[Federal Register Volume 66, Number 241 (Friday, December 14, 2001)]
[Notices]
[Pages 64890-64893]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30926]


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NUCLEAR REGULATORY COMMISSION


Enforcement Program and Alternative Dispute Resolution Request 
for Comments

AGENCY: Nuclear Regulatory Commission.

ACTION: Request for comments.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is announcing its 
intent to evaluate the use of Alternative Dispute Resolution (ADR) in 
the NRC's enforcement program, which is governed by the NUREG-1600, 
``General Statement of Policy and Procedure for NRC Enforcement 
Actions'' (Enforcement Policy). The NRC is undertaking this evaluation 
because ADR techniques have proven to be efficient and effective in 
resolving a wide range of disputes government-wide. The Commission is 
seeking public comment in the form of answers to questions presented in 
the Supplementary Information section of this notice.

DATES: The comment period expires January 28, 2002.

ADDRESSES: Submit written responses to the questions presented in the 
Supplementary Information section of this notice to Michael Lesar, 
Chief, Rules and Directives Branch, Division of Administrative 
Services, Office of Administration, Mail Stop T-6 D59, U.S. Nuclear 
Regulatory Commission, Washington, DC 20555-0001. Hand deliver comments 
to: 11555 Rockville Pike, Rockville, Maryland, between 7:30 a.m. and 
4:15 p.m. on Federal workdays. Copies of comments received may be 
examined at the NRC Public Document Room, 11555 Rockville Pike, 
Rockville, MD 20852. Comments may also be sent electronically to Mr. 
Lesar, E-mail [email protected].

FOR FURTHER INFORMATION CONTACT: Terrence Reis, Office of Enforcement, 
U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001 (301) 
415-3281, E-mail [email protected], or Francis X. Cameron, NRC ADR 
Specialist, Office of the General Counsel, U.S. Nuclear Regulatory 
Commission, Washington DC 20555-0001, (301) 415-1642, E-mail 
[email protected].

SUPPLEMENTARY INFORMATION: ``ADR'' is a term that refers to a number of 
voluntary processes, such as mediation and facilitated dialogues, that 
can be used to assist parties in resolving disputes and potential 
conflicts. The Administrative Dispute Resolution Act of 1996 (ADR Act) 
encourages the use of ADR by Federal agencies, and defines ADR as ``any 
procedure that is used to resolve issues in controversy, including but 
not limited to, conciliation, facilitation, mediation, fact finding, 
minitrials, arbitration, and use of an ombudsman, or any combination 
thereof'' (5 U.S.C. 571(3)). These techniques involve the use of a 
neutral third party, either from within the agency or from outside the 
agency, and are typically voluntary processes in terms of the decision 
to participate, the type of process used, and the content of the final 
agreement. Federal agency experience with ADR has demonstrated that the 
use of these techniques can result in more efficient resolution of 
issues, more effective outcomes, and improved relationships between the 
agency and the other party.
    The NRC has a general ADR policy (57 FR 36678; August 14, 1992) 
that supports and encourages the use of ADR in NRC activities. In 
addition, the NRC has used ADR effectively in a variety of 
circumstances, including rulemaking and policy development, and EEO 
disputes. Section 2.203 of the Commission's regulations provides for 
the use of ``settlement and compromise'' in proceedings dealing with 
enforcement issues. In addition, Sec. 2.337 of the Commission's 
proposed revisions to the NRC hearing process provides for ADR in NRC 
proceedings (see, 66 FR 19610, 19645; April 16, 2001). In at least one 
instance, an NRC enforcement case has been resolved through the use of 
a ``settlement judge'' from the Atomic Safety and Licensing Board Panel 
pursuant to 10 CFR 2.203 of the Commission's regulations, but there has 
been no systematic evaluation of the need for ADR in the enforcement 
process. The NRC's participation in a 1998 interagency initiative to 
encourage the use of ADR by Federal agencies, and the NRC's receipt of 
a request to use ADR in a recent enforcement case, have prompted the 
agency to consider whether a new, specific ADR policy would be 
beneficial in the enforcement area.
    Use of ADR by the NRC and other Federal Agencies. In order to 
encourage Federal agencies to take advantage of the benefits of ADR, 
Congress enacted the ADR Act. The Act requires each agency to do the 
following:
    1. Adopt a policy that addresses the use of ADR;
    2. Designate a senior official to be the dispute resolution 
specialist for the agency;
    3. Provide ADR training on a regular basis; and
    4. Review each standard agency agreement for contracts, grants, and 
other assistance with an eye towards encouraging the use of ADR.
    As noted above, ``ADR'' is a term that describes a set of processes 
which assist parties in resolving their disputes quickly and 
efficiently. Mediation, early neutral evaluation, facilitated 
dialogues, and arbitration are examples of these ADR processes. Central 
to each ADR process is the use of an objective third party or neutral, 
for example, a

