CO·NCFSSIONS . REFORM 

HEARING 

BEFORE THE 

SUBCOMMITTEE ON 

NATIONAL PARKS, FORESTS AND PUBLIC LANDS 

OF THE 

COMMITTEE ON 

NATURAL RESOURCES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

'FIRST SESSION 

ON 

H.R. 743 

TO AMEND THE NATIONAL PARK SERVICE CONCESSIONS POLICY ACT 

TO FOSTER COMPETITION AMONG CONCESSIONERS, TO IMPROVE 

MANAGEMENT OF CONCESSIONS CONSISTENT WITH THE PRESERVATION OF RESOURCES AND THE PURPOSES OF THE NATIONAL PARK 

SYSTEM, AND FOR OTHER PURPOSES 

H.R. 1493 

TO REFORM THE CONCESSIONS POLICIES OF THE NATIONAL PARK 

SERVICE, AND FOR OTHER PURPOSES 

H.R. 2146 

TO REFORM THE CONCESSIONS POLICIES OF THE NATIONAL PARK 

SERVICE, AND FOR OTHER PURPOSES 

76-380 

HEARING HELD IN WASHINGTON, DC 

OCTOBER 19, 1993 

Serial No. 103-M 

Printed for the use of the Committee on Natural Resources 

U.S. GOVERNMENT PRINTING OFFICE 

WASIDNGTON; 1994 

For sale by the U.S. Government Printing Office 

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 

ISBN 0-16-043427-0 
COMMITTEE ON NATURAL RESOURCES 

GEORGE MILLER, California, ChainruJn 

PHILIP R. SHARP, Indiana DON YOUNG, Alaalta, 

EDWARD J. MARKEY, Musachuaetta Ranlcing &publialn Member 

AUSTIN J . MURPHY, Pennsylvania JAMES V. HANSEN, Utah 

NICK JOE MIL\LL II, West Vuginia BJ.RBAR.\ F. VUCANOVICH, Nevada 

BRUCE F. VENTO, Minnesota ELTON G.ALLEGLY, California 

PAT WILLIAMS, Montana ROBERT F. SMITH, Oregon 

RON DE LUGO, Vugin Islands CRIUG THOMAS, Wyoming 

SAM GEJDENSON, Connecticut JOHN J. DUNCAN, JR., Tennessee 

RICHARD H. LEHMAN, California JOEL HEFLEY, Colorado 

BILL RICHARDSON, New Mezico JOHN T. DOOLI'M'LE, California 

PETER A. DEF.AZIO, Oreaon WAYNE MJ.ARD, Colorado 

ENI F.H. FA.LEOMAVA.EG.A, .American RICHARD H. BAKER, Louisiana 

Samoa KEN CALVERT, California 

TIM JOHNSON, South Dakota SCOTT MciNNIS, Colorado 

LARRY LAROCCO, Idaho RICHARD W. POMBO, California 

NEIL ABERCROMBIE, Hawaii JAY DICKEY, Arkansas 

CALVIN M. DOOLEY, Califot;nia 

C.ARLOS ROMERO-BARCELO, Puerto Rico 

KARAN ENGLISH, Arizoua 

KAREN SHEPHERD, Utah 

NATHAN DEAL, Georgia 

MAURICE D. HINCHEY, New York 

ROBERT A. UNDERWOOD, Guam 

SAM FA.RR, California 

LANE EVANS, Illinois 

PATSY T. MINK, Hawaii 

THOMAS J. BARLOW m, Kentucky 

THOMAS M. BARRETT, W"UICOnain 

JOHN LAWRENCE, St4lf Director 

RICHARD MELTZER, General Coruuel 

DANIEL VAL KlsH, &publican Staff Director 

SUBCOMMITTEE ON NATIONAL PARKS, FORESTS AND PuBLIC LANDs 

BRUCE F. VENTO, Minneeota, ChainruJn 

EDWARD J. MARKEY, Musach111etts JAMES V. HANSEN, Utah, 

NICK JOE MIL\LL II, We.t Vuginia RtuaJcin6 &publil:tm Member 

PAT WILLIAMS, Montana ROBERT F. SMITH, Qreaon 

PETER A. DBF.AZIO, Oregon CRIUG THOMAS, Wyoming 

TIM JOHNSON, South Dakota JOHN J . DUNCAN, JR., Tennessee 

LARRY LAROCCO, Idaho JOEL HEFLEY, Colorado 

NEIL ABERCROMBIE, Hawaji JOHN T. DOOLI'M'LE, California 

C.ARLOS ROMERO-BARCELO, Puerto Rico RICHARD H. BAKER, Louisiana 

KARAN ENGLISH, Arizona KEN CALVERT, California 

KAREN SHEPHERD, Utah JAY DICKEY, Arkansas 

MAURICE HINCHEY, New York 

ROBERT A. UNDERWOOD, Guam 

AUSTIN J. MURPHY, Pennsylvania 

BILL RICHARDSON, New Maico 

PATSY T. MINK, Hawaii 

RICHARD HEALY, St4ff Director 

CHARLBS (STAN) SLoss, Coruasel 

ToNYA :Mrrciwl, Staff Assistcmt 

ALLEN FREEMYER, &publican Cocmtlel OR Natiaull Parb, Forests and Public Lands 

(D) 
CONTENTS 

Hearing held: October 19, 1993 ............................................................................ .. Text of the bills: H.R. 743 ............................................................................................................ . H.R. 1493 .......................................................................................................... . H.R. 2146 .......................................................................................................... . Member statements: 

Hon. Bruce F. Vento ........................................................................................ . Hon. James V. Hansen ..................................................................................... -· Witness statements: 

Panel consisting of: 

Hon. Mike Synar, a Representative in Congress from the State of 

Oklahoma, and chair:man, Subcommittee on Environment, Energy, and Natural Resources, Committee on Government Operations ...... . Hon. Jan Meyers, a Representative in Congress from the State of 

Kansas ................................................................................................... . Bonnie R. Cohen, Assistant Secretary for Policy, Management and Budget, Department of the Interior, accompanied by Jack Davis, former 

superintendent of the Grand Canyon, and John Reynolds, Deputy Director, U.S. Park Service ............................................................................. . Panel consisting of: 

William J. Chandler, Director of Conservation, National Parks and 

Conservation Association ..................................................................... . Joseph K. Fa88ler, chairman, board of Glacier Park, Inc., on behalf 

of the National Park Hospitality Association ..................................... . David Brown, executive director, America Outdoors ............................ . Panel consisting of: 

J. Richard Hill founding partner Hill Retail Property Services, and 

president, Hili Partners, Inc., Charlotte, NC ..................................... . Don Roush, former chief of concessions (retired), National Capital 

Region, National Park Service ............................................................. . Mary E. Ames, president, Wright Brothers Air Service, Inc., Southest 

Aviation Group, Inc., Kill Devil Hills, NC ......................................... .. Bob Gersack, president, First National Park Bank of Livingston, MT .......................................................................................................... . Material submitted for the record from: 

William J. Chandler, National Parks and Conservation Association: 1. Prepared statement of Antonio F. Marciuez, Member of the Board, 

National Parks and Conservation Association ............................... . 2. Letter and prepared statement of Roger E. Mann, Senior Director 

of Business Development, Host Marriott Corporation ................... . David Brown, America Outdoors: The impacts of proposed franchise fee 

increases for outfitter permittees and concessioners, submitted originally to Mr. David Gibbons, Office of Management and Budget ............. . 

APPENDIX 

OCToBER 19, 1993 

Additional material submitted for the record from: 

Subcommittee on National Parks, Forests and Public Lands: 

Pap 

1 

2 

11 

28 

1 

46 

47 

56 

67 

97 

122 

136 

168 

174 

189 

197 

98 

102 

146 

1. Letter to Roger Kennedy, Director, National Park Service, from 

Chairman Vento, dated October 25, 1993 ........................................ 213 

2. Letter to Chairman Vento from Mr. Kennedy, National Park Service, dated December 8, 1993, in response to Chairman Vento's 

October 25 letter ................................................................................ 215 

(III) 

H.R. 743, TO AMEND THE NATIONAL PARK 

SERVICE CONCESSIONS POLICY ACT TO 

FOSTER COMPETITION AMONG CONCESSIONERS, TO IMPROVE MANAGEMENT OF 

CONCESSIONS CONSISTENT WITH THE 

PRESERVATION OF RESOURCES AND THE 

PURPOSES OF THE NATIONAL PARK SYSTEM, AND FOR OTHER PURPOSES 

H.R. 1493, TO REFORM THE CONCESSIONS 

POLICIES OF THE NATIONAL PARK SERVICE, AND FOR OTHER PURPOSES 

H.R. 2146, TO REFORM THE CONCESSIONS 

POLICIES OF THE NATIONAL PARK SERVICE, AND FOR OTHER PURPOSES 

TUESDAY, OCTOBER 19, 1993 

COMMITTEE ON NATURAL RESOURCES, 

SUBCOMMI'ITEE ON NATIONAL PARKS, 

FORESTS AND PuBLIC LANDS, 

Washington, DC. 

The subcommittee met at 10:05 a.m. in room 1324 of the Longworth House Office Building, Hon. Bruce F. Vento (chairman of the 

subcommittee) presiding. 

STATEMENT OF HON. BRUCE F. VENTO 

Chairman VENTO. The Subcommittee on National Parks, Forests 

and Public Lands will come to order. 

As members were advised, we are meeting today to hear three 

pending measures that would revise existing laws applicable to 

concession contracts and to provide goods and services to visitors 

of the National Park System. 

The park concession issues are not new to this subcommittee or 

to Congress. 

[Texts of the bills, H.R. 743, H.R. 1493, and H.R. 2146, follow:] 

(1) 
103n CONGRESS 

1ST SESSION 

2 

H.R. 743 

To amend the National Park Service Concessions Policy Act to foster competition among concessioners, to improve management of concessions consistent with the preservation of reaources and the purposes of the National 

Park System, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 2, 1993 

Mr. 8YNAR introduced the following bill; which was refeiTed to the Committee 

on Natural Resources 

A BILL 

To amend the National Park Service Concessions Policy Act 

to foster competition among concessioners, to improve 

management of concessions consistent with the preservation of resources and the purposes of the National Park 

System, and for other purposes. 

1 Be it enacted by tlw Senate and House of Representa2 tives of tlw United States of America in Congress assembkd, 

3 SECI'ION 1. SHORT TITLE AND DEFINITION. 

4 (a) SHORT TITLE.-This Act may be cited as the 

5 "National Park Revitalization Act". 

6 (b) DEFINITION.-As used in this Act, the term "Na7 tiona! Park Service Concessions Policy Act" means the 
3 

2 

1 Act entitled "An Act relating to the establishment of con2 cession policies in the areas administei-ed by National 

3 Park Service and for other purposes" (16 U.S.C. 20-20g). 

4 SEC. 2. CONTRACTS. 

5 (a) MAxiMuM PERIOD; REQUIREMENTS.-Section 

6 3(a) of the National Park Service Concessions Policy Act 

7 (16 U.S.C. 20b(a)) is amended8 (1) by inserting "(1)" after "(a)"; 

9 (2) in paragraph (1) (as designated by para10 graph (1) of this subsection), by inserting after the 

11 first sentence the following: "Except as provided in 

l2 paragraph (3), the period of a contract entered into 

13 under this Act may not exceed 10 years."; and 

14 (3) by adding at the end the following new 

15 paragraphs: 

16 "(2) Contracts entered into under this Act after the 

17 date of enactment of this paragraph .shall18 "(A) be consistent with the laws relating to the 

19 National Park System and the unit concerned; 

20 "(B) be implemented in accordance with the 

21 purposes of the National Park System and the gen22 eral management plan for the unit of the National 

23 Park System concerned; 

• •BK 748 m . 
4 

3 

1 "(C) to the maximum extent practicable, con2 tain similar tenns and conditions in order to facili3 tate administration; 

4 "(D) to the extent applicable, provide for acqui5 sition of the possessory interest of a concessioner in 

6 a manner consistent with the objective of section 

7 6(c); and 

8 "(E) shall be transferable or assignable only 

9 upon the consent of the Secretary after reconsidertO ation and possible redetermination of the contract 

11 terms, including the franchise fee. 

12 "(3) The period of a contract may be for a period 

13 greater than 10 years if the Secretary finds that a longer 

14 period is necessary for the acquisition of possessory inter15 est under section 6(c); except that in no event may the 

16 period be greater than 15 years. 

17 "(4) In entering contracts under this Act, considerIS ation of revenue to the United States shall be subordinate 

19 to the objectives of protecting and preserving areas admin20 istered by the National Park Service arid of providing ade21 quate and appropriate 8ervices for visitors at reasonable 

22 rates.". 

23 (b) REPEAL OF OBLIGATION OF UNITED STATES TO 

24 COMPENSATE FOR Loss OF INVESTMENT.-Paragraph 

25 (1) of section 3(a) of the National Park Service Conces-
5 

4 

1 sions Policy Act (16 U.S.C. 20b(a)) (as amended by sub2 section (a)) is further amended by striking the last sen3 tence and inserting the following: "Effective with respect 

4 to contracts entered into, renewed, transferred, assigned, 

5 or renegotiated under this Act after the date of enactment 

6 of this sentence, the United States shall not be obligated 

7 to compensate the concessioner for such structures, fix8 tures, or improvements.". 

9 (c) FRANcmsE FEEs.-Section 3(d) of the National 

10 Park Service Concessions Policy Act (16 U.S.C. 20b(d)) 

11 is amended to read as follows: 

12 "(d) Franchise fees, however stated, shall be based 

13 on annual gross receipts from the concession and shall not 

14 be less than 22.5 percent of the annual gross receipts from 

15 that concession. Provision shall be made for reconsider16 ation and possible readjustment of franchise fees at least 

17 every 5 years unless the contract period is for a lesser 

18 period of time.". 

19 (d) UTILITY CoSTS.-(1) Section 3 of the National 

20 Park Service Concessions Policy Act (16 U.S.C. 20b) is 

21 amended by adding at the end the following: 

22 "(e) The concessioner shall be responsible for all util23 ity costs incurred by the concessioner in the operation of 

24 the concession under contracts entered into, renewed, 

•Ba 10m 
6 

5 

1 transferred, assigned, or renegotiated under this Act after 

2 the date of enactment of this subsection.". 

3 (2) Paragraph 4 of the first section of the Act enti4 tied "An Act to facilitate the management of the National 

5 Park System and miscellaneous areas administered in con6 nection with that System, and for other purposes" (16 

7 U.S.C. lb(4)) is amended by striking "concessioners,". 

8 SEC. 3. REPEAL OF PREFERENTIAL RIGHTS AND 

9 POSSESSORY INTEREST. 

10 (a) ADDITIONAL CoNTRACTS.-Section 4 of the Na11 tional Park Service Concessions Policy Act (16 U.S.C. 

12 20c) is amended by striking "and may grant to such con13 cessioner a preferential right to provide such new or addi14 tional accommodations, facilities, or services". 

15 (b) RENEWAL OF CoNTRACTS.-(!) The first sen16 tence of section 5 of the National Park Service Conces17 sions Policy Act is amended by striking "giving preference 

18 in the renewal of contracts or permits and in the negotia19 tion of new contracts or permits to the". 

20 (2) Section 5 of the National Park Service Conces21 sions Policy Act is amended by adding at the end the fol22 lowing: "The Secretary may not give a preference in the 

23 renewal of contracts or permits under this Act.". 

24 (c) POSSESSORY lNTERESTS.-Section 6 of the Na25 tiorial Park Service Concessions Policy Act is amended-

•BR 7411R 
7 

6 

1 (1) by inserting "(a)" after "SEc. 6"; 

2 (2) by inserting at the end of subsection (a) (as 

3 designated by paragraph (1)) the following: "This 

4 subsection shall not apply to contracts entered into, 

5 renewed, transferred, assigned, or renegotiated after 

6 the date of enactment of this sentence."; and 

7 (3) by adding at the end the following: 

8 "(b) Effective with respect to contracts entered into, 

9 renewed, transferred, assigned, or renegotiated under this 

10 Act after the date of enactment of this subsection, all 

11 right, title, and interest to any structure, fixture, or im12 provement acquired or constructed on land owned by the 

13 United States within an area administered by the National 

14 Park Service shall vest in the United States. 

15 "(c) The Secretary shall acquire any possessory inter16 est established before the date of enactment of this sub17 section relating to any contract subject to subsection (a) 

18 with funds made available by section 10(2). Possessory in19 terests relating to a concession shall be acquired before 

20 the end of the first contract period beginning after the 

21 date of enactment of this subsection that relates to that 

22 concession. 

23 "(d) Except as provided in section 11 of the Act enti24 tied 'An Act to establish the National Park Foundation', 

25 approved December 18, 1967, the Secretary may not ap-

•BR7 .. m 
8 

7 

1 prove the direct or indirect transfer of the possessory in2 terest relating to a contract subject to this Act.". 

3 SEC. 4. AVAILABILITY OJ' AUDIT JNli'ORMATION. 

4 The first undesignated paragraph of section 9 of the 

5 National Park Service Concessions Policy Act (16 U.S.C. 

6 20g) is amended by adding at the end the following: "A 

7 record of each audit under this section shall be available 

8 to the public in a manner that does not reveal trade ~ 

9 crets and commercial or financial information that is privi10 leged or confidential." . 

11 SEC. a. USE 01' I'RANCHISE I'EE8. 

12 (a) IN GENERAL.-The National Park Service Con13 cessions Policy Act is amended by adding at the end the 

14 following new section: 

15 "SEC. 10. USE OJ' I'RANCHISE I'EE8. 

16 "All receipts from franchise fees, however stated, col17 lected pursuant to this Act after September 30, 1991, 

18 shall be covered into a special account established in the 

19 Treasury of the United States. Amounts covered into the 

20 account in a fiscal year shall be available without further 

21 appropriation after the end of the fiscal year as follows: 

22 "(1) 2.5 percent of such receipts shall be avail23 able for the purposes of section 3 of the National 

24 Park System Visitor Facilities Fund Act. 

~iia 741 di 
9 

8 

1 "(2) 77.5 percent of the receipts shall be allo2 cated among the units of the National Park System 

3 in the same proportion as franchise fees from a unit 

4 bears to the total amount collected from all units 

5 under this section and shall be for capital and re6 source management, interpretation, and conservation 

7 needs and acquisition of possessory interest under 

8 section 6. 

9 "(3) The remaining 20 percent shall be allo10 cated among the units of the National Park System 

11 on the basis of capital and resource management, in12 terpretation, and conservation need as determined by 

13 the Director.". 

14 (b) CONFORMING AMENDMENT.-Section 3 of the 

15 National Park System Visitor Facilities Fund Act (16 

16 U.S.C. 19bb) is amended by striking "all National Park 

17 System concession fees, including franchise fees and build18 ing user fees," and inserting "2.5 percent of all National 

19 Park System concession franchise fees and all National 

20 Park System concession building user fees" . 

21 (c) NATIONAL PARK FOUNDATION.-The Act entitled 

22 "An Act to establish the National Park Foundation" (16 

23 U.S.C. 19c-19n) is amended by adding at the end the 

24 following: 

•BR 743 IH 
10 

9 

1 "SEC. 11. The Foundation is authorized to acquire 

2 the possessory interest relating to a concession if that 

3 possessory interest, upon acquisition by the Foundation, 

4 is transferred to the United States. For the purpose of 

5 this section, the tenn 'possessory interest' has the mean6 ing given such tenn under section 6 of the Act entitled 

7 'An Act relating to the establishment of concession policies 

8 in the areas administered by National Park Service and 

9 for other purposes', approved October 9, 1965.". 

0 

•HR '743 m 
11 

103nCONGRESS H R 1493 1ST SESSION • • 

To refonn the concessions policies of the National Park Service, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARcH 25, 1993 

Mrs. MEYERS of Kansas introduced the following bill; which was referred to 

the Committee on Natural Resources 

A BILL 

To refonn the concessions policies of the National Park 

Service, and for other purposes. 

I 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "National Park Service 

5 Concessions Policy Refonn Act of 1993". 

6 SEC. 2. FINDINGS AND POLICY. 

7 (a) FINDINGS.-In furtherance of the Act of August 

8 25, 1916 (39 Stat. 535), as amended (16 U.S.C. 1, 2-

9 4), which directs the Secretary of the Interior to admin10 ister areas of the National Park System in accordance 
12 

2 

1 with the fundamental purpose of preserving their !W..enery, 

2 wildlife, natural and historic objects, and providing for 

3 their enjoyment in a manner that will leave them 

4 unimpaired for the enjoyment of future generations, the 

5 Congress finds that the preservation of park values re6 quires that public accommodations, facilities, and services 

7 be limited to those necessary and. appropriate to carry out 

8 the approved management objectives for each park. 

9 (b) POLICY.-It is the policy of the Congress that10 (1) public facilities or services shall be provided 

11 within a park only when the private sector or other 

12 public agencies . cannot ad~ately provide such fa13 cilities or services in the vicinity of the park; 

14 (2) if the Secretary determines that public fa15 cilities or services should be provided within a park, 

16 such facilities or services shall be limited to locations 

17 and designs consistent with the highest degree of re18 source preservation and protection of the aesthetic 

19 values of the park; 

20 (3) such facilities and services shpuld be award21 ed through competitive bid procedures; ~nd 

22 ( 4) such facilities or services should be provided 

23 to the public at reasonable rates. 

24 SEC. 3. DEFINITIONS. 

25 As used in this Act, the term-
13 

3 

1 (1) "bid" means the complete proposal for a 

2 concessions contract offered by a potential or exist3 ing concessioner in response to the minimum re4 quirements for the contract established by the SeeS retary; 

6 (2) "concessioner" means a private person, cor7 p0ration, or other entity to whom a concessions conS tract has been awarded; 

9 (3) "concessions contract" means a contract, 

10 including permits, to provide facilities or services, or 

11 both, at a park; 

12 ( 4) "facilities" means improvements to real 

13 property within parks used to provide accommoda14 tions, facilities, or services to park visitors; 

15 (5) "park" means a unit of the National Park 

16 System; and 

17 (6) "Secretary'' means the Secretary of the In18 terior. 

19 SEC. 4. REPEAL OP CONCESSIONS POLICY ACT OP 1885. 

20 The Act of October 9, 1965, Public Law 89-249 (79 

21 Stat. 969, 16 U~S.C. 20-20g), entitled "An Act relating 

22 to the establishment of concession policies administered in 

23 the areas administered by the National Park Service, and 

24 for other purposes", is hereby repealed. The repeal of such 

25 Act shall not affect the validity of any contract entered 
14 

4 

1 into under such Act, but the provisions of this Act shall 

2 apply to any such contract except to the extent such provi3 sions are inconsistent with the express tenns and condi4 tions of the contract. 

5 SEC. I. CONCESSIONS POUCY. 

6 Subject to the findings and policy stated in section 

7 2 of this Act, and upon a detennination by the Secretary 

8 that facilities or services are necessary and appropriate for 

9 the accommodation of visitors at a park, the Secretary 

10 shall, consistent with the provisions of this Act, laws relat11 ing generally to the administration and management of 

12 units of the National Park System, and the park's general 

13 management plan, authorize private persons, corporations, 

14 or other entities to provide and operate such facilities or 

15 services as the Secretary deems necessary and appro16 priate. 

17 SEC. 8. COMPETITIVE BID PROCEDURES. 

18 (a) IN GENERAL.-Except as provided in subsection 

19 (b), and consistent with the provisions of subsection (f), 

20 any concessions contract entered into pursuant to this Act 

21 shall be awarded only through competitive bid procedures. 

22 Within 180 days after the date of enactment of this Act, 

23 the Secretary shall promulgate appropriate regulations es24 tablishing such procedures. 

•BRI-m 
15 

5 

1 {b) TEMPORARY CONTRA.CT.-Notwithstanding the 

2 provisions of subsection (a), the Secretary may waive com3 petitive bid procedures and award a temporary concessions 

4 contract in order to avoid interruption of services to the 

5 public at a park. 

6 (c) PuBLICATION OF CONTRACT REQUIREMENTS.-

? Prior to soliciting bids for a concessions contract at a 

8 park, the Secretary shall publish in the Federal Register 

9 the minimum bid requirements for such contract, as set 

10 forth in subsection (d). The Secretary shall also publish 

11 the terms and conditions of the previous concessions con12 tract awarded for such park, and such financial informa13 tion of the existing concessioner pertaining directly to the 

14 operation of the affected concessions facilities and services 

15 during the preceding contract period as the Secretary de16 termines is necessary to allow for the submission of com17 petitive bids. Any concessions contract entered into pursu18 ant to this Act shall provide that the concessioner shall 

19 waive any claim of confidentiality with respect to the po20 tential disclosure of such information by the Secretary. 

21 (d) MINIMUM BID REQUIREMENTS.-(!) No bid shall 

22 be considered which fails to meet the minimum require23 ments as determined by the Secretary. Such minimum re24 quirements shall include, but need not be limited to, the 

25 amount of franchise fee, the duration of the contract, and 

·BR.·t• m 
16 

6 

1 facilities or services required to be provided by the conces2 sioner. 

3 (2) The Secretary may reject any bid, notwithstand4 ing the amount of franchise fee offered, if the Secretary 

5 determines that the bidder is not qualified, is likely to pro6 vide unsatisfactory service, or that the bid is not respon7 sive to the objectives of protecting and preserving park 

8 resources and of providing necessary and appropriate fa9 cilities or services to the public at reasonable rates. 

10 (3) If all bids submitted to the Secretary either fail 

11 to meet the minimum bid requirements or are rejected by 

12 the Secretary, the Secretary shall establish new minimum 

13 bid requirements and reinitiate the competitive bid process 

14 pursuant to this section. 

15 (e) CONGRESSIONAL NOTIFICATION.-(1) The Sec16 retary shall submit any proposed concessions contract with 

17 anticipated annual gross receipts in excess of $1,000,000 

18 or a duration of greater than five years to the Committee 

19 on Energy and Natural Resources of the United States 

20 Senate and the Committee on Natural Resources of the 

21 United States House of Representatives. 

22 (2) The Secretary shall not ratify any such proposed 

23 contract until at least 60 days subsequent to the notifica24 tion of both Committees. 

•BR lOS.m 
17 

7 

1 (f) No PREFERENTIAL RIGHT OF RENEWAL.-(1) 

2 Except as provided in paragraph (2), the Secretary shall 

3 not grant a preferential right to a concessione~ to renew 

4 a concessions contract executed pursuant to this Act. 

5 (2)(A) Notwithstanding the provisions of paragraph 

6 (1), the Secretary may grant a preferential right of re7 newal to a concessioner8 (i) for a concessions contract which9 (I) authorizes a concessioner to provide 

10 outfitting or guide services (including, but not 

11 limited to "river running'' or other similar serv12 ices) within a park; and 

13 (II) does not grant the concessioner any 

14 interest in any structure, fixture, or improve15 ment pursuant to section 11 of this Act; and 

16 (ii) where the Secretary determines that the 

17 concessioner has operated satisfactorily on all eval18 uations conducted during the term of the previous 

19 contract; and 

20 (iii) where the Secretary determines that the 

21 concessioner's bid for the new contract satisfies the 

22 minimum bid requirements established by the Sec23 retary. 

24 (B) For the purpose of paragraph (2), the term 

25 "preferential right of renewal" means that the Secretary 
18 

8 

1 may allow a concessioner satisfying the requirements of 

2 subparagraph '(A) the opportunity to match any higher bid 

3 submitted to the Secretary. 

4 (g) No PREFERENTIAL RIGHT TO .ADDITIONAL 

5 SERVICES.-The Secretary shall not grant a preferential 

6 ·right to a concessioner to provide new or additional serv7 ices at a park. 

8 SEC. 7. FRANCHISE FEES. 

9 (a) IN GENERAL.-Franchise fees, however stated, 

10 shall be determined competitively from among those bids 

11 determined by the Secretary12 (1) to have satisfied the minimum bid require13 ments established pursuant to section 6(d); and 

14 (2) to be responsive to the objectives of protect15 ing and preserving park resources and of providing 

16 necessary and appropriate facilities or services to the 

17 public at reasonable rates. 

18 (b) MINIMUM FEE.-Such fee shall not be less than 

19 the minimum fee established by the Secretary for each 

20 contract. The minimum fee shall provide the concessioner 

21 with a reasonable opportunity to realize a profit on the 

22 operation as a whole, commensurate with the capital in23 vested and the obligations assumed. 

24 (c) OBJECTIVES OF FEE.-Consideration of revenue 

25 to the United States shall be subordinate to the objectives 
19 

9 

1 of protecting and preserving park resources and of provid2 ing necessary and appropriate facilities or services to the 

3 public at reasonable rates. 

4 SEC. 8. USE OF FRANCHISE FEES. 

5 .All receipts collected pursuant to this Act shall be 

6 covered into a special account established in the Treasury 

7 of the United States. Amounts covered into such account 

8 in a fiscal year shall be available for expenditure, subject 

9 to appropriation, solely as follows: 

10 (1) 50 percent shall be allocated among the 

11 units of the National Park System in the same pro12 portion as franchise fees collected from a specific 

13 unit bears to the total amount covered into the ac14 count for each fiscal year, to be used for resource 

15 management and protection, maintenance activities, 

16 interpretation, and research; and 

17 (2) 50 percent shall be allocated among the 

18 units of the National Park System on the basis of 

19 need, in a manner to be determined by the Sec20 retary, to be used for resource management and pro21 tection, maintenance activities, interpretation, and 

22 research. 
20 

10 

1 SEC. 9. DURATION OF CONTRACT. 

2 (a) MAxiMuM TERM.-A concessions contract en3 tered into pursuant to this Act shall be awarded for a tenn 

4 not to exceed ten years. 

5 (b) TEMPORARY CONTRACT.-A temporary conces6 sions contract awarded on a noncompetitive basis pursu7 ant to section 6(b) of this Act shall be for a tenn not 

8 to exceed two years. 

9 SEC. 10. TRANSFER OF CONTRACT. 

10 (a) IN GENERAL.-(1) No concessions contract may 

11 be transferred, assigned, sold, or otherwise conveyed by 

12 a concessioner without prior written notification to, and 

13 approval of the Secretary. The Secretary shall not approve 

14 the transfer of a concessions contract to any individual, 

15 corporation or other entity if the Secretary detennines 

16 that such individual, corporation or entity is, or will be, 

17 unable to adequately provide the appropriate facilities or 

18 services required by the contract. 

19 (2) The Secretary shall reject any proposal to trans20 fer, assign, sell, or otherwise convey a concessions cont:r_-act 

21 if the Secretary determines that such transfer, assign22 inent, sale or conveyance is not consistent with the objec23 tives of protecting and preserving park resources, and of 

24 providing necessary and appropriate facilities or services 

25 to the public at reasonable rates . 

. • ... ••m 
21 

11 

1 (b) CONGRESSIONAL NOTIFICATION.-Within 30 

2 days after receiving a proposal to transfer, assign, sell, 

3 or otherwise convey a concessions contract, the Secretary 

4 shall notify the Committee on Energy and Natural Re5 sources of the United States Senate and the Committee 

6 on Natural Resources of the United States House of Rep7 resentatives of such proposal. Approval of such proposal, 

8 if granted by the Secretary, shall not take effect until 60 

9 days after the date of notification of both Committees. 

10 SEC. 11. PROTECI'ION OF CONCESSIONER INVE8TMENT. 

11 (a) EXISTING STRUCTURES.-(!) A concessioner who 

12 before the date of the enactment of this Act has acquired 

13 or constructed, or has commenced acquisition or construc14 tion of any structure, fixture, or improvement upon land 

15 owned by the United States within a park, pursuant to 

16 a concessions contract, shall have a possessory interest 

17 therein, to the extent provided by such contract. 

18 (2) The provisions of this subsection shall not apply 

19 to a concessioner whose contract in effect on the date of 

20 enactment of this Act does not include recognition of a 

21 possessory interest. 

22 (3) With respect . to a concessions coritract entered 

23 into . on or after the date of enactment of this Act, the 

24 provisions of subsection (b) shall apply to any existing 

25 structure, fixture, or improvement as defined in paragraph 

•BRI-m 
22 

12 

1 (a)(1), except that the actual original cost of such struc2 ture, fiXture, or improvement shall be deemed to be the 

3 value of the possessory interest as of the termination date 

4 of the previous concessions contract. 

5 (b) NEW STRUCTURES.-(1) On or after the date of 

6 enactment of this Act, a concessioner who constructs or 

7 acquires a new, additional, or replacement structure, fix8 ture, or improvement upon land owned by the United 

9 States within a park, pursuant to a concessions contract, 

10 shall have an interest in such. structure, fixture, or im11 provement equivalent to the actual original cost of acquir12 ing or constructing such structure, fixture, or improve13 ment, less straight line depreciation over the estimated 

14 useful life of the asset according to Generally Accepted 

15 Accounting Principles: Provided, That in no event shall 

16 the estimated useful life of such asset exceed 31.5 years. 

17 (2) In the event that the contract expires or is termi18 nated prior to the recovery of such costs, the concessioner 

19 shall be entitled to receive from the United States or the 

20 successor concessioner payment equal to the value of the 

21 concessioner's interest in such structure, fixture, or im22 provement. A successor concessioner may not revalue the 

23 interest in such structure, fixture, or improvement, the 

24 method .of depreciation, or the estimated useful life of the 

25 asset. 

•HR 141111B 
23 

13 

1 (3) Such costs shall be accounted for in the schedule 

2 of rates and charges established pursuant to section 13 

3 of this Act. 

