Notice of Approval of Alternative Arbitration Procedure; American Arbitration Association, 67484-67487 [2019-26519]

Download as PDF 67484 Federal Register / Vol. 84, No. 237 / Tuesday, December 10, 2019 / Notices The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b. Dated at Rockville, Maryland, this 6th day of December 2019. For the Nuclear Regulatory Commission. Denise L. McGovern, Policy Coordinator, Office of the Secretary. [FR Doc. 2019–26681 Filed 12–6–19; 4:15 pm] BILLING CODE 7590–01–P PENSION BENEFIT GUARANTY CORPORATION Notice of Approval of Alternative Arbitration Procedure; American Arbitration Association Pension Benefit Guaranty Corporation. ACTION: Notice of approval. AGENCY: This notice advises interested persons that the Pension Benefit Guaranty Corporation (PBGC) has approved a request from the American Arbitration Association (AAA) for approval of an alternative arbitration procedure. DATES: PBGC’s approval of the AAA’s alternative arbitration procedure is effective January 1, 2020. FOR FURTHER INFORMATION CONTACT: Bruce Perlin (Perlin.Bruce@PBGC.gov), 202–326–4020, ext. 6818, Office of the General Counsel, Suite 340, 1200 K Street NW, Washington, DC 20005– 4026; (TTY users may call the Federal relay service toll-free at 1–800–877– 8339 and ask to be connected to 202– 326–4020, extension 6818 or 6757.) SUPPLEMENTARY INFORMATION: jbell on DSKJLSW7X2PROD with NOTICES SUMMARY: Background Section 4221(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), requires ‘‘any dispute’’ between an employer and a multiemployer pension plan concerning a withdrawal liability determination to be ‘‘resolved through arbitration.’’ Under the MPPAA, an employer has 90 days after receipt of notice of a withdrawal liability assessment to request review of that assessment. ERISA § 4219(b)(2)(A). If there remains a dispute about the assessment of withdrawal liability, the employer may ‘‘initiate’’ arbitration of the dispute within a 60-day period after the earlier of (i) the date the employer was notified of the plan’s response to the employer’s request for review, or (ii) 120 days after the date that the employer requested review of the VerDate Sep<11>2014 17:08 Dec 09, 2019 Jkt 250001 withdrawal liability. ERISA § 4221(a)(1). If the employer fails to timely initiate arbitration, the assessment becomes due and owing and the plan sponsor may bring an action in a state or federal court to collect the assessment. ERISA § 4221(b). The MPPAA directed PBGC to promulgate fair and equitable procedures for the conduct of an arbitration under section 4221 of ERISA. PBGC’s implementing regulation, ‘‘Arbitration of Disputes in Multiemployer Plans’’ (29 CFR part 4221), was designed to provide procedures to facilitate prompt resolution of disputes by an impartial arbitrator, facilitating expeditious resolutions of disputes concerning an employer’s withdrawal liability. PBGC’s default arbitration procedures provide rules for the appointment and powers of the arbitrator, rules for discovery and hearings, and rules for awards, costs, filing and service (§§ 4221.4–4221.13). Scope of Alternative Arbitration Procedures In lieu of the default procedures, under § 4221.14 of PBGC’s arbitration regulation, an arbitration may be conducted in accordance with an alternative arbitration procedure approved by PBGC in accordance with § 4221.14(c). Certain rules applicable to the default procedures cannot be varied in any alternative procedure. 29 CFR 4221.14(b). If an arbitration is conducted under a PBGC-approved alternative procedure, the alternative procedure governs all aspects of the arbitration, with the following exceptions provided in § 4221.14(b): The time limits for initiating arbitration may not differ from the time limits provided § 4221.3; the arbitrator must be selected after the initiation of arbitration; the arbitrator must give the parties an opportunity for prehearing discovery that is substantially equivalent to that required by § 4221.5(a)(2); copies of the award must be made available to the public at least to the extent mandated by § 4221.8(g); and the arbitration costs must be allocated in accordance with § 4221.10. Process for Approval of Alternative Arbitration Procedures Under § 4221.14(c) PBGC may approve arbitration procedures on its own initiative by publishing an appropriate notice in the Federal Register. Additionally, the sponsor of an arbitration procedure may request PBGC approval of its procedures by submitting an application to PBGC. The application must include: (1) A copy of the procedures for which approval is PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 sought; (2) a description of the history, structure and membership of the organization that sponsors the procedures; and (3) a description of the reasons why, in the sponsoring organization’s opinion, the procedures satisfy the criteria for approval set forth in this section. Criteria for Approval of Alternative Procedures Under § 4221.21(d), PBGC shall approve an application if it determines that the proposed procedures will be substantially fair to all parties involved in the arbitration of a withdrawal liability dispute and that the sponsoring organization is neutral and able to carry out its role under the procedures. PBGC may request comments on the application by publishing an appropriate notice in the Federal Register and notice of PBGC’s decision on the application shall be published in the Federal Register. Unless the notice of approval specifies otherwise, approval will remain effective until revoked by PBGC through a Federal Register notice. AAA’s Alternative Arbitration Rules— 1981 & 1986 MPPAR In 1985, on its own initiative, PBGC approved the 1981 Multiemployer Pension Plan Arbitration Rules for Withdrawal Liability Disputes (the ‘‘1981 MPPAR’’), an alternative arbitration procedure sponsored by the International Foundation of Employee Benefit Plans and administered by the American Arbitration Association (AAA). 50 FR 38046 (Sept. 19, 1985). In 1986, PBGC approved AAA’s request to use an amended MPPAR (the ‘‘1986 MPPAR’’) which eliminated certain procedural differences from the 1981 MPPAR and PBGC’s final arbitration regulation. 