failure of the program to grow as anticipated. For one, although appropriations are authorized, not one cent has ever been appropriated to improve the program. The number of staff at the Federal level, particularly in the RSA Central office, is inadequate to undertake all, or even most, of the responsibilities assigned to them by the act. Federal property managers continue to default on their responsibilities under the act. Many State licensing agencies are not aggressive in identifying vending opportunities, or in demanding vending machine income, at Federal locations. Other State agencies do not protect the interests of their licensed vendors, or serve as their advocates, to a sufficient extent.

The result of all these problem areas is that life for many blind vendors is a constant battle. The blind vendors of this country deserve a lot better treatment than they are receiving, Mr. Chairman. I believe one reason the program has not flourished is that current blind operators become frustrated and discouraged, and finally leave the program. Those blind persons and there are many-who need employment and who are good candidates for the Randolph-Sheppard program, often are frightened away by the problems they hear about. Decent vending opportunities do not become available until long after the new vendors are trained and licensed, if ever. The expectant vendors become discouraged and drop out. It is difficult to expand a program when there is no enthusiasm in a State licensing agency, or when no vending opportunities exist.

Before I respond to your request for current examples of violations of the Randolph-Sheppard Act, I believe it would be useful to review for the committee the major provisions of that landmark law, particularly as expanded by the 1974 amendments, and to discuss the reasons for their inclusion.

As it was originally enacted on June 20, 1936, the Randolph-Sheppard Act simply authorized blind persons to operate vending stands in Federal buildings as long as the involved Federal agency approved of such placement. In 1954, after some years of experience under the Act, Congress expanded the kinds of articles which could be sold by blind vendors, and accorded a preference in the operation of vending stands in Federal buildings to blind vendors, so long as United States interests were not affected by such operation, as determined by the Federal building manager or

agency.

By 1969 it had become apparent to Senator Jennings Randolph, the original author of the act, that Federal agencies were not providing the number and quality of opportunities for establishing blind vending facilities to the extent they should be. Vending machines in Federal buildings were taking income away from blind vendors. Federal employee morale and welfare groups were laying claim to vending machine income and expending it for their own purposes. Agencies were actually discouraging the establishment of Randolph-Sheppard facilities.

After a series of hearings, bills being reintroduced through several sessions of Congress, and a report on blind vending operations on Federal property by the General Accounting Office, the 1974 amendments were enacted. Congress was determined, once and for all, to set forth strongly and clearly its intention that blind vending facilities are preeminent on Federal property. The mechanisms for ensuring this preeminence were numerous. It was believed at the time that if all these mechanisms were put into place the program would flourish, and a segment of the disabled population with one of the highest levels of unemployment, finally would be offered many new job opportunities.

First, the act provided a priority, or prior right, not merely a preference, to blind licensees for the operation of vending facilities on any Federal property. Congress set forth the requirement that wherever feasible, one or more blind vending facilities are to be established on all Federal property. Any limitation on the placement or on the operation of a blind vending facility by a Federal department, agency or instrumentality was required to be justified in writing to the Secretary of Education (then HEW). No such limitation is approvable unless the Secretary finds that the blind vending operation is adverse to the interests of the United States.

Next, the 1974 amendments required that every new building owned or leased by the Federal Government, and every building substantially altered or renovated by or for the Federal Government after January 1, 1975, must include a satisfactory site for a blind vending facility. The appropriate State licensing agency is authorized, in consultation with the Federal property manager, to select satisfactory sites and require the establishment of a blind vending facility.

For the first time, the amendments mandated that all income from vending machines on Federal property which are in direct competition with a blind vendor must be turned over to the affected vendor and the State agency. Where there is no direct competition, 50 percent of the income, in most situations, is to be turned over to the state licensing agency for the benefit of the blind vendors.

The new law gave vendors and state agencies important weapons with which to vindicate their rights. Mandatory arbitration was established for aggrieved vendors against State licensing agencies, and for state agencies against Federal property managing agencies, and the arbitration panels have broad authority to provide remedies. Judicial review of arbitration decisions is authorized. State committees of blind vendors were required to be established. The committees were given the right to participate in the major administrative and policy decisions of the State agencies and to advocate on behalf of all vendors in the State.

