement prohibiting the EHS regulatory agency from seeking penalties.  This will typically be based on the contingency that the supplemental project or other item be implemented accordingly. 

18.16.3 Settlement Agreements

If I am involved in a true settlement negotiation and will have a negotiated agreement (e.g., consent agreements/final orders (CA/FOs) or administrative orders on consent (AOCs), consent decrees, etc.), I would have legal counsel involved since the EHS regulatory agency likely has one involved.  If I am simply signing off on the inspection notice or violation acceptance form, this may not be necessary.

If you have a negotiated settlement agreement, you likely had a significant issue or disagreement, but the advantage is you can request clauses/requirements in the settlement agreement.  Some examples I have seen and/or used include:

• Prohibiting the EHS regulatory agency from seeking penalties for the alleged violations if you complete the settlement agreement
• You company does not admit fault (i.e., you do not necessarily agree that you were in violation)
• The EHS regulatory agency will not publicize the settlement
• The EHS regulatory agency will not conduct inspections, within a certain timeframe given certain constraints (e.g., they can conduct an inspection if you have a recordable incident)

The EHS regulatory agency will also likely want certain language included such as:

• Prohibition on certain activities (e.g., activities identified as violations or issues by the regulatory agency)
• Submission of documents showing completion of negotiated items, compliance with regulatory requirements, etc.
• Consequences for failure to comply with the settlement agreement
• Prohibition on suing the EHS regulatory agency due to issues arising from the supplemental project
• Payment requirements

The settlement agreement will likely have deadlines and may have an end date where certain additional compliance requirements are no longer required.

18.16.4 Public Response

Depending upon the size and attention you expect from the settlement agreement, you may want to prepare a public response.  Even if you stipulate that the regulatory agency will not promote the settlement agreement, it will still be part of a public record.  I would identify a spokesperson and inform anyone that might receive an inquiry that they are to direct questions to this spokesperson.  If you have the resources, you may have a public relations company handle the response.

18.16.5 Timing

If you are involved in a related lawsuit (e.g., injury, nuisance dust, etc.), you might want to delay closing the case, so it is not used against you in the lawsuit.  As usual, you will likely have legal counsel involved if you have a related lawsuit and they can provide advice on settling the case.

18.17 References

[1] “NFRA ‘Auditor is a watchdog and not a bloodhound’ is a serious misconception” Faceless Compliance website accessed August 14, 2022 (https://facelesscompliance.com/15909/nfra-auditor-is-a-watchdog-and-not-a-bloodhound-is-a-serious-misconception)

[2] Table 2-1, Occupational Safety and Health Administration (OSHA) Field Operations Manual, Directive Number: CPL 02-00-148, Effective Date: November 9, 2009 (http://www.osha.gov/OshDoc/Directive_pdf/CPL_02-00-148.pdf)

[3] “Directives – NEP” Occupational Safety and Health Administration (OSHA) Enforcement website accessed February 16, 2022 (https://www.osha.gov/enforcement/directives/nep)

[4] “Directives – Regional LEP” Occupational Safety and Health Administration (OSHA) Enforcement website accessed February 16, 2022 (https://www.osha.gov/enforcement/directives/nep)

[5] “National Compliance Initiatives” EPA website accessed May 11, 2022 (https://www.epa.gov/enforcement/national-compliance-initiatives#:~:text=The%20EPA%20focuses%20its%20enforcement%20and%20compliance%20assurance,air%20pollution%2C%20and%20protecting%20safe%20and%20healthy%20land.)

[6] “Policy On Civil Penalties” EPA General Enforcement Policy #GM – 21, Environmental Protection Agency, Published February 16, 1984, Page 5 (https://www.epa.gov/sites/default/files/documents/epapolicy-civilpenalties021684.pdf)

[7] “U.S. EPA Interim Revised NPDES Inspection Manual”, EPA Publication Number: 305-K-17-001, Interim Revised Version, United States Environmental Protection Agency, January 2017, page 36 (https://www.epa.gov/sites/default/files/2017-01/documents/npdesinspect.pdf)

[8] “Basic Inspector Training Course: Fundamentals of Environmental Compliance Inspections”, Office of Enforcement and Compliance, U.S. Environmental Protection Agency, February 1989, pages 5-7 to 5-8

[9] 40 Code of Federal Regulations part 2 Subpart B

[10] 29 Code of Federal Regulations part 70.2(b)

[11] 5 United States Code 552(b)(4)

[12] Clean Water Act 308(b) (https://www.epa.gov/cwa-404/clean-water-act-section-308-inspections-monitoring-entry)

