`[Federal Register Volume 90, Number 6 (Friday, January 10, 2025)]
[Proposed Rules]
[Pages 2550-2573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00124]



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Vol. 90

Friday,

No. 6

January 10, 2025

Part VII





Department of Education





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34 CFR Part 395





Amendments to Definitions and Related Provisions Under the Randolph-
Sheppard Vending Facility Program; Proposed Rule

  Federal Register / Vol. 90, No. 6 / Friday, January 10, 2025 / 
Proposed Rules  

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DEPARTMENT OF EDUCATION

34 CFR Part 395

[Docket ID ED-2024-OSERS-0088]
RIN 1820-AB83


Amendments to Definitions and Related Provisions Under the 
Randolph-Sheppard Vending Facility Program

AGENCY: Office of Special Education and Rehabilitative Services, 
Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The U.S. Department of Education (Department) proposes to 
amend certain definitions and add a new definition in the Randolph-
Sheppard Act (R-S Act) regulations to clarify statutory requirements 
and make other conforming changes necessary for Federal agencies, 
States, and non-governmental stakeholders to better implement the R-S 
Act, thereby allowing the Randolph-Sheppard Vending Facilities Program 
(RSVFP) to evolve with technology and ever-changing customer demand.

DATES: Comments must be received on or before March 11, 2025.

ADDRESSES: Comments must be submitted via the Federal eRulemaking 
Portal at www.regulations.gov. However, if you require an accommodation 
or cannot otherwise submit your comments via www.regulations.gov, 
please contact the program contact person listed under FOR FURTHER 
INFORMATION CONTACT. The Department will not accept comments submitted 
by fax or by email, or comments submitted after the comment period 
closes. To ensure that we do not receive duplicate copies, please 
submit your comments only once. Additionally, please include the Docket 
ID at the top of your comments.
    Federal eRulemaking Portal: Go to www.regulations.gov to submit 
your comments electronically. Information on using Regulations.gov, 
including instructions for finding a rule on the site and submitting 
comments, is available on the site under ``FAQ''.
    Privacy Note: The Department's policy is generally to make all 
comments received from members of the public available for public 
viewing in their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should include in their 
comments only information about themselves that they wish to make 
publicly available. Commenters should not include in their comments any 
information that identifies other individuals or that permits readers 
to identify other individuals. If, for example, your comment describes 
an experience of someone other than yourself, please do not identify 
that individual or include information that would allow readers to 
identify that individual. The Department reserves the right to redact 
at any time any information in comments that identifies other 
individuals, includes information that would allow readers to identify 
other individuals, or includes threats of harm to another person.

FOR FURTHER INFORMATION CONTACT: Corinne Weidenthal, U.S. Department of 
Education, 400 Maryland Ave. SW, Room 4A212, Washington, DC 20202. 
Telephone: (202) 245-6529. Email: [email protected].
    If you are deaf, hard of hearing, or have a speech disability and 
wish to access telecommunications relay services, please dial 7-1-1.
    A brief summary of the proposed rule is available at http://www.regulations.gov/docket/ED-2024-OSERS-0088.

SUPPLEMENTARY INFORMATION: 

Table of Contents

Executive Summary
Background
    1. The R-S Act and the Need for Regulations
    2. States Participating in the RSVFP; Developments in the 
Vending Landscape
    3. Role of the Department
    4. Overview of Proposed Changes
Significant Proposed Regulations
    Articles
    Vending Facility
    Vending Machine
    Location and Operation of Vending Facilities for Blind Vendors 
on Federal Property
    Severability
    Executive Orders 12866, 13563, and 14094
    Regulatory Impact Analysis
Background
    1. Need for Regulatory Action
    2. RSVFP Funding Sources
    VR Program Funds
    State Appropriations
    RSVFP Set-Aside Funds
    3. Fiscal Impact of RSVFP Expenditures on the VR Program
Discussion of Costs and Benefits
Overview
Non-Monetized Benefits of the Proposed Regulations
    1. Definition of ``Articles''
    2. Definition of ``Vending Facility''
    3. Definition of ``Vending Machine''
    4. Priority on Certain Federal Property
Non-Monetized Costs of the Proposed Regulations
    1. Implementation of Proposed Definitions
    2. Definition of ``Articles''
    3. Definition of ``Vending Facility''
    4. Definition of ``Vending Machine''
    5. Priority on Certain Federal Property
    6. Technical Changes
Monetized Costs of the Proposed Regulations
    1. Administrative Costs

Executive Summary

Purpose of This Regulatory Action

    The purpose of this regulatory action is to clarify and modernize 
the R-S Act regulations to ensure that the RSVFP can evolve with 
technology and ever-changing customer demand. To achieve the employment 
goals of the R-S Act by keeping current with vending technology and 
business practices and opportunities for individuals who are blind 
under the RSVFP, the Department proposes to add and amend certain 
definitions in the R-S Act regulations that would:
     Define ``articles,'' thereby ensuring clarity and 
consistency for the scope of items that may be sold at vending 
facilities and by vending machines.
     Modify the definition of ``vending facility'' to describe 
the scope of business models allowed.
     Modify the definition of ``vending machine'' to dispense 
only ``articles,'' not services in exchange for cash or electronic 
payments.
    The Department also proposes to make the following other changes:
     Amend the regulation pertaining to the location and 
operation of vending facilities for licensed blind vendors on Federal 
property to better implement the statute with respect to certain 
Federal properties.
     Add a regulatory provision pertaining to severability for 
part 395.
    For a more detailed discussion of the purpose of this regulatory 
action, see the ``Background'' and ``Significant Proposed Regulations'' 
sections further below in this document.
    The R-S Act authorizes the Secretary of Education to promulgate 
regulations implementing the blind vendors' priority to operate vending 
facilities on Federal property and ensure that, wherever feasible, one 
or more vending facilities are established on all Federal property to 
the extent that any such facility or facilities would not adversely 
affect the interests of the United States. (20 U.S.C. 107(b).) The R-S 
Act further directs the Secretary to establish requirements for the 
uniform application of the R-S Act by each State agency designated by 
the Secretary to license blind vendors, the State licensing agency 
(SLA),\1\ including

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policies on the selection and establishment for new vending facilities, 
the operation of cafeterias, and distribution of vending machine income 
to blind vendors, as well as any other rules and regulations necessary 
or desirable in carrying out the provisions of the R-S Act. (20 U.S.C. 
107(b), 107a(a)(1) and (6), and 107d-3(e) and (g).)
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    \1\ An SLA, as defined in 34 CFR 395.1(v), is the State 
Vocational Rehabilitation (VR) agency providing VR services to 
individuals who are blind in the State under the VR services portion 
of the Unified or Combined State Plan (see 34 CFR 395.2 and 395.5) 
and that has been designated by the Secretary of Education to issue 
licenses to individuals who are blind under the RSVFP. Therefore, 
there is a close administrative nexus between the State VR agency 
and the SLA. While the SLA and VR agency are the same entity 
organizationally, administratively the VR program and RSVFP operate 
separately and distinctly. These different administrative functions 
are operationalized at the State level through policy and fiscal 
decision-making responsibilities. In this NPRM, the Department 
refers to ``SLA'' when addressing requirements associated with the 
RSVFP; however, we use ``VR agency'' when addressing requirements, 
particularly those related to the use of VR funds under the VR 
program for the benefit of the RSVFP.
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Summary of the Major Proposed Provisions of This Regulatory Action

    The proposed regulations would:
     Define ``articles'' for the RSVFP as items of tangible 
personal property that can be felt or touched by an individual and can 
be physically relocated, thereby clarifying the wide scope of articles 
that may be sold through RSVFP vending facilities, including vending 
machines.
     Amend the existing definition of ``vending facility'' to 
state that vending facilities may be operated by blind licensees 
pursuant to a permit or contract, thereby removing any confusion about 
whether this definition applies to key requirements governing the 
operation of vending facilities in part 395.
     Add illustrative examples to the definition of ``vending 
facility'' to further clarify the evolving applicability of the terms 
``snack bars,'' ``cart services,'' ``shelters,'' and ``counters,'' 
thereby promoting consistency nationwide for the RSVFP and clarifying 
the evolution of the term ``vending facility'' with technology and the 
capabilities of licensed blind vendors. The proposed changes to this 
definition would codify aspects of current Department guidance.
     Amend the existing RSVFP definition of ``vending machine'' 
by making clear that such machines sell or dispense only articles in 
exchange for cash or electronic payment. As a result of this proposed 
change, licensed blind vendors could dispense services but only through 
vending facilities that are not vending machines.
     Amend 34 CFR 395.30 to clarify the nature and scope of the 
priority that blind vendors receive at National Park Service (NPS) and 
National Aeronautics and Space Administration (NASA) properties to 
operate those ``vending facilities'' that would meet the proposed 
updated definition of that term, thereby better implementing the 
statutory priority with respect to these Federal properties.
    A more detailed discussion of the proposed regulations is provided 
in the ``Significant Proposed Regulations'' section of the preamble.

Costs and Benefits

    This proposed regulatory action is a significant regulatory action 
subject to OMB review because it raises legal or policy issues for 
which centralized review would meaningfully further the President's 
priorities or the principles set forth in Executive Order 14094. We 
believe that the proposed regulations would likely result in additional 
net costs for the acquisition of vending facilities and equipment for 
some SLAs and State Vocational Rehabilitation (VR) \2\ agencies (or 
organizational units of those agencies), as they replace or improve 
outdated equipment and identify additional or more modern vending 
facility opportunities for blind vendors. We also expect that the 
proposed regulations would result in VR agencies incurring additional 
costs to convert existing vending facilities from one type of business 
model to another and purchase initial stocks and supplies for new 
vending facilities to allow them to evolve with the vendors' needs to 
remain competitive and self-supporting, as is the purpose of the RSVFP.
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    \2\ Although the VR program is separate and distinct from the 
RSVFP, section 103(b)(1) of the Rehabilitation Act of 1973 
(Rehabilitation Act) authorizes State VR agencies to expend VR 
program funds (both Federal and non-Federal matching) for the 
benefit of certain RSVFP costs, such as acquisition of vending 
facilities and equipment and the purchase of initial stocks and 
supplies.
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    As discussed further in the Regulatory Impact Analysis (RIA) of 
this notice of proposed rulemaking (NPRM), the VR program is a 
significant funding source for many RSVFP-related costs, including 
those at issue in these proposed regulations. This means that States 
may use VR program funds (both Federal VR grant funds and non-Federal 
matching funds) to pay those RSVFP costs that are also allowable under 
the VR program. Therefore, the cost and benefits analysis of these 
proposed regulations will necessarily describe the critical nexus 
between the VR program and the RSVFP. To the extent that States use 
non-Federal funds to pay additional RSVFP-related costs anticipated by 
these proposed regulations, States may use those non-Federal 
expenditures to draw down more Federal VR funds that may be available 
to them. Specifically, for 21.3 percent of allowable costs paid with 
non-Federal funds, the State may draw down 78.7 percent Federal VR 
funds to pay the balance of the total cost.
    Furthermore, we believe that the proposed regulations would benefit 
blind vendors and customers who use the vending facilities through 
increased earnings and increased product selection, respectively, to 
the extent the products are not already available through the vending 
facilities. We invite the public to comment on the economic impact of 
the proposed changes. For a more comprehensive discussion of costs and 
benefits including the VR program match requirements, please see the 
``Regulatory Impact Analysis'' section of this document.
    Invitation to Comment: We invite you to submit comments regarding 
these proposed regulations. To ensure that your comments have maximum 
effect in developing the final regulations, you should identify clearly 
the specific section or sections of the proposed regulations that each 
of your comments address and arrange your comments in the same order as 
the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866, 13563, and 14094 and their 
overall goal of reducing regulatory burden that might result from the 
proposed regulations. Please let us know of any further ways we could 
reduce potential costs or increase potential benefits while preserving 
the effective and efficient administration of the Department's programs 
and activities. We also welcome comments on any alternative approaches 
to the subjects addressed by the proposed regulations.
    During and after the comment period, you may inspect public 
comments about the proposed regulations by accessing Regulations.gov. 
You may also inspect the comments in person. Please contact the person 
listed under FOR FURTHER INFORMATION CONTACT to make arrangements to 
inspect the comments in person.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: Upon request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for the proposed regulations. To schedule an 
appointment for this type of accommodation or auxiliary aid, please

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contact the person listed under FOR FURTHER INFORMATION CONTACT.

Background

1. The R-S Act and the Need for Regulations
    The R-S Act, 20 U.S.C. 107 et seq., provides individuals who are 
blind with the opportunity to operate businesses on Federal and other 
property, as defined in 34 CFR part 395,\3\ through permits or 
contracts, with the goal of the individual becoming self-supporting. 
(20 U.S.C. 107(a).) To achieve this purpose, the R-S Act provides a 
priority to operate vending facilities on Federal property to 
individuals who are blind and licensed by the SLA, the State agency 
that provides services to individuals who are blind (i.e., the VR 
agency that provides VR services to individuals who are blind in the 
State).\4\ (20 U.S.C. 107(b).)
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    \3\ Federal property means any building, land, or other real 
property owned, leased, or occupied by any department, agency or 
instrumentality of the United States (including the Department of 
Defense and the U.S. Postal Service), or any other instrumentality 
wholly owned by the United States, or by any department or agency of 
the District of Columbia or any territory or possession of the 
United States. 34 CFR 395.1(n). Other property means property which 
is not Federal property and on which vending facilities are 
established or operated by the use of any funds derived in whole or 
in part, directly or indirectly, from the operation of vending 
facilities on any Federal property. 34 CFR 395.1(n). An example of 
``other property'' is a vending facility on State property 
established with proceeds from unassigned Federal vending machine 
income (i.e., unassigned income from vending machines located on 
Federal property).
    \4\ See footnote 1 for a description of the organizational and 
administrative relationship between the SLA and VR agency in each 
State that operates the RSVFP. This NPRM's RIA will provide a 
comprehensive discussion of the nexus between the two, particularly 
with respect to the funding of the RSVFP.
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    It is important to note that in 1954, Congress expanded the R-S Act 
to include vending machines as vending facilities available to blind 
vendors operating in Federal buildings, thereby extending a preference 
to blind licensees to operate these vending machines. Congress added 
vending machines because employee groups had excluded blind vendors 
from operating vending machines and used those vending machines to 
create significant competition with vending stands operated by blind 
vendors. (100 Cong. Rec. 9940, 9946 (1954); The President's Health 
Recommendations and Related Matters; Hearing Before the Subcomm. On 
Health of the S. Comm. Of Labor and Pub. Welfare, Part 2, 83rd Cong., 
384 (1954).) Congress further expanded the RSVFP by allowing blind 
vendors access to Federal property, not just Federal buildings, 
including military posts and atomic centers. (100 Cong. Rec. 9943-9944 
(1954).)
    To ensure consistent implementation of the priority for blind 
vendors on Federal and other property nationwide, the R-S Act (20 
U.S.C. 107e(7)) defines ``vending facility'' as automatic vending 
machines, cafeterias, snack bars, cart services, shelters, counters, 
and such other appropriate auxiliary equipment necessary for the sale 
of the articles and services described in 20 U.S.C. 107a(a)(5) and 
which may be operated by blind licensees. Section 107a(a)(5) states 
that the vending facilities operating on Federal and other properties 
under permits issued to the SLAs may sell newspapers, periodicals, 
confections, tobacco products, foods, beverages, and other articles or 
services dispensed automatically or manually and prepared on or off the 
premises in accordance with all the health laws, as determined by the 
SLA, and including the vending or exchange of chances for any lottery 
authorized by State law and conducted by an agency of the State.
    Although the R-S Act's definition of ``vending facility'' 
specifically mentions certain types of business models popular when the 
statute was enacted in 1936 and amended in 1954 and 1974 (i.e., vending 
machines, cafeterias, snack bars, cart services, shelters, and 
counters), the statute does not further define those terms with respect 
to their facilities or business models, and neither do the Department's 
current RSVFP regulations. The lack of specificity as to these 
enumerated types of facilities has led to inconsistency with the 
implementation of the ``vending facility'' definition across the 
country.
    According to the Department's Program Assistance Circular (PAC)-89-
02, dated January 3, 1989, RSVFP vending facilities historically fell 
into one of the following categories, with some facilities representing 
combinations of these categories:
     dry or sundry facilities;
     snack bars, which may involve the sale of food prepared 
on/off the premises;
     cafeterias; and
     automatic vending machines.
    In addition to mentioning certain examples of business models for 
the RSVFP but providing little guidance regarding their scope, the R-S 
Act permits vending facilities to sell ``other articles or services 
dispensed automatically or manually,'' without defining the nature and 
scope of those ``other articles or services'' or defining the term 
``articles'' itself. The lack of a definition for the term ``articles'' 
or the phrase ``other articles or services'' has led to inconsistency 
under the RSVFP.
    Since the inception of the RSVFP, vendors have pursued these 
business models as vending facilities and with changes in technology, 
have pursued more modern versions of the business models identified in 
the definition of ``vending facility.'' In recent years, the Department 
has received an increasing number of inquiries from SLAs and licensed 
blind vendor constituent groups concerning the allowability of these 
newer business models under the RSVFP and the allowable funding sources 
to pay for such activities. In fielding these inquiries, the Department 
learned that there is inconsistency nationwide with the implementation 
of the RSVFP, with some States forging ahead to modernize while some 
remain locked in tradition, not enabling vendors to evolve or expand 
their vending facilities to keep up with customer demands or 
competition.
    To minimize inconsistency among the States and address identified 
areas of confusion, the Department issued a guidance document in 2024 
for implementation of the RSVFP, which is relevant to the content of 
this NPRM. On August 13, 2024, the Department issued Technical 
Assistance Circular (TAC)-24-06, ``Allowable Costs for Vending 
Facilities and Equipment for Vendors under the Randolph-Sheppard 
Vending Facility Program,'' \5\ which describes existing Federal 
requirements applicable to vending facilities and equipment acquired 
for the benefit of the RSVFP. In so doing, the Department hoped to help 
VR agencies and SLAs implement the requirements appropriately and 
consistently, given the evolution of the RSVFP since it was first 
introduced in connection with the VR Program in 1954,\6\ making certain 
RSVFP-related costs allowable under the VR program.
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    \5\ TAC-24-06 is on RSA's website at https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance.
    \6\ The R-S Act, initially enacted in 1936, was amended by the 
Vocational Rehabilitation Amendments of 1954, which created a nexus 
between the VR program and the R-S Act.
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    Although TAC-24-06 provides much needed guidance to States about 
the flexibilities afforded by the R-S Act regarding the nature and 
scope of allowable business models that can exist and articles that can 
be sold under the RSVFP, questions persist. Specifically, some SLAs and 
Federal agencies are reluctant to allow licensed blind vendors to take 
advantage of all allowable opportunities under the RSVFP, particularly 
those not

