Rule2023-28659
Commercial Visitor Services; Concession Contracts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 29, 2023
Effective
January 29, 2024
Issuing agencies
Interior DepartmentNational Park Service
Abstract
The National Park Service revises regulations that govern the solicitation, award, and administration of concession contracts to provide commercial visitor services at National Park System units under the authority granted through the Concessions Management Improvement Act of 1998 and the National Park Service Centennial Act. The changes reduce administrative burdens and expand sustainable, high quality, and contemporary concessioner-provided visitor services in national parks.
Full Text
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<title>Federal Register, Volume 88 Issue 249 (Friday, December 29, 2023)</title>
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[Federal Register Volume 88, Number 249 (Friday, December 29, 2023)]
[Rules and Regulations]
[Pages 90098-90120]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-28659]
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DEPARTMENT OF THE INTERIOR
National Park Service
36 CFR Part 51
[NPS-WASO- 36913; PPWOBSADC0; PPMVSCS1Y.Y00000]
RIN 1024-AE57
Commercial Visitor Services; Concession Contracts
AGENCY: National Park Service, Interior.
ACTION: Final rule.
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SUMMARY: The National Park Service revises regulations that govern the
solicitation, award, and administration of concession contracts to
provide commercial visitor services at National Park System units under
the authority granted through the Concessions Management Improvement
Act of 1998 and the National Park Service Centennial Act. The changes
reduce administrative burdens and expand sustainable, high quality, and
contemporary concessioner-provided visitor services in national parks.
DATES: This rule is effective January 29, 2024.
ADDRESSES: The comments received on the proposed rule and an economic
analysis are available on <a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket ID:
NPS-2020-0003.
FOR FURTHER INFORMATION CONTACT: Kurt Rausch, Chief of Commercial
Services Program, National Park Service; (202) 513-7202;
<a href="/cdn-cgi/l/email-protection#ed86989f99b29f8c989e8e85ad839d9ec38a829b"><span class="__cf_email__" data-cfemail="94ffe1e6e0cbe6f5e1e7f7fcd4fae4e7baf3fbe2">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
Authority and Purpose
The National Park Service (NPS) enters into contracts with
concessioners to provide commercial visitor services in over 100 units
of the National Park System. Examples of such services include lodging,
food, retail, marinas, transportation, and guided recreation. Each
year, concession contracts generate approximately $1.5 billion in gross
revenues and return approximately $135 million in franchise fees to the
NPS. The National Park Service Concession Policies Act of 1965 (1965
Act) (Pub. L. 89-249) provided the first statutory authority for the
NPS to issue concession contracts. Since the repeal of the 1965 Act,
concession contracts have been awarded under the Concessions Management
Improvement Act of 1998 (1998 Act), 54 U.S.C. 101901-101926. A revision
to the 1998 Act was also included in section 502 of the 2016 National
Park Service Centennial Act (Centennial Act) (Pub. L. 114-289). NPS
regulations in 36 CFR part 51 govern the solicitation and award of
concession contracts issued under the 1998 Act and the administration
of concession contracts issued under the 1965 and 1998 Acts. The NPS
promulgated these regulations in April 2000 (65 FR 20630) and since
that time has made only minor changes to them (see, e.g., 79 FR 58261).
In August of 2018, as part of the Department of the Interior's
implementation of Executive Order 13777, Enforcing the Regulatory
Reform Agenda, and in response to a request for public input on how the
Department of the Interior can improve implementation of regulatory
reform initiatives by identifying regulations for modification (82 FR
28429), the NPS's external concessions partners provided the Secretary
of the Interior (Secretary) with suggestions for improving existing
concession regulations. The Department of the Interior considered the
suggestions provided by the concessions partners, and those suggestions
are reflected in this rule. In addition, Secretary's Order 3366,
Increasing Recreational Opportunities on Lands and Waters Managed by
the U.S.
[[Page 90099]]
Department of the Interior, signed by the Secretary in April of 2018,
directed the NPS to look for ways to streamline and improve the
contracting process for recreational concessioners as part of the
Department's efforts to expand access to and improve the infrastructure
on public lands and waters, including through the use of public-private
partnerships. The directives set forth in that Secretary's Order are
intended to provide the public with more recreational opportunities and
memorable experiences on the Department's public lands and waters. This
rule is responsive to these directives, suggestions received, and areas
for improvement identified by the NPS. Finally, the NPS received a
variety of comments on the proposed revisions to the rule during the
public comment period including suggestions for additional improvements
to the rule. The NPS considered these comments and has incorporated
some of the suggestions in this final rule.
Each of the changes to 36 CFR part 51 is explained below and
corresponds to the subparts of the existing regulations that are
amended under this rule. In total, this final rule makes 12 changes to
the existing regulations, which are numbered to assist with ease of
reading. Some of the changes are implemented for new contracts, while
others are effective for both current and new contracts as identified
in the explanation for each change. The overall purpose of these
changes is to update and improve the regulations governing concession
contracts so that the public is better served when visiting our
nation's most cherished public lands and waters.
Subpart C--Solicitation, Selection, and Award Procedures (36 CFR 51.4-
51.22)
The regulations in Subpart C set forth the processes and rules
governing the solicitation, selection, and award of concession
contracts. The NPS makes four changes to this subpart, as explained
below.
Change 1: New Concession Opportunities
The NPS recognizes that the needs for commercial visitor services
in parks may change over time, including the need to provide new
services that are not currently provided. Recent examples include
wireless connectivity services at Lake Mead National Recreation Area,
parking management at Muir Woods National Monument, and bike rentals at
Grand Canyon National Park. The NPS considers evolving visitor needs
through its commercial services planning processes. Each unit of the
national park system is required to have a park foundation document,
that provides basic guidance for all planning and management decisions
and from which the NPS develops a park's planning portfolio. The
planning portfolio is the assemblage of individual plans, studies, and
inventories that guide park decision-making. For commercial services,
these may range from broader planning efforts such as visitor use
studies and commercial services strategies to more focused studies such
as climbing or horse management plans. Commercial visitor services
planning also occurs through the concession contract prospectus
development process. During this process, the NPS reviews the services
currently provided, conducts market studies, and may solicit public
comments to assess new commercial visitor service opportunities.
The final rule recognizes this planning framework by requiring the
solicitation and consideration of suggestions for new concession
opportunities. Section 51.4(c) states that the Director will issue a
prospectus for a new concession opportunity when the Director
determines that a new concession opportunity is necessary and
appropriate for public use and enjoyment of the park area and is
consistent to the highest practicable degree with the preservation and
conservation of the resources and values of the park area. This
standard for evaluating new opportunities is consistent with the 1998
Act. 54 U.S.C. 101912(b)(1)-(2). Section 51.4(d) requires the Director
to establish procedures to annually solicit and consider suggestions
from the public for new commercial services in NPS units. While the
regulation does not specify the procedures for the solicitation, the
regulation does require the Director to make all proposals and the
Director's evaluation of them public.\1\ Section 51.4(e) establishes
relevant factors that the Director will consider when deciding whether
to issue a prospectus for a new concession opportunity in addition to
the determination that a commercial visitor service is necessary and
appropriate for public use and enjoyment of the park area and is
consistent to the highest practicable degree with the preservation and
conservation of the resources and values of the park area. These
factors shall include whether the suggested concession opportunities
are already adequately provided within the unit; the potential for
augmented resources for park area operations; the effects of the
suggested concession operations on the park area; the sustainability of
the suggested concession opportunities; the innovative quality of the
suggestions; and the potential impacts on park area visitation and on
communities located near the park area. Paragraph (f) clarifies that
the NPS may not, during the competitive evaluation process, give
preference to any party that suggests an opportunity that is
subsequently offered by the NPS simply because the party originally
suggested the idea. The 1998 Act recognizes only two categories of
concession contracts that provide preferential rights to incumbent
concessioners. 54 U.S.C. 101913(7), (8). The final rule recognizes,
however, that in some circumstances the Director may award a contract
without competition under 36 CFR 51.25. Section 51.4(g) provides the
Director discretion to amend an existing contract to allow a
concessioner to provide new or additional services under 36 CFR 51.76.
This preserves the authority of the Director to adjust the services
being provided in response to changing visitor needs over the term of
the contract, consistent with the fundamental business opportunity that
was offered in the concession prospectus. Paragraph (h) states that
nothing in the new processes to be established by the Director would
limit the Director from soliciting, considering, or collecting
information related to new concession opportunities.
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\1\ The NPS will specify solicitation procedures in policy and
in instructions that will be posted on public-facing websites, such
as the website for the NPS Commercial Services Program (<a href="https://www.nps.gov/orgs/csp/index.htm">https://www.nps.gov/orgs/csp/index.htm</a>).
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Change 2: Timing of Issuing Prospectuses
Section 51.4(b) of the existing regulations states that the
Director will not issue a prospectus for a concession contract earlier
than 18 months prior to the expiration of a related existing concession
contract. The original purpose of this restriction was to ensure that
an existing concessioner would not have to compete for a new contract
in circumstances where assessment of the feasibility of the terms and
conditions of the new contract would be unduly speculative (65 FR
20637). The proposed rule would have eliminated the 18-month
restriction for new concession contract prospectuses to allow the NPS
the flexibility to issue a prospectus earlier in circumstances where
there are unusually significant commitments required of potential
offerors to acquire personal property, such as vessels, or to obtain
financing or to manage reservations. The NPS proposed this change on
the view that
[[Page 90100]]
this additional time would provide for more offerors, which benefits
the NPS and the public because increased competition generally results
in higher quality offers.
Based on comments, however, the NPS retains the 18-month rule but
provides an exception for when the Director determines releasing a
prospectus earlier is necessary to provide additional time to potential
offerors, such as when additional time is needed to avoid issuing a
prospectus during a busy operating season or where potential offerors
must make significant financial commitments to meet the requirements of
the contract. Such additional time must be as short as prudent.
Change 3: Publishing Notice of a Prospectus
Section 51.8 of the existing regulations states that the Director
will publish notice of the availability of a prospectus at least once
in the Commerce Business Daily or in a similar publication if the
Commerce Business Daily ceases to be published. The rule updates this
provision to require publication in the System for Award Management
(SAM). The rule expands the description of the types of electronic
media that will be used to advertise opportunities to include websites
and social media.
Change 4: Weighting Selection Factors
The fourth change is to Sec. 51.16 of the existing regulations.
Section 51.16 is closely related to Sec. 51.17 of the existing
regulations, which identifies selection factors that must be applied by
the Director when assessing the merits of a proposal. Section 51.17(a)
lists five primary selection factors:
Principal selection factor 1: The responsiveness of the proposal to
the objectives, as described in the prospectus, of protecting,
conserving, and preserving resources of the park area.
Principal selection factor 2: The responsiveness of the proposal to
the objectives, as described in the prospectus, of providing necessary
and appropriate visitor services at reasonable rates.
Principal selection factor 3: The experience and related background
of the offeror, including the past performance and expertise of the
offeror in providing the same or similar visitor services as those to
be provided under the concession contract.
Principal selection factor 4: The financial capability of the
offeror to carry out its proposal.
Principal selection factor 5: The amount of the proposed minimum
franchise fee, if any, and/or other forms of financial consideration to
the Director.
The Director must consider these five factors under the 1998 Act.
54 U.S.C. 101913(5)(A).
Section 51.17(b) identifies one secondary selection factor
(secondary selection factor 1) and allows the Director to use
additional secondary selection factors where appropriate and otherwise
permitted by law. Secondary selection factor 1 is the quality of the
offeror's proposal to conduct its operations in a manner that furthers
the protection, conservation and preservation of park area and other
resources through environmental management programs and activities,
including, without limitation, energy conservation, waste reduction,
and recycling. The NPS may exclude this factor for small contracts and
those expected to have limited impacts on park resources. Secondary
selection factors are permitted, but not required, to be considered
under the 1998 Act. 54 U.S.C. 101913(5)(B). Although the 1998 Act is
silent on how the Director should weigh each factor, Sec. 51.16
requires the Director to assign a score for each selection factor that
reflects the merits of the proposal compared to other proposals
received, if any.
The final rule retains the relative scoring relationships of the
2000 rule but provides additional flexibility for the NPS by increasing
the possible number of total points from 30 to 40. The final rule also
requires that each selection factor used must provide for a maximum
score of at least one point. Further, the final rule provides that
secondary selection factor 1 must have a maximum score less than the
maximum score for the principal selection factor for franchise fees and
the aggregate score of all other secondary selection factors must have
a maximum score less than the maximum score for the principal selection
factor for franchise fees. The final rule also assigns a score of one
point for agreeing to the prospectus franchise fee (as defined in Sec.
51.78) or, when the Director determines use of the prospectus franchise
fee inappropriate, the minimum acceptable franchise fee set forth in
the prospectus. The proposed rule did not specify minimum or maximum
points for selection factors and provided that the principal selection
factor for franchise fees could have the same possible score as the
other principal selection factors. The revisions to Sec. 51.16 will
apply to all prospectuses issued after the effective date of the final
rule and will provide the NPS with greater flexibility to weigh the
factors according to how important they are to the NPS and for the
specific contract.
Change 5: Adding Secondary Selection Factor for Consideration of New
Services
The final rule features the benefit of providing new commercial
visitor services. For several years, the NPS occasionally has included
a secondary selection factor asking offerors to identify ways they
could add additional services and programs within the scope of the
subject contract. The NPS has revised Sec. 51.17(b)(2) specifically to
provide that the Director will include such a secondary selection
factor when appropriate. This revision will apply to all prospectuses
issued after the effective date of the final rule.
Subpart G--Leasehold Surrender Interest (36 CFR 51.51-51.67)
The regulations in Subpart G explain how a concessioner can obtain
leasehold surrender interest (LSI) in capital improvements to visitor
service facilities that are made under the terms of a concession
contract. The NPS makes one change to this subpart, as explained below
under Change 6. This change applies to future concession contracts.
The NPS manages concession contracts to ensure concessioners
maintain and repair the facilities assigned as required under the terms
of their contract. The NPS also seeks to encourage concessioners to
make capital improvements in order to ensure facilities are
structurally sound, updated, and adequate to meet the needs of the
visiting public. When the NPS approves the concessioner to fund and
construct capital improvements to expand, update, and rehabilitate
facilities, the concessioner receives LSI for the associated costs in
each capital improvement. The NPS considers the costs associated with
these improvements, as well as the opportunity for receiving LSI, when
it determines the concessioner's reasonable opportunity for net profit
and sets the prospectus or minimum franchise fee for the contract. The
1998 Act outlines, in general terms, what constitutes a capital
improvement eligible for LSI and how to value LSI. 54 U.S.C. 101915.
Details about which types of construction activities are eligible for
LSI and how it is valued are found in subpart G.
LSI is unique to NPS concession contracts and is not used in the
private sector. In the private sector, an owner
[[Page 90101]]
bears the risk of changes when an asset increases or decreases in
value. The owner may realize a return on its investment for capital
improvements when it sells an improved property, if the value has
appreciated, or lose money if the value has declined. In contrast,
under concession contracts with the NPS, the concessioner invests in
facilities they do not own. As a result, since the concessioner cannot
receive a return on the investment through a sale of the property, LSI
provides them that opportunity in the form of a guaranteed return to
the concessioner of its investment.
