Federal Mediation and Conciliation Service

29 CFR Part 1404

Arbitration Policy; Roster of Arbitrators, and Procedures for Arbitration Services

AGENCY: Federal Mediation and Conciliation Service.

ACTION: Proposed rule.

SUMMARY: The proposed revision to 29 CFR Part 1404 is being published in order to revise the policies and procedures used by Federal Mediation and Conciliation Service in administering its arbitration program.

The goals of the proposed revision are to more accurately reflect current practice, clarify the role of the Arbitrator Review Board, revise the standards for arbitrator listing on the Roster, and announce certain changes . Among the changes made are:

First, requests for special experience or qualifications, or other special requirements, must be either jointly submitted by the parties, or, if unilaterally submitted, must certify that the other party agrees, or there is no conflict with the applicable contract. This will allow a single party, for example, to request a panel with special expertise, so long as the required assurances are made. Similarly, FMCS will make a direct appointment of an arbitrator based on the assurances of one party.

Second, the Federal Mediation and Conciliation Service, Office of Arbitration Services (OAS) will no longer receive or interpret contract language in regard to furnishing services.

Third, as a alternative to the submission of a panel of arbitrators, FMCS, upon, request, will furnish the names and biographical sketches of all listed arbitrators in specified geographical locations. In this case, the parties may directly appoint and deal with the arbitrator without any further involvement of FMCS.

Finally, the regulations call for an annual listing fee for all arbitrators as well as a fee for all arbitrator list and panel requests of FMCS.

DATES: Comments must be received on or before April 15, 1997.

ADDRESSES: Interested organizations and individuals are invited to submit written comments to these proposed regulatory changes. Comments should be submitted to Peter L. Regner, Director of Program Services, Federal Mediation and Conciliation Service, 2100 K Street, NW., Washington, DC 20427. All written comments will be available for inspection during work hours at the above address.

FOR FURTHER INFORMATION CONTACT:

Mr. Peter L. Regner, Director, Program Services, Federal Mediation and Conciliation Service 2100 K Street NW., Washington, DC 20427, (202) 606-8181.

SUPPLEMENTARY INFORMATION: An analysis of the changes in the proposed revisions follows.

SUBPART A: Arbitration Policy; Administration of Roster, Sections 1404.1-1404.3

Section 1404.3 Administrative responsibilities

(c) This section establishes the Arbitrator Review Board and outlines powers and duties. Paragraph (iv) is new. It provides that the Board may upon request of the Director, review FMCS Arbitration policies and procedures.

SUBPART B: Roster of Arbitrators Admission and Retention, Sections 1404.4-1404.7.

Section 1404.4

Paragraph (e). This part is unchanged except that the service of issuing lists or panels of arbitrator names will now be subject to a nominal fee. The collection of these

fees is needed in order to assure a continuous non-appropriated source of funds to be solely used by FMCS for its internal education, training and professional development initiatives.

Paragraph (f) a provision has been added to reinforce FMCS authority to

remove or suspend from its Roster those arbitrators who habitually fail to adhere to the regulations.

Section 1404.5

This section outlines the criteria the Arbitrator Review Board will use in

recommending to the Director whether or not an individual will be listed on the Roster.

This section provides that applicants for listing on the Roster must complete and submit an application. The Office of Arbitration Services will review the application, make the necessary inquiries, and forward the application to the Arbitrator Review Board. The Board will then review the application and make a recommendation to the Director about whether or not to list an applicant on the Roster based on the criteria established in paragraphs (a) (b) (c) of §1404.5. The Director of FMCS has the authority to make all final decisions about listing on the Roster. This section is substantially unchanged from current regulations.

Paragraph (a) outlines the general criteria that the Arbitrator Review Board will use when considering an applicant. Individuals requesting listing on the Roster must be experienced, competent and acceptable in labor management decision-making roles. This paragraph is changed from the current regulations only to the extent that a statement in the current rules that the applicant have extensive experience in collective bargaining, and that he or she be capable of conducting an orderly hearing, analyze testimony and evidence and prepare a clear and concise award, is deleted. However, subsection (b) now contains similar requirements as outlined immediately below.

Paragraph (b). Proof of Qualifications, is different from the current regulations in that the proposed rule provides that the standards of acceptability, experience and competence in subsection (a) above, are demonstrated by the submission of at least 5 actual arbitration awards, issued by the applicant while serving as an arbitrator of record chosen by the parties to a labor dispute. The Board is also authorized to consider an applicant's bargaining and labor negotiations experience, or experience as a judge or hearing examiner in labor relations issues as a substitute for the awards. This provision is similar to the current regulations §1404.5(a)(1) and (2). However, the specific requirement of 5 awards is new. It is designed to allow the Board to objectively apply a test of acceptability.

