[Federal Register Volume 65, Number 251 (Friday, December 29, 2000)]
[Notices]
[Pages 83085-83095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33247]


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DEPARTMENT OF JUSTICE

Federal Alternative Dispute Resolution Council


Confidentiality in Federal Alternative Dispute Resolution 
Programs

AGENCY: Federal Alternative Dispute Resolution Council, Department of 
Justice.

ACTION: Guidance.

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SUMMARY: This notice publishes a document entitled ``Confidentiality in 
Federal Alternative Dispute Resolution Programs,'' which provides 
guidance to assist Federal agencies in developing ADR programs. The 
document was created by a subcommittee of the Federal ADR Steering 
Committee, a group of subject matter experts from federal agencies with 
ADR programs. It was approved by the Federal ADR Council, a group of 
high-level government officials chaired by the Attorney General. The 
document contains detailed guidance on the nature and limits of 
confidentiality in Federal ADR programs and also includes guidelines 
for a statement on these issues that Federal neutrals may use in ADR 
proceedings.
    Interested persons have been afforded an opportunity to participate 
in the making of this guidance. A draft was submitted for public 
comment in the Federal Register, and due consideration has been given 
to the comments received. Comments were provided by private sector 
organizations and government agencies from around the country.

ADDRESSES: Address any comments to Jeffrey M. Senger, Deputy Senior 
Counsel for Dispute Resolution, United States Department of Justice, 
950 Pennsylvania Ave. NW., Room 4328, Washington, DC. 20530.

    Dated: December 19, 2000.
Jeffrey M. Senger,
Deputy Senior Counsel for Dispute Resolution, Department of Justice.

SUPPLEMENTARY INFORMATION:

Authority

    The Administrative Dispute Resolution Act of 1996 (ADR Act), 5 
U.S.C. 571-584, requires each Federal agency to promote the use of ADR 
and calls for the establishment of an interagency committee to assist 
agencies in the use of ADR. Pursuant to this Act, a Presidential 
Memorandum dated May 1, 1998, created the Interagency ADR Working 
Group, chaired by the Attorney General, to ``facilitate, encourage, and 
provide coordination'' for Federal agencies. In the Memorandum, the 
President charged the Working Group with assisting agencies with 
training in ``how to use alternative means of dispute resolution.'' The 
following document is designed to serve this goal.

Introduction

    The subject of the document is confidentiality, which is a critical 
component of a successful ADR process. Guarantees of confidentiality 
allow parties to freely engage in candid, informal discussions of their 
interests in order to reach the best possible settlement of their 
claims. A promise of confidentiality allows parties to speak openly 
without fear that statements made during an ADR process will be used 
against them later. Confidentiality can reduce posturing and 
destructive dialogue among parties during the settlement process.
    Public comment was solicited on a draft of this document that was 
published in the Federal Register at 65 FR 59200, October 4, 2000. The 
draft was revised to incorporate many suggestions on the draft received 
from the following private sector organizations, government agencies, 
and individuals from around the country:

American Bar Association, Section of Administrative Law and Regulatory 
Practice
American Bar Association, Section of Dispute Resolution
Association of the Bar of the City of New York, Committee on 
Alternative Dispute Resolution
Executive Council on Integrity and Efficiency
Federal Mediation and Conciliation Service
Martin J. Harty
Lawrence A. Huerta
Oregon Department of Agriculture Farm Mediation Program
Margaret Porter, Administrator, Federal Sharing Neutrals Program
Karen D. Powell
President's Council on Integrity and Efficiency
Texas Center for Public Policy Dispute Resolution
United States Department of Agriculture, Office of Inspector General

[[Page 83086]]

United States Department of Energy, Chicago Operations Office
United States Department of Transportation, Federal Aviation 
Administration
United States Institute for Environmental Conflict Resolution
Richard C. Walters

    Major comments fell primarily into three categories. The first is 
the interplay of the ADR Act confidentiality provisions with federal 
``access'' statutes that provide Federal entities authority to seek 
access to certain classes of information. The second is the extent of 
confidentiality protection for statements of parties made in joint 
session. The third is the model statement on confidentiality for 
neutrals to read to parties at the beginning of a mediation.
    The ADR Council believes that the understanding of these issues 
will benefit from experience and further collaboration with a broader 
community. The Council recognizes that its timetable for comments to 
this document was limited and wants to make clear that it anticipates 
further discussion of these issues. Future research, analysis, and 
practical experience in the field are certain to have a continuing 
impact on these important areas, and this Guidance may need to be 
revised or updated. We look forward to cooperation with interested 
parties in this work.

The Relationship Between the ADR Act and Other Authorities

    The largest number of comments concerned the relationship between 
ADR Act confidentiality guarantees and other laws or regulations that 
authorize access to certain classes of information. Some commenters 
suggested that confidentiality should be narrower than provided under 
the draft Guidance. For example, some commenters believed that threats 
of physical harm and statements concerning ongoing or future criminal 
activity should not be confidential. Other commenters stated that 
Federal statutes providing access for government investigatory agencies 
should override the ADR Act's confidentiality guarantees.
    In sharp contrast, other commenters believed that the 
confidentiality guarantees in the draft should be much broader. Several 
commenters argued that the ADR Act prohibitions on disclosure take 
precedence over any other Federal statute. These commenters argue that 
the ADR Act allows Inspectors General and other investigators to obtain 
confidential communications only through a court order obtained 
pursuant to the Act.
    The Federal ADR Council acknowledges the points of view expressed 
in these comments but does not concur with them. There does not appear 
to be an easy answer to the tension between these authorities. While 
the ADR Act's confidentiality provisions are clear, the access 
provisions of other statutes are equally clear.
    Standard techniques for resolving statutory conflicts do not 
provide a ready answer in this situation. For example, arguments have 
been made on both sides as to which statute is more specific. While the 
ADR Act specifically addresses the types of processes to which it 
applies, some have argued that other acts, such as the Inspector 
General Act, do the same by specifically describing the types of 
information that may be requested and the purposes for which a request 
can be made. Nor does the legislative history of the ADR Act provide an 
apparent solution, as it does not appear to contain any mention of this 
conflict.
    A further problem is that the Federal ADR Council is not the 
appropriate body to provide a final decision on this question. The 
Council is an advisory body created by the Attorney General to issue 
guidance, but it is not authorized to promulgate binding 
interpretations in the manner of a court.
    While it is, of course, appropriate to give this matter careful 
attention, we note that the circumstances when confidentiality might be 
challenged are, based on our experience, rare. The Council believes 
that there are opportunities for ADR programs and Federal requesting 
entities to establish good working relationships such that disputes 
over demands for disclosure of confidential communications can be 
minimized. This report continues to endorse a cooperative approach of 
this nature.
    In addition, the revised report endorses use of the standards in 
the ADR Act's judicial override provision, sections 574(a)(4) and 
(b)(5), stating that they should be used both formally, when available, 
and informally to resolve the rare instances where requesting entities 
seek access to communications protected by the ADR Act.