Although the NPS seeks to encourage concessioners to make capital
investments, it must balance the benefits of such investments with the
need to address the LSI generated from such investments. If the
incumbent concessioner wins the new contract, the concessioner retains
the LSI value, which continues through the term of the next contract.
If there is a new concessioner, the LSI is often transferred to a new
concessioner by the new concessioner compensating the outgoing
concessioner for the value of the LSI. This can create a significant
investment hurdle that limits competition on the contract. A higher
initial investment can lead to reduced competition because fewer
entities have access to the large buy-in amounts for certain contracts
or because the return on their investment is not as attractive as other
opportunities. When there is the likelihood of less competition, the
incumbent also may not be incentivized to offer as many new
enhancements when providing the services required, which can lessen the
visitor experience. If, instead, the NPS pays the value of the LSI to
the outgoing concessioner, the funds expended are unavailable to
support other NPS needs, such as prospectus development or managing the
new concessioner during the term of the contract and improving visitor
operations and facilities.
Change 6: Definition of Major Rehabilitation
Section 51.51 defines terms used in subpart G to explain how LSI is
applied.
The NPS revises the definition of ``major rehabilitation'' in order
to simplify and more appropriately characterize what qualifies as a
major rehabilitation with the intent of encouraging investment in
commercial visitor service capital improvements by concessioners. These
changes apply for future concession contracts.
First, the NPS simplifies the definition of a major rehabilitation
by removing the term ``comprehensive'' because it is vague and suggests
a limitation on investments that is not intended to be included in the
concept of a planned ``major'' rehabilitation as defined in the
regulation.
Second, the NPS removes the term ``that the director approves in
advance'' as Sec. 51.54 already requires such approval for any capital
improvement, including major rehabilitations.
Third, the NPS removes the requirement that, unless special
circumstances exist, the Director must determine the rehabilitation
project is completed within 18 months from the start of the
rehabilitation work. Projects must be approved by the Director and any
approval would include a project schedule. Eighteen months is a
timeframe typical for such projects. In practice, however, the Director
approves the timeline for major rehabilitation projects based on the
complexity and scope of the project. The result is that the 18-month
requirement in the existing regulation has been rendered superfluous
and does not provide any benefit to the public. Removing this
requirement simplifies and clarifies the definition to match existing
practice.
Fourth, the NPS decreases the construction cost threshold for what
constitutes major rehabilitation from 50% of the pre-rehabilitation
value to 30% of the pre-rehabilitation value. This allows for a broader
range of major commercial visitor service capital improvement
construction projects to qualify for increased LSI under Sec. 51.64 or
new LSI under Sec. 51.66.
The NPS selected the 30% threshold through industry research. The
International Facility Management Association identifies 30% as the
threshold for when a rehabilitation is ``critical'' to the structure.
The NPS believes the 30% threshold better aligns with this industry
standard than does the 50% threshold in the existing definition.
Further, the NPS believes that broadening the situations in which the
Director may approve the availability of LSI will facilitate important
and needed capital improvement projects that will improve the
conditions of facilities and help ensure a safe and enjoyable
experience for park visitors.
While the 1998 Act intended to promote private investment in
concession structures by providing LSI to concessioners, the 50%
threshold contained in the existing regulations has limited the
Director's ability to allow concessioners' opportunities to make
investments of the type envisioned by Congress. Concerns have been
raised that the current regulations actually discourage investment in
concessions structures. The NPS seeks to improve the regulations to
encourage concessioners to invest in capital improvements.
Broadening the scope of projects that can be supported by the
availability of LSI will have other consequences to the concession
contract and its management. For example, the utilization of LSI for
rehabilitation projects allows for the recovery of investment by the
concessioner where insufficient remaining contract term could make the
investment financially imprudent without LSI lowering the risk of that
investment. This lower risk associated with the ability of a
concessioner to incur LSI will be considered in the NPS analysis of the
opportunity and may result in a higher franchise fee set in the
prospectus consistent with the statutory requirements to set a fee
appropriate to the probable value of the contract and thus possibly
result in a higher franchise fee paid to the government. Franchise fee
revenue may also increase if increased concessioner investment in
higher quality facilities results in increased visitor demand for NPS
concessions. The NPS could use the new fee revenue for other NPS needs
or when appropriate to buy down LSI incurred on the contract as a
result of the concessioner investment. This assumes that revenue
projections for the contract are realized and adequate franchise fees
are available, since franchise fees are calculated as a function of
revenue. The use of franchise fees for this purpose will be balanced
against the use of these funds for other NPS needs in light of all
funding sources. An analysis of the expected relationship between LSI
and franchise fees as a result of this change can be found in the
report entitled ``36 CFR [part] 51 Concessions Contract Revisions
Regulatory Impact Analysis (RIA) and Initial Regulatory Flexibility
Analysis (IRFA)'' that can be accessed at <a href="https://www.regulations.gov">https://www.regulations.gov</a>
in Docket ID: NPS-2020-0003.
Fifth, the NPS added to the definition of a major rehabilitation,
that it must improve visitor health, safety, and enjoyment or the
health and safety of concessioner employees and will either enhance the
property's overall value, prolong its useful life, or adapt it to new
uses. This adopts a common industry definition for the scope of capital
investment to aid concessioners in understanding the scope of LSI-
eligible projects.
The changes to the definition of ``major rehabilitation'' do not
negate the requirement that the Director must approve in advance any
major
[[Page 90102]]
rehabilitation project in accordance with Sec. 51.54. Although the
changes to the definition will likely increase the opportunities for
concessioners to seek approval for major rehabilitation projects, the
NPS considers many factors when deciding whether to approve a capital
investment. For example, the NPS may decide that the value of LSI that
would result from the capital improvement would decrease competition
for future contracts, outweighing the benefit of the improvement. As a
result, the availability of LSI may not generate the desired outcome of
increased investment in all cases. However, in these cases the NPS may
pay for the capital improvements itself to avoid generating imprudent
levels of LSI. The NPS would need to evaluate the benefits of the
investment against the opportunity costs of diverting funds from other
projects, and how that would impact the quality of other concession
facilities and visitor services.
Subpart I--Concession Contract Provisions (36 CFR 51.73-51.83)
The regulations in subpart I govern key provisions in concession
contracts. The NPS makes six changes to this subpart, as explained
below.
Change 7: Term of Concession Contracts
Section 51.73 of the existing regulations governs the length of
concession contracts and contained a phrase not required by the statute
that concessioner contracts should be as short as is prudent
considering certain factors. The final rule deletes the reference to
``as short as is prudent'' to better align Sec. 51.73(a) with the
provisions of the 1998 Act (54 U.S.C. 101914). The final rule states
that contracts may not exceed 20 years in length and generally will be
awarded for ten years or less, unless the Director determines that the
contract terms and conditions, including the required construction of
capital improvements, warrant a longer term. The regulations also say
that it is the policy of the Director that the terms should account for
the financial requirements of the concession contract, resource
protection, and visitor needs, and other factors the Director may deem
appropriate.
The NPS also revises Sec. 51.73 to allow the Director to include
contract provisions allowing for an optional term or terms of one year
or more (but not to exceed three years in total), provided that the
total term of the contract, including all optional terms, does not
exceed 20 years. As proposed, the concessioner would need to meet the
performance criteria described in the contract. In the final rule, the
NPS states the subject contract will set out the evaluation rating
requirements and other performance criteria rather than regulating the
rating standard. The final rule also provides that the concessioner may
exercise the option(s) only if the Director has determined the
concessioner has met the performance criteria. This change applies to
future contracts only.
The final rule has a separate provision allowing the Director and
concessioner to agree to amend a contract to lengthen the original term
of a contract when the Director determines there has been a substantial
interruption of or change to operations due to natural events or other
reasons outside the control of the concessioner. These substantial
interruptions could include, for example, cessation of operations due
to extended fire season, severe hurricane damage, or lengthy
administrative closures ordered by the government. This change allows
the NPS and the concessioners a better opportunity to receive the
benefits that both anticipated during the solicitation process and upon
execution of the contract. This change applies to current concession
contracts still within the original term of the contract as well as
future contracts; it does not apply when the concessioner is operating
under either a temporary concession contract or an extension of an
existing concession contract awarded pursuant to subpart D of this
part, as the NPS may only award a temporary contract or a contract
extension ``for a term not to exceed 3 years,'' and only ``[t]o avoid
interruption of services to the public[.]'' 54 U.S.C. 101913(11)(A).
The NPS expects that this change will increase competition for
contracts and avoid situations where concessioners reduce services,
facility management, or other aspects of their contracted requirements
to cover lost revenue.
Change 8: New or Additional Services
The Centennial Act revised 54 U.S.C. 101913(9) to allow the NPS to
amend an existing contract to provide new and additional services that
do not represent a material change to the required and authorized
services under the contract. This language may provide new
opportunities to enhance commercial services under existing contracts
allowing concessioners to meet changing visitor needs where
appropriate. Before the Director authorizes such new or additional
services under a contract, the rule will continue to require the
Director to determine that the services are necessary and appropriate
for public use and enjoyment of the NPS unit where they will be
provided and are consistent to the highest practicable degree with the
preservation and conservation of the resources and values of that unit
in accordance with the Centennial Act and the 1998 Act. 54 U.S.C.
101912(b) and 10913(9).
The final rule also regulates the administrative practice of
allowing minor changes to the scope of existing services (such as
extending operating hours) as part of the revisions to this section.
The proposed rule would have retained a provision that prohibited
the Director from including a provision in a concession contract that
would grant a concessioner a preferential right to provide new or
additional visitor services under the terms of a concession contract
(defined as a right of a concessioner to a preference in the nature of
a right of first refusal). The Centennial Act replaced the statutory
basis for this regulatory prohibition, so the NPS excludes it from the
final rule.
This change applies to current and future concession contracts.
Change 9: Setting Franchise Fees
Section 51.78 reflects the requirement of the 1998 Act that
concession contracts provide for payment to the government of a
franchise fee in consideration of the probable value to the
concessioner of the privileges granted by the contract. The regulations
describe how probable value will be determined and how the fee may be
adjusted during the term of the contract. The final rule modifies Sec.
51.78 in several ways to clarify how the NPS will set the franchise fee
to encourage competition and provide enhanced or higher quality service
offerings while considering the reasonable opportunity for net profit
in relation to capital invested and the obligations of the contract.
First, the NPS modifies language in Sec. 51.78(a) to clarify that
the consideration in the capital invested to determine reasonable
opportunity for net profit includes those funds required to be placed
in special accounts identified in Sec. 51.81, and the obligations of
the contract as described in the prospectus.
Second, the NPS provides a new subsection (b) providing alternative
methods for the Director to determine the type of franchise fee to
include in a prospectus. Congress has charged the NPS with ensuring
that the franchise fee reflects ``the probable value to the
concessioner of the privileges granted by the particular contract
involved,'' 54
[[Page 90103]]
U.S.C. 101917(a). Historically, the NPS implemented this statutory
directive by setting a minimum acceptable franchise fee in the
prospectus and allowing competition to determine whether a higher
franchise fee better reflects the contract's probable value to the
offeror in consideration of the capital invested and obligations of the
contract including any enhancements in visitor services that might be
offered. In the final rule, the NPS has included an additional means of
meeting the statutory directive by using a ``prospectus franchise
fee,'' which will be set at a level to encourage competition for the
concession opportunity through offers of either higher franchise fees,
or lower franchise fees combined with enhanced or higher quality
service offerings that exceed the requirements included in the
prospectus. The NPS will use the prospectus franchise fee unless such
use is inappropriate, in which case the NPS will use the minimum
acceptable franchise fee.
Third, the final rule adds in a new paragraph (c) that requires
that the Director use relevant industry data when determining the
applicable franchise fee and to provide the basis for this
determination in the prospectus. These additions to the regulation are
consistent with historical NPS practice in prospectus development that
already provides the basis for the calculation of a franchise fee based
on the probable value of the contract to the offeror. This addition to
the regulation will further transparency in prospectuses.
These changes apply to all prospectuses issued after the effective
date of the final rule. As noted, however, many of these requirements
reflect historical NPS practice.
Change 10: Special Accounts
Section 51.81(b) of the existing regulations allows concession
contracts to require the concessioner to set aside a percentage of its
gross receipts in a repair and maintenance reserve to be used, at the
direction of the Director, solely for maintenance and repair of real
property improvements located in park areas and utilized by the
concessioner in its operations. Repair and maintenance reserve funds
may not be expended to construct improvements that would be eligible
for LSI. The proposed rule merely changed the name of the ``repair and
maintenance reserve'' to ``component renewal reserve to reduce
confusion about how the funds in this reserve may be used.'' The final
rule retains that change (which applies to current, if amended, and
future contracts) and well as the following changes that will improve
the understanding of the reserve.
First, the rule specifies that the NPS should identify the
anticipated timing and estimated costs of component renewal projects in
the prospectus. This change applies to all prospectuses issued after
the effective date of the final rule.
Second, to further avoid confusion, the rule describes that the
component renewal reserve provides a mechanism for a concessioner to
reserve monies to fund component renewal projects, and that
concessioner obligations to maintain assigned concession facilities,
including component renewal, are not limited to the monies in the
component renewal reserve. This change does not change how the NPS and
concessioners treat the component renewal reserve or the concessioners'
maintenance obligations.
Change 11: Concessioner Rates
Section 51.82(a) of the existing regulations states that concession
contracts must allow concessioners to set reasonable rates and charges
to the public for visitor services, subject to approval by the
Director. Paragraph (b) explains how the Director will determine
whether rates and charges are reasonable, by comparison with rates and
charges for facilities and services of comparable character under
similar conditions with due consideration to the following factors:
length of season, peakloads, average percentage of occupancy,
accessibility, availability and costs of labor and materials, and types
of patronage. Rates and charges may not exceed market rates and charges
for comparable facilities, goods, and services, after considering
certain factors. These requirements are taken directly from the 1998
Act. 54 U.S.C. 101916.
The 1998 Act also states that the rate approval process shall be as
prompt and as unburdensome to the concessioner as possible and rely on
market forces to establish the reasonableness of rates and charges to
the maximum extent practicable. 54 U.S.C. 101916(b)(1). The NPS
finalizes several changes to Sec. 51.82 to meet these requirements.
These changes apply to current and future concession contracts.
First, the NPS codifies the requirements in the 1998 Act and
provides that the NPS will rely on market forces to establish the
reasonableness of such rates and charges to the maximum extent
practicable.
