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Success in negotiating environmental regulations
ENVIRON IMPACT ASSESS REV 1985; 9:67 77
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SUCCESS IN NEGOTIATING ENVIRONMENTAL REGULATIONS
PETER SCHNEIDER AND ELLEN TOHN
The US Environmental Protection Agency recently completed two regulatory negotiation demonstrations. These demonstrations suggest that the current EPA rulemaking process could be improved through the introduction of face-to-face negotiation at the earliest stages of rulemaking. In the demonstrations, EPA (1) relied on a consensus building process to forestall litigation after the promulgation of the final rule; (2) Used a nonpartisan facilitator to convene the negotiations; (3) Defined criteria to determine which parties should be represented in the negotiation. From the perspective of participants, the negotiating consensus version of a draft regulation is a successful alternative to the traditional rulemaking process. It is still too soon to say negotiated rulemaking significantly reduces the likelihood of ligitation. The results of the demonstration indicate that it is possible for either an agency employee or a neutral outsider to facilitate the sessions. A successful negotiation also requires top level agency support as well as the confidence of the environmental community. The single most important outcome of the negotiations was that the participants developed a greater understanding of the interests of the other parties. The demonstrations also suggest possible changes in future regulatory negotiations.
PETER SCHNEIDER is a principal with ERM-McGlennon Associates, a Boston-based environmental consulting firm. He served on the project team for both of the regulatory negotiations discussed in this article. Ellen Tohn, a former Associate with ERM-McGlennon, conducted the conflict assessment for the first demonstration. She is now pursuing a Master's degree in Environmental Planning and Dispute Resolution at the Massachusetts Institute of Technology. Ms. Tohn is also an Associate with the Program on Negotiation at Harvard Law School.
Address correspondencet o : Ellen Tohn, Laboratory of Architecture and Planning, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Cambridge, MA 02139. © 1985 Elsevier Science Publishing Co., Inc. 52 Vanderbilt Avenue, New York, NY 10017
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Environmental regulatory negotiation has worked. Since 1981 (Bingham 1981; Harter 1982b), regulatory negotiation has been promoted as a supplement to traditional rulemaking. Two federal agencies, the Occupational Safety and Health Administration (OSHA) and the Federal Aviation Administration (FAA), have attempted regulatory negotiation. However, only recently has the process been used to develop an environmental rule. Regulatory negotiation tests the usefulness of face-to-face interaction as a supplement to the traditional rulemaking process. Parties with an interest in a particular regulation participate in a discussions aimed at reaching consensus on the content of the draft regulation. The consensus agreement serves as the basis for a Notice of Proposed Rulemaking. The draft regulation is then subject to the traditional review, including public comment, before the agency promulgates a final regulation. Parties who participate in these negotiations do not waive their right to litigate after the final rule is issued. The US Environmental Protection Agency (EPA) has acknowledged that its current adversarial rulemaking process is often inefficient. At the second National Conference on Environmental Dispute Resolution, former US EPA Administrator William D. Ruckelshaus (1984) reiterated this concern and noted that "about 80 percent of all of the rules that EPA issues are challenged in court." To improve their rulemaking process, the EPA sought in 1982 to develop two regulations through face-to-face. The first involved a Nonconformance Penalty (NCP) rule under the Clean Air Act (Section 206g). The second developed a pesticide exemption rule under Section 18 of the Federal Fungicide, Insecticide and Rodenticide Act (FIFRA). The two demonstrations: • Relied on a consensus building process to forestall litigation following the promulation of the final rule; • Used a nonpartisan facilitator to convene the negotiation sessions; • Defined criteria for selecting the key participants. The demonstration project was designed and administered by the Office of Regulations and Standards. Chris Kirtz was EPA Project Manager. ERMMcGlennon Associates assisted the EPA in identifying the candidate rules and potentially interested parties to the negotiations. To compare the effects of having either an agency or a nonagency facilitator, John McGlennon of ERM-McGlennon facilitated the first negotiation and LaJuana Wilscher, Special Assistant to EPA's General Counsel, played this role for the second demonstration. The EPA also selected Lawrence Susskind, head of the Public Disputes Program at MIT and Executive Director of the Program on Negotiation at Harvard Law School, to document the demonstrations. Jerry McMahan and David Kronenberg of the documentation team spoke or met regularly with all the parties and observed all the negotiating sessions. The EPA was encouraged by the results of the two regulatory negotiations.
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Though the issues had different regulatory histories, each negotiation resulted in a written consensus. The Agency intends to sponsor at least one more demonstration in 1985. This article discusses the demonstrations from the perspective of the members of the nonagency mediation team. Included as background are descriptions of the prenegotiation activities, the organization of negotiating committees, the role of the mediation team, the resources used to implement the negotiations, the personal dynamics and trust that developed among negotiating committee members, and the ratification process used in each demonstration. These demonstrations indicate that regulatory negotiation can help to improve the traditional rulemaking process. The experience described here suggests that the agency should consider several modifications in future demonstrations including the use of nonagency mediation teams, providing financial resources primarily for travel expenses, and requiring parties to sign a written agreement indicating that they will support the draft regulations during the hearing process.
