United States
            Environmental Protection
            Agency
               of
             Solid Waste and
             Emergency Resconse
  &EPA
DIRECTIVE NUMBER:
9834.12
            TITLE:  Final Guidance on Use of Alternatve Dispute
                  Resolution Techniques in Enforcement Actions
            APPROVAL DATE:  August 14, 1987

            EFFECTIVE DATE:  August 14, 1987

            ORIGINATING OFFICE: OECM

            H FINAL

            D DRAFT

              LEVEL OF DRAFT
               r-X.  Signed by Administrator
               LJ A — Signed by AA or DAA
               D 8 — Signed by Office Director
               DC — Review & Comment

            REFERENCE (other documents):
SWER      OSWER       OSWER
  DIRECTJVE    DIRECTIVE    Dl

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             United States
             Environmental Protection
             Agency
              Office of
              Solid Waste and
              Emergency "esoonse
  &EPA
DIRECTIVE DUMBER: 9834.12
TITLE: Final Guidance on Use of Alternatve Dispute
     Resolution Techniques in Enforcement Actions
             APPROVAL DATE:  August 14, 1987
             EFFECTIVE DATE:  August 14, 1987
             ORIGINATING OFFICE: OECM
             H FINAL
             D DRAFT
              LEVEL OF DRAFT
                .—.X  Signed by Administrator
                O A — Signed by AA or OAA
                D 8 — Signed by Office Director
                DC — Review & Comment
             REFERENCE (other documents):
SWER       OSWER      OSWER
  DIRECTIVE   DIRECTIVE    Dl

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           united otates environmental Protection Agency
                  Washington. DC 20460
OSWER Directive Initiation Request
                                                                      1. Directive Number

                                                                        9834.12
                                    2. Originator Information
       Name of Contact Person
        Rich Robinson
                   Mail Code
                    LE 130A
Office
 OECM
'Teleoncne Coce
'•  382-2860
       3. Title
            Final Guidnace on Use of Alternative Dispute Resolution Techniques in

            Enforcement Actions
       4. Summary of Directive (include bnef statement of purpose)
         As  this guidance explains, ADR involves the  use of third-party neutrals Jo aid in
         the resolution of disputes through arbitration mediation, mini-trails and fact finding
         ADR is being used increasingly to resolve Private commerical disputes.
       5. Keywords
               ADR
       6arDoes This Directive Supersede Previous Directive(s)?
       b. Does It Supplement Previous Directive(s)?
                                               No
                                               No
                                     Yes   What directive (number, title)
                                     Yes   What directive (number, title)
       .DraftLevel x .Administrator
           A - Signed by AA/DAA
              B - Signed by Office Director
       C - For Review & Comment
          0 - In Development
8. Document to be distributed to States by Headquarters?


Yes


No
       This Request Meets OSWER Directives System Format Standards.
      9. Signature of Lead Office Directives Coordinator
                                                   Date
      10. Name and/Title of Approving
                                                   Date
      EPA Form 1315-17 (Rev. 5-87) Previous editions are obsolete.
                                                         (J
   OSWER   S      OSWER                OSWER               O
VE     DIRECTIVE          DIRECTIVE        DIRECTIVE

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                                                             9834.12
     .<*•
  «••*•-
                            AUG I 4 1937
                                              ~-S ••:'•' •• = "*•; =
 MEMORANDUM   "

 SUBJECT:   Final  Guidance  on  Use of Alternative Dispute
           Resolution  Techniques in Enforcement Actions

 TO:        Assistant Administrators
           Regional Administrators


 I. .  Purpose                                         •.'...

     Attached is  the  final guidance on the use of alternative
 dispute resolution (ADR)  techniques in enforcement actions.  This
 guidance has  been reviewed by EPA Headquarters and Regional
 offices, the  Department of Justice, as well as by representatives
 of the regulated  community.  We have also sought the advice of
 leading ADR professionals, including many of the renowned partici-
 pants at a recent Colloquium on ADR sponsored by the Administrative
 Conference of the United  States.

     The reaction to  the  draft guidance has been overwhelmingly  .
 favorable and helpful.  In response to comments, the guidance more  •
 clearly distinguishes the uses of binding and non-binding techniques,
 emphasizes the need to protect the confidentiality of conversations
 before a neutral, and includes model agreements and procedures for
 the use of each ADR technique.        .      .

 II.  Use of ADR

     As the guidance explains, ADR involves the use of third-party
 neutrals to aid in the resolution of disputes through arbitration,
 mediation, mini-trials and fact-finding.  ADR ia being used increas-
 ingly to resolve private commercial disputes.  EPA is likewise
 applying forms of ADR in  various contexts:  negotiated rulemaking,
RCRA citing,   and  Superfund remedial actions.  ADR holds the promise
of lowering th« transaction  costs to both the Agency and the
regulated community of resolving applicable enforcement disputes.

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                                                 9834.12
                                 -2-

     I  view  ADR as  a  new,  innovative and potentially more effective"
 way to accomplish  the  results we have sought for years using    ^sk '
 conventional  enforcement  techniques.  We retain our strict adher^^e
 to the principle thaf the regulated community must comply with the
 environmental laws.  ' The  following tasks will be undertaken to
 enable the  Agency  to utilize ADR to more effectively and efficiently
 foster compliance:

     Training.  Some within the Agency may fear that using Less
 adversarial techniques  to resolve enforcement actions implies that '
 the agency  will be seeking less rigorous settlements.  This is not '•
 the case.   We must train  our own people in what ADR is,  what it is
 not, and how  it can  help  us meet our own compliance objectives.  We.
 plan to accomplish this by making presentations at national program;
 and regional  counsel meetings, and by consulting on particular cases.

     Outreach.  We must also make an affirmative effort to demon-
 strate to the regulated community that EPA is receptive to sugges-
 tions  from  them about using ADR in a given case.  Nominating
 a  case for  ADR need  not be .viewed as a sign of weakness in either
 party.  After we have gained experience, we plan to conduct a
 national conference  to broaden willingness to apply ADR in the
 enforcement context.

     Pilot  Cases.  Ultimately/ the value of ADR must be proven by-
 its successful  application in a few pilot cases.  ADR is being used
 to  resolve  an important municipal water supply problem involving
 the city of Sheridan, Wyoming.  Two recent TSCA settlements also
 utilized ADR  to resolve disputes which may arise in conducting
 environmental  audits required under the consent agreements.
 these,  however, we need to explore the applicability of ADR to
 additional  cases.

 III. Action and Follow-Up

    I  challenge each of you to help in our efforts to apply ADR
 to the  enforcement process.  I ask the Assistant Administrators to
 include criteria for using ADR in future program guidance, and to
 include discussions  of ADR at upcoming national meetings.  I ask
 the Regional  Administrators to review the enforcement actions  now
 under development  and those cases which have already been  filed to
 find cases  which could be resolved by ADR.  I expect each  Region
 to nominate at least one  case for ADR this fiscal year.  Cases
 should be identified and  nominated using the procedure set forth
 in the guidance by September 4,  1987
                              Lee  M.  Thomas

Attachment

cc:  Regional Enforcement  Contacts
     Regional Counsels

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                                          9834.12
GUIDANCE ON THE  USE OF ALTERNATIVE DISPUTE  RESOLUTION



              IN EPA ENFORCEMENT CASES
    United  State* Environaental Protection Agency

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                                                        9834.1 2
   , wUiw_..s... w.i  -i
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                                                    983412
        GUIDANCE  ON THE  USE  OK ALTERNATIVE DISPUTE RESOLUTION

                      IN  EPA ENFORCEMENT CASES
 I.    INTRODUCTION

      To  effect  compliance with  the nation's environmental laws,.
 the  United  States  Environmental Protection Agency (EPA) has
 developed and maintained a vigorous judicial and administrative
 enforcement program.  Cases  instituted under the program must be
 resolved, either  through settlement or decision by the appro-
 priate authority,  as rapidly as possible in order to maintain
 the  integrity and  credibility of the program, and to reduce the
 backlog  of  cases.

      Traditionally, the Agency's enforcement cases have been
 settled  through negotiations solely between representatives of
 the  Government  and the alleged violator.  With a 95 percent
 success  rate, this negotiation process has proved effective,
 and  will continue  to be used in most of the Agency's cases.
 Nevertheless, other means of reaching resolution, known col-
 lectively as alternative dispute resolution (ADR), have evolved.
 Long  accepted and  used in commercial, domestic, and labor disputes'/
 AOR  techniques, such as arbitration and mediation, are adaptable
 to environmental enforcement disputes.  These ADR procedures
 hold  the promise for resolution of some of EPA's enforcement
 cases more  efficiently than, but just as effectively as, those
 used  in  traditional enforcement.  Furthermore, ADR provisions
 can also be  incorporated into judicial consent decrees and consent
 agreements ordered by administrative law judges to address
 future disputes .

      EPA does not mean to indicate that by endorsing the use of
ADR  in its enforcement actions, it is backing away from a strong
 enforcement position.  On the contrary, the Agency views ADR as
 merely another  tool in its arsenal for achieving environmental
 compliance.  EPA intend* to  use the ADR process, where appropriate,
 to resolve enforcement actions with outcomes similar to those
 the Agency reaches through litigation and negotiation.  Since
ADR address** only the process  (and not the substance) of case
resolution, its u*« will not necessarily lead to more  lenient
results  for violator*; rather, ADR should take EPA to  its desired
ends by Bor« efficient means.
         i* increasingly becoming accepted by many  federal
agenci««> private citizens, and organizations as a  method of
handling dispute*.  Th« Administrative  Conference of  the United
States ha* repeatedly called  for federal  agencies' to  make greater

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                                                    983412
                               -2-

use of ADR  techniques, and has sponsored numerous studies to
further  their use by the federal government.  The Attorney
General  of  the United States has stated that it is the policy
of the United States to use ADR in appropriate cases.   By
memorandum, dated February 2, 1987, the Administrator  of  EPA
endorsed the concept in enforcement disputes,  and urged senior
Agency officials to nominate appropriate cases.

     This guidance seeks to:

    (1)  Establish Policy - establish that it  is EPA policy
         to utilize ADR in the resolution of appropriate  civil
         enforcement cases.

    (2)  Describe Methods - describe some of the applicable
         types of ADR, and the characteristics of cases which
         might call for the use of ADR;

    (3)  Formulate Case Selection Procedures - formulate
         procedures for determining whether to use ADR in
         particular cases/ and for selection and procurement
         of a "third-party neutral" (i.e., mediators,
         arbitrators, or others employed in the use of ADR);

    (4)  Establish Qualifications - establish qualifications
         for third-party neutrals; and

    (5)  Formulate Case Management Procedures - formulate •
         procedures for management of cases in which some
         or all issues are submitted for ADR.
II.  ALTERNATIVE DISPUTE RESOLUTION METHODS

     ADR mechanisms which are potentially useful in environ-
mental enforcement cases will primarily be mediation and nonbind-
ing arbitration.  Fact-finding and mini-trials may also be helpful
in a number of cases.  A general description of these mechanisms
follows.  (See also Section VIII, below, which describes in
greater detail how each of these techniques works.) Many other
forms of ADR exist, none of which are precluded by this guidance.
Regardless of th« technique employed, ADR can be used to resolve
any or all of th« issue* presented by a case.

     A.  Mediation1 is the facilitation of negotiations by a
person?not a party to the dispute  (herein "third-party neutral")
who h*s* no power to decide the issues, but whose function is to
1 For further  information on  th«  mediation  role *of  Clean  Sites  Inc.,
  sea guidance  from  the Assistant Administrator,  Office of  Solid
  Waste and Emergency  Response  and Assistant  Administrator,  Office
  of Enforcement and Compliance Monitoring  on the "Role of  Clean
  Sites Inc. at Superfund Sites," dated April 24, 1987.