The Confidentiality of Statements Made in Joint Session

    Many comments were also received concerning the extent of 
confidentiality protection for statements made by parties in joint 
session. The draft report stated that there is no confidentiality 
protection for a party's dispute resolution communications that are 
available to all other parties, such as comments made or documents 
shared in joint session. Commenters noted that the guidance on this 
issue differs from traditional ADR practices and party expectations 
regarding confidentiality, and said this interpretation could reduce 
the utility of joint sessions. One commenter suggested that the 
report's interpretation of section 574(b)(7), the key provision on this 
point, would render sections 574(b)(1)-(6) superfluous. Further, this 
commenter noted that comments by several legislators and a Senate 
report indicate 574(b)(7) was intended to cover only documents, not 
oral statements.
    The Federal ADR Council acknowledges that the ADR Act's treatment 
of this issue is different from the practice in many ADR processes that 
do not involve the government, but notes that the language of the 
statute is difficult to overcome. The Act states that there is no 
confidentiality protection if ``the dispute resolution communication 
was provided to or was available to all parties in the dispute 
resolution proceeding.'' 5 U.S.C. 574(b)(7). Communications in a joint 
session with all parties present fit squarely within this provision. 
Further, the Act's definition of dispute resolution communication 
contains no exception for oral statements. Indeed, it explicitly 
includes ``any oral or written communication prepared for the purposes 
of a dispute resolution proceeding'' (emphasis added).
    Despite the language of (b)(7), it appears that the remaining 
provisions of 574(b) provide protection for limited types of 
communications. These other sections continue to protect, for example, 
a party who is asked what a mediator said at any time, or a party who 
is asked what another party said in a multi-party case when not all 
parties were present. With regard to legislative history, an indicator 
of Congressional intent is the report of the final Conference Committee 
in 1996, when the current statute was enacted. It states, ``A dispute 
resolution communication originating from a party to a party or parties 
is not protected from disclosure by the ADR Act.'' H.R. Rep. No. 104-
841, 142 Cong. Rec. H11,110 (September 25, 1996). The Committee could 
have used the word ``document'' if it wanted to exclude oral 
statements, but it chose to use the term ``dispute resolution 
communication,'' which is explicitly defined in the statute to include 
oral statements.
    The Council does recognize that this provision could hinder a 
party's candor in a joint session, and therefore the Guidance suggests 
that parties address

[[Page 83087]]

this issue through the use of a contract. Confidentiality agreements 
are a standard practice in many ADR contexts, and their use is 
encouraged in Federal dispute resolution processes where 
confidentiality of party-to-party communications is desired. It is 
important to note that confidentiality agreements do not bind anyone 
who is not a signatory. Further, such agreements will not protect 
against disclosure of documents through the Freedom of Information Act 
(FOIA). Nevertheless, the majority of problems caused by the plain 
language reading of section 574(b)(7) can be rectified through a well-
drafted confidentiality agreement.

The Model Confidentiality Statement for Use by Neutrals

    Finally, many commenters made suggestions regarding the Model 
Confidentiality Statement for Use by Neutrals that appeared at the end 
of the draft report. Some commenters argued that provisions should be 
added to the statement to ensure parties were made aware of additional 
possible confidentiality exceptions. Others stated that the statement 
was already too complex and potentially chilling. The Council 
appreciates the difficulty in making an opening statement complete 
enough to put parties on notice of important issues, while not making 
it so exhaustive that it discourages participation in ADR. The Council 
acknowledges that a well-drafted statement should accommodate all of 
these concerns as well as possible.
    Other commenters noted that the statement may not be appropriate 
for all types of proceedings or all types of neutrals. The Federal ADR 
Council agrees that the model statement may not fit all situations and 
all ADR processes, or even all stages of a single ADR process. In 
response to these comments, the Guidance now includes a set of 
guidelines for neutrals to use in developing their own statements on 
confidentiality, appropriate to the situation. It is the neutral's 
responsibility to address confidentiality with the parties. Neutrals 
and agency ADR programs may want to develop a standard confidentiality 
statement, consistent with the guidelines presented in this report, 
that is appropriate to a particular ADR process.
    The Guidance also includes an example of one possible 
confidentiality statement. It is important to note that this statement 
should be tailored, as necessary, to fit the needs of each particular 
case. This statement refers to a mediation, because mediation is the 
most common ADR process in the Federal government.

Conclusion

    The balance of this revised report follows the same format as the 
draft report. Section I is a reprint of the confidentiality provisions 
of the ADR Act. Section II is a section-by-section analysis of the 
confidentiality provisions of the Act. Section III contains the revised 
questions and answers on confidentiality issues likely to arise in 
practice. Section IV contains the new guidelines for use in developing 
confidentiality statements. In addition, as assistance for neutrals and 
agencies drafting confidentiality statements, Section IV contains an 
example of one possible confidentiality statement.
    Nothing in this Guidance shall be construed to create any right or 
benefit, substantive or procedural, enforceable at law or in equity, by 
a party against the United States, its agencies, its officers or any 
other person.

The Federal ADR Council

    Chair: Janet Reno, Attorney General, Department of Justice.
    Vice Chair: Erica Cooper, Deputy General Counsel, Federal Deposit 
Insurance Corporation.
    Members: Leigh A. Bradley, General Counsel, Department of Veterans 
Affairs; Meyer Eisenberg, Deputy General Counsel, Securities and 
Exchange Commission; Mary Anne Gibbons, General Counsel, U.S. Postal 
Service; Gary S. Guzy, General Counsel, Environmental Protection 
Agency; Jeh C. Johnson, General Counsel, Department of the Air Force; 
Stewart Aly, Acting Deputy General Counsel, Department of Defense; 
Rosalind Knapp, Acting General Counsel, Department of Transportation; 
Anthony N. Palladino, Director, Office of Dispute Resolution, Federal 
Aviation Administration, Department of Transportation; Janet S. Potts, 
Counsel to the Secretary, Department of Agriculture; Harriett S. Rabb, 
General Counsel, Department of Health and Human Services; Henry L. 
Solano, Solicitor, Department of Labor; John Sparks, Acting General 
Counsel, Department of the Navy; Peter R. Steenland, Jr., Senior 
Counsel for Dispute Resolution, U.S. Department of Justice; Mary Ann 
Sullivan, General Counsel, Department of Energy; Robert Ward, Senior 
Counsel for Dispute Resolution, Environmental Protection Agency.

Report on the Reasonable Expectations of Confidentiality Under the 
Administrative Dispute Resolution Act of 1996

Table of Contents

I. Administrative Dispute Resolution Act
II. Section-By-Section Analysis of Confidentiality Provisions
III. Questions & Answers on Confidentiality Under the Administrative 
Dispute Resolution Act (ADR Act)
IV. Guidance on Confidentiality Statements for Use by Neutrals

I. Administrative Dispute Resolution Act

Definitions (5 U.S.C. 571)

    For the purposes of this subchapter, the term--
    (1) ``agency'' has the same meaning as in section 551(1) of this 
title;
    (2) ``administrative program'' includes a Federal function which 
involves protection of the public interest and the determination of 
rights, privileges, and obligations of private persons through rule 
making, adjudication, licensing, or investigation, as those terms are 
used in subchapter II of this chapter;
    (3) ``alternative means of dispute resolution'' means any procedure 
that is used to resolve issues in controversy, including, but not 
limited to, conciliation, facilitation, mediation, factfinding, 
minitrials, arbitration, and use of ombuds, or any combination thereof;
    (4) ``award'' means any decision by an arbitrator resolving the 
issues in controversy;
    (5) ``dispute resolution communication'' means any oral or written 
communication prepared for the purposes of a dispute resolution 
proceeding, including any memoranda, notes or work product of the 
neutral, parties or nonparty participant; except that a written 
agreement to enter into a dispute resolution proceeding, or final 
written agreement or arbitral award reached as a result of a dispute 
resolution proceeding, is not a dispute resolution communication;
    (6) ``dispute resolution proceeding'' means any process in which an 
alternative means of dispute resolution is used to resolve an issue in 
controversy in which a neutral is appointed and specified parties 
participate;
    (7) ``in confidence'' means, with respect to information, that the 
information is provided--
    (A) with the expressed intent of the source that it not be 
disclosed; or
    (B) under circumstances that would create the reasonable 
expectation on

[[Page 83088]]

behalf of the source that the information will not be disclosed;
    (8) ``issue in controversy'' means an issue which is material to a 
decision concerning an administrative program of an agency, and with 
which there is disagreement--
    (A) between an agency and persons who would be substantially 
affected by the decision; or
    (B) between persons who would be substantially affected by the 
decision;
    (9) ``neutral'' means an individual who, with respect to an issue 
in controversy, functions specifically to aid the parties in resolving 
the controversy;
    (10) ``party'' means--
    (A) for a proceeding with named parties, the same as in section 
551(3) of this title; and
    (B) for a proceeding without named parties, a person who will be 
significantly affected by the decision in the proceeding and who 
participates in the proceeding;
    (11) ``person'' has the same meaning as in section 551(2) of this 
title; and
    (12) ``roster'' means a list of persons qualified to provide 
services as neutrals.

