[Federal Register Volume 64, Number 33 (Friday, February 19, 1999)]
[Rules and Regulations]
[Pages 8243-8247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4076]
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OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
29 CFR Part 2200
Rules of Procedure
AGENCY: Occupational Safety and Health Review Commission.
ACTION: Final rule.
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SUMMARY: The Occupational Safety and Health Review Commission has
concluded that it is in the public interest to supplement the voluntary
settlement judge procedure prescribed at 29 C.F.R. 2200.101 with an
additional settlement process that would be mandatory for cases where
the penalty proposed by the Secretary of Labor is $200,000 or greater
or other cases deemed appropriate by the Chief Administrative Law
Judge. This additional procedure, to be known as the Settlement Part,
would be instituted as a pilot program for a one-year trial period to
ascertain whether requiring the parties to appear before a settlement
judge facilitates the settlement process with respect to large and
complex cases.
During and after the trial period, the Commission will evaluate the
results in order to decide whether it should continue the Settlement
Part procedure and, if so, what modifications should be made. The
evaluation will take into account data on the rate at which settlements
are achieved in large and complex cases and the length of time those
cases remain on the Commission's docket before a settlement agreement
is reached. The Commission will also consider the views of its judges
and the parties regarding how well the process is working and how it
might be improved.
DATES: This rule is effective from February 19, 1999 until February 22,
2000 unless extended by the Commission by publication in the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Earl R. Ohman, Jr., General Counsel,
One Lafayette Center, 1120 20th St., N.W. 9th Floor, Washington, D.C.
20036-3419, phone 202-606-5410.
SUPPLEMENTARY INFORMATION:
Development of the Final Rule
On March 2, 1998 the Occupational Safety and Health Review
Commission published in the Federal Register a proposal to institute,
as a pilot program for a one year trial period, a new procedure to be
known as the Settlement Part for the purpose of facilitating the
settlement process in large and complex cases. 63 FR 10166. The notice
explained the reasons why
[[Page 8244]]
the Commission developed this proposal and the basis and purpose of
each particular provision. The notice included a request for public
comment.
In response, the Office of the Solicitor of Labor, which represents
the Secretary of Labor in all adjudicative proceedings before the
Commission, filed comments on behalf of the Secretary of Labor. Matthew
J. Rieder, an attorney in a regional office of the Solicitor of Labor,
filed comments setting forth his personal views based on his many years
of experience in Commission proceedings. Comments were also received
from two law firms, Gibson, Dunn & Crutcher (on behalf of United Parcel
Service, the Anheuser-Busch Companies, Inc., and Champion International
Corporation) and McDermott, Will & Emery, which is a frequent
practitioner before the Commission. The Synthetic Organic Chemical
Manufacturers Association, Inc. (``SOCMA''), Alabama Power, and
Southern Company also filed comments. The Commission gratefully
acknowledges these comments and has made several modifications and
clarifications in response to the comments received. After careful
consideration, the Commission issues this final rule establishing a
mandatory settlement procedure to be evaluated after a one-year trial
period.
Need for a Mandatory Procedure
Alabama Power, Southern Company, and SOCMA were strongly supportive
of the proposed Settlement Part. All three were in agreement that a
mandatory settlement procedure would strongly enhance the possibility
that the parties would achieve significant savings in cost and time by
reaching a mutually satisfactory resolution of the case.
On the other hand, two commentators, the Secretary and Gibson, Dunn
& Crutcher, explicitly took exception to the mandatory nature of the
proposed procedure. Gibson, Dunn & Crutcher expressed the view that
mandating formal procedures at the outset of the case will obstruct
rather than encourage settlements because the procedural requirements--
preparing for and attending a conference or conferences and developing
a written statement of the issues and the party's position on those
issues--would cause the parties' positions to become hardened rather
than more flexible and therefore would be unproductive and inefficient.
The Secretary stated that her own statistical analysis demonstrates
that even in cases in which substantial penalties are in issue the
parties are able to achieve settlement within a relatively expeditious
period of time under the Commission's existing procedures. Thus, the
Secretary concluded that parties who are inclined to settle have
sufficient opportunity to do so under the present procedures and
imposing a mandatory and structured process would be costly and time-
consuming.
