
[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Rules and Regulations]
[Pages 34249-34254]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14087]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Part 386

[Docket No. FMCSA-2003-14794]


Notice of Final Revision to Guidance for the Use of Binding 
Arbitration Under the Administrative Dispute Resolution Act of 1996

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of final revision to guidance.

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SUMMARY: Under existing guidance, FMCSA must use a form of arbitration 
known as ``Night Baseball'' for its civil penalty forfeiture 
proceedings in which the only issues remaining to be resolved are the 
amount of the civil penalty owed and/or the length of time in which to 
pay it. On March 21, 2011, FMCSA proposed to revise the Guidance to 
eliminate the ``Night Baseball'' format, and to replace it with a 
format in which the Arbitrator determines the final civil penalty and 
the amount of time in which to pay it. The Arbitrator would no longer 
be bound by the closest suggested penalty submission of the parties. 
The Notice provided the public with 30 days to comment on the proposal. 
The Agency received no comments and is therefore revising the Guidance 
by eliminating the ``Night Baseball'' format. The Agency is also 
revising the Guidance to incorporate typographical and other minor 
changes.

DATES: The revised Guidance is effective June 11, 2012. It will apply 
to all cases in which an order assigning a matter to binding 
arbitration is issued from June 11, 2012 forward.

FOR FURTHER INFORMATION CONTACT: Steven B. Farbman, Adjudications

[[Page 34250]]

