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Arbitration Panel Decision Under the Randolph-Sheppard Act

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Department of Education.


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


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.

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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 INFORMATION CONTACT.

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Under section 6(c) of the Randolph-Sheppard Start Printed Page 52974Act (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 property.


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 beverages.

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.

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Dated: September 8, 2009.

Tracy R. Justesen,

Assistant Secretary for Special Education and Rehabilitative Services.

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[FR Doc. E8-21142 Filed 9-11-08; 8:45 am]