Randolph-Sheppard was modernized in various other respects, as well. For example, the new law made clear that no limit should be imposed on the nature of a blind vending operation, or on what a blind vendor could sell. That is why "vending stands" became "vending facilities," and cafeterias were included as vending facilities to be accorded priority under the act.

The foregoing provides a broad description of what the Congress did in 1974, and why it was done. A lot of Federal agencies, and even some State licensing agencies, have been unable or unwilling to accept these changes and their intended magnitude. This has caused excruciating problems for blind vendors. In many cases the vendors have been unable to fight for their rights because they lacked the resources to do so. Often they have had to rely on the state agency to do battle for them, since vendors may not under the Act bring arbitration complaints against Federal property managers.

The courts, mainly Federal district courts, have not applied the provisions of the act uniformly, nor have they agreed on the scope of remedies authorized by the act. Some courts have been unwilling to accept the plainly expressed intent of the act, which generally requires any doubt to be resolved in favor of the blind vendors who the act intended exclusively to benefit. Other courts have not been willing to acknowledge the broad remedial authority of arbitration panels and hence, on review, the courts-to award damages and costs, including attorneys' fees, to the prevailing party. All this has had a dampening effect on the vigor with which aggrieved vendors seek to right the wrongs that have been visited upon them. Only the most determined, stubborn, and resolute of vendors are willing to take the risk. Hence, in many cases, their grievances and many violations of the act go unheard, and unremedied.

Although undoubtedly unaware of many current and potential controversies in the Randolph-Sheppard program, and of many violations of the act, I am familiar with a number of these. Other witnesses will add to the list, I am certain, and the committee will be able as a result to see a pattern and practice emerge that it has the duty to address.A number of Randolph-Sheppard cases brought to court since 1974 have been decided incorrectly in terms of Congressional intent, in my view. Likewise, although most arbitration decisions have correctly interpreted the law, some have not. The existing RSA regulations in some respects do not adequately reflect the mandates of the act, so that arguments raised by opponents of aggrieved blind vendors, or State licensing agencies, are sufficiently persuasive to some courts or arbitration panels that the true intent of the act is too often subverted. Following are some recent or pending examples of failures to abide by the spirit or letter of the law which I offer to the committee for its review and action.

In the District of Columbia, the blind vendors brought a class action lawsuit against the city after the State licensing agency nearly 7 years ago took the vendors' set aside funds from their net proceeds to pay an illegal nominee agency which provided no appreciable services to the vendors. The vendors won, the District Court awarded compensatory damages as restitution, attorneys' fees and costs, and interest, all totalling about $850,000 at this point. The city has appealed the judgment, refusing to concede liability. Meanwhile, 11 of the blind vendors who were part of the original class have died, and 14 others have retired. The District's main contentions are that the Randolph-Sheppard Act does not provide damages or attorneys' fees. In another local case, the General Services Administration awarded a contract for operation of a renovated cafeteria to a major professional food service company, and at the same time evicted a 71-year-old blind vendor who had operated the cafeteria for 5 years, and who had been a Randolph-Sheppard vendor for more than 40 years. GSA maintains the cafeteria is new, and that the State licensing agency-the District of Columbia government-submitted a proposal that was not in the competitive range. Although Federal regulations require GSA to consult the Secretary of Education on the blind vendor priority in such cases, GSA did not do so. In addition, GSA did not seek Secretarial relief from the Randolph-Sheppard Act's prohibition against any limitation on the placement or operation of a blind vending facility. The District has filed a complaint for arbitration.

A national case that has been pending in one form or another since 1984 is the socalled "McDonald's-Burger King case. After considerable litigation and a lengthy arbitration process, a unanimous arbitration panel recently held that Defense Department agencies committed per se violations of the act when they solicited national fast food hamburger companies to provide outlets on military and naval installations throughout the country. In both this and the GSA case, the Department of Education failed to assert its prerogatives to protect and nourish the RandolphSheppard program.

