Proposed Rule2025-00124
Amendments to Definitions and Related Provisions Under the Randolph-Sheppard Vending Facility Program
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Published
January 10, 2025
Issuing agencies
Education Department
Abstract
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.
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[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 [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00124]
[[Page 2549]]
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
[[Page 2550]]
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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 <a href="http://www.regulations.gov">www.regulations.gov</a>. However, if you require an accommodation
or cannot otherwise submit your comments via <a href="http://www.regulations.gov">www.regulations.gov</a>,
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 <a href="http://www.regulations.gov">www.regulations.gov</a> to submit
your comments electronically. Information on using <a href="http://Regulations.gov">Regulations.gov</a>,
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
<a href="http://www.regulations.gov">www.regulations.gov</a>. 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: <a href="/cdn-cgi/l/email-protection#e2a18d908b8c8c87ccb5878b86878c968a838ea28786cc858d94"><span class="__cf_email__" data-cfemail="c487abb6adaaaaa1ea93a1ada0a1aab0aca5a884a1a0eaa3abb2">[email protected]</span></a>.
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 <a href="http://www.regulations.gov/docket/ED-2024-OSERS-0088">http://www.regulations.gov/docket/ED-2024-OSERS-0088</a>.
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:
<bullet> Define ``articles,'' thereby ensuring clarity and
consistency for the scope of items that may be sold at vending
facilities and by vending machines.
<bullet> Modify the definition of ``vending facility'' to describe
the scope of business models allowed.
<bullet> 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:
<bullet> 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.
<bullet> 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
[[Page 2551]]
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:
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> 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 <a href="http://Regulations.gov">Regulations.gov</a>.
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
[[Page 2552]]
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:
<bullet> dry or sundry facilities;
<bullet> snack bars, which may involve the sale of food prepared
on/off the premises;
<bullet> cafeterias; and
<bullet> 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 <a href="https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance">https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance</a>.
\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
[[Page 2553]]
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., <a href="https://www.irs.gov/individuals/international-taxpayers/persons-employed-in-us-possessions">https://www.irs.gov/individuals/international-taxpayers/persons-employed-in-us-possessions</a>.
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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 <a href="https://rsa.ed.gov/about/rsa-annual-reports-to-congress">https://rsa.ed.gov/about/rsa-annual-reports-to-congress</a>.
\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 <a href="https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance">https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/legislation-regulations-and-sub-regulatory-guidance</a>. 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).
<a href="https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources">https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources</a>.
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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).
<a href="https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources">https://rsa.ed.gov/about/programs/randolph-sheppard-vending-facility-program/resources</a>.
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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.
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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. <a href="https://www.merriam-webster.com/dictionary/article">https://www.merriam-webster.com/dictionary/article</a>.
\19\ <a href="http://Dictionary.com">Dictionary.com</a> 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.
<a href="https://www.dictionary.com/browse/article">https://www.dictionary.com/browse/article</a>.
\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.'' <a href="https://www.merriam-webster.com/dictionary/good#dictionary">https://www.merriam-webster.com/dictionary/good#dictionary</a>.
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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.
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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 <a href="https://rsa.ed.gov/sites/default/files/programs/randolph-sheppard/UPDATE_-_RS_Permit_3-09-21%20">https://rsa.ed.gov/sites/default/files/programs/randolph-sheppard/UPDATE_-_RS_Permit_3-09-21%20</a>(1).pdf, Attachment
G, Paragraph J.
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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.
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\23\ National Automatic Merchandising Association, <a href="https://namanow.org/convenience-services/micro-markets/">https://namanow.org/convenience-services/micro-markets/</a>.
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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.
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\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)).
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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. <a href="https://www.merriam-webster.com/dictionary/article">https://www.merriam-webster.com/dictionary/article</a>.
\27\ <a href="http://Dictionary.com">Dictionary.com</a> 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.
<a href="https://www.dictionary.com/browse/article">https://www.dictionary.com/browse/article</a>.
\28\ Goods, Merriam-Webster Dictionary, <a href="https://www.merriam-webster.com/dictionary/good#dictionary">https://www.merriam-webster.com/dictionary/good#dictionary</a>-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, <a href="https://www.econ.umd.edu/sites/www.econ.umd.edu/files/pubs/04%20-%20Chapter%204%20-%20Betancourt.pdf">https://www.econ.umd.edu/sites/www.econ.umd.edu/files/pubs/04%20-%20Chapter%204%20-%20Betancourt.pdf</a>. (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).
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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\
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\33\ The Evolution of the Electronic Payment System Until 2020
(TokenEx, Inc., Jan. 6, 2020). Further information can be found at
the following website: <a href="https://www.tokenex.com/blog/evolution-electronic-payment-systems-until-2020">https://www.tokenex.com/blog/evolution-electronic-payment-systems-until-2020</a>.
\34\ Contactless Payments Transaction Values to Surpass $10
Trillion Globally by 2027(Juniper Research, 2022). <a href="https://www.juniperresearch.com/press/contactless-payments-transaction-values-to-surpass./">https://www.juniperresearch.com/press/contactless-payments-transaction-values-to-surpass./</a>
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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.
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\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.
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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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
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\48\ U.S. Department of the Interior (2023, April 4). National
Park Service: Authorized Concessioners. National Park Service:
Concessions. Retrieved May 17, 2024, from <a href="https://www.nps.gov/subjects/concessions/authorized-concessioners.htm">https://www.nps.gov/subjects/concessions/authorized-concessioners.htm</a>.
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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. <a href="https://vendinghow.com/article/should-i-consider-a-credit-card-reader-vending-machine">https://vendinghow.com/article/should-i-consider-a-credit-card-reader-vending-machine</a>.
---------------------------------------------------------------------------
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:
<bullet> Are the requirements in the proposed regulations clearly
stated?
<bullet> Do the proposed regulations contain technical terms or
other wording that interferes with their clarity?
<bullet> Does the format of the proposed regulations (use of
headings, paragraphing, etc.) aid or reduce their clarity?
<bullet> 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.)
<bullet> 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?
<bullet> 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 <a href="http://www.govinfo.gov">www.govinfo.gov</a>. 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:
<a href="http://www.federalregister.gov">www.federalregister.gov</a>. 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
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.