State of Hawaii v. Usedu ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
STATE OF HAWAII, Department of Nos. 21-16242
Human Services, Division of 21-16323
Vocational Rehabilitation,
Hoopono-Services for the Blind, D.C. No.
Plaintiff-Appellee/ 1:17-cv-00430-
Cross-Appellant, LEK-RT
v.
OPINION
U.S. DEPARTMENT OF EDUCATION,
Rehabilitation Services
Administration,
Defendant-Appellant/
Cross-Appellee,
and
UNITED STATES DEPARTMENT OF
THE ARMY,
Defendant.
Appeal from the United States District Court
for the District of Hawaii
Leslie E. Kobayashi, District Judge, Presiding
Argued and Submitted July 6, 2022
Honolulu, Hawaii
2 STATE OF HAWAII V. USDOE
Filed August 30, 2022
Before: Kim McLane Wardlaw, Jacqueline H. Nguyen,
and John B. Owens, Circuit Judges.
Opinion by Judge Wardlaw
SUMMARY *
Randolph-Sheppard Act
In an action brought by the State of Hawaii challenging
the U.S. Department of the Army’s changes to the operation
of its dining facilities at Schofield Barracks and Wheeler
Army Airfield in Honolulu, Hawaii, the panel reversed the
district court’s conclusion that the Randolph-Shepard Act
(“RSA”) did not apply to Dining Facility Attendant (“DFA”)
contracts, and affirmed the district court’s conclusion that
the RSA advance review provision applied to the
reclassification of a Schofield Barracks contract.
Ho’opono, the Hawaii state agency charged with
protecting the rights of blind vendors under the RSA,
asserted that the Army failed to comply with its obligations
under RSA by failing to prioritize blind vendors in the
bidding process for a vending facilities services contract at
the base’s cafeteria, and by failing to obtain the Department
of Education (“DOE”)’s approval before it limited those
operations. An arbitration panel found in favor of the Army
on both issues, and Ho’opono appealed the panel’s decision
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
STATE OF HAWAII V. USDOE 3
to the district court.
The Army operates each of its dining facilities under
either the Full Food Service (FFS) model (contracting out all
cafeteria maintenance tasks), or the DFA model (members
of the military perform most of the tasks required to maintain
the dining facilities). The Schofield Barracks operated under
an FFS model for the duration of the RSA contract with
Ho’opono from 2005 to 2016. When the Army solicited new
contracts for Schofield’s dining facilities in 2016, it
reclassified its dining facilities as DFA facilities. The Army
decided against soliciting the contract under the RSA’s
requirements because the contract covered janitorial and
custodial services only, and instead solicited the contract as
a 100% Small Business Set-Aside, a form of contract on
which Ho’opono is ineligible to bid. The Army did not seek
or enjoin DOE’s permission to reclassify its dining facilities
maintenance contract from FFS to DFA.
The parties disputed whether the RSA applied to DFA
contracts at all. The dispute turned on whether a DFA
contractor, who primarily performs janitorial, custodial, and
sanitization functions, “operates” a vending facility. If a
DFA contractor was operating a vending facility, then the
RSA priority applied. The panel agreed with Ho’opono’s
position that a DFA contractor operates a vending facility by
fulfilling tasks that are integral to the operation of the dining
hall. The panel held that the district court applied an
incorrect standard of review to the RSA arbitration panel’s
construction of 20 U.S.C. § 107(a) when it deferred heavily
to the arbitration panel’s interpretation. Because the RSA
did not delegate interpretive authority to the arbitration
panel, the panel reviewed de novo. The panel held that the
term “operate” was ambiguous in § 107(a). The panel held
further that the statutory structure of the RSA supported a
4 STATE OF HAWAII V. USDOE
broad interpretation in favor of increased opportunities for
blind vendors, and the implementing regulations swept even
more broadly and counseled strongly in favor of applying the
RSA to DFA contracts. The RSA also defined “vending
facility” in broad terms, suggesting that DFA contracts
should fall under the RSA. The Secretary of Education has
reached the same conclusion. The panel concluded that
because the DFA contract for Schofield Barracks covered
responsibilities that were integral to the cafeteria’s
operation, the RSA applied and the Army should have given
RSA priority to blind vendors for the DFA contract.
The panel affirmed the district court’s conclusion that the
RSA advance review requirement applied to the Army’s
reclassification of Schofield Barracks’ dining facilities.
Examining the plain meaning of the statute’s unambiguous
terms, the panel concluded that the Army triggered the
advance review requirement when it reclassified the
Schofield Barracks dining facilities in a way that eliminated
Ho’opono’s eligibility to bid on the DFA contract. This
action limited the ability of blind vendors to assert their RSA
priority to the Schofield Barracks. Accordingly, the Army
violated the RSA by failing to seek the Secretary’s approval.
