11

APPLICATION OF ADRAPPLICATION OF ADRTO REGULATORY TO REGULATORY

DISPUTESDISPUTES Presentation To:Presentation To:

American Public Power AssociationAmerican Public Power Association 2004 Legal Seminar 2004 Legal Seminar

November 8, 2004November 8, 2004

Steven A. ShapiroSteven A. Shapiro Dispute Resolution ServiceDispute Resolution Service

Federal Energy Regulatory CommissionFederal Energy Regulatory Commission

22

AgendaAgenda

Benefits of ADRBenefits of ADR Use of ADR in State and Federal Processes Use of ADR in State and Federal Processes ADR DefinedADR Defined Negotiation ApproachesNegotiation Approaches Barriers to ADRBarriers to ADR ADR Program DevelopmentADR Program Development Ethical ConsiderationsEthical Considerations

33

Part 1Part 1What are the Benefits What are the Benefits

of ADR?of ADR?

44

ADR Benefits (Cont’d)ADR Benefits (Cont’d)

Timing and FlexibilityTiming and Flexibility Third-party neutrals work within the schedules Third-party neutrals work within the schedules

set by the partiesset by the parties ADR can be parallel process on discrete ADR can be parallel process on discrete

disputesdisputes No filing requiredNo filing required Reduced costsReduced costs Increases level of complianceIncreases level of compliance

55

ADR BenefitsADR Benefits If no agreement is reached, parties are better prepared If no agreement is reached, parties are better prepared

for an adjudicatory processfor an adjudicatory process Builds constructive relationships Builds constructive relationships ConfidentialityConfidentiality

At FERC:At FERC: Communications are exempt from ex parte Communications are exempt from ex parte

rules, rules, i.ei.e., not on the record and with a non-., not on the record and with a non-decisional employeedecisional employee

There is an environment for open frank There is an environment for open frank discussions needed for fruitful negotiations discussions needed for fruitful negotiations

66

ADR Benefits (Cont’d)ADR Benefits (Cont’d)

Use of Technical/Subject Matter Expert (SME)Use of Technical/Subject Matter Expert (SME) At FERC:At FERC:

Non-decisional, SME can assist the third-party neutral Non-decisional, SME can assist the third-party neutral and partiesand parties

SME can provide reality checks when options are being SME can provide reality checks when options are being evaluated to solve problemsevaluated to solve problems

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Part 2Part 2Support for ADR Use in Support for ADR Use in

Federal and State Federal and State Government Processes?Government Processes?

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State ExamplesState Examples New York Public Service CommissionNew York Public Service Commission

ALJs cross trained as settlement judges and trial ALJs cross trained as settlement judges and trial judgesjudges

Entire cases, or segments of cases, may be handled Entire cases, or segments of cases, may be handled through ADRthrough ADR

Carrier-carrier, public, and policy matters all have Carrier-carrier, public, and policy matters all have been referredbeen referred

Illinois Commerce CommissionIllinois Commerce Commission-- Title 83: Public Utilities, Chapter 1: Illinois Title 83: Public Utilities, Chapter 1: Illinois

Commerce Commission, Part 734 Mediation Commerce Commission, Part 734 Mediation PracticePractice

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State ExamplesState Examples

Oregon Public Utilities Commission Oregon Public Utilities Commission

-- Settlement Guidelines and MediationSettlement Guidelines and Mediation

Public Service Commission of WisconsinPublic Service Commission of Wisconsin

-- Interim Procedures for Negotiations, Interim Procedures for Negotiations, Mediation, Arbitration and Approval of Mediation, Arbitration and Approval of AgreementsAgreements

1010

State ExamplesState Examples

• Montana Public Service CommissionMontana Public Service CommissionProposed Policy Statement on ADR issued in Proposed Policy Statement on ADR issued in

20032003

-- Encourages voluntary ADREncourages voluntary ADR

-- Any mechanism to resolve dispute without Any mechanism to resolve dispute without litigation or formal administrative processeslitigation or formal administrative processes

-- Notes benefitsNotes benefits

-- Sets forth ADR PrinciplesSets forth ADR Principles

-- Describes ADR TechniquesDescribes ADR Techniques

1111

State ExamplesState Examples Colorado Public Utilities CommissionColorado Public Utilities Commission

““Consumer Service QualityConsumer Service QualityThe PUC's focus on customer service quality The PUC's focus on customer service quality continues. Disputes between utilities will increase continues. Disputes between utilities will increase under competition and could affect service to under competition and could affect service to customers. These activities can be time-consuming customers. These activities can be time-consuming and complex. As dispute resolution becomes a more and complex. As dispute resolution becomes a more common component of the PUC workload, the skill common component of the PUC workload, the skill sets and the knowledge of staff will change. It is sets and the knowledge of staff will change. It is expected that managerial, organizational, and expected that managerial, organizational, and negotiation skills will become more critical to the negotiation skills will become more critical to the successful resolution of issues. The PUC will also rely successful resolution of issues. The PUC will also rely more on quicker and simpler regulatory methods more on quicker and simpler regulatory methods such as alternative dispute resolution processes.”such as alternative dispute resolution processes.”

