ML23151A504

PR-MISC.(92-3) - 57FR36678 - Alternative Means of Dispute Resolution; Policy Statement

ML23151A504
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Issue date:	08/14/1992
From:	NRC/SECY
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PR-MISC.(92-3), 57FR36678
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ADAMS Template: SECY-067 08/14/1992 PR-MISC. (92-3)- 57FR36678 -ALTERNATIVE MEANS OF DISPUTE RESOLUTION; POLICY STATEMENT PR-MISC. (92-3) 57FR36678 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

STATUS OF RULEMAXING PROPOSED RULE:

PR-MISC. (92-3)

OPEN ITEM (Y/N) B RULE NAME:

ALTERNATIVE MEANS OF DISPUTE RESOLUTION; POLICY STATEAMENT PROPOSED RULE FED REG CITE:

57FR36678 PROPOSED RULE PUBLICATION DATE:

08/14/92 ORIGINAL DATE FOR COMMENTS: 09/28/92 NUMBER OF COMMENTS:

EXTENSION DATE:

I I

7 FINAL RULE FED. REG. CITE: 57FR36678 FINAL RULE PUBLICATION DATE: 08/14/92 NOTES QII PUBLISHED AS A FINAL POLICY STATEMENT.

FILE LOCATED ON P1.

ATUS RULE TO FIND THE STAFF CONTACT OR VIEW THE RULEMAKING HISTORY PRESS PAGE DOWN KEY HISTORY OF THE RULE PART AFFECTED: PR-MISC. (92-3)

RULE TITLE:,

ALTERNATIVE MEANS OF DISPUTE RESOLUTION; POLICY STATEAMENT loPoSED RULE PROPOSED RULE DATE PROPOSED RULE SECY PAPER: 92-247 SRM DATE:

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SIGNED BY SECRETARY:

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SIGNED BY SECRETARY:

STAFF CONTACTS ON THE RULE 08/07/92 08/07/92 CONTACT1: JAMES M. CUTCHIN IV CONTACT2:

MAIL STOP: 15-B-18 PHONE: 504-1568 MAIL STOP:

PHONE:

DOCKET NO. PR-MISC. (92-3)

(57FR36678)

In the Matter of ALTERNATIVE MEANS OF DISPUTE RESOLUTION; POLICY STATEAMENT DATE DATE OF TITLE OR DOCKETED DOCUMENT DESCRIPTION OF DOCUMENT 08/10/92 08/07/92 POLICY STATEMENT ON ALTERNATIVE MEANS OF DISPUTE RESOLUTION 09/22/92 09/21/92 COMMENT OF ACNP (ROBERT J. LULL, M.D.) (

1) 09/28/92 09/28/92 COMMENT OF CAROLINA POWER & LIGHT, NIAGARA MOHAWK (JOSEPH 8. KNOTTS, JR.) {

2) 09/29/92 09/24/92 COMMENT OF OCRE (SUSAN L. HIATT, DIRECTOR) {

3) 09/29/92 09/25/92 COMMENT OF SOUTHERN NUCLEAR OPERATING CO.

(J.D. WOODARD, VICE PRESIDENT) (

5) 09/30/92 09/28/92 COMMENT OF NUMARC {ROBERT W. BISHOP, VICE PRESIDENT) (

4) 10/05/92 09/28/92 COMMENT OF GEORGIA POWER COMPANY

{C.K. MCCOY, VICE PRESIDENT) (

6) 10/05/92 09/30/92 COMMENT OF ASCE (ROBERT DEL RE, CHAIR) (

7)

A~

AMERICAN SOCIETY OF At.Ill.I. CIVIL ENGINEERS Washington Office 1015 15th Street, N.W., Suite 600 Washington, D.C. 20005-2605 (202) 789-2200

'92 OCT -5 P 3 :34 The Secretary U.S. Nuclear Regulatory Commissi on Washington, DC 20555 September 30, 1992 Attention:

Office of the General Counsel Docketing and Service Branch

Dear Sir or Madam:

(j)

The Contract Administration Committee of the American Society of Civil Engineers (ASCE) strongly supports the application of alternative dispute resolution techniques to resolve confl icts between parties.

For many years, representatives of the Society have worked with the Construction Industry Advisory Council of the American Arbitration Association to develop and assess the effectiveness of many of the ADR processes.

These methods, as identified in the Administrative Disputes Resolution Act (P.L. 101-552), can assist in unraveling contractual disputes and bringing the parties to a state of agreement or accord in a timely and cost-efficient manner.

A few months ago, ASCE joined with the Business Roundtable, the American Bar Association, The American Insurance Association, the American Institute of Architects, the Associated General Contractors of America, and seven other groups to establish the construction industry Dispute Avoidance and Resolution Task Force (DART).

DART's mission is to reach out to the industry-at-large not only with practical information about alternative means of dispute resolution, but with promising techniques of dispute prevention (such as risk allocation, incentives for cooperation, partnering, and dispute review boards).

DART has also created a database of all known design and construction industry dispute resolution and prevention materials, which is available to all interested organizations and agencies for a nominal fee.

As listed in the August 14, 1992 Federal Register notice, opportunities for the use of ADR may arise in connection with Nuclear Regulatory Commission programs involving licensing, contracts, fees, grants, inspecti ons, enforcement, claims and Civil engineers make the difference They build the quality of life JAN 21 1993 Acknowledged by card..................................

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Page 2 NRC Letter rulemaking.

We urge the Commission to adopt ADR techniques to the fullest extent practicable for agency activities.

If ASCE or DART can be of service, please do not hesitate to contact me at (813) 935-2333, or cal Jeffrey Beard, ASCE's Manager of Regulatory Affairs, at (202) 789-2200.

Enclosures (2):

Sincerely yours,

~fl~ll Robert Del Re Chair, Committee on Contract Administration ASCE Policy Statement 256 "Alternative Dispute Resolution" Dispute Avoidance and Resolution Task Force (DART) Brochure cc:

Richard A. Coughlin, DART Executive Director

ASCE Policy Statement 256 ALTBRJIATrvB DXSPU'l'B RESOLtrrXOH Approved by the Professional Activiti es Committee on January 7, 1990.

Approved by the Committee on Pol icy Review on March 7, 1990.

Adopted by the Board of Direction on April 22, 1990.

Policy The resolution of disputes relat ed to engineering and construction has become increasingly complex, and litigation has failed to resolve these issues in a timely and cost-effective way.

The-American Society of Civil Engineers supports alternative dispute resolution techniques to bring these issues to a timely and cost-effective conclusion.

Issue Resolution of engineering and construction related issues through litigation is not consistent with orderly project development.

Time delays and the cost of litigation are frequently disproportionate to the issue involved and the major portion of cost is usually allocated to nonproductive activity. Alternati ve dispute resolution techniques have gained acceptance in the industry and their use continues to grow.

However, recent years have noted an increasing tendency to mirror the legal process, which they tend to supplant. -There is an evolutionary need to continue development of methods which produce timely and cost-effective solutions of engineering and construction disputes.

Rationale The Society has participated for many years in the Construction Industry Advisory Council of the American Arbitration Association and contributed to many of the techniques used today in alternative dispute resolution procedures.

There is a need to seek out methods of resolving disputes which speak directly to the problem, and in an immediate and cost-efficient manner.

The use of arbitration, mediation and, to some extent, mini-trials has achieved these objectives.

The continued development of new and more effective methods is encouraged.

/

/

• d has complainrt that "Iipgation r~lated to design construction con~nues

to inc~J~." ThtJ'Busines,'Roundta~le asserttl that thefJ.S. construction i'n,~us-try is one of the country's least efficient industries, and blames much of this inefficiency on the "adversarial dance" between the parties to the construction project, which creates "a constant state of confrontation."

It is ironic that the one industry which more than all others depends upon coordination, cooperation and team-work among multiple participants, should be the country's most adversarial Industry.

In 1990 the Center for Public Resources Legal Program appointed a committee of outstanding construction law practitioners, corporate counsel. and leaders of the con-struction industry to take a fresh look at the special dispute prevention and resolution needs of the industry and the current state of the art in both dispute prevention and in dispute resolution.

