[Federal Register Volume 60, Number 111 (Friday, June 9, 1995)]
[Notices]
[Pages 30527-30528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14219]



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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.

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SUMMARY: Notice is hereby given that on July 22, 1993, an arbitration 
panel rendered a decision in the matter of Albert W. Travers v. 
Maryland Division of Vocational Rehabilitation, (Docket No. R-S/92-7). 
This panel was convened by the Department of Education pursuant to 20 
U.S.C. 107d-1(a), upon receipt of a complaint filed by petitioner, 
Albert Travers, on May 22, 1992. 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 hearing from the State licensing agency (SLA). If the 
licensee is dissatisfied with the SLA's decision, the licensee may file 
a complaint with 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 in the Federal Register a 
synopsis of each arbitration panel decision affecting the 
administration of vending facilities on Federal property.

Background

    The complainant, Albert W. Travers, is a blind vendor licensed by 
the respondent, the Maryland Division of Vocational Rehabilitation, 
pursuant to the Randolph-Sheppard Act, 20 U.S.C. 107 et seq. The 
Maryland Division of Vocational Rehabilitation (DVR) is the SLA 
responsible for the operation of the Maryland vending facility program 
for blind individuals.
    The complainant operates a Randolph-Sheppard snack bar located on 
the ground floor of the Fallon Federal Office Building at 31 Hopkins 
Plaza, Baltimore, Maryland. This facility [[Page 30528]] is identified 
as Facility #63 by the SLA. The current permit listing items to be sold 
by Facility #63 provided that both hot and cold beverages may be sold. 
However, the permit did not specify the nature of the beverage nor were 
there restrictions on the type of container.
    Located on the same floor with Facility #63 is another Randolph-
Sheppard facility identified as Facility #54. Facility #54 was 
permitted to sell canned and bottled beverages in May of 1987.
    In May 1990, the vendor at Facility #54 filed a grievance against 
Mr. Travers alleging unfair competition due to the sale of similar 
products. The SLA's regulations pursuant to the Code of Maryland Rules 
(COMAR) Section 13A provides for a committee of peers to review 
complaints between two or more blind vendors managing facilities on the 
same property. A peer review was conducted in June of 1990. On July 11, 
1990, the peer review panel ruled in favor of complainant.
    Subsequently, the vendor of Facility #54 appealed this decision and 
requested an administrative review, which was held on October 30, 1990. 
On November 9, 1990, the Director of the Office of Program and 
Administrative Support Services issued a determination that competition 
existed between Facilities #63 and #54. The decision of the SLA was to 
take steps to minimize the competitive situation between Facility #63 
and Facility #54. The Director decided that Facility #54 should be 
authorized to sell canned and bottled sodas and that Facility #63 
should be authorized to sell fountain sodas. The Director further 
decided that both Facility #54 and Facility #63 should be authorized to 
sell bottled water and canned and bottled juices.
    On December 4, 1990, complainant requested a full evidentiary 
hearing to appeal the Director's decision. The hearing officer affirmed 
the Director of Office Program and Administrative Support Services' 
decision that Mr. Travers should not be permitted to sell bottled 
sodas. On April 10, 1992, the SLA affirmed the decision of the hearing 
officer.
    The complainant, Albert Travers, on May 22, 1992, filed a request 
with the Secretary of Education to convene an arbitration panel to hear 
an appeal of his grievance. An arbitration hearing was conducted on 
March 16, 1993, pursuant to the Act. The complainant was challenging 
the SLA's actions on the grounds that (1) the SLA lacked the legal 
authority to act unilaterally to effectively amend the operating 
permits without the concurrence of either the Federal property managing 
agency, GSA, or complainant and over the objections of both; (2) no 
basis was shown to restrict complainant's sale of non-natural bottled 
sodas, given the lack of any evidence concerning the impact of 
competition upon the operations conducted by complainant or by another 
program vendor; (3) the SLA failed to adhere to its own regulations and 
internal Administrative Manual in the handling of the unfair 
competition claim; and (4) the SLA improperly attempted to 
retroactively apply its Administrative Manual against complainant.

Arbitration Panel Decision

    The majority of the panel found that the Randolph-Sheppard Act is 
silent on the issue of limiting competition between two or more program 
vendors at a single Federal installation. The Act does provide for a 
sharing of vending machine income in cases of more than one program 
vendor operating at a single Federal installation. The panel found that 
the SLA does have a legitimate interest in restricting ``ruinous 
competition'' between program vendors since ``ruinous competition'' 
would deprive one or both program vendors of the ability to survive 
economically and would be contrary to the intent of the Act.
    The panel ruled that, based upon the record of evidence viewed in 
its entirety, the SLA's actions were arbitrary and capricious and 
unsupported by any specific factual evidence as to the impact of 
competition between Mr. Travers and the vendor of Facility #54 relating 
to the sale of bottled sodas. The panel reasoned that, absent that 
factual evidence, no conclusion could be drawn regarding the 
competition as unfair or ruinous. The SLA's actions were not supported 
procedurally or substantively or by its Administrative Manual or by any 
other cited regulatory or statutory authority that would allow the SLA 
to retroactively eliminate the sale of products that were authorized by 
the operating permit and that were not restricted by a valid operating 
agreement.
    The panel found that the SLA failed to adequately take into account 
the fact that Mr. Travers had been selling bottled sodas for an 
extended period of time before the vendor of Facility #54 attempted to 
compete with him. The panel found that the final decision of the SLA 
arbitrarily and capriciously drew a distinction between ``natural'' 
bottled sodas and ``non-natural'' bottled sodas, which led to the 
absurd results of complainant selling exclusively bottled 7-Up and 
bottled Birch Beer and the vendor of Facility #54 selling bottled Diet 
7-Up and bottled Root Beer. No rationale was provided for 
distinguishing between ``natural'' and ``non-natural'' sodas.
    The panel directed the SLA to rescind its final agency 
determination regarding the restriction of complainant to sell bottled 
sodas. The SLA was precluded from attempting to force the complainant 
to sign an operating agreement that would contain such a restriction. 
The panel specifically noted the SLA's authority pursuant to State 
regulations to insist that complainant enter into a valid operating 
agreement governing the operation of his facility.
    A panel member issued a concurring opinion but disagreed with the 
panel's findings that complainant's request for reimbursement for costs 
and attorney's fees was outside the jurisdiction of the panel. That 
panel member urged the panel to award costs of the arbitration to the 
complainant.
    The views and opinions expressed by the panel do not necessarily 
represent the views and opinions of the U.S. Department of Education.

    Dated: June 6, 1995.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 95-14219 Filed 6-8-95; 8:45 am]
BILLING CODE 4001-01-P