Appendix — Texas State Commission for the Blind v. United States, 107 S. Ct. 874 (1987) (No. 86-493)

8 S* 49 3 Supreme Court, U.S. .

Sa 2 aoe

SEP 24 1986

NO. }

JOSEPH F. SPANIOL, JR. |

— -GtERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1986

TEXAS STATE COMMISSION FOR THE BLIND

AND THE STATE OF TEXAS,

Petitioners

7

THE UNITED STATES OF AMERICA,

Respondents.

On Petition For Certiorari To The

United States Court Of Appeals For

The Federal Circuit

APPENDIX TO PETITION FOR CERTIORARI

JIM MATTOX

Attorney General of Texas

MARY F. KELLER

Executive Assistant Attorney

General for Litigation

P.O. Box 12548

Austin, Texas 78711

(512) 463-2100

DAVID R. RICHARDS

PHILIP DURST*

Richards & Durst

600 W. 7th Street

*Counsel of Record Austin, Texas 78701

September 22, 1986 (512) 479-5017

-

TABLE OF CONTENTS

Appendix A Opinion of the Court of Appeals For the

Appendix B

Appendix C

Federal Circuit, en banc, (June 26, 1986) ..... A-l

Opinion of the Claims Court

I ED cee ke es B-1

Opinion of the Arbitration Panel Conven-

ed Pursuant to 20 U.S.C. §107d-1

I co ee tes ou C-1

APPENDIX A

UNITED STATES COURT OF APPEAL

FOR THE FEDERAL CIRCUIT

TEXAS STATE COMMISSION )

FOR THE BLIND AND STATE )

OF TEXAS, )

Appellees,

v. Appeal No. 85-1954

THE UNITED STATES,

)

)

)

)

Appellant. )

DECIDED: June 26, 1986

Before MARKEY, Chief Judge, FRIEDMAN, RICH, DAVIS,

BALDWIN, SMITH, NIES, NEWMAN. BISSELL and AR-

CHER, Circuit Judges.’

NIES, Circuit Judge.

The United States appeals from the judgment of the U.S.

Claims Court’ holding the United States liable under the

income-sharing provisions of the Randolph-Sheppard Act, 20

U.S.C. §§ 107-107f (1982), to the Texas State Commission for

the Blind and the State of Texas (collectively hereafter, TSCB)

for income derived from vending machines operated by the

military exchanges of the Department of Defense. We reverse.

‘4

This appeal involves a question of statutory interpretation

of the Randolph-Sheppard Act (the Act). More precisely, the

issue is whether a regulation of the Department of Defense

(DOD) reasonably interprets the scope of the statutory

1. The appeal was originally heard by a panel of this court. Subsequently,

one member of the panel retired and the court voted to decide the case in

banc. Our jurisdiction rests on 28 U.S.C. § 1295(a)(3) (1982).

2. 6 Cl. Ct. 730 (1984).

A-2

exemption provided for military exchanges from the re-

quirements of the Act that income from vending machines on

federal property be shared with blind vendors and/or state blind

agencies.

In 1936, Congress passed the Randolph-Sheppard Act, Ch.

638, 74 Stat. 1559 (1936) (current version at 20 U.S.C. §§ 107-107f

(1982)), to provide blind persons with remunerative employment

and economic opportunities by permitting them to operate vend-

ing stands in federal buildings. The program was only moderate-

ly successful. Part of the problem was general apathy to the

program among the agencies. In addition, civilian employee

welfare and recreation groups were being permitted by agen-

cies to place vending machines in federal buildings to finance

the activities of such groups. The competition from these

machines diverted income from blind vendors and made the

establishment of new vending stands economically unattractive.

The practice of allowing employee groups, such as unions, to

utilize federal property free of charge and to retain the funds

without any accountability was of questionable legality. In 1952,

the Comptroller General issued an opinion advising the At-

torney General that funds derived from vending machines at

the Federal Bureau of Investigation were received “for the use

of the United States” within the meaning of that phrase in 31

U.SC. § 484 and were required to be deposited into the Treasury

as miscellaneous receipt. Comp. Gen. Dec. B-111,086, 32 Comp.

Gen. 124 (1952). In view of that opinion, the Comptroller

General, in a related opinion that year, ruled that the practice

of allowing postal employee groups to install vending machines

on federal property and retain the profits was of “doubtful’”’

legality. However, the Comptroller General concluded that his

office would “interpose no objection to the continued use of pro-

ceeds by employee groups” pending action on clarifying legisla-

tion which the Controller General had recommended to

Congress.°

In 1954, Congress amended the Randolph-Sheppard Act to

make it more effective. Amendments to the Randolph-Sheppard

3. Comp. Gen. Dec. B-112,840, 32 Comp. Gen. 282 (Dec. 10, 1952). The pro-

posed legislation was never passed.

A-3

Vending Stand Act Pub. L. No. 83-565, § 4, 68 Stat. 663 (1954).

These amendments mandated that blind vendors be given a

“preference,” so far as feasible, in establishing new stands on

federal property and authorized the heads of agencies to assign

vending machine income to blind vendors with whom vending

machines directly competed in order to assure such “preference.”

However, it appears that the assignment of income power was

virtually ignored. In 1962, Senator Randolph, in proposing fur-

ther amendments to improve the opportunities for the blind,

specifically recognized that vending machines of civilian

employee groups were the source of the problem and urged that

such groups could and should find “other means of financing

[their] projects.” Operation of Vending Stands for the Blind in

Federal Buildings: Hearing on S. 394 Before the Special Sub-

comm. of the Senate Comm. on Government Operations, 87th

Cong., 2d Sess. 10 (1962).

In 1974, over strong opposition by civilian employee groups,

particularly the Postal Workers Union, significant changes were

made in the Act because of continued congressional dissatisfac-

tion with the limited expansion of the blind vendor program.

Randolph-Sheppard Act Amendments, Pub. L. No. 93-516, Ti-

tle II, 88 Stat. 1622 (1974). These amendments were in large

part, again, the result of the efforts of Senator Randolph and

included provisions by which blind vendors were given “‘priori-

ty” (not merely a preference) in operating new facilities so as

to increase their numbers; the items allowed to be sold were ex-

panded; and income from vending machines—with some

exemptions—were required to be shared either with blind ven-

dors directly or with state agencies for the blind. The sharing

percentages are 100% for machines in direct competition with

blind vendors; 50% where there is no direct competition unless

at least half of the hours worked on the premises where the

machines are located are outside normal working hours; and

30% in the latter case. 20 U.S.C. § 107d-3(b)(1) (1982).

The exemption provided in the 1974 amendments, which con-

cerns us here, is found in 20 U.S.C. § 107d-3(d) (1962) and

provides:

Subsections (a) and (b)(1) [income sharing] of this sec-

tion shall not apply to income from vending machines

A-4

within retail sales outlets under the control of ex-

change or ships’ stores systems authorized by title

10, or to income from vending machines operated by

the Veterans Canteen Service, or to income from vend-

ing machines not in direct competition with a blind

vending facility at individual locations, installations,

or facilities on Federal property the total of which at

such individual locations, installations, or facilities

does not exceed $3,000 annually. [Emphasis added.]

A DOD regulation, 32 C.F.R. § 260.3(i)(3)(i) (1985), interprets

this exemption to exclude:

Income from vending machines operated by or for the

military exchange or ships’ stores systems.

A number of state agencies, TSCB being one, nevertheless,

sought to share in the income of military exchanges. In May,

1979, TSCB filed a complaint with HEW which resulted in the

convening of an arbitration panel, as provided in the statute

(20 U.S.C. § 107d-1(a) (1982)), to adjudge the validity of its

asserted right to a share of vending machine income of the

military exchanges. TSCB argued that the statutory exemp-

tion covered only those vending machines of the military ex-

changes physically located within the four walls of military ex-

change stores.

In a split decision, the arbitration panel of three held that

the position of TSCB was the correct interpretation of the

statute. Texas (Texas State Commission for the Blind) v.

Department of Defense, No. TD 70-4 (Sept. 2, 198i). The ma-

jority of the arbitrators stated that the statutory language did

not ‘‘appear to be ambiguous.” Slip op. at 11. “‘Within retail

sales outlets,’’ per the two arbitrators, would normally be

understood to mean “‘inside the four walls of an exchange

system store.’’ They then recognized that ‘‘within”’ could also

mean ‘‘a part of’’ but concluded that this would render the

phrase “‘retail sales outlets’’ meaningless. Slip op. 11-12. On

_ the other hand, the unequivocal legislative history against

reaching income of the military exchanges raised questions in

their minds as to the ‘‘clarity’’ of the language. Slip op. at 12.

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A-5

Ultimately, the two arbitrators resolved the question of the

scope of the military exemption by reliance “‘on the general in-

tent and approach of the legislation itself. These facts argue

for a narrow reading of any limitation on opportunities for the

blind.”’ Slip op. at 15. To be exempt, they concluded, vending

machines had to be ‘“‘within the four walls of an exchange

system store”’ but ‘expressly [did] not decide the issue of

whether vending machines directly outside retail sales outlets

are to be deemed inside or outside these stores.’ Slip op. at

18 and n.27. The majority found final support for its position

in regulations of the Department of Health, Education and

Welfare (HEW), the principal agency under the Act charged

with its administration. The majority did not rely on specific

language in the HEW regulations (the regulations simply repeat

the statute), but on HEW’s refusal to amend its regulations

to include the broad exemption language requested by DOD.

Slip op. at 16-17.

The dissenting arbitrator, in reaching his conclusion that

DOD’s position was correct, relied on the essentially different

nature of the military exchanges from civilian employee welfare

and recreation groups. Through the profits generated by

military exchanges, essential governmental support services

were provided for military service personnel and their families.

He noted that extracts from Congressional Hearings and

Reports of record dated 1949, 1953, 1970, 1972, 1974, 1978 and

1979 on non-Randolph-Sheppard legislation established that

this arrangement had been recognized and approved by Con-

gress as mutually beneficial to service personnel and to the

public fisc. In his view, the legislative history unequivocally

indicated that the military exchange systems were intended

to be exempt and that that purpose could be given effect

without a strained reading of the words of the statute.

In the minority arbitrator’s view, the statutory language had

no “plain meaning.’’ Indeed, TSCB had conceded that the

statutory words “retail sales outlet’’ and ‘‘within’’ were suscep-

tible to more than one interpretation, and the majority opinion

had expressly left open the question whether vending machines

directly outside exchange stores should be deemed ‘‘within”’

such stores under the statute. The “‘plain language”’ of the

statute seen by the majority, in his words, ‘‘turned out not

A-6

’

to be so plain.’

Following the decision cf the arbitration panel, on September

2, 1981, TSCB sought to obtain enforcement of the arbitration

decision by the Department of Education (DOE), which had

succeeded to HEW’s authority under the Randolph-Sheppard

Act. Act of October 17, 1979, Pub. L. No. 96-88, Title VI, 93

Stat. 696. In the interim, the State of Oklahoma had initiated

litigation in federal district court against DOD on a comparable

claim to military exchange income.’ Because of the conflict

between the interpretations of the statute by two government

departments (DOE and DOD), DOE referred the matter to the

Department of Justice for resolution, as required by Executive

Order No. 12,146, 3 C.F.R. § 409,411 (1980). On February 1,

1982, the Department of Justice advised that it resolved the

conflict in favor of DOD. Therefore, the Department of Justice

undertook to defend the Oklahoma suit on the basis of DOD’s

interpretation.

The decisions in the Oklahoma litigation are reported at

Oklahoma v. Weinberger, 582 F. Supp. 293 (W.D. Okla. 1982),

aff d, 741 F.2d 290 (10th Cir. 1983). In sum, those courts held

that the statutory language was not without some ambiguity

as evidenced by the changes in HEW’s position during the draf-

ting of its own regulations.’ In their view, the proposed nar-

row interpretation was contrary to the intent of Congress, since

limiting the exemption to vending machines physically within

exchange stores would effectively deprive the exchanges of any

exemption. On the other hand, the DOD regulation, endorsed

by the Department of Justice, was consistent with the

statutory language, the purpose of the exemption, and congres-

sional intent in the overall purpose of the Act. Thus, both the

Oklahoma district court and the 10th Circuit held DOD’s

regulation valid.

4. Oklahoma had filed an arbitration complaint more than a year before.

The district court did not require exhaustion of administrative remedies

because of the delay and the government's interposing of no objection.

Oklahoma v. Weinberger, 582 F. Supp. 293, 294 n.2 (W.D. Okla. 1982).

5. We note that the Tenth Cirucit, in affirming summary judgment,

specifically quoted the district court's finding that the language was ‘‘am-

biguous,”"’ 741 F.2d at 292.

A-7

The suit by TSCB, seeking enforcement of the arbitration

award in its favor, was filed in the United States Claims Court

in March, 1983. The Claims Court rendered its decision,

upholding the award, after the 10th Circuit decision, thereby

creating a clear conflict in interpretation.

The Claims Court’s decision turned particularly on the mean-

ing of the statutory term “‘within.’’ The common usage of the

term, per the court, ‘“‘contemplates spatial boundaries.”’ 6 Cl.

Ct. at 738. The court discounted the significance of the

legislative history relied on by the 10th Circuit since the Claims

Court considered the history to be ‘‘at odds”’ with the concept

of “‘within physical boundaries.” 6 Cl. Ct. at 740. A particular

colloquy on the House floor between Messrs. Brademas and

Sikes (which specifically supports DOD’s interpretation) was

discounted because it occurred after the Senate passed the bill

and could not have been considered by that body.*/d. at 741.

The Claims Court viewed other portions of the legislative

history as supporting TSCB’s position because of the use of

the words “‘retail outlet’’ therein which, in its understanding,

meant a store.’ Jd. at 740. The court also noted the Con-

ference Report characterizing the exemption as excluding “‘cer-

tain locations.’’ Jd. citing S. Rep. No. 1270, 93rd Cong., 2d Sess.

35 (1974); H.R. Rep. No. 1457, 93rd Cong., 2d Sess. 35 (1974).

Further, the legislative history’s reference to the Marine Corps

base in Albany, Georgia, as a ‘“‘model”’ because of the number

of blind vendors was seen to overcome DOD’s argument that

the income-sharing provisions were directed to the civilian

groups only. 6 Cl. Ct. at 741.

Finally, since the majority of vending machines on DOD-

controlled property are operated by the exchange system, the

congressional purpose of the act would be frustrated, per the

Claims Court, if these were exempt. To avoid “‘nullifying”’ the

statute, the court ruled in favor of TSCB. Jd. at 741-42.

6. That the Claims Court was incorrect on this point is analyzed infra.

7. The court quoted from the Senate Report, S. Rep. No. 937, 93rd Cong.,

2d Sess 21 (1974), ‘Subsection (d) provides that the assignment of income

provisions of subsections (a) and (b)(1) do not apply to vending machine in-

come from military exchange retail outlets’’ and a similar passage, S. Rep.

No. 937 at 30.

A-8

The court certified the question of statutory interpretation

to this court which accepted jurisdiction.”

Upon consideration of the statutory language, the legislative

history, the purpose of the exemption, and the status of the

military exchanges as non-appropriated fund instrumentalities

performing essential governmental services, we conclude that

the Claims Court erred in voiding the DOD regulation.

The task before us of interpreting the statutory language of

the military exchanges exemption is succinctly summarized in

United States v. Turkette, 452 U.S. 576, 580 (1981):

In determining the scope of a statute, we look first

to its language. If the statutory language is unam-

biguous, in the absence of the contrary, that language

must ordinarily be regarded as conclusive.’ Consumer

Products Safety Comm’n v. GTE Sylvania, Inc., 447

U.S. 102, 108 (1980). Of course, there is no errorless

test for identifying or recognizing “‘plain”’ or ‘‘unam-

biguous” language. Also authoritative administrative

8. Faced with the 10th Circuit decision, TSCB sought to prevent the

government from raising any legal question attacking the merits of the

award. TSCB contended that the Claims Court lacked ‘‘jurisdiction”’ to con-

sider such a defense for two reasons: (1) the Act provides for a right to ap-

peal from an arbitration award only specifically in favor of the claimant, and

(2) alternatively, the government's challenge shouid be considered barred

by a statute of limitations.

We need not decide whether the U.S. could have taken an appeal from the

award. The issue is whether the presence of a specific provision in the Act

allowing appeal by the claimant bars the U.S., by implication, from defend-

ing against enforcement of the award on the ground that the award is not

authorized that it does not. With respect to the assertion of a bar based on

a state of limitations, none is applicable here against the United States.

United States v. Summerlin, 310 U.S. 414, 416 (1940) (United States is not

bound by state statutes of limitations); Guaranty Trust Co. v. United States,

304 U.S. 126 (1938) (United States is not bound by federal statutes of limita-

tions unless their terms specifically so provide). Finally, TSCB makes no

argument that the government is improperly making a collateral attack on

the arbitration award. In this connection, we note that the parties agreed

before the arbitration panel that ‘‘the meaning of the exemption will be finally

resolved by the courts."’ Accordingly, we hold that the Claims Court pro-

perly considered the issue of the legality of the award under the statute.

A-9

construction should be given the deference to which

they are entitled, absurd results are to be avoided and

internal inconsistencies in the statute must be dealt

with. Trans. Alaska Pipeline Rate Cases, 436 U.S.

631, 643 (1978); Commissioner v. Brown, 380 U.S.

563, 571 (1965).

In this case, the statement of the difficulty in identifying

“plain” or “unambiguous language” is particularly apropos.