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considered traditional RSVFP opportunities. Therefore, inconsistency in 
implementation of the RSVFP remains, making this NPRM necessary for the 
RSVFP, as well as the VR program, which is the primary source of 
funding for the RSVFP in States operating the RSVFP.
2. States Participating in the RSVFP; Developments in the Vending 
Landscape
    There are 51 SLAs across the country, which include 49 U.S. 
States,\7\ the District of Columbia, and Puerto Rico. The State of 
Wyoming and other territories do not participate in the RSVFP. However, 
Wyoming and any territory not participating in the RSVFP could apply to 
the Department to do so at any time since they meet the definition of 
``State'' for purposes of the RSVFP. Under the RSVFP, SLAs recruit, 
train, license, and place individuals who are blind as operators of 
vending facilities, established through permits or contracts on Federal 
and other property in the State. Most States have enacted laws or 
promulgated regulations modeled on the R-S Act and include a priority 
for blind vendors at State, county, municipal, and certain private 
locations.
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    \7\ For purposes of the RSVFP, ``State'' means ``a State, 
territory, possession, Puerto Rico, or the District of Columbia'' 
(34 CFR 395.1(t).) Although the definition of ``State'' in the R-S 
Act and its regulations includes ``possessions,'' since the 
dissolution of the Trust Territory of the Pacific Islands, the 
United States does not have any ``possessions'' that have their own 
local governments. Therefore, there are no ``possessions'' relevant 
to the RSVFP discussion or this NPRM. See e.g., https://www.irs.gov/individuals/international-taxpayers/persons-employed-in-us-possessions.
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    In January 2012, President Obama issued a memorandum to the heads 
of executive departments and agencies emphasizing the importance of 
Federal support for the RSVFP. (77 FR 3915 (Jan. 25, 2012).) That 
memorandum recognized that blind entrepreneurs had demonstrated a 
``proven ability'' to provide exceptional service and ``have challenged 
preconceived notions about disability,'' citing successfully operated 
food services and commercial ventures, ``from a simple snack shop, to 
tourist services at the Hoover Dam, to full food-services operations at 
military installations.''
    Further, technological and business landscapes have changed 
considerably over the last 50 years, providing expanded employment 
opportunities for blind vendors and, therefore, offering a wider array 
of vending opportunities from which to draw. Some blind vendors now 
operate retail facilities such as micro markets and gift shops and 
continue to explore new employment opportunities not considered to be 
those traditionally operated under the RSVFP. Blind vendors also 
operate commissaries in prisons that include such non-food items as 
clothing, cosmetics, and hygiene items, and provide laundry services, 
as well.
    In Fiscal Year (FY) 2023, 43 of the 51 SLAs operated vending 
machines at rest areas along the interstate highways,\8\ ranging from 
two to 57 rest areas within each State for a total of 1,019 rest areas 
managed by SLAs. Of these rest areas, 647 (63 percent) were operated by 
blind vendors, and the remaining 372 rest areas (37 percent) were 
operated by third party vendors. The Department believes, based upon 
its own observations and stakeholder feedback, many blind vendors sell 
products other than food items, such as tee shirts, baseball caps, and 
phone chargers, in vending machines located at these rest areas.
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    \8\ In addition to the priority to operate vending machines on 
Federal property under the R-S Act, the Surface Transportation Act 
requires that, in placing vending machines at highway rest areas, 
States give priority to vending machines operated under the RSVFP 
(23 U.S.C. 111(c)).
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    RSA's Annual Reports to the President and Congress show that the 
RSVFP has experienced a decline over time in the number of blind 
vendors and the number of facilities operated by blind vendors.\9\ 
Since FY 2013, the number of blind vendors has steadily declined from a 
total of 2,173 in FY 2013 to 1,428 in FY 2023, which represents a 34.3 
percent decrease of vendors over a ten-year period.\10\ The overall 
number of facilities (Federal and non-Federal) operated by blind 
vendors fluctuated over the same ten-year period; however, the number 
of Federal facilities operated by blind vendors decreased from 864 in 
FY 2013 to 635 in FY 2023 representing a 26.6 percent decrease in the 
operation of Federal facilities over a ten-year period.\11\ Recent 
reasons for the declines include the COVID-19 pandemic in FYs 2020 and 
2021, which resulted in the closure of Federal and other buildings.
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    \9\ RSA Annual Reports to the President and Congress are on 
RSA's website at https://rsa.ed.gov/about/rsa-annual-reports-to-congress.
    \10\ Id.
    \11\ Id.
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    While the number of vendors and Federal facilities have decreased 
over this ten-year period, with the exception of those fiscal years 
impacted by the COVID-19 pandemic (FYs 2020-2022), gross sales and 
vendor earnings have increased. In FY 2019, the last full fiscal year 
before the pandemic, gross sales for the program were $717,007,108, 
while in FY 2023, the amount rose to $747,455,376, an increase of 4.2 
percent from FY 2019. Likewise, vendor income increased from 
$130,783,764 in FY 2019 to $147,206,158 in FY 2023, an increase of 12.5 
percent during this time period.
3. Role of the Department
    Because Congress determined in 1974 that some Federal agencies were 
failing to implement the R-S Act, it placed the authority for the 
administration of the R-S Act with the Department of Health, Education, 
and Welfare (HEW). The Committee Report relies heavily on a General 
Accountability Office (GAO) report from 1973 studying the RSVFP 
nationwide to support many of the 1974 amendments to the R-S Act. The 
Comptroller General found that States reduced efforts to survey Federal 
sites for possible vending facility locations, ``particularly military 
and postal facilities,'' because of the lack of success in obtaining 
permits or contracts at these locations. (Review of Vending Operations 
on Federally Controlled Property, No. B-176886, p. 13 (1973).)
    The Committee indicated that the amendments assigned HEW new 
responsibilities and authorities, which were previously held by each 
department, agency, and instrumentality of the United States. (Sen. 
Rep. 93-937 pp. 15-19 (1974).) The Committee went further to find 
``there is a record of abuses and neglect of the Randolph-Sheppard 
program by officials of various Federal agencies that is adequate to 
justify the placement of increased overall authority for its operation 
with the Secretary of Health, Education, and Welfare.'' (Id at 16.) 
When Congress divided HEW into the Department of Health and Human 
Services and the Department of Education, it transferred the authority 
for the administration of the R-S Act to the Department of Education. 
(Sec. 301(4)(B) of the U.S. Department of Education Organization Act, 
Public Law 93-88, 93 Stat. 678 (1979).)
    The R-S Act provides that ``The Secretary of Education shall--
insure that the Rehabilitation Services Administration is the principal 
agency for carrying out this chapter.'' (20 U.S.C. 107a(a)(1).) As the 
principal agency to administer the R-S Act, the Rehabilitation Services 
Administration (RSA) within the Office of Special Education and 
Rehabilitative Services in the Department has the authority to 
promulgate regulations designed to assure the priority to operate 
vending facilities is given to licensed blind persons and that wherever 
feasible, one or more vending facilities are

[[Page 2554]]

established on all Federal property to the extent that any such 
facility or facilities would not adversely affect the interests of the 
United States. (20 U.S.C. 107(b).)
    In addition, the Secretary is directed to establish requirements 
for the uniform application of the R-S Act by each SLA, including 
policies on the selection and establishment for new vending facilities, 
the operation of cafeterias, and distribution of vending machine income 
to blind vendors, as well as any other rules and regulations necessary 
or desirable in carrying out the provisions of the R-S Act. (20 U.S.C. 
107a(a)(1) and (6), and 107d-3(e) and (g).)
    In support of the uniform application of the RSVFP, the Department 
regularly publishes TACs to provide updated guidance and clarify the R-
S Act and its regulations as circumstances require. As an example, RSA 
has issued TACs on the active participation of the Elected Committee of 
Blind Vendors with SLAs in the RSVFP (RSA-TAC-21-01), the application 
of the R-S Act priority for blind vendors on Federal property related 
to the operation of vending machines and the use of contractors on that 
property (RSA-TAC-21-02), the process for RSA's approval of State Rules 
(RSA-TAC-22-01), and the use of VR program funds for initial stocks and 
supplies and initial operating expenses for blind vendors under the 
Randolph-Sheppard vending facilities program (RSA-TAC-24-03), as well 
as TAC-24-06 discussed previously.\12\
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    \12\ The five RSVFP-related TACs mentioned herein are on RSA's 
website at https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance. RSA's website includes information related to the 
Memorandum of Understanding Between the Committee for Purchase from 
People who are Blind or Severely Disabled and the U.S. Department of 
Education Rehabilitation Services Administration (Jan. 2021). 
https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources.
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    In addition, RSA and the U.S. AbilityOne Commission (AbilityOne) 
executed a Memorandum of Understanding that establishes a process for 
AbilityOne and RSA to work more closely together. AbilityOne identifies 
the opportunities presented to it that may be appropriate opportunities 
for persons who are blind to operate vending facilities under the R-S 
Act and provides information about those opportunities to RSA, who 
determines whether the opportunities merit review by the appropriate 
SLA, who decides if it will pursue them under the R-S Act's 
priority.\13\
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    \13\ RSA's website includes information related to the 
Memorandum of Understanding Between the Committee for Purchase from 
People who are Blind or Severely Disabled and the U.S. Department of 
Education Rehabilitation Services Administration (Jan. 2021). 
https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources.
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    The Department's proposed changes in this NPRM would confirm the 
applicability of the RSVFP on any Federal or other property subject to 
the R-S Act, except as otherwise provided by statute. As directed by 
the R-S Act, the Secretary, through the RSA Commissioner, consulted 
with heads of departments and agencies when proposing these regulations 
implementing the RSVFP. (20 U.S.C. 107(b).) However, the R-S Act, as 
amended in 1974, makes clear that the Department is the ``principal 
agency'' responsible for carrying out the statute and promulgating 
implementing regulations.
4. Overview of Proposed Changes
    In recent years, RSA has learned of varied applications in the 
operation of the RSVFP by the SLAs, Federal agencies, and blind vendors 
with respect to the types of vending facility business models permitted 
and the types of articles dispensed. The Department proposes to clarify 
and modernize the program's regulatory definitions to continue 
advancement of economic opportunities for blind vendors and to evolve 
with modern trends in business practices and vending technology, many 
of which already exist within the RSVFP, with the goal of ensuring the 
regulations best implement the statute. To that end, the Department has 
determined it is necessary to amend the RSVFP regulations in three 
overarching ways.
    First, the Department proposes to define the term ``articles,'' as 
it is authorized to do while administering and implementing the RSVFP, 
thereby clarifying the broad scope of items that can be sold. In so 
doing, the Department would improve consistency nationwide with respect 
to articles currently sold by RSVFP vendors and provide further clarity 
for the breadth of articles that could be sold or dispensed as the 
RSVFP continues to evolve.
    Second, the Department proposes to provide illustrative examples of 
the scope of business models allowed as a ``vending facility'' to 
address how the types of business models named in the statute apply in 
a modern context. In proposing these changes, the Department studied 
the legislative history of the R-S Act, dating back to its enactment in 
1936. While Congress took care to identify specific business models and 
articles that are permissible under the RSVFP, Congress also made clear 
in legislative history and in the text of the statute that neither the 
term ``vending facility'' nor the term ``articles'' were intended to be 
construed narrowly. For example, the 1974 legislative history made 
clear that the concept of a ``vending facility'' was meant to reflect 
the capability of blind vendors to operate extensive and sophisticated 
businesses. (Sen. Rep. 93-937 at 25 (June 17, 1974).) At the time, 
Congress expressed concern about the deployment of technological 
advances that competed with vending stands, specifically the vending 
machine, to circumvent ``the intent and spirit of the Congress'' when 
it passed the R-S Act. (Sen. Rep. 93-937 at 6.) Congress amended the 
statute with the goal of protecting blind vendors ``in light of the new 
inventions.'' Id. The best reading of the statute is that Congress 
intended for the term ``vending facility'' to be construed broadly and 
in a manner capable of protecting the interests of blind vendors 
through potential evolutions in the concept of vending.
    With respect to the articles to be sold, Congress not only added 
the catch-all phrase of ``other articles'' to signal that the list 
mentioned in the statutory definition of ``vending facility'' is not 
exhaustive, but also included legislative history with the 1974 
amendments to describe its intent. With these proposed clarifying 
changes, the Department believes the RSVFP regulations would be applied 
more consistently nationwide over time as the vending industry evolves 
and customer needs and demands for vended articles change, while 
staying faithful to the statutory text and congressional intent.
    Third, the Department proposes to make clear that ``a vending 
machine'' dispenses only ``articles,'' not services. In so doing, the 
Department would ensure the RSVFP regulations are consistent with 
Congressional intent that vending machines would dispense articles of a 
tangible nature while still ensuring the continued advancement of 
economic opportunities for blind vendors. Under the proposed 
regulation, blind vendors could continue to provide services at vending 
facilities and thus, the proposed regulation is not intended to limit 
any currently known vending opportunities with respect to services.
    In addition to the above three overarching proposed changes to the 
RSVFP regulations, the Department proposes to make corresponding 
changes to 34 CFR 395.30. In so doing, the Department would ensure that 
the proposed updated definition of ``vending facility'' would apply to 
those

[[Page 2555]]

RSVFP vending facilities on NPS and NASA properties.
    Last, the Department proposes to add a provision to reflect the 
Department's intent that the regulatory provisions in the RSVFP 
regulations are severable.
    We believe that these proposed regulations would add clarity to the 
RSVFP with respect to advances in vending technology and new vending 
opportunities and minimize confusion for Federal agencies, State 
agencies that administer the RSVFP, and blind vendors. With this added 
clarity, we anticipate there would be increased consistency among the 
SLAs in terms of the implementation of the RSVFP nationwide, 
particularly with the types of vending facility opportunities available 
and the articles sold nationwide by blind vendors. In so doing, we 
believe these proposed regulations would further the legislative 
purpose of the R-S Act to assist individuals who are blind to become 
self-supporting.

Significant Proposed Regulations

Articles

    Statute: The statute uses the term ``article'' in the definition of 
``vending facility'' at 20 U.S.C. 107e(7) and 107a(a)(5), describing 
what blind vendors can sell--newspapers, periodicals, confections, 
tobacco products, foods, beverages, and other articles or services, as 
well as chances for any lottery authorized by State law and conducted 
by an agency of a State.
    Current Regulations: The term ``article'' is used in the regulatory 
definition of ``vending facility'' at 34 CFR 395.1(x) in the same way 
it is used in the statute. It is also used in the definition of 
``vending machine'' at 34 CFR 395.1(y) to refer to what a vending 
machine can dispense--``articles or services.''
    Proposed Regulations: The Department proposes to amend 34 CFR 395.1 
by adding a new paragraph (cc) that would define ``articles'' as items 
of tangible personal property that can be felt or touched by an 
individual and can be physically relocated. This proposed definition 
would apply throughout 34 CFR part 395, including as used in the 
definitions of ``vending facility'' and ``vending machine,'' Sec. Sec.  
395.1(x) and (y), respectively.
    Reasons: The Department proposes to define ``articles'' to clarify 
the definitions of ``vending facility'' and ``vending machine'' in 34 
CFR 395.1(x) and (y), respectively, since the term ``articles'' is used 
in both definitions but is undefined. For purposes of the RSVFP, there 
is a wide breadth of what could constitute ``articles'' that are 
dispensed automatically or manually and prepared on or off the premises 
in accordance with all applicable health laws. The proposed new 
definition would further clarify that the scope of articles dispensed 
or sold at vending facilities and by vending machines for purposes of 
the RSVFP are not, and should not be, limited to those articles 
traditionally found in blind-operated vending facilities, but rather, 
should be able to evolve with the times and customer needs and demands. 
See also ``Vending Facility'' and ``Vending Machine'' discussions 
below.
    In 1977, the Department promulgated final regulations which, among 
other things, defined terms applicable to the requirements of the R-S 
Act. (42 FR 15802 (Mar. 23, 1977).) In the preamble to the final 
regulations, the Department explained that the purpose of each 
definition was to facilitate the effective implementation of the R-S 
Act. Further, those definitions reflected the Department's belief and 
policy determination at the time of how to implement the statute's 
purpose.
    While it did not define the term ``articles'' in the 1977 
regulations, the Department determined that it was necessary to clarify 
the definition of ``vending machine'' for purposes of vending machine 
income distribution. The 1977 regulations, under which the RSVFP is 
currently operating, expressly excluded two types of machines from the 
definition of ``vending machine'': machines providing services of a 
recreational nature and pay telephones. While the Department 
acknowledged public comments in support of a broader interpretation of 
``articles or services'' appropriate for dispensing by vending machines 
for vending machine income under the RSVFP, the Department's rationale 
at that time for excluding certain types of machines from vending 
machine income sharing requirements was that Congress had not intended 
to change the scope of ``articles or services'' beyond those 
``traditionally found in blind-operated vending facilities.'' (Id.) 
\14\ This interpretation in the 1977 preamble has engendered confusion 
for Federal and State agencies as well as blind vendors and led some 
agencies and entities to adopt a limited concept of covered ``articles 
or services'' that could be dispensed by vending facilities based on 
the Department's interpretation at that time of the statute's text 
regarding vending machine income sharing and a static understanding of 
blind vendor operations as of 1974.
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    \14\ The 1977 regulations included a third exemption from the 
definition of a vending machine--machines operated by the U.S. 
Postal Service for the sale of postage stamps or other postal 
products and services. However, that exemption was not based on the 
understanding that these articles or services were not traditionally 
found in blind-operated vending facilities, but that these machines 
were ``uniquely supportive of the United States Postal Service 
mission.'' (Id.)
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    The trend of decreasing blind vendor opportunities, the majority of 
which are for food services, and the evolution of RSVFP vending 
facilities and vending machines selling a wide variety of articles over 
the years has prompted the Department to take a fresh look at the 
statutory interpretation underpinning its 1977 regulations. The 
Department no longer believes that this aspect of the 1977 regulations 
reflect the best reading of the statute and so is currently proposing 
changes that would specify that blind vendors are not limited to the 
vending opportunities that were traditionally found on Federal and 
other property in 1974.
    This view is informed by the Department's review of the statutory 
language allowing for the sale of ``other articles and services'' in 
addition to specific items listed, legislative history that reveals 
Congress intended this language to ``include anything susceptible of 
being sold by blind vendors'' (Sen. Rep. at 25), the evolution of the 
business enterprise programs (BEPs) \15\ to include emerging industry 
technologies, and the Department's understanding of the state of 
employment opportunities for blind vendors on Federal and other 
property.
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    \15\ A Business Enterprise Program (BEP) is authorized under 
section 103(b)(1) of the Rehabilitation Act at 29 U.S.C. 723(b)(1) 
and 34 CFR 361.49(a)(5). The statute refers to ``any type of small 
business operated by individuals with significant disabilities the 
operation of which can be improved by management services and 
supervision provided by the designated State agency, the provision 
of such services and supervision, along or together with the 
acquisition by the designated State agency of vending facilities or 
other equipment and initial stocks and supplies.'' While States can 
create BEPs other than the RSVFP, RSA is not aware of such other 
BEPs and recognizes that States typically refer to the operation of 
the RSVFP in their State synonymously with the operation of their 
BEP.
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    The Department's view of ``articles'' as tangible personal property 
is informed by the ordinary meaning of terms that make up how 
``articles'' was understood in 1974 when Congress amended the R-S Act. 
The term ``article'' was defined as ``a particular object or substance, 
a material thing or a class of things.'' See Black's Law Dictionary 
(4th ed. 1968) ``Object'' was ``anything which comes within the 
cognizance or scrutiny of the senses, especially anything tangible or 
visible.'' Id. Finally, ``tangible'' was defined as ``capable of being 
touched; also,