The committee concluded that In recent years many advances in construction dispute prevention and resolu-tion have been developed. However, the Industry at large knows little about alternative methods of dispute resolu-tion. and especially the newer and more promising tech-niques of dispute prevention (risk allocation, incentives for cooperation. partnering or team building, dispute review boards. and others). Consequently most Industry partici-pants do not use or look for contract provisions and techniques that tend to prevent disputes, or provide mecha-nisms for early resolution of disputes.

Seeking to reduce the impact of litigiousness on the nation's dispute-plagued construction Industry, a number of high-profile organizations have formed the Construction Industry Dispute Avoidance & Resolution Task Force -

DA R T. Public and private owners, design professionals, contractors and leading insurance and legal organizations are among its initial participants. They include the Con-struction Committee of The Business Roundtable, govern-ment agencies, the Construction Industry Institute, the American Institute of Architects, the American Society of 71 CONSTRUCTION BUSINESS REVIEW Civil Engineers. ASFE(fhe Association of Engineering Firms Practicing in the Geosciences. the American Consulting Engineers Council, the Associated General Contractors, the American Subcontractors Association; the American Insurance Association. the American Bar Association Con-struction Forum, the Associated Builders and Contractors, the Associated Specialty Contractors. and the Building Futures Council. Through these associations and societies.

D A RT represents almost 90,000 firms and 224,000 indi-vidual practitioners in the construction industry.

H.B. "Bud" Scoggins, Jr., CAE. has been appointed Execu-tive Director of the new organization. headquartered in the nation's capital in space donated by the American Arbitra-tion Association. According to Scoggins. "The adversarial pendulum has swung too far, l believe. The level of liti-giousness has risen to such a fever pitch that just about every party to a construction project adopts defensive.

adversarial attitudes from the outset. and things just go downhill from there. The end result is a huge increase in the cost of construction and plummeting productivity."

"Architects. engineers, and contractors are forced to rely on defensive design and construction practices. which lengthens schedules, while increasing costs. Resolving disputes long after the job Is completed also places a major burden on budgets, due to the cost of attorneys and the increased cost of Insurance and bonding. It's Ironic that much of what Is done in the name of risk avoidance actually increases risks. and much of what Is done in the name of cost savings increases costs."

James P. Groton, Esq., an attorney with the Atlanta and Washington firm of Sutherland, Asbill and Brennan, is a well known advocate of informal methods of resolving JULY/AUGUST 1992

disputes and has been elected DAR T's Chairman. Accord-ing to Groton, "Billions of dollars are being thrown away each year on disputes. It's terribly discouraging, espe-cially so because we know what is causing the problem. we know how to prevent the problems, and we know how to handle most problems that do arise in a prompt. fair and effective way. As discouraging as the situation is. however, it will only get worse unless someone intervenes. In this case, that 'someone' is DART, and it is our objective to represent every sector of the construction industry through every significant association in the industry."

"So far, we have been extremely encouraged by the response. A group of insurance and surety organizations contributed the seed money to make D A R T a reality.

Endorsing associations and societies have pledged signifi-cant financial support.

Of course. this is just to get 01 ~anizcd u.nd cc*:er the !niti.a! ope?at!o!'.s Wf:H n~Pd far more than that to implement the programs necessary to achieve our goals."

DART intends to focus its energies on promoting greater awareness and use of a number of dispute prevention and alternative dispute resolution techniques that have been demonstrated to be effective on a number of projects.

"Partnering and realistic risk allocation are two highly effective techniques for Improving coordination, commu-nication. and cooperation on projects," Groton said. "They help prevent delays. enhance quality, and encourage rapid resolution of problems that arise, with a win/win attitude."

Scoggins characterized these and several other techniques as "total quality management" applied to the construction process and stated, "They're designed to prevent predict-able problems. and they work."

As for alternative dispute resolution, Groton pointed to case histories that "show how multimillion dollar disputes can be resolved through mediation in days rather than years, at a fraction of the cost that otherwise would have been spent. And totally contrary to so-called conventional wisdom. it is possible for people who seem on the verge of going to war with one another to meet at the bargaining table and voluntarily reach a mediated settlement. All you have to do is know how. And we know and we intend to teach the industry."

One of D A R T's initial activities has been to build a database containing all known construction dispute pre-vention and resolution materials. Information is being collected documenting the successful uses of prevention and early resolution of disputes in the construction indus-try. D ART will work closely with existing organizations.

and especially owners of construction projects, to encour-age greater use of these proven, but relatively unknown approaches to preventing and resolving disputes.

"Once we show people how well some of these tech-niques work, we can expect that lenders will begin demand-ing their use on the part of their customers. Insurers will be able to offer reduced rates for liability and surety coverage. That will cause some of the smaller owners and other participants to follow suit." Scoggins said.

"Imagine a construction industry where all the various participants cooperate to achieve high-quality, completed structures on schedule, within budget. safely, and with no lingering disputes or animosities. It would take a revolu-tion for that to happen. and that's what DART aims to achieve," Groton said. "With the organizations and people already involved, I am convinced it can happen."

A number of programs and materials are on the D A R T drawing boards at this time. and a major event is being planned for the fall, in conjunction with a new initiative the group is already planning. "I'm not at liberty to say any-thing about it at this time." Scoggins said, "but it will be significant. We anticipate participation from every ele-ment of the construction industry, and from the highest levels of government."

For more information about DAR T, contact the organization at I ISO Connecticut Avenue. N. W, Washington, DC 20036-4/99; 202/296-5775.

To occompli*h ib goals, DART ho* established the following general o&iectives:

• Make all elements of the construction industry aware of proven techniques available for preventing and resolving disputes.

• Obtain the commitment of construction industry buaineH and profeHional associations and societies to educate their members in the effective use of dispute prevention and resolution techniques.

• Distribute educational and training materials about dispute prevention and resolution to all elements of the construction industry.

• Secure the pledge of all parties in the construction proceH to prevent disputes, and to use early dispute resolution techniques.

• Convince members of the legal profeHion to become knowledgeable about techniques which help to prevent and resolve disputes and to aHiat their clients in implementing thoM techniques.

• Persuade publishers of construction contract documents and educational materials, and insurance and iurety providers, to promote the use of dispute prevention and resolution techniquH.

• Stimulate research and development of improved dispute prevention and resolution techniques.

• Develop initiatives to achieve universal use of dispute prevention and resolution techniques.

• Work with institutes of higher education (technical, law and business) to educate future members of the industry in dispute prevention and resolution techniques.

JULY I AUGUST 1992 CONSTRUCTION BUSINESS REVIEW 73

(DART) has been Formed ta promote awareness, understanding and use af private dispute prevention and resolu-tion techniques and to encourage the use of these techniques as standard practice in the industry.

DART represents all segments of the industry: public and private owners, architects, engineers, contractors, subcontractors, sureties, lenders and more. All shore o common goal: to declare war on unnecessary disputes and litigation. The DART logo repre-sents this common goal and the partner-ship formed by owners, designers and contractors.

DART hos been endorsed by leading organizations of owners, designers and contractors including:

Construction Committee of the Business Roundtoble Construction Industry Institute Building Futures Council American Institute of Architects American Society of Civil Engineers ASFE/The Association of Engineering Firms Practicing in the Geosciences American Consulting Engineers Council Notional Society of Professional Engineers Associated General Contractors Associated Builders and Contractors American Subcontractors Association Associated Specialty Contractors National Electrical Contractors Association American Insurance Association Professional liability Agents Network a/e ProNet American Arbitration Association Join your construction industry col-leagues in returning profitability to your projects. Join DART today.

DART 1 150 Connecticut Avenue, NW Suite 600 Washington, pc 20036-4 1 99 (202) 296-5775 (202) 296-5795 (Fax)

James P. Groton, Esquire Chairman H.B. Scoggins, Jr., CAE Executive Director

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xcessive lawsuits are draining the financial and human resources of the construction industry, earning it a reputation as one of the most adversarial industries in the country.

There are no winners in such litigation everyone loses through reduced prof-itability, productivity and quality.