51 FR 22585 (June 20, 1986). The administrative fee schedule for handling arbitrations in the 1986 MPPAR was applicable until 2013, at which point AAA adopted an updated 2013 Fee Schedule, creating a revised MPPAR, effective February 1, 2013 (‘‘2013 MPPAR’’). The new Administrative Fee Schedule provides for increases to the Initial Filing Fee, establishes two different fee arrangements—the Standard and Flexible Fee Schedules, and adds a ‘‘Final Fee’’ under each schedule and a ‘‘Proceed Fee’’ in the flexible schedule context. Other than significant changes to the Administrative Fee Schedule and the removal of language regarding the apportionment of fees, the 2013 MPPAR are identical to the 1986 MPPAR that PBGC previously approved. Under § 4221.14, AAA has requested PBGC E:\FR\FM\10DEN1.SGM 10DEN1 67485 Federal Register / Vol. 84, No. 237 / Tuesday, December 10, 2019 / Notices approval of the updated proposed 2013 MPPAR (the ‘‘Application’’). Procedural Background PBGC published a notice of the AAA’s request in the Federal Register at 81 FR 15578 (March 23, 2016), to advise interested persons of the AAA’s Application for approval and solicit their views on it. PBGC received four comments in response to the March 23, 2016 notice. PBGC then invited AAA to respond to the public comments. PBGC published AAA’s response in the Federal Register at 82 FR 27089 (June 13, 2017), and solicited additional comments. PBGC received one final comment. After the final comment period closed, PBGC and AAA began discussions on changes to the 2013 MPPAR. AAA’s Application AAA’s Application included the necessary information under § 4221.14(c): A copy of the 2013 MPPAR; a description of the history, structure and membership of AAA; and a discussion of the reasons why, in AAA’s opinion, the 2013 MPPAR satisfies the criteria for PBGC approval under § 4221.14(d). In response to the public comments and discussions between AAA and PBGC, AAA submitted the proposed rules modifying the 2013 MPPAR (‘‘the 2019 Rules’’), which completely revised the applicable fee schedule, added language regarding the apportionment of fees, and revised procedural rules related to the arbitrator selection process. Section 4221.14(c)(2)—History and Structure of AAA AAA’s Application provided: jbell on DSKJLSW7X2PROD with NOTICES The American Arbitration Association (AAA), is a not-for-profit organization with offices throughout the U.S. as well as abroad. AAA has a long history and experience in the field of alternative dispute resolution, providing services to individuals and organizations who wish to resolve conflicts out of court. The AAA is named in 40 federal statutes and regulations, as well as over 300 state statutes and regulations. The AAA is not a membership organization. The AAA role in the dispute resolution process is to administer cases, from filing to closing. The AAA provides administrative services in the U.S., as well as abroad through its International Centre for Dispute Resolution (ICDR). The AAA’s and ICDR’s administrative services include assisting in the appointment of mediators and arbitrators, setting hearings, and providing users with information on dispute resolution options, including settlement through mediation. Ultimately, the AAA aims to move cases through arbitration or mediation in a fair and impartial manner until completion. Additional AAA services include the design and development of alternative dispute resolution (ADR) systems for corporations, unions, government agencies, law firms, and the courts. The Association also provides elections services as well as education, training, and publications for those seeking a broader or deeper understanding of alternative dispute resolution. Section 4221.14(c)(3)—Discussion of Why the 2013 MPPAR Satisfies the Criteria for PBGC Approval Under § 4221.14(d) AAA’s Application provided: The American Arbitration Association (AAA) has been administering the cases that fall under the Multiemployer Pension Plan Arbitration Rules for Withdrawal Liability Disputes for thirty-four (34) years. The rules that have been previously approved by the PBGC are effective June 1, 1981 and revised effective September 1, 1986. The AAA’s 1986 MEPPA Rules did not change; the only update made was to increase the administrative fees for handling MEPPA arbitrations from the 1986 fee schedule to the 2013 fee schedule. The AAA has provided quality administration on this caseload and based on parties and arbitrator feedback, the AAA’s service is valued and should continue to be available. However, as a not-for profit organization that receives funding only through the administrative fees earned on cases, we need to ensure that the costs associated with the administration of a particular caseload do not vastly exceed the fees earned. The fee increase implemented by the AAA was necessary because of the substantial administrative costs and staffing associated with these complex arbitrations. In particular, MEPPA arbitrations are similar to many of the large complex arbitrations administered by the AAA. They tend to be highly contentious, involve large dollar amounts, the parties engage in voluminous discovery, and there can be multiple preliminary calls as well as multiple days of evidentiary hearings, can be pending for long periods of time, involve bifurcated issues and extensive briefing. The AAA also found it necessary to implement a substantially heightened arbitrator disclosure requirements based on the nature of the MEPPA cases. All of these factors were considered when reviewing the fee schedule and a determination was made to change the fees from the 1986 $650.00 fee to the 2013 fee schedule. The 1986 fee schedule provided the AAA discretion to set the fee where the net amount in dispute was in excess of $5 million. Given this level of discretion provided in the 1986 fee schedule, the AAA did set administrative fees equivalent to those reflected in the 2013 fee schedule for cases with claims in excess of $5 million. In addition, the 2013 fee schedule is the same schedule the AAA has applied to other arbitrations caseloads that are similarly complex. The American Arbitration Association was founded in 1926, following enactment of the Federal Arbitration Act, with the specific goal of helping to implement arbitration as an out-of-court solution to resolving disputes. This legal framework was passed by Congress and signed by President Calvin Coolidge. The AAA’s staff members and neutrals continue to live out the principles on which the Association was founded. The AAA’s official mission statement and vision statement are based on three core values: Integrity, conflict management, and service. We have a long term working relationship with the Arbitrators on the MEPPA Panel. In addition to managing this panel, the AAA recruits Arbitrators who meet the criteria established for admission to this panel. The AAA has long held its mediators and arbitrators to strict codes of ethics and model standards of conduct to ensure fairness and impartiality in conflict management. To further ensure the AAA’s integrity, however, the Association also developed Standards of Ethics and Business Conduct for its staff, as well as a general Statement of Ethical Principles to expand on its core values as an organization. Public Comments and Resulting Changes to 2019 Rules All interested persons were invited to submit written comments on the Application request. PBGC