The panel affirmed the district court’s conclusion that the
Army triggered the RSA advance review requirement by
reclassifying Schofield Barracks’ dining facilities as a DFA
facility.
STATE OF HAWAII V. USDOE 5
COUNSEL
Laura E. Myron (argued) and Mark B. Stern, Appellate Staff;
Judith A. Philips, Acting United States Attorney; Brian M.
Boynton, Acting Assistant Attorney General; Civil Division,
United States Department of Justice, Washington, D.C.; for
Defendants-Appellants/Cross-Appellees.
Ryan W. Goellner (argued) and Matthew C. Blickensderfer,
Frost Brown Todd LLC, Cincinatti, Ohio; Daniel F.
Edwards, Taft Stettinius & Hollister LLP, Columbus, Ohio;
James W. Walther and Lynne M. Youmans, Deputy
Attorneys General; Department of the Attorney General,
Honolulu, Hawaiʻi; for Plaintiff-Appellee/Cross-Appellant.
Andrew D. Freeman and James O. Strawbridge, Brown
Goldstein & Levy LLP, Baltimore, Maryland, for Amici
Curiae National Association of Blind Merchants and
National Council of State Agencies for the Blind.
OPINION
WARDLAW, Circuit Judge:
Ho’opono, the Hawaii state agency charged with
protecting the rights of blind vendors under the Randolph-
Sheppard Act, see 20 U.S.C. §§ 107–107f, challenges the
United States Department of the Army’s (Army) changes to
the operation of its dining facilities at Schofield Barracks
and Wheeler Army Airfield in Honolulu, Hawaii. Ho’opono
asserts that the Army failed to comply with its obligations
under the Randolph-Sheppard Act by failing to prioritize
blind vendors in the bidding process for a vending facilities
services contract at the base’s cafeteria, and by failing to
6 STATE OF HAWAII V. USDOE
obtain the Department of Education’s approval before it
limited those operations. An arbitration panel found in favor
of the Army on both issues, and Ho’opono appealed the
panel’s decision to the district court. The district court
affirmed the arbitration panel on the bidding priority issue,
but it reversed the arbitration panel on the advance review
issue. Unlike the district court, we conclude that blind
vendors were entitled to priority in the bidding process for
the Army’s 2016 vending facilities services contract, but we
agree with the district court that the Army violated the
Randolph-Sheppard Act by failing to seek the Department of
Education’s approval before it limited its dining facilities’
operations.
I.
This case arises from the Randolph-Sheppard Act
(RSA), see 20 U.S.C. §§ 107–107f, which Congress enacted
in 1936 “[f]or the purposes of providing blind persons with
remunerative employment, enlarging the economic
opportunities of the blind, and stimulating the blind to
greater efforts in striving to make themselves self-
supporting,” id. § 107(a). In pursuit of this aim, the RSA
requires federal agencies to give blind individuals priority
for “the operation of vending facilities on Federal property.”
Id. § 107(b). The United States Department of Education
(DOE) implements the RSA, in part by “prescrib[ing]
regulations to establish a priority for the operation of
cafeterias on Federal property by blind licensees.” Id.
§ 107d-3(e); see also 34 C.F.R. §§ 395.1–395.38.
The RSA defines “vending facility” to mean “automatic
vending machines, cafeterias, snack bars, cart services,
shelters, counters, and such other appropriate auxiliary
equipment as the Secretary may by regulation prescribe as
being necessary for the sale of the articles or services
STATE OF HAWAII V. USDOE 7
described in [20 U.S.C. § 107a(a)(5)] and which may be
operated by blind licensees.” 20 U.S.C. § 107e(7). The
articles and services described in § 107a(a)(5) include the
“vending of newspapers, periodicals, confections, tobacco
products, foods, beverages, and other articles or services
dispensed automatically or manually and prepared on or off
the premises . . . and including the vending or exchange of
chances for any lottery authorized by State law and
conducted by an agency of a State.” Id. at § 107a(a)(5).
Under the RSA, the Secretary of Education designates an
agency for each state to act as a State Licensing Agency
(SLA) for blind vendors within that state. Id. §§ 107a(a)(5),
107b. The SLA bids on federal contracts for vending
services covered under the RSA and then licenses blind
vendors to fulfill its contracts. Id. §§ 107a(a)(5), (b), 107b.
For the contracts concerning the operation of cafeterias, an
SLA receives priority if its proposal falls within a
competitive range and is ranked among proposals that have
a reasonable chance of being selected, so long as DOE
determines that the vendor can fulfill the contract at a
reasonable cost and at a level of quality comparable to that
currently provided to federal employees. 34 C.F.R.
