```

[House Report 106-994]
[From the U.S. Government Publishing Office]

106th Congress                                            Rept. 106-994
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
MERIT SYSTEMS PROTECTION BOARD ADMINISTRATIVE DISPUTE RESOLUTION ACT OF 
                                  2000

                                _______
                                

October 23, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Gekas, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 3312]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 3312) to clarify the Administrative Dispute Resolution 
Act of 1996 to authorize the Merit Systems Protection Board to 
establish under such act a 3-year pilot program that will 
provide a voluntary early intervention alternative dispute 
resolution process to assist Federal agencies and employees in 
resolving certain personnel actions and disputes in 
administrative programs, having considered the same, report 
favorably thereon with amendment and recommends that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     4
Background and Need for the Legislation..........................     4
Committee Consideration..........................................     7
Committee Oversight Findings.....................................     7
Committee on Government Reform Findings..........................     7
New Budget Authority and Tax Expenditures........................     7
Congressional Budget Office Cost Estimate........................     8
Constitutional Authority Statement...............................     9
Section-by-Section Analysis and Discussion.......................     9
Agency Views.....................................................    11
Changes in Existing Law Made by the Bill, as Reported............    14

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Merit Systems Protection Board 
Administrative Dispute Resolution Act of 2000''.

SEC. 2. FINDINGS.

  The Congress finds the following:
          (1) Workplace disputes waste resources of the Federal 
        Government, take up too much time, and deflect managers and 
        employees from their primary job functions.
          (2) The Merit Systems Protection Board (hereafter in this Act 
        referred to as the ``Board'') has already taken steps to 
        encourage agency use of ADR before appeals are filed with the 
        Board, including extending the regulatory time limit for filing 
        appeals when the parties agree to try ADR, but high levels of 
        litigation continue.
          (3) The Board's administrative judges, who decide appeals 
        from personnel actions by Federal agencies, find that by the 
        time cases are formally filed with the Board, the positions of 
        the parties have hardened, communication between the parties is 
        difficult and often antagonistic, and the parties are not 
        amenable to open discussion of alternatives to litigation.
          (4) Early intervention by an outside neutral, after the first 
        notice of a proposed action by an agency but before an appeal 
        is filed with the Board, will allow the parties to explore 
        settlement outside the adversarial context. However, without 
        the encouragement of a neutral provided without cost, agencies 
        are reluctant to support an early intervention ADR program.
          (5) A short-term pilot program allowing the Board, upon the 
        joint request of the parties, to intervene early in a personnel 
        dispute is an effective means to test whether ADR at that stage 
        can resolve disputes, limit appeals to the Board, and reduce 
        time and money expended in such matters.
          (6) The Board is well equipped to conduct a voluntary early 
        intervention pilot program testing the efficacy of ADR at the 
        initial stages of a personnel dispute. The Board can provide 
        neutrals who are already well versed in both ADR techniques and 
        personnel law. The Board handles a diverse workload including 
        removals, suspensions for more than 14 days, and other adverse 
        actions, the resolution of which entails complex legal and 
        factual questions.

SEC. 3. MERIT SYSTEMS PROTECTION BOARD ALTERNATIVE DISPUTE RESOLUTION 
                    PILOT PROGRAM.

  (a) Amendment to Chapter 5 of Title 5.--Chapter 5 of title 5, United 
States Code, is amended by adding immediately after section 584 the 
following:

``Sec. 585. Establishment of voluntary early intervention alternative 
                    dispute resolution pilot program for Federal 
                    personnel disputes

  ``(a) In General.--
          ``(1) The Board is authorized under section 572 to establish 
        a 3-year pilot program to provide Federal employees and 
        agencies with voluntary early intervention alternative dispute 
        resolution (in this section referred to as `ADR') processes to 
        apply to certain personnel disputes. The Board shall provide 
        ADR services, upon joint request of the parties, in matters 
        involving removals, suspensions for more than 14 days, other 
        adverse actions under section 7512, and removals and other 
        actions based on unacceptable performance under section 4303.
          ``(2) The Board shall test and evaluate a variety of ADR 
        techniques, which may include--
                  ``(A) mediation conducted by private neutrals, Board 
                staff, or neutrals from appropriate Federal agencies 
                other than the Board;
                  ``(B) mediation through use of neutrals agreed upon 
                by the parties and credentialed under subsection 
                (c)(5); and
                  ``(C) non-binding arbitration.
  ``(b) Early Intervention ADR.--
          ``(1) Authority.--The Board is authorized to establish an 
        early intervention ADR process, which the agency involved and 
        employee may jointly request, after an agency has issued a 
        notice letter of a proposed action to an employee under section 
        4303 or 7513 but before an appeal is filed with the Board.
          ``(2) Notice in personnel disputes.--During the term of the 
        pilot program, an agency shall, in the notice letter of a 
        proposed personnel action under section 4303 or 7513--
                  ``(A) advise the employee that early intervention ADR 
                is available from the neutral Board, subject to the 
                standards developed pursuant to subsection (c)(1)(A), 
                and that the agency and employee may jointly request 
                it; and
                  ``(B) provide a description of the program, including 
                the standards developed pursuant to subsection 
                (c)(1)(A).
          ``(3) Request.--Any agency and employee may seek early 
        intervention ADR from the Board by filing a joint request with 
        the Board pursuant to the program standards adopted under 
        subsection (c)(1)(A). All personnel dispute matters appealable 
        to the Board under section 4303 or 7513 shall be eligible for 
        early intervention ADR, upon joint request of the parties, 
        unless the Board determines that the matter is not appropriate 
        for the program subject to any applicable collective bargaining 
        agreement established under chapter 71.