Counsel, Federal Motor Carrier Safety Administration, 1200 New Jersey 
Avenue SE., Washington, DC 20590, (202) 385-2351. Office hours are from 
8:30 a.m. until 5:00 p.m., e.t., Monday through Friday, except Federal 
holidays. If you have questions on viewing the docket, call Renee V. 
Wright, Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION: On March 4, 2004, FMCSA published in the 
Federal Register (69 FR 10288) its Guidance for the use of binding 
arbitration as an alternative dispute resolution technique in Agency 
civil penalty forfeiture proceedings in which the only issues remaining 
to be resolved are the amount of the civil penalty owed and/or the 
length of time in which to pay it. Under the Guidance's ``Night 
Baseball'' format, telephonic hearings were held, during which each 
party presented to the Arbitrator evidence supporting the penalty it 
considered appropriate for the case without divulging its proposed 
penalty. Following the hearing, each party provided the Arbitrator and 
the opposing party with a sealed envelope containing the amount of the 
total proposed civil penalty for the case and, if desired, a proposed 
payment plan. Before opening the envelopes, the Arbitrator issued to 
the parties an initial written determination of the total civil penalty 
and payment plan. The Arbitrator then opened the envelopes and selected 
the proposed civil penalty and payment plan that was closer to his or 
her determination. The final penalty amount and payment plan were 
distributed to the parties in a final written decision.
    On March 21, 2011, FMCSA published in the Federal Register its 
proposal to eliminate the ``Night Baseball'' format from the Guidance 
(76 FR 15359). Several years of experience with this format have 
revealed that final civil penalties are rarely identical to the 
Arbitrator's determination, and occasionally not close at all. In 
addition, the ``Night Baseball'' format requires each party to persuade 
the Arbitrator to accept the wisdom of its position without being able 
to reveal the civil penalty it is proposing. The Agency sought comment 
on a new procedure, in which the Arbitrator would determine the amount 
of the civil penalty following a hearing. The comment period has 
closed, and FMCSA received no comments. Accordingly, FMCSA is 
eliminating ``Night Baseball'' from all proceedings assigned for 
binding arbitration from this day forward. Following the presentation 
of evidence by the parties, the Arbitrator will determine the amount of 
the civil penalty and the payment plan. The maximum civil penalty will 
be the penalty set forth in the Notice of Claim; there will be a 
minimum civil penalty in only those cases in which there is a statutory 
minimum.
    The Agency is also revising the Guidance to incorporate 
typographical corrections and other minor changes, changes necessary to 
resolve inconsistencies, and changes needed to describe actual 
practice. For example, although the Chief Safety Officer is the FMCSA 
Assistant Administrator, the Agency is changing ``Chief Safety 
Officer'' to ``Assistant Administrator'' because that is the term used 
to describe the decisionmaker in 49 CFR part 386, which includes 
binding arbitration as one of the options for a Reply to a Notice of 
Claim.
    The Guidance contains ``Questions and Answers on FMCSA's Use of 
Binding Arbitration,'' set forth as Issues and Responses. The Responses 
to Issues 2 and 9 in the 2004 Guidance were inconsistent with each 
other. The Response to Issue 2 said that ``[t]he decision to arbitrate 
is strictly that of the parties'' and that ``arbitration must be a 
completely voluntary process.'' On the other hand, the Response to 
Issue 9 said that if a carrier opted for binding arbitration, the Field 
Administrator had the burden to demonstrate why the matter should not 
be so assigned, and the Chief Safety Officer would decide whether the 
matter should be arbitrated.
    In In the Matter of New Metro Trucking Corp., Docket No. FMCSA-
2009-0376, Order on Binding Arbitration, May 23, 2011, the Assistant 
Administrator found that the language in the Response to Issue 9 
trumped the language in the Response to Issue 2, thereby limiting the 
Field Administrator's discretion in objecting to binding arbitration. 
The Assistant Administrator found that, based on the Guidance as it was 
then written, the Field Administrator could prevent binding arbitration 
in only those cases in which binding arbitration had been determined to 
be inappropriate, as described in the Response to Issue 1: maximum 
civil penalty cases issued pursuant to section 222 of the Motor Carrier 
Safety Improvement Act of 1999, or any cases that deal with an 
interpretation of the regulations or with important policy issues.
    Therefore, the Response to Issue 9 effectively removed the 
voluntariness set forth in the Response to Issue 2. Under the Response 
to Issue 9, the Chief Safety Officer could assign a matter for binding 
arbitration if the Field Administrator did not meet his burden, even if 
the Field Administrator did not wish the matter to be arbitrated. 
Accordingly, the Agency is eliminating the inconsistency, merging both 
Responses into Issue 2, and deleting the previous Issue 9 and its 
Response. Under the Guidance that becomes effective today, the Field 
Administrator's objection will not be limited. To make meaningful the 
Response to Issue 2 that the decision to arbitrate is strictly that of 
the parties, the Agency is permitting the Field Administrator to 
prevent binding arbitration by objecting to it for any reason. This 
change is consistent with the Administrative Dispute Resolution Act of 
1996 (ADRA) (Pub. L. 104-320, 110 Stat. 3870, October 19, 1996) (now 
codified at 5 U.S.C. 571-584), which authorizes the use of arbitration 
``whenever all parties consent.'' 5 U.S.C. 575(a)(1).
    Finally, the statements in the previous Responses to Issues 2 and 
9, concerning the issuance of a Notification of Arbitration, were not 
accurate. Those two Responses, which stated that if the Chief Safety 
Officer determined that a case was appropriate for binding arbitration, 
he or she would notify the parties by issuing a Notification of 
Arbitration, did not mirror actual practice. The previous Response to 
Issue 9 provided that the Notification would require each party to 
return the Notification form indicating agreement or objection. In 
actual practice, the Chief Safety Officer did not issue a Notification 
of Arbitration to the parties. As a result, the Agency is eliminating 
the Notification of Arbitration in the revised Response to Issue 2 to 
mirror actual practice. If, in its Reply to a Notice of Claim, a 
respondent requests binding arbitration, the Field Administrator may 
consent or object. If the Field Administrator objects, the matter will 
not be referred to binding arbitration; if the Field Administrator 
consents, the Assistant Administrator will decide whether the case is 
to be referred to binding arbitration. The Assistant Administrator will 
inform the parties of his or her decision in an Order on Binding 
Arbitration.

    Issued on: May 31, 2012.
Anne S. Ferro,
Administrator.

    The revised Guidance reads as follows:

[[Page 34251]]

Guidance for the Use of Binding Arbitration Under the Administrative 
Dispute Resolution Act of 1996

Dated: June 11, 2012.