Confidentiality (5 U.S.C. 574)

    (a) Except as provided in subsections (d) and (e), a neutral in a 
dispute resolution proceeding shall not voluntarily disclose or through 
discovery or compulsory process be required to disclose any dispute 
resolution communication or any communication provided in confidence to 
the neutral, unless--
    (1) all parties to the dispute resolution proceeding and the 
neutral consent in writing, and, if the dispute resolution 
communication was provided by a nonparty participant, that participant 
also consents in writing;
    (2) the dispute resolution communication has already been made 
public;
    (3) the dispute resolution communication is required by statute to 
be made public, but a neutral should make such communication public 
only if no other person is reasonably available to disclose the 
communication; or
    (4) a court determines that such testimony or disclosure is 
necessary to--
    (A) prevent a manifest injustice;
    (B) help establish a violation of law; or
    (C) prevent harm to the public health or safety,
of sufficient magnitude in the particular case to outweigh the 
integrity of dispute resolution proceedings in general by reducing the 
confidence of parties in future cases that their communications will 
remain confidential.
    (b) A party to a dispute resolution proceeding shall not 
voluntarily disclose or through discovery or compulsory process be 
required to disclose any dispute resolution communication, unless--
    (1) the communication was prepared by the party seeking disclosure;
    (2) all parties to the dispute resolution proceeding consent in 
writing;
    (3) the dispute resolution communication has already been made 
public;
    (4) the dispute resolution communication is required by statute to 
be made public;
    (5) a court determines that such testimony or disclosure is 
necessary to--
    (A) prevent a manifest injustice;
    (B) help establish a violation of law; or
    (C) prevent harm to the public health and safety,
of sufficient magnitude in the particular case to outweigh the 
integrity of dispute resolution proceedings in general by reducing the 
confidence of parties in future cases that their communications will 
remain confidential;
    (6) the dispute resolution communication is relevant to determining 
the existence or meaning of an agreement or award that resulted from 
the dispute resolution proceeding or to the enforcement of such an 
agreement or award; or
    (7) except for dispute resolution communications generated by the 
neutral, the dispute resolution communication was provided to or was 
available to all parties to the dispute resolution proceeding.
    (c) Any dispute resolution communication that is disclosed in 
violation of subsection (a) or (b), shall not be admissible in any 
proceeding relating to the issues in controversy with respect to which 
the communication was made.
    (d)(1) The parties may agree to alternative confidential procedures 
for disclosures by a neutral. Upon such agreement the parties shall 
inform the neutral before the commencement of the dispute resolution 
proceeding of any modifications to the provisions of subsection (a) 
that will govern the confidentiality of the dispute resolution 
proceeding. If the parties do not so inform the neutral, subsection (a) 
shall apply.
    (2) To qualify for the exemption established under subsection (j), 
an alternative confidential procedure under this subsection may not 
provide for less disclosure than the confidential procedures otherwise 
provided under this section.
    (e) If a demand for disclosure, by way of discovery request or 
other legal process, is made upon a neutral regarding a dispute 
resolution communication, the neutral shall make reasonable efforts to 
notify the parties and any affected nonparty participants of the 
demand. Any party or affected nonparty participant who receives such 
notice and within 15 calendar days does not offer to defend a refusal 
of the neutral to disclose the requested information shall have waived 
any objection to such disclosure.
    (f) Nothing in this section shall prevent the discovery or 
admissibility of any evidence that is otherwise discoverable, merely 
because the evidence was presented in the course of a dispute 
resolution proceeding.
    (g) Subsections (a) and (b) shall have no effect on the information 
and data that are necessary to document an agreement reached or order 
issued pursuant to a dispute resolution proceeding.
    (h) Subsections (a) and (b) shall not prevent the gathering of 
information for research or educational purposes, in cooperation with 
other agencies, governmental entities, or dispute resolution programs, 
so long as the parties and the specific issues in controversy are not 
identifiable.
    (i) Subsections (a) and (b) shall not prevent use of a dispute 
resolution communication to resolve a dispute between the neutral in a 
dispute resolution proceeding and a party to or participant in such 
proceeding, so long as such dispute resolution communication is 
disclosed only to the extent necessary to resolve such dispute.
    (j) A dispute resolution communication which is between a neutral 
and a party and which may not be disclosed under this section shall 
also be exempt from disclosure under section 552(b)(3).

II. Section-by-Section Analysis of Confidentiality Provisions (5 
U.S.C. 574)

Section 574(a)

    In general, a neutral in a dispute resolution proceeding is 
prohibited from disclosing any dispute resolution communication or any 
communication provided to him or her in confidence. Unless the 
communication falls within one of the exceptions listed below, the 
neutral cannot voluntarily disclose a communication and cannot be 
forced to disclose a communication through a

[[Page 83089]]

discovery request or by any other compulsory process.
    The exceptions to this general rule are found in subsections 
574(a)(1)-(4), 574(d) and 574(e).

Section 574(a)(1)

    A neutral may disclose a dispute resolution communication if all 
parties and the neutral agree in writing to the disclosure. If a 
nonparty provided the dispute resolution communication, then the 
nonparty must also agree in writing to the disclosure.

Section 574(a)(2)

    A neutral may disclose a dispute resolution communication if the 
communication has already been made public.

Section 574(a)(3)

    A neutral may disclose a dispute resolution communication if there 
is a statute which requires it to be made public. However, the neutral 
should not disclose the communication unless there is no other person 
available to make the disclosure.

Section 574(a)(4)

    A neutral may disclose a dispute resolution communication or a 
communication provided in confidence to the neutral if a court finds 
that the neutral's testimony, or the disclosure, is necessary to:
    A. prevent a manifest injustice;
    B. help establish a violation of law; or
    C. prevent harm to the public health and safety.
    In order to require disclosure, a court must determine that the 
need for disclosure is of sufficient magnitude to outweigh the 
detrimental impact on the integrity of dispute resolution proceedings 
in general. The need for the information must be so great that it 
outweighs a loss of confidence among other potential parties that their 
dispute resolution communications or communications provided in 
confidence to the neutral will remain confidential in future 
proceedings.

Section 574(b)

    Unless a dispute resolution communication falls within one of the 
exceptions listed below, a party cannot voluntarily disclose the 
communication and cannot be forced to disclose a communication through 
a discovery request or by any other compulsory process.

Section 574(b)(1)

    The party who prepared the dispute resolution communication is free 
to disclose it.

Section 574(b)(2)

    A party may disclose a dispute resolution communication if all the 
parties agree in writing to the disclosure.

Section 574(b)(3)

    A party may disclose a dispute resolution communication if the 
dispute resolution communication has already been made public.

Section 574(b)(4)

    A party may disclose a dispute resolution communication if there is 
a statute which requires it to be made public.

Section 574(b)(5)

    A party may be required to disclose a dispute resolution 
communication if a court finds that the party's testimony, or the 
disclosure, is necessary to:
    A. prevent a manifest injustice;
    B. help establish a violation of law; or
    C. prevent harm to the public health and safety.
    In order to require disclosure, a court must determine that the 
need for disclosure is of sufficient magnitude to outweigh the 
detrimental impact on the integrity of dispute resolution proceedings 
in general. The need for the information must be so great that it 
outweighs a loss of confidence among other potential parties that their 
dispute resolution communications will remain confidential in future 
proceedings.