BACKGROUND In 1982, the US EPA announced its Negotiated Rulemaking Project and selected ERM-McGlennon Associates as the convenor/facilitators. In December 1983, David Doniger, an attorney with the Natural Resources Defense Council (NRDC), proposed Nonconformance Penalties (NCPs) as one of several candidate rules for regulatory negotiation. The suggestion was the result of several meetings among members of the environmental community, EPA, and ERM-McGlennon. Prior efforts to negotiate a controversial low-level radioactive waste regulation indicated that the support of the environmental community was crucial to a successful negotiation (Susskind and Fish 1983). In the spring of 1984, EPA selected NCPs as the first of two demonstrations. Under the Clean Air Act, EPA was required set emission standards for heavyduty engines based on the performance of the most advanced manufacturers. Firms that do not meet the standards are allowed to produce nonconforming engines if they pay an increasing penalty designed to cost the manufacturers at least as much as compliance with the standard. The NCP negotiations began in June 1984. A 22-member Committee was created under the terms of the Federal Advisory Committee Act (FACA). It was composed of representatives of the automobile and truck manufacturing industry but included individuals from several state air quality agencies, EPA, and NRDC (see Table 1). After four months of negotiations, the Committee reached a consensus. The consensus was recorded in a joint statement that covered the penalty system, the structure of the penalty formula, and the administration of the penalty system. The document was ratified by all the participating parties and sent to the EPA Administrator in December 1984. The second rule selected by EPA had an entirely different regulatory history.
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TABLE 1. Members of the NCP Negotiation Committee American Trucking Association Auto Importers of America California Air Resource Board Caterpillar Tractor Company Chrysler Corporation Colorado Department of Health Cummins Engine Company Engine Manufacturers Association Ford Motor Company General Motors Corporation International Harvestor Isuzu Motors America lveco Trucks of North America Mack Truck Corporation Manufacturers Emission Control Association Mercedes Benz Motor Vehicle Manufacturers Association Natural Resources Defense Council Onan Corporation State and Territorial Air Pollution Program Administrators US Environmental Protection Agency Volvo Truck Company
Under Section 18 of FIFRA, the Administrator in cases of emergency is authorized to exempt certain pesticides from the full range of federal licensing requirements. Unlike the NCP regulation, this emergency exemption process was already published. After operating under these regulations for almost a decade, the Agency recognized a need to revise the rule. In 1982, an internal EPA audit on the Section 18 program raised a number of concerns that supported the need for revisions. The audit found that over a five-year period applications for emergency exemptions increased by 250 percent. Later that same year, the House Subcommittee on Department Operations in Research and Foreign Agriculture released its own report, which also expressed concern over the possible abuses of Section 18 authority. In response to these concerns, the Agency decided to revise the Section 18 rule. After four months of negotiations the stakeholders involved ratified the final consensus statement including the exact language of the draft regulatory changes. The agreement tightens the emergency exemption process. PRENEGOTIATIONS The negotiating process began long before the first formal negotiating sessions. Once the NCP rule was nominated, ERM-McGlennon began a two-phased con-
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flict assessment. Initially, a representative of ERM-McGlennon and EPA Program Program Director, Chris Kirtz, met with E P A ' s Manufacturer's Operations Division (MOD). The position of both ERM-McGlennon and EPA was that the negotiations would fail unless they had the support of the EPA program office. At a February 8 meeting MOD Director Chuck Freed expressed his support for regulatory negotiations and his willingness to negotiate NCPs. Freed later became EPA's chief negotiator. The preliminary assessment began in February. E P A ' s MOD office supplied initial list of 17 contacts. This list expanded to over 45 by the end of the preliminary assessment. Telephone interviews were conducted with representatives of key manufacturing, consumer, and environmental groups, state agencies, and industry associations. The purpose of the phone calls was to identify all potential stakeholders and to understand their concerns about NCPs. The assessment revealed widespread support for using a negotiated approach. Only two groups expressed any skepticism. This favorable response led ERM-McGlennon to recommend that EPA proceed to the second phase of prenegotiations, conflict assessement. A similar process was used in the preliminary assessment for the Section 18 rule. In that case the EPA program office nominated the rule and supplied an initial list of 40 contacts. By the end of the assessment, ERM-McGlennon had contacted 20 parties (see Table 2) and sent project information to 84 additional organizations. Steve Schatzow, E P A ' s Office of Pesticide Programs (OPP) Director, though initially skeptical, was willing to negotiate the Section 18 reguTABLE 2. Members of the Section 18 Negotiating Committee American Seed Trade Association Association of American Pest Control Officials Association of State and Territorial Health Officials Defenders of Wildlife Florida Citrus Mutual Interregional Research Project #4 National Agricultural Chemical Association National Associationof State Departments of Agriculture National Association of Wheat Growers National Audubon Society National Cattlemen's Association National Coalition Against the Misuse of Pesticides National Corn Growers Association National Cotton Council of America National Food Processors Association National Wildlife Federation Pesticide Users Advisory Committee State FIFRA Issues Research Group US Department of Agriculture US Environmental Protection Agency, Office of Pesticide Programs
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lation. The potential stakeholders included environmental groups, national coalitions, other federal agencies, and state officals. Once again the preliminary assessment showed sufficient support to proceed to the next phase. The conflict assessment phase was characterized by personal visits to a limited number of potential parties. Through these interviews, ERM-McGlennon learned more about each stakeholder's interests and concerns. The objective was to ensure that all appropriate parties were represented in the negotiations. From a list of 47 contacts in the NCP assessment the group of potential parties was narrowed to approximately 20. The criteria used in the selection of members for each Negotiating Committees included: • the party's interest in the issue (NCPs or Section 18), • the potential impact of the new regulation on the party, and • whether or not the party's interests were represented by ether groups. In identifying stakeholders, there was a natural tendency to work with organizations and coalitions that represented several parties. The best example is the National Coalition Against the Misuse of Pesticides which represents environmental and public interest groups throughout the country. The criteria as published in the Federal Register (April 24, 1984) required candidate rules: • to be at the preproposal stage of development, • to have a relatively small number of identifiable parties willing to come to the table, • to present a limited number of specific issues, and • to contain a near term deadline for publication of the regulation. (In the case of Section 18, the deadline was established by the Agency.) In practice, perhaps the single most critical factor was a desire on the part of all of the key parties, including EPA, to participate. The completed conflict assessments confirmed the selection of NCPs and Section 18. A notice of EPA's intent to negotiate both regulations was printed in the Federal Register and provided time for public comment. The announcements described the potential issues for negotiations, reasons for choosing the rules, and the criteria for selecting Committee participation. As Lawrence Susskind and Diane Fish have noted, the preliminary assessments and the more comprehensive conflict assessments are crucial to any successful regulatory negotiation (Susskind and Fish 1983). Investigating the interests of each of the parties produces a foundation for negotiation. The prenegotiations should be conducted by non-EPA staff to ensure as objective an evaluation as possible.
