[Federal Register Volume 60, Number 18 (Friday, January 27, 1995)]
[Notices]
[Pages 5373-5374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2066]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF EDUCATION


Arbitration Panel Decision Under the Randolph-Sheppard Act

agency: Department of Education.

action: Notice of arbitration panel decision under the Randolph-
Sheppard Act.

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

summary: Notice is hereby given that on May 1, 1992, an arbitration 
panel rendered a decision in the matter of Garnette Laurell v. Michigan 
Commission for the Blind, (Docket No. R-S/90-1). This panel was 
convened by the Secretary of Education pursuant to 20 U.S.C. 107d-1(a), 
upon receipt of a complaint filed by petitioner, Garnette Laurell, on 
February 12, 1990. The Randolph-Sheppard Act (the Act) provides a 
priority for blind individuals to operate vending facilities on Federal 
property. Under this section of the Act, a blind licensee, dissatisfied 
with the State's operation or administration of the vending facility 
program authorized under the Act, may request a full evidentiary fair 
hearing from the State licensing agency (SLA). If the licensee is 
dissatisfied with the results of the hearing, the licensee may complain 
to the Secretary of Education, who then is required to convene an 
arbitration panel to resolve the dispute.

for further information contact: A copy of the full text of the 
arbitration panel decision may be obtained from George F. Arsnow, U.S. 
Department of Education, 600 Independence Avenue, SW., room 3230, 
Switzer Building, Washington, DC 20202-2738. Telephone: (202) 205-9317. 
Individuals who use a telecommunications device for the deaf (TDD) may 
call the TDD number at (202) 205-8298.

supplementary information: Pursuant to the Randolph-Sheppard Act (20 
U.S.C. 107d-2(c)), the Secretary publishes a synopsis of an arbitration 
panel decision in the Federal Register.

Background

    The complainant, Garnette Laurell, is a blind vendor licensed by 
the respondent, the Michigan Commission for the Blind, pursuant to the 
Randolph-Sheppard Act, 20 U.S.C. 107 et seq. The Michigan Commission 
for the Blind (the Commission) is the SLA responsible for the Michigan 
vending facility program for blind individuals.
    In late 1985, the Commission located an opportunity to take over a 
canteen facility at the United States Post Office Bulk Mail Center in 
Allen Park, Michigan. The Postal Service stipulated that the SLA needed 
to begin operating the vending facility within 30 days of its offer or 
the location would be open to contracting. The SLA determined that it 
was necessary to act quickly to get one of its licensees into the 
facility and activated its bidding procedures. The complainant, 
Garnette Laurell, was the successful bidder and began operating a 
vending facility at the Bulk Mail Center on January 6, 1986.
    The Commission provided Ms. Laurell with a microwave, money 
changing equipment, and an initial merchandise inventory. However, as a 
condition of managing the facility, the complainant was required by the 
SLA to enter into a lease agreement with Canteen Food and Vending 
Service, the [[Page 5374]] predecessor operator, for 10 pieces of 
vending equipment necessary to the operation of the facility. The lease 
required monthly payments of $489.00 for 60 months. In 1988 the monthly 
payments were increased to $514.00 with the lease arrangement ending in 
May 1989, when the equipment was purchased by the SLA. The lease 
payments totaled $19,568.00. During the same period of time that 
complainant was remitting lease payments, Ms. Laurell also paid the SLA 
the uniform set-aside fee of 10 percent of net proceeds.
    On March 28, 1989, complainant filed a request for an evidentiary 
hearing with the SLA, stating that she had been unjustly required to 
pay a lease fee for her equipment and asking for full reimbursement. 
The hearing was held on August 22, 1989, before a Michigan Department 
of Labor Administrative Law Judge (ALJ). The ALJ issued a proposed 
decision on October 16, 1989, affirming the SLA's actions. The SLA 
concurred and in a letter to the complainant dated November 9, 1989, 
declared that the ALJ's decision was final agency action.
    Subsequently, Ms. Laurell filed a request with the Secretary of 
Education to convene an arbitration panel seeking a review of the final 
action. The arbitration hearing was held on January 6, 1992. It was 
agreed between the parties that the following issues would be reviewed: 
(1) Did the Commission have a legal responsibility to provide Garnette 
Laurell with the equipment that she was required to lease at the Allen 
Park Bulk Mail Center? (2) If so, was the Commission legally obligated 
to reimburse complainant for the cost of that leasing? (3) If so, was 
the Commission legally obligated to pay interest on the reimbursed 
funds? and (4) Was the Commission obligated to pay complainant's 
attorney's fees?

