Response to Public Comments on NPS-48

DEPARTMENT OF THE INTERIOR

National Park Service

Response to Public Comments on NPS-48

AGENCY: National Park Service, Interior.

ACTION: Response to public comments on NPS-48.

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SUMMARY: On February 20, 1997, the National Park Service (NPS)

published for additional public comment its staff manual (NPS-48)

dealing with the administration of concession contracts and permits. On

March 27, 1997, NPS extended the due date for receipt of comments

through April 8, 1997. On May 29, 1997, NPS requested public comment on

certain proposed amendments and clarifications to NPS-48. This notice

responds to the comments received in response to these notices and,

after due consideration of public comment, makes certain amendments and

clarifications to NPS-48.

EFFECTIVE DATE: September 10, 1997, except as otherwise noted.

FOR FURTHER INFORMATION CONTACT:

Robert Yearout, Program Manager, Concessions Program, National Park

Service, P.O. Box 37127, Washington, D.C. 20013-7127.

SUPPLEMENTARY INFORMATION: NPS-48 was developed by NPS during the

1980's as an agency staff manual for the management of NPS concession

contract matters. As such, notice of it generally was not initially

published in the Federal Register. (Certain portions of NPS-48 as a

matter of policy were adopted by NPS after a notice and comment

period.) Inasmuch as NPS is considering making major changes to NPS-48

and its legal status has been a subject of two recent federal court

decisions, NPS determined to solicit and consider additional public

comments on it. However, NPS notes that NPS-48 is an agency staff

manual and as such is not required to be published in the Federal

Register pursuant to 5 U.S.C. Sec. 552 nor promulgated as a rule after

public notice and comment pursuant to 5 U.S.C. Sec. 553. In addition,

NPS notes that the rulemaking requirements of 5 U.S.C. Sec. 553, even

if otherwise applicable to an agency staff manual such as NPS-48, are

expressly not applicable to matters relating to agency management or

personnel or to public property, loans, grants, benefits or contracts.

NPS-48, as a matter concerning the administration of public property

and contracts, falls within this exemption to the extent it may be

considered a rule or regulation within the meaning of 5 U.S.C.

Sec. 553.

NPS received nine comments on NPS-48 in response to the February

20, 1997, request for comments and two comments in response to the May

29, 1997, request for comments. With respect to the first category,

seven of the nine comments were submitted by existing NPS

concessioners, one was submitted by an organization representing NPS

concessioners, and one was submitted by a certified public accounting

firm on behalf of a concessioner. No comments from the general public

were received. With respect to the second category, comments were

received only from the organization representing concessioners and an

attorney representing a concessioner.

Several of the comments received from these notices concerned

matters which were not within the scope of the requests for comments.

These comments are not discussed in this notice.

Analysis of Comments in Response to the February 20, 1997, Public

Notice

1. Conformance With Revised Regulations

One commenter pointed out that the concession contracting

regulations (36 CFR, Part 51) included in NPS-48 are not the most

recent version of these regulations, which were amended effective

October 5, 1992. NPS agrees that the copy of the regulations contained

in NPS-48 is outdated, and hereby deletes the old regulations and

incorporates the revised regulations in NPS-48. NPS further notes that

in the event of any conflict between these revised regulations and any

guidance contained in NPS-48, the revised regulations will prevail.

2. Private Enterprise Outside of Park Policy

One commenter expressed concern that NPS and others could interpret

too narrowly its policy of not developing concession facilities within

the park if adequate facilities exist ``or can feasibly be developed by

private enterprise'' outside park boundaries. NPS considers that NPS-48

provides adequate guidance in this regard.