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ORGANIZING T H E NEGOTIATING C O M M I T T E E ERM-McGlennon and EPA sponsored organizational meetings at the beginning of each demonstration. The purpose of these sessions was to allow potential participants to meet, learn about how regulatory negotiations could be used to develop EPA rules, and help the parties decide whether they wanted to participate in the project. Twenty-three potential parties were invited to the NCP session. All except one of the key stakeholders attended the meeting. Chuck Freed, EPA's Program Office Director, confirmed his office's support for regulatory negotiation and explained how negotiations would be integrated into the traditional rulemaking procedure. The EPA's technical consultant on NCP also presented background information on the issue. By late spring, all the potential stakeholders had agreed to participate. The parties were invited to an eight-hour training session one day prior to the first full negotiating meeting. The goals of this training program were: • to educate participants about the fundamentals of negotiations; • to improve the participants' awareness of the dynamics of disputes; • to develop negotiating skills, bargaining strategies, and negotiating style; and • to demonstrate ways to apply these skills in the upcoming session. A similar briefing and training session was held for parties to the Section 18 negotiation. Over 20 negotiators attended each training session. At each meeting, ERMMcGlennon proposed a simple set of protocols drafted in conjunction with the EPA Project Manager and Washington attorney Phillip Harter. The protocols contained the suggestions that the parties not speak with the press and that the group agree on a deadline and meeting schedule. ERM-McGlennon circulated a draft of the protocols to all Committee members prior to the meeting. The draft was designed to be broad enough to allow participants to create other specific protocols. In both demonstrations, the negotiators were content to modify the general guidelines drafted by ERM-McGlennon. Protocols were designed to guide the administration of two $50,000 resource pools. These funds were set aside to defray the anticipated expenses of participating in the negotiations and to support joint research or technical analyses. After contentious discussions at the early NCP Committee meetings, the Committee reached a consensus on how to administer the pool, manage contracts, and distinguish between federal and private funds in the pool. There was not as much controversy in the second demonstration on Pesticide Exemptions. Both Committees eventually agreed that individual stakeholder requests for funds would be reviewed by the entire group and managed by an independent organization. In the NCP negotiations, the pool was managed by the American
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Arbitration Association. The Pesticide Exemption Committee's pool was managed by the National Institute for Dispute Resolution. During the first negotiating session the NCP Committee members grouped their concerns under three headings: • application of NCPs; • penalty structure and rate setting; and • administration and enforcement. These categories became the basis for three working groups that ranged in size from six to 19 members. In several cases, negotiators joined more than one work group. It was in the groups that much of the actual drafting occurred. The groups met between full negotiating sessions. Each group started its discussion with an issue paper prepared by one Committee member. The Section 18 Committee also organized itself into three working groups: • emergency definition; • health and safety; and • implementation. Each group was assigned a subset of issues from a comprehensive list developed by the full Committee. As in the first demonstration, the working groups met between each full negotiating session.
R O L E OF T H E M E D I A T I O N T E A M John McGlennon of ERM-McGlennon Associates served as the convenor/facilitator for the NCP negotiations. LaJuana Wilscher, Special Assistant to EPA's General Counsel, served as the facilitator for the second rule on Pesticide Exemptions and Peter Schneider of ERM-McGlennon served as the convenor. In both cases, ERM-McGlennon handled the prenegotiation work and provided logistical support at full negotiating sessions and working group meetings. Sam Gusman, Senior Associate with the Conservation Foundation, has argued that a negotiating Committee must select its own mediator in order to feel that it "owns" the negotiation process. He has also argued that an inside facilitator, in this case an EPA employee, cannot be neutral. The success of the two demonstrations challenges these hypotheses. These two negotiations are also likely to surprise advocates of small negotiating committees (Harter 1982a). Both negotiating Committees had at least 20 participants and worked well.
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RESOURCES The resource pools were designed to cover extraordinary expenses and to support joint research or analysis. Some representatives agreed to participate only if the resource pool were available to cover travel expenses. In the NCP negotiations, parties spent several hours discussing the appropriate use of the pool. The primary issue was whether the funds should be used to compensate individual Committee members for their time. The group could not agree which compensation was appropriate. In the NCP negotiations, two contracts were awarded to a statistician. The contractor analyzed a specific sampling plan related to the penalty formula. The Committee spent $23,000 over the life of the project. The Section 18 Committe~ spent approximately $20,000. Without the funds to reimburse parties for travel costs it is unlikely that either of the negotiations would have occurred. The availability of such money contributed to the stakeholders' sense that there was relative equality among the participants. The parties, the negotiators, and their staffs devoted many hours to the negotiations. Each party honored its original commitment to negotiate in good faith. Committee members spent approximately 24 hours each month over the life of the negotiations. Several parties, including EPA, spent considerably more.
