Here’s what manufacturing businesses should know about inspections
Manufacturing in Arizona continues to expand at a rapid pace with pre-pandemic statistics of more than $30 billion and 8.61% of the total output in the state, as well as 5.96% of the workforce reflected in hundreds of thousands well-paying jobs. However, many manufacturers are not aware that they enjoy a “Regulatory Bill of Rights” that guarantees protections for them under state, county, and municipal laws.
In particular, these laws require government inspectors to conduct on-site inspections and audits in a way that ensures a fair, structured, and transparent process. There also must be a reasonable opportunity for the manufacturer to work with the inspector to get the facts right and the opportunity to correct compliance problems before the government makes a final compliance determination.
Rights for State and County Inspections
In order to safeguard your manufacturing business rights, here is a sampling of what the inspector must do:
• Present a photo ID and state the purpose of and legal authority for the inspection
• Give a written copy of the Regulatory Bill of Rights
• Allow your authorized representative to accompany the inspection and have your experts and attorney be there to advise you
• Give written notice of your right to have splits and results of any samples taken, copies of any original documents taken, and copies of any documents to be relied upon by the inspector to determine compliance
• Give notice that participation in an interview is voluntary
• Give notice before making an audio recording of a conversation
• State your right to review and revise the inspector’s summary of any witness statement
• Give notice of the right to protect trade secrets and/or proprietary and confidential information taken from you
There are more rights and, of course, exceptions to the rules. However, this gives you a good idea of the importance of familiarizing yourself with the process.
The law says that an inspector who fails to comply may be disciplined or dismissed. More importantly, if a manufacturer’s case eventually ends up in a civil or administrative action, any evidence improperly obtained may be excluded, with reduced fines. As a practical matter, this means an agency with a deficient inspection may be more willing to consider your business’s point of view early in the process and before things escalate.
After an agency inspection, the Regulatory Bill of Rights continues to protect manufacturers by requiring the state or county agency to provide a copy of the inspection report, either at the time of the inspection or no later than thirty working days following. If the inspector finds deficiencies during the inspection or audit, the inspection report must say so. Manufacturers are also entitled to the name and telephone number of a contact person at the agency who is available to answer questions.
With this information, a manufacturing business can try to set the record straight and correct any errors in the inspection report. Although there is not a set process for seeking to correct a report, a written rebuttal statement submitted to the agency, followed by a telephone call to the inspector or agency contact, is generally a good approach. Manufacturers should keep in mind that an inspection report identifying deficiencies is not the same thing as a notice of violation, which may come later. The state or county agency must provide a monthly status report to the company, unless the agency advises no action will be taken.
After your efforts to correct any errors in an inspection report of your manufacturing business, if the agency still thinks there are deficiencies in your compliance, generally the agency cannot immediately issue a notice of violation. Instead, you must first be able to correct deficiencies, and thereby avoid a notice of violation. This is one of the most important rights in the Regulatory Bill of Rights.
Rights for City Inspections
Whereas the state and county versions of the Regulatory Bill of Rights basically are twin provisions, the municipal version is a close cousin with a slightly reduced set of protections due to some differences in city governmental functions compared to the state and counties, as well as to the fact that not all cities have comparable administrative resources. The main actions the inspector must do to protect your rights early in the process of an inspection to determine whether to issue, or determine compliance with, a city permit or license include:
• Present a photo ID and state the purpose of and the legal authority for the inspection
• Give a written copy of the inspection rights
• Allow your authorized representative to accompany the inspection (no mention of experts or attorneys), except in the case of confidential interviews, fire and life safety inspections of public places, and swimming pool inspections
• Give written notice of your right to have splits and results of any samples taken and copies of any original documents taken
• Give notice before making an audio recording of a conversation
• Give notice to each person interviewed that their statements may be included in the report (no mention of whether interviews are voluntary or may be reviewed and corrected)
• Provide the contact information for the municipal contact person
• Disclose any fees
• Give a copy (paper or electronic) of the inspection report at the inspection or no later than 30 days after
• Provide at least monthly written or electronic updates on the status of the report and any city action, including a “no action” decision
There is a big difference in the city Bill of Rights: the opportunity to correct an alleged deficiency is not automatic. The law says the city “may” allow it; and the decision whether to allow it is not appealable. The city’s failure to comply with the Regulatory Bill of Rights is cause for disciplinary action or dismissal; may be considered by a judge as grounds for reduction of a fine or penalty; and might, in limited cases, be used to exclude certain evidence. The inspection rights do not apply to an inspection requested and scheduled by the regulated person, criminal investigations, or to inspections by public health inspections to examine or abate a “nuisance, source of filth or cause of sickness.”
Last year, Arizona’s manufacturing industry faced one of its biggest challenges: the COVID 19 pandemic. By remaining flexible and well-informed, and with an eye on the future, our state’s manufacturing industry is primed to continue its innovation and growth. However, as we emerge from the obstacles of last year, manufacturing businesses should be prepared for renewed government scrutiny going forward. Government inspections are simply a fact of life in the manufacturing industry today. Manufacturers facing an important inspection or audit would do well to review their rights and consult with an attorney in advance. The Arizona Bill of Rights benefits both regulated business and government inspectors by providing clarity, structure, and balance—if both parties know and respect those rights.
J. Stanton Curry is a shareholder and Environmental and Natural Resources attorney at Gallagher & Kennedy, P.A. Gallagher & Kennedy is a full-service law firm with offices in Phoenix, Arizona and Santa Fe, New Mexico. The content contained herein is provided for informational purposes only and should not be construed as legal advice. Readers should consult an attorney to discuss any facts or circumstances concerning a specific situation.