§ 395.33(a)–(b). When an SLA receives a contract, the blind
vendors draw an income from the facilities’ profits and from
funds set aside under the RSA. 20 U.S.C. §§ 107b(3), 107d-
3(a); 34 C.F.R. § 395.32.
Central to this appeal, the RSA also includes a “review
requirement.” If a federal agency plans to place “[a]ny
limitation on the placement or operation of a vending facility
based on a finding that such placement or operation would
adversely affect the interests of the United States,” the
agency must provide a written justification to the Secretary
of Education, “who shall determine whether such limitation
8 STATE OF HAWAII V. USDOE
is justified.” 20 U.S.C. § 107(b)(2). “A determination made
by the Secretary pursuant to this provision shall be binding
on any department, agency, or instrumentality of the United
States affected by such determination.” Id. The Secretary
publishes all such determinations in the Federal Register. Id.Congress also established a method of dispute resolution
for RSA disputes. See id. § 107d-1. An SLA may file a
complaint with DOE if it determines that a federal
department has violated the RSA. Id. § 107d-1(b). DOE
then convenes an arbitration panel consisting of three
people: one person designated by each party, and a third
person appointed by the first two party designees to serve as
a chairperson. Id. § 107d-2. We treat each arbitration panel
decision as a final agency action subject to judicial review
under the Administrative Procedure Act (APA). See id.
§§ 107d-1(b), 107d-2(a); see also 5 U.S.C. §§ 701–706
(provisions governing APA review).
II.
We now turn to the dispute at hand. This case concerns
the operation of the dining halls at Schofield Barracks and
Wheeler Army Airfield (Schofield Barracks) in Honolulu,
Hawaii. In 2005, the Army entered into a contract with
Ho’opono, the SLA for the State of Hawaii, for a five-year
term under which James Theodore Chinn Jr., a blind vendor,
provided cafeteria services at Schofield Barracks’ dining
halls. The Army renewed this contract for five more years
in 2010, and in 2015, it exercised its contractual right to
extend the contract for an additional six months, leaving it in
effect until March 2016. In 2016, however, the Army made
several important changes to its vending contract for
Schofield Barracks.
STATE OF HAWAII V. USDOE 9
To understand the 2016 changes to the vending services
contract, some background on Army dining facilities
operations is useful. The Army operates each of its dining
facilities under one of two models: a Full Food Service (FFS)
model or a Dining Facility Attendant (DFA) model. Under
the FFS model, the Army contracts out all cafeteria
maintenance tasks, including “requisitioning, receiving,
storing, preparing, and serving of food,” and “the
performance of related administrative, custodial, and
sanitation functions.” The Schofield Barracks operated
under an FFS model for the duration of its RSA contract with
Ho’opono from 2005 to 2016.
But under the DFA model, members of the military
themselves perform the lion’s share of tasks required to
maintain the dining facilities, including the requisition,
receiving, storing, preparing, and serving of food, as well as
service functions, payment services, and general
administrative tasks. The Army’s regulations prohibit its
members from performing certain functions “on a regularly
detailed basis without prior approval”—the regulations call
these prohibited functions “DFA functions.” DFA functions
primarily consist of “janitorial and custodial duties,” such as
“sweeping, mopping, scrubbing, trash removal,
dishwashing, waxing, stripping, buffing, window washing,
pot and pan cleaning, and other sanitation-related functions.”
Thus, for facilities operated under the DFA model, the Army
itself maintains nearly all cafeteria functions, except for the
limited DFA functions of janitorial and custodial duties,
which the Army contracts out to another provider.
Although the Army had operated the Schofield Barracks
under an FFS model from 2005–2016, when it solicited new
contracts for Schofield’s dining facilities in 2016, it
reclassified its dining facilities as DFA facilities. According
10 STATE OF HAWAII V. USDOE
to the Army, it switched classifications from FFS to DFA
primarily because as combat operations in Iraq and
Afghanistan wound down, the number of Army members
that remained on base increased. With increased numbers of
Army members on base, the Army determined that it could
operate most dining facilities operations on its own and
would therefore rely on contractors for DFA functions only.
When the Army solicited its DFA service contract in
2016, 1 then, it decided against soliciting the contract under
the RSA’s requirements because the contract covered
janitorial and custodial services only. The Army instead
solicited the contract as a 100% Small Business Set-Aside, a
form of contract on which Ho’opono is ineligible to bid. In
doing so, the Army did not seek or obtain DOE’s permission
to reclassify its dining facilities maintenance contract from
FFS to DFA.
Because the Army’s reclassification suddenly rendered
Ho’opono ineligible for the Schofield Barracks contract,
Ho’opono objected to the reclassification and sought legal
recourse. Ultimately, Ho’opono filed a written request to
initiate arbitration proceedings pursuant to 20 U.S.C.