Binding Arbitration

    In binding arbitration, the parties agree to use a mutually 
selected decisionmaker to hear their dispute and resolve it by 
rendering a decision or award that is binding on the parties. Like 
litigation, binding arbitration is an adversarial adjudicative process 
designed to resolve the specific issues submitted by the parties. 
Binding arbitration differs significantly from litigation, however, in 
that it does not require conformity with the legal rules of evidence, 
and the proceeding is conducted in a private rather than a public 
forum. Binding arbitration awards typically are enforceable by courts, 
absent defects in the arbitration procedure. The grounds for appeal 
from arbitration awards, pursuant to the Federal Arbitration Act, 9 
U.S.C. Sec.  1-16, are generally limited to fraud or misconduct in the 
proceedings. See 9 U.S.C. Sec.  10.
    The process for reaching the final award will be as follows: Each 
party will present evidence it considers appropriate for the case as a 
whole. Evidence will be presented in accordance with the procedures 
established by the parties within the Arbitration Agreement. No 
evidence shall be offered or accepted concerning whether the 
violation(s) occurred, because the parties concede the violations as a 
condition of arbitration. Following the hearing, the arbitrator will 
determine, in writing, the total civil penalty and, if necessary, a 
payment plan.
    As discussed later in this Guidance, the civil penalty amount may 
not be set lower than the statutory minimum for any violation, if there 
is a statutory minimum, or higher than the amount proposed in the 
Notice of Claim. Because the ADRA requires the parties to agree on a 
maximum award, FMCSA provides that the maximum award be set at the 
amount proposed in the Notice of Claim.

Statutory Considerations for Not Using Arbitration

    The ADRA states that Agencies shall consider not using any form of 
alternative dispute resolution (ADR), including binding arbitration, 
if:
    (1) A definitive or authoritative resolution of the matter is 
required for precedential value, and such a proceeding is not likely to 
be accepted generally as an authoritative precedent;
    (2) The matter involves or may bear upon significant questions of 
Government policy that require additional procedures before a final 
resolution may be made, and such a proceeding would not likely serve to 
develop a recommended policy for the agency;
    (3) Maintaining established policies is of special importance, so 
that variations among individual decisions are not increased and such a 
proceeding would not likely reach consistent results among individual 
decisions;
    (4) The matter significantly affects persons or organizations who 
are not parties to the proceeding;
    (5) A full public record of the proceeding is important, and a 
dispute resolution proceeding cannot provide such a record; or
    (6) The agency must maintain continuing jurisdiction over the 
matter with authority to alter the disposition of the matter in the 
light of changed circumstances, and a dispute resolution proceeding 
would interfere with the agency's fulfilling that requirement. See 5 
U.S.C. Sec.  572(b).
    Accordingly, unless the Assistant Administrator determines that the 
use of binding arbitration will be in the best interests of the 
government, a case will not be submitted to binding arbitration under 
the circumstances set forth above.