Paragraph (c), Advocacy is substantially the same as the current §1404.5(c)(1) and (2). The paragraph prohibits advocates, except those who are "grandfathered" under the current rules, from being listed on the Roster. All persons who were listed on the Roster as advocates before the date of the "grandfather" clause, that is

November 17, 1976, may remain listed on the Roster. However, no applicant for listing who is an advocate will be listed on the Roster. A person who was on the Roster before November 17, 1976, and did not divulge his or her advocacy status at the time his or her listing, (emphasis added) may not remain listed on the Roster. This policy is

designed to insure that parties receive the names of arbitrators who are, and are seen as truly neutral, except in the case of those individuals listed on the Roster before the prohibition of advocacy as adopted.

The definition of an advocate in (1) is the same as current FMCS policy. It is designed to be as broad as necessary to insure that parties will not have any reason to question the neutrality of a potential arbitrator. The provision prohibits listing on the Roster people who earn money, or any form of compensations, by representing either side in a labor relations matter.

Paragraph (d) establishes the policies and procedures for listing retention and removal of and individual listed on the Roster. It is a clarification of the current policy in § 1404.5(d). It provides that the Director of FMCS shall make all final decisions about an applicant's listing on the Roster. Removal is by the recommendation of the

Arbitrator Review Board after notice for violations of the regulations and/or the Code

of Professional Responsibility for Arbitrators of Labor Management Disputes as cited in § 1404.4(b). Notice of cancellation will be given by the Board when a Roster member:

(1) No longer meets the criteria for admission. This is the same policy as in the current regulations.

(2) Has become an advocate as defined in § 1404.5(c). This is a new provision and a clarification of current FMCS practice of removing from the Roster individuals who become advocates in order to protect the integrity and neutrality of the Roster.

(3) Has been repeatedly or flagrantly delinquent in submitting awards. This is also the current FMCS rule, and allows the Board to recommend removal of individuals who fail to meet the timely needs of the parties.

(4) Has refused to make reasonable reports as required by FMCS in accordance with Subpart C infra. This is also current FMCS policy and regulation. It is designed to insure that the agency can obtain the necessary information to efficiently operate the program.

(5) Has been the subject of complaints by the parties, and the Board , after inquiry, concludes that reasonable grounds for cancellation has been shown. This is also substantially the same as current FMCS policy and is designed to establish a method for parties to state their concerns and complaints. Removal under such grounds, however, must be conducted according to the procedures established in this paragraph.

(6) This provides that the Director may remove an individual who is not being selected by the parties in at least 2 percent of the cases per year in which his/her name is submitted to parties for selection. This is to insure that the Roster is composed of individuals who are acceptable to the parties.

The procedures for removal is left up to the Arbitrator Review Board, so long as the individual proposed to be removed is given 60 days prior notice of the proposed removal and an opportunity to respond. The Board will consider the reasons for the removal and all responses before making a recommendation to the Director. All decisions to remove must be made by the Director. This is designed to insure that individuals will be given an opportunity to present evidence and argument on their behalf before a decision is made to remove.

There is also a new provision which states that the Director of the Office of Arbitration Services (OAS ) may suspend-that is not send out an individual's name on any panel or appoint an individual to serve as arbitrator for up to 180 days-if the Director of OAS has determined that someone has violated the aforementioned criteria.

This was established to insure prompt action on the part of FMCS to deal with violations of the regulations and to protect the arbitration process, the Roster and the parties. A suspension is not a determination on the merits of any dispute or controversy, and the suspension may not exceed 180 days. Arbitrators will be notified promptly of a suspension and will be afforded an opportunity to appeal, if they wish to do so, to the Arbitrator Review Board. The Board will make a recommendation to the Director of FMCS, whose decision shall constitute final agency action.

Section 1404.6

This is also a new section which provides that an individual listed on the Roster may request that he or she may be put on an inactive status. This means that while they are on such status, their name will not be sent to the parties. This enables a Roster member to request that his or her name not be sent to parties while, for example, they are on an extended vacation. It is designed for the convenience of the person listed on the Roster and the parties.

Section 1404.7

This is a new section announcing that FMCS will be charging all arbitrators wishing to be listed on its Roster an annual listing fee. As with the charging for the provision of lists and panels to the parties, the fees collected will assure FMCS of a continuous non-appropriated source of funds for its internal education, training and professional development initiatives.