§ 107d-2. 2 At the arbitration proceedings, Ho’opono
contended that the Army violated the RSA by soliciting DFA
1
Initially, the Army applied the RSA priority to its 2016 solicitation,
but it later amended its solicitation and removed the RSA priority.
2
When Ho’opono requested arbitration proceedings, it
simultaneously filed a suit in federal court requesting an injunction
prohibiting the Army from awarding a new contract for DFA services
pending the resolution of the arbitration proceedings. The parties settled
this suit upon the Army’s agreement that it would extend the terms of the
then-in-place FFS contract until the arbitration proceedings concluded.
STATE OF HAWAII V. USDOE 11
services at Schofield Barracks, 3 and that the Army violated
the RSA advance review requirement under 20 U.S.C.
§ 107(b).
The arbitration panel issued a split decision in July 2017,
in which the majority ruled in favor of the Army. The panel
majority concluded that the RSA does not apply to DFA
contracts, reasoning that a contrary finding “would too
greatly expand the intent of the RSA beyond its legislative
intent of requirements of vending and dispensing of food.”
Additionally, the arbitration panel concluded that the Army
did not violate the RSA’s advance review requirement,
which requires an agency to seek advance review from the
Secretary of Education before enacting “[a]ny limitation on
the placement or operation of a vending facility based on a
finding that such placement or operation would adversely
affect the interests of the United States,” 20 U.S.C. § 107(b).
The arbitration panel reasoned that applying the advance
review provision to the Army’s decision to reclassify a
dining services contract from FFS to DFA would “seem to
too heavily impact the Army’s ability to operate.”
Ho’opono then filed this action in the United States
District Court for the District of Hawaii against DOE and the
Army, 4 seeking review of the arbitration panel decision
3
Ho’opono also contended that the Army’s DFA solicitation
violated the provisions prohibiting poaching in the John Warner National
Defense Authorization Act for Fiscal Year 2007, but both sides now
agree that these provisions are inapplicable to this appeal.
4
Although DOE’s Rehabilitation Services Administration is also a
named defendant in this lawsuit, we refer to the defendants collectively
as “the Army,” as that is the federal entity advocating the defendants’
position on appeal. Upon judicial review, the Department of Education
is substituted as the defendant for the Army. See 5 U.S.C. § 703 (“If no
12 STATE OF HAWAII V. USDOE
under the APA. See 5 U.S.C. §§ 551–59, 701–06.
Ho’opono attacked the arbitration decision on two grounds:
first, it argued that the Army violated the RSA’s advance
review provision by failing to seek the Secretary of
Education’s approval for reclassifying Schofield Barracks’
contract as a DFA contract; and second, it argued that the
RSA governs DFA service contracts.
Both sides moved for summary judgment, and on
May 27, 2021, the district court partially granted and
partially denied each summary judgment motion. The
district court deferred to the arbitration panel’s refusal to
apply the RSA to DFA contracts, reasoning that this
conclusion was not arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law.
However, the district court ruled in favor of Ho’opono
on the RSA advance review requirement. The district court
construed the word “limitation” in 20 U.S.C. § 107(b) to
mean “something that bounds, restrains, or confines.” Given
this definition of “limitation,” the district court concluded
that the Army placed a limitation on the Schofield Barracks
dining facilities by soliciting a DFA contract instead of an
FFS contract, especially because this eliminated Ho’opono’s
opportunity to bid on the 2016–22 contract. The district
court remanded the case to the arbitration panel with
instructions to issue a decision consistent with its order.
The Army timely appealed the district court’s
interpretation of the RSA advance review provision.
Ho’opono timely cross-appealed, challenging the district
special statutory review proceeding is applicable, the action for judicial
review may be brought against the United States, the agency by its
official title, or the appropriate officer.”).
STATE OF HAWAII V. USDOE 13
court’s conclusion that the RSA does not govern DFA
contracts.
III.
We review a district court’s grant or denial of summary
judgment de novo. Bell v. Wilmott Storage Servs., 12 F.4th
1065, 1068 (9th Cir. 2021). Generally, we review an
arbitration panel’s decision under the RSA as a final agency
action under the APA. 20 U.S.C. § 107d-2(a). We thus must
overturn the arbitration panel’s decision if we find it
“arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A). This
form of review includes deciding relevant questions of law,
as well as interpreting relevant constitutional and statutory
provisions. 5 U.S.C. § 706; see also Sauer v. U.S. Dep’t. of
Educ., 668 F.3d 644, 650 (9th Cir. 2012). Because the RSA
“does not delegate interpretive authority to the arbitration
panel,” we owe no deference to the arbitration panel’s
interpretation of the RSA or other statutes, and we review
these interpretations de novo. Sauer, 668 F.3d at 650.
