**DEPARTMENT OF TRANSPORTATION**

\[Docket OST-2000-7800\]

**RIN:** 2105-AC94

**Statement of Policy on Alternative Dispute Resolution**

**AGENCY:** Department of Transportation, Office of the Secretary

**ACTION:** Statement of Policy

**SUMMARY:** The Department of Transportation publishes this Statement
of Policy to further its commitment to using alternative dispute
resolution (ADR) to advance national transportation goals by preventing,
minimizing, and resolving disputes among our employees and with external
parties, in a mutually acceptable and cost-effective manner. This policy
statement announces the Department's continuing interest in
collaborative problem-solving.

**DATES:** This notice is effective \[upon publication in the Federal
Register\]

**FOR FURTHER INFORMATION CONTACT:** Judith S. Kaleta, Senior Counsel
for Dispute Resolution and Dispute Resolution Specialist, Room 10428,
400 Seventh Street, SW, Washington, DC 20590. 202-493-0992.
<judy.Kaleta@ost.dot.gov>

**SUPPLEMENTARY INFORMATION:**

**Statement of Policy on Alternative Dispute Resolution (ADR)**

ADR is a collaborative, consensual dispute resolution approach. It
describes a variety of problem-solving processes that are used in lieu
of litigation or other adversarial proceedings to resolve disagreements.
ADR encompasses mediation, facilitation, conciliation, factfinding,
mini-trials, negotiation, negotiated rulemaking, neutral evaluation,
policy dialogues, use of ombuds, arbitration, and other processes that
usually involve a neutral third party who assists the parties in
preventing, minimizing the escalation of, and resolving disputes. The
efficient and effective use of ADR will help us resolve disputes at an
early stage, in an expeditious, cost-effective, and mutually acceptable
manner.

The Department of Transportation is committed to advancing our national
transportation goals though alternative dispute resolution. We will
consider using ADR in all areas including workplace issues, formal and
informal adjudication, issuance of regulations, enforcement and
compliance, issuing and revoking licenses and permits, contract and
grant award and administration, litigation brought by or against the
Department, and other interactions with the public and the regulated
community.

We will ensure that neutrals disclose any actual or potential conflicts
of interest.

We will provide learning and development opportunities for our employees
so that they will be able to use conflict resolution skills, understand
the theory and practice of ADR, and apply ADR appropriately.

We will use a variety of evaluation and assessment strategies to measure
and improve our processes and our use of ADR.

We will allocate resources to support the use of ADR.

We will provide confidentiality consistent with the provisions of the
Administrative Dispute Resolution Act and other applicable Federal laws.

The Department will attempt to incorporate ADR in its dispute
resolution, or as appropriate, rulemaking processes. In addition, either
on our own initiative or in response to a request, the Department will
examine the appropriateness of using ADR on a case-by-case basis. ADR is
voluntary and the Department will not impose its use on parties. The
decision-making on when to use ADR should reflect sound judgment that
ADR offers the best opportunity to resolve the dispute. In appropriate
disputes, the Department will use ADR in a good-faith effort to achieve
consensual resolution. However, if necessary, we will litigate or
participate in some other process to resolve a dispute.

We will work together, internally and with external stakeholders and
experts, to further ADR use across the Department. However,
decision-making on incorporating ADR into dispute resolution processes,
using ADR to resolve a particular dispute, and allocating resources
rests with the Department's operating administrations, secretarial
offices, or Office of the Inspector General.

We are committed to eliminating all barriers to equal opportunity for
all employees and persons who participate in our programs. A disability
on the part of one or more parties otherwise willing to use ADR will not
act as a bar to its use.

All employees and persons who interact with the Department are
encouraged to identify opportunities for collaborative, consensual
approaches to dispute resolution or rulemaking.