received four comments. Each commenter urged PBGC to reject AAA’s Application on the basis that the fees in the 2013 MPPAR were too high. Three commenters maintained that AAA’s Application did not substantiate the significant increase in fees under the 2013 MPPAR. Another commenter suggested that a reasonable fee increase to account for the passage of time since the 1986 MPPAR made sense. PBGC agrees that a modest increase from the 1986 MPPAR is reasonable. In response, AAA proposed a modified fee structure that removes the Final and Flexible fee schedules and considerably reduces the initiation fees: 1986 MPPAR Proposed 2013 MPPAR Proposed 2019 rules Initiation fee Maximum fees Initiation fee Amount in dispute Less than $1M .......................................................................................................... $1M–$5M .................................................................................................................. VerDate Sep<11>2014 17:08 Dec 09, 2019 Jkt 250001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 $650–$1,000 ........ 1,000–1,450 ......... E:\FR\FM\10DEN1.SGM $1,550–$11,200 14,400 10DEN1 $2,500 3,750 67486 Federal Register / Vol. 84, No. 237 / Tuesday, December 10, 2019 / Notices 1986 MPPAR Proposed 2013 MPPAR Proposed 2019 rules Initiation fee Maximum fees Initiation fee Amount in dispute $5M and above ......................................................................................................... With the removal of the Final and Flexible fee schedules, the 2019 Rules provide for additional fees for matters that are in abeyance for over one year ($300) and a hearing rescheduling fee ($150). The 2019 Rules also include a Refund Schedule based on the timing of a case settlement or withdrawal, however $750 of the Initiation Fee is non-refundable. Other than these fees, parties initiating arbitration will only be required to pay the Initiation Fee and the Final Fees are no longer applicable. With these changes and the adjustment to the Initiation Fee schedule, PBGC has determined that the 2019 Rules are fair and equitable based on AAA’s Response and follow-up discussions between PBGC and AAA. The 2019 Rules provide for a reasonable inflation adjustment from 1986 and also account for resources that were not necessary in 1986 such as cyber-security. Three commenters pointed out that the 2013 MPPAR did not specifically provide for apportionment of the initiation fees between the parties. Additionally, two commenters suggested that the initiation fee should be split in advance of the arbitration. Under § 4221.10, ‘‘other costs of arbitration’’ are required to be ‘‘borne equally unless the arbitrator determines otherwise’’ and § 4221.14(b)(5) requires alternative procedures to allocate the cost of arbitration in accordance with § 4221.10. Therefore, PBGC agrees that the 2019 Rules should specify that the arbitration fees should be borne equally, subject to arbitrator discretion. However, due to the pay first, dispute later arrangement that MPPAA requires, PBGC does not agree that the initiation fee should be borne by both parties equally in advance of the arbitration. Section 47 of the 2019 Rules specifically provide for apportionment, as follows: jbell on DSKJLSW7X2PROD with NOTICES An Initial Filing Fee is payable in full by the filing party when a claim, counterclaim, or additional claim is filed, subject to final apportionment by the Arbitrator in the Award. Fee Apportionment Under 29 CFR 4221.10, the cost of arbitration shall be borne equally by the parties, unless the arbitrator determines otherwise. § 4221.14 (b) (5) also requires alternative procedures to allocate the cost of arbitration in accordance with § 4221.10. VerDate Sep<11>2014 17:08 Dec 09, 2019 Jkt 250001 Case-by-case ....... The inclusion of this language in the 2019 Rules addresses PBGC’s concerns regarding fee apportionment and is consistent with § 4221.10. Two commenters focused on the arbitrator selection process and, specifically, AAA’s ability to unilaterally appoint an arbitrator if the parties cannot agree on an arbitrator selection. One of those commenters also pointed out that AAA’s process for disqualification of an arbitrator is inadequate as compared to PBGC’s default rule. Although the arbitrator selection process in the proposed 2013 MPPAR did not differ from the approved 1986 MPPAR, PBGC believes the commenters raised valid concerns with the arbitrator selection process. PBGC’s 1986 MPPAR approval provided that ‘‘fundamental fairness demands that the impartiality of one in whom such powers are vested be free from reasonable doubt, and the best way to ensure that all parties will have confidence in his impartiality is to have him selected by mutual consent.’’ PBGC’s default rules under § 4221.4(e) provide that if the parties fail to select an arbitrator either party or both may seek the designation and appointment of an arbitrator in a U.S. district court pursuant to the provisions in title 9 of the United States Code. PBGC agrees with the commenters that AAA’s, and not the parties’ selection of an arbitrator, and their ultimate determination on a party’s objection undercuts the principle of mutual consent. Therefore, PBGC recommended that AAA amend its rules consistent with § 4221.4(e) and provide a more equitable process that ensures an arbitrator is selected by mutual consent and the arbitrator removal process is more aligned with PBGC regulations. AAA agreed to provide an extended selection process if the parties cannot agree on an arbitrator, and if the parties are still unable to mutually select an arbitrator, either party may seek designation and appointment of an arbitrator in a U.S. District Court, consistent with § 4221.4(e). Additionally, consistent with § 4221.4(b), the 2019 Rules provide for automatic removal of an arbitrator if a party objects within 10 days of a postappointment disclosure. In that case, a new arbitrator will be selected through the mutual consent process. Objections received after 10 days of a post- PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 14,400–77,500 5,000 appointment disclosure will be ruled on by the arbitrator, not AAA, unless the parties mutually agree to have AAA make the determination. These changes in the 2019 Rules are found in Section 11, Appointment from Panel and Section 13, Disclosure and Challenge Procedure: Section 11. Appointment From Panel The Arbitrator shall be appointed in the following manner: Immediately after the filing of the Demand or Submission, the AAA shall submit simultaneously to each party to the dispute an identical list of names of not less than five (5) persons, with a brief biographical profile and fee structure of each, chosen from the Panel. Each party to the dispute shall have fourteen days from the