The Costs of Environmental Alternative Dispute Resolution

Edward Brunet

In his recent Article advocating greater use of alternative dispute resolution (ADR) techniques by the Environmental Protection Agency (EPA) in enforcement actions, Richard Mays thoroughly analyzed the benefits of ADR but failed to adequately discuss its drawbacks.¹ This Dialogue identifies problems associated with Agency promotion of ADR and recommends that the status quo of infrequent and highly selective use of ADR techniques is entirely healthy. The Dialogue will identify and analyze four myths underlying Mays' conclusion that ADR should play a key role in environmental enforcement.

Myth #1: Use of ADR is Entirely Procedural and Does Not Affect the Substantive Result of EPA Enforcement Efforts

Mays suggests that "use of ADR affects not the substance of the case against the violator, but merely [affects] the procedure by which the same result may be obtained."² The reasoning is fallacious.

The nature of mediation is compromise and avoidance of so-called winner-take-all results. Most advocates of ADR laud this characteristic as an attractive attribute since each adversary can claim to "win" and since compromises may be "creative" and not "bound" or constrained by substantive law.³

The results of mediation and arbitration can be and are inconsistent with substantive law.⁴ Indeed, mediators are not free to counsel adversaries on "the law" for fear of jeopardizing their essential neutrality.

The fact that mediation and other forms of ADR reach results antagonistic to existing substantive law is cause for concern to environmental enforcement. There is every reason to suspect that a regulated firm can reach a "better" result in a compromise-driven mediation than in litigation, where courts apply predetermined legal principles. Accordingly, firms that know they have ability to mediate may choose to purposefully violate existing law and thereby create a dispute. For example, a polluting firm faced with a published emission sanction may prefer to mediate the penalty with EPA rather than to risk a litigated application of the published sanction. Under such circumstances, favorable mediated sanctions might cause firms faced with a potential pollution decision to pollute rather than to abate. Use of mediation in this setting undermines preventative law; the Agency needs to present private firms with compliance programs that call for rigid adherence to published Agency norms. Introduction of a mediation program under these circumstances disrupts compliance programs, which are essential to improve the environment and increase the effectiveness of EPA enforcement efforts.

Adherence to published substantive law is of great value to society generally, to regulated firms, and to administrative agencies. Litigation can be counted on to apply substantive principles to the facts of a dispute. Conventional litigation "give[s] force to the values embodied in authoritative texts" and "bring[s] reality into accord with them."⁵ In cautioning against mediating every kind of dispute, Judge Henry Edwards reminds us that formal litigation possesses the "oft forgotten virtue" of ensuring "the proper resolution and application of public values."⁶ Recent New Jersey legislation now requires arbitrators to enter written conclusions of law to ensure that the substantive law is applied.⁷

[18 ELR 10516]

Myth #2: Litigation Factfinding Is Inferior to ADR Decisionmaking

Mays and others⁸ mistakenly laud the quality of ADR decisionmaking and criticize the nature of factfinding used in litigation. In fact, only formal litigation and adjudication provide a mechanism for accurate determination of facts.⁹ In contrast, arbitration and mediation, dependent upon speed and voluntary exchange of data, are unable to resolve facts with the quality degree of accuracy available through litigation procedures.¹⁰

The ability to conduct some discovery is crucial if any accurate result is to be reached in a dispute. Discovery enables disputants to learn the facts essential to a fair and accurate dispute resolution result. Some arbitration and mediation procedures provide discovery mechanisms. Nonetheless, these ADR discovery procedures are informal and ambiguous and lack a managerial judge with the full range of sanctioning powers able to force parties to comply with and not abuse discovery. ADR procedures are weak since they rely on voluntary party exchange of data and do not have an authority figure equivalent to a judge to prevent discovery abuse. Indeed, the mediator is in a particularly inefficacious position to ever force or jawbone discovery compliance since successful mediation requires slavish adherence to the notion of an impartial mediator.

What all this means is that the "facts" produced in an environmental mediation are likely to be incomplete and inaccurate. This is particularly problematic given the factually complex nature of environmental disputes — the facts are usually quite complex, often hidden, and not easily understood. Under these circumstances, litigation is superior to ADR since accurate factfinding is essential to a "just" determination of environmental disputes.

Another advantage of litigation procedure lies in the formal joinder mechanisms used in conventional court processing but not normally employed in ADR techniques. Intervention allows third parties who are affected by litigation to enter a case voluntarily and be heard. Similarly, compulsory joinder can force a third party affected by a dispute into a case involuntarily. The results reached following joinder through either of these devices are superior to those that would have been reached without their use. Evidentiary input from the additional party will often shed new light on a dispute.¹¹

Use of these mechanisms to add parties and potentially valuable evidence is uncommon in ADR. Devices like mediation work best in simple disputes between two parties and work poorly in more complex polycentric disputes among multiple parties.¹² Furthermore, the delay associated with adding parties is inconsistent with the overriding ADR concern with speedy dispute resolution.

