[Federal Register Volume 59, Number 62 (Thursday, March 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7700]


[[Page Unknown]]

[Federal Register: March 31, 1994]


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FEDERAL DEPOSIT INSURANCE CORPORATION

 

Eligibility Standards for FDIC/RTC Roster of Neutrals

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC or 
Corporation) herewith publishes for comment the recommendations of the 
FDIC/Resolution Trust Corporation (RTC) Roster Qualifications Panel 
(Panel) regarding the standards to be used to determine eligibility for 
the FDIC/RTC Roster of Neutrals. The RTC is considering the Panel's 
recommendations separately. The purpose of the Panel was to give in-
depth consideration to the issues raised by roster qualifications and 
to recommend criteria to be used for the FDIC/RTC National Roster. The 
recommendations to be adopted will assist in the development of a 
roster to be used to provide a list of neutrals which disputants can 
use for selecting a neutral in all cases where the FDIC or the RTC is 
involved in a matter which warrants the use of independent outside 
neutrals. The need for a FDIC/RTC National Roster is the result of the 
increase in demand for outside neutrals in Alternative Dispute 
Resolution (ADR) cases involving the Corporation.

DATES: Comments must be submitted on or before May 31, 1994.

ADDRESSES: Send comments to Robert E. Feldman, Acting Executive 
Secretary, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429. Comments may be hand-delivered to room F-402, 
1776 F Street, NW., Washington, DC 20429, on business days between 8:30 
a.m. and 5 p.m. Comments may also be inspected in the FDIC's Reading 
Room, room 7118, 550 17th Street, NW., Washington, DC 20429, between 9 
a.m. and 4:30 p.m. FAX number: (202) 898-3838.

FOR FURTHER INFORMATION CONTACT: Charlotte Kaplow, Counsel, Legal 
Division, Federal Deposit Insurance Corporation, 1717 H Street, NW., 
room H-11083, Washington, DC 20006, (202) 736-0248.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    The Administrative Dispute Resolution Act (the Act), Public Law 
101-552, authorizes and encourages agencies to use mediation and other 
consensual methods of dispute resolution as alternatives to traditional 
dispute resolution processes. The Corporation has been committed to the 
use of alternative dispute resolution (ADR) methods since 1989, when 
the Legal Division began using ADR in disputes among FDIC- and RTC-
controlled entities. Following the passage of the Act, the Corporation 
established the ADR Unit which was tasked with developing, implementing 
and coordinating ADR programs across the FDIC. The program for 
resolution of disputes between controlled entities was so successful 
that the FDIC expanded the use of ADR to disputes with outside parties, 
including commercial matters, creditor claims and professional 
liability cases.
    Since the implementation of the ADR program at the FDIC, the 
Corporation has maximized recoveries, quickened resolutions and reduced 
legal fees and expenses. For example, in 1993, the FDIC saved an 
estimated $9.3 million in legal fees and expenses through the use of 
formal ADR. The FDIC's success with the program shows that ADR is an 
effective dispute resolution mechanism and litigation management tool.

II. Establishment of Roster of Neutrals

    One of the main components of the FDIC's ADR programs is the 
development of a joint roster of neutrals with the RTC which contains 
the names of the qualified outside service providers (attorneys, as 
well as non-attorneys) around the country who have a minimum threshold 
level of ADR experience. The need for a FDIC/RTC National Roster is the 
result of the increase in demand for outside neutrals in ADR cases 
involving the Corporations. There was a need for access to a nationwide 
roster of qualified outside neutrals with experience relevant to the 
types of disputes in which the Corporations were involved. As a result, 
the Corporations jointly decided to develop a nationwide roster which 
could be utilized in all cases where the FDIC or RTC was involved in a 
matter which warranted the use of independent outside neutrals.
    The Corporations had a number of reasons for establishing a minimum 
level of qualifications for the Roster:

    The FDIC/RTC case load is nationwide and involves a wide range 
of cases, from small and simple to large and very complex, which 
requires qualified experienced neutrals.
    The attorneys in the field who would be doing the neutral 
selection on behalf of the FDIC and RTC may be relatively 
unsophisticated in ADR, as may be the other party(ies).
    Because ADR is relatively new to the FDIC/RTC, use of an 
inexperienced neutral for a case could jeopardize the entire 
program.
    Due to significant congressional oversight and a high public 
profile, successful experiences with the ADR process and 
accountability for the expenditure of funds is imperative.

    Following a joint effort by the FDIC and the RTC to develop 
criteria to be used in qualifying neutrals, the Corporations requested 
that a panel of dispute resolution experts be formed to give in-depth 
consideration to the issues raised by roster qualifications and to make 
recommendations for criteria to be used for the FDIC/RTC National 
Roster. Members of the Panel were: Linda Singer, Executive Director, 
Center for Dispute Settlement, who acted as facilitator for the Panel; 
Michael Lewis, President, ADR Associates; Frank E.A. Sander, Professor, 
Harvard Law School; Philip Harter, mediator; Charles Pou, 
Administrative Conference of the United States; Sheldon Guttmann, 
Dispute Resolution Specialist, Federal Communications Commission; and 
Deborah Dalton, Deputy Director, Consensus and ADR Project, United 
States Environmental Protection Agency.
    The Panel convened on March 25, 1992 in Washington, DC. As a result 
of the meeting the Panel issued a report summarizing the discussions 
held and the recommendations which resulted.
    The FDIC/RTC procedure for disputants' selection of a neutral for a 
particular case contemplates that the Roster will be available to FDIC/
RTC attorneys through an on-line computer database. Through the 
database, the parties will be given panels of neutrals with the 
experience and ADR expertise that the disputants themselves deem to be 
relevant. The disputants will then select a mutually acceptable 
neutral.
    One of the principles set forth in the Report of the Society of 
Professionals in Dispute Resolution (SPIDR) Commission on 
Qualifications (SPIDR Report) is that the greater degree of choice the 
parties have over the dispute resolution process, program or neutral, 
the less mandatory the qualifications should be. It was suggested that 
an open, unqualified roster where the parties could make their search 
request very narrow might be most suitable for the FDIC/RTC. However it 
was suggested that a nationwide, open and unqualified roster could very 
well result in a roster much too large for the FDIC/RTC purposes and 
that the larger the roster, the more difficult to get neutrals who are 
qualified.