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                                                    9834.12


 assist the parties in reaching settlement.   The mediator serves
 to schedule and structure negotiations,  acts as a catalyst between
 the parties,  focuses the discussions,  facilitates exchange between
 the parties,  and serves as an  assessor - but not a  judge - of
 the positions taken by the parties  during the course of negotia-
 tions.  With the parties'  consent,  the mediator may take on
 additional functions such as proposing solutions to the problem.
 Nevertheless,  as in traditional  negotiation, the parties retain
 the power to resolve the issues  through an  informal, voluntary
 process,  in order to reach.a mutually  acceptable agreement.
 Having agreed to a mediated settlement/  parties can then make
 the results binding.

      B.   Arbitration involves  the use  of a  person —• not a party
 to the dispute — to hear stipulated issues pursuant to procedures
 specified by the parties.   Depending upon the agreement of the
 parties  and any legal constraints against entering  into binding
 arbitration,  the decision of the arbitrator may or  may not be
 binding.   All  or a 'portion of  the issues -- whether factual,
 legal  or  remedial —  may be submitted  to the arbitrator.  Because
 arbitration is less  formal than  a courtroom proceeding, parties
 can agree to  relax rules of evidence and utilize other time-saving
 devices.   For  the present,  EPA appears to be restricted by law
 to use binding arbitration only  for saall CERCLA cost recovery    .'
 cases.  We are conducting further research regarding its use to
 decide factual  issues.

     C.   Fact-finding entails  the investigation of  specified
 issues by a neutral  with subject matter expertise,  and selected
 by the parties  to the dispute.   The process may be  binding or
 nonbinding, but  if the parties agree,  the material  presented
 by: the fact-finder may be admissible as an established fact in
 a  subsequent  judicial or administrative hearing, or determinative
 of  the issues  presented.   As an  essentially investigatory process,
 fact-finding  employs  informal  procedures.   Because  this ADR
 mechanism seeks  to narrow factual or technical issues in dispute,
 fact-finding  usually  results in  a report,  testimony, or established
 fact which  may be admitted as  evidence,  or in a binding or advisory
 opinion.

     D.   Mini-trial*  perait the  parties to present  their case, or
 an  agreed upon portion of it,  to principals who have authority
 to  settle the) dispute* (e.g., vice-president of a company and a
 senior EPJt official)  and,  in some cases as agreed by the parties,
 to  a neutral  third-party advisor.   Limited discovery may precede
 the case*presentation.   The presentation itself may be summary
or  an abbreviated hearing with testimony and cross-examination
as  the partiee agree.   Following the presentation,  the principals
reinatitute negotiations,  possibly  with the aid of  the neutral
as mediator.  The principals are the decisionmakers while  the
 third-party neutral,  who usually has specialized subject matter
expertise  in  trial procedures  and evidence, acts as an advisor
on potential rulings  on issues if the  dispute were  to proceed  to
 trial.  This ADR mechanism is  useful in narrowing  factual  issues

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                               -4-
                                                      •9834.12
or mixed questions of law and fact, and in giving the principals
a realistic view o"f the strengths and weaknesses of their cases.


III. CHARACTERISTICS OF ENFORCEMENT CASES SUITABLE FOR ADR

     This section suggests characteristics of cases which may  be
most suitable  for use of ADR.  These characteristics are neces-
sarily broad,  as ADR may theoretically be used in any type of
dispute.  Enforcement personnel can use these characteristics  to
make a preliminary assessment of whether ADR should be considered
for use in a particular case, including a discrete portion or
issue in a case.

     ADR procedures may be introduced into a case .at any point
in its development or while pending in court.  However, it is
preferable that ADR be considered as early as possible in the
progress of the case to avoid the polarizing effect which frequently
results from long and intense negotiations or the filing of a
lawsuit.  ADR  should, therefore, be considered prior to referral
of a case to DOJ.  Indeed, the threat of a referral may be used
as an incentive to convince the other parties to utilize an
appropriate ADR technique.

     Notwithstanding the preference for consideration and use
of ADR at an early stage in the progress of a case, there are.
occasions when ADR should be considered after a case has been
referred and filed in court.  This is particularly true when the
parties have reached an apparent impasse in negotiations, or the
court does not appear to be willing to expeditiously move the
case to conclusion through establishing discovery deadlines,
conducting motions hearings or scheduling trial dates.  In such
cases, introduction of a mediator into the case, or submission
of some contested facts to an arbitrator may help to break the
impasse.  Cases which have been filed and pending in court for a
number of years without significant movement toward resolution
should be scrutinized for prospective use of ADR.

     In addition to those circumstances, the complexity of legal
and technical  issues in environmental cases have resulted in a
recent trend of courts to appoint special masters with increasing
frequency.  Those masters greatly increase the cost of the litigation
and, while they Bay speed the progress of the case, the parties
have little direct control over the selection or authority of
the masters.   The government should give careful consideration
to anticipating a court's desire to refer complex  issues  to a
master^by proposing that the parties themselves select a  mediator
to assist in negotiations or an arbitrator to determine  some
factual issues.

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                                -s-                 983412


      The following characteristics of cases which may be candidates
 for use of some form of. AOR are not  intended to be exhaustive.
 Agency personnel must-rely upon their own judgment and experience
 to evaluate their cases for potential applications of ADR.  in all
 instance*_where the other  parties demonstrate their willingness to
 use AOR,  EPA should consider its use.  Sample characteristics of
 cases for ADR2:

 A.    Impasse or Potential  for Impasse

      When the resolution of a case is prevented through impasse,
 EPA is prevented from carrying out its mission to protect and
 enhance the environment, and is required to continue to commit
 resources to the case which could otherwise be utilized to address
 other problems.   It is  highly desirable to anticipate and avoid,
 if  possible,  the occurrence of an impasse.

      Impasse,  or the  possibility for impasse, is commonly created
 by  the following conditions,  among others:

      (1)  Personality  conflicts or poor communication among
 negotiators;

      (2)  Multiple parties  with conflicting interests;

      (3)  Difficult  technical  issues which may benefit from
 independent analysis;    .

      (4)  Apparent unwillingness of a court to rule on matters
 which  would advance the case  toward resolution; or

      (S)  High  visibility concerns making it.difficult for the
 parties to  settle such  as cases  involving particularly sensitive
 environmental  concerns  such as national parks or wild and scenic
 rivers, issues of national  significance, or significant adverse
 employment  implication*.

     In such cases, the) involvement of a neutral to structure,
 stimulate and  focus negotiations and, if necessary, to serve as an
 intermediary between personally conflicting negotiators should be
considered as  early a*  possible.

B.  Resource Considerations

     All enforcement cases  are important in that all have, or
shouldrhave), soee deterrent  effect upon the violator and other
member« of -the regulated community who hear of the case.  It is,
therefore, important that EPA's cases be supported with the
2  ADR is not considered appropriate  in cases where  the Agency is
   contemplating criminal action.

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                                                   983412

                               -6-

 level of resources necessary to achieve the desired result.
 Nevertheless, because _of the size of EPA's enforcement effort,
 it is recognized that resource efficiencies must be achieved
 whenever possible to enable EPA to address as many violations as
 possible.-

     There are many cases in which utilizing some form of  ADR
 would achieve resource efficiencies for EPA.  Generally, those
 cases contain the following characteristics:

     (1) Those brought in a program area with which EPA has  had
 considerable experience, and in which the procedures,  case law
 and remedies are relatively well-settled and routine;  or

     (2) Those having a large number of parties dr issues  where
 AOR can be a valuable case management tool.


 C.   Remedies Affecting Parties not Subject to an Enforcement Action

     Sometimes, the resolution of an underlying environmental "problem
 would benefit from the involvement of persons, organization* or
 entities not a party to an impending enforcement action.   This  is
 becoming more common as EPA and the Congress place greater emphasis
on public participation in major decision* affecting remedies  in
 enforcement actions.  Such cases might include thoie in which:

     (1) A state or local governmental unit have expressed an
 interest, but are not a party;                      ,

     (2) A citizens group has expressed, or is likely to express
 an interest; or

     (3) The remedy is likely to affect not only the violator,
but the community in which the violator is  located as well (e.g.,
 those cases in which the contamination is wide-spread, leading
 to a portion of the remedy being conducted off-site).

     In such ca*es, EPA should consider the use of a neutral very
early in the enforcement process in order  to  establish communication
with thoae interested persons who are not parties to the  action,
but who** understanding and acceptance of  the remedy will be
 important to an expeditious resolution of  the case.


 IV.  PROCEDURES FOR APPROVAL OF CASES FOR ADR

     Thi* section describe* procedure*  for  the nomination of
case* for ADR.  These procedure* are designed to- eliminate  confusion
 regarding the selection of cases for ADR by:  (1)  integrating the

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                                                     9834.12
 selection of cases for ADR into the existing enforcement  case
 selection process; and (2) creating decision points  and contacts
 in the regions, headquarters,  and DOJ to determine whether  to
 use ADR in particular actions.

      A.  Decisionmakers

      To facilitate decisions whether to use  ADR  in a particular
 action, decision points in headquarters,  the regions and  DOJ
 must be established.   At  headquarters,  the decisionmaker  will
 be the appropriate Associate Enforcement  Counsel (AEC) .   The AEC
 should consult on this decision with his/her corresponding head-
 quarters compliance division director.   At DOJ,  the  decisionmaker
 will be the Chief,  Environmental Enforcement Section.  In the
 regions,  the decisionmakers will be the Regional Counsel  in con-
 sultation with the appropriate  regional program  division  director.
 If the two Regional authorities disagree on  whether  to use ADR
 in a particular case,  then the  Regional Administrator  (RA) or
 the Deputy Regional Administrator (DRA),  will decide the  matter.
 This decisionmaking process guarantees  consultation  with  and
 concurrence of all relevant interests.

      B.   Case Selection Procedures

      Anyone in the regions,  headquarters, or DOJ who is partici-
 pating in the development or management of an enforcement action,
 or any defendant or PRP not yet named .as a defendant,  may suggest
.a  case or. selected -issues in a  case for ADR. 3 Any suggestion,
 however,  must be communicated  to and discussed with  the appropriate
 regional  office for its consent.  The respective roles of the AECs
 and DOJ are discussed  below.  After a decision by the  Region or
 litigation team to use ADR in  a particular case, the nomination
 should be forwarded to headquarters and,  if  it is a  referred
 case,  to  DOJ.   The nominations  must be in writing, and must
 enumerate why the case is appropriate for ADR.  (See Section III
 of this document which describes the characteristics for  selection
 of cases  for ADR.)  Attachments A and B are  sample case nomination
 communications.   Attachment A pertains  to nonbinding ADR, and
 Attachment B pertain*  to  binding ADR.

      Upon a determination by the Government  to use ADR, Government
 enforcement personnel  assigned  to the case  (case team) must
 approach  th« PRP(s) or other defendant (s) with the suggestion.
 The ca««h tea* should  indicate  to the PRP(s)  or defendant(s)  the
 factoesr1 which have led to the Agency's recommendation  to  use
  Nomination papers  should always be deemed attorney work produce
  so that they are discovery free.

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                                                 9834.12
                                -8-

ADR,  and  the  potential  benefits  to all parties from its use.
The  PRP(s)  or other defendant(s)  should understand, nevertheless!
that  the  Government is "prepared  to proceed with vigorous litiga
in the case if the use  of a  third-party neutral fails to resolve
the  matter.   Further,  for cases  which are referrable, the defendar.t (s
should be-advised  that  EPA will  not hesitate to refer the matter
to DOJ for  prosecution.

      1.   Nonbinding ADR

      For  mediation, mini-trials,  nonbinding arbitration, and
other ADR mechanisms  involving use of a third-party neutral as a
nonbinding  decisionmaker, regions should notify the appropriate
AEC  and,  if  the case  is referred, DOJ of:  (1) its intent to use
ADR  in a  particular case, and (2) the opportunity to consult
with  the  Region on its  decision.  Such notification should be in
writing and by telephone call.   The AEC will consult with the
appropriate headquarters program division director.  The Region
may presume that the  AEC and DOJ agree with the selection of the
case  for  ADR  unless the AEC or DOJ object within fifteen (15)
calendar  days  of receipt of  the  nomination of the case.  If
either the AEC or DOJ object, however, the Region should not
proceed to use ADR in the case until consensus is reached.

