[Federal Register Volume 59, Number 29 (Friday, February 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3086]


[[Page Unknown]]

[Federal Register: February 11, 1994]


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FEDERAL TRADE COMMISSION

16 CFR Part 14

 

Administrative Interpretations, General Policy Statements, and 
Enforcement Policy Statements

AGENCY: Federal Trade Commission.

ACTION: Notice of Proposed Policy Statement, Request for Comment.

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SUMMARY: The Federal Trade Commission (FTC or Commission) proposes 
amending its regulations by adopting a policy statement supporting and 
encouraging the use of alternative dispute resolution (ADR) procedures 
in appropriate circumstances. This statement implements the 
Administrative Dispute Resolution Act (ADRA), which requires federal 
agencies to develop a policy regarding the use of ADR in their 
administrative programs. Both the ADRA and the Negotiated Rulemaking 
Act (NRA) authorize and encourage agencies to use arbitration, 
mediation, negotiated rulemaking, and other consensual methods of 
dispute resolution.
    The Commission is seeking comment from interested persons on its 
proposed ADR policy statement, including any comments concerning issues 
or proceedings that would be especially amenable to alternative dispute 
resolution or areas in which such techniques should be limited or not 
used.

DATES: Written comments must be received on or before April 12, 1994. 
The Commission's policy on alternative dispute resolution will become 
effective upon its publication in final form in the Federal Register.

ADDRESSES: Send written comments to: Office of the Secretary, ADR 
Comment, Federal Trade Commission, 6th Street and Pennsylvania Ave NW., 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Elizabeth Grant, Attorney, Division of Marketing Practices, Bureau of 
Consumer Protection, Federal Trade Commission, (202) 326-3299.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    Congress has amended the Administrative Procedure Act through 
enactment of the Administrative Dispute Resolution Act (ADRA), Public 
Law 101-552, 5 U.S.C. 571 et seq. and the Negotiated Rulemaking Act 
(NRA), Public Law 101-648, 5 U.S.C. 561 et seq. The ADRA authorizes 
federal agencies to use arbitration, mediation, settlement negotiation, 
and other consensual methods of dispute resolution. The NRA authorizes 
agencies to use negotiated rulemaking techniques to assist in drafting 
proposed rules as an alternative to more adversarial procedures. By 
enacting the ADRA and the NRA, Congress expressed its views that, in 
some cases, the use of ADR techniques by federal agencies can result in 
more effective, timely, and less expensive dispute resolution than 
litigation.

    The ADRA requires federal agencies to adopt a policy that addresses 
the use of alternative means of dispute resolution and to examine 
alternative means of resolving disputes in connection with formal and 
informal adjudications, rulemakings, enforcement actions, the issuance 
and revocation of licenses or permits, contract administration, 
litigation brought by or against the agency, and other agency actions. 
The Commission proposes amending 16 CFR part 14 by issuing a policy 
statement on alternative dispute resolution (``ADR'') in order to 
implement the ADRA. Although notice and comment procedures are not 
required for general statements of policy or procedure (5 U.S.C. 
553(b)(A)), an opportunity for public comment is being provided.

II. Policy Statement on Alternative Dispute Resolution

List of Subjects in 16 CFR Part 14

    Administrative practice and procedure, Advertising, Alternative 
dispute resolution, Dispute resolution, Trade practices, Truth in 
lending.

    It is proposed that Part 14 of Title 16 of the Code of Federal 
Regulations be amended as follows:

PART 14--ADMINISTRATIVE INTERPRETATIONS, GENERAL POLICY STATEMENTS, 
AND ENFORCEMENT POLICY STATEMENTS

    1. The authority citation for part 14 is revised to read as 
follows:

    Authority: 5 U.S.C 561-581, 15 U.S.C. 41-58.

    2. Section 14.18 is added to read as follows:


Sec. 14.18  Alternative Dispute Resolution Policy.