Second, the NPS adds a new paragraph (c) that requires the Director
to identify the rate approval method for each category of facilities,
goods, and services in the prospectus. Unless the Director determines
that market forces are not sufficient to establish the reasonableness
of rates and charges, the rule requires the Director to make a
competitive market declaration (rather than using other NPS annual rate
approval methods), and further provides that rates and charges will be
approved based upon what the concessioner determines the market will
bear. The Director will determine this by reviewing the services being
provided by the current concessioner relative to the comparable set of
offerings in the market. Other rate approval methods will be used only
when the Director determines that market forces are inadequate to
establish the reasonableness of rates and charges for the facilities,
goods, or services. For example, this may occur for lodging or food and
beverage outlets where there are no alternatives, guiding services for
one-of-a-kind recreational experiences, and transportation to NPS units
where there is only one way to access the site (e.g. ferry service to
the Statue of Liberty). This rule requires the Director to monitor
rates and charges and competition and allows the Director to change the
rate approval method during the term of the contract to reflect changes
in market conditions. This last provision allows the NPS to respond to
market pressures on rates for concessioner services that did not
historically exist. This has occurred where lodging and other visitor
services have expanded in gateway communities, aided by online searches
and booking methods that provide more options for visitors. In
addition, competitors in some locations use dynamic pricing to set
rates, which means that prices are adjusted to reflect demand. The task
of approving reasonable and appropriate rates and charges in these
scenarios is burdensome. Unlike private sector companies, concessioners
must undergo an annual rate approval process each year where maximum
rates are set through a complex comparability process that occurs
months in advance of the season. The concessioners are then not as able
to quickly and efficiently adjust rates, particularly in times when
visitor demand is higher than was forecasted. This rule acknowledges
this fact and allows the NPS to more fully consider competitive,
demand-driven pricing methods where it makes sense to lessen this
burden. The NPS monitors the rates of the concessioner. In the event
that the concessioner's rates set based upon a competitive market
declaration no
[[Page 90104]]
longer reflect changes in market conditions taking into account the
varied characteristics and quality of services offered, the Director
may determine that this rate approval method is not providing
reasonable and appropriate rates and may change the rate approval
method to one that will meet these conditions. The Director will
monitor rates and charges and competition and may change the rate
approval method during the term of the contract to reflect changes in
market conditions.
The enhanced use of competitive market methods may result in
increased rates and revenue with no change in expenses to the
concessioner. These changes in the financial opportunity of the
contract will be accounted for through contract requirements that would
benefit the public using the concession services. An analysis of the
expected relationship between rates and such contract changes can be
found by reading the report entitled ``36 CFR [part] 51 Concessions
Contract Revisions Regulatory Impact Analysis (RIA) and Initial
Regulatory Flexibility Analysis (IRFA)'' that can be accessed at
<a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket ID: NPS-2020-0003. The NPS notes
that the competitive market declaration and other rate methods
establish reasonable and appropriate rates for the services that are
being offered. This is separate than the determination of what services
are necessary and appropriate, including the range of offerings and
associated price points. That determination is conducted through the
NPS planning process.
Third, the NPS adds a new paragraph (d) that establishes rules for
how the Director responds to requests from existing concessioners to
change rates and charges to the public so that they are as prompt and
as unburdensome as possible to the concessioner. The new language
requires each contract to include a schedule for rate requests and
describe the information necessary to include in a complete rate
request. This clarifies a current NPS practice to include this
information in the concession contract operating plan. The rule further
requires, upon receipt of a request for a change in rates or charges,
the NPS, as soon as practicable but not more than 20 days of receipt of
the request, to provide the concessioner with a written determination
that the request is complete, or, if not, a description of the
information required for the request to be determined complete. Where
changes in rates and charges have been requested and the NPS deems the
request complete, concessioners may notify visitors making reservations
90 or more days in advance of the anticipated rates subject to review
and adjustment, if necessary, at or before the time of the visit
pursuant to the NPS's timely decision to approve or reject the rate
change. The NPS will issue a final decision approving or rejecting a
request by a concessioner to change rates and charges to the public
within 10 days of receipt of a complete request in accordance with the
conditions described in the contract, except for those change requests
requiring a full comparability study, for which the NPS will issue a
decision as soon as possible and in no event longer than 30 days after
receipt of the complete request. If the NPS does not approve of the
rates and charges proposed by the concessioner, the NPS must provide in
writing the substantive basis for any disapproval. These timeframes
will be exceeded only in extraordinary circumstances and the
concessioner must be notified in writing of such circumstances. If the
NPS fails to meet the timeframes described above, and has not notified
the concessioner in writing of the existence of extraordinary
circumstances justifying delay, a concessioner may implement the
requested change to rates and charges until the Director issues a final
written decision. If the Director denies the requested change to rates
and charges after implementation by the concessioner, the Director will
not require the concessioner to retroactively adjust any rates or
charges for services booked prior to the Director's denial.
Under current policy, the NPS responds to rate requests within 45
days, but does not have any specific timeframes as outlined in the
revisions to the rule. The specific response requirements included in
the final rule will improve responsiveness and provide more certainty
to concessioners by ensuring prompt and transparent decisions regarding
requests for rates and charges. Additionally, the advance rate
practices described in the rule provide the concessioner flexibility so
they are not encumbered in their ability to advertise, take
reservations and charge reasonable and appropriate rates during the
rate request and approval process. The NPS clarifies that charging
advanced rates outside the rate request schedule in the contract and
rate request and approval procedures in paragraph (c) of Sec. 51.82
may be allowed if specified in the contract. Such allowances may occur
when additional advanced rate practices are determined by the NPS as
appropriate and consistent with comparable services and when they are
conducted in accordance with NPS rate administration policy.
Change 12: Subpart J--Assignment or Encumbrance of Concession Contracts
(36 CFR 51.84-51.97).
The regulations in Subpart J set forth rules for executing
assignments and encumbrances of concession contracts. The proposed rule
included a prohibition on submitting requests to approve an assignment
of a concession contract within twenty-four months following the
effective date of the contract unless the proposed assignment was
compelled by circumstances beyond the control of the assigning
concessioner. After receiving many comments criticizing this
prohibition as too restrictive, the NPS has decided to withdraw the
rule change. Instead of imposing an additional restriction on the
assignment of concession contracts, the NPS will pursue its policy
objectives through the current regulatory framework.
Final Rule
Summary of Changes
After internal deliberations and in response to comments, the NPS
made the following changes to the proposed rule. For a more detailed
discussion of these changes, refer to the next section entitled
``Summary of Public Comments'' and bureau responses, organized by
topic.
------------------------------------------------------------------------
Title 36 Description of change
------------------------------------------------------------------------
Sec. 51.4.................. How will the Director invite the general
public to apply for the award of a
concession contract and how will the
Director determine when to issue a
prospectus for a new concession
opportunity where no prior concession
services had been provided?
<bullet> NPS retained the 18-month
rule with exceptions for issuing
prospectuses earlier.
<bullet> NPS added a requirement for
an annual process to invite ideas for
new services and requires public
disclosure of proposals and
evaluations.
<bullet> NPS changed the factors
considered when issuing a prospectus
for new concession opportunities.
<bullet> NPS added a reference to the
authority for noncompetitive award of
concession contracts.
Sec. 51.8.................. Sec. 51.8 Where will the Director
publish the notice of availability of
the prospectus?
[[Page 90105]]
<bullet> NPS kept the language as
proposed with editing improvement.
Sec. 51.16................. How will the Director evaluate proposals
and select the best one?
<bullet> NPS added a maximum aggregate
score of 40 points.
<bullet> NPS added a requirement that
each selection factor used must have
a maximum score of at least one
point.
<bullet> NPS provided that the maximum
score for the principal selection
factor for franchise fees remains
subordinate to the other principal
selection factors listed in Sec.
51.17(a).
<bullet> NPS provided that an offerors
will receive one point for agreeing
to the prospectus franchise fee or
the minimum acceptable franchise fee,
whichever is applicable.
<bullet> NPS included the prospectus
franchise fee option when describing
the scoring for the principal
selection factor for franchise fees.
<bullet> NPS provided that the scores
for secondary selection factors
reflect the relationship between
principal and secondary selection
factors.
Sec. 51.17................. What are the selection factors?
<bullet> NPS added a requirement to
include a secondary selection factor
for new services when appropriate.
Sec. 51.51................. What special terms must I know to
understand leasehold surrender interest?
<bullet> The NPS is removing the term
``comprehensive'' from the definition
of a major rehabilitation.
<bullet> The NPS is removing the term
``that the director approves in
advance'' from the definition of
major rehabilitation in paragraph
(a).
<bullet> The NPS is removing the word
``solely'' from the definition of
leasehold surrender interest because
it is unnecessary. This is a non-
substantive edit that will not change
the meaning of the definition.
Sec. 51.73................. What is the term of a concession
contract?
<bullet> NPS clarified the conditions
for including option terms based on
performance factors in new concession
contracts including a three-year
limit for such options.
<bullet> NPS clarified when the
Director and concessioner may amend a
concession contract to lengthen the
term of a contract due to a
substantial interruption of or change
to operations including a three-year
limit.
Sec. 51.76................. May the Director amend a concession
contract to provide new or additional
visitor services or grant a concessioner
a preferential right to provide new or
additional visitor services?
<bullet> NPS included the
administrative practice of amending
operating plans for minor changes to
visitor services.
<bullet> NPS included a list of
possible changes that could lead to
an operating plan or contract
amendment.
<bullet> NPS deleted the provision
regarding granting concessioners a
preferential right to new or
additional services.
<bullet> NPS added a provision that
the Director should consider whether
other operators adequately provide a
service when considering whether to
amend an existing contract to add a
new service.
Sec. 51.78................. Will a concession contract require a
franchise fee and will the franchise fee
be subject to adjustment?
<bullet> The NPS is modifying the
language in paragraph (a) clarifying
that the consideration in the capital
invested to determine reasonable
opportunity for net profit includes
those funds required to be placed in
special accounts identified in Sec.
51.81.
<bullet> The NPS is moving
requirements regarding the
consideration of revenue to the
Government compared to other factors
to paragraph (c).
<bullet> The NPS is adding a new
paragraph (b) providing a new means
for the Director to determine the
franchise fee for the contract as an
alternative to the minimum franchise
fee. This alternative method would
include in the prospectus, a
``prospectus franchise fee'' set at a
level to encourage competition for
the concession opportunity through
offers of higher franchise fees or
lower franchise fees combined with
enhanced or higher quality service
offerings that exceed prospectus
requirements.
<bullet> The NPS provides that the NPS
will use the prospectus franchise fee
unless such use is inappropriate, in
which case the NPS will use the
minimum acceptable franchise fee.
Sec. 51.81................. May the Director include ``special
account'' provisions in concession
contracts?
<bullet> The NPS is revising paragraph
(b) to add a requirement that the
anticipated timing and estimated
costs of component renewal projects
should be identified in the
prospectus.
<bullet> The NPS is expanding
paragraph (b) to clarify that the
component renewal reserve provides a
mechanism for a concessioner to
reserve monies to fund component
renewal projects and that
concessioner obligations to maintain
assigned concession facilities
including component renewal are not
limited to the monies in the
component renewal reserve.
Sec. 51.82................. Are a concessioner's rates required to be
reasonable and subject to approval by
the Director?
<bullet> The NPS is removing the
requirement provided in the proposed
rule that the Director respond to
rate requests within 30 days.
<bullet> The NPS is adding a new
paragraph (d) that establishes more
defined rules for how the Director
responds to requests from
concessioners to change rates and
charges to the public. The provision
requires that each contract include a
schedule for rate requests and
describe the information necessary to
include in a complete rate request.
Specific timelines for various rate
approval actions by the Director and
advanced rate charging allowances
during the rate approval process have
been included.
Sec. 51.87................. Does the concessioner have an
unconditional right to receive the
Director's approval of an assignment or
encumbrance?
<bullet> The NPS removed the
requirement in paragraph (i) that the
request for approval of the
assignment must be received 24 months
or more after the effective date of
the contract unless the requested
assignment is compelled by
circumstances beyond the control of
the concessioner.
------------------------------------------------------------------------
Summary of Public Comments
The NPS published a proposed rule in the Federal Register on July
20, 2020, (85 FR 43775) and accepted comments on the proposed rule
through the mail, by hand delivery, and through the Federal eRulemaking
Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The comment period closed on
September 18, 2020. The NPS received 68 comments on the proposed rule
from individuals and organizations. A summary of the pertinent issues
raised in the comments and NPS responses are provided below. In
general, the concessioner community generally supported the proposed
rule. Some individual members of the public objected to expanding
commercial
[[Page 90106]]
operations in national parks. Non-governmental organizations generally
supported the proposed rule as a whole while objecting to some changes,
citing perceived detrimental effects on the National Park System, small
business, and the visitor experience. After considering public comments
and after additional review, the NPS made several substantive changes
in the final rule that are explained in the responses to comments
below. Additionally, the NPS made non-substantive stylistic,
formatting, and structural changes in the final rule.
General Comments
1. Comment: Several commenters do not support allowing for
commercial visitor service opportunities in the National Park System
and expressed concerns that this will have a detrimental effect to both
resources and the public, could change the nature of the visitor
experience, and is contrary to the Organic Act.
NPS Response: The NPS disagrees with these commenters. In
accordance with statutory requirements contained in 1998 Act, the NPS
provides commercial visitor services only when they are necessary and
appropriate for public use and enjoyment of the unit of the National
Park System in which they are located and are consistent to the highest
practicable degree with the preservation and conservation of the
resources and values of the unit. These statutory conditions are
restated in the rule in regard to the introduction of any new or
additional services. NPS adheres to these tenets in planning,
solicitation and award and management of concession contracts.
2. Comment: Several commenters assert that the rule could damage or
disadvantage existing small businesses.
NPS Response: The NPS disagrees that the rule will damage or
disadvantage small businesses. The regulatory impact analysis conducted
for this rule resulted in a determination that the rule will have a
positive impact on small businesses. First, the rule changes are
designed to improve the way that NPS solicits, evaluates, and
administers concessions contracts. The vast majority of concessioners
operating in parks (estimated 96%) are small businesses as defined by
the Small Business Administration (SBA) and, as such, will benefit from
the changes to the rule. Solicitations for concession contracts are
full and open and any qualified businesses, including small businesses,
may compete in such solicitations. In regard to whether new or
additional services may impact small businesses outside the park unit,
the NPS must consider the potential impacts on communities located near
the park area when evaluating the potential to offer new and/or
additional services. This includes potential impacts on small
businesses. Additionally, when considering whether to amend the
applicable terms of an existing concession contract to provide new or
additional services, the rule requires the Director to consider the
potential benefit to the visitor experience where other commercial
operators (most of which are small businesses) in the same park area
already adequately provide those services.
3. Comment: One commenter requested that the NPS include in the
rule a statement ``that concessions agreements are a legitimate
strategy for meeting the financial needs for both park protection and
infrastructure creation, operation and maintenance directly associated
with visitor needs.''
NPS Response: NPS declines to make this addition as the purpose of
concession contracts are clearly stated in the 1998 Act and are
reaffirmed in the regulation as currently written.
4. Comment: One commenter expressed concern that the NPS failed to
include regulations pertaining to the Visitor Experience Improvements
Authority (VEIA) in the rule.
NPS Response: The NPS declines to address the VEIA in this rule as
these revisions to 36 CFR part 51 focus on concession contracts and not
on other contract types for commercial visitor service that may be
authorized under the VIEA.
New Concession Opportunities
5. Comment: The NPS received some comments generally opposed to
increasing commercial operations in parks and listed types of
activities the NPS should prohibit in the regulation such as Amazon
deliveries, food trucks, cell towers, Wi-Fi services, and other ``urban
amenities.'' The NPS also received comments that the NPS should
consider only the expansion of existing services rather than allowing
entirely new services.
