[Federal Register Volume 60, Number 139 (Thursday, July 20, 1995)]
[Notices]
[Pages 37469-37470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17917]
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DEPARTMENT OF THE INTERIOR
Revision of Certain Concession Policies
AGENCY: National Park Service, Interior.
ACTION: Revision of certain concession policies.
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SUMMARY: The National Park Service (NPS) authorizes private businesses
known as concessioners to provide necessary and appropriate visitor
facilities and services in areas of the National Park System. NPS is
undertaking a review of its policies concerning concession management
activities. Pending completion of a full review, NPS has amended
certain specific policies regarding concession contracts as follows:
(1) Its current system for determining concessioner franchise fees by
eliminating a policy which indicates that a concessioner's franchise
fee usually should not exceed 50 percent of the concessioner's pre-tax,
pre-franchise fee profit; and (2) revising portions of the NPS rate
approval system. NPS had also proposed an amendment to eliminate the
policy that franchise fees should not be collected with respect to the
sale of Native American handicrafts. However, due to a technical
oversight, NPS has determined that it is appropriate to seek additional
comments on this policy proposal under a separate notice to assure that
all potentially affected parties have an adequate opportunity to
comment.
EFFECTIVE DATE: July 20, 1995.
FOR FURTHER INFORMATION CONTACT: Robert Yearout, Chief, Concessions
Division, National Park Service, PO Box 37127, Washington, DC 20013-
7127, Tele. (202) 343-3784.
SUPPLEMENTARY INFORMATION: On January 17, 1995, NPS published for
public comment in the Federal Register proposed amendments to the
concession policies described above. Although not required by law to
seek public comments on these policy amendments, NPS wished to afford
all potentially affected or interested parties an opportunity to
comment before making its final decisions on these matters.
NPS received 11 comments concerning their proposal to amend certain
management policies. Eight of these comments came from NPS
concessioners or associated companies, two from associations
representing groups of NPS concessioners, and one comment from an
interested environmental organization.
Analysis of Comments
The following is an analysis of comments received on the two policy
proposals NPS is adopting under this notice.
1. Franchise Fees
With respect to the elimination of the policy which indicates that
a concessioner's franchise fee usually should not exceed 50 percent of
the concessioner's pre-tax, pre-franchise fee profit (the 50 percent
policy), the majority of those commenting opposed this proposal. This
opposition was based on their belief that this change is contrary to
the intent of the Concession Policy Act of 1965 and that elimination of
the policy would remove needed safeguards from the franchise fee
process. Franchise fees would rise, they believe, to inappropriate
levels and the subsequent reduced profits would adversely impact
services to the visitor, the availability of funds for needed
maintenance and improvements, and the incentive to actively participate
in the bidding process.
According to statute, franchise fees are to be based on the
probable value of the privileges granted by the particular
authorization in question, but are secondary to the protection and
preservation of the areas and of providing adequate and appropriate
services to visitors at reasonable rates. Of primary importance to this
process, the statute also requires that franchise fees must be
consistent with a reasonable opportunity for the concessioner to
realize a profit on the investment.
The 50 percent policy was originally intended as a ``shorthand''
mathematical approximation of the upper limit on franchise fees and was
not intended to obstruct the assignment of probable value fees. As this
formula had neither an empirical nor theoretical basis, the results of
analyses have shown that this 50 percent policy can restrict the
assignment of probable value fees and, therefore, does not function in
the manner intended. This change in policy simply removes the use of
the faulty mathematical approximation and leaves the remaining aspects
of the franchise fee process in place. The statutory mandate of a
reasonable opportunity for profit in coordination with the probable
value determination process provides a powerful safeguard against
arbitrary fees. As such, the fears of inappropriately rising fees and
bankrupt concessioners would not be possible given these procedural
checks and balances.
There were also comments that this change was unnecessary due to
the increased professionalism of National Park Service employees and
because the current policy allows the setting of fees above this limit.
