Appendix B:Integrating Mediation into the Administrative Process

Appendix B:Integrating Mediation into the Administrative Process

Government agencies have found a multitude of ways to put ADR to work for them. What follows are two examples:

• two New York agencies, one of them an old hand at ADR (the Department of Public Service, which has used it since the late 1970's), and one newcomer (the Department of Environmental Conservation, which launched its ADR program in 1996).

Department of Public Service [Administrative Law Judge Jaclyn A. Brilling of the Department of Public Service generously assisted with this section.]

The Department of Public Service (DPS) regulates the rates and services of public utilities that provide electricity, gas, telecommunications, steam, water, and cable. It aims "to ensure that New Yorkers have access to competitively priced, high quality utility services provided safely, cleanly, and with maximum consumer choice," in the words of its mission statement. The governing board is the Public Service Commission (PSC).

The PSC issued its first procedural guidelines for settlements in 1983 after a number of successful settlement agreements had emerged in the course of various Commission proceedings. Parties had developed an increasing preference for such settlements as a way of avoiding unnecessary litigation. When the Commission reviewed the guidelines in 1990, it determined a need to balance the flexibility of these guidelines with formal regulations relating to notification and confidentiality in settlement proceedings, in order to protect the rights of parties and "preserve the integrity of the negotiating process." [Op. 92-2, Pub. Serv. Comm. (1992 WL 487888 (N.Y.P.S.C.)]. Reluctant to convert the guidelines into regulations that would inhibit flexibility and innovation in future negotiations, the Commission opted to maintain separate guidelines, but modified them to specify how the Commission could comment on issues and identify concerns to consider in negotiations, and to set up a procedure to follow when the Commission rejected all or part of a settlement.

Therefore, the regulations adopted in 1992 [16 NYCRR Part 3.9], address utilities' and the Commission's responsibilities in assuring that all appropriate parties will be notified in impending negotiations, and the confidentiality of settlement discussions. The modified guidelines adopted at the same time address the following issues: what supporting documentation must accompany proposed settlements when submitted to the Commission for approval; when notice is not required (e.g., for caucuses among parties of common interest); the role and responsibilities of the ALJ; the scope of settlements; the responsibilities of the parties to develop the record; the Commission's standards of review of proposed settlements, and procedure for remand or commentary in the event that the Commission modifies or rejects a settlement.

Type of Case

Among the types of cases in which these guidelines have worked effectively are those stemming from deregulation of utilities, where a competitor utility seeks access to channels that are currently under the control of an incumbent utility; cases between a utility and the PSC, as with an enforcement case or when a utility files a new rate tariff with the Commission; or cases stemming from a suit filed by one or more consumer groups. Generally there are multiple interested parties or intervenors are also involved, such as the NYS Consumer Protection Board, the Attorney General, or the Public Utility Law Project of New York. At least 80% of the cases that come before the DPS involve some sort of ADR.

Scheduling

The process begins when a case is filed with the Department and an ALJ assigned by the Chief ALJ. In pre-conference telephone calls and at conference, the ALJ and the parties identify issues susceptible to resolution through negotiation. It is estimated that about 60% of the time the initiative comes from the parties themselves. If, as is often the case, the dispute involves numerous issues and/or many parties, it will follow parallel tracks of litigation (or arbitration, for cases occurring under the Telecommunications Act of 1996) and ADR.

Issues severed from litigation are assigned a time frame for resolution. There are no hard and fast rules whether ADR will proceed concurrent with litigation or proceed in alternating steps. It has been handled both ways, depending on the case. When an issue in litigation is dependent on the outcome of a negotiated issue, there are several choices: decide all other litigated issues, wait for settlement, or start another proceeding. When issues move into ADR, the parties are given the opportunity to request a different Administrative Law Judge for ADR proceedings. The form of ADR to be used is determined by the ALJ with the input and agreement of the parties.

The ALJ may require periodic progress reports on negotiations and will relay to the parties any specific concerns that the Commission wishes to be addressed. When a proposed settlement has been reached, the parties have the burden of proving to the Commission that the settlement is in the public interest, and must provide the Commission with a complete record in support, including details of the agreement, the underlying rationale, and how the settlement differs from their original litigation positions. The Commission may provide guidance on what information is necessary for its review of the settlement. The ALJ prepares an independent review on the issues to help the parties determine their settlement and litigation risks. Parties not participating in the settlement may oppose it by developing their positions through cross-examination and affirmative testimony before the PSC.