Other Statutory Considerations

    The ADRA includes a number of provisions relating to arbitration. 
FMCSA's use of binding arbitration will be modeled on these provisions.
Authorization of Arbitration
    1. The decision to arbitrate must be voluntary on the part of all 
parties to the arbitration (See 5 U.S.C. Sec.  575(a)(1).)
    2. An agreement to arbitrate must be in writing. It must set forth 
the subject matter submitted to the arbitrator, and must specify the 
maximum award that may be granted by the arbitrator. (See 5 U.S.C. 
Sec.  575(a)(2).)
    3. FMCSA shall not require anyone to consent to arbitration as a 
condition of entering into a contract or obtaining any other benefit. 
(See 5 U.S.C. Sec.  575(a)(3).)
    4. The Field Administrator who offers to use arbitration has the 
authority to enter into a settlement concerning the matter after the 
Assistant Administrator has consented to the use of arbitration. (See 5 
U.S.C. Sec.  575(b)(1) and (2).)
Enforcement of Arbitration Agreements (5 U.S.C. Sec.  576)
    Arbitration agreements are enforceable pursuant to 9 U.S.C. Sec.  
4.
Arbitrators (5 U.S.C. Sec.  577)
    1. The parties to an arbitration are entitled to participate in 
selecting an arbitrator. (See 5 U.S.C. Sec.  577(a).)
    2. An arbitrator shall not have an official, financial, or personal 
conflict of interest with respect to the issue in controversy, unless 
that interest is fully disclosed in writing and all parties agree that 
he/she may serve as the arbitrator. (See 5 U.S.C. Sec. Sec.  573 and 
577(b).)
Authority of the Arbitrator (5 U.S.C. Sec.  578)
    1. An arbitrator may regulate the course and conduct of the 
arbitration hearing. (See 5 U.S.C. Sec.  578(1).)
    2. An arbitrator may administer oaths and affirmations. (See 5 
U.S.C. Sec.  578(2).)
    3. An arbitrator may compel the attendance of witnesses and the 
production of evidence only to the same extent the agency involved is 
otherwise authorized by law to do so. (See 5 U.S.C. Sec.  578(3).)
    4. An arbitrator may make awards. (See 5 U.S.C. Sec.  578(4).)
Arbitration Proceedings (5 U.S.C. Sec.  579)
    1. The arbitrator shall set the time and place for the arbitration 
hearing and shall notify the parties of same at least five days before 
the hearing is to take place. (See 5 U.S.C. Sec.  579(a).)
    2. Parties are entitled to a record of the arbitration hearing. Any 
party wishing a record shall: (1) Make the arrangements for it; (2) 
notify the arbitrator and other parties that a record is being 
prepared; (3) supply copies to the arbitrator and the other parties; 
and (4) pay all costs, unless the parties have agreed to share the 
costs or the arbitrator determines that the costs shall be apportioned. 
(See 5 U.S.C. Sec.  579(b)(1)-(4).)
    3. At any arbitration hearing, parties are entitled to be heard, to 
present evidence, and to cross-examine witnesses. The arbitrator may, 
with the consent of the parties, conduct the hearing by telephone, 
television, computer, or other electronic means, if each party has the 
opportunity to participate. (See 5 U.S.C. Sec.  579(c)(1) and (2).)
    4. The arbitrator may receive any oral or documentary evidence. The 
arbitrator, however, may exclude any evidence that is irrelevant, 
immaterial, unduly repetitious, or privileged. (See 5 U.S.C. Sec.  
579(c)(4).)
    5. The arbitrator shall interpret and apply any relevant statutes, 
regulations, legal precedents, and policy directives. (See 5 U.S.C. 
Sec.  579(c)(5).)
    6. No party shall have any unauthorized ex parte communication

[[Page 34252]]