At the outset, the Commission believes that the Secretary's
estimates of the length of time in which cases achieve settlement may
not accurately reflect the Commission's experience. The Secretary notes
that ``many cases'' with penalties in excess of $100,000 settle
informally before a notice of contest is filed. However, such cases do
not become docketed with the Commission and therefore do not affect the
Commission's caseload. In addition, the Commission conducted an
analysis of the narrower range of cases in which the penalties sought
are $200,000 or greater. There were eleven such cases that became final
orders through settlement agreements in fiscal year 1997. With the
exception of one case which settled before the pleadings were filed,
the time between the date the case was assigned to the judge and the
date the settlement agreement was reached ranged from 81 to 280 days,
with a median time of 190 days, or over six months. Even more
significant, in accordance with the Commission's usual practice, these
cases were not even assigned to a judge until after the parties filed
their pleadings and any preliminary matters were resolved. In almost
half of these cases, the time consumed awaiting assignment of a judge
added at least four months to the overall case disposition time; one
case was not assigned to a judge until almost nine months after
docketing and another was not assigned for over a year after docketing.
The total time between date of docketing with the Commission and the
date the settlement was reached ranged between 135 to 583 days, with a
median of 261 days, or almost nine months. Three of these ten cases
required over a year to achieve a settlement and one took almost a
year. Moreover, of those cases having penalties between $100,000 and
$200,000 to which the Secretary refers, most did not settle within 120
days. Rather, the median time between docketing and final disposition
was 226 days for those cases in the $100,000-$200,000 range which
became final by settlement in fiscal year 1997. The statistics with
respect to fiscal year 1998 cases are similar. Of the 25 cases having
penalties of at least $200,000 that became final orders through
settlement agreements in fiscal year 1998, three took over a year to
achieve settlement, two took approximately one year, and two others
required approximately 11 months. The total time between date of
docketing with the Commission and the date the settlement was reached
ranged from 100 to 527 days, with a median of 261 days, for cases
having penalties of at least $200,000, and the median time between
docketing and final disposition was 238 days for those cases in the
$100,000-$200,000 range which became final by settlement in fiscal year
1998. Thus, the Commission's experience does not support the
Secretary's contention that high penalty cases generally settle within
a relatively short time frame.
The Commission also notes that through the pilot program it seeks
to determine whether a mandatory settlement procedure not only would
bring large and complex cases to settlement in a shorter period of time
but also whether such a procedure would increase the proportion of such
cases that settle rather than go to trial. Trials in large cases are
always expensive both for the parties and the Commission. In addition,
cases that the parties settle voluntarily rarely, if ever, come before
the Commission for review of the judge's decision, and therefore
settlement reduces costs and conserves resources at the appellate level
as well as at the hearing stage of the proceeding. The Commission
appreciates the concerns of the commentators that the settlement
procedures not be so structured as to ultimately reduce the likelihood
of a settlement or impose additional costs and burdens on the parties,
and the Commission emphasizes that it is precisely those issues on
which it intends to gather information and evaluate as part of the
pilot program. The Commission intends to carefully review the pilot
program. The Commission will particularly review the relative benefits
to and burdens on participants of a mandatory settlement process.
Applicability
Alabama Power and Southern Company suggested that the pilot program
include smaller employers by lowering the penalty threshold to $60,000
and that it also be expanded to include all citations for willful
violations and any case in which the employer requests that a judge be
appointed under the Settlement Part. As explained in the preamble to
the proposed rule, the Commission deliberately chose the $200,000
threshold to ensure a sufficiently large sample of cases without
overtaxing the resources the Commission could justifiably devote to a
pilot program.
[[Page 8245]]
Moreover, under the proposed pilot program, the Chief Administrative
Law Judge retains discretion to assign other cases to the Settlement
Part, and, as discussed more fully below, the settlement judge
procedures prescribed in Sec. 2200.101 and the authority of the trial
judge to convene settlement conferences under Sec. 2200.67(g), remain
in effect for all cases.
