THE ADMINISTRATIVE DISPUTE RESOLUTION ACT OF 1996

THE FEDERAL MEDIATION AND CONCILIATION SERVICE

2100 K STREET, N.W.

WASHINGTON, D.C. 20427

(202) 606-8100

THE ADMINISTRATIVE DISPUTE RESOLUTION ACT OF 1996

THE NEGOTIATED RULEMAKING ACT OF 1996

INTRODUCTION

Alternative Dispute Resolution and Negotiated Rulemaking

Alternative dispute resolution, often called AADR,@ describes a number of techniques used voluntarily to resolve disputes between parties by consensus and agreement, generally with the assistance of a neutral third party. In the federal sector, resolving disputes using these techniques is increasingly seen as an alternative to court litigation or administrative adjudication. Such techniques include, but are not limited to: mediation, facilitation, conciliation, arbitration, factfinding, and minitrials. In 1990, Congress passed the Administrative Dispute Resolution Act (ADR Act), making explicit the authority of federal agencies to use ADR to supplement existing methods of resolving disputes.

In the same year, Congress also passed the Negotiated Rulemaking Act, making explicit the authority of federal agencies to develop and promulgate rules and regulations through a consensus-based procedure called regulatory negotiation, or Areg-neg.@ In that process, the agency invites representatives of interests likely to be affected by a proposed regulation to work with each other and with the agency to develop a consensus draft of the text of the proposed rule.

Both statutes were enacted with Asunset@ or expiration dates -- the Administrative Dispute Resolution Act was scheduled to expire in 1995, and the Negotiated Rulemaking Act in 1996. After reviewing the experience of federal agencies under both Acts, Congress permanently reauthorized them in 1996.

1996 Statutes

The Administrative Dispute Resolution Act of 1996, including provisions that constitute the Negotiated Rulemaking Act of 1996, was passed, as H.R. 4194, by the 104th Congress on October 4, 1996, and signed into law by President William Clinton on October 19, 1996. The official citation is Pub. L. 104-320, 110 Stat. 3870 (1996). Both statutes will be codified in

title 5 of the United States Code as subchapters of the Administrative Procedure Act, 5 U.S.C. '551 et seq. The Administrative Dispute Resolution Act of 1996 reauthorizes and amends its predecessor, the Administrative Dispute Resolution Act of 1990, Pub. L. 101-552, 104 Stat. 2736 (1990), as amended by Pub. L. 102-354 (the Administrative Procedure Technical Amendments Act of 1991). Similarly, the Negotiated Rulemaking Act of 1996 amends its predecessor, the Negotiated Rulemaking Act of 1990, Pub. L. 101-648, 104 Stat. 4969 (1990), as also amended by Pub. L. 102-354.

Legislative History

On September 5, 1995, the Administrative Dispute Resolution Act of 1995, S. 1224, was introduced in the Senate (104th Cong., 1st Sess.) and subsequently referred to the Committee on Government Affairs. Introductory information and statements can be found at 141 Cong. Rec. S12959-12961 (daily ed., September 8, 1995). Hearings were held on November 29, 1995, before the Subcommittee on Oversight of Government Management and the District of Columbia. A mark-up by the full committee occurred on December 12, 1995, and the bill was ordered reported to the Senate. On March 27, 1996, the Committee on Government Affairs submitted its report, S. Rept. 104-245, and the bill was placed on the Senate calendar.

Meanwhile, the Subcommittee on Commercial and Administrative Law of the House Committee on the Judiciary held a public hearing on federal agency use of administrative dispute resolution on December 12, 1995. As no bill had been introduced in the House, the hearing was in the nature of oversight. A bill comparable to the Senate bill, entitled the Administrative Dispute Resolution Act of 1996, H.R. 2977, was introduced in the House of Representatives on February 27, 1996 (104th Cong., 2d Sess.) and referred to the House Committee on the Judiciary. The Subcommittee on Commercial and Administrative Law marked-up H.R. 2977 on February 29, 1996, and cleared it to the full committee. The full Committee marked up the bill on March 12, 1996, and ordered it reported. The House report, H. Rept. 104-597, was filed on May 26, 1996. Subsequently, H.R. 2977 was called up under a motion to suspend the rules and considered, amended, and passed by the House on June 4, 1996. Information and statements can be found at 142 Cong. Rec. H5786-5789 (daily ed., June 4, 1996).

The measure as passed in the House was placed on the Senate calendar on June 5, 1996; and on June 12, 1996, the Senate incorporated H.R. 2977 into S. 1224, further amended the measure, and passed H.R. 2977, in lieu of S. 1224, by unanimous consent. Conferees were appointed by the House and Senate, as the amended bill passed by the Senate differed from the version of H.R. 2977 passed by the House. The chief substantive differences concerned mediator confidentiality, including FOIA disclosure, and binding arbitration. In addition, the Senate bill, but not the version passed in the House, contained a provision reauthorizing the Negotiated Rulemaking Act and an unrelated amendment concerning federal contract bid protests. On September 25, 1996, the Conference Report, H. Rept. 104-841, addressing and resolving the differences, was filed in the House. The full text of the Conference Report is printed at 142 Cong. Rec. H11108-11111 (daily ed., September 25, 1996).

On September 26, 1996, the Administrative Dispute Act of 1996, H.R. 4194, a substitute bill that conformed to the Conference Report, was introduced in the House. The bill was passed by the House the following day, September 27, and sent to the Senate. On September 30, 1996, the measure was called up by unanimous consent in the Senate, considered, further amended, and passed by the Senate, as amended. The House agreed to accept the Senate amendments on October 4, 1996, and the enrolled bill was signed into law by the President on October 19, 1996.

Commentary

In this document, major changes in the 1996 Acts are first briefly described in an AOverview@ section. The complete text of the 1996 Acts follows. Commentary, in bold italic type, setting forth additional information, explanation, and history immediately follows relevant provisions of the Acts.

OVERVIEW

Permanent Enactment

The 1996 Act amends and permanently reenacts the Administrative Dispute Resolution Act of 1990 and the Negotiated Rulemaking Act of 1990, each of which had included sunset (expiration) dates. Permanent reenactment was accomplished by repealing Sec. 11 of the 1990 ADR Act, entitled ASunset Provision,@ which had terminated the authority of agencies to use dispute resolution proceedings under the Act on October 1, 1995, and by repealing a similar provision of the Negotiated Rulemaking Act of 1990, 5 U.S.C. '561 note, which scheduled that Act to expire on November 29, 1996. The 1990 Acts also contained extensive requirements for reporting to Congress on federal agencies= use of alternative dispute resolution (AADR@) and negotiated rulemaking (also known as regulatory negotiation or Areg-neg@), but these requirements are not part of the 1996 Acts, suggesting that Congress has come to view the ADR and reg-neg Ainnovations@ of the 1990 Acts as regular administrative processes to be used by federal agencies.

Broadened Coverage

The Administrative Dispute Resolution Act of 1996 broadens coverage beyond its predecessor Act in two ways. First, in '571(3), an additional dispute resolution technique,Ause of ombuds@ (ombudsmen), is included in the definition of Aalternative means of dispute resolution.@ Note, also, that the term Asettlement negotiations,@ used in the 1990 Act, is removed from '571(3), apparently to clarify that ADR procedures under the Act must involve the participation of a third-party neutral. While all alternatives to litigation, including direct settlement negotiations between parties, are generally favored, this language makes clear that the Act=s statutory protections (for example, confidentiality) are reserved for procedures under the Act using a neutral.

Second, coverage is broadened by ending exemptions in '571(8) that had made the use of ADR under the 1990 Act inapplicable to certain federal workplace conflicts set out in 5 U.S.C. '2302 (various prohibited personnel practices, including appointing relatives to government positions, coercing political activity, and preventing a person from competing for employment) and 5 U.S.C. '7121 (matters not subject to negotiated grievance procedures in collective bargaining agreements involving federal employees, including Hatch Act violations, retirement and insurance, and certain suspensions, removals, examinations, and appointments). The purpose and benefit of excluding these issues from the 1990 Act were never entirely clear; and to the extent that ADR procedures might aid in resolving such issues, Congress has now permitted their use.

Enhanced Confidentiality Protections

Congress understands that confidentiality is critically important to the success of dispute resolution proceedings and provides explicit protection for confidential communications in ADR proceedings. In doing this, Congress also seeks to maintain a balance between the openness required of governmental actions in a democracy and the confidentiality required to reach agreement in dispute resolution proceedings. The 1990 ADR Act had provided for the confidentiality of dispute resolution communications, but the communications were not exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. '552. This had several consequences. First, federal parties in a dispute resolution proceeding and the neutral, if the neutral were a government employee or official, might be required to disclose confidential information, which particularly inhibited the use of government personnel as neutrals, although such use is permitted under the Act. Second, private parties, who enjoy significant confidentiality protection for settlement discussions under Federal Rule of Evidence 408, may have avoided using ADR to resolve disputes with the federal government because of concerns that business competitors might force disclosure of proprietary information revealed in the ADR proceeding.

Congress provides additional confidentiality in the 1996 Act, specifically exempting from FOIA disclosure the neutrals= notes and communications between neutrals and parties, except under certain specific circumstances set out in the Act. In addition, communications generated by the neutral for the use of parties in a proceeding, such as early neutral evaluations or settlement proposals, are also protected from FOIA disclosure. The confidentiality provisions are found at '574.

Binding Arbitration

The 1990 ADR Act authorized federal agencies to resolve disputes through binding arbitration, but permitted the head of an agency to unilaterally vacate any arbitral award within 30 days. In these circumstances, private parties were unwilling to enter into binding arbitration with government agencies. The 1996 Act eliminates the one-way rights of agencies to vacate decisions. Agencies are authorized to engage in binding arbitration, as long as its use comports with the criteria governing the appropriate use of ADR set forth in '572 of the Act. Agencies are also required to specify the maximum award the arbitrator may issue in a case; and, prior to engaging in binding arbitration, agency heads are to issue guidance, after consultation with the Attorney General, on the appropriate use of arbitration. Congress made these changes by amending ''575, 580, and 581 of the Act.