NPS Response: NPS declines to include such a list because some of
those activities may be necessary and appropriate in some parks and
during some time periods. For example, food trucks for special events
at the National Mall in Washington, DC, would provide additional
visitor services during well attended events. Rather than listing
specific activities to allow or disallow, the NPS relies on existing
planning processes and the necessary and appropriate determination
process to make park-by-park determinations of visitor services to
include in a concession contract. In some instances, services available
to the NPS and its employees are not subject to concession contracts
(Amazon deliveries and Wi-Fi services). The NPS manages cell towers in
the National Park System through other authorities and not concession
contracts. The decision of what commercial visitor services to allow in
individual parks considers park specific conditions. The NPS regional
directors, upon advice from park superintendents, decide what
commercial visitor services are necessary and appropriate. NPS avoided
regulating any specific commercial visitor service to allow this
discretion by those most familiar with park-specific conditions.
6. Comment: Many commenters generally supported the idea of
expanding visitor services citing topics such as economic development,
modernization, and technology. Others suggested developing
comprehensive criteria to evaluate new visitor service suggestions. The
NPS also received a comment that the NPS should reevaluate currently
provided commercial services that may be inadequate and should consider
the public benefits of having multiple providers of a service, or
multiple variations of a service, to suit differing visitor needs.
NPS Response: The NPS appreciates these comments. The 1998 Act
provides that the NPS may issue concession contracts only for
commercial visitor services determined to be necessary and appropriate
and consistent to the highest practicable degree with the preservation
and conservation of the National Park System unit. The NPS complies
with this direction through public planning processes guided by NPS
Management Policies and related guidance. The NPS chooses to allow park
managers and regional directors discretion to consider circumstances
and conditions unique to a System unit rather than define one
regulatory standard for the entire National Park System. Experience has
shown that the existing policies and guidance provide sufficient
standards to ensure continued preservation and conservation of System
units as required by law.
7. Comment: One commenter encouraged the NPS to establish an annual
process for the Director to solicit ideas for new services (in addition
to the recognition in the proposed rule that the NPS would do this
during park-level planning processes). That commenter also stated the
NPS should commit to consider a minimum number of proposals each year
(suggesting 10).
[[Page 90107]]
NPS Response: Considering these comments, NPS has included in the
rule a provision to require the Director to annually solicit visitor
service ideas through a process separate from the park planning
processes. Proposals received for new visitor service and concession
opportunities will be encouraged, reviewed, and responded to; however,
NPS chose not to set a minimum number of proposals to consider as the
NPS cannot predict or control how many such proposals it will receive.
8. Comment: As proposed, the regulation stated no party will have a
preference to a new contract that authorizes a suggestion submitted by
that party. One commenter suggested deleting that language and creating
a method to provide that party ``appropriate credit'' in the rating
process. That commenter also suggested the NPS allow the suggesting
party, if awarded the contract, to credit against franchise fees a
``portion of the costs incurred . . . in generating a proposal for new
or additional visitor services . . .'' The commenter suggested
regulatory language to incorporate these concepts.
NPS Response: The NPS declines to make such revisions. The 1998 Act
included preferences for only two categories of concessioners--those
whose operations generate under $500,000/year and those who met
specific qualifications as outfitters and guides. The NPS thinks
providing credit as suggested by this commenter would create a
preference system not authorized by law. In addition, allowing a
deduction for the costs of developing a suggestion to the Director
could also provide a preference for the offeror that submitted the
idea, as knowing it would recoup some of the cost of development might
allow it to propose a higher franchise fee than other offerors, and,
therefore, receive more points for the principal selection factor for
franchise fees during the competitive evaluation process. Furthermore,
allowing for the recoupment of development costs is uncommon in the
private sector and other government contracting actions. The NPS sees
no benefit in allowing such for concession contracts.
In consideration of these concerns, however, the NPS added a new
provision to Sec. 51.17(b) providing that the NPS will include a
secondary selection factor requesting suggestions for new services when
appropriate. This reflects a practice the NPS has used off and on for
several years to encourage new ideas for commercial visitor services
within the scope of the contract included in a prospectus and should
allow entities that seek to provide new services in a park area to
develop such ideas and receive appropriate credit as part of the
competitive process.
9. Comment: NPS received several comments expressing concerns that
allowing new services may adversely affect businesses in nearby towns
or the operations of other park concessioners or commercial operators.
NPS Response: The final rule addresses this concern. In determining
whether to issue a prospectus for a concession contract to provide such
new concession opportunities, the Director shall consider relevant
factors including whether the suggested opportunities are adequately
provided within the park area by other authorized commercial providers;
the potential for augmented resources for park area operations; the
effects of the suggested concession operations on the park area; the
sustainability of the suggested concession opportunities; the
innovative quality of the suggestions; and the potential impacts on
park area visitation and on communities located near the park area.
10. Comment: The NPS received several comments about using the
innovative quality of the suggested new services as one of the
evaluation factors because some visitor service ideas, such as bicycle
rentals, may not be innovative but could still provide a valued
additional visitor service. Another commenter suggested NPS consider
the impacts of new services to park operations and the sustainability
of the new concession operation.
NPS Response: The NPS chooses to keep the innovative nature of the
visitor service as a factor to consider, however, it is by no means a
controlling factor or intended to work to exclude new visitor services
that are not considered innovative. The NPS also included consideration
of the impacts of new services to park operations and the
sustainability of the new concession operations.
11. Comment: One commenter stated the NPS should set clear criteria
in determining what visitor services to provide within a park,
suggesting that this would include making the necessary and appropriate
determinations. For many years, the NPS has relied on policy to guide
this exercise of discretion.
NPS Response: Both NPS Management Policies 2006 and the Commercial
Services Guide have information on this process. The NPS declines to
regulate more specific criteria for this decision process.
12. Comment: One commenter stated the NPS should set a deadline for
developing the process of seeking proposals for new visitor services.
Another commenter recommended the NPS include broad agency input and
include some outside parties in its evaluations. Finally, a commenter
suggested creating a unique plan for Alaska.
NPS Response: While the rule does not contain a specific timeframe
for soliciting and reviewing proposals for new visitor services, it
does require an annual process. The NPS, therefore, intends to
implement the first solicitation of ideas as soon as practicable and
before the end of the calendar year following the effective date of the
final regulations. The NPS will consider suggestions for broad input in
evaluating proposals for developing new visitor service opportunities,
including those in currently underdeveloped Alaska park areas as the
NPS constructs the new visitor service opportunity solicitation process
and related guidance.
Timing of Issuing Prospectuses
13. Comment: Several comments generally opposed or generally
supported the elimination of the requirement to issue prospectuses not
sooner than 18 months before the contract expires. Some commenters
raised specific objections, often contradicted by other commenters (for
example: ``it will increase competition'' and ``it will have no effect
on competition;'' ``it will decrease the quality of bids'' and ``it
will increase the quality of bids'').
NPS Response: The NPS has decided to keep the language in the
existing regulation retaining what we call the 18-month rule but
allowing the Director to issue a prospectus earlier when necessary to
provide additional time to potential offerors, such as when additional
time is needed to avoid issuing a prospectus during a busy operating
season or where potential offerors must make significant financial
commitments to meet the requirements of the contract. This additional
time will be as short as prudent.
14. Comment: One commenter supported keeping the 18-month rule and
suggested adding a requirement that the NPS not issue a prospectus
during a busy operating season.
NPS Response: The NPS has chosen to keep the 18-month rule. Some
limited circumstances, however, could result in the need to depart from
the 18-month rule. Generally, the NPS issues contracts with a January 1
start date, rather than having contract start dates scattered over the
year, keeping the inventory of contracts on a calendar year basis.
Consequently, the 18-month rule would
[[Page 90108]]
prohibit the NPS from issuing a prospectus sooner than July 1 the year
before the current contract expires. Since most recreation providers
are busiest during the summer season, the 18-month rule results in the
NPS either issuing a prospectus during the operator's busy season or
delaying release until later that year. Preparing an offer during the
busiest time of year can present many challenges for concessioners,
especially for small businesses with limited staff. Delaying the
release until later in the year, however, can result in the NPS needing
to extend an existing contract for another year because of the time it
takes the NPS to complete its evaluation process, announce the
selection of the best proposal, and award the contract. In some
circumstances the potential for contract extension out of necessity
should be avoided by the issuing of a prospectus in advance of 18
months prior to contract expiration, but as close to contract
expiration as is prudent.
15. Comment: Several commenters said the NPS should use the ability
to extend contracts to provide more time during the solicitation and
evaluation period rather than eliminating the 18-month rule.
NPS Response: Contract extensions may be appropriate when necessary
to ensure the continuity of visitor services and as such serve as a
remedy where the circumstances surrounding the solicitation and
evaluation of proposals within the allotted 18-month period may give
rise to interruptions of services to the public. However, such
extensions should be the exception and not the rule. The final rule,
therefore, provides the NPS with flexibility in certain circumstances
to use additional time for prospectus solicitation, evaluation and
award, provided that additional time is a short as is prudent. This
added flexibility to the 18-month rule is necessary, as the 18-month
rule can leave insufficient time to solicit, evaluate, select and award
contracts for several reasons. First, as described above, to avoid
issuing prospectuses during the concessioners' (and likely
competitors') busy seasons, the NPS has delayed issuing a prospectus
until later in the year, which frequently leads to extending contracts.
Second, for more complex contracts, the NPS frequently allows offerors
four to five months to compile and submit proposals. Many of these
contracts require notice to Congress at least 60 days prior to award
(see 54 U.S.C. 101913(6)). All of this extra time often leads to the
need for a contract extension. Third, even for less complex contracts,
the rigorous evaluation and selection processes, providing the selected
offeror time to review the terms of the contract, and allowing
reasonable transition time also may give rise to the need for
extensions of contracts.
16. Comment: Several commenters pointed to the justification for
including the 18-month rule in the 2000 regulations, that issuing
prospectuses sooner that 18 months before contract expiration would
result in too much uncertainty and speculation.
NPS Response: The concerns raised have led to keeping the 18-month
rule in the final regulations as a matter of general application, but
with limited exceptions. Over the past 20 years, the NPS has developed
a professional and reliable process to analyze information and develop
prospectuses. The NPS relies on the incumbent concessioner's operating
history and on industry metrics and the experience of long-time
financial consultants and A&E firms. Where it is necessary due to
operating circumstances to issue a prospectus more than 18 months in
advance, the reliability of this information will not diminish by
issuing a prospectus a few months earlier. That said, the NPS remains
concerned with information becoming stale when issuing a prospectus too
far in advance of a contract effective date. The NPS also anticipates
for most contracts where circumstances require early release of a
prospectus, the timing of such releases will move less than six months.
In other rare circumstances, for example, the NPS may release a
prospectus two years before expiration to accommodate a new
concessioner's need to acquire expensive personal property such as
passenger ferries. The NPS may award those well before operations
commence to provide the new concessioner an awarded concession contract
to rely upon to enter into acquisition agreements and necessary
financing.
17. Comment: Several commenters suggested keeping the 18-month rule
and adding language requiring the NPS to demonstrate a need for an
earlier prospectus release.
NPS Response: The NPS has added criteria for the NPS to use to
issue a prospectus earlier than 18 months before a contract expires.
Applying these criteria will be the exception to the 18-month rule and
will be supported by an administrative record. Modifying the 18-month
rule to allow for earlier releases when necessary provides the NPS with
the ability to time the issuance of prospectuses to meet many goals,
including that of relieving concessioners of the burden of preparing
proposals during a busy operating season, and of alleviating the
uncertainty associated with a concessioner's future operations. As
stated in the preamble to the proposed rule, it also allows the NPS to
better design competition and award for contracts with substantial
personal property investment. The NPS recognizes the concern
represented by commenters opposing this change and will develop
guidance on factors the NPS should consider in determining when to
release a prospectus as well as additional steps the NPS could take to
improve competition and the quality of proposals.
18. Comment: A commenter suggested several processes the NPS should
use to encourage more and better proposals including earlier disclosure
of contract requirements, two rounds of questions and answers, and a
more thorough debriefing process.
NPS Response: The NPS will consider these as suggestions to
consider in developing additional policy guidance but does not find it
necessary to include such guidance in the final rule.
Publishing Notice of a Prospectus
19. Comment: The NPS received three comments related to the
publication of the notice of a prospectus release. None of the comments
addressed the change in the regulation. One commenter suggested changes
to the NPS practices of posting expected prospectus releases on the
WASO Commercial Services Program website. Two supported publishing
notice in trade publications (included in the existing rule). One
suggested taking steps to notify the incumbent concessioner directly.
NPS Response: The NPS sees no need to make changes to the rule as
proposed based on these comments, which addressed the title of the
publication and not the method, but will consider this input in
developing any additional policy guidance regarding publication
methods.
Weighting Selection Factors
20. Comment: The NPS received one comment opposing the additional
flexibility the proposed changes would provide the NPS due in part to
the ambiguities in the proposed rule. On the other hand, the NPS also
received many comments supporting additional flexibility in scoring
proposals but asking for further clarification. Additional comments
noted that each selection factor used should be worth at least one
point.
NPS Response: The proposed rule language, which provided
considerable flexibility to the NPS to design proposal packages that
reflected park area goals, unfortunately was vague and led to
[[Page 90109]]
differing interpretations of how the scoring would work. The final rule
clarifies the scoring and recognizes the subordination of franchise
fees and other consideration to the government to other principal
selection factors. For consistency and clarity, the new language for
Sec. 51.16(a) includes a maximum aggregate total point score of 40,
which is 10 points higher than provided for in the existing
regulations. The NPS believes the new maximum will provide additional
flexibility for the NPS and reliability for those who submit proposals
for new concession contracts. The final rule also includes a
requirement that each selection factor used must have a maximum score
of at least one point. In Sec. 51.16(a)(2) and (3), the final rule
clarifies the scoring for secondary selection factors to reflect the
relative scoring structure of the existing regulations, to wit: the
maximum score for the secondary selection factor in Sec. 51.17(b)(1)
must be lower than the maximum score for the principal selection factor
for franchise fees and the maximum aggregate score for all other
secondary selection factors must be lower than the maximum score for
the principal selection factor for franchise fees. This retains the
current scoring structure and continues to differentiate between
principal and secondary selection factors.
21. Comment: Many commenters pointed out the proposed rule did not
provide that franchise fees and other consideration to the government
would be subordinate to other principal selection factors as required
by the 1998 Act and as incorporated into the existing regulations. In a
related vein, several commenters requested that experience receive
higher consideration than consideration of franchise fees and other
consideration to the government, especially for high risk recreation
activities.