Section 574(b)(6)

    (1) Parties may use dispute resolution communications to show that 
a settlement agreement was in fact reached or to show what the terms of 
this agreement mean.
    (2) Parties may also use dispute resolution communications in 
connection with later issues regarding enforcing the agreement.

Section 574(b)(7)

    (1) A party is not prohibited from disclosing another party's 
dispute resolution communication that was available to all parties in 
the proceeding. For example, in a joint mediation session with all 
parties present, statements made and documents provided by parties are 
not confidential.
    (2) Dispute resolution communications coming from the neutral are 
nonetheless confidential.

Section 574(c)

    No one may use any dispute resolution communication in a related 
proceeding, if that communication was disclosed in violation of Section 
574 (a) or (b).

Section 574(d)(1)

    (1) Parties may agree to alternative confidentiality procedures for 
disclosures by a neutral.
    (2) Parties must inform the neutral of the alternative procedures 
before the dispute resolution proceeding begins.
    (3) If parties do not inform the neutral of the alternative 
procedures, the procedures outlined in Section 574(a) will apply.

Section 574(d)(2)

    (1) Dispute resolution communications covered by alternative 
confidentiality procedures may be protected from disclosure under FOIA.
    (2) To qualify for this protection, the alternative procedures must 
provide for as much, or more, disclosure than the procedures provided 
in Section 574.
    (3) Dispute resolution communications covered by alternative 
confidentiality procedures do not qualify for protection from 
disclosure under FOIA if the alternative procedures provide for less 
disclosure than those outlined in Section 574.

Section 574(e)

    (1) A neutral who receives a demand for disclosure, in the form of 
a discovery request or other legal process, must make reasonable 
efforts to notify the parties and any affected non-party participants 
of the demand.
    (2) Parties and non-party participants who receive a notice of a 
demand for disclosure from a neutral:
    a. must respond within 15 calendar days and offer to defend a 
refusal to disclose the information; or
    b. if they do not respond within 15 calendar days, they will be 
deemed to have waived their objections to disclosure of the 
information.

Section 574(f)

    Evidence that is otherwise discoverable or admissible is not 
protected from disclosure under this Section merely because the 
evidence was presented during a dispute resolution proceeding.

Section 574(g)

    The provisions of Section 574(a) and (b) do not affect information 
and data that are necessary to document agreements or orders resulting 
from dispute resolution proceedings.

Section 574(h)

    Information from and about dispute resolution proceedings may be 
used for educational and research purposes as long as the parties and 
specific issues in controversy are not identifiable.

[[Page 83090]]

Section 574(i)

    Dispute resolution communications may be used to resolve disputes 
between the neutral in a dispute resolution proceeding and a party or 
participant, but only to the extent necessary to resolve a dispute 
between a neutral and party or participant.

Section 574(j)

    A dispute resolution communication between a neutral and a party 
that is protected from disclosure under this section is also protected 
from disclosure under FOIA (Section 552(b)(3)).

III. Questions & Answers on Confidentiality Under the 
Administrative Dispute Resolution Act of 1996 (ADR Act)

General Confidentiality Rules

1. What types of communications are confidential?
    Subject to certain exceptions, the following two types of 
communications are potentially confidential under the ADR Act:
    A. A dispute resolution communication. A dispute resolution 
communication is any oral statement made or writing presented by a 
party, nonparty participant or neutral during a dispute resolution 
proceeding prepared specifically for the purposes of a dispute 
resolution proceeding. However, written agreements to enter into a 
dispute resolution proceeding and any written final agreement reached 
as a result of the proceeding are not dispute resolution 
communications. Citation: 5 U.S.C. 571(5).

    Example: At the outset of the mediation conference, the parties 
sign an agreement to mediate. During private meetings with the 
mediator, they each make oral statements and give the mediator 
documents prepared specifically for use in the mediation. At the 
conclusion of the mediation, the parties sign a settlement agreement 
resolving the matter.
    The oral statements and written documents prepared specifically 
for use in the mediation are dispute resolution communications. The 
agreement to mediate and the settlement agreement are not dispute 
resolution communications.
    B. A ``communication provided in confidence to the neutral.'' A 
``communication provided in confidence to the neutral'' is any oral 
statement or written document provided to a neutral during a dispute 
resolution proceeding. The communication must be: (1) Made with the 
express intent that it not be disclosed or (2) provided under 
circumstances that would create a reasonable expectation that it not be 
disclosed. Citation: 5 U.S.C. 571(7) and 574(a).

    Example:  During private meetings, counsel for the contractor 
and for the agency separately give the mediator different documents 
prepared before mediation which contain highly sensitive 
information. Counsel for the contractor expressly asks the mediator 
to keep his document confidential; counsel for the agency says 
nothing about keeping her document confidential. Both documents are 
``communications provided in confidence to the neutral.'' The 
contractor's documents are communications provided in confidence 
because counsel for the contractor expressly asked the neutral to 
keep it confidential. The agency's documents are communications 
provided in confidence because they were provided under 
circumstances which create a reasonable expectation that they should 
not be disclosed.
    Example:  An employee during a caucus in a mediation session 
tells the neutral that he might appear inattentive during the joint 
session because he has been diagnosed recently with cancer and is 
taking medicine. He tells the mediator not to share that information 
with the other party, his supervisor. The information is a 
communication provided in confidence because the employee provided 
it to the neutral with the expressed intent that it not be 
disclosed.
2. What confidentiality protection is provided for dispute resolution 
communications?
    Generally, neutrals and parties may not voluntarily disclose or be 
compelled to disclose dispute resolution communications. The ADR Act 
contains specific exceptions to the general rule. (See Question 11) 
Citation: 5 U.S.C. 574(a), (b).

    Example:  A party resolves his EEO complaint through mediation 
and signs a written agreement settling all issues. The mediator 
subsequently receives a phone call from another employee asking (1) 
What was management's position in the mediation, and, (2) what 
relief was obtained. The mediator, as a neutral, may not disclose to 
the employee any communications made by management in the dispute 
resolution proceeding. However, the neutral may provide the employee 
with a copy of the final agreement which sets forth the relief 
obtained.
    Example:  During a mediation involving ten parties, two meet in 
caucus with the mediator and discuss their common interests. Later, 
a person contacts one of the two parties asking about what the other 
party said during the caucus with the mediator. The first party may 
not disclose what the other party said during the caucus.
3. What confidentiality protection applies to a ``communication 
provided in confidence'' by a party to a neutral?
    Generally, neutrals may not disclose any communication provided to 
them in confidence. The ADR Act contains specific exceptions to the 
general rule. (See Question 11.) Citation: 5 U.S.C. 574(a).

    Example: A government contractor during a caucus in a mediation 
session tells the neutral the details of his proposed ``bid'' for a 
government contract. The neutral may not disclose the information 
because the program participant would have a reasonable expectation 
that the information would not be shared.
4. What is a dispute resolution proceeding?
    A dispute resolution proceeding is an alternative means of 
resolving an issue in controversy arising from an agency's program, 
operations or actions. The ADR Act supports a broad reading of the term 
``dispute resolution proceeding.'' The ADR Act broadly incorporates all 
ADR forms and techniques, including any combination of ADR forms or 
techniques. In defining an issue in controversy, the ADR Act 
incorporates disagreements between an agency and parties or between 
parties. This indicates a legislative intent to provide for the use of 
ADR processes in an inclusive manner to assist the wide range of 
situations where disagreements may arise in the conduct of an agency's 
programs, operations, or actions. A dispute resolution proceeding 
includes intake and convening stages as well as more formal stages, 
such as mediation. Citation: 5 U.S.C. 571(3), (6) and (8).