      2.    Binding ADR

      For  binding arbitration and fact-finding, and -other ADR
mechanisms  involving  the use of  third-party neutrals as binding
decisionmakers, the appropriate  AEC must concur in the nomination
of the case by the Region.   In addition, DOJ must also concur in
the use of binding ADR  in referred cases.  Finally, in non-CERCLA
cases which may involve compromise of claims in excess of $20,000
or where  the  neutral's  decision  will be embodied in a court order,
DOJ must  also  concur.   Without the concurrence of headquarters
and DOJ under  these circumstances, the Region may not proceed
with  ADR.  OECM and DOJ should attempt to concur in the nomina-
tion  within fifteen (15) days of receipt of the nomination.

      Under the Superfund Amendments and Reauthorization Act  (SARA),
Pub.   L.  No. 99-499. J122(h) (2) (1986), EPA may. enter into binding
arbitration for cost  recovery claims under Section 107 of CERCLA,
provided  the claims are not  in excess of $500,000, exclusive of
interest.  Until regulations are promulgated under this section,
EPA is precluded from entering into binding arbitration in cost
recovery  actions.  Accordingly,  Attachment C is not yet appropriate
for us*- in cases brought under this section.  It is, however, avail-
able  lor?  use  in nonbinding arbitration.
      -i •  -
V.    SELECTION OF A THIRD-PARTY  NEUTRAL

     A.    Procedures for Selection

      Both the  Government and all defendants must agree on  the need

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                                                    9834.12
                                -9-


 for a neutral in order -to proceed with  ADR.   in  some  situations
 (e.g.,  in a Superfund case),  however, the  parties  may proceed with
 ADR with consensus of "only some of the  parties depending on the
 issue and .the parties.   Once  agreed,  the method  for selecting
 the neutral and the actual selection  in both  Superfund and other
 cases will be determined by all parties involved with the excep-
 tion of cases governed by §107  of CERCLA.  To help narrow the
 search for a third-party neutral,  it  is useful, although not
 required,  for the parties to  agree preliminarily on one or more
 ADR mechanisms.   OCCM is available to help at this point in the
 process,  including the procurement of in-house or outside persons
 to aid the parties in selecting an appropriate ADR mechanism.

      In Section  VIII  below, we  have indicated some of the situations
 where each ADR mechanism may  be most appropriate* . Of course, the
 parties are free to employ whichever  technique the'y deem appropriate
 for the case.   Because the ADR  mechanisms  are flexible, they are
 adaptable  to meet  the needs and desires of the parties.

      The parties can  select a third-party  neutral  in  many ways.
 Each  party may offer  names of proposed  neutrals  until all parties
 agree on one person or organization.  Alternatively,  each party
 may propose a list of candidates,  and allow the other parties to
 strike  unacceptable names from  the list until agreement is
 reached.   For additional methods,  see Attachments  C,  D, and E.
 Regardless  of how  the parties decide  to proceed, the  Government
 may obtain  names of qualified neutrals  from the  Chief, Legal
 Enforcement  Policy Branch (LEPB)  (FTS 475-8777,  LE-130A, E-Mail
 box EPA 2261), by  written or  telephone  request.  With the help
 of  the  Administrative .Conference of the U.S.  and the  Federal
 Mediation  and  Conciliation Service, OECM is working to establish
 a national  list  of candidates from which the  case  team may select
 neutrals.   In  selecting  neutrals,  however, the case team is not
 limited to  such  a  .list.

      It is  important  to  apply the qualifications enumerated below
 in  section  V.B.  in evaluating the appropriateness  of  a proposed
 third-party  neutral for  each  case.  Only the  case  team can decide
 whether a particular  neutral  is acceptable in its  case.  The
 qualifications described below  provide  guidance  in this area.

      At any point  in  the process of selecting an ADR  mechanism or
 third-party neutral,  the case team may  consult with the Chief,
 LEPB, for guidance.

      B.  Qualifications  for Third-Party Neutrals

      The following qualifications are to be applied in the
selection of all  third-party  neutrals who  may be'considered  for
 service in ADR procedures to  which EPA  is  a party.  While a

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                                -10-


 third-party neutral  should  meet as many of the qualifications as
 possible,  it may be  difficult  to  identify candidates who possess
 all  the  qualifications  for  selection of a third-party neutral.
 Failure  to meet  one  or  more of these qualifications should not
 necessarily preclude 'a  neutral who all the parties agree would
 be satisfactory  to serve  in a  particular case.  The qualifications
 are,  therefore,  intended  only  as  guidance rather than as.pre-
 requisites to the use of  ADR.   Further, one should apply a greater
 degree of  flexibility regarding the qualifications of neutrals
 involved in nonbinding  activities such as mediation, and a stricter
 adherence  to the qualifications for neutrals making binding
 decisions  such as arbitrators.

           1.   Qualifications for  Individuals

              a.   Demonstrated  Experience.  The candidate should
 have  experience  as a third-party  neutral in arbitration, mediation
 or other relevant forms of  ADR.   However, other actual and active
 participation in negotiations,  judicial or administrative hearings
 or other forms of dispute resolution, service as an administrative
 law judge,  judicial  officer or judge, or formal training as a
 neutral  may be considered.  The candidate should have experience
 in negotiating,  resolving or otherwise managing cases of similar
 complexity to the dispute in question, e.g., cases  involving
 multiple issues,  multiple parties, and mixed technical and legal
 issues where  applicable.

              b.   Independence. The candidate must  disclose any
 interest or  relationship  which may give rise to bias or  the
 appearance of bias toward or against any party.  These interests
 or relationships include:

      (a)   past,  present or  prospective positions with or financial
           interests  in  any  of  the parties;

      (b)   any existing  or past financial, business, professional,
           family or  social  relationships with any of the parties
           to  the dispute  or their attorneys;

      (c)   previous or current  involvement in the specific dispute;

      (d)   paet or prospective  employment, including employment as
           a neutral  in  previous disputes, by any of the  parties;

      (e)   pact or present receipt of a significant  portion of the
      ........  neutral's  general operating funds or grants  from one or
      _?'  more of the parties  to  the dispute.

     The existence of such  an  interest or relationship does  not
necessarily preclude the  candidate  from  serving as  a neutral,
particularly if  the  candidate  has demonstrated sufficient
 independence  by  reputation  and performance.  The neutrals  with

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                                                    5834.12
                                -li-


 the most experience are most  likely to  have past or current
 relationships with some parties to the  dispute, including the
 Government.   Nevertheless/  the candidate  must disclose all
 interests, and the. parties  should  then  determine whether the
 interests create actual or  apparent bias.

              c.   Subject Matter Expertise.  The candidate should
 have sufficient  general knowledge  of the  subject matter of the
 dispute to understand  and follow the issues, assist the parties
 in recognizing and establishing priorities and the order of
 consideration of those issues,  ensure that all possible avenues
 and alternatives to settlement  are explored, and otherwise serve
 in the most  effective  manner  as a  third-party neutral.  Depending
 on the case,  it  may also be helpful if  the candidate has specific
 expertise in the issues under consideration.

              d.   Single Role.   The candidate should not be serving
 in any other capacity  in the  enforcement  process for that particular
 case that would  create actual or apparent bias-.  The case team
 should consider  any prior involvement in  the dispute which may
 prevent the  candidate  from"  acting  with  objectivity.  For example,
 involvement  in developing a settlement  proposal, particularly
 when the  proposal  is developed  on  behalf  of certain parties, may
 preclude  the  prospective neutral from being objective during
 binding arbitration or other  ADR activities between EPA and  the  . '
 parties concerning that particular proposal.

      Of course,  rejection of  a  candidate  for a particular ADR
 activity, such as  arbitration, .does not necessarily preclude
 any  role  for  the candidate  in that case.  The candidate may
 continue  to  serve  in other  capacities by, for example, relaying
 information  among  parties and presenting  offers on behalf of
 particular parties.

          2.   Qualifications for Corporations and Other Organiza-
 tions.4   Corporations  or other  entities or organizations which
 propose to act as  third-party neutrals, through their officers,
 employees or  other agents,  in disputes  involving EPA, must:

      (a)  like unaffiliated  individuals, make the disclosures
          listed  above; and

      (b)  submit  to tha parties  a list of  all parsons who, on
          behalf  of tha corporation,  entity or organization,  will
          or may  ba significantly involved in the ADR procedure.
          Thesa raprasantativas  should also make tha disclosures
      ' :•'•  listed  above.
4 For furthar guidance regarding  Clean  Sitas  Inc.,  sea  guidance
  from the Assistant Administrator,  Offica  of Solid Waste  and
  Emergency Response and Assistant Administrator,  Office of
  Enforcement and Compliance Monitoring on  tha "Role of Clean  Sites
  Inc. at Superfund Sites," dated April 24,  1987.

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                                               9834.12
                                -12-


      In  selecting a  third-party neutral to resolve or aid in the
 resolution of a dispute  to which EPA is a party, Agency personnel
 should remain at all  times aware that the Agency must not only
 uphold its obligation  to protect public health, welfare and the
 environment, but also  develop and maintain public confidence
 that  the Agency is performing its mission.  Care should be taken
 in  the application of  these qualifications to avoid the selection
 of  third-party neutrals whose involvement in the resolution of
 the case might undermine the integrity of that resolution and
 the enforcement efforts of the  Agency.


 VII.  OTHER ISSUES;

      A.   Memorialization of Agreements

      Just as it would  in cases  where AOR has not been used, the
 case  team should memorialize agreements reached through ADR in
 orders and settlement  documents and obtain 00J and headquarters
 approval  (as appropriate) of the terms of any agreement reached
 through  ADR.

      8.   Fees For Third-Party Neutrals

      The  Government's  share of  ADR costs will be paid by Head-
quarters.  Contact LEPB to initiate payment mechanisms.  Because
 such  mechanisms require lead time, contact with LEPB should be
 made  as  early as possible after approval of a case for ADR,

      It  is EPA policy  that PRPs and defendants bear a share of
 these costs equal to EPA except in unusual circumstances.  This
policy ensures that  these parties "buy in" to the process.  It
 is  important that the  exact financial terms with these parties
be  settled and set forth in writing before the initiation of AOR
 in  the case.

      C.   Confidentiality

      Unless otherwise  discoverable, records and communications
arising  from ADR shall be confidential and cannot be used  in
 litigation or disclosed to the  opposing party without permission.
This  policy does not  include issues where the Agency is  required
 to  oak* decisions on  the basis  of an administrative record  such
as  the* select ion of  a  remedy in CERCLA cases.   Public policy
 interest* in fostering settlement compel  the confidentiality  of
ADR negotiations and documents. These interests are reflected
in  a  nuaber of measures which seek to guarantee confidentiality
and are  recognized by  a growing body of  legal authority.

      Most indicative of the support for  non-litigious  settlement
of disputes is Rule  408 of the  Federal Rules of Evidence which

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                               -13-
                                                  9834.12
 renders offers of compromise or settlement or statements made
 during discussions inadmissable in subsequent litigation between
 the parties to prove liability.  Noting the underlying policy
 behind the rule, court's have construed the rule to preclude
 admission-of evidence regarding the defendant's settlement of
 similar cases. 5

     Exemption protection under the Freedom of Information Act
 (FOIA), 15 U.S.C. §552, could also accommodate the interest in
 confidentiality.  While same courts have failed to recognize the
 "settlement negotiations privilege,"6 other courts have recognized
 the privilege. '

     In addition to these legal authorities and policy arguments,
confidentiality can be ensured by professional ethical codes.
Recognizing that promoting candor on the parties \..part and
impartiality on the neutral's part is critical to the success: of
ADR,  confidentiality provisions are incorporated, into codes of
conduct as well as written ADR agreements (See Attachment, D).
The attachment  provides liquidated damages where a neutral reveals
confidential information except under court order.