Expedited Acquisition of Neutrals

To encourage federal agency use of ADR, the 1996 Acts seek to make it easier for federal agencies to procure expeditiously the services of experts or neutrals for alternative dispute resolution and negotiated rulemaking proceedings. This is accomplished in both Acts by

amending the competitive bidding and award requirements for federal agency contacts

(41 U.S.C.'253(c)(3)(C)) and defense agency contracts (10 U.S.C. '2304(c)(3)(C)), thereby authorizing agencies to use other than fully competitive procedures to procure the services of an expert or neutral. In addition, '573 of the ADR Act is amended to make the Presidentially-designated agency or interagency committee, first mentioned in section 3(a)(1) (see, AFederal Consulting and Coordinating,@ below), responsible for developing procedures that will permit agencies to obtain the services of neutrals on an expedited basis.

Encouragement of Reg-Neg

Congress permanently reauthorizes and amends the Negotiated Rulemaking Act of 1990, authorizes appropriations as necessary to carry out the Act, and requires the President to designate an agency or interagency committee to facilitate and encourage federal agencies= use of negotiated rulemaking, a provision similar to Sec. 3(a)(1) of the 1996 ADR Act. The Joint Explanatory Statement of the Committee of Conference, Conference Report (H. Rept. 104-841), 142 Cong. Rec. H11110 (daily ed., September 25, 1996), encourages the President to designate the same entity under both the Alternative Dispute Resolution Act and the Negotiated Rulemaking Act to Apromote the coordination of policies, enhance institutional memory on the relevant issues, and make more efficient use of ADR and Negotiated Rulemaking.@ In addition, to further encourage federal agency use of reg-neg, '569(e) of the Act orders the Director of the Office of Management and Budget (OMB) to expedite and simplify the administrative requirements for establishing negotiating committees, in particular the chartering requirements of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. The Director is required to submit recommendations for any necessary legislative changes to Congress within one year.

Federal Consulting and Coordinating

In sections 3(a)(1) and 573 of the Administrative Dispute Resolution Act and in comparable section 569(a) of the Negotiated Rulemaking Act, the 1996 Acts direct the President to create one or more locations in the federal government to encourage and facilitate the use of ADR and reg-neg and to assist agencies in the expeditious acquisition of neutrals.

The Administrative Dispute Resolution Act of 1996

Pub. Law 104-320

(amending Pub. Law 101-552 and Pub. Law 102-354)

Sec. 1. Short Title

This Act may be cited as the AAdministrative Dispute Resolution Act of 1996.@

Sec. 2. Findings

The Congress finds that--

(1) administrative procedure, as embodied in chapter 5 of title 5, United States Code, and other statutes, is intended to offer a prompt, expert, and inexpensive means of resolving disputes as an alternative to litigation in the Federal courts;

(2) administrative proceedings have become increasingly formal, costly, and lengthy resulting in unnecessary expenditures of time and in a decreased likelihood of achieving consensual resolution of disputes;

(3) alternative means of dispute resolution have been used in the private sector for many years and, in appropriate circumstances, have yielded decisions that are faster, less expensive, and less contentious;

(4) such alternative means can lead to more creative, efficient, and sensible outcomes;

(5) such alternative means may be used advantageously in a wide variety of administrative programs;

(6) explicit authorization of the use of well-tested dispute resolution techniques will eliminate ambiguity of agency authority under existing law;

(7) Federal agencies may not only receive the benefit of techniques that were developed in the private sector, but may also take the lead in the further development and refinement of such techniques; and

(8) the availability of a wide range of dispute resolution procedures, and an increased understanding of the most effective use of such procedures, will enhance the operation of the Government and better serve the public.

Commentary: This section of the Act is unchanged from the 1990 version and sets forth Congress= intent and rationale for passage of the Act.

Sec. 3. Promotion of Alternative Means of Dispute Resolution

(a) Promulgation of Agency Policy.--Each agency shall adopt a policy that addresses the use of alternative means of dispute resolution and case management. In developing such a policy, each agency shall--

(1) consult with the agency designated by, or the interagency committee designated or established by, the President under section 573 of title 5, United States Code, to facilitate and encourage agency use of alternative dispute resolution under subchapter IV of chapter 5 of such title; and

(2) examine alternative means of resolving disputes in connection with--

(A) formal and informal adjudications;

(B) rulemakings;

(D) issuing and revoking licenses or permits;

(E) contract administration;

(F) litigation brought by or against the agency; and

(G) other agency actions.

(b) Dispute Resolution Specialists.--The head of each agency shall designate a senior official to be the dispute resolution specialist of the agency. Such official shall be responsible for the implementation of--

(1) the provisions of this Act and the amendments made by this Act; and

(2) the agency policy developed under subsection (a)

(c) Training.--Each agency shall provide for training on a regular basis for the dispute resolution specialist of the agency and other employees involved in implementing the policy of the agency developed under subsection (a). Such training should encompass the theory and practice of negotiation, mediation, arbitration, or related techniques. The dispute resolution specialist shall periodically recommend to the agency head agency employees who would benefit from similar training.

(d) Procedures for Grants and Contracts.

(1) Each agency shall review each of its standard agreements for contracts, grants, and other assistance and shall determine whether to amend any such standard agreements to authorize and encourage the use of alternative means of dispute resolution.

(2) (A) Within 1 year after the date of the enactment of this Act [Nov. 15, 1990], the Federal Acquisition Regulation shall be amended, as necessary, to carry out this Act and the amendments made by this Act.

(B) For purposes of this section, the term `Federal Acquisition Regulation' means the single system of Government-wide procurement regulation referred to in section 6(a) of the Office of Federal Procurement Policy Act (41 U.S.C. 405(a)).

Commentary: Under Sec. 3, which is virtually identical in the 1990 Act, agencies retain maximum flexibility in determining whether and how to use ADR; but four (4) requirements are imposed. Each agency must: (1) appoint a senior official as the agency=s Adispute resolution specialist@ (DRS) to take the lead in developing and implementing the agency=s ADR policy; (2) develop an ADR policy with appropriate consultation; (3) provide

training for the DRS and other key employees; and (4) review and amend, as appropriate, the agency=s standard contracts and grant agreements to encourage the use of ADR in resolving disputes under them. The only 1996 amendment is found in Sec. 3(a)(1) and reflects the closure of the Administrative Conference of the United States (ACUS). It requires agencies adopting policies addressing the use of ADR in dispute resolution and case management to Aconsult with the agency designated by, or the interagency committee designated or established by, the President under section 573 of title 5, United States Code, to facilitate and encourage agency use of alternative dispute resolution under subchapter IV of chapter 5 of such title.@ The 1990 Act provided for such consultation by the Administrative Conference of the United States. Section 573, referred to in this provision, concerns third-party neutrals. The 1996 ADR Act also amends '573 by charging the agency or interagency committee created in Sec. 3 with developing procedures permitting agencies to obtain the services of third-party neutrals on an expedited basis. Section 573 is discussed further, below.

Sec. 4. Administrative Procedures.

(a) Administrative Hearings.--Section 556(c) of title 5, United States Code, is amended--

(1) in paragraph (6) by inserting before the semicolon at the end thereof the following: "or by the use of alternative means of dispute resolution as provided in subchapter IV of this chapter"; and

(2) by redesignating paragraphs (7) through (9) as paragraphs (9) through (11), respectively, and inserting after paragraph (6) the following new paragraphs:

"(7) inform the parties as to the availability of one or more alternative means of dispute resolution, and encourage use of such methods;

"(8) require the attendance at any conference held pursuant to paragraph (6) of at least one representative of each party who has authority to negotiate concerning resolution of issues in controversy;".

Commentary: Sec.4(a) is unchanged by the 1996 amendments. In the 1990 Act, this provision amended a section of the Administrative Procedure Act, 5 U.S.C. '556, which governs the conduct of hearings required by section 553 (rulemaking) or section 554 (adjudications),

explicitly authorizing and encouraging the use of ADR in such proceedings and empowering the presiding official to require the attendance of party representatives to negotiate resolution of the issue(s) in controversy.

(b) Alternative Means of Dispute Resolution.--Chapter 5 of title 5, United States Code, is amended by adding at the end the following new subchapter:

ASubchapter IV Alternative Means of Dispute Resolution in the Administrative Process

'571. Definitions.

'572. General authority.

'573. Neutrals.

'574. Confidentiality.

'575. Authorization of arbitration.

'576. Enforcement of arbitration agreements.

'577. Arbitrators.

'578. Authority of the arbitrator.

'579. Arbitration proceedings.

'580. Arbitration awards.

'581. Judicial review.

'582. Compilation of Information (Repealed).

'583. Support services.

'584. Authorization of appropriations (New).

This subsection of the original 1990 Act amended the Administrative Procedure Act (APA) by adding a new subchapter IV, comprising sections 571-583, entitled AAlternative Means of Dispute Resolution in the Administrative Process,@ to title 5 of the U.S. Code (codified as 5 U.S.C. ''571-583). Provisions of the 1996 Act further amend various of these sections:

'571 (Definitions), '573 (Neutrals), '574 (Confidentiality), '575 (Authorization of Arbitration), '580 (Arbitration Awards), '581 (Judicial Review), and '583 (Support Services). In addition, '582 (Compilation of Information) is repealed, and a new section, '584 (Authorization of Appropriations), is added. These changes are discussed, section by section, below.

'571. Definitions

For the purposes of this subchapter, the term--

(1) "agency" has the same meaning as in section 551(1) of this title;

(2) "administrative program" includes a Federal function which involves protection of the public interest and the determination of rights, privileges, and obligations of private persons

through rule making, adjudication, licensing, or investigation, as those terms are used in subchapter II of this chapter;

(3) "alternative means of dispute resolution" means any procedure that is used to resolve issues in controversy, including, but not limited to, conciliation, facilitation, mediation, fact finding, minitrials, arbitration, and use of ombuds, or any combination thereof;

(4) "award" means any decision by an arbitrator resolving the issues in controversy;

(5) "dispute resolution communication" means any oral or written communication prepared for the purposes of a dispute resolution proceeding, including any memoranda, notes or work product of the neutral, parties or nonparty participant; except that a written agreement to enter into a dispute resolution proceeding, or final written agreement or arbitral award reached as a result of a dispute resolution proceeding, is not a dispute resolution communication;

(6) "dispute resolution proceeding" means any process in which an alternative means of dispute resolution is used to resolve an issue in controversy in which a neutral is appointed and specified parties participate;

(7) "in confidence" means, with respect to information, that the information is provided--

(A) with the expressed intent of the source that it not be disclosed; or

(B) under circumstances that would create the reasonable expectation on behalf of the source that the information will not be disclosed;

(8) "issue in controversy" means an issue which is material to a decision concerning an administrative program of an agency, and with which there is disagreement--

(A) between an agency and persons who would be substantially affected by the decision; or

(B) between persons who would be substantially affected by the decision;

(9) "neutral" means an individual who, with respect to an issue in controversy, functions specifically to aid the parties in resolving the controversy;

(10) "party" means--

(A) for a proceeding with named parties, the same as in section 551(3) of this title; and

(B) for a proceeding without named parties, a person who will be significantly affected by the decision in the proceeding and who participates in the proceeding;

(11) "person" has the same meaning as in section 551(2) of this title; and

(12) "roster" means a list of persons qualified to provide services as neutrals.