Myth #3: Litigation Results Are Nothing More Than Costly and Delayed Dispute Resolution

Inherent in the Mays Article is an attitude that litigation results are inevitably costly, that litigation will result in intractable delay, and that litigation has value only to the partieswho are litigating. Indeed, Mays made few positive comments regarding litigation.

In fact, carefully selected administrative agency litigation has value far beyond the litigants involved in a case. The substantive "case law" drafted by courts guides third parties who are not in the dispute and who seek to avoid disputes by complying with substantive law. In a field such as environmental regulation, numerous businesses attempt to comply with case outcomes in the healthy exercise of preventative law. In this way, the "guidance effect" of litigation case law is a separate benefit far in excess of resolving one case.

This guidance effect is central to the selection of disputes for litigation by an administrative agency such as EPA. When engaging in the inevitable prosecutorial discretion inherent in agencies with limited resources, EPA officials select among potential prosecutions. The selection process undoubtedly considers the need for a court to clarify vague legislation or to fashion common law principles and assumes that leading cases — those selected by the agency for litigation — will "guide" third-party businesses.

Mays correctly contends that litigation is costly and often unnecessarily lengthy. Yet, there is no clear and reliable proof that ADR techniques will reduce costs. Judge Richard Posner has criticized ADR advocates for boasting of cost savings and speedy results without adequate proof.¹³ Posner contends that no reliable benchmark of potential cost-saving features of ADR can exist until proper social science techniques are employed to compare conventional litigation and its alternatives in a verifiable manner.¹⁴

Myth #4: The ADR Process Can Produce Necessary Public Confidence in Results Reached by Agencies Such as EPA

Mays acknowledges public criticism of "sweetheart deals" between EPA and regulated firms during 1982-83 and resulting public distrust.¹⁵ While subsequent changes in funding and prosecution strategy have undoubtedly improved public confidence, a full-scale ADR program creates a substantial risk of a return to allegations of improper deal-making.

[18 ELR 10517]

Litigation occurs in public with results freely available for all to see. Litigation is presided over by politically accountable judges who lend legitimacy to those matters resolved. Much litigation ends with written opinions, results that are accessible and open to criticism. In contrast, normal ADR results are reached far from public scrutiny, in secret. Many ADR advocates boast of result "privacy" as a primary virtue of ADR when compared with "public" litigation.¹⁶ Neither mediation nor most arbitrations terminate with written opinions. Indeed, ADR advocates caution arbitrators not to write opinions that might be criticized.¹⁷

This comparison between the differing characteristics of conventional litigation and ADR creates respect for the safeguards of litigation. Agencies that have lost a measure of public confidence should be hesitant to embark on ambitious ADR programs. Mays correctly points out that public participation in the dispute settlement process will help to mitigate against public distrust. Nonetheless, until ADR methods can integrate the open and public processes of litigation, the public should be skeptical of results reached out of the public eye.

Conclusion

This Dialogue has been critical of the anti-litigation bias inherent in the Mays Article. While cataloging numerous benefits of ADR techniques, Mays shed little light on the numerous virtues of conventional litigation. Mays, however, was careful to point out that ADR should not be used by EPA where "(1) there are important precedential legal issues that need resolution; (2) an injunction or other court-supervised relief is necessary and the parties do not have the time for or interest in negotiating a consent degree; or (3) the conduct of one of the parties is so egregious as to make it in the public interest to subject that party to the most visible trial and punishment available."¹⁸ This qualification is significant because it demonstrates Mays' understanding that courts are a superior force to craft or fashion law and to supervise adherence to injunctive relief. This point also shows Mays' concession that visible court trials can be of extreme value to an agency seeking adherence to published standards.

Litigation, while admittedly expensive to private litigants and agencies, possesses numerous virtues such as open decisionmaking, third-party "guidance," accurate factfinding, and focused application of substantive legal principles. In short, litigation, while not perfect, is a quality product possessing multiple attractive features that may be unavailable through the presently trendy ADR methods. ADR procedures may be able to decide disputes cheaply and quickly. Nonetheless, if speedy and cheap results were the only goals of dispute resolution, we could institutionalize coin flips. ADR methods are most appropriate where the nature of the dispute is essentially "private" with little or no third-party impact, where the dispute is ongoing and some "peace" mechanisms are preferable to a winner-take-all outcome, and where the law is extremely vague or nonexistent. Under these narrow conditions, litigation may be counterproductive and agencies should look to alternatives.¹⁹ ADR methods should be considered as alternatives to litigation but not without understanding the accompanying drawbacks.

Mr. Brunet is Professor of Law at Lewis and Clark Law School, Portland, Oregon. He received his B.A. from Northwestern University, J.D. from the University of Illinois, and LL.M. from the University of Virginia.