Changes and problems are inherent in the construction process. But prevent-ing such problems from becoming dis-putes when possible and using early resolution techniques when problems arise con significantly improve the con-struction process and improve every-one' s bottom line.

The Construction Industry's D ispute Avoidance and Resolution Task Force

E ighty percent or more of construc-tion disputes occur between parties lo the process. As an independent, autonomous task farce, DART offers everyone the techniques far prevention or early resolution of disputes. These techniques include properly allocating the risk on projects; providing incentives for cooperation; partnering or team-building; and jobsite dispute resolution techniques including dispute review boards, negotiation and mediation.

The benefits of dispute prevention and early resolution are numerous:

increased productivity, improved quali-ty, a reduction in down time, increased professional satisfaction, improved safety and accelerated payment, all of which lead to increased profits for everyone.

litigation of a typical construction case can entail up to 30 depositions plus other pretrial, trial and appeal costs. Attorney fees can easily run from

$50,000 to $500,000 or more. Media-tion generally costs between $3,000 and $10,000, a mere fraction of the cost of litigation.

DART's programs emphasize the importance of developing strong relation-ships at every level within the industry and haw those partnerships translate ta greater profits for all. The recent move among all sectors of the construction industry to Total Quality Management (TQM) parallels the dispute prevention and resolution move-ment. An integral part of TQM is establish-ing a relationship between the owner, designer and contractor ta achieve mutual and beneficial goals.

CASE STUDY A major national construction firm re-duced ita legal expenaes ~om 1 30 per-cent of division operating proflta to less than l O percent in less than two years by implementing dispute avoidance and resolution techniques. On a major pro-ject the firm Jtot only avoided litigation, but developed poaltlve relationships that led the own9r to non-competitively award the fl'1" an $80 million contract on ita next ~ect.

CASE STUDY Value engineering savings amounted to more than $1.8 million on the $34 million project.

Contt-ollable cost growth wos held to 3.3 percent compared with an average l O percent cost growth over the life of a typical major construction project.

To date, there has been no litigation on the 19 projecta on which the Corp*

has used partnering. The concept la now standard policy.

CASE STUDY

i The Washington State Department of The U. S. ""f'Y Corp of Engineers is Transportation uaed private dispute,..,.

one of the greatest odvocatea of part-olution techniques on a project to con-nering. One i::>f the first large projecta to struct the largest diameter soft-earth use partnering involved a $34 million tunnel in the worid: l,332 feet long and contract with a Portland, Oregan con-63 feet In diameter. The bid was $38.3 struction firm to build diaphragm walls million compared to the estimate of $79 at Bonneville Dam on the Columbia million. The contractor eatimated that River. The project designers, englneera, the bid was reduced by nearly 10 per-monagers, attorneys, superintendenta, cent due to the knowledge that dispute subcontractors and suppliers participat-resolution provisions would be Included ed in a partnering workshop to estab-in the contract.

fish the parameters of the project and During the course of the project, set objective~. They jointly developed three major disputes were submitted to a the apec;lflc f spute prevenllo:' and reao-

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Dispute Review Board. In each Instance,

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the Board's recommendation was ji>,~;\\:-l. 0.~ pl.; ~. ~~.,;~°iJol" ~mpj~I!)'. _; f,'hi..... :***.

=., ;.,,.. accepted. No disputes were litigated.

\\:." *project, th*,k* of unkt10'!l'll *geology..;._~ _,

The three-year project was complet-and the lntrl 1

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ed ahead of schedule. The final cost of project waa lghly successful.

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$36. 1 million waa almo6t 6 percant Th 1

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below the bid. The cost of the Di*p*

ere wa no I go onan noc ma

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Review Board was $98,000, or leu

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than.3 percent of the total project coat.

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orrespon ence a ca~u, 1ng paperwork were reduced by 66 percent compared to similar projects.

BENEFITS OF MEMBERSHIP H

ad enough controversy and litiga-tion? Restore communication, coordination and cooperation in construction. DART membership is your opportunity to do something positive to return profitability to your projects.

A DART membership is a sound busi-ness investment for any sector of the construction industry. DART members will gain access to leaders in the field of private dispute prevention and resolu-tion for meetings and conferences. Its publications contain the latest informa-tion on dispute avoidance and resolu-tion developments -

seminars, research, training programs, successful applications. Subscriptions to the Dis-pute Resolution Digest and abstracts of major presentations on the subject are included in the membership.

DART policy is established by a steering committee appointed by the associations and societies that represent all elements of the industry. DART's pro-grams are developed by consultation with the organizations representing every sector of the industry. Member-ship provides an opportunity to make your voice heard on industry issues.

Georgia Power Company 40 Inverness Center Parkway Post Office Box 1 295 Birmingham, Alabama 35201 Telephone 205 877-7122 C. K. McCoy Vice President, Nuclear Vogtle Proiect Docket Nos.

50-321 50-366 September 28, 1992 50-424 50-425 Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, DC 20555 ATTENTION: Docketing and Service Branch

'92 lC KE. H.t lh'i{ C OCT -5 the southern electrtc system ©

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ELV-04017 Comments on Policy Statement "Alternative Means of Dispute Resolution" (57 Federal Register 36678 of August 14, 1992)

Dear Mr. Chilk:

Georgia Power Company has reviewed the policy statement, "Alternative Means of Dispute Resolution," published in the Federal Register on August 14, 1992.

In accordance with the request for comments, Georgia Power Company is in total agreement with the NUMARC comments which are to be provided to the NRC.

Should you have any questions, please advise.

Respectfully submitted, CKM/JDK JAN 2. 1 1993 Acknow\\edged by card.................................

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Mr. Samuel J. Chilk u.s. Nuclear Regulatory Commission Page 2 cc: Georgia Power Company Mr. J. T. Beckham, Jr., Vice President, Plant Hatch Mr. w. B. Shipman, General Manager - Plant Vogtle Mr. H. L. Sumner, Jr., General Manager - Plant Hatch NORMS

u. s. Nuclear Regulatory Commission, Washington, DC Mr. K. N. Jabbour, Licensing Project Manager -

Hatch Mr. D. s. Hood, Licensing Project Manager - Vogtle

u. s. Nuclear Regulatory Commission, Region II Mr. s. D. Ebneter, Regional Administrator Mr. L. D. Wert, Senior Resident Inspector -

Hatch Mr. B. R. Bonser, Senior Resident Inspector - Vogtle

Southern Nuclear Operating Company Post Office Box 1295 Birmingham, Alabama 35201 Telephone 205 868-5086 J. D. Woodard Vice President Farley Project September 25, 1992 the southern electric system

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Docket Nos.

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ooc:<ETED Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, DC 20555 ATTENTION: Docketing and Serv ice Branch Comments on Policy Statement "Alternative Means of Dispute Resolution" (57 Federal Register 36678 of August 14, 1992)

Dear Mr. Chilk:

SEP 2. S \\992 Southern Nuclear Operating Company has reviewed the policy statement, "Alternative Means of Dispute Resolution," published in the Federal Register on August 14, 1992.

In accordance with the request for comments, Southern Nuclear Operating Company is in total agreement with the NUMARC comments which are to be provided to the NRC.

Should you have any questions, please advise.

JDW/JDK cc: Mr. s. D. Ebneter Mr. s. T. Hoffman Mr. G. F. Maxwell Respectfully submitted, JAN 2 1 1993 Acknowledged by card..................................

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be: Mr. R. P. McDonald Mr. w. G. Hairston, III Mr. R. D. Hill Mr. D. N. Morey Mr. K. w. McCracken Mr. J. K. Osterholtz Mr. J. w. McGowan Mr. o. Saturn Mr. w. R. Bayne Commitment Tracking System ( 2)

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NUCLEAR MANAGEMENT AND RESOURCES COUNCIL 1776 Eye Street N.W.