The Commission's standard of review for a settlement requires that the terms of such a settlement must be in the public interest:

"A desirable settlement should strive for a balance among (1) protection of the rate payers, (2) fairness to investors, and (3) the long-term viability of the utility; should be consistent with sound environmental, social, economic policies of the Agency and the State, and should produce results that were within the range of reasonable results that would likely have arisen from a Commission decision in a litigated proceeding.... The Commission shall give weight to the fact that a settlement reflects the agreement by normally adversarial parties." [Procedural Guidelines for Settlements, Op. 92-2, Pub. Serv. Comm. (1992 WL 487888 (N.Y.P.S.C.)].

In the event that the Commission modifies or rejects a settlement, the proceeding is remanded. When remand is not possible, the settling parties "will generally be given an opportunity to comment on whether [the Commission's] intended resolution alters their positions on the settlement." [Id.].

Confidentiality

The Public Service Commission has adopted regulations assuring confidentiality of settlement negotiations at 16 NYCRR §3.9(d):

Confidentiality of settlement discussions. No discussion, admission, concession or offer to stipulate or settle, whether oral or written, made during any negotiation session concerning a stipulation or settlement shall be subject to discovery, or admissible in any evidentiary hearing against any participant who objects to its admission. Participating parties, their representatives and other persons attending settlement negotiations shall hold confidential such discussions, admissions, concessions, and offers to settle and shall not disclose them outside the negotiations except to their principals, who shall also be bound by the confidentiality requirement, without the consent of the parties participating in the negotiations. The Administrative Law Judge assigned to the case, or the director of the appropriate division if no judge has been assigned, may impose appropriate sanctions for the violation of this subdivision which may include exclusion from the settlement process.

Training

Every ALJ at the Department of Public Service is trained in ADR to varying degrees. The basic requirement is for 40 hours of training. The DPS offers its own ADR courses, with a focus on mediation and associated topics such as facilitative mediation. The course is 60 to 70% agency-specific. ALJs may be sent out for training to the Community Dispute Resolution Centers, where they enter at the level of observer, and move into mentored mediation. Through service as volunteer neutrals for the Community Dispute Resolution Centers (CDRCs), ALJs gain continuous training. The skills developed at the CDRCs may be used at the DPS, and vice-versa, because DPS judges' experience with multi-party mediation is helpful to the CDRCs as they are increasingly called upon to do more in this area.

Department of Environmental Conservation [Thank you to Administrative Law Judge Daniel E. Louis of the Department of Environmental Conservation for his assistance with this section.]

The Department of Environmental Conservation (DEC) launched its environmental dispute resolution process in 1996, underscoring its commitment to the initiative by adding "and Mediation Services" to the title of its Office of Hearings. The intent was to shift emphasis away from strict enforcement toward helping the regulated community comply with environmental regulations. Increased interest in the carrot rather than the stick brought along an interest in cultivating the ground within the permit and enforcement processes – communicating, problem-solving, negotiating – without losing sight of the absolute requirements for compliance and environmental quality.

Corollary to the shift in emphasis toward compliance was a re-thinking of how to measure success. Is success commensurate with cases brought or settled, or with reduction of adverse environmental impact? A penalty, "success" in terms of the first, needs more if it is to satisfy the second.

Enter ADR as a complement to traditional adjudicatory processes and unassisted negotiations. Because mediation emphasizes underlying interests (often non-legal) rather than "rights," requires parties to talk to each other, and helps them forge a mutually acceptable solution, it may bring flexibility to parties' negotiation strategies and help produce an agreement that accommodates both the public interest and the private interest.

