NPS Franchise Fee Determination Guidelines

DEPARTMENT OF THE INTERIOR

National Park Service

NPS Franchise Fee Determination Guidelines

AGENCY: National Park Service, Interior.

ACTION: Consideration of public comments on NPS franchise fee

determination guidelines.

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SUMMARY: On December 5, 1997, the National Park Service (NPS) again

published for public comment that portion of its concession management

staff manual (NPS-48) dealing with guidelines for concession contract

franchise fees. Comments were invited on, among other matters, specific

proposed changes in concept or in detail, for dealing with concession

contract franchise fees. The comment period has closed and NPS has duly

considered the comments received.

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EFFECTIVE DATE: February 6, 1998.

FOR FURTHER INFORMATION CONTACT:

Robert Yearout, Program Manager, Concession Program, National Park

Service, 1849 C Street, NW, Washington, DC 20240.

SUPPLEMENTARY INFORMATION: The franchise fee guidelines contained in

NPS-48 were adopted by NPS on December 31, 1986, after receipt and

consideration of public comments pursuant to Federal Register

notification. The guidelines were amended on July 20, 1995, after

consideration of public comment pursuant to Federal Register

notification. In addition, the guidelines were clarified on August 11,

1997, after consideration of pubic comment pursuant to Federal Register

notification. NPS is presently considering the possibility of

significantly revising the guidelines. If it chooses to do so, the

proposed revisions will be made available for public comment through

Federal Register notification.

Two comments were received in response to the December 5, 1997,

Federal Register notice. One commenter expressed concern that franchise

fee adjustments made as part of a concession contract fee

reconsideration are neither easily quantifiable nor subject to any

``cap'' as to how much a fee may be raised as a result of the

reconsideration. The commenter considers that franchise fees should be

quantifiable for the term of a contract. The commenter suggested that

this would allow better calculation of prospective financial returns,

increase the ability to obtain financing, and decrease the risk of

bidding to obtain a concession contract. Specifically, the commenter

suggested that the basis for fee adjustments should be a pre-determined

formula established at the outset of the contract.

NPS considers that this comment has merit in some respects.

However, it notes that under current concession contract provisions,

franchise fees may be adjusted upwards or downwards as circumstances

warrant during the term of the contract. The present system,

accordingly, treats the concessioner and the Government alike with

respect to franchise fee adjustments.

The commenter also suggested that in analyzing franchise fees, the

complete financial history of the operation should be considered. NPS

notes that its current guidelines permit analysis of as many years of

financial history as is appropriate and that during a franchise fee

consideration the concessioner is likewise able to provide analysis as

it sees fit with respect to the operation's financial returns and

history.

Finally, the commenter noted that, although, in theory, the NPS

consideration of industry ratios would seem equitable in analyzing

franchise fees, published statistics in this regard are not readily

comparable to NPS concession operations in light of their more

extensive mix of facilities and services and other factors related to

operations in areas of the national park system. In addition, the

commenter suggested that the ratios provided in industry statistics

have such a wide swing in results that any assignment of ranking would

be purely subjective on the part of NPS in attempting to recommend a

new franchise fee. NPS has received similar criticisms of using

published industry statistics in franchise fee analysis on other

occasions, including in prior responses to Federal Register requests

for public comment on NPS franchise fee guidelines.

NPS agrees that consideration of published industry statistics in

and of itself would not be an appropriate means to establish a

franchise fee. However, the NPS guidelines only contemplate

consideration of published statistics as one starting point for

franchise fee analysis. The guidelines call for analysis of such

statistics to account for differences between the general industry and

the particular circumstances of the concession operation in question.

In addition, industry statistics as part of a franchise fee

reconsideration process are shared with the concessioner which may

dispute their validity and provide alternative statistics. A decision

on an adjusted franchise fee is made on the basis of all the

information developed during the reconsideration process, including

discussions with the concessioner. In addition, if NPS and the

concessioner cannot agree on an adjustment to the franchise fee, up or

down as the case may be, the concessioner is entitled to request

advisory arbitration on the issue and a final decision from the

Secretary of the Interior based upon the entire record of the matter

and the views of the arbitration panel. In short, NPS appreciates that

published statistics cannot be the exclusive means of analyzing

franchise fees and that they have shortcomings which must be taken into

account. Nonetheless, NPS considers it appropriate to use published

statistics, with appropriate adjustment and consideration of their

limitations, as a franchise fee analytical tool.

The other comment received was concerned that NPS should permit

public comment on the specifics of its proposed changes to its

franchise fee guidelines. This NPS intends to do through Federal

Register notification if significant changes are proposed.

Having considered the comments received, and similar comments

received in response to past Federal Register notification, NPS

believes that its present franchise fee guidelines are adequate and

hereby re-adopts them to the extent legally necessary. However, NPS

does consider that there may be other and perhaps better ways to deal

with concession contract franchise fees and may suggest significant

revisions to the present guidelines in the near future. If this occurs,

further public comment will be invited on the revisions and the

comments received in response to the December 5, 1997, notice and prior

notices will be taken into due account as well in reaching a final

decision on any proposed revisions.

Dated: January 23, 1998.

Wendelin M. Mann,

Acting Concession Program Manager.

[FR Doc. 98-2977 Filed 2-5-98; 8:45 am]

BILLING CODE 4310-70-M