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• Washington. ~1~~43~ A 9 :55 (202) 872-1280 Robert W. Bishop Vice President &

General Counsel Mr. Samuel J. Chilk S~cretary of the Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 I**

t,,........ ;,;, : p September 28, 1992 ATIENTION:

Docketing and Services Branch RE:

Policy Statement Alternative Means of Dispute Resolution 57 Fed. Reg. 36678 - August 14, 1992

Dear Mr. Chilk:

• . *. * !f

• The Nuclear Management and Resources Council, Inc. (NUMARC) 1, on behalf of the nuclear power industry, submits herewith its comments to the U.S. Nuclear Regulatory Commission (NRC) Policy Statement, Alternative Means of Dispute Resolution, noticed in the Federal Register on August 14, 1992 (57 Fed. Reg. 36678).

The concept of alternative dispute resolution deserves consideration as a way to provide a more effective and efficient regulatory environment. In fact, alternative dispute resolution mechanisms are already in use in various contexts in NRC proceedings, such as informal settlement of controverted issues in a licensing process.

There certainly is value in the NRC conducting a thorough analysis of where and how alternative dispute resolution mechanisms can improve the regulatory process.

1NUMARC is the organization of the nuclear power industry that is responsible for coordinating the combined efforts of all utilities licensed by the NRC to construct or operate nuclear power plants, and of other nuclear industry organizations, in all matters involving generic regulatory policy issues and on the regulatory aspects of generic operational and technical issues affecting the nuclear power industry. Every utility responsible for constructing or operating a commercial nuclear power plant in the United States is a member of NUMARC. In addition, NUMARC's members include major architect/engineering firms and all of the major nuclear steam supply system vendors.

J~N 2, 1 1993 Acknowledged by card..................................

Mr. SamuelJ. Chilk September 28, 1992 Page 2 As a starting point, the Administrative Conference of the United States bas identified a number of conditions which are conducive to negotiated rulemakings, which is one type of alternative dispute resolution mechanism. Those conditions are:

A limited number of interests will be significantly affected, and they are such that individuals can be selected to represent them; The issues are known and ripe for decision; No party will have to compromise a fundamental value; The rule involves diverse issues, so that parties have room to give and compromise among_ a set of diverse issues; The outcome of the issues is genuinely in doubt, and no one interest should be able to dominate the proceeding; The parties view it as in their interest to use the negotiated rulemaking process; and The agency is willing to use the process and participate in it With respect to the use of ADR mechanisms other than negotiated rulemaking, similar guidelines provided by the Administrative Conference of the United States, as summarized in the NRCs policy statement, establish criteria to be used to evaluate circumstances in which the use of other ADR mechanisms may be appropriate. As the Commission bas correctly observed, a number of ADR mechanisms, without that formal title, have been and will continue to be used in proceedings before Atomic Safety and Licensing Boards. The Commission, as well as parties to various NRC proceedings, should consider the possible use of ADR in any NRC proceeding and determine whether the appropriate criteria can be satisfied such that the use of ADR in a particular circumstance will be able to resolve a dispute in a more effective manner than the current process. While there may be many circumstances in which these conditions can be satisfied, they may not be able to be satisfied in many commercial nuclear power plants licensing proceedings because of the nature of the issues and the diversity of the interests of the parties in these proceedings.

However, the use of ADR in enforcement proceedings should be given serious consideration because enforcement actions provide circumstances which seem categorically appropriate for instituting an ADR procedure. In addition, as the system now exists, the NRC functions not only as the investigator but also determines whether

Mr. Samuel J. Chi1k September 28, 1992 Page 3 to enforce a contested notice of violation. Although the NRC probably views its enforcement proceedings and resultant decisions to be well-reasoned and unbiased, certainly there could be no question about impartiality if a third party arbiter were to hear the facts, review the applicable laws and regulations, and render a decision. As with any other proceeding where there are contested issues, principles of fundamental fairness strongly favor, if not in fact dictate, the use of a neutral decisionmaker, and particularly where the process is not bound by the constraints of traditional judicial procedure.

In the Federal Register notice, the NRC sought public comment on three specific issues. First, with respect to issues that might appropriately be resolved through the use of ADR in lieu of adjudication, we have described above an example, although fairly unconventional, of an NRC administrative program affecting commercial nuclear power plants licensees where ADR could provide an effective dispute resolution mechanism.

Of much broader significance for Commission consideration is th~ Atomic Energy Act requirement that hearings be held with respect to certain licensing actions -- significant benefits to the parties and the public could be achieved by the use of either legislative hearings or ADR rather than adjudication to resolve controverted issues. We urge the Commission to reexamine whether an adjudicatory process is the best way to resolve technical issues that arise in that context. Experience demonstrates that those proceedings are frequently protracted and used for purposes unrelated to technical issue resolution ( e.g., as a public forum to challenge the societal wisdom of using nuclear power to generate electricity). For these reasons, we urge the Commission to consider the use of a legislative hearing format, or ADR, rather than an adjudicatory hearing in licensing proceedings. A more effective licensing process clearly would be in the public interest and, we believe, is fully in consonance with the Atomic Energy Act requirements.

The second question posited by the Commission was whether employees of federal government agencies or individuals outside the federal government should be used as "neutrals" in ADR processes. The Federal Register notice provides no insight as to whether the NRC envisions that employees of specific federal government agencies should be used because they might have some expertise in a particular area or because they might be preferable for some other reason. It is not clear why government employees serving as "neutrals" would be more beneficial to the process than individuals outside the government. It is also not clear whether the actual cost of using a federal government employee as a "neutral," where many government agency costs are now recovered 100% from affected licensees, would be less expensive than using someone outside the government In sum, and consistent with the principles of ADR, the parties to the proceeding should decide who an appropriate neutral individual or category of individuals would be and how the costs of that individual's participation should be borne by the parties to that dispute.

Mr. Samuel J. Chilk September 28, 1992 Page 4 With respect to actions the NRC should take to encourage the use of ADR, the articulation by the Commission of its policy regarding ADR is a significant step toward advising licensees and the public of the Commission's desire to utilize ADR in appropriate circumstances. In addition, education of NRC employees and individuals participating in proceedings in which ADR could be used should be provided. This could be in the form of a handout containing an easily understood explanation of potential ADR mechanisms and which descnbes the characteristics of a dispute that would likely be effectively resolved by ADR. This handout could then be distnbuted to parties in appropriate NRC proceedings.

Three principles underlie the NRCs successful use of any ADR mechanism.

First, a fair evaluation must be made regarding whether the criteria identified by the Administrative Conference of the United States associated with the appropriate use of ADR are satisfied - the situation should not be forced to fit a predetermined conclusion that ADR is an appropriate way to resolve that particular issue. In particular, the parties to a dispute, including the NRC, must agree that use of ADR is likely to result in a prompt, equitable resolution of the dispute.

Second, the use of ADR should not be allowed to foster abuse of the process by imposing an additional burden on the NRC or other parties to a proceeding or to add delay to the process. For example, it would be inappropriate for a requirement to be adopted that a licensing proceeding not proceed until issues which potentially could be resolved by ADR are subjected to ADR processes. That would impose a significant resource cost and could lead to significant delays in reaching a decision. Even if issues amenable to resolution by ADR are identified and addressed in parallel with resolution of other issues in a licensing proceeding, any breakdown in the ADR process short of resolution would cause those issues to revert back to the ASLB, with a concomitant expenditure of additional time and resources. Further, if the NRC were to establish a process to hear an appeal of what one of the ADR participants concluded was an incorrect or unacceptable result on a particular issue, the potential for even further delay and burden has been created. And, without the adoption by rulemaking of a mechanism to establish the legal finality of the conclusion of any issue reached through ADR, the validity of that result may be subject to collateral attack at some future time. Such additional burdens would be in direct opposition to the goal of improving the regulatory process and environment.

Finally, and most importantly, the NRC must be vigilant to ensure that the use of ADR, even where it can achieve significant advantages in improving the efficiency and effectiveness of the NRCs regulatory process and programs, does not in any way adversely affect the NRCs fundamental responsibility to ensure adequate protection of

Mr. SamuelJ. Chilk September 28, 1992 Page 5 public health and safety - decisions with respect to safety cannot be brokered through a consensus-seeking process.

We appreciate the opportunity to comment on the ADR policy statement. If there are any questions regarding the comments provided in this letter, please contact Ellen Ginsberg or me. We are available to meet with the NRC and discuss the issue further if desired.