[[Page 2556]]

perceptible to the touch; tactile; palpable, and as being capable of 
being possessed or realized. Id. Based on the meaning of the words used 
in the definition of ``article'' and the context of how ``articles'' is 
used in the statute, the Department believes that the proposed 
definition of ``articles'' as items of tangible personal property that 
can be felt or touched by an individual and can be physically relocated 
reflects the best reading of the R-S Act.
    Furthermore, the legislative history to the 1974 amendments to the 
R-S Act supports the breadth which Congress intended for the RSVFP with 
respect to the types of items to be sold: ``[T]he kinds of articles 
which may be sold by blind vendors is expanded to include anything 
susceptible of being sold by blind vendors. There is no reason, 
physical or otherwise, to limit the kinds of articles a blind vendor 
may sell.'' (emphasis added.) (Sen. Rep. 93-937, 25 (1974)). Congress 
wanted to protect the livelihoods, rights, and economic interests of 
blind vendors on Federal property. (100 Cong. Rec. 9946 (1954), Sen. 
Rep. 93-937 (1974)).
    The Department believes the proposed regulations would better 
effectuate Congressional intent to support the economic interest of 
blind vendors by recognizing the evolution of the wide range of 
articles that can be sold through vending facilities and vending 
machines on Federal and other property. In fact, articles sold in RSVFP 
vending machines and vending facilities have continued to evolve beyond 
those traditionally sold by blind vendors in the years preceding the 
1977 regulations. For example, the Department believes, based upon 
stakeholder feedback and the Department's observations, that blind 
vendors operate, and have been operating, vending facilities and 
vending machines that dispense a variety of items in addition to those 
listed in the statute, including souvenirs, cosmetics, flowers, 
electronics, and personal care and health products, which may include 
over-the-counter, but not prescription, medications.
    Therefore, through these proposed regulations, the Department is 
reconsidering the position taken in the preamble of the 1977 
regulations that limited the articles and services blind vendors could 
sell to only those traditionally dispensed by blind vendors in the 
years preceding 1977. We no longer believe that interpretation best 
reflects the intent of Congress, as reflected in the text Congress 
enacted nor does it best effectuate the purposes of the R-S Act or 
reflect the actual vending of articles done by many licensed blind 
vendors under the RSVFP.
    Given the evolution of RSVFP vending facilities and vending 
machines over the years, the Department has determined it necessary to 
amend the RSVFP regulations to codify the Department's interpretation 
regarding the wide array of what vendors can sell under the statute 
\16\ and to address the questions raised by SLAs, blind vendors, and 
other stakeholders. Through this proposed definition, the Department 
would update the regulation to reflect the breadth of articles 
currently sold under the RSVFP by blind vendors through vending 
machines and vending facilities and clarify the scope of articles that 
could be sold by blind vendors under the RSVFP as the industry 
continues to evolve.
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    \16\ See RSA-TAC-24-03 ``Use of VR program funds for initial 
stocks and supplies and initial operating expenses for blind vendors 
under the Randolph-Sheppard vending facilities program'' and TAC-24-
06 ``Allowable Costs for Vending Facilities and Equipment for 
Vendors under the Randolph-Sheppard Vending Facility Program.''
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    The Department intends to clarify that it interprets ``articles'' 
broadly. However, this proposed definition should not be construed to 
require any specific item be sold on Federal property or, equally 
important, require only certain articles be sold on Federal property. 
The permit process \17\ to operate a vending facility other than a 
cafeteria and the contracting process for a cafeteria would not change 
and would still include the negotiation process between the Federal 
agency and the SLA to determine what types of articles will be sold on 
Federal property or between the State Department of Transportation and 
the SLA for purposes of highway rest areas. Rather, the proposed 
definition would clarify that vending facilities that sell a wide 
variety of ``articles'' would be subject to the same permit and 
contracting processes. This proposed definition would enable the RSVFP 
to evolve over time and, thus, continue to provide economic 
opportunities to blind vendors so they may be self-supporting both now 
and in the future.
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    \17\ 34 CFR 395.16.
---------------------------------------------------------------------------

    Therefore, the Department proposes to define ``articles'' as items 
of tangible personal property that can be felt or touched by an 
individual and can be physically relocated. This proposed definition 
reflects the best reading of the statute that Congress intended vending 
machines to dispense only articles of tangible personal property, as 
discussed later in this document where we discuss the proposed 
definition of the term ``vending machine.'' The Department's proposed 
definition is consistent with commonly-used definitions of 
``articles,'' specifically that they are goods,\18\ objects and items 
for sale.\19\ In analyzing the commonly-used definitions of 
``articles,'' the Department considered the individual terms used 
within those definitions, particularly ``goods,'' which is defined, in 
pertinent part, as an item of tangible personal property having value 
but usually excluding money, securities, and negotiable 
instruments.\20\
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    \18\ Merriam-Webster definition 4--a member of a class of things 
especially: an item of goods. https://www.merriam-webster.com/dictionary/article.
    \19\ Dictionary.com definition 2--an individual object, member, 
or portion of a class; an item or particular: an article of food; 
articles of clothing. Definition 4--an item for sale; commodity. 
https://www.dictionary.com/browse/article.
    \20\ Goods, Merriam-Webster Dictionary, entry-2--``personal 
property having intrinsic value but usually excluding money, 
securities, and negotiable instruments,'' ``something manufactured 
or produced for sale.'' https://www.merriam-webster.com/dictionary/good#dictionary.
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    To illustrate the breadth that the Department intends from the 
proposed definition, the Department also believes ``articles'' could 
include items such as flowers, personal care products (e.g., 
deodorants, toothpaste, hairbrushes and combs, and cosmetics), and 
electronics. As with the items named in the statute, these, too, can be 
felt, touched, and physically relocated, thereby constituting tangible 
personal property. The Department understands that many blind vendors 
are already dispensing these articles at their vending facilities or in 
their vending machines, but also that SLAs and blind vendors nationwide 
have not consistently interpreted ``articles'' this broadly.
    Therefore, the Department has determined these proposed 
regulations, and particularly this proposed definition, are necessary 
to ensure consistency with respect to the implementation of the RSVFP 
nationwide. See ``Vending Machine'' below for a more in-depth 
discussion of the scope of articles that could be dispensed by a 
vending machine under the RSVFP.

Vending Facility

    Statute: The definition of ``vending facility'' in 20 U.S.C. 
107e(7) means automatic vending machines, cafeterias, snack bars, cart 
services, shelters, counters, and such other appropriate auxiliary 
equipment necessary for the sale of the articles and services described 
in 20 U.S.C. 107a(a)(5) and which may be operated by blind licensees. 
Section 107a(a)(5) provides that RSA designate the State agency that

[[Page 2557]]

provides services to the blind to issue licenses to blind persons to 
operate vending facilities on Federal and other property in its State. 
The statute states that the vending facilities may sell newspapers, 
periodicals, confections, tobacco products, foods, beverages, and other 
articles or services dispensed automatically or manually and prepared 
on or off the premises in accordance with all the health laws, as 
determined by the State licensing agency. The 1974 amendments also 
added to the list of articles specifically identified the vending or 
exchange of chances for any lottery authorized by State law and 
conducted by an agency of the State.
    Current Regulations: 34 CFR 395.1(x) defines ``vending facility'' 
to mean automatic vending machines, cafeterias, snack bars, cart 
service, shelters, counters, and such other appropriate auxiliary 
equipment which may be operated by blind licensees and which is 
necessary for the sale of newspapers, periodicals, confections, tobacco 
products, foods, beverages, and other articles or services dispensed 
automatically or manually and prepared on or off the premises in 
accordance with all applicable health laws. It also added that vending 
facility includes the vending or exchange of changes for any lottery 
authorized by State law and conducted by an agency of a State within 
such State.
    Proposed Regulations: The Department proposes to amend the 
definition of ``vending facility'' in section 395.1(x) in two 
substantive ways by--(1) reinforcing other regulatory requirements that 
vending facilities are operated by blind licensees pursuant to a permit 
or contract, and (2) adding illustrative examples of vending facilities 
to further interpret the terms ``snack bars,'' ``cart services,'' 
``shelters,'' and ``counters'' used in the statutory definition of 
``vending facility'' as including micro markets, laundry and catering 
establishments, gift shops, retail stores, and temporary or mobile 
establishments such as pop-up stands and food trucks.
    The Department also proposes to make several non-substantive 
wording and organizational revisions that do not change the meaning of 
the definition but are intended to add clarity and minimize confusion. 
Specifically, the Department proposes to--(1) add the word ``their'' 
before ``auxiliary equipment,'' to clarify that appropriate auxiliary 
equipment alone is not a ``vending facility'' but rather a component of 
a ``vending facility;'' (2) move mention of the lottery to be near the 
other articles sold; (3) remove the phrase ``and including the vending 
or exchange of changes'' when describing the authorization to sell 
lottery tickets; (4) restructure the definition from a single original 
paragraph to multiple paragraphs to improve clarity and readability; 
and (5) make other minor wording changes necessitated by the 
restructuring of the definition.
    Reasons: Consistent with the statutory language and the legislative 
history, the Department proposes to amend the definition of ``vending 
facility'' in Sec.  395.1(x) to accomplish two critical purposes--to 
clarify which vending opportunities on Federal and other property 
constitute a ``vending facility'' for purposes of the RSVFP; and add 
illustrative examples to provide clarity to ensure that the definition 
of ``vending facility'' can evolve with technology and the capabilities 
of blind vendors. The Department proposes other non-substantive wording 
and restructuring changes throughout to add clarity for Federal and 
State agencies administering the RSVFP and for blind vendors operating 
vending facilities.
    To ensure consistent implementation of the priority for blind 
vendors on Federal property nationwide, the R-S Act (20 U.S.C. 107e(7)) 
includes a definition of ``vending facility'' through which Congress 
establishes a general framework for the operation of these facilities 
and the types of articles and services to be sold or dispensed. To 
clarify this statutory purpose in regulation and address numerous 
inquiries to which the Department has responded in a variety of 
settings at the Federal and State levels, the Department proposes to 
amend the definition of ``vending facility'' at 34 CFR 395.1(x) to add 
language clarifying the types of business opportunities on Federal or 
other property that constitute a ``vending facility'' for purposes of 
the RSVFP.
    First, the Department proposes to add a clause stating that vending 
facilities may be operated by blind licensees pursuant to a contract or 
permit. The R-S Act requires cafeterias, which are a type of ``vending 
facility,'' to be operated pursuant to a contract.\21\ All other 
vending facilities are established by permit issued by the appropriate 
Federal agency to the SLA in accordance with the process outlined in 34 
CFR 395.16. While these requirements are already codified in separate 
sections of the R-S Act regulations, the Department believes adding 
this clause to the vending facility definition will bring added clarity 
to stakeholders and the public by reinforcing those requirements in the 
definition of ``vending facility'' itself. The changes to this 
definition are not intended to revise any requirements of 34 CFR 395.16 
and 395.33.
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    \21\ 20 U.S.C. 107d-3(e); 34 CFR 395.33.
---------------------------------------------------------------------------

    The second purpose of the substantive changes to the vending 
facility definition is to provide additional examples of vending 
facilities to add clarity to the vending models in the definition, 
thereby ensuring evolution of vending facilities with technology and 
the capabilities of blind vendors. This proposed change would be 
consistent with existing guidance addressing modern illustrative 
examples of statutory terms used in the definition of ``vending 
facility.''
    Specifically, the R-S Act defines ``vending facility'' at 20 U.S.C. 
107e(7), in addition to vending machines and cafeterias, to include 
snack bars, cart services, shelters, and counters. Since the 
regulations were promulgated, new technologies and updated business 
models of those listed in the definition have emerged for meeting 
customer demand for articles and services on Federal and other 
property. Consequently, the Department has received questions from SLAs 
and other stakeholders about whether and to what extent the concept of 
a ``vending facility'' encompasses modern iterations of facilities 
that, like those articulated in the statute, sell or dispense articles 
and services of the type contemplated by the statute. Several 
stakeholders expressed concern that the current regulations do not 
clearly address the applicability of the definition of ``vending 
facility'' to modern vending operations and noted the risk of 
inconsistent application of the R-S priority across agencies for 
certain types of vending operations not expressly mentioned.
    In the Department's view, the best reading of the statutory 
definition of a ``vending facility'' encompasses modern iterations of 
facilities enumerated in the statute, consistent with the 1974 
amendments to the R-S Act and the shift in the statute away from the 
term ``vending stand'' to ``vending facility.'' The text of the statute 
provides that automatic vending machines, cafeterias, snack bars, cart 
services, shelters, and counters are all vending facilities and leaves 
it to the Department to implement through regulation how those vending 
business models dispense articles and services. As explained in the 
legislative history, the concept of a ``vending facility'' was meant to 
reflect the capability of blind vendors to operate extensive and 
sophisticated businesses. (Sen. Rep. 93-937 at 25.) The Committee 
report accompanying the 1974 amendments stated that the term ``vending 
facility'' was intended to

[[Page 2558]]

encompass the enumerated examples ``as well as the stereotypical kiosk 
type stand.'' Id. The Department believes it would be contrary to the 
goals of the statute to construe the term ``vending facility'' narrowly 
or in a manner that limits or restricts the application of the priority 
afforded to blind vendors to the evolution of vending operations on 
Federal property.
    For that reason, the Department proposes to add a non-exhaustive 
list of current examples of such facilities to demonstrate that the 
best reading of the terms ``cafeterias, snack bars, cart services, 
shelters, and counters'' captures a broad range of vending businesses. 
Based on interactions RSA held with SLAs during FYs 2022 and 2023, many 
SLAs indicated that blind vendors are already operating such modern 
vending facilities including, but not limited to, micro markets, 
laundry and catering establishments, retail stores (such as gift shops, 
and convenience stores), and temporary or mobile establishments such as 
food trucks and pop-up stands.\22\ Guidance issued in 2024 addressed 
some modern iterations of the vending facilities identified in the 
statute, and the proposed regulations would provide additional clarity 
on this issue.
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    \22\ Among the resources listed on the RSA website is a template 
for permits to operate vending facilities. The permit template 
contemplates vending facilities such as pop-up food services and 
food trucks. See https://rsa.ed.gov/sites/default/files/programs/randolph-sheppard/UPDATE_-_RS_Permit_3-09-21%20(1).pdf, Attachment 
G, Paragraph J.
---------------------------------------------------------------------------

    As an example, micro markets are unmanned retail environments where 
customers can engage with products on shelves and in open coolers with 
cash or electronic payment methods.\23\ Blind vendors are increasingly 
choosing to operate micro markets as more versatile vending facilities 
due to the wider range of product offerings generally available than 
vending machines and the relatively low costs of running these types of 
facilities compared to other manned alternatives, like snack bars. In 
addition, they are established by permits as opposed to contracts for 
cafeterias, and, unlike cafeterias and other manned retail facilities, 
can be in operation 24 hours a day without staff.
---------------------------------------------------------------------------

    \23\ National Automatic Merchandising Association, https://namanow.org/convenience-services/micro-markets/.
---------------------------------------------------------------------------