1. Mays, Alternate Dispute Resolution and Environmental Enforcement: A Noble Experiment or a Lost Cause?, 18 ELR 10087 (Mar. 1988).

2. Mays, supra note 1, 18 ELR at 10094 (emphasis in original).

3. See, e.g., Riskin, Mediation and Lawyers, 43 OHIO ST., L.J. 29, 34 (1982); Lieberman and Henry, Lessons From the Alternate Dispute Resolution Movement, 53 U. CHI. L. REV. 424, 429 (1986); R. FISHER & W. URY, GETTING TO YES: NEGOTIATING AGREEMENT WITHOUT GIVING IN, 73 (1981).

4. Lieberman and Henry, supra note 3, at 425, 429; M. DOMKE, DOMKE ON COMMERCIAL ARBITRATION § 25.01 (arbitrators not required to follow applicable law); J. FOLBERG AND A. TAYLOR, MEDIATION: A COMPREHENSIVE GUIDE TO RESOLVING CONFLICTS WITHOUT LITIGATION 10 (1984) (mediation not bound by rules of procedure and substantive law).

5. Fiss, Against Settlement, 93 YALE L.J. 1073, 1085 (1984).

6. Edwards, Alternate Dispute Resolution: Panacea or Anathema, 99 HARV. L. REV. 668, 676 (1986); accord, Funk, When Smoke Gets in Your Eyes: Regulatory Negotiation and the Public Interest — EPA's Woodstove Standards, 18 ENVT. L. 54 (1987) (criticizing an EPA regulatory negotiation as no substitute for a public interest determination); Shoenbrod, Limits and Dangers of Environmental Mediation: A Review Essay, 58 N.Y.U. L. REV. 1453, 1466-71 (1983).

7. See N.J. STAT. ANN. § 2A:23A-3 (West 1987), discussed in O'Hara, The New Jersey Alternative Procedure for Dispute Resolution Act: Vanguard of a "Better Way"?, 136 U. PENN. L. REV. 1723, 1757-58 (1988).

8. Mays, supra note 1, 18 ELR 10088-89; Dinkins, Shall We Fight or Will We Finish: Environmental Dispute Resolution in a Litigious Society, 14 ELR 10398, 10398-99 (1984); Lieberman and Henry, supra note 3.

9. See Brunet, Questioning the Quality of Alternate Dispute Resolution, 62 TULANE L. REV. 1, 31-39 (1987); Macklin, Promoting Settlement, Foregoing the Facts, 14 N.Y.U. REV. L. & SOC. CHANGE 575 (1986); McDonald v. City of West Branch, 466 U.S. 284, 291 (1984) (court rejects preclusive effect of arbitration because arbitral factfinding is generally not equivalent to judicial factfinding).

10. Id.; accord, O'Hara, supra note 7, at 1755 (describing new New Jersey legislation allowing deposition and document production within the first 60 days of a demand for arbitration).

11. See Brunet, A Study in the Allocation of Scarce Judicial Resources: The Efficiency of Federal Intervention Criteria, 12 Ga. L. Rev. 701, 729-733 (1978); Natural Resources Defense Council, Inc. v. Tennessee Valley Authority, 340 F. Supp. 400, 408-09, 1 ELR 20634, 20637 (S.D.N.Y. 1971), rev'd on other grounds, 459 F.2d 255, 2 ELR 20152 (2d Cir. 1972) (allowing intervention of Audubon Society because of its "longstanding interest in and familiarity with strip-mining, expertise that may be helpful in clarifying the facts and issues in this case").

12. See Fuller, The Forms and Limits of Adjudication, 92 HARV. L. REV. 353 (1978).

13. Posner, Summary Jury Trial and Other Methods of Alternate Dispute Resolution: Some Cautionary Observations, 53 U. CHI. L. REV. 366 (1986).

14. Id. at 374-77.

15. Mays, supra note 1, 18 ELR at 10092.

16. See, e.g., Mentschikoff, Commercial Arbitration, 61 COLUM. L. REV. 846, 849 (1961); Comment, 43 U. PITT. L. REV. 1109, 1110-11 (1982); AMERICAN ARBITRATION ASSOCIATION, COMMERCIAL MEDIATION RULES (1984) (mandating confidential treatment of records received by mediator).

17. See, e.g., R. COULSON, BUSINESS ARBITRATION — WHAT YOU NEED TO KNOW (3d ed. 1986).

18. Mays, supra note 1, 18 ELR at 10089.

19. See Fuller, Mediation — Its Forms and Functions, 44 S. CAL. L. REV. 305, 326-28 (1971) (suggesting that ideal subject matter areas for mediation are where legal rules do not always guide disputants and where disputants have a stake in continuing relationships, such as business contracts, marriage dissolution, and labor unrest). These conditions may exist in some environmental disputes, particularly where pollution impact is contained to discrete geographic areas and where polluters and those impacted will have ongoing relationships.