with the arbitrator relevant to the merits of the proceeding, unless 
the parties agree otherwise. If a party violates this provision, the 
arbitrator shall ensure that a memorandum of the communication is 
included in the record, and that an opportunity for rebuttal is 
allowed. The arbitrator may require the party who engages in an 
unauthorized ex parte communication to show cause why the issue in 
controversy should not be resolved against that party for the improper 
conduct. (See 5 U.S.C. Sec.  579(d).)
Arbitration Awards
    1. An arbitration award shall include a brief informal discussion 
of the factual and legal bases for the award. Formal findings of fact 
and conclusions of law are not required. (See 5 U.S.C. Sec.  
580(a)(1).)
    2. A final award is binding on the parties and may be enforced 
pursuant to 9 U.S.C. 9-13. (See 5 U.S.C. Sec.  580(c).)
    3. An arbitration award may not serve as an estoppel in any other 
proceeding and may not be used as precedent in any factually unrelated 
proceeding. (See 5 U.S.C. Sec.  580(d).)
Judicial Review
    1. Any action for review of an arbitration award must be made 
pursuant to sections 9 through 13 of title 9, U.S. Code. (See 5 U.S.C. 
Sec.  581(a).) A court may vacate an award where the award was procured 
by corruption, fraud, or undue means; where there was arbitrator 
partiality, corruption, misconduct, or misbehavior; or where an 
arbitrator has exceeded his or her powers or so imperfectly executed 
the these powers that a mutual, final, and definitive award was not 
made. (See 9 U.S.C. Sec.  10(a).)
    2. A decision by an agency to use or not to use arbitration shall 
be committed to the discretion of the agency and shall not be subject 
to judicial review, except that if the agency uses arbitration, a court 
may vacate the award under section 10 of title 9, U.S. Code (see 5 
U.S.C. Sec.  581(b), if the use of arbitration or the award is clearly 
inconsistent with the factors set forth in section 572 of title 5.
Questions and Answers on FMCSA's Use of Binding Arbitration
    Issue 1: For what types of cases will FMCSA be willing to use 
binding arbitration?
    Response: FMCSA is generally willing to use binding arbitration for 
the resolution of cases in which the only questions are the amount of 
the civil penalty and/or the length of time permitted to pay it. FMCSA 
is generally willing to arbitrate the length of time in which to pay a 
civil penalty, but not the civil penalty amount, in: (1) maximum civil 
penalty cases issued pursuant to section 222 of the Motor Carrier 
Safety Improvement Act of 1999, Pub. L. 106-159, 113 Stat. 1748 
(December 9, 1999), 49 U.S.C. 521 note; (2) cases in which the 
statutorily mandated minimum amount has been assessed; or (3) any cases 
that deal with an interpretation of the regulations or with important 
policy issues.
    Issue 2: How and by whom will the decision to arbitrate be made?
    Response: The decision to arbitrate is that of the parties. As with 
any other form of ADR, arbitration must be a voluntary process. As a 
result, if either party objects for any reason, the matter will not be 
referred to binding arbitration. Even if both parties consent to 
binding arbitration, however, the Assistant Administrator may decline 
to refer the amount of the civil penalty to arbitration if he or she 
determines that it is one of the cases set forth in the Response to 
Issue 1, above, that FMCSA will not agree to arbitrate. The Assistant 
Administrator will issue an Order on Binding Arbitration indicating 
that a matter will or will not be referred to binding arbitration.
    In accordance with 49 CFR 386.14(b)(3), a respondent may seek 
binding arbitration as part of its reply to a Notice of Claim. The 
Field Administrator in the service center in which the case resides 
will consent or object to the request for binding arbitration. If the 
Field Administrator objects, the matter will not be referred to binding 
arbitration; if the Field Administrator consents, the Assistant 
Administrator will decide whether the case will be referred to binding 
arbitration. Referral is contingent upon the respondent's admission of 
liability that the violation or violations occurred as charged.
    Issue 3: Who will have authority to authorize arbitration?
    Response: The Assistant Administrator will decide which cases are 
appropriate for ADR. Again, this class of cases will include only those 
that involve a monetary dispute and/or the time in which to pay a civil 
penalty, and do not fall within the category of cases excluded under 
Response 1, above. The Assistant Administrator has the discretion to 
delegate this authority to the FMCSA Adjudications Counsel.
    Issue 4: Who has the authority to enter into settlement for FMCSA? 
May this authority be delegated?
    Response: The Field Administrator has the authority to settle a 
case for FMCSA. This authority may be delegated to the Enforcement 
Program Manager.
    Issue 5: How will a cap on the award be established?
    Response: The maximum arbitration award will be set at the civil 
penalty amount assessed in the Notice of Claim, or amended Notice of 
Claim, if one is issued.
    Issue 6: Is there a limitation on the length of time for a payment 
plan, if the arbitrator orders a payment plan?
    Response: The maximum period that the Arbitrator may permit for a 
payment plan is 60 months from the date of the issuance of the Award.
    Issue 7: Who will negotiate the rules and selection of the 
arbitrator?
    Response: The parties must mutually agree upon the arbitrator and 
will have several options from which to choose, including: (1) Civilian 
Board of Contract Appeals Judges or representatives from other 
government agencies who have been trained in arbitration; (2) 
Uncompensated Neutrals from local communities; and (3) Compensated 
Neutrals from outside the government, whose costs are to be shared by 
agreement of the parties. For FMCSA, the decision regarding selection 
of the arbitrator will be that of the Field Administrator. The parties 
will establish the procedural rules that will govern any binding 
arbitration, with input from the selected arbitrator, and include the 
rules in the Arbitration Agreement.
    Issue 8: Who will draft the Arbitration Agreement?
    Response: The parties will draft the Arbitration Agreement, with 
substantive input from the selected arbitrator. A sample Arbitration 
Agreement is included in Appendix A.
    Issue 9: How can FMCSA encourage the efficiency of the arbitration 
process?
    Response: Only single arbitrators (rather than panels of 
arbitrators) will handle these cases. To ensure maximum efficiency of 
the arbitration process, subject to the consent and cooperation of the 
carrier, FMCSA will encourage:
    A. The resolution of the controversy by means of document review or 
by arbitration via telephone conference in appropriate cases, with the 
consent of the carrier.
    B. The arbitrator to establish reasonable deadlines for any hearing 
and rendering of an award. These timeframes will be incorporated into 
the Arbitration Agreement.
    Issue 10: What is the arbitrator's role?
    Response: Consistent with the ADRA, the arbitrator will have the 
authority to:
     Regulate the course and conduct of arbitration hearings;
     Administer oaths;
     Compel attendance of witnesses and production of evidence, 
to the