NPS Response: In Sec. 51.16(a)(1), the NPS added language to
reflect the 1998 Act requirement that consideration of franchise fees
and other consideration to the government will be subordinate to the
objectives of protecting, conserving, and preserving resources of the
park area and of providing necessary and appropriate visitor services
to the public at reasonable rates, which are two of four statutorily
mandated ``principal selection factors.'' Even though the foregoing
statutory requirement subordinates consideration of franchise fees and
other consideration to the government only to these two principal
selection factors, the NPS decided to maintain the relative scoring
structure of the existing regulations and also subordinate
consideration of franchise fees and other consideration to the
government to the experience and related background of offerors and the
financial capability of offerors, which are the other two principal
selection factors. The NPS also agree that experience in high risk
operations should matter more than consideration of franchise fees and
other consideration to the government, but thinks it should matter in
all circumstances. And while the NPS did not receive comments asking to
maintain the higher consideration for the principal selection factor
regarding the financial capability of offerors over the principal
selection factor for franchise fees and other consideration to the
government, we recognize from twenty years of evaluating proposals that
those supported by strong financial capability and understanding of the
business opportunity translate into financially sustainable concession
operations. As a result, the final rule provides that the maximum score
for the principal selection factor regarding franchise fees and other
consideration to the government must be less than the maximum score for
the other principal selection factors set out in Sec. 51.7(a).
22. Comment: The NPS received comments that supported continuing to
award one point for agreeing to the minimum franchise fee.
NPS Response: The NPS revised the proposed language to provide that
the score for agreeing to the prospectus franchise fee or the minimum
franchise fee (as applicable) set out in the prospectus would be one
point.
23. Comment: Several commenters pointed out that the scoring scheme
in the proposed rule could result in a scoring anomaly where the
franchise fee is undervalued inappropriately.
NPS Response: The NPS thinks that the maximum aggregate score of 40
points resolves this concern.
24. Comment: One commenter suggested the NPS limit the score for
franchise fees to 15% of the total score for all selection factors
asserting that would retain the current approximate weight of that
selection factor as against the other selection factor scores.
NPS Response: The NPS declined to do this for two reasons. First,
this could lead to a situation where the minimum and maximum scores for
the principal selection factor for franchise fees would be other than a
whole number, which would unduly complicate the panel evaluation
process. For example, rather than having a range of scores from zero to
four, the range could be zero to 3.705 or 5.47. Second, by adding the
maximum score of 40 points, our calculations for various scenarios
resulted in scores for principal selection factor 5 at or near levels
under the existing regulations or around 15%. To reflect the change
under Sec. 51.78 defining a new method of developing a ``prospectus
franchise fee,'' the NPS included a reference to that type of franchise
fee in discussing the scoring for the principal selection factor on
franchise fees.
25. Comment: The NPS received comments stating we should require
disclosure of subfactor scores for every subfactor.
NPS Response: The NPS declines to make this part of the regulatory
change because each prospectus includes proposal instructions that vary
little from one prospectus to the next. Those instructions contain a
provision (which has been included in the prospectus instructions for
many years) that all subfactors will receive the same weight unless the
NPS specifies otherwise. The NPS believes this instruction sufficient
for offerors to understand when we do and do not assign different
scoring weights among subfactors. To enhance transparency, however, the
NPS will develop guidance to disclose when subfactors are considered of
equal weight beyond the language in the prospectus instructions.
26. Comment: The NPS received a variety of comments suggesting we
require specific topics for secondary selection factors such as using
local businesses to support concession operations, efforts to attract
lower income visitors, demonstrated knowledge or the NPS or the park
area involved, and recommending additional visitor services.
NPS Response: The NPS agrees these are good topics for secondary
selection factors and have used variations of these in past
prospectuses. Rather than requiring specific topics, however, the NPS
thinks it important to develop topics for secondary selection factors
as appropriate for the specific concession contract. The NPS will
consider adding to existing policy guidance some of these topics to
remind those who develop prospectuses of the value of these ideas.
27. Comment: The NPS received comments asking the NPS to provide
that certain commitments would receive additional points such as
favoring minority or women-owned businesses or specific nonprofit
organizations.
NPS Response: The current regulatory language in Sec. 51.17(b)(2)
provides direction in this regard.
28. Comment: Several commenters stated the NPS should include
requirements in the regulations to explain the allocation of points in
each
[[Page 90110]]
prospectus and how we determined the minimum franchise fee.
NPS Response: The NPS thinks the existing structure of proposal
packages, which identify the NPS's objectives for protecting,
conserving and preserving park resources and of providing necessary and
appropriate visitor services at reasonable rates, currently discloses
this reasoning. The NPS, however, will review existing policy guidance
and consider whether we need to develop additional guidance on these
topics considering the changes to the scoring as reflected in the new
regulatory language. In addition, in Proposed Change # 8, the NPS has
provided additional information on how it determines the minimum
franchise fee.
29. Comment: The NPS received a variety of comments suggesting
additional process changes or guidance topics not directly related to
the revision of scoring in the proposed rules. Those topics include
making sure page limitations reflect the relative scoring weights among
subfactors, having less restrictive operating plans to provide more
opportunity for creative proposals, provide more detailed debriefing
opportunities, exercise better contract management to enforce
commitments made in proposals, and recognition of concessioners working
with certain nonprofit organizations.
NPS Response: The NPS will consider these when reviewing existing
guidance.
Definition of Major Rehabilitation
30. Comment: Several commenters did not support the change in the
definition of major rehabilitation and proposed the existing definition
should be retained. One of these commenters suggested the change in
definition would lead to more LSI credit for maintenance that should
have been routine, that the concessioner will delay and bundle projects
in order to achieve more LSI at the lower threshold, and stated there
is no evidence that franchise fees will be increased under the reduced
threshold. A commenter suggested that the options presented all
transfer costs to the NPS.
NPS Response: NPS disagrees with these comments. As outlined in the
preamble, the NPS accounts for LSI-eligible projects through the
prospectus development process and considers these investments in the
franchise fee analysis for the contract. The NPS has and will maintain
procedures to approve facility improvement projects, monitor
maintenance and component renewal needs, and other activities to ensure
LSI-eligible projects are conducted in a timely manner and avoid
unplanned LSI-eligible events.
31. Comment: One commenter suggested that it should be explicitly
stated that concessioners are responsible for maintenance and that
clear standards should be set for maintenance and LSI eligibility.
NPS Response: NPS declines to include a statement in the rule
regarding maintenance responsibilities as those responsibilities are
clearly defined in the standard concession contract. NPS already has
standards for maintenance and LSI eligibility in the standard
concession contract and policy but will review its policy and update as
necessary.
32. Comment: One commenter recommended that NPS remove the term
``comprehensive'' from the definition of major rehabilitation in
Section 51.51 because existing criteria in the regulation make clear
that LSI applies only where the investment is substantial and adding
the undefined term ``comprehensive'' appears unnecessary and risks
confusing the standard.
NPS Response: NPS agrees that the term ``comprehensive'' is vague
and an unnecessary modification of the term ``major rehabilitation''
and therefore has been removed from the rule. A major rehabilitation is
a planned rehabilitation of an existing structure that will either
enhance the property's overall value, prolong its useful life, or adapt
it to new uses and therefore could involve a number of separate planned
actions that collectively and in combination are a major rehabilitation
that benefits the subject structure.
33. Comment: Several commenters recommended additional
modifications to the definition of major rehabilitation projects
eligible for LSI. Commenters proposed that a LSI-eligible major
rehabilitation should include ``any qualified capital investment
approved by the Director in advance and vital to the visitor health,
safety and enjoyment or the health and safety of NPS and concession
employees with the life expectancy of at least 30 years.'' Commenters
also proposed that a LSI-eligible major rehabilitation should be any
``Capital Improvements as defined by Generally Accepted Accounting
Principles (GAAP) or . . . is a qualified capital investment approved
by the Director. . .''. The commenter separately indicated that the
criteria for what work on existing capital improvements can qualify for
LSI must incorporate the Congressional intent of ``capital
improvements,'' whether as defined under GAAP or some other commonly
used industry definition.
NPS Response: The NPS declines to incorporate these recommendations
as presented, but has included a more detailed definition of major
rehabilitations eligible for LSI to provide clarity and more closely
track industry standards. NPS has described why the use of GAAP is not
an appropriate standard for this purpose in the report titled 36 CFR
[part] 51 Concessions Contract Revisions Regulatory Impact Analysis
(RIA) and Initial Regulatory Flexibility Analysis (IRFA)'' that can be
accessed at <a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket ID: NPS-2020-0003.
Instead, the final rule defines an LSI-eligible major rehabilitation to
be a planned rehabilitation of an existing structure where the
construction cost exceeds thirty percent of the pre-rehabilitation
value of the structure and the work performed improves visitor health,
safety, and enjoyment or the health and safety of concessioner
employees and will either enhance the property's overall value, prolong
its useful life, or adapt it to new uses. The NPS selected the 30%
threshold through industry research, specifically the International
Facility Management Association, and the requirement that the work
``either enhance the property's overall value, prolong its useful life,
or adapt it to new uses'' relies on common industry understanding of
the term ``capital improvement.'' The NPS declines to include projects
for NPS employee safety in the definition of LSI-eligible major
rehabilitations since projects for that purpose are not specifically
relevant to concession contracts. NPS does not include a 30-year life
expectancy condition for qualifying major rehabilitations but does
include that the work must either enhance the property's overall value,
prolong its useful life, or adapt it to new uses.
34. Comment: One commenter suggested the proposed changes to the
LSI eligibility threshold should apply to existing contracts and not
only new contracts.
NPS Response: NPS declines this recommendation. NPS will not apply
changes to the LSI eligibility to existing contracts as changing the
LSI structure would change the financial terms of the concession
contract and would be a material change to the opportunity that was
initially solicited.
35. Comment: One commenter suggested that the NPS allow LSI for
employee housing for concessioners or for the housing of both NPS and
concessioner employees.
NPS Response: No change is needed to the rule. Concessioners may
already obtain LSI for capital improvements for
[[Page 90111]]
employee housing where it is determined to be necessary during the
prospectus process. However, a concessioner cannot build dedicated NPS-
employee housing under a concession contract as such capital
improvements are not a commercial visitor service.
36. Comment: One commenter proposed that the criteria for defining
fixtures be modified through policy.
NPS Response: NPS is not taking any action in the rule but may
consider this recommendation if appropriate in policy as suggested.
37. Comment: One commenter encouraged the NPS to use the
alternative method formula (aka straight-line depreciation) allowed for
contracts where LSI is estimated to exceed $10 Million.
NPS Response: The NPS already uses this formula where the NPS
determines it is appropriate.
38. Comment: One commenter suggested that NPS allow concessioners
to negotiate third party agreements that provide the concessioner with
reimbursement rights that survive both during and after the length of
the concession contract. For example, a ferry concessioner may
negotiate with the third party for the right to recover a docking fee
for use of the constructed facility over a certain number of years,
extending beyond the end of the concession contract, as well as a
provision for an incoming concessioner to buy out that right. While the
NPS would not confer these rights to the concessioner, NPS would allow
these agreements, and would have to disclose them to a new incoming
concessioner. The commenter suggested that allowing concessioners a
better third-party reimbursement approach could incentivize and
encourage even more essential and complementary projects--dock and dock
repairs, seawalls, roadways, parking, lighting, shelters--that greatly
improve visitor services for the park.
NPS Response: NPS is not taking any action in the rule but may
consider this recommendation if appropriate in policy as suggested.
There is nothing currently in the regulation that requires NPS approval
of these third-party arrangements; however, when the NPS determines
that third-party capital investment could potentially be required, the
NPS takes this investment into consideration when determining the
franchise fee for the contract.
Term of Concession Contracts
Most commenters supported the proposed changes to Sec. 51.73 that
primarily set out circumstances when the NPS may add additional
operating time to a concession contract without invoking the extension
authority of Sec. 51.23 to avoid an interruption of visitor services.
When reviewing the proposed changes to the rule, the NPS noticed an
error in Sec. 51.73(a) in the following sentence: ``The Director will
issue a contract with a term longer than 10 years when the Director
determines that the contract terms and conditions, including but not
limited to the required construction of capital improvements or other
potential investments related to providing both required and authorized
services, warrant a longer term (emphasis added).'' To clarify, when
developing the financial analysis for a new concession contract, the
NPS analyzes the financial profile of providing the required visitor
services but not the authorized visitor services as a concessioner may
choose not to offer the authorized visitor services. Consequently, the
final rule deletes the italicized words in the quoted language above to
accurately reflect the financial requirements of the new contract.
39. Comment: Several commenters wanted the NPS to retain the phrase
``should be as short as prudent'' in Sec. 51.73(a), stating the phrase
reinforced Congressional intent to support competition for concession
contracts.
NPS Response: The proposed rule deleted the phrase ``should be as
short as is prudent'' from Sec. 51.73(a). The phrase was not
reflective of the statutory requirements, as the language of the 1998
Act expresses no preference for the shortest possible term.
40. Comment: One commenter wanted the NPS to delete the phrase
``years (unless extended in accordance with this part)'' from the end
of the first sentence of Sec. 51.73(a) asserting it was inconsistent
with Congress limiting the length of concession contracts to 20 years.
NPS Response: The NPS declines to make that change. The subject
phrase appears in the existing regulation, recognizing that the
authority under Sec. 51.23 to extend contracts to avoid an
interruption of visitor services applies to concession contract no
matter the length of the term.
41. Comment: The proposed language for Sec. 51.73 (b) appeared to
create confusion among commenters and may not have accurately reflected
the NPS's intent for the two situations for option terms.
NPS Response: The NPS has revised the language to clarify these
provisions. The first situation provides that the NPS may include
contract terms that allow a concessioner to have additional option
years for meeting NPS-defined performance criteria, which includes
evaluation ratings criteria (the NPS refers to this as the performance
option). The second situation provides that the Director (outside the
express terms of a concession contract) may provide a concessioner
additional operating terms for substantial interruption in operations
(the NPS refers to this as the interruption option). For the
performance option, the NPS would develop opportunities for new
concession contracts providing additional operating years if the
concessioner performs at a defined evaluation level and meets other
performance metrics (for example, occupancy during shoulder season or
visitor satisfaction scores). The NPS would describe those performance
metrics in the draft contract included in a prospectus to reflect the
NPS's priorities for that operation. The NPS will develop additional
guidance on this process.
42. Comment: Some commenters expressed concern with the timing of
exercising performance options.
NPS Response: The NPS understands the issues with timing and the
prospectus process. The NPS has used this in one current contract,
which set out the time by which the Director must determine the
concessioner has met the performance criteria and the time in which the
concessioner must agree to exercise the option. That contract also had
provisions for continued levels of performance after exercise of the
option to support continued successful operations. The timing
recognizes the need for the NPS to commence prospectus development for
a new contract at a certain point should the concessioner not achieve
the performance criteria or decide to not exercise the option for
additional time.
For the interruption option, the Director would exercise his or her
discretion to amend an existing unexpired contract to provide
additional operating time when events outside the control of the
concessioner cause a substantial interruption of or change to
operations. This ability of the Director to take such action does not
need to be an express part of a concession contract and is an exercise
of the Director's discretion and authority under the 1998 Act.
The NPS added language clarifying that both options are subject to
the statutory requirement that concessions contracts, including
options, are limited to terms of 20 years. One commenter wanted that
limitation struck from the regulation, but the NPS does not find the
statutory authority to do so. Other commenters urged the NPS to limit
the
[[Page 90112]]
length of performance options and one suggested a limit of three years
like contract extensions. The NPS agrees and has included language for
such limitation, thereby adopting for option years Congress' expressed
preference of a three-year maximum when it comes to increasing the
length of time a concessioner may provide visitor services.