IV.
The parties dispute whether the RSA applies to DFA
contracts at all. The RSA provides that “blind persons
licensed under [its] provisions . . . shall be authorized to
operate vending facilities on any Federal property,”
20 U.S.C. § 107(a), and that “[i]n authorizing the operation
of vending facilities on Federal property, priority shall be
given to blind persons licensed by a State agency,” id.§ 107(b). Neither party disputes that the Schofield Barracks
dining facilities are “vending facilities” under the RSA.
Thus, this dispute turns on whether a DFA contractor, who
primarily performs janitorial, custodial, and sanitization
functions, “operates” a vending facility. In other words, if a
14 STATE OF HAWAII V. USDOE
DFA contractor is operating a vending facility, then the RSA
priority applies. The Army argues that a DFA contractor
does not operate a vending facility because a DFA contractor
does not oversee and manage the food preparation in its
dining halls. Ho’opono argues, however, that a DFA
contractor operates a vending facility by fulfilling tasks that
are integral to the operation of the dining hall. We believe
Ho’opono has the better of the argument.
To begin, the district court applied an incorrect standard
of review to the RSA arbitration panel’s construction of
20 U.S.C. § 107(a). The district court deferred heavily to the
arbitration panel’s interpretation, focusing primarily on
whether its interpretation was arbitrary and capricious. But
as explained above, that standard does not apply to the
construction of statutes by RSA arbitration panels. Because
the RSA “does not delegate interpretive authority to the
arbitration panel,” we owe no deference to the arbitration
panel’s interpretation of the RSA, and we review it de novo.
Sauer, 668 F.3d at 650. Thus, the district court should have
independently interpreted the RSA, as a matter of law.
To interpret the meaning of “operate” in § 107(a), we
begin by determining “whether the language at issue has a
plain and unambiguous meaning with regard to the particular
dispute in the case.” Barnhart v. Sigmon Coal Co., 534 U.S.
438, 450 (2002) (citation omitted). If a term is
unambiguous, we merely apply the plain term. Id. But if we
find a term ambiguous, “we look to the congressional intent
revealed in the history and purposes of the statutory
scheme.” Pit River Tribe v. Bureau of Land Mgmt., 939 F.3d
962, 970 (9th Cir. 2019) (citation omitted). To aid in this
task, we look to “the statutory structure, and other traditional
aids of statutory interpretation.” Heavenly Hana LLC v.
Hotel Union & Hotel Indus. of Haw. Pension Plan, 891 F.3d
STATE OF HAWAII V. USDOE 15
839, 844 (9th Cir. 2018) (internal quotation marks and
citation omitted).
The term “operate” is ambiguous in § 107(a). Neither
the RSA itself nor the DOE regulations implementing the
RSA define the term “operate” or “operation.” See
20 U.S.C. § 107e; see also 34 C.F.R. §§ 395.1–395.38. We
have yet to define “operate” within the meaning of the RSA,
and when we have defined “operate” or “operation” in other
contexts, our definitions have varied such that they provide
little guidance here. See, e.g., Potts v. Cont’l Cas. Co.,
453 F.2d 276, 278 (9th Cir. 1971) (“The word ‘operated’
may include both the owner-lessor of the plane and the
[employer] and its pilot.”); Lentini v. Cal. Ctr. for the Arts,
Escondido, 370 F.3d 837, 849 (9th Cir. 2004) (defining
“operate” based on the level of authority possessed).
Given the lack of a statutory definition, we next “consult
common dictionary definitions” to divine the “ordinary,
contemporary, common meaning” at the time the statute was
enacted. Cal. All. of Child & Fam. Servs. v. Allenby,
589 F.3d 1017, 1021 (9th Cir. 2009) (citation omitted). As
Ho’opono details in its briefing, consulting dictionaries
proves unhelpful here, because there are several contending
definitions of the word “operate,” including “exercise force
or influence,” “produce an effect,” “to exert oneself to do
something,” and “to produce the intended or proper effect.”
Operate, Oxford English Dictionary (1st ed. 1933). In the
transitive sense, operate may also mean “to effect or produce
by action or the exertion of force or influence,” “to cause or
actuate the working of,” and “to direct the working of.” Id.In fact, the arbitration panel in this case split over the
meaning of the word operate. Given the lack of statutory
definition and the abundance of dictionary definitions, the
meaning of operate as used in the RSA is ambiguous.
16 STATE OF HAWAII V. USDOE
The Army counters with the Supreme Court’s Bestfoods
decision as proof that the meaning of “operate” is settled.
See United States v. Bestfoods, 524 U.S. 51 (1998). But
Bestfoods is distinct from this case in several pertinent ways.
There, the Supreme Court construed the meaning of
“operate” within the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA).