    As noted in section 107a(a)(5) of the R-S Act, articles and 
services sold include, but are not limited to, ``foods, beverages, and 
other articles or services dispensed automatically or manually and 
prepared on or off the premises.'' (20 U.S.C. 107a(a)(5).) (emphasis 
added.) Consistent with how the statute permits food and beverages 
dispensed at the Federal agency's location to be prepared off the 
premises, such as by the manufacturers of those products, blind vendors 
use similar business models to provide other articles and services on 
the Federal property that are prepared off the premises, such as 
laundry and catering establishments.
    Laundry services involve distributing laundered articles at the 
agency's location (dispensing automatically or manually) after washing 
and drying items at a laundry establishment offsite (prepared on or off 
the premises). Similarly, catering establishments prepare food and 
beverages (i.e., the articles to be dispensed through the vending 
facility) off the premises, as it is permitted to do, and then delivers 
the food and beverages to be dispensed (i.e., served) on the premises. 
Since the 1974 amendments, the R-S Act specifically has included 
articles and services prepared off the premises. Including laundry and 
catering establishments as illustrative examples in the proposed 
definition of ``vending facility'' gives meaning to the words 
``prepared on or off the premises'' which appear in the statute, is 
consistent with guidance provided to stakeholders over the years and 
improves consistency.
    In addition, SLAs and blind vendors are exploring the feasibility 
of operating food trucks as viable business opportunities due to the 
mobile nature of food trucks, which would allow them to meet the demand 
for vending facilities on large Federal properties such as military 
bases and national parks. The proposed inclusion of illustrative 
examples of modern types of vending facilities would clarify that food 
trucks can be vending facilities under the R-S Act.
    Retail stores \24\ include convenience stores open to the public or 
agency employees that may sell a wide array of articles, beyond just 
food and beverages. Gift shops provide articles, which include 
souvenirs such as tee shirts, key chains, water bottles, and other 
items such as cosmetics and electronics.
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    \24\ Retail stores established under the R-S Act's priority as 
vending facilities are distinct from the military commissaries and 
exchange stores (together, the exchange system) currently operating 
under the authority of Title 10 of the U.S. Code, that sell at 
reduced prices, food and other merchandise to active duty personnel 
and other persons authorized to use the system. The R-S Act and 
Title 10 can be implemented in such a way that the military can 
further the purposes of both the RSVFP and the exchange systems on 
DOD property.
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    Including these illustrative examples in the proposed regulation of 
more modern versions of vending facilities already listed would clarify 
the permissibility of the methods for selling or dispensing articles 
and services that have already evolved in some States implementing the 
RSVFP, thereby ensuring consistency across all State RSVFPs. These 
business models have become increasingly prevalent on Federal and other 
property. If ``vending facility'' were to be interpreted narrowly to 
include only those business models listed in the statute as they 
existed in 1974, these more modern ways of vending articles and 
services could not be considered vending facilities to which the R-S 
Act priority may be afforded. This would likely result in these 
business models being operated by contractors outside of the RSVFP and 
thus, competing directly with, or even replacing, the traditional 
cafeterias, vending machines, snack bars, and counters operated by 
blind vendors. This result would be inconsistent with the 1974 
amendments, which made clear that vending facilities should encompass a 
broad array of facilities and that blind vendors should receive a 
priority in the operation of those facilities on Federal property.
    To clarify, these examples of vending facilities could dispense any 
article, as proposed to be defined in 395.1(cc) or service. The 
Department believes the proposed changes represent the best 
interpretation of the statute, which is to advance employment 
opportunities for blind vendors. The Department recognizes that there 
may be modern examples of vending facilities other than those listed in 
these proposed regulations and, accordingly, invites comment as to 
whether the Department should incorporate other illustrative examples 
in the regulatory text or further clarify how the statutory examples of 
a ``vending facility'' apply to modern vending operations.
    The Department of Education invites comments from the public and 
key stakeholders who ensure quality-of-life programs and provide 
support for the military community. The proposed definitions of 
``articles'' and ``vending facilities,'' which would apply the R-S Act 
priority to blind vendors for various retail businesses on Department 
of Defense installations, could reduce the financial support that the 
military resale system provides to military members and their families. 
The Department of Education invites comment, particularly on the 
potential for the proposal to impact revenue streams that support 
essential quality-of-life benefits for military members and their 
families and seeks input on alternative definitions of the terms 
``articles'' and ``vending facilities'' that could better support the 
existence of the military resale systems and blind vendors on DoD 
property.

[[Page 2559]]

    Finally, the Department proposes other non-substantive, solely 
technical changes intended to add clarity. Specifically, the Department 
proposes to add the word ``their'' to modify ``appropriate auxiliary 
equipment,'' to clarify that appropriate auxiliary equipment, by 
itself, does not constitute a ``vending facility,'' but rather is a 
component of a ``vending facility.''
    The Department also proposes to revise text describing a lottery in 
the current regulations in two ways. The Department proposes to remove 
the phrase ``and including the vending or exchange of changes'' when 
describing the authorization to sell lottery tickets. This change would 
remove a typographical error that has existed since 1977 when the 
regulations were promulgated. Specifically, ``changes'' was supposed to 
read ``chances'' as provided in the statute and removing the phrase 
would improve readability of the sentence. The Department intends this 
change to be technical, and not substantive.
    The Department also proposes to move the mention of the lottery, so 
it is included with the other specified list of articles sold by blind 
vendors. This phrase is at the end of the current regulation, separate 
from the rest of the specified list of articles, thereby creating a 
potential for confusion as to the significance of its isolation from 
the other articles. As with the other proposed non-substantive changes, 
the Department intends this change to be solely technical in nature.
    The Department also proposes to restructure the definition from a 
single paragraph to multiple paragraphs. In so doing, most of the 
current regulatory definition content remains intact, with only the 
three minor changes just described, and the new text added in new 
paragraphs, thereby improving clarity and readability, and reducing 
confusion for those administering the RSVFP.

Vending Machine

    Statute: The statute uses the term vending machine throughout 20 
U.S.C. 107, et seq. However, the section most pertinent is the 
inclusion of ``vending machine'' as a type of ``vending facility'' in 
20 U.S.C. 107e(7) where vending facility includes automatic vending 
machines that may sell newspapers, periodicals, confections, tobacco 
products, foods, beverages, lottery, and other articles or services.
    Current Regulations: 34 CFR 395.1(y) defines ``vending machine'' 
for the purpose of assigning vending machine income under the 
regulations in part 395. The term means a coin or currency operated 
machine that dispenses articles or services. However, machines operated 
by the United States Postal Service for the sale of stamps and other 
postal products and services, recreational machines, and pay telephones 
are excluded.
    Proposed Regulations: The Department proposes to amend the 
definition of ``vending machine'' in section 395.1(y) by--(1) removing 
``for purposes of assigning vending machine income under this part;'' 
(2) removing ``services'' as that which can be dispensed by a ``vending 
machine;'' (3) replacing ``coin or currency'' with ``cash'' and adding 
``electronic payment methods'' as allowable payment methods; (4) 
removing the specific exclusion for recreational machines and pay 
telephones; and (5) replacing the term ``postal machine'' with ``self-
serve postal center.'' The Department also proposes to reorganize the 
definition from a single paragraph to multiple paragraphs to improve 
readability and clarity and make other technical, non-substantive 
changes.
    Reasons: The Department published proposed RSVFP regulations in 
1975 that sought to define ``vending machine'' because the statute does 
not define this term. (40 FR 59408 (Dec. 23, 1975).) The proposed 
regulations at that time defined ``vending machine'' for purposes of 
vending machine income to mean ``an unattended coin or currency 
operated machine which dispenses any articles automatically or manually 
or which dispense services when such services are authorized under a 
permit to be sold by a blind licensee, except that those machines 
operated by the United States Postal Service for the sale of postage 
stamps or other postal products and services shall not be considered to 
be vending machines.'' (40 FR 59409.) The proposed regulations at that 
time did not include any explanation or rationale in support of the 
definition.
    The preamble of the 1977 final regulations states that the purpose 
of the regulatory definitions, including the definition of ``vending 
machine,'' is to facilitate the effective implementation of the R-S Act 
through providing precise interpretations of complex concepts. (42 FR 
15802.) The Department's proposed definition of ``vending machine'' 
would govern the types of machines subject to the priority afforded to 
blind vendors on Federal property \25\ and any applicable vending 
machine income sharing provisions.
---------------------------------------------------------------------------

    \25\ In addition to the priority to operate vending machines on 
Federal property under the R-S Act, the Surface Transportation Act 
requires that in placing vending machines at highway rest areas, 
States give priority to vending machines operated under the RSVFP 
(23 U.S.C. 111(c)).
---------------------------------------------------------------------------

    The Department proposes to revise the definition of ``vending 
machine'' in five substantive ways and to make other technical, non-
substantive changes as described separately below to reflect the 
realities of ever-changing technology and the employment and economic 
opportunities for blind vendors.
    First, we propose to amend the definition of ``vending machine'' by 
removing ``for purposes of assigning vending machine income under this 
part'' because that qualifier could limit the application of the term 
``vending machine'' throughout part 395. The Department addressed the 
definition of vending machine only in the context of the vending 
machine income provisions of part 395 to address the concerns raised to 
the 1975 NPRM. (42 FR 15804-15807 (Mar 23, 1977)). However, the current 
definition of ``vending machine'' created confusion as to whether the 
definition applies throughout part 395 or is limited only to the 
vending machine income provisions. Therefore, the Department believes 
there is a need for a general definition to provide clarity and ensure 
consistency in the application of all provisions under the R-S Act. In 
deleting this phrase, the Department would make clear that the 
definition of ``vending machine'' would apply throughout part 395.
    Second, the Department proposes to remove ``services'' from the 
definition of ``vending machine.'' Removing ``services'' from the 
definition of ``vending machine'' reflects the Department's current 
view that Congress intended the term ``vending machine,'' as used in 
the definitions of ``vending facility'' and ``vending machine income'' 
in the R-S Act to be equipment that dispenses only articles of a 
tangible nature. While the statutory definition of ``vending facility'' 
is broad, it uses the disjunctive in describing ``other articles or 
services'' related to what can be vended under the RSVFP to make it 
clear that a vending facility need not sell both articles and services 
to qualify as such. 20 U.S.C. 107(a)(5). The R-S Act defines a 
``vending facility'' to include a variety of business models, including 
the ``vending machine'' business model, but only imposes income sharing 
requirements under the RSVFP on the income earned through vending 
machines. See generally, 20 U.S.C. 107d-3.
    Congress made clear that while vending machines could operate 
separately as a vending facility, there were unique aspects to vending 
machines and the history of their use in Federal agencies that make 
them

[[Page 2560]]

distinct from the other business models described in the statute.
    The Department's current view is also consistent with the statutory 
definition of vending machine income at 20 U.S.C. 107e(8) as ``receipts 
from vending machine operations on Federal property, after cost of 
goods sold.'' As noted in our above discussion of ``articles,'' the 
proposed definition is based on commonly used definitions of 
``articles,'' that describe ``articles'' as goods,\26\ objects and 
items for sale.\27\ ``Goods'' is commonly defined as an item of 
tangible personal property having value but usually excluding money, 
securities, and negotiable instruments.\28\ Further, nothing in the 
statutory definition of vending machine income refers to earnings from 
the sale of services. For purposes related to an entity's income, 
``cost of services sold'' is typically a distinct concept from ``costs 
of goods sold.'' \29\ Where Congress has intended for provisions to 
encompass service-related sales, it has used the term ``costs of 
services sold.'' \30\ The Department has similarly used the term 
``costs of services'' in its regulations concerning income under the 
State VR program.\31\ Therefore, when Congress used the phrase ``cost 
of goods'' in the definition of vending machine income, it is 
reasonable to conclude that it referred to the cost of the articles 
sold in vending machines.\32\
---------------------------------------------------------------------------

    \26\ Merriam-Webster definition 4--a member of a class of things 
especially: an item of goods. https://www.merriam-webster.com/dictionary/article.
    \27\ Dictionary.com definition 2--an individual object, member, 
or portion of a class; an item or particular: an article of food; 
articles of clothing. Definition 4--an item for sale; commodity. 
https://www.dictionary.com/browse/article.
    \28\ Goods, Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/good#dictionary-entry-2 ``personal property 
having intrinsic value but usually excluding money, securities, and 
negotiable instruments,'' ``something manufactured or produced for 
sale.''
    \29\ See, e.g., Bentancourt, Roger R. Chapter 4: Distribution 
services, Technological Change and the Evolution of Retailing and 
Distribution in the Twenty-First Century, Handbook on the Economics 
of Retailing and Distribution, https://www.econ.umd.edu/sites/www.econ.umd.edu/files/pubs/04%20-%20Chapter%204%20-%20Betancourt.pdf. (Indicates when services are sold the term ``cost 
of services sold'' should be used in place of ``costs of goods 
sold.'')
    \30\ See, e.g., Public Law 108-136 (using the term ``costs of 
services sold'' when referring to an intranet contract).
    \31\ See 34 CFR 361.63(b). OMB and Health and Human Services' 
regulations also separately define ``costs of services sold'' in 
various provisions. See 2 CFR 200.1 (definition of central service 
cost allocation plan); 42 CFR 414.1465 (physician-focused payment 
models).
    \32\ 20 U.S.C. 107e(8).
---------------------------------------------------------------------------

    When the Department first defined ``vending machine for purposes of 
vending machine income'' in 1977, it included the reference to 
``articles or services,'' used in the definition of ``vending 
facility'' when applying it to the definition of ``vending machine,'' 
without any discussion in the preamble, or without examples of RSVFP 
vending machines that dispense services. While there was a lengthy 
discussion in the preamble to the final regulations regarding the large 
number of comments received about vending machine income, the only 
mention of machines that dispense services occurs with the exclusion 
from the definition of a vending machine, specifically ``pinball 
machines, telephones, perfume spray machines, and jukeboxes.'' 42 FR 
15802, 15806.
    Finally, the Department does not believe this proposed change would 
significantly disadvantage blind vendors in the RSVFP, because the 
Department is not aware, based upon stakeholder feedback and the 
Department's observations, of any vending machines, past or present, 
operated under the RSVFP, that dispense services. Moreover, should a 
blind vendor choose to dispense a service via a machine, the vendor 
could still do so within a vending facility.
    We invite public comment on the proposed removal of ``services'' 
from the vending machine definition, including the potential impact of 
this proposed change on the RSVFP.
    Third, the Department proposes to revise the listed payment methods 
in the current definition from ``coin or currency'' to ``cash and 
electronic payment methods'' to provide clarity and reflect more 
current methods of payment. The Department proposes to replace ``coin 
or currency'' with the term ``cash,'' to incorporate both coin and 
currency as payment methods and streamline the regulatory text. The 
proposed revision also would include electronic payment methods, which 
are a common payment method in the 21st century.\33\ The term 
``electronic payment methods'' would be intended to encompass a range 
of non-cash transactions, including credit card, debit card, and mobile 
payments. Examples of mobile payment methods include mobile wallets, 
applications on electronic devices, such as cell phones or tablet 
computers for the transfer of funds, and mobile or wireless credit card 
readers. The value of these contactless payment transactions is 
expected to reach $10 trillion globally by 2027, an increase from $4.2 
trillion in 2022. It is anticipated that contactless point of sales 
will be the key driver of contactless transactions over the next five 
years.\34\
---------------------------------------------------------------------------

    \33\ The Evolution of the Electronic Payment System Until 2020 
(TokenEx, Inc., Jan. 6, 2020). Further information can be found at 
the following website: https://www.tokenex.com/blog/evolution-electronic-payment-systems-until-2020.
    \34\ Contactless Payments Transaction Values to Surpass $10 
Trillion Globally by 2027(Juniper Research, 2022). https://www.juniperresearch.com/press/contactless-payments-transaction-values-to-surpass./
---------------------------------------------------------------------------

    The Department's proposed use of ``cash or electronic payment 
methods'' would reflect the changing customer demand and industry 
standards for the use of vending machines under the RSVFP. Further, the 
Department recognizes that there may be additional modern payment 
methods other than those listed in these proposed regulations and 
accordingly invites comments on whether we should incorporate other 
examples of payment methods used in connection with a ``vending 
machine.''
    Fourth, we propose to remove mention of the exemption for 
recreational machines and pay telephones from the proposed definition 
of ``vending machine'' since, under the proposed definition, no 
machines that dispense services would be included, making a specific 
exemption for these machines unnecessary. In the 1977 regulations, the 
Department acknowledged that pay telephones and recreational or 
amusement machines were frequently found on Federal property at the 
time. However, the Department took the position, at that time, that 
such machines were outside the purview of the R-S Act, as amended, 
because ``such machines [had] traditionally not been located in vending 
facilities operated by blind vendors.'' (42 FR at 15806-07.)
    The proposed definition would remove mention of the specific 
exclusion of these machines because, we no longer believe ``vending 
machines'' should be defined to include machines that dispense 
services. To that end, recreational services provided by machines and 
pay telephones, which provide communications and entertainment 
services, would not be included in the proposed definition of ``vending 
machine'' because they would fall outside the proposed definition of 
``vending machine.''
    Fifth, while we believe it is no longer necessary to exempt 
recreational machines and pay telephones from the definition of 
``vending machine'', we do propose to keep the exclusion for the U.S. 
Postal Service machines that dispense postage stamps or other postal 
products. Our last proposed substantive change to the definition of 
``vending machine,'' would update the language related to this 
exemption by removing the word ``machine'' and replacing it

[[Page 2561]]

with ``self-serve postal center.'' The phrase ``self-serve postal 
center'' is defined in the postal service regulations at 39 CFR 
255.7(a)(2)(iii), as ``contain[ing] vending equipment for the sale of 
stamps and stamp items, and deposit boxes for parcels and letter 
mail.'' The Department views this change as technical in nature, but 
necessary, and is not intended to change the meaning of the exemption 
under the definition of ``vending machine,'' which has existed for 
nearly 50 years, for a ``self-serve postal center.''
    The Department believes that this exemption for a ``self-serve 
postal center'' remains necessary because, as we noted in 1977, certain 
machines located in post offices dispense purely postal products and 
are uniquely supportive of the United States Postal Service mission. In 
1970, Congress passed the Postal Reorganization Act, which designed the 
U.S. Postal Service to be self-sufficient and operate like a business 
using the sales of postage and postage-related products to cover its 
operating expenses. (39 U.S.C. 101(d).) Therefore, an exemption for the 
sale of postal products is still required in the definition of 
``vending machine'' for purposes of the R-S Act, since these self-serve 
postal centers dispense ``articles'' under our proposed definition.
    Finally, the Department proposes to restructure the definition from 
a single paragraph to multiple paragraphs. This proposed restructuring 
of the definition of ``vending machine'' necessitates that some of the 
current definition, along with the proposed amendments, be reorganized 
into multiple paragraphs with some minor technical wording changes.
    The Department believes this restructuring of the definition would 
improve clarity and readability, reducing confusion for those 
administering the RSVFP at both the Federal and State levels and for 
blind vendors operating vending machines under the RSVFP.