1212

State ExamplesState Examples

Washington Utilities and Washington Utilities and Transportation CommissionTransportation Commission administrative code WAC 480-09-465-470administrative code WAC 480-09-465-470-- Options include voluntary negotiations, Options include voluntary negotiations,

settlement conferences, collaboratives, settlement conferences, collaboratives, stipulations and stipulated factsstipulations and stipulated facts

-- “The commission will not delegate to “The commission will not delegate to parties parties the power to make final decisions, the power to make final decisions, but will but will retain the authority to approve retain the authority to approve any proposed any proposed settlement or agreement.”settlement or agreement.”

1313

FERC SupportFERC Support• In 1958, the FPC stated that ". . . settlements, as a rule, In 1958, the FPC stated that ". . . settlements, as a rule,

are favored in the law. § 5(b) of the Administrative are favored in the law. § 5(b) of the Administrative Procedure Act requires us to afford all interested Procedure Act requires us to afford all interested parties in proper proceedings opportunity for . . . offers parties in proper proceedings opportunity for . . . offers of settlement . . . where time, the nature of the of settlement . . . where time, the nature of the proceeding, and the public interest permit.”proceeding, and the public interest permit.”

Commission Order No. 32, issued in 1979, emphasized Commission Order No. 32, issued in 1979, emphasized the importance of voluntary settlements to the orderly the importance of voluntary settlements to the orderly and expeditious conduct of its business. Procedures for and expeditious conduct of its business. Procedures for Submission of Settlement Agreements, Order No. 32, Submission of Settlement Agreements, Order No. 32, FERC Stats. & Regs. ¶ 30,061 (1979); Order No. 32-A, 8 FERC Stats. & Regs. ¶ 30,061 (1979); Order No. 32-A, 8 FERC ¶ 61,160 (1979)FERC ¶ 61,160 (1979)

1414

Administrative Dispute Administrative Dispute Resolution Act of 1990Resolution Act of 1990

(initially passed in 1990; later finalized in (initially passed in 1990; later finalized in 1996)1996)

promotes the use of alternative means of dispute promotes the use of alternative means of dispute resolution resolution

ADR is any voluntary procedure used instead of ADR is any voluntary procedure used instead of traditional adjudication to resolve matters in traditional adjudication to resolve matters in controversycontroversy

each agency required to designate a senior official each agency required to designate a senior official to be the Dispute Resolution Specialistto be the Dispute Resolution Specialist

ADR may be used only "if the parties agree to such ADR may be used only "if the parties agree to such a proceeding"a proceeding"

1515

FERC SupportFERC Support In 1994, the Commission in its NOPR to implement the ADRAct In 1994, the Commission in its NOPR to implement the ADRAct

stated:stated: ““It is the policy of the Commission to conclude its It is the policy of the Commission to conclude its

administrative proceedings as fairly, effectively, efficiently, administrative proceedings as fairly, effectively, efficiently, and expeditiously as possible. . . . The ADRA gives the and expeditiously as possible. . . . The ADRA gives the Commission the opportunity to further develop and refine its Commission the opportunity to further develop and refine its policies to achieve less costly, less contentious, and more policies to achieve less costly, less contentious, and more timely decisions in its proceedings. . . . [T]he Commission timely decisions in its proceedings. . . . [T]he Commission intends to foster the effective and sound use of innovative ADR intends to foster the effective and sound use of innovative ADR procedures pursuant to the guidelines established in the procedures pursuant to the guidelines established in the ADRA.”ADRA.”

Administrative Dispute Resolution, Notice of Proposed Administrative Dispute Resolution, Notice of Proposed Rulemaking, FERC Stats. & Regs. ¶ 32,510, at 32,914 (1994).Rulemaking, FERC Stats. & Regs. ¶ 32,510, at 32,914 (1994).

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FERC SupportFERC Support Order No 578 issued in April 1995 integrated ADR techniques Order No 578 issued in April 1995 integrated ADR techniques

into the Commission's dispute resolution procedures. The into the Commission's dispute resolution procedures. The final rule also modified, and added to, the Commission's final rule also modified, and added to, the Commission's regulations to achieve this goal. Alternative Dispute regulations to achieve this goal. Alternative Dispute Resolution, Order No. 578, FERC Stats. & Regs. ¶ 31,018 Resolution, Order No. 578, FERC Stats. & Regs. ¶ 31,018 (1995). (1995).

Order No. 602, issued 3/31/99, revised the Commission’s Order No. 602, issued 3/31/99, revised the Commission’s regulations governing complaints: encourages and supports regulations governing complaints: encourages and supports the consensual resolution of complaints; offered the services the consensual resolution of complaints; offered the services of the new Office of Dispute Resolution Service and the of the new Office of Dispute Resolution Service and the Commission's Enforcement Hotline to achieve this goal; and Commission's Enforcement Hotline to achieve this goal; and filings must state whether ADR has been tried and if ADR filings must state whether ADR has been tried and if ADR under the Commission's supervision should be considered.under the Commission's supervision should be considered.