mailing date in which to cross off any names objected to, number the remaining names to indicate the order of preference, and return the list to the AAA. If a party does not return the list within the time specified, all persons named therein shall be deemed acceptable. From among the persons who have been approved on both lists, and in accordance with the designated order of mutual preference, the AAA shall invite the acceptance of an Arbitrator to serve. If the parties fail to agree upon any of the persons named, or if acceptable Arbitrators are unable to act, or if for any other reason the appointment cannot be made from the submitted lists, the parties can agree to the submission of additional names. If the parties fail to mutually consent to the selection of an arbitrator, either party or both may seek designation and appointment of an arbitrator in a U.S. district court, consistent with 29 CFR 4221.4(e). Section 13. Disclosure and Challenge Procedure A person appointed as neutral Arbitrator shall disclose to the AAA any circumstances likely to affect impartiality, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their counsel. Upon receipt of such information from such Arbitrator or other source, the AAA shall communicate such information to the parties, and, if it deems it appropriate to do so, the Arbitrator and others. In the event a party objects within 10 days of a post-appointment disclosure, consistent with 29 CFR 4221.4(b), the arbitrator shall withdraw and the AAA shall select a new arbitrator by going back to the selection process. Objections received after 10 days will be determined by the Arbitrator and not the AAA, consistent with 29 CFR 4221.4(c), unless the parties mutually agree to have the AAA make the decision. E:\FR\FM\10DEN1.SGM 10DEN1 Federal Register / Vol. 84, No. 237 / Tuesday, December 10, 2019 / Notices Statutory and Regulatory Criteria POSTAL REGULATORY COMMISSION In addition to requiring that alternative arbitration procedures mirror PBGC’s default rules of arbitration, § 4221.14 provides the procedure and criteria for approval. The Procedure for approval of alternative procedures under § 4221.14(c) provides that an application requesting approval shall include (1) a copy of the procedures for which approval is sought; (2) a description of the history, structure and membership of the organization that sponsors the procedures; and (3) a discussion of the reasons why, in the sponsoring organization’s opinion, the procedures satisfy the criteria for approval set forth in 4221.14(d). The Criteria for approval of alternative procedures under § 4221.14(d) provides: ‘‘PBGC shall approve an application if it determines that the proposed procedures will be substantially fair to all parties involved in the arbitration of a withdrawal liability dispute and that the sponsoring organization is neutral and able to carry out its role under the procedures.’’ [Docket Nos. MC2020–45 and CP2020–43; MC2020–46 and CP2020–44] Determination jbell on DSKJLSW7X2PROD with NOTICES In light of the significant increase of fees in the 2013 MPPAR and the comments submitted by interested parties, PBGC resumed discussions with AAA to seek changes to ensure the proposed rules were substantially fair to all parties involved in the arbitration of withdrawal liability disputes. PBGC advised AAA that three specific issues needed to be addressed for any amendment to the 1986 MPPAR to be approved: (i) Fee Increase; (ii) Apportionment of Fees; and (iii) Arbitrator Selection Process. The discussions resulted in proposed changes by AAA which are memorialized in the 2019 Rules as discussed above. PBGC has determined that the changes reflected in the 2019 Rules are consistent with the requirements of section 4221 of ERISA and the regulatory requirements under § 4221.14(d) in that they are fair to all parties involved in the arbitration of a withdrawal liability dispute and AAA is neutral and able to carry out its role under the procedures. This approval is effective unless revoked by PBGC, and future changes, including changes to the applicable fee schedule will be subject to PBGC review under § 4211.14(d). Issued in Washington, DC. Gordon Hartogensis, Director, Pension Benefit Guaranty Corporation. [FR Doc. 2019–26519 Filed 12–9–19; 8:45 am] BILLING CODE 7709–02–P VerDate Sep<11>2014 17:08 Dec 09, 2019 Jkt 250001 New Postal Products Postal Regulatory Commission. Notice. AGENCY: ACTION: The Commission is noticing a recent Postal Service filing for the Commission’s consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps. DATES: Comments are due: December 12, 2019. ADDRESSES: Submit comments electronically via the Commission’s Filing Online system at http:// www.prc.gov. Those who cannot submit comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives. SUMMARY: FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 202–789–6820. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Docketed Proceeding(s) I. Introduction The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list. Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request’s acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request. The public portions of the Postal Service’s request(s) can be accessed via the Commission’s website (http:// www.prc.gov). Non-public portions of the Postal Service’s request(s), if any, can be accessed through compliance PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 67487 with the requirements of 39 CFR 3007.301.1 The Commission invites comments on whether the Postal Service’s request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II. II. Docketed Proceeding(s) 1. Docket No(s).: MC2020–45 and CP2020–43; Filing Title: USPS Request to Add Priority Mail Contract 568 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: December 4, 2019; Filing Authority: 39 U.S.C. 3642, 39 CFR 3020.30 et seq., and 39 CFR 3015.5; Public Representative: Christopher C. Mohr; Comments Due: December 12, 2019. 2. Docket No(s).: MC2020–46 and CP2020–44; Filing Title: USPS Request to Add Priority Mail Contract 569 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: December 4, 2019; Filing Authority: 39 U.S.C. 3642, 39 CFR 3020.30 et seq., and 39 CFR 3015.5; Public Representative: Christopher C. Mohr; Comments Due: December 12, 2019. This Notice will be published in the Federal Register. Darcie S. Tokioka, Acting Secretary. [FR Doc. 2019–26514 Filed 12–9–19; 8:45 am] BILLING CODE 7710–FW–P POSTAL SERVICE Product Change—Priority Mail Negotiated Service Agreement Postal ServiceTM. ACTION: Notice. AGENCY: The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to SUMMARY: 1 See Docket No. RM2018–3, Order Adopting Final Rules Relating to Non-Public Information, June 27, 2018, Attachment A at 19–22 (Order No. 4679). E:\FR\FM\10DEN1.SGM 10DEN1