43. Comment: Several commenters asked for clarification surrounding
the issue of ``favorable annual ratings'' for performance options as
used in the proposed rules. Several commenters asked the NPS to define
``favorable.''
NPS Response: The NPS has a comprehensive concessioner evaluation
system that has the following levels of ratings: superior,
satisfactory, marginal, and unsatisfactory. Just a few years ago, the
superior level did not exist, but was added as a matter of guidance.
NPS believes it important to retain the flexibility to adjust how we
evaluate concession operations and describe performance levels as a
matter of guidance and not of regulation. At this time, a favorable
rating would be at the satisfactory or superior level.
44. Comment: Several commenters objected to the requirement of a
favorable annual rating for every year of the contract citing issues
with the NPS's evaluation system and subjectivity of park managers.
Some commenters wanted the NPS to eliminate any requirement regarding
evaluation ratings.
NPS Response: NPS agrees that a favorable rating, which documents
that a concessioner is meeting the terms of the concession contract,
should not be required for every year of the contract but otherwise
disagrees with those comments. Generally, a favorable rating indicates
that a concessioner is meeting the terms of the concession contract,
which seems a minimum expectation, but an unusual instance of poor
performance should not be used to frustrate the award of additional
operating time where performance otherwise justifies such an award.
Rather than define the requirement in the regulation, however, the NPS
proposes to define all performance requirements in the individual
contracts, including the operational goals the concessioner must meet
and the evaluation ratings the concessioner must achieve.
45. Comment: NPS received one comment suggesting the rule authorize
amending a contract to provide an additional operating term for new or
unanticipated mid-contract investments.
NPS Response: NPS declines to include this in the final rule as it
has not evaluated the potential economic consequences of such a change.
46. Comment: NPS received a comment suggesting additional actions
NPS could take to encourage high performance from concessioners such as
reducing franchise fees in later years of a contract.
NPS Response: NPS did not analyze the consequences of reducing
franchise fees in later years of contracts and does not understand the
economic consequences of such action, especially as it would affect the
NPS's ability to plan for use of franchise fees. Also, NPS did not
include such item in the proposed rule and receive public comment on
such action.
47. Comment: A commenter suggested the NPS solicit additional ideas
from concessioners to incentivize their performance and earn
performance options.
NPS Response: The NPS declines to add such process to the
regulation but may consider it in guidance. The NPS intends to use
performance options to meet its goals. The NPS is not sure if meeting
the concessioners' goals would meet the NPS's objectives and needs to
evaluate such an idea further. The NPS also received comments raising
questions about how we would implement performance options when a park
has multiple operators providing the same or similar service under a
group of contracts. The NPS will address these situations on a case by
case basis as it develops prospectuses using such options.
48. Comment: Several commenters stated the NPS should not shorten
the ``base term'' in order to provide for options.
NPS Response: The NPS interprets ``base term'' as meaning ten years
and thinks the comment means that contracts with performance options
should have an initial term of ten years before options. The NPS
appreciates this perspective, but will not add language to the
regulation to include such a provision. The NPS will consider the
concern in developing guidance for performance options. It is not the
intent of the rule to have the availability of performance options
affect the base term in any way. The base term must reflect the
financial requirements of the contract. Several commenters stated the
concessioner should be able to refuse to exercise an option. The final
rule provides that it is the concessioner that would exercise the
option once the Director has determined the concessioner has met the
performance criteria. An allowance to exercise an option includes the
ability to decline the exercise of the option.
49. Comment: For interruption options, one commenter stated the
rule should specify that the NPS can require no other contract changes
unless the concessioner agrees.
NPS Response: The NPS chooses not to include such a restriction in
the regulation, believing that it could unduly constrain the Director's
discretion.
50. Comment: The NPS received comments on other incentives it could
offer to enhance concessioner performance as well as encouragement to
increase the length of contracts.
NPS Response: The NPS appreciates these comments. As for contract
length, the NPS again reminds commenters that Congress defined the
maximum contract term as 20 years and that stated contracts generally
should be ten years or less.
New or Additional Services
Many comments supported the concept of adding new or additional
services to existing concession contracts. The NPS received suggested
revisions from industry trade groups and some individual concessioners.
51. Comment: For Sec. 51.76(a), one commenter suggested revising
the regulatory language to specifically allow for adjustments to
existing services that could be provided by changes to the operating
plan (which is an exhibit to and part of a concession contract). That
commenter proposed using a metric measured against existing gross
receipts as a method for determining when new or additional services
could simply be added to a contract's operating plan by a
superintendent or must be added to the main body of the contract
through a formal amendment executed by the Director.
NPS Response: The NPS declines to make this change as it overly
complicates current practices not subject to a specific rule, such as
expanding operating hours for a store or extending operating seasons
for a lodging facility.
52. Comment: A commenter proposed to add criteria for consideration
involving contribution to visitor enjoyment and understanding of the
System unit and the National Park System.
NPS Response: The NPS-proposed language in Sec. 51.76(a) is nearly
identical to the statutory language in the Centennial Act, and the NPS
declines to add to the statutory criteria. Additionally, the suggested
supplemental criteria, enhancing visitor experiences and contributing
to visitor understanding and appreciation of a
[[Page 90113]]
unit, already are part of the necessary and appropriate determination.
53. Comment: A commenter proposed rule language that would require
keeping the franchise fee at the existing level after adding new or
additional visitor services.
NPS Response: The NPS declines to make that change. Although rare,
some changes could provide substantial revenue gains to the
concessioner without significant added expense. For example, increasing
the number of passengers a concessioner could transport on a vessel
creates little additional expense but adds considerable additional
revenue on a passenger by passenger basis. The NPS sees no reason to
prohibit the NPS from sharing the financial benefits of such a change.
54. Comment: A commenter proposed a sample list of actions that
could be considered new or additional services.
NPS Response: The NPS included a list of such actions in the rule.
55. Comment: Several commenters requested a provision prohibiting
adding new and additional services to a concession contract if other
concessioners already provide the service in the System unit.
NPS Response: 36 CFR 51.77 provides ``Concession contracts will not
provide in any manner an exclusive right to provide all or certain
types of visitor services in a park area. The Director may limit the
number of concession contracts to be awarded for the conduct of visitor
services in a particular park area in furtherance of the purposes
described in this [Part 51].'' The NPS thinks that these commenters
raised a valid concern, and Sec. 51.77 allows recognizing such
concern. Consequently, the NPS has added language stating the Director
should consider whether other commercial operators in the park area
already provide the services adequately. Although the NPS received no
comments on the proposed subsection (b), we deleted it because it
implemented a provision in the 1998 Act replaced in the Centennial Act.
Setting Franchise Fees
56. Comment: Several commenters supported the proposed changes to
the rule clarifying how the NPS sets the franchise fee.
NPS Response: No proposed action or response is required.
57. Comment: One commenter indicated that the NPS should expand the
scope of the data it uses to determine the minimum franchise fee beyond
``relevant hospitality industry data'' to include outdoor recreation
industry data.
NPS Response: The NPS currently uses such data and has incorporated
such revisions to the rule.
58. Comment: One commenter suggested that the NPS should use
current practices to establish the minimum acceptable franchise fee and
then reduce that minimum franchise fee by 25% when posting that minimum
franchise fee in the prospectus. The commenter suggested that it would
allow offerors to compete as Congress intended by letting offerors
propose what they believe is the best balance of efforts to protect
park resources and provide quality visitor services (which are the
primary selection criteria) along with the most competitive fee.
NPS Response: After reviewing comments and internal deliberation,
NPS will provide an alternative to its current practice of setting a
minimum franchise fee. This alternative will be to set a ``prospectus
franchise fee'' and allow offerors to either propose a higher franchise
fee, or a lower franchise fee when combined with enhanced or higher
quality visitor services offerings that exceed prospectus requirements,
as allowed in the 1998 Act.
59. Comment: Several comments indicated NPS should expand on data
provided in the prospectus to include additional hospitality
statistics, profitability measures, return on investment assumptions or
more thoroughly describe the steps associated with calculating the
franchise fee.
NPS Response: The NPS declines this suggestion. NPS indicated in
the proposed rule that it would provide the basis for its franchise fee
analysis and retains this proposal in the final rule. However, NPS will
not expand the information provided beyond this basis because NPS will
continue to expect offerors to complete their own due diligence to
present their understanding of the business opportunity.
60. Comment: One commenter recommends NPS adopt a policy of setting
minimum franchise fees below ``breakeven,'' to maintain essential
flexibility and to guard against bids that are pre-planned to reduce
the performance levels. The same commenter suggested that the NPS set
the minimum franchise fee to balance requirements, risks, costs and
potential challenges throughout the contract.
NPS Response: The NPS declines this suggestion. Any franchise fee
set by the NPS is determined in accordance with the 1998 Act,
considering the probable value to the concessioner of the privileges
granted by the particular contract involved based upon a reasonable
opportunity for net profit in relation to capital invested and the
obligations of the contract. Artificially lowering the fee below this
determination would be contrary to this statuary requirement. However,
the NPS has included in the rule a new, alternative means to set the
franchise fee in the contract. This alternative approach allows the NPS
to use a ``prospectus franchise fee,'' which is still based upon the
probable value determination mentioned above, but also allows offerors
to offer a higher franchise fee, as they have traditionally done, or a
lower franchise fee when combined with enhanced or higher quality
visitor service offerings that exceed the requirements of the
prospectus. The NPS also retains the current means to establish a
minimum acceptable franchise fee when the NPS determines using a
``prospectus franchise fee'' is inappropriate for the particular
concession opportunity.
61. Comment: One commenter provided a statement that references
uniformity in franchise fees in situations where there are multiple
contracts for outfitting, guiding, river running or similar services.
This NPS assumes this is in reference to Sec. 411 of the 1998 Act (54
U.S.C. 101921). The commenter also provided a statement that suggests
that this would discourage bidding up of franchise fees.
NPS Response: No proposed action or response to the commenter's
statements is required. NPS abides by the terms of the 1998 Act when
setting the minimum franchise fee for these types of contracts.
Special Accounts
62. Comment: All commenters on these changes supported replacing
the term ``Repair and Maintenance Reserve'' with ``Component Renewal
Reserve.''
NPS Response: None.
63. Comment: A few commenters suggested that the NPS should
consistently set out a description of CRR-eligible projects in the
prospectus to help offerors more accurately assess and take into
account the scope and cost of these activities.
NPS Response: The NPS agrees with the commenters, and the final
rule requires that the timing and estimated costs of anticipated
component renewal projects be identified in the contract.
64. Comment: Several commenters suggested changes to how the NPS
distributes any CRR that remains at the end of the contract, which is
currently returned to the park as franchise fees. One commenter
suggested NPS issue administrative guidelines that would allow
concessioners to share in any excess funds being left in the CRR fund.
[[Page 90114]]
The commenter indicated this would incentivize concessioners to seek
cost savings when undertaking CRR-eligible projects. The same
concessioner suggested the NPS include in the rule, a process for
funding unanticipated CRR costs that arise during the term of the
contract through an addition to the special account resulting from
either a reduction in franchise fee rate or generated from other
revenues, such as surcharges on concessioner-offered goods and
services. A second commenter stated that the funds left in the reserve
should be returned to the park unit as something other than franchise
fees because the commenter believes that returning the funds as
franchise fees allows the NPS to spend the funds for park unit needs
that are not concession related.
NPS Response: The NPS disagrees with these recommendations. In
regard to the NPS adjusting the franchise fee or otherwise funding the
concessioner for unanticipated CRR projects, the component renewal
reserve provides a mechanism for a concessioner to reserve monies to
fund component renewal projects. However, concessioner obligations to
maintain assigned concession facilities are not limited to the monies
in the component renewal reserve. Additionally, franchise fee changes,
including for the purpose of adjusting the component renewal reserve,
cannot occur during the term of the contract unless it is in accordance
with the franchise fee reconsideration procedures in the 1998 Act. In
regard to allowing concessioners to retain a portion of the unspent CRR
that remains at the end of the contract, this could create an incentive
for the concessioner to avoid spending the CRR, not just be more
efficient in their expenditure. Historically, the balance of the
reserve was returned to the concessioner as has been recommended, and
the NPS found these funds in fact, were often not expended when
appropriate and facilities were inadequately maintained. Further, the
concessioner has already benefited from the CRR as the reserve
percentage is accounted for in the probable value calculation used to
set the franchise fee. Regarding CRR funds that might be returned to
the NPS as a franchise fee, the NPS has policies that prioritize use of
franchise fees paid to the NPS for concession-related purposes such as
prospectus development, saving for LSI payment and concession program
management before any other park unit needs. Furthermore, to avoid the
need to convert such component renewal reserves, NPS has in place and
continues to develop processes including periodic reserve audits, to
ensure that reserve funds are used during the term of the contract to
address appropriate component renewal projects and avoid deferred
maintenance for concession facilities.
65. Comment: One commenter suggested that concessioners should be
able to ``deposit'' additional reserve funds during the contract term
to address projects that need more funding than what is available in
the reserve.
NPS Response: The NPS declines to address this in the rule. The NPS
will consider the proposal for forward funding to address such needs as
a change in policy and/or contract terms.
66. Comment: One commenter recommends that the NPS include, as part
of the solicitation, a prospectus selection factor to gain ``points''
for proposals that include, as a commitment, an increase in the reserve
percentage.
NPS Response: NPS declines this recommendation. Concessioners are
responsible for all maintenance regardless of the amount of funds that
are available in the CRR. Offerors should not be given extra points
just to meet what is a contractual obligation because they reserved
such funds. Concessioners may set aside additional reserves outside the
CRR as an internal business practice.
Concessioner Rates
67. Comment: Several commenters expressed concern regarding the
change to the rule that would emphasize competitive market pricing,
indicating that prices to visitors will rise due to the change and
visitors will be priced out of staying in parks. A different commenter
suggested that it is the concessioner's goal to set prices as high as
possible, not considering the diversity of park visitors from a variety
of income levels. That commenter stated visitors should pay reasonable
rates and concessioners should help encourage all visitors to enjoy our
national parks and the services and products concessioners provide,
implying perhaps that the rule changes would prevent this from
happening. Another commenter provided statements that it is not clear
on how competitive market declaration pricing will impact rates (some
could be higher, others, lower).
NPS Response: The NPS disagrees with these comments. The changes in
the rule to provide in most cases for competitive market declaration
(``CMD'') pricing implement rather than depart from statutory
requirements. The final rule clarifies the NPS's commitment to ensuring
that rates and prices are set in accordance with market forces to the
maximum extent possible, as the1998 Act requires; that is, rates are
reasonable and appropriate, and the process for approving rates is as
unburdensome to the concessioner as possible. CMD represents the best
means to meet these objectives. As noted in the preamble, the NPS
recognizes there may be situations where market forces are not adequate
for a CMD to provide for reasonable and appropriate rates. The NPS will
use other rate approval methods such as direct comparability in those
circumstances. With regard to meeting the needs of a diversity of
visitors, the NPS strives to offer a variety of service levels, thereby
providing options to account for diverse preferences. For example,
dependent upon the size of park, there may be upscale to rustic (e.g.
camping) lodging options, and food and beverage options from fast
casual to formal sit-down restaurants offering a range of price points
as dictated by the market.