SUBPART C: Procedures for Arbitration Services, Sections 1404.8-1404.16

Section 1404.8

This new provision applies only to Subpart C. The new text incorporates the provision which currently appears at § 1404.6, but points out that while the parties are free to choose arbitration procedures that are acceptable to them, such procedures are subordinate to the provisions of Subpart C. Thus, if either

(a) The parties designate in their agreement that FMCS furnish arbitration services, or

(b) One or more parties request FMCS arbitration services, then all parties are subject to the rules contained in Subpart C. This new language has been added to insure that FMCS has the authority to remedy any abuse of Subpart C rules and enforce

compliance with them.

Section 1404.9

Paragraph (a) is essentially a repeat of the provision now found at

§ 1404.10.

Paragraph (b) is essentially a repeat of the provision found at § 1404.10(a). In stating that the issuance of a panel-or a direct appointment-is nothing more than a response to a request, the text adds new language stating that such actions also do not signify the adoption of any position in regard to arbitrability. This additional language aligns the text with the wording that appears at the bottom of FMCS Form R-43, Request for Arbitration Services.

Paragraph (c). This is a new service which will allow parties to receive the names and biographical sketches of arbitrators and deal directly with the arbitrator. This is a cost-savings measure for those parties with frequent need for arbitrators and whose relationship is such that they can select and deal with the arbitrators without FMCS appointment and tracking services.

Paragraph (d). This new provision allows FMCS to refuse to supply arbitration services if the request creates difficult operational problems. For example, if FMCS received a request for 100 panels, it might be refused because of the workload imposed. In such case the OAS might contact the requestor to see if some less burdensome arrangements could be made or if FMCS could design an alternative solution. It also allows FMCS to deny services to parties who abuse the process by habitually failing to pay arbitrator fees or other such actions.

Paragraph (e). This provision changes the text found in § 1404.10(b) and (d) and replaces those two subsections. While the current language urges parties to use FMCS Form R-43 to make requests for arbitration services, it also allows the use of letters as a substitute. The revised text mandates that only Form R-43 be used and states that a failure to do so may result in the request being returned to the sender. This change to mandatory use of Form R-43 is required because the OAS has converted its operations from a manual system to computer system, and the receipt of typed requests on Form R-43 is necessary in order to obtain prompt entry and storage of data. Although approximately 80% of all requests are now received on Form R-43, FMCS will (1) allow for a phase-in period for this new requirement (2) conduct a campaign of notification and education to make requestors aware of the requirement, and (3) make Form R-43 available in quantity to all labor organizations and employers dealing with

FMCS. This change is a product of a lengthy reinvention effort by the staff of OAS. It is their collective opinion that even if this presents a small burden to some of our customers, it will provide a greater benefit to all concerned by streamlining our processing of requests.

Paragraph (f). This is a new provision. It is based on the experience of the OAS, that a significant increase has taken place in incidents involving procedural quarrels between the parties. These clashes concern such matters as (1) whether or not one party or the other has refused to cooperate in striking names from a panel of arbitrators (2) whether or not the grievance issues have been determined in a previous arbitration award, (3) whether arbitrators on a panel should or should have not have special expertise, (4) whether arbitrators should or should not come from a particular geographic area, and (5) whether a local contract or a national contract governs the parties.

The OAS has found itself increasingly entangled in such procedural disputes and therefore has decided on the following changes:

(1) The OAS will no longer receive or review the terms contained in the parties collective bargaining agreements, and will make no determinations as to the meaning or effect of such agreements. Accordingly, the second sentence of the text now appearing at § 1404.10(c)-calling for submissions of contract language-has been deleted. Also, since there is no longer a requirement that a brief statement describing each issue in dispute accompany the request, the first sentence of the current § 1404.10(c) has similarly been deleted, thus negating the entire text of this section.

(2) For unilateral requests-except those asking for a list or standard panel of seven names-the requestor will certify that one of the following conditions applies:

(a) The other party has agreed to the request, or

(b) There is no conflict with the parties collective bargaining agreement.

FMCS Form R-43, Request for Arbitration Services, has been modified to

allow requestors to so certify in a simple and convenient way. The OAS will consider all statements as made in good faith and will honor all requests as submitted. A failure to supply the information required in (a) or (b) above disqualifies the request.

While the OAS realizes that a unilateral request, under the conditions set out above, may be subject to abuse by one party or the other, the following policy considerations have led to the adoption of the proposed new language.

As to the issuance of panels

If the OAS were to require that all requests-except for a standard 7 person panel-be submitted on the basis of mutual consent, the arbitration process would be frustrated by the quarrels of the parties. That is, there would be no agreement, no

submission of a request, and recourse would have to be sought through the relatively lengthy procedures of the National Labor Relations Board, the Federal Labor Relations Authority or the courts.