Commentary: In '571, Congress broadens coverage under the 1996 Act in two ways. First, in '571(3), an additional dispute resolution technique, Ause of ombuds@ (ombudsmen), is included in the definition of Aalternative means of dispute resolution.@ Also, the term Asettlement negotiations@ that appeared in the 1990 Act is deleted from '571(3), apparently to clarify that ADR procedures under the Act must involve the participation of a third-party neutral. While all alternatives to litigation, including direct settlement negotiations between parties, are generally favored, this language makes clear that the Act=s statutory protections (for example, confidentiality) are reserved for procedures under the Act using a neutral.

'572. General authority

(a) An agency may use a dispute resolution proceeding for the resolution of an issue in controversy that relates to an administrative program, if the parties agree to such proceeding.

(b) An agency shall consider not using a dispute resolution proceeding if--

(1) a definitive or authoritative resolution of the matter is required for precedential value, and such a proceeding is not likely to be accepted generally as an authoritative precedent;

(2) the matter involves or may bear upon significant questions of Government policy that require additional procedures before a final resolution may be made, and such a proceeding would not likely serve to develop a recommended policy for the agency;

(3) maintaining established policies is of special importance, so that variations among individual decisions are not increased and such a proceeding would not likely reach consistent results among individual decisions;

(4) the matter significantly affects persons or organizations who are not parties to the proceeding;

(5) a full public record of the proceeding is important, and a dispute resolution proceeding cannot provide such a record; and

(6) the agency must maintain continuing jurisdiction over the matter with authority to alter the disposition of the matter in the light of changed circumstances, and a dispute resolution proceeding would interfere with the agency's fulfilling that requirement.

(c) Alternative means of dispute resolution authorized under this subchapter are voluntary procedures which supplement rather than limit other available agency dispute resolution techniques.

Commentary: Section 572, unchanged by the 1996 Act, amends the Administrative Procedure Act to make explicit, in subsection (a), the authority of agencies to use ADR processes to voluntarily resolve virtually all disputes in which an agency is involved, either as a party or as the forum for rendering a decision. Subsection (c) emphasizes that the use of ADR must be

voluntary -- that is, all parties to the dispute must agree to its use, and its use cannot be a condition of a government contract or benefit -- and that ADR should supplement, rather than limit, other available methods of resolving disputes.

Congress also recognizes that ADR processes might not be appropriate in all situations. In '572(b), circumstances in which an agency should Aconsider not using@ ADR are listed. The use of ADR is never prohibited; indeed, the language of '572(b) indicates it is presumed generally appropriate. Rather, '572(b) identifies a number of situations in which an agency might decide not to use ADR, for example, matters requiring an authoritative or precedent-setting decision or cases that need to be resolved based on a public record. The list is not exhaustive. Other circumstances may arise that also would caution against a decision to use ADR. The fact that one or more of the listed circumstances exist does not necessarily bar the use of ADR to resolve a matter. In this regard, '581(b), below, makes an agency=s decision to use or not use ADR in any case is not subject to judicial review.

Note, also, that the '572(b) situations are referenced in '575, AAuthorization of arbitration.@ Subsection 575(c), added by the 1996 amendments, requires heads of agencies to take these Afactors@ into account in issuing required guidance on the use of binding arbitration.

'573. Neutrals

(a) A neutral may be a permanent or temporary officer or employee of the Federal Government or any other individual who is acceptable to the parties to a dispute resolution proceeding. A neutral shall have no official, financial, or personal conflict of interest with respect to the issues in controversy, unless such interest is fully disclosed in writing to all parties and all parties agree that the neutral may serve.

(b) A neutral who serves as a conciliator, facilitator, or mediator serves at the will of the parties.

(c) The President shall designate an agency or designate or establish an interagency committee to facilitate and encourage agency use of dispute resolution under this subchapter. Such agency or interagency committee, in consultation with other appropriate Federal agencies and

professional organizations experienced in matters concerning dispute resolution, shall--

(1) encourage and facilitate agency use of alternative means of dispute resolution; and

(2) develop procedures that permit agencies to obtain the services of neutrals on an expedited basis.

(d) An agency may use the services of one or more employees of other agencies to serve as neutrals in dispute resolution proceedings. The agencies may enter into an interagency agreement that provides for the reimbursement by the user agency or the parties of the full or partial cost of the services of such an employee.

(e) Any agency may enter into a contract with any person for services as a neutral, or for training in connection with alternative means of dispute resolution. The parties in a dispute resolution

proceeding shall agree on compensation for the neutral that is fair and reasonable to the Government.

Commentary: A Aneutral@ is defined in '571(9) of the Act as Aan individual who, with respect to an issue in controversy, functions specifically to aid the parties in resolving the controversy.@ It is commonly understood, as well, that a Aneutral@ is one who has no interest in the outcome of the controversy. In proceedings under the Acts, a neutral may be identified as a mediator, facilitator, convenor, arbitrator, or by any other appropriate title. Subsections (a), (b), and (d), originally enacted in 1990, provide that the neutral can be a federal employee or any other individual acceptable to the parties, that the neutral (except arbitrators) serves Aat the will of the parties,@ and that the neutral should not have any official, financial, or personal conflict of interest with regard to the issues in controversy. A neutral with a conflict of interest may still serve, however, if s/he fully discloses the conflict in writing and all parties agree that the neutral should serve. No other qualifications for neutrals are specified. Agencies are authorized to use employees of other federal agencies as neutrals under reimbursable interagency agreements.

The 1996 Act focuses on two ways to expedite the acquisition of neutral services: (1) by amending subsection (c) of '573, and (2) by amending federal procurement statutes. First, in amending '573, Congress strikes all of subsection (c) of the 1990 Act, which authorized the Administrative Conference of the United States (ACUS), in consultation with the Federal Mediation and Conciliation Service (FMCS), to establish standards for neutrals, maintain a roster of neutrals, contract for the services of neutrals to be used by agencies, and develop procedures permitting agencies to obtain the services of neutrals on an expedited basis. A new subsection (c) is inserted, providing: A(c) The President shall designate an agency or designate or establish an interagency committee to facilitate and encourage agency use of dispute resolution under this subchapter. Such agency or interagency committee, in consultation with other appropriate Federal agencies and professional organizations experienced in matters concerning dispute resolution, shall -- (1) encourage and facilitate agency use of alternative means of dispute resolution; and (2) develop procedures that permit agencies to obtain the services of neutrals on an expedited basis.@

This designated agency or interagency committee is the same one created and charged in Sec.3(a)(1) of the Act with facilitating and encouraging agency use of ADR.; section 573 adds the additional requirement that the agency or interagency committee develop procedures permitting agencies to obtain the services of neutrals on an expedited basis. The other requirements of prior subsection (c) -- establishing standards for neutrals, maintaining a roster of neutrals, and contracting for neutrals= services on behalf of agencies -- are not made part of the designated agency=s or interagency committee=s responsibilities.

The second way the 1996 Act addresses the expedited hiring of neutrals involves the statutory competitive requirements for procurement related to the hiring of neutrals by federal civilian and defense agencies. The competitive requirements for federal agency contracts (41 U.S.C. '253(c)(3)(C)) and for defense agency contracts (10 U.S.C. 2304(3)(c)(C)) are amended to authorize the head of an agency to use other than full competitive procedures A. . . to procure the services of an expert or neutral for use in any part of an alternative dispute resolution or negotiated rulemaking process, . . . .@ This means that neutrals may be hired under procedures less burdensome and time-consuming than Afull and open@ competition and, therefore, on an expedited basis. However, other applicable procurement requirements, for example, relevant Small Business Act requirements, are not waived. To the extent that federal procurement requirements prevent the expeditious acquisition of neutrals, these amendments are designed to address the problem. Depending on how agencies implement these provisions, the amendments may represent a solution, at least in part, to the task Congress has set out for the designated agency or interagency committee in '573(c)(2), i.e., to develop procedures permitting agencies to obtain the services of neutrals on an expedited basis.

'574. Confidentiality

(a) Except as provided in subsections (d) and (e), a neutral in a dispute resolution proceeding shall not voluntarily disclose or through discovery or compulsory process be required to disclose any dispute resolution communication or any communication provided in confidence to the neutral, unless--

(1) all parties to the dispute resolution proceeding and the neutral consent in writing, and, if the dispute resolution communication was provided by a nonparty participant, that participant also consents in writing;

(2) the dispute resolution communication has already been made public;

(3) the dispute resolution communication is required by statute to be made public, but a neutral should make such communication public only if no other person is reasonably available to disclose the communication; or

(4) a court determines that such testimony or disclosure is necessary to--

(A) prevent a manifest injustice;

(B) help establish a violation of law; or

of sufficient magnitude in the particular case to outweigh the integrity of dispute resolution proceedings in general by reducing the confidence of parties in future cases that their communications will remain confidential;

(b) A party to a dispute resolution proceeding shall not voluntarily disclose or through discovery or compulsory process be required to disclose any dispute resolution communication, unless--

(1) the communication was prepared by the party seeking disclosure;

(2) all parties to the dispute resolution proceeding consent in writing;

(3) the dispute resolution communication has already been made public;

(4) the dispute resolution communication is required by statute to be made public;

(5) a court determines that such testimony or disclosure is necessary to--

(A) prevent a manifest injustice;

(B) help establish a violation of law; or

(6) the dispute resolution communication is relevant to determining the existence or meaning of an agreement or award that resulted from the dispute resolution proceeding or to the enforcement of such an agreement or award; or

(7) except for dispute resolution communications generated by the neutral, the dispute resolution communication was provided to or was available to all parties to the dispute resolution proceeding.

(c) Any dispute resolution communication that is disclosed in violation of subsection (a) or (b), shall not be admissible in any proceeding relating to the issues in controversy with respect to which the communication was made.

(d) (1) The parties may agree to alternative confidential procedures for disclosures by a neutral. Upon such agreement the parties shall inform the neutral before the commencement of the dispute resolution proceeding of any modifications to the provisions of subsection (a) that will govern the confidentiality of the dispute resolution proceeding. If the parties do not so inform the neutral, subsection (a) shall apply.

