Ferc

A

lternative Dispute Resolution (ADR)

 is an inclusive term that encompasses

a variety of dispute resolution methods used in

lieu of adjudicative or adversarial methods for

resolving conflicts. Generally, ADR is a voluntary process in which participants focus on

meeting their business, consumer resource protection, or other important objectives rather than on whom has

the stronger position.

Examples of ADR techniques include collaborative processes, facilitated negotiations,

early neutral evaluation, mediation, settlement judge procedures, mini-trial,

and binding and non-binding arbitration. One of

the strengths of ADR is its flexibility. The parties choose a third party neutral and design the

process based on their needs and comfort level.

With the help of the third party neutral, the parties explore how to satisfy their underlying interests and find mutually acceptable solutions

to their disputes. Ultimately, the ADR process

may result in stronger relationships, save time,

and reduce costs. While ADR cannot guarantee

results, it succeeds when parties work cooperatively and focus on identifying and satisfying

their underlying interests.

 So think smart! Check with the Dispute

Resoulution Services (202) 208-0702;1-877-

FERC-ADR(337-2237);

FERC.ADR@FERC.FED.US) early when you

have a dispute to determine if your dispute is

an appropriate candidate for ADR.

Y

ou have a dispute. Already, a considerable

amount of time, money, and resources have

been used to advance your position. Your case is

now before the U. S. Court of Appeals. The Court,

on its own initiative, selects your case for mediation.

At first, you are skeptical of its chances for success.

But you give it a try--and mediation works. Your interests are met.

An obvious question is: ‘why wasn’t mediation

or some other ADR process considered at the outset

of the dispute’? Was it lack of knowledge of the available options? Was it due to the belief that certain

ADR IN A WHY USE ADR?

NUTSHELL

Inside This Issue

4

OEP’s Pipeline Outreach Efforts

See Why ADR? on page 3

60-Day Dispute Resolution;

OEP’s Alternative Hydroelectric Licensing

2 ADR Wins! Successes from

the DRS and the ALJ Corps

Volume 1, Issue 1 OUR INAUGURAL ISSUE! FALL 2000

Published by the Dispute Resolution Service

5 OAL’s New Settlement Approach;

FERC ADR NEWSLETTER 1 Have Questions? Call Toll-Free 1-877-FERC-ADR
We have had many ADR successes at the Commission and want to

share a few. Take a look:

FROM THE DRS

O

ver a year had lapsed since the Commission required each interstate pipeline to enter into an Operational Balancing Agreement (OBA) with the natural

gas companies with whom the pipelines had interconnections. Since approximately 40 OBAs involving 5 major

interstate natural gas companies had not been executed,

the DRS was asked by the Commission to convene the

parties to assess whether a process could be arranged

to assist the parties in reaching agreement. Through

both face-to-face meetings with the parties as well as

telephone contact, the DRS facilitated agreement with

the parties in connection with all outstanding OBAs. Factors that contributed to successful execution of the OBA

agreements included: face-to-face interactions, active

listening, creative thinking, focusing on interests, and periodic check-ins by the facilitator to offer assistance and

monitor the progress of the negotiations. In cases where

the only barrier to executing an OBA was other work

that had taken priority, it took only a dedicated thirdparty neutral to jump-start the agreement to a successful conclusion.

I

n another case, a utility and a marketer were involved

in a dispute concerning a protested notice of cancellation. While the Commission’s 60-day clock was running, the DRS called the parties and explained that the

case appeared to be an excellent candidate for an ADR

process. The parties agreed to convene to explore the

use of ADR. The convening session transitioned into

an assisted negotiation with the DRS staff and the parties reached a settlement in principle the same day. The

protest was withdrawn and a Commission order became

unnecessary. The parties did a great job to focus on

their underlying interests and were able to quickly find a

creative solution that met their needs.

J

udge Peter Young achieved success as a settlement

judge in a highly contested New York Independent

System Operator (NY ISO) case. The case addressed

significant amendments to 38 pre-existing transmission agreements filed by the Member Systems of the

New York Power Pool to incorporate various provisions of the NY ISO tariff. The presiding judge and the

parties decided to narrow the scope of the hearing through

parallel settlement judge proceedings. Throughout the

settlement judge proceedings, progressive settlement milestones were established and parties focused on business

interests and objectives.

T

hrough an iterative process, these procedures resulted in the submittal of 13 formal offers of partial settlement. These settlements eliminated the vast

majority of the substantive issues, as well as many of

the original parties from the litigated proceeding. In addition, the settlement judge proceedings provided a mechanism for various parties to resolve separate disputes pending in other Commission dockets.