The Supreme Court referenced a mechanical definition of
operate as “to control the functioning of; run,” as well as an
organizational definition as “to conduct the affairs of;
manage.” Id. at 66 (alterations and citations omitted). The
Court then concluded that due to CERCLA’s unique
qualities, it would construe “operate” in the organizational
sense for the purposes of CERCLA. Id.In the context of the RSA, however, it appears far less
clear that Congress intended the organizational sense of
operate. Whereas in CERCLA the statute targeted
“operators” in the sense of those with authority to manage a
project, the regulations implementing the RSA target a
broader range of workers. The DOE regulations provide that
“[s]uch operation shall be expected to provide maximum
employment opportunities to blind vendors to the greatest
extent possible.” 34 C.F.R. § 395.33(a). It would run
counter to the RSA’s sweeping and inclusive purpose to
limit the term “operate” to include only those who “conduct
the affairs of” or “manage” the entire operation of a dining
facilities—clearly Congress wanted to provide jobs to blind
vendors who “control the functioning of” and “run” dining
facilities as well. Therefore, although the Supreme Court
arrived at a conclusive definition of the term “operate” for
the purposes of CERCLA, the term “operate” remains
ambiguous for the purposes of the RSA.
STATE OF HAWAII V. USDOE 17
Given this ambiguity, we turn to our other tools of
statutory interpretation to determine Congress’s intent. See
Pit River Tribe, 939 F.3d at 970. And here, the statutory
structure and implementing regulations counsel strongly in
favor of applying the RSA to DFA contracts.
First, the statutory structure of the RSA invites us to
interpret it broadly in favor of increased opportunities for
blind vendors. The RSA begins by defining its own
purposes as “providing blind persons with remunerative
employment, enlarging the economic opportunities of the
blind, and stimulating the blind to greater efforts in striving
to make themselves self-supporting.” 20 U.S.C. § 107(a).
The RSA’s implementing regulations sweep even more
broadly, mandating that the operation of cafeterias at federal
agencies “shall be expected to provide maximum
employment opportunities to blind vendors to the greatest
extent possible.” 34 C.F.R. § 395.33(a). In fact, the
Secretary’s regulation requires that agencies renegotiate
“[a]ll contracts or other existing arrangements pertaining to
the operation of cafeterias on Federal property” to ensure
they meet the RSA’s requirements. Id. § 395.33(c)
(emphasis added). While DFA contracts do not address the
entire operation of dining facilities, they certainly pertain to
the operation of dining facilities. Thus, including DFA
contracts under the RSA increases the range of vending
contracts for which blind vendors will receive priority,
furthering the RSA purposes of increasing access to jobs for
blind vendors.
The RSA also defines “vending facility” in broad terms,
suggesting that DFA contracts should fall under the RSA.
The statutory definition of vending facility includes “such
other appropriate auxiliary equipment as the Secretary [of
Education] may by regulation prescribe as being necessary
18 STATE OF HAWAII V. USDOE
for the sale of the articles or services . . . and which may be
operated by blind licensees.” 20 U.S.C. § 107e(7). Pursuant
to this provision, the Secretary has passed regulations
including “sanitation practices” as one of the criteria by
which agencies may evaluate SLA bids for vending facility
contracts. 34 C.F.R. § 395.33(b). Under the RSA, then,
sanitation duties are seen as a vital part of vending facilities
contracts for which blind vendors should receive priority.
As DFA contracts primarily concern sanitation and custodial
duties, this definition of vending facilities also counsels in
favor of applying the RSA to DFA contracts for services that
are integral to running vending facilities.
The Fifth Circuit reached the same conclusion in a
virtually identical circumstance, holding that blind vendors
should receive priority under the RSA for DFA contracts.
See Tex. Workforce Comm’n v. U.S. Dep’t of Educ., 973 F.3d
383, 390–91 (5th Cir. 2020). There, the Army divided its
FFS contracts at Fort Bliss, Texas, into two—the first, an
FFS contract for which blind vendors continued to receive
priority, and the second, a DFA contract for which only
small businesses could bid, eliminating Texas’s SLA from
bidding. Id. at 384–85. As here, the question turned on the
meaning of the word “operate” in the RSA. Id. at 386. After
concluding that the term “operate” was ambiguous for the
purposes of the RSA, the Fifth Circuit concluded that the
statutory context strongly supported construing the word
operate to include DFA contracts for services that are
integral to the operation of a dining facility. See id. at 385–
91. Although not binding, the Fifth Circuit’s conclusion is
persuasive.
Moreover, the Secretary of Education has reached the
same conclusion. In a letter to Representative Pete Sessions
dated March 5, 2018, then Secretary of Education Betsy
STATE OF HAWAII V. USDOE 19
DeVos acknowledged that there had been some dispute over
whether the RSA applies to both FFS and DFA contracts.