          ``(4) Confidentiality and withdrawal.--The consent of an 
        agency or an employee with respect to an early intervention ADR 
        process is confidential and shall not be disclosed in any 
        subsequent proceeding. Either party may withdraw from the ADR 
        process at any time.
          ``(5) Ancillary matter.--In any personnel dispute accepted by 
        the Board for the ADR pilot program authorized by this section, 
        the Board may attempt to resolve any ancillary matter which the 
        Board would be authorized to decide if the personnel action 
        were effected under section 4303 or 7513, including--
                  ``(A) a claim of discrimination as described in 
                section 7702(a)(1)(B);
                  ``(B) a prohibited personnel practice claim as 
                described in section 2302(b); or
                  ``(C) a claim that the agency's action is or would 
                be, if effected, not in accordance with law.
  ``(c) Implementation.--
          ``(1) Program duties.--In carrying out the program under this 
        section, the Board shall--
                  ``(A) develop and prescribe standards for selecting 
                and handling cases in which ADR has been requested and 
                is to be used;
                  ``(B) take such actions as may be necessary upon 
                joint request of the parties, including waiver of all 
                statutory, regulatory, or Board imposed adjudicatory 
                time frames; and
                  ``(C) establish a time target within which it intends 
                to complete the ADR process.
          ``(2) Extension.--The Board, upon the joint request of the 
        parties, may extend the time period as it finds appropriate.
          ``(3) Advocacy and outreach.--The Board shall conduct 
        briefings and other outreach, on a non-reimbursable basis, 
        aimed at increasing awareness and understanding of the ADR 
        program on the part of the Federal workforce--including 
        executives, managers, and other employees.
          ``(4) Recruitment.--The Chairman of the Board may contract on 
        a reimbursable basis with officials from other Federal agencies 
        and contract with other contractors or temporary staff to carry 
        out the provisions of this section.
          ``(5) Training and credentialling of neutrals.--The Board 
        shall develop a training and credentialing program to ensure 
        that all individuals selected by the Board to serve as program 
        neutrals have a sufficient understanding of the issues that 
        arise before the Board and are sufficiently skilled in the 
        practice of meditation or any other relevant form of ADR.
          ``(6) Regulations.--The Board is authorized to prescribe such 
        regulations as may be necessary to implement the ADR program 
        established by this section.
  ``(d) Evaluation.--
          ``(1) Criteria.--The Board's Office of Policy and Evaluation 
        shall establish criteria for evaluating the ADR pilot program 
        and prepare a report containing findings and recommendations as 
        to whether voluntary early intervention ADR is desirable, 
        effective, and appropriate for cases subject to section 4303 or 
        7513.
          ``(2) Report content.--The report, subject to subsection 
        (b)(4) and section 574, shall include--
                  ``(A) the number of cases subject to the ADR program, 
                the agencies involved, the results, and the resources 
                expended;
                  ``(B) a comprehensive analysis of the effectiveness 
                of the program, including associated resource and time 
                savings (if any), and the effect on the Board's 
                caseload and average case processing time;
                  ``(C) a survey of customer satisfaction; and
                  ``(D) a recommendation regarding the desirability of 
                extending the ADR program beyond the prescribed 
                expiration date and any recommended changes.
        The recommendation under subparagraph (D) shall discuss the 
        relationship between the Board's pilot ADR program and those 
        workplace ADR programs conducted by other Federal agencies.
          ``(3) Report date.--The report shall be submitted to the 
        President and the Congress 180 days before the close of the ADR 
        pilot program.''.
  (b) Appropriations.--
          (1) In general.--For the purpose of carrying out the ADR 
        pilot program established by this section, there are authorized 
        to be appropriated such sums as may be necessary for each of 
        the 3 fiscal years beginning after the date of enactment of 
        this Act.
          (2) No reductions.--The authorization of appropriations by 
        paragraph (1) shall not have the effect of reducing any funds 
        appropriated for the Board for the purpose of carrying out its 
        statutory mission under section 1204.
  (c) Effective Date.--The amendment made by subsection (a) shall take 
effect no later than the close of the 60th day after the enactment of 
appropriations authorized by subsection (b)(1) and shall remain in 
effect for 3 years from the effective date.
  (d) Conforming Amendment.--The table of sections for subchapter IV of 
chapter 5 of title 5, United States Code, is amended by adding after 
the item relating to section 584 the following new item:

``585. Establishment of voluntary early intervention alternative 
dispute resolution pilot program for Federal personnel disputes.''.

  Amend the title so as to read:

    A bill to clarify the Administrative Dispute Resolution Act 
of 1996 to authorize the Merit Systems Protection Board to 
establish under such Act a 3-year pilot program that will 
provide a voluntary early intervention alternative dispute 
resolution process to assist Federal agencies and employees in 
resolving certain personnel actions.