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Part 3Part 3 Alternative Dispute Alternative Dispute

Resolution DefinedResolution Defined

1818

What is ADR?What is ADR? A term that covers a variety of dispute resolution A term that covers a variety of dispute resolution

methods.methods.

ADR generally focuses on interests but can focus ADR generally focuses on interests but can focus on positions.on positions.

ADR is generally a voluntary process.ADR is generally a voluntary process.

ADR involves a third party neutral.ADR involves a third party neutral.

ADR is NOTADR is NOT-- adjudication (except for arbitration)adjudication (except for arbitration)- - appropriate to every disputeappropriate to every dispute- - a guarantee that a solution will resulta guarantee that a solution will result

1919

Resolving Disputes ContinuumResolving Disputes ContinuumWhere Does ADR Fit in Conflict Resolution?Where Does ADR Fit in Conflict Resolution?

Step 1 -- Unassisted NegotiationStep 1 -- Unassisted Negotiation

..

Step 2 -- ADR (Assisted Negotiation)Step 2 -- ADR (Assisted Negotiation)

Non-evaluative Non-evaluative EvaluativeEvaluative

Conciliation *Arbitration (not ass’t Conciliation *Arbitration (not ass’t neg.)neg.)

Facilitation Early-neutral Facilitation Early-neutral EvaluationEvaluation

Mediation Mini-TrialMediation Mini-Trial

Settlement Judge ProcessSettlement Judge Process

Step 3 -- AdjudicationStep 3 -- Adjudication

Court Administrative Binding Court Administrative Binding ArbitrationArbitration

2020

ConciliationConciliation Involves building a positive relationship between the Involves building a positive relationship between the

parties by the use of a third party or conciliatorparties by the use of a third party or conciliator May establish communications, clarify May establish communications, clarify

misperceptions, deal with strong emotions, and build misperceptions, deal with strong emotions, and build

trust. Conciliators may: provide for a neutral meeting trust. Conciliators may: provide for a neutral meeting

place, carry initial messages between/among the place, carry initial messages between/among the

parties, provide reality testing regarding perceptions parties, provide reality testing regarding perceptions

or misperceptions, and affirm the parties' abilities to or misperceptions, and affirm the parties' abilities to

work together. work together.

2121

FacilitationFacilitation What is itWhat is it? ? Facilitation involves the use of Facilitation involves the use of

techniques to improve the flow of information in a techniques to improve the flow of information in a meeting between parties and may also be applied to a meeting between parties and may also be applied to a decision-making meeting where a specific outcome is decision-making meeting where a specific outcome is desired.desired.

The term "facilitator" is often used interchangeably The term "facilitator" is often used interchangeably with the term "mediator," but a facilitator does not with the term "mediator," but a facilitator does not typically become as involved in the substantive issues typically become as involved in the substantive issues as does a mediator. The facilitator focuses more on as does a mediator. The facilitator focuses more on the process involved in resolving a matter. the process involved in resolving a matter.

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FacilitationFacilitation

How is it doneHow is it done? ? The facilitator generally works with The facilitator generally works with all of the participants at once and provides procedural all of the participants at once and provides procedural directions for the group to move efficiently and arrive directions for the group to move efficiently and arrive at the jointly agreed-upon goal. at the jointly agreed-upon goal.

The facilitator may be a member of one of the parties The facilitator may be a member of one of the parties to the dispute or may be an external consultant. to the dispute or may be an external consultant. Facilitators focus on procedural assistance and Facilitators focus on procedural assistance and typically remain impartial to the topics or issues typically remain impartial to the topics or issues under discussion.under discussion.

2323

FacilitationFacilitation

When is it usedWhen is it used? ? Appropriate when: Appropriate when: the intensity of the parties' emotions about the issues the intensity of the parties' emotions about the issues

inhibits good communication inhibits good communication the parties or issues are not extremely polarized the parties or issues are not extremely polarized the parties have enough trust in each other that they the parties have enough trust in each other that they

can work togethercan work together the parties are in a common predicament and they need the parties are in a common predicament and they need

or will benefit from a jointly-acceptable outcome.or will benefit from a jointly-acceptable outcome.

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MediationMediationWhat is itWhat is it??- The intervention of an acceptable, impartial and The intervention of an acceptable, impartial and

neutral third party who has no decision-making neutral third party who has no decision-making authorityauthority

- The objective of the third-party neutral is to assist the The objective of the third-party neutral is to assist the parties in voluntarily reaching a resolutionparties in voluntarily reaching a resolution

- Mediation does not eliminate other dispute resolution Mediation does not eliminate other dispute resolution optionsoptions

- Process is confidentialProcess is confidential

2525

MediationMediationHow is it doneHow is it done? A mediator? A mediator works with parties to develop a process that meets works with parties to develop a process that meets

their needs and the role they want the mediator to their needs and the role they want the mediator to playplay

will focus parties on identifying issues first and then will focus parties on identifying issues first and then have parties define their underlying interestshave parties define their underlying interests

will focus parties on developing options and may will focus parties on developing options and may suggest options to encourage parties to expand the suggest options to encourage parties to expand the range of possible resolutions range of possible resolutions

works with parties in caucuses, or with all parties works with parties in caucuses, or with all parties present, to explore options that address their interestspresent, to explore options that address their interests

can differ in their degree of directiveness. can differ in their degree of directiveness.

