[Federal Register Volume 61, Number 55 (Wednesday, March 20, 1996)]
[Notices]
[Pages 11433-11434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6704]



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NATIONAL CREDIT UNION ADMINISTRATION


Alternative Dispute Resolution

AGENCY: National Credit Union Administration (NCUA).

ACTION: Policy statement.

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SUMMARY: Consistent with the Administrative Dispute Resolution Act of 
1990, the Community Development and Regulatory Improvement Act of 1994, 
the recommendations of the National Performance Review, and Executive 
Order 12988, NCUA has adopted a Statement of Policy on the use of 
alternative dispute resolution (ADR) techniques to resolve appropriate 
disputes in a fair, timely, and cost efficient manner.

EFFECTIVE DATE: March 13, 1996.

FOR FURTHER INFORMATION CONTACT: Lisa Henderson, Staff Attorney, Office 
of General Counsel, National Credit Union Administration, 1775 Duke 
Street, Alexandria, Virginia 22314-3428, telephone (703) 518-6561.

SUPPLEMENTARY INFORMATION:

Background -

    The Administrative Dispute Resolution Act of 1990 (ADRA) encouraged 
federal agencies to employ consensual methods of dispute resolution as 
alternatives to litigation. Congress enacted the ADRA to reduce the 
time, cost, inefficiencies, and contentiousness that too often are 
associated with litigation and other adversarial dispute resolution 
mechanisms. Although the ADRA sunset in October 1995, federal agencies 
continue to have authority to use ADR techniques to resolve disputes.
    Support and encouragement for the use of ADR in federal agencies 
have come from other sources. In September 1993, Vice President Gore 
recommended that federal agencies ``increase the use of alternative 
means of dispute resolution.'' Report of the National Performance 
Review, Recommendation REG06 (Sept. 7, 1993).
    A year later, Congress enacted the Riegle Community Development and 
Regulatory Improvement Act of 1994. Section 309(e) of the statute 
requires that NCUA implement a pilot program for using ADR methods to 
resolve: a) claims against insured credit unions for which NCUA has 
been appointed conservator or liquidating agent; b) actions taken by 
NCUA in its capacity as conservator or liquidating agent; and c) any 
other issue for which the NCUA Board determines that ADR would be 
appropriate. The statute mandates that the program: a) be fair to all 
interested parties; b) resolve disputes expeditiously; and c) be less 
costly than traditional means of dispute resolution, including 
litigation.-
    On February 5, 1996, President Clinton signed Executive Order 
12988, addressing civil justice reform. Section 1 of the Executive 
Order directs those federal agencies and litigation counsel that 
conduct civil litigation on behalf of the United States Government in 
federal court to follow certain guidelines designed to promote the just 
and efficient resolution of civil claims. The guidelines encourage 
litigation counsel to resolve claims through informal discussions, 
negotiations, and settlements rather than through formal court 
proceedings. They state that it is appropriate for litigation counsel 
to use ADR techniques to resolve claims after determining that the use 
of a particular technique is warranted for a particular claim and will 
materially contribute to the prompt, fair, and efficient resolution of 
the claim. Finally, the guidelines state that litigation counsel should 
be trained in ADR techniques to facilitate broader and effective use of 
ADR. -
    In light of the above, the NCUA Board has adopted the following 
policy statement.

Statement of Policy on Alternative Dispute Resolution -

    Alternative dispute resolution is the resolution of disputes 
through informal, voluntary consensual techniques. NCUA is committed to 
the use of ADR as a tool to resolve disputes at the earliest stage 
possible in an expeditious, cost effective, and mutually acceptable 
manner. NCUA adopts this policy to express its full support for ADR and 
to set forth a framework for the continuing and expanded use of ADR. 
NCUA fully supports the cost-effective use of ADR, including 
negotiation, mediation, early neutral evaluation, minitrials, use of 
settlement judges, and other hybrid forms of ADR in appropriate 
instances. -
    NCUA will consider ADR in any dispute in which a negotiated 
solution is a potentially acceptable outcome. The individual at NCUA 
who has decision-making authority in a particular matter will determine 
whether to use ADR in the matter and which method to use. Not every 
dispute is suitable for settlement through ADR. NCUA views ADR 
processes as supplementary to, not a displacement of, traditional 
adjudicative methods of resolving disputes. NCUA will engage in ADR 
only after determining that ADR is appropriate in a particular case. -
    The factors NCUA will use to determine whether ADR is appropriate 
in a particular case are as follows: (1) A creative solution, not 
necessarily available in formal adjudication, may provide the most 
satisfactory outcome; (2) The case does not involve or require the 
setting of precedent; (3) All of the substantially affected parties are 
involved in the proceeding; (4) Variation in outcome is not a major 
concern; (5) The parties are likely to agree to use ADR; (6) Litigation 
likely would be a lengthy and/or expensive process; (7) Cases of this 
type frequently settle at some point in the process; and (8) The 
potential for impasse is high. -
    The particular ADR method selected will depend on the specifics of 
the case.