     Furthermore, confidentiality can be effected by court order,
if ADR is court supervised.  Finally, as many state* have don*
   See Scaraauzzo v. Glenmore Distilleries Co., 501 F.Supp. 727
   CN.D.  111.  1980), and to bar discovery, see Branch v.  Phillips
   Petroleun Co.,  638 F.2d 873 (5th Cir. 198TJ".  Courts have
   also construed labor laws to favor mediation or arbitration
   and have therefore prevented third-party neutrals from being
   compelled to testify.  See, e.g.,  N.L.R.B. v. Joseph Macaluso,
   Inc.,  618 F.2d 51 (9th CT?. 1980)  (upholding N.L.R.8. 's
   revocation of subpoena issued to mediator to avoid breach of
   impartiality).

   See,  a.g.,  Center for Auto Safety v. Department of Justice, 576
see, e.g., Center for Auto Sate
F. Supp~T73 9, 749 (D.D.C. 1983).
   See Bottaro v. Hattpn Associates, 96 P.R.D. 158-60 (E.D.N.Y 1982)
   (noting "strong public policy of favoring settleaents" and public
   interact in "insulating the bargaining table froa unnecessary
   intrusions").   In interpreting Exemption 5 of the FOIA, the Supreme
   Court- asserted that the "contention that £a requester could] obtain
   through' the FOIA material that is normally privileged would create
   an  anomaly in  that the FOIA could be used to supplement civil
   discovery.   ...We do not think that Congress could have intended
   that the weighty policies underlying discovery privileges could
   be  so easily circumvented."  United States v. Weber Aircraft,
   104 S.Ct.  1488,  1494 (1984).

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                                                     9834.12

                               -14-

 statutorily, EPA  is considering the promulgation of regulations
 which  further ensure  the confidentiality of ADR proceedings.

     D.   Relationship"of ADR to Timely and Appropriate and
          Significant  Noncompliance Requirements

     The  decision  to  use ADR would have no particular impact  under
 the  "timely and appropriate" (T&A) criteria in a case where there
 is already an administrative order or a civil referral since  the
 "timely and appropriate" criteria would have been met by the
 initiation of the  formal enforcement action.  In the case of  a
 civil  referral, the 60-day period by which DOJ is to review and
 file an action may be extended if ADR is used during this time.

     The  decision  to  use ADR to resolve a violation prior to the
 initiation of a formal enforcement action, however, would be
 affected  by applicable "timely and appropriate" criteria (e.g.,
 if the violation  fell under a program's Significant Nbncompliance
 (SNC) definition,  the specific timeframes in which compliance
 must be achieved or a formal enforcement action taken would
 apply).   The use of ADR would not exempt applicable "T&A"
 requirements and the  ADR process would normally have to proceed
 to resolve the case or "escalate" the enforcement response.
 However,  since, "T&A" is not an immutable deadline, that ADR
 is being  used for  a particular violation would be of central
 significance to any program management review of that case (e.g.,
 the Deputy Administrator's discussion of "timely and appropriate"
 enforcement during a  regional review would identify the cases in
 which ADR is being used.)                      -


 VIII. PROCEDURES FOR  MANAGEMENT OF ADR CASES

     This section  elaborates on the various ADR techniques:  How
 they work, some problems that may be encountered in their use,
 and their relationship to negotiation and litigation.  For each
ADR technique, we  have provided, as an attachment  to this guidance,
an example of procedures reflecting its use.  These attachments
are for illustrative  purposes only, and do not represent required
procedures.  The specific provisions of the attachments should
be adapted to the  circumstances of the case or eliminated  if not
applicable.

     A.   Arbitration

          1.   Scope)  and Nature

     As stated in  Section II, above, arbitration involves  the
selection by the parties of a neutral decisionaaker  to hear
selected  issues and render an opinion.  Depending  on  the  parties
agreement, the arbitrator's decision may or may  not be binding.

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 For the present,  EPA appears  to be  restricted by  law to use
 binding arbitration only for  small  CERCLA cost recovery cases.
 We are conducting further research  regarding its  use to decide
 factual issues.   Included as  Attachment  C are draft generic
 arbitration procedures  for formal arbitration.  To conduct less
 formal proceedings,  the parties may modify  the procedures.

           2.   Use

      Arbitration  is  most appropriate in  resolving routine cases
 that do not merit the resources required to generate and process
 a  civil judicial  referral.  It  may  aid in resolving technical
 disputes that  are usually submitted to the  courts or administrative
 law judges  (ALJs), which disputes require subject-matter expertise
 which federal  district  court  judges and  ALJs may,lack.8

      8.   Mediation

          1. . Scope and  Nature

      Mediation, an informal process,  is  entered into voluntarily
 by the  parties to a  dispute and in  no way binds then beyond their
 own  agreement.  More than the other ADR  processes, nediation is
 best viewed as an extension of  the  direct negotiation process
 begun by the parties.   As in  direct negotiation, the parties
 continue to control  the substance of discussions and any agree-
 ment  reached.  In mediation,  however, the mediator directs and
 structures  the course of discussions.

      The mediation-format varies.with the individual style of the
 mediator and the  heeds  of the parties.   Initially, the mediator is
 likely  to call a  joint  meeting  with the  parties to work out ground
 rules such as how and when meetings will be scheduled.  Included
 as Attachment 0 are  generic mediation protocols for use and
 adaptation  in all EPA mediations.   Most  of  the iteas covered in
 the  attachment would be useful  as ground rules for most EPA
 enforcement negotiations.  Ordinarily, mediators will hold a
 series of meetings with the parties in joint session, as well as
 with each party.   In joint meetings,  the aediator facilitates
discussion.  In separate caucuses,  the mediator may ask questions
or pose  hypothetical terms to a party in order to clarify its
position and identify possible  areas for exchange and agreement
with the opposing party.   Some  mediators will be  more aggressive
than others in this  role;  they  may  even  suggest possible settlement
alternatives) to resolve deadlocks between the parties.  In general,
howeve*> the nediator serves  as a facilitator of discussions and
abstain* from taking positions  on substantive points.
8 Arbitration is specifically authorized  under  Section 107  of  CERCLA
  for cost recovery claims not in  excess  of  5500,000,  exclusive  of
  interest•

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                              -16-


     There  are  no  external  time  limits on mediation other than
 those  imposed by the parties  or  by external pressures from the
 courts,  the community or public  interest groups.  In all cases,
 the  Government  should insist  on  a time limit for the mediation
 to ensure that  the defendants do not use mediation as a stalling
 device.  The Government should also insist on establishing points
 in the process  to  evaluate  progress of the mediation.  As the
 parties  approach settlement terms through mediation, final authority
 for  decisionmaJcing remains  the same as during direct negotiations,
 i.e., requirements for approval  or concurrence from senior managers .
 are  applicable.

         2.  Use of Mediation                              •

     Mediation  is  appropriate for disputes in which the parties
 have reached or  anticipate  a  negotiation impasse based on, among
 other things, personality conflicts, poor communication, multiple
 parties, or  inflexible negotiating postures.  Additionally,
 mediation is useful in those  cases where all necessary parties are
 not  before  the court (e.g., a state which can help with the funding
 for  a municipality's violation).  Mediation is the most flexible
 AOR  mechanism, and should be  the most widely used in Agency disputes

         3.  Withdrawal from  Mediation

     As  a voluntary and unstructured process, mediation proceeds
 entirely at  the  will of the parties and, therefore, may be conclude
 by the parties prior to .settlement.  A determination to withdraw
 from mediation should be considered only when compelling  factors
 militate against proceeding.  If the mediation has extended
 beyond a reasonable time period  (or the period agreed upon by
 the parties) without significant progress toward agreement, it
 may be best  to withdraw and proceed with direct negotiations or
 litigation.  Withdrawing from mediation might also be considered
 in the unlikely  event that  prospects for settlement appear more
 remote than  at the outset of  the mediation.  Finally, inappropriate
 conduct by the mediator would warrant concluding the mediation
 effort or changing mediators.

         4.  Halation to Litigation

     In  th«  ordinary case,  prio'r to referral or the  filing of an
administrative) complaint, the time limit* for mediation could be
 the  saaer a*  those)  for negotiation.  In contrast to  normal
negotiations, however, the  parties may agree that during  the
 time- period  specified for mediation, litigation activities
 such as  serving  interrogatories, taking depositions, or  filing
motions  may  be suspended.   In filed civil judicial  cases, where
 the court imposes  deadlines,  it  will be necessary to apprise  the

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                                                  9834.12
                                -17-


 court of the parties'  activities  and  to build ADR into the court's
 timetable.   For agreements  relating ADR activities to ongoing
 litigation,  see paragraph 17 of Attachment E.

      C.   Mini-Trial

          1.   Scope and Nature                   :! '

     Like other  ADR techniques, the mini-trial is also voluntary
 and nonbinding  on the  parties.  In the mini-trial,  Authority for
 resolution of one or more issues  rests with senior managers who,
.representing each party in  the dispute, act as decisiohmakers.
 In  some  cases a neutral  referee is appointed to supervise the
 proceedings  and assist the  decisionraakers in resolving an issue
 by  providing the parties with a more  realistic view of their
 case.  In addition, the neutral's presence can enhance public
 acceptability of a resolution by  effectively balancing the
 interests of the Government and the defendant.

      The scope  and format of the  mini-trial are determined solely
by  the parties  to the  dispute and are outlined in an initiating
agreement.   Because the  agreement will govern the proceedings,
the  parties  should carefully consider and define issues in advance1
of  the mini-trial.  Points  that could be covered include the.
option of and role for a neutral, issues to be considered, and
procedural matters such  as  order  and  schedule of proceedings and
time limits.  Attachment E'is a sample mini-trial agreement.

      The  mini-trial proceeds before a panel of decisionmakers
representing the parties and, in  some cases, a neutral referee.
Preferably,  the decisionmakers will not have participated directly
in  the case  prior to the mini-trial.  The defendant's represen-
tative should be a principal or executive of the entity with
decisionmaking  authority.   CPA's  representative should be a
senior Agency official comparable in  authority to the defendant's
representative.  In some cases, each  side may want to use a
panel consisting of several decisionmakers as its representatives.
The  neutral  referea is selected by both parties and should have
expertise in the issues  under consideration. .

     At  the  «ini-trial,  counsel for each side presents his or her
strongest and nost persuasive case to the decisionmakers in  an
informal, trial-like proceeding.  In  light of this structure,
stricfc rules] of evidence do not apply, and the format for the
presentation is unrestricted.  Each decisiorunaker is then afforded
the  unique- opportunity to proceed, as agreed, with open and
direct questioning of  the other side.  This information exchange
allow* the decisionaakers to adjust their perspectives and posi-
tions in  light  of a preview of the case.  Following this phase
of the mini-trial, the decisionmakers meet, with or without
counsel or the  neutral referee, to reso|ve the, issus(s) or case
presented, through negotiation.

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                                                  983412
                               -18-

         2.  Role of the Neutral

     The neutral referee may serve in more than one capacity
in this process, and should be selected with a clearly defined
concept o{ his or her role.  The most common role is to act as
an advisor to the decisionmakers during the information exchange.
The neutral may offer opinions on points made or on adjudication
of the case in litigation, and offer ass'-Ifs-tance to the decision-
makers in seeing the relative merits pf their positions.   The
neutral's second role can-be to mediate the .negotiation between
the decisionmakers should they reach an impasse or seek assistance
in forming an agreement.  Unless otherwise agreed by the parties,
no evidence used in the mini-trial is admissible in litigation.