    Example: A neutral is engaged to help resolve a dispute between 
an agency and one of its contractors. The process managed by the 
neutral (i.e., mediation, arbitration, or another technique) is a 
dispute resolution proceeding.
    Example: A dispute exists between an agency and several other 
parties with regard to the agency's interpretation of a regulation. 
The work of a neutral to convene the parties (i.e., to bring them 
together for purposes of conducting a negotiated settlement) is a 
dispute resolution proceeding.
5. Who is a neutral?
    A neutral is anyone who functions specifically to aid the parties 
during a dispute resolution process. A neutral may be a private person 
or a federal government employee who is acceptable to the parties. 
There may be more than one neutral during the course of a dispute 
resolution process (e.g., an ``intake'' neutral, a ``convener'' 
neutral, as well as the neutral who facilitates a face-to-face 
proceeding). It is important that agencies clearly identify neutrals to 
avoid misunderstanding.
    The ADR Act supports a broad reading of the term ``neutral.'' In 
defining neutral, the ADR Act refers to the services of an individual 
who functions to aid parties in the resolution of an issue in 
controversy. This indicates the intent of the ADR Act to support the 
use of neutrals to aid parties during all stages of the resolution of a

[[Page 83091]]

disagreement, from the convening of participants and design of 
effective dispute resolution procedures to the conduct of settlement 
discussions.
    The ADR Act provides that a neutral should be acceptable to the 
parties. In light of the broad variety of ADR services and types of 
disagreements encompassed by the ADR Act, this requirement must be 
considered on a case by case basis to provide flexibility in how 
individual parties ``accept'' a neutral. If an agency clearly 
identifies an individual as an intake or convening neutral, an agency 
or private party who contacts the neutral for the purpose of seeking 
aid in resolving a disagreement indicates an acceptance of the neutral 
for that purpose. Likewise, the voluntary participation of a party in 
an ADR process conducted by a neutral indicates an acceptance of the 
neutral. Citation: 5 U.S.C. 571(3), (6), (8),and (9) & 573(a).

    Example: An employee contacts an agency ADR program seeking 
assistance in resolving a dispute and describes a dispute to an 
intake person. The conversation is confidential only if the intake 
person has been appropriately identified as a neutral by the agency 
to aid parties in resolving such disputes.
    Example: An EEO office automatically assigns, on a rotating 
basis, a trained neutral from within the agency, without consulting 
the parties. The parties can be deemed to have agreed to the neutral 
by virtue of their participation.
6. Who is a party?
    A party is any person or entity who participates in a dispute 
resolution proceeding and is named in an agency proceeding or will be 
affected significantly by the outcome of an agency proceeding. 
Consistent with common legal practice, the obligations of parties 
extend to their representatives and agents. Citation: 5 U.S.C. 571(10).

    Example: An agency convenes a mediation of all affected 
stakeholders to resolve an environmental dispute. Every person, 
business entity, state or local government, and non-profit 
organization that will be significantly affected by the outcome of 
the process and agrees to participate is a party to the mediation.
7. What constitutes disclosure?
    Disclosure is not defined in the ADR Act. Disclosure occurs when a 
neutral, a party, or a non-party participant makes a communication 
available to some other person or entity by any method.

    Example: A federal employee is mediating a workplace dispute as 
a collateral duty. The mediator's supervisor asks for a briefing on 
the case. Telling the supervisor ``dispute resolution 
communications'' or ``communications provided in confidence'' would 
constitute disclosure.
8. May a party or neutral disclose dispute resolution communications in 
response to discovery or compulsory process?
    In general, neither a neutral nor a party can be required to 
disclose dispute resolution communications through discovery or 
compulsory process. Compulsory processes include any administrative, 
judicial or regulatory process that compels action by an individual. 
Citation: 5 U.S.C. 574(a) & 574(b).

    Example: A neutral receives a notice of deposition from an 
attorney in a lawsuit regarding a matter which the neutral mediated. 
The attorney informs her that she will be asked about the statements 
by the complainant made during the mediation. In the deposition, the 
neutral may not disclose the complainant's statements because they 
are dispute resolution communications.
9. What confidentiality protection is provided for communications by a 
nonparty participant in a dispute resolution proceeding?
    The term ``nonparty participant'' is not defined in the ADR Act. 
However, common usage suggests that a nonparty participant is an 
individual present during a dispute resolution proceeding other than a 
party, an agent or representative of a party, or the neutral. This 
could be an individual who is asked by the neutral to present 
information for use of the neutral or parties. Dispute resolution 
communications made by nonparty participants are subject to the same 
protections and exceptions as are all other dispute resolution 
communications. A neutral needs to obtain the written consent of all 
parties and the nonparty participant to disclose such communications. 
Citation: 5 U.S.C. 574(a)(1).

    Example: An expert talks about inflation and wages she prepared 
for mediation. The communication is confidential and cannot be 
disclosed by the neutral without the consent of all the parties and 
the expert.
    Example: An expert retained by the neutral discusses his 
environmental impact research and participates in subsequent 
discussions with the parties. The expert is not prohibited from 
disclosing any communications from those discussions, absent a 
signed agreement to that effect.
10. When in an ADR process do the confidentiality protections of the 
ADR Act apply?
    Confidentiality applies to communications when a person seeking ADR 
services contacts an appropriate neutral. A communication made by a 
party to a neutral is covered even if made prior to a face-to-face ADR 
proceeding. Confidentiality does not apply to communications made after 
a final written agreement is reached or after resolution efforts aided 
by the neutral have otherwise ended. Citation: 5 U.S.C 571(6), 574(a) 
and (b).

    Example: Two parties have agreed to use an ADR process to try to 
resolve a dispute and have selected a neutral. Prior to the first 
session between the parties and the neutral, the neutral 
communicates independently with each of the parties. The 
confidentiality provisions of the ADR Act apply to these 
discussions.
    Example: The parties to an ADR process have completed a dispute 
resolution proceeding and signed a settlement agreement. One of the 
parties subsequently calls the neutral to discuss how the settlement 
is being implemented. This discussion is not confidential under the 
ADR Act because the dispute resolution proceeding has already ended.

Exceptions To Confidentiality Protection

11. Under what circumstances may communications be disclosed under the 
ADR Act?
    A. A party's own communications during a dispute resolution 
proceeding. A party may disclose any oral or written communication 
which the party makes or prepares for a dispute resolution proceeding. 
Citation: 5 U.S.C. 574(b)(1).

    Example: During a separate caucus, the contractor drafts a 
document showing the financial impact of his breach of contract. The 
mediation is unsuccessful. The government subpoenas the contractor 
to produce the document for an administrative hearing. The 
contractor cannot be compelled to produce the document. She may, 
however, voluntarily produce it.
    B. A dispute resolution communication that has ``already been made 
public.'' The ADR Act's confidentiality protections do not apply to 
communications that have already been made public. Although the ADR Act 
does not define the term, examples of communications that have 
``already been made public'' could include, for example, the following:
    1. The communication has been discussed in an open Congressional 
hearing;
    2. The communication has been placed in a court filing or testified 
about in a court in a proceeding not under seal;
    3. The communication has been discussed in a meeting which is open 
to the public;
    4. The communication has been released under FOIA. Citation: 5 
U.S.C. 574(a)(2) & 574(b)(3).
    C. Communications required by statute to be made public. There are 
a handful of statutes which require certain classes of information to 
be

[[Page 83092]]

made public. To the extent that such information is shared during a 
dispute resolution proceeding the information is not confidential. 
Citation: 5 U.S.C. 574(a)(3), 574(b)(4).

    Example: Section 114(c) of the Clean Air Act states that certain 
records, reports or information obtained from regulated entities 
``shall be made available to the public.'' These communications are 
not subject to the ADR Act prohibitions on disclosure by a neutral 
or a party.

    D. When a court orders disclosure. A court may override the 
confidentiality protections of the ADR Act in three limited situations. 
In order to override the confidentiality protections, a court must 
determine that testimony or disclosure of a communication is necessary 
to either (1) prevent a manifest injustice, (2) help establish a 
violation of law, or (3) prevent harm to the public health or safety. 
The court must also determine, by applying a balancing test, that the 
need for the information is of a sufficient magnitude in the particular 
case to outweigh the integrity of dispute resolution proceedings in 
general by reducing the confidence of parties in future cases that 
their communications will remain confidential. Citation: 5 U.S.C. 
574(a)(4) & (b)(5).