Whether or not words of a statute are clear is itself not always

clear. Even if the ‘common’ understanding of ‘‘within retail

sales outlets’’ were physically within the walls of a store, as

the Claims Court held, that does not make the subject phrase

“plain”’ or ‘‘unambiguous.”’ The determination of what usage

of particular words is common must be rejected as an “errorless

test.”’

Moreover, even where a statute is clear on a purely linguistic

level, interpretation may be necessary if that interpretation

does not do justice to the realities of the situation. As stated

by the Supreme Court in Church of the Holy Trinity v. United

States, 143 U.S. 457, 459 (1892), it is a ‘‘familiar rule that a

thing may be within the letter of the statute, but not within

its spirit nor within the intention of its makers.”’ See also United

States v. Riverside Bayview Homes, Inc., 106 S. Ct. 455, 461

(1985) (argument that it is “unreasonable to classify ‘land,’ wet

or otherwise, as ‘waters’ ”’ is ‘‘simplistic.’’)

Finally, the question in this case is not what interpretation

this court would give to the statute were it the executive

branch. The issue to be decided by this court is whether the

statute is capable of more than one interpretation and whether

the agency’s interpretation is reasonable.

With these premises in mind, we turn to the statutory

analysis.

III.

The arbitration award represents an amount estimated to be

in excess of $10 million which must be paid from DOD current

funds for essential government services for the military and

A-10

‘their families. The brief review of legislative history noted above

indicates that the funds Congress anticipated would be used

for the state agencies for the blind were funds which could be

diverted at no cost to the government and no dimuntion in

essential government services. In keeping with that expecta-

tion, Congress over a period of 11 years has failed to appropriate

any moneys to make up for the loss of exchange funds which

the Claims Court held Congress intended to be transferred to

the blind.

No rational reason can be advanced to conclude that Con-

gress intended military personnel and their families to support

the blind by giving up essential services. Indeed, the whole ra-

tionale behind the Claims Court’s finding that it had jurisdic-

tion over the claim here shows the special nature of the funds

generated by the military exchange systems and differentiates

such funds from those of private groups organized by civilian

employees, such as employees’ unions, which were clearly in-

tended to be diverted to the blind.’ As indicated, the funds of

the latter-type of organizations were being used without any

governmental control for whatever group activities their

membership wished, such as flowers for the sick, birthday and

wedding gifts, band uniforms, scholarships, furnishings for

recreation rooms, and general social activities.” No funding

by Congress can be provided for such activities. In contrast,

the only services financed by the funds of the military exchanges

are child care centers, libraries, youth activities, gymnasiums,

9. Some of the legislative history is confusing in that such private organiza-

tions of government employees are referred to as “non-appropriated fund in-

-strumentalities” (NAF I). That term has had no single meaning among govern-

ment agencies. See Study of Procurement Payable From Nonappropriated

Funds, August 1976. Cf. L: Enfant Plaza Properties, Inc. v. U.S., 668 F.2d 1211

(Ct. Cl. 1982). See also infra note 18.

10. Review of Vending Operations On Federally Controlled Property, Report

to the Subcomm. on the Handicapped, Senate Comm. on Labor and Public

Welfare, B-176886 37, 43 (Sept. 27, 1973) (hereinafter ‘GAO Report). In addi-

tion to civilian employee groups, GAO noted competition from minority-owned

businesses which were being favored over blind vendors and privately con-

tracted cafeterias in connection with which vending machines were allowed

in order to lower prices in the cafeterias. Jd. at 42; see also Letter from General

Services Administration to Senator Randolph (Dec. 27, 1973). However, the

legislative history makes clear that the activities of civilian employee groups

were the primary concern of congress.

A-11

arts and crafts facilities and similiar essential support services,

which are furnished around the world for military personnel and

families. Such services are of a nature for which appropriated

funds are also used, indeed, have been provided by yearly Con-

gressional appropriation. The amount of exchange-generated

funds is taken into account in determining the amount of the

appropriation. Precisely because of this interrelationship, the

Claims Court found it had jurisdiction over this claim under

the precedent of United States v. General Electric Corp., 727

F.2d 1567, 1570 (Fed. Cir. 1984) and cases cited therein. Texas

State Commission for the Blind v. U.S., 6 Cl. Ct. at 737-38.

The Claims Court avoided what it called the “difficult ques-

tion” which would be raised were additional appropriated funds

necessary as a result of its judgment (28 U.S.C. § 2517, 31 U.S.C.

§ 1304) by characterizing the judgment which will result as “in

the nature of a refund.” 6 Cl. Ct. at 737. Under this theory, the

judgment is then payable by DOD from the account which was

credited with the revenues collected by the exchanges, or from

other appropriated funds used by DOD to fund its morale,

welfare and recreational programs.

The concept that the judgment is a “refund” is not only a

tortured theory, but also ignores the realities of the judgment.

The judgment of the Claims Court would require an immediate

cut in essential government services to satisfy the retroactive

liability, as well as additional appropriations indefinitely into

the future to provide essential government services which other-

wise must be reduced. It is unlikely that such a major change

in financing for, or in the amount of, military support services

would have been undertaken by Congress without serious con-

troversy. There was none. Moreover, if the bill were intended

to have such an effect, it would have been taken up by ap-

propriate finance and military affairs committees. /t was not.

Skirting these problems, the Senate Subcommittee on the Han-

dicapped, which reported the bill, inserted a last-minute amend-

ment exempting the military exchanges, and the Senate Report

states unequivocally that the exchanges were wholly exempt.

See S. Rep. No. 937, 93d Cong., 2nd Sess. 24 (1974). The House

floor debate agreed with the Senate’s understanding of the scope

of the exemption. See 120 Cong. Rec. 35,712 (1974).

A-12

The 1973 statement submitted on behalf of organizations for

the blind, in support of enactment of the 1974 amendments,

was limited to the funds of civilian employee groups:

The mandatory assignment of vending machine

revenue would provide substantial sums of new

money for the achievement of the purpose of the

Randolph-Sheppard Act without creating any hard-

ships for federal employees. Likewise, the mandatory

assignment of this revenue to achieve the purpose of

the Randolph-Sheppard Act would place no burden

upon the United States Treasury because the funds

in question have not been collected by the govern-

ment. [Emphasis added.]

* %* *

Over a period of several years, unions of federal

employees have been increasingly successful in ac-

quiring the possession and use of revenue from vend-

ing machines operated on federal property. This has

been accomplished by the cooperation and ac-

quiescence of the administrative branch of govern-

ment through the recognition of de facto ““employee

welfare committees” and “‘employee welfare funds.”’

Randolph-Sheppard Act for the Blind Amendments of 1973:

Hearings on S.2581 Before the Subcomm. on the Handicapped

of the Senate Comm. on Labor and Public Welfare, 93d Cong.,

lst Sess. 139 (1973) (statement of representatives of various

organizations for the blind).

The funds of such employee groups were attractive targets

for diversion. No similar motive existed for reaching the earn-

ings of military exchanges. Diversion of that income to state

agencies for the blind would make no economic sense. It would

simply be robbing Peter to pay Paul, and then appropriating

money for Peter to make up for the transfer.

The government does not argue here that the Randolph-

Sheppard Act does not apply to military bases. There is no

questions that Congress sought more opportunities for blind

vendors on all DOD properties, and other provisions of the 1974

A-13

amendments effectively reach DOD." These include expansion

of blind opportunities from vending “stands” to vending

“facilities,” e.g., cafeterias, including rooms with vending

machines only; expansion of items to be sold; the granting of

a mandatory “priority” in allocating sites rather than merely

a “preference” to blind vendors; a requirement for sites for blind

vendors in all new or renovated Federal buildings; and, of course,

income sharing, which reaches the numerous non-military ex-

change groups within DOD. At this time, DOD is second only

to GSA in implementing the program for the blind both in

numbers of sites and in the amount of income turned over to

states for their programs.'”

As initially drafted, that is, before the exemption, the bill

amending the Act was so broad that it could be read to cover

every vending machine on federal property. The circumstances

surrounding insertion of the subsection providing exemptions

were not conducive to precision in drafting.’ The subsection

simply appeared in a mark-up of the entire bill put before the

January 29, 1974, executive meeting of the Senate Committee

on Labor and Public Welfare, Subcommittee on the Handicap-

ped.'* There was no opportunity for input from other commit-

tees or from DOD. The minutes of the meeting, which are in

the record, disclose that the sole topic of discussion was in con-

tinuing controversy with the Postal workers and other unions

over diverting funds from their vending machines and

11. The GAO report as summarized in 6 Cl. Ct. at 732-33 was concerned

with the number of blind vendors on DOD facilities, including bases, not with

diverting exchange income.

12. The record shows DOD contributed $784,613 to state blind agencies

in 1983; $729,471 in 1981. The dissent errs in its assertion that DOD can

somehow keep blind vendors off military bases because of the subject ex-

emption. The exemption has no applicability to the mandatory requirement

to provide sites for blind vendors.

13. See infra note 16 and section IV.

14, The exemption may have been in response to a brief comment by Lieute-

nant General Benade of DOD during a 1973 hearing, but contrary to the

dissent, there is no evidence of a “compromise” with respect to the military

exchanges. Even TSCB does not so assert. All evidence is that the exchanges

were to be entirely exempt.

A-14

what compromise (such as grandfathering) could be worked out

to mollify them.

On June 5, 1974, at another executive session, Senator

Williams asked the sponsor of the bill, Senator Randolph, to

explain it. Senator Randolph said the bill would enable more

blind persons to become active so that they would not have to

rely on relief or charity. “The moneys that should go to the blind

are going to Federal employee unions.” He hoped that ‘‘an ac-

comodation would be reached with the unions.” Senator

Dominick asked again “Ib whom does the income from vending

machines now go?” Mr. Robert Humphreys (of the staff) replied,

“To the Employee Union Welfare Committees.”’ Since Senator

Randolph was the sponsor of the amendments, his explanation

and that of the staff cannot be viewed as casual, off-the-cuff

comments. The subcommittee was conscientiously restricting

itself to reaching only funds of civilian organizations which were

being withheld from the Treasury. The compromise worked out

with the unions was that the blind would share in the vending

machine income earned by private employee groups in exchange

for Congress’ sanctioning the retention of the balance by such

private groups. There was no similar compromise necessary with

respect to exchange funds inasmuch as the retention of ex-

change funds had for years been approved and the exchanges

were recognized as official government instrumentalities."*

15. The percentages and the $3,000 exemption became the accommoda-

tion finally adopted for these groups.

16. Technically the exchanges and ships’ stores systems are not “‘authoriz-

ed by title 10” as stated in the statute, but are established by the Secretary

of Defense under general authority to regulate the department. Although

' there were earlier federal court cases dealing with the exchange activities

and their employees, the most significant decision is Standard Oil Company

of California v. Johnson, 316 U.S. 481, 485 (1942), in which the Supreme Court

stated, “{W]e concluded that post exchanges, as now operated, are arms of

the government deemed by it essential for the performance of government

functions. They are integral parts of the War Department, share in fulfilling

the duties entrusted to it, and partake of whatever immunities it may have

under the constitution and federal statutes.” The court further stated, “{tjhat

the establishment and control of post exchanges have been in accordance

with regulations rather than specific statutory directions does not alter their

status, for authorized War Department regulations have the force of law.”

316 U.S. at 484.

(footnote continued on next page)

ser epee Be ENE

A-15

On June 17, 1974, the Senate Committee on Labor and Public

Welfare issued Senate Report 93-937, which is the principal Con-

gressional report on the 1974 amendments. The Senate Report

interprets the exemption to apply to all exchange operated

machines:

Subsection (d) exempts certain activities from vending

machine income assignment. Both military exchange

systems and the Veterans Canteen Service operate

under specific statutory authority, and are thus, as

a matter of policy, excluded.

S. Rep. No. 937, supra, at 24.

A House version of the bill had been passed as part of H.R.

14225 on May 21, 1974; the Senate version on September 10,

1974. In presenting the conference version to the House for final

passage, Mr. Brademas, floor manager of the bill and Chairman

of the House Select Education Subcommittee, gave the follow-

ing explanation of the military exchange exemption:

Other provisions of the conference report, Mr.

Speaker, address the question of the assignment of

vending machine income. 1

Briefly, this is what the bill would do.

First. One hundred percent of income from machines

in direct competition with a vendor, and 50 percent

of income from machines not in direct competition

shall accrue to blind vendors and their state licens-

ing agencies:

Second. At facilities where at least 50 percent of the

hours worked are outside normal working hours, 30

percent of income from vending machines shall accrue

to the vendors; and

(footnote continued from previous page)

This misstatement in the statute is symptomatic of its inherent flaws which

must be overlooked to carry out congressional intent.

A-16

Third, Facilities with less than $3,000 annual vending

machine income are totally exempt, as are retail

military sales outlets and the Veterans Canteen

Service.

Mr. Speaker, the conferees are confident that these

provisions will help blind vendors and adequately pro-

tect the rights of the Government and its employees

with respect to the availability at all times of vending

facilities and the assignment of income.

Finally, Mr. Speaker, I would like to congratulate

my friend in the other body, Senator Randolph, for

his persistence in this matter.

Mr. Sikes, Chairman of the House Armed Services Committee,

sought explicit confirmation of the extent of that exemption

and the following exchange occurred between them:"’

Mr. SIKES. I would like the distinguished subcom-

mittee chairman to verify for the record, that this pro-

vision exempts from the revenue-sharing plan all those

vending machines which are operated by the military

post exchanges, Navy exchanges, officer and enlisted

messes, and so forth.

As you are aware, the profits from those vending

machines are utilized by the services to finance such

17. The dissenter’s comments on lack of a quorum are entertaining but

legally in error. A quorum was established by a count of the members prior

to debate on the conference report. Under House procedures a quorum is

deemed presert at all times until it is determined by a count of the House

on a proper pcini of order that no quorum is present. Further, a member may

make the point of order that no quorum is present whether there is, in fact,

a quorum present or not. See VI C. Cannon, Cannon's Precedents of the House

of Representatives, 805, 853 (1935). However, the question of a quorum can-

not be raised once established by vote until “the Speaker has put the pen-

ding motion or proposition to a vote.” H. Rep. Rule XV 6(e)(1); see also W.

Oleszek, Congressional Procedures and the Policy Process, 125-26 (2d ed.

1984). Thus, during the debate, a quorum was legally present under House

rules and the number of members present may, in fact, have constituted a

quorum.

A-17

worthwhile endeavors as the base libraries, the youth

activities, the gymnasium, and other sports activities,

hobby shops and motion picture programs, ashore and

afloat. The servicemen finance these programs

themselves through the revenues collected in the retail

sales outlet systems as I have mentioned. To require

that these revenues be shared might well necessitate

the appropriation of additional funds for the defense

budget. Since work in the fiscal year 1975 defense ap-

propriations bill has been completed, the effect would

be to cut off these needed programs without support.

Would the gentleman confirm for me the fact that it

is the intent that this paragraph shall not apply to

the military services, and that this is in keeping with

. the language on page 24 of the Senate report [S. Rept.

No. 93-937] which is more specific on this issue that

[sic] ts the conference report?

MR. BRADEMAS. Mr. Speaker, I thank the gentle-

man from Florida for his fine remarks about this legis-

lation. IJ am pleased to tell the gentleman that the an-

swer to both his questions is “‘ Yes.” [Emphasis added.]

120 Cong. Rec. 35,712 (Oct. 16, 1974).

Immediately following that exchange, the House passed the

bill. It could not be clearer that Congress did not intend to cut

back on funds for the military or to make additional appropria-

tions as a result of 1974 Randolph-Sheppard amendments. The

exemption for the exchanges was intended by both the Senate

and the House to be complete. The Claims Court opined that

the colloquy’s:

significance is further diminished by the fact that it

occurred on the House floor several weeks after the

Senate passed the legislation and several days after

the Senate unanimously agreed to the Conference

Report. Clearly, one cannot say that the Senators who

voted for the language in issue did so with any

understanding of the meaning reflected in this subse-

quent colloquy.

A-18

6 Cl. Ct. at 741 (citations omitted). The Claims Court's analysis

discounts the Senate's own legislative history. The House was

adopting the Senate's understanding not vice versa. In any

event, because of a presidential veto, Congress passed the bill

again.'" Mr. Brademas’s explanation, confirmed by the collo-

quy, thus, is a major factor in determining the intent of both

houses, as Mr. Brademas was not simply “another member”

but the floor manager and chairman of the sponsoring commit-

tee whose remarks are entitled to particular weight. See Lin-

dahl v. Office of Personnel Management, 105 S. Ct. 1620

(1985)."°

All legislative history expressly addressing the possible diver-

sion of income from the exchanges indicates that income was

to be exempt. The records contain not even a suggestion of cut-

ting funds for essential military services or making up the loss

with additional appropriations. The exchanges simply were not

to be affected, as the blind organizations themselves

represented. The portions of the congressional report, relied on

by the Claims Court (and accepted by the dissent) as support

for its view, do not, in fact, indicate a contrary purpose. Rather,

the portions were deemed supportive to its theory that ‘within

retail sales outlets” must be given a spatial connotation, as a

matter of linguistics. Further, Congressional approval of the

‘“‘model’’ Marine Corps base was made with reference to pro-

viding additional sites for blind vendors, not with reference to

income-sharing. The Marine Corps base was not then sharing

income generated by exchanges and never has.

18. Following initial passage, President Ford vetoed the bill, the veto was

overridden. However, the President returned the bill to Congress claiming

that the veto was a pocket veto (which could not be overriden) and not a return

veto. Congress’ override was based on the assumption that the veto was a

return veto. To eliminate uncertainty, both the House and Senate again passed

a bill with the identical military exchange exemption, S.4194, on November

26, 1974. See S. Rep. No. 1297, 93d Cong., 2d Sess 1-2, reprinted in 1974 U.S.