                          Purpose and Summary

    H.R. 3312, the ``Merit Systems Protection Board Alternative 
Dispute Resolution Act of 2000,'' is designed to further 
encourage the use of alternative dispute resolution within the 
Federal Government. H.R. 3312 clarifies the Administrative 
Dispute Resolution Act of 1996 to authorize the Merit Systems 
Protection Board (MSPB or the Board) to establish a 3-year 
pilot program to provide Federal agencies and employees the 
opportunity to seek early intervention alternative dispute 
resolution \1\ (ADR) to resolve certain types of workplace 
disputes before they escalate into formal litigation before the 
Board. The act also requires the MSPB to evaluate different ADR 
techniques and to submit a report to Congress and the President 
detailing the effectiveness of the pilot program within 6 
months of its expiration. Finally, H.R. 3312 authorizes the 
appropriation of sums necessary to implement the pilot program 
during each year of the program's 3-year duration.
---------------------------------------------------------------------------
    \1\ ADR refers to procedures for settling disputes by means other 
than litigation; e.g. by arbitration, mediation, mini-trials or a 
hybrid of each. Usually less costly and more expeditious, ADR is 
increasingly used in commercial and labor disputes and in other 
disputes that would likely otherwise involve court litigation. Black's 
Law Dictionary 78 (6th ed. 1990).
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                Background and Need for the Legislation

Alternative Dispute Resolution
    Over the last few decades, as litigation costs have risen 
and court dockets have become increasingly congested, parties 
have come to rely on various forms of ADR to resolve their 
contractual disputes in a timely and cost-effective manner. The 
use of ADR has been encouraged by Congress and the Federal 
courts, which have enunciated a strong national policy in favor 
of it.
    Congress' first expression of Federal support for ADR came 
in 1925 with passage of the Federal Arbitration Act (FAA).\2\ 
The act reversed judicial hostility toward arbitration, a 
common form of ADR, by making agreements to arbitrate 
enforceable ``save upon such grounds as exist in law or in 
equity for the revocation of any contract.'' \3\ At the same 
time, the Federal courts have advanced ADR by liberally 
construing arbitration clauses in contracts and by invalidating 
State efforts to limit the enforcement of these agreements. For 
example, the Supreme Court has held that ``doubts concerning 
the scope of arbitrable issues should be resolved in favor of 
arbitration.'' \4\ The Court has also held that congressional 
passage of the FAA ``declared a national policy favoring 
arbitration and withdrew the power of the States to require a 
judicial forum for the resolution of claims which the 
contracting parties agreed to resolve by arbitration.'' \5\ 
Finally, the Court has unequivocally rejected State efforts to 
limit the enforcement of arbitration agreements by ruling that 
the FAA preempts all State laws that subject arbitration 
agreements to heightened levels of contractual scrutiny.\6\
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    \2\ United States Arbitration Act, ch. 213, 43 Stat. 883 (1925) 
(codified as amended at 9 U.S.C. Sec. Sec. 1-14 (2000)).
    \3\ See id. Sec. 2.
    \4\ Moses Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 
24 (1983).
    \5\ Southland Corp. v. Keating, 465 U.S. 1, 18 (1984).
    \6\ Allied-Bruce Terminix v. Cos. v. Dobson, 513 U.S. 265 (1995).
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Prevalence of ADR in the Federal Government

    In response to spiraling litigation costs faced by the 
Federal Government, Congress has sought to extend the benefits 
of ADR to Federal agencies. Finding that the ``availability of 
a wide range of dispute resolution procedures * * * will 
enhance the operation of the Government and better serve the 
public,'' Congress passed the Administrative Dispute Resolution 
Act \7\ (ADRA) in 1990. The ADRA required Federal agencies to: 
adopt a policy favoring ADR; designate a senior official as the 
agency responsible for ADR; provide training on ADR methods; 
and review agency contracts and agreements for possible 
implementation of ADR techniques. A year later, President Bush 
issued a corresponding executive order affirming the benefits 
of ADR and encouraging its continued implementation throughout 
the Federal Government.\8\
---------------------------------------------------------------------------
    \7\ Pub. L. No. 101-552, 104 Stat. 2736 (codified as amended at 5 
U.S.C. Sec. Sec. 581-593 (2000)).
    \8\ Exec. Order No. 12,778, 56 Fed. Reg. 55,195 (1991) (codified at 
5 U.S.C. Sec. Sec. 581-593 (2000)).
---------------------------------------------------------------------------
    Encouraged by the success of ADR programs at Federal 
agencies, Congress permanently reauthorized the ADRA, with 
amendments, in 1996.\9\ The 1996 amendments extended the scope 
of the ADRA by authorizing Federal agencies to establish ADR 
programs employing binding arbitration \10\ and by prohibiting 
the disclosure of confidential material obtained in the course 
of ADR settlement under the Freedom of Information Act.\11\ 
These amendments have served to further enhance the use of ADR 
at Federal agencies. Congress has also encouraged the judicial 
branch to implement ADR programs. In 1990, Congress authorized 
Federal district courts to implement pilot ADR programs to 
facilitate settlement outside of the formal litigation 
process.\12\ In 1998, Congress greatly expanded government 
support of ADR by passing legislation requiring every Federal 
district court to provide litigants at least one ADR 
alternative during the Federal civil litigation process.\13\
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    \9\ Administrative Dispute Resolution Act of 1996, Pub. L. No. 104-
320, 110 Stat. 38709.
    \10\ See id. Sec. 590.
    \11\ See id. Sec. 584.
    \12\ Civil Justice Reform Act of 1990, Pub. L. No. 101-650, 104 
Stat 5089 (codified at 28 U.S.C. Sec. Sec. 471-82 (2000)).
    \13\ Alternative Dispute Resolution Act of 1998, Pub. L. No. 105-
315, 112 Stat. 2993 (codified at 28 U.S.C. Sec. Sec. 651-658 2000)).