4 ( 4) Title to any such structure, fixture, or improveS ment shall be vested in the United States. 

6 (c) INSURANCE, MAINTENANCE AND REPAIR.-Noth7 ing in this section shall affect the obligation of each conS cessioner to insure, maintain, and repair any structure, 

9 fixture, or improvement assigned to such concessioner and 

10 to insure that such structure, fixture, or improvement 

11 fully complies with applicable safety and health laws and 

12 regulations. 

13 (d) PuBLIC REVIEW.-The construction of any new, 

14 additional, or replacement structure, fixture, or improve15 ment involving costs of $1,000,000 or more, provided or 

16 financed by a concessioner, upon land owned by the Unit17 ed States within a park, shall be authorized only after 

18 public review, including an opportunity for public hear19 ings, to determine whether. such construction is appro20 priate and consistent with the purposes of the National 

21 Park System, the laws relating generally to the adminis22 tration and management of the system, and the park's 

23 general management plan. The requirements of this sub24 section may be satisfied by the public review and hearings 

·tBB 1.-IB 
24 

14 

1 associated with the development of the general manage2 ment plan for the park. 

3 SEC. 12. U1'ILITY COSTS. 

4 (a) IN GENERAL.-A concessions contract entered 

5 into pursuant to this Act shall provide that the conces6 sioner shall be responsible for all utility costs incurred by 

7 the concessioner. 

8 (b) CONFORMING AMENDMENT.-Section 1 of the 

9 Act of August 8, 1953 (16 U.S.C. 1b) is amended in para10 graph 4 by striking "concessioners,". 

11 SEC. 13. RATES AND CHARGES TO PUBLIC. 

12 The reasonableness of a concessioner's rates and 

13 charges to the public shall, unless otherwise provided in 

14 the bid specifications and contract, be judged primarily 

15 by comparison with those rates and charges for facilities 

16 and services of comparable character under similar condi17 tions, with due consideration for length of season, seasonal 

18 variance, average percentage of occupancy, accessibility, 

19 availability and costs of labor and materials, type of pa20 tronage, and other factors deemed significant by the Sec21 retary. 

22 SEC. 14. CONCESSIONER PERFORMANCE EVALUATION. 

23 (a) REGULATIONS.-Within 180 days after the date 

24 of enactment of this Act, the Secretary shall publish in 

25 the Federal Register after an appropriate period for public 
25 

15 

l comment; regulations establishing standards and criteria 

2 for evaluating the performance of concessions operating 

3 within parks. 

4 (b) PERIODIC EVALUATION.-(1) The Secretary shall 

5 periodically conduct an evaluation of each concessioner op6 e~ting under a concessions contract pursuant to this Act, 

7 as appropriate, to detennine whether such concessioner 

8 has perfonned satisfactorily. If the Secretary's perfonn9 ance evaluation results in an unsatisfactory rating of the 

10 concessioner's overall operation, the Secretary shall pre11 pare an analysis of the minimum requirements necessary 

12 for the operation to be rated satisfactory, and shall so no13 · tify the concessioner in writing. 

14 (2) The concessioner shall be responsible for all costs 

15 associated with any subsequent evaluations resulting from 

16 an unsatisfactory rating. 

17 (3) If the Secretary tenninates a concessions contract 

18 pursuant to this section, the Secretary shall solicit bids 

19 for a new contract consistent with the provisions of this 

20 Act. 

21 (c) CONGRESSIONAL NOTIFICATION.-The Secretary 

22 shall notify the Committee on Energy and Natural Re23 sources of the United States Senate and the Committee 

24 on Natural Resources of the United States House of Rep-
26 

16 

1 resentatives of each unsatisfactory rating and of each con2 cessions contract terminated pursuant to this section. 

3 SEC. 115. RECORDKEEPING REQUIREMENTS. 

4 (a) IN GENERAL.-Each concessioner shall keep such 

5 records as the Secretary may prescribe to enable the Sec6 retary to determine that all terms of the concessioner's 

7 contract have been, and are being faithfully performed, 

8 and the Secretary or any of the Secretary's duly author9 ized representatives shall, for the purpose of audit and ex1 0 amination, have access to such records and to other books, 

11 documents and papers of the concessioner pertinent to the 

12 contract and all the terms and conditions thereof as the 

13 Secretary deems necessary. 

14 (b) GENERAL ACCOUNTING OFFICE REVIEW.-The 

15 Comptroller General of the United States or any of his 

16 or her duly authorized representatives shall, until the expi17 ration of five calendar years after the close of the business 

18 year for each concessioner or subconcessioner, have access 

19 to and the right to examine any pertinent books, docu20 ments, papers, and reeords of the concessioner or 

21 subconcessioner related to the contracts or contract in22 volved. 

•BRl.-m 
27 

17 

1 SEC. 18. EXEMP'nON FROM CERTAIN LEASE REQUIBE2 liiENT8. 

3 The provisions of section 321 of the Act of June 30, 

4 1932 (47 Stat. 412; 40 U.S.C. 303b), relating to the leas5 ing of buildings and properties of the United States, shall 

6 not apply to contracts awarded by the Secretary pursuant 

7 to this Act. 

8 SEC. 1'7. CONFORMING AMENDMENT. 

9 Subsection (h) of section 2 of the Act of August 21, 

10 1935, the Historical Sites, Buildings and Antiquities Act 

11 (49 Stat. 666; 16 U.S.C. 462(h)), is amended by striking 

12 out the proviso therein. 

0 
28 

103D CONGRESS H R 2146 1ST SESSION 

• • 

To refonn the concessions policies of the National Park Service, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 18, 1993 

Mr. STEARNS introduced the following bill; which was referred to the 

Committee on Natural Resources 

A BILL . ' 

To refonn the concessions policies of the National Park 

Service, and for other purposes. 

1 Be it enacted by the Senate and House of Representa~ 

2 tives of the United States of .America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "National Park Service 

5 Concessions Policy Refonn Act of 1993". 

6 SEC. I. FINDINGS AND POLICY. 

7 (a) FINDINGS.-In furtherance of the Act of August 

8 25, 1916 (39 Stat. 535), as amended (16 U.S.C. 1, 2-

9 4), which directs the Secretary of the Interior to admin1 0 ister areas of the National Park System in accordance 
29 

2 

1 with the fundamental purpose of preserving their scenery, 

2 wildlife, natural and historic objects, and providing for 

3 their enjoyment in a manner that will leave them 

4 unimpaired for the enjoyment of future generations, the 

5 Congress finds that the preservation of park values re6 quires that public ,accommodations, facilities, and · services 

7 be limited ·to those necessary and appropriate to carry out 

8 the approved management objectives for each park. 

9 (b) POLICY.-It is the policy of the Congress thatr10 (1) public facilities or services shall be provided 

11 within a park only when the private sector or other 

12 public agencies cannot adequately provide such fa13 cilities or services in the vicinity of the park; 

14 (2) if the Secretary determines that public fa15 cilities or services should be provided within a park, 

16 such facilities or services shall be limited to locations 

17 and designs consistent with the highest degree of re18 source preservation and protection of the aesthetic 

19 values of the park; 

20 (3) such facilities and services should be award21 ed through competitive bid procedures; and 

22 ( 4) such facilities or services should be provided 

23 to the public at reasonable rates. 

24 SEC. S. DEFINITIONS. 

25 .As used in this Act, the term-

•BR 1.141 1B 

75-380 - 94 - 2 
30 

3 

1 (1) "bid" means the complete proposal for a 

2 concessions contract offered by a potential or exist3 ing concessioner in response to the minimum re4 quirements for the contract established by the Sec5 retary; 

6 (2) "concessioner" means a private person, cor7 poration, or other entity to whom a concessions conS 1 

tract has been awarded; 

9 (3) "concessions contract" means a contract, 

10 including permits, to provide facilities or services, or 

11 both, at a park; 

12 ( 4) "facilities" means improvements to real 

13 property within parks used to provide accommoda14 tions, facilities, or services to park visitors; 

15 (5) "park" means a unit of the National Park 

16 System; and 

17 (6) "Secretary" means the Secretary of the In18 terior. 

19 SEC. 4. REPEAL OF CONCESSIONS POLICY ACf OF 1961. 

20 The Act of October 9, 1965, Public Law 89-249 (79 

21 Stat. 969, 16 U.S.C. 20-20g), entitled "An Act relating 

22 to the establishment of concession policies administered in 

23 the areas administered by the National Park Service, and 

24 for other purposes", is hereby repealed. The repeal of such 

25 Act shall not affect the validity of any contract entered 
31 

4 

1 into under such Act, but the provisions of this Act shall 

2 apply to any such contract except to the extent such provi3 sions are inconsistent with the express tenns and condi4 tions of the contract. 

5 SEC. 5. CONCESSIONS POUCY. 

6 Subject to the findings and policy stated in section 

7 2 of this Act, and upon a detennination by the Secretary 

8 that facilities or services are necessary and appropriate for 

9 the accommodation of visitors at a park, the Secretary 

10 shall, consistent with the provisions of this Act, laws relat11 ing generally to the administration and management of 

12 units of the National Park System, and the park's general 

13 management plan, authorize private persons, corporations, 

14 or other entities to provide and operate such facilities or 

15 services as the Secretary deems necessary and appro16 priate. 

17 SEC. 8. COMPETITIVE BID PROCEDURES. 

18 (a) IN GENERAL.-Except as provided in subsection 

19 (b), and consistent with the provisions of subsection (f), 

20 any concessions contract entered into pursuant to this Act 

21 shall be awarded only through competitive bid procedures. 

22 Within 180 days after the date of enactment of this Act, 

23 the Secretary shall promulgate appropriate regulations es24 tablishing such procedures. 

•HRI148 m 
32 

5 

1 (b) TEMPORARY CONTRACT.-Notwithstanding the 

2 provisions of subsection (a), the Secretary may waive com3 petitive bid procedures and award a temporary concessions 

4 contract in order to avoid interruption of services to the 

5 public at a park. 

6 (c) PuBLICATION OF CONTRACT REQUffiEMENTS;--

7 Prior to soliciting bids for a concessions contract at a 

8 park, the Secretary shall publish in the Federal Register 

9 the minimum bid requirements for such contract, as set 

10 forth in subsection (d). The Secretary shall also publish 

11 the terms and conditions of the previous concessions con12 tract awarded for such park, and such financial informa13 tion of the existing concessioner pertaining directly to the 

14 operation of the affected concessions facilities and services 

15 during the preceding contract period as the Secretary de16 termines is necessary to allow for the submission of com17 petitive bids. Any concessions contract entered into pursu18 ant to this Act shall provide that the concessioner shall 

19 waive any claim of confidentiality with respect to the po20 tential disclosure of such information by the Secretary. 

21 (d) MINIMUM BID REQumEMENTS.-(1) No bid shall 

. 22 be considered which fails to meet the minimum require23 ments as determined by the Secretary. Such minimum re24 quirements shall include, but need not be limited to, the 

25 amount of franchise fee, the duration of the contract, and 

•DR 11441 m 
33 

6 

1 facilities or services required to be provided by the conces2 sioner. 

3 (2) The Secretary may reject any bid, notwithstand4 ing the amount of franchise fee offered, if the Secr~tary 

S determines that the bidder is not qualified, is likely to pro6 vide unsatisfactory service, or that the bid is not respon7 sive to the objectives of protecting and preserving park 

8 resources and of providing necessary and appropriate fa9 cilities or services to the public at reasonable rates. 

10 (3) If all bids submitted to the Secretary either fail 

11 to meet the minimum bid requirements or are rejected by 

12 the Secretary, the Secretary shall establish new minimum 

13 bid requirements and reinitiate the competitive bid process 

14 pursuant to this section. 

15 (e) CONGRESSIONAL NOTIFICATION.-(1) The Sec16 retary shall submit any proposed concessions contract with 

17 anticipated annual gross receipts in excess of $1,000,000 

18 or a duration of greater than five years to the Committee 

19 on Energy and Natural Resources of the United States 

20 Senate and the Committee on Natural Resources of the 

21 United States House of Representatives. 

22 (2) The Secretary shall not ratify any such proposed 

23 contract until at least 60 days subsequent to the notifica24 tion of both Committees. 

•BR 1148 m 
34 

7 

1 (f) No PREFERENTIAL RIGHT OF RENEWAL.-(1) 

2 Except as provided in paragraph (2), the Secretary shall 

3 not grant a preferential right to a concessioner to renew 

4 a concessions contract executed pursuant to this Act. 

5 (2)(A) Notwithstanding the provisions of paragraph 

6 (1), the Secretary may grant a preferential right of re7 newal to a concessioner8 (i) for a concessions contract which9 (I) authorizes a concessioner to provide 

10 outfitting or guide services (including, but not 

11 limited to "river running" or other similar serv~ 

12 ices) within a park; and 

13 (II) does not grant the concessioner any 

14 interest in any structure, fixture, or improveIS ment pursuant to section 11 of this Act; and 

16 (ii) where the Secretary determines that the 

17 concessioner has operated satisfactorily on all eval18 uations conducted during the term of the previous 

19 contract; and 

20 (iii) where the Secretary determines that the 

21 concessioner's bid for the new contract satisfies the 

22 minimum bid requirements established by the Sec23 retary. 

24 (B) For the purpose of paragraph (2), the term 

25 "preferential right of renewal" means that the Secretary 

•BR·I146 m 
35 

8 

1 may allow a concessioner satisfying the requirements of 

2 subparagraph (A) the oppertunity to match any higher bid 

3 submitted to the Secretary. 

4 (g) NO PREFERENTIAL RIGHT TO ADDITIONAL 

5 SERVICES.-The Secretary shall not grant a preferential 

6 right to a concessioner to provide new or additional serv7 ices at a park. 

8 SEC. 7. FRANCffiSE FEES. 

9 (a) IN GENERAL.-Franchise fees, however stated, 

10 shall be determined competitively from among those bids 

11 determined by the Secretary12 ( 1) to have satisfied the minimum bid require13 ments established pursuant to section 6(d); and 

14 (2) to be responsive to the objectives of protect15 ing and preserving park resources and of providing 

16 necessary and appropriate facilities or services to the 

17 public at reasonable rates. 

18 (b) MINIMUM FEE.-Such fee shall not be less than 

19 the minimum fee established by the Secretary for each 

20 contract. The minimum fee shall provide the concessioner 

21 with a reasonable opportunity to realize a profit on the 

22 operation as a whole, commensurate with the capital in23 vested and the obligations assumed. 

24 (c) OBJECTIVES OF FEE.-Consideration of revenue 

25 to the United States shall be subordinate to the objectives 

•HR 2148 m .. 
36 

9 

1 of protecting and preserving park resources and of provid2 ing necessary and appropriate facilities or services to the 

3 public at reasonable rates. 

4 SEC. 8. USE OF FRANCIUSE FEES. 

5 All receipts collected pursuant to this Act shall be 

6 covered into a special account established in the Treasury 

7 of the United States. Amounts covered into such account 

8 in a fiscal year shall be available for expenditure, subject 

9 to appropriation, solely as follows: 

10 (1) 50 percent shall be allocated among the 

11 units of the National Park System in the same pro12 portion as franchise fees collected from a specific 

13 unit bears to the total amount covered into the ac14 count for each fiscal year, to be used for resource 

15 management and protection, maintenance activities, 

16 interpretation, and research; and 

17 (2) 50 percent shall be allocated among the 

18 units of the National Park System on the basis of 

19 need, in a manner to be determined by the Sec20 retary, to be used for resource management and pro21 tection, maintenance activities, interpretation, and 

22 research. 
37 

10 

1 · SEC. 9.•DURATION OF CONTRACf. 

2 (a) MAxiMuM TERM.-A concessions contract en3 tered into pursuant to this Act shall be awarded for a tenn 

4 not to exceed ten years. 

5 (b) TEMPORARY CONTRACT.-A temporary conces6 sions contract awarded on a noncompetitive basis pursu7 ant to section 6(b) of this Act shall be for a tenn not 

8 to exceed two years. 

9 SEC. 10. TRANSFER OF CONTRACf. 

10 (a) IN GENERAL.-(1) No concessions ~ntract may 

11 be transferred, assigned, sold, or otherwise conveyed by 

12 a concessioner without prior written notification to, and 

13 approval of the Secretary. The Secretary shall not approve 

14 the transfer of a concessions contract to any individual, 

15 corporation or other entity if the Secretary determines 

16 that such individual, corporation or entity is, or will be, 

17 unable to adequately provide the appropriate facilities or 

18 services required by the contract. 

19 (2) The Secretary shall reject any proposal to trans20 fer, assign, sell, or otherwise convey a concessions contract 

21 if the Secretary detennines that such transfer, assign22 ment, sale or conveyance is not consistent with the objec23 tives of protecting and preserving park resources, and of 

24 providing necessary and appropriate facilities or services 

25 to the public at reasonable rates. 

•HB 1148 m 
38 

11 

1 (b) CONGRESSIONAL NOTIFICATION.-Within 30 

2 days after receiving a proposal to transfer, assign, sell, 

3 or otherwise convey a concessions contract, the Secretary 

4 shall notify the Committee on Energy and Natural Re5 sources of the United States Senate and the Committee 

6 on Natural Resources of the United States House of Rep7 resentatives of such proposal. Approval of such proposal, 

8 if granted by the Secretary, shall not take effect until 60 

9 days after the date of notification of both Committees. 

10 SEC. 11. PROTECI'ION OF CONCESSIONER INVESTMENT. 

11 (a) EXISTING STRUCTURES.-(!) A concessioner who 

12 before the date of the enactment of this Act has acquired 

13 or constructed, or has commenced acquisition or construc14 tion of any structure, fixture, or improvement upon land 

15 owned by the United States within a park, pursuant to 

16 a concessions contract, shall have a possessory interest 

17 therein, to the extent provided by such contract. 

18 (2) The provisions of this subsection shall not apply 

19 to a concessioner whose contract in effect on the date of 

20 enactment of this Act does not include recognition of a 

21 possessory interest. 

22 · (3) With respect to a concessions contract entered 

- 23 into on or after the date of enactment of this Act, the 

24 provisions of subsection (b) shall apply to ahy existing 

25 structure, fixture, or improvement as defined in paragraph 

•BRat• m 
39 

12 

1 (a)(l), except that the actual original cost of such struc2 ture, fixture, or improvement shall be deemed to be the 

3 value of the possessory interest as of the termination date 

4 of the previous concessions contract. 

5 (b) NEW STRUCTURES.-(!) On or after the date of 

6 enactment of this Act, a concessioner who constructs or 

7 acquires a new, additional, or replacement structure, fiX8 ture, or improvement upon land owned by the United 

9 States within a park, pursuant to a concessions contract, 

10 shall have an interest in such structure, fixture, or im11 provement equivalent to the actual original cost of acquir12 ing or constructing such structure, fixture, or improve13 ment, less straight line depreciation over the estimated 

14 useful life of the asset according to Generally Accepted 

15 Accounting Principles: Provided, That in no event shall 

16 the estimated useful life of such asset exceed 31.5 years. 

17 (2) In the event that the contract expires or is termi18 nated prior to the recovery of such costs, the concessioner 

19 shall be entitled to receive from the United States or the 

20 successor concessioner payment equal to the value of the 

21 concessioner's interest in such structure, fixture, or im22 provement. A successor concessioner may not revalue the 

23 interest in such structure, fiXture, or improvement, the 

24 method of depreciation, or the estimated useful life of the 

25 asset. 

•BR 11441 m 
40 

13 

1 (3) Such costs shall be accounted for in the schedule 

2 of rates and charges established pursuant to section 13 

3 of this Act. 

4 ( 4) Title to any such structure, fixture, or improveS ment shall be vested in the United States. 

6 (c) INSURANCE, MAINTENANCE AND REPAIR.-Noth7 ing in this section shall affect the obligation of each conS cessioner to insure, maintain, and repair any structure, 

9 fixture, or improvement assigned to such concessioner and 

10 to insure that such structure, fixture, or improvement 

11 fully complies with applicable safety and health laws and 

12 regulations. 

13 (d) PuBLIC REVIEW.-The construction of any new, 

14 additional, or replacement structure, fixture, or improve15 ment involving costs of $1,000,000 or more, provided or 

16 financed by a concessioner, upon land owned by the Unit17 ed States within a park, shall be authorized only after 

18 public review, including ail opportunity for public hear19 ings, to determine whether such construction is appro20 priate and consistent with the purposes of the National 

21 Park System, the laws relating generally to the adminis22 tration and management of the system, and the park's 

23 general management plan. The requirements of this sub24 section may be satisfied by the public review arid hearings 

······~ ~ 
41 

14 

1 associated with the development of the general manage2 ment plan for the park. 

3 SEC. 12. UTILITY COSTS. 

4 (a) IN GENERAL.-A concessions contract entered 

5 into pursuant to this Act shall provide that the conces6 sioner shall be responsible for all utility costs incurred by 

7 the concessioner. 

8 (b) CONFORMING AMENDMENT.-Section 1 of the 

9 Act of August 8, 1953 (16 U.S.C. 1b) is amended in para10 graph 4 by striking "concessioners,". 

11 SEC. 13. RATES AND CHARGES TO PUBLIC. 

12 The reasonableness of a concessioner's rates and 

13 charges to the public shall, unless otherwise provided in 

14 the bid specifications and contract, be judged primarily 

15 by comparison with those rates and charges for facilities 

16 and services of comparable character under similar condi17 tions, with due consideration for length of season, seasonal 

18 variance, average percentage of occupancy, accessibility, 

19 availability and costs of labor and materials, type of pa20 tronage, and other factors deemed significant by the Sec21 retary. 

22 SEC. 14. CONCESSIONER PERFORMANCE EVALUATION. 

23 (a) REGULATIONS.-Within 180 days after the date 

24 of enactment of this Act, the Secretary shall publish in , 

25 the Federal Register after an appropriate period for public 
42 

15 

1 comment, regulations establishing standards and criteria 

2 for evaluating the performance of concessions operating 

3 within parks. 

4 (b) PERIODIC EVALUATION.-(!) The Secretary shall 

5 periodically conduct an evaluation of each concessioner op6 erating under a concessions contract pursuant to this Act, 

7 as appropriate, to determine whether such concessioner 

8 has performed satisfactorily. If the Secretary's perform9 ance evaluation results in an unsatisfactory rating of the 

10 concessioner's overall operation, the Secretary shall pre11 pare an analysis of the minimum requirements necessary 

12 for the operation to be rated satisfactory, and shall so no13 tify the concessioner in writing. 

14 (2) The concessioner shall be responsible for all costs 

15 associated with any subsequent evaluations resulting from 

16 an unsatisfactory rating. 

17 (3) If the Secretary terminates a concessions contract 

18 pursuant to this section, the Secretary shall solicit bids 

19 for a new contract consistent with the provisions of this 

20 Act. 

21 (c) CONGRESSIONAL NOTIFICATION.-The Secretary 

22 shall notify the Committee on Energy and Natural Re23 sources of the United States Senate and the Committee 

24 on Natural Resources of the United States House of Rep-

' 

. • 114e iiiJ' 
43 

16 

1 resentatives of each unsatisfactory rating and of each con2 cessions contract tenninated pursuant to this section. 

3 SEC. 15. RECORDKEEPING REQUIREMENTS. 

4 {a) IN GENERAL.-Each concessioner shall keep such 

5 records as the Secretary may prescribe to enable the Sec6 retary to detennine that all tenns of the concessioner's 

7 contract have been, and are being faithfully perfonned, 

8 and the Secretary or any of the Secretary's duly author9 ized representatives shall, for the purpose of audit and ext 0 amination, have access to such records and to other books, 

11 documents and papers of the concessioner pertinent to the 

12 contract and all the tenns and conditions thereof as the 

13 Secretary deems necessary. 

14 {b) GENERAL ACCOUNTING OFFICE REVIEW.-The 

15 Comptroller General of the United States or any of his 

16 or her duly authorized representatives shall, until the expi17 ration of five calendar years after the close of the business 

18 year for each concessioner or subconcessioner, have access 

19 to and the right to examine any pertinent books, docu20 ments, papers, and records of the concessioner or 

21 subconcessioner related to the contracts or contract 

22 involved. 

•BB 2148 Ql 
17 

1 SEC. 18. EXEMPI'ION FROM CERTAIN LEASE REQUIRE· 

2 MENTS. 

3 The provisions of section 321 of the Act of June 30, 

4 1932 (47 Stat. 412; 40 U.S.C. 303b), relating to the leas5 ing of buildings and properties of the United States, shall 

6 not apply to contracts awarded by the Secretary pursuant 

7 to this Act. 

8 SEC. 17. CONFORMING AMENDMENT. 

9 Subsection (h) of section 2 of the Act of August 21, 

10 1935, the Historical Sites, Buildings and Antiquities Act 

11 (49 Stat. 666; 16 U.S.C. 462(h)), is amended by striking 

12 out the proviso therein. 

0 

•DR Jt.fC m 
45 

Chairman VENTO. Over the years, there have been extensive 

oversight and legislative hearings concerning national park concessions and the extent to which the specific provisions of law on concession policy, the Concession Policy Act, have shaped the National 

Park Service concession management policies. We have looked at the activities themselves in terms of specific 

sites such as Ellis Island and the Statue of Liberty concession. We 

have had extensive hearings on the issue of the Yosemite contract 

and the sale and transfer of the previous holder of that contract 

and the extinguishing of possessory interest. · And, there have been a number of significant reports on the subject by the General Accounting Office and by the Interior and Inspector General's Office. 

The basic law now governing the subject in the National Park 

System was enacted nearly 30 years ago. Members who served on 

the subcommittee in the last Congress will recall that the Bush Administration's view was that some changes in park concession policy were desirable but that there was no need for revisions in the 

law. I don't share that view. And, I think that most Members of 

Congress do not share that view. 

As a matter of fact, the Department of the Interior under Secretary Lujan did make a number of changes in concession policy 

and regulations. But there are some changes in policy that under 

existing law cannot be accomplished through administrative means 

alone. Those would require a change in law. 

And, I think that Secretary Lujan, after working with the regulations, came to appreciate and understand that and supported that. 

He supported changes in law. · In my opinion, it's time for serious consideration of revisions to 

the Concessions Policy Act. As I've stated, nearly 30 years have 

elapsed since the Act was put on the books. And, we are living in 

a new era. 

The national parks, for the most part, are no longer as isolated 

or remote from developed areas as once was the case. Visitors can 

more readily obtain goods and services in the vicinity of the parks. 

So, there is presumably less absolute need for some concession operations within parks. 

Also, national park concession contracts are more sought after, so 

that there is less need to extend special inducements to attract concessioners. And, enhancing competition among would-be concessioners can better serve both park visitors and the taxpayers and 

can be done in the normal course of business such as with other 

types of lease arrangements that exist and work in the private sector. 

In this era of tight budgets, we also need to seriously look at 

changes in the way concession receipts are used, especially in view 

of the backlog of needs throughout the National Park System. 

One of the bills before us, by Congressman Synar, would make 

a number of specific revisions to the Concessions Policy Act. The 

other two bills would repeal the Concessions Policy Act and replace 

it with a new statute. 

The background material is all before the members and staff, as 

well as much of the testimony, which I appreciate receiving prior 
46 

to the hearing, including your statement, Congressman Synar. So, 

I would suggest members look at it. 

And, I will see if my colleague has an opening statement. Mr. 

Hansen. 

STATEMENT OF BON. JAMES V. HANSEN 

Mr. HANSEN. Yes. Thank you, Mr. Chairman. I welcome our two 

colleagues here and other: .• people who are here. 

Mr. Chairman, I would like to thank you for holding this hearing 

on the topic of concession management in the National Park Service. This is a subject of critical importance to park visitors and one 

which has been examined in numerous hearings by this subcommittee in the last few years. 

The existing law establishes three priority objectives for the concessionaire management program. First, protection of park resources; second, providing quality service to visitors at a reasonable 

price; and, third, ensuring a reasonable rate of return to the government and opportunity for profit by the concessionaire. 

In all these many hearings we have had on this topic, we have 

yet to receive testimony detailing negative impacts of unauthorized 

concession activities on park resources or about how visitors are 

being ripped off for poor quality services. Yet, again we hear this 

cry for a total rejection of our existing laws and policies, which appear to be working pretty well. 

I will agree with those who argue that some of the existing concession contracts, particularly the older ones, don't provide the type 

of return to the government that we would like to have in hindsight. But, starting with the efforts of former Secretary Lujan, I believe that the National Park Service negotiating process has begun 

to improve. 

I would also note for the record that the contract most often 

characterized in the past as a sweetheart franchise fee for the Yosemite concession went from a . 75 percent fee to a zero franchise 

under Secretary Babbitt. 

I would also agree with those who argue for greater competition 

at the time of contract renewal. We do need to be careful in how 

we approach this issue so that we do not take the rights previously 

provided under existing contracts. 

However, I do wonder if the existing program represents the type 

of balance we want between retention of existing quality operators 

and adequate competition to get the best deal for the public and 

the government. I remain skeptical about those who want a complete overall of the existing system. 

I am concerned that the cumulative effect of all of the reforms 

included in these measures will undermine the success we have enjoyed in the existing concession program. I don't understand why 

the Administration is seeking new legislation before they test out 

our own regulations. 

I note that the Administration's testimony incorrectly recites the 

basic National Park Service mission as defined in the 1916 National Park Service Organic Act. The same environmental extremists who advocate changing the National Park Service mission from 

conservation to preservation have also advocated total elimination 
47 

of all concession facilities in places such as Zion National Park in 

the past. 

As I represent that area, and have for many .years, I know that 

the American public is opposed to such an approach to park management. And, I think even the majority of the members of this 

subcommittee will oppose it. 

Mr. Chairman, I hope that we can work together on a tune-up of the existing law based on our experience of over nearly 30 years. 

However, I would say to those who are seeking a complete overall 

of existing law that they have a lot more work to do to make their 

case, I believe, before Congress and the committee. 

And, thank you, Mr. Chairman. 

PANEL CONSISTING OF BON. MIKE SYNAR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA, AND 

CHAIRMAN, SUBCOMMITTEE ON ENVIRONMENT, ENERGY 

AND NATURAL RESOURCES, COMMITTEE ON GOVERNMENT 

OPERATIONS; AND BON. JAN MEYERS, A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF KANSAS 

Chairman VENTO. You are welcome. We are pleased to welcome 

Congressman Synar and Congresswoman Meyers. 

I don't see Cliff Stearns here at this time. Maybe he will submit 

his testimony or be by_ a little later. 

But, let's proceed. Without objection, the complete statements of 

members on the subcommittee and witnesses will be made part of 

the record. Hearing no objection, so ordered. 

Mike, why don't you proceed with your statement? 

STATEMENT OF BON. MIKE SYNAR 

Mr. SYNAR. Thank you, Bruce. I will be very brief. 

It's a great opportunity for me to be back before the committee 

to talk about some reforms I think all of us agree need to be done, 

which are long overdue. What I am going to offer to you today are 

reforms that are good for not only the taxpayers but for the environment. 

There are two basic truths that are indisputable. One truth is 

that the Federal Government and the taxpayers of this country are 

being severely underpaid for the use of their assets in our national 

parks. 

And, truth number 2 is that the Department of the Interior does 

not have a national or a rational system of managing our park concessions. 

You know, as an oversight chairman with jurisdiction over the 

NPS, I have had many hearings over the years and delivered reports to this Committee. And, would you be shocked to know that, 

until we asked the GAO to review the National Park Service concessions management, the Park Service did not even have a simple 

inventory of all the agreements they had with private concessionaires? 

I mean, the fact is that the National Park Service is not in 

charge of their concessions, except on paper. There is no central 

collection or control of fmancial information of these private oper- ations. 
48 

There is no financial data on at least 97 long-term or short-term 

concession agreements. And, there are none on the commercial use 

licenses. 

Headquarters doesn't even have a simple inventory of our government-owned facilities. And, because of that, taxpayers are literally losing many millions of dollars because many concessionaires 

don't pay reasonable or equitable fees for the use of these public 

lands. 

The Park Service Headquarters, very frankly, and their managers have failed to understand that their prime objective and the 

responsibility they have for managing these concessions operations 

is to ensure that it's a healthy, safe recreation experience for all 

people, with a reasonable return to the taxpayers. Now, the Park Service is going to argue that they cannot afford 

to obtain financial information from these commercial use licensees 

or they can't charge the fair market rates for government-owned facilities assigned to concessionaire use or they can't conduct annual 

reviews. They are dead wrong. 

In fact, we really don't have any option at this point. The Park 

Service has to do a better job. 

Now, what are we recommending? Well, four very quick things 

in very quick summary. One, the franchise fees are way too low. 

We've got to raise them. 

Second, the contracts last too long so that we lose control over 

them. 

Third, the existing contractors have such a sweetheart renewal 

preference that it's preventing open competition for many of those 

concessions. 

And, finally, these contracts are not charging fair market value 

rents for use of taxpayers' facilities. And, the cost of administering 

these concessions is too high. 

You know, in the past it seems that some of our Park Service 

concessionaire administrators are more concerned about the convenience of the concessionaires than they are about the safety and 

convenience of the visitors. I am hopeful that the committee will 

take the responsibility to make these necessary amendments to the 

basic bill so that we can get a handle on this, not only for our taxpayers but for the environment. 

[Prepared statement of Mr. Synar follows:] 
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H.R. 743, National Parks Revitalization Act. 