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• 92 SEP 29 P 3 :56 September 24, 1992 I)..,\\

COMMENTS OF OHIO CITIZENS FOR RESPONSIBLE ENERGY, INC.

( "OCRE") I§'\\

ON "POLICY STATEMENT: ALTERNATIVE MEANS OF DISPUTE RESOLUTION," ~

57 FED. REG. 36678 (AUGUST 14, 1992)

OCRE supports this policy statement and also supports the use of ADR techniques in NRC proceedings.

OCRE agrees that the use of ADR may yield significant benefits, as identified in the Federal Register notice, particularly a reduction in the hostility and levels of antagonism among the parties so that their energies are expended on finding solutions to problems rather than in unpro-ductive bickering and ad hominem attacks.

Unfortunately, the debate over nuclear power issues has often been dominated by such bitter, polarized "us-versus-them" behavior, on both sides, with the result that the real issues are obscured and moderate people who have legitimate concerns and something to contribute are alienated by the intolerance, extremism, rhetoric and posturing.

The result is that the issue is largely dominated by the extrem-ists on both sides who are often more interested in fighting than in anything else, even winning.

While this may seem to be a

pessimistic scenario for the use of ADR, it is OCRE's experience with such processes, on the state level, that they can be effec-tive.

The process has the power to change the attitudes of the participants in a positive manner.

This is achieved by creating a sense of ownership in the product of the ADR process.

OCRE's responses to the question~ posed in the Federal Register notice for public comment follow.

1.

"Specific issues, that are material to decisions concerning the administrative programs of the NRC and that result in dis-putes between the NRC and persons substantially affected by those decisions, that might appropriately be resolved using ADR proc-esses in lieu of adjudication."

Response: OCRE believes that ADR may be utilized for many issues and proceedings in NRC programs.

OGRE would especially encour-age the use of ADR in the certification of standard designs for nuclear power plants under 10 GFR Part 52.

The use of ADR in such proceedings was extensively discussed in the public workshop on standard design certification rulemaking procedures held by the NRC on July 20, 1992. OGRE believes that standard design certification proceedings are ideally suited to the use of

ADR, since the likely outcome of such a proceeding would be modifica-tion to the design rather than outright denial of an application.

1 jAN 21 1993 Acknowledged by card................................. ~

Since such proceedings do not involve any particular proposed site, it is unlikely that parties to the proceedings will be motivated by the "NIMBY" syndrome, and thus they will be more willing to enter the realm of statesmanship and to address safety concerns as a

matter of public policy rather than taking an inflexible obstructionist position.

Some of the concerns raised by the participants in the July 20 workshop on the use of ADR include:

(a) skepticism that ADR could work given the levels of hostility among "combatants" {Tr. 93);

{b) that the use of ADR as part of the NRC Staff's safety could lead to negotiating away fundamental safety issues 97);

review (Tr.

(c) the use of ADR could add instability to the design certifica-tion process, contrary to the intent and purpose of Part 52, which is to increase stability (Tr. 97); and (d) if Staff's

safety, whereas, SER, the the ADR process takes place after the issuance of the

SER, the SER will likely become the minimum level of and the vendors might see this as a no-win situation, if the ADR process takes place before issuance of the process might become unmanageable (Tr. 109).

OCRE's response to these concerns is that, with regard to the first issue, as noted above, the use of ADR techniques can lead to a decrease in the level of hostility among the participants.

With regard to the remaining issues, OCRE believes that the ADR process can be managed so as to avoid such problems.

The partic-ipants need to recognize that ADR is an alternative to tradition-al litigation; if the expense and delay of traditional litigation (including the prospect of judicial review) can be avoided, then instability has been avoided.

However, a win-win outcome is not the same as a win-lose outcome.

In order to obtain the benefits of the win-win solution which ADR can provide, the vendors must accept the fact that they may have to make certain design changes as part of the negotiation process.

OCRE suspects that a basic part of the industry's reluctance to entertain the use of ADR is that in traditional win-lose nuclear licensing litigation, the industry has largely been the winner and the public interest intervenors the losers.

However, the industry's victories did not come without a price,

namely, the cost and delay of litigation.

Perhaps the industry has become so accustomed to winning and paying the price that it does not want 2

to change the status quo.

Or perhaps the industry does not relish the prospect of accommodating intervenors in any way.

Parties accustomed to winning naturally do not want to risk changing the status quo.

People who can only think in terms of win-lose situations naturally think that if their opponents win

anything, then they must be losing.

The root cause of these attitudes is, of course, the polarization and antagonism dis-cussed previously.

While ADR mechanisms can reduce this antago-

nism, the difficulty lies in getting the skeptics to suspend their disbelief long enough to try ADR.

OCRE has no solution to this problem.

(2)

"Whether employees of Federal government agencies should be used as neutrals in ADR processes or whether neutrals should come from outside the Federal government and be compensated by the parties to the dispute, including the NRC, in equal shares."

Response

OCRE would have no objection to the use of Federal employees, including persons within the NRC, as neutrals in ADR processes.

The important point is that all the participants in the ADR process should accept the neutral person as qualified and impartial.

As long as this person is accepted by and agreeable to all parties, it should not matter whether he or she is em-ployed by the Federal government.

As to compensation of the neutral person by the parties to the

dispute, in equal shares, OCRE is concerned that this approach may place a significant financial burden on non-profit public interest groups and other small business entities.

OCRE under-stands that the intent is to avoid the appearance, and the reali-ty, that the neutral person is in the employ of any of the par-ties to the dispute.

However, as long as the neutral is a pro-fessional who is accepted as fair, qualified and impartial by all the parties, this should not be a problem.

A professional should behave impartially regardless of who is paying the salary.

(3)

"Actions that the NRC could take to encourage disputants to participate in ADR processes, in lieu of adjudication, to resolve issues in controversy concerning NRC administrative programs."

Response: As noted above, probably the most challenging aspect to this problem is getting persons who are skeptical of ADR process-es or who are extremely hostile and combative toward the other participants to participate in ADR.

As stated above, OCRE does not have the solution to this problem.

In general, OCRE believes that public education on ADR processes could lessen this skepti-cism.

OCRE suspects that there is much misunderstanding about ADR that needs to be eliminated.

3

OCRE is identifying below some of the criticisms or misunder-standings of ADR processes which it has encountered in the hope that the NRC can fashion some solution.

(a) Persons who are accustomed to the structured world of litiga-

tion, where there are rules specifying the rights and responsi-bilities of the parties, as well as regulatory standards, are reluctant to enter what they perceive to be the unstructured world of ADR.

They fear that, without those

rules, they are giving up rights and control.

(They may also fear that they are giving power to their opponents.)

I have heard an attorney who heads a

state agency complain that in ADR, "There aren't any rules!"

(b) Persons who are accustomed to the aggressive world of litiga-tion may view compromise and negotiation as weakness or "selling out."

This is particularly true of persons who represent, are answerable to, or obtain financial support from a militant con-stituency which eschews compromise.

It is also true of those with aggressive personalities.

Some militant groups may view ADR processes as an attempt to "co-opt" people.

(c)

Some people, particularly those in the public interest sec-tor, may view ADR processes as less than open, public, and demo-cratic.

I have heard some people liken ADR to "making deals in smoke-filled back rooms."

It is important to recognize that most public interest participants do not view themselves merely as private litigants to private disputes.

Rather, they believe they represent the broader public interest; they become involved in NRC proceedings to advance public policy concerns.

One such concern is that nuclear regulation should be an open, public, and democratic process.

(d)

It is important for the NRC to use ADR processes in the most fair and professional manner.

Even innocent mistakes can rein-force skepticism of ADR and distrust of the agency.

My observa-tion of an ADR process at the state level is that if mistakes are made and a situation is handled poorly, many people will not give the agency a second chance.

Respectfully submitted, Susan L. Hiatt Director, OCRE 8275 Munson Road Mentor, OH 44060- 2406 (216) 255-3158 4

FREDERICK H. WINSTON (1853-1886)

SILAS H. STRAWN (1891-1946) 1400 L STREET, NW.