3. Concessioner Participation in Planning

One commenter felt that concessioner input into NPS planning

efforts should be expanded. Present procedures limit concessioner input

to ``assistance in basic data collection and review as a member of the

public.'' This commenter suggests that concessioners should be

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granted ``interested party status'' in this regard. NPS recognizes that

concessioners can make important contributions to park planning

efforts. However, the very nature of the contractual relationship

between NPS and its concessioners is such that NPS must exercise

caution to avoid perceived conflicts of interest in park planning

decisions. NPS is sensitive to concerns raised by members of the public

during the planning process, and does not agree that categorization as

``a member of the public'' in any way demeans the concessioner's input

into the planning process.

4. Term of Contracts

Two commenters agreed that the term of concession contracts should

continue to be based on the investment required. However, they

suggested that NPS also should consider a requirement for substantial

depreciation or amortization as justification for a longer contract

term. One commenter felt that the length of a contract term should not

be judged solely by investment, because longer term contracts enhance

continuity and consistency of service to park visitors.

NPS believes that the goals of continuity and consistency of

service are adequate by NPS-48 guidelines and applicable law and

regulations. NPS does not agree that longer term contracts are

necessary to achieve these goals. NPS believes that the term of

concession contracts should continue to be based primarily on the

investment required.

5. Contract Extensions

One commenter stated that longer-term extensions for expired

concession contracts should be considered in lieu of year-to-year

extensions, because 1-year extensions may not adequately protect the

concessioner's investment in needed major repairs or improvements. Two

other commenters objected to the NPS use of interim letters of

authorization in lieu of formal contract extensions or timely contract

renewals. Although NPS-48 provides for contract extensions with terms

of up to 2 years, NPS, as a matter of practice, has been authorizing

continuation of concession services with 1-year interim letters of

authorization over the past several years. NPS does not consider that

changes to NPS-48 are warranted in this regard.

6. Facility Design and Construction

One commenter felt that NPS review of design and construction

projects has become too detailed, sometimes extending to the selection

of furniture, carpeting, draperies, and color selections. NPS considers

that, although there may have been specific instances where NPS has

become unduly involved in such matters, the general guidance of NPS-48

in this connection is appropriate.

7. Cooperating Associations

Three commenters felt that cooperating associations which were

established for interpretive and educational purposes have been

permitted to move into sales areas directly competitive with

concessioners who have clear contract rights. NPS will continue to

review any situation where a concessioner feels this has occurred on a

case-by-case basis. However, the guidance in NPS-48 in this connection

is considered appropriate.

8. Rate Approval

Three commenters felt that the current rate approval processes

followed by NPS are cumbersome, outdated, and too detailed. NPS

believes that the present methodology is adequate. However, NPS is also

considering the possibility of generally revising its rate approval

program. If such a proposal is made, it will be published for public

comment in the Federal Register.

9. Concessioner Review Program

One commenter felt that the current program is too detailed and

time-consuming. Two other commenters expressed concern about the

requirements of the review program and felt that these requirements

should be implemented by NPS personnel who understand the

concessioner's operation. NPS considers that the present guidance of

NPS-48 provides an appropriate program in this regard. However, NPS is

also considering a major revision to its review program guidelines. If

such a proposal is made, it will be published for public comment in the

Federal Register.

Another commenter pointed out that a conflict exists between NPS-48

and the revised regulations (36 CFR Sec. 51.5) concerning the

disposition of unsatisfactory and marginal ratings. NPS-48 states that

if a concessioner receives an annual overall rating of

``unsatisfactory'' in any year of the contract term or ``marginal'' for

any 2 consecutive years, then the concessioner is not entitled to a

right of preference in the renewal of its contract. The regulations at

36 CFR Sec. 51.5(a) limit the loss of a concessioner's right of

preference in contract renewal to the last year (for ``unsatisfactory''

ratings) or the last 2 years (for ``marginal'' ratings) prior to

issuance of a prospectus. NPS requested public comment on this issue on

May 29, 1997, and after having considered all comments received, agrees

that the regulations and guidelines are in conflict on this point, and

hereby clarifies NPS-48 to include the language of the regulation at 36

CFR Sec. 51.5(a).