---------------------------------------------------------------------------

Merit Systems Protection Board

    The Merit Systems Protection Board (the Board) is an 
independent adjudicatory agency which was established by the 
Civil Service Reform Act of 1978.\14\ The Board has appellate 
jurisdiction over certain types of adverse personnel actions 
\15\ taken against Federal employees. Board decisions are 
appealable to the U.S. Court of Appeals for the Federal 
Circuit, or if the appeal concerns a discrimination claim, to 
the Equal Employment Opportunity Commission.\16\ Since its 
creation, the Board has heard tens of thousands of cases while 
providing Federal employees with an institutionally independent 
and impartial forum for resolving their employment disputes 
with Federal agencies.
---------------------------------------------------------------------------
    \14\ Pub. L. No. 95-454, 91 Stat. 1111 (codified as amended in 
scattered sections of 5 U.S.C.).
    \15\ 5 U.S.C. Sec. Sec. 7512 & 4303 (2000).
    \16\ See id. Sec. 1204 (codified at 5 U.S.C. Sec. Sec. 1201-22 
(2000)).
---------------------------------------------------------------------------
    Over the last decade, Congress has steadily expanded the 
jurisdiction of the Board. Examples of this expansion include 
the Whistleblower Protection Act of 1989,\17\ the Civil Rights 
Act of 1991,\18\ the Uniformed Services Employment and 
Reemployment Rights Act of 1994,\19\ the Presidential and 
Executive Office Accountability Act of 1996,\20\ and the 
Veterans Employment Opportunities Act of 1998.\21\ The added 
scope and complexity of the Board's jurisdiction has not been 
matched by a commensurate increase in judicial resources. Since 
1993, MSPB's staff has fallen nearly 25 percent, from 323 to 
250 employees.\22\ In 1999, the Board and its regional and 
field offices closed 9,806 cases.\23\ While the MSPB has lived 
up to its promise of providing Federal employees with an 
independent appellate forum to resolve employment disputes with 
the Federal agencies for which they work, the volume of this 
caseload has necessitated further exploration of alternatives 
to formal litigation before the Board.
---------------------------------------------------------------------------
    \17\ Pub. L. No. 101-12, 103 Stat. 16.
    \18\ Pub. L. No. 102-166, 105 Stat. 1071 (codified in scattered 
sections of 42 U.S.C.)
    \19\ Pub. L. No. 103-353, 108 Stat. 3149 (codified at 38 U.S.C. 
Sec. Sec. 4301-4333 (2000)).
    \20\ Pub. L. No. 104-331, 110 Stat. 4054 (codified at 3 U.S.C. 
Sec. 401 (2000)).
    \21\ Pub. L. No. 105-339, 112 Stat. 3182 (codified in scattered 
sections of 8 U.S.C.).
    \22\ 1999 MSPB. Ann. Rep. 6.
    \23\ Id. at 11.
---------------------------------------------------------------------------

H.R. 3312, MSPB Alternative Dispute Resolution Act of 2000

    H.R. 3312 would clarify the Administrative Dispute 
Resolution Act of 1996 to authorize a 3-year, early 
intervention pilot ADR program at the Board to assist Federal 
agencies and employees in resolving personnel actions and 
disputes within the MSPB's jurisdiction. The pilot program is 
designed to assist the Board's judges in managing an increasing 
caseload while reducing litigation expenses faced by Federal 
agencies and employees who might have otherwise sought formal 
litigation before the Board.
    A key feature of the pilot program permits Federal agencies 
and employees to seek early intervention ADR from a neutral 
after the first notice of planned agency action but before an 
appeal is formally filed with the Board. This provision for 
early intervention outside the adversarial context helps to 
maximize the chances of settlement before the positions of the 
parties harden and become so antagonistic that settlement is 
unlikely. Since a fully litigated Board appeal can be as costly 
as private litigation, the administrative savings from 
effective early settlement can be substantial. The program is 
also notable for its voluntariness, since either party may 
withdraw from ADR at any stage of the process. Establishment of 
this program will in no way affect the collective bargaining 
rights of covered personnel.
    Another important provision of H.R. 3312 requires that the 
Board evaluate the efficacy of a variety of ADR techniques. 
H.R. 3312 authorizes such sums as may be necessary to fund the 
pilot program. The provision of funds will ensure that MSPB has 
the resources necessary to fully implement the pilot program 
while encouraging the participation of other agencies in the 
program. Finally, the bill requires the Board's Office of 
Policy and Evaluation to submit a comprehensive report 
detailing the effectiveness of the pilot program within 6 
months of the program's termination. This information, to be 
drawn from empirical evidence based upon actual settlements, 
will allow Congress to more fully ascertain the fiscal prudence 
of extending the program beyond the 3-year period of the pilot 
program.

                        Committee Consideration

    On June 20, 2000, the Subcommittee on Commercial and 
Administrative Law met in open session and ordered favorably 
reported the bill H.R. 3312, as amended, unanimously by voice 
vote, a quorum being present. On September 19, 2000, the 
committee met in open session and ordered favorably reported 
the bill H.R. 3312, with a single amendment in the nature of a 
substitute unanimously by voice vote, a quorum being present.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is applicable because 
this legislation provides new budgetary authority or increased 
tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the committee sets forth, with 
respect to H.R.3312, the following estimate and comparison 
prepared by the Director of the Congressional Budget Office 
under Section 402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 22, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3312, a bill to 
clarify the Administrative Dispute Resolution Act of 1996 to 
authorize the Merit Systems Protection Board to establish under 
such act a 3-year pilot program that will provide a voluntary 
early intervention alternative dispute resolution process to 
assist federal agencies and employees in resolving certain 
personnel actions.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                  Dan L. Crippen, Director.
