§386.14 Reply.

Question 1: For what types of cases will FMCSA be willing to use binding arbitration?

Guidance: 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.

Question 2: How and by whom will the decision to arbitrate be made?

Guidance: 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.

Question 3: Who will have authority to authorize arbitration?

Guidance: 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.

Question 4: Who has the authority to enter into settlement for FMCSA? May this authority be delegated?

Guidance: The Field Administrator has the authority to settle a case for FMCSA. This authority may be delegated to the Enforcement Program Manager.

Question 5: How will a cap on the award be established?

Guidance: 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.

Question 6: Is there a limitation on the length of time for a payment plan, if the arbitrator orders a payment plan?

Guidance: The maximum period that the Arbitrator may permit for a payment plan is 60 months from the date of the issuance of the Award.

Question 7: Who will negotiate the rules and selection of the arbitrator?

Guidance: 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.

Question 8: Who will draft the Arbitration Agreement?

Guidance: The parties will draft the Arbitration Agreement, with substantive input from the selected arbitrator. A sample Arbitration Agreement is included in Appendix A [see below].

Question 9: How can FMCSA encourage the efficiency of the arbitration process?

Guidance: 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.

Question 10: What is the arbitrator’s role?

Guidance: 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 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.

Question 11: Will FMCSA permit the use of a panel of arbitrators in some circumstances?

Guidance: 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.

Question 12: What selection criteria will be considered in choosing an arbitrator?

Guidance: 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.

Question 13: Will FMCSA agree to allow non-attorneys to represent a party, or for a party to appear pro se at the arbitration?

Guidance: 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.

Question 14: What should an Arbitration Agreement include?

Guidance: 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. § 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 [see below].

Question 15: How will FMCSA pay the arbitrator?

Guidance: 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. § 1342 (regarding the acceptance of voluntary services). See 5 U.S.C. §583. In addition, the ADRA permits selection of all ADR neutrals, including arbitrators, to be done non-competitively. See 41 U.S.C. §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.

Question 16: Is FMCSA willing to use “administered arbitration?”

Guidance: No. Because of the cost implications, FMCSA will not agree to “administered arbitration,” which is arbitration administered by an outside ADR organization.

Question 17: What must the arbitration award include?

Guidance: 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.

Question 18: Will FMCSA allow arbitration on the documents only, without a hearing?

Guidance: 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-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.

Question 19: May an arbitration award be used as a precedent in any other proceeding?

Guidance: No. The arbitration award may not be used as precedent consistent with 5 U.S.C. § 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. § 581 and 9 U.S.C. §§ 9-13. Section

Ten—Governing Law

__ This Agreement is entered into consistent with 5 U.S.C. § 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.