CHAPTER 10 EFFECTIVE DISPUTE RESOLUTION IN NATURAL RESOURCES AND ENVIRONMENTAL CASES

• Jurisdiction: United States

Natural Resources & Environmental Litigation II
(May 1996)
CHAPTER 10
EFFECTIVE DISPUTE RESOLUTION IN NATURAL RESOURCES AND ENVIRONMENTAL CASES
Daniel C. Himelspach
Disputes Management, Inc.
Denver, Colorado
Leslie M. Lawson
Judicial Arbiter Group, Inc.
Denver, Colorado

INTRODUCTION

"(Traditional litigation) is a mistake that must be corrected ...... trials by adversarial contest must in time go the way of the ancient trial by battle and blood. Our system is too costly, too painful, too destructive, too inefficient for a truly civilized people."

This harsh indictment delivered a few years ago by Warren Burger, former Chief Justice of the United States Supreme Court clearly illustrates the current deep-seated dissatisfaction of society with our litigation system. Litigation, and administrative adversarial actions are costly, time consuming and stressful on all participants, including the attorneys. The real problem is overuse of a system — the litigation system — to resolve disputes when it was never designed or intended to be a dispute resolution system. Our litigation system is designed to find the truth¹ and ascertain legal rights. With many disputes in litigation, the truth and who is legally right, is less important than resolving a problem and allowing the disputants to continue normal lives and get on with business.

Lawyers and judges have the responsibility to design and implement a dispute resolution system that is fair, accessible, time and cost efficient, user friendly and responsive to the needs of our citizens. In the most fundamental of terms, this effort is what the proliferation of ADR methods is all about.

This article will discuss the dispute resolution techniques and settlement tools used in resolving natural resources and environmental disputes. The focus is placed on mediation of these disputes. However it is important to understand that the first imperative in any type of case is to understand the ADR process. If the process is understood, application of the process to a natural resources or environmental dispute is a follow-up that is not difficult if the third party neutral has some familiarity with the law and the industry.

GENERAL

There are only two ways to resolve any dispute. The disputing parties develop a solution on their own, or another person dictates the solution. The first is called conciliatory methods and the second adjudicatory methods. All dispute resolution techniques, despite their fancy names, fall into one of these two categories. Negotiation between the parties and mediation are the two best known conciliatory techniques. Litigation and arbitration are the best known adjudicatory techniques.

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Terminology presents a problem with any discussion of dispute resolution techniques. While many of these processes are ancient, they have only come into widespread use in the last few years. As a result, terminology is not standardized. The ADR Committee of the Colorado Bar Association compiled a Manual on Alternative Dispute Resolution that includes definitions that we feel are excellent. Bar associations of several other states have used the Manual. In the interest of obtaining standardized definitions, we set out the following definitions.

Mediation is a process whereby a neutral and impartial third party (the mediator) facilitates communication between negotiating parties which may enable the parties to reach settlement.

Early Neutral Evaluation is a process whereby an evaluator is appointed by the court or chosen by the parties to intervene in a lawsuit for the purpose of narrowing the issues, assisting in case planning and management and assisting in settlement, if appropriate.

Mini-trial is a process whereby a neutral and an official with settlement authority from each party listen to the evidence and conduct settlement negotiations.

Med-Arb is a process whereby a neutral and impartial third party facilitates communication between negotiating parties and failing settlement, receives evidence and testimony provided by the parties and issues a binding decision.

Arbitration is a process whereby one or more neutral and impartial expert third parties hear and consider the evidence and testimony provided by the disputants and issue a binding or non-binding decision.²

Mediation, Early Neutral Evaluation and Mini-Trial are conciliatory processes. Med-Arb is a combination conciliatory and adjudicatory process. Arbitration is an adjudicatory process.

There is no shortage of disputes in our society. Most disputes are, of course, resolved by negotiation between the parties before involvement of attorneys or any third party. Mediation is by far the most widely used dispute resolution technique that involves parties other than the disputants and their legal representatives. It is our opinion that while mediation is the most used method, it is still greatly underutilized.