Location and Operation of Vending Facilities for Blind Vendors on 
Federal Property

    Statute: 20 U.S.C. 107(b) provides that in authorizing the 
operation of vending facilities on Federal property, priority shall be 
given to blind persons licensed by an SLA.
    Current Regulations: 34 CFR 395.30(c) requires that a priority be 
given to blind vendors in the operation of vending facilities in areas 
administered by the National Park Service (NPS) or the National 
Aeronautics and Space Administration (NASA). The priority in the 
awarding of contracts for the operation of concessions in such areas 
when such concessions provide accommodations, facilities, and services 
of a scope or of a character not generally available in vending 
facilities operated by blind vendors shall be given in accordance with 
the provisions of the Concession Policy Act (Pub. L. 98-249, 16 U.S.C. 
1) or the National Aeronautics and Space Act of 1958, as amended (Pub. 
L. 85-568, 42 U.S.C. 2473). Finally, the regulations provide that the 
provisions of the R-S Act and its regulations do not apply when all 
accommodations, facilities, or services in such areas are operated by a 
single responsible concessioner.
    Proposed Regulations: First, the Department proposes to substitute 
the words ``on Federal property'' for the words ``in areas'' in the 
phrase ``in areas administered by the National Park Service or National 
Aeronautics and Space Administration.'' Next, the Department proposes 
to remove the statement that ``when such concessions in areas 
administered by the NPS or NASA provide accommodations, facilities, and 
services of a scope or of a character not generally available in 
vending facilities operated by blind vendors, priority for contracts 
awarded shall be given in accordance with the provisions of the 
Concession Policy Act or the National Aeronautics and Space Act of 
1958, as amended.'' The proposed regulatory text would continue to 
apply the priority for blind vendors in the operation of vending 
facilities on Federal property administered by the NPS or NASA. We also 
propose to remove the statement that the provisions of the R-S Act and 
its regulations do ``not apply when all accommodations, facilities, or 
services in [areas administered by the NPS or NASA] are operated by a 
single responsible concessioner'' and replace it with a statement that 
makes clear to the extent that these agencies seek to provide visitor 
services that meet the definition of ``vending facility'' under 34 CFR 
395.1(x) and are not combined with visitor services that do not meet 
that definition, the priority for blind vendors applies.
    Reasons: The Department proposes this amendment to change the term 
``areas'' used in this section to the term ``Federal property'' because 
it is the appropriate term as defined under the Act. It is unclear why 
the 1977 regulations used the term ``areas'' in this section, rather 
than the statutorily defined term ``Federal property.'' However, the 
Department intends for the proposed change to ``Federal property'' to 
clarify that the priority for the operation of vending facilities 
applies to the Federal property administered by NPS and NASA, just as 
it does for other Federal agencies. We do not intend that this change 
will have any substantive impact.
    The Department also proposes to align the application of the 
priority on Federal property administered by the NPS and NASA with the 
proposed revisions to the definition of ``vending facility'' and to 
reflect that the Concession Policy Act and the National Aeronautics and 
Space Act of 1958 have been repealed and replaced by statutes that 
continue to include specific procedures for obtaining contractors that 
provide services to visitors on NPS and NASA property.\35\ The 
substance of the current regulation provides that blind vendors receive 
a priority at those NPS and NASA locations to operate vending 
facilities that meet the definition of ``vending facility'' under 34 
CFR 395.1(x). The proposed regulation would continue with the premise 
that the RSVFP priority to operate a vending facility as defined in 
these regulations would apply to the NPS and NASA property and 
implemented consistent with any specific statutory procedures for 
awarding permits and contracts. To the extent that the NPS and NASA, or 
any Federal agency, seeks to provide services through an establishment 
that does not meet the definition of ``vending facility'' under the R-S 
Act, the RSVFP priority would not apply, and the business establishment 
would fall outside the scope of the RSVFP.
---------------------------------------------------------------------------

    \35\ National Park Service Concessions Management Improvement 
Act of 1998, 54 U.S.C. 1001, et seq., provides that special 
contracting procedures are needed to preserve and conserve park 
resources. National Aeronautical Space Administration, 51 U.S.C. 
30304, requires the agency to annually set goals of providing at 
least 8 percent of the total value of prime and subcontracts to 
minority and disadvantaged small businesses.
---------------------------------------------------------------------------

    To further the Department's interpretation reflected throughout 
these proposed regulations that blind vendors are not limited to 
dispensing only articles and services traditionally sold by blind 
vendors, the Department is proposing to remove this limiting language 
from the current regulation addressing NPS and NASA property. As stated 
throughout this preamble, particularly in connection with the 
definitions of ``vending facility,'' ``vending machine,'' and 
``articles,'' the Department no longer believes the best interpretation 
of the statute limits blind vendors to selling articles and services 
traditionally sold by blind vendors. There is no such limitation in the 
language of the statute, and the

[[Page 2562]]

legislative history indicates that Congress intended a broader scope of 
what blind vendors could dispense; therefore, the Department believes 
the best reading of the statute does not limit blind vendors to selling 
only articles and services that had traditionally been sold under the 
RSVFP.
    Finally, we recognize that the NPS and NASA are uniquely situated 
in providing a variety of visitor services to customers visiting the 
Federal property administered by those agencies, unlike most Federal 
agencies. The proposed regulation would retain the concept that if the 
NPS or NASA combine into one contract visitor services that do not meet 
the RSVFP definition of vending facility with those that do meet the 
definition, the provisions of the R-S Act and its regulations do not 
apply. However, the Department proposes to clarify that to the extent 
that these agencies seek to provide visitor services through an 
establishment that meets the definition of ``vending facility'' under 
34 CFR 395.1(x) and are not combined with visitor services that do not 
fall within a covered vending facility, the RSVFP priority for blind 
vendors applies.

Severability

    Statute: None.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  395.50 would provide that, if 
any provision of part 395 or its application to any person, act, or 
practice is held invalid, the remainder of the part or the application 
of its provisions to any person, act, or practice shall not be affected 
thereby.
    Reasons: The Department believes that each of the proposed 
provisions discussed in this preamble would serve one or more 
important, related, but distinct, purposes. Each provision would 
provide a distinct value to blind vendors, State agencies that 
administer the RSVFP, the RSVFP generally, and the Federal and State 
governments separate from, and in addition to, the value provided by 
the other provisions. To best serve these purposes, we propose to 
include this administrative provision in the regulations to make clear 
that the regulations are designed to operate independently of each 
other and to convey the Department's intent that the potential 
invalidity of one provision should not affect the remainder of the 
provisions.

Executive Orders 12866, 13563, and 14094

Regulatory Impact Analysis
    Under Executive Order 12866, OMB must determine whether this 
regulatory action is ``significant'' and, therefore, subject to the 
requirements of the Executive order and subject to review by OMB. 
Section 3(f) of Executive Order 12866, as amended by Executive Order 
14094, defines a ``significant regulatory action'' as an action likely 
to result in a rule that may--
    (1) Have an annual effect on the economy of $200 million or more 
(adjusted every 3 years by the Administrator of OIRA for changes in 
gross domestic product), or adversely affect in a material way a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, territorial, or Tribal 
governments or communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise legal or policy issues for which centralized review would 
meaningfully further, the President's priorities, or the principles 
stated in the Executive order as specifically authorized in a timely 
manner by the Administrator of OIRA in each case.
    This proposed regulatory action is a significant regulatory action 
subject to review by OMB under section 3(f)(4) of Executive Order 
12866, as amended by Executive Order 14094. Accordingly, we have 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this proposed regulatory action and have determined 
that the benefits would justify the costs.
    We have also reviewed the proposed regulations under Executive 
Order 13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these proposed regulations only on a reasoned 
determination that their benefits justify any costs associated with 
them. Based on the analysis that follows, the Department believes that 
these regulations are consistent with the principles in Executive Order 
13563. We also have determined that this regulatory action does not 
unduly interfere with State, local, territorial, or Tribal governments 
in the exercise of their governmental functions.
    In accordance with Executive Orders 12866, 13563, and 14094, the 
Department has assessed the potential costs and benefits, both 
quantitative and qualitative, of this proposed regulatory action. The 
potential costs associated with this proposed regulatory action are 
those allowed by statutory requirements and those we have determined as 
necessary for administering the Department's programs and activities. 
This regulatory impact analysis discusses the need for regulatory 
action, the potential costs and benefits, assumptions, limitations, and 
data sources, as well as regulatory alternatives considered.
    Because the proposed regulations would only require States to make 
changes to the definitions in their State rules and procedures for the 
RSVFP to align those definitions with the changes in the Federal 
definitions, there is uncertainty as to how such changes would impact 
further revisions in State policies and procedures and to what extent, 
if the proposed regulations were finalized. Therefore, the Department 
is unable to determine whether this proposed regulatory action would 
have an annual effect on the economy of more than $200 million, but we 
anticipate the impact will be less than

[[Page 2563]]

that in the initial implementing years. We invite the public to comment 
on the economic impact of the proposed changes.

Background

1. Need for Regulatory Action

    Since the RSVFP regulations were promulgated in 1977, the business 
practices and technology associated with vending facilities and vending 
machines have advanced greatly. As discussed in the Background section, 
the number of blind vendors and the number of facilities operated by 
blind vendors, as well as gross sales for the program and gross income 
for blind vendors, have decreased substantially since 2013. For the 
RSVFP to remain a viable employment opportunity for blind individuals, 
the Department believes the definitions of ``vending facility'' and 
``vending machine'' must be amended to ensure consistency within the 
RSVFP and continued advancement of economic opportunities for blind 
vendors. These proposed regulations would reflect evolving trends in 
business practices and vending technology, consistent with the R-S 
Act's purpose of providing viable employment opportunities for blind 
individuals.
    To meet these needs, the Department proposes to amend the 
definitions of ``vending facility'' and ``vending machine'' in various 
ways and add a definition of ``articles'' to improve clarity and 
consistency for the implementation of the RSVFP. These proposed 
regulations would clarify and improve the current regulations, ensuring 
they reflect evolving business practices, vending technology, and 
commercial payment methods. More specifically, the proposed regulations 
would define ``articles,'' for purposes of the items to be dispensed by 
a ``vending facility'' and ``vending machine,'' and would clarify that 
services may only be dispensed at a vending facility that is not a 
vending machine. The proposed definition of ``vending facility'' also 
would make clear that updated methods of operating a vending facility 
would constitute ``vending facilities.'' Furthermore, the Department 
proposes to align the application of the priority for blind vendors on 
Federal property administered by NPS and NASA with the proposed 
definition of ``vending facility.'' Finally, the Department proposes to 
add a regulation regarding the severability of the provisions in part 
395, which is not substantive and would not impact the analysis of 
costs or benefits of these proposed regulations.
    Although some of the changes proposed in this NPRM are already 
permissible, the Department has learned through inquiries from SLAs and 
licensed blind vendor constituent groups that there is inconsistency 
among SLAs with the implementation of available flexibilities to 
modernize and evolve the RSVFP, thereby making these proposed 
regulatory changes necessary.

2. RSVFP Funding Sources

    When Congress enacted the R-S Act in 1936, and subsequently amended 
it in 1954 and 1974, it did not appropriate Federal funds for the 
RSVFP. It also has not done so through annual Appropriations laws, as 
it could have done.\36\ Therefore, there is no Federal funding 
specifically appropriated for the administration and operation of the 
RSVFP, which is administered by the SLA in 51 States.
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    \36\ Congress appropriated $20 million to the RSVFP Federal 
Relief and Restoration Program (FRRP) through the Consolidated 
Appropriations Act of 2021, Public Law 116-260, Division H, title 
III, section 318. These one-time financial relief and restoration 
grants to SLAs were to be used: (1) to offset losses incurred by 
blind vendors in calendar year 2020, so long as those losses were 
not otherwise compensated; and (2) to the extent funds remained 
available, for any of the set-aside purposes authorized under 34 CFR 
395.9.
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    The RSVFP operates based on multiple funding sources. The three 
primary sources are: VR program funds,\37\ State appropriations, and 
RSVFP set-aside funds. The amount of each type of funds available in 
any given State varies and depends on a wide range of factors unique to 
each State. Each of these funding sources are discussed separately 
below.
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    \37\ In this NPRM, ``VR program funds'' refers to both Federal 
VR grant funds and non-Federal funds used for matching purposes 
under the VR program, unless specified otherwise.
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    VR Program Funds: The VR program is the largest source of funding 
for the RSVFP. This has been true since 1954 when the Vocational 
Rehabilitation Amendments (which also amended the R-S Act) amended the 
Smith-Fess Act to permit the VR program to engage in certain activities 
for the benefit of the RSVFP, such as the acquisition of vending 
facilities and equipment and the purchase of initial stocks and 
supplies. Prior to that time, States could not use VR program funds to 
pay for costs associated with the RSVFP. The acquisition of vending 
facilities and other equipment for the benefit of the RSVFP remained an 
authorized service to groups under the VR program when the 
Rehabilitation Act of 1973 (Rehabilitation Act) superseded the Smith-
Fess Act, and this service remains permissible today.
    To be clear, the VR program is separate and distinct from the 
RSVFP; however, section 103(b)(1) of the Rehabilitation Act continues 
to authorize States to use VR program funds to pay for certain RSVFP 
costs. Because it is an allowable VR activity, State VR agencies \38\ 
may pay for cost of acquiring vending facilities and other equipment 
for the benefit of the RSVFP with either Federal VR grant funds or non-
Federal funds, whereas previously SLAs relied on State funds, RSVFP 
set-aside funds, and any other source of available funds to pay 
necessary RSVFP expenditures.
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    \38\ Pursuant to section 101(a)(2) of the Rehabilitation Act, 
each State must designate an agency responsible for providing VR 
services to eligible individuals with disabilities in the State. 
When a State only has one VR agency that serves all individuals with 
disabilities, including those who are blind, this VR agency is also 
designated as the SLA. However, when a State has two VR agencies 
(one that serves individuals who are blind and visually impaired and 
another that serves all other disability groups), the SLA and the VR 
agency that serves individuals who are blind are the same State 
agency. However, as noted in footnote 1, the SLA and VR agency are 
responsible for administering their respective programs separately 
and distinctly. Because the VR agency director is solely responsible 
for the expenditure of VR program funds, including the expenditure 
of those funds for the benefit of the RSVFP, pursuant to 34 CFR 
361.13(c), we intentionally refer to the VR agency in this context 
rather than the SLA.
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    The VR program operates on a mixture of Federal grant funds and 
non-Federal funds used to match those Federal grant funds. 
Specifically, section 110(a) of the Rehabilitation Act establishes a 
statutory formula that determines the Federal grant amount that each 
State receives; section 111(a)(1) makes clear that this Federal grant 
pays only the Federal share of the total costs of the VR program. 
Section 101(a)(3) of the Rehabilitation Act requires States to assure 
they will provide a non-Federal share of the total VR program costs, 
and section 7(14) of the Rehabilitation Act defines ``Federal share'' 
as 78.7 percent of the total costs, making the required non-Federal 
share 21.3 percent of the total costs. This means that the State can 
draw down $78.70 in available \39\ Federal VR grant funds for every 
$21.30 in non-Federal expenditures it incurs (i.e., almost a $4 to $1 
return of investment to the State