2626

Settlement Judge Settlement Judge ProceedingsProceedings

A settlement judge attempts to:A settlement judge attempts to: -- reduce the inherent and tactical delays in the reduce the inherent and tactical delays in the

settlement process, provides structure, controls settlement process, provides structure, controls the the pace of negotiationspace of negotiations

-- meets with all parties separately, and/or meets with all parties separately, and/or collectively, looks for a common ground, and collectively, looks for a common ground, and crafts or suggests solutions crafts or suggests solutions

-- often expresses an opinion based on precedent often expresses an opinion based on precedent and and the judge's experience as to how the case may the judge's experience as to how the case may or or may not be decided by a presiding judge or the may not be decided by a presiding judge or the

agency if the case proceeds to litigation. agency if the case proceeds to litigation.

2727

Settlement Judge Process - Settlement Judge Process - Advantage of ProcessAdvantage of Process

Provides For Frank Exchange of Merits of PositionsProvides For Frank Exchange of Merits of Positions

Judicial Deference Holds Down Rhetoric and Judicial Deference Holds Down Rhetoric and

PosturingPosturing

Power To Continue Negotiations Where Other Power To Continue Negotiations Where Other

Neutrals Might Give UpNeutrals Might Give Up

Substantive Knowledge HelpsSubstantive Knowledge Helps

2828

Early Neutral EvaluationEarly Neutral EvaluationWhat is itWhat is it? ? Early neutral evaluation (ENE)Early neutral evaluation (ENE)

-- provides parties with an early and frank evaluation of provides parties with an early and frank evaluation of the merits of a casethe merits of a case

- used when the parties disagree significantly about the used when the parties disagree significantly about the value of their cases and are locked in positional value of their cases and are locked in positional bargainingbargaining

- is voluntary and does not eliminate other dispute is voluntary and does not eliminate other dispute resolution options. resolution options.

- is confidential, whether or not it results in settlementis confidential, whether or not it results in settlement- the evaluator is neutralthe evaluator is neutral

2929

Early Neutral EvaluationEarly Neutral EvaluationHow is it doneHow is it done?? The objective Evaluator studies background The objective Evaluator studies background

materials, performs independent research, materials, performs independent research, considers presentations (written and/or oral), and considers presentations (written and/or oral), and clarifies positions and facts through questions. clarifies positions and facts through questions.

The Evaluator offers a non-binding, advisory-only, The Evaluator offers a non-binding, advisory-only, confidential opinion as to the settlement value confidential opinion as to the settlement value and the potential outcome of the case, and and the potential outcome of the case, and including in the case of FERC, what the including in the case of FERC, what the Commission staff may recommend.Commission staff may recommend.

The evaluation may alter parties negotiation The evaluation may alter parties negotiation approaches, cause parties to reevaluate their approaches, cause parties to reevaluate their BATNAs, or explore other options for settlement.BATNAs, or explore other options for settlement.

3030

Early Neutral EvaluationEarly Neutral Evaluation

When is it usedWhen is it used? ? ENE is particularly appropriate when the ENE is particularly appropriate when the dispute involves technical or factual issues that lend dispute involves technical or factual issues that lend themselves to expert evaluation, and when the top themselves to expert evaluation, and when the top decision-makers of one or more of the parties could be decision-makers of one or more of the parties could be better informed about the real strengths and better informed about the real strengths and weaknesses of their cases. ENE can enhance direct weaknesses of their cases. ENE can enhance direct communication between the parties about their claims communication between the parties about their claims and supporting evidence and provide an assessment of and supporting evidence and provide an assessment of the merits of the case by a neutral expert. In addition, the merits of the case by a neutral expert. In addition, ENE can provide a "reality check" for clients and ENE can provide a "reality check" for clients and lawyers and help to identify and clarify the central lawyers and help to identify and clarify the central issues in dispute. issues in dispute.

3131

Mini-trialMini-trialWhat is a Mini-trialWhat is a Mini-trial? ? A mini-trial is not a trial. It A mini-trial is not a trial. It

involves a structured settlement process in which involves a structured settlement process in which each side to a dispute presents abbreviated summaries each side to a dispute presents abbreviated summaries of its cases to the major decision-makers for the of its cases to the major decision-makers for the parties who have authority to settle the dispute. The parties who have authority to settle the dispute. The summaries contain presentations about the legal basis summaries contain presentations about the legal basis and the merits of a case. and the merits of a case.

How is it doneHow is it done? ? The process generally follows more The process generally follows more relaxed rules of discovery and case presentation than relaxed rules of discovery and case presentation than might be found in a court or other formal proceeding might be found in a court or other formal proceeding and usually the parties agree on specific limited and usually the parties agree on specific limited periods of time for presentations and arguments. periods of time for presentations and arguments.