Negotiation between the parties should always be the first step. The next step should be negotiation with the parties accompanied by their legal representatives. These negotiations often fail not because there are no logical and fair solutions, but because there are multiple failures of communication and because the needs of the parties are not identified and addressed. The next step should be mediation and the final step should be arbitration or litigation. With this step by step approach, attorneys can give their clients every opportunity to resolve their disputes with the least expenditure of time, money and stress. Litigation should always be the final step after there has been a fair opportunity for the other steps to succeed.

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Overcrowded court dockets have often provided the incentive for parties and their counsel to attempt ADR methods. Nationwide only about 5% of all lawsuits filed proceed to a trial. This means that 95% of all cases settle sometime before trial or are dismissed for lack of prosecution. Unfortunately, most cases settle just before trial after investment of substantial costs and time. Traditionally, attorneys have waited until just before trial to seriously talk settlement. This accounts for the low percentage of cases going to trial, but this approach does little to control costs, decrease the time involved in the litigation process, or to alleviate stress.

All ADR processes, including arbitration, are private processes. The government, including the courts, has no control over the process. The process is a creature of contract. Parties can design and use any mutually agreeable criteria, guidelines, rules or procedures. Attorneys sometimes fail to recognize the freedom and flexibility that presents. We are too used to resolving our clients disputes in the court, which is a highly regulated governmental environment. Governmental agencies, such as EPA, also struggle with this.

IS ADR EFFECTIVE?

Application of ADR methods, especially conciliatory methods, has proven highly successful in virtually every area of law and societal conflict. The commonly accepted explanation for the increase in the use of ADR techniques is that they save time, money and stress for all participants, including the attorneys.

There have been a few recent articles that attack the assumption that ADR saves time and money.³ Most of the bad press comes out of California and is directed toward arbitration and court appointed masters to rule on discovery disputes. The allegation is that court appointed masters were not solving the problems quickly and were charging excessive rates for their services. California has recently promulgated regulations aimed at curbing such abuses. The criticisms are not much different from the historic criticisms of the litigation system. This entire effort is in its infancy. There will be problems, bad methods and bad applications for years to come.

Because of the overall success of ADR applications, we are seeing more and more use of ADR processes by the private sector and more and more encouragement to use ADR by courts, administrative governmental agencies and legislatures. This expanded use is encouraged for almost every type of dispute. Natural resources and environmental disputes are no exception. The analysis of the benefits of ADR systems depends on the point of view of the agency considering using ADR processes. Legislatures are asking if mandatory dispute resolution requirements will save money allocated to the judiciary and address the public concern about the litigation system. Judges are primarily concerned with overcrowded dockets and limited time available for trials. Corporate counsel and businesses ask if widespread use of ADR will save time, in house and outside legal fees and result in lower payouts to plaintiffs. Governmental agencies are asking if the use of ADR will decrease their work load, improve public satisfaction with their regulatory function, and yet not compromise their enforcement mandate. Lawyers generally are looking to ADR to reduce the risk of going to trial.

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To date there is no complete answer. Mandatory court-annexed arbitration programs have had the most extensive review. Nationwide costs savings with these programs is inconclusive. However in a study on a typical mandatory arbitration program that was in effect in Colorado a few years ago, it appears that: 1) Cases were resolved 30-60% faster. 2) 68% of the attorneys and 52% of the litigants were satisfied with the outcomes of the arbitration hearings. It would be interesting to compare this with the satisfaction level of attorneys and clients with the outcome of trials. 3) The costs for most clients decreased. However, there appeared to be no savings to the courts.⁴ Despite these favorable findings the Colorado legislature allowed the program to "sunset." The Colorado Bar Association Board of Governors narrowly voted to not support continuation of the program. The primary objection from the legal community seemed to center on...