The Secretary suggested that the Commission prescribe guidelines
for the Chief Administrative Law Judge in selecting the cases which he
may assign to the Settlement Part at his discretion. The Commission
emphasizes that the Settlement Part is a trial program for one year,
and the discretion accorded the Chief Administrative Law Judge was
intended to permit some exploration of different criteria and some
flexibility in selecting cases for proceeding under the Settlement Part
in the event the Commission's caseload warrants including other cases
in the pilot program in addition to those cases meeting the $200,000
mandatory threshold.
Assignment of the Settlement Part Judge
Commentator McDermott, Will & Emery expressed the view that while a
tentative evaluation of the merits of the case from an impartial third
party early in the proceedings can potentially be an effective catalyst
for a settlement where negotiation and discussion between the parties
has been unsuccessful, that ``first impression'' is best given by the
same judge who will be deciding the case. Accordingly, McDermott, Will
& Emery suggested that the Commission amend Sec. 2200.67(g) to
explicitly provide that the case judge is authorized to conduct
settlement conferences regardless of whether settlement has been
discussed under the Settlement Part structure or under the voluntary
settlement judge procedure at Sec. 2200.101. Alternatively, McDermott,
Will & Emery requested that the Commission invite additional public
comment on the use of settlement conferences by the case judge after a
case has been processed through the Settlement Part or settlement judge
procedure.
The Commission does not believe that either of these courses is
necessary. The Settlement Part rule merely supplements the existing
settlement judge procedure by making essentially the same mechanism
available in certain cases which otherwise could have proceeded under
the settlement judge process if the parties had so agreed. The
Commission's existing rules specifically provide that ``settlement is
permitted and encouraged * * * at any stage of the proceedings.''
Sec. 2200.100(a). Nothing in either the proposed Settlement Part or the
existing settlement judge rule precludes either party from seeking the
assistance of the case judge in facilitating settlement under
Sec. 2200.100 after proceedings under Sec. 2200.101 or the Settlement
Part have terminated. Under proposed Sec. 2200.109(f)(2) (codified as
Sec. 2200.120(f)(1) by this final rule) the Settlement Part Judge may
at any time make a determination that further negotiations would be
unlikely to achieve settlement. Upon that determination, the case would
be assigned to a hearing judge, and the possibility of settlement could
be raised at any time during those subsequent proceedings.
Commencement of Settlement Part Proceedings
Both the Secretary and Gibson, Dunn & Crutcher urge that the
involvement of the Settlement Part Judge not commence until after the
parties have had an opportunity to discuss settlement among themselves
without the formal intervention of the judge. The Secretary suggests
that because high penalty cases have already shown themselves to be
susceptible to settlement at an early stage of the proceedings, the
mandatory involvement of the judge should be deferred until after the
completion of discovery, at which point the parties would be better
able to identify to the judge those areas in which disagreements
remain, and the judge would be better able to assist the parties in
addressing those areas of disagreement.
The Commission recognizes that in order for a settlement judge to
assist the parties, there must be some initial contact between the
parties and some development of the parties' positions, whether by some
exchange of discovery or by other means. As noted above, however, the
Commission's concern relates not only to the proportion of complex or
large cases that are resolved by settlement but also to the length of
time required to achieve settlement. A primary purpose of the
Settlement Part pilot program is to determine whether the settlement
process can be expedited if the settlement judge is assigned at an
early stage in the proceedings. It is the Commission's hope that as the
parties engage in their initial discussions and development of the
issues and their positions on those issues the settlement judge will be
able to assist and guide the parties toward the objective of a
settlement. Accordingly, the Commission does not believe that
assignment of the Settlement Part Judge should be deferred until after
discovery is underway.
Moreover, the Commission remains concerned as well about the length
of time the filing of pleadings or other preliminary matters
contributes to the delay in reaching a final disposition in cases where
the parties are able to come to an agreement. The Commission therefore
amends the proposed rule to authorize the Chief Administrative Law
Judge to assign a judge as early as the docketing of the notice of
contest under Sec. 2200.33. The Commission expects that the judge will
act in his discretion to manage the case with the objective of
advancing the case toward a voluntary settlement in a prompt and
expeditious manner. The Commission emphasizes that the final rule
empowers the judge to issue any orders that in his judgment would
facilitate the proceedings, including at the pleading stage.