Statement of 

REPRESENTATIVE MIKE SYNAR 

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Chairman, Subcommittee on Environment, Energy and Natural Resources 

Before the Subcommittee on National Parks, Forests, and Public Lands, 

House Committee on Natural Resources 

October 19, 1993 

Mr. Chairman, thank you for this opportunity to appear and testify in favor of H.R. 

743, National Parks Revitalization Act of 1993, legislation I introduced earlier this year. 

Enactment of this measure will promote reforms of National Park Concession management 

that are long overdue, and I am here to strongly urge your swift and positive action on the 

bill. Enactment of this amendment to the 1965 National Park Concessions Policy Act will 

be good for both the taxpayers and the environment. 

Mr. Chairman, it is increasingly clear that the Federal government is underpaid for 

the use of taxpayer assets at National Parks. In fact, the Department of the Interior does 

not have a national -- or rational - system for managing park concessions. The GAO 

estimates that there are more than 1,800 concession arrangements at National Park 

administered sites, including more than 500 long-term (more than 5 years) concession 

agreements; 265 short-term (less than 5 years) permits and limited permits; and 1,164 shortterm concessioners operating under commercial-use licenses. 

But until my Government Operations Subcommittee on Environment Energy and 

Natural Resources asked the U.S. General Accounting Office (GAO) to review National 

Park Service concessions management, the Park Service did not even have a simple 

inventory of its agreements with private concessioners. In fact, GAO's continuing 

investigation raises for us several important issues standing in the way of professional 

management of concession activities at National Parks. 

Mr. Chairman, as a result of our GAO and Subcommittee investigations, it appears 

that the headquarters of the National Park Service is not in charge of concessions policy -

except on paper. For example, we found that within the Park Service there was Ill! central 

collection or control of financial information from these private operations. The Park 

Service had Ill! financial data for at least 97 long-term and short-term concessions 
50 

agreements and ~ at all on commercial use licensees doing business on Federal lands 

administered by the Park Service. The Park Service headquarters does not even have a 

simple inventory of the government-owned facilities that are ~d by private companies for 

concessions operations. 

We found that the taxpayers are losing millions of dollars each year because many 

concessioners don't pay reasonable and equitable fees or rents for the use of public lands. 

And finally, we found that state and local governments must sometimes carry out the 

Federal government's burden of ensuring public health safety standards at concessioner 

operated facilities on Federal lands. 

Mr. Chairman, in each of these instances, the most thorough accounting and report 

of the nature and extent of concessions arrangements, financial data and building use fees 

was prepared by GAO during its audit for our Subcommittee - not by the Park Service, 

which is charged with managing concessioner activities. This is a disgraceful state of affairs. 

Unfortunately, Mr. Chairman, the Park Service headquarters concessions managers 

fail to understand that a prime objective and responsibility of managing concession 

operations is to ensure that the concessioners offer a healthy, safe and reasonably priced 

recreation experience. In fact, the Park Service headquarters has continually failed to meet 

that responsibility in a consistent way. 

For example, the breakdown of central authority in managing recreation concessions 

is particularly apparent in regard to fair market rental fees. According to the Park Service's 

own guidelines, the fee for use of government-owned facilities should be based on appraisals 

of those facilities. However, appraisals are rarely completed and almost never used as the 

basis for establishing building use fees. In fact, the fee objectives are generally poorly 

defined, conflicting and wildly inconsistent -- even within the same region of the same 

agency. Incredibly, the headquarters office of the National Park Service still does not even 

have a complete inventory of the 1,400 government-owned facilities assigned for 

concessioner use at our National Parks. 

And at the local level, the Park Service has failed to effectively use their most 

important tool in judging concessioners performance -- the annual overall performance 

review. For example, annual reviews are not required for all short-term concessioners, and 

when they are performed, many are not documented. The requirements for overall annual 

performance evaluations of short-term concessioners differ in the Park Service's case, even 

with the same agency. For example, outfitters and guides for the Park Service who provide 

basically the same service operate under three types of agreements -- permits, limited 

permits or commercial-use licenses. For the 265 Park Service permits and limited permits, 

annual performance evaluations and price reviews are required. But for the 1,164 shortterm conc:essioners operating under commercial-use licenses, neither annual evaluations nor 

price reviews are required. That makes no sense at all. 

2 
51 

Mr. Chairman, the Park Service contends it cannot afford to obtain financial 

information from commercial use licensees, charge fair market rates for government-owned 

facilities assigned for concessioner use, or conduct annual reviews of concessioner 

performance. That is dead wrong. In fact, we have no real option. The Park Service must 

do a better job of conducting the people's business. Unfortunately, in the past it has seemed 

that some Park Service concession administrators are more concerned about the 

convenience of concessioners ~han about the safety and convenience of visitors or revenues 

to the Treasury and the taxpayers. 

At a time when many Americans are concerned about the overall performance of 

concessions operations on Federal land, it is very disturbing to learn that the land managers 

have taken such a lax attitude toward the health and safety of visitors and toward their 

obligation to taxpayers. Instead of working hard to assure compliance by every concessioner, 

the Park Service is busy making up excuses for yet another embarrassing audit finding. 

For example, while the Park Service has begun to ask concessioners to increase the 

return to the taxpayers, it has not dramatically increased franchise fees or rents. Instead, 

the agency is increasingly relying on rum-fee compensation and so-called "set-aside" accounts. 

But Mr. Chairman, the Park Service has llil system for tracking non-fee compensation and 

there are so many methods of determining concession, building uses fees and commercial 

use licenses among the various Parks reviewed, that a meaningful comparison is almost 

impossible. 

The Park Service is currently collecting inadequate information on the franchise fees 

paid by concessioners and commercial use licensees, but they need to develop complete data 

on (1) the number of concession agreements which involve the use of government-owned 

facilities; (2) the number of facilities used by concessioners; (3) the building use fees paid 

by concessioners; and (4) the value of the work performed from so-called "set aside" 

accounts. Currently, that data is a minimum. 

Additionally, Mr. Chairman, the Park Service needs to develop specific policies, 

methodologies and guidelines on how to (1) obtain financial information; (2) best determine 

commercial use license and building use fees; and (3) establish, administer and track setaside accounts as well as other contractual arrangements for repair, maintenance and 

improvements to federally owned facilities used by concessioners. 

Thankfully, Secretary of the Interior Bruce Babbitt and Assistant Secretary for Policy 

Management and Budget, Bonnie Cohen, have already started to fiX the problem. But, the 

taxpayers have already lost millions of dollars, and they deserve better. Professional 

managers should be careful, alert and vigilant, not lax and apathetic. 

Many of these concession arrangements have not been reviewed for years, and many 

have resulted in the Federal Government and the taxpayers being underpaid by scores of 

millions of dollars. For example, to the extent reliable data is available, overall gross 

3 
52 

.concessions receipts by National Park concessioners topped $570 million in 1990, but less 

than 3 percent of those gross revenues ($13.2 million) were returned to Treasury through 

fees· paid to the Government by concessioners. 

Unbelievably, complete financial data is available for only 60 percent of the more 

than 1,500 concession agreements; for the remaining 40 percent, financial data was not 

'required by the agency or, if required, was not submitted by the concessioners. More 

equitable concession fees, improved collection of financial data from concessioners and 

contractors, and fair market building use fees for federally owned recreation facilities 

(discussed below) could result in an increase of over $200 million per year in Federal 

revenues - a far more equitable return for the taxpayers. 

1be National Park Service is not receiving fair market rental value for most of the 

1,400 government-owned·facilities used by private companies to provide concession services 

and amenities at more than 100 National Park Service sites, even though Park Service policy 

requires the Service to receive "fair market value" for use of these facilities. In fact, until 

GAO obtained and analyzed the data for my Subcommittee, the Park Service did not even 

have an inventory of the government-owned facilities that are used by private companies for 

concession operations. 

GAO estimates that in 1990 concessioners paid the Park Service just $1.2 million in 

building use fees. In 1990, the Interior Department's Inspector General estimated the Park 

Service was losing more than $1.4 million each year on rents paid by concession operators 

at just 11 major Parks and historic areas, by charging only about one-quarter of the actual 

fair market rental value for government-owned facilities. 

The simple truth is that it is time for a change. Concession contracts create 

monopolies over all goods and services consumed at our National Parks, the crown jewels 

of this Nation's natural heritage. But, the contracts and the National Park Concessions 

Policy Act are relics of a time gone by. 

Mr. Chairman, the existing law is based on set of assumptions that are no longer 

valid. It was enacted at a time in our Nation's history when it was deemed necessary to 

extend extraordinary incentives to businesses to operate in our National Parks. At that time 

- before the completion of our interstate highway system revolutionized family travel -

concessions operations in National Parks were viewed as risky commercial outposts that we 

sought to coax into providing goods, services and hospitality at remote and scarcely visited 

locales with a short summer season of operations and activities. 

Accordingly, the 1965 National Park Concessions Policy Act created a set of 

incentives for concessioners, which included low franchise fees, renewal preference for 

satisfactory performance and the rights to acquire, hold and transfer a possessory interest 

in structures, fixtures and improvements upon land owned by the United States within areas 

administered by the National Park Service. This incentive package worked in the beginning; 

4 
53 

but over the long run, it has worked too well. 

Mr. Chairman, the circumstances at our National Parks have changed dramatically 

since 1965. Our National Parks are not commercial "outposts." In fact, many parks are 

teeming with visitors and the short summer season .is growing to 10 months or even yearround visitation even in many of the most remote areas. Now, operating a concession at 

one of our National Parks has become a lucrative enterprise and the taxpayer is being 

shortchanged. 

While the right of preference renewal and the rights associated with possessory 

interest served the initial purposes of attracting private capital and quality concessions 

operations to our National Parks, these rights have now become significant - and almost 

insurmountable - impediments to competition. 

The leverage created by the National Park Concessions Policy Act's incentive package 

has made it virtually impossible for others to compete against an existing concessioner at 

one of our National Parks. At the end of every concessionS contract term, the Secretary of 

the Interior must entertain offers from others for improved concessions services or increased 

franchise fees, but few submit a bids. Instead, enterprising businesses are dissuaded from 

submitting proposals because a successful bidder would have to do more than simply 

prepare the highest and best bid for concessioner services. In fact, a successful bidder would 

have to pay off the possessory interest of the existing, tenured concessioner and would have 

to overcome the existing concessioner's renewal preference. Thus, the incentive package has 

become a nearly perfect barrier to competition for concession opportunities. 

The current policy poses other problems, as well. For example, it is good that 

concession services are provided by the private sector, instead of the government, and no 

one wants to change that aspect of National Park concession operations. However, it is 

wrong for concession revenues to be diverted from the National Park System's resource 

conservation needs at a time when Park budgets are stagnant and Park visitation: is soaring. 

Mr. Chairman, here is a summary of some of the continuing deficiencies in existing 

concessions policy, law and regulation: franchise fees for National Park concession contracts 

are far too low; existing concession contracts have lasted too long; existing contractors have 

a renewal preference and possessory interest in Park structures and facilities that are 

preventing open competition; existing contracts do not charge fair market rents for taxpayerowned facilities; the cost of administering concession contracts are too high; and, contracts 

allow a concessioner to sell his exclusive use of Park facilities, low concession fees and 

preference for renewal as intangible assets when the concessioner corporation is sold. Some 

even argue that concession contracts allow our National Parks to be managed for the benefit 

of concessioners, rather than for resource conservation. 

Unfortunately, the loser in all this is the taxpayer, Mr. Chairman. As documented 

in reports from the Inspector General of the Department of Interior (OIG), the U.S. 

5 
, 54 

General Accounting Office, the House Committees on Small Business and Government 

Operations and the National Park Service itself, the existing contract law and regulations 

are not in the public interest. It is time for reform. 

To his credit, former Secretary of the Interior Manuel Lujan initiated a reform 

campaign to correct some of these deficiencies. But concessioners strongly opposed reforms 

and the job has not been completed. Now, Congress must take legislative action to 

complete and prefect the reform effort. The National Parks Revitalization Act will 

strengthen the Secretary's authority to reform concessions operations, standardize the 

process of concessions reform, and assure a fair return to the taxpayers. 

This reform effort is vitally important since most contracts come up for renewal over 

the next five years, including several large contracts. Therefore, we need to give the 

Secretary all the tools necessary to take advantage of this unique window of opportunity to 

construct a proper balance for concessions operation. 

Mr. Chairman, as I have already noted the National Parks Revitalization Act is 

written as an amendment to the 1965 National Park Concessions Policy Act so as to take 

advantage of the better aspects of the existing law while making the changes necessary to 

fit current circumstances. 

The National Parks Revitalization Act would increase franchise fees from the present 

average of 2.5 percent of gross receipts to 22.5 percent of gross receipts. That level of 

increase was chosen solely because it was consistent with former Secretary Lujan's publicly 

stated objective for concessions reform. In fact, it might be too low in some instances. For 

example, that figure is about one-half of the return for private concerns that maintain 

concession agreements with many of the same companies that operate in our National Parks. 

For example, the standard at major league ballparks seems to be a return to the owners of 

about 45 cents on every dollar. In that context, a return to the taxpayers of about one-half 

of the private market standard seems generous to concessioners. 

Our good friend Senator Dale Bumpers has proposed that the 1965 Act be amended 

to require competitive bidding. I think that could work well, provided that any increased 

revenues are used to acquire the possessory interest of existing concessioners and to more 

adequately fund resource management, interpretation and conservation activities from the 

proceeds of more reasonable franchise fees. 

But raising franchise fees by itself will not remedy our National Park concessions 

problems. Congress must agree to return more of these dollars to the Parks for operation, 

maintenance, and capital improvements. 

Additionally, Mr. Chairman, the National Parks Revitalization Act prescribes 

maximum terms for concessions contracts, requires concessioners to pay fair market rents 

and all utilities costs, and phases out the anti-competitive problems presented by the existing 

6 
55 

statute's treatment of renewal preference. The National Parks Revitalization Act will allow 

the National Park Service and the Secretary of Interior to redirect concession operations to 

be consistent with today's circumstances and budget constraints. 

Finally, the National Parks Revitalization Act will resolve the argument that 

concession contracts allow our National Parks to be managed for benefit of concessioners 

rather than for resource conservation and the public. Under this measure, all concession 

contracts must be consistent with the National Park Service Organic Act, the purposes of 

the act creating the particular unit of the National Park System in question, and its General 

Management Plan. 

Mr. Chairman, I hope that introduction of the National Parks Revitalization Act 

will help frame this important debate and promote reform. I believe the National Parks 

Revitalization Act presents a formula that will be good for both the taxpayers and the 

environment I urge all my colleagues to join me in supporting this important legislation, 

and hope the Committee will act quickly in adopting it. 

7 
56 

Chairman VENTO. Thank you very much, Congressman Synar. 

Congresswoman Meyers, we are pleased to welcome you. We 

have talked about your advocacy of this issue earlier. I am pleased 

that we are able to finally schedule a hearing this year on this 

matter. 

Please, proceed with your statement, Jan. 

STATEMENT OF BON. JAN MEYERS 

Ms. MEYERS. Thank you, Mr. Chairman. I appreciate the opportunity to testify before you about my bill, H.R. 1493, which is the 

same as the Bumpers bill in the Senate. 

As the Chairman knows, I have an interest in our national 

parks. And, this interest was heightened because several people 

from my district are active in the National Parks and Conservation 

Association, including the current President, Mr. Gordon Beaham. 

I would like to agree initially with Mr. Hansen, incidentally. I 

think many concessionaires have done very well. 

The changes that I am making do attempt to be fairer to the concessionaires. But, they would make substantial changes and try to 

get a better return for the American people. 

This bill would change our policy in regard to concessions in our 

national parks. The new policies would allow for more competition 

in bidding for concessions, would mean a fairer return to the American taxpayer, would dedicate more funding to our parks which 

have a $2 billion backlog of infrastructure repair, and would provide for a fair disposition of property at the end of the contract. 

Specifically, it would allow the National Park Service to set a 

minimum franchise fee for new contracts. The Congressional Budget Office estimates that H.R. 1493 would result in a $40 million increase in franchise fees. 

Now, after this minimum or floor is established, bidding would 

be allowed above that minimum. Currently, no bids are received 

when a contract is being renewed because the current holder can 

always retain his contract by meeting the low bid. 

Consequently, no other prospective bidders are willing to make 

the effort and go to the expense only to have the current concessionaire meet that bid. Such a process truly stifles bidding. In a recent year, 28 out of 29 contracts open for bid received no bids other 

than the existing concessionaire. 

H.R. 1493 would establish a trust fund funded by franchise fees. 

Fifty percent would be retained in the specific park unit which collected the franchise fee, and 50 percent would be allocated among 

all units of the park system based on need. 

It's imperative that H.R. 1493 be enacted soon, because 37 contracts have expired which await renewal. And, another 57 will expire in calendar year 1993 and 20 in 1994. 

Without action, contracts will be renewed without competition 

and continue NPS policy of anemic franchise fees, including rewards to concessionaires to build more money making structures. 

Meanwhile, trails deteriorate, potholes multiply and park infrastructure cannot be maintained while visitors increase. 

Many of these same firms operate successful concessions for state 

parks, airports and other public venues and private markets, winning these contracts on a strictly competitive basis and without 
57 

that guaranteed lock on a permanent contract which they have 

with the National Park Service. 

Well, what will the competition created by my bill accomplish for 

the Park Service? I think it will mirror the recent open competition 

for the Yosemite National Park concessions contract. 

There was no incumbent concessionaire in the running. Six interested parties, six, submitted a bid with the winning bid returning 

to the Federal Government benefits equivalent to 20 percent of annual gross profits. In contrast, the previous franchise fee, set without competition, was three-fourths of one percent. 

We also should change the policy which grants possessory interest in structures to concessionaires. At the end of a contract, either 

the federal government or a new contractor is forced to buy the 

structure at its present current cost or fair market value. And, estimates of this value are very high, of course, because the facility is 

located in a national park. Under H.R. 1493, structures would be valued at original cost amortized over 31% years. This is the manner in which other concessions are contracted at the state level, in the private market, and 

is fair to the American people and to the concessionaire. 

Mr. Chairman, because of the "preferential right of renewal" and 

possessory interest, we do not have open bidding for the concessions in our national parks. Consequently, we receive less than 3 

percent of gross receipts from concessionaires. State parks and others in the market receive more than 10 percent. 

At one time, these policies were probably necessary. And, now 

they are folly. 

Our national parks are visited by 275 million people annually. 

And, this number is expected to increase to half a billion by the 

year 2000. 

I hope that this bill will pass this year and allow the National 

Park Service the resources to better care for our national parks at 

this time of tremendously increasing visitorship. I thank you very much, Mr. Chairman. 

[Prepared statement of Ms. Meyers follows:] 
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The National Park Service Concessions Policy Reform Act 

October 19, 1993 

Thank you for the opportunity to testify before you about my 

bill H.R. 1493 which is the same as the Bumpers bill in the 

Senate. 

As the Chairman knows, I have an interest in our National 

Parks and this interest was heightened because several people 

from my district are active in the National Parks and 

Conservation Association, including the current president Mr. 

Gordon Beaham. 

This bill would change our policy in regard to concessions 

in our national parks. The new policies would allow for more 

competition in biddin9 for concession; would mean a fairer return 

to the American taxpayer: would dedicate more funding to our 

parks which have a $2 billion backlog of infrastructure repair; 

and would provide for a fair disposition of property at the end 

of the contract. 

Specifically, it would allow the National Park Service to 

I"RtNff.O ON RECYCUO PAPEA 
59 

set a minimum franchise tee tor new contracts. Congressional 

Budget Office estimates that H.R. 1493 would result in a $40 

million increase in franchise tees. 

After this floor is established, bidding would be allowed 

above the minimum. currently, no bids are received when a 

contract is being renewed because the current holder can always 

retain his contract by meeting the low bid. Consequently, no 

other prospective bidders are willing to make the effort only to 

have the current concessionaire meet the bid. Such a process 

stifles bidding. In a recent year, 28 ot 29 contracts open tor 

bid received no bids other than the existing concessionaire. 

H.R. 1493 would establish a trust fund funded by franchise 

fees--fifty percent would be retained in the specific park unit 

which collected the franchise fee and fifty percent would be 

allocated among all units of the park system based on need. 

It is imperative H.R. 1493 be enacted because 37 contracts 

have expired which await renewal and another 57 will expire in 

1993, and 20 in 1994. Without action, contracts will be renewed 

without competition and continue NPS policy of anemic franchise 

fees, including rewards to concessioners to build more money 

making structures. Meanwhile, trails deteriorate, potholes 

multiply, and park infrastructure cannot be maintained while 

visitors increase . 
Many of these same firms operate successful concessions for 

state parks, airports, and other public venues, winninq these 

contracts on a strictly competitive .basis--and without the 

quaranteed 'lock' on a permanent contract which they have with 

the National Park Service. 

What will the competition created by my bill accomplish for 

the Park Service? I think it will mirror the recent ~ 

competition for the Yosemite National Park concessions contract. 

Since no incumbent concessionaire was in the runninq, six 

interested parties submitted a bid, with the winninq bid 

returninq to the federal qovernment benefits equivalent to twenty 

percent of annual qross profits! In contrast, the previous 

franchise fee, set without competition, was three/fourths of one 

percent. 

We also should chanqe the policy which qrants possessory 

interest in structures to concessionaires. At the end of a 

contract, either the federal qovernment, or a new contractor, is 

forced to buy the structure at its present current cost, or fair 

market value. Estimates of this value are very hiqh because the 

facility is located in a National Park. 

Under H.R. 1493, structures would be valued at oriqinal cost 

amortized over 31 and a half years. This is the manner in which 

other concessions are contracted at the state level, in the 

private market, and is fair to the American people and to the 
61 

concessionaire. 

Mr. Chairman, because of "preferential right of renewal" and 

"possessory interest," we do not have open bidding for the 

concession in our National Parks. Consequently, we receive less 

than 3 percent of gross receipts from concessionaires. State 

parks and others in the market receive more than ten percent. 

At one time these policies may have been necessary. Now 

they are folly. Our National Parks are visited .by 275 million 

people annually, and this number is expected to increase to half 

a billion by the year 2000. 

I hope that this bill will pass this year, and allow the 

National Park Service the resources to better care for our 

National Parks at this time of increasing visitorship. 

75-380 - 94 - 3 
62 

Chairman VENTO. Thank you very much, Jan. Thank you both. 

I especially want to commend my colleague on our sister committee, the chairman of the Oversight Committee on Environment, Energy, and Natural Resources. Congressman Synar has completed 

and filled a big amount of work in terms of that effort, in terms 

of the reports and the constant focus on this and other issues. 

I think that he often has been first in addressing these issues on 

the House side through that process. I appreciate it. It has been 

very helpful to the authorizing committee. It's my intention that we move ahead on this as soon as possible. 

And, I think there is enough consensus now. 

There are recommendations coming from the Administration. Obviously, neither of these bills are in the final shape that they have 

to be. 

One of the criticisms of your bill, Mike, is the 22¥2 percent franchise fee. I know the genesis of that, you state in your testimony, 

was because Secretary Lujan said that's what it should be. 

Do you want to elaborate any further on that? 

Mr. SYNAR. Well, first of all, when you compare it to what the 

usual franchise fee is in the private sector, such as a concession in 

the Baltimore Orioles Stadium, they pay about 49 cents of every 

dollar to sell a hot dog or a beer or a Coke. Secretary Lujan 

thought at least half of that value would be reasonable for the national parks. But, obviously these have to be negotiated on a park- by-park basis. 

The reason for 22 cents, beyond that, is that if we take the monies that we will get we will begin to solve the problem that Jan outlined, which is to start buying back some of these possessory interests which we have so that we can get more control of the situation, with the remaining money to be spread out through the system. I don't think 22 percent is unreasonable. 

When you look at what the private sector is doing in concession 

contracts, I think it would be folly, as Jan also said, to continue 

down the path of thinking that 6 or 7 percent is reasonable. 

Chairman VENTO. Well, I think that no Administration wants to 

see. a hard figure on a number like this. They want the flexibility 

to negotiate. 

But, even when we put things like fair market value into a 

charge to them, they don't do it. I mean, that's one of the concerns. 

And, so I think that we want to have some predictability that we 

are going to end up with the type of conclusion that we desire. 

I think the other factor that weighs in here is, as you said, there 

have been a lot of set-asides. That is, there are credits where concessionaires have been asked to pay a smaller franchise fee or 

amount but nevertheless have been asked to do other improvements that either benefit the park visitor or, in some cases, even 

benefit the concessionaires, where they have these set-aside agreements because of funding needs for that park that don't come out 

of the regular operation and maintenance cycle-and then they 

keep no record of it. 

I can agree with you on that completely, because we tried to get 

information and gave them every opportunity to explain it. And, 

they have never been able to rationalize where they are at. It's just 

very frustrating. I think the Park Service's operation and mainte-
63 

nance and assessments process and this no record keeping and setasides are indicative of the mess that the Park Service has in its 

operation and maintenance budget. It is a mess. 

Mr. SYNAR. You know, it's hard for all of us to make decisions 

on this, particularly for those of you who are on the legislative committee. We've got 1,800 concession contracts. 

Five hundred of them are long term. Two hundred and sixty-five 

are short term, under five years. And, then the rest of them, the 

1,164, are commercial licenses and we don't have any information 

about them. 

How do we know what is right if the Park Service can't even provide us with this basic information? 

Chairman VENTO. Well, I think that I understand there is a lot 

of good will on both the Park Service and the concessionaire side 

in terms of what's going on here. I think that the lack of records 

does not serve this process well and leads to a lot of conclusions 

that may or may not be correct. 

For instance, unlike what happens at the ball park and so forth, 

concessionaires don't charge two bucks a hot dog. And, so obviously 

the amount of profit-in fact, it's something that is strictly limited 

and set by the Park Service so that visitors to the Grand Canyon 

or Yellowstone are paying a rate that is affordable to a family that 

might be going there which is, I think, not something that is inappropriate. 

So, I think those type of factors we want to recognize as being 

important. But, the question is, while recognizing we have certain 

objectives with regards to making certain that someone can stay for 

$35 a night in the park someplace, at a motel or at a facility, where 

there are such overnight facilities, how are we certain that there 

is competition in this process? 

Well, obviously having 30-year contracts is a hindrance to that. 

And, I know that both of you agree-and, Jan, I noticed specifically 

in your last statement you talk about the right of renewal preference, preferential right of renewal and the possessory interest. 

And, those I think are two points that have to be addressed. 

They are in the law. They can't be changed by regulation. 

I think they really have presented an insurmountable hurdle in 

terms of injecting competition into the process although the intention, I think, in terms of providing them or initiating them was 

probably good. But, I think today they have outweighed their usefulness. In fact, they are a hindrance to competition. 

Jan, do you want to elaborate on that point? 

Ms. MEYERS. Well, I think you are absolutely right, Mr. Chairman. And, I would like to say that I haven't studied Mr. Synar's 

bill in detail, but I think the main difference is that instead of having a 22-percent minimum, which he has, my bill would allow setting a different minimum, a kind of a case-by-case and park-bypark minimum. 

And, the National Park Service would be allowed to set different 

minimums just so that we assure that bidding takes place. The 

possessory right and the preferential right of renewal have absolutely meant that there literally is no bidding going on. 
64 

And, once you break that policy of low bid, I don't think you are 

doing right by the taxpayer. And, I don't think you are getting the 

best service that you could. 

I am active on the Small Business Committee. And, I am very 

protective and supportive of small business. And, so I wouldn't 

want to do anything that was unfair to those business people that 

have those contracts currently. 

But, I do think that we have been locking out an awful lot of 

business people who simply are not allowed to bid. And, a number 

of those concessionaires that are locked into a contract in the National Park Service in other areas bid in the fair market system 

and get along fine. 

So, I think we could operate like that and get a much better return for the taxpayer. 

Chairman VENTO. I agree. And, I think the one thing that 

underlies most of this, you have to understand, is whether there 

was a contract with regards to possessory interest that has to be 

extinguished in an appropriate manner. Nobody is going to just 

take away something that exists there. 

Ms. MEYERS. No. 

Chairman VENTO. But, it is not an easy process in terms of the 

transition. If we were starting with a clean slate, it would be a different matter here. 

But, the committee is faced with, and the policymakers and this 

Congress are faced with, making a transition in terms of extinguishing the existing possessory interests that exist in these parks. But, for the most part, they represent an absolute barrier to competition, because if you are going to bid on a concession you also 

have to bid on paying off that possessory interest or reestablishing 

one of your own, which is a much bigger problem than simply trying to address providing the services on a 10- or 15-year basis at 

most that would, in fact, amortize over that particular period. And, 

you would then not have any accrued interest at the conclusion of 

it. 

And, that's a lot easier bid than trying to pick up something 

which is basically very difficult to estimate the value of because it's 

in a park. And, it represents considerably more dollars in terms of 

bidding if you had to go to a bank and obtain that type of financing. 

So, again it causes someone that is in place to become really entrenched in that particular position with far less competition unless 

you are able to deal with it. So, that's what we have to move from 

where we are today. 

So, it isn't just that the 1965 law is a problem, but that problem 

has been carried forward which limits and conditions the options 

as we move down the future policy path. 

Mr. Hansen. 

Mr. HANSEN. Thank you, Mr. Chairman. I appreciate the com- ments from both of our colleagues. 

I have to say that their arguments are very compelling. The four 

issues that Mr. Synar brought up are probably all very reasonable. 

The issues that Jan Meyers brought up are reasonable issues. 
65 

I have to say that it reminds me of the insurance industry to a 

certain extent. They used to say about the insurance policy, the big 

print gives it to you and the little print takes it away. 

So, maybe the devil is in the details here. And, we will have to 

work those out. And, I hope we can work these out cooperatively. 

I have to say that our friend from Oklahoma, he always comes 

in with some very compelling and interesting things whenever he 

walks in this room and causes me more study than just about anybody in Congress. I imagine I have spent hundreds of hours trying 

to figure out-I don't know if it's material or not-how all the 48 

lower states got their ground. 

Many of them got simple fee title. I know those in the West got 

permits. And, maybe we would have been better with the simple 

fee title. 

But, if I may say so to my friend from Oklahoma, I appreciate 

the stimulating area you bring in. And, I think what you have said 

are very compelling arguments. 

Now, I guess we have just got to work it out. And, I hope we can 

work in harmony and try to work out something that is best for 

everybody concerned. 

I think really the bottom line is the individuals who go to our 

parks. That's the person I am more concerned about. 

I know in our state of Utah we have so many national parks. 

And, I visit them on a regular basis. 

And, people enjoy our parks. They really do. They love them to 

death. 

Like at Zion where we have now got such a traffic problem, it's 

a dead-end park. The only way you go in is tum around and come 

out again. 

I was up in Yellowstone visiting that. And, the horrendous problems they've got of taking care of just the roads are almost insurmountable. I don't know how they are going to do it. 

Anyway, not to get into all that. But, I thank you both for coming 

and hope we can work in harmony to develop something that is 

best for those who visit our parks and keep a good market economy going. 

Thank you, Mr. Chairman. 

Chairman VENTO. Yes. Mr. Duncan, we are pleased to see you 

are present. 

Mr. DUNCAN. I would like to commend both Ms. Meyers and Mr. 

Synar. I think that they are headed in the right direction. And, I 

think both parties agree that there needs to be some kind of increase in these franchise fees. 

Mr. Synar, I noticed recently though that Secretary Babbitt 

signed a new franchise agreement in the Yosemite Park with a zero 

percent franchise fee apparently because the company agreed to do 

other spending in the parks. Would you permit something like 

that? 

Mr. SYNAR. Our bill starts with a premise for debate that we 

would do a 22.5 percent fee. But, I think Ms. Meyers' and Dale 

Bumpers' legislation is not something that I would oppose. 

I think Jan put it best. A lot of these can be done on a case-bycase basis. 
66 

The problem we get into is what Bruce alluded to, which is that 

we would expect the Park Service to take the responsibility to do 

it right. But, in fact, history shows they won't do it. 

And, so I came at it from the premise that we need to at least 

set a standard. And, former Secretary Lujan and I, who worked 

this through the last time, set the 22 percent as a good starting 

point. 

Obviously, offsets and other things have got to be considered. 

And, let me just say one thing. The less money we receive from 

these franchise agreements, the less we can have to buy those 

possessory interests out that gives us control of the concessions. 

And, so every dollar we steal from ourselves is one that we can't 

give back to the concessionaires to get them out of their situation. 

But, you know, Secretary Babbitt is trying to do it on a case-bycase basis. 

I think he realizes franchise fees have got to go up at Yosemite. 

And, I think he was convinced that the offset was sufficient. 

Mr. DUNCAN. I noticed in Ms. Meyers' bill and Congressman 

Stearns' bill that they have 10-year durations for these franchise 

fees. Does your bill have anything similar to that? 

Mr. SYNAR. It's 10 years and then 15 years to buy back 

possessory interests. 

Ms. MEYERS. I would think that maybe my bill could be amended 

to allow for 15 years in case of a large investment, but I think 10 

years was a good starting point. 

Mr. DUNCAN. Well, I will tell you, as I said earlier, I think it's 

something that we certainly need to take a look at. And, I think 

we need some kind of increase or better return. I do agree with the Chairman, though, when he said that we 

want to make sure that we don't price families out of the national 

parks. And, certainly I know that both of you feel that same way. 

And, so I commend you for the actions that you are taking. And, 

I thank you for being with us today. 

Chairman VENTO. Thank you very much, Jan and Mike. I appreciate your presence this morning and your efforts. 