    Enclosure.

H.R. 3312--A bill to clarify the Administrative Dispute Resolution Act 
        of 1996 to authorize the Merit Systems Protection Board to 
        establish under such act a 3-year pilot program that will 
        provide a voluntary early intervention alternative dispute 
        resolution process to assist federal agencies and employees in 
        resolving certain personnel actions

    H.R. 3312 would authorize the Merit Systems Protection 
Board (MSPB) to establish a three-year pilot program to 
encourage agencies and employees to use alternative dispute 
resolution (ADR) procedures to settle disputes before they 
escalate into formal actions before the MSPB. The bill would 
require that the MSPB evaluate and report on the pilot program 
within six months of its expiration. H.R. 3312 would authorize 
the appropriation of such sums as are necessary each year to 
implement the program.
    Based on information from the MSPB, CBO estimates that 
implementing H.R. 3312 would cost around $2 million in each of 
fiscal years 2001 through 2003. (The MSPB received an 
appropriation of $27.6 million for fiscal year 2000.) That 
estimate would allow the MSPB to develop and advertise the 
program to federal agencies, to both hire new employees and 
contract with nonfederal professionals, to train and certify 
individuals in the practice of ADR techniques, and to report on 
the program's effectiveness. Because the bill would not affect 
direct spending or receipts, pay-as-you-go procedures would not 
apply. H.R. 3312 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
and would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is John R. Righter, 
who can be reached at 226-2860. This estimate was approved by 
Robert A. Sunshine, Assistant Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

               Section-by-Section Analysis and Discussion

Section 1. Short title

    This section entitles the bill the ``Merit Systems 
Protection Board Administrative Dispute Resolution Act of 
2000.''

Section 2. Findings

    Section 2 consists of a congressional statement of 
findings. The findings reflect Congress' recognition of the 
cost, time and expense of Federal workplace disputes and the 
persistence of high levels of litigation at the MSPB. The 
statement stresses the importance of early intervention ADR to 
help resolve disputes while parties are more amenable to formal 
litigation, and notes that Federal agencies are more inclined 
to support alternatives to formal litigation if neutrals are 
provided to them without expense. The findings state that a 
pilot program that permits Federal agencies and employees to 
request early intervention ADR at the Board would effectively 
test the efficacy of ADR in this context. Finally, the 
statement stresses that the Board is well-equipped to implement 
the pilot program since Board judges are well-versed in both 
ADR techniques and in the substance of employment law.

Section 3. Merit Systems Protection Board Alternative Dispute 
        Resolution Pilot Program

    Section 3(a) amends chapter 5 of title 5 of the United 
States Code by adding section 585, which authorizes the 
establishment of a voluntary early intervention ADR pilot 
program at the Board. Subsection (a) specifies the types of 
personnel and administrative disputes that may be resolved by 
the program and requires the Board to evaluate a variety of ADR 
techniques, including mediation conducted by Board staff, 
private neutrals, or neutrals from appropriate Federal agencies 
other than the Board.
    Subsection (b) stresses that Federal agencies and employees 
may jointly request to participate in the program at any time 
if the dispute is one under a Board administrative program. In 
the case of personnel disputes, parties may jointly request ADR 
under the program after an agency has issued a notice letter of 
proposed action under section 4303 or 7513 of title 5. This 
subsection requires that the notice letter of proposed agency 
action under sections 4303 and 7513 describe the Board's early 
intervention ADR program and inform employees of their option 
to participate in the program. Section 585(b) further provides 
that agencies and employees may seek early intervention ADR 
under the program by filing a joint request with the Board and 
states that all personnel disputes under sections 4303 and 7513 
are eligible for early intervention ADR unless the Board 
determines that the matter is not appropriate for the program. 
Finally, section (b) provides that an agency or employee 
decision to participate in the Board's early intervention ADR 
program shall not be disclosed in any subsequent proceeding and 
states that either party may withdraw from the ADR program 
throughout the process.
    Section 585(c) specifies how the Board should implement the 
ADR program. It requires the Board to develop and prescribe 
standards for selecting and handling cases in which ADR has 
been requested and enables the Board to take actions that might 
be necessary, including waiver or extension of all statutory, 
regulatory or Board-imposed time frames, to facilitate the 
success of the program. This subsection also requires the Board 
or other contractors hired by the Board Chairman to conduct 
advocacy and outreach to increase awareness of the program 
within the Federal workforce. Section 585(c) further requires 
the Board to develop a training and credentialing program to 
ensure that all individuals selected by the Board to serve as 
program neutrals possess sufficient understanding of ADR 
process and of the issues that arise before the Board. Finally, 
section 585(c) authorizes the Board to prescribe such 
regulations as may be necessary to implement the ADR program.