The Secretary expressed the Department’s view that the
RSA applies to both types of cafeteria contracts, referencing
the Oxford English Dictionary definition of the word
“operate.” She concluded that if “a vendor is responsible for
all the functions of the cafeteria aside from those performed
by military personnel—such as supervisory, administrative,
and sanitation-related functions—the vendor can be said to
‘manage’ the cafeteria, even if the vendor is not preparing
the food.” As the Secretary made this comment “in an
opinion letter, not one arrived at after, for example, a formal
adjudication or notice-and-comment rulemaking,”
Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000), we
treat it with Skidmore deference, following its interpretation
to the extent it has the “power to persuade,” Skidmore v.
Swift & Co., 323 U.S. 134, 140 (1944). For the reasons
stated above, we find the Secretary’s broad construction of
the RSA persuasive, lending further support to our
conclusion that the RSA covers this DFA contract.
Therefore, we conclude that because the DFA contract
for Schofield Barracks covered responsibilities that are
integral to the Schofield Barracks’ cafeteria’s operation, the
RSA applies and the Army should have given RSA priority
to blind vendors for the DFA contract.
V.
Next, the Army contends that the RSA advance review
requirement did not apply to its decision to list the Schofield
Barracks food services contract as a DFA contract, while
Ho’opono argues that the Army violated the RSA by failing
to meet the advance review requirement. We affirm the
district court’s conclusion that the RSA advance review
20 STATE OF HAWAII V. USDOE
requirement applies to the Army’s reclassification of
Schofield Barracks’ dining facilities.
The RSA advance review requirement provides: “Any
limitation on the placement or operation of a vending facility
based on a finding that such placement or operation would
adversely affect the interests of the United States shall be
fully justified in writing to the Secretary, who shall
determine whether such limitation is justified.” 20 U.S.C.
§ 107(b). It is undisputed that the Army did not seek
approval from the Secretary of Education before
reclassifying the Schofield Barracks dining facilities
contract as a DFA contract, so this question turns on whether
the reclassification constitutes a “limitation on the placement
or operation of a vending facility.” Id.Examining the plain meaning of the statute’s
unambiguous terms, we conclude that the Army triggered
the advance review requirement when it reclassified the
Schofield Barracks dining facilities in a way that eliminated
Ho’opono’s eligibility to bid on the DFA contract. See
Ahlman v. Barnes, 20 F.4th 489, 493 (9th Cir. 2021) (“When
the statute’s language is plain, the sole function of the courts
is to enforce it according to its terms.” (citation omitted)).
This action limited the ability of blind vendors to assert their
RSA priority to the Schofield Barracks contract. Thus, the
Army violated the RSA by failing to seek the Secretary’s
approval.
As the statute itself provides no definition for
“limitation,” we should begin by “consulting common
dictionary definitions.” Allenby, 589 F.3d at 1021. At the
time Congress enacted the RSA, the dictionary defined
“limit” as “[t]o confine within limits, to set bounds to” and
“to bound, restrict.” Limit, Oxford English Dictionary (1st
ed. 1933). Obviously, by including the word “any” before
STATE OF HAWAII V. USDOE 21
the word “limitation,” Congress clarified that all limitations
fall within the advance review requirement. See Patel v.
Garland, 142 S. Ct. 1614, 1622 (2022) (defining “any” to
mean “of whatever kind,” “[a]s this Court has repeatedly
explained [that] the word ‘any’ has an expansive meaning”
(internal quotation marks and citations omitted)); Kansas ex
rel. Kan. Dep’t for Child. & Fams. v. SourceAmerica, 826 F.
App’x 272, 285–86 (4th Cir. 2020).
Under the undisputed facts of this case, the Army
bounded, restrained, and confined the operation of its
Schofield Barracks dining facilities in 2016. By changing
the dining facilities contract from an FFS contract to a DFA
contract, the Army drastically reduced the scope of services
covered under the contract, removed the RSA priority from
its 2016–22 contract solicitation, and designated the new
solicitation as a “Small Business Set-Aside,” which rendered
Ho’opono ineligible to bid on the contract. In short, the
change to a DFA model led to fewer services and fewer
opportunities for blind vendors under the contract—a
textbook example of a limitation.
The Army counters that although its reclassification may
have been a form of limitation, it nonetheless falls outside
the advance review requirement’s scope because the
limitation did not apply to the “placement or operation of a
vending facility.” Ho’opono does not dispute that the
placement of the Schofield Barracks dining facilities was
unchanged, but asserts that the physical location is irrelevant
in light of the change in contract from full-service operations
to limited-service operations.