WASH INGTON, D.C. 20005-3502 (202) 371 -5700 FACSIMILE (202) 371-5950 September 28, 1992 Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D.C.

20555 Attention:

Docketing and Service Branch

Subject:

Policy statement

Dear Mr. Chilk:

Al t ernati ve Means of Dispute Resolution 57 Fed. Reg. 36,678 (August 14, 1992) 0:.:,

CHICAGO OFFICE EST WACKER DRIVE 1 l on August 14, 1992, the Nuclear Regulatory Commission

("NRC" or "Commission" ) published an immediately effective Policy statement on Alternative Means of Dispute Resolution ( "ADR" ).

See 57 Fed. Reg.

36,678.

Therein, the Commission invited public comment on its policy initiative.

On behalf of the power reactor licensees listed in the margin, l' we respectfully submit the following comments.

Those licensees also subscribe to the NUMARC comments being filed on their behalf under separate cover.

Overview In the Policy Statement, the NRC identifies three issues particularly worthy of comment.Y In general, we offer the Carolina Power

& Light Co., Niagara Mohawk Power Corp.,

Northeast Utilities, Rochester Gas & Electric Corp., Texas Utilities Electric Co., and Washington Public Power Supply system.

'lJ The NRC specifically is interested in comments on the following:

(1) issues that might appropriately be resolved using ADR processes in lieu of adjudication; (2) whether employees of Federal government agencies should be used as neutrals in ADR processes; and (3) actions that the NRC could (continued... )

JAN 2 1 1993 Acknowledged by card..................................

- WINSTON & STRAWN Mr. Samuel J. Chilk September 28, 1992 Page 2 following in response to the NRC' s inquiry.

First, as will b~e discussed in greater detail below, we believe that the issues mdst likely to benefit from ADR processes are challenges to enforcement orders and proposed civil penalties.

As a general matter, it is unlikely that ADR techniques could be used effectively in NRC licensing actions.

CUrrently, a licensee may only challenge an enforcement order or a civil penalty pursuant to a 10 C.F.R. S 2.205(d} request for a hearing conducted in accordance with the procedure*s in 10 C.F.R. Part 2, Subpart G; ~, in a full adjudicatdry hearing.

The time and expense of such a hearing has contributed in large part to the dearth of such challenges. 'J/

A fair and expeditious process which allows licensees to contest disputed issues at something less than the time and expense now necessary would be an improvement over current procedures.

As discussed below, however, rulemaking action, rather than a policy statement, is heeded to ensure that ADR p*rocesses and results have binding legal effect.

Second, we believe that, in order to avoid any po'ssible bias on the part of the neutral decisionmaker in an ADR proceeding, neutrals should be dra:wn from outside the Federal government, and that the costs should be fairly allocated among the parties to the dispute.

Although the resolution of certain issues may require technical or legal expertise, the pool of available talent is not necessarily limited to employees of the NRC, or even to the Federal government.~

Equitable resolution of such issues can be achieved by independent experts havinq no existing ties to either the government or power readtor licensees.~

Y(... continued}

take to encourage disputants to participate in ADR processes.

57 Fed. Reg. at 36,679 -

680.

11 To our knowledge, only three orders imposing civil penalties have been challenged by power reactor licensees and proceeded to a full hearing.

Alabama Power Co. challenged two or these orders, and GPU Nuclear Corp. challenged the other.

~,

The ADR Act requires the Administrative Conference of the United states ("ACUS"} to establish standards for neutrals, and maintain a roster of individuals who meet those standards.

i, Nothing we say here should be construed as excluding former employees of the NRC or of licensees.

, WINSTON & STRAWN Mr. Samuel J. Chilk September 28, 1992 Page 3 Finally, as further explained below, we believe that the existence of a rule governing the specific application of ADR processes to certain disputes would encourage licensees to participate in the process, because they would have a reasonable expectation that the goals of ADR could be achieved.

It is anticipated that such a rule would define the circU1D.stances under which ADR would be applicable, e.g., only upon mutual agreement of interested parties otherwise subject to NRC adjudicatory procedures.

Moreover, by removing any uncertainty as to the finality of the results of an ADR proceeding, licensees may be more willing to participate in ADR processes.

A.

Discussion Rulemaking is Necessary to Successfully Implement Legally Binding ADR Processes

1.

Need For Rulemaking In order to attract participants to the ADR forlllD., and more importantly to ensure the finality of decisions reached via the application of ADR techniques, the Commission should proceed on the basis of a rulemaking, rather than a policy statement.

The ADR Act itself is silent on the issue of the validity and binding effect of decisions reached through ADR processes.

Therefore, we believe that the NRC should promulgate a rule, consistent with the notice and comment provisions of the Administrative Procedure Act

("APA"), 5 u.s.c. S 551 et ~, that would be binding on all future parties to NRC actions.

A policy statement alone cannot accomplish this.

In this regard, it is well established in case law that a policy statement is "not finally determinative of the issues or rights to which it is addressed."

Pacific Gas & Elec, Co. y, Federal Power Comm'n, 506 F.2d 33, 38 (D.C. Cir. 1974).

We are concerned that, absent an agency rulemaking, a decision reached through the use of ADR processes could be subject to collateral attack.

The rule should specify the types of proceedings in which ADR is an option, and the types of ADR techniques applicable to

such, as well as fundamental procedural issues such as the availability of discovery, the right to counsel, non-disclosure of confidential or attorney-client communications, and the use and discipline of non-attorney representatives.

This suggested course of action would be consistent with the APA and the Atomic Energy Act's mandate to protect the public health and safety.

- WINSTON & STRAWN Mr. Samuel J. Chilk September 28, 1992 Page 4 To illustrate this point, consider the procedural rules in Part 2.

All were promulgated through notice and comment rulemaking, even though the basic requirements for a hearing were authorized in the Atomic Energy Act and the APA.

Similarly, a rulemaking should be the vehicle used by the NRC to ensure that ADR results are binding and valid.

In addition, the Policy Statement, while it is a step in the right direction, falls short of meeting th~ requirements of the Alternative Dispute Resolution Act, P.L. 101-552, 5 u.s.c. SS 581 et seq.

Among other requirements, the ADR Act requires Federal agencies to adopt policies addressing ADR and case management, appoint a senior ADR specialist, and provide training to agency employees on implementing the agency policy.

P.L. 101-552, S 2.

While the Policy Statement recites that the NRC has done the above, the ADR Act requires more.

We discuss these deficiencies in further detail below, along with additional issues which we believe a rule should address.

2.

Issues to be Resolved in a Rulemaking The most important issue to be resolved, and the issue that requires the certainty of a rule, is the finality of any decision reached through ADR processes.

Licensees need to be assured of the binding effect of any decision on other persons, and whether the decision would be open to collateral attack in subsequent proceedings. The Policy Statement does not answer that, nor could it. As stated in Limerick Ecology Action, Inc. v. United States Nuclear Regulatory Comm'n, 869 F.2d 719 (3d Cir. 1989), "the NRC's Final Policy Statement is entitled to no greater deference-than any other policy statement, i.e., none."

Id. at 736.

A decision premised upon an agency rule that gave ADR results the same legal effect as adjudicatory results, in contrast to a mere policy statement, would tend to assure that such ADR decision would be treated by the courts as equally valid and binding.

In order to resolve this issue, we recommend that the rule require any decision reached through ADR processes to be ratified by an Atomic Safety and Licensing Board, or the Commission itself. To further ensure that persons not a party to the process could not launch a later collateral attack, we recommend that a statement be included in each pertinent notice of opportunity for a hearing that ADR processes are an option in lieu of a more traditional hearing, and that all present and prospective parties will be bound by the decision.

These steps, as well as the implementation of the ADR Act through a rulemaking, will help ensure that decisions reached through ADR processes could not be

. WINSTON & STRAWN Mr. Samuel J. Chilk September 28, 1992 Page 5 later voided on the ground that the processes used were not lawfully promulgated.

The rule also should address several issues that are required by the ADR Act, but are missing from the Policy Statement.

Specifically, the ADR Act requires agencies to "develop a policy with regard to the representation by persons other than attorneys P.L. 101-552, S 9.