10. Franchise Fee Renegotiation

Three commenters suggested the elimination of the five-year

franchise fee reconsideration, or the use of a different approach to

fee increases during the term of the contract. NPS is required, by law

(16 U.S.C. 20(d)), to reconsider the franchise fees at least every 5

years during the term of a contract. Accordingly, the requirement

cannot be eliminated. NPS also notes that the substance of the NPS

franchise fee reconsideration process was established through adoption

of the NPS standard language concession contract after solicitation and

consideration of public comments.

11. Handcrafts, Gifts and Merchandise

One commenter reacted favorably to the overall direction taken by

NPS in the development of thematic merchandising in parks, but

cautioned that NPS should also allow for the selection of some

merchandise customarily sold in similar theme-oriented retail outlets

outside the park. It is important to note that the thematic approach

referred to is being taken by NPS on a case-by-case basis as contracts

are renewed, and is not specifically required by NPS-48. NPS is

presently considering the possibility of making revisions to the

handcraft, gift and merchandising guidance of NPS-48, which it expects

to publish for comment within the next year. In the interim, NPS

considers it appropriate to continue the current guidance of NPS-48.

12. Deposits for Advance Reservations

One commenter pointed out that one provision in NPS-48 requires

that rates in effect at the time of a deposit should apply to all or a

portion of the visitor stay, even though there may have been a price

increase (Chapter 29, D.2.b.), and that this conflicts with another

provision in NPS-48 which allows concessioners to charge the increased

rates so long as individuals making advance reservations are notified

that rates are subject to change and are not guaranteed by the deposit

(Chapter 29, D.1.c.(1)). NPS, after proposing an amendment to NPS-48 in

this regard on May 29, 1997, and having considered all public comments

received, agrees that these provisions are in conflict and hereby

adopts a provision allowing

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concessioners to charge increased rates if individuals making

reservations are notified that rates are subject to change and not

guaranteed by the deposit. Chapter 29 of NPS-48 is hereby amended by

deleting subsection D.2.b.

13. Advertising and Informational Literature

One commenter felt that general, and not detailed guidelines,

should be issued with regard to NPS review of concessioner advertising

and informational literature. NPS considers that the current guidance

of NPS-48 in this regard provides adequate flexibility with respect to

necessary review of advertising and informational literature.

14. NPS Concession Employee Training

One commenter commended NPS for including selected concessioners,

their employees and others to assist in providing training to NPS

concession employees.

15. Applicability of Related NPS Guidelines

One commenter stated that references to other NPS guidelines should

be deleted from NPS-48, as these other guidelines have not been subject

to a public review process. NPS believes that the references contained

in NPS-48 to other NPS staff manuals are necessary to portray the

concession program in its proper context within the overall NPS

organization and are, therefore, appropriate.

16. Exemption of Handcraft Sales from Franchise Fee Calculation

Three commenters requested that the exemption of handcraft sales

from franchise fee calculations be reinstated. NPS published for

comment a notice of its intention to eliminate this exemption in the

Federal Register on January 17, 1995, and again on July 20, 1995. 23

comments were received in response to those notices. The NPS analysis

of those comments and final decision to eliminate the exemption were

published in the Federal Register on April 26, 1996. NPS finds no new

arguments in the 2 comments received that would persuade it to change

its position on this matter.

17. Standard Language Concession Contract

Two commenters objected to revisions made by NPS in its standard

concession contract language in 1993. Specific objections included

changes in possessory interest compensation and compensation for

equipment, requiring the concessioner to acknowledge the reasonable

opportunity to realize a profit on its operations, requiring the

concessioner to acknowledge maintenance and operating plans which can

be unilaterally changed by NPS, and ability of NPS to modify contract

terms as a condition to the approval of a sale or transfer.

NPS published for comment a notice proposing changes to the

standard concession contract language on September 3, 1992. 61 comments

were received in response to that notice. The NPS analysis of those

comments and final standard contract language were published in the

Federal Register on January 7, 1993. NPS finds no new arguments in the

comments received that would persuade it to change its position on

these matters.