         3.  Use                  .     .                  .   .

         As with mediation, prior to referral or the filing of an
administrative complaint, the time limits for a mini-trial would
be the same as those for negotiation.  The parties usually agree,
however, that during the time period specified for a mini-trial,
litigation activities such as serving interrogatories, talcing
depositions, or filing motions may be suspended except as otherwise
agreed.  In general, mini-trials are appropriate in cases involving
only a small number of parties, and are most useful in four  kinds
of disputes:

         1.  Where the parties have reached or anticipate reaching
a negotiation impasse due to one party's overestimation, in  the
view of the other party, of the strength of its position;

         2.  Where significant policy issues exist which would
benefit from a face-to-face presentation to decisionmakers (without
use of a neutral);

         3.  Where the issues are technical, and the decisionmakers
and neutral referee have subject-matter expertise; or

         4.  Where the imprimatur of a neutral's expertise would
aid in the resolution of the case.

     D.  Fact-finding

         1.  Scope and Nature

     Binding or nonbinding fact-finding may be  adopted voluntarily
by parties to a dispute, or imposed by a court.   It  is most
appropriate for issues involving  technical  or  factual  disputes.
The primary purpose of this process is  to  reduce or  eliminate
conflict over facts at issue in a case.  The  fac.t-finder's role
is to act as an independent investigator,  within the scope of the
authority delegated by the parties.  The  findings  may be used in
reaching settlement, as  "facts" by a judge or  ALJ in litigation,

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                                                   9834.12
                                -19-
 or  as  binding  determinations.   Like other ADR processes involving
 a neutral,  a resolution based on a fact-finder's report will have
 greater credibility  with  the public.

     The neutral's role in  fact-finding is clearly defined by an
 initial agreement of the  parties on the issue(s) to be referred
 to  the fact-finder and the  use  to be made of the findings or
 recommendations, e.g., whether  they will be binding or advisory.
 Once this agreement  is framed,  the role of the parties in the
 process is  limited and the  fact-finder proceeds independently.
 The fact-finder may  hold  joint  or separate meetings or both with
 the parties in which the  parties offer documents, statements, or
 testimony in support of their positions.  The fact-finder is also
 free to pursue other sources of information relevant to the
 issue(s).   The initial agreement Of the parties should include a
 deadline for receipt of the fact-finder's report.  Attachment F
 is  a sample fact-finding  agreement.

     The fact-finder issues a formal report of findings, and
 recommendations, if  appropriate, to the parties, ALJ or the
 court.   If  the report is  advisory, the findings and recommenda-
 tions  are used to influence the parties' positions and give
 impetus  to  further settlement negotiations.  If the report is
 binding,  the parties adopt  the  findings and recommendations a»
 provisions  of  the settlement agreement.  In case of litigation,
 the findings will be adopted by the judge or ALJ as" "facts"  in
 the case.

          2.   Relation to  Litigation

     Decisions regarding  pursuit of litigation when fact-finding
 is  instituted  are contingent upon the circumstances of the case
 and the  issues to be referred to the fact-finder.  If fact-find-
 ing is undertaken in connection with an ongoing settlement
 negotiation, in most cases  it is recommended that the parties
 suspend  negotiations on the issues requiring fact-finding until
 the fact-finder's report  is received.  If fact-finding is part
of  the litigation process, a decision must be made whether to
proceed  with litigation of  the  rest of the case or to suspend
litigation  while awaiting the fact-finder's report.

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                                                       Q O 7 ft 1  O
                            ATTACHMENT A                   ^ '
 MEMORANDUM

 SUBJECT:  Nomination of U.S. v. XYZ Co. for Non-binding
          Alternative  for Dispute Resolution

 FROM:     Deputy  Regional Administrator

 TO:       Associate Enforcement Counsel
            for Hazardous Waste Enforcement

          Chief,  Environmental Enforcement Section
          Department of Justice

     This memorandum is to nominate U.S. v. XYZ Co. for alterna-
 tive dispute resolution (ADR).  The case is a CERCLA enforcement
 action involving  multiple PRPs as well as a number of complex
 technical and legal issues.  The RI/FS and the record of decision-
 have both been completed.  We anticipate that the PRPs are inte-
 rested in settling this matter and, we believe, a trained mediator
 will greatly aid  negotiations.  The members of the litigation
 team concur in this judgment.

     We understand that if you object within 15 days of the receipt
of this letter, we will not proceed with ADR in this case without
 your approval.  We do believe, however, that ADR is appropriate
 in this action.   We look forward to working with your offices in
 this matter.

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                                                    9834.12
                          ATTACHMENT 8
 MEMORANDUM
 SUBJECT:  Jfomination "of  United States  v. ABC Co. for Binding
          Alternative  Dispute Resolution

 FROM:     Deputy Regional Administrator

 TO:       Associate Enforcement Counsel for Water Enforcement

          Chief,  Environmental Enforcement Section
          Department of  Justice

     This memorandum requests concurrence in the use of a binding
 fact-finding procedure in United States v. ABC Co-... The case
'involves the following facts:

     ABC Co. owns and operates a specialty chemical production
 and  formulation  facility.  Wastewater  streams come from a variety
 of production areas which change with  product demand.  Because
 of these diverse processes, the company's permit to discharge
 wastewater must be based on the best professional judgment of
 the permit writer as to  the level of pollution control achievable.

     The company was issued an NPDES permit in 1986.  The permit
 authorizes four  (4) outfalls and contains limits for both conven-
 tional and toxic organic pollutants.   The effluent limitations of
 the permit incorporate the Best Available Technology requirements
 of the Clean Water Act (CWA).

     EPA filed a civil lawsuit against the company for violating
 effluent limits of the 1986 permit.  As part of the settlement of
 the action,  the company  was required to submit a compliance plan
 which would provide for  modification of its existing equipment,
 including institution of efficient operation and maintenance
 procedures to obtain compliance with the new permit.  The settle-
 ment agreement provides  for Agency concurrence in the company's
 compliance plan.

     The company submitted a compliance plan, designed by in-house
engineers,  which proposed to slightly  upgrade their existing
activated sludge treatment system.  The company has claimed that
 this upgraded system provide* for treatment adequate to meet the
permit'liait*.  EPA has  refused to concur in the plan because  EPA
 expert«nb«lieve that additional treatment modifications to enhance
pollutant removals are required to meet permit limits on a con-
tinuous basis.  This enhancement, EPA  believes, is possible with
moderate additional capital expenditures.

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                   9834.12
-2-

       of experts  in

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                           ATTACHMENT C                983412

                      ARBITRATION PROCEDURES*

SUBPART A - GENERAL

1.  Purpose

       This document establishes and governs procedures for  the
       arbitration of EPA disputes arising under [insert, applicable
       statutory citations].

2.   Scope and Applicability

       The procedures enunciated in this document may be used  to
       arbitrate claims or disputes of the EPA regarding [insert
       applicable statutory citations and limitations on scope,  if
       any.]

SUBPART B - JURISDICTION OP ARBITRATOR, REFERRAL OF CLAIMS,
            AND ARBITRATOR SELECTION	.  - .	

1.   J-urisdiction of Arbitrator

       (a) In accordance with the procedures set forth in this'
           document, the Arbitrator is authorized to arbitrate
           [insert applicable categories of claims or dispute*.]

       (b) The Arbitrator is authorized to resolve,disputes
           and award claims within the scope of the issues      .
           presented in the joint request for arbitration.

2.   Referral of Disputes

       (a) EPA [insert reference to mechanism by which EPA has
           entered into dispute, e.g., after EPA has issued
           demand letters or an administrative order], and one
           or more parties to the case may submit a joint request
           for arbitration of [EPA's claim, or one or more issues
           in dispute among the parties] 	 [a group
           authorized to arbitrate such matters, e.g., the National
           Arbitration Association (NAA)] if [restate any general
           limitations on scope].  The joint request shall include:
           A statement of the matter in dispute; a statement of
           the issue* to be submitted for resolution; a statement
           that the signatories consent to arbitration of the
      .:•    dispute in accordance with the procedures established
    .i:.li'::   by thi» document; and the appropriate filing fee.

           Within thirty days after submission of the  joint request
           for arbitration, each signatory to the joint request shall
           individually submit to the National Arbitration Association
   Regulations applicable to section  112 of SARA are currently
   being prepared.

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                                                    y-834.12

                               -2-


           two copies of a written statement which shall  include:

              (1) An assertion of the parties'  positions  in  the
                  matter in dispute;

              (2) The amount of money in dispute,  if appropriate;

              (3) The remedy sought;

              (4) Any documentation which the party deems necessary
                  to support its position;

             C(5) A statement of the legal standard applicable to
                  the claim and any other applicable principles of
                  law relating to the claim;]

              (6) The identity of any known parties who are  not
                  signatories to the joint request for arbitration;
                  and

              (7) A recommendation for the locale for  the arbitral
                  hearing.

       A copy of the statement shall be sent to all parties.

3.   Selection of Arbitrator

   (a) The NAA.has established and maintains a  National Panel of
       Environmental Arbitrators.

   (b) After the filing of the joint request for arbitration, the
       NAA shall submit simultaneously to all parties  to the
       dispute an identical list of ten [five]  names of persons
       chosen from the National Panel of Environmental Arbitrators.
       Each party to the dispute shall have seven days from the
       date of receipt to strike any names objected to, number
       the remaining names to indicate order of preference,  and
       return the list to the NAA.  If a party does not return
       the list within the time specified, all persons named
       shall be deemed acceptable.  From among the persons
       who have been approved on all lists, and if possible, in
       accordance with the designated order of mutual  preference,
       the HAA shall invite an Arbitrator to serve.  If the
       parties) fail to agree upon any of the persons named, or
       if acceptable Arbitrators are unable to serve,  or if  for
       any other reason the appointment cannot be made from  the
       submitted lists, the NAA shall make the appointment  from
       aaong other members of the Panel without the submission
       of any additional lists.  Once the NAA ma)$e» the appointment
       it shall immediately notify the parties of  the  identity
       of the Arbitrator and the date of the appointment.

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                                                       9834.12


                              -3-

    (c)  The dispute shall be heard and determined by one
        Arbitrator, unless the NAA decides that three Arbitrators
        should be approved based on the complexity of the issues
        or'the number of parties.

    (d)  The NAA shall notify the parties of the appointment of the
        Arbitrator and send a copy of these rules to each party.
        A signed acceptance of the case by the Arbitrator shall
        be filed with the NAA prior to the opening of the hearing.
        After the Arbitrator is appointed, all communications
        from the parties shall be directed to the Arbitrator.

    (e)  If any Arbitrator should resign, die, withdraw,  or be
        disqualified, unable or refuse to perform -the duties of the
        office, the NAA may declare the office vacant.  Vacancies
        shall be filled in accordance with the applicable provisions
        of this Section, and unless the parties agree otherwise,
        the matter shall be reheard.

4.  Disclosure

    (a) A person appointed as an Arbitrator under the above section.
        shall,  within five days of receipt of his or her notice of/
        appointment disclose to the NAA any circumstances likely
        to affect impartiality, including [those factors listed in
        section V.B. of the accompanying guidance]                  .

    (b)  Upon receipt of such information from, an appointed  .
       Arbitrator or other source, the NAA shall on the same day
       communicate such iaformation to the parties and, if it
       deems it appropriate, to the Arbitrator and others.

    (c) The parties may request within seven days of receipt of
       such information from the NAA that an Arbitrator be
       disqualified.

    (d) The NAA shall make a determination on any request for
       disqualification of an Arbitrator within seven days after
       the NAA receives any such request.  This determination
       shall be within the sole discretion of the NAA, and  its
       decision shall be final.

5.  Intervention and Withdrawal

    (a): Subject to the approval of the parties and the Arbitrator,
       any person [insert applicable limitations, if any,  e.g.
       any person with a substantial interest in.the subject of
       the referred dispute] may move to intervene  in the  arbitral
       proceeding.  Intervening parties shall be bound by  rules
       that the Arbitrator may establish.

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                                                 9834.12
                            -4-
    (b) Any party may for good cause shown move to withdraw from
       the arbitral proceeding.  The Arbitrator may approve such
       withdrawal, with or without prejudice to the moving party,
       and nay assess administrative fees or expenses against
       th« withdrawing party as the Arbitrator deems appropriate.

SUBPART C - HEARINGS BEFORE THE ARBITRATOR

1.  Filing of Pleadings

    (a) Any party may file an answering statement with the NAA  no
       later than seven days from the date of receipt of an
       opposing party's written statement.  A copy of any
       answering statement shall be served upon all parties.