Code Cong. & Ad. News 63473-74; See also Kennedy v. Jones, 412 F. supp.

353 (D.D.C. 1976). Thus, contrary to the Claims Court, the Senate passed the

exemption after the colloquy in the House.

19. The dissent errs in discounting Mr. Brademas’ statements and the

Brademas-Sikes colloquy. As in Lindahl, these were not unreliable comments

“just by ‘a few congressmen,’ but by the sponsor of the legislation [and chair-

man of the] Subcommittee from which it originated.” 105 S. Ct. at 1631.

A-19

HEW’s Interpretation of the Exemption

HEW had responsibility for coordinating the administration

of the Act among the government agencies and was to draft

regulations in consultation with them. There was substantial

dispute between HEW and DOD as to the extent of the exemp-

tion provided for the military. None of the dispute, however, in-

itially concerned the exemption of military exchanges. HEW

agreed these organizations were exempt. Principally, the dispute

was over an exemption for enlisted and officers’ messes (not

part of the exchanges). DOD pressed for such an exemption on

the basis of the legislative history despite the absence of any

language in the statute directed to the messes.

HEW vacillated on allowing this exemption. The negotiations

between HEW and DOD and the series of proposed HE W draft

regulations, as well as correspondence discussed below, confirm

that the HEW position that military exchange income was to

be diverted to the blind was a change from its original

interpretation.

That the scope of the military exemption was not “plain” to

HEW from the statutory language is evidenced by the various

drafts of regulations which HEW considered over a period of

two years. One of the first HEW drafts, dated March 20, 1975,

read:

[T]he provisions of this section shall not apply to in-

come from vending machines under the control of post

exchange or ships’ stores systems authorized under

Title 10, United States Code, or to Department of

Defense morale, welfare, and recreation activities or

to Department of Defense clubs, messes, civilian

restaurant and welfare funds....[Emphasis added.]

This version continued through several drafts. An HEW

memorandum dated June 2, 1975, clarified HE W's — with

respect to DOD civilian employee funds:

However, the latest revision of the proposed regula-

tion proposed by the Department of Health, Educa-

tion and Welfare (HEW) contains an exemption for

A-20

these activities in recognition of legislative history

(referring to discussions between Mr. Brademas and

Mr. Sikes on October 18, 1974). While it is realized

that this exemption could be interpreted to include

both military and civilian morale, welfare, and recrea-

tion activities, HEW officials drafting the implemen-

ting regulation stated that such exclusion is not in-

tended to provide relief for civilian nonappropriated

fund activities...

The latest revision of the proposed regulation is be-

ing circulated within HEW with its expected publica-

tion in the Federal Register in about 60 days. [Em-

phasis added.]

The proposed regulation was not, however, published and the

next version in July, 1975, while continuing the exemption for

the exchanges, eliminated the exemption for officer and enlisted

messes and civilian groups. This version read:

The provisions of this section shall not apply to in-

come from vending machines under the control of post

exchange or ships’ stores systems authorized under

Title 10 of the United States Code ....

DOD pressed for revision to exclude all vending machines

in military base communities. The first suggestions by HEW

that the exchange income was not exempt appears to have been

made in October, 1975. DOD was continuing at that time to

argue that messes and civilian DOD groups on military bases

should be excluded. On December 23, 1975, HEW published

proposed regulations simply repeating the statutory language

with no interpretation of what the language meant. 40 Fed. Reg.

59,408, 59,414 (1975). DOD and HEW continued their

negotiations.

On April 26, 1976, Congressman Sikes wrote Secretary Mat-

thews of HEW, confirming that the intent of Congress was to

exempt the military exchanges, stating: ‘Although the law was

designed to expand opportunities for blind persons, it was not

intended to cripple certain Armed Forces morale and welfare

activities.”’

A-21

At an April 28, 1976, meeting with DOD, HEW personnel

proposed defining “vending machine” in the regulations to ex-

clude any “machines from which the revenue accrues to the

Federal Government for credit to the Federai Government.”

HEW verified that the intent of this change was to exempt

DOD non-appropriated fund instrumentalities.”’

DOD then wrote HEW as follows:

The revised wording of Section 1369.1(y) of the pro-

posed regulations furnished to the attendees of the

April 28 meeting and your Mr. Shey’s explanation

that the revised wording is intended to accomplish

the purpose of exempting vending machine income of

Department of Defense (DOD) nonappropriated fund

instrumentalities (NAFIs) from the income-sharing

provisions of the Amendments have, of course, greatly

eased our concern. Assuming that the provisions of

said Section 1369.1(y) are issued as revised, it would

appear that the Congressional intent reflected in the

16 October 1974 exchange between Congressman

Brademas and Congressman Sikes on the House floor

will have been appropriately incorporated in the HE W

regulations. [Emphasis added.]

On May 11, 1976, Secretary Matthews answered Con-

gressman Sikes’ letter, reassuring him that HEW appreciated

his clarification of congressional intent with respect to officers

and enlisted messes and that HEW was working closely with

DOD. No mention was made of HEW’’s intention to deny ex-

emption to income from exchange vending machine.

In June, 1976, Congressman Brademas wrote Congressman

Sikes:

20. Unlike other agencies, DOD used this term only for organizations per-

forming approved government services—not civilian employee groups. Under

this regulation, it is understood the messes would have been exempt. The

question of an implied exemption for messes is not before us.

Ce

A-22

[T]he problem with the Randolph-Sheppard act pro-

posed regulations which you recently brought to my

attention ...appears to be solved.

The Department of Health, Education and Welfare

has advised my subcommittee that the interpretation

which we agreed upon in our colloquy on the House

floor would be adhered to.

Needless to say, I am glad that DHEW had decided

to follow the intent of Congress in formulating its

regulations. [Emphasis added. |

However, no regulations ‘‘conforming’’ to the intent of Con-

gress were issued and HEW ceased consultation with DOD.

On March 23, 1977, HEW published final regulations which

were exhaustive in other details but, with respect to the military

exemption, did little more than repeat the statutory language.

42 Fed. Reg. 15,802-17 (1977), now 34 C.F.R. § 395.32

(1985).”" Interestingly, the preamble to the regulations, in ex-

plaining why officers and enlisted messes were not considered

exempt, states that the act “limits exemptions from the income

sharing requirements to systems authorized under Title 10 of

the United States Code ....”’ (Emphasis added.) 42 Fed. Reg.

at 15,807. To exclude messes would, HEW stated, require

statutory clarification despite their “‘linkage to Title 10.”’ Jd.

On the other hand, HEW did exempt (without an explicit

statutory basis) stamp vending machine, copy machines, pay

telephones, coin-operated game machines, juke boxes and cer-

tain NASA and National Park Service concessions, 34 C.F.R.

§ 395.30 (1985), citing such reasons as “‘vending that is uni-

quely supportive of the Postal Service mission,’’ too “‘signifi-

cant’’ a change, probable ‘Congressional intent,’’ and ‘‘not

traditionally found in blind operated vending facilities.’’ 42 Fed.

Reg. at 15,806.

On July 7, 1977, DOD published its own proposed regula-

tions which stated flatly that income sharing did “‘not apply

21. The regulations added the words “‘operated”’ before ‘‘within”™ and ‘‘post”’

before exchanges.

A-23

to: “Income from vending machines operated by or for the

military exchanges or ships’ stores systems.” 42 Fed. Reg. 34,895

(1977). The identical provision was included in DOD’s final

regulations. 42 Fed. Reg. 25,337, 25,341 (June 12, 1978), now

32 C.E.R. § 260.3(i)(3)(i) (1985).

The agencies were then at logger-heads. DOD attempted to

get clarifying amendments before Congress. As acknowledged

in the majority decision of the arbitrators:

It should be noted, further, that DOD’s inability to

convince Congress to pass an amendment making

clear the broad nature of the exemption is not helpful

in assessing Congressional intention since HEW and

its successor, the Department of Education, has,

through the Office of Management and Budget, ef-

fectively blocked this legislation from being con-

sidered by Congress.

In 1979, HEW proposed to DOD that the Department of

Justice resolve the conflict between the agencies, stating:

Since the Department of Health, Education, and

Welfare believes that only income generated within

retail sales outlets is exempt, we believe that at this

time, as suggested at the meeting held by the Office

of Management and Budget, this issue of statutory

construction is appropriate for referral to the Depart-

ment of Justice for resolution.

However, it was not until the Oklahoma litigation that the mat-

ter was referred to the Department of Justice for resolution of

the conflicting HEW/DOD interpretations. Justice upheld DOD.

HEW acknowledges that it is bound by Justice’s ruling and

no longer advances its former unpublished interpretation.”

22. The Claims Court erroneously believed that HEW’'’s interpretation was

entitled to more weight than DOD’s. While HEW was the coordinator of the

program throughout the government, it was only on a par with DOD in an

interagency level dispute before Justice. See Exec. Order No. 12,146, 3 CFR.

§ 409.411 (1980).

A-24

Under these circumstances, there is no basis for deference to

the interpretation by HEW. Internally, HEW has vacillated.

Its published regulations have never set forth an interpreta-

tion of the statutory language. Its late-adopted private inter-

pretation was never published or given effect. It is bound by

Justice’s interpretation. And, finally, in the face of Justice’s in-

terpretation, which conflicted with HEW’s, HEW has found

it unnecessary to revise its regulations. This is understandable

since HEW’'’s regulations have never done more than repeat the

statute.

The Statutory Purpose

The Claims Court looked to the overall purpose of the legisla-

tion and concluded that an exemption for the exchanges would

leave “little or no opportunity” for blind vendors on DOD in-

stallations since the majority of vending machines were

operated by the exchanges. That finding is clearly erroneous

in view of DOD’s large contributions to state agencies for the

blind.

In any event, the statutory purpose to be considered here is

not simply the purpose of the legislation, but the purpose of

the exemption. That exemption was designed to keep the finan-

cial support of essential services by the exchanges intact so that

Congress need not appropriate additional funds. Congress ex-

pected the exchange income to continue to supplement essen-

tial programs approved by Congress. Senator Randolph, the

blind groups, Mr. Brademas, Mr. Sikes, and both chambers of

Congress all agreed on this purpose.

IV.

The Statutory Language

Given the congressional purpose of the exemption, the ques-

tion becomes whether the language can reasonably be inter-

preted, as in DOD's regulation, to effectuate that purpose. We

conclude that the statutory language has sufficient ambigui-

ty to make DOD's interpretation reasonable.”

23. Judge Davis, in his concurrence, more eloquently expresses the inter-

relationship of the strength of the language, on the one hand, and the strength

of legislative history, on the other.

A-25

The first phrase which must be looked at is ‘income from

vending machines.”’ ““Vending machine income” requires inter-

pretation, as reflected by the definitions of these terms in HE W

regulations setting out exclusions for vending machines of

various types and at certain of the National Park Service and

NASA facilities. 34 C.F.R. § 395.30 (1985). No statutory pro-

vision authorizes these exemptions. HEW simply deemed it

necessary and witin its power to exclude certain categories of

vending machine income which came within the literal words

of the statute but were not, in HEW’s view, within its intend-

ed scope.

“Within retail sales outlets” is not without some ambigui-

ty. ‘‘Within”’ can mean “‘a part of’’ a system as well as “‘in-

side’ a structure. “‘Retail sales outlets’’ need not mean

‘“‘Stores.’’ The military exchanges operate movie theatres and

other recreation facilities, which easily fall within the term

“retail sales outlets’’ and are not “stores.” Indeed, an area with

only vending machines has become a typical “‘retail sales

outlet.”’

TSCB argues that the phrase ‘“‘within retail sales outlets”’

is surplusage if DOD’s interpretation is accepted.“ By the

same token, the words “under the control’’ are surplusage under

the contrary interpretation. No real significance can be attached

to either argument.

TSCB also argues that Congress narrowly drafted the ex-

change exemptions in comparison with the Veterans Canteen

Service exemption. However, the Canteen Service does not have

retail outlets which generate a surplus to be used for other ser-

vices. It simply provides articles and services in veterans

hospitals and any surplus income is required by statute to be

turned in to the Treasury. 38 U.S.. § 4201. Thus, this difference

in exemption language can be explained. In any event, both

the Senate and the House said that both were intended to be

wholly exempt.

24. Although not very compelling, DOD’s explanation, that the exchanges

occasionally make sales which are ‘‘wholesale”’ in nature, at least gives some

reason for including the phrase.

A-26

The parsing of sentences is a meaningless exercise here. Un-

doubtedly, in some instances where statutory language has been

finely tuned to cover or to exclude, it is important to consider

each word and its relationship to others with great care. This

statutory provision was not drawn with great care or precision.

For example, the reference to the exchanges systems being

authorized by Title 10 is erroneous. See supra note 16.

We do not have an instance here where the words of an ex-

emption were selected after debate over its scope. Indeed, in

light of the legislative history, had no exemption been specifical-

ly granted, an interpretation by regulation to exclude the

military exchanges from the definition of “vending machine in-

come’—which HEW has concluded is proper for other

agencies—would appear appropriate. The language selected to

insure that the military exchanges were unquestionably exempt

“represents an instance of inartful drafting rather than the in-

tentional drawing of a subtle distinction.” Exxon Corp. v. Hunt,

106 S.Ct. 1103, 1113 (1986).

V.

“An agency's construction of a statute it is charged with en-

forcing is entitled to deference if it is reasonable and not in con-

flict with the expressed intent of Congress.” United States v.

Riverside Bayview Homes, Inc., 106 S. Ct. at 461. After con-

sidering the ambiguities in the statutory language, the

legislative history supporting DOD’s position, the purpose of

the exemption, and the status of the military exchanges as non-

appropriated fund instrumentalities performing essential

government services, we are convinced that DOD’s regulation

is reasonable and is not in conflict with the intent of Congress

as expressed in the statute. For the foregoing reasons, we agree

with the 10th Circuit that DOD’s regulation is not void. The

judgement of the Claims Court is reversed.”

REVERSED

25. The dissent, despite its length, has only one argument: the statutory

language is unambiguous. If the slightest ambiguity were to be acknowledged

by the dissent, its position crumbles away. In stark contrast, HE W, DOD,

Justice, the three arbitrators, the Oklahoma district court and the judges

(footnote continued on next page)

A-27

(footnote continued from previous page)

of the Tenth Circuit all found the language subject to various interpretations.

If the dissent did not distort the Tenth Circuit opinion on this point, the dis-

sent would have no basis for characterizing our sister circuit's reasoning as

“weak.”

A-28

UNITED STATES COURT OF APPEAL

FOR THE FEDERAL CIRCUIT

TEXAS STATE COMMISSION

FOR THE BLIND AND STATE

OF TEXAS,

)

)

)

Appellees, )

Vv. ) Appeal No. 85-1954

)

)

)

THE UNITED STATES,

Appellant.

DAVIS, Circuit Judge, with whom MARKEY, Chief Judge, and

FRIEDMAN, Circuit Judge, join, concurring in the result.

This case presents, in acute form, the recurrent problem of

the tension between statutory language and legislative history.

I write separately because, for me, the plurality opinion

overstresses the alleged “ambiguity” of the statute, while the

dissenters underplay the role of the legislative history. My

general position is that pertinent legislative history is never

wholly irrelevant in the construction of a statute but that the

interrelationship of that history with the statutory text follows

a continuous spectrum measuring the strength of the language,

on the one hand, and the strength of the history, on the other.

The more compelling and defintive the words are, the less con-

trolling the legislative history; conversely, the less compelling

and definite the language, the more controlling the history to

the extent of its strength.' In this particular instance, my

judgment is that Congress’ words can permissibly accommodate

a certain degree of breadth which is required by the very strong

legislative history.

I start with the statutory words. If there were no pertinent

legislative history (or if it were amorphous or weak) I would

1. | believe my general position does not contravene any established or

definitive Supreme Court rule. There are many different variations in Supreme

Court opinions on the use of legislative history, but in my understanding

no definitive rule has emerged either that there are certain instances in which

legislative history should not be considered at all, or that particular instance,

my such history should always be taken into account.

A-29

certainly adopt the appellees’ reading. To me, the normal mean-

ing of section 107d-3(d) (exempting “income from vending

machines within the retail sales outlets under the control of ex-

change or ships’ stores system authorized by title 10’) (emphasis

added) covers only vending machines within post exchange

stores (or perhaps immediately outside and adjacent to those

facilities). However, that wording is not as precise or as definite

as if the statute reached only vending machines “inside” ex-

change stores or ships’ stores; rather, the words Congress ac-

tually used—‘within the retail sales outlets under the control

of [military] exchange ... systems’’ (emphasis added)—can have

a wider reach and potentially be read, without necessarily tur-

ning white into black, as including all vending machines

operated by the military exchange systems. As I have said, I

would not take that course unless the legislative history com-

pelled (or very strongly supported) that broader interpretation.

I agree with the plurality’s view of the statute because, as

I see it, the germane legislative history is very strong and points

directly to the wider construction. The colloquy, on the floor

of the House of Representatives, between Congressmen

Brademas and Congressman Sikes’ inescapably states that all

vending machines operated by the military exchanges are ex-

empt from the income sharing provision. This colloquy was not

simply a floor exchange between two individual, ordinary

members of the House. Congressman Brademas was Chairman

of the House Select Education Subcommittee and floor manager

of the very bill containing the disputed language; Congressman

Sikes was Chairman of the House Armed Services Committee,

obviously interested in the military exchange systems. Each

spoke in that official capacity, and I think their joint views

represented the position of their two committees. As the plurali-

ty opinion points out, the bill was passed by both Houses of

Congress after the Sikes-Brademas colloquy. ‘lo me there is very

little doubt that the colloquy had a primary role in the enac-

ting of this amendment to the Randolph-Sheppard Act—

equivalent in essence to a formal statement in a committee

report. In fact Congressman Brademas referred (in June 1976

at the time the Department of Health, Education and Welfare

2. This colloquy is set forth in both the plurality opinion and the main

dissent.