That section further requires agencies to review their regulations regarding representation by non-attorneys, to ensure that the rules for disqualification of attorneys apply as appropriate to non-attorneys, and to establish procedures for receiving complaints from interested persons.

The Policy Statement does not accomplish these objectives.

Any rule implementing the ADR Act must include such provisions, particularly with respect to the imposition of sanctions against non-attorney representatives.

Another requirement of the ADR Act that the Policy Statement omits is the "sunset" provision.

P.L. 101-552, S 11.

That section provides that the authority of any agency, such as the NRC, to use ADR processes expires on October 1, 1995.

Given that the NRC, in its Policy statement, sets no definitive schedule for review of its ADR experience, it is important that a specific date(s) not only be selected but also be consistent with the expiration of the statutory authority.

There are other issues that must be addressed in a rulemaking in order to successfully incorporate ADR processes into NRC proceedings.

For example, the confidentiality provisions of 5 u.s.c. S 584 should be spelled out in a rule.

In addition, the NRC should promulgate rules stating the criteria under which the agency head may vacate an arbitration award under 5 u.s.c. S 590(g).

our remaining comments focus on areas which, while not specifically required to be addressed by the ADR Act, are necessary to the successful functioning of the ADR process and hence to the willingness of parties to use it.

The first of these is the identification of the disputes which could most benefit from ADR processes, and the processes that seem best suited to the type of dispute at issue.~ The NRC should identify the characteristics of

§t We note that even the Policy Statement should have addressed these issues.

The ADR Act identified the ACUS as the organization with which each agency shall consult in implementing the ADR Act.

An ACUS publication, "Implementing (continued... )

. WINSTON & STRAWN Mr. Samuel J. Chilk September 28, 1992 Page 6 proceedings which would benefit most from ADR processes, and the processes that would be most suitable.

For example, we believe that challenges to enforcement orders and civil penalties are likely to benefit from less formal, expedited proceedings.

In addition to identifying situations where ADR processes may be applicable, any rule also should answer at what point in the agency process the right to ADR begins.

For

example, an adjudication is defined as an "agency process for the formulation of an order."

5 u.s.c. S 551(7).

Under this definition, an enforcement conference could be considered an adjudication.

The NRC should consider then whether it wants to offer ADR processes, such as binding arbitration, at the enforcement conference stage or only at the point at which an opportunity for hearing is now given.

The ADR Act specifies situations where ADR processes may not be appropriate.

5 u.s.c. S 582(b).

The Policy Statement, however, omits any mention of situations unique to NRC practice where it may not be advisable to use ADR processes.

This is an omission that the NRC should cure in a rule.

The rule also should provide for any limited grounds (such as cases of fraud or bad faith) for appeal from decisions that are not reached by agreement,

~, decisions of neutrals or arbitrators that the parties have agreed in advance would be binding.

To close the issue of what proceedings would benefit from ADR processes, we strongly encourage the NRC to omit rulemakings from any implementation of ADR methods.

Congress, in passing the ADR Act, clouded the issue of whether ADR methods could be applicable to rulemakings. Although rulemakings are listed in P.L.

101-552 S 3(B), as proceedings for which ADR should be examined, S 4 (b), 5 U. s. C. § 581 (3) defines ADR as "any procedure that is used, in lieu of an adjudication as defined* in section 551 (7) of this title....

Section 551(7), when read with Section 551(6),

excludes rulemakings from the definition of an adjudication. Thus,

§)( *** continued) the ADR Act:

Guidance for Agency Dispute Resolution Specialists,"

(Feb.

1992), lists elements which agencies should include in their policies.

Among these are the identification of the types of disputes and ADR procedures which might be useful.

lg. at 21.

The NRC should have considered and proposed for comment "where, when, and what kind of ADR techniques might be useful... "

.Ig. at 22.

Such a step should have resulted in more than a recitation of ADR methods from the ADR Act.

Mr. Samuel J. Chilk September 28, 1992 Page 7 it is not clear whether rulemakings should be considered for ADR processes.

However, from a policy standpoint, we believe that including rulemaking would be unwise.

Special procedures for mediated, negotiated rulemaking already exist in the Negotiated Rulemaking Act, P.L. 101-648, 5 u.s.c. S 594 et. seq.

The NRC should resolve any ambiguity and state that its rulemaking activities are excluded from the scope of proceedings amenable to the application of ADR procedures.

conclusion ADR processes have the potential to be beneficial to both the NRC ( and hence the public interest) and licensees. However, to achieve the greatest benefit from the application of ADR techniques, the NRC must do more than publish a Policy Statement which merely recites the provisions of the ADR Act.

Foremost is the necessity of a rulemaking to implement ADR processes.

Without certainty as to the finality and validity of decisions through ADR processes, it would be unwise for a licensee to ever agree to their use.

The issues that we discuss above should be included in the rulemaking we suggest in order to eliminate confusion and allow for some likelihood of use during a trial period.

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(202) 429-5120 U')NR(Fax (202) 223-4579 American College of Nuclear Physicians September 21, 1992 Mr. Samuel J. Chilk Secretary U.S. Nuclear Regulatory Commission Washington, D. C. 20555

Dear Mr. Chilk,

• 92 SEP 22 P4 :14 The Society of Nuclear Medicine

([)

We are writing on behalf of the American College of Nuclear Physicians (AC P) and the Society of Nuclear Medicine (SNM) regarding the Nuclear Regulatory Commission (NRC) policy statement on the use of "alternative means of dispute resolution" (ADR) to resolve issues in controversy concerning NRC administrative programs. The ACNP and SNM membership represents approximately 14,000 nuclear medicine physicians, scientists, radiopharmacists and technologists involved in nuclear medicine clinical practice and research.

We commend the adoption of the policy statement on ADR which supports and encourages the use of ADR as appropriate. However, we urge your consideration of certain aspects of the policy in order to ensure that the ADR process is equitable:

1.

Employees of the Federal government agencies should not be used as neutrals in ADR processes. The neutrals should come from outside the Federal government so as to avoid bias in the dispute resolution.

2.

The parties involved in the dispute should agree to the selection of the neutral.

3.

To encourage the use of ADR processes, in lieu of adjudication, to resolve disputes concerning NRC administrative programs, the NRC should hold a workshop or other public forum for licensees to understand the ADR process, under what circumstances the ADR process should be considered and how that determination is made.

4.

The policy statement is unclear as to whether the decision of the neutral is binding.

5.

We encourage the NRC to publish for public comment any regulations related to the implementation of the ADR procedures.

JAN 2 1 1993 Acknowledged by card.............................._

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Letter to Mr. Chilk September 21, 1992 page 2 We appreciate your consideration of our comments on the policy statement. We believe that the ADR process, if implemented with the cooperation of NRC licensees, will provide an innovative approach to dispute resolution.

Robert J. Lull, M. D.

President American College of Nuclear Physicians Sincerely,

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Paul H. Murphy, Ph. D.

President Society of Nuclear Medicine

DOCKt:T NUMBER nn

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PROPOSED RULE_if_ffl_~;

Cs 7 FJC 3661a, NUCLEAR REGULATORY COMMISSION AGENCY:

Nuclear Regulatory Commission.

ACTION:

Policy statement.

[7590-01]

DOCKETED USNRC

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SUMMARY

This Policy statement presents the policy of the Nuclear Regulatory Commission (NRC) on the use of "alternative means of dispute resolution" (ADR) to resolve issues in controversy concerning NRC administrative programs.

ADR processes include, but are not limited to, settlement negotiations, conciliation, facilitation, mediation, fact-finding, mini-trials, and arbitration or combinations of these processes.

These processes present options in lieu of adjudicative or adversarial methods of resolving conflict and usually involve the use of a neutral third party.

This polic¥ statement is effective on [date of J-/ I '-I /'P-DATES:

publication in the Federal Register).

Because this is a general statement of policy, no prior notice or opportunity for public comment is required.

However, an opportunity for comment is being provided.

The period for comments expires on [45 days after publication in the Federal Register.]

Comments received after this date will be considered to the extent practical;,

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however, to be of greatest assistance to the Commission in planning the implementation of its ADR policy, comments should be received on or before this date.