(2) To qualify for the exemption established under subsection (j), an alternative confidential procedure under this subsection may not provide for less disclosure than the confidential procedures otherwise provided under this section.

(e) If a demand for disclosure, by way of discovery request or other legal process, is made upon a neutral regarding a dispute resolution communication, the neutral shall make reasonable efforts to notify the parties and any affected nonparty participants of the demand. Any party or

affected nonparty participant who receives such notice and within 15 calendar days does not offer to defend a refusal of the neutral to disclose the requested information shall have waived any objection to such disclosure.

(f) Nothing in this section shall prevent the discovery or admissibility of any evidence that is otherwise discoverable, merely because the evidence was presented in the course of a dispute resolution proceeding.

(g) Subsections (a) and (b) shall have no effect on the information and data that are necessary to document an agreement reached or order issued pursuant to a dispute resolution proceeding.

(h) Subsections (a) and (b) shall not prevent the gathering of information for research or educational purposes, in cooperation with other agencies, governmental entities, or dispute resolution programs, so long as the parties and the specific issues in controversy are not identifiable.

(I) Subsections (a) and (b) shall not prevent use of a dispute resolution communication to resolve a dispute between the neutral in a dispute resolution proceeding and a party to or participant in such proceeding, so long as such dispute resolution communication is disclosed only to the extent necessary to resolve such dispute.

(j) A dispute resolution communication which is between a neutral and a party and which may not be disclosed under this section shall also be exempt from disclosure under section 552(b)(3).

Commentary: Confidentiality is often critical to successful dispute resolution. To encourage and protect the integrity of dispute resolution proceedings and the confidence of parties in future cases that their communications will remain confidential, Congress provides that neither the neutral nor the parties should voluntarily disclose or be compelled to disclose a dispute resolution communication in any type of case or proceeding except under specifically enumerated circumstances. A Adispute resolution communication@ is defined in '571(5) as Aany oral or written communication prepared for the purpose of a dispute resolution proceeding, including any memoranda, notes, or work product of the neutral, parties or nonparty participants . . . .@ This definition excludes from protection a written agreement to enter into a dispute resolution proceeding and a final written settlement agreement or arbitral award reached as a result of the proceeding.

Subsection 574(a) is directed to the neutral and provides that a Aneutral in a dispute resolution proceeding shall not voluntarily disclose or through discovery or compulsory process be required to disclose any dispute resolution communication or any communication provided in confidence@ except in four (4) specific circumstances: (1) all parties to the proceeding, or a nonparty who provided the communication, and the neutral consent to the disclosure in writing; or (2) the dispute resolution has already been made public; or (3) the dispute resolution communication is required by statute to be made public, and no other

person but the neutral is reasonably available to make the disclosure; or (4) a court determines the disclosure is necessary to prevent an injustice, establish a violation of law, or prevent serious harm to the public health and safety.

Subsection (b), directed to parties, says that a party shall not voluntarily disclose or through discovery or compulsory process be required to disclose any dispute resolution communication except in seven (7) specific circumstances: (1) the communication was prepared by the party seeking disclosure; or (2) all parties to the proceeding consent in writing; or (3) the communication has already been made public; or (4) the communication is required by statute to be made public; or (5) a court determines disclosure is necessary to prevent injustice, establish a violation of law, or prevent serious harm to public health and safety; or (6) disclosure of the communication is relevant to determining the existence or meaning of an agreement or award resulting from the dispute resolution proceeding, or enforcement of it; or (7) except for communications generated by the neutral, the communication was provided or available to all parties to the proceeding.

To enforce nondisclosure, '574(c) provides that a dispute resolution communication disclosed in violation of subsections (a) and (b) is not admissible in any proceeding relating to the issues in controversy for which the dispute resolution communication was made. Under '574 (e), the neutral must make reasonable efforts to notify parties and affected nonparty participants of demands made on him or her for dispute resolution communications by discovery or other legal process, and parties or affected nonparties who do not offer within 15 days of notification to defend the neutral=s refusal to disclose are deemed to have waived any objection to disclosure. Even if parties are deemed to have waived their objections, the neutral may have independent grounds for nondisclosure.

Involvement of the neutral in the communication is the threshold predicate for confidentiality protection. The Act does not provide any new protection for communications originating from a party and given to another party or parties. Congress enacted the confidentiality provisions to protect and encourage confidential communications between the neutral and the parties -- a key to the success of dispute resolution proceedings. Thus, communications between and among parties are not afforded any greater (or less) confidentiality protection than any unassisted settlement negotiations. In addition, subsection 574(b)(7) protects communications originating from the neutral and provided to all parties, such as early neutral evaluations and settlement proposals, to facilitate the use of such techniques in resolving disputes. Congress makes clear its intent to protect such communications in the AJoint Explanatory Statement of the Committee of Conference,@ appended to the Conference Report (H. Rept. 104-841), 142 Cong. Rec. H11108-11111. On the other hand, Congress was also concerned that confidentiality protection not be used as a sham. In this regard, subsection (f) clarifies that otherwise discoverable evidence cannot be protected from disclosure simply by presenting it in the course of a dispute resolution proceeding, and the Joint Explanatory Statement of the Committee of Conference emphasizes that efforts to thwart the nondisclosure provisions (for example, by passing a communication from one party to another through the neutral) will make the confidentiality protection inapplicable. 142 Cong. Rec. H11110.

Perhaps the most important enhancement to confidentiality made by the 1996 amendments is the statutory exemption for qualifying dispute resolution communications from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C.'552. FOIA requires all federal agencies to make agency records available to the public upon request, and Aagency records@ are defined as documents or information either created or obtained by an agency. There are statutory exemptions to FOIA disclosure, including Arecords that are specifically exempted from disclosure by statute. . . .@ 5 U.S.C. '552(b)(3). In the 1990 Act, Congress had declared that '574 was not a statute specifically exempting disclosure under '552(b)(3). Consequently, concerns arose that mediators or other third-party neutrals who were government employees, as well as agencies that were parties, might be required to disclose notes or other communications from dispute resolution proceedings.

Congress responded to those concerns in the 1996 Act by striking and replacing '574(j) with a new subsection, as follows: A(j) A dispute resolution communication which is between a neutral and a party and which may not be disclosed under this section shall also be exempt from disclosure under section 552(b)(3).@ Therefore, a dispute resolution communication between a party and a neutral or a neutral and a party that meets the standards for confidentiality set out in '574 is also exempt from disclosure under FOIA. Similarly, a dispute resolution communication originating from a neutral and provided to all parties, like an early neutral evaluation or a settlement proposal, already protected from disclosure under '574(b)(7), is also protected from disclosure under FOIA.

The final change to the Act=s confidentiality provisions is an amendment to '574(d). Under subsection (d) of the 1990 Act, parties were permitted to agree to Aalternative confidential procedures for disclosures by a neutral.@ Absent such agreement, the disclosure provisions of '574(a) applied. The 1996 Act retains this provision, which is renumbered subsection (d)(1); and adds a new subsection (d)(2): ATo qualify for the exemption established under subsection (j) [i.e., the exemption under FOIA], an alternative confidential procedure under this section may not provide for less disclosure than the confidential procedures otherwise provided under this section.@

'575. Authorization of arbitration

(a) (1) Arbitration may be used as an alternative means of dispute resolution whenever all parties consent. Consent may be obtained either before or after an issue in controversy has arisen. A party may agree to--

(A) submit only certain issues in controversy to arbitration; or

(B) arbitration on the condition that the award must be within a range of possible outcomes.

(2) The arbitration agreement that sets forth the subject matter submitted to the arbitrator shall be in writing. Each such arbitration agreement shall specify a maximum award that may be

issued by the arbitrator and may specify other conditions limiting the range of possible outcomes.

(3) An agency may not require any person to consent to arbitration as a condition of entering into a contract or obtaining a benefit.

(b) An officer or employee of an agency shall not offer to use arbitration for the resolution of issues in controversy unless such officer or employee--

(1) would otherwise have authority to enter into a settlement concerning the matter; or

(2) is otherwise specifically authorized by the agency to consent to the use of arbitration.

(c) Prior to using binding arbitration under this subchapter, the head of an agency, in consultation with the Attorney General and after taking into account the factors in section 572(b), shall issue guidance on the appropriate use of binding arbitration and when an officer or employee of the agency has authority to settle an issue in controversy through binding arbitration.

Commentary: Sections 575-581 relate to arbitration, an ADR technique in which the parties present their dispute to a neutral, called an arbitrator, who renders a decision that may be binding on them. Unlike mediation and similar consensus-based techniques, in which the neutral assists the parties in reaching a voluntary agreement, arbitration more closely resembles adjudication. Nonetheless, binding arbitration under the Act may offer, in appropriate cases, alternative dispute resolution benefits to the parties, including speed and lower costs.

The 1990 Act had authorized federal agencies to use binding arbitration to resolve disputes; however, the technique was rarely used because the Act also gave the head of an agency the authority to terminate the proceeding or vacate any award issued within 30 days. The 1996 Act amends ''575, 580, and 581 to eliminate the unilateral vacation right of agencies while, at the same time, imposing some additional requirements on agencies to ensure that an arbitration award does not overwhelm an agency=s budget. These amendments are intended to make more likely the use of binding arbitration in appropriate cases, particularly in government contract claims and in the resolution of disputes arising under ongoing contracts and agreements. The other sections of the Act relating to arbitration remain unchanged from the 1990 version. Title 9 of the U.S. Code, referenced in these sections, is entitled AArbitration@ and sets forth federal arbitration law.

While permitting the use of binding arbitration, Congress amends '575 to impose three (3) limitations on agencies= binding arbitration authority. First, under amended subsection (a)(2), each agreement to arbitrate must specify a maximum award -- that is, a ceiling on the amount the arbitrator can award. No minimum award, or floor, need be specified. The agreement may also specify other conditions limiting the range of possible outcomes. Second, amendments to subsection 3(b)(1) require that the agency officer or official offering to use arbitration must possess settlement authority. Third, a new subsection (c) is added, requiring an agency head, in consultation with the Attorney General and in conformity with the criteria for appropriate use of ADR set forth in '572, to issue guidance on the use of arbitration and the settlement authority of agency officers and employees prior to entering into binding arbitration.