    Example (to prevent a manifest injustice): During a separate 
caucus in a Federal Tort Claims Act mediation, a husband tells the 
mediator that his wife's claims to have been paralyzed in an 
accident were false. Mediation terminates, and the case proceeds to 
trial. Information about the wife's statements comes to the 
attention of the insurance company which seeks an order to compel 
testimony from the mediator. The court, in applying the balancing 
test in 574(a)(4), may order the mediator to disclose information if 
it finds that a failure to disclose the information would result in 
a manifest injustice to the moving party.
    Example (help establish a violation of law): During a mediation 
regrading the dismissal of a federal employee, the employee divulges 
to the mediator that he charged personal goods to his government 
credit card. In a later action against the employee for misuse of 
government funds, the neutral is asked to testify about what he 
learned in the mediation. The court, in applying the balancing test 
in 574(a)(4), may require the neutral to testify if it determines 
that the neutral's testimony is necessary to help establish a 
violation of law.
    Example (prevent harm to the public health or safety): During 
mediation of a tort claim, an engineer discloses to the neutral that 
her structural evaluation indicated serious defects in a building, 
but that her supervisor refused to accept the report as written and 
threatened her job security if she did not alter the report. When 
the case comes to trial, the plaintiff subpoenas the neutral to 
testify. The court, in applying the balancing test in 574(a)(4), may 
require the neutral to testify if it determines that the neutral's 
testimony is necessary to prevent harm to the public safety.

    E. In order to resolve a dispute over the existence or meaning of a 
settlement arrived at through a dispute resolution proceeding. The ADR 
Act creates an exception to the general rule of nondisclosure by a 
party for the limited purpose of determining the existence or meaning 
of an agreement arrived at through a dispute resolution proceeding. 
Parties may also disclose communications as required to enforce an 
agreement arrived at through a dispute resolution proceeding. Citation: 
5 U.S.C. 574(b)(6).

    Example: Parties may disclose dispute resolution communications 
as required to show that a settlement agreement was reached or 
explore the meaning of the terms of this agreement.

    F. Parties' communications in joint session, with all parties 
present. A neutral may not disclose dispute resolution communications 
made in joint session. However, except for communications by a neutral, 
there is no prohibition against a party disclosing communications 
available to all other parties in the proceeding. Citation: 5 U.S.C. 
574(b)(7).

    Example: In a joint session, with all parties present, a party 
admits that she was unaware of the defect in question. The other 
parties may disclose the information without violating the ADR Act.

    G. Information sought for specific purposes. The ADR Act allows for 
the disclosure of information for educational and research purposes, in 
cooperation with agencies, governmental entities, or dispute resolution 
programs. However, it is required that the parties and specific issues 
in controversy not be identifiable. Citation: 5 U.S.C. 574(h).

    Example: An individual who has served as a neutral in a number 
of agency ADR proceedings may share collected experiences when 
participating in a training program, provided that the parties and 
specific issues are not identifiable.
    Example: An ADR program administrator may provide statistical 
information to an auditor or inspector who is evaluating the 
efficiency and effectiveness of an ADR program, provided that the 
parties and specific issues are not identifiable.

    H. Communications required to resolve disputes that arise between 
the neutral and a party. If there is a dispute between a neutral and a 
party regarding the conduct of a dispute resolution proceeding, both 
may disclose dispute resolution communications to the extent necessary 
to resolve the dispute. Citation: 5 U.S.C. 574(I)

    Example:  If a party refuses to pay the neutral for services, 
the neutral can disclose dispute resolution communications to the 
extent necessary to establish that payment is due.
12. Are a neutral's communications to parties in joint session or 
otherwise provided to all parties confidential?
    Yes. The ADR Act protects communications by a neutral. A party, 
however, may not use this provision to gain protection for a 
communication by providing it to the neutral who then provides it to 
another party. The ADR Act provides that the communication must be 
``generated'' by the neutral, not just passed along by the neutral. 
Citation: 5 U.S.C. 574(b)(7). (See H. Rept. 104-841,142 Cong. Rec. 
H11108-11 (September 25, 1996).

    Example: Early neutral evaluations or settlement proposals 
provided to the parties by a neutral are protected from disclosure 
by either the neutral or the parties.
13. Can confidentiality attach to communications that are provided to 
or available to fewer than all of the parties?
    Yes. The ADR Act does not prohibit parties from disclosing dispute 
resolution communications that are ``provided to or * * * available to 
all parties to the dispute resolution proceeding.'' Under a plain 
reading of the statute, communications are not protected when provided 
to, or available to, all parties; thus, they remain protected if they 
are provided to, or are available to, some (but not all) of the parties 
in a dispute.
    The legislative history states, ``A dispute resolution 
communication originating from a party to a party or parties is not 
protected from disclosure by the ADR Act.'' H.R. Rep. No. 104-841, 142 
Cong. Rec. H11110 (Sept. 25, 1996). The plain language of the statute 
is not inconsistent with this piece of legislative history, in that it 
can be interpreted to mean both parties in a two-party (``party to the 
other party'') or all parties in a multi-party dispute (``party to all 
other parties''). Citation: 5 U.S.C. 574(b)(7).

    Example: Six parties participate in a mediation. The mediator 
initially convenes a day-long meeting with all parties together in a 
joint session. The mediator believes that four have similar 
interests and convenes a separate meeting with just those four. 
Confidentiality attaches to communications which take place at the 
separate meeting, since fewer than all parties are present. Only if 
all six were present, or the information was available to all six, 
would disclosure be permissible under the (b)(7) exception.

[[Page 83093]]

14. Does the ADR Act prevent the discovery or admissibility of all 
information presented in a dispute resolution proceeding?
    No. Information presented in a dispute resolution proceeding that 
is not protected by the ADR Act may be subject to discovery or 
admissibility as evidence in a subsequent legal action. Citation: 5 
U.S.C. 574(f).