[[Page 64891]]

facilitator or mediator, to assist the parties in resolving their 
dispute. Experience has shown that ADR can resolve disputes in a manner 
that is quicker, cheaper, and less adversarial than the traditional 
litigation process. In ADR, parties meet with each other directly, 
under the guidance of a neutral professional who is trained and 
experienced in handling disputes. The parties talk about the problems 
that led to the dispute and discuss possible resolution strategies. 
With the assistance of the neutral professional, the parties are able 
to retain control over their own disputes and work collaboratively to 
find creative, effective solutions that are agreeable to all sides. ADR 
commonly involves mediation and facilitation, in which a third party 
neutral assists the parties in coming to agreement. The neutral in 
these cases does not impose any decision on the parties.
    Many Federal agencies have established or are considering the use 
of ADR in civil enforcement actions. For example, the Environmental 
Protection Agency has used ADR to assist in the resolution of numerous 
disputes related to the enforcement of Superfund and other 
environmental statutes that EPA administers. Mediated negotiations have 
ranged from two-party Clean Water Act cases to Superfund disputes 
involving upwards of 1200 parties. The U.S. Navy has entered into an 
innovative partnering agreement with the State of Florida to address 
compliance with environmental regulations at naval installations. The 
Federal Energy Regulatory Commission has established an alternative 
licensing process that provides for a facilitated dialogue to assist 
parties in negotiating licensing agreements. The Federal Mine Safety 
and Health Review Commission has proposed the use of settlement judges 
serving as mediators to assist parties in reaching settlement prior to 
an administrative hearing on contested compliance cases arising under 
the Federal Mine Safety and Health Act of 1997. The NRC staff has 
consulted several of these agencies that are experienced in the 
application of ADR to enforcement cases. These discussions have 
highlighted a number of important points for the NRC to consider in the 
course of its evaluation:
    The use of ADR should be understood broadly. ADR encompasses many 
different techniques that might be employed at various points in the 
enforcement process. For example, although mediation is the most 
commonly used ADR technique in the enforcement arena, techniques such 
as neutral fact-finding or facilitated negotiation can also assist in 
resolving disputes and avoiding potential conflicts. In addition, ADR 
can be used at any point in the enforcement process where a discussion 
or negotiation between the parties takes place.
    ADR should not be viewed as an alternative to settlement. Agencies, 
including the NRC, have traditionally attempted to settle disputes in 
the enforcement area. ADR is simply a set of additional tools that an 
agency can use to more effectively address potential settlement issues, 
whether in the enforcement area or elsewhere. A key distinguishing 
feature of ADR-assisted settlement discussions is the presence of a 
neutral third party (i.e., a mediator, a facilitator) with expertise in 
conflict resolution techniques. ``Effectiveness'' in this context may 
include a faster and more systematic settlement process, as well as 
better and more enduring outcomes, reduced transaction costs, and 
improved relationships between the parties. However, the potential 
effectiveness of ADR must be evaluated within the context of an 
agency's mission, process, and procedures.
    The use of ADR is not appropriate in all circumstances. There will 
always be cases that should go to litigation, rather than be settled, 
for example, because of an important policy objective or in cases of 
first impression.
    Although there are many potential beneficial uses of ADR, the ADR 
Act also identifies several situations where an agency should consider 
not using ADR:
    1. A definitive or authoritative resolution of the matter is 
required for precedential value;
    2. The matter involves significant questions of government policy 
that require additional procedures before a final resolution is made;
    3. Maintaining established policies is of special importance so 
that variations among individual decisions are not increased;
    4. The matter significantly affects persons or organizations that 
are not parties to the proceeding;
    5. A full public record of the proceeding is important and a 
dispute resolution proceeding cannot provide such a record; and
    6. The agency must maintain continuing jurisdiction over the matter 
with authority to alter the disposition of the matter in light of 
changed circumstances.
    The NRC intends to consider these factors, along with the public 
comments on this notice, in evaluating whether, and to what extent, a 
specific ADR policy in the enforcement area is needed.
    The NRC Enforcement Process. The NRC's Enforcement Process is 
generally based on open, fact-finding and evaluative processes that 
rely on the principles of transparency to the public and early and full 
discourse to the party responsible for the apparent violation.\1\
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    \1\ Investigations, however, are confidential, and enforcement 
conferences involving wrongdoing are closed.
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    In brief, the agency's enforcement process, as governed by the 
Enforcement Policy (NUREG-1600, General Statement of Policy and 
Procedure for NRC Enforcement Actions, February 16, 2001), can be 
summarized as follows:
    Agency enforcement actions arise from the results of inspections 
and investigations. Following identification of potentially escalated 
enforcement actions the issue is brought to a multi-disciplinary NRC 
staff panel to achieve consensus that a violation of NRC requirements 
has occurred and that the violation warrants escalated enforcement 
action. Enforcement actions also include the issuance of orders to 
modify, suspend or revoke a license which may be based on a violation 
or noncompliance with a requirement or other public health and safety 
issue. If consensus is reached, the licensee or individual is then 
formally notified that the NRC considers an issue an apparent violation 
and is told the basis for the apparent violation. The licensee or 
individual is then offered an opportunity to have a conference with the 
NRC or provide its position in writing. The licensee or individual 
subject to the action is always asked to state whether it agrees or 
disagrees with apparent violations as stated. After the licensee or 
individual presents its case, the multi-disciplinary panel meets again 
to determine what enforcement action, if any, is appropriate. If it is 
determined that a civil penalty is warranted in accordance with the 
enforcement policy, that decision and the basis for it are formally 
transmitted to the licensee or individual in the form of a Notice of 
Violation and Proposed Civil Penalty. At this stage the licensee or 
individual has the opportunity to restate its case in writing. If after 
reviewing the response, the NRC continues to maintain the action is 
appropriate, the civil penalty is imposed by order. After imposition, 
the licensee or individual then has the opportunity to request a 
hearing and proceed with adjudication. After a hearing has been 
requested, settlement is subject to the provisions in 10 CFR 2.203.
    If only a Notice of Violation is proposed, such is normally the 
case for issues dispositioned under the Reactor