'576. Enforcement of arbitration agreements

An agreement to arbitrate a matter to which this subchapter applies is enforceable pursuant to section 4 of title 9, and no action brought to enforce such an agreement shall be dismissed nor shall relief therein be denied on the grounds that it is against the United States or that the United States is an indispensable party.

'577. Arbitrators

(a) The parties to an arbitration proceeding shall be entitled to participate in the selection of the arbitrator

(b) The arbitrator shall be a neutral who meets the criteria of section 573 of this title.

'578. Authority of the arbitrator

An arbitrator to whom a dispute is referred under this subchapter may- (1) regulate the course of and conduct arbitral hearings; (2) administer oaths and affirmations;

(3) compel the attendance of witnesses and production of evidence at the hearing under the provisions of section 7 of title 9 only to the extent the agency involved is otherwise authorized by law to do so; and

(4) make awards.

'579. Arbitration proceedings

(a) The arbitrator shall set a time and place for the hearing on the dispute and shall notify the parties not less than 5 days before the hearing. (b) Any party wishing a record of the hearing shall--

(1) be responsible for the preparation of such record other parties and the arbitrator of the preparation of such record;

(3) furnish copies to all identified parties and the arbitrator; and

(4) pay all costs for such record, unless the parties agree otherwise or the arbitrator determines that the costs should be apportioned.

(c) (1) The parties to the arbitration are entitled to be heard, to present evidence material to the controversy, and to cross-examine witnesses appearing at the hearing.

(2) The arbitrator may, with the consent of the parties, conduct all or part of the hearing by telephone, television, computer, or other electronic means, if each party has an opportunity to participate.

(3) The hearing shall be conducted expeditiously and in an informal manner.

(4) The arbitrator may receive any oral or documentary evidence, except that irrelevant, immaterial, unduly repetitious, or privileged evidence may be excluded by the arbitrator.

(5) The arbitrator shall interpret and apply relevant statutory and regulatory requirements, legal precedents, and policy directives.

(d) No interested person shall make or knowingly cause to be made to the arbitrator an unauthorized ex parte communication relevant to the merits of the proceeding, unless the parties agree otherwise. If a communication is made in violation of this subsection, the arbitrator shall ensure that a memorandum of the communication is prepared and made a part of the record, and that an opportunity for rebuttal is allowed. Upon receipt of a communication made in violation of this subsection, the arbitrator may, to the extent consistent with the interests of justice and the policies underlying this subchapter, require the offending party to show cause why the claim of such party should not be resolved against such party as a result of the improper conduct.

(e) The arbitrator shall make the award within 30 days after the close of the hearing, or the date of the filing of any briefs authorized by the arbitrator, whichever date is later, unless--

(1) the parties agree to some other time limit; or

(2) the agency provides by rule for some other time limit.

'580. Arbitration awards

(a) (1) Unless the agency provides otherwise by rule, the award in an arbitration proceeding under this subchapter shall include a brief, informal discussion of the factual and legal basis for the award, but formal findings of fact or conclusions of law shall not be required.

(2) The prevailing parties shall file the award with all relevant agencies, along with proof of service on all parties.

(b) The award in an arbitration proceeding shall become final 30 days after it is served on all parties. Any agency that is a party to the proceeding may extend this 30-day period for an additional 30-day period by serving a notice of such extension on all other parties before the end of the first 30-day period.

(c) A final award is binding on the parties to the arbitration proceeding, and may be enforced pursuant to sections 9 through 13 of title 9. No action brought to enforce such an award shall be dismissed nor shall relief therein be denied on the grounds that it is against the United States or that the United States is an indispensable party.

(d) An award entered under this subchapter in an arbitration proceeding may not serve as an estoppel in any other proceeding for any issue that was resolved in the proceeding. Such an

award also may not be used as precedent or otherwise be considered in any factually unrelated proceeding, whether conducted under this subchapter, by an agency, or in a court, or in any other arbitration proceeding.

Commentary: Section 580 is amended by striking the subsections in the 1990 Act that had permitted the head of the agency, but not other parties, to terminate an arbitration proceeding or vacate an arbitral award before the award became final (i.e., within 30 days). This unilateral power was, apparently, a bar to the use of arbitration, and Congress clearly intended these changes in '580 to result in an increased use of binding arbitration in appropriate cases.

'581. Judicial Review

(a) Notwithstanding any other provision of law, any person adversely affected or aggrieved by an award made in an arbitration proceeding conducted under this subchapter may bring an action for review of such award only pursuant to the provisions of sections 9 through 13 of title 9. (b) A decision by an agency to use or not to use a dispute resolution proceeding under this

subchapter shall be committed to the discretion of the agency and shall not be subject to judicial review, except that arbitration shall be subject to judicial review under section 10(b) of title 9.

Commentary: In accord with the amendments made to '580, above, section 581 is amended by striking a subsection that had specifically made unreviewable the actions of an agency head terminating an arbitration or vacating an award under the 1990 Act. Subsection (b) continues to provide, as it has since 1990, that an agency=s decision to use or not use an ADR technique in any given case to resolve a dispute is not subject to judicial review.

'582. ~~Compilation of information~~ (Repealed)

Commentary: This section, part of Congressional oversight in the 1990 Act, had required the Chairman of the Administrative Conference of the United States (ACUS) to compile and maintain data on the use of ADR in agency proceedings. No similar compilation or archival requirements are included in the 1996 Act.

'583. Support Services

For the purposes of this subchapter, an agency may use (with or without reimbursement) the services and facilities of other Federal agencies, State, local, and tribal governments, public and

private organizations and agencies, and individuals, with the consent of such agencies, organizations, and individuals. An agency may accept voluntary and uncompensated services for purposes of this subchapter without regard to the provisions of section 1342 of title 31.

Commentary: Section 583, originally in the 1990 Act, authorizes agencies to use the services and facilities of other agencies, public and private organization, and individuals, with their consent, and with or without reimbursement, in carrying out alternative dispute resolution

activities and permits agencies to accept voluntary and uncompensated services. The 1996 Act amends '583 by adding the services and facilities of AState, local, and tribal governments@ to the list of what may be used to carry out ADR activities.

'584. Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to carry out the purposes of this subchapter.

Commentary: This provision of the Act was added by the 1996 amendments.

Sec. 5. Judicial Review of Arbitration Awards.

Section 10 of title 9, United States Code, is amended--

(1) by designating subsections (a) through (e) as paragraphs (1) through (5), respectively; (2) by striking out "In either" and inserting in lieu thereof "(a) in any"; and

(3) by adding at the end thereof the following:

"(b) The United States district court for the district wherein an award was made that was issued pursuant to section 580 of title 5 may make an order vacating the award upon the application of a person, other than a party to the arbitration, who is adversely affected or aggrieved by the award, if the use of arbitration or the award is clearly inconsistent with the factors set forth in section 572 of title 5.".

Sec. 6. Government Contract Claims.

(a) Alternative Means of Dispute Resolution.--Section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) is amended by adding at the end the following new subsections:

"(d) Notwithstanding any other provision of this Act, a contractor and a contracting officer may use any alternative means of dispute resolution under subchapter IV of chapter 5 of title 5, United States Code, or other mutually agreeable procedures, for resolving claims. The contractor shall certify the claim when required to do so as provided under subsection (c)(1) or as otherwise required by law. All provisions of subchapter IV of chapter 5 of title 5, United States Code, shall apply to such alternative means of dispute resolution.

(b) Judicial Review of Arbitral Awards.--Section 8(g) of the Contract Disputes Act of 1978 (41 U.S.C. 607(g)) is amended by adding at the end the following new paragraph:

"(3) An award by an arbitrator under this Act shall be reviewed pursuant to sections 9 through 13 of title 9, United States Code, except that the court may set aside or limit any award

that is found to violate limitations imposed by Federal statute."

Commentary: The 1990 Act had amended the Contract Disputes Act to encourage use of ADR. The language of the 1990 provision, however, created an undesirable consequence: all claims submitted for resolution under ADR were required to be certified, regardless of amount. In cases where ADR was not used, only claims exceeding $100,000 are ordinarily required to be certified. This certification requirement was a disincentive for using ADR to resolve small claims where use of ADR might have been most appropriate. Congress amended subsection (d) in the 1996 Act to end the different thresholds for certification in claims submitted to ADR. The 1996 amendments also strike section 6(e) of the Contract Disputes Act, which had authorized agencies to resolve contract claims using ADR only until October 1, 1995. Removal of this additional Asunset@ provision makes permanent agencies= authority to resolve contract claims under ADR. Subsection (b) is unchanged from the 1990 Act.

Sec. 7. Federal Mediation and Conciliation Service.

Section 203 of the Labor Management Relations Act, 1947 (29 U.S.C. 173) is amended by adding at the end the following new subsection:

A(f) The Service may make its services available to Federal agencies to aid in the resolution of disputes under the provisions of subchapter IV of chapter 5 of title 5, United States Code. Functions performed by the Service may include assisting parties to disputes related to administrative programs, training persons in skills and procedures employed in alternative means of dispute resolution, and furnishing officers and employees of the Service to act as neutrals. Only officers and employees who are qualified in accordance with section 573 of title 5, United States Code, may be assigned to act as neutrals. The Service shall consult with the agency designated by, or the interagency committee designated or established by, the President under

section 573 of title 5, United States Code, in maintaining rosters of neutrals and arbitrators, and to adopt such procedures and rules as are necessary to carry out the services authorized in this subsection.@

Commentary: The 1990 Act amended section 203 of the Labor Management Relations Act, 29 U.S.C. '173, to authorize FMCS to make its ADR services available to federal agencies. The 1996 Act makes this authorization permanent. The only change is the substitution of Adesignated agency or committee@ for AAdministrative Conference of the United States@ because of the closure of the Conference, as discussed, above, n.4. This is the same designated agency or interagency committee named in Sec. 3(a)(1) and '573 of the Act. Note that substitution of the designated entity for ACUS without further amendment makes it appear that consultation could involve a roster of neutrals, despite the fact that the 1996 amendments to '573(c) and (e) dispense with the roster of neutrals.

