FR Doc E8-21142[Federal Register: September 12, 2008 (Volume 73, Number 178)]
[Page 52973-52974]
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 of Education (Department) gives notice that on 
December 5, 2007, an arbitration panel rendered a decision in the 
matter of Hawaii Department of Human Services, Vocational 
Rehabilitation and Services for the Blind Division v. United States 
Department of Defense, Department of the Navy (Case No. R-S/06-4). 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 Hawaii 
Department of Human Services, Vocational Rehabilitation and Services 
for the Blind Division.

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

[[Page 52974]]

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 Hawaii Department of Human Services, Vocational Rehabilitation 
and Services for the Blind Division, the State Licensing Agency (SLA) 
alleged violations by the United States Department of Defense, 
Department of the Navy (Navy) of the Act, and the implementing 
regulations in 34 CFR part 395. Specifically, the SLA alleged the Navy 
improperly denied the SLA's request to establish a Randolph-Sheppard 
vending facility at three parcels of real property located at the Pearl 
Harbor Naval Base. The Navy owned the parcels but leased them to 
private entities as described in this notice.
    In 1999, Congress gave the Navy authority to lease or convey real 
and personal property in Hawaii that was not needed for Navy 
operations. On June 30, 2003, the Navy entered into a lease with Fluor 
Hawaii, LLC, which was terminated in April 2007, covering an area of 
property at Pearl Harbor immediately adjacent to the USS Arizona 
Memorial Visitor Center that is known as Halawa Landing. The lease 
granted exclusive use and possession of the property for a term of 65 
years and provided that the property be used solely for a support 
facility for visitor attractions.
    In November 2004, the lessee entered into an agreement with the 
Pearl Harbor Visitor Center (PHVC) providing for the provision of 
visitors services at Halawa Landing including but not limited to food, 
beverage, bag storage, and visitor information. Between late 2004 and 
early 2007, PHVC operated several food concessions and other visitor 
services in a large white tent constructed on a portion of the Halawa 
Landing property adjacent to the primary parking lot used by visitors. 
A blind vendor operated a food stand at the entrance to that complex 
pursuant to a concession granted by the National Park Service.
    In June 2003, the Navy entered into a lease with a private party 
for Ford Island, which covered certain Pearl Harbor property on which 
old and underutilized airplane hangars stood. In 2006, the lessee 
subleased a portion of the area to the Pacific Aviation Museum (PAM) at 
Pearl Harbor. The PAM included a cafe, which sold a variety of food and 
    On July 7, 1986, the Navy leased certain property near Halawa 
Landing for the sole purpose of establishing a museum. Inside the 
museum, known as the USS Bowfin Museum, was a hot dog cart where, in 
addition to hot dogs, sandwiches, snacks, beverages, and ice cream, 
some nonfood items were sold.
    The SLA alleged that the three parcels of real property at the 
Pearl Harbor Naval base leased by Navy to a private entity were in 
violation of the Act that authorizes blind persons to operate vending 
facilities on any Federal property. Navy responded that the Act did not 
apply to leased property. After several informal attempts to resolve 
this dispute, the SLA filed for Federal arbitration in February 2006. A 
hearing on this matter was held on July 25, 2007.
    The issues heard by the arbitration panel were: whether the act 
applies to real property owned by Navy if leased to a private entity 
and whether an arbitration panel convened under the Act can award 
monetary damages.

Arbitration Panel Decision

    After reviewing all of the records and hearing testimony of 
witnesses, the panel ruled for the Navy. While finding the Act 
ambiguous with regard to whether the priority provisions of the Act at 
20 U.S.C. 107(b) applies to Federally owned property that has been 
leased to a private entity, the panel concluded, based on legislative 
history as well as the text of the Act and its implementing 
regulations, that the priority applies only on property ``controlled, 
maintained, or operated by Federal agencies.''
    Specifically, the panel majority found that Congress had authorized 
the Secretary of the Navy to sell or lease any property in excess of 
the needs of the Navy. The Navy entered into lease agreements granting 
exclusive use and possession of the leased properties. With respect to 
the USS Bowfin Museum, the arbitration panel determined that, because 
no cafe or cafeteria was planned for the museum, the SLA's claims 
regarding the museum were moot. With respect to the Halawa Landing and 
PAM properties, the majority concluded that the priority did not apply 
because the Navy did not control the leased properties.
    Furthermore, the panel concluded that the satisfactory site 
provisions of the Act did not apply because no Federal employees used 
the properties and there was not any Federal office space located 
there. Based upon the foregoing, the panel ruled that the Act's 
priority did not apply to these properties leased by the Navy.
    Lastly, although stating that the concession area in the white tent 
at Halawa Landing apparently damaged the blind vendor financially, the 
panel concluded that the Act does not prohibit competition except in 
instances where vending machines are in direct competition with a blind 
vendor's facility, which did not occur here. In addition, the panel 
concluded that the SLA would not be entitled to damages even if the 
Navy violated the Act because the Act does not authorize the panel to 
make damages awards. One panel member concurred with the majority 
opinion and 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

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    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, 2009.
Tracy R. Justesen,
Assistant Secretary for Special Education and Rehabilitative Services.1
[FR Doc. E8-21142 Filed 9-11-08; 8:45 am]