IMF S.B. 694 75(R)BILL ANALYSIS STATE AFFAIRS S.B. 694 By: Brown (Greenberg) 4-3-97 Committee Report (Substituted) BACKGROUND The Comptroller of Public Accounts Texas Performance Review in the December 1996 report, "Disturbing the Peace," recommended greater alternative dispute resolution (ADR) usage by state agencies. Several Texas agencies already use ADR procedures in one form or another, including: Department of Criminal Justice; Department of Human Services; Department of Insurance; General Land Office; General Services Commission; Texas Education Agency; Texas Natural Resource Conservation Commission; Office of the Attorney General; Office of the Comptroller; and the Public Utility Commission. The comptroller reports that some of these agencies have enjoyed reduced complaint caseloads and savings through the use of ADR procedures. The Texas Department of Transportation estimates that it has saved $7 million by using ADR procedures in their programs. This bill is patterned in part after the Federal Administrative Dispute Resolution Act, enacted in 1990 and permanently reauthorized in 1996, which promotes use of ADR in federal agencies in a government-wide, systematic manner. PURPOSE As proposed, C.S.S.B 694 authorizes and encourages state agencies to use ADR procedures; permits agencies to share ADR expertise including using existing employees as impartial third parties; permits expenditures for training, system design, and impartial third parties as needed; articulates a standard for the confidentiality of communications made in, or for use in, an ADR procedure; and authorizes administrative law judges at the State Office of Administrative Hearings (SOAH) to refer cases to ADR procedures. This legislation works to supplement, not replace or limit, existing dispute resolution practices and procedures. RULEMAKING AUTHORITY It is the committee's opinion that this bill expressly grants rulemaking authority to all state agencies subject to Government Code, Chapter 2001 in SECTION 1 (Section 2008.051(b) of the Government Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 10, Subtitle A, Government Code, by adding Chapter 2008, as follows: CHAPTER 2008. ALTERNATIVE DISPUTE RESOLUTION AT STATE AGENCIES SUBCHAPTER A. GENERAL PROVISIONS Sec. 2008.001. SHORT TITLE: Governmental Dispute Resolution Act. Sec. 2008.002. POLICY. Provides that it is the policy of this state that disputes before state agencies be resolved as fairly and expeditiously as possible and that each state agency support this policy by developing and using alternative dispute resolution procedures in appropriate aspects of the agency's operations and programs. Sec. 2008.003. DEFINITIONS. Defines "alternative dispute resolution procedure," "state agency," "contested case," "party," "person," and "rule." Sec. 2008.004. AGENCY CONTRACTS; BUDGETING FOR COSTS. Authorizes a state agency to pay for costs necessary to meet the objectives of this chapter, including reasonable fees for certain items. Authorizes an agency, to the extent allowed by the General Appropriations Act, to use for this purpose money budgeted for legal services, executive administration, or any other appropriate aspect of the agency's operations. Authorizes a state agency to contract with another state agency, including the Center for Public Policy Dispute Resolution at the University of Texas School of Law (Center), with a county alternative dispute resolution system under Chapter 152, Civil Practice and Remedies Code, or with a private entity to meet the objectives of this chapter. Sec. 2008.005. SOVEREIGN IMMUNITY. Provides that this chapter does not waive immunity from suit and does not affect a waiver of immunity from suit contained in other law. Provides that the state's sovereign immunity under the Eleventh Amendment to the United States Constitution is not waived by this chapter. Provides that nothing in this chapter authorizes binding arbitration as a method of alternative dispute resolution. SUBCHAPTER B. ALTERNATIVE DISPUTE RESOLUTION Sec. 2008.051. DEVELOPMENT AND USE OF PROCEDURES. Authorizes each state agency to develop and use alternative dispute resolution procedures. Requires alternative dispute resolution procedures developed and used by a state agency to be consistent with Chapter 154, Civil Practice and Remedies Code, and with the administrative procedure law, Chapter 2001, Government Code. Authorizes the State Office of Administrative Hearings to issue model guidelines for the use of alternative dispute resolution procedures by state agencies. Authorizes a state agency subject to Chapter 2001, Government Code, that decides to adopt an alternative dispute resolution procedure, to adopt those procedures by rule. Sec. 2008.052. SUPPLEMENTAL NATURE OF PROCEDURES. Provides that procedures developed and used under this chapter supplement and do not limit other dispute resolution procedures available at a state agency. Prohibits this chapter from being