Response to Comments Received Pursuant to the May 29, 1997, Request for

Comments

1. Franchise Fee Waivers

NPS, on May 29, 1997, proposed clarifying NPS-48 with respect to

waiver of franchise fees. In this regard, Chapter 24, section 5.i. of

NPS-48 authorizes waiver of NPS concession contract franchise fees in

certain circumstances. However, NPS-48 fails to expressly note that as

a matter of law such waivers are permissible only where the concession

contract or permit in question contains an express provision

authorizing such a waiver or in other special circumstances as

discussed below. Decision of the Comptroller General, April 11, 1944

(B-40226). In addition, NPS proposed to clarify NPS-48 to state more

explicitly that the waiver provisions of NPS-48 apply only to waiver of

franchise fees (where an express contract provision so authorizes), not

to any other financial obligations of a concessioner set forth in an

NPS concession contract or permit. Two comments were received on this

proposal. One was from an attorney representing an NPS concessioner. He

took the position, among others, that the 1944 Comptroller General

opinion cited by NPS is no longer valid law (also noting that the

opinion is unpublished) an that it is inconsistent with the Concessions

Policies Act of 1965 (16 U.S.C. Sec. 20 et. seq.) (the ``Act'').

NPS first notes that the conclusions of this unpublished

Comptroller General opinion were subsequently affirmed by the

Comptroller General in 34 Comp. Gen. 207 (1954).

In any event, it is a matter of settled law that in the absence of

a statute specifically so providing, no officer of the federal

government has authority to give away or surrender (without adequate

consideration) a right vested in or acquired by the government under a

contract. 14 Comp. Gen. 897, 900; 15 Comp. Gen. 25; 20 Comp. Gen. 703;

22 Comp. Gen. 260. This basis for this rule is set forth as follows in

Columbus Ry. Power & L. Co. v. Columbus, 249 U.S. 399, 412 (1919):

It certainly was not intended to question the principle, frequently

declared in decisions of this court, that if a party charges himself

with an obligation to be performed, he must abide by it unless

performance is rendered impossible by an act of God, the law, or other

third party. Unforeseen difficulties will not excuse performance. Where

the parties have made no provision for a dispensation, the terms of the

contract must prevail. (Citations omitted).

This legal doctrine has been applied to NPS concession contracts by

the Comptroller General on a number of other occasions in addition to

B-40226 cited above. 23 Comp. Gen. 811 (1944); 40 Comp. Gen. 234, 239

(1960); and 58 Comp. Gen. 7 (1978). This latter decision, issued long

after the passage of the Act, reiterates that it is a ``well

established rule that, without a compensating benefit to the United

States, Government agents and officers have no authority to dispose of

the money or property of the United States, to modify existing

contracts, or to surrender or waive vested rights,'' 58 id. 7, citing

Christine v. United States, 237 U.S. 234 (1915) and Pacific Hardware v.

United States, 49 Ct. Cl. 327, 335, 337 (1914).

The commenter also notes a series of decisions and other supporting

materials which indicate that impossibility or impracticability may

operate to discharge a contractual duty under a contract as a matter of

law. For example, the commenter states, this doctrine may excuse

performance by a contractor in circumstances occasioned by acts of God,

acts of third parties, ``or in cases of war, embargo, or the like.'' In

light of this comment, NPS has further clarified NPS-48 with respect to

waiver of franchise fees by modifying the first sentence of its

proposed clarification of NPS-48 regarding waiver of franchise fees to

state as follows:

Franchise fee waivers as a matter of law are only permissible under

this section or otherwise where the concession contract contains an

express provision which authorizes such a waiver or where payment of

franchise fees by a concessioner is otherwise excused by operation of

law.