Agencies

[Federal Register Volume 84, Number 237 (Tuesday, December 10, 2019)]
[Notices]
[Pages 67484-67487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26519]


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PENSION BENEFIT GUARANTY CORPORATION


Notice of Approval of Alternative Arbitration Procedure; American 
Arbitration Association

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of approval.

-----------------------------------------------------------------------

SUMMARY: This notice advises interested persons that the Pension 
Benefit Guaranty Corporation (PBGC) has approved a request from the 
American Arbitration Association (AAA) for approval of an alternative 
arbitration procedure.

DATES: PBGC's approval of the AAA's alternative arbitration procedure 
is effective January 1, 2020.

FOR FURTHER INFORMATION CONTACT: Bruce Perlin ([email protected]), 
202-326-4020, ext. 6818, Office of the General Counsel, Suite 340, 1200 
K Street NW, Washington, DC 20005-4026; (TTY users may call the Federal 
relay service toll-free at 1-800-877-8339 and ask to be connected to 
202-326-4020, extension 6818 or 6757.)

SUPPLEMENTARY INFORMATION:

Background

    Section 4221(a)(1) of the Employee Retirement Income Security Act 
of 1974 (ERISA), as amended by the Multiemployer Pension Plan 
Amendments Act of 1980 (MPPAA), requires ``any dispute'' between an 
employer and a multiemployer pension plan concerning a withdrawal 
liability determination to be ``resolved through arbitration.'' Under 
the MPPAA, an employer has 90 days after receipt of notice of a 
withdrawal liability assessment to request review of that assessment. 
ERISA Sec.  4219(b)(2)(A). If there remains a dispute about the 
assessment of withdrawal liability, the employer may ``initiate'' 
arbitration of the dispute within a 60-day period after the earlier of 
(i) the date the employer was notified of the plan's response to the 
employer's request for review, or (ii) 120 days after the date that the 
employer requested review of the withdrawal liability. ERISA Sec.  
4221(a)(1). If the employer fails to timely initiate arbitration, the 
assessment becomes due and owing and the plan sponsor may bring an 
action in a state or federal court to collect the assessment. ERISA 
Sec.  4221(b).
    The MPPAA directed PBGC to promulgate fair and equitable procedures 
for the conduct of an arbitration under section 4221 of ERISA. PBGC's 
implementing regulation, ``Arbitration of Disputes in Multiemployer 
Plans'' (29 CFR part 4221), was designed to provide procedures to 
facilitate prompt resolution of disputes by an impartial arbitrator, 
facilitating expeditious resolutions of disputes concerning an 
employer's withdrawal liability. PBGC's default arbitration procedures 
provide rules for the appointment and powers of the arbitrator, rules 
for discovery and hearings, and rules for awards, costs, filing and 
service (Sec. Sec.  4221.4-4221.13).

Scope of Alternative Arbitration Procedures

    In lieu of the default procedures, under Sec.  4221.14 of PBGC's 
arbitration regulation, an arbitration may be conducted in accordance 
with an alternative arbitration procedure approved by PBGC in 
accordance with Sec.  4221.14(c). Certain rules applicable to the 
default procedures cannot be varied in any alternative procedure. 29 
CFR 4221.14(b). If an arbitration is conducted under a PBGC-approved 
alternative procedure, the alternative procedure governs all aspects of 
the arbitration, with the following exceptions provided in Sec.  
4221.14(b): The time limits for initiating arbitration may not differ 
from the time limits provided Sec.  4221.3; the arbitrator must be 
selected after the initiation of arbitration; the arbitrator must give 
the parties an opportunity for prehearing discovery that is 
substantially equivalent to that required by Sec.  4221.5(a)(2); copies 
of the award must be made available to the public at least to the 
extent mandated by Sec.  4221.8(g); and the arbitration costs must be 
allocated in accordance with Sec.  4221.10.

Process for Approval of Alternative Arbitration Procedures

    Under Sec.  4221.14(c) PBGC may approve arbitration procedures on 
its own initiative by publishing an appropriate notice in the Federal 
Register. Additionally, the sponsor of an arbitration procedure may 
request PBGC approval of its procedures by submitting an application to 
PBGC. The application must include: (1) A copy of the procedures for 
which approval is sought; (2) a description of the history, structure 
and membership of the organization that sponsors the procedures; and 
(3) a description of the reasons why, in the sponsoring organization's 
opinion, the procedures satisfy the criteria for approval set forth in 
this section.

Criteria for Approval of Alternative Procedures

    Under Sec.  4221.21(d), PBGC shall approve an application if it 
determines that the proposed procedures will be substantially fair to 
all parties involved in the arbitration of a withdrawal liability 
dispute and that the sponsoring organization is neutral and able to 
carry out its role under the procedures. PBGC may request comments on 
the application by publishing an appropriate notice in the Federal 
Register and notice of PBGC's decision on the application shall be 
published in the Federal Register. Unless the notice of approval 
specifies otherwise, approval will remain effective until revoked by 
PBGC through a Federal Register notice.