**Background**

As the Department of Transportation strives to meet national
transportation goals, we recognize the need to collaborate, to work
together in the spirit of cooperation, and to form partnerships,
internally and externally. Experience at the Department, in other
Federal agencies, and in the private sector shows that alternative means
of dispute resolution can achieve mutually acceptable solutions more
effectively than traditional, non-collaborative processes. Mediation,
facilitation, conciliation, factfinding, mini-trials, negotiation,
negotiated rulemaking, early neutral evaluation, policy dialogues, use
of ombuds, arbitration, and other processes that usually involve a
neutral third party who assists the parties in preventing and resolving
disputes, when used effectively, will help us resolve potential
conflicts and disputes at an early stage and in an expeditious,
cost-effective manner. These approaches to problem-solving are not just
"alternatives," but an integral part of the way we do business at the
Department. We are issuing this statement of policy on the use of
alternative dispute resolution to further our commitment to its use.

For purposes of this initiative, "the Department" or "we" refers to the
Office of the Secretary, the operating administrations (the United
States Coast Guard, the Federal Aviation Administration, the Federal
Highway Administration, the Federal Motor Carrier Safety Administration,
the Federal Railroad Administration, the National Highway Traffic Safety
Administration, the Federal Transit Administration, the Maritime
Administration, the Saint Lawrence Seaway Development Corporation, the
Research and Special Programs Administration, the Transportation
Security Administration, the Bureau of Transportation Statistics, and
the Transportation Administrative Services Center), and the Office of
Inspector General.

On November 15, 2000, the Department published an interim policy
statement on the use of alternative dispute resolution (65 FR 69121).
The Department requested comment on the statement, on how to incorporate
ADR into our processes, and how to encourage its use in appropriate
circumstances. The Department also requested input on areas of agency
activity that would benefit from a dispute resolution process that
incorporates ADR techniques. The Department noted the following areas
for consideration: workplace issues, formal and informal adjudication,
issuance of regulations, enforcement and compliance, issuing and
revoking licenses and permits, contract and grant award and
administration, litigation brought by or against the Department, and
other interactions with the public and the regulated community.

**Response to Request for Comments**

In response to the request, the Department received seven comments.
Commenters included private neutrals; an attorney representing clients
in various motor carrier related activities; a State department of
transportation; and the American Bar Association, Commission on Mental
and Physical Disability Law, Subcommittee on Disability Dispute
Resolution and Mediation.

None of the commenters objected to the initiative and some were very
supportive of the Department's efforts. For example, one commenter noted
that "once tried, ADR proves to be a valuable method to resolve
difficult issues, disputes, discrepancies and squabbles." Another stated
that ADR "can often conserve all the participants' time, energy, and
resources (and costs associated with them), speed the time for
resolution of matters, and smooth over some of the rougher edges created
by the adversarial nature of many of the matters in which DOT is
involved."

Some commenters offered suggestions and recommendations for clarifying
and strengthening the policy. Their comments and the Department's
response follow.

[ADR is Voluntary]{.underline}

One commenter suggested that the Department add to the section on "No
Creation of Rights" that the Department "would not require or impose the
use of ADR on an unwilling private sector entity or employee."

The Department agrees that ADR is voluntary and there must be mutual
agreement to use it. ADR cannot work unless the users of it want it to
work and want to use it. Therefore, the Department has included a
statement on the voluntary nature of ADR in its policy statement and in
the section on "No Creation of Rights."

[Litigation]{.underline}

One commenter noted that the Interim Statement of Policy said that the
Department will use ADR to resolve litigation. The commenter suggested
that we clarify whether the Department has the ability or the authority
to use ADR to resolve a matter in litigation or whether the Department
of Justice makes that decision.

The Department of Transportation works closely with the Department of
Justice to ensure that the interests of the United States are fully and
properly represented. Together, we determine whether litigation should
be initiated and whether adverse decisions should be appealed. Likewise,
we determine whether ADR would be appropriate in particular cases.
Furthermore, with the passage of the Alternative Dispute Resolution Act
of 1998, in which Congress directed all Federal courts to establish ADR
programs, continued growth in ADR usage by the Federal government in
litigation matters is highly likely. The Department of Justice estimates
that its use of ADR has quadrupled from 5 years ago to more than 2000
cases in FY 2000.