Duration of Settlement Part Procedures
McDermott, Will & Emery contended that the maximum period of 90
days prescribed under the proposed rule is overly short. Particularly
considering that the Commission is amending the proposed rule to allow
the proceedings under the Settlement Part to commence as early as the
date of docketing, the Commission agrees. Accordingly, by this final
rule the Commission is increasing the time allowed for settlement
proceedings to 120 days, with an additional period, not to exceed 30
days, permitted at the discretion of the judge. The Commission is
cognizant of the fact that it may be necessary for the parties to
engage in at least some discovery in order to be in a position to
conduct meaningful settlement negotiations. However, the Commission is
hopeful that any such discovery can be expedited, and as part of the
pilot program the Commission intends to evaluate how effectively the
parties are able to use discovery under the Settlement Part procedures.
At the same time, while the Commission strongly believes that the cycle
time for voluntary dispositions by settlement can be reduced, the
Commission also recognizes that the parties must have some degree of
flexibility in the length of time needed to achieve a settlement.
Furthermore, it clearly would be counterproductive to terminate
proceedings under this rule where the parties have been actively
pursuing settlement but have been unable to come to a final agreement
prior to the expiration of a fixed time period. Therefore, the final
rule provides that with the concurrence of the Chief Administrative Law
Judge the parties may be granted an extension of no more
[[Page 8246]]
than 30 days in which to complete ongoing settlement negotiations. The
Commission reiterates its expectation that the parties and the
Settlement Part Judge will work together to achieve effective and
timely completion of proceedings under Sec. 2200.120.
Attendance at the Settlement Conference
Several commentators expressed opposition to the requirement of
proposed Sec. 2200.109(d)(2) that an official of the party having full
settlement authority attend settlement conferences along with the
party's representative. The Commission does not agree that the
requirement is unduly burdensome. The Commission believes that the
personal presence of a representative having full settlement authority
may be essential for the efficacy of a settlement conference with the
judge and will minimize the potential for further drawn-out
negotiations. In the Commission's view, the savings in time, effort,
and potential further negotiations outweighs any inconvenience to the
parties that may ensue by requiring the presence of an individual
authorized to make a final commitment for that party. The Commission
notes, in that regard, that this provision for personal presence is
patterned after the practice in courts of requiring the presence of a
responsible official of each party at settlement conferences.
Commentator Matthew Rieder expressed the concern that
Sec. 2200.109(d)(2) may be impractical because it could require the
attendance of high-level officials both from the Office of the
Solicitor and the Office of the Assistant Secretary for Occupational
Safety and Health (``OSHA''). Mr. Rieder noted that in general the
individuals having settlement authority for the Secretary are the
Regional Solicitor and the OSHA Regional Administrator and that the
Secretary's internal operating procedures vest final authority for the
conduct of certain cases at the level of Deputy Solicitor and Deputy
Assistant Secretary or above. See, e.g., OSHA Instruction CPL 2.80,
Handling of Cases to be Proposed for Violation-By-Violation Penalties,
sections H.4.c & H.6.d (Oct. 21, 1990). Nevertheless, the Commission
does not agree that Sec. 2200.109(d)(2) is impractical or would impose
an undue burden on the Secretary. The individual having authority for
cases under the Secretary's procedures would necessarily be familiar
with the cases under their purview. Involving these individuals in
settlement discussions and negotiations merely continues their case
responsibility and would occur under the Commission's existing
settlement rules in any event. To the extent that the personal presence
of the Regional Solicitor or other officials either of the Solicitor's
office or of OSHA might not be practical in any particular case, any
such difficulties could be avoided by an appropriate delegation of
authority. For example, the Justice Department has prescribed
regulations setting forth the authority to accept settlement offers at
various levels within that agency. 28 CFR Secs. 0.160-0.172 and
directives issued pursuant thereto. Indeed, the Secretary presently
delegates settlement authority in certain cases, OSHA Instruction CPL
2.90, Guidelines for Administering of Corporate-Wide Settlement
Agreements, sections F.4.a & G.3 (June 3, 1991), and, as Mr. Rieder
himself noted in his comment, Regional Solicitors in certain cases may
now delegate settlement authority to counsel.