In Georgia, the U.S. Court of Appeals in a split decision found that a State licensing agency cannot be compelled by a blind vendor to bring an arbitration complaint against a violating Federal agency, even though the agency closed the vendor's facility and left her out of work. The court said that arbitration is elective, and since only a State licensing agency can file an arbitration complaint against a Federal agency, the blind vendor could not sue the State agency for failing to do so. The blind vendor therefore had no remedy. Since she had no remedy, the court also reversed the award of attorneys, fees by the arbitration panel and the District Court. In Arkansas, a blind vendor brought an arbitration complaint against the State because it denied him a vending facility to which he was entitled by seniority. After the hearing but before the arbitration decision was issued, the Commissioner of RSA said the Secretary of Education took the position that neither compensatory relief nor attorneys' fees were contemplated by the act, and such awards would be contrary to the immunity of States from suit under the 11th Amendment. Ignoring the RSA Commissioner's statement, the arbitration panel confirmed the vendor's right to the facility he sought, and said he also had a right to ask the panel to consider additional compensatory relief, attorneys' fees, and costs. The RSA Commissioner refused to reconvene the panel and the vendor appealed to the District Court which determined that arbitration panels have authority to award compensatory relief and attorneys' fees. The Court of Appeals, in a confused mixture of opinions, affirmed the district court decision, modified to the extent that it found panels could award prospective, but not retroactive, damages. The court directed the Secretary of Education to reconvene the panel.

In Minnesota, the State licensing agency brought an arbitration complaint against the Department of Veterans Affairs for failure to give priority under the act to a blind vending operation. Although the arbitration panel found a violation of the act, it allowed the Federal department to continue charging the vendor a 17 percent commission to operate the blind vending facility. This decision is being appealed to the Federal courts by the State. The result is contrary to the spirit of the act: rather than giving a priority to blind vending operations as the act requires, the Department of Veterans Affairs is for all practical purposes requiring the vendor to buy his priority.

The Department of Veterans Affairs has asserted as official policy that its Canteen Service is exempt from the Randolph-Sheppard Act. This is plainly wrong. No Federal department, agency, or instrumentality is exempt from coverage by the act. In Mississippi NASA, the space agency, let a contract to a local bottling company to service and operate soda vending machines. NASA contested the State's assertion that the vending machines should be combined to be operated as a single vending facility by a blind vendor. The State sought arbitration on the issue, and won.

Other issues and problems arise constantly, throughout the country. Apart from the major controversies, blind vendors daily face small frustrations and obstacles, both from their own State agencies which exist for the vendors' benefit and which are supposed to be supportive and not obstructive, and from the Federal or other property manager of the building that houses them.

Apart from the negative attitudes of many Federal property managers toward the Randolph-Sheppard program, and their resistance to meeting their statutory obligations, there is another reason for this committee to express its concern at the Federal level. The office within the Rehabilitation Services Administration charged with the responsibility of administering and overseeing the program has never been adequately staffed. Section 208 of Public Law 93516 directed the Secretary to assign ten additional full-time personnel to carry out duties related to the Randolph-Sheppard Act. The number of staff currently assigned is woefully inadequate, and is not in accord with the requirements of the law.

Here in Washington, the seat of the Federal Government, problems abound. The Government Printing Office generates some $75,000 in annual vending machine income which should be provided to the District's blind vendors, but GPO has refused, and continues to refuse, to turn over the income. The Federal Bureau of Investigation at one time provided over $55,000 a year in vending machine income to the blind vending program. In 1984 it unilaterally decided to reduce the amount to

$5,000. The District's State licensing agency objected, but did not file an arbitration complaint. In just these two isolated examples it is apparent that the District's blind vendors over the years have been robbed of hundreds of thousands of dollars.

Mr. Chairman, thank you again for holding these hearings. The blind vendors of the Nation are grateful for your interest. After what you hear today, I urge you most emphatically to take decisive action to terminate the abuses and correct the misconceptions that engulf this vital program. I respectfully offer to you and the committee such time, energy, and assistance as you may require of me, in the hope that I can help to put the Randolph-Sheppard program back on track. The Nation's blind vendors deserve no less.

Thank you.

Chairman OWENS. Thank you.

Mr. Durward McDaniel.