[Administrative Enforcement Proceedings]{.underline}

An attorney representing clients in various motor carrier related
activities recommended that the Department consider using ADR in motor
carrier enforcement proceedings**.** He provided three reasons in
support of this position. First, he noted that ADR results in cost
savings. Second, he stated that "to the extent the resolution of
enforcement matters may be speeded up by ADR, this has the benefit of a
quick response to a perceived safety problem." Third, he said that "ADR
can frequently take the rough edges off of adversarial proceedings . . .
When one is engaged in a bitter dispute, one may lose sight of the
greater purpose." Referring to the FMCSA enforcement decisions as
reported on the Department's Docket Management System, he noted that
"the tenor of the pleadings on both sides often appears to be bitter,
going well beyond the mere assertion of different, conflicting arguments
about what the law requires and what penalty, if any, should be
imposed."

While the commenter referred to the FMCSA enforcement program, the
Department considered the appropriateness of ADR for all its
administrative enforcement proceedings. The Department is committed to
concluding its administrative enforcement proceedings as fairly,
effectively, efficiently, and expeditiously as possible. The Department
will use ADR as an opportunity to further develop and refine its
processes to achieve less costly, less contentious, and more timely
decisions when appropriate. Parties to any enforcement proceeding, both
Departmental personnel and regulated entities, are encouraged to
identify cases that are appropriate for a variety of ADR techniques,
including mediation, early neutral evaluation, and arbitration. The
interim statement of policy included a list of ADR considerations. For
the ease of those wishing to determine whether ADR may be appropriate,
these considerations are included in the Appendix. As noted below, a
party may want to explore the possibility of using ADR without talking
with their immediate adversary. Therefore a list of ADR contacts is
available on the Department's ADR web site:
[www.dot.gov/adr](http://www.dot.gov/adr). However, ADR is voluntary and
there must be mutual agreement to use it.

[Evaluation]{.underline}

One commenter suggested that the evaluation of ADR should include a
comparison of the traditional processes. The commenter noted that "if
ADR were evaluated alone, it might look pretty terrible since no one in
particular likes conflict and ADR is both that and requires the
expenditure of resources that people would just as soon not spend; but,
as compared to litigation and traditional rulemaking, it is highly
likely that it will be viewed quite positively."

Evaluation is an important component of an ADR program. The Department
will use a variety of evaluation and assessment strategies to provide
valid and reliable information for measuring and improving performance.
Depending on the ADR program, we may look at the number of attempts to
use ADR, the number of resolutions, customer satisfaction with the
process, the neutral, and /or the resolutions, estimated cost- and/or
time-savings, or whether the program is meeting its stated goals. The
Department agrees that evaluating ADR without evaluating traditional
processes may lead to a distorted and inaccurate picture. In FY 2001,
the Department's Dispute Resolution Council conducted a program
evaluation of the Department's use of mediation to resolve complaints of
discrimination. As a result of this effort, the evaluation found that
the costs associated with traditional processes are not usually readily
available. We will attempt to estimate those costs when evaluating ADR
use, even if based on anecdotal information and non-quantifiable data.

[Confidentiality]{.underline}

One commenter complimented the Department on the way confidentiality was
addressed.

The Department recognizes the importance of confidentiality. In some
instances, many of the benefits of ADR can be realized only through
confidential proceedings. Confidentiality ensures that the parties may
speak freely with a neutral who will not disclose their confidences to
other parties or to the outside world. Without that assurance, the
parties may be unwilling to freely discuss their interests and possible
settlements with the neutral. Confidentiality also allows the parties to
raise sensitive issues and discuss creative ideas and solutions that
they would be unwilling to discuss publicly.