By placing a burden of good faith on the party submitting the unilateral request, and by acting promptly to honor it, the OAS acts to further the arbitration process. Moreover, receiving the OAS panel establishes no obligation on any party to use it, or to arbitrate any issue. The panel simply permits the option of moving further on the path of arbitration.

As to direct direct appointments

In the case of a unilateral request for appointment of an arbitrator, the result may cause a burden to be placed on a party. That is, a party may be either obliged to appear before an appointed arbitrator to argue that arbitration is not warranted, or risk the result of an ex parte award. While OAS is mindful of this possible result, it has proposed the new procedure for the following reasons.

(i) Reliance by the OAS on contract interpretation, as the basis for a direct appointment, means becoming entangled in the parties' quarrels. One side or the other may dispute the reading of the contract made by the OAS, and thus make OAS interpretation one more obstacle to arbitration.

(ii) Reliance by the OAS, on mutual assent by the parties, as the basis for a direct appointment, again means frustrating the arbitration process. Thus, the quarreling parties will refuse to agree, and a solution will have to be sought through the relatively time consuming procedures of the National Labor Relations Board, the Federal Labor Relations Authority, or the courts.

(iii) By instead placing a burden of good faith on the party making the unilateral request, and simply honoring it, the OAS will promptly place the matter of proper jurisdiction before a neutral decision maker-the arbitrator. If the arbitrator finds that one party or the other has acted improperly in pursuing arbitration, the arbitrator may provide redress in the terms of the remedy awarded, or the arbitrator's finding may be used as the basis for redress before another tribunal.

Section 1404.10

This provision follows the language which currently appears a § 1404.11. No significant change has been made.

Section 1404.11

This section-made up of four subsections-replaces the current § 1404.12.

Paragraph (a) describes the content of lists and standard panels. It deletes the reference to the parties' contract, as contracts will no longer be reviewed, (ii) deletes the reference to requests by parties for a number of arbitrators different than 7, as joint requests for services other than a standard panel are described in the last sentence of the new text, and (iii) adds the statement that requests for standard panels-made jointly or unilaterally-will be honored without the need for compliance with § 1404.9(f), and (iv) paragraph (a) adds language explaining the new "list of arbitrators" service offered by OAS.

Paragraph (b) describes non-standard panels, and states, in conformance with the new policy of FMCS, that unilateral requests for a non-standard panel must comply with the requirement of § 1404.9(f). This subsection serves as a replacement for the language now appearing at § 1404.12(c)(4).

Paragraph (c). This provision describes the assignment OAS case numbers and is essentially the same as that now found at § 1404.12(b).

Paragraph (d) describes the factors involved in selecting names for panels now found at § 1404.12(c). The current statement-that the agreed upon wishes of the parties are paramount-is deleted, as this concept is expressed in subsections (d)(2) and (d)(3) which follow immediately below.

Paragraph (d)(1) is a new provision which explain that unless the parties jointly request otherwise, the site of the dispute serves as the geographical basis for the selection of the arbitrators.

Paragraph (d)(2) is a repeat of the text of § 1404.12(c)(1), with one change. The phrase for valid reasons is omitted because the OAS will not pass judgment on the validity of the reasons given-if any-that persons be included or omitted from panels of arbitrators. This position corresponds to the FMCS policy that its arbitration services constitute a response to a request and nothing more.

Paragraph (d)(3). This language replaces the current text at § 1404.12(c)(3). While the current language prohibits a single party from including or omitting names from a panel, the revised text permits one party to do so, if the conditions as to numbers, and compliance with § 1404.9(f), are met.

Section (e) replaces the language now found at § 1404.12(c)(5). The new text eliminates reference to the terms of agreement in the parties' contract-as the OAS will no longer receive or review such terms-and places a fixed ceiling-of three-on the number of panels which will be successively issued. Under the current language no

fixed ceiling is established, and instead the matter is left open ended with consideration to be made on a case by case basis. After the issuance of three panels, FMCS will make a direct appointment.

Section 1404.12. This section, consisting of three paragraphs, replaces the current § 1404.13.

Paragraph (a). The current language-in § 1404.13(a)-says that parties should not notify the OAS of their selection of an arbitrator. The new text makes this requirements mandatory and states that the parties must do so. The new text also adds a requirement-not present in the current § 1404.13(c)-that parties must notify the arbitrator as well as OAS if they decide not to proceed to arbitration. As to both of these mandatory provisions there is also new penalty language stating that a consistent failure to comply may led to denial of OAS services. These changes will assist FMCS in implementing these regulations.