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Oversight Process, the licensee is required to respond to the violation 
and may contest it. However, in such cases there are no hearing rights 
as there are in cases where an Order is issued or a civil penalty is 
imposed.
    Data on enforcement cases suggest that the agency's current 
enforcement process offers ample opportunity for settlement and avoids 
costly litigation without specifically employing ADR techniques. Since 
1988, out of approximately 1300 civil penalties proposed, there have 
been 222 Orders imposing civil monetary penalties, and 29 related 
requests for hearings (out of a total of 79 enforcement related hearing 
requests). The majority of those requests were settled prior to 
hearing. However, these statistics do not provide insights as to 
whether there might be additional opportunities to use ADR at various 
points in the enforcement process or whether existing settlement 
discussions might be improved by the use of ADR.
    Specific Issues. The NRC has identified a number of issues that it 
believes must be evaluated in order to determine whether an enforcement 
specific ADR policy is needed. Two of the more notable issues are:
    At what point in the enforcement process should ADR be used? If the 
agency is to pursue implementing ADR in its enforcement processes, it 
must decide what types of disputes would be appropriate for resolution 
through ADR. Enforcement is intended to act as a deterrence and to 
ensure appropriate and lasting corrective action to prevent the 
recurrence of a non-compliance; in this sense, it is one means by which 
the agency ensures compliance with its regulations and license 
requirements, which, in turn, supports the ``adequate protection'' 
standard of the Atomic Energy Act. Enforcement sanctions are a function 
of the significance of violations. Viewing ADR from a narrow 
perspective, one could argue that, in terms of the enforcement program, 
only disputes pertinent to the existence and significance of a 
violation need be considered. The NRC's rules of practice for 
enforcement, as set forth in Subpart B of 10 CFR Part 2, provide the 
right to request a hearing in connection with orders imposing civil 
penalties, orders modifying, suspending, or revoking a license, or 
orders restricting an individual's right to engage in a licensed 
activity. There are no hearing rights for notices of violation issued 
without a corresponding civil penalty. Given the limited scope of 
issues in dispute in the enforcement arena--existence and significance 
of violations, and in the case of civil penalties, the appropriate 
amount--should the use of ADR techniques be reserved only for those 
issues that are eligible to be adjudicated?
    What are the implications of ADR for the confidentiality of 
settlement discussions in the enforcement area? The ADR Act (5 U.S.C. 
571-584) provides for confidentiality of ``dispute resolution 
communications'' in ``dispute resolution proceedings'' involving a 
Federal agency ``administrative program.'' A Federal agency 
``administrative program'' includes any Federal function which involves 
the protection of the public interest and the determination of the 
rights, privileges, and obligations of private persons through 
rulemaking, adjudication, licensing or investigation. NRC enforcement 
processes and proceedings would fall under this definition. A ``dispute 
resolution proceeding'' is 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. The ADR Act 
provides for a broad reading of the term ``dispute resolution 
proceeding'' and incorporates all ADR forms and techniques, including 
convening, facilitation, mediation, and fact-finding. The neutral may 
be a private person or a Federal government employee who is acceptable 
to the parties. The ADR Act supports the use of neutrals to assist 
parties during all stages of the resolution of a disagreement, from the 
convening of the participants and design of an effective process to the 
conduct of settlement discussions. ``Confidential Information,'' in the 
context of a dispute resolution proceeding, means information that a 
neutral or a party cannot, by law or agreement, voluntarily disclose to 
anyone, or if disclosed, cannot be admitted into evidence in any future 
legal proceeding. Note that a key distinction between ``dispute 
resolution proceedings'' under the ADR Act and traditional settlement 
discussions conducted by the NRC and other agencies is the presence of 
a neutral who functions specifically to aid the parties in resolving 
the controversy.
    Settlement discussions between NRC staff and licensees or other 
parties have traditionally been closed and the information kept 
confidential. Like the practice under the ADR Act, the settlement 
agreement itself must be disclosed. Unlike the ADR Act, oral and 
written communications by the parties during joint sessions may be kept 
confidential. No discovery has been allowed on the issues in settlement 
discussions in NRC enforcement cases.
    Confidentiality can be a critical component of a successful ADR 
process. Guarantees of confidentiality, whether in joint session of all 
the parties with the neutral, or in a caucus involving the neutral and 
one party, 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. Neutrals try to promote a candid and informal 
exchange regarding events of concern, as well as about the parties' 
perceptions of and attitudes toward these events, and encourage parties 
to think constructively and creatively about ways in which their 
differences might be resolved. This frank exchange may be achieved only 
if the participants know that what is said in the ADR process will not 
be used to their detriment in some later proceeding or in some other 
manner. These considerations would seem to apply regardless of whether 
a neutral was involved in the settlement discussions.
    However, some ADR practitioners believe that mediation and other 
forms of ADR will work without confidentiality and that there is no 
need to preserve confidentiality in an ADR process. As noted above, the 
ADR Act does not provide confidentiality to statements or written 
comments by the parties made during joint session. Therefore, it may be 
possible to limit confidentiality to the caucuses involving the neutral 
and one of the parties, and still open the information provided in the 
joint sessions to public scrutiny, if not public observation. In 
addition, public policies that place an emphasis on access rather than 
confidentiality may lead to disclosure of information in joint ADR 
sessions. In fact, to the extent that settlement discussions on 
enforcement issues are public, there may be a value in having these 
sessions assisted by a neutral.
    The policy choice may not be between ADR-assisted settlement 
discussions and traditional settlement discussions without the 
assistance of a neutral. Rather, the choice seems to be whether or not 
to engage in any confidential settlement discussions on enforcement 
issues, particularly certain types of enforcement issues, such as when 
wrongdoing is involved.
    Questions for Public Comment. In order for the NRC to evaluate 
whether, and to what extent, ADR should be used