A-30

was drafting its regulations) to the Sikes-Brademas exchange

as representing “the intent of Congress” (see plurality opinion,

p. 27). There is nothing in the remainder of the legislative history

which contradicts or conflicts with the Sikes-Brademas collo-

quy; on the contrary, the relevant part of the Senate Report (S.

Rep. No. 937, 93rd Cong., 2d Sess. 24 (1974)) seems in its

generality to exempt all vending machines operated by military

exchange systems. The sum of it, for me, is that the significant

legislators concerned with the precise question before us

deliberately and knowingly chose the military version of the

meaning of the disputed phase.

I add, however, that I disassociate myself from the emphasis

in the plurality opinion on the position of the Department of

Justice as relevant to this interpretive issue. As the main dis-

sent points out, the statute expressly gives to the Department

of Health, Education and Welfare (now Health and Human Ser-

vices (HHS)) the power to promulgate regulations necessary to

assure compliance with the provision before us (20 U.S.C. §

107d-3(g))—not to the Department of Justice or to the Depart-

ment of Defense. The fact is, though, that the current HHS

regulations are of no help because they do not deal at all with

the dispute we are asked to resolve; an internal or unpublished

HHS position (not promulgated in a regulation) does not have

the status of a proper regulation, and need not be considered.

In a word, there is now no regulation of which account should

be taken in construing the statute.

A-31

UNITED STATES COURT OF APPEAL

FOR THE FEDERAL CIRCUIT

TEXAS STATE COMMISSION )

FOR THE BLIND AND STATE )

OF TEXAS, )

Appellees,

v.

Appeal No. 85-1954

THE UNITED STATES,

Appellant.

— Ne eee

SMITH, Circuit Judge, with whom NEWMAN, Circuit Judge,

joins, dissenting.

I respectfully dissent.

The purpose of the Randolph-Sheppard Act is to create

employment opportunities for the blind by requiring a priori-

ty for blind vending stands on all federal property. The priori-

ty is achieved and protected by requiring that income from

vending machines operated by competitors must be shared with

the blind vendors.

At issue in this appeal is the meaning of the exemption from

income sharing for “‘vending machines within retail sales outlets

under the control of exchange or ships’ stores systems.’”

Also at issue are two conflicting approaches to statutory

construction.

A substantial portion of the majority analysis is based on

the silence of Congress with respect to military exchange ap-

propriations. The majority also relies on a colloquy which took

place on the House floor when a quorum was not present. On

this tenuous basis, the majority established ‘congressional pur-

pose’’ in the face of the admittedly clear language of the statute.

Plain Meaning of Statute

I can see nothing ambiguous or superfluous in the statutory

1. 20 U.S.C. § 107d-3(d) (1982).

A-32

exemption for ‘income from vending machines within retail

sales outlets under the control of exchange or ships’ stores

systems.’’ HEW, GAO, the arbitration panel, and the Claims

Court reached the only possible conclusion when they decided

that vending machines which are not within such retail sales

outlets are not exempt from income sharing.

The majority, at the urging of DOD, has rewritten the statute’

by deleting the words ‘‘within retail sales outlets’”’ from Con-

gress’ own language. The statutory exemption, as rewritten

by the majority, now reads: “income from vending machines

under the control of exchange or ships’ stores systems.”’ Only

after rewriting the statute is it possible to conclude that the

exemption covers all vending machines operated by the military

exchanges, without regard to the machines’ location.

The word ‘‘ambiguity’ has been defined as ‘‘uncertainty of

meaning” or ‘admitting of two or more meanings.” As for

“uncertainty of meaning,’’ it is not difficult to understand

“within retail sales outlets”’ as having the certain meaning ‘“‘in-

side the four walls of an exchange system store’’ (commonly

known as “the PX”).’ As for ‘‘admitting of two or more

meanings,’’ the majority never reveals what other meaning

“within retail sales outlets’’ has.*

2. WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 66

(1967).

3. Contrary to the majority's implication, a court's act of explaining a

statute is not evidence of ambiguity. The very function of the courts is to

apply statutes and necessarily to interpret and explain them.

Here, DOD has asserted ambiguity where there is none. We explain the

statute at DOD's insistence, and DOD cannot be heard to complain that

the very act of explanation which it demands is evidence of ambiguity. If

it were so, every statute which a party requires the court to apply would

be deemed ambiguous. See 2A N. SINGER, SUTHERLAND STATUTORY

CONSTRUCTION § 45.02 (4th ed. 1984).

4. The majority concedes that the “common” understanding of “within

retail sales outlets"’ might be physically within the walls of a store, as the

Claims Court held. The majority then embarks on an exploration of subjec-

tive policy considerations, leaving us in suspense as to what other possible

meaning the words could have. When the majority finally returns to the

statutory language, it is with the ambivalent statement that “ ‘within retail

sales outlets’ is not without some ambiguity."

A-33

Contrary to the majority’s assertion, the Tenth Circuit did

not hold or even imply that the statute was at all ambiguous.

) The Tenth Circuit stated in Oklahoma v. Weinberger:

We agree with DHS [Department of Health and Ser-

vices of the State of Oklahoma] that a literal reading

of the exception limits the exception from revenue

sharing only to ‘‘vending machines within retail sales

outlets under the control of exchange or ships’ store

system.”’ *** [Emphasis in original.]

Similarly, the district court in Oklahoma found that ‘‘{rlejec-

tion of the ‘plain meaning’ of the exemption’’ was necessary

because:°

Following the literal meaning of the words would, in

this case, compel concurrence with the plaintiff’s posi-

tion as ‘“‘vending machines within retail sales outlets”’

would appear to refer to machines within an exchange

store. ****

Rather, the rationale of the Tenth Circuit and the Western

District of Oklahoma was that:’

a court has “‘some [‘|scope for adopting a restricted

rather than a literal or usual meaning of its words

where acceptance of that meaning would lead to ab-

surd results ... or would thwart the obvious purpose

of the statute[.’] ...’’ ***

I agree with the Tenth Circuit that the statute is unam-

biguous. But notwithstanding my great respect for the Tenth

Circuit, I cannot agree that the literal meaning of the words

5. Oklahoma v. Weinberger, 741 F.2d 290, 292 (10th Cir. 1983), cert. denied,

104 S. Ct. 2345 (1984).

6. Oklahoma v. Weinberger, 582 F. Supp. 293, 294-95 (W.D. Okla. 1982),

aff'd, 741 F.2d 290 (10th Cir. 1983), cert. denied, 104 S. Ct. 2345 (1984).

7. Oklahoma, 582 F. Supp. at 295 (quoting Trans. Alaska Pipelire Rate

Cases, 436 U.S. 631, 643 (1978)); see also Oklahoma, 741 F.2d at 292.

a ee ee

A-34

would lead to “absurd results” or “thwart the obvious purpose

of the statute.”

A. Clear, Customary Meaning.

Section 107d-3(d) states:°

(d) Income from vending machines in certain locations

excepted

Subsections (a) and (b)(1) of this section shall not

apply [1] to income from vending machines within

retail sales outlets under the control of exchange or

ships’ stores systems authorized by title 10, or [2] to

income from vending machines operated by the

[Vjeterans Canteen Service***.

This section creates distinct exemptions: one for the exchange

systems and another for the veterans canteen service.

The exemption provided for the exchange systems, unlike the

one provided for the canteen system, contains two phrases of

modification. Not only must the machines be “under the con-

trol of” the exchange system, the machines must also be “within

[its] retail sales outlets.’’ As the Claims Court correctly deter-

mined, the plain and customary meaning of the word “within”

clearly connotes spatial boundaries.'” The common usage of

the word “within” is “to indicate enclosure or containment.”

8. The weakness in the Tenth Circuit's reasoning is that the common mean-

ing of the words does not lead to “absurd results” or “thwart the obvious

purpose of the statute.” Indeed, the common meaning of the words must be

used “where no such consequences would follow and where ... [the plain mean-

ing] appears to be consonant with the purposes of the Act ....’ " Trans Alaska,

436 U.S. at 643 (quoting Commissioner v. Brown, 380 U.S. 563, 571 (1965)).

9. 20 U.SC. § 107d-3(d) (1982).

10. Texas State Comm'n for the Blind v. United States, 6 Cl. Ct. 730, 738

(1984).

11. WEBSTER’'S THIRD NEW INTERNATIONAL DICTIONARY 2627

(1967). In Shakespeare's time “within” could also mean “in the control of,”

but this definition is obsolete. /d.

A-35

oe

Thus, as the majority concedes, the customary meaning of

“within retail sales outlets” is “physically within the walls of

a store.”

DOD argues that “within” implies more than just “contain-

ed in” and that the exemption protects all machines operated

by the military exchanges.'* DOD contends that “within” can

mean something other than spatial proximity—for example

when used to mean “within the law.”"”

In the context of section 107d-3(d), DOD's interpretation

would require this court to hold that “within” really means

“within and without.” DOD's interpretation completely reads

out of the statute the phrase “within retail sales outlets.” Basic

principles of statutory construction require that effect should

be given to each word of the statute so that no part will be

rendered meaningless.'* The two distinct phrases of modifica-

tion in the statute clearly suggest that vending machines must

be more than “under the control of” the military exchanges.

The machines must also be “within [a] retail sales outlet.”

No definition for “within” urged by DOD makes sense when

read in the context of section 107d-3(d). If Congress had simp-

ly meant “under the control of" the military exchanges, it would

not have included the phrase “within retail sales outlets” in the

statute at all. DOD considers the word “within” in isolation

and discusses the almost metaphorical meanings that it can

take on in other contexts. As this court has recently explained,

12. It is significant to note that the case cited by DOD for this argument

adopts the common meaning and defines the word “within” to mean “inside

the bounds” and “not without.” Jobwn of Alexandria v. Clark County, 231 SW.

2d 622, 624 (Mo. 1950).

13. Although “within” in that context connotes something other than

physical space, it still means “inside the boundaries of “or “contained in.”

DOD can offer no accepted synonym or use of the word that when read in

context with “retail sales outlets” can lead to the result it desires.

14. Rickler v. United States, 396 F.2d 454 (Ct. Cl. 1968); 2A SUTHERLAND

§ 46.06 (1984); see also Hart v. United States, 585 F.2d 1025, 1035 (Ct. CL

1978) (“People are entitled to find in the statute books the laws that govern

them.").

nwa

A-36

statutory words ‘cannot be considered in a vacuum. We sit to

interpret a statute, not a word.’””

The majority also accepts DOD's argument that the phrase

‘retail sales outlet” can describe “a cluster of vending machines

or even a single vending machine” and that the statute, thereby,

exempts all machines. The first error in this strained interpreta-

tion is that it is contrary to the accepted meaning of the word

“outlet.” The term outlet has a common, everyday meaning of

“a market for a commodity” or “a retail store.”"® It is well

settled that unless Congress has clearly indicated a contrary

meaning, a word’s customary, everyday meaning is favored."’

A second problem with DOD's construction of the phrase

“retail sales outlet” is that, in context, it makes the statute

meaningless. By equating a vending machine with a “retail sales

outlet,” DOD construes the statute to exempt “income from

vending machines within vending machines.” Such a bootstrap-

ped definition would read all meaning out of the exemption. The

Claims Court reached the correct interpretation by accounting

for all of the words in the statute, without nullifying any of its

terms.

B. Veterans Canteen Service Exemption.

DOD's construction of the statute is as follows:

15. United States v. John C. Grimberg Co., 702 F.2d 1362, 1366 (Fed. Cir.

1983). The decision in Grimberg hinged on whether “claim” meant a claim

filed with the Claims Court or a claim filed with the Government’s contrac-

ting officer. Grimberg held that the word “claim” had to be read in context,

just as the word “within” must be read in context here. Certainly, Grimberg

provides no support for the majority to change the meaning of the statute

by deleting words from it.

16. WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1602

(1967).

17. Lynch v. Alworth-Stephens Co., 267 U.S. 364, 370 (1925) (“the plain,

obvious and rational meaning of a statute is always to be preferred to any

curious, narrow, hidden sense that nothing but the exigency of a hard case

and the ingenuity and study of an acute and powerful intellect would discover”

(quoting lower court opinion, 294 Fed. 194)); Benson v. United States, 488

F.2d 1017, 1020 (Ct. Cl. 1973); Prudential Ins. Co. of America v. United States,

319 F.2d 161, 166 (Ct. Cl. 1963).

A-37

The literal words of the statute may fairly be read

as exempting from income sharing any vending

machine that is a part of [“‘within’’] a network of sales

facilities [“‘retail sales outlets’’] operated by or fora

military exchange. *** [Emphasis supplied.]

Thus, DOD is really arguing to be treated like the veterans

canteen service. Section 107d-3(d) specifically exempts ‘‘ven-

ding machines operated by the Veterans Canteen Service”’ (em-

phasis supplied). The wording of the exemption for the canteen

services proves two things. First, Congress knew how to draft

the exact exemption that DOD wants, because it did so in the

very next clause. Second, this exemption proves that Congress

only wanted to provide this broad exemption (encompassing

all machines, regardless of location) to the veterans canteen

service.”

Legislative History

Where the words of a statute are clear, there is no need to

review the legislative history.'* A corollary is that the

18. The reason for the distinction lies in the nature of the two departments.

First, the veterans canteen service is specifically authorized under law and

is a direct entity of the Federal Government. 38 U.S.C. § 4201 (1982). Se-

cond, the canteen system and the exchanges serve different customers and

different ends. The legislative history shows that Congress was well aware

of the veterans canteen services’ unique legal and factual status. Randolpn-

Sheppard Act for the Blind Amendments of 1973: Hearings on S. 2581 Before

the Subcomm. on the Handicapped of the Senate Comm. on Labor and Public

Welfare, 93d Cong., 1 Sess. 26 (1973) (hereinafter cited as 1973 Hearings).

19. The majority departs from the path established by the Supreme Court:

“It is elementary that the meaning of a statute must, in the first instance,

be sought in the language in which the act is framed, and if that is plain,

and if the law is within the constitutional authority of the law-making body

which passed it, the sole function of the courts is to enforce it according to

its terms. [Citations omitted.]

“Where the language is plain and admits of no more than one meaning

the duty of interpretation does not arise and the rules which are to aid doubt-

ful meanings need no discussion. [Citation omitted.] There is no ambiguity

in the terms of this act.***

(footnote continued on next page)

|

A-38

legislative history cannot be used to create ambiguity where

- there is none in the statute.”

The majority has placed great reliance on excerpts from the

legislative history; however, other portions of the same reports

give a clear indication that Congress fully addressed a much

broader problem than that spotlighted by the majority. In ad-

dressing that part of the majority opinion, the words of our

predecessor court, the Court of Customs and Patent Appeals,

give us guidance:”

We have dwelt at some length upon this phase of

the case not because we regard the statute as am-

biguous, because we do not so regard it, but out of

respect for the views of those who think otherwise.

Even if we be in error as to this, however, we do not

regard such legislative history as has been cited here

controlling.

A. Purpose of the Act.

The majority unacceptably narrows the purpose of the act

by focusing only on ‘‘civilian employee groups.’’ Thus the ma-

jority ignores Congress’ language reaching “‘all Federal pro-

perty,”’ including DOD and military bases in particular.

Notwithstanding the appeal of arguments made on behalf

of the military, the Randolph-Sheppard Act is primarily legisla-

tion in support of the blind. The primary purpose of Congress

(footnote continued from previous page)

“Statutory words are uniformly presumed, unless the contrary appears,

to be used in their ordinary and usual sense, and with the meaning commonly

attributed to them.***”

Caminetti v. United States, 242 U.S. 470, 485-86 (1917); see Packard Motor

Car Co. v. NLRB, 330 U.S. 485, 492 (1947); Selman v. United States, 498

F.2d 1354, 1356 (Ct. Cl. 1974).

20. Railroad Comm'n of Wisconsin v. Chicago, B. & Q. R.R., 257 U.S. 563,

589 (1922) (‘‘Such aids are only admissible to solve doubt and not to create

it."’) United States v. Kung Chen Fur Corp., 188 F.2d 577, 584 (CCPA 1951).

21. Kung Chen Fur, 188 F.2d at 585.

A-39

was to create a 2-pronged approach to establish a priority for

blind vendors. First, Congress ordered that one or more blind

vending stands must be placed on all federal property.” Con-

gress recognized, however, that since 1936 the act had already

required a “preference” for blind vending stands on all federal

property. The act had been unsuccessful because of competi-

tion from vending machines.”

Blind vendors collectively have been confronted with

obstacles at virtually every turn. Competition from

automatic vending machines has increasingly

threatened to suffocate the blind vendor program. ***

The act had been amended in 1954 to require the assignment

of vending machine income to blind vendors, where vending

machines were in direct competition with the blind:

The provision was believed necessary due to the unan-

ticipated growth of automatic vending machines on

Federal property, which were beginning to affect blind

vendor operations. Unfortunately, that language did

not have the desired effect of protecting the livelihood

of blind vendors. On the contrary, in the intervening

twenty years since the enactment of the provision, the

automatic vending machine has been vastly improv-

ed, the kinds of food and other merchandise sold

through such machines have greatly expanded, and

the numbers of tnachines on Federal property have

grown exponentially. Not only has the existing

language faileci to protect the blind vendor, in many

cases the language has been disregarded, and vending

22. The majority concedes that military bases are subject to the required

priority for blind vendors. Thus, one or more blind vending stands must be

established on every military base. See 20 U.S.C. §§ 107(b)(2), 107e(3) (1982).