I

n another successful settlement judge process con-

 ducted by Deputy Chief Judge William J. Cowan in

Docket No. EL00-9-000, a complaint filed by Cherokee County Cogeneration Partners, L.P. alleged violations of the Federal Power Act by Duke Electric Transmission. The parties met with the Dispute Resolution

Service, and agreed to pursue settlement opportunities

under the aegis of a settlement judge. The parties seSee ALJ on page 3

FERC ADR NEWSLETTER 2 Have Questions? Call Toll-Free 1-877-FERC-ADR

lected Judge Cowan, who proceeded to convene a

number of settlement conferences and worked with

the parties to explore alternative approaches that might

resolve the dispute. This case was somewhat unique

in that, in order to settle the FERC-jurisdictional comFROM THE ALJ CORPS
rights are forfeited if you use ADR? Was it due to the

need to have the Commission make a policy call? Or

was it based on doing the traditional thing?

There may be many reasons why ADR is not

considered, and in some instances, ADR may not be

appropriate. But, as the use of ADR at the Commission grows to keep pace with the changes occurring in

the oil, electric, gas, and hydroelectric industries, FERC

practitioners are learning new ways that ADR can meet

their clients’ interests earlier and at lower costs. They

are learning that there are fewer reasons not to consider ADR.

In order to foster greater use of ADR and to

provide ADR services (e.g., convening, facilitation,

mediation) at FERC, the Commission created the Dispute Resolution Service (DRS). The DRS staff will

answer any questions you may have and will help

screen your dispute to determine if it is a good candidate for ADR. If ADR is considered, the DRS staff

will convene a meeting with you and the other parties

to discuss options and help you design an ADR process that is tailored to the parties’ specific needs. Should

the parties decide to use ADR, the DRS will assist you

in both finding a third-party neutral for the ADR process and defining what role the third party should have.

Experience has shown that ADR is most effective when used early. Therefore, timelines can be developed and an ADR process can be used parallel to

the Commission processing of a case. Remember--

ADR is a voluntary process when used through the DRS

and you need not give up your rights to pursue your

positions at the Commission or the Courts should you

decide to go forward with an ADR process.

Why ADR? from page 1

FERC ADR NEWSLETTER 3 Have Questions? Call Toll-Free 1-877-FERC-ADR

plaint, other related disputes between the parties needed to be aired and resolved. After much work, a

comprehensive settlement was achieved that resolved problems with the purchase power agreement governing

the sale and purchase of power from the Cherokee facility to Duke as well as pending court litigation, in

addition to the matters in dispute before the Commission. The overall settlement package resolved all current

disputes between the parties and modified their on-going relationship to minimize the likelihood of future

disputes. The FERC-jurisdictional component of the settlement was accepted by the Commission at its July

26, 2000 meeting.

ALJ from page 2

In just a short time, new ADR practices have

taken hold at FERC. The DRS wants to spread the

word about those practices and how the public can

take full advantage of ADR at FERC. The DRS wants

to share FERC’s ADR successes and educate the

public FERC serves when to think “ADR.”

Hagar the Horrible

Reprinted with special permission of King Features Syndicate
Through an innovative new approach, certain protested filings may be resolvable within the Commission’s 60-day window for electric rate and tariff filings.

If a case is appropriate for this resolution path, a member of the DRS Staff may

contact the parties to explore the possibilities of settling the case. Or, one of

the parties can call the DRS to express their interest in this option. The DRS

will explain the procedural options to the parties so they can determine whether

an ADR process may be an effective way to resolve their dispute. Experience

has shown that once parties meet face to face it becomes much more feasible

for them to work through their differences-- even during the 60-day period. If

the parties wish to pursue ADR beyond the Commission’s 60-day window, they

may do so, provided they request a delay in the Commission’s statutory deadline to act. Of course, Commission review of an agreement may be required.

STOP THE CLOCK! 60 DAY DISPUTE

RESOLUTION

T

he FERC’s Office of Energy Projects (OEP) has a new natural gas outreach initiative that may provide

a unique opportunity for the effective use of alternative dispute resolution (ADR) techniques in the early

stages of gas pipeline certificate projects. It is hoped that this initiative will nurture an environment in which

pipeline stakeholders can work together on pipeline route planning and issue resolution prior to filing these applications with the Commission. The Commission hopes that this new initiative will shorten gas facility certificate

processing time through the appropriate use of ADR methods.

OEP’s Gas Outreach Initiative is new and broader reaching than previous efforts such as the Collaborative

Procedures for Energy Facility Application (Order No. 608, issued September, 1999), a voluntary process

modeled after a similar process for hydroelectric licenses. To introduce this new initiative, an initial outreach

meeting was held on September 26, 2000 in Albany, NY. There, the Commission staff, State and Federal

Agencies and landowner representatives publicly discussed the challenges of landowner and agency participation

in project planning, early collaboration with agencies and other issues important to the pipeline community.

