[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Notices]
[Pages 18335-18336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9650]


=======================================================================
-----------------------------------------------------------------------

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

-----------------------------------------------------------------------

SUMMARY: Notice is hereby given that on November 20, 1996, an 
arbitration panel rendered a decision in the matter of Chester Smalley 
v. New York State Commission for the Blind and Visually Handicapped 
(Docket No. R-S/95-7). This panel was convened by the U. S. Department 
of Education pursuant to 20 U.S.C. 107d-1(a), upon receipt of a 
complaint filed by petitioner, Chester Smalley.

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, S.W., Room 3230, Mary 
E. Switzer Building, Washington D.C. 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 and other property.

Background

    Mr. Chester Smalley, complainant, has operated a vending facility 
at the Roswell Park Cancer Institute, Buffalo, New York, from January 
1981 to the present. Until September 1993, complainant's vending 
facility operation

[[Page 18336]]

at the hospital consisted of a dry stand in the main building and 
approximately 24 satellite vending machines located in other buildings 
throughout the hospital complex.
    The machines were provided by a commercial vending company, and Mr. 
Smalley restocked some of the machines and received a monthly 
commission. In June 1993, the hospital undertook an extensive 
construction and renovation program resulting in the hospital 
administration requesting additional vending machines from the New York 
Commission for the Blind and Visually Handicapped, the State licensing 
agency (SLA). The SLA provided those machines at a new leased building 
located at Main and Virginia Streets. Previously when additional 
machines were provided, Mr. Smalley received commissions from the 
vending machines. However, with respect to the machines at the new 
leased building, Mr. Smalley did not receive commissions.
    In September 1993, the Tower Building, which previously housed 
vending machines operated by the complainant, was demolished. 
Complainant alleged that he lost income from those machines.
    In October 1993, vending machines were placed in the new leased 
building at Main and Virginia Streets. At that time, the SLA determined 
that the income from those machines would accrue directly to the SLA. 
The SLA determined that the new leased building was geographically 
separate from Mr. Smalley's vending facility. Consequently, Mr. Smalley 
would not be receiving the commissions from the machines since, in the 
opinion of the SLA, the machines in the new leased building were not in 
direct competition with his operation.
    The complainant objected to this new arrangement. He made inquiries 
to the SLA regarding the matter and received a written explanation from 
the SLA on February 3, 1994, concerning the placement of the new 
machines at the leased building and the reassignment of the 
commissions. Mr. Smalley requested and received an administrative 
review of the matter. The SLA, in a decision dated April 29, 1994, 
affirmed its earlier determination. Subsequently, complainant requested 
and received a State fair hearing on June 30, 1994. By decision 
rendered August 4, 1994, the New York Department of Social Services 
upheld the Commission for the Blind and Visually Handicapped decision 
concerning the allocation of the vending machine income. Mr. Smalley 
requested the Secretary of Education to convene a Federal arbitration 
panel to hear this grievance. An arbitration hearing was held on August 
13, 1996.

Arbitration Panel Decision

    The issue heard by the arbitration panel as stipulated by the 
parties was as follows: Whether the determination of the New York State 
Department of Social Services confirming the action of the Commission 
for the Blind and Visually Handicapped with respect to the allocation 
of vending machine income at leased property on Main and Virginia 
Streets was arbitrary, capricious, or unlawful; and if so, what should 
the remedy be?
    The majority of the panel ruled that the scope of Chester Smalley's 
vending operation on the Roswell Park property was defined in the 
license granted to him by the SLA in 1986. The complainant's vending 
facility at that time included the newsstand and vending machines in 
five ``free standing'' buildings. The panel noted that these properties 
continue to be within the scope of Mr. Smalley's facility and will also 
continue when the construction project has been completed and personnel 
returned from the leased property at Main and Virginia Streets to the 
Roswell Park complex.
    The panel further ruled that the SLA erred in its interpretation of 
Federal regulations in 34 CFR 395.1(f) and (h) and 395.32 regarding the 
definition of ``individual location, installation or facility'' and the 
definition of ``direct competition.'' Specifically, the panel ruled 
that the SLA's interpretation of these definitions to determine that 
the leased space at Main and Virginia Streets was a separate individual 
location or facility and that the commissions from the vending machines 
should accrue to the SLA was arbitrary.
    The panel stated that under the Federal regulations, in order for 
the revenues from the vending machines at the leased building to accrue 
to the SLA, the SLA would have to show that there was no blind vendor 
on that property. The panel ruled that Chester Smalley's original and 
longstanding license included the outlying buildings on Roswell Park 
property. Therefore, the panel found that the determination of the New 
York State Department of Social Services confirming the action of the 
SLA to allocate the vending machine income from the leased property at 
Main and Virginia Streets to the SLA was arbitrary.
    Based upon the foregoing, the panel reversed the decision of the 
New York State Department of Social Services.
    Additionally, the majority of the panel ordered the SLA to make 
complainant whole for the vending machine commissions from the leased 
site during the period of October 1, 1993, to the date of the decision 
and prospectively. The panel also directed the SLA to pay complainant 
the cost of bringing this action and attorney's fees. One panel member 
dissented.
    The views and opinions expressed by the panel do not necessarily 
represent the views of the Department of Education.

    Dated: April 9, 1997.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 97-9650 Filed 4-14-97; 8:45 am]
BILLING CODE 4000-01-P