Although negotiated rulemaking is a process conducted under the Federal
Advisory Committee Act at public meetings that have been announced in
the Federal Register, confidentiality may also be a consideration for
the participants. For example, a convenor who impartially assists an
agency in determining whether establishment of a negotiated rulemaking
committee is feasible and appropriate may agree not to disclose the
identity of a party who raises a particular concern about an agency.
Information shared in caucuses may also be confidential.

The Administrative Dispute Resolution Act generally provides that
communications (including a neutral's notes and documents prepared for
the proceedings) between a neutral and the parties must be kept
confidential by the neutral and the parties, unless certain specific
exceptions exist. A court may require disclosure of such information if
it is necessary to prevent a manifest injustice, help establish a
violation of law, or prevent harm to the public health or safety. The
injustice, violation, or harm must be of a sufficient magnitude in the
particular case to outweigh the integrity of the dispute resolution
proceedings. In addition, other Federal laws may impact the
confidentiality of information in specific cases.

[Working Together]{.underline}

One commenter questioned the meaning of the statement in the Interim
Statement of Policy on ADR: **"**We will work together to further
ADR.**"** The commenter requested that the Department clarify whether
the statement was intended to apply to the Department and its employees
or whether it referred to the Department working with affected interests
on the outside. The commenter suggested that an inclusion of outside
interests, both stakeholders and experts, be made explicit.

The Department has adopted this suggestion and the statement of policy
reads accordingly.

[Persons with Disabilities]{.underline}

The American Bar Association, Commission on Mental and Physical
Disability Law, Subcommittee on Disability Dispute Resolution and
Mediation, suggested that the Department incorporate the provisions of
the ADA Mediation Guidelines
(http://www.cardozo.yu.edu/cojcr/guidelines) or adopt some modifications
of the Guidelines to meet the Department's needs. Under the Guidelines,
"ADA mediation" means programs mediating claims arising under the
Americans with Disabilities Act and other disability civil rights
statutes. The Guidelines address issues in the areas of program and case
administration, process, training, and ethics.

The Department is committed to eliminating all barriers to equal
opportunity for all employees of the Department, for all applicants for
jobs in the Department, and for the persons who participate in the
Department's programs, services, and activities. The Department will
comply with Section 504 of the Rehabilitation Act of 1973, which
prohibits discrimination on the basis of disability and requires our
programs, activities, and facilities to be accessible, subject to the
limitations contained within the statute and our regulations. A
disability on the part of one or more parties otherwise willing to use
ADR will not act as a bar to its use. The Department will bear the cost
of these accommodations. As particular ADR programs are established, we
will consider whether to fully incorporate the ADA Mediation Guidelines.

[Requesting the Department to Consider ADR]{.underline}

One commenter suggested that we provide persons who are potentially
interested in using ADR with a way of exploring the possibility of its
use. The commenter noted that parties should be able to explore the
potential for using ADR without talking with their immediate adversary.

The Department agrees. We have updated the Department's ADR web site
([www.dot.gov/adr)]{.underline} to include information about the
Department's Dispute Resolution Council and contact information for the
Department's Dispute Resolution Specialist and the Deputy Dispute
Resolution Specialists in each of the operating administrations and the
Office of Inspector General.

[Internal vs. External Neutrals]{.underline}

One commenter recommended that the Department rely on outside
contractors to serve as neutrals in ADR proceedings. The commenter
stated that in-house staff may "have an opinion about the general nature
of the problem and therefore may not be neutral." In addition the
commenter noted that there may be a perception of bias by the parties.
Another commenter noted that the United States Postal Service has
successfully used private mediators to resolve employment disputes and
that feedback from employees and management has been extremely positive.