    Section 585(d) sets standards for evaluating the Board's 
ADR pilot program. It requires the Board to establish criteria 
for evaluating the program and to prepare a report detailing 
finding and recommendations as to whether voluntary early 
intervention ADR is a desirable, effective, and appropriate 
means of resolving disputes before the Board. Section 585(d) 
requires the report to identify the number of cases subject to 
the ADR program, the agencies involved, the results of the 
program, and the resources expended. The report must include a 
detailed analysis of the effectiveness of the program, 
including any resource and time savings, and the program's 
impact on the Board's caseload and case processing time. The 
report must also include a customer service survey, a 
recommendation as to whether to extend the program beyond its 
expiration date, any suggested improvements to the program, and 
a discussion of the relationship between the Board's pilot ADR 
program and workplace ADR programs conducted by other Federal 
agencies. Section 585(d) requires that the report be submitted 
to the President and Congress 180 days before the close of the 
ADR pilot program.
    Section 3(b) authorizes the appropriation of sums necessary 
to implement the pilot ADR program for each of the 3 years 
following the enactment of the act. This subsection also 
requires that the authorization of funds shall not reduce the 
funds appropriated to the Board to carry out its statutory 
mission under section 1204.
    Section 3(c) states that the program shall take effect no 
later than 60 days after the enactment of appropriations 
authorized under subsection (b)(1) and remain in effect for 3 
years from the effective date.
    Section 3(d) amends subchapter IV of chapter 5 of title 5 
of the United States Code by adding section 584, 
``Establishment of voluntary early intervention ADR pilot 
program for Federal personnel disputes.''

                              Agency Views

                              Federal Mediation and
                                      Conciliation Service,
                                      Washington, DC, May 15, 2000.
Hon. George W. Gekas,
Chairman, Subcommittee on Commercial & Administrative Law, Committee on 
        the Judiciary, House of Representatives, Washington, DC.
    Dear Congressman Gekas: Please consider this letter to be 
the official submission of commentary by the Federal Mediation 
& Conciliation Service (FMCS) on HR 3312, which seeks to 
clarify the Administrative Dispute Resolution Act of 1996 to 
authorize the Merit Systems Protection Board (``MSPB'' or ``the 
Board'') to establish a 3-year pilot program to provide a 
voluntary early intervention Alternative Dispute Resolution 
(ADR) process. The purpose of this commentary is to explain to 
the Subcommittee why FMCS believes HR 3312, modified as 
recommended by the Department of Justice, to be a worthy and 
important bill that it should recommend for passage to the 
Judiciary Committee.

                             I. ABOUT FMCS

    Employing over 200 full time mediators, the largest cadre 
of full time mediators in the world, FMCS is a unique federal 
agency with over fifty years of experience in the resolution of 
labor-management disputes. FMCS is only one of two agencies in 
the federal government that has conflict resolution as its 
primary mission. (The other is the National Mediation Board, 
which resolves disputes in the air and railway transportation 
industries.) In recent decades, FMCS' mandate has expanded 
significantly in response to the changing needs of the U.S. 
economy and the growing awareness that FMCS' dispute resolution 
techniques can be successfully applied to many situations 
beyond the labor-management context. In particular, through 
congressional legislation, federal agency regulations, 
executive orders, and agreements with other federal agencies, 
FMCS has for many years provided expert services as outside 
third party neutrals, ADR systems designers, and ADR trainers 
throughout the federal government.

 II. WHY THIS SUBCOMMITTEE SHOULD RECOMMEND HR 3312 FOR PASSAGE TO THE 
                          JUDICIARY COMMITTEE

    It is FMCS' position that HR 3312, modified as recommended 
by the Department of Justice, is a good bill which, if enacted, 
would save a significant amount of time and money in the form 
of reduced litigation costs and increased productivity for 
employees, agencies and taxpayers alike. Resolving disputes at 
the lowest possible level and in the most expeditious manner 
avoids significant resource expenditures to resolve them more 
formally later on. Early resolution of disputes often better 
preserves workplace relationships because the parties tend to 
become less entrenched in their respective positions. 
Relationships can also improve from the joint exercise of 
working cooperatively toward a resolution in an ADR setting. In 
addition, early and lasting resolution of workplace disputes 
enhances productivity because it keeps employees away from 
their jobs for shorter periods of time and reduces the amount 
of time they are mentally distracted by workplace conflict. In 
the long run, ADR can also contribute to the development of a 
culture of conflict resolution that keeps disputes from 
escalating in the first place.
    HR 3312 provides an important mandate as well a legal and 
economic framework in which the above positive outcomes can 
occur. It provides built-in flexibility for the MSPB to 
experiment with different systems and approaches for resolving 
disputes in the most expeditious manner and at the lowest 
possible level. It wisely provides for the continuous learning 
that is necessary when an organization adopts any significant 
change in its operating procedures. These are significant 
strengths that reflect a most enlightened approach to 
legislation. For these reasons this Subcommittee should 
strongly recommend passage of HR 3312.

1. HR 3312 is also laudable for its emphasis on a systems approach to 
        ADR

    It is FMCS' view that passage of HR 3312 would be extremely 
beneficial not only because of its economic and social impact, 
but also because of its value as Congress' continuing 
recognition of the importance of ADR and the elements that 
comprise a coherent and successful ADR system. As ADR 
professionals, we at FMCS always advise our clients to think in 
terms of a systems approach. This advice recognizes that an ADR 
system is, in reality, the interdependence of several 
indispensable elements.
    The draft text of HR 3312 submitted by the Justice 
Department (``Draft Text'') recognizes the importance of these 
elements in several ways. First, it explicitly provides for the 
training and credentialing of the program's neutrals. This is a 
very attractive feature of the legislation: without a system in 
place to train the program's neutrals to ensure that they are 
sufficiently skilled in the practice of mediation and also 
understand the arcane and complex issues that the Board 
confronts, there would be a great risk that quality would 
suffer. In such a case, parties could lose faith in the system 
and stop using it, thereby continuing to increase the Board's 
caseload with even more deeply entrenched positions. For these 
reasons, it is wise to include a provision for the training and 
credentialing of the program's neutrals in HR 3312.