3232

Mini-trialMini-trial A third party neutral may oversee a mini-trial. That A third party neutral may oversee a mini-trial. That

individual is responsible for explaining and individual is responsible for explaining and maintaining an orderly process of case presentations maintaining an orderly process of case presentations and may give an advisory opinion regarding a and may give an advisory opinion regarding a settlement range, if requested, rather than offer a settlement range, if requested, rather than offer a specific solution for the parties to consider. The third specific solution for the parties to consider. The third party may also provide mediation services upon party may also provide mediation services upon request.request.

When is it usedWhen is it used? The rationale behind a mini-trial is ? The rationale behind a mini-trial is that if the decision-makers are fully informed directly that if the decision-makers are fully informed directly as to the merits of their cases and that of the opposing as to the merits of their cases and that of the opposing parties, they will be better prepared to successfully parties, they will be better prepared to successfully engage in settlement discussions. engage in settlement discussions.

3333

Fact-findingFact-finding

What is itWhat is it? ? Fact-finding is a process of determining the Fact-finding is a process of determining the relevant facts to a controversy. relevant facts to a controversy.

How is it done and when is it usedHow is it done and when is it used? ? Fact-finding can be Fact-finding can be performed by advisory staff or a neutral third party performed by advisory staff or a neutral third party selected by the parties in advance. The parties may also selected by the parties in advance. The parties may also select expert fact-finders, who are neutrals who give expert select expert fact-finders, who are neutrals who give expert opinions that are either conclusive or non-binding on opinions that are either conclusive or non-binding on technical, scientific or legal questions. FERC’s advisory technical, scientific or legal questions. FERC’s advisory staff's use of technical conferences is comparable to an staff's use of technical conferences is comparable to an ADR fact-finding process.ADR fact-finding process.

3434

Binding ArbitrationBinding Arbitration What is it and how is it doneWhat is it and how is it done? A? A party presents a party presents a

dispute to an impartial or neutral individual dispute to an impartial or neutral individual (arbitrator) or panel (arbitration panel) for issuance of (arbitrator) or panel (arbitration panel) for issuance of a binding decision (non-appealable on the merits). a binding decision (non-appealable on the merits). The parties usually have the ability to select the The parties usually have the ability to select the arbitrator(s). The parties may retain a particular arbitrator(s). The parties may retain a particular arbitrator (often from a list of arbitrators) to decide a arbitrator (often from a list of arbitrators) to decide a number of cases or to serve the parties for a specified number of cases or to serve the parties for a specified length of times. Parties are typically free to negotiate length of times. Parties are typically free to negotiate the terms and conditions under which arbitrators are the terms and conditions under which arbitrators are used to resolve disputes, including the procedures for used to resolve disputes, including the procedures for their selection.their selection.

3535

Binding ArbitrationBinding Arbitration

When is it usedWhen is it used? ?

Binding arbitration is most appropriate when the Binding arbitration is most appropriate when the parties want a third party to decide the outcome of parties want a third party to decide the outcome of their dispute for them but would like to avoid the their dispute for them but would like to avoid the formality, time, and expense of a trial. The parties do formality, time, and expense of a trial. The parties do not retain control over how their dispute is resolved, not retain control over how their dispute is resolved, and generally cannot appeal the arbitrator's award.and generally cannot appeal the arbitrator's award.

3636

Role of the Third-Party NeutralRole of the Third-Party Neutral

• Works with the parties to help them find Works with the parties to help them find mutually acceptable, win/win or mutual gain mutually acceptable, win/win or mutual gain solutionssolutions

• Assists the parties with identifying their Assists the parties with identifying their interests interests

• Assists the parties with creative problem-Assists the parties with creative problem-solving through the generation of options to solving through the generation of options to meet their interestsmeet their interests

• Is evaluative in an early neutral evaluation role Is evaluative in an early neutral evaluation role or in arbitrationor in arbitration

3737

ADR May Not Be Appropriate ADR May Not Be Appropriate IfIf::

The resolution will define policyThe resolution will define policy Existing procedures cannot be changedExisting procedures cannot be changed Outcome would affect non-participantsOutcome would affect non-participants A full record is important (e.g., rate case)A full record is important (e.g., rate case) A definitive resolution is requiredA definitive resolution is required Parties do not have full commitment to the Parties do not have full commitment to the

process or want a definitive ruling based on their process or want a definitive ruling based on their positionposition

3838

Part 4Part 4Negotiation Approaches Negotiation Approaches

in ADRin ADR

3939

Interest-Based Aspects of ADRInterest-Based Aspects of ADR

Basic ElementsBasic Elements Separates people from the problemSeparates people from the problem Explores all interests to define issues clearlyExplores all interests to define issues clearly Brainstorms possibilities and opportunitiesBrainstorms possibilities and opportunities Establishes a fair process and objective Establishes a fair process and objective

criteriacriteria Should identify “Best Alternative to a Should identify “Best Alternative to a