    (b) Any party may file an amended written statement with
       the NAA prior to the appointment of the Arbitrator.  A
       copy of the amended written statement shall be served
   ' '; . upon all parties.  After the Arbitrator is appointed,
       however, no amended written statement may be submitted
       except with the Arbitrator's concent.

  C(c) Any party may file an answering statement to the amended
       written statement with the NAA no later than seven day*
       from the date of receipt of an opposing party's amended
       written statement.  A copy of any answering statement
       shall be served upon all parties.J

2.  Pre-hearing Conference

    At the request of one or more of the parties or at the
discretion of the Arbitrator, a pra-hearing conference with the
Arbitrator and the parties and their counsel will be scheduled in
appropriate cases to arrange for an exchange of information,
including witness statements, documents, and the stipulation
of uncontested facts to expedite the arbitration proceedings.
The Arbitrator may encourage further settlement discussions
during the pre-hearing conference to expedite the arbitration
proceedings.  Any pre-hearing conference must be held within
sixty days of the appointment of the Arbitrator.

3.  Arbitral Hearing

    (a) Th«r Arbitrator shall select the  locale for  the arbitral
      / hearing, giving due consideration to any recommendations
      '; by the parties.

   (b) Th« Arbitrator shall fix the time and place for  the
       hearing.

   (c) The hearing shall commence within  thirty days of  the
       pre-hearing conference,  if such  conference  is held, or

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                                                  983412
                          -5-
    within sixty [thirty] days of the appointment of  the
    Arbitrator,, if.no pre-hearing conference is held.   The
    Arbitrator shall notify each party by mail of the
    hearing at least thirty days in advance, unless the parties
    by mutual agreement waive such notice or modify the terms
    thereof.

(d) Any party may be represented by counsel.  A party who
    intends to be represented shall notify the other  parties
    and the Arbitrator of the name and address of counsel at
    least three days prior to the date set for the hearing at
    which counsel is to appear.  When an arbitration  is
    initiated by counsel, or where an attorney replies  for
    the other parties,  such notice is deemed to have  been
    given.

(e) The Arbitrator shall make the necessary arrangements for
    .making a record of the arbitral hearing.

(f) The Arbitrator shall make the necessary arrangements for
    the services of an interpreter upon the request of  one or
    more of the parties, and the requesting parties shall
    assume the cost of such service.

(g) The Arbitrator may halt the proceedings upon' the  request of
    any party or upon the Arbitrator's own initiative.

(h) The Arbitrator shall administer oaths to all witnesses
    before they testify at the arbitral hearing.

(i) (1) A hearing shall be opened by the recording of the
        place, time, and date of the hearing, the presence
        of the Arbitrator and parties, and counsel, if any,
        and by the receipt by the Arbitrator of the written
        statements,  amended written statements, if any, and
        answering statements, if any.  The Arbitrator may, at
        the beginning of the hearing, ask for oral statements
        clarifying the issues involved.

    (2) The) EPA shall then present its case, information and
        witnesses, if any, who shall answer questions posed
        by both parties.  The Arbitrator has discretion to
        vary this procedure but shall afford full and equal
        opportunity to all parties for the presentation
       .of any material or relevant information.

    (3) Exhibits,  when offered by any party, may be  received
        by the Arbitrator.  The names and addresses  of  all
        witnesses, and exhibits in ths order received,  shall
        be part of the record.

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                                               9834.12

                           -6-

( j) The arbitration -may proceed in the absence of any party
    which, after notification, fails to be present or fails
    to obtain a' stay of proceedings.  If a party, after
    notification, fails to be present, fails to obtain a
    stay, or fails to present information, the party  will be
    in default and will have waived the right to be present
    at the arbitration.  A decision shall not be made solely
    on the default of a party.  The Arbitrator shall  require
    the parties who are present to submit such information as
    the Arbitrator may require for the making of a decision.

(k) Information and Evidence

    (1) The parties may offer information as t.hey desire,
    subject to reasonable limitations as the Arbitrator deems
    appropriate, and shall produce additional information as
    the Arbitrator may deem necessary to an understanding and
    determination of the dispute.  The Arbitrator shall be
    the judge of the relevancy and materiality of the information
    offered, and conformity to legal rule* of evidence shall
    not be necessary.

    (2) All information shall be introduced in the presence
    of the Arbitrator and all parties, except where any  of
    the parties has waived the right to be present pursuant
    to paragraph (j) of this section.  All information
    pertinent 'to the issues presented to the Arbitrator  for
    decision, whether in oral or written fora, shall be  made
    a part of the record.

(I) The Arbitrator may receive and consider the evidence
    of witnesses by affidavit, interrogatory or deposition,
    but shall give the information only such weight as the
    Arbitrator deems appropriate after consideration of  any
    objections made to its admission.

(m) After the presentation of all information, the Arbitrator
    shall specifically inquire of all parties whether they
    have any further information to offer or witnesses to be
    heard.  Upon receiving negative replies, the Arbitrator
    shall declare the hearing closed and minutes thereof
    shall b« recorded.
        parties may provide, by written agreement, for the
  sv waiver of the oral hearing.
   "«K"-.. -
(o) Ail documents not submitted to the Arbitrator at the
    hearing, but arranged for at the hearing pr by subsequent
    agreement of the parties, shall be filed with the Arbitrator

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                                              •     9834.12

                              -7-

        All  parties  shall  be  given an opportunity to examine
        documents.

 4.   Arbitral  Decision

    (a)  The  Arbitrator  shall  render a decision within thirty [five]
        days after the  hearing  is declared closed except if:

           (1) All parties agree in writing to an extension; or

           (2) The Arbitrator determines that an extension of the
              time  limit  is necessary.

    (b)  The  decision of the Arbitrator shall be signed and in
        writing.  It shall contain a brief statement of the basis
        and  rationale for  the Arbitrator's determination.  At the
        close of the hearing, the Arbitrator may issue an oral
        opinion which shall be  incorporated into a subsequent written
        opinion.

    (c)  The  Arbitrator  may grant any remedy or relief within the
        scope of the issue* presented in the joint request for
        arbitration.

    (d)  The  Arbitrator  shall assess arbitration fees* and expenses
        in favor of  any party,  and, in the event any administra-
        tive fees or expenses are due the NAA, -in favor of the
   (e) If the dispute has been heard by three Arbitrators, all
       decisions and awards must be made by at least a majority,:
       unless the parties agree in writing otherwise.

   (f) If the parties settle their dispute during the course of
       the arbitration, the Arbitrator, upon the parties' request,
       may set forth the terms of the agreed settlement.

   (g) The Arbitrator shall mail to or serve the decision on
       the parties.

   (h) The) Arbitrator shall, upon written request of any party,
       furnish certified facsimiles of any papers in the Arbitrator's
       possession that may be required in judicial proceedings
       relating to the arbitration.

SUBPART D - APPEALS, FEES AND OTHER PROVISIONS

1.  Appeals Procedures

   (a) Any party may appeal the award or decision within  thirty
       days of notification of the decision.  Any such appeal

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                                                      9834.12
                               -8-

       shall be made to the [insert "Federal district court  for
       the district in which the arbitral hearing took place" or
       "Chief Judicial Officer, U.S. Environmental Protection
       Agency"].

   (b) The award or decision of the Arbitrator shall be binding
       and conclusive, and shall not be overturned unless  achieved *
       through fraud, misrepresentation, abuse of discretion,
       other misconduct by any of the parties, or mutual mistake
       of fact.  [Insert "No court shall" or "The Chief Judicial
       Officer shall not"] have jurisdiction to review the award
       or decision unless there is a verified complaint with
       supporting affidavits attesting to specific instances
       of such fraud, misrepresentation, abuse of discretion,
       other misconduct, or mutual mistake of fact.

   (c) Judgment upon the arbitration award may b*..entered  in
       any Federal district court having jurisdiction.  The  award
       may be enforced in any Federal district court having
       jurisdiction.           .                      •       .

   (d) Except as provided in paragraph (c), no award or decision
       shall be admissible as evidence of any issue of fact  or
       law in any proceeding brought under any other provision
       of [insert applicable statutory acronyms] or any other-
       provision of law, nor shall any prearbitral settlement be
       admissible as evidence in any such proceeding.  Arbitration
       decisions shall have no precedential value for future
       arbitration, administratiave or judicial proceedings.

2.   Administrative Fees, Expenses, and Arbitrator's Fee

   (a) the NAA shall prescribe an Administrative Fee Schedule
       and a Refund Schedule.  The schedules  in effectJat  the
       time of filing or the time of refund shall be applicable.
       The filing fee shall be advanced by the parties to  the
       NAA as part of the joint request for arbitration, subject
       to apportionment of the total administrative fees by the
       Arbitrator in the award.  If a matter  is withdrawn or
       settled, a refund shall be made in accordance with the
       Refund Schedule.

   (b) Expenses of witnesses shall be borne by the party presenting
       such witnesses.  The expense of the stenographic record
       and all transcripts thereof shall be prorated  equally
       among all parties ordering copies, unless otherwise
       agreed by the parties, or unless the Arbitrator.assesses
     '-- such expenses or any part thereof against  any  specified
       party in the award.

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                                                   9834.12
                               -9-

   (c) The per diem fee for the Arbitrator  shall  be agreed upon
       by the parties and the NAA prior to  the  commencement of
       any activities .by the Arbitrator.  Arrangements  for
       compensation of the Arbitrator shall be  made by  the NAA.

   (d) The NAA may require an advance deposit  from  the  parties
       to defray the Arbitrator's Fee and the Administrative
       Fee,  'nut shall render an accounting  to  the parties and
       return any balance of such deposit in accordance with
       the Arbitrator's award.

3.   Miscellaneous Provisions

   (a) Any party who proceeds with the arbitration  after know-
       ledge that any provision or requirement  of this  Part
       has not been complied with, and who  fails  to object
       either orally or in writing, shall be deemed to
       have waived the right to object. An objection,  whether
       oral  or written, must be made at the earliest possible
       opportunity.

   (b) Before the selection of the Arbitrator,  all  oral or
       written communication* from the parties  for  the  Arbitra-
       tor's consideration shall be directed to the NAA for
       eventual transmittal to the Arbitrator.

   (c) Neither a party nor any other interested person  shall
       engage in ex parte communication with the Arbitrator.
                             t
   (d) All papers connected with the arbitration shall  be  served
       on an opposing party either by personal  service  or  United
       States mail, First Class, addressed  to  the party's  attorney,
       or if the party is not represented by an attorney or  the
       attorney cannot be located, to the  last  known address of
       the party.

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                                                    9634J2
                          ATTACHMENT D

                     . MEDIATION PROTOCOLS

 I.   PARTICIPANTS

     A.   Interests Represented.  Any interest that would  be
          substantially affected by EPA's action in 	
          [specify case] may be represented.  Parties  may
          group together into caucuses to represent allied
          interests.

     B.   Additional Parties.  After negotiations have begun, addi-
          tional parties may join the negotiations only with the
          concurrence of all parties already represented.

     C.   Representatives.   A representative of' each party or
          alternate must attend each full negotiating  session.
          The designated representative aay be accompanied by such
          other individuals as the representative believes is~-
          aporopriate to represent his/her interest, but only the
          designated representative will have the privilege of
          sitting at the negotiating table and of speaking
          during the negotiations, except that any repre-
          sentative may call upon a technical or legal adviser
          to elaborate on a relevant point.

II.   DECISIONMAKING           .                                   :

     A.   Agendas.  Meeting agendas will be developed  by consensus.
          Agendas will be provided before every negotiating
          session.

     B.   Caucus.  A caucus can be declared by any participant  at
          any time.  The participant calling the caucus will  inform
          the others of the expected length of the caucus.

III.  SAFEGUARDS FOR THE PARTIES

     A.   Good Faith.  All participants oust act in good faith  in
          ail aspects of these negotiations.  Specific offers,
          position** or statements made during the negotiations
          sj*y not b« used by other parties for any other purpose
     vY" or as a basis for pending or future litigation.   Personal
     .':"•   attacks and prejudiced statements are unacceptable.