    FMCS agrees with our colleagues at the Justice Department 
that the MSPB should not require parties to use mediators who 
are MSPB Administrative Judges (AJs) in order to participate in 
the program. Such an arrangement risks creating a perception 
that the MSPB AJ mediating the case might share information 
with the MSPB AJ(s) hearing the case. Irrespective of whether 
such a communication would actually take place, there might 
very well be the perception that it could. That perception is 
potentially very damaging to the mediation process, as candor 
and openness are essential elements of any successful 
mediation. Parties may not make the statement that can ``seal 
the deal'' if they suspect it could prejudice them before the 
AJ if the mediation ultimately does not resolve the issue. For 
these reasons as well as the reasons identified by the Justice 
Department, FMCS endorses subsection 585(a)(2)(A) of the HR 
3312 Draft Text, requiring the Board to test and evaluate a 
variety of ADR techniques, including ``mediation conducted by 
private neutrals, Board staff, or neutrals from appropriate 
federal agencies other than the Board.'' If MSPB AJs do end up 
serving as mediators in this program, there should be 
procedures in place to assure the parties that he or she will 
not reveal statements made in mediation with the Judge(s) that 
will hear the case.
    Another attractive feature of the HR 3312 Draft Text is its 
mandate for the Board to conduct appropriate advocacy and 
outreach aimed at increasing awareness and understanding of the 
ADR program on the part of the federal workforce. Such advocacy 
and outreach is critical to ensuring that the program's 
potential users are aware that it is available and, of 
fundamental importance, that they are informed as to how to 
recognize when ADR is appropriate and how to go about availing 
themselves of the program. Appropriate advocacy and outreach 
can also ensure that potential parties feel comfortable using 
the program--that they understand that it is voluntary, does 
not require that they forfeit any of their rights, is neutral 
and confidential, and that there are great potential benefits 
from participating in the process. For these reasons, the Draft 
Text's provision for outreach to federal managers, supervisors 
and staff is an example of very smart legislation, legislation 
that takes into account how it will actually be put into 
practice.
    Finally, the bill wisely provides for an independent 
evaluation and feedback mechanism to track not only whether the 
program is meeting its objectives but also whether it is 
meeting the needs of its customers. As guardians of the 
public's trust and the public's money, it is important for 
implementing agencies to not only publicly account for a 
program's results, but also to have a feedback mechanism by 
which they can continuously improve the quality of their 
service delivery. FMCS has much confidence in the expertise of 
the MSPB and its capacity to deliver a quality program to the 
public, and trusts that as the Board designs its program it 
will provide for an evaluation loop to feed back into service 
delivery at several points, well before the final independent 
report is due at the end of three years. As the most 
experienced designers of ADR systems in the federal government, 
FMCS stands prepared to advise the Board, at its request, in 
how to provide for a continuously improving ADR program that 
most wisely spends the taxpayers' money.

                            III. CONCLUSION

    As I have discussed above, this Subcommittee should 
recommend HR 3312, modified as recommended by the Department of 
Justice, for passage because it encourages early settlement of 
disputes, with all of the attendant benefits, and does so by 
taking a systems approach. While the provisions that I have 
discussed--training and credentialing, education and outreach, 
and independent evaluation and feedback--are important 
components of a coherent ADR system, the design of a truly 
effective system is a complex task requiring great expertise 
and experience. With FMCS' considerable expertise in the areas 
of ADR training and certification, education and outreach, 
program evaluation, maintenance of a panel of outside neutrals 
(FMCS has over 1400 of them), and the development and 
maintenance of standards of professional responsibility, we 
would be happy to contract with the MSPB to coordinate with and 
advise them as they implement this pilot program.
    In conclusion, FMCS strongly encourages the Subcommittee to 
support this commendable legislation and the good work of the 
Merit Systems Protection Board by recommending it for passage 
to the Judiciary Committee. I would be happy to appear before 
the Subcommittee to provide further comment on how the proposed 
legislation could be implemented successfully, and the role 
that FMCS could play in making that happen.
            Sincerely,
                                  Richard Barnes, Director.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                      TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

                     PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *

                  CHAPTER 5--ADMINISTRATIVE PROCEDURE

           *       *       *       *       *       *       *

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec.
500.    Administrative practice; general provisions.
     * * * * * * *

     SUBCHAPTER IV--ALTERNATIVE MEANS OF DISPUTE RESOLUTION IN THE 
                         ADMINISTRATIVE PROCESS

     * * * * * * *
585.    Establishment of voluntary early intervention alternative 
          dispute resolution pilot program for Federal personnel 
          disputes.
     * * * * * * *

     SUBCHAPTER IV--ALTERNATIVE MEANS OF DISPUTE RESOLUTION IN THE 
                         ADMINISTRATIVE PROCESS

     * * * * * * *

Sec. 585. Establishment of voluntary early intervention alternative 
                    dispute resolution pilot program for Federal 
                    personnel disputes

  (a) In General.--
          (1) The Board is authorized under section 572 to 
        establish a 3-year pilot program to provide Federal 
        employees and agencies with voluntary early 
        intervention alternative dispute resolution (in this 
        section referred to as ``ADR'') processes to apply to 
        certain personnel disputes. The Board shall provide ADR 
        services, upon joint request of the parties, in matters 
        involving removals, suspensions for more than 14 days, 
        other adverse actions under section 7512, and removals 
        and other actions based on unacceptable performance 
        under section 4303.