Sec.8. Government Tort and Other Claims. (a) Federal Tort Claims.--Section 2672 of title 28, United States Code, is amended by adding at the end of the first paragraph the following: ANotwithstanding the proviso contained in the preceding sentence, any award, compromise, or settlement may be effected without the prior written approval of the Attorney General or his or her designee, to the extent that the Attorney General delegates to the head of the agency the authority to make such award, compromise, or settlement. Such delegations may not exceed the authority delegated by the Attorney General to the United States attorneys to settle claims for money damages against the United States. Each Federal agency may use arbitration, or other alternative means of dispute resolution under the provisions of subchapter IV of chapter 5 of title 5, to settle any tort claim against the United

States, to the extent of the agency's authority to award, compromise, or settle such claim without the prior written approval of the Attorney General or his or her designee.@ A(b) Claims of the Government.--Section 3711(a)(2) of title 31, United States Code, is amended by striking out A$20,000 (excluding interest)@ and inserting in lieu thereof A$100,000 (excluding interest) or such higher amount as the Attorney General may from time to time prescribe.@

Sec. 9. Use of Nonattorneys. (a) Representation of Parties.--Each agency, in developing a policy on the use of alternative means of dispute resolution under this Act, shall develop a policy with regard to the representation by persons other than attorneys of parties in alternative dispute resolution proceedings and shall identify any of its administrative programs with numerous claims or disputes before the agency and determine--

(1) the extent to which individuals are represented or assisted by attorneys or by persons who are not attorneys; and (2) whether the subject areas of the applicable proceedings or the procedures are so complex or specialized that only attorneys may adequately provide such representation or assistance. (b) Representation and Assistance by Nonattorneys.--A person who is not an attorney may provide representation or assistance to any individual in a claim or dispute with an agency, if--

(1) such claim or dispute concerns an administrative program identified under subsection (a); (2) such agency determines that the proceeding or procedure does not necessitate representation or assistance by an attorney under subsection (a)(2); and

(3)such person meets any requirement of the agency to provide representation or assistance in such a claim or dispute.

(c) Disqualification of Representation or Assistance.--Any agency that adopts regulations under subchapter IV of chapter 5 of title 5, United States Code, to permit representation or assistance by persons who are not attorneys shall review the rules of practice before such agency to-- (1) ensure that any rules pertaining to disqualification of attorneys from practicing before the agency shall also apply, as appropriate, to other persons who provide representation or assistance; and

(2) establish effective agency procedures for enforcing such rules of practice and for receiving complaints from affected persons.

Sec. 10. Definitions.

As used in this Act, the terms 'agency', 'administrative program', and 'alternative means of dispute resolution' have the meanings given such terms in section 571 of title 5, United States Code (enacted as section 581 of title 5, United States Code, by section 4(b) of this Act, and redesignated as section 571 of such title by section 3(b) of the Administrative Procedure Technical Amendments Act of 1991).

Sec. 11. Reauthorization of Negotiated Rulemaking Act of 1990.

(a) Permanent Reauthorization.- Section 5 of the Negotiated Rulemaking Act of 1990 (Public Law 101-648; 5 U.S.C. 561 note) is repealed.

Commentary: The full text of the Negotiated Rulemaking Act of 1996, as amended, follows Sec.12, below.

Sec. 12. Jurisdiction of the United States Court of Federal Claims and the District Courts of the United States: Bid Protests.

(a) Bid Protests- Section 1491 of title 28, United States Code, is amended--

(1) by redesignating subsection (b) as subsection (c);

(2) in subsection (a) by striking out paragraph (3); and

(3) by inserting after subsection (a), the following new subsection:

A(b)(1) Both the Unites States Court of Federal Claims and the district courts of the United States shall have jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. Both the United States Court of Federal Claims and the district courts of the United States shall have jurisdiction to entertain such an action without regard to whether suit is instituted before or after the contract is awarded.

A(2) To afford relief in such an action, the courts may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs.

A(3) In exercising jurisdiction under this subsection, the courts shall give due regard to the interests of national defense and national security and the need for expeditious resolution of the action.

A(4) In any action under this subsection, the courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5.@.

(b) Effective Date- This section and the amendments made by this section shall take effect on December 31, 1996 and shall apply to all actions filed on or after that date.

(c) Study- No earlier than 2 years after the effective date of this section, the United States General Accounting Office shall undertake a study regarding the concurrent jurisdiction of the district courts of the United States and the Court of Federal Claims over bid protests to determine whether concurrent jurisdiction is necessary. Such a study shall be completed no later than December 31, 1999, and shall specifically consider the effect of any proposed change on the ability of small businesses to challenge violations of Federal procurement law.

(d) Sunset- The jurisdiction of the district courts of the United States over the actions described in section 1491(b)(1) of title 28, United States Code (as amended by subsection (a) of this section) shall terminate on January 1, 2001 unless extended by Congress. The savings provisions

in subsection (e) shall apply if the bid protest jurisdiction of the district courts of the United States terminates under this subsection.

(e) Savings Provisions-

(1) Orders- A termination under subsection (d) shall not terminate the effectiveness of orders that have been issued by a court in connection with an action within the jurisdiction of that court on or before December 31, 2000. Such orders shall continue in effect according to their terms until modified, terminated, superseded, set aside, or revoked by a court of competent jurisdiction or by operation of law.

(2) Proceedings and Applications-

(A) a termination under subsection (d) shall not affect the jurisdiction of a court of the United States to continue with any proceeding that is pending before the court on December 31, 2000.

(B) Orders may be issued in any such proceeding, appeals may be taken therefrom, and payments may be made pursuant to such orders, as if such termination had not occurred. An order issued in any such proceeding shall continue in effect until modified, terminated, superseded, set aside, or revoked by a court of competent jurisdiction or by operation of law.

(C) Nothing in this paragraph prohibits the discontinuance or modification of any such proceeding under the same terms and conditions and to the same extent that proceeding could have been discontinued or modified absent such termination.

(f) Nonexclusivity of GAO Remedies- In the event that the bid protest jurisdiction of the district courts of the United States is terminated pursuant to subsection (d), then section 3556 of title 31, United States Code, shall be amended by striking `a court of the United States or' in the first sentence.

The Negotiated Rulemaking Act of 1996

Pub. Law 104-320

OVERVIEW

Negotiated Rulemaking

The promulgation of rules and regulations by federal agencies under the informal rulemaking provision of the Administrative Procedure Act, 5 U.S.C. '553, has long been criticized as burdensome, lengthy, and costly, resulting in rules frequently subject to litigation. Under '553, agencies are required to provide public notice of a proposed rule and an opportunity for public comment on it. To meet these requirements, agencies generally publish a proposed rule in the Federal Register and solicit written, public comment before adopting the proposal as a final rule.

Federal agencies may also develop and promulgate rules and regulations through a consensus-based procedure called negotiated rulemaking or regulatory negotiation (Areg-neg@). In this process, after the head of an agency determines that negotiation of a particular rule is in the public interest, the agency invites representatives of interests likely to be affected by the proposed regulation to work with each other and with the agency on a negotiating committee to develop a consensus draft of the text of the proposed rule. In this way, competing interests become partners in problem solving. The agency, in turn, agrees to publish the consensus proposed rule for public comment under the customary '553 procedures. To assist the negotiating committee in resolving issues and reaching consensus, the process uses a neutral party, called a Afacilitator.@ Meetings of the negotiating committee are open to public observation. In short, negotiated rulemaking is an alternative dispute resolution process based on cooperative problem solving. When properly employed, it can promote early and significant public participation in agency rulemaking and can result in better, more acceptable regulations, thereby avoiding litigation and improving compliance. Agencies can also use this process, or a modified form of it not involving the text of a specific regulation, in formulating policies or considering options for future actions.

Although most federal agencies possess the authority to use reg-neg and other innovative rulemaking process under their enabling statutes, only a few had done so prior to passage of the Negotiated Rulemaking Act of 1990, Pub. Law 101-648, 5 U.S.C. ''561-570. That Act, which encouraged, but did not require, the use of negotiated rulemaking to supplement and enhance the development and issuance of rules under the Administrative Procedure Act, provided additional, explicit statutory authority and set out basic rules for using the negotiation process. The Act, however, contained a scheduled expiration date, or Asunset provision,@ unless reauthorized by Congress; and while sunset would not have automatically prevented agencies from engaging in reg-neg, it probably would have been perceived as a lack of Congressional enthusiasm for negotiated rulemaking. Thus, Congress included provisions reauthorizing and amending the 1990 Negotiated Rulemaking Act within H.R. 4194, the Administrative Dispute Resolution Act of 1996.

Reauthorized and Amended Statute

The permanently reauthorized and amended statute is entitled the Negotiated Rulemaking Act of 1996. The official citation is Pub. Law 104-320, 110 Stat. 3870 (1996). It will be codified at sections 561-570 of title 5 of the United States Code, as a subchapter of the Administrative Procedure Act, 5 U.S.C. '551 et seq. The Act amends its predecessor, the Negotiated Rulemaking Act of 1990, Pub. Law 101-648, as further amended by Pub. Law 102-354, the Administrative Procedure Technical Amendments Act of 1991.

The 1996 Act amends its predecessor in three (3) respects. First, the Act is permanently reauthorized by removing the sunset provision. Second, a provision authorizing appropriations to carry out the Act is added. Third, and most significant, '569, entitled ARole of the Administrative Conference of the United States and Other Entities,@ is deleted, and a new '569, entitled AEncouraging Negotiated Rulemaking,@ is substituted. Congress had given the Administrative Conference a number of responsibilities under the 1990 Act, including the encouragement of negotiated rulemaking, but the Conference ceased operations on October 31, 1995. Substitute '569 and two (2) related provisions, one concerning expedited hiring of neutrals, and the second concerning new responsibilities for the Office of Management and Budget (OMB), represent the substantive changes made by Congress in the reauthorized Act.

The complete text of the Negotiated Rulemaking Act of 1996, passed as H.R. 4194, follows. Commentary in bold italic typeface, presenting additional information, explanation, or history, immediately follows various provisions of the Act.

The Negotiated Rulemaking Act of 1996

Pub. Law 104-320

(amending Pub. Law 101-648 and Pub. Law 102-354)

Title 5, U.S. Code

Subchapter III -- Negotiated Rulemaking Procedure

'561. Purpose.

'562. Definitions.

'563. Determination of need for negotiated rulemaking committee.

'564. Publication of notice; applications for membership on committees.

'565. Establishment of committee.

'566. Conduct of committee activity.

'567. Termination of committee.

'568. Services, facilities, and payment of committee member expenses.

'569. Encouraging negotiated rulemaking.

'570. Judicial review.

'570a. Authorization of appropriations.

'561. Purpose

The purpose of this subchapter is to establish a framework for the conduct of negotiated

rulemaking, consistent with section 553 of this title, to encourage agencies to use the process when it enhances the informal rulemaking process. Nothing in this subchapter should be construed as an attempt to limit innovation and experimentation with the negotiated rulemaking process or with other innovative rulemaking procedures otherwise authorized by law.