Negotiated Agreement” (BATNA)Negotiated Agreement” (BATNA) Focuses on effective communication and Focuses on effective communication and

relationshipsrelationships

4040

Positional-Based Aspects of ADRPositional-Based Aspects of ADR

- Parties focus on the value or merit of their positions in Parties focus on the value or merit of their positions in which the resolution is based on who has the better which the resolution is based on who has the better position, as opposed to interest-based negotiation in position, as opposed to interest-based negotiation in which parties attempt to meet each others' interestswhich parties attempt to meet each others' interests

- Party sees that if one is right, the other must be wrongParty sees that if one is right, the other must be wrong- Large opening demands, reluctance to disclose Large opening demands, reluctance to disclose

information, may threaten consequences if no information, may threaten consequences if no agreement, hard on people and the problemagreement, hard on people and the problem

- Can damage relationship/trust, inhibits creative Can damage relationship/trust, inhibits creative solutions, acceptance of compromisesolutions, acceptance of compromise

4141

Major Distinctions Between Major Distinctions Between Positions and InterestsPositions and Interests

Positions are what a party feels/believes/wants Positions are what a party feels/believes/wants

The party’s own solutions to an issue.The party’s own solutions to an issue.

Interests are why a party feels/believes/wants a Interests are why a party feels/believes/wants a certain thing certain thing

What is important about the issue.What is important about the issue.

4242

7 Elements of Effective 7 Elements of Effective Negotiation: Circle of InfluenceNegotiation: Circle of Influence

CommunicationCommunication RelationshipRelationship

CommitmentCommitment BATNABATNA* * Getting to YesGetting to Yes, Roger Fisher and William Ury (1981)., Roger Fisher and William Ury (1981).

InterestsOptions

Legitimacy

4343

ADR as Mutual Gains NegotiationsADR as Mutual Gains Negotiations Preparation (Know your BATNA, define your Preparation (Know your BATNA, define your

interests and think about opponents interests)interests and think about opponents interests) Create Value (brainstorming, no attribution or Create Value (brainstorming, no attribution or

evaluation, make the pie larger)evaluation, make the pie larger) Distribute Value (build trust, standards, use Distribute Value (build trust, standards, use

neutrals)neutrals) Follow Through (monitoring, incentives, focus Follow Through (monitoring, incentives, focus

on relationships)on relationships)

** Dealing With An Angry PublicDealing With An Angry Public, , Lawrence Susskind and Patrick Lawrence Susskind and Patrick

Field.Field.

4444

Part 5Part 5Barriers to ADRBarriers to ADR

Is it Cultural or Behavioral?Is it Cultural or Behavioral?Or Both? Or Both?

4545

ADR BarriersADR Barriers

Asking for third-party assistance is viewed as Asking for third-party assistance is viewed as a sign of weaknessa sign of weakness

- Internally -- to bosses, management- Internally -- to bosses, management

- Externally -- to other entities- Externally -- to other entities There are concerns about meeting schedulesThere are concerns about meeting schedules There a perception that ADR must be applied There a perception that ADR must be applied

to the entire project rather than discrete to the entire project rather than discrete disputesdisputes

Company fears loss of control over decisionsCompany fears loss of control over decisions

4646

More ADR BarriersMore ADR Barriers

Using ADR once will require the company Using ADR once will require the company to use it on every disputeto use it on every dispute

Misunderstanding of ADR processMisunderstanding of ADR process Cultural and behavioral blocks to use of Cultural and behavioral blocks to use of

ADRADR Participants are wedded to traditional Participants are wedded to traditional

approachesapproaches Who is in control - Lawyers or Managers?Who is in control - Lawyers or Managers?

4747

Examples of How ADR Is Examples of How ADR Is MisunderstoodMisunderstood

Excerpts from complaint filings:Excerpts from complaint filings: ““. . . has attempted for almost a year to resolve . . . has attempted for almost a year to resolve

this dispute informally with . . . . [We even] this dispute informally with . . . . [We even] sent . . . . a settlement proposal . . . For these sent . . . . a settlement proposal . . . For these reasons [we] believe that further discussions reasons [we] believe that further discussions with . . . would not be productive.”with . . . would not be productive.”

““. . . the parties have already discussed the . . . the parties have already discussed the issues presented . . . without a successful issues presented . . . without a successful resolution. Consequently, the issues have resolution. Consequently, the issues have already been joined through those direct already been joined through those direct discussions with little possibility for success of discussions with little possibility for success of alternative dispute resolution procedures.”alternative dispute resolution procedures.”

4848

Part 6Part 6ADR Use in the FutureADR Use in the Future

Will You Have A role?Will You Have A role?

Questions For FERC’s Regulatory Questions For FERC’s Regulatory CommunityCommunity

Will conflict resolution in the energy Will conflict resolution in the energy

industries be different in the 21industries be different in the 21stst Century? Century? Or Or

Will conflict resolution rely on the 20Will conflict resolution rely on the 20thth Century approach of costly, time-consuming Century approach of costly, time-consuming

adjudication?adjudication?