PERSONAL DYNAMICS AND TRUST The investment of time and resources was rewarded most directly by the consensus agreements. Each party, however, also developed relationships with the other stakeholders. The positive and productive spirit of the negotiations generated a good deal of mutual respect. This may be the most lasting outcome of the negotiations. The contrast between the early Committee meetings and the concluding sessions was striking. The personal relationships that evolved during the four to six months of intense negotiations are likely to be useful in other related areas in the years ahead.
R A T I F I C A T I O N AND F O L L O W U P Although both negotiating Committees reached agreement, the specific nature of their consensus statements and the mechanisms used to ratify the agreements were different. In the case of NCPs, the Committee did not develop specific regulatory language. Instead, the Committee developed a statement that specifies the agreement on the overall concept of NCPs, the penalty formula, and the administration of the penalty system. The Committee reached agreement on October 12, 1984, and created a small working group to draft a final written statement. Over one month later a smaller
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five-member group produced a 16-page written statement. Throughout the final drafting the group checked back with the other Committee members to ensure that changes did not disrupt Committee consensus. After seven hours of conference calls, moderated by Peter Schneider, they had an agreement. The last step in the negotiation process was to obtain signatures from the 22 Committee members. Five weeks after the statement was finalized, the last letter ratifying the final statement was received by ERM-McGlennon. The Pesticide Exemption Committee adopted a different approach. Because there was existing regulatory language, the Committee chose to prepare a consensus statement that could be used as the draft regulation. At the suggestion of EPA's chief negotiator, Steve Schatzow, the Committee agreed to prepare a consensus statement that could be signed by all parties at the last negotiating session. On Jaunary 16, 1985, the Committee concluded its negotiations and each of the 19 members present signed the statement. Committee members prepared for this ratification step through ongoing consultation with their Boards of Directors or other relevant groups to review both the regulation and the preamble. The Section 18 process expedited ratification and demanded fewer resources from ERM-McGlennon and many of the other parties during this phase of the negotiations.
CONCLUSIONS The EPA has shown that regulatory negotiation can produce written consensus agreements. The success of these efforts cannot be judged until the final rules are promulgated. The Agency will, however, sponsor other demonstration projects and evaluate their results. The NCP and Pesticide Exemptions negotiations suggest several important modifications to the process for future regulatory negotiations. Given the size of the Committees that are likely to form for these types of negotiations, a team of n~ediators, rather than a single person, must be more effective. The team could include a chief mediator and several assistant mediators. The chief mediator might facilitate each of the full Committee meetings while assistant mediators could be assigned to working groups. Allen Spalt, chief negotiator for the National Coalition Against the Misue of Pesticides (NCAMP) in the Section 18 negotiations, believes the team concept is clearly a more efficient approach, but the team must include an individual with specific expertise in the substance of the rule (1985). Experience with both negotiations showed that issues will arise that demand technical expertise. For example, a statistician was hired for the NCP negotiations, and several agricultural economists contributed to the Section 18 negotiations. It would be helpful if specialists could be associated with the mediation
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team. Requests for technical expertise could be reviewed by the entire Committee and experts hired through the mediation team. The experts would act as consultants to the mediation team and report to the full Committee. All parties to both negotiations believed that it was important to develop written consensus statements. The approach adopted by the Section 18 Committee was more efficient. When a negotiating deadline is set, the parties should agree that their final session will include signing a written consensus agreement. If the parties expect to sign a document on a specific date, they will work with their decision makers to prepare for the signing. This process minimizes the potential that the consensus will break down after the last session, as the parties finalize the language of the agreement. A final ratification meeting could be made even more efficient if the Committee used a wordprocessing system. This arrangement would allow all parties to revise the text and to obtain printed copieg instantly. Regulatory negotiation is surprisingly resource intensive. Nevertheless, both of the negotiations discussed here resulted in proposed rules that met the needs of all of the concerned parties. Perhaps most important, the participants developed a greater understanding of each other's true interests. This unquantifiable gain may be the most significant outcome of applying negotiation to rulemaking.
REFERENCES Bingham, G. 1981. Does Negotiation Hold a Promise for Regulatory Reform? Resolve Fall: 1-7. Brown, K. 1985. Personal Communication. Gussman, S. 1983. Selecting Parties for a Regulatory Negotiation. Environmental Impact Assessment Review, 4-2:195-202. Hatter, P. 1982a. Negotiating Regulations; A Chance for Actual Participation. Environmental Forum 1(6):8-9. Harter, P. 1982b. Negotiating Regulations: A Cure for Malaise? Environmental Impact Assessment Review 3(1 ):75-92. Kirtz, C. 1982. EPA Announces Negotiated Rulemaking Project. Environmental Impact Assessment Review 3(4):367-372. Ruckelshaus, W. 1984. An Address before the Conservation Foundation's Second National Conference on Environmental Dispute Resolution. Washington, D.C. Spalt, A. 1985. Personal Communication. Susskind, L., and Fish, D. 1983. Status Report: The EPA's Negotiated Rulemaking Demonstrations. Washington, D.C.: Office of Regulation and Standards, Environmental Protection Agency. Susskind, L., and McMahon, G. 1985. Documentation of EPA's Nonconformance Penalties (NCP) Regulatory Negotiation Demonstration. Washington, DC: Office of Regulation and Standards, Environmental Protection Agency.