We are pleased to welcome Bonnie Cohen, the Assistant Secretary for Policy, Management and Budget, from the Department 

of the Interior. She will be presenting the Department's position. 

And, Bonnie, I see Mr. Jack Davis is sitting behind you, who is 

a former Superintendent at Grand Canyon and now is on service 

here. So, we appreciate if he wants to sit with you and John Reynolds, the Deputy Director of the Park Service. We appreciate their 

presence this morning. 

So, did you have anyone else accompanying you this morning, 

Ms. Cohen? 

Ms. COHEN. That's it so far. 

Chairman VENTO. Your statement has been made part of the 

record. We appreciate having it early so that I and other members 

could review it. 

Please, proceed. 
67 

STATEMENT OF BONNIE COHEN, ASSISTANT SECRETARY FOR 

POLICY, MANAGEMENT AND BUDGET, DEPARTMENT OF THE 

INTERIOR, ACCOMPANIED BY JACK DAVIS, FORMER SUPERINTENDENT OF THE GRAND CANYON, AND JOHN REYNOLDS, 

DEPUTY DIRECTOR, U.S. NATIONAL PARK SERVICE 

Ms. COHEN. Thank you very much, Mr. Chairman and members 

of the subcommittee. I would also like to say that we appreciate the 

attention, although sometimes it's!ainful, that Mr. Synar has devoted to this subject. It has helpe us a lot to come to grips with 

the problems that the Park Service faces. 

And, we are also very appreciative of the support that Congresswoman Meyers has shown in her bill for our goals with the Park 

Service. 

We have submitted the testimony ahead. So, I will just excerpt 

from it. 

As you know, the 1965 Act laid the foundation of the National 

Park Service's current concessions program by recognizing the integral role of concessioners in the furtherance of the missions of the 

Park Service, "preserving the scenery, wildlife, and natural and 

historic elements of the parks and providing for their enjo;yment in 

a way that leaves them unimpaired for future generations. The primary and essential purpose of concessioners, as acknowledged in these bills, is the provision of services to the visitor, not 

revenue to the Treasury, though the latter is undeniably relevant 

in these days of constrained budgets and emphasis on securing a 

fair return for privileges granted. Indeed, the quality of concessions 

operations often defines the experience of a large percentage of 

park visitors by providing such requirements as food, lodging and 

guide services that enable visitors to take full advantage of park 

resources. 

I am here to express the Department of the Interior's strong support for concessions reform, as embodied in H.R. 1493 and H.R. 

2146, and our desire to work with you to make new concessions 

legislation and our new regulatory program even more effective 

agents of reform. 

By way of history, the first concessioners were typically modest, 

family-owned operations, often there before the parks themselves 

providing services to a few adventurous visitors. Yosemite National 

Park, for example, was host to about 5,500 visitors in 1906. 

Today, that figure has risen to nearly 4 million, last year overtaking all but two major league baseball teams. Annual visitation 

for the entire Park System has risen to 275 million people annually 

and is increasing. 

The type of concessionaire has also changed markedly, as we see 

large corporations and conglomerates emerging as strong contenders for the privilege of doing business in the parks. Clearly, many 

of the assumptions that guided our approach to the parks 50 years 

ago must be adjusted to a new reality. 

Having evolved in the early years of the Park System, the Concessions Policy Act of 1965 essentially encapsulates a long past 

state of affairs in which the National Park Service sought to provide generous incentives for businesses to construct and operate hotels, restaurants, gift shops and other services in isolated parks 

that lacked heavy visitation. 
68 

I would like to focus the remainder of my testimony on what we 

consider to be the four most critical elements at issue here. And, 

those are similar to the ones mentioned by Congressman Synar. 

The first is the determination and the use of franchise fees. H.R. 

1493 and H.R. 2146 provide that franchise fees be covered into a 

special account established in the Treasury of the United States 

and, subject to appropriation, that they be divided equally between 

those parks that collected the fees and all parks in the system 

based on needs as determined by the Secretary and for use in resource management and protection, maintenance activities, interpretation and research. 

We support this and feel this could be a significant step towards 

addressing the pressing resource management and operations 

needs of the National Park System. For these reasons, we also believe that these funds should not be entirely offset by accompanying equivalent cuts in the annual budgets, which is often the case. 

We also feel that all consideration provided by the concessioner 

under National Park Service contracts should be considered a franchise fee pursuant to Sections 7 and 8 of the bills. 

We fully support the provision in H.R. 1493 and H.R. 2146 that, 

in setting franchise fees, consideration of revenue to the United 

States shall be subordinate to the objectives of protecting and preserving park resources and of providing necessary and appropriate 

facilities or services to the public at a reasonable rate. 

In today's environment, however, many franchise fees are too 

low. In 1991, national park concessions brought in about $622 million in gross receipts. The average franchise fee, however, was 

about 2.9 percent. 

In comparison, the National Parks and Conservation Association, 

and others, estimates that the state park franchise fees average 

about 10 percent of gross. 

On the second issue, preferential right of renewal, under the current Concessions Policy Act, franchise fee revenues remain low because an incumbent concessionaire has no incentive to tender a 

higher bid due to the statutory preferential right of renewal enjoyed by concessioners who need only match any competing bid to 

renew a contract. Indeed, there is very little incentive for anyone 

to submit a competing bid. 

No sensible potential concessionaire would invest the time and 

money, estimated to be up to six months of work and $150,000 for 

a large concession contract, if this contract had no real chance of 

being accepted. Between 1985 and 1989, for example, 28 of 29 contracts up for renewal were awarded to the incumbent concessionaire who submitted the only offer for a contract. 

Repeal of the preferential right of renewal will open the doors to 

competition to allow that choice. At the same time, however, we 

recognize the need in this process to protect the many exemplary, 

smaller concessionaires who often have special or historic ties to 

the respective parks and thus bring to their operations an important expertise with respect to park resources and expectations. 

And, we would be glad to work with the committee on that. 

On possessory interest, H.R. 1493 and H.R. 2146 acknowledge 

the government's obligation to protect a concessioner's existing investments in physical facilities within the parks to the extent that 
69 

they are covered in valid, existing contracts. The bills also stipulate 

that concessioners' possessory interest in new structures acquired 

or constructed after the enactment of this Act shall be depreciated 

over the estimated useful life of that asset, which will not exceed 

31¥2 years. 

It further provides that should the contract end before full recovery of the value of that investment, the concessioner may receive 

from the United States or the successor concessioner payment 

equal to the value of interest in such fixture, structure or improvement. 

Contrary to standard practice in the private sector, the 1965 Act 

imparts to a concessioner a possessory interest, that is a permanent real property ownership in structures or improvements which 

the concessioner has built as part of its contract with the National 

Park Service. In contrast to a standard commercial lease, the concessioners' interest does not end with that contract. 

At the end of a contract, the Federal Government or the succeeding concessioner is faced with the purchase of these facilities at 

their present· day reconstruction cost or fair market value. Estimates of fair market value for these structures in the national park 

are often very, very high for one reason, the fundamental law of 

retail management-location, location, location. 

We must remember, however, that it is not the concessioner's investment in facilities that makes the concession inherently valuable but rather the attraction of the park itself and the Federal 

Government's investment in the infrastructure and other things 

that increase the park's visitation. 

The concessioner gets to depreciate its original investment for 

tax purposes and receives windfall revenue for the sale of concession structures. This practice either results in added expense to the 

American taxpayers upon termination of a contract or it discourages potential new concessionaires from bidding on a contract when 

faced with the requirement to buy costly existing facilities from a 

predecessor. 

This is unacceptable and runs counter to the Administration's 

goal of reinventing government to bring its financial practices more 

in line with those of successful private enterprise. 

As to the term of the contract, the two bills would limit concession contracts to a maximum of 10 years and would further provide 

that temporary contracts may not exceed 2 years. Shorter term 

contracts will grant the National Park Service the flexibility it 

needs to develop a dynamic concessions program that takes account 

of changing park needs. 

Under most circumstances, we agree that 10 years is entirely 

sufficient and appropriate. There are certain rare circumstances, 

however, under which 10 years will not suffice in light of the enormous investment required in the contract. 

An example is the Yosemite National Park contract, which I am 

told would not have been feasible with a 10-year length due to the 

investment requirements. That contract is for 15 years. 

We, therefore, believe that the Secretary should be accorded the 

authority under such circumstances to approve 15-year contracts. 

In summary, we believe the concessions reform legislation should 

encourage competitive proposals that will increase the quality of 
70 

service and enhance revenues to the parks, eliminate the preferential right of renewal in new contracts, eliminate possessory interest in new contracts and limit new contract terms to no more 

than 10 years in most cases. 

I would now like to make a few brief comments on H.R. 7 43 specifically. Several of the provisions in H.R. 743 would, in our view, 

have a negative impact on the concessions program. 

One issue was raised already. The minimum 22.5 percent franchise fee is beyond, we feel, the means of most concessioners. 

In addition, the requirements that possessory interest be extinguished over a 15-year term and there would be no protection for 

future concessioner investment would produce an environment in 

which very few business people would invest. Therefore, we strongly recommend that the committee consider H.R. 1493 and H.R. 

2146 as the measures for enacting concession reform. 

We would appreciate the opportunity to work with the committee 

on any technical issues that may need to be addressed. And, we 

look forward to further discussions that might improve the bills 

and would be pleased to work directly with you and your staff to 

that end. 

In addition, we will soon be submitting for your consideration 

more detailed comments on these bills. 

Thank you. 

[Prepared statement of Ms. Cohen follows:] 
71 

STATBJIDIT OJ' BONNIE R. COBBN, ASSISTANT SECRE'rARY-POLICY, IIANAGBMBNT 

AND BUDGET, DEPARTMENT OF TBE INTERIOR, BEFORE TBE SUBCOMMITTEE ON 

KATIONAL PAIUtS 1 FORESTS-, AND PUBLIC LAJI])S 1 BOUSE COMMITTEE ON NATURAL 

RESOURCES, ON H.R. 743 1 H.R. 1493 AND B.R. 2146, BILLS TO REFORM TBE 

CONCESSIONS POLICY OJ' TBE NATIONAL PARK SERVICE. 

October 19, 1993 

Mr. Chairman and Members of the Subcommittee, I appreciate the 

opportunity to appear before you today to present the views of the 

Department of the Interior with respect to H.R. 743, H.R. 1493 and 

H.R. 2146, bills designed to update the concessions policies of the 

National Park Service as set forth in the 1965 Concessions Policy 

Act. As you know, the 1965 Act laid the foundation of the National 

Park Service's current concessions program by recognizing the 

integral role of concessioners in the furtherance of the mission of 

the Park Service: "preserving the scenery, wildlife, and natural and 

historic elements of the parks and providing for their enjoyment in a 

way that leaves them unimpaired for future generations." 

The primary and essential purpose of concessioners, as acknowledged 

in these bills, is the provision of service to the visitors, not 

revenue to the Treasury, though the latter is undeniably relevant in 

these days of constrained budgets and emphasis on securing a fair 

return for privileges granted. Indeed, the quality of concessions 

operations often defines the experience of a large percentage of park 

visitors, by providing such requirements as food, lodging, and guide 

services that enable visitors to take full advantage of park 

resources. 
72 

It is the position of this Administration that the quality of these 

and other services could be significantly reinforced through open 

competition. This is fundamental to our approach to concessions 

reform and it is also the premise of the bills before you today. I 

am here, therefore, to express the Department of the Interior's 

strong support for concessions reform, as embodied in H.R. 1493 and 

H.R. 2146, and our desire to work with you to make new concessions 

legislation and our new regulatory program even more effective agents 

of reform. 

By way of history, the first concessioners were typically modest, 

family-owned operations, often there before the parks themselves 

providing services to a few adventurous visitors. Yosemite National 

Park, for example, was host to about 5,500 visitors in 1906. Today, 

that figure has risen to nearly 4,000,000- -last year overtaking all 

but two major league baseball teams. Annual visitation for the 

entire park system, meanwhile, has risen to 275 million people. As a 

result, the National Parks are becoming increasingly "urbanized," 

with the introduction of· the very aspects of our society from which 

those 275 million seek reprieve: litter, traffic, smog, and even 

crime. 

The type of concessioner has also changed markedly, as we see large 

corporations and conglomerates emerging as strong contenders for the 

privilege of doing business in the parks. Clearly, many of the 

assumptions that guided our approach to the parks fifty years ago 

2 
73 

must now be adjusted to a new reality. Reform of the Concessions 

Policy Act of 1965 is an important place to start to recognize the 

world-wide popularity and accessibility of our parks. 

Having evolved in the early years of the Park System, the Concessions 

Policy Act of 1965 essentially encapsulates a long-past state of 

affairs, in which the National Park Service sought to provide 

generous incentives for businesses to construct and operate hotels, 

restaurants, gift shops, and other services in isolated parks that 

lacked heavy visitation. Long-term contracts were the norm and 

businesses were granted exclusive rights to operate and preference in 

renewing their contracts. As a result, the concessions contracting 

process today lacks the competitive vigor that exists elsewhere in 

our economy. We no longer need a concessions policy focused on 

luring businesses to the parks. There are already 275 million 

reasons for aspiring concessioners to compete for the opportunity to 

serve. It is now time to change our concessions policy to reflect 

both the resource management challenges facing our parks and the 

lucrative business opportunities available to concessioners. 

Recently, the Department of the Interior took steps in this 

direction, issuing new regulations concerning concessions operations 

in the National Park System. These regulations will make the 

concessions contracting process somewhat more competitive. The 

Department has also issued new standard contract language to provide, 

for example, for the amortization of concessioners' possessory 

3 
74 

interests. I think you will aqree that our approaches are very 

similar, but that H.R. 1493 and H.R. 2146 with some modifications 

will brinq to fruition our joint efforts to reform the concessions 

program. 

Havinq said that, I would like to focus the remainder of my testimony 

on what we consider to be the tour most critical elements at issue 

bere. They are discussed in the context ot H.R. 1493 and H.R. 2146. 

I will have comments on H.R. 743 at the end of my statement •. 

1. petermination and Use of Franchise Fees 

B.R. 1493 and H.R. 2146 provide that franchise fees be covered into 

a s pecial account established in the Treasury of the United states 

and, subject to appropriation, that they be divided equally between 

those parks that collected the fees and all parks in the System ba sed 

on need as determined by the Secretary and for use in resource 

aanaqement and protection, maintenance activities, interpretation, 

and research. we support this and feel that this could be a 

siqniticant step toward addressinq the pressinq resource manaqement 

and operations needs of the National Park System. For these reasons, 

we also believe that these funds should not be entirely off-set by 

accompanyinq equivalent cuts in the annual budqets. Further, to 

enhance accountability for concessioner payments to the qovernment, 

all consideration provided by the concessioner under National Park 

service contracts should be considered a franchise tee pursuant to 

4 
75 

sections 7 and 8 of the bills. 

We fully support the provision in H.R. 1493 and H.R. 2146 that, in 

setting franchise fees, consideration of revenue to the United States 

shall be subordinate to the objectives of protecting and preserving 

park resources and of providing necessary and appropriate facilities 

or services to the public at reasonable rates. 

At the same time, we concur with many members of.Congress that in 

today's environment, many franchise fees are too low. In 1991, 

national park concessions brought in about $622 million in gross 

receipts. The average franchise fee, however, was 2.9\. In 

comparison, the National Parks and conservation Association estimates 

that state park franchise fees average 10\ of gross. The concessions 

reform legislation pending in the Congress would require the Park 

Service to set a minimum franchise fee for individual concessions 

contracts and would require competitive bidding to establish the 

actual fee paid. However, the legislation also emphasizes that the 

franchise fee should not be the sole consideration in awarding a 

contract. The quality of each contract bid must be evaluated for its 

overall responsiveness to individual park needs. Thus, the best 

overall offer may be accepted by the Park Service, not just the 

highest bid. 

We believe that a balance can be struck between improving the revenue 

situation and ensuring that the most qualified bid receives the 

5 
76 

contract so that the goals of the parks remain paramount. We fully 

support this concept and intend to negotiate higher franchise fees in 

future concession contracts. 

2. frefergntial Right of Renewal 

Under the current Concessions Policy Act, franchise fee revenue 

remains low because an incumbent concessioner has no incentive to 

tender a higher bid due to the statutory preferential right of 

renewal enjoyed by concessioners who need only match any competing 

bid to renew a contract. 

H.R. 1493 . and H.R. 2146, with exceptions for guides and river 

runners, do away with the practice of granting concessioners a 

preferential right of renewal for successive contracts. The 

Administration agrees with the -intent of this proposed provision, for 

we think that a preferential right of renewal is not compatible with 

the goal of introducing true competition to the concessions 

contracting process. Indeed, it acts to the contrary, discouraging 

the introduction of potentially more effective and efficient contract 

proposals. No sensible potential concessioner would invest the time 

and money (estimated to be up to 6 months of work and $150,000 for a 

large concession) required to prepare a proposal that has no real 

chance of being accepted. Between 1985 and 1989, for example, 28 of 

29 contracts up for renewal were awarded to the incumbent 

6 
77 

concessioner who submitted the only offer for the contract. 

If the Parks are to operate at maximum efficiency, they must have the 

latitude .to choose the concessioners that best suit their needs. 

Repeal of the preferential right of renewal will open the doors to 

competition to allow that choice. At the same time, however, we 

recognize the need in this process to protect the many exemplary, 

smaller concessioners who often have special or historic ties to 

their respective parks and thus bring to their operations an 

important expertise with respect to park resources and expectations. 

We believe that such concessioners merit preferential consideration 

in contract renewal based on a solid performance record and we are 

willing to work with you to define a level of gross receipts under 

which the Secretary might maintain the discretion to grant such 

consideration. We do not agree, however, that this consideration 

should be applied to speci fic categories of concessioners, such as 

guides or river runners, instead of or in addition to a monetary cutoff. 

• 

3. Possessory Interest 

H.R. 1493 and H.R. 2146 acknowledge the government's obligation to 

protect a concessioner's existing investments in physical facilities 

within parks, to the extent they are covered in valid, existing 

contracts. The bills also stipulate that concessioners' possessory 

7 
78 

interest in new structures acquired or constructed after the 

enactment of this act shall be depreciated "over the estimated useful 

life of that asset," which shall not exceed 31.5 years. It further 

provides that, should the contract end before full recovery of the 

value of that investment, the concessioner may "receive from the 

United States or the successor concessioner payment equal to the 

value of ••• interest in such structure, fixture, or improvement." 

This provision closely resembles the new regulations we intend to 

implement. 

It is helpful to think of the concessioner's relationship to the park 

as similar to the arrangement that exists between a retail operator 

and the owner of a shopping mall. The individual store owners in the 

mall do not own their space, but lease it from the owner of the mall. 

The lessees receive no appreciation on their structural improvements, 

but rather depreciate the costs of their investments over the term of 

the lease. If a retailer has actually constructed a building into 

the mall, as is often the case with larger stores, the rental fee is 

less in order to allow the store owner to fairly amortize the 

construction cost. Upon termination of a lease, any fixed 

improvements made by the retailer become the property of the owner of 

the mall. 

contrary to standard practice in the private sector, the 1965 Act 

imparts to a concessioner a possessory interest, that is a permanent 

real property ownership in structures or improvements which the 

8 
79 

concessioner has built as part of its contract with the National Park 

Service. In contrast to a standard . commercial lease, the 

concessioners' interest does not end with the contract. It is 

permanently owned. At the end of a contract, the Federal qovernment 

or the succeedinq concessioner is faced with the purchase of these 

facilities at their present-day reconstruction cost (or fair market 

value). This means that structures built by concessioners appreciate 

in value over the term of the contract. 

For example, a lodqe built in 1965 for $1 million is worth $2-3 

million by 1995. Estimates of fair market value in a National Park 

are often exorbitant because of the fundamental law of retail 

manaqement: location, location, location. We must remember, however, 

that it is not the concessioner's investment in facilities that makes 

a concession valuable, but rather the attraction of the park itself 

and the Federal qovernment's investment in infrastructure and other 

thinqs that increase visitation to the Park area. The concessioner 

qets to depreciate its oriqinal investment for tax purposes and 

receives "windfall" revenue for the sale of concessions structures. 

This practice either results in added expense to the American 

taxpayers upon termination of a contract or it discouraqes potential 

new concessioners from biddinq on a contract when faced with the 

requirement to buy costly existinq facilities from a predecessor. 

This is unacceptabl~ and runs counter to the .Clinton Administration's 

qoal of reinventinq qovernment to brinq its financial practices more 

9 
into line with those of successful private enterprise. These 

concessions policy reform bills would end this questionable practice. 

They would require that structures or improvements, under new 

concession contracts, which are built after the new law is enacted 

and in which a concessioner maintains a possessory interest be valued 

at their original construction cost and that. this cost be amortized 

over the useful life of the structure up to 31 . 5 years. 

4. Term of Contract 

H.R. 1493 and H.R. 2146 would limit concession contracts to a maximum 

of ten years and would further provide that temporary contracts may 

not exceed two years. This is in contrast to contracts that, at 

present, can last as long as 30 years. Shorter-term contracts will 

grant the National Park Service the flexibility it needs to develop a 

dynamic concessions program that takes account of changing park 

needs. The recently-awarded Yosemite concessions contract provides a 

good illustration of the disadvantages of long-term contracts. The 

previous contract was awarded in 1963 for a term of 30 years. The 

franchise fee was set at .75% and could only be raised if the 

increase was agreeable to the concessioner. Needless to say, it was 

never raised. Under the conditions of the new contract, awarded to 

one of six bidders chosen through a competitive bidding process, the 

total return to the Federal government amounts to 20.5% of annual 

qross. 

10 
81 

Under most circumstances, we agree that ten years is entirely 

sufficient and appropriate. There are certain, rare circumstances, 

however, under which ten years will not suffice in light of the 

enormous investment requirements of the contract. I would draw your 

attention to the recently considered Yosemite National Park 

concession contract, which, I am told, would not have been feasible 

with a ten year length due to its investment requirements. That 

contract was awarded for 15 years. We believe, therefore, that the 

Secretary should be accorded the authority under such circumstances, 

to approve 15 year contracts. 

In summary, we believe concession-reform legislation should: 

* encourage competitive proposals that will increase the quality 

of service and enhance revenues to the parks; 

* eliminate the preferential right of renewal in new contracts; 

* eliminate possessory interest in new contracts; and 

* limit new contract terms to no more than 10 years in most 

cases. 

Now, Mr. Chairman, I would now like to make a few brief comments on 

H.R. 743 specifically. Several of the provisions in H.R. 743 would, 

in our view, have a negative impact on the concessions program. The 

minimum 22.5 percent franchise fee is beyond the means of most 

concessioners. In addition, the requirements that possessory 

interest be extinguished over a 15 year term and that there be no 

11 
82 

protection ror ruture concessioner investment would produce an 

environment in which no businessperson would invest. Thererore, we 

strongly recommend that the Committee consider H.R. 1493 and H.R. 

2146 as the measures for enacting concessions rerorm. section 4 or 

B.R. 1493 and H.R. 2146 would repeal the Concessions Policy Act of 

1965. While we support this approach, we would appreciate an 

opportunity to work with the committee on any technical issues that 

aay need to be addressed. 

rn closing, it is important to remember that the relationship between 

the National Park Service and its concessioner is a necessary and, 

under the correct circumstances, healthy public-private partnership. 

The Park Service needs concessioners to provide services that the 

Federal government should not and could not effectively provide. 

Indeed, it is often the quality of concessions operations that helps 

define the experience of countless Park visitors. The present 

concessions policy, however, has fostered something that falls far 

short or a true partnership. The National Park Service can no longer 

operate under a law that leaves it virtually beholden to its 

concessioners and unable to assert the primacy of its mission in the 

shaping of its concessions program. 

Mr. Chairman, r think you will agree that we are close to agreeing on 

this rundamental and long-awaited reform of existing concessions 

policy in the National Park System. The Secretary is committed to 

the establishment or a concessions policy that will improve the 

12 
ability of the National Park Service to deliver quality services to 

.aet the demands of a rising tide of visitation to the Parks and will 

rationalize an inadequate and outmoded concessions policy to ensure 

fair treatment of the taxpayer and the concessioner. 

We look forward to further discussions that might improve the bills 

and would be pleased to work directly with your staff to that end. In 

addition, we will soon be submitting for your consideration more 

detailed comments on these bills. We hope this will lead to 

enactment of a new concessions policy act that is designed t~ address 

the realities of today's national parks. Thank you very much. 

13 
84 

Chairman VENTO. Thank you, Ms. Cohen. I appreciate the statement that you've made and the effort of the Department to come 

forth and propose changes in laws. 

And, you know, I have sat here and been versed in this for half 

a dozen years myself. And, so I think I know a little bit about it, 

probably not as much as I need to know. 

But, I can tell you that we are going to move ahead with legislation. And, I hope we can do it quickly. 

I know where the problems are. I mean, those that have had the 

existing contracts are very concerned and nervous about maintaining fair treatment. We want to do that. And, I think you want to 

do that. 

But where we are going to need the help here is to try to give 

you the type of tools that you need to extinguish the existing 

possessory interest and move ahead, which is not easy. I think with 

the Yosemite contract, the major problem was, in fact, in that particular area. 

I don't think either of these bills are completely adequate or address enough of the transition issue to give a comfort level to those 

that are in that particular position and the proper guidance so that 

we can do it. So, we are going to have to work with those that are 

impacted and with the members of the committee and the Administration to resolve the concerns. 

Ms. Cohen, one of the backup things that I think is predicate 

here is going to have to be having an adequate information system. 

Do you concur with the comments of my colleague and myself, 

Congressman Synar and myself, about the lack of reliable information and record keeping with regards to the concession contracts 

and such issues as set-asides that he addressed and that I addressed? 

Ms. COHEN. I think we do. And, I think that the Park Service 

now is in large agreement with these earlier fundings. 

As a result they have taken steps themselves to improve their information systems. And, in addition, in the 1994 budget we have 

put in funds to be able to increase that activity, because if we go 

forward with this legislation it will be even more important to have 

accurate information. 

Chairman VENTO. You know, my view of this-and I don't know 

if it's shared by yourself or by Mr. Davis and Mr. Reynolds-is that 

part of this is the tension that goes on between the individual park 

units and the regional and the national offices in the sense of trying to retain or reclaim dollars that would otherwise go into Washington and not come back out. As has been noted, it's easy to get 

money to come into Washington; it's hard to get it back out. 

And, so it has provided a degree of autonomy and decision making at the local level. I understand that. 

But, at the same time, it tends to provide an ad hoc, fly-by-theseat-of-your-pants functioning in which each superintendent or 

someone in the regional office is actually making the decisions as 

to what goes forward. 

Do you understand that tension that exists that I'm talking 

about? Would you agree that that is part of the problem? 

Ms. COHEN. That's a real tension. We have seen it quite a bit. 
85 

Chainnan VENTO. Yes. Well, the concern here-and you addressed it-is that probably everyone that is involved in this, including the concessioners, the Park Service and the Members of 

Congress who are concerned about parks want to see the benefits 

from the increased revenues and so forth flow back to be directed 

to help to supplement, not to supplant, the appropriated dollars 

that are in the parks. 

Ms. COHEN. I think that, as I said, that is a real tension. We've 

had a number of discussions with the park superintendents who 

would be directly involved in this and who have the major concessions. And, I think that they are very appreciative of the legislation's focus on getting the money back into the parks. 

Chainnan VENTO. We can only say that from a. policy standpoint. 

Obviously, in the budgeting process, whether it's the OMB from 

your side or appropriators and budgeters from our side, some don't 

always follow the prescriptions that we lay out in legislation. Or 

they do follow them, but then offset some of the revenue. So, in any 

case, I think that it does help obviously to move as far as we can 

go in that direction. 

But, we will need help in tenns of making the transition and extinguishing the possessory interest and moving forward. 

One of the points I noted in your testimony is that you say in 

one instance that the Synar bill wouldn't provide enough leeway in 

tenns of the length of contracts, that you need more years that 

would be provided. But, in another instance in the testimony, you 

say 10 or 15 years should be enough time. 

So, which is it? Do you favor 31 years or do you favor 10 or 15 

years? 

What would be the ideal policy if you were-maybe I misunderstood. And, that's why I'm asking the question. 

Ms. COHEN. The 31 years would be the period of time over which 

they would be allowed to depreciate the investment. But, the actual 

contract would be, in most instances, 10 years but in special circumstances where the investment is large the Secretary would like 

the discretion to provide for a 15-year contract. 

Chainnan VENTO. But, wouldn't the investment then be depreciated then in the 15-year period and not need a 31 ¥2-year depreciation schedule? 

It seems to me I'm getting two messages is what my problem is. 

And, I don't know. 

Mr. Davis. 

Mr. DAVIS. I believe what we would prefer to have is the option 

for the longer depreciation schedule in case an individual business 

operation would not support depreciating over the 15- or 10-year 

period. And, we would, where the business would support such an 

accelerated depreciation, be most happy to negotiate that kind of 

a contract. 

We merely want the latitude to go longer if the financial analysis 

drives us in that direction. 

Chainnan VENTO. The contract doesn't have to be the same tenn 

in tenns of the depreciation. 

Ms. COHEN. Right. 

Chainnan VENTO. In other words, I think it's also important to 

note here an important change that has not missed me, and I'm 
86 

certain others that know the issue, and that is that you are talking 

about depreciation, a straight line depreciation, on original cost 

versus current value or whatever the value is that they now use 

here, which actually, as you pointed out, grows in value substantially over what the original investments would be. And, that's an 

important point. 

So, I'm looking at that. I think if you only need that 30 years--

I mean, I think there may be some problems. 

But, here we had Yosemite which had I think almost the largest 

investment of any park or one of the largest investments of any 

park in the nation, and that is being extinguished over a 15-year 

period, is it not? 

Mr. DAVIS. Yes, it is. Chairman VENTO. And, so I am wondering, I don't know that the 

authority should be out there. It may be that it isn't so much a 

case of how large the investment is but what the revenue flow is 

that comes in. 

You may have a park that has a low revenue flow, like 

Voyogeurs National Park in northern Minnesota or mayb~I don't 

know-Zion, but the point is that there you may need a longer 

time. But, then I guess I wonder whether in those instances there 

are other ways to deal with that through the Visitor Facility Fund 

or some other means which would not open up the option, because 

the problem is that once we establish this in policy for these rare 

instances, .then it very quickly is something that is sought after by 

all, depending upon a different Administration and different interpretations. 

So, Mr. Reynolds. 

Mr. REYNOLDS. I think the point here is to try to break the connection between writing off the possessory interest and the length 

of the contract, not have those two connected together. 

Chairman VENTO. Okay. 

Mr. REYNOLDS. In some cases, in most cases, we would say a 10-

year contract for contractual purposes or for the purposes of the 

National Park System is rme. A few cases should go to 15 years. If the possessory interest cannot be paid off because of the combination of flow of money in both directions in 15 years or in 10 

years, then the remaining part of that could be worked into the following contract consideration. Chairman VENTO. Yes. Well, the problem I have, John, and, of 

course, I am certain that is apparent to everyone, is that the contract could end and it would leave us or somebody else holding the 

bag to buy out the remaining possessory interest. 

What you are doing is you are extinguishing one type of 

possessory interest and establishing another one here. And, the 

concern I have is that if we wanted to, we wouldn't need that particular concept in law if, in fact, they were coterminous. Mr. REYNOLDS. I think we are just talking about cases of existing 

concession contracts. 

Chairman VENTO. Okay. So, I think that that's the important 

point. And, I did raise that point. 

Ms. COHEN. Well, I think that this is part of the transition problem. 
87 

Chairman VENTO. Yes. I think maybe there are other ways to 

deal with this. As I said, where you have a low revenue flow maybe 

we can set aside some of the franchise fee to go into the Visitor Facility Fund so it can be used by the Park Service only. I mean, the 

Visitor Facility Fund may be the wrong fund, but there--

Mr. REYNOLDS. I was not correct when I said just existing contracts. It applies to new contracts. 

Chairman VENTO. Yes, it's on all. So, anyway, this is something 

that we don't want to leave ambiguous in terms of the legislation. 

We appreciate the testimony was prepared on a shorter basis. 

On Pages 4 and 5 of your statement, Ms. Cohen, you say that, 

"all consideration provided by the concessioner under National 

Park Service contracts should be considered a franchise fee," and 

under Sections 7 and 8 of H.R. 1493, which relate to the use of the 

franchise fee receipts. 

Do you mean to suggest that we should apply this to the current 

Yosemite concession contract, which is a special accounts case? In 

other words, in terms of extinguishing the possessory interest 

there, they went to a special account. 

Ms. COHEN. I think that that's a definitional problem. I think 

that my point-and I probably should have used better words-is 

that there be a full and clear accounting at the time that the contract is given for everything that is being provided to the government. 

Chairman VENTO. In other words, your point is that the special 

account is a mechanism for the extinguishing of possessory interest. And, you believe that we ought to redefine that to be a franchise fee, then, I take it, and that there ought to be a full accounting of all of the remuneration being paid to the Park Service directly or indirectly at that time. 

Ms. COHEN. Yes. 

Chairman VENTO. I think that gets back to the point that I made 

initially about the accounting process and the tendency for each 

park to have pursued a different policy with regards to how they 

receive remuneration, which sometimes comes back as, you know, 

reflecting a very, very low franchise fee when, in fact, there are 

other considerations that are provided but have not always been 

defined and/or no good records kept of them. 