In this connection, NPS concession contracts entered into prior to

1979 generally contain a franchise fee waiver provision. NPS concession

contracts

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entered into thereafter generally do not. NPS acknowledges that in the

past it may have waived franchise fees in circumstances where no

express waiver provision was contained in the contract. Such waivers,

however, may have been appropriate because payment of the franchise fee

was excused by operation of law as discussed above. Any other waivers

which may have been granted in the absence of an express contract

franchise fee waiver provision were unauthorized for the reasons stated

above.

The commenter also argues that the Act mandates that franchise fee

waivers be granted to NPS concessioners. NPS does not consider that

this is the case. The Act makes no reference to any authority or

requirement regarding waivers of concession franchise fees.

The commenter argues that 16 U.S.C. Sec. 20b(b) requires that NPS

waive franchise fees if necessary in order for the concessioner to have

a reasonable opportunity for profit. However, 16 U.S.C. Sec. 20b(b)

states as follows in its entirety:

The Secretary shall exercise his authority hereunder in a manner

consistent with a reasonable opportunity for the concessioner to

realize a profit on his operation as a whole commensurate with the

capital invested and the obligations assumed. (Emphasis added.)

The Act makes no mention of any NPS authority to waive franchise

fees nor does it expressly authorize NPS to include a franchise waiver

provision in concession contracts. This is in pointed contrast to the

Act's express requirements regarding franchise fee reconsideration

provisions. The Act expressly discusses NPS authority regarding the

alteration of franchise fees during the term of a concession contract.

It requires that NPS include in concession contracts provisions for

reconsideration of franchise fees at least every five years unless the

contract is for a shorter period of time. Waiver of franchise fees is

not mentioned. (Such reconsideration provisions are contained in all

NPS concession contracts with a term of more than five years.)

An organization which represents concessioners also commented on

the NPS-48 franchise fee waiver clarification. This organization

suggested that NPS should include in NPS concession contracts a

provision which would allow waiver of franchise fees and other

concessioner payments to the government. NPS does not consider this to

be necessary or appropriate in light of the franchise fee

reconsideration provisions contained in NPS concession contracts as

required by the Act. The commenter also suggested that the Act should

be interpreted to allow waiver of franchise fees in circumstances which

precluded the concessioner, ``through no fault of his, from having a

reasonable opportunity to realize a profit, such as acts of God or

government closures.'' NPS considers that the further clarification to

NPS-48 discussed above accommodates this concern to the extent

appropriate.

Neither of the commenters expressly objected to the clarification

to NPS-48 regarding the fact that its franchise fee waiver provisions

only apply to waiver of franchise fees and not to waiver of any other

financial obligations established by a concession contract. However,

the comment from the attorney representing a particular concessioner

implied that an obligation of a concessioner to deposit a percentage of

the concessioner's gross receipts in an account to be used by the

concessioner to make concessioner improvements constitutes a franchise

fee obligation. This is not the case. All NPS concession contracts

clearly distinguish between payment of franchise fees and other

financial obligations a contract may impose, including deposits into

capital improvement accounts. The provisions of NPS-48 concerning

waiver of franchise fees apply only to waiver of franchise fees owed

the United States by a concessioner and denominated as such by the

terms of the concession contract in question. To the extent that NPS in

the past may have waived the payment of other financial obligations by

a concessioner, such waivers were unauthorized unless made pursuant to

a specific contract waiver provision regarding such financial

obligations or were otherwise required by operation of law.

2. Food Service Sanitation Program

In its May 29, 1997, ``Federal Register'' notice, NPS proposed to

amend Chapter 21, Standard 1, of NPS-48 with respect to its Food Code

guidelines to conform them to the revised ``Food Code'' issued by the

U.S. Public Health Service. One commenter objected to this proposal and

expressed concerns about the new rating system for the Food Service

Sanitation Inspection Report, its use in the Concessioner's Operational

Performance Rating, and the proposed implications on the concessioner's

right of preference in the renewal of its contract. This commenter

feels that there would be too much subjectivity involved in determining

a ``critical item'' and believes that if a Sanitation Inspector decides

that an imminent health hazard exists, the concessioner's right of

preference in the renewal of its contract would be jeopardized. NPS

disagrees. Both ``critical items'' and ``imminent health hazards'' are

defined in the U.S. Public Health Service Food Code. They are not

determinations that are made subjectively by inspectors in the field.