[[Page 2564]]

for its non-Federal funds spent), even for those costs incurred under 
the VR program for the benefit of the RSVFP.
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    \39\ Pursuant to section 110(a) of the Rehabilitation Act, each 
State receives a VR grant award based on a statutory formula. The 
State may access those Federal VR grant funds to the extent it can 
provide the requisite match of 21.3 percent. At the end of each 
fiscal year, States may request additional VR grant funds, to the 
extent they will not be used by other States and have been 
relinquished by them (section 110(b) of the Rehabilitation Act) and 
to the extent they can provide the requisite match of 21.3 percent. 
Once a State has fully matched all grant funds available to it, non-
Federal expenditures no longer count toward the State's match.
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    Under the VR program, States may use a variety of sources for 
satisfying the non-Federal share requirement. However, the two primary 
sources in the context of the RSVFP are State appropriations and RSVFP 
set-aside funds. State VR agencies can use other non-Federal funds that 
may be available for these expenditures, and these amounts vary from 
State to State and from year to year.
    State Appropriations: With respect to State appropriations, the 
availability of funds dedicated to the RSVFP varies from State to 
State. Some States appropriate funds to the RSVFP, while others do not. 
However, State appropriations generally comprise the largest source of 
non-Federal funding for the VR program at the State level. As described 
above, States may use non-Federal funds under the VR program to pay 
allowable RSVFP costs; this means they may use State appropriations 
dedicated to the RSVFP or that are assigned to the VR program since 
these costs are allowable under both programs.
    RSVFP Set-Aside Funds: RSVFP set-aside funds are the third primary 
source of funding available for certain costs associated with the 
administration and operation of the RSVFP. Pursuant to 34 CFR 395.1(s), 
``set-aside funds'' are funds that accrue to an SLA from an assessment 
against the net proceeds \40\ of each vending facility in the RSVFP and 
any unassigned vending machine income \41\ from vending machines on 
Federal property which accrues to the SLA.\42\ Therefore, RSVFP set-
aside funds consist of contributions from RSVFP vendor profits and a 
percentage of unassigned Federal vending machine income that is 
provided to the SLA.
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    \40\ 34 CFR 395.1(s). For purposes of RSVFP set-aside funds, 
``assessments against the net proceeds'' of each RSVFP vending 
facility vary from State to State and are generally based on a 
percentage of each vending facility's net income (i.e., income minus 
costs, in other words, the profit). This percentage must be approved 
by the Secretary of Education as reasonable (34 CFR 395.9(a)) and is 
generally contained in the State's RSVFP rules, which are developed 
in active participation with the State's Elected Committee of Blind 
Vendors and approved by the Secretary of Education. 34 CFR 395.4 and 
395.14. Once the percentage is approved by the Secretary, each 
licensed blind vendor assigned to a RSVFP vending facility must 
contribute that percentage of their net income to the RSVFP set-
aside funds. This contribution constitutes the ``assessment'' 
mentioned in the definition of ``set-aside funds.'' States are not 
required to have set-aside funds; therefore, there are States that 
do not assess a set-aside fee.
    \41\ For purposes of the RSVFP, unassigned vending machine 
income refers to the percentage of the net proceeds (i.e., profits) 
paid to the SLA by the Federal agency on whose property the vending 
machine is located when there is no licensed blind vendor assigned 
to operate that vending machine. See 34 CFR 395.1(z). Authorized 
uses of unassigned Federal vending machine income by the SLA can be 
found at 34 CFR 395.8(c), and the income sharing requirements are 
found at 34 CFR 395.32. Vending machine income is assigned to a 
blind vendor if it accrues from a vending machine not operated by a 
blind vendor that is in direct competition with a vending facility 
operated by a blind vendor on the same Federal property pursuant to 
34 CFR 395.32(b). Under 34 CFR 395.33(c), 50% of the income received 
by the Federal agency from vending machines on Federal property that 
are not in direct competition with a vending facility operated by a 
blind vendor must be paid to the SLA. Under 34 CFR 395.33(d), 30 
percent of the income received by the Federal agency from vending 
machines on Federal property that are not in direct competition with 
a vending facility operated by a blind vendor, and which are on 
Federal property at which at least 50 percent of the total hour 
worked on the premises occurs during a period other than normal 
working hours must be paid to the SLA.
    \42\ In addition to unassigned Federal vending machine income, 
there can be vending machine income accruing to the SLA from non-
Federal property. However, the vending machine income regulations in 
34 CFR part 395 only govern income from vending machines on Federal 
property and its disposition.
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    The R-S Act authorizes the SLA to use RSVFP set-aside funds only 
for certain purposes; maintenance of equipment, replacement of 
equipment, and the purchase of new equipment are the three most 
relevant for purposes of this NPRM. The SLA is responsible for the 
administration and expenditure of these funds. When the SLA pays RSVFP 
costs that are also allowable under the VR program with set-aside 
funds, the State may count those expenditures towards its non-Federal 
share requirement under the VR program. By incurring these allowable 
RSVFP costs with RSVFP set-aside funds, the State can access more of 
its Federal VR grant funds that remain available to it.
    Following is a table that describes the amount of RSVFP 
expenditures incurred during a three-year period (FY 2021 through FY 
2023) and the source of funds used to pay those expenditures. It is 
important to note that the RSA-15, which is the annual data collection 
instrument by SLAs of income and expenditures for the RSVFP, collects 
data about expenditures paid with RSVFP set-aside funds and unassigned 
Federal vending machine income separately. To be clear, unassigned 
Federal vending machine income is included in the definition of ``set-
aside funds'' at 34 CFR 395.1(s), but the RSA-15 collects the amount of 
expenditures paid with vendor assessments (which would be the ``set-
aside'' amount) and unassigned Federal vending machine income 
separately.

                        FY 2021-2023 Randolph-Sheppard Expenditures by Source of Funding
----------------------------------------------------------------------------------------------------------------
                                                                   FY 2021          FY 2022          FY 2023
----------------------------------------------------------------------------------------------------------------
Federal Vending Machine Income...............................       $3,103,501       $3,077,666       $3,616,697
Non-Federal Vending Machine Income...........................       10,589,070       10,662,860       10,480,002
RSVFP Set-Aside..............................................        9,943,153        8,783,719       10,446,738
State Appropriated Funds.....................................        8,002,944        9,929,055        9,353,040
VR Federal Funds.............................................       38,392,506       40,713,782       45,604,065
Other Sources of Funding.....................................          364,236          210,264          584,218
                                                              --------------------------------------------------
    Total Funds Expended.....................................       70,384,755       73,377,346       80,084,760
----------------------------------------------------------------------------------------------------------------

3. Fiscal Impact of RSVFP Expenditures on the VR Program

    According to data submitted by SLAs to RSA annually through the 
RSA-15 report, VR program funds represent the dominant source of 
funding used for most expenditures incurred for the benefit of the 
RSVFP with respect to vending facilities and other equipment and 
vending machines. RSVFP set-aside funds represent other critical 
sources of funding for these expenditures, albeit much smaller sources 
than those expenditures incurred under the VR program for the benefit 
of the RSVFP.\43\ When States pay RSVFP-related costs with non-Federal 
funds, it can have a direct impact on the VR program as described 
herein.
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    \43\ For example, in FY 2023, SLAs reported that $16,717,487 in 
Federal VR funding, $1,198,602 in State funding, and $3,748,522 in 
RSVFP set-aside funds were used for the purchase, maintenance and 
replacement of equipment for the benefit of the RSVFP.

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[[Page 2565]]

    As noted in the ``VR Program'' section of ``RSVFP Funding Sources'' 
above, pursuant to sections 110(a) and 111(a)(1) of the Rehabilitation 
Act, each State receives a Federal grant, based on a formula, to 
administer the VR program and pay the Federal share (i.e., 78.7 
percent) of costs of that program. RSA awards the VR grant to each 
State for a one-year period; however, a State may carry over unspent 
Federal funds for use into a second year, pursuant to section 19 of the 
Rehabilitation Act, if the State provided sufficient non-Federal match 
(i.e., 21.3 percent) by September 30 of the year of appropriation 
(i.e., the year in which the grant was awarded). If a State is unable 
to spend all of its funds by the end of the year of appropriation or 
provide sufficient match to carry the funds over into a second year by 
the end of the year of appropriation, a State may relinquish its 
unspent VR funds to RSA in accordance with section 110(b) of the 
Rehabilitation Act; RSA, in turn, awards these funds to other States 
that can use them and provide the requisite match prior to the end of 
the year of appropriation.
    Despite statutory provisions that allow for the carryover of funds 
for use in a second year and the ability to relinquish Federal VR funds 
so they may be reallotted to other States that can use those funds, 
there has been an increasing trend in recent years in the amount of 
Federal VR funds remaining available after reallotment. The VR funds 
that remain available after the VR program reallotment process, because 
States did not request to receive all funds that were available during 
that process, are unavailable for VR program use after the expiration 
of the year of appropriation for which the funds were awarded and have 
been repurposed by Congress for new discretionary grant programs 
assisting individuals with disabilities under the Disability Innovation 
Fund (DIF).\44\ Similarly, the VR program funds that lapsed after the 
carryover year because they were retained by the VR agencies but not 
spent by the end of that year were unavailable for VR program use after 
the end of the carryover year and were returned to Treasury. According 
to RSA's fiscal data at the end of the award period, in FYs 2021 and 
2022 VR State agencies lapsed \45\ a total of approximately $139.6 
million and $90.8 million, respectively, of Federal VR grant funds 
awarded to States.
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    \44\ In recent years, Congress has provided the Department with 
authority, through appropriations language, to repurpose any 
available Federal VR program funds remaining after the VR 
reallotment process is complete. Recently, those funds were 
repurposed, for example, to provide new discretionary grant programs 
assisting individuals with disabilities obtain competitive 
integrated employment (CIE).
    \45\ The VR funds that lapsed and are described herein are in 
addition to the funds that Congress repurposed for the DIF. Most of 
the lapsed funds were VR grant funds that were matched and carried 
over into the succeeding fiscal year, as permitted by section 19 of 
the Rehabilitation Act, but not spent for a variety of reasons. At 
least some of these lapsed funds represent a portion of the minimum 
15 percent in VR grant funds reserved by VR agencies for the 
provision of pre-employment transition services to students with 
disabilities, as required by section 110(d)(1) of the Rehabilitation 
Act, but never spent. When funds lapse, neither RSA nor the States 
can obligate or draw down the funds. The total amount of lapsed 
funds is an estimate until final closeout of awards.
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    RSA has learned over the years as part of its monitoring efforts 
that there is no single reason for the unspent VR funds. For example, 
some States are not able to match their full VR grant award and, thus, 
relinquish the unmatched funds to RSA during the reallotment process. 
Other States match and reserve the full 15 percent minimum required for 
the provision of pre-employment transition services to students with 
disabilities, but for a variety of reasons, are not able to expend the 
full amount reserved by the end of the carryover period; these funds, 
however, cannot be spent for any other VR program purpose and so they 
remain unspent and lapse. Still other States can match their full grant 
awards, but do not expend their full Federal award because they either 
do not have sufficient State personnel or community providers necessary 
to use the funds to serve VR program participants.
    Therefore, to the extent that States can provide additional match 
beyond the requisite match to access funds available through the 
reallotment process, and to the extent that States are not currently 
able to expend all of their fully matched funds, it appears there would 
be sufficient funds remaining available for States to access to cover 
at least some of the costs that could be generated by these proposed 
regulations without negatively impacting direct services to individuals 
with disabilities served under the VR program.
    However, the same is not likely to be true for those States that 
cannot match their full VR grant. Even though excess VR funds remain 
available, these States are not able to access those additional funds 
because they cannot provide the requisite non-Federal share of 21.3 
percent. Similarly, States reserving funds as required by section 
110(d)(1) of the Rehabilitation Act for the provision of pre-employment 
transition services would not be able to use those funds for costs 
associated with RSVFP vending facilities and vending machines under 
these proposed regulations because those funds must be reserved solely 
for the provision of pre-employment transition services.
    While those funds appear to be available for expenditure, they are 
not available for an unfettered use. To the extent States in either of 
these categories (i.e., those unable to fully match their VR grant or 
those with reserved, but unspent, funds for the provision of pre-
employment transition services) would choose to acquire vending 
equipment, for example, in connection with these proposed regulations, 
it is likely there would be less funds available in those States for 
the delivery of direct services under the VR program to individuals 
with disabilities to assist them in achieving employment outcomes.
    Finally, as explained further in the ``RSVFP Funding Sources'' 
section above, it is likely that the proposed regulations would result 
in SLAs receiving additional opportunities for blind vendors to operate 
vending facilities resulting in an increase in assessments on earnings 
from blind vendors set aside by the SLA and potentially an increase in 
unassigned Federal vending machine income if blind vendors are not 
available to operate all opportunities for vending machines on Federal 
property. See ``RSVFP Set-Aside Funds'' in the ``RSVFP Funding 
Sources'' section above for a more detailed discussion of RSVFP set 
aside funds and their requirements.
    The SLAs could use these increased set-aside funds to purchase new 
equipment or maintain or replace equipment for the benefit of the 
RSVFP, and these expenditures could count towards the State's non-
Federal share under the VR program. It is possible States receiving the 
increased set-aside funds under the RSVFP may be able to access more 
Federal VR funds (i.e., more of their own VR grant funds and, to the 
extent funds are available, more funds during reallotment), which would 
benefit both the RSVFP and individuals with disabilities. The interplay 
between the VR program and the RSVFP will be analyzed more fully below 
with respect to the benefits and costs of these proposed regulations.
    Furthermore, we believe that the proposed regulations would benefit 
blind vendors who would have more opportunities to operate evolving 
vending facilities and provide more choices for customers who use the 
vending facilities.

Discussion of Costs and Benefits

    Overview: After conducting a costs and benefits analysis of these 
proposed

[[Page 2566]]

regulations, the Department believes additional net costs are likely 
for the acquisition of vending facilities and equipment for some SLAs 
and State VR agencies, as they replace outdated equipment and identify 
additional or more modern vending facility opportunities for blind 
vendors to the extent they are not already doing so under current 
Department guidance. We also expect that the proposed regulations could 
result in VR agencies incurring additional costs to convert existing 
vending facilities from one type of business model to another and 
purchase initial stocks and supplies for those new vending facilities 
to allow them to evolve with the vendors' needs to remain competitive 
and self-supporting, as is the purpose of the RSVFP. Although current 
Department guidance permits these costs, the Department recognizes 
there is inconsistency among States, with some working with blind 
vendors to modernize and evolve the RSVFP, while others remain locked 
in more traditional RSVFP business models.\46\
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    \46\ While costs to convert vending facilities are allowable 
under the VR program for the benefit of the RSVFP and, thus, may be 
paid with VR program funds (both Federal and non-Federal), these 
costs are not allowable under the RSVFP with RSVFP set-aside funds.
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    Despite some anticipated increased expenditures to be incurred by 
States, particularly those incurred under the VR program, these same 
expenditures, if paid with non-Federal funds, could increase the amount 
of Federal VR funds States may draw down, to the extent Federal funds 
are available. When States use non-Federal funds to pay these allowable 
RSVFP expenditures and, thus, increase the amount of matching funds 
they could otherwise provide, States may receive more Federal VR funds 
to the extent they are available, thereby potentially incurring more 
costs under the VR program for purposes related to the RSVFP. See a 
more comprehensive discussion of the VR program as a ``RSVFP Funding 
Source'' above. Furthermore, the Department believes that the proposed 
regulations would benefit blind vendors and customers who use RSVFP 
vending facilities through increased earnings and increased product 
selection, respectively, to the extent the products are not already 
available through the vending facilities, given the inconsistency 
nationwide with the scope of articles sold or dispensed through RSVFP 
vending facilities. In so doing, licensed blind vendors would benefit 
by increased earnings, expanded vending opportunities, and increased 
customer satisfaction. Through increased earnings to the licensed blind 
vendors, the State would benefit as well through increases to the RSVFP 
set-aside funds, to the extent the State places assessments on vendor 
net proceeds to accrue such funds.
    The Department believes the benefits to blind vendors and their 
customers generated by the proposed rule's flexibilities under the 
RSVFP will outweigh the increased expenditures by the states and the 
Federal Government.

Non-Monetized Benefits of the Proposed Regulations

1. Definition of ``Articles''

    We anticipate that the proposed definition of ``articles'' would 
provide clarification on and consistency for implementation of the 
provisions relating to vending facilities and vending machines (which 
are a type of vending facility) and could result in an increase in the 
variety of articles sold in vending facilities under the RSVFP. This 
could also potentially lead to increased income for blind vendors and 
an increase in set-aside assessments received by the SLAs.
    In FY 2023, gross sales for the RSVFP were $747,455,376. Of this, 
blind vendor gross income represented $147,206,158. We estimate that up 
to 48 of the 51 SLAs would make changes to increase the variety of 
articles that may be sold in vending facilities in their States due to 
this proposed change. The Department uses this estimate because three 
SLAs are quite small, with only one to two blind vendors in the 
program, and these small SLAs may not have the capacity or customer 
demand to increase the variety of articles sold in their vending 
facilities. While some States already allow vending facilities to sell 
articles that were not traditionally sold by blind vendors, since there 
is nothing in the R-S Act to preclude such sales, we expect that this 
clarification would lead to the sale of a larger variety of articles 
through existing vending facilities in most States. Because the permit 
for a vending facility, other than a cafeteria, is negotiated between 
the Federal agency and SLA prior to the placement of the blind vendor, 
it is necessary for all SLAs and Federal agencies to have greater 
clarity on what is permitted to ensure consistency throughout the 
RSVFP.
    While we do not know how much additional income for blind vendors 
would be generated by the sale of the increased variety of articles, we 
expect that this change could yield an increase in gross sales in the 
48 SLAs that are likely to make at least some changes to existing 
vending facilities as a result of this proposed change because, while 
many blind vendors are already selling the types of articles clarified 
as allowable in these proposed regulations, it is likely that some 
Federal agencies and SLAs would provide additional opportunities for 
blind vendor sales as a result of the clarity provided by these 
proposed definitions, particularly in areas where blind vendors are not 
selling the types of articles clarified in this proposal. Additional 
income for blind vendors will also result in additional set-aside funds 
that SLAs in States that have an assessment on blind vendor net 
proceeds can use for the authorized purposes under 34 CFR 395.9.
    In addition, if contractors are already operating vending machines 
that sell articles on Federal property, under the proposed regulations, 
SLAs would be entitled to receive a priority for establishing vending 
machines operated by blind vendors, and if no blind vendor in that 
State is available, receive any unassigned Federal vending machine 
income funds from the operation of such contractor operated vending 
machines. See ``RSVFP Set-Aside Funds'' in ``RSVFP Funding Sources'' 
section of the RIA's Background above for a more detailed discussion.
    We welcome public comment regarding the likely impact on gross 
program sales and blind vendor income due to the proposed definition of 
``articles'' and the changes that would result from it.

2. Definition of ``Vending Facility''

    We anticipate that adding illustrative examples of vending 
facilities to provide the best interpretation of the terms ``snack 
bars,'' ``cart services,'' ``shelters,'' and ``counters'' as including 
micro markets, laundry and catering establishments, shops that dispense 
articles, such as gift shops and retail stores, and other 
establishments, such as food trucks and pop-up stands, would provide 
additional clarity regarding the broad range of vending facilities 
encompassed by the RSVFP.
    While we know that some States already allow blind vendors to 
operate these types of vending facilities under the RSVFP, and as such 
is consistent with current Department guidance, we anticipate that the 
inclusion of this modernized, illustrative list would clarify that 
blind vendors are not limited to the business models listed in the 
statute, as they existed in 1974, and would encourage SLAs and Federal 
agencies to allow for the addition of modernized types of these vending 
facilities as technology continues to

[[Page 2567]]

evolve. For example, the Department is aware, through its work with 
SLAs, that many States already allow extensive use of micro markets 
under the RSVFP. While some SLAs have inquired about the option to 
allow food trucks, the extent to which State RSVFPs currently have any 
food trucks operating is unclear.
    The Department welcomes public comment on the number of blind 
vendors operating micro markets, laundry or catering establishments, 
retail shops, pop-up stands, or food trucks, either directly or through 
arrangements with third parties to do so under the RSVFP, as well as 
information on the costs associated with operating these types of 
vending facilities. The Department is also interested in information 
about the extent to which Federal agencies are issuing permits for such 
types of vending facilities and the likely impact of the addition of 
this illustrative list to the ``vending facility'' definition.