Section 2 of Pub. L. No. 101-648 provided that: AThe Congress makes the following

findings:

A( 1) Government regulation has increased substantially since the enactment of the Administrative Procedure Act.

A(2) Agencies currently use rulemaking procedures that may discourage the affected parties

from meeting and communicating with each other, and may cause parties with different interests

to assume conflicting and antagonistic positions and to engage in expensive and time-consuming

litigation over agency rules.

A(3) Adversarial rulemaking deprives the affected parties and the public of the benefits of

face-to-face negotiations and cooperation in developing and reaching agreement on a rule. It also

deprives them of the benefits of shared information, knowledge, expertise, and technical abilities

possessed by the affected parties.

A(4) Negotiated rulemaking, in which the parties who will be significantly affected by a

rule participate in the development of the rule, can provide significant advantages over

adversarial rulemaking.

A(5) Negotiated rulemaking can increase the acceptability and improve the substance of

rules, making it less likely that the affected parties will resist enforcement or challenge such

rules in court. It may also shorten the amount of time needed to issue final rules.

A(6) Agencies have the authority to establish negotiated rulemaking committees under the

laws establishing such agencies and their activities and under the Federal Advisory Committee

Act (5 U.S.C. App.). Several agencies have successfully used negotiated rulemaking. The

process has not been widely used by other agencies, however, in part because such agencies are

unfamiliar with the process or uncertain as to the authority for such rulemaking.@

Commentary: Congress permanently reauthorized the Act by repealing the footnote associated with this section that had scheduled the Act to Asunset@ on November 11, 1996, six years after the date of enactment. In all other respects, the purpose and findings set forth in '561 remain unchanged from the 1990 Act.

'562. Definitions

For the purposes of this subchapter, the term--

(1) Aagency@ has the same meaning as in section 551(l) of this title;

(2) Aconsensus@ means unanimous concurrence among the interests represented on a negotiated rulemaking committee established under this subchapter, unless such committee

(A) agrees to define such term to mean a general but not unanimous concurrence; or

(B) agrees upon another specified definition;

(3) Aconvener@ means a person who impartially assists an agency in determining whether

establishment of a negotiated rulemaking committee is feasible and appropriate in a particular

rulemaking;

(4) Afacilitator@ means a person who impartially aids in the discussions and negotiations

among the members of a negotiated rulemaking committee to develop a proposed rule;

(5) Ainterest@ means, with respect to an issue or matter, multiple parties which have a

similar point of view or which are likely to be affected in a similar manner;

(6) Anegotiated rulemaking@ means rulemaking through the use of a negotiated rulemaking

committee;

(7) Anegotiated rulemaking committee@ or Acommittee@ means an advisory committee

established by an agency in accordance with this subchapter and the Federal Advisory

Committee Act to consider and discuss issues for the purpose of reaching a consensus in the

development of a proposed rule;

(8) Aparty@ has the same meaning as in section 551(3) of this title;

(9) Aperson@ has the same meaning as in section 551(2) of this title;

(10) Arule@ has the same meaning as in section 551(4) of this title; and

(11) Arulemaking@ means Arule making@ as that term is defined in section 551(5) of this

title.

'563. Determination of need for negotiated rulemaking committee

(a) Determination of Need by the Agency. An agency may establish a negotiated

rulemaking committee to negotiate and develop a proposed rule, if the head of the agency

determines that the use of the negotiated rulemaking procedure is in the public interest. In

making such a determination, the head of the agency shall consider whether

(1) there is a need for a rule;

(2) there are a limited number of identifiable interests that will be significantly affected by

the rule;

(3) there is a reasonable likelihood that a committee can be convened with a balanced

representation of persons who

(A) can adequately represent the interests identified under paragraph (2); and

(B) are willing to negotiate in good faith to reach a consensus on the proposed rule;

(4) there is a reasonable likelihood that a committee will reach a consensus on the proposed

rule within a fixed period of time;

(5) the negotiated rulemaking procedure will not unreasonably delay the notice of proposed

rulemaking and the issuance of the final rule;

(6) the agency has adequate resources and is willing to commit such resources, including technical assistance, to the committee; and

(7) the agency, to the maximum extent possible consistent with the legal obligations of the

agency, will use the consensus of the committee with respect to the proposed rule as the basis

for the rule proposed by the agency for notice and comment.

(b) Use of Conveners.

(1) Purposes of conveners. An agency may use the services of a convener to assist the

agency in

(A) identifying persons who will be significantly affected by a proposed rule, including

residents of rural areas; and

(B) conducting discussions with such persons to identify the issues of concern to such

persons, and to ascertain whether the establishment of a negotiated rulemaking committee is

feasible and appropriate in the particular rulemaking.

(2) Duties of conveners. The convener shall report findings and may make

recommendations to the agency. Upon request of the agency, the convener shall ascertain the

names of persons who are willing and qualified to represent interests that will be significantly

affected by the proposed rule, including residents of rural areas. The report and any

recommendations of the convener shall be made available to the public upon request.

Commentary: Since only an agency is authorized to issue final rules and regulations, an agency alone must determine whether negotiated rulemaking is the appropriate process for promulgation of a particular rule. Section 563, unchanged from the 1990 Act, sets out the standard for that determination (Apublic interest@) and lists seven (7) factors for the agency to consider in making the determination. Subsection (b) authorizes, but does not require, the agency=s use of a neutral, called a Aconvenor,@ to assist in making the determination and in identifying potential members of a balanced and representative negotiating committee. The term Aconvenor@ is defined in '562(3).

'564. Publication of notice; applications for membership on committees

(a) Publication of Notice. If, after considering the report of a convener or conducting its own

assessment, an agency decides to establish a negotiated rulemaking committee, the agency

shall publish in the Federal Register and, as appropriate, in trade or other specialized

publications, a notice which shall include

(1) an announcement that the agency intends to establish a negotiated rulemaking committee to negotiate and develop a proposed rule;

(2) a description of the subject and scope of the rule to be developed, and the issues to be

considered;

(3) a list of the interests which are likely to be significantly affected by the rule;

(4) a list of the persons proposed to represent such interests and the person or persons

proposed to represent the agency;

(5) a proposed agenda and schedule for completing the work of the committee, including a

target date for publication by the agency of a proposed rule for notice and comment;

(6) a description of administrative support for the committee to be provided by the agency,

including technical assistance;

(7) a solicitation for comments on the proposal to establish the committee, and the

proposed membership of the negotiated rulemaking committee; and

(8) an explanation of how a person may apply or nominate another person for membership

on the committee, as provided under subsection (b).

(b) Applications for Membership on Committee. Persons who will be significantly

affected by a proposed rule and who believe that their interests will not be adequately

represented by any person specified in a notice under subsection (a)(4) may apply for, or

nominate another person for, membership on the negotiated rulemaking committee to represent

such interests with respect to the proposed rule. Each application or nomination shall include

(1) the name of the applicant or nominee and a description of the interests such person shall

represent;

(2) evidence that the applicant or nominee is authorized to represent parties related to the

interests the person proposes to represent;

(3) a written commitment that the applicant or nominee shall actively participate in good

faith in the development of the rule under consideration; and

(4) the reasons that the persons specified in the notice under subsection (a)(4) do not

adequately represent the interests of the person submitting the application or nomination.

(c) Period for Submission of Comments and Applications. The agency shall provide

for a period of at least 30 calendar days for the submission of comments and applications under

this section.

Commentary: If an agency determines to establish a negotiating committee, pursuant to '563, above, section 564, unchanged from the 1990 Act, requires the agency to inform the public by publishing notice in the Federal Register and other relevant, specialized publications. In addition, the agency must provide an opportunity to persons who believe their interests are not

adequately represented to apply to join the committee. The intent of '564 is to ensure that all concerned interests be heard in the negotiation; note, however, that the agency alone decides whether the applicants will be invited to the table.

'565. Establishment of committee

(a) Establishment.

(1) Determination to establish committee. If after considering comments and applications

submitted under section 564, the agency determines that a negotiated rulemaking committee can

adequately represent the interests that will be significantly affected by a proposed rule and that it

is feasible and appropriate in the particular rulemaking, the agency may establish a negotiated

rulemaking committee. In establishing and administering such a committee, the agency shall

comply with the Federal Advisory Committee Act with respect to such committee, except as

otherwise provided in this subchapter.

(2) Determination not to establish committee. If after considering such comments and

applications, the agency decides not to establish a negotiated rulemaking committee, the agency

shall promptly publish notice of such decision and the reasons therefor in the Federal Register

and, as appropriate, in trade or other specialized publications, a copy of which shall be sent to

any person who applied for, or nominated another person for membership on the negotiating

rulemaking committee to represent such interests with respect to the proposed rule.

(b) Membership. The agency shall limit membership on a negotiated rulemaking

committee to 25 members, unless the agency head determines that a greater number of members

is necessary for the functioning of the committee or to achieve balanced membership. Each

committee shall include at least one person representing the agency.

(c) Administrative Support. The agency shall provide appropriate administrative support

to the negotiated rulemaking committee, including technical assistance.

Commentary: This section, unchanged from the 1990 Act, contains the rules for establishing a negotiated rulemaking committee. In establishing the committee, the agency must comply with the Federal Advisory Committee Act, 5 U.S.C. App. If the agency determines not to establish a committee, it must publish a notice of that determination, setting forth the reasons. Section 565(b) limits the committee to a maximum of 25 members, including at least one person representing the agency, unless the agency head determines that more members are required for balance or to ensure adequacy of representation. Section 565(c) requires agencies to provide administrative and technical support to the negotiating committee.

'566. Conduct of committee activity

(a) Duties of Committee. Each negotiated rulemaking committee established under this

subchapter shall consider the matter proposed by the agency for consideration and shall attempt

to reach a consensus concerning a proposed rule with respect to such matter and any other matter

the committee determines is relevant to the proposed rule.

(b) Representatives of Agency on Committee. The person or persons representing the

agency on a negotiated rulemaking committee shall participate in the deliberations and activities

of the committee with the same rights and responsibilities as other members of the committee,

and shall be authorized to fully represent the agency in the discussions and negotiations of the

committee.

(c) Selecting Facilitator. Notwithstanding section 10(e) of the Federal Advisory

Committee Act, an agency may nominate either a person from the Federal Government or a

person from outside the Federal Government to serve as a facilitator for the negotiations of the

committee, subject to the approval of the committee by consensus. If the committee does not

approve the nominee of the agency for facilitator, the agency shall submit a substitute

nomination. If a committee does not approve any nominee of the agency for facilitator, the

committee shall select by consensus a person to serve as facilitator. A person designated to

represent the agency in substantive issues may not serve as facilitator or otherwise chair the

committee.