68. Comment: One commenter suggested the revisions to the rule
would curtail the ability of the Director to approve rates, that they
would not be effective because some parks are located in remote
locations where competitive markets are scarce and that this market
emphasis would place significant burden on the NPS to prove the
inadequacy of market forces.
NPS Response: The NPS disagrees with this comment. The burden upon
the NPS to complete rate approvals has not changed; the NPS remains
responsible for determining whether to use CMD or the appropriate
alternative rate method, to monitor the operations to ensure the rate
method continues to be appropriate, to approve rates when CMD is not
being used, and monitor rates. These features of the rate
administration process remain unchanged. The rule reinforces that CMD
is the preferred method and should be used unless rates using this
method would not be reasonable and appropriate. The NPS has, however,
defined specific timelines that will apply in order to ensure it takes
action to review and approve rate requests in a reasonable timeframe.
69. Comment: One commenter suggested the rule should include a
statement to address improved accessibility as a requirement for new
contracts or modified pricing.
NPS Response: The NPS disagrees with this comment. Concessioners,
as expressly set forth in their contracts, are already required to
provide accessible services as operational and facility requirements in
accordance with statutes, regulations, and NPS policy.
[[Page 90115]]
Additionally, the requirement for accessibility is not directly
relevant to prices and rates.
70. Comment: One commenter suggested the NPS should consult with
the Interior Business Center (IBC) or an alternative external source
(i.e., hospitality consultants) as part of its rate review process.
NPS Response: The NPS declines to add this requirement to the rule.
The IBC does not have the hospitality expertise to complete such
reviews. The NPS currently uses trained concession specialists to
complete analyses to review rate requests and already uses its
hospitality consultants as needed to provide assistance, particularly
during the prospectus development process and when there are especially
complex issues. The NPS will continue these practices. The NPS also
notes that involvement by third parties in all circumstances would
inhibit the ability for a timely response to concessioners.
71. Comment: Numerous commenters supported the change in the rule
that requires the NPS to codify and reduce the current policy-defined
response time for rate requests from 45 to 30 days when possible. Many
commenters suggested that additional steps should be taken (either
independently or in some combination) such as:
(a) Notifying concessioners within a certain window of time if a
request is not ``complete and timely,'' no later than 10 days after
receipt of request;
(b) Removing the ``when possible'' qualifier that describes the 30-
day approval window;
(c) De facto approval of rates in 45 days without NPS action;
(d) That NPS notify a concessioner within 15 days of receipt of a
rate request if additional information to support the rate request is
necessary; and
(e) Defining what constitutes a ``response'' from NPS.
NPS Response: The NPS agrees that any rate requests should be
responded to in a substantive and timely manner. To that end, NPS has
established in the final rule detailed timelines and procedures the NPS
will follow in responding to rate requests. These timelines will be met
unless there are extraordinary circumstances. In the event that the
timeline is not met and there are no extraordinary circumstances, the
concessioner will be able to charge the requested rates until the
Director makes a rate approval determination without being subject to
retroactive adjustment.
72. Comment: Numerous commenters had varying comments on rate
structures and CMD. Most commenters supported using CMD but had
different suggestions surrounding its application, either to policy or
the rule itself. For example, one commenter suggested the NPS should
eliminate clarifying examples provided in the preamble to the rule on
when CMD might not apply because there is not a competitive market. A
commenter wanted the rule to state that a comparability study is not
required to establish CMD reasonable rates. Another commenter suggested
that rate setting for comparability should be based on ``unbundled
rates'' (likely referring to situations such as a tour service where
the tour price may have associated fees attached such as for an audio-
tour provided through another party) and that such situations should be
identified in the rule as a ``due consideration'' factor in 51.82 (b).
The same commenter also suggested changes to the rule to create
distinctions between what it calls ``market rate'' (the highest
visitors show they are willing to pay), ``direct price'' (stated as
lower than market price) and ``final'' prices paid by the consumer. One
commenter expressed concern that CMD rates could result in increased
franchise fees to be paid to the NPS without accounting for the trend
in increasing expenses to the concessioner and that additional
requirements could be imposed if NPS changes the rate approval method
during the term of the contract.
NPS Response: The NPS may consider these comments if appropriate,
when it establishes or adjusts policy for rate administration to
implement this regulation, but the NPS declines to address these
recommendations in the rule.
73. Comment: A commenter recommended that NPS should provide
national permission to use an anticipated rate method where competitive
market declaration is not utilized.
NPS Response: The NPS declines to include this recommendation in
the rule. The NPS already allows advanced rates as a matter of policy
where appropriate and will continue this practice. The NPS has,
however, included in the rule specific advance rate procedures for the
time after a concessioner has submitted a complete rate request but
before the NPS has made a decision approving or disapproving the
request to ensure that the concessioner can take appropriate steps to
advertise and take reservations during this period.
Timing of Assigning Contracts
74. Comment: A number of commenters disagreed with the proposed
restriction on assigning concession contracts. Most of these commenters
focused on the unique circumstances of concessioners holding qualified
contracts and, thus, holding a right of preference to a new concession
contract. Commenters asserted that the combination of needing to
operate satisfactorily for two years under an existing contract and a
24-month delay in submitting a request to transfer the contract to a
new operator unfairly restricts the transfer of such contracts.
NPS Response: Although the NPS thinks it is reasonable to require
24 months of operations under a concession contract before submitting a
request to transfer the contract, we have decided to withdraw this
proposed change in consideration of the many comments criticizing this
prohibition as too restrictive. The NPS will develop policy and
procedures, however, that require the authority approving requests for
assignments of contracts to carefully scrutinize the ability of the
purported new concessioner to provide the required services based on
that entity's specific experience and financial ability to carry out
the terms of the concession contract.
Compliance With Other Laws, Executive Orders, and Department Policy
Regulatory Planning and Review (Executive Orders 12866, 13563, and
14094)
Executive Order 12866 provides that the Office of Information and
Regulatory Affairs (OIRA) in the Office of Management and Budget will
review all significant rules. OIRA has determined that this rule is
significant.
Executive Order 14094 amends Executive Order 12866 and reaffirms
the principles of Executive Order 12866 and Executive Order 13563 and
states that regulatory analysis should facilitate agency efforts to
develop regulations that serve the public interest, advance statutory
objectives, and be consistent with Executive Order 12866, Executive
Order 13563, and the Presidential Memorandum of January 20, 2021
(Modernizing Regulatory Review). Regulatory analysis, as practicable
and appropriate, shall recognize distributive impacts and equity, to
the extent permitted by law.
Executive Order 13563 reaffirms the principles of Executive Order
12866 while calling for improvements in the nation's regulatory system
to promote predictability, to reduce uncertainty, and to use the best,
most innovative, and least burdensome tools for achieving regulatory
ends. The Executive Order directs agencies to
[[Page 90116]]
consider regulatory approaches that reduce burdens and maintain
flexibility and freedom of choice for the public where these approaches
are relevant, feasible, and consistent with regulatory objectives.
Executive Order 13563 emphasizes further that agencies must base
regulations on the best available science and the rulemaking process
must allow for public participation and an open exchange of ideas. The
NPS has developed this rule in a manner consistent with these
requirements. The potential costs and benefits of this rule were
assessed by Industrial Economics, Incorporated (IEc), on behalf of the
NPS, in a Regulatory Impact Analysis (prepared for the proposed rule)
and associated Memorandum (assessing the costs and benefits of the
changes from the proposed rule in the final rule) that can be accessed
at <a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket ID: NPS-2020-0003.
Regulatory Flexibility Act (RFA) and Small Business Regulatory
Enforcement Fairness Act (SBREFA)
The head of this agency certifies that this rule will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended
by the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA; 5 U.S.C. 801 et seq.). An Initial Regulatory Flexibility
Analysis (IRFA) was prepared pursuant to the Regulatory Flexibility Act
(RFA) and the Small Business Regulatory Enforcement Fairness Act
(SBREFA). The analysis is available in the report prepared by
Industrial Economics, Incorporated (IEc), on behalf of the NPS,
entitled ``36 CFR [part] 51 Concessions Contract Revisions Regulatory
Impact Analysis (RIA) and Initial Regulatory Flexibility Analysis
(IRFA)'' that can be accessed at <a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket
ID: NPS-2020-0003--specifically, Chapter 5 of that report. The analysis
in the IRFA concluded that the potential impact on small concessioners
is likely to be positive. The IRFA estimated that the majority (96%) of
the entities that have concession contracts are small businesses and
that this makeup is likely to be similar in the future. Furthermore,
the IRFA conducted a qualitative analysis to determine the likely
impacts of the rule on concessioners that focused on key changes to the
rule related to LSI, rates and franchise fees. While the NPS lacks the
ability to quantify the impact, the IRFA found that the impacts are
likely to be beneficial to concessioners in general, without any
particular bias toward small or large businesses. Since the majority of
contracts are held by small businesses, the IRFA concluded that the
impacts to small businesses would therefore be positive.
The IRFA stated that, due to uncertainties associated with
quantifying the impact on small entities, the ``potential exists for
the proposed rule to result in a significant beneficial impact on a
substantial number of small entities.'' Based upon a further review of
the impacts described in the IRFA, the NPS now believes the beneficial
impact on small entities will not be significant and will not affect a
substantial number of small entities. This certification is based upon
the following statements and upon the analysis contained in a
Memorandum prepared by IEc that concludes that the small entities
holding concession contracts that would be affected by this rule
represent less than 0.1 percent of the small entities providing similar
services in the United States. This Memorandum is available on <a href="https://www.regulations.gov">https://www.regulations.gov</a> in Docket ID: NPS-2020-0003.
The IRFA estimated the annual transfer payments associated with
changes in the eligibility threshold for LSI in the rule as $4.2
million from concessioners to the NPS in increased franchise fees and
up to $4.2 million from NPS to concessioners in the form of LSI buy
downs for a total net financial impact of zero to the concessioner
community. There are no changes between the proposed and final rule
that the NPS believes would change this analysis.
The IRFA identified that the implementation of market-based pricing
in the rule could result in transfers of $54 million in franchise fee
revenue from concessioners to the NPS. As stated in the IRFA, an
increase in rates resulting from the rule, without any change in
service or amenities, would be reflected as an increase in revenue to
the concessioner without any increase in expense. Because the base
franchise fee as determined using the current rate approval methods
(without enhanced market-based pricing) already provides a reasonable
opportunity for the concessioner, the NPS assumed in the IRFA that all
of the additional profit would pass-through flow to the government in
the form of the $54 million in franchise fees for a total net financial
impact of zero to the concessioner community. There are no changes
between the proposed and final rule that the NPS believes would change
this analysis.
One change was made to the final rule in response to public
comments that required further consideration relative to potential
impacts to the concessioner community. That change is in Sec. 51.78,
Will a concession contract require a franchise fee and will the
franchise fee be subject to adjustment? The final rule provides as an
alternative, the ability for the NPS to provide in the prospectus, a
proposed franchise fee based on the probable value determination in the
prospectus (``prospectus franchise fee''). The Offerors may bid either
(i) higher franchise fees or (ii) lower franchise fees in combination
with enhanced or higher quality service offerings that exceed
prospectus requirements. Any investment made by the concessioner to
provide enhanced or higher quality offerings is intended to be offset
by an adjustment in the franchise fee offered, such that the total net
financial impact to the concession community is estimated at zero.
Congressional Review Act (CRA)
This rule is not a major rule under 5 U.S.C. 804(2), the CRA. This
rule:
(a) Does not have an annual effect on the economy of $100 million
or more.
(b) Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions.
(c) Does not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S.-based enterprises to compete with foreign-based enterprises.
Unfunded Mandates Reform Act (UMRA)
This rule does not impose an unfunded mandate on State, local, or
Tribal governments or the private sector of more than $100 million per
year. The rule does not have a significant or unique effect on State,
local or Tribal governments or the private sector. This rule clarifies
NPS procedures and does not impose requirements on other agencies or
governments. A statement containing the information required by the
UMRA (2 U.S.C. 1531 et seq.) is not required.
Takings (Executive Order 12630)
This rule does not effect a taking of private property or otherwise
have takings implications under Executive Order 12630. A takings
implication assessment is not required.
Federalism (Executive Order 13132)
Under the criteria in section 1 of Executive Order 13132, the rule
does not have sufficient federalism implications to warrant the
preparation of a federalism summary impact
[[Page 90117]]
statement. A federalism summary impact statement is not required.
Civil Justice Reform (Executive Order 12988)
This rule complies with the requirements of Executive Order 12988.
This rule:
(a) Meets the criteria of section 3(a) requiring agencies to review
all regulations to eliminate errors and ambiguity and write them to
minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring agencies to
write all regulations in clear language and contain clear legal
standards.
Consultation With Indian Tribes (Executive Order 13175 and Department
Policy)
The Department of the Interior strives to strengthen its
government-to-government relationship with Indian Tribes through a
commitment to consultation with Indian Tribes and recognition of their
right to self-governance and Tribal sovereignty. The NPS has evaluated
this rule under the Department's consultation policy and under the
criteria in Executive Order 13175, and has determined that it has no
substantial direct effects on federally recognized Indian Tribes and
that consultation under the Department's Tribal consultation policy is
not required.
Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.)
This rule contains no new information collections. All information
collections require approval under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.). The NPS may not conduct or sponsor and you
are not required to respond to a collection of information unless it
displays a currently valid Office of Management and Budget (OMB)
control number.
National Environmental Policy Act (NEPA)
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. A detailed statement
under NEPA is not required. The NPS has determined the rule is
categorically excluded under 43 CFR 46.210(i) because it is
administrative, financial, legal, and technical in nature. In addition,
the environmental effects of this rule are too speculative to lend
themselves to meaningful analysis. NPS decisions to enter into
concession contracts will be subject to compliance with NEPA at the
time the contracts are executed. The NPS has determined that the rule
does not involve any of the extraordinary circumstances listed in 43
CFR 46.215 that would require further analysis under NEPA.
Effects on the Energy Supply (Executive Order 13211)
This rule is not a significant energy action under the definition
in Executive Order 13211; although the rule is significant under
Executive Order 12866, the rule is not likely to have a significant
adverse effect on the supply, distribution, or use of energy, and the
Administrator of OIRA has not otherwise designated the rule as a
significant energy action. A Statement of Energy Effects in not
required.
List of Subjects in 36 CFR Part 51
Commercial services, Government contracts, National parks, Visitor
services.
Signing Authority
The Assistant Secretary for Fish and Wildlife and Parks has
delegated authority to the Chief of Staff, Office of the Assistant
Secretary for Fish and Wildlife and Parks, to electronically sign this
document for purposes of publication in the Federal Register.
In consideration of the foregoing, the National Park Service is
amending 36 CFR part 51 as follows:
PART 51--CONCESSION CONTRACTS
0
1. The authority citation for part 51 is revised to read as follows:
Authority: 54 U.S.C. 101901-101926 and title IV of the National
Parks Omnibus Management Act of 1998 (Pub. L. 105-391).