Here, a recent unpublished Fourth Circuit decision is
illustrative. In SourceAmerica, the Fourth Circuit addressed
the question we face: whether the military triggered the RSA
advance review requirement by reclassifying its dining
22 STATE OF HAWAII V. USDOE
services contract from an FFS contract to a DFA contract.
826 F. App’x at 284. As here, this reclassification
effectively terminated the military’s prior dining services
contract with a blind vendor pursuant to the RSA. Id. at 284–
85. The Fourth Circuit analyzed the RSA advance review
requirement’s use of the broad term “any limitation,” noting
that the provision contains “no qualifiers as to the type or
degree of limitations.” Id. at 285. Given that the
reclassification of dining facilities “did more than just ‘limit’
a blind vendor’s operation of the vending facility; it
eliminated it altogether,” the Fourth Circuit concluded that
the military was required to obtain DOE’s approval before
reclassifying the contract. Id. at 286. We find the Fourth
Circuit’s reasoning persuasive and also conclude that a DFA
reclassification is a “limitation” under the RSA advance
review requirement.
Eighth Circuit precedent also supports our conclusion
that a DFA reclassification limits the operation of vending
facilities. In Minnesota Department of Jobs & Training v.
Riley, 18 F.3d 606 (8th Cir. 1994) (Riley I), the Eighth
Circuit held that requiring blind vendors to pay commissions
on their vending sales triggered the RSA advance review
requirement, as it limited the vendor’s operation of the
dining facilities by reducing their total income. Id. at 609.
Along similar lines, in Minnesota Department of Economic
Security v. Riley, 107 F.3d 648 (8th Cir. 1997) (Riley II), the
Eighth Circuit concluded that when a federal agency
imposed a condition on an RSA vending machine contract
that required the blind vendor to permit the agency to install
its own competing vending machines in the same building,
this condition constituted a limitation on operations that
triggered the RSA advance review clause. Id. at 649–50. In
both these cases, the Eighth Circuit concluded that
restricting a blind vendor’s ability to draw income from a
STATE OF HAWAII V. USDOE 23
dining services contract—whether by exacting commissions
from the vendor or by forcing the vendor to compete with
non-RSA vending machines—constituted a limitation on
operations. Riley I, 18 F.3d at 609; Riley II, 107 F.3d at 650.
Important to our inquiry here, both these cases assume that
an agency limits operations if it limits the ability of a blind
vendor to benefit from a services contract. Given that the
DFA reclassification here completely eliminated
Ho’opono’s ability to bid on the contract, the reclassification
triggers the advance review requirement, subjecting the
decision to DOE approval.
The Army contends that even if it did limit the operation
of a vending facility, it did not do so “based on a finding that
such placement or operation would adversely affect the
interests of the United States,” 20 U.S.C. § 107(b), the third
statutory predicate to the advance review requirement.
However, the record of the Army’s decision-making belies
this contention. According to the Army, it switched
Schofield Barracks from an FFS model to a DFA model
because “[w]ith a large number of soldiers returning to
Schofield Barracks in 2016, they were able to resume
operating the Schofield Barracks dining facilities, making
the contract for Full Food Service unnecessary.” In other
words, the Army determined that staffing its dining halls
with its own members for non-DFA functions would be
more favorable to its interests than continuing to contract out
all dining services under an FFS model—or conversely,
continuing to operate under an FFS model “would adversely
affect the interests” of the Army given that sufficient
numbers of soldiers had returned to the base to allow the
switch to a DFA model.
Finally, the Army emphasizes throughout its briefing
that it possesses authority over its own operations such that
24 STATE OF HAWAII V. USDOE
it can decide how to structure its own contracts,
characterizing its reclassification as a “decision about how
to employ its own personnel.” However, the Army fails to
explain how its prerogatives in running its own organization
trumps the legislative requirements that Congress has
imposed on all federal agencies in the RSA. At no point has
Congress limited the RSA so that it does not apply to
personnel decisions within an agency’s authority—in fact,
Congress swept broadly to include “[a]ny limitation” on a
vending facilities operation. 20 U.S.C. § 107(b) (emphasis
added). Indeed, the purpose of regulations like the RSA
advance review requirement is to rein in actions that an
agency may otherwise be free to take. And the RSA
provides that the Army “fully justif[y]” any limitation to the
Secretary of Education before it acts, so the Army’s
argument here was best made to the Secretary, not in
litigation after the limitation was imposed. Id.Therefore, we affirm the district court’s conclusion that
the Army triggered the RSA advance review requirement by
reclassifying Schofield Barracks’ dining facilities as a DFA
facility.
VI.
For the foregoing reasons, we REVERSE the district
court’s conclusion that the RSA does not apply to DFA
contracts, and we AFFIRM the district court’s conclusion
that the RSA advance review provision applies to the
reclassification of the Schofield Barracks contract.