3. Definition of ``Vending Machine''

    The Department intends that the proposed change to amend the 
definition of ``vending machine'' by removing the qualifier ``for 
purposes of assigning vending machine income under this part'' would 
clarify that the definition of ``vending machine'' would apply 
throughout part 395. The Department expects that the proposed changes 
to the definition of vending machine to replace ``coin or currency'' 
with ``cash'' and add ``electronic payment methods'' to the payment 
methods specified would clarify the methods available to accept payment 
through vending machines, reflect modern methods of payment aligned 
with industry standards, simplify the current regulatory text, and meet 
changing demand from vending facility customers.
    For blind vendors who are not already accepting electronic payment, 
the addition of electronic payment as a payment option would likely 
result in additional sales as individuals who do not carry cash would 
be able to use the vending machines. To provide a reasonable estimate 
of the impact of this change, the Department is interested in public 
comment on the number of vending machines operated by blind vendors 
under the RSVFP and the number of such vending machines that do not 
already accept electronic payment.
    The proposed change to remove ``services'' from the definition of 
``vending machine'' would clarify that vending machines may only 
dispense articles of a tangible nature, leaving the dispensing of 
services to other types of vending facilities and their appropriate 
auxiliary equipment (i.e., that are not vending machines). This change 
would better align the regulations with the statute's intent. RSA is 
not aware of any blind vendor operating vending machines that dispense 
services so we do not believe this proposed change would have any 
quantifiable benefits. However, as noted above, we invite comment on 
the proposed removal of ``services'' from within the vending machine 
definition and the impact of this proposed change.
    The proposal to remove the specific exclusion for machines 
providing recreational services and pay telephones would streamline the 
regulations. This exclusion would no longer be necessary as the 
proposed change to remove ``services'' from the definition of vending 
machine would clarify that such services may not be dispensed by 
vending machines, as defined in the proposed regulations. We do not 
anticipate any quantifiable benefits to this change since it preserves 
the status quo.

4. Priority on Certain Federal Property

    The proposed change to align the application of the priority for 
blind vendors on Federal property administered by the NPS and NASA \47\ 
with the proposed definition of ``vending facility'', to include the 
sale of a wider variety of articles, as well as the related changes, 
could provide additional employment opportunities for blind vendors and 
income for SLAs and blind vendors, but it is unclear how significant 
the impact would be.
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    \47\ See preamble discussion related to proposed changes to 34 
CFR 395.30 based on the vending requirements that maybe unique to 
NPS and NASA.
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    As of May 17, 2024, there were 50 NPS \48\ sites located in States 
with RSVFP programs that had only one concessioner. Based on the 
current regulations, blind vendors therefore do not receive a priority 
for the operation of concessions on these sites. However, under the 
proposed regulations, blind vendors would receive a priority if the 
concessions on the NPS site meet the proposed definition of ``vending 
facility.'' As a result, blind vendors could have additional employment 
opportunities at these sites once the existing concessioner contracts 
or permits expire and become available, thereby not only increasing 
income for licensed blind vendors personally but also for some SLAs 
through any assessments on the blind vendor's net proceeds treated as 
set-aside funds. However, it is not clear to what extent the 
concessions on NPS sites meet the proposed definition of ``vending 
facility''; the Department invites public comment on this topic, 
particularly with respect to whether the income generated will help 
offset any costs incurred due to these proposed regulations.
---------------------------------------------------------------------------

    \48\ U.S. Department of the Interior (2023, April 4). National 
Park Service: Authorized Concessioners. National Park Service: 
Concessions. Retrieved May 17, 2024, from https://www.nps.gov/subjects/concessions/authorized-concessioners.htm.
---------------------------------------------------------------------------

    In addition, it is not clear to what extent blind vendors would 
take advantage of these potential opportunities due to the remoteness 
and lack of public transportation to many of these NPS sites; the 
Department also welcomes public comment on this topic to help inform 
the cost-benefit analysis associated with this proposed change.
    A significantly higher percentage of blind vendor income comes from 
the operation of cafeterias than other types of vending facilities. In 
FY 2023, 65 of the 635 vending facilities operated on Federal property 
were cafeterias. The gross sales from those 65 cafeterias were 
$429,396,840, while the gross sales from all 635 vending facilities 
were only $747,455,376, meaning that 57.44 percent of the total gross 
sales came from cafeterias, even though cafeterias represented only 
10.2 percent of the facilities. Twenty-six \49\ of the NPS sites that 
have only one concessioner include food service operations. As a 
result, it is possible that this proposed change could result in a 
significant increase in the gross sales for blind vendors were they to 
operate the food service operations, or other concessions meeting the 
proposed updated definition of a vending facility, on these NPS sites.
---------------------------------------------------------------------------

    \49\ The NPS analysis excludes sites in Wyoming since Wyoming 
does not currently participate in the RSVFP.
---------------------------------------------------------------------------

    In addition, to the extent that existing commercial concessioners 
are operating vending machines on NPS sites, any income received by NPS 
generated by the vending machines would be considered unassigned 
Federal vending machine income, the sharing of which with SLAs would 
result in additional income transferred from NPS to the SLAs for the 
benefit of the RSVFP. Based on currently available information, at 
least four NPS sites with only one concessioner currently operate 
vending machines.
    Further, in addition to the new employment opportunities that could 
become available on NPS sites with only one concessioner, there are 46 
other NPS sites in States with the RSVFP that contract with more than 
one concessioner. Under the current

[[Page 2568]]

regulations, the priority for blind vendors on NPS sites does not apply 
if the concessions provide accommodations, facilities, or services of a 
scope or of a character not generally available at that time in vending 
facilities operated by blind vendors. Therefore, the clarification that 
the articles and services that may be sold in vending facilities are 
not limited to those traditionally sold by blind vendors could lead to 
additional opportunities for blind vendors on these NPS sites.
    NASA already affords the priority to blind vendors on at least some 
of its sites. However, the Department welcomes input on the likely 
impact of these proposed changes for NASA sites.

Non-Monetized Costs of the Proposed Regulations

1. Implementation of Proposed Definitions

    While the Department anticipates that the proposed regulations 
would require States to make changes to their current implementation of 
the RSVFP, by amending their policies and procedures to align them with 
these proposed changes, the proposed regulations would provide clarity 
on the scope of other existing opportunities, which could lead to 
additional vending opportunities for blind vendors.
    Beyond the costs associated with updating their policies and 
procedures, the Department does not believe that implementation of the 
proposed regulations would necessitate any required costs for SLAs or 
blind vendors immediately. However, it is likely that blind vendors 
would increase the types of articles sold through vending facilities 
and vending machines, modernize with updates to their vending machine 
payment technology, and pursue new vending facility business models, 
which would likely lead to additional costs to the SLA and VR agency 
using, as applicable, RSVFP set-aside funds and VR program funds, for 
the costs to convert the facilities from one type of facility to 
another since these costs are typically borne by the VR program and not 
the blind vendor. To the extent the State uses non-Federal funds to pay 
these increased costs incurred for converting from one type of vending 
facility to another, the State may be able to draw down and expend 
additional Federal VR grant funds for the benefit of individuals with 
disabilities, including the RSVFP, thereby potentially further 
increasing costs to the State and Federal Governments. See ``RSVFP 
Sources of Funding'' in the ``Background'' section of this RIA for a 
more comprehensive discussion of the nexus between the VR program and 
RSVFP, including the use of non-Federal funds for matching purposes, to 
benefit the RSVFP.
    In addition, changes to the definition of ``vending facility'' 
could also lead to Federal agencies applying the priority more often 
with the introduction of more modern business models of vending. With 
the clarification of the broad array of articles that can be sold 
through vending machines, it could also be that Federal agencies will 
need to apply the priority for vending machines that were previously 
operated by non-blind vendors or share additional Federal vending 
machine income with the SLA that they receive from those vending 
machines.
    Due to limited information, the Department has no reliable method 
for estimating how many blind vendors will pursue these changes, or the 
likely resultant costs, but based on the information currently 
available, we do not anticipate that the proposed regulations would 
result in significant costs. However, the Department specifically 
requests public comments on whether the proposed definition of 
``articles'' and the proposed changes to the definition of ``vending 
facility'' would have a quantifiable effect on the implementation of 
the RSVFP on Federal agencies, and particularly on military bases. It 
is unclear to the Department how many RSVFP vending facilities on 
Department of Defense property are already dispensing articles as 
broadly defined in the proposed regulation or operating business models 
proposed as illustrative examples of those listed in the R-S Act. For 
that reason, we specifically request public comment on the impact that 
these proposed regulations may have.

2. Definition of ``Articles''

    While predicting how licensed blind vendors might change behavior 
due to the proposed revisions to the definition of ``vending facility'' 
and ``vending machine'' and the addition of a definition of 
``articles'' to include tangible personal property is speculative, we 
anticipate that some blind vendors may choose to increase the variety 
of articles they sell in their vending facilities, including vending 
machines. We note that blind vendors would not be required to make any 
changes as a result of the proposed revisions to the definition of 
``articles'' and that we do not estimate any certain costs resulting 
from this proposed change. These proposed revisions may initially 
result in additional costs to blind vendors in the form of initial 
supplies to the extent that blind vendors choose to take on such cost. 
The Department believes that blind vendors would only assume these 
optional costs if there is a reasonable assurance that the resultant 
income would offset the costs. Therefore, to the extent that blind 
vendors choose to make any changes as a result of this proposed change, 
we assume that blind vendors would be able to recoup their initial 
costs when the items are eventually sold.
    Similarly, these proposed revisions also could result in additional 
costs to SLAs and VR agencies in the purchase of new equipment or 
replacement (e.g., improvement) of existing equipment as blind vendors 
expand the variety of articles they sell. For example, this proposed 
revision may result in additional costs for SLAs and VR agencies as new 
shelving and other equipment may be needed to display the new items. To 
the extent the State pays these additional costs with non-Federal funds 
used for matching purposes under the VR program and, thus, increases 
the amount of Federal VR funds it may draw down and expend, this 
spending by the State could further increase costs for the Federal 
Government.
    In addition, if private contractors are already operating vending 
machines on Federal property that sell articles that the Department is 
now clarifying can be sold by blind vendors through vending machines 
(i.e., articles that may not have traditionally been provided by blind 
vendors), the Federal agencies, not contractors, would have to provide 
up to 50 percent of the vending machine income they receive from the 
operation of the contractor's vending machines to the SLA under the 
vending income sharing requirements. The vending machine income sharing 
requirements impact Federal agencies for as long as vending machines 
are operated by a private contractor. This requirement continues even 
when an SLA does not have an available blind vendor to operate the 
vending machines at the Federal property in question.
    The Department recognizes the proposed regulation could increase 
the application of the priority on Federal property resulting in 
Federal agencies entering into permits with SLAs to allow blind vendors 
to operate vending facilities including vending machines once a private 
company's contract expires. A consequence of SLAs seeking permits to 
assert the priority in the operation of vending facilities including 
vending machines on Federal property could be that the Federal agency 
would decline to enter into future contracts with private companies 
currently operating vending facilities including

[[Page 2569]]

vending machines on such property. The Department recognizes this could 
be a cost to private companies. However, it is unclear how many private 
companies this would affect.
    The Department does not have data available on the number of 
private companies operating vending machines on Federal and other 
property and is therefore unable to quantify or monetize possible 
costs. The Department requests comment on potential costs for private 
companies operating vending machines on Federal and other property.
    The Department welcomes public comment on the likely cost impact of 
these changes to blind vendors, SLAs, and Federal agencies. We are 
especially interested in comments regarding the impact these costs 
could have on the State's ability to draw down additional Federal funds 
under the VR program, thereby further increasing costs to the State and 
Federal Governments. We are particularly interested in receiving 
comments whether these potential costs, particularly those incurred 
with non-Federal funds and used for matching purposes, would be offset 
by the benefits received by blind vendors because of the increased 
vending opportunities and increased earnings and the benefits received 
by other individuals with disabilities because of services provided by 
the increased VR funds received as a result of the matching funds.

3. Definition of ``Vending Facility''

    Regarding the proposed revision to include modern illustrative 
examples of vending facilities, the Department believes that the 
proposed regulations may encourage some blind vendors to alter or 
expand their business model to include, for example, food trucks or 
micro markets. While we do not estimate any certain costs resulting 
from this proposed revision, if blind vendors determine that they 
require new equipment to pursue these options, there may be additional 
costs to the SLA and VR agency, including the purchase of equipment. 
Such equipment purchases may be paid for with Federal VR State grant 
funds, State funds, or R-S Act set-aside funds. Such equipment could 
also be rented or leased.
    In FY 2023, VR agencies used $12,446,353 of VR State grant funds to 
purchase new and replace (e.g., improve) equipment under the VR program 
for the benefit of the RSVFP. Because the proposed regulations could 
enable some vending facilities to convert from one type of facility to 
another, it is likely that the proposed regulations would result in 
States spending at least as much in the first year on equipment as they 
reported spending in FY 2023, namely $12,446,353. However, we believe 
that the proposed revisions would likely lead to States incurring 
additional costs under the VR State grant program in the year or years 
immediately following implementation of the proposed regulations as 
blind vendors and SLAs take advantage of the flexibilities provided by 
the clarifications in these proposed regulations.
    While the potential increase in the use of funds from the VR State 
grants program could negatively impact the availability of funds for 
the provision of services to individuals with disabilities under an 
approved Individualized Plan for Employment (IPE), this is potentially 
unlikely in some States. As discussed earlier, many VR State agencies 
are failing to use all of their VR State grant funds. See ``Fiscal 
Impact of RSVFP Expenditures on the VR program'' in the Background 
section of this RIA for a discussion of why States fail to expend their 
entire grant amounts.
    According to RSA's fiscal data, between FY 2020 and FY 2022, States 
lapsed over $436.8 million.\50\ Of the total 163 VR awards to States 
during this time, there were at least 60 instances of VR State agencies 
returning more than $1.3 million each in unused VR funds. In seven 
cases, VR State agencies left between $10 million and $30.8 million 
each unspent under the VR program, including for the benefit of the 
RSVFP.\51\ Additionally, in FY 2020, $130.1 million of Federal VR State 
grant funds remained available following the reallotment of funds, in 
accordance with section 110(b)(2) of the Rehabilitation Act, to those 
States that could match them prior to the end of the year of 
appropriation.
---------------------------------------------------------------------------

    \50\ The total amount of lapsed funds is an estimate until final 
closeout of awards.
    \51\ The VR program funds described herein as lapsing are in 
addition to the VR funds that were repurposed by Congress for the 
DIF. See also footnote 49.
---------------------------------------------------------------------------

    Similarly, in FY 2021 and FY 2022, $177.4 million and $264.3 
million, respectively, remained available following the reallotment of 
funds to States that could match the additional VR funds in each of 
those years. Although these funds were available to any State that 
could provide the requisite match under the VR program during the 
reallotment process, there were more funds available than requested by 
States during the VR reallotment process, and therefore became 
available under the DIF, through which Congress has authorized RSA to 
use the remaining VR funds for innovative activities that benefit 
individuals with disabilities in a wide variety of ways distinct from 
the RSVFP and the VR program, and other Congressionally-directed 
purposes. In other words, Federal funds initially appropriated for the 
VR program, but that remained unused by that program, were repurposed 
by Congress.
    When considering that these particular funds were initially 
appropriated for the VR program for its own use, including for the 
benefit of the RSVFP, it is reasonable to project that some of these 
same funds would likely be available to VR agencies--and not repurposed 
by Congress--if States could increase their ability to generate match 
to help pay for many of the costs resulting from these proposed 
regulations, as described above, such as the costs that SLAs and VR 
agencies would bear in purchasing new vending equipment or improving 
vending facilities in response to these proposed regulations. In other 
words, to the extent States can generate more matching funds than they 
had in previous years for the VR program, such as from expenditures 
incurred by SLAs with RSVFP set-aside funds, VR agencies may be able to 
access additional VR funds (i.e., more of their own VR grant funds and, 
to the extent funds are available, more funds during reallotment) that 
otherwise would have remained unspent and unused by the VR program 
without impacting the amount of VR funds available for services to 
individuals with disabilities.
    For those States that could provide the requisite match but were 
unable to spend their VR grants, thus resulting in funds lapsing at the 
end of the carryover year, the Department believes these proposed 
changes would clarify the breadth of allowable expenditures under both 
the RSVFP and the VR program. In clarifying the wide breadth of 
allowable expenditures under these programs, the Department anticipates 
that some SLAs and VR agencies could increase their expenditures for 
the benefit of the RSVFP and thereby significantly reduce the amount of 
VR funds lapsing each year. Because of the large amount of VR funds 
that some VR agencies have lapsed in recent years, the Department 
believes that these VR agencies could implement policy changes 
consistent with these proposed regulations without negatively impacting 
direct services to individual VR program participants.
    Due to the variety of approaches available to obtain equipment and 
the lack of relevant data, we cannot determine with specificity what 
the likely associated costs may be; the Department welcomes public 
comment on this topic so that we can provide a

[[Page 2570]]

reasonable estimate of the likely cost impact on SLAs, VR agencies, and 
the VR State grant program. We are particularly interested in comments 
regarding whether VR agencies and SLAs believe additional matching 
funds will be available to cover costs that might be incurred for some 
of the potential improvements resulting from these proposed 
regulations, thereby reducing the amount of VR funds remaining unspent 
and unused by the VR program each year. Likewise, we are interested in 
how these increased non-Federal expenditures under the VR program could 
further increase costs to the State and any projected offsets to those 
costs by the benefits received by the increased opportunities to 
licensed blind vendors and services provided under the RSVFP and VR 
program. We also are interested in receiving comments from SLAs 
regarding whether these proposed regulations would generate increased 
RSVFP set-aside funds, which could be used to pay for the costs of 
acquiring new vending machines and appropriate auxiliary equipment, as 
well as the maintenance and replacement (i.e., capital expenditures) of 
that equipment, for the benefit of the RSVFP.