Arbitration Panel Decision

    The arbitration panel ruled that the Commission had a legal 
responsibility to provide equipment to complainant pursuant to the Act, 
20 U.S.C. 107b, which states in relevant part that the SLA is required 
``to provide for each license blind person such vending facility 
equipment * * * as may be necessary.'' This requirement is also 
reflected in the Federal regulations in 34 CFR 395.3(a)(5) and 
395.6(a). In addition, the SLA's statute (Michigan, Section 4(2) of Act 
No. 260 of the Michigan Public Acts of 1978, (MCL 393.351)) states that 
the Commission ``shall * * * (1) Aid individual visually handicapped 
persons or groups of visually handicapped persons to engage in gainful 
occupations by furnishing * * * equipment * * * as necessary to 
encourage and equip them to reach objectives established with them by 
the Commission.''
    However, the panel majority concluded that there is a distinction 
between providing equipment and providing it without cost.While section 
107b of the Act requires SLAs to agree to provide the necessary 
equipment, it expressly permits ownership interest in the equipment to 
reside with either the SLA or the blind licensee. The panel concluded 
that the Act did not contemplate that the blind licensee would acquire 
that ownership through a gift from the State agency, because the Act 
expressly anticipates that the State agency will pay the blind licensee 
fair value in the event that the SLA chooses to exercise its right to 
acquire the ownership interest. Further, Sec. 395.3(a)(5) of the 
Federal regulations suggests that the obligation to provide equipment 
can be satisfied by ``making suitable vending facility equipment 
available to a vendor'' (emphasis added).
    The panel reasoned that this also could include providing equipment 
to a vendor by means of a ``lease'' arrangement. To support this 
concept the panel also considered Act No. 260 of the Michigan Public 
Acts of 1978. R 393.105 of the Michigan Rules states that the Michigan 
Commission for the Blind shall furnish equipment to the vendor. 
Specifically, the panel considered language in R 393.101(k)(viii), 
which gives the definition of operating costs to vendors. The 
definition states that operating costs may include renting or leasing 
Commission-approved equipment or location. Therefore, the panel 
concluded that it is quite unlikely that Michigan intended its 
requirement to preclude cost to the blind licensee when the Federal 
authorities did not intend their requirement to preclude cost to the 
blind licensee.
    Regarding the complainant's concern about paying set-aside fees 
while she was paying lease payments on equipment, the panel determined 
that section 107b(3) of the Act and 34 CFR 395.9(a) of the Federal 
regulations indicate that the determination of the reasonableness of a 
set-aside fee is a function of the Secretary of Education. The 
Secretary did not make a determination of unreasonableness with respect 
to the Commission's uniform set-aside fee. Furthermore, the panel 
concluded that while complainant's set-aside fee was the uniform 10 
percent of net proceeds, the dollar amount of her set-aside fee was in 
fact somewhat reduced as a result of the deduction of her lease 
payments in the calculation of her net proceeds.
    Accordingly, the panel found that the Commission did not have a 
legal responsibility to provide the complainant, without cost to her, 
the equipment that she was required to lease at the Bulk Mail Center in 
Allen Park, Michigan, during the period of January 1986 to May 1989 and 
that, therefore, it is not legally obligated to reimburse her for the 
cost of that leasing.
    In addition, the panel found that complainant's requests for 
interest and attorney's fees were without merit.
    One panel member dissented.
    The views and opinions expressed by the panel do not necessarily 
represent the views and opinions of the U.S. Department of Education.

    Dated: January 23, 1995.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 95-2066 Filed 1-26-95; 8:45 am]
BILLING CODE 4000-01-M