[Federal Register Volume 62, Number 154 (Monday, August 11, 1997)]
[Notices]
[Pages 43006-43010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21080]
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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
[[Page 43007]]
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
[[Page 43008]]
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
[[Page 43009]]
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
[[Page 43010]]
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