    Example: During a mediation proceeding in a dispute over a 
promotion, the complainant produces notes she made during an 
interview with the selecting official. She shares her interview 
notes with the neutral and management representative. In private 
caucus with the neutral, complainant prepares handwritten notes of 
the neutral's comments regarding the case. When the case goes to 
litigation, the agency requests discovery of complainant's interview 
notes, as well as the notes reflecting the neutral's assessment of 
the case.
    The agency would not be prohibited from seeking complainant's 
notes of the interview with the selecting official. The interview 
notes are not dispute resolution communications because they were 
not prepared for purposes of the dispute resolution proceeding. 
However, the complainant's notes reflecting the neutral's assessment 
of her case constitute a dispute resolution communication because 
they were prepared for the purpose of the dispute resolution 
proceeding.
15. Does the ADR Act protect against the disclosure of dispute 
resolution communications in response to requests by federal entities 
for such information?
    Section 574 of the ADR Act prohibits a neutral or a party from 
disclosing, voluntarily or in response to discovery or compulsory 
process, any protected communication. The ADR Act further states that 
neutrals and parties shall not ``be required'' to disclose such 
communications.
    A number of federal entities have statutory authority to request 
disclosure of documents from federal agencies and employees. Examples 
of such statutes include, but are not limited to, the Inspector General 
Act (5 U.S.C. App.) and the Whistle blower Protection Act (5 U.S.C. 
Section 1212(b)(2)). Further, certain statutes may be read to impose an 
affirmative obligation to disclose certain classes of information. 
These include, 18 U.S.C. Section 4 (knowledge relating to the 
commission of a felony) and 28 U.S.C. Section 535 (investigation of 
crimes involving Government officers and employees).
    None of the exceptions to the ADR Act's confidentiality provisions 
directly applies to the above-mentioned authorities. For example, none 
of the authorities cited above constitutes a requirement that 
information be ``made public'' pursuant to ADR Act section 574(a)(3) 
and (b)(4). In addition, the judicial override procedure outlined in 
Section 574(a)(4) and (b)(5) will not always be available when a 
conflict between the ADR Act and disclosure statute arises.
    In summary a tension among these authorities exists. The issues of 
statutory interpretation between these differing authorities have not 
yet been considered in an appropriate forum. Although we do not 
anticipate that direct conflicts between the ADR Act and one of the 
disclosure statutes will be common, it is important for agencies, 
neutrals, and participants to be aware of the potential issue.
    The ADR Act's judicial override provision contains a standard for 
determining if disclosure is necessary despite the Act's general 
prohibition on disclosure. The judicial override procedure should be 
followed whenever possible by requesting entities. Use of this 
statutorily authorized procedure will provide the best guidance to both 
the ADR community and requesting entities. Even when the override 
procedure is not available (because of jurisdictional limitations, for 
example), this standard should be used in determining whether to 
disclose an otherwise protected communication. The override provision, 
at section 574(a)(4) & (b)(5), takes into account the need for access 
to information to prevent manifest injustice, establish violations of 
law, and prevent harm to public health and safety, while considering 
the integrity of dispute resolution proceedings in general and the 
consequences breaching confidentiality.
    There are also several practical steps that agencies can take to 
minimize the likelihood of a dispute over a demand for disclosure of 
confidential communications. Agency ADR programs and potential 
requesting entities should enter into a dialogue to establish a 
framework for how potential demands for disclosure will be handled. The 
following principles should be included in such a framework:
     Agency ADR programs and requesting entities should educate 
each other about their respective missions.
     Procedures should be established for access to information 
that balance the need to prevent manifest injustice, help establish a 
violation of law, and prevent harm to the public health and safety 
against the need to protect the integrity of the agency's dispute 
resolution proceedings.
     ADR programs should identify classes of information that 
are not confidential, such as budgetary and statistical information 
regarding the number and types of cases and processes used.
     Requesting entities should use non-confidential 
information as a basis for information requests.
     Requesting entities should seek confidential information 
only if the information is not available through other means.
     Requesting entities should seek information from a neutral 
only if the information is not otherwise available.
     The ADR program and requesting entities should agree to 
procedures to resolve specific disagreements that arise with regard to 
the disclosure of information.

Alternative Procedures to Establish Confidentiality Protection

16. May parties agree to confidentiality procedures which are different 
from those contained in ADR Act?
    Yes. Parties may agree to more, or less, confidentiality protection 
for disclosure by the neutral or themselves than is provided for in the 
Act.
    The ADR Act provides that parties may agree to alternative 
confidential procedures for disclosures by a neutral. While there is no 
parallel provision for parties, the exclusive wording of this 
subsection should not be construed as limiting parties' ability to 
agree to alternative confidentiality procedures. Parties have a general 
right to sign confidentiality agreements, and there is no reason this 
should change in a mediation context.
    If the parties agree to alternative confidentiality procedures 
regarding disclosure by a neutral, they must so inform the neutral 
before the dispute resolution proceeding begins or the confidentiality 
procedures in the ADR Act will apply. An agreement providing for 
alternative confidentiality procedures is binding on anyone who signs 
the agreement. On the other hand, such an agreement will not be binding 
on third parties and may not guarantee that dispute resolution 
communications will be protected by the ADR Act from disclosure to such 
parties. Consistent with prudent practice, it is recommended that any 
such agreements be documented in writing. (See Questions 23 and 24 for 
potential FOIA implications.) Citation: 5 U.S.C. 574(d)(1).

    Example: Parties to an ADR proceeding can agree to authorize the 
neutral to use his or her judgment about whether to voluntarily 
disclose a protected communication, as long as the neutral is 
informed of this agreement before the ADR proceeding commences.
    Example: Parties to an ADR proceeding can agree that they, and 
the neutral, will keep

[[Page 83094]]

everything they say to each other in joint session confidential. A 
third party expert who overhears their discussions is not bound by 
their agreement unless she also signs it.

Issues Regarding the Disclosure of Protected Communications

17. What restrictions are put on the use of confidential communications 
disclosed in violation of the ADR Act?
    If the neutral or any participant discloses a confidential 
communication in violation of Sections 574(a) or (b), that 
communication is not admissible in any proceeding that is related to 
the subject of the dispute resolution proceeding in which the protected 
communication was made. A dispute resolution communication that was 
improperly disclosed may not be protected from use in an unrelated 
proceeding. Citation: 5 U.S.C. 574(c).

    Example: A supervisor and employee are engaged in a very bitter 
dispute regarding allegations of sexual harassment. They try 
mediation with a well respected mediator who is considered an expert 
in federal sexual harassment law. During a separate caucus between 
the mediator and the supervisor (alleged harasser) the mediator 
pointedly questioned the strength of the supervisor's defense.
    The mediation is unsuccessful, and the EEOC issues a decision 
finding that the supervisor did not sexually harass his employee. 
The supervisor is ecstatic and talks to his friends about the 
situation, mocking some of the ``wrong'' comments the mediator made.
    The employee appeals the case. She learns of the supervisor's 
reaction to the mediator's comments and wants to use the information 
in her brief. She will not be able to use the information because 
(1) the supervisor improperly disclosed information generated by the 
neutral, and (2) the appeal is a related proceeding.
    Example: A federal agency and two contractors are mediating a 
dispute over an alleged breach of contract. During a caucus with the 
mediator, the two contractors share confidential information about 
their financial status. After completing mediation, Contractor 1, in 
violation of the ADR Act, tells Company X about Contractor 2's 
financial status.
    A year later, Company X and Contractor 2 are in a dispute over a 
different contract in which Contractor 2's financial status is in 
dispute. Company X wants to use the information disclosed by 
Contractor 1. Company X would not be precluded by the ADR Act from 
using the information disclosed by Contractor 1, because the subject 
of the current proceeding is not related to that of the prior 
mediation.
18. What is the penalty for disclosing confidential communications in 
violation of the statute?
    The ADR Act does not specify any civil or criminal penalty for the 
disclosure of a protected communication in violation of the Act. 
However, such disclosure may violate other laws, regulations or 
agreements of the parties.

    Example: The parties agree in writing to keep confidential all 
statements they make in joint session. The agreement includes a 
provision that anyone disclosing statements made in joint session 
will be liable for damages. A party issues a press release 
disclosing statements made in joint session. The other parties may 
proceed against him in a suit for damages.
19. What must a neutral do when he or she receives a ``demand for 
disclosure'' of dispute resolution communications?
    Although the ADR Act does not define the term, a ``demand for 
disclosure'' may be understood as a formal request for confidential 
information. The demand must be made by a discovery request or some 
other legal process.
    Upon receiving a demand for disclosure of a dispute resolution 
communication, a neutral must make a reasonable effort to notify the 
parties and any affected non-party participants of the demand. Notice 
must be provided even if the neutral believes that there is no basis 
for refusing to disclose the communication.
    Notice should be delivered to the last address provided by a party. 
Parties have fifteen calendar days, from the date they receive the 
notice, in which to offer to defend the neutral against disclosure. 
Therefore, notice should be sent by a process that provides 
certification of delivery. For example, delivery could be by registered 
mail, courier, or by any other carrier that provides tracking and 
certification of delivery. Use of telephone or email communications as 
notice could be problematic. Since the parties must respond within 15 
calendar days or waive their right to object to disclosure, there 
should be a written record of when the notice was sent and when it was 
received. In certain rare circumstances, such as a criminal 
investigation, a neutral may be asked not to notify parties and others 
(e.g., program administrators) of a request for information. Under such 
circumstances, the neutral should seek the advice of counsel. Citation: 
5 U.S.C. 574(e).