          (2) The Board shall test and evaluate a variety of 
        ADR techniques, which may include--
                  (A) mediation conducted by private neutrals, 
                Board staff, or neutrals from appropriate 
                Federal agencies other than the Board;
                  (B) mediation through use of neutrals agreed 
                upon by the parties and credentialed under 
                subsection (c)(5); and
                  (C) non-binding arbitration.
  (b) Early Intervention ADR.--
          (1) Authority.--The Board is authorized to establish 
        an early intervention ADR process, which the agency 
        involved and employee may jointly request, after an 
        agency has issued a notice letter of a proposed action 
        to an employee under section 4303 or 7513 but before an 
        appeal is filed with the Board.
          (2) Notice in personnel disputes.--During the term of 
        the pilot program, an agency shall, in the notice 
        letter of a proposed personnel action under section 
        4303 or 7513--
                  (A) advise the employee that early 
                intervention ADR is available from the neutral 
                Board, subject to the standards developed 
                pursuant to subsection (c)(1)(A), and that the 
                agency and employee may jointly request it; and
                  (B) provide a description of the program, 
                including the standards developed pursuant to 
                subsection (c)(1)(A).
          (3) Request.--Any agency and employee may seek early 
        intervention ADR from the Board by filing a joint 
        request with the Board pursuant to the program 
        standards adopted under subsection (c)(1)(A). All 
        personnel dispute matters appealable to the Board under 
        section 4303 or 7513 shall be eligible for early 
        intervention ADR, upon joint request of the parties, 
        unless the Board determines that the matter is not 
        appropriate for the program subject to any applicable 
        collective bargaining agreement established under 
        chapter 71.
          (4) Confidentiality and withdrawal.--The consent of 
        an agency or an employee with respect to an early 
        intervention ADR process is confidential and shall not 
        be disclosed in any subsequent proceeding. Either party 
        may withdraw from the ADR process at any time.
          (5) Ancillary matter.--In any personnel dispute 
        accepted by the Board for the ADR pilot program 
        authorized by this section, the Board may attempt to 
        resolve any ancillary matter which the Board would be 
        authorized to decide if the personnel action were 
        effected under section 4303 or 7513, including--
                  (A) a claim of discrimination as described in 
                section 7702(a)(1)(B);
                  (B) a prohibited personnel practice claim as 
                described in section 2302(b); or
                  (C) a claim that the agency's action is or 
                would be, if effected, not in accordance with 
                law.
  (c) Implementation.--
          (1) Program duties.--In carrying out the program 
        under this section, the Board shall--
                  (A) develop and prescribe standards for 
                selecting and handling cases in which ADR has 
                been requested and is to be used;
                  (B) take such actions as may be necessary 
                upon joint request of the parties, including 
                waiver of all statutory, regulatory, or Board 
                imposed adjudicatory time frames; and
                  (C) establish a time target within which it 
                intends to complete the ADR process.
          (2) Extension.--The Board, upon the joint request of 
        the parties, may extend the time period as it finds 
        appropriate.
          (3) Advocacy and outreach.--The Board shall conduct 
        briefings and other outreach, on a non-reimbursable 
        basis, aimed at increasing awareness and understanding 
        of the ADR program on the part of the Federal 
        workforce--including executives, managers, and other 
        employees.
          (4) Recruitment.--The Chairman of the Board may 
        contract on a reimbursable basis with officials from 
        other Federal agencies and contract with other 
        contractors or temporary staff to carry out the 
        provisions of this section.
          (5) Training and credentialling of neutrals.--The 
        Board shall develop a training and credentialing 
        program to ensure that all individuals selected by the 
        Board to serve as program neutrals have a sufficient 
        understanding of the issues that arise before the Board 
        and are sufficiently skilled in the practice of 
        meditation or any other relevant form of ADR.
          (6) Regulations.--The Board is authorized to 
        prescribe such regulations as may be necessary to 
        implement the ADR program established by this section.
  (d) Evaluation.--
          (1) Criteria.--The Board's Office of Policy and 
        Evaluation shall establish criteria for evaluating the 
        ADR pilot program and prepare a report containing 
        findings and recommendations as to whether voluntary 
        early intervention ADR is desirable, effective, and 
        appropriate for cases subject to section 4303 or 7513.
          (2) Report content.--The report, subject to 
        subsection (b)(4) and section 574, shall include--
                  (A) the number of cases subject to the ADR 
                program, the agencies involved, the results, 
                and the resources expended;
                  (B) a comprehensive analysis of the 
                effectiveness of the program, including 
                associated resource and time savings (if any), 
                and the effect on the Board's caseload and 
                average case processing time;
                  (C) a survey of customer satisfaction; and
                  (D) a recommendation regarding the 
                desirability of extending the ADR program 
                beyond the prescribed expiration date and any 
                recommended changes.
        The recommendation under subparagraph (D) shall discuss 
        the relationship between the Board's pilot ADR program 
        and those workplace ADR programs conducted by other 
        Federal agencies.
          (3) Report date.--The report shall be submitted to 
        the President and the Congress 180 days before the 
        close of the ADR pilot program.

           *       *       *       *       *       *       *
                                  
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