The next Outreach Initiative is scheduled for December 7, 2000 at Lewis University in Joliet, Illinois. Look

for the notice in late October. Any questions should be referred to Rich Hoffmann, at (202) 208-0066.

OEP’s OUTREACH INITIATIVE

ADR Opportunities for Pipeline Certificate Proceedings

FERC ADR NEWSLETTER 4 Have Questions? Call Toll-Free 1-877-FERC-ADR
T

he new Office of Administrative Litigation’s

(“OAL”) was rolled out on March 31, 1999.

OAL’s commitment to maximizing the use of ADR was

initiated with a comprehensive training program. OAL’s

ADR training began with a half-day program featuring

leaders in the field of Federal ADR showing how and

why ADR makes sense in the context of settlement or

litigation of administrative disputes. In addition, all of

OAL’s managers participated in a one-day ADR training session that was later refined and offered to the

entire OAL staff.

O

AL’s negotiation and settlement skills have been

greatly enhanced as a result of this ADR training. For example, in a case involving Iroquois Gas

Transmission Co., OAL staff designed an ADR process that permitted a creative approach to discovery.

This approach led to a settlement that expanded the

scope of the agreement to include an unfiled rate case.

In another case, Ameren Services Company, the Commission suspended the start of the hearing to allow for

settlement discussions. At the urging of OAL staff,

the parties committed to settlement negotiations and

agreed that if they proved unsuccessful, an OALJ neutral would be used. The case is unique because it

involved six separately filed rate cases which have been

consolidated as a result of the ADR process.

O

AL will build on its training held and its initial

successes with ADR to incorporate more interest- based negotiations in future cases. OAL will also

look for opportunities to advance novel solutions to

difficult problems.

OEP’s ALTERNATIVE TO

HYDROELECTRIC

LICENSING--

COLLABORATION THAT

WORKS!

OAL’s NEW

APPROACHES TO

SETTLEMENT

FERC ADR NEWSLETTER 5 Have Questions? Call Toll-Free 1-877-FERC-ADR

I

n order to achieve optimum outcomes in hydropower

 licensing proceedings, the Commission developed

the Alternative Licensing Process (ALP) — a collaborative approach that combines pre-filing consultation

and environmental review into a streamlined process

for the licensing and re-licensing of hydroelectric

projects.

T

he ALP encourages parties to settle or reduce

the number of contested issues that would be

raised in a license application. To achieve this goal,

the ALP: (1) requires the applicant to consult with a

variety of entities before preparing an application for

Commission review; (2) accelerates the environmental review process by allowing the evaluation of project

impacts pursuant to the Environmental Protection

Agency; (3) coordinates Federal and State regulatory

reviews; and (4) includes a negotiation process aimed

at expediting the resolution of disputed issues.

S

everal licenses have been completed under the

alternative process, and many more are currently

underway. An early example of successful use of a

collaborative process is Avista Corporation’s 700-

MW Clark Fork Project located in Idaho and Montana. In July 1997, Avista decided to use a collaborative process for Federal, State, and local agencies,

non-governmental organizations, local landowners, and

others. The members of the relicensing team met regularly, and Commission staff provided guidance and

support. A comprehensive settlement agreement was

reached that resulted in the protection and enhancement of the natural and human environment. A license

incorporating Avista’s settlement agreement was issued by the Commission in February 2000, only one

year after the license application was filed. Way to go

Relicensing Team!
FERC ADR NEWSLETTER 6 Have Questions? Call Toll-Free 1-877-FERC-ADR

“Most energy companies will conclude that litigation is a terribly inefficient

way to manage and compete, especially when the market moves faster than any

administrative process possibly could. ADR and other collaborative processes

are a key part of the Commission’s efforts to reengineer itself to be ‘better, faster,

cheaper.’”

 James J. Hoecker, Chairman

COMING UP More Success Stories

IN THE Convening Sessions 101

NEXT ISSUE: ALJ’s Expedited Settlements

Training Update

Federal Energy Regulatory Commission 888 First Street, N.E. Washington, DC 20426

FERC ADR News Published by the Dispute Resolution Service, Richard L. Miles, Director

Amy L. Blauman, Dispute Resolution Specialist, Editor-in-Chief, (202) 208-2143; Amy.Blauman@ferc.fed.us

Ferc

Kasha Helget, Dispute Resolution Specialist, (202) 208-2165

Deborah Osborne, Dispute Resolution Specialist, (202) 208-0831

Lynette Lawrence, Program Assistant, (202) 208-0834