     B.   Right to Withdraw.  Parties may withdraw  from the
          negotiations at any time without prejudice.   Withdrawing
          parties remain bound by protocol provisions on public
          comment and confidentiality.

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                                                9834.12
                         -2-


C.   Minutes •   Ses'sions shall not be recorded verbatim.
     Formal minutes of the proceedings shall  not be kept.

D.   Confidentiality and the Use of Information

     (1)  CAll parties agree not to withhold  relevant informatior
          If a party believes it cannot or  should  not release  '.
          such information/ it will provide the substance of
          the information in some form (such  as by aggregating
          data, by deleting non-relevant confidential informa-
          tion, by providing summaries, or  by furnishing it     -
          to a neutral consultant to use or abstract) or a
          general description of it and the reason for not
          providing it directly.]

     (2)  [Parties will provide information called for by this
          paragraph as much in advance of the meetings as
          possible.J

     (3)  The entire process is confidential. The parties and
          the mediator will not disclose information regarding
          the process/ including settlement terms, to third
          parties/ unless the participants otherwise agree.  The
          process shall be treated as compromise negotiation
          for purposes of the Federal Rules of Evidence  and
          state rules of evidence.  The mediator will be
        .  disqualified as a witness/ consultant or expert  in
          any pending or future action relating  to the  subject
          matter of the mediation, including  those between
          persons not parties to the mediation.  Failure to
          meet the confidentiality or press requirements of
          these protocols is a basis for exclusion from  the
          negotiations.

     (4)  The mediator agrees that if he/she  discloses  informa-
          tion regarding the process, including  settlement  terms,
          to third parties without the participants'  agreement,
          except as ordered by a court with appropriate juris-
          diction, he/she agrees to the following  as liquidated
          damages to the parties:

          (a) Removal from the case;

          (b) Removal from any EPA list of approved neutrals;
              and

          (c) Payment of an amount equal to           Cat a
              minimum, the amount of the mediator's reej.

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                                                       9834.12
                               -3-
 IV.   SCHEDULE
      A.    Time  and  location.  Negotiating sessions will initially
           be  held ^	      [insert how often].  The first
           negotiating session is scheduled for  	.
           Unless otherwise agreed upon, a deadline of
           months  for the negotiations will be established.
           The location of the meetings will be decided by the
           participants.

      B.    Discontinue if unproductive.  The participants may dis-
           continue  negotiations at any time if they do not  appear
           productive.
 V.   Press
     A.    [Joint Statements.  A joint press statement shall be
           agreed to by the participants at th« conclusion
           of each session.  A joint concluding statement shall.
           be agreed to by the participants and issued by the
           mediator at the conclusion of the process.  Participants
           and the mediator shall respond to press inquires within
           the spirit of the press statement agreed to at the
           conclusion of each session.]

     B.    [Meetings with the Press.  Participants and—the
           mediator will strictly observe the protocols regarding
           confidentiality in all contacts with the press and
           in other public forums.  The mediator shall be
           available to discuss with the press any questions on
           the process and progress of the negotiations.  No
           party will hold discussions with the press concerning
           specific offers, positions, or statements made during
           the negotiations by any other party.]
VI.  MEDIATOR

          A neutral mediator will work with all the parties to
          ensure that the process runs smoothly.

VII.  APPROVAL OF PROPOSALS

     A*   Partial Approval.  It is recognized that unqualified
      '-:*-.."  acceptance of individual provisions is not possible
          out of context of a full and final agreement.  However,
          tentative agreement of individual provisions or portions
          thereof will be signed by initialing of the agreed
          upon items by the representatives of all interests
          represented.  This shall not preclude the parties from
          considering or revising the agreed upon items by mutual
          consent.

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     B.
                                                        9834.12
                              -4-


          Final Approva.1.  Upon final agreement,  all  representatives
          shall sign and date the appropriate document.   It  is
          explicitly recognized that the representatives  of  the
          U.S. EPA do not have the final authority to agree  to any
          terms in this case.  Final approval must be obtained
          from 	 [insert names of  proper officials].


VIII.  EFFECTIVE DATE

     These protocols shall be effective upon the  signature of the
representatives.
For the U.S. Environmental Protection Agency
          Signature                                 Date
For	  [Name of violator]
          Signature                                Date

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                                                           98341?
                          Attachment  E                      >u-»-M _

         AGREEMENT TO  INSTITUTE MINI-TRIAL  PROCEEDINGS


      The United  States  Environmental Protection Agency (EPA)
 and XYZ  Corporation,  complainant and respondent, respectively,
 in the matter  of XYZ  Corp.,  Docket No. 	, agree to
 the alternative  dispute resolution procedure set forth in
 this document  for the purpose of fostering the potential
 settlement  of  this case.   This agreement, and all of the
 actions  that are taken  pursuant to this agreement, are
 confidential.  They are considered to be part of the settlement
 process  and subject to  the same privileges that apply to
 settlement  negotiations.

      1.   The parties  agree to hold a mini-trial to inform
 their  management representatives of the theories, strengths,
 and weaknesses of the parties' respective positions:  At the
 mini-trial,: each side will have the opportunity and responsibility
 to  present  its ."best  case"  on all of the issues involved in
 this proceeding.

     2.   Management Representatives of both parties, including  -
 an  EPA official  and an  XYZ official at the Division Vice
 President level  or  higher,  will attend the mini-trial.  The
 representatives  have  authority to settle the dispute.

     3.   A  mutually selected "Neutral Advisor" will attend the
 mini-trial.  The  Neutral  Advisor will be chosen in the
 following manner.   By •    	, [insert date] the parties
 shall  exchange a  list of  five potential Neutral Advisors
 selected  from  the  list  of  candidates offered by _^__^______
 [insert neutral  organization].  The potential candidates
 shall  be numbered  in  order  of preference.  The candidate who
 appears on  both  lists and  who has the lowest total score
 shall  be  selected as  the  Neutral Advisor.  If no candidate
 appears on  both  lists,  the  parties shall negotiate and shall
 select and  agree  upon a  Neutral Advisor by 	
 [insert date].

     4.  The fees and expenses of the Neutral Advisor will be
borne  equally  by both parties.  [However, if the Neutral
Advisor provide*  an opinion as to how the case should be
 resolved* and  * party does  not follow the recommended
dispo«itioir of the  Neutral  Advisor, that party shall bear the
Advisor.'* entire  fees and  expenses.]
       • ''~~
     5;r  neither  party, nor anyone on behalf of either party,
shall  unilaterally  approach, contact or communicate with the
Advisor.   The  parties and  their attorney*  represent and
warrant that they will  make a diligent effort to'ascertain
all prior contact between  themselves and the Neutral Advisor,
and that all such contacts  will be disclosed to counsel for
the opposing party.

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                                                    9834,12
                             -2-
     6.  Within 10 days' after the appointment of the Neutral
Advisor, mutually agreed upon basic source material will be
jointly sent to the Neutral Advisor to assist him or her in
familiarizing himself or herself with the basic issues of the
case.  This material will consist of neutral matter including
this agreement, the complaint and answer, the statute, any
relevant Agency guidance, a statement of interpretation and
enforcement policy, the applicable civil penalty policy, and
any correspondence between the parties prior to the filing
of the complaint.

     7.  All discovery will be completed in the  	
Cinsert number] working days following the execution of this
agreement.  Neither party shall propound more than"25 inter-
rogatories or requests for admissions, including subparts;
nor shall either party take more than five depositions *nd  '
no deposition shall last more than three hours.  Discovery
taken during the period prior to the mini-trial shall be
admissible for all purposes in this litigation, including
any subsequent hearing before [a federal judge or administrative
law judge] in the event this mini-trial does not result in a
resolution of this dispute.  It is agreed that the pursuit
of discovery during the period prior to the mini-trial shall
not restrict either party's ability to take additional discovery
at a later date.  In particular, it is understood and agreed
that partial depositions may be necessary to prepare,  for the
mini-trial.  If this matter is not resolved informally as a
result of this procedure, more complete depositions of the
same individuals may be necessary.  In that event, the partial
depositions taken during this interim period shall in no way
foreclose additional depositions of the same individual regarding
the same or additional subject matter for a later hearing.

     8.  By ____^	»  [insert date] the parties shall
exchange all exhibits they plan to use at the mini-trial,
and send copies at the same time to the Neutral Advisor.  On
the same date the parties also shall exchange and submit to
the Neutral Advisor and to the designated trial attorney  for
the opposing sidet  (a) introductory statements no longer than
25 double-spaced pages (not including exhibits), (b)  the
names of witnesses planned for the mini-trial, and  (c)  all
documentary evidence proposed for utilization at the  mini-tial.
      " !£ - "
     f.  Two weeks before the mini-trial, if he or she  so
desire* and if the parties agree, the Neutral Advisor may
confer jointly with counsel for both parties to resolve any
outstanding procedural questions.

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                                                     9834,12
                             -3-
     10.  The mini-trial proceeding shall be held on 	,
and shall take 	 day(s).  The morning proceedings shall  begin
at 	 a.m. and shall "continue until    •   a.m.  The afternoon's
proceedings shall begin at 	 p.m. and continue until 	 p.m.
A sample two day schedule follows:
     Day 1
 S:30 a.m. -
12:00 Noon -
 1:00 p.m. -
 2:30 p.m. -
 4:00 p.m. -
12:00 Noon
1:00 p.m.
2:30 p.m.
4:00 p.m.
5:00 p.m.
     Day 2
 8:30 a.m  - 12:00 Noon
12:00 Noon -  1:00 p.m.
 1:00 p.m. -  2:30 p.m.
 2:30 p.m. -  3:00 p.m.
 3:00 p.m. -  4:30 p.m.
 4:30 p.m. -  4:45 p.m.
 4:45 p.m. -  5:00 p.m.
EPA's position and case presentation
Lunch*
XYZ's cross-examination
EPA's re-examination
Open question and answer period

XYZ's position and case presentation
Lunch*
EPA's cross-examination
XYZ's re-examination
Open question and answer period
EPA's closing argument
XYZ's closing argument
•Flexible time period for lunch of a stated duration.

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                                                   9834,12
                             -4-
     11.  The presentations at the mini-trial will be informal.
Formal rules of evidence will not apply, and witnesses may
provide testimony in the narrative.  The management repre-
sentatives may question a witness at the conclusion of the
witness'  testimony for a period not exceeding ten minutes,
per witness.  In addition, at the conclusion of each day's
presentation, the management repesentatives may ask any
further questions that they deem appropriate, subject to the
time limitations specified in paragraph 10.  Cross-examination
will occur at the conclusion of each party's direct case
presentation.

     12.  At the mini-trial proceeding, the trial attorneys
will have complete discretion to structure their presentations
as desired.  Forms of presentation include, but are not
limited to, expert witnesses, lay witnesses, audio .visual
'aids, demonstrative evidence, and oral argument.  The parties
agree that there will be no objection by either party to
the form or content of the other party's presentation.

     13.  In addition to asking clarifying questions, the Neutral
Advisor may act as a moderator.  However* the Neutral Advisor
will not preside like a judge or arbitrator, nor have the
power to limit, modify or enlarge the scope or substance of
the parties' presentations.  The presentations will not be
recorded, but either party may take notes of the proceedings.

     14.  In addition to counsel, each management representative
may have advisors in attendance at the mini-trial, provided
that all parties and the Neutral Advisor shall have been
notified of the identity of such advisors at least ten days
before commencement of the mini-trial.

     15.  At the conclusion of the mini-trial, the management
representatives shall meet, by themselves, and shall attempt
to agree on a resolution of the dispute.  By agreement, other
members of their teams may be invited to participate in the
meetings.

     16.  At the request of any management representative,
the Neutral Advisor will render an oral opinion as to the
likely outcome at trial of each issue raised during  the mini-
trial.x- Following that opinion, the management representatives
will again attempt to resolve the dispute.   If all management
representative* agree to request a written opinion on such
matters, the Neutral Advisor shall render  a  written  opinion
within 14 days.  Following issuance of any such written
opinion, the management representatives will again attempt
to resolve the dispute.