AAA's Alternative Arbitration Rules--1981 & 1986 MPPAR

    In 1985, on its own initiative, PBGC approved the 1981 
Multiemployer Pension Plan Arbitration Rules for Withdrawal Liability 
Disputes (the ``1981 MPPAR''), an alternative arbitration procedure 
sponsored by the International Foundation of Employee Benefit Plans and 
administered by the American Arbitration Association (AAA). 50 FR 38046 
(Sept. 19, 1985). In 1986, PBGC approved AAA's request to use an 
amended MPPAR (the ``1986 MPPAR'') which eliminated certain procedural 
differences from the 1981 MPPAR and PBGC's final arbitration 
regulation. 51 FR 22585 (June 20, 1986). The administrative fee 
schedule for handling arbitrations in the 1986 MPPAR was applicable 
until 2013, at which point AAA adopted an updated 2013 Fee Schedule, 
creating a revised MPPAR, effective February 1, 2013 (``2013 MPPAR''). 
The new Administrative Fee Schedule provides for increases to the 
Initial Filing Fee, establishes two different fee arrangements--the 
Standard and Flexible Fee Schedules, and adds a ``Final Fee'' under 
each schedule and a ``Proceed Fee'' in the flexible schedule context. 
Other than significant changes to the Administrative Fee Schedule and 
the removal of language regarding the apportionment of fees, the 2013 
MPPAR are identical to the 1986 MPPAR that PBGC previously approved. 
Under Sec.  4221.14, AAA has requested PBGC

[[Page 67485]]

approval of the updated proposed 2013 MPPAR (the ``Application'').

Procedural Background

    PBGC published a notice of the AAA's request in the Federal 
Register at 81 FR 15578 (March 23, 2016), to advise interested persons 
of the AAA's Application for approval and solicit their views on it. 
PBGC received four comments in response to the March 23, 2016 notice. 
PBGC then invited AAA to respond to the public comments. PBGC published 
AAA's response in the Federal Register at 82 FR 27089 (June 13, 2017), 
and solicited additional comments. PBGC received one final comment. 
After the final comment period closed, PBGC and AAA began discussions 
on changes to the 2013 MPPAR.

AAA's Application

    AAA's Application included the necessary information under Sec.  
4221.14(c): A copy of the 2013 MPPAR; a description of the history, 
structure and membership of AAA; and a discussion of the reasons why, 
in AAA's opinion, the 2013 MPPAR satisfies the criteria for PBGC 
approval under Sec.  4221.14(d). In response to the public comments and 
discussions between AAA and PBGC, AAA submitted the proposed rules 
modifying the 2013 MPPAR (``the 2019 Rules''), which completely revised 
the applicable fee schedule, added language regarding the apportionment 
of fees, and revised procedural rules related to the arbitrator 
selection process.

Section 4221.14(c)(2)--History and Structure of AAA

    AAA's Application provided:

    The American Arbitration Association (AAA), is a not-for-profit 
organization with offices throughout the U.S. as well as abroad. AAA 
has a long history and experience in the field of alternative 
dispute resolution, providing services to individuals and 
organizations who wish to resolve conflicts out of court. The AAA is 
named in 40 federal statutes and regulations, as well as over 300 
state statutes and regulations. The AAA is not a membership 
organization.
    The AAA role in the dispute resolution process is to administer 
cases, from filing to closing. The AAA provides administrative 
services in the U.S., as well as abroad through its International 
Centre for Dispute Resolution (ICDR). The AAA's and ICDR's 
administrative services include assisting in the appointment of 
mediators and arbitrators, setting hearings, and providing users 
with information on dispute resolution options, including settlement 
through mediation. Ultimately, the AAA aims to move cases through 
arbitration or mediation in a fair and impartial manner until 
completion.
    Additional AAA services include the design and development of 
alternative dispute resolution (ADR) systems for corporations, 
unions, government agencies, law firms, and the courts. The 
Association also provides elections services as well as education, 
training, and publications for those seeking a broader or deeper 
understanding of alternative dispute resolution.

Section 4221.14(c)(3)--Discussion of Why the 2013 MPPAR Satisfies the 
Criteria for PBGC Approval Under Sec.  4221.14(d)

    AAA's Application provided:

    The American Arbitration Association (AAA) has been 
administering the cases that fall under the Multiemployer Pension 
Plan Arbitration Rules for Withdrawal Liability Disputes for thirty-
four (34) years. The rules that have been previously approved by the 
PBGC are effective June 1, 1981 and revised effective September 1, 
1986. The AAA's 1986 MEPPA Rules did not change; the only update 
made was to increase the administrative fees for handling MEPPA 
arbitrations from the 1986 fee schedule to the 2013 fee schedule.
    The AAA has provided quality administration on this caseload and 
based on parties and arbitrator feedback, the AAA's service is 
valued and should continue to be available. However, as a not-for 
profit organization that receives funding only through the 
administrative fees earned on cases, we need to ensure that the 
costs associated with the administration of a particular caseload do 
not vastly exceed the fees earned.
    The fee increase implemented by the AAA was necessary because of 
the substantial administrative costs and staffing associated with 
these complex arbitrations. In particular, MEPPA arbitrations are 
similar to many of the large complex arbitrations administered by 
the AAA. They tend to be highly contentious, involve large dollar 
amounts, the parties engage in voluminous discovery, and there can 
be multiple preliminary calls as well as multiple days of 
evidentiary hearings, can be pending for long periods of time, 
involve bifurcated issues and extensive briefing.
    The AAA also found it necessary to implement a substantially 
heightened arbitrator disclosure requirements based on the nature of 
the MEPPA cases. All of these factors were considered when reviewing 
the fee schedule and a determination was made to change the fees 
from the 1986 $650.00 fee to the 2013 fee schedule. The 1986 fee 
schedule provided the AAA discretion to set the fee where the net 
amount in dispute was in excess of $5 million. Given this level of 
discretion provided in the 1986 fee schedule, the AAA did set 
administrative fees equivalent to those reflected in the 2013 fee 
schedule for cases with claims in excess of $5 million. In addition, 
the 2013 fee schedule is the same schedule the AAA has applied to 
other arbitrations caseloads that are similarly complex.
    The American Arbitration Association was founded in 1926, 
following enactment of the Federal Arbitration Act, with the 
specific goal of helping to implement arbitration as an out-of-court 
solution to resolving disputes. This legal framework was passed by 
Congress and signed by President Calvin Coolidge. The AAA's staff 
members and neutrals continue to live out the principles on which 
the Association was founded.
    The AAA's official mission statement and vision statement are 
based on three core values: Integrity, conflict management, and 
service. We have a long term working relationship with the 
Arbitrators on the MEPPA Panel. In addition to managing this panel, 
the AAA recruits Arbitrators who meet the criteria established for 
admission to this panel. The AAA has long held its mediators and 
arbitrators to strict codes of ethics and model standards of conduct 
to ensure fairness and impartiality in conflict management. To 
further ensure the AAA's integrity, however, the Association also 
developed Standards of Ethics and Business Conduct for its staff, as 
well as a general Statement of Ethical Principles to expand on its 
core values as an organization.

Public Comments and Resulting Changes to 2019 Rules

    All interested persons were invited to submit written comments on 
the Application request. PBGC received four comments. Each commenter 
urged PBGC to reject AAA's Application on the basis that the fees in 
the 2013 MPPAR were too high. Three commenters maintained that AAA's 
Application did not substantiate the significant increase in fees under 
the 2013 MPPAR. Another commenter suggested that a reasonable fee 
increase to account for the passage of time since the 1986 MPPAR made 
sense. PBGC agrees that a modest increase from the 1986 MPPAR is 
reasonable. In response, AAA proposed a modified fee structure that 
removes the Final and Flexible fee schedules and considerably reduces 
the initiation fees:

----------------------------------------------------------------------------------------------------------------
                                                    1986 MPPAR                Proposed 2013      Proposed 2019
                                        -----------------------------------       MPPAR              rules
           Amount in dispute                                               -------------------------------------
                                                   Initiation fee              Maximum fees      Initiation fee
----------------------------------------------------------------------------------------------------------------
Less than $1M..........................  $650-$1,000......................     $1,550-$11,200             $2,500
$1M-$5M................................  1,000-1,450......................             14,400              3,750

[[Page 67486]]

 
$5M and above..........................  Case-by-case.....................      14,400-77,500              5,000
----------------------------------------------------------------------------------------------------------------

    With the removal of the Final and Flexible fee schedules, the 2019 
Rules provide for additional fees for matters that are in abeyance for 
over one year ($300) and a hearing rescheduling fee ($150). The 2019 
Rules also include a Refund Schedule based on the timing of a case 
settlement or withdrawal, however $750 of the Initiation Fee is non-
refundable. Other than these fees, parties initiating arbitration will 
only be required to pay the Initiation Fee and the Final Fees are no 
longer applicable. With these changes and the adjustment to the 
Initiation Fee schedule, PBGC has determined that the 2019 Rules are 
fair and equitable based on AAA's Response and follow-up discussions 
between PBGC and AAA. The 2019 Rules provide for a reasonable inflation 
adjustment from 1986 and also account for resources that were not 
necessary in 1986 such as cyber-security.
    Three commenters pointed out that the 2013 MPPAR did not 
specifically provide for apportionment of the initiation fees between 
the parties. Additionally, two commenters suggested that the initiation 
fee should be split in advance of the arbitration. Under Sec.  4221.10, 
``other costs of arbitration'' are required to be ``borne equally 
unless the arbitrator determines otherwise'' and Sec.  4221.14(b)(5) 
requires alternative procedures to allocate the cost of arbitration in 
accordance with Sec.  4221.10. Therefore, PBGC agrees that the 2019 
Rules should specify that the arbitration fees should be borne equally, 
subject to arbitrator discretion. However, due to the pay first, 
dispute later arrangement that MPPAA requires, PBGC does not agree that 
the initiation fee should be borne by both parties equally in advance 
of the arbitration. Section 47 of the 2019 Rules specifically provide 
for apportionment, as follows:

    An Initial Filing Fee is payable in full by the filing party 
when a claim, counterclaim, or additional claim is filed, subject to 
final apportionment by the Arbitrator in the Award.

Fee Apportionment

    Under 29 CFR 4221.10, the cost of arbitration shall be borne 
equally by the parties, unless the arbitrator determines otherwise. 
Sec.  4221.14 (b) (5) also requires alternative procedures to 
allocate the cost of arbitration in accordance with Sec.  4221.10.