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SUCCESS IN NEGOTIATING ENVIRONMENTAL REGULATIONS
PETER SCHNEIDER AND ELLEN TOHN
The US Environmental Protection Agency recently completed two regulatory negotiation demonstrations. These demonstrations suggest that the current EPA rulemaking process could be improved through the introduction of face-to-face negotiation at the earliest stages of rulemaking. In the demonstrations, EPA (1) relied on a consensus building process to forestall litigation after the promulgation of the final rule; (2) Used a nonpartisan facilitator to convene the negotiations; (3) Defined criteria to determine which parties should be represented in the negotiation. From the perspective of participants, the negotiating consensus version of a draft regulation is a successful alternative to the traditional rulemaking process. It is still too soon to say negotiated rulemaking significantly reduces the likelihood of ligitation. The results of the demonstration indicate that it is possible for either an agency employee or a neutral outsider to facilitate the sessions. A successful negotiation also requires top level agency support as well as the confidence of the environmental community. The single most important outcome of the negotiations was that the participants developed a greater understanding of the interests of the other parties. The demonstrations also suggest possible changes in future regulatory negotiations.
PETER SCHNEIDER is a principal with ERM-McGlennon Associates, a Boston-based environmental consulting firm. He served on the project team for both of the regulatory negotiations discussed in this article. Ellen Tohn, a former Associate with ERM-McGlennon, conducted the conflict assessment for the first demonstration. She is now pursuing a Master's degree in Environmental Planning and Dispute Resolution at the Massachusetts Institute of Technology. Ms. Tohn is also an Associate with the Program on Negotiation at Harvard Law School.
Address correspondencet o : Ellen Tohn, Laboratory of Architecture and Planning, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Cambridge, MA 02139. © 1985 Elsevier Science Publishing Co., Inc. 52 Vanderbilt Avenue, New York, NY 10017
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Environmental regulatory negotiation has worked. Since 1981 (Bingham 1981; Harter 1982b), regulatory negotiation has been promoted as a supplement to traditional rulemaking. Two federal agencies, the Occupational Safety and Health Administration (OSHA) and the Federal Aviation Administration (FAA), have attempted regulatory negotiation. However, only recently has the process been used to develop an environmental rule. Regulatory negotiation tests the usefulness of face-to-face interaction as a supplement to the traditional rulemaking process. Parties with an interest in a particular regulation participate in a discussions aimed at reaching consensus on the content of the draft regulation. The consensus agreement serves as the basis for a Notice of Proposed Rulemaking. The draft regulation is then subject to the traditional review, including public comment, before the agency promulgates a final regulation. Parties who participate in these negotiations do not waive their right to litigate after the final rule is issued. The US Environmental Protection Agency (EPA) has acknowledged that its current adversarial rulemaking process is often inefficient. At the second National Conference on Environmental Dispute Resolution, former US EPA Administrator William D. Ruckelshaus (1984) reiterated this concern and noted that "about 80 percent of all of the rules that EPA issues are challenged in court." To improve their rulemaking process, the EPA sought in 1982 to develop two regulations through face-to-face. The first involved a Nonconformance Penalty (NCP) rule under the Clean Air Act (Section 206g). The second developed a pesticide exemption rule under Section 18 of the Federal Fungicide, Insecticide and Rodenticide Act (FIFRA). The two demonstrations: • Relied on a consensus building process to forestall litigation following the promulation of the final rule; • Used a nonpartisan facilitator to convene the negotiation sessions; • Defined criteria for selecting the key participants. The demonstration project was designed and administered by the Office of Regulations and Standards. Chris Kirtz was EPA Project Manager. ERMMcGlennon Associates assisted the EPA in identifying the candidate rules and potentially interested parties to the negotiations. To compare the effects of having either an agency or a nonagency facilitator, John McGlennon of ERM-McGlennon facilitated the first negotiation and LaJuana Wilscher, Special Assistant to EPA's General Counsel, played this role for the second demonstration. The EPA also selected Lawrence Susskind, head of the Public Disputes Program at MIT and Executive Director of the Program on Negotiation at Harvard Law School, to document the demonstrations. Jerry McMahan and David Kronenberg of the documentation team spoke or met regularly with all the parties and observed all the negotiating sessions. The EPA was encouraged by the results of the two regulatory negotiations.
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Though the issues had different regulatory histories, each negotiation resulted in a written consensus. The Agency intends to sponsor at least one more demonstration in 1985. This article discusses the demonstrations from the perspective of the members of the nonagency mediation team. Included as background are descriptions of the prenegotiation activities, the organization of negotiating committees, the role of the mediation team, the resources used to implement the negotiations, the personal dynamics and trust that developed among negotiating committee members, and the ratification process used in each demonstration. These demonstrations indicate that regulatory negotiation can help to improve the traditional rulemaking process. The experience described here suggests that the agency should consider several modifications in future demonstrations including the use of nonagency mediation teams, providing financial resources primarily for travel expenses, and requiring parties to sign a written agreement indicating that they will support the draft regulations during the hearing process.