     17.  If the parties agree, the [adminstrative  law  judge or
federal district court judge] may be  informed  in  a  confidential
communication that an alternative dispute  resolution procedure

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                             -5-

            loyed,  but neither  party shall  inform  the
            .ive law judge or  federal district court  judge]
            as to any aspect  of the  mini-trial or  of the
           urthermore, the parties may  file a joint  motion  to
          jceedings in the      	  [appropriate  court]  in
            The motion shall  advise  the court that the  suspension
           purpose of conducting a mini-trial.   The  court will
         1 as to the time schedule established for completing
         trial proceedings.  Written and oral statements
        me party in the course of the  mini-trial  proceedings
        e  utilized by the other party and shall  be inadmissible
       ..earing of this matter before the [administrative law
       ; federal district court judge]  for  any purpose,
       ng  impeachment.  However, documentary evidence that
      irwise admissible shall not be rendered  inadmissible
      esult of its use at the mini-trial.

     18.  Any violation of these rules  by either party  will
     usly  prejudice the opposing party  and be prima  facie
    ids for a motion for a new  hearing; and to  the extent
     the violation results in the communication  of information
   .he [administrative law judge or  federal district court  judge]
   crary to the terms of this agreement, it shall be prima
   ie grounds for recusal of the [administrative law judge  or
  ieral district court judge].   Moreover, notwithstanding  the
  ovisions of Paragraph 4 above, any violation of these rules
  ' either  party will entitle the opposing party to full
 ompensation for its share of the Neutral Advisor's fees and
 xpenses,  irrespective of the outcome of any administrative
jr court proceeding.

     19.  The Neutral Advisor will be disqualified as a hearing
witness, consultant, or expert  for either party,  and his or her
advisory response will be  inadmissible  for  all purposes in
this or any other dispute  involving the parties.  The Neutral
Advisor will treat the subject  matter of the presentations
as confidential and will refrain from disclosing  any trade
secret information disclosed by the parties.  After the
Advisor render* hi» or her opinion  to  the  parties, he or she
shall return, all materials provided by the parties  (including
any copies) t«nd, destroy all  notes concerning this matter.

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                             -6-
                                                   9834.12
Datedt
Dated:
By:
    Attorney for United States
    Environmental Protection
    Agency
By:
    Attorney for  XYZ
    Corporation
Affirmation of Neutral Advisor:

     I agree to the foregoing provisions  of  this Alternative

Dispute Resolution Agreement.



Dated:
Signed:
           Neutral Advisor

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                                                     9834.12
                         ATTACHMENT F
                           UNITED STATES
                  ENVIRONMENTAL PROTECTION AGENCY
 In the Matter of               )
 XYZ Corporation,               )    Docket No.
      Respondent               )

        AGREEMENT TO INSTITUTE FACT-FINDING PROCEDURES
A. General Provisions
  1.      Purpose
  2.      Definitions
B. Guidelines for Conduct of Neutral Fact-finding
  1.      Scope and Applicability                    '
  2.      Jurisdiction of Neutral Fact-finder          '
  3.      Selection of Neutral Fact-finder
  4.      Information Regarding Dispute
  5.      Determination of Neutral Fact-finder
  6.      Confidentiality
  7.      Appeals Procedures
  8.      Administrative Fees, Expenses, and Neutral Fact-finder's Fee
  9.      Miscellaneous Provisions

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                                                     9834.12
A.  GENERAL PROVISIONS

1.   Purpose

   This agreement contains the procedures to be followed
   for disputes which arise over 	 [state  issue(s)].
2.   Definitions

   Terms not defined in this section have the meaning given by
         	    [state applicable statute(s) and  section(s)].
   All time deadlines in these alternative dispute resolution (ADR)
   procedures are specified in calendar days.  Except when
   otherwise specified:

   (a) "Act" means [state applicable statute(s) and  citation in
       U.S. Code].

   (b) "NAO" means any neutral administrative organization
       selected by the parties to administer the requirements of
       the ADR procedures.

   (c) "Neutral Fact-finder" means any person selected  in accordance
       with and governed by the provisions of these  ADR procedures.

   (d) "Party" means EPA and the XYZ Corporation.


B.   GUIDELINES FOR CONDUCT OF NEUTRAL FACT-FINDING

1.   Scope and Applicability

   The ADR procedures established by this document are
   for disputes arising over 	 [state issue(s)].

2.   Jurisdiction of Neutral Fact-finder

   In accordance with the ADR procedures set forth in this
   document, the Neutral Fact-finder is authorized to issue
   determination* of fact regarding disputes over [state
   __^__^_^^_—^-__ issue(s)], and any other issues
   authorized by the parties.

3. Selection of Neutral Fact-finder

   The Neutral Pact-finder will be chosen by the parties in
   the? following manner.

   (a) The parties shall agree upon a neutral  adminis-
       trative organization  (NAO) to provide services  to the
       parties as specified  in these ADR procedures.

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                                                       9834,12
                             -3-
       The parties shall jointly request the NAO to provide
       thea with a list of three to five (3-5) potential Neutral
       Fact-finders.  .Either party may make recommendations
       to the NAO of qualified individuals,  within ten (10)
       days after the receipt of the list of potential Neutral
       Fact-finders, the parties shall numerically rank the
       listed individuals in order of preference and simultane-
       ously exchange such rankings.  The individuals with
       the three (3) lowest combined total scores shall be
       selected as finalists.  Within ten (10) days after such
       selection, the parties shall arrange to meet with and
       interview the finalists.  Within ten (10) days after
       such meetings, the parties shall rank the finalists in
       order of preference and exchange rankings. . The individual
       with the lowest combined total score shall 6« selected
       as the Neutral Fact-finder.

 •  (b) The NAO shall give notice of the appointment of the
       Neutral Fact-finder to each of the parties.  A signed
       acceptance by the Neutral Fact-finder shall be filed
       with the NAO prior to the initiation of fact-finding
       proceedings.

   (c) If the Neutral Fact-finder should resign, die, withdraw,
       or be disqualified, unable, or refuse to perform the
       duties of the office,  the NAO may, on proof satisfactory
       to it, declare the office vacant.  Vacancies shall be
       filled in accordance with the applicable provisions
       of this section, and the dispute shall be reinitiated,
       unless the parties agree otherwise.

4.   Information Regarding Dispute

   (a) Within ten (10) days after the selection of the Neutral
       Fact-finder,  basic source material shall be jointly
       submitted to the Neutral Fact-finder by the parties.
       Such basic source material shall consist of:

       1) an agreed upon statement of the precise nature of
          the dispute,

       2) th«j position of each party and the rationale for it,

       3) all information and documents which support each
      •'•;••  party's position, and

       4) 	 [describe additional material].

   (b) Thereafter,  for a period of   	   days, the Neutral
       Fact-finder shall conduct an investigation of  the  issues
       in dispute.   As part of such investigation, ths Neutral
       Fact-finder may interview witnesses, request additional

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                             .4-        -             983412
       documents, request additional information  by written
       questions, and-generally use all means  at  his or her
       disposal to gather the facts relevant to the disputes as
       he or she determines.   The Neutral Fact-finder  shall be
       the sole determiner of the relevancy of information.
       Conformity to formal rules of evidence  shall not be
       necessary.

5.   Determination of Neutral Factfinder

   (a) The Neutral Fact-finder shall render a  determination
       within _          days of the time limitation specified
       in Section B. 4(b) above,  unless:

           (1)  Both parties agree in writing  to  an extension;
                Cor

           (2)  The Neutral Fact-finder determines that an
                extension of the time limit is necessary.]

   (b) The determination of the Neutral Fact-finder shall be
       signed and in writing.  It shall contain a full statement
       of the basis and rationale for the Neutral Fact-finder's
       determination.

   (c) If the parties settle their dispute prior  to  the deter-
       mination of the Neutral Fact-finder, the  Neutral Fact-finder
       shall cease all further activities in regard  to the
       dispute upon receipt of joint notice of such  settlement
       from the parties.

   (d) The parties shall accept as legal delivery of  the  deter-
       mination the placing of a true copy of  the decision  in
       the mail by the Neutral Fact-finder, addressed to  the
       parties'  last known addresses or their  attorneys,  or by
       personal service.

   (e) After the Neutral Fact-finder forwards his or  her  deter-
       mination to the parties, he or she shall return all
       dispute-specific information provided by the parties
       (including any copies) and destroy notes concerning
       this matter.
      •-• fc'-
6.   Confidentiality

   (a) The determination of the Neutral  Fact-finder,  and all
       of the actions taken pursuant to  these AOR procedures,
       shall be confidential and shall be entitled to the
       same privileges that apply generally to settlement
       negotiations.

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                             -s-          ..             9834.12


    (b) The  Neutral  Fact-finder shall treat the subject matter
       of all  submitted  information as confidential, and
       shall refrain  from disclosing any trade secret or
       confidential bus'iness information disclosed as such
       by the  parties.   [If XYZ has previously formally claimed
       information as confidential business information (CBI),
       XYZ  shall specifically exclude the information from '
       such CBI classification for the limited purpose of
       review  by the Neutral Fact-finder.]

    (c) No determination of the Neutral Fact-finder shall be
       admissible as evidence of any issue of fact or law in any
       proceeding brought under any provision of [state statute!
       or any  other provision of law.

 7.   Appeals Procedures

    (a) Any party may appeal the determination of the Neutral
       Fact-finder within thirty days of notification of
       such determination.  Any such appeal shall be made to
       the  [Chief Judicial Officer, U.S. Environmental Protec-
       tion Agency, or district court judge].

    (b) The determination of the Neutral Fact-finder shall be
       binding and conclusive, and shall not be overturned
       unless  achieved through fraud, misrepresentation,
       other misconduct by the Neutral Fact-finder or by any
       of the parties, or mutual mistake of fact.  The [admin-
       istrative law judge or federal district court judge] -
       shall not have jurisdiction to review the determination
       unless  there is a verified complaint with supporting
       affidavits filed by one of the parties attesting to
       specific instances of such fraud, misrepresentation,
       other misconduct, or mutual mistake of fact.

8.   Adainiatrative Fees, Expenses, and Neutral Fact-finder's Fee

    (a) The fee* and expenses of the Neutral Fact-finder, and
       of the NAO,  shall be borne equally by the parties.
       The partie* «ay employ additional neutral organizations
       to administer these ADR procedures as mutually deemed
       necessary, with the fees and expenses of such organizations
       born* equally by the parties.

    (b) The MAO shall prescribe an Administrative Fee Schedule
       and a Refund Schedule.  The schedules in effect at the time
       of the  joint request for fact-finding shall be applicable.
       The filing fee, if required, shall be advanced by the
       parties to the NAO as part of the joint request for
       fact-finding.  If a matter is settled, a refund shall
       be made in accordance with the Refund Schedule.

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                             -6-
                                                    9-8 3 4.1 2
   (c)  Expenses of providing information to the Neutral Fact-finder
       shall be borne by the party producing such information.

   (d)  The per diem fee for the Neutral Fact-finder shall  be
       agreed upon by the parties and the NAO prior to the
       commencement of any activities by the Neutral Fact-finder.
       Arrangements for compensation of the Neutral Fact-finder
       shall be made by the NAO.

9.    Miscellaneous Provisions

   (a)  Before the selection of the Neutral Fact-finder, all oral
       or written communications from the parties for the  Neutral
       Fact-finder's consideration shall be directed to the NAO
       for eventual transmittal to the Neutral Fact-finder.

   (b)  All papers connected with the fact-finding shall be served
       on the opposing party either by personal service or United
       States mail, First Class.

   (c)  The Neutral Fact-finder shall be disqualified from acting
       on behalf of either party, and his or her determination
       pursuant to these ADR procedures shall be inadmissible
       for all purposes, in any other dispute involving the
       parties.

   (d)  Any notification or communication between the parties,
       or with and by the Neutral Fact-finder shall be confidential
       and entitled to the same privileges that apply generally
   .    to settlement negotiations.

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