5050

Using ADR Benefits Using ADR Benefits Competitive Gas and Electric Competitive Gas and Electric

MarketsMarkets Competition: Competition:

requires faster and more flexible decision-requires faster and more flexible decision-makingmaking

benefits from certaintybenefits from certainty in most circumstances, benefits if business in most circumstances, benefits if business

interests are met rather than deciding which interests are met rather than deciding which party has the winning legal positionparty has the winning legal position

seeks cost avoidanceseeks cost avoidance lower litigation costslower litigation costs fewer human resources devoted to disputesfewer human resources devoted to disputes

5151

Reasons ADR Use Should Increase Reasons ADR Use Should Increase in the Futurein the Future

Better understanding of ADR and needed skillsBetter understanding of ADR and needed skills More success storiesMore success stories More use of ALJs and program office and More use of ALJs and program office and

regional neutrals as 3rd party neutralsregional neutrals as 3rd party neutrals For most disputes, ADR will be used prior to For most disputes, ADR will be used prior to

adjudication adjudication Increased savings in dollars and human Increased savings in dollars and human

resources when resolving disputesresources when resolving disputes Limited regulatory resourcesLimited regulatory resources

Part 7Part 7

Program DevelopmentProgram Development

Would your company Would your company benefit by having an ADR benefit by having an ADR

leader/program?leader/program?

5353

Resistance and ConstraintsResistance and Constraints

· Sources of Resistance Fear Sources of Resistance Fear CultureCulturePower Power Personality Personality

· Preferences Preferences Symbols & ImagesSymbols & Images

· Types of constraintsTypes of constraints StructuralStructuralResourcesResourcesLeadershipLeadershipOrchestrationOrchestration

5454

Designing an ADR ProgramDesigning an ADR Program About the disputesAbout the disputes

TypesTypes Number -- increasing or decreasingNumber -- increasing or decreasing Cost of disputesCost of disputes Effect on working environmentEffect on working environment

Resolution MethodsResolution Methods Current methodsCurrent methods Who has authority to resolve?Who has authority to resolve? How long does it take?How long does it take? Are results lasting and parties satisfied?Are results lasting and parties satisfied? Are relationships being improved?Are relationships being improved?

5555

Dispute Resolution Options at Dispute Resolution Options at FERCFERC

Alternative hydropower licensing (ALP)Alternative hydropower licensing (ALP) Enforcement HotlineEnforcement Hotline Settlement Judge ProceduresSettlement Judge Procedures Settlement of litigated casesSettlement of litigated cases Technical conferencesTechnical conferences Dispute Resolution ServiceDispute Resolution Service

5656

The Dispute Resolution Service The Dispute Resolution Service (Established March 1999)(Established March 1999)

Convenes parties to begin an ADR processConvenes parties to begin an ADR process Performs facilitation and mediationPerforms facilitation and mediation Conducts ADR outreach activities (e.g., panel Conducts ADR outreach activities (e.g., panel

presentations, workshops, training, consultation services)presentations, workshops, training, consultation services) Works with state regulatory agencies and private and Works with state regulatory agencies and private and

public utilities in the development of ADR programspublic utilities in the development of ADR programs Develop partnerships with public and private Develop partnerships with public and private

organizationsorganizations Travels to the site of the dispute or event Travels to the site of the dispute or event

5757

How a FERC-DRS Process is How a FERC-DRS Process is ConductedConducted

An FERC-DRS process can be initiated at An FERC-DRS process can be initiated at any time:any time: Pre- or post-filing, including a complaintPre- or post-filing, including a complaint Before or during relicensing Before or during relicensing

Process is voluntary, confidentialProcess is voluntary, confidential

5858

Sample of Outreach EffortsSample of Outreach Efforts

Tribal/Corporate Tribal/Corporate Energy DialogueEnergy Dialogue

NAESBNAESB Interagency Steering Interagency Steering

CommitteeCommittee Civil Enforcement and Civil Enforcement and

Regulatory Working Regulatory Working GroupGroup

Historical/Cultural Historical/Cultural Assoc. Assoc.

American Bar American Bar AssociationAssociation

U. S. Institute for U. S. Institute for Environmental Conflict Environmental Conflict ResolutionResolution

PUCs/Williams/ColumbiaPUCs/Williams/Columbia CPR Institute for Dispute CPR Institute for Dispute

ResolutionResolution NARUC/IPUNARUC/IPU NHANHA

5959

Settlement Judge Process At Settlement Judge Process At FERCFERC

Any Proceeding Set For Hearing Or Where Any Proceeding Set For Hearing Or Where Commission So OrdersCommission So Orders

Parties May Request Appointment of Parties May Request Appointment of Settlement Judge By MotionSettlement Judge By Motion

Presiding Judge May Ask Chief Judge For A Presiding Judge May Ask Chief Judge For A Settlement JudgeSettlement Judge

Chief Judge May Initiate The AppointmentChief Judge May Initiate The Appointment Referral From the Commission’s Dispute Referral From the Commission’s Dispute