In any event, although the Commission does not expect that the
proposed rule will prove unduly burdensome for any party, the
practicality of the requirement for attendance of a representative
having full settlement authority will be evaluated during the course of
the pilot program. While the Commission appreciates the concerns voiced
by the commentators, the Commission does not regard those concerns as
sufficient grounds to modify the Settlement Part rule at this time
insofar as the rule permits the judge to require the attendance of
individuals having full settlement authority when the judge deems it
appropriate and mandates compliance by the parties with any such order
issued by the judge.
Confidentiality
The Commission gave a great deal of thought and consideration to
the issue of preserving the confidentiality of settlement negotiations
and discussions. The Commission received no comments regarding
Sec. 2200.109(d)(3) with one exception. The rule as proposed precludes
the Settlement Part Judge from disclosing any information revealed in
private discussions with a party absent that party's consent. The
Secretary, however, expressed concern that the judge might require the
Secretary to divulge to other parties privileged information,
principally the identity of informers. While it is conceivable, the
Commission does not consider it very likely that a party would be
compelled to disclose the identity of informants during the settlement
process or that an agreement to settle would be made conditional on
release of the identity of informers. It is the expectation that the
identity of confidential informants will be treated consistent with
Commission precedent--that is, protected from disclosure. In any event,
the Commission assures the Secretary that protection of the identity of
informers as well as the other issues addressed in this preamble have
been and will continue to be included within the training the
Commission is conducting for its judges assigned to the Settlement
Part. Indeed, the Commission views training of settlement judges as
critical and is committed to continue to conduct appropriate training.
Other Issues
In the preamble to the proposed rule, 63 FR 10166, the Commission
did not expressly make clear what would happen to cases assigned to the
Settlement Part and still pending when the pilot program is concluded.
Any case assigned to the Settlement Part during the pendency of this
rule will continue to be processed under the provisions of the rule
until the termination of proceedings in accordance with
Sec. 2200.120(f) of the final rule even if the rule itself is no longer
in effect at that time.
List of Subjects in 29 CFR Part 2200
Administrative practice and procedure, Hearing and appeal
procedures.
For the reasons set forth in the preamble, the Occupational Safety
and Health Review Commission amends Title 29, Chapter XX, Part 2200 of
the Code of Federal Regulations as follows:
PART 2200--RULES OF PROCEDURE
1. The authority citation continues to read as follows:
Authority: 29 U.S.C. 661(g).
2. Subpart H is added to Part 2200 to read as follows:
Subpart H--Settlement Part
Sec. 2200.120 Settlement part.
(a) Applicability. This section applies only to notices of contest
by employers in which the aggregate amount of the penalties sought by
the Secretary is $200,000 or greater and notices of contest by
employers which are determined to be suitable for assignment under this
section for reasons deemed appropriate by the Chief Administrative Law
Judge.
(b) Proceedings under this Part. Notwithstanding any other
provisions of these rules, upon the docketing of the notice of contest
or at such other time as he deems appropriate the Chief
[[Page 8247]]
Administrative Law Judge shall assign to the Settlement Part any case
which satisfies the criteria set forth in paragraph (a) of this
section. The Chief Administrative Law Judge shall either act as or
appoint a Settlement Part Judge, who shall be a Judge other than the
one assigned to hear and decide the case, to conduct proceedings under
the Settlement Part as set forth in this section.
(c) Powers and duties of Settlement Part Judges. (1) The Judge
shall confer with the parties on subjects and issues of whole or
partial settlement of the case.
(2) The Judge shall seek resolution of as many of the issues in the
case as is feasible.
(3) The Judge may require the parties to provide statements of the
issues in controversy and the factual predicate for each party's
position on each issue or may enter other orders as appropriate to
facilitate the proceedings.
(4) The Judge may allow or suspend discovery during the time of
assignment.
(5) The Judge may suggest privately to each attorney or other
representative of a party what concessions his or her client should
consider, and assess privately with each attorney or other
representative the reasonableness of the party's case or settlement
position.
(d) Settlement conference--(1) General. The Settlement Part Judge
shall convene and preside over conferences between the parties. All
settlement conferences shall be held in person. The Judge shall
designate a place and time of conference.