One of the points that Mr. Synar made concerned trying to find 

some commonality between the way all the land management agencies treat concessions. Do you believe that there ought to be a commonality between at least the BLM, the Fish and Wildlife Service 

and other agencies within the Department of the Interior in terms 

of the types of concession and awarding of concession contracts? 

Ms. COHEN. Well, we are certainly working in that direction. 

And, it's something that we have begun to look at. 

Chairman VENTO. Let me ask Mr. Hansen if he had any questions? I am way beyond my time here. 

Mr. HANSEN. Thank you, Mr. Chairman. I, like you, have other 

things. 

I am supposed to be over in the House Armed Services where 

Secretary Aspin is defending his performance in Somalia. And, they 

just called me to come over and ask him a few interesting questions, which 1--
88 

Chairman VENTO. You should stay here with me. 

Mr. HANSEN. Yeah, maybe I should. And, the VA HUD bill is 

coming up, which I've got to speak on in a few minutes. 

But, I would like to ask some questions. And, I don't mean to 

play a semantics game here with you, Ms. Cohen. 

But, I was interested in reading your opening statement here. 

And, in the first paragraph, you quote from the 1965 Concessions 

Policy which starts out, "preserving the scenery, wildlife, and natural and historic elements," type of thing. 

Actually, it doesn't say that in the law. It says, "conserve" instead of "preserve." And, in the definition section, it says that preserve means through no use and conserve means preservation 

through wise use. 

I hope that wasn't an intentional thing that you put in there. 

Ms. COHEN. Not at all. 

Mr. HANSEN. And, I assume you agree with the definitions that 

were conserved through wise use instead of no use. Would that be 

a correct statement? 

Ms. COHEN. Yes. 

Mr. HANSEN. Thank you. If I may ask you, your testimony indicates that you believe the existing average franchise fee of 2.9 percent is too low. 

Yet, Secretary Babbitt just signed a contract, the new Yosemite 

contract, with a franchise fee of zero percent. Does this really indicate you are concerned about the amount of return to the government? 

Ms. COHEN. I tried to address that in the previous answer-it is 

a definitional problem. 

We feel that the return to the government should be completely 

documented and accounted for. In the Yosemite case, it's our computations that the return to the government is approximately 20 

percent. But, it is not in the form of a traditional franchise fee. 

Mr. HANSEN. I have in front of me the National Park Service 

concession statistics of 1992 and 1991, Attachment A. I don't know 

if you are familiar with these or not. 

But, the annual receipts were $618 million. The annual franchise 

fee was $18.1 million, which is where we get the 2.9 percent, which 

is 2.9 percent of that. 

And, we have annual taxes on top of that at $10.2 million. We 

have annual special accountant fees of $9.1 million. 

We have annual improvement additions, you estimated, at $39.9 

million. You have a rate add-on of $3.3 million. So, the annual return to the parks, to the government, is $80.6 million or 13 percent. 

Which one of these do we feel strong about, the 2.9 percent, 

which is one part of it, or the 13 percent, which is the aggregate? 

Mr. DAVIS. Mr. Hansen, the document you are quoting from is 

one that we have corrected. And, there are some elements within 

that statement that are not returned to the United States in the 

traditional sense of calculating the concessioner's return. 

The taxes are paid as a matter of routine business. And, we do 

not consider those as part of the return to the National Park Service for the right of doing the business. 
89 

Mr. HANSEN. Excuse me. But, the concessionaire has to pay it regardless of what arm of the government gets it is the issue, isn't 

it? 

I mean, this guy, as a businessman, has to pay it out. Mr. DAVIS. Yes, sir, he certainly does. But, any businessman anyplace is in the process of paying taxes. 

And, that is an expense that we consider in determining what 

the return to the United States should be otherwise in the term of 

the traditional franchise fee or the extinguishment of possessory interest in other donations, or not donations but other contributions 

to the estate of our operation. Similarly, the amount as a concessioner passthrough is not something that is paid by the concessioner but rather by the user of the concessioner's facilities. 

And, so some of those figures are not correct in that statement, 

which we did correct. And, I am sorry that I did not bring that with 

me today. So, I can't articulate exactly. 

But, we will be pleased to provide that. 

Mr. HANSEN. I would appreciate that. Of course, it's really the 

park user who pays the franchise fee. 

I mean, if you really get right down to it, he's the guy that pays 

it. That's just like the famous gas tax increase in the Clinton budget. 

I mean, who is going to pay that? The guy who goes to the gas 

pump. Texaco and Standard aren't paying it. 

Of course, if he's not in business, he's not paying any taxes. And, 

that's one of the concerns we have. 

Let me just follow up on that second question which the Chairman got in, which is kind of an intriguing question here, about 

possessory interests. And, you have stated that possessory interest 

is a barrier to competition. 

However, in the recent Yosemite contract bid process, a half 

dozen operators made offers on a contract with the largest 

possessory interest balance of any contract in the country. In fact, 

only 11 concessionaires have possessory interest of book value 

greater than $3 million. And, over 100 operators have no 

possessory interests. 

What evidence can you present to this committee which supports 

your contention that possessory interest is a barrier to competition 

in light of the idea that the vast majority have none? 

Ms. COHEN. We think the combination of possessory interest and 

preferential right are barriers to people bidding on the contract. 

Our evidence for that would be the 28 out of 29 of the last contracts where no one else bid. 

And, if I could say something on the 2.9 percent franchise fee 

and on the passing on of the franchise fee, the goal which we support in this legislation continues to be the protection of the park 

resources and the visitors' experience. The Park Service contract 

policy, which would continue under this, requires that services be 

provided to the visitor based on the prevailing charges for comparable services in the area. 

We don't view this as an opportunity to invite people who are 

bidding on these contracts to charge the maximum amount possible 

because they have a unique location and then return the maximum 
90 

amount possible to the government. That would not be how this 

would operate. 

Mr. HANSEN. Mr. Chairman, I have one more question. 

Chairman VENTO. Take your time. 

Mr. HANSEN. Your testimony substantially endorses H.R. 1493 

and 2146 which, in my opinion, represent a complete rewrite of existing concession laws and policies. In fact, you find existing law 

leaves the National Park Service "virtually beholden to its concessioners and unable to assert the primacy of its mission." 

In other words, you believe there are severe problems with the 

existing law. I would really appreciate it, and sincerely appreciate 

it, if you could provide the subcommittee a few examples where the 

existing law has failed in its two primary objectives of resource protection or serving visitors by causing adverse impacts to park resource values through unauthorized activities or by not providing 

appropriate visitor services at reasonable prices. 

If you would give us some examples of that, it -would surely be 

helpful. 

Ms. COHEN. We would be glad to. Do you want an example right 

now or would you like us to provide additional documentation? 

Mr. HANSEN. Well, I know we are all on a very tight time schedule, you folks as well as we are. If it's okay with the Chairman, 

if you would provide us some of those maybe in written form, I 

would really appreciate it if I could have those. 

Ms. COHEN. We would be pleased to. 

Mr. HANSEN. In my opening remarks, I stated what I read in the 

law as the objectives of the National Park Service. Now, the old 

saying is, "If it ain't broke, don't fix it." And, maybe it's some fine 

tuning. 

I just wonder if these are going too far. And, I hope you keep an 

open mind as we get into this and determine what is the correct 

thing to do in this instance. 

And, I would appreciate it very much if the Park Service could 

supply us with information, because we are only as good as the information we get. 

Ms. COHEN. We would be glad to supply you with as much information as you want and certainly the examples that you asked for. 

I think I would like to say that we look forward to working with 

the committee. 

We feel that the transition period will be difficult. And, we are 

more than willing to work with you and others on the committee, 

as well as the concessioners, to come up with legislation that does 

its best to meet everybody's objectives. 

We find ourselves, as you can see in the 1994 budget, in the position where, because of the backlogs and the tight resources, we are 

going forward asking for additional fees for visitors to the parks. 

And, we feel at the same time for those visitors we have to be arguing for a competitive process for the concessionaires. 

Mr. HANSEN. If it's all right with you, I will ask the staffers to 

send you the questions in written form that I've asked. And, then 

you can make sure that you've got the right question and you can 

give us the answers, if you would, please. I would appreciate it. 

Thank you, Mr. Chairman. 
91 

Chairman VENTO. I know the gentleman has to leave. And, I appreciate that. 

But, I hope he will take with him the testimony from witnesses 

that are about to appear, because I think they point out in no uncertain terms, at least the testimony that was provided, some of 

the problems that exist. 

Now, Yosemite, of course, is atypical in terms of what is taking 

place here. One of the aspects of not describing that as a franchise 

fee and putting it into a special account obviously was to provide 

for the extinguishing of that possessory interest in a timely manner. 

It's beyond the 10 years. It's 15 years, largely negotiated by the 

former Administration with some refinements, some significant refinements, by Secretary Babbitt. But, the point is that particular instance is an example of the 

transition problem: If we were to take and treat that as a definitional problem in terms of franchise fee, then you run into the distribution of the franchise fee on the new formula which then would 

delay the extinguishing of the possessory interest. So it's this sort 

of problem that you get into in terms of trying to work out. 

Now, the Forest Service, as far as I know, doesn't provide any 

possessory interest. The BLM doesn't provide any possessory interest. The Fish and Wildlife Service doesn't provide it. 

Are there any other agencies that you are aware of that use this? 

I mean, this law is absolutely unique to the Park Service. Mr. Reynolds, is that correct? 

Mr. REYNOLDS. That's correct. 

Chairman VENTO. And, so I think in making the transition, the 

idea is that in the private marketplace we are going to hear that 

they are able to extinguish whatever investments they make over 

the life of the contract. That would be the ideal, would it not? 

Mr. Reynolds. 

Mr. REYNOLDS. Well, I think what we are saying is that in some 

cases that might not be possible. And, so to be able to extinguish it over the life of more than one contract without having to have 

the contract be as long as the possessory interest is as important 

as extinguishing the possessory interest. 

That would allow the National Park Service ~ 

Chairman VENTO. It would still remain a barrier to-in a sense 

though I think there is a question here of whether or not the existence of some sort of undepreciated asset, I should call it, I hope not 

a possessory interest but an undepreciated asset, some portion of 

undepreciated asset would represent a decision made. 

I think it's imperative to understand here that, of course, the 

Park Service has concurred and does approve of any type of construction or investment that is made that qualifies as an 

undepreciated asset. Is that correct? 

Mr. REYNOLDS. We do approve of all construction. 

Chairman VENTO. Yes. Who is the central authority for that 

today? Is it the superintendents, who have done this historically? 

And what is the status today? 

Mr. REYNoLDs. The authority is delegated to the regional directors. 

Chairman VENTO. To the regional directors? 
92 

Mr. REYNOLDS. Yes. 

Chairman VENTO. And, is the guidance there effective? I think 

it's something to pay altention to. · Mr. Davis knows. He went through it at Grand Canyon. 

Mr. Davis. 

Mr. REYNOLDS. I may be corrected here. 

Chairman VENTO. Okay. Mr. Davis. 

Mr. DAVIS. The superintendent and the regional director play a 

very vital role in negotiating terms of new contracts and the conditions of them. However, any contract with the gross income of over 

$100,000 must come before the appropriate committees, yours included, Mr. Chairman, in the Congress and are reviewed and approved in the Washington office. 

And, after that, then subsequently the authority is granted to the 

regional director to finalize. 

Chairman VENTO. There has been some contention, too, that 

sometimes the concession activities have not followed general management plans. Of course, there are the overall plans for the park 

units, as you know. And, of course, they can be amended. They can 

be modified. 

But, I guess the problem is that trying to get a handle on major 

assets that would be depreciated over a period of years today would 

be in the possessory interest category and needs to be dealt with 

effectively, too. But, I guess that there should be approval for any 

activities that go on. 

So, this is not something that those that have the possessory interest have been able to do unilaterally. That's my point. 

The Park Service, at least at the superintendent and regional office, have had some input, if not at the Washington office. And, coincidentally, you have reported to Congress, I guess, on some of the 

approvals. 

There are now outstanding a significant number of contracts 

today. I've stated that correctly, have I, Mr. Davis? 

Mr. DAVIS. There are, indeed, a large number of outstanding contracts. 

Chairman VENTO. But, I've summarized the condition with regards to the possessory interest or undepreciated assetMr. DAVIS. There are a good many concession contracts in existence today in which the concessioner has a possessory interest that 

is, at this point, undetermined but would be determined by the conditions of their contract as being the replacement cost minus depreciation not to exceed fair market value. And, that formula is terribly confusing and it is a very uncertain figure, therefore, that 

represents that concessioner's possessory interest. 

Chairman VENTO. And what is being implied in these-if I may 

interrupt-what is being implied in the policy initiative here is to 

have straight-line depreciation based on original cost so that you 

would have-there would be no contention about trying to get an 

appraisal of the value of something such as in a park, which is not 

impossible I guess but it is extremely difficult. 

Mr. DAVIS. You are correct, Mr. Chairman. And, it is the intention of our current policy and the proposed legislation that under 

all new contracts that possessory interest figure will be determined 
93 

at the beginning of a contract and then go on -to a straight line depreciation. 

Chairman VENTO. The problem today is trying to come to some 

reconciliation based on the existing law and the rights of the various concessioners. And again, in the transition. 

And, that really is going to be up to you all to negotiate at the 

end. 

Mr. DAVIS. That's right. 

Chairman VENTO. I could do it, but I don't have the time. So, I 

am going to rely on you to do that, you know. [Laughter.] 

Mr. DAVIS. That will be our job. And, it will undoubtedly be a 

point of much debate. 

Chairman VENTO. It surely will. But, I think it has to be done. 

I think it's the intention to do it in any case from a rules and 

regulations standpoint and, I think, trying to legislate in this area 

while not taking away the flexibility you need. 

I wanted you to proceed, Mr. Davis, with the discussion of what 

we are facing in terms of contracts, concession contracts, that are 

in abeyance based on regulation, based on perhaps change in law. 

They have been in abeyance. They have not been signed. 

So, can you give us a profile of what the problem is? 

Mr. DAVIS. Well, I will give you a brief one. Secretary Lujan 

placed a moratorium on the issuance of new contracts at the time 

he began his concession reform efforts. 

And, until our new regulations and standard contract language 

were approved, the contract language in 1993, January of 1993, 

that prohibition against basically new contracts stood. Today, as a 

result of that, we have a backlog of approximately 85 contracts that 

either have or will expire by the end of 1993. 

We are beginning to move those now. And, you will see more 

progress along those lines. And, we are moving them under the 

guidance presently contained in the standard contract language 

and the new regulations. 

Chairman VENTO. So, what is that doing in terms of possessory interest? Is the goal to extinguish the possessory interest or does 

it not address it? 

Mr. DAVIS. No. The goal will be to extinguish the possessory interest through the new contract on the straight-line depreciation. 

And, we had the Yosemite case. The other contracts that we have 

been dealing with I don't believe contained large amounts of 

possessory interest. 

We have not dealt with--

Chairman VENTO. The larger ones are the ones that are most 

contentious, I guess, in terms of establishing a value and coming 

to agreement with regards to those that have such rights, property rights. 

Is that correct, Mr. Davis? 

Mr. DAVIS. Yes. There will be an effort to come to agreement on 

those rights it will be difficult to establish. 

And, this whole issue is one in which there will be litigation and 

has been litigation started. 

Chairman VENTO. I understand. But obviously your experience in 

dealing with it would be helpful, I think, and as I said, during this 

transition stage which these bills really don't address. 

75-380 - 94 - 4 
94 

The other issue which we need to raise with you-and I know 

that we have other witnesses-is the issue of whether or not there 

should be some differential in terms of preferential right of renewal. One of the bills, or several of the bills, have language that 

provide for guides to receive preferential right of renewal in this 

instance. 

And Secretary Cohen, your testimony on this is not, I don't 

think, clear but suggests that for certain contracts this ought to be, 

or could be or should be, considered-! can't remember exactly the 

language you used. I could find it. 

It's on Page 7, where you discuss this in your testimony, I will 

just quote, "We believe that such concessioners merit preferential consideration in contract renewal based on a solid performance 

record and we are willing to work with you to defme a level of 

gross receipts under which the Secretary might maintain the discretion to grant such consideration." 

This sounds like a small operator exemption. We've had that suggested in a number of different areas-this is apparently a thread 

of views that runs through the Clinton Administration in terms of 

small operator exemptions. 

But, our past experience with that has not always been good- it has been one in which it becomes expanded to the point of maybe 

having an impact over the overall preferential right of renewal 

issue. And, so I wanted to say, did you have any further comments 

on that? 

Ms. COHEN. Our inclination was to have no exemptions. And, in 

discussing this with people who have been in the parks for a long 

time, who have a lot of experience in this area, they feel that in 

some instances there may be small concessionaires who really were 

there before the parks were founded, whose families have been 

there for generations, and who are an important part of the visitors' experience. 

So, we would be willing to consider an exemption for small concessionaires. 

Chairman VENTO. You have suggested that you do not favor, I 

think, the four criteria lined up-you know, they are all "ands" I 

notice in the legislation that Congressman Meyers and others have. 

I guess it's the Bumpers bill that says an exemption for guides. 

Now there are a couple of things about this that are less bothersome in the sense that you are not, with the guides, tied up with 

a lot of possessory interest or capital investment. It is obviously a 

service that is provided and I don't know what risks we would run 

in terms of that. 

Of course, the preferential right of renewal also has been extended, I guess, in many instances to the first opportunity to offer 

extended services, too, hasn't it, under existing law? 

Mr. REYNOLDS. Right. 

Chairman VENTO. It isn't just the preferential right of renewal. 

It was if you add a service; that is, something that has been missing here. 

Ms. COHEN. Yes. 

Chairman VENTO. And, I think that is very key, because not only 

does it affect the existing contract but it has a way of growing with 

the market that might exist. And, when you have 275 million visi-
95 

tors, you may be selling more hamburgers or more trips on the 

river. 

So, in any case, I understand that the guides, I think, do have 

a different category, a different status here that we might want to 

address. I know that Senator Bumpers has done so. Congresswoman Meyers has done so. 

And, so I have not formed a conclusion on that. But, I think it's 

less of a problem, because if you don't have a possessory interest 

and you don't have the type of investment that goes on here and 

they are shorter-term contracts, I think that's another point where 

they would be maybe a shorter-term contract. 

There ought to be some characteristics of that that we could 

identify that would not mean that this would be exploited into a 

major loophole. And, maybe the right of renewal would not necessarily deal with the expansion of the service, as an example. 

Ms. COHEN. Well, we would be glad to work with you on that to 

come up with characteristics. 

Chairman VENTO. Yes, a minimum dollar amount, as an example, of what they do. 

The other aspect here on some of these services that I note are 

provided-and it's very confusing. The Park Service is being criticized for essentially characterizing the same service under three or 

four different types of permits and franchise fees that has been 

raised. 

And there is no commonality-not that everything has to be the 

same between the BLM or the other land management agencies or 

even the Forest Service. But, have you had, or do you have, any 

departmental or interagency discussions about trying to provide 

some standard treatment in terms of such franchise fees or payments? 

Mr. Davis. 

Mr. DAVIS. There was an effort about a year and a half ago for 

all land managing agencies to review together their concession 

management policies. And, from that review, there have been no 

earthshaking decisions relative to conformity but an encouragement of other people to look very carefully at how the National 

Park Service had been conducting much of its business. 

And, there are within each agency different circumstances that 

dictate their operation. And, they are quite different, one from an· other. 

But, there undoubtedly is room for more uniformity in approach. Chairman VENTO. I never saw such a good idea as these inter· 

departmental groups that are going to come up with a common pol 

icy, or anything that works as badly in practice. You know, there· ality, I think, is that it takes an extraordinary leadership to reall) 

make these interdepartmental things become something tha1 

works. 

I mean, I've seen it in more than just the Department of Agri· 

culture and Interior or even the interagency activities. You car 

speak to that yourself. 

Secretary Cohen, you sit in a key place to try to force thosE 

things to work and to reach out. But, there's a lot of pride and ~ 

lot of turf consciousness in the process, as has been noted. 
96 

Why the Park Service needs three or four different categories of 

concessions treatment is another question. That really, I think, provides more confusion and less coherent direction, all with good intentions. 

I don't question the intentions, because fundamentally I believe 

the organization and the people in it are professionals and share 

a real commitment in terms of public service and some of the 

things that I value highest in my own frame of reference. But, good 

intentions are not enough in many instances. 

So, unless you had any further comments, Secretary Cohen, I am 

going to move on to the other witnesses. But, we do need and will 

expect this to be brought to a conclusion and we ought not to torture everyone for the next year on it. 

So, we will submit questions and ask consent, as Congressman 

Hansen has already sought, for others to submit questions in writing, as other members may chose to do so as well. So, I will establish that as consent granted without objection, so that we can have 

them answered for the record. And, hopefully you will receive them 

in a timely manner and answer them in a timely manner so that 

we can move ahead. 

But, more importantly, we need the informal help of Mr. Davis 

and Mr. Reynolds and yourself in order to advance this issue forward in the near term. So, thank you very much. 

Ms. COHEN. I think we all look forward to working with you. Mr. 

Reynolds would just like to say something. Chairman VENTO. Yes. Mr. REYNOLDS. Mr. Chairman, I would just like to recognize Jack 

Davis. Yesterday, Jack announced his retirement from the National 

Park Service. 

He is one of the most respected and intelligent members of the 

National Park Service as both a manager and a staff member of 

the Director of the Park Service. And, I would just like you to know 

that we are going to miss him very, very greatly. Chairman VENTO. Well, I shall miss him, too. I regret to learn 

of that. 

I hope that this hearing had nothing to do with that decision, 

Jack. [Laughter.] 

Chairman VENTO. But, I would hope that you will be available 

to assist. I know that you have put a couple of years into it. 

And, I've very much enjoyed you on the scene as superintendent 

at Grand Canyon some years ago when I visited. And, I congratulate you and wish you well in your future endeavors. 

You have done a great job and, I think, reflect well on the Na- tional Park Service. And, I and other Americans really maybe don't 

always understand, but they would appreciate if they could see 

through my eyes what I've seen in terms of the work you've done. 

We very much appreciate it, Jack. Thank you. 

Mr. DAVIS. Thank you. 

Chairman VENTO. Thank you all. 

Mr. DAVIS. Mr. Chairman, the reason is 42 years and nothing 

else. [Laughter.] 

Chairman VENTO. I hear you. I hear you. Congratulations, Jack. 
97 

PANEL CONSISTING OF WILLIAM J. CHANDLER, DIRECTOR OF 

CONSERVATION, NATIONAL PARKS AND CONSERVATION ASSOCIATION; JOSEPH K. FASSLER, CHAIRMAN, BOARD OF 

GLACIER PARK, INC., ON BEHALF OF THE NATIONAL PARK 

HOSPITALITY ASSOCIATION; AND DAVID BROWN, EXECUTIVE DIRECTOR, AMERICA OUTDOORS 

Chainnan VENTO. We are pleased to welcome the first panel of 

witnesses this morning: William Chandler, who is the National 

Parks and Conservation Association spokesperson; Joe Fassler of 

the National Parks Hospitality Association; and, Mr. David Brown, 

America Outdoors. 

Gentlemen, thank you for your patience this morning. I know 

that listening to the members ask the questions, I could see you 

moving in your chairs wanting to contribute, at least, with body 

language that which you couldn't articulate. 

So, we have your statements before us. And, they are made part 

of the record by my previous request. 

Mr. Chandler, if you can read the releva.I).t portions or summarize 

your statement, it would be helpful to me this morning. Please, 

proceed. Welcome. 

STATEMENT OF WILLIAM J. CHANDLER 

Mr. CHANDLER. Thank you, Mr. Chainnan. I would like to submit my statement for the record. I would also like to submit for the record a statement of a member of our Board of Trustees, who is a banker and who addresses 

the issue of possessory interest which is being debated by the committee. 

Chainnan VENTO. Without objection, that will be added to the 

record. We have also received a statement from Roger Mann at 

Host Marriott that will be added to the record. He is a senior director of business development and talks about the issue of possessory 

interest. 

[The statements follow:] 
98 

National Parks 

and Conservation Association 

STATEMENT OF 

ANTONIO F. MARQUEZ 

MEMBER OF mE BOARD 

NATIONAL PARKS AND CONSERVATION ASSOCIATION 

SUBMITTED TO mE 

-SUBCOMMITTEE ON PUBLIC LANDS, NATIONAL PARKS AND FORESTS 

ON H.R.1493 

A BILL TO REFORM mE CONCESSION POLICIES 

OF mE NATIONAL PARK SERVICE 

OCTOBER 19, 1993 

Mr. Chairman and members of the subcommittee, my name is Antonio Marquez. I am Vice 

President in charge of the Commercial/Residential Real Estate Division of Riggs Bank, here 

in Washington. I am also a member of the Board of Directors for the National Parks and 

Conservation Association (NPCA), a nonprofit citizens' organization dedicated to the 

protection and enhancement of the National Park System. It is in my capacity as an NPCA 

board member that I make this statement in support of H.R. 1493, legislation to reform the 

concessions policy of the National Park Service (NPS). 

Specifically, I would like to address the issue of "Possessory Interest." Although I speak as 

a board member of NPCA, and share the Association's view that national park concessioners 

are important partners in the park experience, professionally I believe that the concept of 

"Possessory Interest" represents an unwarranted subsidy to the concessions industry that 

cannot be j usti fled. 

As a banker, I tend to view additional collateral in support of any loan as good. As a private 

citizen and a taxpayer, however, I have trouble justifying the economic rationale for the 

payment of the So-called "Possessory Interest" at market value. As a bank vice president in 

commercial real estate, I can only remark that national park concessioners have negotiated 

for themselves a sweet deal, apparently at taxpayers expense. 

I hope that through NPCA's testimony we are clear about our organization's belief in free 

enterprise, incentives, and profit. I see no incompatibility between the concessioners right to 

profit and the need for reform in order to create a competitive and equitable concessions 

process. 

1776 Massachusetts Avenue, N.W., Washington, D.C. 20036-1904 

Telephone (202) 223-NPCA(6722) • Fax (202) 659-0650 

() raJN TlDO N arcrc~ED PAPll 
Antonio F. Marquez 

October 19, 1993 

Page 2 of3 

99 

I would like to address two points, (1) How "Possessory Interest" is bad business for the 

Park Service, and (2) What the real collateral value of "Possessory Interest" is in a 

commercial loan underwriting decision. 

Here is the "Possessory Interest" deal as I see it. Assume I am a business person who 

operates a concession, and that I make a decision to proceed with a capital improvement. 

utilize the improved facility to generate cash flow. I have the ability to depreciate the asset 

for tax planning purposes. At the end of the contract, I get market value -- instead of book 

value -- for the asset I leave behind. 

The concessioner's position is analogous to a leaseholder in a tenant-landlord transaction. 

The asset or improvement is depreciated to maximize tax planning, and when the tenant 

leaves, the landlord pays the tenant the market value of the improvements. Not a bad deal, 

if you can get it. The problem is that the Park Service is the landlord, the concessioners are 

the tenants, and the taxpayer is footing the bill. 

NPCA does not contend that the concessioner should walk away with nothing, but rather that 

payment of market rather than depreciated book value is neither appropriate nor justified. 

Concessioners may argue that without the "Possessory Interest" capital improvements at 

national parks might never be made. If the facility or improvement does not make economic 

sense based on the economic benefit (cash flow) to be derived by the concessioner, why 

should the taxpayers provide a subsidy to concessioners to make non-economic improvements 

which prove to be bad business for the National Park Service? 

The concessions industry has argued that without "Possessory Interest" concessioners would 

be unable to obtain bank financing. I find it hard to believe that "Possessory Interest" 

represents more than just ~ of the various loan underwriting criteria utilized by a loan 

officer in assessing a potential loan transaction to a concessioner. The borrower's capacity is 

assessed in a variety of ways. Issues such as personal guaranties, the basic cash flow of the 

transaction, ability of the firm to complete its asset conversion cycle, business reputation, as 

well as collateral value, all impact the underwriting decision. 

Were I sitting in a loan committee and the sole lending rationale for proceeding with a loan 

to a concessioner rested on the fact that an assigned possessory interest served as the back 

stop to repay the loan, I would not be swayed to proceed on that basis alone. Many factors 

need to be assessed and collateral value is just one. 

Now, lets say I am sitting on the loan committee and the various appropriate underwriting 

criteria are evaluated and found to be satisfactory. A question arises as to whether or not the 

risk to the lender of a loan to a concessioner gets worse just because, instead of market 
Antonio F. Marquez 

October 19, 1993 

Page 3 of3 

100 

value, the borrower receives depreciated book value of the asset at the end of the loan 

period. If the loan has been properly structured with loan-to-asset value parameters that are 

acceptable on day one, as that loan amortizes, the fact that the underlying asset is being 

depreciated should not prevent a committee from approving a Joan to a borrower that 

otherwise meets the basic Joan underwriting criteria. 

My point is that loan underwriting is a dynamic process of assessing and mitigating potential 

risks to repayment. Stating that without "Possessory Interest, • loans would not be available 

is too simple an assertion. 

If a loan were made on a leasehold improvement and repayment relied solely on liquidation 

of the collateral at market value, in my estimation, the Joan rests on weak underwriting. 

Concessioners provide a service within our national parks. The concessioners ability to make 

a·profit, i.e., generate cashflow, from providing the service is the primary factor the lender 

will look at in evaluating a loan to a concessioner. A lender will be careful not to confuse 

lending rationales. A service business needs to generate cash flow from the delivery -of the 

service. The value of the leaseholds would probably be a tertiary concern in assessing 

repayment capacity. 

I thank the subcommittee for allowing my views to be entered into the record and encourage 

efforts to reform the national park concessions process. 
Effective Taxpayer Subs

Structures, Fixtures, and Imp

Built by Private COIIC15Sioners on F

TIME 

Under tile COIICe!llions Pulley Ad~ 1965,

• capitalizes the impi'OY"!!IIeelt 

• uses the -'to generateaiSII flow in the 

• depredates the _. ror tu planning pur

• •t eonlnld termination, ..-Iva m.rka 

book'nllue 
102 

//·HoST MARRiorr 

October 15, 1993 

The Honorable Bruce Vento 

Chairman, Subcommittee on National Parks 

Forests and Public Lands, 

812 O'Neil 

Washington, DC 20515 

Dear Congressman Vento: 

Ho.t Marriott Corporation 

10400 Fernwood Ro.ad 

Wasbiqtoo. D.C. 20058 

3011380-7549 

3011380-1851 Fax 

Roaer E. Mann 

Senior Director 

Business Development 

Last year, on behalf of the Marriott Corporation, now Host Marriott Corporation, I testified 

in support of concessions legislative reforms that would make the national park coQcessions 

program more competitive and less costly for the taxpayer. Congress did not act, and the 

issue is currently before the House Subcommittee on National Parks, Forests and Public 

Lands. 

Although Host Marriott would be interested in competing for certain national park 

concessions, there is little incentive for us to do so because of the preferential right given 

by statute to incumbent concessionaires to renew their contracts. In short, present law shuts 

the door to open, fair competition. Until that provision is eliminated by Congress, it is 

unlikely that we will go to the expense of preparing contract proposals for concessions in 

national parks. 

Host Marriott Corporation still supports changes in the 1965 law which would make the 

park concessions program more compatible with existing standards in the in the concessions 

industry. In this regard, I have attac)ted a statement for submission for the hearing on 

HR1493. I would appreciate your consideration of our comments when the biU is marked 

up. 

If I can provide further information or other assistance, please call me. 

Sincerely, 

£?c.:f71 «/a-rvvt._ 

Roger E. Mann 
103 

STATEMENT OF 

ROGER MANN 

SENIOR DIRECI'OR OF BUSINESS DEVELOPMENT 

HOST MARRIOTT CORPORATION 

WASHINGTON, D.C. 

SUBCOMMITTEE ON 

NATIONAL PARKS, FORESTS, AND PUBLIC LANDS 

UNITED STATES HOUSE OF REPRESENTATIVES 

OCTOBER 1993 

HEARINGS ON THE NATIONAL PARK SERVICE 

CONCESSIONS POLICY REFORM ACT OF 1993 

HR1493 
104 

Mr. Chairman and members of the Subcommittee, my name is Roger Mann. I am Senior 

Director of Business Development for Host Marriott Corporation, formerly the Marriott 

Corporation. 

Marriott is the nation's leading hospitality company. We operate more hotel facilities and 

rooms than any company in the country. Marriott is also the nation's leader in providing 

food service to colleges and universities, hospitals, and office buildings. Additionally, 

Marriott is the leading concessionaire in U.S. airports and toll road plazas as well as a 

concessionaire in California and New York state parks. 

Host Marriott Corporation supports the Concessions Policy Reform Bill, HR1493, and 

believes its treatment of both preferential right or renewal and possessory Interest are fair 

to existing and potential concessionaires. These reforms will increase competition for 

contracts and lead to greater revenue to the government and higher quality service to park 

visitors. 

Host Marriott is well qualified, by its broad range of experience, to be a National Park 

concessionaire for provision of lodging, food service, and merchandise sales, but current 

policy excludes us. In 1991, we were ·invited to a pre-bid meeting for the Yellowstone 

National Park contract We did not attend because of the National Park Service 

concessions policy of "preferential right of renewal". Under this policy, if Host Marriott, 

or any company other than the incumbent, submitted the high bid on the Yellowstone 

contract, the incumbent concessionaire would have been able to renew the contract by 

merely matching that bid. This policy eliminates any reasonable opportunity jn National 

Parks for well qualified new concessionaires, such as Host Marriott Corporation. 

