FR Doc E4-3378
[Federal Register: November 30, 2004 (Volume 69, Number 229)]
[Page 69593-69594]
From the Federal Register Online via GPO Access []

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Arbitration Panel Decision Under the Randolph-Sheppard Act

AGENCY: Department of Education.

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


SUMMARY: The Department gives notice that on February 3, 2003, an 
arbitration panel rendered a decision in the matter of North Carolina 
Department of Human Resources, Division of Services for the Blind v. 
United States Postal Service (Docket No. R-S/98-8). This panel was 
convened by the U.S. Department of Education, under 20 U.S.C. 107d-
1(b), after the Department received a complaint filed by the 
petitioner, North Carolina Department of Human Resources, Division of 
Services for the Blind.

FOR FURTHER INFORMATION CONTACT: You may obtain a copy of the full text 
of the arbitration panel decision from Suzette E. Haynes, U.S. 
Department of Education, 400 Maryland Avenue, SW., room 5022, Potomac 
Center Plaza, Washington, DC 20202-2800. Telephone: (202) 245-7374. If 
you use a telecommunication device for the deaf (TDD), you may call the 
Federal Information Relay Services (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 

SUPPLEMENTARY INFORMATION: Under section 6(c) of the Randolph-Sheppard 
Act (the 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 and other 


    This dispute concerns the alleged violation by the United States 
Postal Service (USPS) of the priority provisions of the Act (20 U.S.C. 
107 et seq.) and the implementing regulations in 34 CFR part 395 in 
awarding a contract to a private vending company at the Greensboro 
Processing and Distribution Center (P&DC) in Greensboro, North 
    A summary of the facts is as follows: Beginning in 1995, the North 
Carolina Department of Human Resources, Division of Services for the 
Blind, the State licensing agency (SLA), operated a cafeteria on the 
second floor of the P&DC and also various vending machines in a break 
area and swing room on the first floor of the building under a contract 
agreement with USPS. The cafeteria included a hot food line and was 
staffed by attendants. Later, the cafeteria operation became not as 
profitable as the SLA desired, and discussions took place between the 
SLA and USPS wherein the SLA proposed closing the attendant hot food 
cafeteria and replacing it with a facility comprised of vending 
    In January 1998, USPS issued a request for proposal (RFP) for a 
vending machine facility at P&DC, the same type of facility that the 
SLA had previously discussed with USPS. The SLA received the RFP and 
proposed to USPS that a single blind licensee be allowed to operate all 
vending operations at the P&DC under a permit agreement rather than a 
    After the SLA's proposal, USPS declined to enter into a permit 
agreement with the SLA, and the SLA elected not to submit a response to 
the RFP. USPS then awarded a contract for the operation of the new 
vending machine facility to a private vending company.
    Thereafter, the SLA filed a complaint with the Secretary of 
Education requesting the convening of a Federal arbitration panel. In 
its complaint, the SLA alleged that USPS violated the priority 
provisions of the Act and implementing regulations in awarding the 
contract to a private vending company. The SLA further alleged that the 
Act specifically recognizes that the operation of vending machines are 
to be under a permit agreement, while the operation of a cafeteria is 
required to be under a contract.
    As a result of this dispute, an arbitration panel was convened, and 
a hearing on this matter was held on June 6, 2000.

Arbitration Panel Decision

    The issue heard by the panel was whether USPS had violated the Act 
(20 U.S.C. 107 et seq.) and the implementing regulations in 34 CFR part 
395 in awarding a contract to a private vending company to operate the 
vending machine facility at P&DC.
    After considering all of the evidence, the majority of the panel 
ruled that the P&DC vending facility was not a cafeteria as defined by 
the Act and implementing regulations. The panel stated that the 
regulations in Sec.  395.1(d) define a cafeteria as a facility 
``capable of providing a broad variety of prepared foods and beverages 
(including hot meals) primarily through the use of a line where the 
customer serves himself from displayed selections.'' On this basis, the 
panel ruled that USPS was required to approve the SLA's permit 
application for P&DC or indicate in writing to the Secretary of 
Education the reasons for refusing approval.
    The panel also determined that the vending facility at P&DC 
operated by the private vending company and comprised of vending 
machines was being operated in direct competition with vending machines 
operated by the SLA. Moreover, because the private vending company's 
vending machines were readily accessible to most or all of the 
employees at P&DC, the panel ruled that the SLA was entitled to receive 
100 percent of all vending machine income

[[Page 69594]]

collected by the private vending company as provided by the regulations 
in 34 CFR 395.32(b).
    Accordingly, the panel made the following award: (1) USPS should 
terminate at the earliest practicable date the contract with the 
private vending company, thus allowing for an SLA-licensed blind vendor 
to operate the vending machine facility at P&DC; (2) USPS should 
promptly approve an appropriate permit agreement with the SLA for the 
continued operation of the vending facility at P&DC; and (3) USPS 
should pay to the SLA all sums received from the private vending 
company for the operation of the vending machines at P&DC and all sums 
to be received until the termination of the contract with the private 
vending company.
    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.

Electronic Access to This Document

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    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
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Regulations is available on GPO Access at:

    Dated: November 24, 2004.
Troy R. Justesen,
Acting Deputy Assistant Secretary for Special Education and 
Rehabilitative Services.
 [FR Doc. E4-3378 Filed 11-29-04; 8:45 am]