(2) Participation in conference. The Settlement Part Judge may
require that any attorney or other representative who is expected to
try the case for each party be present. The Settlement Part Judge may
also require that the party's representative be accompanied by an
official of the party having full settlement authority on behalf of the
party. The parties and their representatives or attorneys are expected
to be completely candid with the Settlement Part Judge so that he may
properly guide settlement discussions. The failure to be present at a
settlement conference or otherwise to comply with the orders of the
Settlement Part Judge or the refusal to cooperate fully within the
spirit of this rule may result in the imposition of sanctions under
Sec. 2200.41.
(3) Confidentiality. All statements made, and all information
presented, during the course of proceedings under this section shall be
regarded as confidential and shall not be divulged outside of these
proceedings except with the consent of the parties. The Settlement Part
Judge shall if necessary issue appropriate orders in accordance with
Sec. 2200.11 to protect confidentiality. The Settlement Part Judge
shall not divulge any statements or information presented during
private negotiations with a party or his representative except with the
consent of that party. No evidence of statements or conduct in
proceedings under this section within the scope of Federal Rule of
Evidence 408, no notes or other material prepared by or maintained by
the Settlement Part Judge, and no communications between the Settlement
Part Judge and the Chief Administrative Law Judge including the report
of the Settlement Part Judge under paragraph (f) of this section, will
be admissible in any subsequent hearing except by stipulation of the
parties. Documents disclosed in the settlement process may not be used
in litigation unless obtained through appropriate discovery of
subpoena. The Settlement Part Judge shall not discuss the merits of the
case with any other person, nor appear as a witness in any hearing of
the case.
(e) Record of proceedings. No material of any form required to be
held confidential under paragraph (d)(3) of this section shall be
considered part of the official case record required to be maintained
under 29 U.S.C. 661(g), nor shall any such material be open to public
inspection as required by section 661(g), unless the parties otherwise
stipulate. With the exception of an order approving the terms of any
partial settlement agreed to between the parties as set forth in
paragraph (f)(1) of this section, the Settlement Part Judge shall not
file or cause to be filed in the official case record any material in
his possession relating to these proceedings, including but not limited
to communications with the Chief Administrative Law Judge and his
report under paragraph (f) of this section, unless the parties
otherwise stipulate.
(f) Report of Settlement Part Judge. (1) The Settlement Part Judge
shall promptly notify the Chief Administrative Law Judge in writing of
the status of the case at such time that he determines further
negotiations would be fruitless. If the Settlement Part Judge has not
made such a determination and a settlement agreement is not achieved
within 120 days following assignment of the case to the Settlement Part
Judge, the Settlement Part Judge shall then advise the Chief
Administrative Law Judge in writing of his assessment of the likelihood
that the parties could come to a settlement agreement if they were
afforded additional time for settlement discussions and negotiations.
The Chief Administrative Law Judge may then in his discretion allow an
additional period of time, not to exceed 30 days, for further
proceedings under this section. If at the expiration of the period
allotted under this paragraph the Settlement Part Judge has not
approved a full settlement pursuant to Sec. 2200.100, he shall furnish
to the Chief Administrative Law Judge copies of any written
stipulations and orders embodying the terms of any partial settlement
the parties have reached.
(2) At the termination of the settlement period without a full
settlement, the Chief Administrative Law Judge shall promptly assign
the case to an Administrative Law Judge other than the Settlement Part
Judge or Chief Administrative Law Judge for appropriate action on the
remaining issues.
(g) Non-reviewability. Notwithstanding the provisions of
Sec. 2200.73 regarding interlocutory review, any decision concerning
the assignment of a Settlement Part Judge or a particular Judge and any
decision by the Settlement Part Judge to terminate proceedings under
this section is not subject to review by, appeal to, or rehearing by
any subsequent presiding officer, the Chief Administrative Law Judge,
or the Commission.
Dated: February 12, 1999.
Stuart E. Weisberg,
Chairman.
Dated: February 12, 1999.
Thomasina V. Rogers,
Commissioner.
[FR Doc. 99-4076 Filed 2-18-99; 8:45 am]
BILLING CODE 7600-01-M