For Yellowstone in 1991, only the incumbent bothered to bid, and didn't have to worry 

about bidding high. Why should any other company have gone to the expense of preparing 

and submitting a bid, if it had no real chance of winning? Obviously, without competition 

the government did not maximize its revenues for Yellowstone. And without competition, 

visitors are deprived of the quality and service levels which competition brings. In 1981, 

when there was competition for the Yellowstone contract, eight companies bid. 

We would like to see genuine competition for National Park Service concession contracts. 

Competition exists for concession awards for airports, colleges and universities, hospitals and 

toll roads. This competition maximizes both revenues to the authorities and service to the 

public. We are sure that open competition for National Park contracts would increase 

concessions revenues to the government, and improve quality and customer service. 
105 

Host Marriott would bid for National Park concessions contracts without preferential right 

of renewal. We do it many times each year in airports, state parks, colleges, toll roads and 

other venues. Quality concessionaires want to maintain their reputations. They will 

perform well in order to get their contracts renewed and win new ones on a competitive 

basis. To the best of my knowledge, preferential right of renewal does not exist elsewhere 

in the concessions industry and many public authorities mandate fair and open competition 

by statute. 

Another National Park Service concessions policy which we find unusual is the concept of' 

possessory Interest. This allows a concessionaire to write I!P to replacement value minus· 

depreciation, any investment it has made in Park buildings, and be paid that windfall by the 

National Park Service if it should leave that Park, even as a result of unsatisfactory 

performance. In the universe of concessions outside of National Parks, investments are 

typically amortized over the length of the contract so, at expiration, the concessionaire's 

asset has been completely written off. In case the concessionaire should lose the use of the 

asset before the end of the contract, or the authority requests additional mid-term 

improvements, or the contract is terminated prematurely, the .remaining net book value, that 

is, the unamortized portion of the asset, is generally repaid to the concessionaire by the 

authority, often funded by the concessionaire's successor. If the incumbent concessionaire 

does not win the new contract, the physical property reverts to the authority. 

The concept of possessory Interest is not necessary in National Parks. It is a burdensome 

liability for American taxpayers. The phasing out of all possessory Interest in National 

Parks will not discourage quality operators from coming forward to bid on contracts. 

Some National Park concessionaires have stated that capital investment in National Parks 

cannot be funded without possessory interest to secure loans. If this were true, how do 

many of these same concessionaires and others fund their multi-million dollar investments 

in environments where there is no possessory Interest such as airports, state parks, stadiums 

and arenas? 

The answer is that most of these venues have existing visitation and sales histories. Cash 

flows can be projected with reasonable enough accuracy to satisfy many lenders. These 

capital investments are generally secured in the contract with net book value protection. 

That means that if the contract should be terminated early, the unamortized book value of 

the investment would be refunded. The lender is protected. As a general rule, contracts 

of up to 10 years should be sufficient to amortize investments in National Park concessions. 

2 
106 

Though Host Marriott Corporation supports the Concessions Policy Reform Bill, we believe 

several minor alterations would make the legislation even more effective. 

We recommend the word "proposal" be used instead of "bid". Though Section 3 does state 

that "bid" means "the complete proposal," in the concessions industry a "bid" usually means 

a financial offering while a "proposal" speaks to concept and quality of operations as well 

as finance. In a "proposal", finance is just one of several criteria being evaluated. We 

understand this to be the intent of the Concessions Reform Bill. 

Sectjon 6 states that contracts will be awarded through cqmpetitive process. It does not 

state clearly what criteria wm be evaluated. We would recommend language stating that 

competitors will be evaluated not only on the proposed franchise fee payments, but also on 

investment, quality, service and harmony with the park's mission. The highest percentage 

franchise fee does not necessarily lead to the highest revenue to the government or 

enhanced park visitor satisfaction. Increased quality with a lower franchise fee can lead to 

higher sales and, therefore, more revenue to the government 

Section 11. Subsection (d) requires public review and possibly hearings for all construction 

projects of $1,000,000 or more. We agree that development within park boundaries needs 

to be carefully controlled, but any dollar figure used as a ceiling could easily become 

outmoded. It could potentially lead the Park Service and the concessionaire to underinvest 

in a project requiring expedition in order to avoid public review and hearings. Though we 

would favor deleting Subsection (d), an alternative approach would be to call for a public 

review for new or replacement construction which exceeds a specific size. For example, this 

review could be triggered for construction of over 5,000 square feet. 

Mr. Chairman and members of the subcommittee, I applaud your efforts in attempting to 

improve National Park concessions policies. I can assure you that the introduction of 

competition into National Park concessions contracts will encourage qualified companies 

to come forward and will result in better quality and service for the park visitor, and 

enhanced revenue for the government. 
107 

Chainnan VENTO. Please, proceed with your statement, Mr. 

Chandler. 

Mr. CHANDLER. Thank you. I am sorry that the Congressman 

from Utah had to leave early. I think he raised a couple of interesting questions, which I would like to address at the outset. 

Chainnan VENTO. His staff is here. And, they take good notes. 

Mr. CHANDLER. Okay. With regard to the impact of the visitor, 

you know, the question was raised, what impact will these bills 

have on the park visitor. 

And, I think it's safe to say, Mr. Chainnan, that the legislation 

posed by Congresswoman Meyers and Mr. Stearns does not take 

anything away from the park visitor. In fact, there will be no 

change except over the long tenn. 

What are we going to get out of this? What we think we are 

going to get is responsiveness, more responsiveness, by the concessions industry. 

And, over the long haul, we believe that if you· have to compete 

for contracts periodically, quality of goods and services is going to 

increase. And, that's an axiom of our free market system. And, we 

don't see any reason why it shouldn't be applicable in the National 

Park System like it is everywhere else in this country. 

Second of all, the gentleman from Utah raised the question about 

whether or not there was any evidence that the current concession 

system has hurt park resources. And, he asked the Park Service to 

provide some examples of that. 

One of the examples that has come to light during my tenure at 

the National Parks and Conservation Association is the Yosemite 

situation where it has been repeatedly told to me by numerous individuals that one reason the general management plan at Yosemite was not executed was because of resistance by the incumbent 

concessionaire. You will recall, Mr. Chainnan, that that plan was 

put into place in 1980 and it called for a reduction of certain lodging units and some restaurants. And, it was trying to decrease the 

commercialization and the overcrowding in Yosemite Valley. 

That plan has yet to get off the ground. And, it's only going to 

get off the ground now because the concessionaire has gone. 

We have a new concessionaire. We have a new lease on life. 

And, the Park Service is going to hold Delaware North Corporation to executing that plan. So, the message here, Mr. Chainnan, 

is that it's very important for the Park Service to be able to change 

the concessionaire periodically, within a 5- to 15-year period. 

Otherwise, they become like barnacles on a ship. And, they never 

want to leave. And, they never want to change. 

And, if there's one thing that we all know, we live in a changing 

world where businesses have to change everyday to satisfy their 

clients. And, that is no different in the National Park System than 

anywhere else in our country. 

Fundamentally, Mr. Chainnan, we believe that the concessions 

issue is a financial management issue. And, I have submitted to 

you, Mr. Chainnan, a chart which looks like this. And, you have 

it up there. 

And, it basically shows some of the research that we have put 

together to show how concessions operate everywhere else in the 
108 

United States except in the National Park System. And, there are 

some commonalities here, Mr. Chairman. 

If you will look at all of these different examples, whether they 

are big parks or little state parks, whether they are airports or universities, whether it's the Smithsonian Institution or any other setting where a retail operator is brought in as a concessioner, you 

will find some very interesting things going on. Number one, these 

contracts are short term, 5 to 10 years. 

They have no possessory interest in anything that they build, either in terms of structures or improvements at the end of their contract. They are also paying much higher fees than the National 

Park Service is now receiving. 

I think, if you look at all of these comparative examples, Mr. 

Chairman, you have to conclude that the reason the Park Service 

is getting 2.9 percent return on $618 million worth of gross is one 

simple fact. And, that is that there is no competition for these contracts. 

We believe it's imperative that competition be brought into the 

system. We also believe that it's imperative that the unnecessary 

possessory interest that is being doled out right now to the concessioners be terminated. It is, in fact, no longer necessary to secure 

concessioners in the National Park System. 

Now, you are going to hear a lot from the concessions industry 

this morning, Mr. Chairman, about how they can't make money in 

the national parks without having low fees, how they can't do business in the national parks without having 15-, 20-, 30-year contracts, how they can't get a loan from a bank, Mr. Chairman, because that bank won't give them a loan to execute their business 

unless they have a possessory interest which is, in effect, a guaran- teed loan for the U.S. government to a privileged class of businessmen. 

And, when they come up, Mr. Chairman, to tell you all this, I 

would like you to ask them three questions. Number one. Why are 

you afraid to compete for contracts inside national parks when you 

are competing for them everywhere else outside national parks and 

you give the landlord a much better return? 

The second question I would like you to ask the concessions industry is the following. If being a park concessioner gives you such 

a low return on your money and is such a hardship, why are you 

still doing business there and why is it that 10 operators now own 

52 national park concessions? 

We have a phenomenon, Mr. Chairman, of concessions conglomerates in the national parks. And, in looking at that situation, I 

can only conclude that business must be very good in the National 

Park System, because big operators like ARA are buying up more 

and more of these concessions. 

ARA, Mr. Chairman, incidentally, competes for concessions everywhere else outside the National Park System. They are a $4 billion company. Clearly, they could compete for concessions inside 

the National Park System as well. 

The third question I would like you to ask of the concessions industry, Mr. Chairman, is this. If no bank will give a park concessioner a loan without possessory interest, as defmed under current 

law, how come these same concessioners or concessioners in similar 
109 

situations, both large and small, are able to finance their concessions operations at locations outside the park? 

Again, you have on this table, Mr. Chairman, a list of situations 

where concessioners are doing business with their landlords with 

no possessory interest. Clearly, something is amiss here when 

somebody tells you they can't do business in a national park unless 

they have a possessory interest as defined under current law. 

I will conclude my remarks, Mr. Chairman, with the request that 

we do feel that action is needed this Congress by both the House 

and the Senate. As someone pointed out, it may have been yourself, 

Mr. Chairman, over half of the 195 concessions contracts now in 

existence will be expired or have expired by 1994. 

And, if all those contracts go out the door with low terms and 

so forth, we are in for another 10-, 15- or 20-year period of bad financial deals for the Federal Government. It's a financial management issue. We think that something can be done that will be fair to the concessioners. Reform is not going to hurt the park visitor. 

And, we urge the committee to move forward. Thank you, Mr. 

Chairman. 

[Prepared statement and charts of Mr. Chandler follow:] 
110 

National Parks 

and Conservation Association 

TF.STIMONY PRESENTED BY 

WD..LIAM J. CHANDLER 

DIRECTOR OF CONSERVATION 

NATIONAL PARKS AND CONSERVATION ASSOCIATION 

BEFORE THE 

?ff 

.......... 

Ciri.-Prrtlmi._ 

Aorlto 

SUBCOMM11TEE ON NATIONAL PARKS, FORESTS AND PUBLIC LANDS 

BOUSE COMM11TEE ON NATURAL RESOURCES 

ON B.R. 743, B.R. 14!13, AND B.R. 2146 

BD..LS TO REFORM TilE CONCESSIONS POLICIES 

OF TilE NATIONAL PARK SERVICE 

OCTOBER 1!1, 19!13 

Mr. Chairman and members of the subcommittee, my name is William J. Chandler. I am 

Director of Conservation for the National .Parks and Conservation Association (NPCA), a 

nonprofit citizens' organization dedicated to the protection and enhancement of the National 

Park System. On behalf of our Association's 350,000 members, I am pleased to testify in 

support of legislation to reform the concessions policy of the National Park Service (NPS). 

Action to correct the fiscal and managerial abuses occurring under the concessions system is 

long overdue. These abuses have been documented by the Grace Commission, the General 

Accounting Office, the Inspector General of the Department of the Interior, and witnesses 

before several congressional committees. 

The concessions issue is fundamentally a fmancial management issue. like the best-run 

corporations, government agencies must become more efficient. They must eliminate 

unnecessary costs, and secure fair payments, user fees and rents for publicly-()wned assets. 

Reinventing government is an imperative of the 1990's. And concessions management is a 

good place to start. 

NCPA supports the provision of concessions services which the Secretary of the Interior 

deems necessary and appropriate for park visitors. We also strongly support the provision of 

visitor services in the parks by private enterprise. 

However, we believe that concessioners should pay a fair fee to their landlord, the federal 

government, for the privilege of operating exclusive business franchises in the parks. That's 

not happening now because key provisions of the 1965 concessions law are outmoded and 

inconsistent with the principles of free enterprise. 

1776 MassachusettS Avenue, N.W., Washington, D.C. 20036-1904 

Telephone (202) 223-NPCA(6722) • Fax (202) 659-0650 
111 

Testimony of William I. Chandler 

October 19, 1993 

Page 2 

H.R. 743, H.R. 1493, and H.R. 2146 all contain laudable provisions that would bring 

competition to park concessions and eliminate unnecessary subsidies. Overall, we believe 

H.R. 1493 and H.R. 2146 contain the best mix of reform provisions needed to restructure 

the concessions program. 

ChanKed Conditions 

While generous incentives once may have been necessary to lure concessions operators to the 

parks, times have changed since 1965. Most parks are no longer remote outposts with 

unpredictable visitation, and a high level of business risk. With annual visitation 

approaching a third of a billion visitors, our parks now provide attractive business 

opportunities for small and large businesses alike. If this were not true, how else do you 

explain the phenomenon of concessions conglomerates in the parks? In 1991 , 52 concessions 

were owned by 10 operators. ARA Services -- a $4 billion Fortune 500 company -- operates 

13 of the most lucrative national park concessions. 

A PrivjleKed Class 

Unfortunately, our concessions policies have not changed with the times. Today, the 

incentives of the 1965 law have evolved into subsidies that are clearly unnecessary to secure 

able concessioners in our parks. In the universe of concessions, only in the National Park 

System do we find a privileged class of business operators that 

t operates as a government-created monopoly that is allowed to charge market 

prices (or higher) for goods and services that are sold to a steady supply of 

captive consumers 

t has a perpetual right to renew contracts without competition 

t is provided a prime business location paid for and maintained by the landlord 

t is guaranteed payments at inflated (appreciated) prices for buildings, fixtures, 

or improvements constructed on the landlord's property when a concession is 

sold or terminated 

+ may transfer (sell) a concession contract at anytime to another party, or to its 

government landlord - the buyer of last resort and effective guarantor of the 

assets. 

In sum, incumbent concessioners have a financial strangle-hold on the parks, and hold all the 

cards in negotiating contract renewals with the National Park Service (NPS). That 

stranglehold is made clear by the chart attached to my testimony. It shows that while 
112 

Testimony of William J. Chandler 

October 19, 1993 

Page 3 

concessioners grossed $618 million in the parks in 1991, just 2.9 percent of that amount-

$18 million- came back to the government in the form of franchise fees. (See attached 

chart) 

(Concessioners at some parks also contribute a portion of their revenues to capital 

improvement or maintenance funds that are expended at the park level. According to NPS, 

about $9 million was paid into these accounts in 1991. This sum should not be considered as 

equivalent to franchise fee revenue. Some monies in these funds are recycled into 

concessions operations. and may even be spent on structures, fixtures, and improvements that 

earn the concessioner a compensable possessory interest.) 

Concessions Outside National Parks 

While NPS receives on average 2.9 percent of a concessioner's gross receipts as franchise 

fees, concessioners at other locations are paying much higher fees to their landlords. Some 

examples: 

(I) Niagra Falls State Park, New York 

+ IG-year contract, competitively bid 

+ No right to renew the contract 

+ Fee of 4 percent of gross sales below $2 million and 20 percent above 

$2 million 

• Investment of $2 million with no possessory interest 

(2) Bear Lake State Park, Utah 

+ 5-year contract for marina, competitively bid 

+ No right to renew the contract 

+ Fee of 8 percent of gross 

+ No possessory interest 

(3) Hearst San Simon State Historical Monument, California 

+ 1G-year contract, competitively bid 

+ No right to renew the contract 

+ Fee of 26 percent of gross food and beverage sales, and 51 percent of 

gift shop sales 

+ Investment of $3.5 million with no possessory interest 

(4) Smithsonian Air and Space Museum 

+ Maximum IG-year contract for cafeteria (4 years, plus 3 two-year 

options to renew), competitively bid 

+ No right to renew the contract 

+ Minimum fee of 15 percent, plus 2 percent for equipment replacement 

The reason concessions fees are higher in other situations is simple: competition for 

contracts that are bid every 5 to 10 years. To increase national park concessions fees, the 

1965 law must be amended to require open competition for contracts, and to eliminate 

preferential renewal rights for incumbent concessioners. Competition is the standard in all 

other concessions venues. It should be the standard as well in our national parks. 
Testimony of William J. Chandler 

October 19, 1993 

Page4 

113 

The absence of mega-concessioners like ARA Services and TW Services at public hearings 

such as these is telling. I believe the reason these corporate giants do not show up is because 

they might be asked to explain how they are able to operate concessions oUJSUk national 

parks without the generous terms they claim they need for concessions insUk national parks. 

The Yosemite contract awarded this year is illustrative of what competition can do to 

generate a fair fee to the landlord. According to NPS, the winning bid of Delaware North 

will return financial benefits to the government equal to approximately 21 percent of the 

annual gross ($86 million in 1991). Contrast that with the fee of 0.15 percent received 

previously, and the value of open competition is crystal clear. 

Competitive Schizophrenia 

The 1965 law is especially unfair to those business operators who wish to compete for 

renewing contracts. The Concessions Policy Act of 1965 has a bad case of "competitive 

schizophrenia. • Although one provision of the law encourages the Secretary of the Interior to 

bring private businesses into the parks, other provisions - especially preferential right and 

possessory interest - act in concert to bar non-incumbent businessmen and women from 

competing for concessions contracts. For example, the Inspector General for the Department 

of the Interior examined 29 contract renewals and found that 28 were won by the incumbent 

concessioner who submitted the only offer. 

As Marriott official, Roger Mann, testified before the Senate Energy and Natural Resources 

Committee in 1992, sweetheart contracts that shield incumbent concessioners from 

competition are not necessary to secure top-flight C011Cessioners at our national parks: 

We [the Marriott Corporation] would like to see genuine competition for 

National Park Service concession contracts. Competition exists for concession 

awards for airports, colleges and universities, hospitals, and toll roads. This 

competition maximizes both revenues to the authorities and service to the 

public. We are sure that open competition for National Park contracts would 

increase concessions revenues to the government, and improve quality and 

customer service. 

Marriott would bid for National Park concessions contracts without preferential 

right of renewal. We do it many times each year in airports, state parks, 

colleges, toll roads and other venues. Quality concessionaires want to maintain 

their reputations. They will perform well in order to get their contracts 

renewed and win new ones on a competitive basis. To the best of my 

knowledge, preferential right of renewal does not exist elsewhere in the 

concessions industry and many public authorities mandate fair and open 

competition by statute. 

Outmoded Concqrt of Possessory Interest 

Mr. Mann also noted the irrelevance of the concept of possessory interest, and its burden on 

the taxpayer: 
114 

Testimony of William J. Chandler 

October 19, 1993 

Page 5 

Another National Park Service concessions policy which we find unusual is the 

concept of possessory intecest. This allows a concessionaire to write up to 

replacement value minus depreciation, any investment it has made in Park buildings, 

and be paid that windfall by the National Park Service if it should leave that Park, 

even as a result of unsatisfactory performance. In the universe of concessions outside 

of National Parks, investments are typically amortized over the length of the contract 

so, at expiration, the concessionaire's asset has been completely written off. In case 

the concessionaire should lose the use of the asset before the end of the contract, or 

the authority requests additional mid-term improvements, or the contract is terminated 

prematurely, the remaining net book value, that is, the unamortized portion of the 

asset, is generally repaid to the concessionaire by the authority, often funded by the 

concessionaire's successor. If the incumbent concessionaire does not win the new 

contract, the physical property reverts to the authority. 

The concept of possessory interest is not necessary in National Parks. It is a 

burdensome liability for American taxpayers. The phasing out of all possessory 

interest in National Parks will not discourage quality operators from coming 

forward to bid on contracts. 

Some National Park concessionaires have stated that capital investment in 

National Parks cannot be funded without possessory interest to secure loans. If 

this were true, how do many of these same concessionaires and others fund 

their multi-million dollar investments in environments where there is no 

possessory interest such as airports, state parks, stadiums and arenas? 

The answer is that most of these venues have existing visitation and sales histories. 

Cash flows can be projected with reasonable enough accuracy to satisfy many lenders. 

These capital investments are generally secured in the contract with net book value 

protection. That means that if the contract should be terminated early the unamortized 

book value of the investment would be refunded. The lender is protected. As a 

general rule, contracts of I 0 years should be sufficient to amortize investments in 

National Park concessions. 

Under the 1965 law, the federal government is currently liable for hundreds of millions of 

dollars worth of possessory interests accumulated by incumbent concessioners. Although this 

liability grows each year, the National Park Service does not even keep track of the 

government's total liability. 

The concept of possessory interest is an anachronism that should be eliminated from the 

management of park concessions. The cost of concessioner-built structures should be 

amortized over a fixed period (not to exceed 31.5 years). Should a concessioner sell or be 

terminated, he or she should be entitled to receive the remaining, unamortized portion of the 

building's cost and no more. This approach, which is common in the concessions industry, 

provides adequate financial protection for the concessioner's investment, as well as sufficient 

collateral for loan purposes. 
Testimony of William J. Chandler 

October 19, 1993 

Page 6 

Expiring Contracts Regpim Action 

115 

Timely action on concessions reform is critical. According to data supplied by the NPS, 37 

concessions contracts already have expired and await renewal; another 57 will expire in 

1993, and 20 in 1994. (See attached chart.) 

If Congress doesn't act this year, the federal government could be locked into another round 

of contracts with below-average franchise fees, and escalating possessory interest liability for 

more than half of all concessions operations now under contract. 

To conclude, I urge the committee - Republicans and Democrats alike - to stop the waste, 

and report out H.R. 1493 and H.R. 2146. The reforms proposed in those bills fairly balance 

the relationship between the government and the concessioners, and ultimately will produce 

more revenue for park programs. 
700 

600 

500 

400 

JOO 

200 

100 

1960 

National Park Concessioners' Gross Receipts & F

(million dollars) 

70 80 83 84 85 86 8

Year 

r- ~~:~~' _ f~ ~~ochi~f~•] 

Soun:e: National Parts and Conservation Associat

Prepared from data provided by the National Park Service, C

Figures for 1991 are preliminary. 
60 

50 

40 

JO 

lO 

10 

pre-91 

NPS Concessions Contracts Due for Renewal o

(number of contracts) 

1991 1991 1993 1994 1995 

Year 

1996 

Source: National Parks and Conservation Asso

Prepared from data provided by the National 
118 

State Parks 

Across tbe ru#lon, stale park concessfoners demotrstrate 

tbot concess1o1ters In 1U#Ionlll parks are ml1ldng the 

federal govemmerrt and tbe taxpayer. 

Average :\"ational Park O.mcessioner 

• VlsiWion: Varies from 100,000 to 10 million • H2S a Sla!utory ri8ltt of preference to renew the conaaa 

• Average conaaas range from 10 to 30 Y'2'S 

• fees a.erage 2.9%, many as low as 0.75% 

In pepetuily, eliminating oompelillon 

• Holds a possessory Interest enll!ling it to ill appreciation In 

Slnlttun:s and capi!allmprovemcniS it builds on prmdands 

Comp.trcd to: 

Coye PalkOOey Park. OR 

• VISi1ation: 618,000 

• One axx:essioner awarded ~year conlraCt 

on axnpetitlve bid; no preferential rigtt of 

renewal 

• Fee: 20% of gross on boat slip rentals 

10% on all other SCIVioes 

• No possessory Interest 

Bear lake State Park. VI' 

(Bear rae Marina) 

• VJSitatiOO; 29,000 

• One axx:essioner awarded 5-year ooro2a for 

operation of marina on rompetitlve bid; no 

preferential right cL renewal 

• Fee: 8% of gross recelpls 

• No possessory Interest 

Gamer State Park. IX • VlsiWion: 412,000 

• One concessiooer, >year axuraa 

• Fee (.sliding scale): 15.8% 

• No possessory Interest 

PymattJnin& State Park. PA 

• VISitation: 3.8 million 

• Two a>ncessioners operating camp stores 

and refreshments; both on 1G-year 

axnpelltlve com-aa; no preferential right of renewal . 

• Fee: camp stae pays fiat $9,000, plus 

5% cL gross; refreshmcniS pay flat 

$44,000, plus 5% cL gross 

• No possessory Interest 

NlaP'fl Falls State Park. NY 

• VISitation: 10 million 

• One axx:essioner awarded 1(}.year oompetilive contract; no preferenlial right cL renewal 

• Fee: 4% of gross for sales below $2 million; 

20% of gross above $2 million 

• Invested $2 million in S11Uautes as part cL conaaa 

• No possessory Interest 
119 

Airports ~ opert1t1ng ill tbe rllltlon'slllrports uniformly 

demolutnlte tbat r~QtlonQlparll ~-ml1llbr& tbe 

federal~ andtbetsxpayer. 

An:r..tgt: :'liationall'ark ConlTssiont:r 

• Vlsb!lon: Varies from 100,000 10 10 mDilon • H2s a SWUtDry right of preference 10 renew 1he cxxuraa 

• A .a-age ron~raas range from 10 10 30 years 

• Fees average 2.9%, many as low as 0.75% 

in pc:rpciUily, ellrninaling cxxnpetiiJcn 

• Holds a poosessory IDiercst cnlidlog it 10 all appredotion in 

SIIUc::IIRS and apitallmprovmteDIS it buDds CXl paldands 

Compared to: 

Portland International OR 

• 3.6 mDiion enplaned passengers 

• Multiple ooncessioners; oonttaas never exceed 

8 years; all <XJmpe!itivdy bid; no preferential 

right o( renewal 

• Fee: res12uraniS, 10-17% of gross 

gift shops, 10-16% of gross 

newsstands, 1H:5% of gross 

• No possessory interest 

Anchoraae International AK 

• 1.8 mDiion enplaned passengers 

• Multiple ooncessioners; contraa lenglh V2ries 

from 4 10 IS )UJS, depending oo type of 

operallOn; all <XJmpe!itivdy bid; no preferential 

right of renewal 

• Fee: res12uran!S, 10-lS% of gross 

gift shop, 1~1~ o( l!toflS 

new.ostand, 10% o( gross 

• No possessory interest 

Jackson lntmJational MS 

• 784,000 enplaned~ 

• Multiple ooncessioners; CXlOir.la lenglh varies 

from 3 10 10 )UJS, depending CXl type o( operalion; all <XJmpe!itivdy bid; no preferential right 

of renewal 

• Fee: resl2uraniS, 14% of gross 

• No poosessory interest 

Salt I.ak~ Citt International J.l[ 

• 12.S million enplaned passengers 

• Multiple ooncessioners; <Xllllt2as never ex=<! 

S years; all competitively bid; no preferential 

right of renewal 

• fee: resl2utarn, 10% of gross 

gift shopslllCWSSWids, 1~ of gross 

• No possessory interest 

Ca§per Air:port.M: 

• 73,ooo enpl2ned passense.S 

• Multiple ooncessioners; nwdmum ron1raa 

lenglh • 3 years; all oompclilively bid 

• fee: resl2uran!S, 7-lS% o( gross 

ocher types, 10% of gross 

• No possessory interest 
120 

Miscellitneous 

Concessions 

AlfaciJillesfrom mllilary bases to state fairgrounds, 

concessloners outsUle tbe pari system demonstrate 

that ru#torull pari concessloners are mllldng tbe 

federalgovermrumt and tbe toxpayer. 

Average "'ational Park Concessioner 

• VJSiWion: Varies from 100,000 to 10 million • Has a staiUtay ri8ht of preference to renew the oon1raet 

• Average contraCIS range from 10 to 30 ycus 

• Fees avo:rage 2.9%, many as low as 0.75% 

in perpcll1ily, diminating cxxnpctilion 

• Holds a possessory interest cnliding II to all appreciation in 

SlrUautes and capital improvemeniS It builds on parklands 

Compared to: 

Pennsylvania State Capitol 

Bulldini 

• Restaurant ~ioner provides breakfast and lunch on a 1-year competitively bid 

axuract 

• Fee: 12.5% of gross 

• No possessory interest 

Hill Air Force Base. ur • Base population: 16,500 

• Flower shop ooncession awarded 5-year 

coaract on competitive bid; no preferemal 

riBht of renewal 

• Fee: 14.9% of gross 

• No possessory interest 

Iapanese Tea Garden. Golden 

Gate Park. San Francisco. CA 

• VISitation: 6oo,OOO 

• Single food, beverage, and gift shop 

ooncessioner awarded l<)·year oontract on 

compctitive bid; no preferential right or 

renewal 

• Fee: gift shop, 38.5% of gross 

food, beverage, 38.5% of gross 

• Required to provide $15,000 in capital improvements per year In ycus 1-5 and $35,000 

per year In ycus 6-10 

• No possessory interest 

Albuquerqye State FaiJ'&roWlds 

• VISitation: 1.4 millioo 

• Small "1/Cldor-<XX>CCSSionels. bid for 6-monlh <XdraCIS; no preferential ri8ht of renewal 

• Fee: 25% of gross 

• No possessory interest 
121 

~ 

Museums Corrcessioften operalbw in these rraUddpal and state 

stn4aUres dettrotlstrat. that 1UltiO#Uil paril CIOifCeSSioners 

are ml1ldng tbefedertllgovernmerrt and the taxpayer: 

A\t:ragc ;";ational Park C.<lnn:-;sioncr 

• V"ISilation: Varies &om 100,000 to 10 million 

• Average rontraas range from 10 to 30 years 

• Fees average 2.9%, many as low as 0.75% 

Jackson Memorlal Stadium. MS 

• V"ISilation: 142,000 

• One oonoessioner, multiple operallons, 

awarded +year oorurac:t oo oompclllive bid; 

DO pre{erettiaJ right cl renewal 

• Fee: 36% cl grass =eipiS 

• Conaaa requires $125,000 In Improvements 

during <Xllllnc:t period; DO possessory inrerest 

ISM Museum of ~~tural Histoa 

• VISitatlon: 350,000 

• Restaurnnt concessiooer aW3tded 3-year 

competlllve c:onlract 

• Fee: 7% of grass =eipiS In year 1, 

lnaeaslng to 10% by year 3 

• No possessory 1nrerest 

Meadowlands 

Sports Comglex..lSI 

• Visitatico: 5to6million 

· • One oonoessioner, multiple operalloos 

awarded 15-year mnaaa with renewal 

opdon; no preferentlal right after oplloo 

• Fee: food and beverage. 40-45% 

mcrthandlse, 55-65% 

lilddenl2ls, 5% 

• No possessory 1nrerest 

• Has a swurory right cl preference to renew the ooruraa 

in perpetuity, eiimlnodng competllloo 

• Holds a possessory Inrerest ~ It to all apprecialion In 

sauaures and capitallmproYements It builds on parklands 

Hearst San Simeon State 

Historical Monmnent. CA 

• V"ISitatlon: 800,000 

• One oonoessiooer, multiple op=!ions, l~year 

ccnract oompetitively bid 

• fee: 26% d grass food and bev<:r.lge sales 

51% d grass gift shop sales 

• Concessioncr paid $3.5 million to consttuc:t 

visilor center; no possessory interest 

Air md Sgace Museum, 

Smithsonian Institution 

• V"ISitalion: 8 million 

• Cafeteria oonoessioo holds +year contract, with 

three 2-year renew2l oplions based oo perforltWlCC. Rdlid ccmpc:litlvely after 10 years. 

• fee: minimum of 15% of grass required, bur 

bid amounl hlgber 

additional 2% of grass deposUed in 

equipmem replaa:mem n:volvlng fund 

• No possessory 1nrerest 
122 

Chainnan VENTO. Thank you, Mr. Chandler. I am pleased towelcome Mr. Joe Fassler of the National Parks Hospitality Association. 

Welcome, Joe. 

STATEMENT OF JOSEPH K. FASSLER 

Mr. FASSLER. Mr. Chainnan, before I read my text, I would like 

to answer a couple of questions that Mr. Synar, Ms. Meyers and 

Mr. Chandler discussed here earlier today. 

They give you an exhibit and they try to compare the national 

parks with state parks, stadiums and arenas. And, they say that 

in state parks and in arenas we don't have possessory interest. 

They are correct. We don't need possessory interest in those kind 

of venues. 

In those kind of venues, the pricing is three to four times higher 

than what we are allowed to do in a national park. The return on 

equities are three or four times higher. 

In those type of venues, there is no regulation as there are in the 

national parks. The national parks regulate price, service, 

seasonality. No matter what it is that we put in a national park, 

it's a regulated environment by the National Park Service. 

When you work in a free environment, which is outside the national parks, we don't need possessory interest because we build 

equity. In a national park, you gain no title to anything you make 

investments in. Our only equity is possessory interest. 

I just wanted to respond to those questions. And, now I will address your Subc()mmittee and yourself. 

I, first of all, thank you for the opportunity to appear before you 

today regarding H.R. 743, H.R. 1493 and H.R. 2146. I am Joe 

Fassler, president and chief operating officer of Restaura, Inc., 

which is a wholly owned subsidiary of the Dial Corporation and its 

parent company of Glacier Park, Inc. I am also chainnan of the 

board of Glacier Park, Inc. 