4. Definition of ``Vending Machine''

    Regarding the proposed revisions to the listed payment methods in 
the definition of ``vending machine,'' to the extent that this updated 
technology has not been adopted, some blind vendors may choose to 
install new electronic readers on their vending machines. A new 
electronic reader costs approximately $300 to $500.\52\ Since the 
addition of an electronic reader to a vending machine would be an 
improvement to equipment as a capital expenditure, VR agencies and SLAs 
may pay for the improvement using VR program funds and RSVFP set-aside 
funds (as replacement of equipment).
---------------------------------------------------------------------------

    \52\ This range was identified based on a sample of electronic 
readers available for purchase from online vendors. See also Cramer, 
Jeff. ``Should I Consider a Credit Card Reader Vending Machine?'' 
Vending How. https://vendinghow.com/article/should-i-consider-a-credit-card-reader-vending-machine.
---------------------------------------------------------------------------

    The Department welcomes public comment on the number of vending 
machines under the RSVFP that do not have electronic payment options 
and the average cost to purchase an electronic reader. In addition, the 
Department welcomes public comment on whether vending machines that 
accept electronic payment in addition to cash payment result in more 
vending machine income, and if so, how much more than those vending 
machines that only accept cash payment. We also are particularly 
interested in comments regarding the impact the increased revenues to 
blind vendors will have on the RSVFP with respect to set-aside funds 
and, in turn, the impact this could have on a State's ability to 
generate more match under the VR program, thereby further potentially 
increasing costs to the State and Federal Governments.
    The proposed regulations would no longer permit dispensing of 
services through vending machines; however, this proposed change will 
not likely have any impact on the RSVFP since we are unaware of blind 
vendors operating vending machines that dispense services and blind 
vendors may continue to sell services through vending facilities and 
use appropriate auxiliary equipment to provide those services.
    Similarly, we do not expect the proposed change to remove the 
specific exclusion for machines providing recreational services and pay 
telephones to have any impact since the machines that sell such 
services would continue not to meet the definition of a vending machine 
under the proposed regulations. As a result, the Department does not 
estimate any cost associated with these proposed changes. To ensure 
that we are not overlooking any potential costs associated with these 
proposed changes, as noted earlier, we invite public comment on whether 
there is any impact of the proposed change on the RSVFP.

5. Priority on Certain Federal Property

    The proposed revisions to align the application of the priority for 
blind vendors on Federal property administered by NPS and NASA with the 
proposed definition of ``vending facility'', as well as the related 
changes, are likely to result in additional costs for State agencies 
and NPS, and potentially NASA. To the extent that licensed blind 
vendors receive a priority on NPS and NASA sites, and the SLAs receive 
a permit to operate a vending facility, there would likely be 
significant start-up costs to SLAs, and to VR agencies to the extent VR 
funds are used to benefit the RSVFP under these circumstances, for the 
new vending facilities. The actual cost would vary significantly based 
on the number of NPS and NASA sites on which SLAs receive a permit, the 
type of vending facility on each site, and the number of locations. In 
addition to the costs associated with new equipment and start-up 
supplies, these proposed revisions would likely result in a significant 
amount of time for SLA staff to consult with the on-site official 
responsible for each NPS and NASA site to determine what articles and 
services are suitable for sale at a particular location.
    In addition, if private contractors are already operating vending 
facilities, including vending machines, on NPS or NASA sites, the NPS 
or NASA, would have to provide the priority to SLAs for blind vendors 
to operate such vending facilities when a contractor's contract 
expires. However, there is no guarantee that an SLA would seek to 
obtain a permit at these sites. A consequence of more blind vendors 
operating vending facilities on NPS or NASA property could be that the 
Federal agency would decline to enter into future contracts with 
private companies currently operating those vending facilities. The 
Department recognizes this could be a cost to private companies. 
However, as noted previously, it is unclear how many private companies 
this would affect.
    We note that if no blind vendor is available to operate vending 
machines on certain NPS or NASA properties and the Federal agency does 
use a private company for that operation, the agency is required to 
provide up to 50 percent of the vending machine income it receives to 
the SLA. As noted earlier, any income an SLA receives due to these 
proposed regulations would increase the amount of funds the SLA has at 
its disposal to pay for the costs of the equipment. These expenditures 
can be used by the State to count toward its match requirement under 
the VR program, thereby increasing its ability to potentially access 
more VR program funds (i.e., more of their own VR grant funds and, to 
the extent funds are available, more funds during reallotment), and 
thus potentially increasing the costs to the State and the Federal 
government. The Department welcomes public comment on the cost impact 
to SLAs and Federal agencies of these revisions, particularly the NPS 
and NASA, as well as the impact they could have on the VR program.

6. Technical Changes

    The Department does not expect there to be any additional costs, 
beyond the time needed to review the revised regulations and develop 
revised policies and procedures, as needed, associated with the non-
substantive wording and organizational revisions to 34 CFR 395.1(x), 
including removing the phrase ``and including the vending or exchange 
of changes'' when describing the authorization to sell lottery tickets; 
and removal of the qualifier ``for purposes of assigning vending 
machine income under this part'' to 34 CFR 395.1(y).

[[Page 2571]]

Monetized Costs of the Proposed Regulations

1. Administrative Costs

    While some SLAs may need to only align the definitions in their 
policies and procedures with the new proposed Federal definitions 
applicable to the RSVFP, other SLAs and VR agencies will likely need to 
make extensive changes. To ensure that the Department does not 
underestimate the burden associated with these proposed regulations in 
part 395, we are calculating the administrative cost burden to be 
$209,299.41 assuming all 51 SLAs operating their RSVFP review the 
revised regulations and make conforming changes to their policies and 
procedures.
    The Department estimates that each SLA would have one director 
spend an average of 25 hours, at an hourly rate of $135.72 ($67.86 \53\ 
per hour multiplied by 2.0 to reflect the loaded wage rate), reviewing 
the regulations and making conforming changes to their rules. This 
would result in a total cost to the State Government of $173,043 (51 
SLAs x 25 hours x $135.72 per hour).
---------------------------------------------------------------------------

    \53\ BLS Occupational Employment and Wage Statistics, May 2023, 
State Government Chief Executive 11-1011.
---------------------------------------------------------------------------

    The Department estimates that each SLA would have one State 
Government attorney spend an average of three hours, at an hourly rate 
of $102.32 ($51.16 per hour multiplied by 2.0 to reflect the loaded 
wage rate), reviewing the regulations and the conforming changes to 
their rules. This would result in a total cost to the State Government 
of $15,654.96 (51 SLAs x 3 hours per SLA x $102.32 per hour).
    The Department estimates that it would take three hours for an RSA 
staff member to review each State rule submitted. This would result in 
a total review time of 153 hours, with an hourly loaded wage rate to 
the Government of $61.96. This would result in a total cost to the 
Government of $9,479.88 (51 submissions x 3 hours per submission x 
$61.96 per hour).
    The Department estimates that it would take three hours for an 
attorney from the Office of the General Counsel to review each State 
rule submitted. This would result in a total review time of 153 hours, 
with an hourly loaded wage rate to the Federal government of $72.69. 
This would result in a total cost to the Federal government of 
$11,121.57 (51 submissions x 3 hours per submission x $111.03 per 
hour).
    In total, we estimate that total costs of $188,698 to State 
governments and total costs of $20,601 to the Department in Year 1 for 
grand total Year 1 cost of $209,299. The Department estimates net 
present value cost of $209,299 over ten years. This is equivalent to an 
annualized net cost of $23,300 over ten years.

             Annual Administrative Costs, Years 1 Through 10
------------------------------------------------------------------------
                                                            Net annual
                          Year                                 costs
------------------------------------------------------------------------
Year 1..................................................        $209,299
Year 2..................................................               0
Year 3..................................................               0
Year 4..................................................               0
Year 5..................................................               0
Year 6..................................................               0
Year 7..................................................               0
Year 8..................................................               0
Year 9..................................................               0
Year 10.................................................               0
                                                         ---------------
    Total Net Present Value (NPV).......................         209,299
                                                         ---------------
    Annualized..........................................          23,300
------------------------------------------------------------------------

Assumptions

    We assume that licensed blind vendors and vending facility 
customers would support the proposed changes as the proposed changes 
are likely to result in the availability of a wider variety of articles 
sold on Federal and other property, more modern business models focused 
on customer convenience, additional payment options in vending 
machines, and a resultant increase in the revenue generated by vending 
facilities and vending machines.
    While we assume that SLAs would support most of the proposed 
changes, some SLAs may have concerns that these changes could cause 
them to consider altering plans in their State.
    We acknowledge that some Federal agencies may have concerns about 
the proposed changes to what can be sold through vending facilities and 
machines. Specifically, because the definition of vending machines 
would be clarified by defining ``articles'' to include tangible 
personal property, additional articles that have not traditionally been 
considered articles sold through vending machines would fall under the 
proposed definition. As a result, the requirement for extending a 
priority to licensed blind vendors for vending machines on Federal 
property would apply, as well as the vending machine income sharing 
provisions in the R-S Act requiring Federal agencies to pay SLAs a 
portion of vending machine income earned by agencies when contractors 
operate vending machines on the Federal property. In addition, the 
revised definitions may raise concerns for such agencies about applying 
the priority for blind vendors to operate more modern business models 
for vending facilities where they had not previously considered those 
business models covered under the R-S Act.

Accounting Statement

    As required by OMB Circular A-4, in the following table, the 
Department has prepared an accounting statement showing the 
classification of the expenditures associated with the provisions of 
these proposed regulations. This table provides the best estimate of 
the changes in annual costs of these proposed regulations. As discussed 
throughout the RIA, the Department is not able to monetize the 
projected benefits of these proposed regulations because it is unclear 
how many licensed blind vendors and SLAs will take advantage of the 
flexibilities afforded by these proposed regulations since some are 
already doing so based on the R-S Act itself. Finally, as the 
Department described previously in the background of the preamble, the 
RSVFP suffered some declines as a result of the COVID-19 pandemic and 
the closure of Federal buildings. However, even if more individuals, 
whether employees or visitors, were to frequent Federal office 
buildings and RSVFP vending facilities and vending machines, their 
increased use would result in increased costs to the RSVFP. Therefore, 
it is difficult to project any net benefit these policy changes would 
have on the RSVFP.

                  Accounting Statement Annualized Costs
------------------------------------------------------------------------
                                                       Annualized costs
                                                     -------------------
                                                       2% discount rate
------------------------------------------------------------------------
SLAs updating policies and procedures...............             $21,007

[[Page 2572]]

 
Department of Education staff review................               2,293
                                                     -------------------
    Total...........................................              23,300
------------------------------------------------------------------------

Alternatives Considered

    We considered adding a definition of appropriate auxiliary 
equipment while maintaining all other regulatory language as currently 
written, including additional examples of articles that may be sold in 
vending facilities and vending machines instead of defining 
``articles'' to be tangible personal property and continuing the 
practice of permitting blind vendors to dispense services through 
vending machines. The Department decided the best course of action was 
to proceed with the proposals in this document because we believe these 
proposed changes strike the right balance of clarity, consistency, and 
future flexibility; costs to Federal agencies, SLAs, and licensed blind 
vendors; meeting the needs of today's customer and supporting current 
and future technological advances and industry trends while 
implementing Congressional intent to increase employment opportunities 
for blind individuals.
    Elsewhere in this section under Paperwork Reduction Act of 1995, we 
identify and explain burdens specifically associated with information 
collection requirements.

Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand. The Department invites 
comments on how to make the regulation easier to understand, including 
answers to questions such as the following:

     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (use of 
headings, paragraphing, etc.) aid or reduce their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec. '' and a numbered heading; for example, 
Sec.  395.1 Terms.)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?

    To send any comments that concern how the Department could make 
these proposed regulations easier to understand, see the instructions 
in the ADDRESSES section.

Regulatory Flexibility Act Certification

    The Department certifies that the proposed regulation would not 
have a significant economic impact on a substantial number of small 
entities.
    The U.S. Small Business Administration Size Standards define 
vending machine operators (NAICS code 445132) as ``small entities'' if 
they have a total annual revenue below $18,500,000 and convenience 
operators as ``small entities'' if they have a total annual revenue 
below $32,000,000. These proposed regulations would affect blind 
vendors and other concessioners that meet this definition; therefore, 
these proposed regulations would affect small entities, but they would 
not have a significant economic impact on these entities based on the 
information currently available.
    The proposed regulations would not compel blind vendors to modify 
their operations. While SLAs may request additional permits and 
contracts, there is nothing that would require a blind vendor to pursue 
such opportunities. Proposed changes would provide blind vendors with 
the opportunity to modernize their vending operations and increase the 
types of vending facilities they might pursue. Adoption of such 
opportunities is voluntary.
    For concessioners who are not licensed blind vendors on NPS sites, 
future contracts may no longer be available if the visitor services 
offered meet the revised definition of ``vending facility.'' Despite 
the potential opportunities on at least 46 NPS sites, we do not have 
data that would support the determination that this would have a 
significant economic impact on the entities.
    For this reason, the proposed priorities would impose little to no 
burden on small entities. Blind vendors would determine whether to 
avail themselves of these opportunities and could weigh any associated 
costs against the likelihood of such changes resulting in additional 
off-setting revenue. Blind vendors most likely would implement changes 
or pursue new vending opportunities only if they determine that the 
likely revenue exceeds the costs associated with implementing the 
changes. Thus, licensed blind vendors would likely experience a 
positive economic impact due to these proposed regulations.
    Concessioners who are not licensed blind vendors on NPS sites may 
be unable to renew their concession contracts; however, there is no 
guarantee of future contracts for such concessioners.
    The Department invites comment regarding our estimates and whether 
this proposed rule may have a significant economic impact on a 
substantial number of small entities, particularly concessioners on NPS 
sites.

Paperwork Reduction Act of 1995

    These proposed regulations do not contain any information 
collection requirements.

Intergovernmental Review

    The RSVFP is not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    In accordance with section 411 of the General Education Provisions 
Act (GEPA), 20 U.S.C. 1221e-4, the Department particularly requests 
comments on whether the proposed regulations would require transmission 
of information that any other agency or authority of the United States 
gathers or makes available.
    Accessible Format: On request to the program contact person listed 
under FOR FURTHER INFORMATION CONTACT, individuals with disabilities 
can obtain this document and a copy of the application package in an 
accessible format. The Department will provide the

[[Page 2573]]

requestor with an accessible format that may include Rich Text Format 
(RTF) or text format (txt), a thumb drive, an MP3 file, braille, large 
print, audiotape, compact disc, or other accessible format.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or PDF. To use PDF, you must have 
Adobe Acrobat Reader, which is available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects in 34 CFR Part 395

    Blind, Concessions, Federal buildings and facilities, Reporting and 
recordkeeping requirements.

Miguel A. Cardona,
Secretary of Education.

    For the reasons discussed in the preamble, the Department proposes 
to revise part 395 of title 34 of the Code of Federal Regulations as 
follows:

PART 395--VENDING FACILITY PROGRAM FOR THE BLIND ON FEDERAL AND 
OTHER PROPERTY

0
1. The authority citation for part 395 is revised to read as follows:

    Authority:  20 U.S.C. 107(b), 107a(a) and 107d-3(g).

0
2. Section 395.1 is amended by:
0
a. Revising paragraphs (x) and (y).
0
b. Adding paragraph (cc).
    The revisions and additions read as follows:


Sec.  395.1   Terms.

* * * * *
    (x) Vending facility means automatic vending machines, cafeterias, 
snack bars, cart service, shelters, and counters, and their appropriate 
auxiliary equipment--
    (1) Which are necessary for the sale of newspapers, periodicals, 
confections, tobacco products, foods, beverages, tickets for any 
lottery authorized by State law and conducted by an agency of that 
State, and other articles or services--
    (i) Dispensed automatically or manually;
    (ii) Prepared on or off the premises in accordance with all 
applicable health laws; and
    (2) Which may be operated by blind licensees pursuant to a contract 
or permit.
    (3) Which include facilities meeting the requirements of paragraphs 
(x)(1) and (2), such as micro markets, laundry or catering 
establishments, retail stores, gift shops, and temporary or mobile 
establishments, such as food trucks and pop-up stands.
    (y) Vending machine means a machine that--
    (1) Automatically dispenses articles;
    (2) Is operated by cash or electronic payment methods; and
    (3) Does not include a self-serve postal center, or any part 
thereof, operated by the United Postal Service for the sale of postage 
stamps or other postal products and services.
* * * * *
    (cc) Articles mean items of tangible personal property that can be 
felt or touched by an individual and can be physically relocated.
0
3. Section 395.30 is amended by revising paragraph (c) to read as 
follows:


Sec.  395.30  The location and operation of vending facilities for 
blind vendors on Federal property.

* * * * *
    (c) Priority in the operation of vending facilities on Federal 
property administered by the National Park Service or the National 
Aeronautics and Space Administration shall be given to blind vendors. 
To the extent that these agencies seek to provide visitor services that 
meet the definition of ``vending facility'' under 34 CFR 395.1(x) and 
are not combined with other visitor services that do not meet that 
definition, the priority for blind vendors applies.
0
4. Subpart D is added to part 395 to read as follows:

Subpart D--Severability

Sec.
395.50 Severability.
395.51 Reserved.


Sec.  395.50  Severability.

    If any provision of this part or its application to any person, 
act, or practice is held invalid, the remainder of the part or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.


Sec.  395.51  [Reserved]

[FR Doc. 2025-00124 Filed 1-8-25; 8:45 am]
BILLING CODE 4000-01-P`