It is this increased professionalism that allows the National Park
Service to eliminate this arbitrary and fundamentally unsound policy
and still assure concessioners a reasonable opportunity for profit as
required by statute. Furthermore, while the policy was originally
intended to be used as a guideline to aid in the setting of franchise
fees, it has often been interpreted by various parties to the fee
setting process as a firm cap. This view has led to confusion and the
setting of fees below the probable value of the authorizations
involved. The elimination of this policy will end this confusion.
Finally, one commenter indicated that the elimination of the 50 percent
policy could adversely impact small concessioners if adequate
safeguards do not exist. It was suggested that the 50 percent policy be
retained for those concessioners under $1 million in annual gross
receipts and that safeguards be established to include the
[[Page 37470]]
provision that individual concessioner cash needs be taken into account
in the fee process, that 5-year averages be used to lessen the weight
of abnormal years, and that fixed fee percentages cannot be applied
across the board to all concessioners.
While experience has shown that the 50 percent policy has been more
of a problem with larger concessioners, it still can result in the
application of less than probable value franchise fees for smaller
concessioners. In other words, the arbitrary 50 percent policy does not
meet statutory requirements for any size of concessioner. Moreover, the
suggested safeguards presently exist in the current franchise fee
determination system. It should also be noted that in order to secure
additional safeguards for the smallest concessioners, concessioners
under $100,000 in annual gross receipts pay only 2 percent of gross
receipts, and this policy would be unaffected by this change.
One commenter strongly supported the NPS proposal.
In consideration of the foregoing, the 50 percent policy is
eliminated.
2. Rate Approval System
With regard to the proposal to amend existing guidelines to make
clear that allowing an interim rate schedule is discretionary, 2
commenters expressed concern that tour operators and individual
travelers are asking for rates and booking travel well over a year in
advance, and the current rate approval system places NPS concessioners
at a disadvantage in addressing these advance requests. Current
procedures regarding the honoring of rates, contained in Chapter 29 of
NPS-48 allow concessioners to accept deposits for individual
reservations without securing the rates for the facility or service
reserved if the confirmation notice states in bold print that ``Rates
are subject to change without notice and are not guaranteed.'' NPS
believes that this concept can be applied to increase rates as a result
of increased costs.
One commenter objected to the change of the word ``should'' to
``may''. NPS regards this change in wording as a matter of
clarification rather than a change in policy. The previous wording was
not considered by NPS to limit discretion in the approval of interim
rate schedules. The word change does not preclude a rate increase. If
NPS determines that an interim rate schedule is justified, it will be
approved.
With regard to the elimination of the interim appeal right of
concessioners regarding the selection of comparables, 5 commenters
objected to this proposal. In addition, one commenter added that
delaying the appeal until the whole process had run its course would
defeat the real justice of an appeal. It should be noted that the
approval of rates and the appeal process applies to all rates, interim
or otherwise. NPS recognizes that the selection of comparables plays an
integral part in approving rates. However, the crux of the issue is the
rate that NPS approves. Any appeal will center on the approved rate and
the manner in which it was determined. The selection of comparables may
be a part of a rate appeal. However, the existing language would permit
a concessioner to appeal on the selection of comparables, and if this
proved unsuccessful, to then appeal the approved rate. Conversely, if a
concessioner's appeal of an approved rate were unsuccessful, it could
then appeal on the basis of the comparables selected. The intent of the
amended language is to remove this duplicative appeal tier. NPS
believes that the approved rate and the selection of comparables are
part of the entire rate approval process, and should not be treated as
separate processes for the purpose of appeals. NPS also feels that
combining appeals for approved rates and selection of comparables will
significantly expedite the entire rate appeal process.
One commenter supported the changes in the rate approval system.
In consideration of the foregoing, the rate approval system policy
amendments are adopted.
Dated: July 3, 1995.
John Reynolds,
Acting Director, National Park Service.
[FR Doc. 95-17917 Filed 7-19-95; 8:45 am]
BILLING CODE 4310-70-P