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in the enforcement arena, the NRC has identified a number of issues for 
public comment. The NRC is seeking public comment on the following 
specific questions and also invites general comments on the questions, 
and also invites general comments on the use of ADR in NRC enforcement 
cases.
    It should be noted that the NRC's Discrimination Task Group already 
addressed and initially rejected the use of ADR in employment 
discrimination cases in its draft report which has been released for 
public comment (66 FR 32966 dated June 19, 2001 and http://www.nrc.gov--;Electronic Reading Room, ADAMS Accession No. 
ML011200244). The Commission, however, desires to more thoroughly 
examine the use of ADR in enforcement proceedings, including 
discrimination cases. Accordingly, the Discrimination Task Group will 
await evaluation of comments received as a result of this Federal 
Register Notice before finalizing its recommendation on the use of ADR.
    The specific questions are as follows.
    1. Is there a need to provide additional avenues, beyond the 
encouragement of settlement in 10 CFR 2.203, for the use of ADR in NRC 
enforcement activities?
    2. What are the potential benefits of using ADR in the NRC 
enforcement process?
    3. What are the potential disadvantages of using ADR in the NRC 
enforcement process?
    4. What should be the scope of disputes in which ADR techniques 
could be utilized?
    5. At what points in the existing enforcement process might ADR be 
used?
    6. What types of ADR techniques might be used most effectively in 
the NRC enforcement process?
    7. Does the nature of the existing enforcement process for either 
reactor or materials licensees limit the effectiveness of ADR?
    8. Would any need for confidentiality in the ADR process be 
perceived negatively by the public?
    9. For policy reasons, are there any enforcement areas where ADR 
should not be used, e.g., wrongdoing, employment discrimination, or 
precedent-setting areas?
    10. What factors should be considered in instituting an ADR process 
for the enforcement area?
    11. What should serve as the source of neutrals for use in the ADR 
process for enforcement?

    Dated at Rockville, Maryland, this 10th day of December 2001.

    For the Nuclear Regulatory Commission.
Frank J. Congel,
Director, Office of Enforcement.
[FR Doc. 01-30926 Filed 12-13-01; 8:45 am]
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