In using a variety of ADR techniques, the Department has relied upon
both internal and external neutrals. For example, the Department
established a mediation program to resolve EEO complaints, in which
employees serve as mediators as a collateral duty to their assigned
positions. In addition, depending upon the availability of Departmental
employees or to avoid conflicts of interest, private mediators have been
used. In litigation, the Department has used private mediators. The
Department of Justice has noted that private mediators are the best
source of mediators for government cases. In the area of environmental
ADR, the Department is considering external neutrals. The U.S. Institute
for Environmental Conflict Resolution is assembling a roster of
qualified dispute resolution and consensus building professionals with
particular experience in transportation cases. The Institute will draw
from its roster of qualified neutrals with substantial experience in
environmental conflict resolution. This Transportation Roster is part of
an ADR system designed through an interagency agreement with the Federal
Highway Administration. For most negotiated rulemakings, the Department
has generally relied upon outside neutrals. However, internal neutrals
have been used to convene and facilitate negotiated rulemaking when
parties were interested in the process, but there was a lack of funding
to pay for an outside neutral.

The Department will continue to make a determination of whether to use
an internal or external neutral on a case-by-case basis, considering a
variety of factors, including costs. As a practical matter, in some
instances, the Department may be choosing between in-house neutrals or
no ADR process. In response to the comment, we have added a provision to
the policy statement that neutrals will disclose actual and potential
conflicts of interest. This is consistent with the Model Standards of
Conduct for Mediators that have been approved by the American
Arbitration Association, the Litigation Section and the Dispute
Resolution Section of the American Bar Association, and the Society of
Professionals in Dispute Resolution.

[Environment]{.underline}

Appendix II to the Interim Statement of Policy (65 FR 69125) provided
examples of a variety of the Department's ADR initiatives. The
environmental example noted that, with the assistance of the U.S.
Institute for Environmental Conflict Resolution, a Federal agency
created to assist parties in resolving environmental conflicts around
the country that involve Federal agencies or interests, the Federal
Highway Administration (FHWA) is working on developing an ADR system
that would be applied during the National Environmental Policy Act
(NEPA) process. One State department of transportation (the State)
commented on the example. The State welcomed the use of ADR as long as
it has the discretion to participate in ADR, without the risk of losing
Federal funds. The State is concerned that the Department may create a
policy implementing ADR that would mandate or compel the use of ADR to
resolve disputes.

A copy of the State's comments was provided to FHWA for its
consideration and, as this effort continues, FHWA will continue to
consider input. Draft documents relating to FHWA's initiative will be
posted for review and comment on its environmental streamlining website
http://www.fhwa.dot.gov/environment/strmlng.htm. For additional
information, you may call Lucy Gariliauskas at 202-366-2068 or Fred
Skaer at 202-366-2058. You may write to them at FHWA, Office of National
Environmental Policy Act Facilitation, 400 Seventh Street, SW,
Washington, DC 20590.

[List of ADR Considerations]{.underline}

The interim statement of policy included a list of ADR considerations.
The Department did not receive any comments on that list. For the ease
of those wishing to determine whether ADR may be appropriate, these
considerations are included in the Appendix.

**Legal Authority**

This policy statement is issued pursuant to the Administrative Dispute
Resolution Act of 1996, 5 U.S.C. 571-583, which authorizes and
encourages Federal agencies to use consensual means of dispute
resolution as alternatives to traditional dispute resolution processes.
The Act defines alternative means of dispute resolution as "any
procedure that is used to resolve issues in controversy\..." It defines
"issue in controversy" as "an issue which is material to a decision
concerning an administrative program of an agency, and with which there
is disagreement\..." The Act requires that each Federal agency adopt a
policy that addresses the use of ADR and appoint a Dispute Resolution
Specialist. Congress enacted the Administrative Dispute Resolution Act
to reduce the time, cost, inefficiencies, and contentiousness that too
often are associated with litigation and other adversarial dispute
resolution mechanisms.

This policy is also consistent with several other Federal statutes and
regulations.

The Negotiated Rulemaking Act of 1996, 5 U.S.C. 561-570, establishes a
framework for use of negotiated rulemaking. Congress enacted the
Negotiated Rulemaking Act to increase the acceptability and improve the
substance of rules, making it less likely that the affected parties will
challenge the rules or resist enforcement.