Congress expected to double the number of blind vendors in 5 years by remov-

ing obstacles to growth and requiring blind vending stands on “all Federal

property.” (Emphasis supplied.) Randolph-Sheppard Act Amendments of

1974, Pub. L. No. 93-516, § 201, 1974 US. CODE CONG. & AD. NEWS 1868,

1869.

23. S. REP. NO. 937, 93d Cong., 2d Sess. 10, 14-15, reprinted in 1974 US.

CODE CONG. & AD. NEWS 381, 385-86.

a

A-40

machines now constitute a major threat both to the

livelihood of individual blind licensees and to the

growth of the program as a whole.

The existing law in 1974 already required a preference for blind

vendors on military bases. Yet there were only 46 blind ven-

ding stands on 490 military bases.“ Congress was forced to

take decisive action to achieve its stated goal of one or more

blind vendors on every military base.

Thus, Congress created the second prong, called “income

sharing’’ to “‘achieve and protect”’ the priority for blind ven-

dors.” Income sharing was enacted to prevent competitors

from driving blind vendors out of business. A competitor who

placed vending machines at the same location as the blind ven-

dor was required to assign 100 percent of the vending machine

net income to the blind vendor.”

Similarly, the competitor could not continue to block the

placement of a blind vending stand. Even if the competitor suc-

ceeded at keeping the blind vendor off the federal property

altogether, the competitor was still required to share 50 per-

cent of the vending machine net income with state blind

associations.”

24. 1973 Hearings at 31.

25. 20 U.S.C. §§ 107(b)(1), $07d-3 (1982).

26. 20 U.S.C. § 107d-3(b)(1) (1982). The existing law in 1974 already re-

quired assignment of vending machine income where the machines were in

direct competition with blind vendors. In 1974, there was no exemptions

from income assignment; yet DOD had refused to assign income to the blind

vendors, as required by law. Review of Vending Operations on Federally Con-

trolled Property, Report to the Subcomm. on the Handicapped, Senate Comm.

on Labor and Public Welfare, Comp. Gen. Rep. B-176886 at 27 (Sept, 27,

1973) (GAO Report); see Texas State, 6 Cl. Ct. at 733 n.6.

Thus, in the 1974 amendments, Congress found it necessary to direct the

Secretary of HEW to “take such action and promulgate such regulations

as he deems necessary to assure compliance” with income sharing. 20 U.S.C.

§ 107d-3(g) (1982)

27. 20 U.S.C. § 107d-3(b)(1) (1982).

A-41

Congress designed income sharing to “‘remedy the evil” of

vending machine competition facing blind vendors.” The two

prongs of Congress’ approach go hand-in-hand. The admitted

priority for blind vendors on military bases simply cannot be

“achieve[d] and protect{ed]’”’ without the income-sharing pro-

visions of the act.

There can be no doubt that Congress specifically targeted

the “‘evil’’ of DOD abuses of the Randolph-Sheppard Act when

it enacted the 1974 amendments:”

Commanders of military installations are singularly

insensitive to the need to develop the program. The

vast Defense establishment can report only 9 blind

vendors at Air Force facilities, 17 on Army posts, and

16 at Navy bases. The parent Defense Department

association at a major Federal space installation

demanded that blind vendors give a portion of their

income to the association—precisely the reverse of

what should be taking place on Federal property. ***

It can be concluded from this and other evidence that

there are widespread, major abuses of blind vendors

and of the Randolph-Sheppard program. It is the firm

resolve of the Committee that such abuses must

cease. [Emphasis supplied. ]

* * * * *

Very few blind vendors are to be found at military

28. The majority misplaces its reliance on Church of the Holy Trinity v.

United States, 143 U.S. 457 (1892), where the Supreme Court adopted a

restricted meaning of the word “‘labor”’ to include only “cheap, unskilled

labor” and not to include preachers. The statute was intended to “remedy

the evil of unskilled immigrants who worked for low wages.

Here, the “‘evil’’ expressly includes the military exchanges’ use of vending

machines to compete with blind vendors. Futhermore, the majority does not

adopt a “‘restricted’’ meaning of the words “within retail sales outlets."’ By

deleting the words, the majority expands the scope of the exemption. Holy

Trinity is devoid of any support for this novel judicial legislation.

29. 20 U.S.C. § 107(b)(1) (1982).

30. S. REP. NO. 937 at 10-11, 17.

ic cama aii

A-42

installations. Witnesses before the Committee have

stated that each military post or base commander is

in charge of his particular installation, and that, for

the most part, commanders are either hostile or in-

different to the Randolph-Sheppard program. This at-

titude has severely curtailed the growth of the pro-

gram within the Defense Department. Lt. General Leo

Benade, the department’s witness in the hearings on

S. 2581, recognized the deficiencies. He said:

“IT do not think the military departments

... are insensitive, but I am not very proud

of our record, and I think we can do better,

and we will.”

The majority concedes that one or more blind vending stands

must be placed on every military base, but the majority takes

the teeth out of the statute by recognizing only the first prong

(priority for blind vendors on every base) and not the second

prong (income sharing “to achieve and protect such priority.”

B. Sound and Meaningful Distinction.

DOD argues that the interpretation arrived at by the Claims

Court leads to an “absurd result”’ because it

creates a distinction—between machines physically

located inside the four walls of retail stores and

machines in other locations—that cannot be justified

by reference to any logical policy***.

Although this contention is stated emphatically, DOD offers

no argument or reasons to back it up.

31. Under the majority's holding that military exchanges are wholly ex-

empt from income sharing, the exchanges will continue to profit by competing

directly with blind vendors and by blocking the placement of blind vending

stands. The majority “thwarts the obvious purpose of the statute” to increase

the number of blind vendors on military bases from 46 to 490 or more, by

gutting the statute of its two strengths: (1) income sharing and (2) administra-

tion by HEW.

A-43

The distinction between machines within retail stores and

those in other locations appears to be consistent with Congress’

goals and of the compromise struck between the exhange

system and the blind. Congress exempted from the income-

sharing provisions the revenue from machines located within

the exchanges, thereby allowing the exchanges to sell within

the store, by machine, whatever they could sell ordinarily. Thus,

a blind vendor could not claim that, because an exchange store

was selling cigarettes or drinks from a machine rather than by

a human, he was entitled to share the income. On the other

hand, the exemption does not allow the exchanges to nullify

the priority for blind vendors by placing competing vending

machines over the entire base.

It is DOD’s interpretation that leads to a result plainly at

variance with the purpose of the statute, because the interpreta-

tion would grant DOD the power to completely circumvent the

act. DOD regulations expressly deny the priority for blind ven-

dors with respect to vending machines operated by the ex-

change system.” Thus, if DOD’s interpretation prevails, it

could keep all blind vendors off military bases by ruling that

a blind vendor would be competing with a machine operated

by the exchange system. This self-appointed power was pointed

out to Congress by GAO and it formed a basis for the narrow

compromise exemption.”

C. Congress’ Silence on PX Appropriations.

One of the consequences of the Randolph-Sheppard Act is

that military exchanges are subject to income sharing from ven-

ding machines outside the PX stores. The cost of compliance

with the act would be less than 4 percent of the exchanges’

total annual income.” The act is completely silent about

32. Army Air Force Exchange System Randolph-Sheppard Act Compliance

Manual, ESM 11-2, p. 2-1.

33. GAO Report at 26; see Texas State, 6 Cl. Ct. at 733.

34. Oversight of the Randolph-Sheppard Act, 1979: Hearings Before the

Subcomm. on the Handicapped of the Senate Comm. on Labor and Human

Resources, 96th Cong., 1st Sess. 93 (1979) (statement of Maj. Gen. Stanley

M. Umstead, Jr.) (1979 Oversight Hearings).

A-44

additional appropriations for the military exchanges to make

up for the income sharing. This is not surprising, since this par-

ticular act was intended to help the blind; its primary purpose

was not to help soldiers and sailors.

The majority, however, attaches great significance to Con-

gress’ silence. Under the majority’s view, it is not sufficient

for Congress to require the military exchanges to share income

with the blind. Congress also must demonstrate that it has con-

sidered whether additional appropriations will be necessary for

the military exchanges.”

The Supreme Court has warned of the danger in the majori-

ty’s approach: ‘{t]he search for significance in the silence of

Congress is too often the pursuit of a mirage.” In still

another case, the Supreme Court stated:”

{I]t would be a strange canon of statutory construc-

tion that would require Congress to state in commit-

tee reports or elsewhere in its deliberations that which

is obvious on the face of a statute. In ascertaining

the meaning of a statute, a court cannot, in the man-

ner of Sherlock Holmes, pursue the theory of the dog

that did not bark. [Citation omitted.]

The Supreme Court ‘has never insisted that a legislative

body articulate its reasons for enacting a statute.” Thus, it is

not a function of the courts to ‘‘presume that ‘Congress was

35. The Claims Court’s discussion of whether additional appropriated funds

would be necessary to satisfy the judgment is relevant only to Claims Court

jurisdiction, and not to the merits of the case. Texas State, 6 Cl. Ct. at 737.

Although the majority characterizes this as ‘‘tortured’’ reasoning, the ma-

jority concedes that no additional appropriations are necessary to satisfy

the judgment.

36. Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 11 (1942).

37. Harrison v. PPG Indus., Inc., 446 U.S. 578, 592 (1980).

38. United States R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 179 (1980).

A-45

unaware of what it accomplished...’ ’””

Congress was not obliged to discuss military PX appropria-

tions in this statute related to the blind vending program. The

majority errs in pursuing “the theory of the dog that did not

bark.”

The majority’s reliance on PX appropriations in other legisla-

tion totally unconnected to the Randolph-Sheppard Act is too

remote to be relevant in discerning legislative intent in the pre-

sent act.”

D. Colloquy on the House Floor.

Historically, the courts have been extremely reluctant to

39. Albernaz v. United States, 450 U.S. 333, 342 (1981) (quoting United

States R.R., 449 U.S. at 179).

The majority implies that DOD had “no opportunity for input” to the

Senate Committee because it did not appear at one meeting on January 9,

1974. The majority ignores the lengthy statement of Lt. Gen. Leo E. Benade,

Deputy Assistant Secretary for Military Personnel Policy, Department of

Defense, on November 19, 1973, before the subcommittee. DOD repeatedly

expressed its concern for the impact of the Randolph-Sheppard Act on the

military exchange system, with particular emphasis on vending machines.

DOD warned the subcommittee that ‘{t]he proposed changes to the Randolph-

Sheppard Act would reduce [the military exchanges’ income from vending

machines] by as much as $20 million each year” (out of a total income of $66

million/year). 1973 Hearings at 98-103.

DOD's estimate of the impact on military exchanges turned out to be an

overstatement. At the 1979 Oversight Hearings, DOD admitted that it would

be liable for only $4.4 million in income sharing under the statute out of $120

million received by the exchanges annually. 1979 Oversight Hearings at 93.

The majority’s cry that the statute tolls the death knell for the military

exchanges is simply untrue, since the exchanges are subject to sharing less

than 4 percent of their income. It cannot be said that Congress was unaware

of the consequences of its act, since it was warned of consequences far more

severe than would actually result from applying the statute. Congress was

fully aware of the military exchanges’ use of vending machines income, both

from Lt. Gen. Benade’s statement and from GAO's thorough investigation

of DOD.

40. See 2A N. SINGER, SUTHERLAND STATUTORY CONSTRUCTION

§ 51.03 (4th ed. 1984).

A-46

consider statements made by legislators during floor debate.

In the landmark case of Aldridge v. Williams," the Supreme

Court held:

In expounding this law, the judgment of the court

cannot, in any degree, be influenced by the construc-

tion placed upon it by individual members of Congress

in the debate which took place on its passage, nor by

the motives or reasons assigned by them for suppor-

ting or opposing amendments that were offered. The

law as it passed is the will of the majority in both

houses, and the only mode in which that will is spoken

is in the act itself; and we must gather their inten-

tion from the language there used***.

Explanatory statements made by the committeeman in charge

of the bill when presenting it for passage have been used as an

“aid to the interpretation of a statute where its language is

doubtful or obscure.” “But while they may be looked at to ex-

plain doubtful expressions, not even formal reports—much less

the language of a member of a Committee—can be resorted to

for the purpose of construing a statute contrary to its plain

terms.”

The Supreme Court again explained the limits on the use of

statements by the committeeman in charge of the bill:"

[W]hen taking the act as a whole, the effect of the

language used is clear to the court, extraneous aid like

this can not control the interpretation. [Citations omit-

ted.] Such aids ure only admissible to solve doubt and

not to create it. ***

41. Aldridge v. Williams, 44 U.S. 9, 24 (1845).

42. Wisconsin R.R. Comm'n, 257 U.S. at 589.

43. Pennsylvania R.R. v. International Coal Mining Co., 230 U.S. 184, 199

(1913).

44. Wisconsin R.R. Comm'n, 257 U.S. at 589.

A-47

It is impossible to discover the “intention of Congress”’ from

remarks made by individual legislators on the congressional

floor.” The safest guide to congressional intent is found in the

words employed by Congress in the statute.”

Judge Skelly Wright has stated;*’

[Q]uotes from legislative floor debate do not persuade

us to deviate from the statute’s clear language***

***(/T]he significance of such comments from

legislative floor debates is limited, not only because

of such clear statutory language, but also because

‘“{t]he remarks of a single legislator, even the spon-

sor, are not controlling in analyzing legislative history.

***” [Citation omitted.]

As our predecessor, the Court of Claims, has cautioned:

Congress may be presumed not unskilled in the use

of words and highly likely to have enacted what it in-

tended. It is foolish to abandon this presumption

where the legislative history is perceivably full of pit-

falls that cannot readily be avoided. Some pitfalls are

invisible to the judicial eye, but the most myopic can

see one in a committee report that contradicts the

45. Friedman v. United States. 310 F.2d 381 (Ct. Cl. 1962), cert. denied,

Lipp v. United States, 373 U.S. 932 (1963):

“*** The earlier colloquy at the hearings involving Congressmen Doyle

and Clements—on which reliance has been placed ***—can be said to repre-

sent only their own views and not the position of the subcommittee, or the

full committee, let alone of the House or the Senate as a whole.” 310 F.2d

at 405.

46. Aldridge, 44 U.S at 24.

47. Northern Colo. Water Conservancy Dist. v. Federal Energy Regulatory

Comm'n, 730 F.2d 1509, 1518 (DC. Cir. 1984) (quoting Chrysler Corp. v. Brown,

441 US. 281, 311 (1979)). See also General Elec. Co. v. United States, 610

F.2d 73, 734 (Ct. Cl. 1979).

48. Hart, 585 F.2d at 1035.

A-48

plain language of a statute in guise of interpreting it,

or makes manifestly incorrect statements about it or

what it does. ***

The “judicial eye” must see that there are pitfalls in resor-

ting to floor debate which “contradicts the plain language of

a statute in guise of interpreting it.” Indeed, a member of Con-

gress has warned us that legislators may enter into a “friendly

colloquy” in the hope that the courts will accept their language

instead of the plain language of the statute:“

Mindful of this judicial scrutiny, legislators of today

have used the opportunity of debate to achieve

legislative goals which might otherwise be unat-

tainable. Indeed, by the use of the “friendly colloquy,”

two men may be able to legislate more effectively than

all of Congress.

This type of colloquy is presented in the form of a

friendly exchange of questions and answers about the

pending legislation between members, one of whom

is usually a member of the committee from which the

legislation emanated. This seeming repartee is not ac-

cidental. In fact it is just the opposite. It has been

carefully planned by the parties for the express pur-

pose of providing a legislative interpretation of a

statutory provision which might otherwise be dif-

ferently interpreted.

Turning now to the colloquy relied upon by the majority, it

can be seen that under the “guise of interpret[ation]’’ Con-

gressman Sikes ‘contradicts the plain language of the statute”’

and makes “manifestly incorrect statements about it or what

it does.” Sikes quotes the statutory language limiting the ex-

emption to “vending machines ‘within the retail sales outlets,’ ”’

49. W. Moorhead, A Congressman Looks at the Planned Colloquy and Its

Effect in the Interpretation of Statutes, reprinted in 3. C. SANDS,

SUTHERLAND STATUTORY CONSTRUCTION 639 (4th ed. 1973).

50. Hart, 285 F.2d at 1035.

A-49

and then in the next sentence “presume{s] *** that this provi-

sion exempts from the revenue-sharing plan all those vending

machines which are operated by the military post exchanges

*** and so forth.’”' (Emphasis supplied.) He continued by

stating that the income-sharing provisions “shall not apply to

the military services” (emphasis supplied), a statement so clear-

ly erroneous that even DOD acknowledges that the exemption

is not so broad as Sikes claimed. Sikes also indicated his con-

cern for the funding of the “worthwhile endeavors” of the

military exchange program, stating his belief that additional

appropriations for that year would be impossible.

The majority opinion would give legislative effect to the over-

broad statements of one member of Congress by means of the

terse answer “yes” given by another member. The classic

response to this is that a shorter and more accurate answer by

the second gentleman would have been “no.”