Resolution ServiceResolution Service

6060

Role of the Enforcement HotlineRole of the Enforcement Hotline

The Hotline provides a forum for market participants The Hotline provides a forum for market participants

and the public to complain or ask about market and the public to complain or ask about market

activities or transactions that may be:activities or transactions that may be: An abuse of market power, orAn abuse of market power, or An abuse of an affiliate relationship, tariff violations, An abuse of an affiliate relationship, tariff violations,

or other possible violations by FERC jurisdictional or other possible violations by FERC jurisdictional

entitiesentities

6161

Technical ConferencesTechnical Conferences ". . . an informal, off the record conference at which the ". . . an informal, off the record conference at which the

parties and the staff can explore the issues by the filing, gain parties and the staff can explore the issues by the filing, gain an understanding of the facts, and obtain additional an understanding of the facts, and obtain additional information regarding the positions of the parties in order to information regarding the positions of the parties in order to facilitate a more prompt resolution of the issues raised by the facilitate a more prompt resolution of the issues raised by the filing.“filing.“

Why hold a technical conference?Why hold a technical conference?A meeting between advisory staff and the parties for a A meeting between advisory staff and the parties for a morning and/or afternoon session could:morning and/or afternoon session could: help staff in understanding the conflict better;help staff in understanding the conflict better; fill in factual holes and avoid the need for further inquiries fill in factual holes and avoid the need for further inquiries

or processes;or processes; equip staff to be better prepared to answer questions from equip staff to be better prepared to answer questions from

supervisors, the Commission's advisory staff, and the supervisors, the Commission's advisory staff, and the decision-makersdecision-makers

advance the Commission's policy that favors resolution of advance the Commission's policy that favors resolution of contested issues. contested issues.

6262

Technical Conferences (con’t)Technical Conferences (con’t)

Parties may also be encouraged to explore issues in advance Parties may also be encouraged to explore issues in advance of a technical conference. With a technical conference, staff of a technical conference. With a technical conference, staff could:could:

explore why settlement wasn't tried or was explore why settlement wasn't tried or was unsuccessful; unsuccessful;

uncover the barriers to a resolution; uncover the barriers to a resolution;

assist the parties in focusing on resolving the case assist the parties in focusing on resolving the case through an through an interest-based approach as opposed to who interest-based approach as opposed to who has the stronger has the stronger position; position;

assist the parties by providing a 'Early Neutral assist the parties by providing a 'Early Neutral Evaluation" of Evaluation" of the arguments; the arguments;

transition the discussion from the interest-based transition the discussion from the interest-based recognition to recognition to exploring options and eventually exploring options and eventually solutions to resolve the solutions to resolve the dispute; dispute;

invite the participation of a third party neutral to assist invite the participation of a third party neutral to assist the the parties' settlement discussions parties' settlement discussions

6363

Sample Staff Training ProgramSample Staff Training Program

Introduction to ADR Introduction to ADR Conflict Assessment TrainingConflict Assessment Training Facilitating a Technical ConferenceFacilitating a Technical Conference Use of Early Neutral EvaluationUse of Early Neutral Evaluation Interest-Based Negotiation TrainingInterest-Based Negotiation Training Participating in a Mediation ProcessParticipating in a Mediation Process

6464

Ethical ConsiderationsEthical Considerations

Neutral is Neutral is responsible to:responsible to: PartiesParties ProcessProcess ProfessionProfession Public and Public and

unrepresented unrepresented partiesparties

How responsible?How responsible? Non-injury to partiesNon-injury to parties Empower partiesEmpower parties ConfidentialityConfidentiality DisclosureDisclosure Voluntary processVoluntary process Clear expectationsClear expectations Neutral/impartialNeutral/impartial FairnessFairness Good faith Good faith

6565

Ethical DilemmasEthical Dilemmas Problems may concern:Problems may concern:

ConfidentialityConfidentiality Assessing participants’ casesAssessing participants’ cases Deal brokering attemptsDeal brokering attempts LyingLying

Consult advisor (if no confidentiality violation)Consult advisor (if no confidentiality violation) Take action to resolve matterTake action to resolve matter Withdraw (must explain tactfully)Withdraw (must explain tactfully)

6666

The Dispute Resolution ServiceThe Dispute Resolution Service

Dispute Resolution SpecialistsDispute Resolution Specialists::Richard Miles, Director, 202-502-8702Richard Miles, Director, 202-502-8702

Kasha HelgetKasha Helget, 202-502-8559, 202-502-8559

Deborah OsborneDeborah Osborne, 202-502-8831, 202-502-8831

Steven ShapiroSteven Shapiro, 202-502-8894, 202-502-8894

Jerrilynne Purdy, Jerrilynne Purdy, 202-502-8671202-502-8671

Steven Rothman, Steven Rothman, (Adjunct) 202-502-(Adjunct) 202-502-86438643

Program AssistantProgram Assistant::Tamiko Hinnant,Tamiko Hinnant, , 202-502-6184 , 202-502-6184

Toll-free Help line: Toll-free Help line: 1-877-1-877-337-2237337-2237

Fax No: 202-219-2730 Fax No: 202-219-2730

E-mail address: E-mail address: ferc.adr@ferc.govferc.adr@ferc.gov

Web page: Web page: www.ferc.govwww.ferc.gov