The Alternative Dispute Resolution Act of 1998, 28 U.S.C. 651-658,
directs all Federal courts to establish ADR programs.

The Contracts Disputes Act, 41 U.S.C. 605(d) and (e), permits the use of
ADR for resolving claims.

The FAA's Procedures for Protests and Contracts Disputes, 14 CFR Part
17, encourages the use of ADR as the primary means of resolving
procurement related disputes.

The Federal Sector Equal Employment Opportunity Regulations, 29 CFR Part
1614 requires agencies to establish or make available an ADR program.
The ADR program must be available during both the pre-complaint process
and the formal complaint process.

**Relationship to other Dispute Resolution Procedures**

This policy statement replaces the Interim Statement of Policy on
Alternative Dispute Resolution published in the Federal Register on
November 15, 2000. It does not supersede collective bargaining
agreements or other statutory, regulatory, or contractual dispute
resolution procedures, or military disciplinary processes. ADR is
intended to supplement, not replace, existing procedures.

**No Creation of Rights**

ADR is voluntary. The choice of when and how to use ADR is within the
discretion of the Department's Operating Administrations and Secretarial
offices, and all parties must agree. This statement of policy does not
create any right to judicial review involving the compliance or
noncompliance with the statement. In addition, the statement does not
obligate the Department to offer funds to settle any case, to accept a
particular settlement or resolution of a dispute, or to alter any
existing delegation of settlement or litigation authority.

Issued in Washington, DC on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Norman Y. Mineta

Secretary of Transportation

**Appendix \-- ADR Considerations**

A decision to use ADR may be made before or after a dispute arises.
Several factors should be considered in making that decision. Some
factors may favor the use of ADR while others may weigh against it.
Although not intended as an exhaustive list of factors, the Department
has determined that ADR may be helpful in resolving a particular dispute
where one or more of the following factors are present:

1\. Identifiable Parties. There is an identifiable group of constituents
with interests (the parties) so that all reasonably foreseeable
interests can be represented.

2\. Good Faith. The parties are willing to participate in good faith.

3\. Communication. The parties are interested in seeking agreement, but
poor communication or personality conflicts between the parties
adversely affect negotiations.

4\. Continuing Relationship. A continuing relationship between the
parties is important and desirable.

5\. Issues. There are issues that are agreed to be ripe for a negotiated
solution.

6\. Unrealistic View of the Issues. The parties' demands or views of the
issues are unrealistic. A discussion of the situation with a neutral may
increase the parties' understanding and result in more realistic
alternatives and options.

7\. Sufficient Areas of Compromise. There are sufficient areas of
compromise to make ADR worthwhile.

8\. Expectation of Agreement. The parties expect to agree eventually,
most likely before reaching the courtroom or engaging in other
adversarial processes.

9\. Timing. There is sufficient time to negotiate and ADR will not
unreasonably delay the outcome of the matter in dispute. There is a
likelihood that the parties will be able to reach agreement within a
fixed time. There are no statutory or judicial deadlines that are
adversely affected by the process. ADR may result in an earlier
resolution of the dispute.

10\. Resources. The parties have adequate resources (budget and people)
and are willing to commit them to the process.

While many of these factors may apply to agency rulemaking, there may be
some variation in the consideration. For example, with regard to
"Expectation of Agreement," the consideration may be that all affected
interests recognize that there is a problem that must be solved and that
Federal regulation is the appropriate response. Furthermore, under the
Negotiated Rulemaking Act, the head of the agency would determine
whether negotiated rulemaking is in the public interest and would
consider several factors concerning the parties, the timing, the costs,
and the issues. See 5 U.S.C. 561.

There are also factors that suggest that ADR should not be used. The
Administrative Dispute Resolution Act of 1996 provides factors that
suggest that ADR is inappropriate or may not be productive in a
particular dispute resolution proceeding. See 5 U.S.C. 572.