    The inclusion of this language in the 2019 Rules addresses PBGC's 
concerns regarding fee apportionment and is consistent with Sec.  
4221.10. Two commenters focused on the arbitrator selection process 
and, specifically, AAA's ability to unilaterally appoint an arbitrator 
if the parties cannot agree on an arbitrator selection. One of those 
commenters also pointed out that AAA's process for disqualification of 
an arbitrator is inadequate as compared to PBGC's default rule. 
Although the arbitrator selection process in the proposed 2013 MPPAR 
did not differ from the approved 1986 MPPAR, PBGC believes the 
commenters raised valid concerns with the arbitrator selection process. 
PBGC's 1986 MPPAR approval provided that ``fundamental fairness demands 
that the impartiality of one in whom such powers are vested be free 
from reasonable doubt, and the best way to ensure that all parties will 
have confidence in his impartiality is to have him selected by mutual 
consent.'' PBGC's default rules under Sec.  4221.4(e) provide that if 
the parties fail to select an arbitrator either party or both may seek 
the designation and appointment of an arbitrator in a U.S. district 
court pursuant to the provisions in title 9 of the United States Code. 
PBGC agrees with the commenters that AAA's, and not the parties' 
selection of an arbitrator, and their ultimate determination on a 
party's objection undercuts the principle of mutual consent. Therefore, 
PBGC recommended that AAA amend its rules consistent with Sec.  
4221.4(e) and provide a more equitable process that ensures an 
arbitrator is selected by mutual consent and the arbitrator removal 
process is more aligned with PBGC regulations. AAA agreed to provide an 
extended selection process if the parties cannot agree on an 
arbitrator, and if the parties are still unable to mutually select an 
arbitrator, either party may seek designation and appointment of an 
arbitrator in a U.S. District Court, consistent with Sec.  4221.4(e).
    Additionally, consistent with Sec.  4221.4(b), the 2019 Rules 
provide for automatic removal of an arbitrator if a party objects 
within 10 days of a post-appointment disclosure. In that case, a new 
arbitrator will be selected through the mutual consent process. 
Objections received after 10 days of a post-appointment disclosure will 
be ruled on by the arbitrator, not AAA, unless the parties mutually 
agree to have AAA make the determination. These changes in the 2019 
Rules are found in Section 11, Appointment from Panel and Section 13, 
Disclosure and Challenge Procedure:

Section 11. Appointment From Panel

    The Arbitrator shall be appointed in the following manner: 
Immediately after the filing of the Demand or Submission, the AAA 
shall submit simultaneously to each party to the dispute an 
identical list of names of not less than five (5) persons, with a 
brief biographical profile and fee structure of each, chosen from 
the Panel. Each party to the dispute shall have fourteen days from 
the mailing date in which to cross off any names objected to, number 
the remaining names to indicate the order of preference, and return 
the list to the AAA. If a party does not return the list within the 
time specified, all persons named therein shall be deemed 
acceptable. From among the persons who have been approved on both 
lists, and in accordance with the designated order of mutual 
preference, the AAA shall invite the acceptance of an Arbitrator to 
serve. If the parties fail to agree upon any of the persons named, 
or if acceptable Arbitrators are unable to act, or if for any other 
reason the appointment cannot be made from the submitted lists, the 
parties can agree to the submission of additional names. If the 
parties fail to mutually consent to the selection of an arbitrator, 
either party or both may seek designation and appointment of an 
arbitrator in a U.S. district court, consistent with 29 CFR 
4221.4(e).

Section 13. Disclosure and Challenge Procedure

    A person appointed as neutral Arbitrator shall disclose to the 
AAA any circumstances likely to affect impartiality, including any 
bias or any financial or personal interest in the result of the 
arbitration or any past or present relationship with the parties or 
their counsel. Upon receipt of such information from such Arbitrator 
or other source, the AAA shall communicate such information to the 
parties, and, if it deems it appropriate to do so, the Arbitrator 
and others.
    In the event a party objects within 10 days of a post-
appointment disclosure, consistent with 29 CFR 4221.4(b), the 
arbitrator shall withdraw and the AAA shall select a new arbitrator 
by going back to the selection process. Objections received after 10 
days will be determined by the Arbitrator and not the AAA, 
consistent with 29 CFR 4221.4(c), unless the parties mutually agree 
to have the AAA make the decision.

[[Page 67487]]

Statutory and Regulatory Criteria

    In addition to requiring that alternative arbitration procedures 
mirror PBGC's default rules of arbitration, Sec.  4221.14 provides the 
procedure and criteria for approval. The Procedure for approval of 
alternative procedures under Sec.  4221.14(c) provides that an 
application requesting approval shall include (1) a copy of the 
procedures for which approval is sought; (2) a description of the 
history, structure and membership of the organization that sponsors the 
procedures; and (3) a discussion of the reasons why, in the sponsoring 
organization's opinion, the procedures satisfy the criteria for 
approval set forth in 4221.14(d). The Criteria for approval of 
alternative procedures under Sec.  4221.14(d) provides: ``PBGC shall 
approve an application if it determines that the proposed procedures 
will be substantially fair to all parties involved in the arbitration 
of a withdrawal liability dispute and that the sponsoring organization 
is neutral and able to carry out its role under the procedures.''

Determination

    In light of the significant increase of fees in the 2013 MPPAR and 
the comments submitted by interested parties, PBGC resumed discussions 
with AAA to seek changes to ensure the proposed rules were 
substantially fair to all parties involved in the arbitration of 
withdrawal liability disputes. PBGC advised AAA that three specific 
issues needed to be addressed for any amendment to the 1986 MPPAR to be 
approved: (i) Fee Increase; (ii) Apportionment of Fees; and (iii) 
Arbitrator Selection Process. The discussions resulted in proposed 
changes by AAA which are memorialized in the 2019 Rules as discussed 
above. PBGC has determined that the changes reflected in the 2019 Rules 
are consistent with the requirements of section 4221 of ERISA and the 
regulatory requirements under Sec.  4221.14(d) in that they are fair to 
all parties involved in the arbitration of a withdrawal liability 
dispute and AAA is neutral and able to carry out its role under the 
procedures. This approval is effective unless revoked by PBGC, and 
future changes, including changes to the applicable fee schedule will 
be subject to PBGC review under Sec.  4211.14(d).

    Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2019-26519 Filed 12-9-19; 8:45 am]
 BILLING CODE 7709-02-P