    (a) The Commission supports alternative dispute resolution 
(``ADR'') and seeks to encourage its voluntary use whenever 
appropriate. In some cases, the use of ADR may lead to resolutions that 
are more effective, timely, and less costly than resolutions obtained 
through formal adjudication. Many Commission disputes have been and 
will continue to be resolved without formal adjudication. Historically, 
unassisted negotiation has been the primary means of resolving disputes 
without formal adjudication. However, in some cases, the use of 
assisted negotiation procedures, including but not limited to 
conciliation, facilitation, mediation, neutral evaluation, factfinding, 
minitrials, and arbitration, may help the Commission fulfill its 
statutory mission more effectively. As with other agency actions, 
agreements reached through ADR are not valid or effective unless and 
until the Commission approves and accepts such agreements.
    (b) As required by the Administrative Dispute Resolution Act, Pub. 
L. 101-552, 5 U.S.C. 571 et seq., the Commission has appointed a 
dispute resolution specialist to assist in the implementation of the 
Act and to provide guidance to Commission staff interested in using ADR 
procedures. The Commission has also formed an intraagency work group to 
evaluate the uses of ADR and to assist staff in identifying situations 
where ADR procedures might be appropriate. The work group has developed 
training programs for the Commission staff on ADR techniques and ways 
in which such techniques might be used to resolve disputes before the 
Commission. The Commission will continue to provide training in ADR to 
Commission staff as appropriate. Also, pursuant to the ADRA and 
amendments to Federal Acquisition Regulation (41 U.S.C. 405(a)), the 
Commission will incorporate ADR clauses into its procurement contracts 
where appropriate. Furthermore, the Commission will develop its ADR 
policy in consultation with the Administrative Conference of the United 
States and the Federal Mediation and Conciliation Service.
    (c) Even before the enactment of the ADRA, the Commission used ADR 
in its administrative programs. Past Commission uses of ADR have 
included attempts at both negotiated rulemaking and a minitrial. 
Furthermore, under the Magnuson-Moss Warranty Act (15 U.S.C. 2301 et 
seq.), the Commission is responsible for encouraging the use of 
informal dispute settlement mechanisms as an alternative to litigation 
on warranty matters, and has established minimum standards to govern 
the operation of these mechanisms in its Rule on Informal Dispute 
Settlement Procedures (16 CFR part 703). The Commission has also taken 
an active role in educating consumers regarding the use and advantages 
of ADR. Finally, in several administrative cease and desist orders, the 
Commission has included provisions mandating the use of ADR techniques, 
such as arbitration, as a means of resolving disputes between consumers 
and businesses.
    (d) The Commission has examined alternative means of resolving 
disputes in connection with its formal and informal adjudications, 
rulemakings, enforcement actions, contract administration, litigation 
brought by or against the Commission, and other actions. Due to the 
varied nature of Commission disputes, the Commission believes that the 
question whether to use ADR should be determined on a case-by-case 
basis by appropriate staff. As the Commission develops experience with 
ADR, the cost, effectiveness, and quality of outcomes obtained by using 
ADR processes will be evaluated.
    (e) The Commission directs its staff to consider whether a 
particular dispute might be resolved through the use of ADR, to advise 
parties to Commission disputes of ADR options where appropriate, and to 
consider carefully suggestions from parties interested in using ADR. 
Parties subject to the Commission's enforcement authority are 
encouraged to suggest the use of ADR processes. In evaluating whether 
and what type of ADR processes to employ, all relevant factors should 
be considered. Factors weighing in favor of the use of ADR in a 
particular case include the following circumstances:
    (1) Communication between the parties has broken down or 
negotiations are at an impasse;
    (2) Adjudication would lead to additional delay or expense;
    (3) Neutral evaluation could be of assistance in resolving 
complicated factual or technical disputes;
    (4) Multiple interested parties are involved in the dispute and 
consensus among them is desirable;
    (5) Applicable legal standards are clear; or
    (6) Assisted negotiations could help offer solutions that the 
parties may not generate themselves or could lead to faster resolution 
of the matter than unassisted negotiations.
    (f) As provided in the ADRA, factors weighing against the use of 
ADR include the following circumstances:
    (1) A definitive or authoritative resolution of the matter is 
required for precedential value and an ADR proceeding is not likely to 
be accepted generally as an authoritative precedent;
    (2) The matter involves or may bear upon significant questions of 
Government policy that require additional procedures before a final 
resolution may be made, and an ADR proceeding would not likely serve to 
develop a recommended policy for the agency;
    (3) Maintaining established policies is of special importance so 
that variations among individual decisions are not increased, and an 
ADR proceeding would not likely reach consistent results among 
individual decisions;
    (4) The matter significantly affects persons or organizations who 
are not parties to the proceeding;
    (5) A full public record of the proceeding is important, and an ADR 
proceeding cannot provide such a record; and
    (6) The agency must maintain continuing jurisdiction over the 
matter with authority to alter the disposition of the matter in the 
light of changed circumstances, and an ADR proceeding would interfere 
with the agency's fulfillment of that requirement.
    (g) To encourage the use of alternative means of dispute 
resolution, the ADRA protects the confidentiality of settlement 
communications made by the parties or neutrals in a dispute resolution 
proceeding. The Commission will interpret the Freedom of Information 
Act (5 U.S.C. 552) in a manner consistent with the ADRA to avoid public 
disclosure of settlement communications made as part of a dispute 
resolution proceeding.
    (h) Agency decisions to use or to refrain from using ADR are not 
judicially reviewable, except at the instance of a nonparty adversely 
affected by an arbitral award. 5 U.S.C. 581 (a) and (b)(1).


    Authority: 5 U.S.C. 561-581, 15 U.S.C. 41-58.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 94-3086 Filed 2-10-94; 8:45 am]
BILLING CODE 6750-01-M