Perhaps the greatest danger in rewriting the statute on the

basis of this colloquy, not addressed in the majority opinion,

is that there was not a quorum present when the colloquy took

place.” Thus, the “two men [were] able to legislate more effec-

tively than all of Congress.’”*

With apologies to Gilbert and Sullivan,” it may be observ-

ed that:

“Things are seldom what they seem

Skim milk masquerades as cream.”

51. 120 CONG. REC. 35,712 (1974).

52. Id. Also, the remarks were made after the Senate voted. See Texas State,

6 Cl. Ct. at 741. Although both houses voted again over 1 month later to

override the veto, it is not realistic to assume that Congress even considered

this bit of colloquy, grown stale in the record, over the words in the bill itself.

“Congress may be presumed not unskilled in the use of words and highly

likely to have enacted what it intended.” Hart, 585 F.2d at 1035.

53. W. Moorhead, reprinted in 3 C. SANDS, SUTHERLAND STATUTORY

CONSTRUCTION at 639.

54. W. Gilbert, H.M.S. Pinafore, Act II (1878), quotation reprinted in J.

Barlett, Familiar Quotations 623 (11th ed. 1937).

A-50

Two and two aren't always four

In dialogue upon the floor

Of any legislative forum,

In the absence of a quorum

This circumstance may be revised,

Now all debates are televised.

Attendance now, so we envision,

Will improve with television.

I have no doubt that Congressman Sikes was sincere in his

concern for the welfare of the military exchanges; indeed, I

would expect such concern from the Chairman of the House

Armed Services Committee. Nor do I question the authority

of Congress to enact a statute such as Sikes would have

preferred.

There is no doubt that if Sikes had been successful in amen-

ding the bill to delete the words “within retail sales outlets,”

and if Congress had passed such a bill, this court would give

effect to the resulting statute. The only hitch is that the bill

was not amended to delete the language to which Sikes objected.

DOD comes to this court asking us to give effect to the

language of Congressman Sikes (before less than a quorum of

1 house) rather than the language of the statute enacted by Con-

gress. This we cannot do under the precedent of the Supreme

Court and our predecessor courts. “Even assuming, for the time

being,” that it would make more “economic sense” to exempt

all vending machines instead of only those machines “within

retail sales outlets”:

[W]e would only be left with the fact that Congress

could have promulgated a better and more meaningful

statute. Nevertheless, to improve legislation is certain-

ly not the function or responsibility of the court.

‘{Ojur problem is to construe what Congress has writ-

ten. After all, Congress expresses its purpose by

55. Ricker v. United States, 396 F.2d 454, 456 (Ct. Cl. 1968) (quoting 62

Cases, More or Less Each Containing Sixty Jars of Jam v. United States,

340 U.S. 593, 596 (1951).

A-51

words. It is for us to ascertain—neither to add nor to

substract, neither to delete nor to distort’***

“Since Congress thought there was a reason’ to grant an ex-

emption for vending machines “within retail sales outlets,” but

not for vending machines in other locations, “‘we cannot say

otherwise.”

The Court of Claims further stated in Ricker:”

Defendant would have us delete or ignore the clear

language of the statute. We must adhere to the rule

stated in Prudential Ins. Co. of America v. United

States***: “It is fundamental that an unambiguous

statute should be given effect according to its plain

and obvious meaning”: [Citation omitted.]

It is not within the power of this court to rewrite the

Randolph-Sheppard Amendments of 1974 under the rationale

of “no economic sense.”

I would give effect to the words employed by Congress. The

exemption from income sharing applies to “vending machines

within retail sales outlets under the control of exchange or ships’

stores systems.” All other vending machines under the control

of the exchange systems are subject to income sharing, as pro-

vided by the Randolph-Sheppard Act.”

E. Subsequent Letters from Congressmen.

The majority errs in relying on letters, written by individual

congressmen subsequent to the bill’s enactment, as evidence

of “the intent of Congress.” As the Court of Claims has

56. Ricker, 396 F.2d at 456.

57. Id. -

58. Id.

59. 20 U.S.C. § 107d-3(b) (1982).

60. See 2A N. SINGER, SUTHERLAND STATUTORY CONSTRUCTION

§ 48.16.

A-52

stated:°’

How [a congressman] could possibly have ‘‘personal

knowledge of the object or intention of the enact-

ment” by both Houses of Congress is not easy to com-

prehend. At most he could have only personal

knowledge of his own object and intention, and that

would not go far towards showing the object and in-

tention of each, or of a majority of the several hun-

dred members of the House of Representatives and

of the members of the Senate in passing the act,***.

Futhermore, if subsequent interpretations were relevant, the

1979 Oversight Hearings indicate that Congress enacted ex-

actly the words it intended in the 1974 statutory exemption.

Senator Randolph, the author of the act, was highly critical

of DOD’s noncompliance with both the act and the HEW

regulation concerning vending machine income sharing.”

Just as the colloquy was ineffective to amend the language

of the bill, the subsequent letters were ineffective to amend the

language of the statute.

In sum, the legislative history of the act reveals its sweep-

ing purpose to combat the “‘widespread, major abuses’”’ of the

blind vendor program and to double the number of blind ven-

dors on all federal property. DOD alone was characterized as

“singularly insensitive”’ and “‘hostile or indifferent’’ to the pro-

gram. DOD was criticized not only for its abuses of blind ven-

ding stands but specifically for the military exchanges’ use of

61. Badeau v. United States 21 Ct. Cl. 48, 49-50 (1886); See United States

v. Philadelphia Nat'l Bank, 374 U.S. 321, 348-49 (1963); Waterman S.S. Corp.

v. United States, 381 U.S. 252, 268-69 (1965). See also Key Buick Co. v. Com-

missioner, 68 T.C. 178, 183 (1977), affd, 613 F.2d 1306 (5th Cir. 1980).

62. 1979 Oversight Hearings at 93. The majority also discounts the

testimony and letters from the GAO in connection with the 1979 Oversight

Hearings, in which GAO found that the DOD regulation was inconsistent

with the statute as well as with the authorized HEW regulations. Finally,

the majority reverses the well-reasoned decisions of the arbitration panel

and of the Claims Court.

A-53

vending machines to compete with blind vendors.” The

amendments were adopted to protect the blind from the

military exchanges and not vice versa.

HEW Interpretation

Congress expressly stated its desire and reason for regulatory

supremacy in HEW:™

The Committee finds that 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 authori-

ty for its operation with the Secretary of Health,

Education, and Welfare. ***

* * * *

The Committee believes that the Department of

Health, Education, and Welfare should be the

overseer of the Randolph-Sheppard program

throughout the Federal government. As such, it is in-

evitable that there will be some incursion by that

department in matters traditionally handled by other

agencies. The Department of Health, Education, and

Welfare, however, has the expertness and the sen-

sitivity to the problems inherent in the blind vendor

program which may be lacking in other agencies. If

the program is to be coordinated, well run and con-

sistent, it must have a coordinator. The only possi-

ble choice for this function is HEW.

Congress acted on the committee’s recommendations by

granting both broad and specific powers to HEW alone. Thus,

HEW shall prescribe regulations to assure the priority for blind

vendors (including income sharing ‘“‘to achieve and protect such

63. See Texas State, 6 Cl. Ct. at 733 n.6.

64. S. REP. NO. 937, 93d Cong., 2d Sess. at 16, 19 (1974).

54

priority’). HEW shall prescribe regulations establishing one

or more vending facilities on all federal property.” “A deter-

mination made by the Secretary [of HE W] pursuant to this pro-

vision shall be binding on any department, agency, or in-

strumentality of the United States affected by such

determination.’”’

HEW shall “make annual surveys of concession vending op-

portunities for blind persons *** particularly with respect to

*** the Department of Defense.” HEW shall convene ar-

bitration panels to decide disputes under the Randolph-

Sheppard Act.”

Finally, and most significantly:”

The Secretary [of HE W] shall take such action and

promulgate such regulations as he deems necessary

to assure compliance with this section [concerning

vending machine income sharing].

Given the statute and the express statements of Congress,

the majority’s conclusion that HEW is “only on a par with

DOD” in promulgating regulations under the act is surprising,

to say the least.

65. 20 U.S.C. § 107(b) (1982). The functions under the Randolph-Sheppard

Act which were administered by the Secretary of HEW are now administered

by the Secretary of Education. 20 U.S.C. § 3441 (1982). For the purposes of

this opinion, I will continue to refer to HEW because the regulations in ques-

tion were promulgated by HEW rather than by Education.

66. 20 U.S.C. § 107(b) (1982).

67. Id.

68. 20 U.S.C. § 107a(a) (1982). The only other reference to DOD in the act

is that “Federal property” is defined to include DOD property. 20 U.S.C. §

107e(3) (1982). DOD is not “charged with enforcing” the act. Actually, DOD

is not given any authority whatsoever under the act. Cf. United States v.

Riverside Bayview Homes, Inc., 106 S. Ct. 455, 461 (1985).

69. 20 U.S.C. §§ 107d-1, 107d-2 (1982).

70. 20 U.SC. § 107d-3(g).

A-55

For two reasons, the majority misplaces its reliance on Ex-

ecutive Order No. 12,146,"’ which only states that if two ex-

ecutive agencies disagree on the interpretation of a statute, they

may submit the dispute to the Attorney General “‘prior to pro-

ceeding in any court’’ (emphasis supplied). First, the Depart-

ment of Justice is not allowed to issue a ruling on a matter

already in litigation.”

Thus, in Oklahoma v. Weinberger,” the Department of

Justice was not functioning in the neutral position that the

Tenth Circuit assumed. As the letter upon which DOD bases

it argument clearly states, the issue reached the Department

of Justice only after suit was filed in Oklahoma. The Depart-

ment of Justice was already functioning as the Government’s

lawyer in response to pending litigation against the United

States. The Department of Justice was merely advising its

client not to take any action that would compromise the litiga-

tion in progress. The Department of Justice thus issued no for-

mal opinion, nor could it have under federal law, because the

matter was under litigation.

The majority errs in stating that Justice’s interpretation in

litigation is binding. The United States is always a party in

the Claims Court, where it is represented by the Department

of Justice. Under the majority’s analysis, the Department of

Justice could issue a binding ruling in every case, and there

would be no need for a Claims Court.

Second, it is inaccurate for the majority to suggest that con-

flicting regulations of two agencies are entitled to equal weight,

without regard to the statutory authority of the agencies. Here,

the respective authority of HEW and DOD can be determined

only in reference to the act, which overwhelmingly rejects the

majority’s assertion that the agencies are ‘‘only on a par.”

The majority criticizes the HEW regulation because it merely

71. Exec. Order No. 12,146, 3 C.F.R. 409 (1980).

72. See, e.g., 38 Op. Att’y Gen. 149 (1934); 37 Op. Att’y Gen. 34 (1932);

32 Op. Att’y Gen. 472 (1921).

73. Oklahoma, 741 F.2d at 293.

“repeat|[s] the statutory language.” In my view, a better basis

for disregarding a regulation of the authorized agency would

be if the agency did not follow the statute.’‘ Furthermore, the

fact that HEW did not find it necessary to depart from the

statutory language, stating that only an amendment by Con-

gress could effect such a change, is a powerful indication that

the statute was clear and unambiguous.

The majority states that “there is no basis for deference to

the interpretation ky HEW” because HEW has “‘vacilated in-

ternally.” A close reading of the majority opinion, however,

discloses the fact that HEW published its final regulation on

March 23, 1977, and HEW has never changed or withdrawn

this regulation.

Advocates for DOD wrote letters attempting to prevail upon

HEW to change its regulation. It is this fiurry of cor-

respondence which the majority describes as evidence of “‘in-

ternal vacillation.” If the correspondence proves anything, it

is that HEW carefully considered the views of DOD as well as

the language of the statute before it promulgated its regula-

tions. This initial correspondence was never promulgated or

published, but even if it had been, it would not be sufficient

to undermine HEW's credibility. The United States Supreme

Court has recently explained:”

The fact that the agency has from time to time chang-

ed its interpretation of the term “source” does not,

as respondents argue, lead us to conclude that no

deference should be accorded the agency's interpreta-

tion of the statute. An initial agency interpretation

is not instantly carved in stone. On the contrary, the

agency, to engage in informed rulemaking, must con-

sider varying interpretations and the wisdom of its

policy on a continuing basis. ***

When it became clear to DOD that HEW would not change

its regulations, DOD acted upon HEW’s advice and

74. See Northern Colo., 730 F. 2d at 1517.

75. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 863-64 (1984).

a

A-57

attempted to introduce legislation to amend the Randolph-

Sheppard Act to delete the words “‘within retail sales outlets.”’

DOD's legislative proposal was not acted on, however, and the

statutory exemption remained unchanged.

Undaunted, DOD proceeded to publish its own final regula-

tions exempting all vending machines “‘operated by or for the

military exchanges.’”° DOD acknowledged comments

disagreeing with its version of the exemption, but it refused

to change the DOD regulation.”

The majority ‘‘conclude{d] that the interpretation of DOD,

as the agency compelled to apply the statutory exemption, is

the only authoritative administrative construction.’” Clear-

ly, the majority has erred.

Conclusion

The majority has rewritten a clear statute despite its plain

meaning, the legislative history supporting that plain mean-

ing, and the interpretation of the authorized agency. Thus,

DOD has accomplished through the courts what it was unable

to accomplish in the legislature or in the executive branch.

I would affirm the judgment of the United States Claims

Court.

76. 43 Fed. Reg. 25,337-42. DOD’s actions are inconsistent with its argu-

ment of ambiguity. Query: If the statute contained any support for DOD's

interpretation, why was DOD so vigorous in attempting to change the statute

and the HEW regulation which tracked the statute? Why did DOD pro-

mulgate its own regulation instead of simply withholding the income under

the statute and the HEW regulation as written?

77. Id. at 25,339.

78. The majority misplaces its reliance on Riverside Bayview Homes, 106

S. Ct. at 461, since Congress charged HEW and not DOD with enforcing

the statute. Thus, it is HEW’s regulation which is entitled to deference.

A-58

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

TEXAS STATE COMMISSION

FOR THE BLIND AND STATE

OF TEXAS,

v. Appeal No. 85-1954

THE UNITED STATES,

Appellant.

NEWMAN, Circuit Judge, with whom SMITH, Circuit Judge

joins, dissenting.

)

)

)

Appellees, )

)

)

)

I generally agree with Judge Smith's opinion in dissent, and

offer the following additional remarks.

Both sides of this issue pose questions that are inappropriate

for judicial answer, yet answer we must. The literal words of

the statute, on which Judge Smith’s opinion turns, are challeng-

ed by the fact that DOD has apparently never implemented

those words; this in turn is balanced by the contrary reading

of the statute by HEW (the agency charged with administer-

ing the statute). The 10th circuit has held one way, and the Texas

arbitrators (split 2-1) and the Claims Court held the other way.

The legislative history can support both interpretations, as the

preceding opinions demonstrate at length.

No fundamental law of nations or peoples is at stake; rather,

at stake is the choice of Congress on how to aid both the blind

and military recreation. This is a decision of national policy,

and it cries for the voice of Congress, not a court’s conclusion

that Congress did not intend the legislation that it enacted.

Until that voice is heard, I conclude that the balance is on

the side of the position supported by Judge Smith. This result

does not require explaining away the plain words of the statute,

as is eloquently done by the majority of the court. I find it

anomalous to conclude that the House and Senate* believed

that the simple clause “within retail sales outlets” really means

“anywhere on the base’? Although the government has cited

precedent for judicial rewrite of acts of Congress, none of this

authority goes as far as the dramatic rewrite advanced by the

court.

*The House voted 398 for, 7 against, and the Senate 90 for, 1 against, to

override President Ford's veto.

APPENDIX B

IN THE UNITED STATES CLAIMS COURT

No. 132-83C

(Decided November 26, 1984)

THE TEXAS STATE

COMMISSION FOR THE

BLIND AND STATE OF

TEXAS

Vv.

)

)

)

)

)

)

)

THE UNITED STATES )

OPINION

MEROW, Judge.

Introduction

This case comes before the court on cross-motions for sum-

mary judgment. Reply briefs have been filed and oral argument

has been held.

Plaintiff, Texas State Commission for the Blind (TSCB), seeks

enforcement of an arbitration decision holding defendant, the

United States, liable for monies unlawfully withheld under the

income-sharing provisions of the Randolph-Sheppard Act (Act).

20 U.SC. §§ 107-107f (1976). Plaintiff claims damages in excess

of $10 million. Defendant argues the Act’s “military exemption,”

20 U.SC. § 107d-3(d), exempts it from liability.

Background of the Randolph-Sheppard Act

The Randolph-Sheppard Act, 20 U.S.C. §§ 107-107, was pass-

ed in 1936, Pub. L. No. 732, ch. 638, 49 Stat. 1559. Its purpose

was to provide the blind with remunerative employment and

greater economic opportunities. Sec. 1, 49 Stat. at 1559. The

legislation permitted blind persons licensed under the Act to

set up vending stands in federal buildings. No priority or

preference was given in approving licenses. H.R. Rep. No. 1094,

B-2

74th Cong., lst Sess. 1, 2 (1936). Rather, the legislation was

designed merely to create employment opportunities for the

blind on federal property and to further federal rehabilitative

efforts on behalf of the blind. Jd.

In 1954, it appeared the program was not as effective as it

might be, in large measure, because of competition from the

new technological advance and rapid proliferation of vending

machines. 100 Cong. Rec. 9895 (statement of Sen. Gore), 9940

(statement of Rep. Barden), 9949 (statement of Rep. Rhodes)

(1954). Congress strengthened the program by passing the

Randolph-Sheppard Act Amendments of 1954. Sec. 4(a), Pub.