BACKGROUND In 1982, the US EPA announced its Negotiated Rulemaking Project and selected ERM-McGlennon Associates as the convenor/facilitators. In December 1983, David Doniger, an attorney with the Natural Resources Defense Council (NRDC), proposed Nonconformance Penalties (NCPs) as one of several candidate rules for regulatory negotiation. The suggestion was the result of several meetings among members of the environmental community, EPA, and ERM-McGlennon. Prior efforts to negotiate a controversial low-level radioactive waste regulation indicated that the support of the environmental community was crucial to a successful negotiation (Susskind and Fish 1983). In the spring of 1984, EPA selected NCPs as the first of two demonstrations. Under the Clean Air Act, EPA was required set emission standards for heavyduty engines based on the performance of the most advanced manufacturers. Firms that do not meet the standards are allowed to produce nonconforming engines if they pay an increasing penalty designed to cost the manufacturers at least as much as compliance with the standard. The NCP negotiations began in June 1984. A 22-member Committee was created under the terms of the Federal Advisory Committee Act (FACA). It was composed of representatives of the automobile and truck manufacturing industry but included individuals from several state air quality agencies, EPA, and NRDC (see Table 1). After four months of negotiations, the Committee reached a consensus. The consensus was recorded in a joint statement that covered the penalty system, the structure of the penalty formula, and the administration of the penalty system. The document was ratified by all the participating parties and sent to the EPA Administrator in December 1984. The second rule selected by EPA had an entirely different regulatory history.
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TABLE 1. Members of the NCP Negotiation Committee American Trucking Association Auto Importers of America California Air Resource Board Caterpillar Tractor Company Chrysler Corporation Colorado Department of Health Cummins Engine Company Engine Manufacturers Association Ford Motor Company General Motors Corporation International Harvestor Isuzu Motors America lveco Trucks of North America Mack Truck Corporation Manufacturers Emission Control Association Mercedes Benz Motor Vehicle Manufacturers Association Natural Resources Defense Council Onan Corporation State and Territorial Air Pollution Program Administrators US Environmental Protection Agency Volvo Truck Company
Under Section 18 of FIFRA, the Administrator in cases of emergency is authorized to exempt certain pesticides from the full range of federal licensing requirements. Unlike the NCP regulation, this emergency exemption process was already published. After operating under these regulations for almost a decade, the Agency recognized a need to revise the rule. In 1982, an internal EPA audit on the Section 18 program raised a number of concerns that supported the need for revisions. The audit found that over a five-year period applications for emergency exemptions increased by 250 percent. Later that same year, the House Subcommittee on Department Operations in Research and Foreign Agriculture released its own report, which also expressed concern over the possible abuses of Section 18 authority. In response to these concerns, the Agency decided to revise the Section 18 rule. After four months of negotiations the stakeholders involved ratified the final consensus statement including the exact language of the draft regulatory changes. The agreement tightens the emergency exemption process. PRENEGOTIATIONS The negotiating process began long before the first formal negotiating sessions. Once the NCP rule was nominated, ERM-McGlennon began a two-phased con-
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flict assessment. Initially, a representative of ERM-McGlennon and EPA Program Program Director, Chris Kirtz, met with E P A ' s Manufacturer's Operations Division (MOD). The position of both ERM-McGlennon and EPA was that the negotiations would fail unless they had the support of the EPA program office. At a February 8 meeting MOD Director Chuck Freed expressed his support for regulatory negotiations and his willingness to negotiate NCPs. Freed later became EPA's chief negotiator. The preliminary assessment began in February. E P A ' s MOD office supplied initial list of 17 contacts. This list expanded to over 45 by the end of the preliminary assessment. Telephone interviews were conducted with representatives of key manufacturing, consumer, and environmental groups, state agencies, and industry associations. The purpose of the phone calls was to identify all potential stakeholders and to understand their concerns about NCPs. The assessment revealed widespread support for using a negotiated approach. Only two groups expressed any skepticism. This favorable response led ERM-McGlennon to recommend that EPA proceed to the second phase of prenegotiations, conflict assessement. A similar process was used in the preliminary assessment for the Section 18 rule. In that case the EPA program office nominated the rule and supplied an initial list of 40 contacts. By the end of the assessment, ERM-McGlennon had contacted 20 parties (see Table 2) and sent project information to 84 additional organizations. Steve Schatzow, E P A ' s Office of Pesticide Programs (OPP) Director, though initially skeptical, was willing to negotiate the Section 18 reguTABLE 2. Members of the Section 18 Negotiating Committee American Seed Trade Association Association of American Pest Control Officials Association of State and Territorial Health Officials Defenders of Wildlife Florida Citrus Mutual Interregional Research Project #4 National Agricultural Chemical Association National Associationof State Departments of Agriculture National Association of Wheat Growers National Audubon Society National Cattlemen's Association National Coalition Against the Misuse of Pesticides National Corn Growers Association National Cotton Council of America National Food Processors Association National Wildlife Federation Pesticide Users Advisory Committee State FIFRA Issues Research Group US Department of Agriculture US Environmental Protection Agency, Office of Pesticide Programs
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lation. The potential stakeholders included environmental groups, national coalitions, other federal agencies, and state officals. Once again the preliminary assessment showed sufficient support to proceed to the next phase. The conflict assessment phase was characterized by personal visits to a limited number of potential parties. Through these interviews, ERM-McGlennon learned more about each stakeholder's interests and concerns. The objective was to ensure that all appropriate parties were represented in the negotiations. From a list of 47 contacts in the NCP assessment the group of potential parties was narrowed to approximately 20. The criteria used in the selection of members for each Negotiating Committees included: • the party's interest in the issue (NCPs or Section 18), • the potential impact of the new regulation on the party, and • whether or not the party's interests were represented by ether groups. In identifying stakeholders, there was a natural tendency to work with organizations and coalitions that represented several parties. The best example is the National Coalition Against the Misuse of Pesticides which represents environmental and public interest groups throughout the country. The criteria as published in the Federal Register (April 24, 1984) required candidate rules: • to be at the preproposal stage of development, • to have a relatively small number of identifiable parties willing to come to the table, • to present a limited number of specific issues, and • to contain a near term deadline for publication of the regulation. (In the case of Section 18, the deadline was established by the Agency.) In practice, perhaps the single most critical factor was a desire on the part of all of the key parties, including EPA, to participate. The completed conflict assessments confirmed the selection of NCPs and Section 18. A notice of EPA's intent to negotiate both regulations was printed in the Federal Register and provided time for public comment. The announcements described the potential issues for negotiations, reasons for choosing the rules, and the criteria for selecting Committee participation. As Lawrence Susskind and Diane Fish have noted, the preliminary assessments and the more comprehensive conflict assessments are crucial to any successful regulatory negotiation (Susskind and Fish 1983). Investigating the interests of each of the parties produces a foundation for negotiation. The prenegotiations should be conducted by non-EPA staff to ensure as objective an evaluation as possible.