[[Page 34253]]

extent that the agency is authorized to do so by law;
     Issue awards.
    The parties, as part of their Arbitration Agreement, may include 
any specific additional powers they wish the arbitrator to have and 
provide the arbitrator broad discretion in terms of efficient case 
management.
    Issue 11: Will FMCSA permit the use of a panel of arbitrators in 
some circumstances?
    Response: Because of the costs of a panel of arbitrators and the 
lack of complexity in these cases, FMCSA will not agree to a panel of 
arbitrators.
    Issue 12: What selection criteria will be considered in choosing an 
arbitrator?
    Response: The primary criteria for selecting an arbitrator will be: 
(1) Overall reputation of the arbitrator in terms of competence, 
integrity, and impartiality; (2) availability of the arbitrator during 
the period most convenient for the parties; (3) relative cost; (4) the 
absence of any actual or potential conflict of interest; and (5) 
geographic proximity of the proposed arbitrator to the parties and to 
witnesses if the Arbitration Agreement calls for an in-person hearing.
    Issue 13: Will FMCSA agree to allow non-attorneys to represent a 
party, or for a party to appear pro se at the arbitration?
    Response: Yes. The Rules of Practice for Motor Carrier, Intermodal 
Equipment Provider, Broker, Freight Forwarder, and Hazardous Materials 
Proceedings, 49 CFR part 386, are designed to be readily accessible to 
small business enterprises and other entities. Carriers often respond 
to notices of claim without assistance of any counsel. Before approving 
any Arbitration Agreement entered into by an unrepresented carrier, the 
arbitrator shall require such carrier to execute a statement 
acknowledging the risks and limitations inherent in any arbitration.
    Issue 14: What should an Arbitration Agreement include?
    Response: The Agreement should include the following:
    1. The names of the parties.
    2. The issues being submitted to binding arbitration.
    3. The maximum award that the arbitrator may direct.
    4. Any other conditions limiting the range of possible outcomes, 
including, but not limited to, any statutory minimum for violations, 
such as the statutory minimum for violations of the Hazardous Materials 
Regulations, as set forth at 49 U.S.C. Sec.  5123(a).
    5. The scope of the arbitration. This will limit time and cost and 
give the arbitrator power to be a ``case manager.'' A sample case 
management provision might read:
    ``The Arbitrator is expected to assume control of the process and 
to schedule all events as expeditiously as possible, to ensure that an 
award is issued no later than ---- days from the date of this 
Agreement. The penalty will be due to FMCSA thirty (30) days after 
service of the Arbitration Award by the Arbitrator unless a payment 
plan is ordered by the Arbitrator.''
    6. References to all provisions of the 49 CFR 386 rules regarding 
discovery and the conduct of hearings that the parties may wish to 
apply to the arbitration process.
    7. The name of the arbitrator, the amount of compensation (if any) 
and how it will be paid. (Note: No Agreement shall provide for deposits 
in an escrow account to pay for expenses of the proceeding in advance 
of expenses being incurred.)
    8. The date the arbitration will begin.
    9. The types of remedies available.
    10. A confidentiality provision referring to the ADRA and stating 
that neither the Arbitration Agreement nor the arbitration award will 
be considered confidential.
    11. The bases for appeal.
    12. A statement that the arbitration hearing is open only to 
parties, their representatives, and the arbitrator and that the hearing 
is not a public forum.
    13. A statement that the arbitrator's decision will be issued in 
writing, and will state the factual and legal bases for, and the amount 
of, the penalty awarded by the arbitrator.
    14. A statement that the carrier will have thirty (30) days from 
the date of service of the award to pay the amount awarded unless the 
arbitrator orders a payment plan.
    15. A statement that the arbitration award is final and has the 
same force and effect as any final agency order and that the failure to 
pay the determined award triggers the same Agency remedies as would the 
failure to pay a civil penalty award entered by the Assistant 
Administrator.
    A Sample Arbitration Agreement is included in Appendix A.
    Issue 15: How will FMCSA pay the arbitrator?
    Response: The ADRA allows an agency to use, with or without 
reimbursement, the services and facilities of other Federal agencies, 
State, local and tribal governments, public and private organizations 
and agencies, and individuals, with the consent of such agencies, 
organizations, and individuals, and without regard to the provisions of 
31 U.S.C. Sec.  1342 (regarding the acceptance of voluntary services). 
See 5 U.S.C. Sec.  583. In addition, the ADRA permits selection of all 
ADR neutrals, including arbitrators, to be done non-competitively. See 
41 U.S.C. Sec.  253(c)(3). FMCSA and the carrier must agree on the 
selection of the arbitrator.
    FMCSA uses three categories of potential arbitrators: (1) Judges 
from the United States Civilian Board of Contract Appeals (CBCA) or 
representatives from other government agencies who have been trained in 
arbitration; (2) Uncompensated Neutrals from local communities; and (3) 
Compensated Neutrals from outside the government, whose costs are to be 
shared by agreement of the parties. If the parties cannot agree on the 
no-cost option of either a CBCA judge or an Uncompensated Neutral, the 
parties must agree in advance to share any arbitrator fees and costs, 
the costs of any transcripts, or other costs, all of which will be paid 
after the award is issued. FMCSA will not escrow funds or pay in 
advance for any such costs.
    Issue 16: Is FMCSA willing to use ``administered arbitration?''
    Response: No. Because of the cost implications, FMCSA will not 
agree to ``administered arbitration,'' which is arbitration 
administered by an outside ADR organization.
    Issue 17: What must the arbitration award include?
    Response: The arbitration award need not be in the form of formal 
findings of fact and conclusions of law, but must be in writing and at 
least provide in summary form the monetary amount of the award, if any, 
and the factual and legal basis for the arbitrator's decision. The 
award will be subject to the amount set forth in the Notice of Claim as 
the maximum, to statutory minimums, if any, and to any other 
limitations agreed upon by the parties.
    Arbitration awards are not confidential documents. Awards shall be 
entered into the FMCSA docket in regulations.gov for the case. 
Additionally, awards will be posted on FMCSA's Chief Counsel Web site.
    Issue 18: Will FMCSA allow arbitration on the documents only, 
without a hearing?
    Response: While the parties to the arbitration are entitled to be 
heard, to present evidence, and to cross-examine witnesses appearing at 
a hearing, FMCSA encourages arbitration on the documents only without a 
hearing. This would have the advantage of saving time and money, and 
avoiding scheduling conflicts. The Arbitration Agreement, however, 
should allow the parties to request a hearing either in-person or 
through telephonic, video-