III. Method for Qualifying Neutral for the FDIC Roster

    The Panel discussed the balance between the need to ensure some 
minimum objective qualifications and the need for flexibility to meet 
the specific needs (substantive and procedural) of the disputants in a 
particular matter. There was a general consensus that the discretion of 
the FDIC to qualify neutrals through application of subjective criteria 
should be minimized and that objective criteria and rating standards 
should be developed and applied systematically. Subsequently, the Panel 
narrowed the discussion to the minimum threshold qualities of a 
neutral, the information required to qualify neutrals, and the 
standards and criteria that should be used to qualify neutrals.
    The Panel focused on the possible methods and specific paradigms of 
qualifying neutrals. The SPIDR Report strongly recommended that 
performance criteria be the basis for qualifying neutrals. The FDIC and 
RTC determined that, due to time, geographic and cost constraints, 
performance-based testing for the FDIC/RTC National Roster is not 
possible. In the alternative, the SPIDR Report suggested using 
experience-based criteria as a screening tool for neutrals.
    The Panel generally agreed that some combination of quantity of ADR 
experience, complexity of issues handled and diversity of types of 
disputes was important as a minimum threshold. The Panel discussed the 
relevance of substantive expertise, and whether such expertise should 
be a minimum threshold for the parties themselves in their choice of an 
individual neutral. Given the variety of cases handled by the FDIC/RTC, 
it was determined that such experience was more appropriately 
considered as a selection factor by the disputants, not a qualification 
factor determined by the FDIC/RTC.
    The Panel discussed specific experience-based criteria and ranking 
systems that could be utilized, acknowledging that one of their chief 
concerns in designing and implementing an experience-based 
qualification system was the ability to adequately qualify neutrals 
with diverse experience. The Panel agreed that some method for 
establishing equivalencies and variably weighing different types of ADR 
processes and complexity of substantive issues was necessary in order 
to permit an accurate evaluation of a neutral's experience. Six 
categories or qualifying factors were listed as essential to providing 
a quantifiable measurement of a neutral's experience: The hours or time 
as a neutral (Hours/Time), the total number of cases (Number of Cases), 
the diversity of ADR processes (Diversity), the dollar amounts in 
controversy (Dollar Amount), the number of multi-party cases (including 
the number of parties) (Multi-Party), and the nature of the issues 
involved (Complexity). The Panel decided that there should be some 
ranges for equivalencies between different types within the same 
categories of qualification factors.
    Aware of the mandate of the FDIC/RTC to encourage participation by 
minorities and women in all aspects of its contracting and hiring, the 
Panel decided that ten points should be awarded for the neutral's 
status as a female or a member of a minority. (Women/Minority).
    In addition to establishing a criteria to qualify applicants for 
the Roster of Neutrals, the Panel discussed the revision of the FDIC's/
RTC's questionnaire to potential neutrals, the possibility of the 
disputants selecting a neutral who is not on the roster, the 
dissemination of qualification standards, and the future review and 
revision of the qualification process.

IV. Recommendation

    At the conclusion of the meeting the FDIC/RTC Roster Qualifications 
Panel recommended that:
    1. The FDIC/RTC use experience-based criteria for qualifying 
applicants for the Roster of Neutrals.
    2. The FDIC/RTC send a follow-up request for information to those 
who have already applied to obtain needed information and revise the 
questionnaire to obtain that information in the future.
    3. A certification requirement replace the notarization requirement 
on the questionnaire.
    4. The specific factors and points should be: 

------------------------------------------------------------------------
                            Factors                               Points
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Hours/Time.....................................................       25
Number of Cases................................................       10
Diversity......................................................       15
Dollar Amount..................................................       10
Multi-Party....................................................       15
Complexity.....................................................       15
Women/Minority.................................................      10 
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    5. The minimum score necessary to qualify for the FDIC/RTC Roster 
be 60 points.
    6. To encourage participation by minorities and women, ten points 
be awarded for a neutral's status as a female or member of a minority.
    7. A limited ad hoc procedure be offered to afford the opportunity 
to select a neutral who is acceptable to the parties to a dispute, but 
who is not on the roster. The FDIC/RTC should develop internal 
guidelines to determine when such a procedure would be appropriate.
    8. The selection of qualified applicants be done by the FDIC/RTC 
under the supervision of a committee, either the Panel itself, or a 
group of inter-government agency personnel.
    9. The proposed qualification procedures and standards be published 
for notice and comment in the Federal Register and circulated to major 
industry groups through press release.
    10. A reconvening of the Panel and review of the process take place 
at specified intervals.
    Following the period of notice and comment, the Corporation plans 
to incorporate appropriate comments and proceed with the qualification 
of applicants.

    Dated at Washington, DC, this 22nd of March 1994.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
[FR Doc. 94-7700 Filed 3-30-94; 8:45 am]
BILLING CODE 6714-01-P