L. No. 83-565, ch. 655, 68 Stat. 652, 663-65. The amendments

authorized a preference, where feasible, allowing blind vendors

to set up vending stands on federal property. Jd. This preference

was assured by assigning vending machine income to the blind.

Id. Blind vendors would receive all income from vending

machines which were in direct competition.’

In 1969, additional amendments were proposed. The legisla-

tion was introduced because of the weak showing in the number

of blind vendors operating on federal property,’ the growing

trend toward installation of vending machines and the exclusive

use of machines in some federal buildings, as well as increas-

ing use of vending machine income by federal employees for

recreation and welfare purposes. S. 2461 was designed to pro-

tect the blind preference established in the 1954 amendments.

1. The Secretary of Health, Education and Welfare (HEW) was charged

with authority to issue regulations necessary for the operation of the pro-

gram. 68 Stat. at 663. The implementing regulation provided “for the assign-

ment to the [blind] operator of the income from vending machines within

reasonable proximity to and in direct competition with the vending stand.

(If a vending machine vends articles of a type authorized by the [blind ven-

dor’s] permit and is so located that it attracts customers who would other-

wise patronize the vending stand, such machine shall be considered to be

in reasonable proximity to and in direct competition with the stand.)” 45

C.F.R. § 403.6(c) (1957).

2. A comparison of blind vending stands on federal and nonfederal installa-

tions shows that in fiscal year 1969 there were 836 stands on federal proper-

ty employing 972 blind persons and that there were 1984 stands on nonfederal

property employing 2287 persons. S. Rep. No. 1235, 91st Cong., 2d Sess. 2

(1970).

B-3

S. Rep. No. 1235, 91st Cong., 2d Sess. 2 (1970). The bill provid-

ed for exclusive assignment of vending machine income to the

blind (or to the state licensing agencies administering the

Randolph-Sheppard Act) There were no exemptions for any

agency or vending machine. The exclusive income assignment

was implemented to facilitate the purpose of the Act, to pro-

vide maximum new job opportunities for the blind. Jd. °

In August 1972 Congress requested the General Accounting

Office (GAO) to review vending operations on federally-

controlled property and to determine if blind vendors were

receiving a preference as required by the 1954 amendments. The

report’ included a specific investigation of property under the

control of the Department of Defense (DOD), the United States

Postal Service (USPS), and the General Services Administra-

tion (GSA). It was a major catalyst for enacting the 1974

amendments. S. Rep. No. 937, 93rd Cong., 2d Sess. 9 (1974), S.

Rep. No. 1297, 98rd Cong., 2d Sess., reprinted in 1974 U.S. Code

Cong. & Ad. News 6373 , 6397.

The report concluded that the program was languishing at

the federal level while flourishing at the state level and in the

private sector. GAO found that not only had little attention

been paid to the blind vendor program, but that major abuses

had occurred.” GAO concluded that, insofar as DOD com-

pliance was concerned, military officials had not been “recep-

3. S. 2461 passed the Senate on September 28, 1970, 116 Cong. Rec. 33936

(1970), but was returned to the Committee on Education and Welfare on

September 29, 1970. 116 Cong. Rec. 34241 (1970).

4. “Review of Vending Operations On Federally Controlled Property,” Report

to the Senate Subcommittee on the Handicapped, Committee on Labor and

Public Welfare, B-176886 (Sept. 27, 1973)” (hereinafter “GAO Report’).

5. For instance, the parent Defense Department association at a major

federal space installation demanded blind vendors give a portion of their in-

come to the association. This was precisely the reverse of the 1954 amend-

ment requirements. S. Rep. No. 937, 93rd Cong., 2d Sess. 10 (1974). In another

instance, federal employees boycotted a blind vendor because he made modest

price increases on some items to meet rising costs. Jd. at 10-11.

B-4

tive’ to establishing blind vendor stands.° In addition, GAO

found that DOD regulations implementing the Act provided

that no permits would be granted to blind vendors for the opera-

tion of vending stands if morale and welfare programs would

be placed in jeopardy. These programs were funded by vending

machine revenues. 32 C.F.R. § 260.4(b) (3) (ii) (1966).

The 1974 legislation created a ‘‘priority’’ for blind vendors

in establishing and operating vending facilities on federally-

controlled property. 20 U.S.C. § 107(b). This priority included

a ‘‘prior right’’ to do business once the vending facility had

been established. S. Rep. No. 937, supra, at 15. In addition,

the committee stated that the legislation is directed toward

the establishment and protection of blind vending oppor-

tunities. Jd.

Absent from the 1974 legislation was the exclusive assign-

ment of vending machine income to blind vendors provision

present in the 1969 bill, s. 2461, supra. In its place an income-

sharing formula was established. A blind vendor or state licen-

sing agency would share 100 percent of the income of vending

machines directly in competition with the blind vending facility,

or a 50 or 30 percent share of vending machines not in direct

competition with the blind vending facility. Sec. 107d-3(b) (1).

In addition, unlike S. 2461 proposed in 1969, the 1974 Act had

three exemptions from the income-sharing requirements." The

6. GAO visited six major military installations and the Pentagon. There

were 5,984 vending machines on the installations, all of which were operated

by nonblind vendors. Of 56 stands, four were operated by the blind. GAO

Report, at 25. The four blind vendors had individual incomes ranging from

$4,000 to $16,000 and received no income from competing machines as re-

quired by 45 C.F.R. § 403.6(c) (1957). Id. at 27.

7. DOD regulations provided for income sharing only if there was

“unreasonable” or ‘‘unfair’’ competition from vending machines operated

by nonblind vendors. 32 C.F.R. § 260.4(c); GAO Report at 26. This resulted

in few blind vendor stands on DOD property. In fiscal year 1972 only 46

of 878 stands on federal property were located on DOD property. Jd. at 27.

8. The Act states that the income-sharing provisions “‘shall not apply to

income from vending machines within retail sales outlets under the control

of exchange or ships’ stores systems authorized by Title 10, or to income

(footnote continued on next page)

———e

B-5

first exemption, the “military exemption,” is at issue in this case.

The 1974 Act also contained a new provision provid:ng for

arbitration if a complaint was filed with the Secretary of

HEW’ by a blind licensee, or by a state licensing agency, 20

USC. § 207d-2, 34 C.F-R. § 395.13(a) (1982), 34 CER. § 395.37(a)

(1982). An arbitration panel would be comprised of three

members. The statute provided one panel member to be

designated by each party and the third member to be jointly

chosen. 20 U.S.C. §§ 107d-2(b). The arbitration is conducted as

a formal hearing. Jd. § 107d-2(a). The panel's decision is final

and binding on the parties, subject to judicial review under

chapter 7 of the Administrative Procedures Act (APA), 20 U.S.C.

§ 107; 34 C.R.F. §§ 295.13(c), 395.37(b) (1982).

Factual Background

Plaintiff, Texas State Commission for the Blind, a state licen-

sing agency, 20 U.S.C. § 107b, filed a complaint with the

Secretary of HEW alleging DOD failed to comply with the

income-sharing provisions of the Randolph-Sheppard Act. Pur-

suant to 20 U.S.C. § 107d-2, an arbitration panel was convened

by the HEW Secretary on January 29, 1981. The dispute stems

from differing interpretations of the military exemption, 20

U.S.C. § 107d-3(d). This exemption states that the income-

sharing provisions “shall not apply to income from vending

machines within retail sales outlets under the control of ex-

change or ships’ stores systems authorized by Title 10.” In its

implementing regulations, 32 C.F.R. §§ 260.1-260.6 (1982), DOD

broadly construed the exemption as applying to “income from

vending machines operated by or for the military exchanges or

ships’ stores systems.” 32 C.F.R. § 260.3(D) (3)(i) (1982). The

(footnote continued from previous page)

from vending machines operated by the Veteran Canteen Service, or to in-

come from vending machines not in direct competition with a blind vending

facility at individual locations, installations, or facilities on Federal proper-

ty the total of which at such individual locations, installations, or facilities

does not exceed $3,000 annually.” 20 U.S.C. § 107d-3(d).

9. All duties of the Secretary of HEW under the Randolph-Sheppard Act

were transferred to the Secretary of Eduation. Pub. L. No. 96-88, Title V1,

Oct. 17, 1979. 93 Stat. 696.

B-6

Secretary of HEW, who is charged with the authority to carry

out the provisions of the Act, 20 U.S.C. § 107a, and with the

responsibility to assure compliance with the income-sharing pro-

visions, 20 U.S.C. § 107d-3(g), interpreted the exemption as ex-

cluding “income from vending machines within operated retail

sales outlets under the control of post exchange or ships’ stores

systems authorized under Title 10 of the U.S.C.” 34 CFR. §

395.32(i) (1982).

At the arbitration proceeding, plaintiff argued in favor of

HEW’'s interpretation of the exemption. Plaintiff contended

since HEW is charged with implementing the Randolph-

Sheppard Act, its interpretation of the exemption should be

given great deference. Plaintiff also argued that the plain

reading of the statute favors a narrow interpretation. Plaintiff

contended that defendant’s interpretation would provide a

blanket DOD exclusion from the Act. TSCB also argued that

the legislative history on which DOD relied, was ambiguous

and unreliable evidence of congressional intent. Plaintiff also

contended that DOD’s unsuccessful attempts to obtain new

legislation endorsing its interpretation of the exemption is

strong evidence that DOD's interpretation is inconsistent with

the purpose of the existing legislation. Finally, plaintiff con-

tended that any overlap of the military exemption with the

$3,000 exemption, 20 U.S.C. § 107d-3(d), should be discounted.

Defendant argued that the military exemption is ambiguous

and that the legislative history should be consulted. Defendant

relied primarily on the Brademas-Sikes colloquy'’ and Senate

10. “Mr. SIKES. Mr. Speaker, first let me congratulate my distinguished

friend, the gentleman from Indiana (Mr. Brademas), and his committee for

an important legislative accomplishment. This is a good bill and a needed bill.

“Mr. Speaker, I do seek clarification on one point. I have discussed this

with the distinguished gentleman, and let me ask a question.

“In section 7(d) of the amended act (section 206 of H.R. 14225), there is

a statement that the income-sharing provisions as they pertain to vending

machines ‘within the retail sales outlets under the control of exchange or

ship's store’s systems authorized by title 10,’ shall not apply. I would presume,

and I would like the distinguished subcommittee chairman to verify for the

record, that this provision exempts from the revenue-sharing plan all those

(footnote continued on next page)

B-7

Report No. 937, supra.'' DOD contended that the military ex-

emption includes vending machines other than those within

retail saies outlets because the $3,000 exemption is sufficient

te exempt the latter. Defendant argued that if only the

machines within the retail sales outlets were exempt, Congress

would have created a meaningless exemption. Lastly, DOD

maintained that the income-sharing provisions were directed

at vending machine competition from civilian employee groups

rather than at military personnel.

The arbitration panel reviewed the legislative history of the

Act and issued its decision on September 2, 1981. A majority

concluded that the military exemption applies only to vending

machines actually inside the four walls of retail stores. The

panel reasoned that since Congress unquestionably intended

(footnote continued from previous page)

vending machines which are operated by the militay post exchanges, Navy

exchanges, officer and enlisted messes, and so forth.

‘“‘As you are aware, the profits from these vending machines are utilized

by the services to finance such worthwhile endeavors as the base libraries,

the youth activities, the gymnasium, and other sports activities, hobby sports

and motion picture programs, ashore and afloat. The servicemen finance these

programs themselves through the revenues collected in the retail sales outlet

systems as I have mentioned. To require that these revenues be shared might

well necessitate the appropriation of additional funds for the defense budget.

Since work in the fiscal year 1975 defense appropriations bill has been com-

pleted, the effect would be to cut off these needed programs without support.

‘Would the gentleman confirm for me the fact that it is the intent that

this paragraph shall not apply to the military services, and that this is in

keeping with the language on page 24 of the Senate report. (S.Rep. No. 93-937)

which is more specific on this issue tha[n] is the conference report?

“Mr. BRADEMAS. Mr. Speaker, I thank the gentleman from Florida for

his fine remarks about this legislation. I am pleased to tell the gentleman

that the answer to both his questions is ‘Yes.’ ’’ 120 Cong. Rec. 35712 (Oct.

16, 1974).

11. The pertinent section of Senate Report 93-937 reads as follows:

“Subsection (d) exempts certain activities from vending machine income

assignment. Both military exchange systems and the Veterans Canteen Ser-

vice operate under specific statutory authority, and are thus, as a matter

of policy, excluded.’ S. Rep. No. 937, 93rd Cong., 2d Sess. 24 (1974).

B-8

the Act to greatly enhance economic opportunities for the blind,

the exceptions must be read narrowly. The panel directed DOD

to reimburse plaintiff for all income due since the effective date

of the 1974 amendments. Plaintiff estimates this sum to be in

excess of $10 million.

Plaintiff commenced this action to enforce the arbitration

award. Defendant argues the arbitration decision is invalid as

a matter of law and seeks judicial review of the decision. Plain-

tiff argues that since review of the award is controlled by

chapter 7 of the Administrative Procedures Act, 5 U.S.C.

§§701-06, defendant cannot challenge the award. In addition,

an array of jurisdictional issues have been raised. These include

the basis for the court’s jurisdiction, the accrual of the statute

of limitations, the proper scope of review of the arbitration deci-

sion and whether the nonappropriated fund doctrine deprives

the court of jurisdiction.

For the reasons stated below, it is concluded that this court

has jurisdiction to determine the validity the monetary arbitra-

tion award and that the arbitration panel correctly interpreted

the Act.

~ Discussion

Jurisdiction

Jurisdiction over the claim is based on 28 U.S.C. § 1491. The

Tucker Act, of course, is itself only a jurisdictional statute; it

does not create any substantive right enforceable against the

United States for money damages. United States v. Testan,

424 U.S. 392, 398 (1975). The Act merely confers jurisdiction

whenever the substantive right exists. Mitchell v. United

States, 445 U.S. 535, 538 (1980). Plaintiff’s claim for money

damages must be based on another statute. In this case, plain-

tiff’s right is based on 20 U.S.C. §§107d-1 and 197d-2(b) requir-

ing the implementation of the arbitration award obtained on

its monetary claim. As such, the statute of limitations com-

mences to run from the date of the arbitration decision. United

Parcel Service, Inc. v. Mitchell, 451 U.S. 56 (1981).

B-9

Had plaintiff chosen not to arbitrate,'” it could

12. Arbitration under the Randolph-Sheppard Act is voluntary. 20 U.S.C.

§ 107d-1 provides:

‘“(a) Any blind licensee who is dissatisfied with any action arising from

the operation or administration of the vending facility program may sub-

mit to a state licensing agency a request for a full evidentiary hearing, which

shall be provided by such agency in according with Section 107b(6) of this

title***.

“(b) Whenever any state licensing agency determines that any department

*** is failing to comply with the provisions of this chapter or any regula-

tions thereunder *** such licensing agency may file a complaint with the

Secretary who shall convene a panel to arbitrate.’’ (Emphasis added.)

See also 34 C.F.R. § 395.13(a) (1982); 34 C.F.R. § 395.37(a) (1982). In com-

paring the permissive language allowing an arbitration request with the man-

datory language requiring arbitration only after such a request, it becomes

clear arbitration is not mandatory. See Oklahoma v. Weinberger, No.

Civ.-81-928-7 (W.D. Okla. 1982), affd, No. 83-1258 (10th Cir. 1983); contra

Fillinger v. Cleveland Society for the Blind, 587 F.2d 337 (6th Cir. 1978);

Mass. Elected Committee of Blind Vendors Matava, 482 F. Supp. 1186 (D.

Mass. 1980); Texas State Commission for the Blind, Civil No. A-84-CA 214

(W.D. Tex., Sept. 28, 1984).

The decision in Oklahoma supports this result. The court implied that the

blind licensee or agency has a choice whether to arbitrate or to seek judicial

relief directly. The court stated:

“The Randolph-Sheppard Act provides for arbitration of a state licensing

agency’s complaint regarding a federal department or agency’s failure to

comply with the provisions of the act or any regulations issued pursuant

to it. Plaintiff filed an arbitration complaint more than a year ago with the

Department of Education but has not obtained a decision and does not an-

ticipate one will be rendered due to the recalcitrance of the Department of

Defense. The defendant has not objected to the Court’s consideration of this

issue and accordingly, under these circumstances, plaintiff will not be re-

quired to exhaust its administrative remedies.”

Slip Op. at 2, n. 2.

The decisions in other jurisdictions requiring prior arbitration are not per-

suasive. In Texas the court stated arbitration was mandatory and provided

‘no reasoning for its decision. In Fillinger the court reasoned the amendments

to the Randolph-Sheppard Act allowing arbitration reflected a congressional

policy ‘‘that blind vendors must exhaust their administrative and arbitra-

tion remedies before seeking review in the district court." 587 F.2d at 338.

(footnote continued on next page)

B-10

then have instituted a suit for money wrongfully withheld pur-

suant to 20 U.S.C. § 107d-3. The court would have jurisdiction

over such a claim. See Eastport Steamship Corp. v. United

States, 178 Ct. Cl. 599, 605, 372 F.2d 1002, 1007 (1967). Under

these circumstances the statute of limitations would then have

commenced to run within a reasonable time after the statutory

payment obligation arose. See Nager Electric Co. v. United

States, 117 Ct. Cl. 234, 368 F.2d 847 (1966).

However, because plaintiff did elect arbitration and suit was

filed within six years of the arbitration decision, the statute

of limitations does not bar enforcement of this decision despite

the fact that the sums involved commenced to accrue as early

as 1974.