[13] 29 Code of Federal Regulations (CFR) 1903.6(a)

[14] “Basic Inspector Training Course: Fundamentals of Environmental Compliance Inspections”, Office of Enforcement and Compliance, U.S. Environmental Protection Agency, February 1989, page 7-10

[15] “Preparing for and Managing an Occupational Safety and Health Administration (OSHA) Inspection“ Presentation Slides by Eric J. Conn, Epstein Becker Green  February 6, 2014 (https://www.grainnet.com/pdf/Managing_Occupational Safety and Health Administration (OSHA)_Inspections_Slides.pdf)

[16] 29 Code of Federal Regulations (CFR) 1903.3(a)

[17] United States Environmental Protection Agency “Statutory Programs Compliance Monitoring” website“ (http://www.epa.gov/compliance/monitoring/programs/index.html)

[18] Title 42 United States Code, The Public Health and Welfare, Chapter 85 – Air Pollution Prevention and Control, Subchapter I – Programs And Activities, Part A – Air Quality and Emission Limitations, Sec. 7414 – Recordkeeping, inspections, monitoring, and entry (https://www.govinfo.gov/content/pkg/USCODE-2013-title42/html/USCODE-2013-title42-chap85-subchapI-partA-sec7414.htm)

[19] 29 Code of Federal Regulations (CFR) 1903.7(a)

[20] “How to Win Friends and Influence People” Special Anniversary Edition by Dale Carnegie, Gallery Books, New York, New York, 1981

[21] 29 Code of Federal Regulations (CFR) 1903.7(b)

[22] 29 Code of Federal Regulations (CFR) 1903.7(b) and 1903.10

[23] “How to Prepare for a Surprise OSHA Inspection” by Bethany Carpenter of Workplace Safety accessed August 14, 2022 (https://hsi.com/blog/how-to-prepare-for-a-surprise-osha-inspection)

[24] 29 Code of Federal Regulations (CFR) 1903.8(a)

[25] Ibid

[26] “OSHA Employee Interviews — Leveling the Playing Field” by Seyfarth Shaw LLP, September 3, 2014 (https://www.laborandemploymentlawcounsel.com/2014/09/osha-employee-interviews-leveling-the-playing-field/)

[27] Ibid

[28] “How to Prepare for a Surprise OSHA Inspection” by Bethany Carpenter of Workplace Safety accessed August 14, 2022 (https://hsi.com/blog/how-to-prepare-for-a-surprise-osha-inspection)

[29] “OSHA Employee Interviews — Leveling the Playing Field” by Seyfarth Shaw LLP, September 3, 2014 (https://www.laborandemploymentlawcounsel.com/2014/09/osha-employee-interviews-leveling-the-playing-field/)

[30] 29 Code of Federal Regulations (CFR) 1903.14(a)

[31] 28 U.S. Code Section 2462 – Time for commencing proceedings

[32] 29 Code of Federal Regulations (CFR) 1903.16

[33] 29 Code of Federal Regulations (CFR) 1903.16

[34] 29 Code of Federal Regulations (CFR) 1903.20

[35] “Federal Employer Rights and Responsibilities Following an Occupational Safety and Health Administration (OSHA) Inspection-1996” (https://www.osha.gov/publications/fedrites)

[36] 29 Code of Federal Regulations (CFR) 1903.15(a)

[37] “Revised Guidance on the Use of Expedited Settlement Agreements” Memorandum by Cynthia Giles dated November 24, 2014, page 3 (https://www.epa.gov/sites/default/files/2014-12/documents/revisedesaguidance.pdf)

[38] “5 Essentials for Victory” The Leader Make, A Blog About Leadership and the Pursuit of Responsibility, accessed August 14, 2022

[39] Sun Tzu Quotes\Quotable Quotes, GoodReads website accessed August 14, 2022 (https://www.goodreads.com/quotes/17976-if-you-know-the-enemy-and-know-yourself-you-need)

[40] “Department of Justice (DOJ) Phases Out Supplemental Environmental Projects in Environmental Enforcement” by Hana Vizcarra and Laura Bloomer, Environmental and Energy Law Forum, EPA Mission Tracker website, August 6, 2020 (https://eelp.law.harvard.edu/2020/08/doj-phases-out-supplemental-environmental-projects-in-environmental-enforcement/#:~:text=On%20March%2012%2C%202020%20the%20Department%20of%20Justice,offset%20the%20environmental%20harm%20caused%20by%20the%20defendant.)

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