Getting an ADR initiative actually launched at the DEC involved: identifying internal and external "customers" and their needs, designing an ADR mechanism that best responded to such parties and needs, constructing a handbook for mediators, creating informational materials for the public, and marketing the program. The DEC's Office of Hearings and Mediation Services (OHMS) assembled a guidance team of key players inside and outside the DEC to provide advice on the work plan. These included representatives of DEC executive and program areas, the environmental community, and the regulated business and commercial community. OHMS took to the road, visiting the nine regions of the State to promote ADR and seek ideas on how to put it to use – and encountered unexpected enthusiasm among technical staff, who have frequent opportunities to negotiate technical issues in the course of their duties. The OHMS team posted its work on the DEC's Intranet web site. ALJs and selected DEC staff underwent ADR training.

A key feature of the DEC's ADR program is its method of case selection. Rather than place certain categories of cases into mandatory mediation or a mediation screening track, DEC allows its regional attorneys broad discretion on when to proceed with mediation, so that ADR case selection reflects regional values and culture. What works in New York City might not work in the Adirondacks.

The OHMS ADR program primarily employs mediation, as its name suggests, although OHMS staff is prepared to conduct any form of ADR as circumstances require, including early neutral evaluation, and use of an ombudsperson. Although growth of the ADR program was still slow, the 85% settlement rate to date was highly encouraging.

The OHMS is optimistic about ADR's applications to environmental problem-solving. ADR is flexible and creative and makes room for ideas from multiple interests. ADR can facilitate compliance through an interdisciplinary approach, when technical, legal, environmental, and public policy concerns jostle for recognition, and whether in permit (developmental) or enforcement actions.

Type of Case

In referring cases to ADR, OHMS suggests considering four broad attributes:

1. "Those that cannot be tried," involving “many parties with conflicting interests and positions”, the prospect of years of litigation “with no real 'winners,'...[p]olicy questions...[and/or] novel issues”;

2. "Those that do not absolutely require an attorney," where "technical staff ...[can] exercise its program responsibilities through use of mediation";

3. "Those where 'one last chance' is offered," such as those involving "uncollectible judgments, insufficient resources to remedy the problem in a way satisfactory to DEC, or where the action is too small to warrant use of litigation, or where a personality conflict between the respondent and staff has brought matters to a stalemate or impasse"; and

4. "Those that would benefit from long-term relationships by using a non-litigious option," where "disputants need or have an ongoing long-term relationship that requires understanding each other's business." [N.Y.S. Dept. of Environmental Conservation, Office of Hearings and Mediation Services, The Use of Alternative Dispute Resolution in DEC 15(1997), http://www.dec.state.ny.us/ohms.]

Among the types of cases that the OHMS suggests to the public may be suitable to ADR are:

1. environmental enforcement, characterized by a limited number of parties, negotiation of remedial actions to be taken, and amount of penalty to be paid;

2. resource or pollutant allocations, where a finite amount must be divided among the parties;

3. permit applications, which often involve engineering and scientific factors whose application must be realistic and enforceable; and

4. nuisance issues, balancing such factors as operating hours, truck routes, dust and noise control concerns. [N.Y.S. DEPT. OF ENVIRONMENTAL CONSERVATION, DEC's ENVIRONMENTAL DISPUTE RESOLUTION PROGRAM, http://www.dec.state.ny.us/ohms/dec-adr.htm].

Neutrals

Most ADR is conducted by staff ALJs, although in some cases, technical staff trained in ADR may use it, as explained above. Parties may provide an outside mediator by mutual agreement and at their own expense; however, few do so. Depending upon the issue, general and/or technical subject matter expertise may be necessary so that the neutral may be most effective in helping the parties establish priorities and ensuring that all possible avenues are fully explored.

ADR training conducted by the Government Law Center at Albany Law School included 25 hours of basic environmental mediation, followed by 25 hours of advanced training. Supplemental training has been provided to DEC ALJs.

Confidentiality

Evidence arising out of settlement discussions (and mediation, considered a variety of settlement discussion) may not be admitted in subsequent administrative or court proceedings without permission, unless the material is otherwise discoverable. Confidentiality is unlikely to pose a problem with regard to documents, as a considerable amount of documentation often accumulates prior to the time the case is filed. Much pertinent information is thus discoverable from sources outside of mediation.

With the consent of all parties, the presiding ALJ may also mediate.

Scheduling

The proceeding is usually delayed for ADR; however, the DEC prefers to begin ADR earlier in the case, before there is any question of delaying other proceedings.