[[Page 34254]]

conference, or computer-based means. The Arbitration Agreement should 
also allow the arbitrator discretion to call for an in-person hearing 
should the arbitrator determine that credibility may be a factor in the 
proceeding. The arbitrator may also conduct, with the consent of the 
parties, all or part of a hearing by telephone, video conferencing, or 
computer, so long as each party has an equal opportunity to 
participate.
    Issue 19: May an arbitration award be used as a precedent in any 
other proceeding?
    Response: No. The arbitration award may not be used as precedent 
consistent with 5 U.S.C. Sec.  580(d). Nonetheless, by entering into 
arbitration, the carrier has admitted, or the Assistant Administrator 
has found that the carrier has admitted, violating the regulation(s) as 
charged in the Notice of Claim. These violation(s) may be considered in 
future enforcement actions by FMCSA.

Appendix A

Sample Agreement to Submit to Binding Arbitration

Section One--Parties and Controversy

    The Federal Motor Carrier Safety Administration and ------------
---- (``Carrier'') (collectively the ``Parties'') voluntarily agree 
to submit the following controversy arising from violations of the 
Federal Motor Carrier Safety Regulations, the Hazardous Materials 
Regulations, and/or the Federal Motor Carrier Commercial Regulations 
to binding arbitration: (briefly describe the controversy).

Section Two--Assignment of Arbitrator

    We agree upon ---------------- as the Arbitrator.