ADDRESSES:

Mail written comments to the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555, Attention: Docketing and Service Branch.

Deliver comments to One White Flint North, 11555 Rockville Pike, Rockville, Maryland, between 7:30 a.m. and 4:15 p.m. on Federal workdays.

Copies of comments received may be examined and/or copied for a fee at the NRC Public Document Room, 2120 L Street, NW, (Lower Level), Washington, DC, between 7:45 a.m. and 4:15 p.m.

FOR FURTHER INFORMATION CONTACT:

James M. cutchin IV, Special Counsel, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555; Telephone: (301) 504-1568.

SUPPLEMENTARY INFORMATION:

Background

Congress enacted the Administrative Dispute Resolution Act (Public Law 101-552) on November 15, 1990.

The Act requires each Federal agency to designate a senior official as its dispute resolution specialist, to provide for the training in ADR processes of the dispute resolution specialist and certain other

e.

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employees, to examine its administrative programs, and to develop, in consultation with the Administrative Conference of the United States (ACUS) and the Federal Mediation and Conciliation Service (FMCS), and adopt, a policy that addresses the use of ADR and case management for resolving disputes in connection with agency programs.

A~though the Act authorizes and encourages the use of ADR, it does not require the use of ADR.

Whether to use or not to use ADR is committed to an agency's discretion.

Moreover, participation in ADR processes is by agreement of the disputants.

The use of ADR processes may not be required by the agency.

Discussion The Act provides no clear guidance on when the use of ADR is appropriate or on which ADR process is best to use in a given situation.

However, Section 581 of the Act appears to prohibit the use of ADR to resolve matters specified under the provisions of Sections 2302 and 7121(c) of Title 5 of the United States Code, and Section 582(b) identifies situations for which an agency shall consider not using ADR.

Nevertheless, numerous situations where the use of ADR to resolve disputes concerning NRC programs would be appropriate may arise.

A document issued by ACUS in February 1992, entitled "The Administrative Dispute Resolution Act: Guidance for Agency Dispute Resolution Specialists," suggests that the use of ADR may be appropria~e in

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situations involving a particular type of dispute when one or more of the following characteristics is present:

Parties are likely to agree to use ADR in cases of this type; cases of this type do not involve or require the setting of precedent; Variation in outcome of the cases of this type is not a major concern; All of the significantly affected parties are usually involved in cases of this type; cases of this type frequently settle at some point in the process; The potential for impasse in cases of this type is high because of poor communication among parties, conflicts within parties or technical complexity or uncertainty; Maintaining confidentiality in cases of this type is either not a concern or would be advantageous;

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Litigation in cases of this type is usually a lengthy and/or expensive process; or Creative solutions, not necessarily available in formal adjudication, may provide the most satisfactory outcome in cases of this type.

As the Act requires, a Dispute Resolution Specialist has been designated, NRC administrative programs have been reviewed, a policy on the use of ADR has been adopted, and the training of certain NRC employees has begun.

As the Act requires, input on development of the policy has been sought from ACUS and FMCS.

Although the Act does not require it, input on the policy and its implementation is being sought from the public, including those persons whose activities the NRC regulates, because the possible benefits of ADR cannot be realized without the agreement of all parties to a dispute to participate in ADR processes.

Among the possible benefits of ADR are:

More control by the parties over the outcome of their dispute than in formal adjudication; A reduction in levels of antagonism between the parties to a dispute; and

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Savings of time and money by resolving the dispute earlier with the expenditure of fewer resources.

Paperwork Reduction Act Statement This policy statement contains no information collection requirements and therefore is not subject to the requirements of the Paperwork Reduction Act of 1980 (44 u.s.c. 3501 et seq.).

Statement Of Policy:

This statement sets forth the policy of the Commission with respect to the use of "alternative means of dispute resolution" (ADR) 1 to resolve issues in controversy concerning NRC administrative programs.

The Commission has conducted a preliminary review of its programs for ADR potential and believes that a number of them may give rise to disputes that provide opportunities for the use of ADR in their resolution.

For example, as the Commission has long recognized, proceedings before its Atomic Safety and Licensing 1

ADR is an inclusive term used to describe a variety of joint problem-solving processes that present options in lieu of adjudicative or adversarial methods of resolving conflict.

These options usually involve the use of a neutral third party.

ADR processes include, but are not limited to, settlement negotiations, conciliation, facilitation, mediation, fact-finding, mini-t~ials, and arbitration or combinations of these processes.

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Boards (ASLBs) provide opportunities for the use of ADR and case management.

The commission has encouraged its ASLBs to hold settlement conferences and to encourage parties to negotiate to resolve contentions, settle procedural disputes and better define substantive issues in dispute.

The commission also has stated that its ASLBs at their discretion should require trial briefs, prefiled testimony, cross-examination plans and other devices for managing parties' presentations of their cases, and that they should set and adhere to reasonable schedules for moving proceedings along expeditiously consistent with the demands of fairness.

statement of Policy on conduct of Licensing Proceedings. (46 FR 28533, May 27, 1981); CLI-81-8, 13 NRC 452 (1981).

In addition, the Commission has indicated that settlement judges may be used in its proceedings in appropriate circumstances.

Rockwell International corporation (Rocketdyne Division), CLI-90-5, 31 NRC 337 (1990).

Opportunities for the use of ADR in resolving disputes may arise in connection with programs such as those involving licensing, contracts, fees, grants, inspections, enforcement, claims, rulemaking, and certain personnel matters.

Office Directors and other senior personnel responsible for administering those programs should be watchful for situations where ADR, rather than more formal processes, may appropriately be used and bring them to the attention of the NRC's Dispute Resolution Specialist.

Persons who become involved in disp~t~s

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with the NRC ih connection with its administrative programs should be encouraged to consider using ADR to resolve those disputes where appropriate.

The Commission supports and encourages the use of ADR where appropriate.

The use of ADR may be-appropriate:

(1) where the parties to a dispute, including the NRC, agree that ADR could result in a prompt, equitable, negotiated resolution of the dispute; and (2) the use of ADR is not prohibited by law.

The NRC's Dispute Resolution Specialist is available as a resource to assist Office Directors and other senior personnel responsible for administering NRC programs in deciding whether use of ADR would be appropriate.

That individual should receive the cooperation of other senior NRC personnel:

(1) in identifying information and training needed by them to determine when and how ADR may appropriately be used; and (2) in implementing the Commission's ADR policy.

The Commission believes that certain senior NRC personnel should receive training in methods such as negotiation, mediation and other ADR processes to better enable them: (1) to recognize situations where ADR processes might appropriately be employed to resolve disputes with the NRC; and (2) to participate in those processes.

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The Commission recognizes that participation in ADR processes is voluntary and cannot be imposed on persons involved in disputes with the NRC.

To obtain assistance in identifying situations where ADR might beneficially be employed in resolving disputes in connection with NRC programs and steps that can be taken to obtain acceptance of NRC'a-use of ADR, input from the public, including those persons whose activities the Commission regulates, should be solicited

• After a reasonable trial period, the Commission expects to evaluate whether use of ADR has been made where its use apparently was appropriate and whether use of ADR has resulted in savings of time, money and other resources by the NRC.

The Commission will wait until some practical experience in the use I

of ADR has been accumulated before deciding whether specific regulations to implement ADR procedures are needed.

Public Comment The NRC is interested in receiving comments from the public, including those persons whose activities the NRC regulates, on any aspect of this policy statement and its implementation.

However, the NRC is particularly interested in comments on the following:

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Specific issues, that are material to decisions concerning administrative programs of the NRC and that result in disputes between the NRC and persons substantially affected by those decisions, that might appropriately be resolved using ADR processes in lieu of adjudication.

Whether employees of Federal government agencies should be used as neutrals in ADR processes or whether neutrals should come from outside the Federal government and be compensated by the parties to the dispute, including the NRC, in equal shares.

Actions that the NRC could take to encourage disputants to participate in ADR processes, in lieu of adjudication, to resolve issues in controversy concerning NRC administrative programs.

Dated at Rockville, Maryland this 1 ~' day of ¥,1992..

Regulatory Commission,