The portion of the revised text directing the arbitrator to notify the OAS of his or her selection remains the same, except for (i) the added word stating that the arbitrator must do so promptly, and (ii) the added statement that the arbitrator is expected to communicate with the parties within 14 days of notification of appointment by OAS. This added statement replaces the current § 1404.13(d) which requires the arbitrator to communicate immediately.

This notification to OAS by the arbitrator is only necessary following the selection of a panel by FMCS. It is not necessary or wanted if the parties have elected to work off a list of all arbitrators in their area as described in section 1404.11(a).

Paragraph (c). The current text-found at § 1404.13(b)-Is mostly unchanged.

Paragraph (d) describes direct appointments. The revised text removes the phrase referring to the applicable collective bargaining agreement, as such agreements will no longer be considered by the OAS. Once more, if a unilateral request for a direct appointment is made, the unilateral request must comply with § 1404.9(f). In other respects, the revised text is basically the same as the current provisions in § 1404.13(c)

Section 1404.13. The revised text is similar to that now found at § 1404.14, except as follows:

(i) The current text says that an arbitrator is expected to conduct all proceedings in conformity with § 1404.4(b). The revised text states that the arbitrator shall do so.

(ii) The current text says that the arbitrator's decision is to be based upon the evidence and testimony presented. The revised text states that the decision shall be so based.

Section 1404.14. The revised text is similar to that now found at 1404.15, except as follows:

Paragraph (a),

(i) The current text of § 1404.15(a) says that arbitrators are encouraged to render awards not later than 60 days from the date of the closing of the record. The revised text at § 1404.14(a), states that arbitrators shall make awards no later than 60 days from the same date.

(ii) In the current text, at § 1404.15(a), the date of the closing of the record is described as determined by the arbitrator, unless otherwise agreed upon by the parties or specified by law. The revised text, at § 1404(a), adds to this description by inserting the phrase-or specified by the collective bargaining agreement.

(iii) The current text as § 1404.15(a) says that the issuance of untimely awards by an arbitrator may lead to his removal from the FMCS roster. The revised text, at § 1404.14(a), removes the word his, thus deleting any reference to whether the arbitrator is male or female.

Paragraph (b). The current text states that an arbitrator should inform the OAS concerning a delay in issuing an award, and in describing the circumstances when the arbitrator should do so, says that this should happen when the arbitrator cannot schedule, hear and determine issues promptly. The revised text changes the phrase

"determine issues" to "render decisions," as the new phrase is more complete and encompasses within it the inability to determine issues.

Section 1404.15. The revised text is similar to that now found at § 1404.1b, except as follows:

Paragraph (a),

(i) The current text requires that fees charges by arbitrators be certified in advance to the Service. The revised text requires only that they be provided in advance.

(ii) The revised text adds two requirements, not contained in the current provisions at § 1404.16(a), as follows:

(A) Arbitrators with dual business addresses shall bill the parties for expenses from the nearest business address to the hearing site. This provision has been added in order to prevent excessive billing charges.

(B) Arbitrators shall submit their schedule of fees to both parties when accepting arbitration appointments. This provision has been added because biographical sketches state only the per diem fee charged by the arbitrator. Other fees involved in the arbitrator's service must therefore be made known to the parties when accepting an appointment.

(C) A reference is once again made to charging arbitrators an annual listing fee.

Paragraph (d). While the current text, at § 1404.16(d), states that the Service will not attempt to resolve any fee dispute, the revised text states that the Service does not resolve such disputes. The language also notifies the public that FMCS will file complaints about excessive charges and that repeated complaints will be forwarded to the Arbitrator Review Board.

Section 1404.16. There are no major changes in this section.

EXECUTIVE ORDER 12291

This proposed rule is not a "major rule" under Executive Order 12291 because it is not likely to result in (1) an annual effect on the economy of $100 million or more (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) a significant decline in productivity, innovation, or on the ability of the United States-based enterprises to compete with foreign-based enterprises in domestic or export markets. Accordingly, no regulatory impact analysis is required.

Regulatory Flexibility Act Certification

The FMCS finds that this proposed rule will have no significant economic impact upon a substantial number of small entities within the meaning of section 3(a) of the Regulatory Flexibility Act, Pub. L. 96-354, 94 Stat. 164 (5 U.S.C. 605(g)), and will so certify to the Chief Counsel for Advocacy of the small Business Administration. This conclusion has been reached because the proposed rule does not, in itself, impose any additional economic requirements upon small entities. Accordingly, no regulatory flexibility analysis is required.

List of Subjects in 29CFR Part 1404

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