[[Page 11434]]

Mediation, which involves the use of a trained neutral third party to 
help disputants negotiate a mutually agreeable settlement, may be 
suitable when one or more of the following characteristics are present: 
(1) The parties are looking for a substantial level of control over the 
resolution of the dispute; (2) The parties have, or expect to have, an 
ongoing relationship; (3) Communication between the parties has broken 
down to a significant degree; (4) The legal standards for decision are 
fairly clear, or neither party has a need to clarify them; or (5) There 
are multiple issues to be resolved. -
    Early neutral evaluation involves using a neutral factfinder, often 
one with substantive expertise, to evaluate the relative merits of the 
parties' cases. This process, which can be used early on in a dispute, 
usually involves an informal presentation to the neutral of the 
highlights of the parties' cases or positions. The neutral provides a 
nonbinding evaluation, sometimes in writing, which can give parties a 
more objective perspective on the strengths and weaknesses of their 
cases, thereby making further negotiations more likely to be 
productive. Early neutral evaluation may be an appropriate process when 
some or all of the following are characteristics of the dispute: (1) 
The dispute involves technical or factual issues that lend themselves 
to expert evaluation; (2) The parties disagree significantly about the 
value of their case; (3) Top decision-makers of one or more parties 
could be better informed about the real strengths and weaknesses of the 
case; or (4) The parties are seeking an alternative to extensive 
discovery. -
    A minitrial is a structured settlement process in which the 
disputants agree on a procedure for presenting their cases in highly 
abbreviated versions (usually no more than a few hours or a few days) 
to the senior officials for each side with the authority to settle the 
dispute. This process allows those in senior positions to see first 
hand how their case and that of other parties play out, and can serve 
as a basis for more fruitful negotiations. Often, a neutral presides 
over the hearing, and may subsequently mediate the dispute or help 
parties evaluate their cases. The procedures for minitrials are 
developed by agreement among the parties. Minitrials can be useful in 
cases that have some or all of the following characteristics: (1) 
Getting important facts and positions before high-level decision-makers 
for the parties is important; (2) The parties are looking for a 
substantial level of control over the resolution of the dispute; (3) 
Some or all of the issues are of a technical nature; or (4) A trial on 
the merits would be very long and/or complex.-
    A settlement judge serves essentially as a mediator or neutral 
evaluator in cases pending before a tribunal. The settlement judge is 
usually a second judge from the same body as the judge who will 
ultimately make the decision if the case is not resolved by the 
parties. In some cases, a settlement judge may give an informal 
advisory opinion. Settlement judges can be useful in cases that have 
some or all of the following characteristics: (1) The case is in formal 
adjudication; or (2) The parties have not been able to negotiate a 
settlement on their own. -
    Common to most of the processes discussed above is the use of a 
neutral third party. NCUA anticipates that most of the time a neutral 
is used to resolve a dispute with an outside party, the neutral will 
not be an employee of NCUA. Neutrals are available from other federal 
agencies, court systems, and private companies. In all cases, the 
particular neutral will be approved by all parties to the dispute. -
    The Community Development and Regulatory Improvement Act of 1994 
required that NCUA's use of ADR processes: 1) be fair to all interested 
parties; 2) resolve disputes expeditiously; and 3) be less costly than 
traditional means of dispute resolution, including litigation. In 
addition to those objectives, NCUA's goals in using ADR techniques will 
be to: (1) Free up personnel and other resources; (2) Create 
opportunities for wider ranges of creative solutions and possible 
options; (3) Forge better relationships among disputing parties, inside 
and outside the agency; (4) Improve communication between and within 
parties; (5) Improve the satisfaction level of disputants with both the 
process and substantive results of the dispute resolution process; and 
(6) Improve the reliability of information on which decisions are 
based. -
    In furtherance of its commitment to ADR and in response to 
Executive Order 12988, NCUA will provide its litigation attorneys with 
training in ADR techniques. NCUA also will provide introductory ADR 
training to executives, managers, and supervisors so that they 
understand what ADR is, its potential benefits, and where to go for 
assistance. -
    This policy statement is intended only to improve the internal 
management of NCUA in resolving disputes. It shall not be construed as 
creating any right or benefit, substantive or procedural, enforceable 
at law or in equity, by a party against NCUA or its employees. This 
policy statement shall not be construed to create any right to judicial 
review involving the compliance or noncompliance of NCUA or its 
employees with this statement. Nothing in this policy statement shall 
be construed to obligate NCUA to offer funds to settle any case, to 
accept a particular settlement or resolution of a dispute, to alter its 
standards for accepting settlements, to submit to binding arbitration, 
or to alter any existing delegation of settlement or litigating 
authority.-NCUA will engage in ADR only if it consents to do so. -
    NCUA hereby announces that during the period from March 13, 1996, 
to August 13, 1997, it will conduct an ADR pilot project based on the 
principles and objectives set forth above. Every dispute in which the 
agency is engaged during that period will be evaluated to determine its 
appropriateness for ADR. At the end of the period, NCUA will evaluate 
the project to determine the effectiveness of its ADR program and 
whether changes need to be made to improve the program. -
    NCUA welcomes and encourages input on the use of ADR and comment on 
current and potential uses of ADR from both within and outside the 
agency.

    -By the National Credit Union Administration Board on March 13, 
1996.
Becky Baker,
Secretary of the Board.
[FR Doc. 96-6704 Filed 3-19-96; 8:45 am]
BILLING CODE 7535-01-P