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ORGANIZING T H E NEGOTIATING C O M M I T T E E ERM-McGlennon and EPA sponsored organizational meetings at the beginning of each demonstration. The purpose of these sessions was to allow potential participants to meet, learn about how regulatory negotiations could be used to develop EPA rules, and help the parties decide whether they wanted to participate in the project. Twenty-three potential parties were invited to the NCP session. All except one of the key stakeholders attended the meeting. Chuck Freed, EPA's Program Office Director, confirmed his office's support for regulatory negotiation and explained how negotiations would be integrated into the traditional rulemaking procedure. The EPA's technical consultant on NCP also presented background information on the issue. By late spring, all the potential stakeholders had agreed to participate. The parties were invited to an eight-hour training session one day prior to the first full negotiating meeting. The goals of this training program were: • to educate participants about the fundamentals of negotiations; • to improve the participants' awareness of the dynamics of disputes; • to develop negotiating skills, bargaining strategies, and negotiating style; and • to demonstrate ways to apply these skills in the upcoming session. A similar briefing and training session was held for parties to the Section 18 negotiation. Over 20 negotiators attended each training session. At each meeting, ERMMcGlennon proposed a simple set of protocols drafted in conjunction with the EPA Project Manager and Washington attorney Phillip Harter. The protocols contained the suggestions that the parties not speak with the press and that the group agree on a deadline and meeting schedule. ERM-McGlennon circulated a draft of the protocols to all Committee members prior to the meeting. The draft was designed to be broad enough to allow participants to create other specific protocols. In both demonstrations, the negotiators were content to modify the general guidelines drafted by ERM-McGlennon. Protocols were designed to guide the administration of two $50,000 resource pools. These funds were set aside to defray the anticipated expenses of participating in the negotiations and to support joint research or technical analyses. After contentious discussions at the early NCP Committee meetings, the Committee reached a consensus on how to administer the pool, manage contracts, and distinguish between federal and private funds in the pool. There was not as much controversy in the second demonstration on Pesticide Exemptions. Both Committees eventually agreed that individual stakeholder requests for funds would be reviewed by the entire group and managed by an independent organization. In the NCP negotiations, the pool was managed by the American
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Arbitration Association. The Pesticide Exemption Committee's pool was managed by the National Institute for Dispute Resolution. During the first negotiating session the NCP Committee members grouped their concerns under three headings: • application of NCPs; • penalty structure and rate setting; and • administration and enforcement. These categories became the basis for three working groups that ranged in size from six to 19 members. In several cases, negotiators joined more than one work group. It was in the groups that much of the actual drafting occurred. The groups met between full negotiating sessions. Each group started its discussion with an issue paper prepared by one Committee member. The Section 18 Committee also organized itself into three working groups: • emergency definition; • health and safety; and • implementation. Each group was assigned a subset of issues from a comprehensive list developed by the full Committee. As in the first demonstration, the working groups met between each full negotiating session.
R O L E OF T H E M E D I A T I O N T E A M John McGlennon of ERM-McGlennon Associates served as the convenor/facilitator for the NCP negotiations. LaJuana Wilscher, Special Assistant to EPA's General Counsel, served as the facilitator for the second rule on Pesticide Exemptions and Peter Schneider of ERM-McGlennon served as the convenor. In both cases, ERM-McGlennon handled the prenegotiation work and provided logistical support at full negotiating sessions and working group meetings. Sam Gusman, Senior Associate with the Conservation Foundation, has argued that a negotiating Committee must select its own mediator in order to feel that it "owns" the negotiation process. He has also argued that an inside facilitator, in this case an EPA employee, cannot be neutral. The success of the two demonstrations challenges these hypotheses. These two negotiations are also likely to surprise advocates of small negotiating committees (Harter 1982a). Both negotiating Committees had at least 20 participants and worked well.
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RESOURCES The resource pools were designed to cover extraordinary expenses and to support joint research or analysis. Some representatives agreed to participate only if the resource pool were available to cover travel expenses. In the NCP negotiations, parties spent several hours discussing the appropriate use of the pool. The primary issue was whether the funds should be used to compensate individual Committee members for their time. The group could not agree which compensation was appropriate. In the NCP negotiations, two contracts were awarded to a statistician. The contractor analyzed a specific sampling plan related to the penalty formula. The Committee spent $23,000 over the life of the project. The Section 18 Committe~ spent approximately $20,000. Without the funds to reimburse parties for travel costs it is unlikely that either of the negotiations would have occurred. The availability of such money contributed to the stakeholders' sense that there was relative equality among the participants. The parties, the negotiators, and their staffs devoted many hours to the negotiations. Each party honored its original commitment to negotiate in good faith. Committee members spent approximately 24 hours each month over the life of the negotiations. Several parties, including EPA, spent considerably more.