We have been the owners of Glacier Park, Inc. since 1981. And, 

I am here today representing the National Park Hospitality Association. And, they were fonnerly known as the Conference of National Park Concessioners. 

These bills propose many major changes to the present NPS concessions system. And, I would like to address some of the concerns 

over these changes. 

Since this hearing addresses three different bills, certain comments will be directed only to provisions of H.R. 1493 and H.R. 

2146, which happen to be identical bills. Other comments will be 

directed towards H.R. 743, which varies in its provisions from the 

other bills. 

Our first comment. H.R. 1493 and H.R. 2146 would alter the 

focus on necessary and appropriate visitor services. The present 

law directs the National Park Service to determine what are necessary and appropriate visitor services in each park. 

H.R. 1493 and H.R. 2146 would reverse that policy by providing 

that visitor services would only be provided in a park when the private sector or other public agencies could not adequately serve the 

visitor in the vicinity of the park. The focus would be on facilities 

available outside the park rather than accommodating visitor needs 

when the visitors are in the park. 
123 

The role of the National Park Service is twofold. To protect the 

resources of the park and to provide for the use and enjoyment of 

those areas for the visiting public. Therefore, the focus must be on 

what services should be provided in the park and not what may be 

available at some distant point outside the park. 

The second concern. All these bills would require a competitive 

bidding process with emphasis on commercialization and competitiveness. Franchise fees are presently set under guidelines in the 

law upon consideration of probable value of the privileges granted 

after considering the type of operation, the capital investments and 

other factors. 

H.R. 1493 and H.R. 2146 propose to award contracts to the highest bidder regardless of those other factors. The present law says, 

"revenue to the government is secondary to preserving the resource 

and serving the visitor at reasonable rates." 

H.R. 743 would mandate a minimum fee of 22.5 percent of gross 

revenues. A rigid statutory directive of this magnitude would make 

it impossible for concessioners to sustain their businesses and result in record business failures and bankruptcies. 

One of the arguments for competitive bidding has been that the 

return to the government will increase. It has been alleged that the 

return presently is approximately 3 percent of the gross receipts. 

This is absolutely not true, as is shown by figures compiled by 

the National Park Service which are attached to my statement as 

Attachment A. That report shows that for 1991, the gross receipts 

from concessions was $618 million and the total return to the government from all categories was $80.6 million. And, that equates 

to 13 percent. 

The return to the concessioner, on the other side, was $34.7 million or 5.6 percent, much lower than the average for the hospitality 

industry as a whole. 

Glacier Park's return on investment is only 6 percent. And, that's 

after 12 years of operating in the park. Our return on sales was 

4 percent last year. And, that was our best year in 12. 

Franchise fees should be a consideration but only after one considers the capital invested, the return on investment, return on 

sales and most important, the return to the visitors with reasonable rates and services. As a point of reference, I operate one of 

Burger King's largest franchises. Our franchise fee is 4 percent, 

which is the average franchise fee in most fast food restaurants. 

In the commercial environment, as the owner of those Burger 

King's, I set my own prices. I set my level of services. I approve 

my hours of operation. 

How could the government expect the park concessionaire to pay 

more in the franchise fee than is common in the commercial environment when, in fact, the government regulates our prices, regulates our services and, most importantly, limits our ability to grow 

revenues? 

The third concern. All these bills will abolish possessory interest 

as security for the private investment. Now, at a time when the 

federal government has less money to invest in park facilities, 

these bills propose to abolish possessory interest as security for the 

private sector. 
124 

That surely will discourage further private investments in park 

facilities and move the entire burden to the federal budget. This is 

a mistake when the private investments have worked so well and 

saved millions of taxpayer dollars over the years. 

Glacier Park has invested over $18 million in Glacier National 

Park hotels and visitor facilities, while we believe the government 

has invested approximately $1 million during this same 12-year period in the same facilities. If we were only able to depreciate our 

investments instead of building equity, as is common with business 

investments outside the national park, we would never have made 

investments inside Glacier National Park nor would any wise business person. 

H.R. 7 43 would not only abolish possessory interest in all future 

contracts but would direct the Secretary to acquire all outstanding 

possessory interest from future concessions' revenue. This bill also 

specifically states that the United States does not need to compensate a concessionaire for the loss of an investment. 

This policy is unwise and totally unfair to those investing in 

United States facilities in national parks. 

The fourth concern, H.R. 1493 and H.R. 2146 would remove an 

effective incentive for satisfactory performance by severely limiting 

the preference in renewal. The preference in renewal is not a guarantee and still requires public notice of the contract and consideration given to all competing responses prior to exercising any preference rights. 

It does assure a first right of refusal for a satisfactory incumbent 

to meet or improve on any competing proposal. That allows the National Park Service to retain the continued good services of a satisfactory performer but at the same time increase the requirements 

for the next contract term. 

If we, at Glacier Park, were not concerned about preference in 

renewal, I am sure we would not be investing over 10 percent a 

year more in additional capital and maintenance than our contract 

requires us to do. We do that because we want to be considered a 

good concessionaire and gain the opportunity for preference. And, 

the government, therefore, gains this additional value for this preference incentive. 

While H.R. 1493 and H.R. 2146 would grant this right to river 

outfitters and guides, if they had no possessory interest and were 

rated as satisfactory operators, H.R. 7 43 would abolish that right 

completely. The irony of this approach is that the reason for the 

right to encourage continuity of service is more important where 

the concessioner is delivering substantial services of various types 

rather than a single-service function. The continuity of service is 

important in each case but more so when the delivery of services 

is more complex. 

Our last concern, H.R. 1493 and H.R. 2146 would limit contracts 

to not more than 10 years, allowing no flexibility. The present law 

wisely allows the National Park Service latitude in determining the 

proper term for concession contracts up to a maximum after considering all the contract requirements such as investments and the 

nature of the contract. 

Under H.R. 1493 and H.R. 2146, no contract, despite possible 

heavy investment requirements, could be written for more than 10 
125 

vears. With the present requirement of franchise fee reviews every 

5 years, the maximum term of 10 years is too short to impose on 

every contract situation. 

Some contracts, of course, by their nature could be shorter in 

terms. But, the flexibility is needed. 

H.R. 743 would also limit contracts to not more than 10 years 

and does allow the Secretary to extend the term but only if he determines that more time is needed to acquire possessory interest. 

To summarize, the present concession system in our national 

parks is a product of many yea!"s of effort through trial and error 

and through an almost endless number of Executive Department 

and congressional reviews of the system. The conclusion has always 

been that the partnership between the private sector and the National Park Service is unique and valuable and should be supported. Now, we come again to another review of the system. I don't believe anyone disagrees that the system has produced good results 

and is valuable to the future of the parks. The disagreement seems 

to be over whether the system should be altered and in what ways. 

The need for the basic features of the National Park Concessions 

Policy Act, discussed above, are as valid today as when the Act was 

signed into law in 1965. The present law is a good illustration of 

a balance between contractual incentives and responsibilities which 

are incorporated into the present system. 

Franchise fees, based on the statutory guidelines, giving recognition to the statutory policy that revenue to the government should 

be secondary to preserving the resources and serving the visitors 

at reasonable rates and yielding a fair return to the government 

can be obtained under the present system without change. Incentives to invest in park facilities are granted now through the security of possessory interest, which is valued realistically so that it 

does not exceed market value. 

So, the definition of possessory interest is market value. That's 

the bottom line of possessory interest. 

Superior performance is encouraged by the incentive of a preference in renewal conditioned on ratings as a satisfactory concessioner. Terms of the contract should be left to the necessary flexibility of the requirements of the contract and not locked into a 10-

year maximum. 

The three bills before the subcommittee in this hearing are not 

carefully crafted amendments to the present system which would 

improve it. Instead, they are filled with radical departures from the 

strong building blocks of a public/private partnership which have 

produced good results for all concerned. 

With so many things that don't work well in the government, it 

is ironic that such a strong focus has been placed on the National 

Park Service concessions contracts, which have worked to the bene- fit of the national parks, the visiting public and the concessionaires. 

These bills, if passed, would accomplish what the extremists for 

years have tried to do. And, that is to prevent the American public 

access to, and enjoyment of, the national parks. 

These bills, if passed, will kill the goose that laid the golden egg 

for the government. Improvements can be made under the present 

75-380 - 94 - 5 
126 

system without destroying the foundation of the system which has 

worked well. 

I would be pleased to answer any questions you may have or any 

members of your Subcommittee. 

[Prepared statement of Mr. Fassler follows:] 
127 

STATEMENT BY 

JOSEPH K. FASSLER 

NATIONAL PARK HOSPITALITY ASSOCIATION 

******** 

UNITED STATES HOUSE OF REPRESENTATIVES 

SUBCOMMITTEE ON NATIONAL PARKS, FORESTS, AND PUBLIC LANDS 

COMMITTEE ON NATURAL RESOURCES 

******** 

HEARING ON H.R. 743, H.R. 1493 AND H.R. 2196 

******** 

OCTOBER 19, 1993 
128 

Mr. Chairman and Members of the Subcommittee: 

Thank you for this opportunity to appear before you today 

regarding H.R. 743, H.R. 1493 and H.R. 2196. I am Joe Fassler, 

President and Chief Operating Officer of Restaura, Inc. a wholly 

owned subsidiary of the Dial Corporation and parent company of 

Glacier Park Inc. I am also Chairman of the Board of Glacier Park, 

Inc. We have been the owners of Glacier Park, Inc. since 1981. I 

am representing the National Park Hospitality Association, formerly 

known as the Conference of National Park Concessioners. 

These bills propose many major changes to the present NPS 

concessions system and I will address some of our concerns over 

those changes: 

Since this hearing addresses three different bills certain 

comments will be directed to the provisions of H.R. 1493 and H.R. 

2196, which are identical. Other comments will be .directed toward 

H.R. 743 which varies in its provision from the other bills. 

1. H.R. 1493 and H.R. 2196 would alter the focus on 

•necessary and apprgpriate• visitor senices. The present law 

directs the National Park Service to determine what are "necessary 

and appropriate" visitor services in each park. H.R. 1493 and H.R. 

2196 would reverse that policy by providing that visitor services 

would only be provided in a park when the private sector or other 

public agencies could not adequately serve the visitors in the 

"vicinity of the park area". The focus would be on facilities 

available outside the park, rather than accommodating visitor needs 

when the visitors are in the park. 
129 

The role of the National Park Service is two-fold: To protect 

the resources of the park areas and to provide for the use and 

enjoyment of those areas for the visiting public. Therefore, the 

focus must be on what services should be provided in the park, not 

what may be available at some distant point outside the park 

boundaries. 

2 . All of tbese bills would require a coapetitiye bidding 

process. witb eaphasis on co..arcialization and coapetitiyeness. 

Franchise fees are presently set under guidelines in the law upon 

consl.deration of the probable value of the privileges granted, 

after considering the type of operation, capital investments and 

other factors. H.R. 1493 and H.R. 2196 propose to award contracts 

to the highest bidder regardless of those other factors. The 

present law says "revenue to the government is secondary to 

preserving the resource and serving the visitors at reasonable 

rates." 

H.R. 743 would mandate as a minimum fee the amount of 22.5% of 

gross revenues. A rigid statutory directive of this magnitude 

would make it impossible for concessioners to sustain their 

businesses and result in record business failures and bankruptcies. 

one of the arguments for competitive bidding has been that the 

return to the government will increase. It has been alleged that 

the return presently is approximately 3% of gross receipts. This 

is not true, as is shown by figures compiled by the National Park 

service which are attached to my statement as Attachment A. As 

that report shows for 1991 the gross receipts from concessions was 

$618 million and the total return to the government from all 
130 

categories was $80.6 million or 13%. The return to the 

concessioner was $34 . 7 million or 5 . 6%, much lower than the average 

for the hospitality industry as a whole. Glacier Park, Inc , 's 

return on investment is only 6%, and that's after 12 years of 

operating in the Park. Our return on sales was 4% last year which 

was our best year in 12. Franchise fees should be a consideration 

but only after one considers the capital invested, return on 

investment, return on sales, and most important the return to the 

visitors with reasonable rates and services. As a point of 

reference: I operate as one of Burger King Corporation's largest 

franchisees. Our franchise fee is 4% which i s the average 

franchise fee in most fast food restaurants. In the commercial 

environment, as the owner, I set my own prices, I set my level of 

service, and I approve my hours of operations. How could the 

government expect the park concessioners to pay more in franchise 

fees than is common in the commercial environment, when in fact the 

government regulates our prices, our services and limits our 

ability to grow revenues. 

3. All of tbese bills wpuld abplish possessory interest as 

security for priyate inyest.ents. Now, at a time when the federal 

government has even less money to invest in park facilities, these 

bills propose to abolish possessory interest as security for 

private-sector investments. That will surely discourage further 

private investment in park facilities and move the entire burden to 

the federal budget. This is a foolish mistake when the private 

investments have worked well and saved million of taxpayers' 

dollars over the years. 
131 

Glacier Park, Inc. has invested over $18 million in Glacier 

National Park hotels and visitor facilities, while we believe the 

government has invested approximately $1 million during this 12 

year period in the same facilities. If we were only able to 

depreciate our investments, instead of building equity as is common 

with business investments, we would never have made investments 

inside Glacier National Park, nor would any wise business person. 

H.R. 743 would not only abolish possessory interest in all 

future contracts, but would direct the Secretary to acquire all 

outstanding possessory interest from future concessions revenue. 

The bill also specifically states that the u.s. does not need to 

compensate a concessioner for the loss of investment. This policy 

is unwise and totally unfair to those investing in facilities. 

4. H.R. 1493 and. H.R. 2196 would rewove an effective 

incentive for satisfactory perforaance by severely liwiting tbe 

preference in renewal. The preference in renewal is not a 

guarantee and still requires public notice of the contract and 

consideration given to all competing responses, prior to exercising 

any preference rights. It does assure a first right of refusal for 

a satisfactory incumbent to meet or improve on any competing 

proposals. That allows the National Park Service to retain the 

continued good service of a satisfactory performer but at the same 

time increase the requirements for the next contract term. If we 

at Glacier Park, Inc. were not concerned about preference in 

renewal, I'm sure we would not be investing over 10% a year more in 

additional capital and maintenance than our contract requires us to 

do. We do that because we want to be considered a very good 
concessioner and 

government gains 

incentive. 

gain 

this 

132 

the opportunity for preference and the 

additional value for the preference 

While H. R. 1493 and H.R . 2196 would grant this right to river 

outfitters and guides, if they had no possessory interest and were 

rated as satisfactory operators, H.R. 743 would abolish the right 

completely. The irony of this approach is that the reason for the 

right - to encourage continuity of service - is more important 

where the concessioner is delivering substantial services of 

various types rather than a single service function. The 

continuity of service is important in each case but even more so 

when the delivery of services is more complex. 

5. H.R. 1493 ana H.R. 2196 would liait contracts to not -ore 

than 10 vears. allowing no flexibility. The present law wisely 

allows the National Park Service latitude in determining the proper 

term for concessions contracts up to a maximum, after considering 

all contract requirements such as investments and the nature of the 

concessions. Under H.R. 1493 and H.R. 2196 no contract, despite 

possible heavy investment requirements, could be written for more 

than 10 years. With the present requirement of franchise fee 

reviews every 5 years, the maximum term of 10 years is too short to 

impose on every contract situation. Some contracts, of course, by 

their nature, could be shorter terms but the flexibility is needed. 

H.R. 743 would also limit contracts to not more than 10 years 

and does allow the Secretary to extend the term but only if he 

determines that more time is needed to acquire the possessory 

interest. 
133 

Summary and Conclusion 

The present concession system in our National Parks is the 

product of many years of effort through trial and error and through 

an almost endless number of Executive Department and Congressional 

reviews of the system. The conclusion has always been that the 

partnership between the private sector and the National Park 

Service is unique and valuable and should be supported. 

Now we come again to another review of the system. No one 

disagrees that the system has produced good results and is valuable 

to the future of the parks. The disagreement seems to be over 

whether the system should be altered and in what ways, if so. 

The need for the basic features of the National Park 

Concessions Policy Act discussed above are as valid today as when 

the Act was signed into law in 1965. The present law is a good 

illustration of a balance between contractual incentives and 

responsibilities which are incorporated into the present system. 

Franchise fees, based on the statutory guidelines, giving 

recognition to the statutory policy that revenue to the government 

should be secondary to preserving the resources and serving the 

visitors at reasonable rates, and yielding a fair return to the 

government, can be obtained under the present system without 

change. Incentives to invest in park facilities are granted now 

through the security of possessory interest, valued realistically 

so that it does not exceed fair market value. superior performance 

is encouraged by the incentive of a preference in renewal 

conditioned on ratings as a satisfactory concessioner. Terms of 

the contract should be left to the necessary flexibility of the 
134 

requirements of the contract, not locked into a 10 year maximum. 

The three bills before the Subcommittee in this hearing are 

not carefully crafted amendments to the present system which would 

improve it. Instead they are filled with radical departures from 

the strong building blocks of a public-private partnership which 

have produced good results for all concerned. 

With so many things that don't work well in the government, it 

is ironic that such a strong focus has been placed on National Park 

Service concessions contracts, which have worked to the bene~it of 

our ·National Parks, the visiting public and the concessioners. 

These bills, if passed , would accomplish what the extremists for 

years have tried to do, and that is to prevent the American public 

access to, and enjoyment of, the National Parks. THESE BILLS, IF 

PASSED, WILL KILL THE GOOSE THAT LAID THE GOLDEN EGG FOR THE 

GOVERNMENT. Improvements can be made under the present system 

without destroying the foundation of a system which has worked 

well. 

I would be pleased to answer any questions you may have, Mr. 

Chairman, or from Members of the Subcommittee. 
135 

National Plrk Service Cgnaujgns Stl!lat!ca 

Park with Concesaioners 

Number of Concesafoners - Conuacu 

Permits 

Total 

Number of Commercial Use Ucenses 

Peek Employment 

Annual Receipts 

BtDJm to Gpyt~mment 

Annual Franchise Fee 

AMue!Taxes 

Annual Special Account Fees 

NPCI - .3 million 

YeUowstone - 6.6 million 

Others - 2.2 million 

Annual Improvement Additions (Estimate) 

Rate Add-on (No Possessory lmerestl 

Glen Canyon - 2.3 million 

Yonmite - 1 .0 million 

Annual Return to Parks or Governmental 

Return tp ConS'aaianer 

Nat Income 

195 

465 

Prepared as of March 30, 1 993 

ATTACHMENT A 

132 

660 

1,781 

2!5,827 

$618 million 

18.1 million 

10.2 mllllon 

9.1 million 

39.9 miUion 

3.3 million 

e8p.s million !13.0%1 

$34.7 rmlllon (5.6%) 
136 

Chainnan VENTO. Thank you, Mr. Fassler. And, -finally on this 

panel, Mr. Brown. 

Mr. Brown, we have included your statement and the attachment 

in the record. I notice that you have a long statement. You can feel 

free to summarize it if you choose. 

STATEMENT OF DAVID BROWN 

Mr. BROWN. Thank you, Mr. Chainnan. I intend to summarize 

my statement. 

I am David Brown, executive director of America Outdoors. 

America Outdoors is the North American trade association of pro- fessional outfitters and guides. 

Our 300 members provide outdoor recreation experiences to the 

outfitted public in such activities as whitewater rafting, canoeing, 

hiking, fishing and horse packing. Professional outfitters and 

guides provide access into wild, remote areas for those people who 

lack the skills, equipment or time to prepare themselves for such 

a trip. · For the privilege of operating on federal and public lands, outfitters pay fees to the Treasury, which we believe represent a fair return to the government. Outfitters also provide many uncompen- sated services to the public and to federal land management agencies. 

As this subcommittee has identified, federal managers in the 

field are finding it harder and harder to find the dollars to provide 

essential day-to-day visitor services, let alone manage and protect 

the resource base. The outfitters' voluntary contributions of experience, labor and materials toward meeting that shortfall has become 

increasingly important. Our people receive no payment or reduction in fees for mainte- nan~ and clean up on trails, roads, camps and beaches. And, some 

of those are actually required by their contracts and pennits. 

Our guides participate in search and rescue missions and provide medical aid to other boaters and hikers they might encounter. Assistance to law enforcement agencies and leadership roles in orga- nizing the community around resource management needs is common. 

As the agencies evolve toward ecosystem management, our people are playing bigger voluntary roles in resource assessment and 

monitoring. 

Additionally, outfitters are required to carry sufficient liability 

insurance on their operations to ensure the government as well 

against claims arising out of any trip incidents on federal property. 

Outfitters and guides have much in common with other outdoor 

recreation services. A distinguishing feature for most of our members, however, is their lack of real estate within parks and national 

forests. 

Our impact on the resource base and the regulations needed to 

direct our operations are vastly different. And, of course, we have 

minimal use of public facilities. 

The warehouses, office space and occasional retail operations 

which support outfitter services are built outside the boundaries of 

federal and public lands, most frequently to be found within small 

rural communities. As such, outfitter businesses commonly provide 
137 

the economic core which attracts tourism to these towns and away 

from areas experiencing high user impacts within the national 

parks. · Competition for customers is also a distinguishing characteristic 

of outfitter operation. At every park service unit, a number of companies vie for the same market. There are no monopolies in river 

rafting or other type of outfitter concessions. 

In the Grand Canyon, 19 separate outfitter concessions provide 

services to the public. We think the outfitters measure their lives 

in much the same way the outfitted public measure their experiences on trips. 

We fervently hope that this subcommittee shares those values, 

which is to say it should not be the goal of this subcommittee to 

maximize revenues from national parks or from other places on the 

public lands which offer a quality recreation experience. We think 

it should be our common goal of this subcommittee to provide in 

equal measure for the protection of these natural resources and for 

their enjoyment by the American public. 

Now, we find the USDA Forest Service has best met that challenge in their administration of outfitter and guide permits. As its 

mission has begun to diversify, a real emphasis has been placed on 

the training of its recreation and land staff to meet the needs of 

sustainable commercial uses of forest resources, including recreation. 

The agency's permitting system works for us. And, under it we 

have achieved a solid record of satisfied customer service. 

Furthermore, the General Accounting Office seems to feel that 

the USDA Forest Service fee schedule for guides and outfitters is 

capturing a fair return to the government. 

Drawing from a decade of experience as that outfitter and guide 

policy has evolved, I would like to make some specific recommendations about the concessioner legislation introduced in the U.S. 

House of Representatives. America Outdoors is choosing to address 

the provisions of H.R. 1493 and H.R. 2146, identical bills introduced by Representative Meyers of Kansas and Steams of Florida. 

They are companion bills to the Senate legislation, which we've 

closely addressed over the past two years. 

Certain issues raised by provisions of the legislation relate to the 

fundamental needs of the outfitting industry. And, there has been 

some comment about the bills providing preferential right of renewal to outfitters and guides. 

We don't think the bill quite does that. So, we recommend changing "may'' to "shall" with respect to granting a preferential right of 

renewal to outfitters. 

We also think it's important to modify and preserve the principle 

that preference in contract renewal is earned only by outfitters who 

have operated satisfactorily during the term of the previous contract. 

We believe the fee bidding requirements should be changed to 

provide a standardized fee based on fair market value for outfitters 

providing similar services at the same approximate location or resource within a national park. And, that's important because there 

are a number of outfitters providing the same service and competing for a customer base. 
138 

Preferential right of renewal is the single most important regulatory feature of a successful outfitter and guide policy. Providing 

existing satisfactory permittees with a clear preference in the renewal of their contracts is essential to protecting the public's access 

to quality recreation services. 

If competitive bidding is implemented, resource stewardship and 

quality service will become subordinate to the fee returned to the 

government. The business principle involved here is very simple. 

Most of these are very short-term contracts, 5 years in length. The longest I know of is 7 years. 

And, there is no incentive to invest in the latter part of the contract to replace boats, trucks, buses, life jackets, horses, saddles or 

to construct new warehouses or bam facilities outside the park 

when you feel like you are going to have to bid for your contract. 

As the concessioner comes closer to the year in which his permit expires, there is that loss of incentive to continue investing if there 

is no preference. 

We also believe that a standardized fee for similar services is important. If multiple contracts are to be awarded to provide the 

same or similar outfitting services-river running, horse packing, 

canoe livery operations, et cetera-at the same approximate resource or location within a park, the Secretary should be required 

to establish an identical franchise fee for all such contracts based 

on fair market value. 

And, again that's because typically there are a dozen or more 

outfitters competing at any given recreation site. 

The standardized fee which GAO recommends willdrovide a 

level playing field for outfitter and guide competitors an will continue to focus their competitive efforts toward customer service. 

We understand the need to standardize agency administration of 

permits. An examination of concessioner management by the General Accounting Office has demonstrated that there is little consistency between the Park Service policies and the management of outfitter operations by the Forest Service and the Bureau of Land 

Management. And, each of these agencies, of course, have their strength and 

weaknesses. But, if we had to choose a model from which to build 

a consistent national interagency outfitter and guide policy, it 

would be the outfitter and guide policy by the Forest Service. BLM 

is already tracking that policy in its regulations. 

America Outdoors hopes to continue a recreation policy which offers quality outfitter services to the public at affordable prices and 

at a reasonabledrofit. We think we have achieved that balance in 

the outfitter an guide business. And, we hope to make a convincing case as the subcommittee's deliberations continue. 

Thank you, Mr. Chairman, for the opportunity to testify. 

[Prepared statement of Mr. Brown and attachment follow:] 
139 

The national voice of the outjilling industry. 

STATEMENT OF 

DAVID BROWN 

EXECUTIVE DIRECTOR 

AMERICA OUTDOORS 

before the 

SUBCOMMITTEE ON NATIONAL PARKS, FORESTS, AND PUBLIC LANDS 

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

Testbtony on 

H.R. 743, the National Park Revitalization Act 

and 

H.R. 1493 and H.R. 2146, the National Park service 

Concessions Policy Refora Act of 1993 

WASHINGTON, D.C. 

OCTOBER 19, 1993 

National headquarters. P. 0 . Box 1348. Knoxville. TN 37901.615-524-4814 Fax 615-525-4765 

Washingloo office. 308 Conslilulion Ave .. NE. Washington. D.C. 20002. 202-546-1808 Fax 202-543-6870 
140 

Mr . Chairman, I am David Brown, executive director of America 

Outdoors. 

AO is the North American trade association of professional 

outfitters and guides. our 300 member companies provide outdoor 

recreation services to the outfitted public in such activities as 

whitewater rafting, c anoeing, hiking, fishing, and horse packing. 

Professional outfitters and guides provide access into wild, remote areas for those people who lack the skills, equipment or time to 

prepare themselves for such a trip . Our guides are responsible for 

the health and safety of these visitors. Outfitters provide their 

guests with other amenities as well: great campfire cooking, 

environmental educational, and memorable experiences in spectacular 

and often challenging settings. 

For the privilege of operating on federal and public lands, 

outfitters pay fees to the Treasury which we believe represent a 

fair return to the government. 

Outfitters also provide many noncompensated services to the public 

and to federal land management agencies. As this subcommittee has 

identified, federal managers in the field are finding it harder and 

harder to find the dollars to provide essential day-to-day visitor 

services, let alone manage and protect the resource base. 

The outfitters' voluntary contributions of experience, labor and 

materials toward meeting that shortfall has become increasingly 

important. our people receive no payment or reduction in fees for 

maintenance and clean-up on trails, roads, camps and beaches. Our 

guides participate in search and rescue missions and provide 

medical aid to other boaters and hikers they might encounter. 

Assistance to law enforcement agencies and leadership roles in 

organizing the community around resource management needs is 

common. As the agencies evolve toward ecosystem management, our 

people are playing bigger voluntary roles in resource assessment 

and monitoring. 

Additionally, outfitters are required to carry sufficient liability 

insurance on their own operations to insure the government as well 

against claims arising out of any trip incidents on federal 

property. 

The real rewards to an outfitter or guide are not in most instances 

measured in money. The average profit in an outfitting company is 

four percent. Most are paying a fee (to USFS and BLM) which is 

three percent of gross. In essence, they're "splitting" their 

profits with the Treasury. 

The reward is in the lifestyle ra~s~ng families in small, closeknit rural communities and living at close proximity to rivers and 

trails and wild areas. 
141 

Page Two 

outfitters and _guides have much in common with other outdoor 

recreation seryices. A distinguishing feature for most AO members, 

however, is their lack of real estate within Parks and National 

Forests. Our impact on the resource base and the regulations 

needed to direct our operations are vastly different. 

The warehouses, office space and occasional retail operations which 

support outfitter s~rvices are built outside the boundaries of 

federal and public lands, most frequently to be found within small 

rural communities. As such, outfitter businesses commonly provide 

the economic core which attracts tourism to these towns and away 

from areas experiencing high user impacts within the National 

Parks. 

We think outfitters measure their lives in much the same way the 

outfitted public measure their experiences on a trip. A!llerica 

Outdoors fervently hopes that this subcommittee shares those 

values, which is to say: it should not be the goal of this 

subcommittee to maximize revenues from National Parks or from any 

other places on the public lands which offer a quality recreation 

experience. We think it should be our common goal with this 

subcommittee to provide in equal measure for the protection of 

these ·natural resources and for their enjoyment by the American 

public. 

Our camping, cookipg, and the means and methods of travel through 

wild areas, have come to depend upon low impact equipment and leave 

no trace practices. The out{itting industry is required to take 

responsibility for carrying out its own trash and human waste. We 

voluntarily collect the litter of less thoughtful (and apparently 

less regulated) members of the nonoutfitted public. 

our guides are trained to educate guests about their impact on the 

wildlife, vegetation, water quality, and other site features which 

they will pass through. This job as interpreters of natural areas is as politically important outfitters as it is practical. 

In Oregon alone in the '93 season, guides and packers will have 

spent over one million days -- quality time -- with visitors who are interested in Ancient Forest issues, in restoration of salmon 

habitat, in management of upland game species, in Oregon's pioneer 

history, and i"n merely naming the wildflowers. 

Those customers are our "messengers" back to you, the Congress, 

that good conservation is good business when you're in our business. More money is needed in the field; and it's needed for 

things that aren't very flashy: operations and maintenance. 
142 

Page Three 

We ask, too, that federal managers educate themselves about the 

practical and reasonable needs of small businesses operating on 

federal and public lands. In order to continue to provide safe, 

enjoyable outdoor experiences to the outfitted public, our businesses require economic stability . Without some level of 

economic stability no business can continue to support staff 

training, maintenance of equipment, capital investment, and a 

reasonable return to the owner . 

We find it is the USDA Forest Service which has best met that 

challenge. As its mission has begun to diversify, a real emphasis 

has been placed on· the training of its recreation and lands staffs 

to meet the needs of sustainable commercial uses of forest 

resources, including recreation. That agency's permitting system 

works for us, and under it we've achieved a solid record of 

satisfied customer service. 

Furthermore, the General Accounting Office seems to feel that the 

USDA Forest Service fee schedule for outfitters and guides . is 

capturing a fair return to the government. 

Drawing from a decade of experience as that Outfitter and Guide 

Policy has evolved, I'd like to make specific recommendations about 

the concessioner legislation introduced in the U.S. House of 

Representatives. · · 

America Outdoors is chasing to address the provisions of H.R. 1493 

and H.R. 2146," identical bills introduced 1:5y Representative Meyers 

of and Stearns of Florida. They are companion bills to Senate 

legislation which we've closely addressed over the past two years. 

Certain issues raised by provisions of the legislation relate to 

fundamental needs of the outfitting industry: 

* Change "may" to "shall" with respect to granting a Preferential Right of Renewal to outfitters; 

* Modify and preserve the principle that Preference 

in contract renewal is earned only by outfitters 

who have "operated satisfactorily during the tera 

of the previous contract"; 

* Change the Fee Bidding requirements to provide a standardized fee · based on fair aarket value for 

outfitters providing si•ilar services at the same 

approximate location or resource within a National 

Park unit. 
143 

Page Four 

Preferential Rigbt of Renewal 

Preferential Right of Renewal is the single most important 

regulatory feature of a successful Outfitter and Guide Policy. 

Providi ng existing satisfactory permittees with a clear preference 

in the renewal of their contracts is essential to protecting the 

public's access to quality recreation services. If competitive 

bidding is implemented, resource stewardship and quality service 

will become subordinate to fee return to the government. 

The business principle involved is very simple. In each year of 

operation there is a need to replace boats, trucks, buses, life 

jackets, horses, saddles, or to construct new warehouse or barn 

facilities outside the Park. As the concessioner comes closer to 

the year in which his permit expires, there is less incentive to· continue investing if there is no Preference. Better to "wear it 

out" than to be left holding used equipment if Park management 

decides. to experiment in the selecti on of a new recreation service 

provider. Until now outfitters have operated in the faith that 

with satisfactory service, they can earn renewal. 

The NPS Concessions Management Manual ( NPS-48) contains 

comprehensive pr ocedures and systems for concess1oner review. 

Concessioners are presently evaluated and rated several times each 

year, and then presented with a composite annual rating. Tl}e 

system identifies· performance · shortfalls and sets priori ties and 

schedules for correcting deficiencies. That system provides both· the incentive and the mechanism to correct deficiencies as they are 

noted. Poor safety procedures and a bad service record can't 

simply accumulate over the term of the permit, nor can the 

concessioner simply ignore the problem without risking loss of 

Preference, if not immediate termination of the permit. 

