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The Prehearing Conference as a Settlement Opportunity Edna H. Travis, Chief A.L.J.
Introduction
As implemented by the Office of Administrative Appeals in the Massachusetts Department of Environmental Protection, the prehearing conference is a powerful vehicle for dispute resolution in administrative appeals. This is because it combines two important functions--setting a matter up for a hearing and providing the parties with an opportunity to discuss settlement before a neutral third party--in a way that gives parties a strong incentive to attempt to resolve their disputes in an amicable manner.
Background
Typically administrative proceedings begin when someone is "aggrieved" by an agency action. Both federal and state law require that before any such claims are brought to court, they must first be raised in an agency's internal administrative review process. This process affords agencies an opportunity to reevaluate their decisions. It also provides an ideal vehicle for all parties to consider alternative approaches to resolving their disputes.
In Massachusetts, while the Division of Administrative Law Appeals generally handles appeals from agency decisions, many agencies have their own in-house administrative appeal process. The Department of Environmental Protection is one of those. Appeals to the Department's Office of Administrative Appeals are typically from agency permit or enforcement decisions. For example, a recipient of an air permit might appeal the terms of the permit, a neighbor or group of ten residents might challenge the conditions of a wetlands permit, or an alleged violator might appeal the terms of the enforcement action or a penalty. These cases are often multi-party disputes, with the Department as a party in every case.
The Prehearing Conference: A Settlement Opportunity
The appeal process in the Department of Environmental Protection is relatively formal. It begins with a request for an adjudicatory hearing, following which the Department's Office of General Counsel assigns an attorney, and an ALJ in the Office of Administrative Appeals issues an Order to all parties to attend a prehearing conference. The Order imposes a number of obligations on the parties and advises them of certain things they must do in advance of the conference. Similar to the pretrial conference in a court proceeding, parties are ordered to come prepared to set a schedule for proceeding to a hearing. This includes identifying disputed issues and witnesses, who are generally technical experts. The Order also orders the parties to "confer" before the conference as to settlement possibilities. Frequently, this is enough to settle a case before the prehearing conference.
In preparing for a prehearing conference, the ALJ reviews the record, which includes the appeal document itself, the Department decision from which the appeal was taken, and the parties' prehearing filings -- their issues statements and witness lists -- as well as the Department's regulations which apply to the case. From these, the ALJ develops a sense of the parties' views and can separate out those issues that are truly legal issues from those which involve factual questions. For each, the ALJ develops a sense not only of the strength of the claims but also of whether they might be amenable to resolution either because they are mediable or because the law is relatively clear.
As the ALJ tells the parties at the outset of a prehearing conference, the conference will result in the issuance of a Prehearing Conference Report identifying issues and witnesses and scheduling the filing of testimony. At the conference, it becomes apparent that within an identified period of time the parties will be required to hire expert witnesses and otherwise incur the expenses of a hearing. In other words, the expenses and risks to each party become quantifiable. Therefore, to the extent an appeal was used as an attempt to delay a project or the payment of a penalty, it will no longer serve that function. The parties realize that the prehearing conference is the last clear chance for them to attempt to resolve their differences before the full-scale litigation process begins. This provides the parties with an incentive to reevaluate their positions and consider whether settlement would be preferable. In essence, the old maxim that settlement often occurs at the court house steps applies here as well.
At the same time, the ALJ also asks the parties to report on the status of settlement efforts and uses that to initiate further discussion. The fact that the discussion is initiated by a neutral third person allows the parties to begin talks without the often-stated fear that the other side might perceive them as weak. Second, the Office of Administrative Appeals has instituted a "two judge" system, whereby the ALJ conducting the prehearing conference will not be the one holding the hearing. Therefore, the ALJ can assure the parties that he or she will not be involved in the case as it goes to hearing. This eliminates another concern of parties, namely, that by sharing their views with the ALJ at the prehearing conference they run the risk of prejudicing their position at a subsequent adjudication before the same fact-finder.
In essence, the ALJ is playing two complimentary roles: preparing the matter for trial and helping the parties to explore settlement possibilities. By combining these two functions in one event, we have created an environment that is especially conducive to dispute resolution.
First, as the person setting the matter up for trial, the ALJ plays an important role. The ALJ controls the scheduling of further proceedings. Further, the ALJ is an effective "agent of reality." In working with the parties to develop an issue statement and witness list, the ALJ can send messages to the parties, both directly and indirectly, as to the merit of the various issues they have identified to be adjudicated and the witnesses they intend to produce to prove them. Helping disputants evaluate their options is one of a mediator's most important tasks. The ALJ performs this function as one of the basic components of a prehearing conference. Thus, the prehearing conference forces parties to consider the options available to them.
Within this context, the ALJ uses the prehearing conference to afford the parties an opportunity to focus on alternatives to adjudication. The ALJ listens to the parties' concerns and encourages them to arrive at a mutually agreeable resolution. On occasion, the ALJ will act as a mediator, caucusing separately with the parties. Sharing concerns in this way with a neutral person can defuse the emotions that so often accompany litigation. In the interest of moving forward, parties are often willing to accept additional permit conditions or a project redesign that in the heat of anticipated litigation they were not prepared to put on the table. This is especially so in cases such as ours that often involve disputes between neighbors who must co-exist for the foreseeable future and who for that reason possess an independent incentive to work things out amicably.
The Department may also view the Prehearing Conference as an opportunity to hear the concerns and arguments of the other parties and reconsider its earlier position. Occasionally, where challenges are brought by third parties, a proposed resolution results in permit conditions which are more environmentally protective than those required by DEP. Alternatively, the Department may be asked to reconsider whether it is wiling to compromise its earlier position in some way, such as by accepting a smaller penalty amount than it had originally sought or extended payment terms.
Depending on what transpires at the prehearing conference, the ALJ may suggest a second prehearing conference within a few weeks to provide the parties with a chance to pursue possible settlement approaches, or that the parties continue the discussion with a mediator. The hearing schedule may be adjusted to accommodate such a process. At the same time, the ALJ is careful to keep a tight rein on the schedule.
Suggestions for Improvement
Certainly there are ways that the process could be improved. First, although the Order requires the parties to "confer" in advance of the prehearing conference, the parties frequently wait until the prehearing conference to engage in a meaningful discussion. As a result, much time is taken up at the prehearing conference explaining each party's position to the others. Second, because individuals whose input is essential to a resolution may not attend the prehearing conference, some of its effectiveness as a vehicle for dispute resolution is lost. For example, although disputants are ordered to come to the conference with authority to settle, they often do not. Some send only the lawyer, some only the technical consultant. Typically, before a resolution can be reached, consultant, principal and lawyer all must be in agreement. To address this, our hearing room has a speaker phone. We also provide telephones for private conferences. But the effectiveness of this approach depends on the availability of the missing individuals and may well be hindered by their need to actually view the plans that are under discussion.
Because each state agency has its own adjudicative appeal process, the use of the prehearing conference as a vehicle for dispute resolution may or may not be adaptable to other agencies. Most basically, our system depends on our unique two-ALJ system and a scheduling approach that affords sufficient time for each prehearing conference to allow the ALJ to use it to accomplish both purposes. This in turn comes from a recognition that the benefits to be gained, in terms of effective dispute resolution, more than outweigh any extra time consumed.
FOOTNOTE
1/ The views expressed in this article are those of the author and not necessarily those of the Department of Environmental Protection. |
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