0
2. Amend Sec. 51.4 by revising the section heading and paragraph (b)
and adding paragraphs (c) through (h) to read as follows:
Sec. 51.4 How will the Director invite the general public to apply
for the award of a concession contract and how will the Director
determine when to issue a prospectus for a new concession opportunity
where no prior concession services had been provided?
* * * * *
(b) Except as provided under Sec. 51.47 (which calls for a final
administrative decision on preferred offeror appeals prior to the
selection of the best proposal) the terms, conditions and
determinations of the prospectus and the terms and conditions of the
proposed concession contract as described in the prospectus, including,
without limitation, its minimum franchise fee, are not final until the
concession contract is awarded. The Director will not issue a new
prospectus for a concession contract earlier than eighteen months prior
to the expiration of a related existing contract except when the
Director determines it is necessary to provide additional time to
potential offerors, such as when additional time is needed to avoid
issuing a prospectus during a busy operating season or where potential
offerors must make significant financial commitments to meet the
requirements of the contract. This additional time should be as short
as prudent.
(c) The Director will issue a prospectus for a new concession
opportunity in a park area when the Director determines, in the
Director's discretion, that a new concession opportunity is necessary
and appropriate for public use and enjoyment of the park area and is
consistent to the highest practicable degree with the preservation and
conservation of the resources and values of the park area.
(d) The Director will establish procedures to solicit and consider
suggestions for new concession opportunities within park areas from the
public (including from potential concessioners) through the National
Park Service's planning processes for such opportunities as well as
through annual invitations for proposals for improving visitor
experiences through third-party providers. The Director shall fully
review all proposals received, provide a written evaluation for each
proposal, and make all proposals and completed evaluations available to
the public.
(e) In determining whether to issue a prospectus for a concession
contract to provide such new concession opportunities, the Director
will consider relevant factors including whether the suggested
concession opportunities are adequately provided within the park area
by other authorized commercial providers; the potential for augmented
resources for park area operations; the effects of the suggested
concession operations on the park area; the long-term viability of the
suggested concession opportunities; the innovative quality of the
suggestions; and the potential impacts on park area visitation and on
communities located near the park area.
(f) No preference to a concession contract shall be granted to a
party based on that party's having submitted a proposal for a new
concession opportunity described in this section. The Director,
however, may award a contract noncompetitively to such a party when
determined appropriate as described in Sec. 51.25.
(g) The Director may consider suggestions for new services as
[[Page 90118]]
additional services to be provided through an existing concession
contract as described in Sec. 51.76.
(h) Nothing in this section shall constrain the discretion of the
Director to solicit or consider suggestions for new concession
opportunities or collect other information that can be used by the
Director in connection with a new concession opportunity.
0
3. Revise Sec. 51.8 to read as follows:
Sec. 51.8 Where will the Director publish the notice of availability
of the prospectus?
The Director will publish notice of the availability of the
prospectus at least once in the System for Award Management (SAM) where
Federal business opportunities are electronically posted, or in a
similar publication if this site ceases to be used. The Director, if
determined appropriate, may also publish notices electronically on
websites including social media and in local or national newspapers or
trade magazines.
0
4. Amend Sec. 51.16 by revising paragraph (a) to read as follows:
Sec. 51.16 How will the Director evaluate proposals and select the
best one?
(a) The Director will apply the selection factors set forth in
Sec. 51.17 by assessing each timely proposal under each of the
selection factors on the basis of a narrative explanation, discussing
any subfactors when applicable. For each selection factor, the Director
will assign a score that reflects the determined merits of the proposal
under the applicable selection factor and in comparison to the other
proposals received, if any. The maximum aggregate score available for
all selection factors will be 40 points, and every selection factor
used must have a maximum score of one point or higher. Each selection
factor will be scored as identified in the prospectus, subject to the
following criteria:
(1) The maximum score assignable for the principal selection factor
described in Sec. 51.17(a)(5) will be less than the lowest maximum
score of the other principal selection factors described in Sec.
51.17(a) with a score of one point for agreeing to the prospectus
franchise fee (as defined in Sec. 51.78) or, when the Director
determines appropriate, the minimum acceptable franchise fee set forth
in the prospectus.
(2) The maximum score assignable for the secondary selection factor
set forth in Sec. 51.17(b)(1) will be less than the maximum score for
the principal selection factor described in Sec. 51.17(a)(5); and,
(3) The maximum scores assignable for any additional secondary
selection factors set forth in Sec. 51.17(b) will be such that the
maximum aggregate score assignable for all additional secondary
selection factors will be less than the maximum score for the principal
selection factor described in Sec. 51.17(a)(5).
* * * * *
0
5. Amend Sec. 51.17 by revising paragraph (b)(2) to read as follows:
Sec. 51.17 What are the selection factors?
* * * * *
(b) * * *
(2) Any other selection factors the Director may adopt in
furtherance of the purposes of this part, including, where appropriate
and otherwise permitted by law, the extent to which a proposal calls
for the employment of Indians (including Native Alaskans) and/or
involvement of businesses owned by Indians, Indian Tribes, Native
Alaskans, or minority or women-owned businesses in operations under the
proposed concession contract. When appropriate, the Director will
include a secondary selection factor requesting suggestions for new
services.
* * * * *
0
6. Amend Sec. 51.51 by:
0
a. Removing the word ``solely'' from the term ``Leasehold surrender
interest solely''; and
0
b. Revising the definition of the term ``Major rehabilitation''.
The revision reads as follows:
Sec. 51.51 What special terms must I know to understand leasehold
surrender interest?
* * * * *
Major rehabilitation means a planned rehabilitation of an existing
structure that the Director determines:
(1) The construction cost of which exceeds thirty percent of the
pre-rehabilitation value of the structure; and
(2) Improves visitor health, safety, and enjoyment or the health
and safety of concessioner employees and will either enhance the
property's overall value, prolong its useful life, or adapt it to new
uses.
* * * * *
0
7. Revise Sec. 51.73 to read as follows:
Sec. 51.73 What is the term of a concession contract?
(a) A concession contract will generally be awarded for a term of
10 years or less and may not have a term of more than 20 years (unless
extended in accordance with this part). The Director will issue a
contract with a term longer than 10 years when the Director determines
that the contract terms and conditions, including but not limited to
the required construction of capital improvements or other potential
investments related to providing required services, warrant a longer
term. It is the policy of the Director under these requirements that
the term of concession contracts should take into account the financial
requirements of the concession contract, resource protection, visitor
needs, and other factors the Director may deem appropriate.
(b) The Director may include in a concession contract, as
advertised in the applicable prospectus, an optional term or terms in
increments of at least one year and not to exceed three years in total,
where the total term of the contract, including all optional terms,
does not exceed 20 years. The Director shall specify in the contract
the performance criteria (including evaluation ratings) the
concessioner must meet to be eligible to exercise such option term or
terms. Such contract also shall provide that the concessioner may
exercise an optional term or terms only if the Director determines that
the concessioner has met the performance criteria defined in the
contract.
(c) When the Director determines, in his or her sole discretion,
that a substantial interruption of or change to operations due to
natural events or other reasons outside the control of the
concessioner, including but not limited to government-ordered
interruptions, warrants lengthening the original term of a concession
contract, the Director and the concessioner may amend the contract to
add the amount of time to the term of the contract deemed appropriate
by the Director, which in no case may be longer than three years and
where the total term of the contract, including any added time, may not
exceed 20 years.
0
8. Revise Sec. 51.76 to read as follows:
Sec. 51.76 May the Director amend a concession contract to provide
new or additional visitor services or grant a concessioner a
preferential right to provide new or additional visitor services?
(a) The Director may provide for new or additional services under
the annual operating plan of the concessioner or through a contract
amendment, as appropriate, where the Director determines the new or
additional services are necessary and appropriate for public use and
enjoyment of the park area in which they are located. New or additional
services must be consistent to the highest practicable degree with the
preservation and conservation of the resources and values of the park
area. Such new or additional services shall not represent a material
change to the required and authorized services as set
[[Page 90119]]
forth in the applicable prospectus or contract. Changes may include,
but are not limited to, extensions of seasons, operating hours and
increases in capacity limitations.
(b) When considering whether to amend the applicable terms of an
existing concession contract to provide new or additional services, the
Director should consider the benefit to the visitor experience where
other concessioners or holders of commercial use authorizations in the
same park area already provide those services.
(c) A concessioner that is allocated park area entrance, user days
or similar resource use allocations for the purposes of a concession
contract will not obtain any contractual or other rights to
continuation of a particular allocation level pursuant to the terms of
a concession contract or otherwise. Such allocations will be made,
withdrawn and/or adjusted by the Director from time to time in
furtherance of the purposes of this part.
0
9. Revise Sec. 51.78 to read as follows:
Sec. 51.78 Will a concession contract require a franchise fee and
will the franchise fee be subject to adjustment?
(a) Concession contracts will provide for payment to the government
of a franchise fee or other monetary consideration as determined by the
Director upon consideration of the probable value to the concessioner
of the privileges granted by the contract involved. This probable value
will be based upon a reasonable opportunity for net profit in relation
to capital invested, including any funds required to be placed in
special accounts identified in Sec. 51.81, and the obligations of the
contract as described in the prospectus.
(b) Each prospectus shall include one of the following:
(1) A proposed franchise fee based on the probable value
determination in the prospectus (``prospectus franchise fee''). The
prospectus franchise fee should be set at a level to encourage
competition for the concession opportunity through offers of either:
(i) Higher franchise fees; or
(ii) Lower franchise fees in combination with enhanced or higher
quality service offerings that exceed prospectus requirements.
(2) Alternatively, when the Director determines that using a
prospectus franchise fee is inappropriate for the particular concession
opportunity, a minimum acceptable franchise fee based on the probable
value determination and set at a level to encourage competition.
(c) In determining the minimum acceptable franchise fee or
prospectus franchise fee to include in a prospectus, the Director shall
use relevant industry data for similar operations (e.g., hospitality,
recreation) and provide in the prospectus the basis for the
determination of the minimum acceptable franchise fee or prospectus
franchise fee. Consideration of revenue to the United States shall be
subordinate to the objectives of protecting and preserving park areas
and of providing necessary and appropriate services for public use and
enjoyment of the park area in which they are located at reasonable
rates.
(d) The franchise fee contained in a concession contract with a
term of 5 years or less may not be adjusted during the term of the
contract. Concession contracts with a term of more than 5 years will
contain a provision that provides for adjustment of the contract's
established franchise fee at the request of the concessioner or the
Director. An adjustment will occur if the concessioner and the Director
mutually determine that extraordinary, unanticipated changes occurred
after the effective date of the contract that have affected or will
significantly affect the probable value of the privileges granted by
the contract. The concession contract will provide for arbitration if
the Director and a concessioner cannot agree upon an appropriate
adjustment to the franchise fee that reflects the extraordinary,
unanticipated changes determined by the concessioner and the Director.
0
10. Amend Sec. 51.81 by revising paragraph (b) to read as follows:
Sec. 51.81 May the Director include ``special account'' provisions in
concession contracts?
* * * * *
(b) Concession contracts may contain provisions that require the
concessioner to set aside a percentage of its gross receipts or other
funds in a component renewal reserve to be used at the direction of the
Director solely for renewal of real property components located in park
areas and utilized by the concessioner in its operations. The
anticipated timing and estimated costs of component renewal projects
should be identified in the prospectus. Component renewal reserve funds
may not be expended to construct real property improvements, including,
without limitation, capital improvements. Component renewal reserve
provisions may not be included in concession contracts in lieu of a
franchise fee, and funds from these reserves will be expended only for
the renewal of real property components as identified in the contract
and assigned to the concessioner by the Director for use in its
operations. The component renewal reserve provides a mechanism for a
concessioner to reserve monies to fund component renewal projects.
Concessioner obligations to maintain assigned concession facilities
including component renewal are not limited to the monies in the
component renewal reserve.
* * * * *
0
11. Amend Sec. 51.82 by revising paragraph (b) and adding paragraphs
(c) and (d) to read as follows:
Sec. 51.82 Are a concessioner's rates required to be reasonable and
subject to approval by the Director?
* * * * *
(b) The Director shall approve rates and charges that are
reasonable and appropriate in a manner that is as prompt and as
unburdensome to the concessioner as possible and that relies on market
forces to establish the reasonableness of such rates and charges to the
maximum extent practicable. Unless otherwise provided in the concession
contract, the reasonableness and appropriateness of rates and charges
shall be determined primarily by comparison with those rates and
changes for facilities, goods and services of comparable character
under similar conditions with due consideration to the following
factors and other factors deemed relevant by the Director: length of
season; peakloads; average percentage of occupancy; accessibility;
availability and cost of labor; and types of patronage.
(c) The Director shall identify the rate approval method to be used
for each category of facilities, goods, and services to be provided
when preparing the prospectus for a concession contract. The Director
will use the least burdensome and most market-based comparability
method. Unless the Director determines that market forces are not
sufficient to determine reasonable and appropriate rates, the Director
shall make a competitive market declaration as the means of
comparability, and rates and charges will be approved based upon what
the concessioner determines the market will bear. Other rate approval
methods will be used only when the Director determines that market
forces are inadequate to establish the reasonableness of rates and
charges for the facilities, goods, or services. The Director will
monitor rates and charges and competition and may change the rate
approval method during the term of the contract to reflect changes in
market conditions.
[[Page 90120]]
(d) Each contract shall include a schedule for rate requests and
describe the information necessary to include in a complete rate
request. Upon receipt of a request for a change in rates or charges the
Director shall, as soon as practicable but not more than 20 days of
receipt of the request, provide the concessioner with a written
determination that the request is complete, or where the Director
determines the request incomplete, a description of the information
required for the request to be determined complete. Where changes in
rates and charges have been requested and the request has been deemed
complete, concessioners shall be allowed to notify visitors making
reservations 90 or more days in advance of the anticipated rates. Those
rates are subject to adjustment prior to the visit based upon the
Director's review and final decision about the requested rate change .
The Director shall issue a final decision approving or rejecting a
request by a concessioner to change rates and charges to the public
within 10 days of receipt of a complete request in accordance with the
conditions described in the contract, except for those change requests
requiring a full comparability study, for which the Director shall
issue a decision as soon as possible and in no event longer than 30
days after receipt of the complete request. If the Director does not
approve of the rates and charges proposed by the concessioner, the
Director must provide in writing the substantive basis for any
disapproval. These timeframes will be exceeded only in extraordinary
circumstances and the concessioner must be notified in writing of such
circumstances. If the Director fails to meet the timeframes described
above, and has not notified the concessioner in writing of the
existence of extraordinary circumstances justifying delay, a
concessioner may implement the requested change to rates and charges
until the Director issues a final written decision. If the Director
denies the requested change to rates and charges after implementation
by the concessioner, the Director will not require the concessioner to
retroactively adjust any rates or charges for services booked prior to
the Director's denial.
Maureen Foster,
Chief of Staff, Office of the Assistant Secretary for Fish and Wildlife
and Parks.
[FR Doc. 2023-28659 Filed 12-28-23; 8:45 am]
BILLING CODE 4312-51-P
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</html>Indexed from Federal Register on December 29, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.