PERSONAL DYNAMICS AND TRUST The investment of time and resources was rewarded most directly by the consensus agreements. Each party, however, also developed relationships with the other stakeholders. The positive and productive spirit of the negotiations generated a good deal of mutual respect. This may be the most lasting outcome of the negotiations. The contrast between the early Committee meetings and the concluding sessions was striking. The personal relationships that evolved during the four to six months of intense negotiations are likely to be useful in other related areas in the years ahead.
R A T I F I C A T I O N AND F O L L O W U P Although both negotiating Committees reached agreement, the specific nature of their consensus statements and the mechanisms used to ratify the agreements were different. In the case of NCPs, the Committee did not develop specific regulatory language. Instead, the Committee developed a statement that specifies the agreement on the overall concept of NCPs, the penalty formula, and the administration of the penalty system. The Committee reached agreement on October 12, 1984, and created a small working group to draft a final written statement. Over one month later a smaller
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five-member group produced a 16-page written statement. Throughout the final drafting the group checked back with the other Committee members to ensure that changes did not disrupt Committee consensus. After seven hours of conference calls, moderated by Peter Schneider, they had an agreement. The last step in the negotiation process was to obtain signatures from the 22 Committee members. Five weeks after the statement was finalized, the last letter ratifying the final statement was received by ERM-McGlennon. The Pesticide Exemption Committee adopted a different approach. Because there was existing regulatory language, the Committee chose to prepare a consensus statement that could be used as the draft regulation. At the suggestion of EPA's chief negotiator, Steve Schatzow, the Committee agreed to prepare a consensus statement that could be signed by all parties at the last negotiating session. On Jaunary 16, 1985, the Committee concluded its negotiations and each of the 19 members present signed the statement. Committee members prepared for this ratification step through ongoing consultation with their Boards of Directors or other relevant groups to review both the regulation and the preamble. The Section 18 process expedited ratification and demanded fewer resources from ERM-McGlennon and many of the other parties during this phase of the negotiations.
CONCLUSIONS The EPA has shown that regulatory negotiation can produce written consensus agreements. The success of these efforts cannot be judged until the final rules are promulgated. The Agency will, however, sponsor other demonstration projects and evaluate their results. The NCP and Pesticide Exemptions negotiations suggest several important modifications to the process for future regulatory negotiations. Given the size of the Committees that are likely to form for these types of negotiations, a team of n~ediators, rather than a single person, must be more effective. The team could include a chief mediator and several assistant mediators. The chief mediator might facilitate each of the full Committee meetings while assistant mediators could be assigned to working groups. Allen Spalt, chief negotiator for the National Coalition Against the Misue of Pesticides (NCAMP) in the Section 18 negotiations, believes the team concept is clearly a more efficient approach, but the team must include an individual with specific expertise in the substance of the rule (1985). Experience with both negotiations showed that issues will arise that demand technical expertise. For example, a statistician was hired for the NCP negotiations, and several agricultural economists contributed to the Section 18 negotiations. It would be helpful if specialists could be associated with the mediation
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team. Requests for technical expertise could be reviewed by the entire Committee and experts hired through the mediation team. The experts would act as consultants to the mediation team and report to the full Committee. All parties to both negotiations believed that it was important to develop written consensus statements. The approach adopted by the Section 18 Committee was more efficient. When a negotiating deadline is set, the parties should agree that their final session will include signing a written consensus agreement. If the parties expect to sign a document on a specific date, they will work with their decision makers to prepare for the signing. This process minimizes the potential that the consensus will break down after the last session, as the parties finalize the language of the agreement. A final ratification meeting could be made even more efficient if the Committee used a wordprocessing system. This arrangement would allow all parties to revise the text and to obtain printed copieg instantly. Regulatory negotiation is surprisingly resource intensive. Nevertheless, both of the negotiations discussed here resulted in proposed rules that met the needs of all of the concerned parties. Perhaps most important, the participants developed a greater understanding of each other's true interests. This unquantifiable gain may be the most significant outcome of applying negotiation to rulemaking.
REFERENCES Bingham, G. 1981. Does Negotiation Hold a Promise for Regulatory Reform? Resolve Fall: 1-7. Brown, K. 1985. Personal Communication. Gussman, S. 1983. Selecting Parties for a Regulatory Negotiation. Environmental Impact Assessment Review, 4-2:195-202. Hatter, P. 1982a. Negotiating Regulations; A Chance for Actual Participation. Environmental Forum 1(6):8-9. Harter, P. 1982b. Negotiating Regulations: A Cure for Malaise? Environmental Impact Assessment Review 3(1 ):75-92. Kirtz, C. 1982. EPA Announces Negotiated Rulemaking Project. Environmental Impact Assessment Review 3(4):367-372. Ruckelshaus, W. 1984. An Address before the Conservation Foundation's Second National Conference on Environmental Dispute Resolution. Washington, D.C. Spalt, A. 1985. Personal Communication. Susskind, L., and Fish, D. 1983. Status Report: The EPA's Negotiated Rulemaking Demonstrations. Washington, D.C.: Office of Regulation and Standards, Environmental Protection Agency. Susskind, L., and McMahon, G. 1985. Documentation of EPA's Nonconformance Penalties (NCP) Regulatory Negotiation Demonstration. Washington, DC: Office of Regulation and Standards, Environmental Protection Agency.