    Example: A colleague asks a neutral what happened in a 
mediation. The neutral must simply refuse to discuss the matter. The 
neutral does not need to notify the parties of the request since the 
demand was not a formal request for information.
    Example: A neutral receives a formal discovery request for 
information on what happened in a mediation. Despite the fact that 
the neutral believes that the requested information could be 
disclosed under the ADR Act, the neutral must notify the parties of 
this demand for disclosure using the procedures described above.
20. What can/must parties do when they receive notice of a demand for 
disclosure from the neutral?
    If a party has no objection to the disclosure of confidential 
communications, it need not respond to the notice. On the other hand, 
if a party believes that the sought-after communications should not be 
disclosed, the party should notify the neutral within 15 calendar days 
and make arrangements to defend the neutral from the demand for 
disclosure. Federal agencies should develop departmental procedures for 
responding to such notices.

    Example: A party receives notice from a neutral that she has 
been served with a subpoena from the agency to produce documents and 
testify in a court proceeding. The party fulfills his responsibility 
under the Act by notifying the neutral within 15 calendar days that 
he objects to the demand for disclosure and that he will obtain 
counsel to defend the neutral.
21. What responsibilities do agencies have for ensuring that the 
notification requirement is met?
    An agency does not have a notification requirement under the ADR 
Act. However, in some Federal ADR programs the neutral may be a Federal 
employee performing collateral duty. Requiring these neutrals to keep 
records of parties to dispute resolution proceedings may be unduly 
onerous and ineffective. Agencies should develop administrative 
procedures to ensure that the necessary records are retained. It is 
ultimately the neutral's responsibility to ensure that the notice is 
sent to the parties.

    Example: A Federal employee who serves on collateral duty as a 
mediator for the ADR program of another agency receives a demand for 
disclosure but does not know how to locate the parties. She 
approaches the ADR program manager of the other agency for 
assistance. The program manager provides the neutral with sufficient 
information to deliver notice as required under the ADR Act.
22. May a neutral refuse to disclose communications even when the 
parties have failed to agree to defend the neutral?
    Yes. The ADR Act permits, but does not compel, a neutral to 
disclose if the parties have waived objections to disclosure under 
Section 574(e). While the statute is clear that a neutral ``shall not'' 
disclose where a party objects, the statute does not say that a neutral 
must disclose if a party does not object.

[[Page 83095]]

    The effectiveness and integrity of mediation and other ADR 
processes is largely dependent on the credibility and trustworthiness 
of neutrals. In order to safeguard the integrity of ADR programs and to 
eliminate the potential for eroding confidence in future ADR 
proceedings, neutrals should be allowed to rely on established codes of 
ethics and confidentiality standards to support a decision not to 
disclose. Citation: 5 U.S.C. 574(a) & (e).

    Example: A neutral receives a subpoena requesting disclosure of 
confidential communications from a dispute resolution process. The 
parties do not object to the disclosure and have not offered to 
defend the neutral against the subpoena. The neutral may still, at 
his or her own expense, resist the subpoena if the neutral objects 
to the disclosure.

Issues Related to the Freedom of Information Act (FOIA)

23. What dispute resolution communications are protected from 
disclosure under FOIA?
    Dispute resolution communications between a neutral and a party 
that may not be disclosed under the ADR Act are specifically exempted 
from disclosure under section 552(b)(3) of the Freedom of Information 
Act. This could include communications that are generated by a neutral 
and provided to all parties, such as an Early Neutral Evaluation. In 
addition, other FOIA exemptions may apply.
    Since only Federal records are subject to FOIA, dispute resolution 
communications that are not Federal records are not subject to the 
disclosure requirements of FOIA. Therefore, this subsection would not 
apply to oral dispute resolution communications because they are not 
records. Citation: 5 U.S.C. 574(j).

    Example: During mediation of a contract claim, the parties (a 
contractor and the agency) request a neutral to provide an 
evaluation of the merits of their respective cases. The neutral 
agrees, reviews the evidence, and presents each party separately 
with a written assessment of their respective cases. The contractor 
submits a FOIA request to obtain a copy of the neutral's written 
evaluation of the agency's case. The FOIA request can be denied 
under section 574(j) because the document is a dispute resolution 
communication generated by a neutral and may not be disclosed under 
the ADR Act.
24. If parties agree to alternative confidentiality procedures, are 
dispute resolution communications subject to FOIA?
    Parties may agree to confidentiality procedures that differ from 
those otherwise provided in the Act. Parties should be aware, however, 
that the FOIA exemption might not apply to all the communications that 
are protected under their agreement to use alternative confidentiality 
procedures.
    If the alternative confidentiality procedures agreed to by the 
parties provide for less disclosure than the ADR Act permits, those 
dispute resolution communications that would not be protected under the 
ADR Act are also not protected by the FOIA exemption in section 574(j). 
Parties cannot contract for more FOIA protection than the ADR Act 
provides. Citation: 5 U.S.C. 574(d) & (j).

    Example: Parties enter into a confidentiality agreement as part 
of an agreement to mediate. The parties agree to keep statements 
made and documents presented during joint session confidential . 
Documents that are made available by the parties during joint 
session are not protected by the FOIA exemption in 574(j), even 
though they are provided by contract to be kept confidential.

Other Considerations

25. Do the ADR Act's confidentiality provisions apply differently to 
government and private sector neutrals?
    No. There are, however, certain circumstances in which the choice 
of neutral may affect disclosure related to ADR processes. For example, 
because a private neutral's records are likely not deemed ``agency 
records,'' they likely will not be subject to FOIA or to record 
retention requirements. Additionally, the IG Act authorizes an IG to 
subpoena a private neutral, but not a government neutral. Finally, a 
private neutral is not subject to some of the statutory provisions that 
create a tension with the ADR Act's non-disclosure requirements (See 
Question 15).

IV. Guidance on Confidentiality Statements for Use By Neutrals

    Neutrals should make introductory remarks at the outset of a 
dispute resolution process explaining applicable ADR Act 
confidentiality provisions. Which provisions apply will vary, depending 
on such things as the type of ADR used, the number of parties 
participating, and the issues involved. In addition, agencies may 
choose to highlight or supplement ADR Act provisions to meet specific 
programmatic needs. We provide guidelines below to assist neutrals in 
crafting appropriate introductory confidentiality statements.
    An introductory confidentiality statement should address the 
following topics:
    (1) Application of the ADR Act to administrative ADR processes;
    (2) The intent of the ADR Act to provide confidentiality assurances 
for communications between the parties and the neutral occurring during 
an ADR proceedings;
    (3) Confidentiality between and among parties, consistent with this 
Guidance;
    (4) Exceptions to the Act's nondisclosure provisions pertinent to 
the particular dispute;
    (5) Availability of alternative confidentiality protections through 
written agreement and applicable limitations; and
    (6) Authorities other than the ADR Act that may also apply.

    Example: The confidentiality provisions of the Administrative 
Dispute Resolution Act apply to this mediation. The Act focuses 
primarily on protecting private communications between parties and 
the mediator. Generally speaking, if you tell me something during 
this process, I will keep it confidential. The same is true for 
written documents you prepare for this process and give only to me.
    There are exceptions to the confidentiality provisions in the 
Act. For example, statements you make with all the other parties in 
the room or documents you provide to them are not confidential. 
Also, in unusual circumstances, a judge can order disclosure of 
information that would prevent a manifest injustice, help establish 
a violation of law, or prevent harm to public health and safety.
    You can agree to more confidentiality if you want to. For 
example, you can agree to keep statements you make or documents you 
share with the other parties confidential . If you want to do this, 
everyone will need to agree in writing. Outside parties may, 
however, still have access to statements or documents as provided by 
law.
    (This is only an example of one possible confidentiality 
statement. It is important that this statement be tailored to fit 
the needs of each particular case.)

[FR Doc. 00-33247 Filed 12-28-00; 8:45 am]
BILLING CODE 4410-AR-U