Section Three--Issues of Arbitration

    We agree that the Arbitration shall be limited to the following 
issues of fact and law: (Set forth each issue with specificity 
including the question of whether a payment plan is appropriate).

Section Four--Costs of Arbitration

    ---- We agree to pay the Arbitrator a fee of $ ---- (``the 
Fee'') for services as an arbitrator. The Fee is based on the issues 
specified in Section Three above.
    We agree to reimburse the Arbitrator for all reasonable out-of-
pocket expenses that the Arbitrator may incur for the arbitration. 
These expenses include, but are not limited to: Travel, lodging, and 
meals (consistent with Federal per diem standards), long-distance 
charges, printing and copying, postage and courier fees. There is no 
cost if the parties choose a Civilian Board of Contract Appeals 
Judge or an Uncompensated Neutral as the arbitrator.

Section Five--Minimum and Maximum Award

    We agree that the maximum award shall be (the amount demanded in 
the Notice of Claim). This amount is a total of the penalties for 
each of the individual violations as follows:
    We also agree that the minimum award for violations will be 
those set forth in the statute or regulations.

Section Six--Management of the Proceeding

    We further agree that the arbitration proceeding will be 
conducted in accordance with procedures established in 49 CFR part 
386 for hearings. Additional rules and procedures for the 
arbitration may be negotiated and agreed upon by the Arbitrator and 
the Parties at any time during the arbitration process.
    We further agree that we will faithfully observe this Agreement 
and the applicable procedural rules and we will abide by any award 
rendered by the Arbitrator. ------------ (``Carrier'') will pay to 
the Field Administrator the award determined by the Arbitrator.
    We agree that the Arbitrator will assume control of the process 
and will schedule all events as expeditiously as possible, to ensure 
that an award is issued no later than ---- days from the date of 
this Agreement. The penalty, if any, will be due to FMCSA 30 days 
after service of the Arbitration Award by the Arbitrator unless the 
Arbitrator orders a payment plan.
    Consistent with the Rules of Practice for Motor Carrier, 
Intermodal Equipment Provider, Broker, Freight Forwarder, and 
Hazardous Materials Proceedings, 49 CFR part 386, Carriers may be 
represented by a representative of their choice, including non-
lawyers. Representatives and FMCSA counsel shall be responsive to 
the direction provided by the Arbitrator.
    We understand that neither party shall initiate or participate 
in ex parte communication with the Arbitrator relevant to the merits 
of the proceeding, unless the parties agree. If a party or its 
representative engages in an unauthorized ex parte communication, 
the Arbitrator may resolve the case against the offending party. 
Before taking that action, however, the Arbitrator must allow the 
offending party to show cause why the issue in controversy should 
not be resolved against it for improper conduct.

Section Seven--Arbitrator's Award

    We agree that the Arbitrator's decision will be issued in 
writing and will state the legal and factual bases and amount of the 
penalty awarded by the Arbitrator. We further agree that the 
arbitration award is final and has the same force and effect as any 
final agency order. We understand that there is no appeal to the 
Assistant Administrator of the Arbitrator's award. Thus, failure to 
pay the determined award triggers the same Agency remedies as would 
the failure to pay a civil penalty award entered by the Assistant 
Administrator.

Section Eight--Confidentiality of the Proceeding

    We agree that the arbitration proceeding is not a public forum 
and will be restricted to the Parties, their representatives, and 
the Arbitrator. We acknowledge and agree that 5 U.S.C. 574 controls 
the confidentiality of the proceeding, and that neither the 
Arbitration Agreement nor the arbitration award may be considered 
confidential.

Section Nine--Judicial Review

    ---- The award shall be reviewable only under provisions of 5 
U.S.C. Sec.  581 and 9 U.S.C. Sec. Sec.  9-13.

Section Ten--Governing Law

    ---- This Agreement is entered into consistent with 5 U.S.C. 
Sec.  571 et seq., and we agree that Federal law shall govern this 
Arbitration. The Arbitrator shall apply relevant statutory and 
regulatory requirements, legal precedents, and policy directives.

[FR Doc. 2012-14087 Filed 6-8-12; 8:45 am]
BILLING CODE 4910-EX-P