Mr. MCDANIEL. Thank you, Mr. Chairman.

I, too, wish to commend this subcommittee for holding these hearings. It's timely.

The Act, as amended, has, based on paper, created some progress; but in terms of jobs for blind people, the trend is the other way. There are fewer blind people working in the RandolphSheppard program today than there were in 1974 when the Act was amended.

I have been asked to speak with some emphasis on arbitrations because of my experience in arbitration panels. I am now serving on my ninth one, which includes what Mr. Humphreys referred to as the McDonald's-Burger King arbitration panel, which went on for several years.

We came out with a modified, not quite perfect, but progressive decision there; and I must say that asking for food services on a multi-state or national basis transcends the ability of any one State licensing agency to bid or operate outside their own State bound

aries.

And I would say to you that I think that example, which may be the trend for the future, underscores the need for a more aggressive RSA to assert its leadership in finding locations, but also in even negotiating multi-state arrangements which the licensed blind vendors could operate on a multi-state or national basis.

I point out in my written testimony some examples of violations. The break-even policy of the Postal Services obviously is contrary to the Act but still being done, and I hope that the resources can be brought together to adjudicate that, although it is expensive.

Of course, the Defense Department is in first place in not complying with the Act, and if at such time as the amendments are presented to the Randolph-Sheppard Act, I would want to have the opportunity to make some suggestions about some correction of court cases that have happened to impair the Act.

I do have some suggestions about how the arbitration panels can be strengthened. I think the Secretary of Education could do much of that by amending the rules. The rules are rather sparce in that respect, and I call special attention to the defects as far as evidentiary hearings where blind vendors are concerned, because the Secretary will not pay the reasonable costs of evidentiary hearings or the costs of a complainant in an arbitration case.

And the evidentiary hearings are while the idea is meritorious-actually it asserts a step that is to be exhausted to get to arbitration. But the final agency action at the State level is such that

blind vendors understand and believe that in most cases, they are going to lose because the final decision is to be made by somebody at State government level.

I advocate that in such cases the decision should be made by the administrative law judge, who can make a final agency decision, and that hearings be conducted in accordance with the State's Administrative Procedures Act or the Federal Administrative Procedures Act. The Secretary could require that by rulemaking if he would.

I am generally supportive of the arbitration mechanism. If we didn't have it, I suggest to you that the plight of blind vendors and jobs would be much worse than it is today.

We persuaded Congress in 1974 to amend the Act, and it is a good Act. It needs to be enforced. The number of jobs could be doubled in 5 years, but instead it has gone down; and I think the Federal leadership is the major factor in that decline.

I do advocate, as you will note, a special supplemental appropriation of $16 million, not requiring State matching funds, to help reverse this decline.

It is a viable program. But, when we consider the number of jobs that have been created generally in our economy in the 17 years since the 1974 amendments, we are losing ground while the general economy has gained.

Whether we can expect to gain a proportion or not, we certainly should have gained, not lost; and I think the arbitration provisions should be, if anything, strengthened, certainly not abandoned.

I do give some emphasis to what Mr. Humphreys said about the staffing of the Division for the Blind and also for the greater recognition and participation of the State committees of blind vendors. I also touch on the subject that Congressman Ballenger mentioned, that is the opening up of the Act to other disabled persons. Separate State agencies for the blind cannot serve other disabled persons; and I suggest to you, with emphasis, that to generate a surplus of applicants for already too few jobs would just generate friction and discontent for blind people and other disabled people. I do point out, and we will hear, that the Rehabilitation Act provides for a business enterprise program outside of Randolph-Sheppard, which is available to other disabled persons but which hasn't been used much. And until that is used, I think we couldn't, I think nobody could demonstrate a real demand for a business enterprise program within Randolph-Sheppard.

I would say to you that the arbitration right is fundamental, it is expensive, and most blind vendors cannot afford it. I understand that in the early days of the 1974 amendments the Secretary did pay for some of the costs of arbitration on the part of the complainant, but they stopped that policy.

The law doesn't equivocate. It says the Secretary shall pay for all reasonable costs of arbitration. That has not been done. There are many things we can talk about, but with that, I will stop and answer any questions you may have.