FR Doc E8-21154[Federal Register: September 11, 2008 (Volume 73, Number 177)]
[Page 52850-52851]
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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 of Education (Department) gives notice that on 
May 15, 2008, an arbitration panel rendered a decision in the matter of 
Arizona Department of Economic Security, Rehabilitation Services 
Administration v. United States Postal Service (Case No. R-S/06-3). 
This panel was convened by the Department under 20 U.S.C. 107d-1(b), 
after the Department received a complaint filed by the petitioner, the 
Arizona Department of Economic Security, Rehabilitation Services 

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 telecommunications device for the deaf (TDD), you may call 
the Federal Relay Service (FRS) 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 under FOR FURTHER 

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 


    The Arizona Department of Economic Security, Rehabilitation 
Services Administration, the State Licensing Agency (SLA) alleged 
violations by the United States Postal Service (USPS) of the Randolph-
Sheppard Act (Act), and the implementing regulations in 34 CFR part 
395. Specifically, the SLA alleged that USPS improperly denied the 
SLA's request to establish vending facilities comprised of vending 
machines at postal locations in Mesa and Tucson, Arizona in violation 
of the priority provisions of the Act at 20 U.S.C. 107(b).
    On October 22, 2002, USPS notified the SLA that the Mesa Postal 
Service was seeking a new vendor for nine postal locations in Mesa, 
Arizona. On October 29, 2002, the SLA informed USPS that it was 
exercising its priority under the Act and would be providing vending 
services to the nine Mesa postal locations. However, on December 16, 
2002, USPS sent the SLA a letter to notify them of a change in the 
projected start up date for the SLA to begin operating the Mesa vending 
    On April 22, 2003, USPS again notified the SLA that it was in need 
of vending food service for 15 postal locations in Tucson, Arizona. 
Following this notification, the SLA and USPS staff met on June 18, 
2003. At that time, USPS informed the SLA that it had issued a 
directive stating that each of the 15 Tucson vending locations would 
have a permit and each location would require a separate blind vendor 
to manage the facility.
    On July 31, 2003, the SLA sent a letter to USPS indicating that it 
did not intend

[[Page 52851]]

to waive the priority under the act regarding the 15 Tucson postal 
vending locations. Additionally, the SLA requested that USPS clarify in 
writing and provide a copy of the directive regarding USPS's position 
that a different blind vendor must operate each of the 15 vending 
    The Postal Service contracting officer responded to the SLA in a 
letter dated September 18, 2003. The contracting officer citing Postal 
Service Handbook EL-602 (August 1994), section 331.1 stated, ``It is 
the Postal Service's policy that a blind vendor may not be assigned 
vending machines remote from the location for which the permit is 
issued.'' Therefore, USPS informed the SLA each of the 15 vending sites 
in Tucson for which a permit was issued must be operated by separate 
blind vendors working full-time and vending sites could not be combined 
into a single operation for a blind vendor.
    On August 17, 2005, the staff of the SLA's Business Enterprise 
Program contacted USPS's customer relations coordinator for an update 
on the Mesa vending locations. The customer service coordinator 
responded that no action had been taken pending the outcome of the 
SLA's request to operate the Tucson vending locations. Subsequently, 
the SLA filed a request for federal arbitration with the Secretary of 
Education regarding this matter. A federal arbitration panel heard this 
case on August 23, 2007.
    The central issue heard by the arbitration panel was: Whether the 
Act and implementing regulations provided the SLA a priority to operate 
and manage vending machine routes on USPS property.

Arbitration Panel Decision

    After reviewing all of the records and hearing testimony of 
witnesses, the panel majority ruled that vending locations combined 
into a single vending route are permissible under the Act and that 
current USPS policies are not in compliance with either the spirit or 
letter of the Act. The panel determined that there was nothing in the 
satisfactory site provisions in 34 CFR 395.31(d) that would exempt a 
federal entity desiring vending services from the priority under the 
act. Further, the majority found that there is nothing in the Act or 
the Postal Service Handbook EL-602 that addresses blind vendors being 
at a vending site full-time. The panel also found that USPS had not 
sought and received approval from the Secretary of Education to impose 
the requirement that blind vendors be on-site at USPS vending 
facilities full-time and that no similar restriction was imposed on 
private vending companies.
    Based upon the foregoing, the majority concluded USPS's policy of 
requiring that each vending location have an individual permit and a 
separate blind vendor constituted a limitation upon the placement of a 
vending facility on federal property in violation of the act and 
implementing regulations at 34 CFR 349.31(b).
    Thus, the panel majority directed USPS to immediately terminate 
agreements with private concessionaires providing vending services at 
the Mesa and Tucson postal locations and to grant a permit(s) to the 
SLA to operate one or more facilities pursuant to the act. The panel 
also indicated that USPS should have the understanding that the SLA may 
choose to assign multiple postal locations to a single blind vendor.
    Finally, the panel majority found that USPS's conduct warranted 
damages in this case. However, the majority did not award damages since 
they were not sought by the SLA and no individual blind vendor was 
    One panel member dissented.
    The views and opinions expressed by the panel do not necessarily 
represent the views and opinions of the Department.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site:
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

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

    Dated: September 8, 2008.
Tracy R. Justesen,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. E8-21154 Filed 9-10-08; 8:45 am]