applied in a manner that denies rights granted under other law. Sec. 2008.053. IMPARTIAL THIRD PARTIES. Sets forth regulations regarding the appointment by a state agency of a person to serve as an impartial third party in an alternative dispute resolution procedure. In cases referred by a State Office of Administrative Hearings administrative law judge, allows the administrative law judge to appoint the impartial third party if the parties are unable to agree upon an impartial third party within a reasonable period. Sec. 2008.054. CONFIDENTIALITY OF CERTAIN RECORDS AND COMMUNICATIONS. Sets forth regulations regarding the confidentiality of records, communications, conduct, and demeanor of the impartial third party and the parties. Requires confidentiality unless all parties consent to the disclosure, but does not apply to a final written agreement to which a governmental entity is a signatory reached as a result of a dispute resolution procedure conducted under this chapter. Sec. 2008.055. INTERAGENCY SHARING OF INFORMATION; CONSISTENCY OF PROCEDURES. Authorizes a state agency to share the results of its alternative dispute resolution program with other agencies and with the center. Authorizes the center to collect and analyze the information and report its conclusions and useful information to state agencies and the legislature. Provides that state agencies should, to the extent feasible, adopt policies and procedures for alternative dispute resolution that are consistent with the policies and procedures of other state agencies. SECTION 2. Amends Section 2003.001, Government Code, to define "alternative dispute resolution procedure." Makes conforming changes. SECTION 3. Amends Section 2003.021(b), Government Code, to authorize the State Office of Administrative Hearings to conduct alternative dispute resolution procedures as described in Section 2008.002. SECTION 4. Amends Section 2003.042, Government Code, to authorize an administrative law judge (ALJ) to take certain actions regarding alternative dispute resolution. Allows an ALJ to serve as an impartial third party for disputes under this chapter, except for a dispute that the ALJ refers to an alternative dispute resolution procedure. SECTION 5. Amends Title 10, Government Code, Section 2003.047, by adding Subsection (j), to prohibit an ALJ, hearing a case on behalf of the Texas Natural Resource Conservation Commission (TNRCC), without the agreement of all parties, from issuing an order referring the case to an alternative dispute resolution procedure if TNRCC has already conducted an unsuccessful alternative dispute resolution procedure. Requires the ALJ, if TNRCC has not already conducted an alternative dispute resolution procedure, to consider TNRCC's recommendation in determining whether to issue an order referring the case to the procedure. SECTION 6. Effective date: September 1, 1997. SECTION 7. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. The new language in Subsection 2008.004 (b) adds county established alternative dispute resolution systems to the list of entities that an agency may contract with for services necessary to meet the objectives of the act. ADR systems, funded under statute by county court filing fees, provide free or low cost professional assistance in their service areas for a range of alternative dispute resolution procedures. In Subsection 2008.051 (b), the Committee Substitute strikes the word "shall" and substitutes the word "may". This new language changes the rulemaking provisions of the act from mandatory to permissive. The Committee Substitute authorizes, but does not require, agencies using alternative dispute resolution procedures to adopt these procedures by rule. In Subsection 2008.053 (c), the Committee Substitute inserts the following language after "School of Law," and before "or another state or federal agency": "an alternative dispute resolution system created under Chapter 152, Civil Practice and Remedies Code," The new language in Subsection 2008.053 (c) specifically authorizes state agencies to contract with the numerous county established alternative dispute resolution systems across Texas to obtain the services of impartial third parties. The Committee Substitute strikes Subsection 2008.054 (b) from S.B. 694. This Subsection provided that the Attorney General and Travis County District Courts have authority to review issues arising from conflicts of law relating to confidentiality under the Act. The Subsection referenced a provision of the Texas ADR Act (Section 154.073 (d), Civil Practice and Remedies Code) which currently provides that any court may review conflicts of law on confidentiality arising in ADR procedures. Striking Subsection 2008.054 (b) from S.B. 694 clarifies that the Texas ADR Act provisions for resolving conflicts of confidentiality laws are to be applied in governmental ADR applications just as they would be in any other ADR use authorized by the Texas ADR Act.