NPS notes that a concessioner's right of preference in renewal would

only be affected if the concessioner is found ``unsatisfactory'' in the

last year or ``marginal'' in the last two years of its contract.

This commenter suggests that if NPS is firm on this system, then a

workable and fair appeal procedure needs to be outlined and included in

the amendments. NPS believes that an adequate appeal procedure exists.

Concessioners have the same appeal rights that currently exist in the

Concessioner Review Program. Concessioners may appeal their annual

overall rating to the Regional Director. As indicated below, Annex 1

(``Compliance and Enforcement'') of the Food Code is not being adopted

by NPS.

The commenter further suggests that the numerical rating assigned

should stand on its own, and feels that the system established for

converting the rating could result in a rating with which the

superintendent may not agree. NPS recognizes that the system

established for converting the rating is imperfect. However, numeric

ratings must be converted since the concessioner's Annual Overall

Rating for operational performance (including public health and safety

reports) is established as ``satisfactory,'' ``marginal'' or

``unsatisfactory.'' Other conversion or rating systems were considered,

but all had certain drawbacks that adversely affected either the small

or large operator. NPS believes that the system devised provides

sufficient flexibility, and is fair and objective. Further, NPS does

not feel that this proposal will require a superintendent to give a

concessioner a rating that he or she deems less than appropriate. The

superintendent, with justification, may adjust the Operational

Performance Rating on the NPS Concessioner Annual Overall Rating. This

process is no different than the one that currently exists.

Amendments and Clarifications to NPS-48

For the reasons discussed above, NPS-48 is hereby amended and

clarified as follows:

1. Chapter 5, Subsection B.2., of NPS-48 is amended by deleting the

former text of 36 CFR part 51, and replacing it

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with the text of 36 CFR, part 51, as revised on October 5, 1992.

2. Chapter 19 of NPS-48 is amended by deleting the first sentence

of subsection G and replacing it with the following two sentences:

When a concessioner's Annual Overall Rating is Unsatisfactory

for a year, or Marginal for two consecutive years, it constitutes

grounds for termination of the contract/permit. Further, if a

concessioner receives an annual overall rating of Unsatisfactory

during the last year prior to issuance of a prospectus, or an annual

overall rating of Marginal during the 2 years prior to issuance of a

prospectus, then the concessioner is not entitled to a right of

preference in the renewal of its contract or permit.

3. Chapter 24 of NPS-48 is clarified, effective immediately as a

matter of law, by adding the following two sentences to the end of the

first paragraph of section 5.i.:

Franchise fee waivers are only permissible under this section or

otherwise where the concession contract or permit in question

contains an express provision which authorizes such a waiver or when

payment of franchise fees is otherwise excused by operation of law.

In addition, even in circumstances where a concession contract or

permit contains such an express franchise fee waiver provision, such

waiver authority applies only to payment of franchise fees; it does

not apply to any other financial or other obligations a concessioner

may have under the terms of a concession contract or permit unless

the contract or permit in question expressly so states.

3. Chapter 29 of NPS-48 is amended by deleting subsection D.2.b.

4. Chapter 21, Standard 1, of NPS-48 is amended, effective

immediately, by deleting existing Standard 1 and replacing it with a

new Standard 1 conforming with the revised ``Food Code'' (exclusive of

Annex 1 thereto) issued by the United States Public Health Service in

1993. Copies of the revised Standard 1 are available upon request.

All other portions of NPS-48 remain in effect.

Dated: July 24, 1997.

Dale Wilking,

Associate Director, Park Operations and Education.

[FR Doc. 97-21080 Filed 8-8-97; 8:45 am]

BILLING CODE 4310-70-M