(d) Duties of Facilitator. A facilitator approved or selected by a negotiated rulemaking

committee shall

(1) chair the meetings of the committee in an impartial manner;

(2) impartially assist the members of the committee in conducting discussions and

negotiations; and

(3) manage the keeping of minutes and records as required under section 10(b) and (c) of

the Federal Advisory Committee Act, except that any personal notes and materials of the

facilitator or of the members of a committee shall not be subject to section 552 of this title.

(e) Committee Procedures. A negotiated rulemaking committee established under this

subchapter may adopt procedures for the operation of the committee. No provision of section

553 of this title shall apply to the procedures of a negotiated rulemaking committee.

(f) Report of Committee. If a committee reaches a consensus on a proposed rule, at the

conclusion of negotiations the committee shall transmit to the agency that established the

committee a report containing the proposed rule. If the committee does not reach a consensus on

a proposed rule, the committee may transmit to the agency a report specifying any areas in

which the committee reached a consensus. The committee may include in a report any other

information, recommendations, or materials that the committee considers appropriate. Any

committee member may include as an addendum to the report additional information,

recommendations, or materials.

(g) Records of Committee. In addition to the report required by subsection (f), a

committee shall submit to the agency the records required under section 10(b) and (c) of the

Federal Advisory Committee Act.

Commentary: Section 566 governs the manner in which the negotiated rulemaking committee operates. Subsection (a) directs members of the committee to seek to reach consensus on the proposed rule Aand any other matter the committee determines is relevant to the proposed rule,@ thereby giving the committee the flexibility necessary to successfully engage in joint problem solving. The term Aconsensus,@ is defined in '562(2). Subsection (c) provides for the appointment of a neutral Afacilitator,@ who may be a federal employee, to assist the committee in its deliberations; subsection (d) specifies certain duties for the facilitator, including assisting the discussions, chairing meetings, and record keeping. If the committee reaches consensus on the text of the proposed rule, '566(f) requires the committee to transmit a report containing the text to the agency or agencies that established the committee. If, on the other

hand, the committee is unable to reach consensus, it may send a report to the agency indicating matters on which the committee achieved consensus, and including any additional information the committee considers appropriate.

'567. Termination of committee

A negotiated rulemaking committee shall terminate upon promulgation of the final rule

under consideration, unless the committee=s charter contains an earlier termination date or the

agency, after consulting the committee, or the committee itself specifies an earlier termination

date.

'568. Services, facilities, and payment of committee member expenses

(a) Services of Conveners and Facilitators.

(1) In general. An agency may employ or enter into contracts for the services of an

individual or organization to serve as a convener or facilitator for a negotiated rulemaking

committee under this subchapter, or may use the services of a Government employee to act as a

convener or a facilitator for such a committee.

(2) Determination of conflicting interests. An agency shall determine whether a person

under consideration to serve as convener or facilitator of a committee under paragraph (1) has

any financial or other interest that would preclude such person from serving in an impartial and

independent manner.

(b) Services and Facilities of Other Entities. For purposes of this subchapter, an agency

may use the services and facilities of other Federal agencies and public and private agencies and instrumentalities with .the consent of such agencies and instrumentalities, and with or without

reimbursement to such agencies and instrumentalities, and may accept voluntary and

uncompensated services without regard to the provisions of section 1342 of title 31. The Federal

Mediation and Conciliation Service may provide services and facilities, with or without

reimbursement, to assist agencies under this subchapter, including furnishing conveners,

facilitators, and training in negotiated rulemaking.

(c) Expenses of Committee Members. Members of a negotiated rulemaking committee

shall be responsible for their own expenses of participation in such committee, except that an

agency may, in accordance with section 7(d) of the Federal Advisory Committee Act, pay for a

member=s reasonable travel and per diem expenses, expenses to obtain technical assistance, and a

reasonable rate of compensation, if

(1) such member certifies a lack of adequate financial resources to participate in the

committee; and

(2) the agency determines that such member=s participation in the committee is necessary to

aasure an adequate representation of the member=s interest.

(d) Status of Member as Federal Employee. A member=s receipt of funds under this

section or section 569 shall not conclusively determine for purposes of sections 202 through 209

of title 18 whether that member is an employee of the United States Government.

Commentary: Section 568 authorizes agencies to acquire the services of convenors and facilitators, including individuals, organizations, private vendors, or government employees; to use the services of federal, public, and private agencies, with or without reimbursement, and to accept voluntary and uncompensated services in carrying out provisions of the Act; and to pay the expenses of negotiating committee members, when the participation of those members is necessary to assure adequate and balanced representation of interests at the table and the committee member lacks adequate financial resources to permit participation.

Subsection (b) specifically authorizes the Federal Mediation and Conciliation Service (FMCS) to provide negotiated rulemaking services to agencies, including the furnishing of convenors and facilitators, and training in negotiated rulemaking.

'569. Encouraging Negotiated rulemaking

(a) The President shall designate an agency or designate or establish an interagency committee to facilitate and encourage agency use of negotiated rulemaking. An agency that is considering, planning, or conducting a negotiated rulemaking may consult with such agency or committee for information and assistance.

(b) To carry out the purposes of this subchapter, an agency planning or conducting a negotiated rulemaking may accept, hold, administer, and utilize gifts, devises, and bequests of property, both real and personal if that agency=s acceptance and use of such gifts, devises, or bequests do not create a conflict of interest. Gifts and bequests of money and proceeds from sales of other property received as gifts, devises, or bequests shall be deposited in the Treasury and shall be

disbursed upon the order of the head of such agency. Property accepted pursuant to this section, and the proceeds thereof, shall be used as nearly as possible in accordance with the terms of the gifts, devises, or bequests.

(1) Defense Agency Contracts. Section 2304(c)(3)(C) of title 10, United States Code, is amended by inserting Aor negotiated rulemaking@ after Aalternative dispute resolution.@

(2) Federal Contracts. Section 303(c)(3)(C) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(c)(3)(C)), is amended by inserting Aor negotiated

rulemaking@ after Aalternative dispute resolution.@

(d) Authorization of Appropriations.

(1) In General -- Subchapter III of title 5, United States Code, is amended by adding at the end thereof the following new section: A'570a. Authorization of appropriations. AThere are authorized to be appropriated such sums as may be necessary to carry out the purposes of this subchapter.@

(e) Negotiated Rulemaking Committees. The Director of the Office of Management and Budget shall --

(1) within 180 days of the date of the enactment of this Act, take appropriate action to expedite the establishment of negotiated rulemaking committees and committees established to to resolve disputes under the Administrative Dispute Resolution Act, including, with respect to negotiated rulemaking committees, eliminating any redundant administrative requirements related to filing a committee charter under section 9 of the Federal Advisory Committee Act

(5 U.S.C. App.) and providing public notice of such committee under section 564 of title 5, United States Code; and

(2) within one year of the date of enactment of this Act, submit recommendations to Congress for any necessary legislative changes.

Commentary: Section 569 of the 1990 Act, entitled A Role of the Administrative Conference of the United States and Other Entities@ is stricken and replaced with a new '569, entitled AEncouraging Negotiated Rulemaking.@ In '569(a) agencies considering, planning, or conducting a negotiated rulemaking may consult with an agency or interagency committee designated by the President Ato facilitate and encourage agency use of negotiated rulemaking.@ This designated agency or committee is the analogue of the entity established under Sec.3 (a) and '573 of the 1996 Administrative Dispute Resolution Act. Section 569(b) authorizes agencies to accept and use gifts and bequests to carry out the purposes of the Negotiated Rulemaking Act. Section 569(c), entitled AExpedited Hiring of Convenors and Facilitators,@is identical to amendments made to '573 of the Administrative Dispute Resolution Act of 1996 to enable agencies to expeditiously procure the services of neutrals. Competitive requirements for federal agency contracts (41 U.S.C. '253(c)(3)(C)) and defense agency contracts(10 U.S.C. '2304(c)(3)(C)) are amended to authorize the head of an agency to use other than competitive procedures A. . . to procure the services of an expert or neutral for use in any part of an alternative dispute resolution or negotiated rulemaking process . . .@ The 1996 amendments also add a new '570a, authorizing appropriations to carry out the purposes of the Negotiated Rulemaking Act.

Finally, a new subsection (e), entitled ANegotiated Rulemaking Committees@ is added. This provision addresses the longstanding problem of certain administrative requirements for negotiated rulemaking committees, particularly the chartering of the negotiating committee under '9 of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. Such requirements are alleged to have a chilling effect on the establishment of committees -- at the very least, the chartering requirements delay the establishment of the committees. The Office of Management and Budget (OMB) is ordered to take appropriate action within 180 days to expedite the establishment of negotiated rulemaking committees. One possible solution may be that public notice of the establishment of a committee under 5 U.S.C. '564 could replace the FACA chartering requirements, but there appears to be no limits on what OMB may consider. OMB is further directed to submit recommendations to Congress for any necessary legislative changes within one year (i.e., on or before October 11, 1997).

'570. Judicial review

Any agency action relating to establishing, assisting, or terminating a negotiated

rulemaking committee under this subchapter shall not be subject to judicial review. Nothing in

this section shall bar judicial review of a rule if such judicial review is otherwise provided by

law. A rule which is the product of negotiated rulemaking and is subject to judicial review shall

not be accorded any greater deference by a court than a rule which is the product of other

rulemaking procedures.

Commentary: To avoid creating possible new sources of litigation, '570 makes agency procedural decisions in a negotiated rulemaking proceding not subject to judicial. Of course, any final agency rule resulting from a negotiated rulemaking remains subject to judicial review, and Congress cautions that the agency is to be afforded no greater deference with regard to negotiated rules.

'570a. Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to carry out the purposes of this subchapter.

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Copyright © 1998 Federal Mediation and Conciliation Service
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Send mail to: lazurus@fmcs.gov Please restrict comments to technical issues. Comments relating to policy, content or style will not be acted on by the Webmaster. Copyright © 1998 Federal Mediation and Conciliation Service Last modified: April 16, 1998

Send mail to: lazurus@fmcs.gov Please restrict comments to technical issues. Comments relating to policy, content or style will not be acted on by the Webmaster.
Copyright © 1998 Federal Mediation and Conciliation Service
Last modified: April 16, 1998