Plaintiff argues defendant is precluded by the APA from at-

tacking the arbitration decision. 20 U.S.C. § 107d-2(a) provides

the arbitration decision “shall be subject to appeal and review

as a final agency action for purposes of chapter 7 of such Title

5.”"* 5 U.S.C. § 702 provides: “A person suffering legal wrong

because of agency action, or adversely affected or aggrieved by

agency action within the meaning of a relevant statute, is en-

titled to judicial review thereof.” A person is defined as “‘an in-

dividual, partnership, corporation, association, or public or

private organization other than an agency.” 5 U.S.C. § 551(2).

Plaintiff argues that defendant cannot challenge the arbitra-

tion award because it is not a person under the APA."

(footnote continued from previous page)

The court in Massachusetts Electric found this reasoning persuasive and

followed Fillinger. From the language of the statute, however, it appears Con-

gress simply provided blind vendors with the option to pursue an additional

avenue of relief rather than mandated prior arbitration in each instance. In

addition, there is no indication in the legislative history that Congress in-

tended to impose arbitration as a prerequisite to judicial relief. See general-

ly 1974 U.S. Code Cong. and Ad. News, p. 6373.

13. Plaintiff's argument that the arbitration is final and not reviewable by

this court must be rejected. According to 20 U.S. § 107d-2(a), this court

may review the decision within the scope of review provided by 5 U.S.C. § 706.

14. This argument has been rejected by the one other court which has rul-

ed on the issue. Georgia Department of Human Resources v. Bell, 528 F. Supp.

17, 22 (N.D. Ga. 1981) (amended on other grounds, Apr. 16, 1982).

B-11

In harmonizing the reference to the APA in the Randolph-

Sheppard Act with this court’s jurisdiction, it is necessary to

reject plaintiff's argument that defendant cannot seek review

of the arbitration decision. For the purpose of suits maintain-

ed in the Claims Court, this section must be interpreted to in-

corporate only the review provisions of 5 U.S.C. § 706. Such a

result is necessary because this court is without jurisdiction

to enforce chapter 7 in its entirety. 5 U.S.C. § 705 sets forth

equitable remedies beyond the jurisdiction of this court. In ad-

dition, the Administrative Procedures Act is not a substantive

statute for jurisdictional purposes. See, Brenner, Judicial Review

By Money Judgment in the Court of Claims, 31 Fed. Bar J. 179,

183-85 (1961); Califano v. Sanders, 430 U.S. 99, 107 (1977).

The United States is always a party before the court. To argue

that only the plaintiff may challenge an arbitration decision

would lead to an inequitable result.'® There is a strong bias in

favor of review of administrative action. See Barlow v. Collins,

397 U.S. 159, 166-67 (1970); Abbott Laboratories v. Gardner,

387 U.S. 136, 139-143 (1967). It is likely that the intent of the

legislation was to allow limited review of the award by request

of either party in a court otherwise have subject matter

jurisdiction.

This result is supported by the legislative history. The early

provisions of what was to become the 1974 amendments pro-

vided that only blind persons and state licensing agencies had

the right to judicial review. The language limiting review only

to non-governmental entities was eliminated before passage of

the 1974 amendments.” In addition, had Congress intended

15. The present situation is unlike S & E Contractors, Inc. v. United States,

406 U.S. 1 (1972). In the present case there is no contractual provision pro-

hibiting judicial review. In addition, unlike the contract disputes systems

as construed in S & E, arbitration is not akin to a compromise procedure.

16. The language of the provisions as proposed in Senate Bill 2461, introduc-

ed in 1969, and Senate Bill 2506, introduced in 1971, was as follows:

“Sec. 10. Notwithstanding other provisions of this Act, any blind person

or State licensing agency suffering legal wrong because of any agency ac-

tion, or adversely affected or aggrieved by such action within the meaning

of this Act or other relevant statutes, shall be entitled to and shall have

(footnote continued on next page)

B-12

to limit the government's right to review, it could have explicitly

so provided in the statute. Compare 5 U.S.C. § 7703(d); Devine

v. Nutt, 718 F.2d 1048, 1052 (1983).

Finally, although we are dealing with nonappropriated funds,

28 U.S.C. § 2517 does not deprive the court of jurisdiction.

Although the nonappropriated fund doctrine may be a limiting

factor in the court’s jurisdiction, it does not deprive this court

of jurisdiction if appropriate funds may be used to fund the

agency. United States v. General Electric Corp., 727 F.2d 1567,

1570 (1984); L’Enfant Plaza Properties, Inc. v. United States,

229 Ct. Cl. 278, 668 F.2d 1211 (1982); McCarthy v. United States,

229 Ct. Cl. 361, 670 F.2d 996 (1982). A judgment need not be

satisfied from the permanent judgment fund. 31 U.S.C. § 1304.

A judgment in this case is in the nature of a refund and could

be satisfied from defendant’s Morale Welfare and Recreation

Account as well as O&M appropriations. See GAO Report

B-211206 (Sept. 27, 1984). Thus, we are not faced with the dif-

ficult question which would be presented were exercise of the

Claims Court’s judgment owner sought to provide additional

appropriated sums under 28 U.S.C. § 2517, 31 U.S.C. 1304, in

lieu of nonappropriated funds unlawfully retained and utilized

by an agency. In such an instance, absent some indication that

prior congressional approval existed for bypassing the

legislative appropriation process, the Constitutional prohibition

set forth in Article 1, § 9, cl. 7, might well apply. See Great

Western Ins. Co. v. United States, 19 Ct. Cl. 206, affirmed, 112

US. 193 (1884); United States v. Richardson, 418 U.S. 166 (1974).

(footnote continued from previous page)

standing for judicial review thereof.” (Emphasis added.) The language pro-

posed in Senate Bill 2581, which was later to become a part of the 1974 amend-

ments was:

“Sec. 7. (b) Whenever any State licensing agency, designated as such by

the Secretary under this Act, determines that any department, agency, or

instrumentality of the United States that has control of the maintenance,

operation, and protection of Federal property is failing to comply with the

provisions of this Act or any regulations issued thereunder such licensing

agency may file a complaint with the Secretary who shall convene a panel

to arbitrate the dispute pursuant to section 6 of this Act, and the decision

of such panel shall be final and binding on the parties except as otherwise

provided in this Act. (Emphasis added.)

B-13

No such problem would arise were suit brought in a tribunal

having the equitable jurisdiction to compel a refund of withheld

sums.

Merits

The issue presented in this case is one of statutory construc-

tion. Under the APA, questions of law are fully reviewable by

courts. 5 U.S.C. § 706; North Georgia Building & Construc-

tion Trades v. Goldschmidt, 621 F.2d 697, 708 (5th Cir. 1980);

Coca-Cola Co. v. Atchinson, 608 F.2d 213, 218 (5th Cir. 1979);

General Ry Signal Co. v. Washington Metropolitan Area Tran-

sit Authority, 527 F. Supp. 359, 360 (D.C. D.C. 1979), aff,

664 F.2d 296, cert. denied, 452 U.S. 915 (1981).

In determining the meaning of a statute, the first inquiry

must be directed to the statute’s language. If the language is

plain, the duty of interpretation does not arise and the func-

tion of the courts is limited to enforcing the statute according

to its own terms. Caminetti v. United States, 242 U.S. 470, 485

(1917). 2A Sands, Sutherland Statutory Construction, § 46.01

(4th ed.). When a statute is plain and unequivocal on its face,

there is no need to resort to legislative history. United States

v. Oregon, 366 U.S. 643, 648 (1961). However, when enforce-

ment of the literal interpretation of a statute leads to “absurd”

results such that a literal view would impute to Congress an

irrational purpose, United States v. Bryan, 339 U.D. 323, 338

(1950), or would thwart the obvious purposes of the statute,

In Re Trans Atlantic Pipeline Rate Cases, 436 U.S. 631, 643

(1978), or would lead to an ‘‘unreasonable”’ result plainly at

variance with the policy of the legislation as a whole, Trustee

of Indiana University v. United States, 223 Ct. Cl. 88, 94, 618

F.2d 736, 739 (1980), literal interpretation will be eschewed in

favor of a more flexible inquiry into legislative intent. 2A Sands,

Sutherland Statutory Construction, § 46.07. Thus, if a statute’s

text is unclear or ambiguous and its words do not readily pro-

vide a plain meaning, a literal approach is unhelpful and it is

appropriate to resort to legislative history. United States v.

Oregon, 366 U.S. at 648; Fitzpatrick v. Internal Revenue Ser-

vice, 665 F.2d 327, 329-30 (11th Cir. 1982).

B-14

a) The Statute

i) Customary Meaning

The statutory provision at issue appears unambiguous on

its face.'’ The disputed phrase is ‘‘“vending machines within

retail sales outlets under the control of exchange or ships’ stores

systems.’’ The term ‘‘within,”’ a preposition, is defined as “‘us-

ed as a function word to indicate enclosure or containment,”’

Webster’s Third New International Dictionary (1967 ed.), and

‘in or into the interior of or the parts or space enclosed by,”’

Random House Dictionary of the English Language (1967 ed.),

or may mean “‘the inside of a place, space or building.’’ Jd. The

common usage of the term contemplates spatial boundaries.

Defendant’s assertion that ‘“‘within’’ may also mean “‘subject

to’’ or ‘‘a part of’’ broadens its meaning and eliminates the con-

notation of spatial contraints. This strains the ordinary mean-

ing of this term and must be avoided. 2A Sands, Sutherland

Statutory Construction, § 46.01. The customary meaning of the

term favors plaintiff’s assertion that Congress intended to ex-

empt vending machines located within physical boundaries, i.e.,

retail stores.

Similarly, the term ‘‘outlet’’ is undefined in the statute.

Unless Congress has clearly indicated a contrary meaning, its

ordinary meaning is favored. United States v. Snider, 502 F.2d

645, 651 (4th Cir. 1974). The term ‘outlet’? has a common,

everyday meaning of ‘‘a market for a commodity,”’ ‘“‘a retail

store,’’ Webster’s Dictionary, supra, or ‘“‘a store, merchant or

agency selling one’s goods.’’ Random House Dictionary, supra.

The ordinary and customary purport of the term ‘“‘outlet’’

favors plaintiff’s interpretation that the exemption applies to

retail stores rather than to vending machines.

17. Both HEW and GAO have maintained that the ‘plain meaning”’ of

the exemption should prevail and that inquiry into legislative history is un-

necessary. Memorandum to Leo Corbett, Special Assistant to the Secretary

of HEW from Richard Beattie, Acting General Counsel of HEW (Apr. 12,

1977); Memorandum from Milton J. Socolar, General Counsel, GAO, to Direc-

tor, Federal Personnel and Compensation Division, B-183894-O.M. (Feb. 26,

1979) (hereinafter ‘“‘“Socolar Memorandum”’).

B-15

Defendant argues for an interpretation which would exempt

all vending machines under the control of military exchanges

or ships’ stores systems. It would read the retail sales outlet

limitation out of the statute and would render the phrase

‘within retail sales outlets’’ meaningless. Defendant’s inter-

pretation would ignore a limitation in the statute. Basic prin-

ciples of statutory construction militate against this practice.

Effect should be given, where possible, to every word of a

statute so that no part will be rendered nugatory, superfluous,

void or insignificant. 2A Sands, Sutherland Statutory Construc-

tion, § 46.06; Ricker v. United States, 184 Ct. Cl. 402, 396 F.2d

454 (1968).

ii) HEW’s Interpretation

Under § 107d-3(g) of the Act, the Secretary of HEW is charg-

ed with authority “‘to take such action and promulgate such

regulations as he deems necessary to assure compliance”’ with

the income-sharing provisions of the statute. This language has

been construed as granting “‘broad rulemaking powers.”’ Blum

v. Bacon, 457 U.S. 132, 140, n. 8 (1982). The legislative history

indicates that Congress intended to confer broad authority on

HEW to carry out the Randolph-Sheppard Act. Congress view-

ed HEW as having the “‘expertness and sensitivity to the blind

vendor program which may be lacking in other agencies.”’ S.

Rep. No. 937, 93rd Cong., 2d Sess. 19 (1974). HEW was con-

sidered to be the only possible choice for coordinating the blind

vendor program on federal property. Jd.

It is axiomatic that an interpretation of a statute by an ad-

ministrative body charged with its implementation is accord-

ed great weight as an extrinsic aid in the interpretation of

statutes by the courts. 3 Sands, Sutherland Statutory Construc-

tion, § 65.05; United States v. Clark, 454 U.S. 555, 565 (1982).

HEW has consistently construed the military exemption as ap-

plying only to vending machines within the four walls of retail

outlets."*

18. See Notice of Proposed Rulemaking on December 23, 1975, 40 Fed.

Reg. 59408. 40 Fed. Reg. 549414 (Dec. 23, 19/5) (proposed rules); 42 Fed.

Reg. 15814 (Mar. 23, 1977) (final rules); 45 C.F.R. § 1369.32(i) (1980); 34 C.F.R.

§ 395.32(i) (1982).

(footnote continued on next page)

B-16

iii) Statutory Scheme

The statute reveals a congressional desire to ensure DOD

compliance. For instance, Congress provided for a survey of

vending opportunities afforded blind vendors on federal pro-

perty. The statute requires particular scrutiny of opportunities

on DOD, GSA and the Postal Service property. 20 U.S.C. §

107a-(a)(2). This emphasis was not present in earlier legislation.

Its inclusion in the 1974 amendments highlights increased con-

gressional concern for the program’s development on these pro-

perties. DOD’s interpretation of the exemption would severe-

ly restrict blind vendor opportunities on DOD property and

the survey provision would be rendered meaningless.

In addition, the text of the statute demonstrates that Con-

gress could create unambiguously a blanket exemption from

the income-sharing provisons. Congress exempted without

limitation “‘income from vending machines operated by the

Veteran’s Canteen Service.’’ The military exemption does not

contain similarly broad language.

Defendant argues that if plaintiff’s interpretation is adopted,

the military exemption would duplicate the $3,000 exemption.

Defendant reasons that all vending machines within retail sales

outlets are already covered by the latter exemption. The $3,000

exemption was a compromise provision intended to mollify non-

DOD federal employees who strenuously opposed the blind ven-

dor program. Socolar Memorandum, supra, at 6. There is no

evidence that Congress considered the overlapping nature of

the two exemptions. Arbitration Panel’s Decision at 14, n. 22.

In addition, although vending machines within retail sales

outlets of the exchanges may have produced income of $3,000

or less in 1978 and qualified as exempt under two exemptions,

(footnote continued from previous page)

Defendant points to draft regulations considered, but subsequently re-

jected, by HEW in April 1975. These reflect defendant's interpretation of

the exemption. Defendant views the inconsistent interpretation as under-

mining HEW'’s longstanding narrow interpretation and argues less judicial

deference which should be accorded to HEW's interpretation. See also

Oklahoma v. Weinberger, No. 83-1258, slip op. at 4-5 (10th Cir. 1983). The

fact that HEW rejected the broader interpretation of the exemption, however,

is significant. Arbitration Panel Decision at 17.

B-17

it is entirely probable that Congress anticipated that the ven-

ding machine income would exceed $3,000 in the future.

b) Legislative History

Even if the exemption is ambiguous and legislative history —

is consulted, defendant’s interpretation is not persuasive.

Although defendant’s position is supported by selected ex-

cerpts of legislative history, it is not supported by the Act as

a whole.

Defendant relies very heavily on two excerpts of legislative

history. The portion of Senate Report No. 937,” which defen-

dant cites as exempting the “military exchange systems”’ from

income-sharing includes other references to the same exemp-

tion. These excerpts support a narrower interpretaton. The

report states:

Subsection (d) provides that the assignment of in-

come provisions of subsectiois (a) and (b)(1) do not

apply to vending machine income from military ex-

change retail outlets ***.

Report at 21.

Subsection (d) excludes from application of this sec-

tion [the income-sharing provisions] vending machine

income from retail outlets of military exchanges ***.

Report at 30.

The text of the Report cited by defendant is ambiguous when

read in conjunction with contrary references in other sections

of the same document.

Furthermore, the Conference Report, which is more per-

suasive of congressional intent than committee reports, Dem-

by v. Schweiker, 671 F.2d 507, 510 (D.C. Cir. 1981), describes

the exemption as excluding vending machines in “‘certain loca-

tions’’ from income-sharing. This suggests that individual retail

19. See n. 11.

B-18

outlets are within the exemption but that vending machines

in multiple locations are excluded. S. Rep. No. 93-1270, 93rd

Cong., 2d Sess. 35 (1974) and H.R. Rep. No. 93-1457, 93rd

Cong., 2d Sess. 35 (1974).

Defendant maintains that the most persuasive evidence of

congressional intent is the Brademas-Sikes colloquy of October

16, 1974.” See also Oklahoma v. Weinberger, No. 82-1258,

slip op. at 6 (Oct. 19, 1983). Rep. Brademas was a floor manager

of the 1974 legislation and the chairman of the House Subcom-

mittee that sponsored the bill (H.R. 14225). Although remarks

made by a member of a committee in charge of a bill are general-

ly considered in construing the enacted legislation, such

statements are not given effect to override a clear and unam-

biguous meaning conveyed by the statutory language. 2A

Sands, Sutherland Statutory Construction, 4 48.14. Here, the

interpretation is at odds with the statutory language as well

as the ordinary meaning of the phrase “within retail sales

outlets.’ Therefore, the dialogue is less significant in determin-

ing congressional intent. Even GAO described the dialogue as

“isolated statements of individual legislators”’ and rejected it

as unpersuasive in view of the clear

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