From the customer's standpoint "Preference" is part of the 

guarantee that experienced companies continue to be available to 

guide them through wild and remote areas. The business of guiding 

relatively unskilled people through wilderness, difficult rapids, 

and the c liff trails of the Grand Canyon is not the same as providi ng beds, meals, souvenirs and suntan lotion to tourists. 

Standardized Fee For Similar Services 

If multiple contracts are to be awarded to provide the same or similar outfitting services (e.g., river running, horse packing, canoe livery, etc.) at the same approximate resource or location 

within a Park, the Secretary should be required to establish an identi cal franchise fee for all such contracts, based on fair 

market value. 
144 

Page Five 

Because typically a dozen or more outfitters compete at any given 

recreation site, the business is both price and serv~ce 

competitive. The standardized fee which AO recommends will provide 

a level playing field for outfitter;guide competitors and continue 

to focus their competitive efforts toward customer service. 

Customers needn't in the future be wary of selecting an outfitter 

who bid a high fee, but compensates by cutting corners on safety or 

services in order to remain price competitive. 

Standardize Agency Administration As Well 

Examination of concessioner management by the General Accounting 

Office has demonstrated that there is little consistency between 

Park Service policies and the management of outfitter operations by 

USDA Forest Service and the Bureau of Land Management. These 

differences become even more apparent from real life experience. 

It is not uncommon for an outfitted group to begin under the 

jurisdiction of one agency and end the trip in the domain of 

another. Consistency in equipment requirements, trip operations 

and paperwork back at the office would be a welcome outcome from 

congressional attention to concessioner reform. 

Each o.f the federal agencies have their strengths and weaknesses in 

the management of recreation users. If outfitters had to chose a 

model upon which to built a consistent national interagency 

outfitter and guide policy, it would be the Outfitter and Guide 

Policy used by USDA Forest Service. It is already tracked by BLM 

regulations and policies. 

The outfitting industry knows that it can constantly improve all 

aspects of its operations as well. We have feared throughout this 

debate about concessioner policy that the primary goal for some has 

been to raise revenue, at whatever cost to the public. From a 

handful of others, we've heard a shrill call to lock out all but 

day use in the National Park System. Both are wrong. 

outfitter services are essential if the government is to succeed in 

keeping wild lands open to the public. And outfitters are good at 

what they do. With the support of this subcommittee, they'll 

continue to provide memorable days in the lives of millions of 

people. 

America Outdoors hopes to continue a recreation policy which offers 

quality outfitter services to the .public at affordable prices and 

a reasonable profit. We think we've achieved that balance in the 

outfitter and guid~ business, and we hope to make a convincing case 

as the subcommittee's deliberations continue. 

Thank you, Mr. Chairman, for the opportunity to testify today. 
145 

Page Six 

Attachments for Subcommittee File 

The Impacts of Proposed Franchise Fee Increases for Outfitter 

Permittees and Concessioners (submitted 1992 to Office of 

Management and Budget) 

America Outdoors 1993 Outfitter Directory 
146 

The Impacts of Proposed Franchise Fee 

Increases for Outfitter Permittees and Concessioners 

Submitted to Mr. David Gibbons, Ofr~ee of Management and Budget 

by David L. Brown, Executive Director, America Outdoors 

1 
147 

Overview 

The Department of Interior is proposing to alter the franchise fee for 

concessioners and permittees operating within National Parks and on other public 

lands. Fee increases ranging as high as 22% of gross revenue have been suggested. 

The proposals have not adequately considered the impacts of fee increases on 

demand and access by the outfitted public, on the viability of the concessioner's 

business, and on outfitters' investments in facilities and services to the public. With 

the country mired deeply in what some have described as the worst recession since 

the depression, these proposed fee increases will have devastating impacts on 

outfitter businesses and rural economies in many areas and states that depend on 

income and tax revenue from outfitters and their customers. America Outdoors 

believes that fee increases for outfitter concessioners are inappropriate at this time. 

This paper will provide an overview of the market for outfitted trips and 

information about other factors that will assist decision makers in assessing tbe 

existing fee structure and the impacts of proposed increases. Since the time for 

preparation of this report was limited, no new data was gathered. It is based on 

available studies and reports and is related strictly to impacts on the outfitted public 

and their private-sector service providers. 

Existing fees 

The following description of fees is related to outfitter concessions where 

facilities are located outside the Park but where a portion or all of the service to the 

public is provided within Park boundaries. Outfitters provide guided services 

within park boundaries but have facilities, warehouses, and reservation systems 

outside Park boundaries. 

Franchise fees for outfitter concessioners operating within National Park 

Service units vary according to the amount of time or service provided in the Park 

unit or, in some cases, by the type of use. For example, outfitters operating wholly 

within Dinosaur National Monument pay three percent (3%) of gross revenue. 

These outfitters operate under five year permits. Outfitters operating in 

Canyonlands National Park spend about 40% of their time in the Park and pay 

$6.00 per person. 

Outfitters operating on the Colorado River through the Grand Canyon pay 

six percent (6%) of gross revenue for motor-powered trips and 2.25% of gross 

revenue for oar-powered trips. Since 60% of customers take motor-powered trips, 

most use is subject to six percent (6%) of gross. Outfitters operating at Grand 

Canyon are also required to collect entrance fees. Concession contracts for 

outfitters operating on the Colorado River through the Grand Canyon are issued for 

ten year terms, subject to annual evaluation. 

Forest Service and Bureau of Land Management fees are equal to three (3%) 

of gross revenue for five year contracts .. 

Nonfee compensation 

Outfitters provide a number of services to visitors and to the Park units that 

further compensates the government for the right to do business on public lands. 

Outfitters are required to buy liability insurance to cover guests, for example, with 

specified limits of liability. In addition a number of additional services are 

provided including interpretation, clean-up, search and rescue, road maintenance 

and information. 

2 
148 

Why fees should not be increased. 

1. Significantly higher fees will reduce or eliminate participation by middle 

and lower income Americans, especiaUy during these tough economic times. 

River users are a diverse socioeconomic group. The notion that the outfitted 

public is so wealthy that demand will withstand any level of fee increase is not 

supported by the available data. Indeed, significant fee increases will eliminate 

opportunities for middle income families and for those with less discretionary 

income. 

The socioeconomic profile of participants varies from river to river, 

depending on travel costs, time required, and the nature of the experience. 

Nationwide, more participants take day-trips than long wilderness river trips. 

Day trips are lower in cost and are likely to be more popular with lower income 

users. 

For example, approximately 18,000 individuals run the Colorado River 

through the Grand Canyon with outfitters each year (See Colorado River 

Commercial Use Statistics, See appendix, page 1) compared' to 149,000 annual 

visits to the Arkansas in Colorado. Seven of the ten most popular western river 

trips are day trips (Top Ten Western Rivers, 1989, See appendix page 2). 

Virtually all of the use on the top ten whitewater rivers in eastern U.S. consists of 

day trips by individuals (See appendix, page 2). 

There is clear and convincing evidence from the PARVS study (U.S. Forest 

Service from presentation at Confluence 91, Orlando, Florida, 1991, See 

appendix, pages 3 and 4) that the vast majority of river users are from statistical 

groups that are highly sensitive to increased fees and prices. The PARVS study 

surveyed users of four separate river units in the East. 34% had incomes of less 

than $25,000 annually. 42% made between $25,000 and $50,000 annually. 

(66% had incomes under $50,000). Families from these groups who may save 

for a once-a- year river trip will look for less expensive alternatives or better 

recreational values if they are faced with significant fee increases. 

Even demand for trips generally considered to be "high end" would be 

adversely impacted by fee increases. The customer profile provided by one 

Grand Canyon outfitter revealed that over 50% of those taking a trip had a total 

family income of under $55,000. Many within this group would be sensitive to 

price increases. 

Lower income individuals, students, and groups on fixed incomes also 

participate in the longer western trips. For example, 20% of the students of the 

Colorado Outward Bound School (COBC), are unable to pay for their trip and are 

funded from a "scholarship fund" . COBC also runs regular trips for individuals 

over 60 through their "Eiderhostel program", a growing segment of the outfitted 

public. Programs fer -students are common. One outfitter on the Colorado River 

. through the Grand Canyon runs trips for the disabled that requires increased 

staffing and much higher overhead. These kinds of programs will be among the 

first eliminated by increased fees and reduced profit margins. 

The shock effect created by a significant fee increase during a prolonged 

recession is a formula for disaster. Demand for river trips is not inelastic. Given 

the extent of involvement by middle income families in outfitted river recreation, 

dramatic fee increases would drastically reduce demand. Unfair discrimination of 

this group will occur if fees are based on the financial resources of the most 

affluent customers for outfitter services. 

3 
149 

2. Demand for river trips is a function of value and is influenced by 

competition from other activities. 

Since most users are from middle income groups, it is clear that the impacts 

of the recession will influence the travel decisions of many prospects for river 

trips. "Down-sizing" and "discounting" are new strategies implemented by 

business to survive difficult economic times. Increasing fees during this period is 

contrary to these strategies and, therefore, to sound business practices. Middle 

income participants will be encouraged to consider other recreation opportunities. 

Demand from more affluent travl"!ers may also be impacted, since there is 

competition for the discretionary travel dollar from other activities. 

Approximately 50 percent of one Grand Canyon outfitter's clients had recently 

taken a foreign vacation, according to their market survey. If the value of a western river trips is diminished by fee increases, those who can afford to travel 

may choose trips to Mexico, the Caribbean, or the Bahamas as an alternative. 

Other recreational pursuits may also become more attractive if river trips lose their 

value. 

3. Current fees are appropriate given the nature of outfitter concessions. 

Outfitter concessioners assume risks and add value to Parks in ways that 

hospitality concessions do not. 

Unlike concessioners providing hospitality services from facilities inside 

Parks, outfitters absorb all the risks and costs for capitalizing business assets 

(complete with Off-Park lodges in larger operations) since they do not use Park 

facilities. They must promote their services while enduring the cash crunch of a seasonal operation and surviving the effects of drought and flood. Most outfitters 

invested in their businesses and struggled for years to build demand and enhance 

their off-park assets. 

Outfitters provide highly specialized and skilled services that are acquired 

through years of devotion to their profession and to specific river resources. 

They must learn to recognize and compensate for the risks presented by everchanging weather conditions, treacherous rapids, medical emergencies and 

evacuations in wilderness settings. It is this high level of specialized service 

along with the quality of the hospitality extended to their guests that bas 

driven demand for river trips. Certainly the natural settinp have value. But 

there would be oo value In a river trip without the safety and professionalism 

that aUows inexperienced vjsitors to enjoy the roaring rapids of the Grand 

Canyon's inaccessible gorge. Creating this opportunity for the public is not a function of the permit or contract provided by the government. It is a function of the outfitter's skill and professionalism. In this sense outfitters 

add value to the Park system by assuming aU the risks for providing the 

general public with benign access to otherwise inviolable areas. These 

characteristics distinguish outfitters from concessioners who provide 

hospitality services or seD gifts and receive more benerrt from their location 

and passive activity within the Parks. 

For these reasons requiring outfitters to pay three percent (3%) of gross 

revenues for a five year permit or contract is appropriate compensation to the 

government. Most operations in the Grand Canyon are already paying six percent 

4 
150 

(6%) of gross revenue for ten year contracts. Operations using only a portion of 

Park lands for their activities should continue to pay less. 

4. The Park Service has no rational basis for evaluating or justifying fee 

increases under current management practices. 

In most Park units prices charged for river trips and similar services are subject to approval by Park officials. On the other hand franchise fees may be 

raised at will by the agency. Even if conditions permitted an increase in fees, 

there is no assurance that the increase could be passed on to the customer given 

current approval requirements of the agency. This one-sided, arbitrary aspect of 

determining fees makes any proposal for fee increases unacceptable because 

outfitter's margins may be eliminated or reversed. It leaves the impression that 

the only justification necessary for increased fees is the government's own need 

for revenue. It permits the Service to discriminate against certain types of 

participants. What will preclude NPS or any federal agency from implementing 

additional fee increases in subsequent years? 

While outfitter profit margins may vary, a 1987 study of Idaho outfitters and 

guides reveals that industry's net income was 4.5% of gross revenue for that season (Industry Report on the 1983-84 through 1986-87 Idaho Outfitting Seasons, 

JML2 Consulting, November 20. 1987, See Appendix, page 5). Outfitters should 

not be expected to absorb fee increases with those profit margins. 

Without a reasonable method for justifying increased fees or a reasonable 

expectation that those increases can be passed on to the consumer without 

eliminating certain segments of the market, fees should not be raised arbitrarily. 

S. The outratting industry is one rural economic develop strategy that is 

succeeding. 

Rural economic development is an important, valid strategy currently 

promoted throughout the federal government. Whitewater outfitters and other 

backcountry guides are already successful in attracting visitors and their tourist revenues from urban areas to rural locations. The Idaho study previously cited 

found that "excluding payments to State and Federal agencaes, 75"' of aU revenues collected from clients remain in the Idaho economy." (Industry 

Report, JML2 Consulting, See appendix, page 6). The outfitting industry was responsible for 841 full time job equivalents in 1987 (Ibid, appendix, page 8) and 

contributed an aggregate of $45.4 million to the economy during the 1986-1987 season. (Ibid, appendix page 7). 

Transferring money from local economies to the federal government by 

increasing federal fees is contrary to rural development strategies, especially when 

those fees threaten the stability of the industry. The Idaho studied concluded that 

outfitters are already paying 10% of revenues for user fees, licenses and taxes, 

most of which left the State (Ibid, see appendix page 6). The aggregate fee 

burden of outfitters from various layers of government is already reducing capital 

investment and the viability of the industry in many other areas. Agencies should 

point to the outfitting industry as an example of a successful rural development 

program that doesn't require federal subsidies and consider the impacts of fee 

increases on rural economies. 

5 
151 

Conclusions 

I. Outfitters and backcountry guides do not have possessory interests and are unlike hospitality services with facilities inside Parks. Therefore, outfitter 

concessions should not be subject to the same fee requirements as hospitality services in National Parks. Fees for outfitters should be directly related to the 

amount of time utilizing Park property and or facilities. Fee reductions should be 

proportional to the amount of time spent outside Park boundaries. 

2. Current fees are appropriate given the terms of the contracts and permits and 

should not be arbitrarily increased to solve the federal budget crisis. 

3. The shock of significant fee increases during these difficult economic times, 

coupled with fees from other levels of government, would create severe disruptions in demand. Middle income families, individuals on fixed incomes and 

those from lower income groups would lose recreation opportunities now available 

to them through outfitters. More affluent customers may chose another activity or vacation. 

6 
152 

Appendix 

GRAND CANYON NATIONAL PARK 

COLORADO RIVER COMMERCIAL USE STATISTICS 

05/01/91 THRU 09/30/91 

TOTAL I OF TRIPS 

TOTAL PASSENGERS LEAVING LEES FERRY 

TOTAL PASSENGERS JOINING TRIPS 

TOTAL COMMERCIAL PASSENGERS 

TOTAL USER DAY ALLOCATION 

TOTAL COMMERCIAL USER DAYS 

PERCENTAGE OF ALLOCATED USE 

TOTAL I MOTORIZED BOATS 

TOTAL I OAR BOATS 

TOTAL I DORIES 

TOTAL I PADDLE BOATS 

TOTAL I KAYAKS 

AVERAGE PASSENGER TRIP LENGTH 

AVERAGE I PASSENGERS/TRIP 

TOTAL I CREW 

AVERAGE I CREW/TRIP 

AVERAGE I PASSENGERS/CREW 

AVERAGE TRIP LENGTH TO DIAMOND 

653 

12974 

5499 

18473 

106156 

106183 

100.03\ 

814 

635 

56 

79 

115 

5.7 

28.3 

2874 

4.4 

6.4 

8.2 
153 

TOP TEN WESTERN RIVERS - 1989 

l<ll!!a.-1111 lllltl.~lltlll! f_QyUU~IItl 

1. Arkan••• 149,000 no ~.,t 

2 . Rogue .95,000 Y•• 44 

J . s. Fk, A••rican 80,000 Y•• 38 

t. S n ake, Vyo ~ng 76,000 Y•• a 

5. Snake, Teton• 62,290 Y•• 13 

'• D••chut•• 35,775 no 1.40 

'· KJ:"ddl• Fk, Salaon 33,430 Y•• . 28 

I . Snake, H•ll• Can. 22,070 Y•• 34 

l . Kd1• Fk, Aa eri.can 20,000 Y•• 42 

.o . IJRdO (GC) llhOO·o· Y•• ~'0 

TOP TEN EASTERN RIVERS· 1189 

l<ll!!!a...:llll lllltl~lltl.ll !! t_QyUUlltl 

Nantahala 139,670 Y•• 15 

Ocoee 122,876 Y•• 24 

Nev River 85,000 Y•• 24 

Youghiogh•ny 74,189 Y•• 4 

L•high 58,132 Y•• 4 

Chattooga .50,000 Y•• 3 

Ottova 50,000 no • ·aau1•y 35:ooo Y•• 25 

Kenebec 30,000 Y•• 13 

'· P•nob•cott 18,000 Y•• 10 

her river• not r••••rched but kely to hav• h1gh u••• per Colorado, .W••tvater, Cataract , Grand Canyon, Rio Grande CTao• Box), Rio and• <Big Bend NP), Oreen, Yaapa, Chaaa, San Juan. · 

•piled for the Colorado River Out11tter • A••oc. by Joe Oreiner, Vildern••• ar• Ratting. 1990. 
-..._ ____ 

:::r-----

··-··-.. ··············-·--··-----··-······--··············-·-·--""'\J·-···········-····--······· .. ···--·-·······-·-··--·-·-·-···
155 
156 

§xpendltume Madt by Qytflttora 

Outfitters make .a variety of expenditure• with the revenues they 

collect from their ollenta. Excluding paymenta to State and Federal agenclee, 

an estimated 75 percent of all revenues collected from clients remain II'! the 

Idaho economy. · Refer to Chart 3 for a representation of outfitter net lneome 

and expenditures resulting from activities conducted during the 1988·87 

season. 

CHART3 

OUTFITTER NET INCOME AND EXPENDllURES FROM ACTIVI11ES 

CONDUCTED DURING THE 1988-87 OUTFITTlNG SEASON 

!xptftdttuh ~,...., ~ .. • OWWt SorviMf ",245,616 

• u • .,., ... • 207,103 

• Etpllpmt11t t4,017,61t 

llll ttatt & Ft4tr'a1 T.x., t 541 ;nt 

Cl v., .. Q,OH,sn 

B CHtntiOUWt FH4 t1,114,HI 

ID Antna1 '0041 • 41S,tl2 

1§1 Mvtr'tlftlt t Hl,oM 

121 Other 12,tS'I ,ozt 

ED Ntt llloeiM ! i!!.!!! 

Ptrotnt 

of Total 

U2!1 

1.32!1 

2S.SS'JI 

1.44'JI 

IU9'JI 

10.27!1 

I.OI'JI 

111.48!1 

11.80!1 

4.4SJI 

TOTALS tl s '724 t20 I 00.0091 

plroct Exptndltyres 

Of the $21,95!5,790 In gross expenditures generated from activities 

conducted during the 1988·87 aeason (see Table 2), ~n estimated $3,788,382 

flowed out of the state In the form of outfitter expenditures and non· 

resident employee eavlngs. The remaining $18,11SSI,408 .,_yed within the 

state In · the form of direct spending by clients, outfitters and their 

employees. Refer to Table . 3 for a breakdown of direct spending from the 

1988·87 aeason· classified by activity category. For simplicity, client 

expenditure• for . fls.h.!ng licensee have been grouped Into the Boating activity 

category. 

6 
157 

TABLE3 

DIRECT SPENDING WITHIN THE STATE FROM ACTIVITIES 

CONDUCTED DURING THE 1988-87 OUTFITTING SEASON 

Boating 

Hunting 

Recreation 

TOTAL 

p!rtgt SQfncflng 

$8,763,590 

7,488,128 

1.847890 

$18,189,408 

Of the direct spending dtplcttd above about ten percent, or $2,148,719, 

In state revenue was colltctid In the form of taxes, ueer fete, and licensee. 

Refer to Chart 4 for a graphic reprisentatlon of estimated direct epindlrig 

within Idaho from the 1983-84 through the 1986-87 sauons. . · . 

CHART4 

D!'FIECT SPENDING IN IDAHO: 1983-84 SEASON THROUGH 

THE 1988-87 SEASON 

t20,000 

T 111,000 

h 116,000 

0 114,000 

u lt2,000 

• 110,000 

·a se,ooa n d ,,,000 

I t4,ooo 

12,000 

to 

75-380 - 94 - 6 

I ti4-H I tl5-86 ltU.ff 

Seasons 

8 
158 

Regional PlatrJbutlgn of EXQtndltyrOI 

Idaho Travel Council ,.glons are used to describe regional spending 

characterlstlcl of guldel and clients for tourist type expenditures (lodging, 

restaurants, suppllet,- etc.). Refer to Chart 5 for a graphic representation of 

these expenditures (client fees and expenditures for licenses have been· 

excluded). Refer to the appendix for a description of tach region. 

T 

h 

0 

u 

s 

0 

n 

Cl 

s 

CHART5 

REGIONAL DISTRIBUTION OF EXPENDITURES: GUIDES AND CUENTS 

(CUENT FEES AND UCENSES NOT INCWDED) 

.,lil!ICMdtl 

12,000 

~~,too 

,,,,00 

11,400 

11,200 

11,000 

1800 

1600 

S400 

1200 

to 

2 J 4 s ' 

ldoho Travel Council Regions 

E!nane!el lmpacta frgm the Outfitting Industry 

To estimate the aggregate financial Impact of outfitting and guiding en 

the. Idaho economy, secondary economic Impact• within Idaho must be 

calculated. These secondary Impacts are the additional economic activity 

that Ia stimulated by direct spending . within the state. To quantify these 

secondary Impacts a gross revenue multiplier of 2.5 ' Is appropriate. 

Application of the gross · revenue multiplier to 1988·87 estimated direct 

Instate spending of $18,169,408 yields an estimated aggregate financial 

impact of $45,423,520 within · Idaho tor that seuon. In other words, direct 

spending during the 1988·87 season stimulated an estimated $27,254,112 In 

additional economic .. activity within the state. Refer to Table 5 for a 

breakdown of the aggregate financial Impacts generated by activities 

conducted within each activity category during the 1988·87 season. 

7 
159 

Seeondarv Employment ·Attributable tg th• lndyatr,y 

' 

Due to the significant' economic activity generated by outfitting and 

guiding, there Ia Indirect employment attributable to the lnduatry; · This · 

Indirect employment Ia the additional employment created In ather 

establishments In response to the secondary effects generated from the 

Industry. The estimated Indirect .employment attributable to the 1988·87 

outfitting season was approximately 841 full time jobs. Taking Into account 

the seasonal nature of outfitting, the 841 full time jobs would be roughly 

equivalent to 3,300 aeasonal jobs. This value represents an 11 percent 

Increase over the previous season. 

Indirect employment attributable 

to the 1988·87 outfitting season: 841 full time jobs 

or 

3,300 seasonal Jobs 

Yalye of tho Outfitting lndy,try to tba Idaho Eegnomv 

To measure the current value of the outfitting Industry to the Idaho 

economy, expected future financial Impacts must be estimated. The 

estimated future financial Impacts are In turn discounted to reflect a 

preference for ImpactS that occur In the near term over Impacts that occur In 

the distant future. A discount rate (or lntereat rate) · reflects this 

preference. The present value method of discounting future cash flows 

Incorporates this logic and Is t~e appropriate method for estimating current 

value.1 · . 

Simply stated, the value of the outfitting Industry to the Idaho economy 

Is equal to the Industry'• future economic Influences discounted to the 

present using an appropriate discount rate. For the al')aiysls, a 15 year time 

horizon. and a 12 percent discount rate (the historical rate ·of return for 

securities In the stock market) have been selected. Applying these 

parameters to a constant payment of $45.4 million (the estimated aggregate 

financial Impact from the 1988·87 outfitting season) the present value of 

future Impact• Is $309.2 million. If the average growth rate of financial 

Impacts on the Idaho-economy (1 0.5 percent) Is considered In the calculation, 

the value to the Idaho economy from the outfitting and guiding Industry could 

exceed $600 mtnlon dollars over the next fifteen year period. 

1 For more Information on the present value method, refer to: 

J.W. Petty, A.J. Keown, D.F. Scott, Jr., Baste Flnnnclnl Managemftnt 

(Prentice Hall: Englewood Clllla). pg. 241 · 
160 

Chairman VENTO. Thank you for your statement. Thank you for 

summarizing the attached material. 

And, as I noted, I did raise that question with the Assistant Secretary in terms of how we can pursue this in terms of the matter 

that is before us. 

Mr. Fassler, as you know, I am familiar with, some of the points 

you make and can argue it either half full or half empty here at 

this point. 

But, the point is that the argument being made is that 

possessory interests or some sort of recognition of encouraging investment is necessary because of the price controls that exist within the Park Service. 

IsthatMr. FASSLER. No. That's not my comment. 

Chairman VENTO. Okay. 

Mr. FASSLER. My comment is when you compare the national 

park concession contracts with stadium contracts-and I operate 

stadium contracts and I operate school contracts and I operate in 

that arena, based on that exhibit-our pricing to the public are 

three to four times what we are allowed to charge in a national 

park. 

Chairman VENTO. Okay. 

Mr. FASSLER. And, that's the way it should be, because that--

Chairman VENTO. But, I mean that was the point, that the pricing or the controls are-okay, so please proceed. I don't want ~ 

Mr. FASSLER. Okay. The issue of possessory interest has to do 

with equity. . . When you make investments in the national park, you gain zero 

equity without possessory interest. What bank is going to lend anybody money to make an investment in the national park without 

one or two elements, either collateral-and, since most of these 

concessionaires are small business people, they don't have the kind 

of resources that my company would have because it's a major Fortune 500 company. 

These companies, these small businesses, have to go to their local 

bank and either give collateral or give possessory interest, which 

replaces collateral. And, what that does to the banker, it assures 

the banker that they are going to get their money back because 

this property at the termination will bring back fair market value, 

which is the definition of possessory interest. 

The definition of possessory interest is replacement cost less depreciation. But, the key and operative word here is "not to exceed 

fair market value." So, that's what the banker gets as collateral. 

All I was saying is when you deal with the private sector inside 

stadiums, I don't need-I built my own equity. I am building an 

arena. I am building a good service or whatever the concession 

might be. 

And, I can sell it at any time for good will, because I own equity 

in it. I own zero equity when I am dealing with the national parks. 

Chairman VENTO. I think that the expression here of the Congress is that they are going to look to extinguish possessory interest. That's my own view of where we are going. 

That's the message I am getting from the Senate. That's the message I'm getting from my colleagues on the committee here. 
161 

I'm trying to suggest that they want in this process more competition. And, there are a lot of reasons that apparently it doesn't 

exist now. 

I am certain that you would not agree with some of the suggestions made, that possessory interest and/or right of preferential refusal are the sum total of why there isn't competition, I take it, Mr. 

Fassler. How can you get competition in the system where there 

seems to be an absence of it today? 

Mr. FASSLER. Okay. I believe that there is competition in the system, maybe not as much as you wo.uld like it to be. 

Mr. Chandler asked the general question-and I can't answer for 

the concessionaires-but one of his questions was why aren't we 

going after other parks. 

My answer from my company is because the experience we have 

in the one that we have, which is Glacier, has shown us to have 

very little returns on our investment, a very highly regulated industry. I am better off taking my shareholders' money and putting 

that investment outside the park where I can build equity, where 

I could have a much better opportunity to get a fairer return on 

my investment. 

That's the answer for my company. Now, why don't other companies compete? I don't know that they don't. 

You just had the Yosemite contract. I think there were three or 

four companies that went after that. I'm not sure exactly how 

many. 

I personally did not. Some other major corporations did not because of the condition of that contract. 

The requirements of that contract made it difficult for you to get 

a fair return. At least, that was my judgment. 

Chairman VENTO. No, I understand. We've got a statement here 

that we entered in the record from an officer from Marriott Corporation who said that they will not compete because of those particular factors. 

And, I've got a statement here from Richard Hill. He is going to 

testify. And, he's going to say much the same thing. 

We've got the statement attached from the banker. And, there is 

a banker that is going to testify later to say, maybe something different. I haven't read that testimony, because I didn't receive it. 

But, I think the banker that is a Board member of the National 

Parks and Conservation Association is saying that the possessory 

interest and the right of first refusal are not necessary. So, I mean, 

there is a difference of opinion here about this. 

And, I'm just suggesting to you that a number want more competition and they are saying these are the reasons they are not getting it. 

Mr. FASSLER. Mr. Chairman, I am familiar with Roger Mann's 

comment. And, I know Dick Marriott very well. 

I would ask them why didn't they bid on Yosemite. There was 

all the requirements that Secretary Lujan put out which eliminated all these factors that we are talking about today in order to 

get greater competition, so he said. 

And, yet the Marriott Corporation didn't even bid on Yosemite. So, I don't know where they are coming from. 
162 

Chairman VENTO. Yeah. Yosemite had the problem-! mean, we 

have the problem-! think most of them are looking at it from a 

blank-slate standpoint where you don't have the purchase agreement, that requirement, which was, of course, one of the highest 

of any of the parks I guess. 

I don't know if it's higher than Yellowstone. We own everything 

at Yellowstone I guess now. So--

Mr. CHANDLER. Mr. Chairman, if I could address the Marriott 

situation, I know a little bit about it. 

Chairman VENTO. Sure. 

Mr. CHANDLER. Their attorneys tell me that the m~or reason 

they didn't get into that was because it was the toxic substances 

liability, that they did not want to sign a blank check. They did not 

know what they were getting into. 

But, I really can't speak for them. I would rather address the 

price controls issue that Mr. Fassler raises as such a tremendous 

hurdle to his corporation being able to successfully operate in a 

park. 

And, Joe, I'm sure ARA Services would love to buy you out and 

operate Glacier if you would put it on the block for them. And, 

maybe you could talk to them about that. 

But, with regard to price controls, Mr. Chairman, the concessioner in a park can charge market prices for everything they sell 

in the park. Now, what does that mean? 

That means that the Park Service supposedly does a price survey 

all around that area to find out what a fair price is for a bed, for 

a hot dog, for a horse ride. And, they are allowing the concessioner 

to charge market prices. 

And, in some cases, they allow them to have a higher price, because the cost of getting goods to the park may add a transportation cost. So, we don't understand what the problem is. 

They can charge market prices. They can raise their prices. 

They come in with price increases every year because of inflation. 

The Park Service approves it. 

And, we frankly don't understand what the problem is, Mr. 

Chairman. 

Chairman VENTO. Mr. Fassler will tell you what it is. 

Mr. CHANDLER. Okay. [Laughter.] 

Mr. FASSLER. First of all, to make the record straight, pricing is 

done on a comparability study. And, that's the immediate area of 

the park. 

And, all rates around the park and in the park are reasonably 

low in order to meet the government requirement that rates to the 

visitor are reasonable and secondary to the income that they could 

receive through franchise fees and other investments. 

When you talk about market value in arenas or state parks, you 

are comparing yourself to other arenas, other state parks where 

the pricing, as I said, is three to four times higher. So, you are 

comparing apples with lemons when you compare those two factors. 

Chairman VENTO. No $2.00 hot dogs in the parks, right? 

Mr. FASSLER. In one particular stadium that we have, which is 

the Phoenix Suns, the Phoenix American West Arena, a hot dog is 

$4.00. Beer is $4.00. · 
163 

To equate that to Glacier National Park, I can't quote exactly, 

but a hot dog is probably a buck and a quarter, maybe $1.50 at 

most. And, beer might be the same $1.25. That's a three times difference. 

Chairman VENTO. And, if the committee voted on that, we would 

vote for that price. [Laughter.] 

Mr. FASSLER. Well, that's right. Which price would you vote on, 

the big one or the small one? 

Chairman VENTO. Well, if we didn't, we would hear about it, let 

me tell you. So, in any case, I think there is a goal here in terms 

of the comparability. 

But, very often, where parks are located, Mr. Chandler, they are 

also in less expensive areas. They aren't located in Minneapolis or 

St. Paul often. They are located in more remote areas. And, in 

some of these areas, you may pay more. 

I was fascinated, Mr. Fassler, by your comments, about the fact 

that you had a Burger King. Don't they have some standards of 

service in terms of the type of products and so forth? 

Mr. FASSLER. They have minimum levels. Chairman VENTO. Pillsbury does keep you a little bit under control. 

Mr. FASSLER. Pillsbury doesn't own it anymore. 

Chairman VENTO. Oh, they are out of it? Oh, okay. 

Mr. FASSLER. An England company owns it now. 

Chairman VENTO. I'm aware of that. I just was going with the 

Minneapolis derivative here. 

Mr. FASSLER. They do not tell us the pricing. They do not tell us 

the hours of service. There are some minimum levels that you have 

to live with. 

Chairman VENTO. There are some regulatory things. There are 

some standards that you have to deal with. 

Mr. FASSLER. That much compared to what you are talking about 

when you are dealing with the National Park System. 

Mr. CHANDLER. Mr. Chairman, I guess my point is that if pricing 

is such a hardship in the national parks, you know, why did six 

people come up and bid for the Yosemite contract? They knew all 

the terms and conditions of being a tenant there. 

But, yet some of these corporations were willing to put in a bid. They think they could make money. 

You know, maybe they are more efficient than the Dial Corporation. Maybe they are not. 

But, they at least felt like they could operate effectively and 

make a reasonable return on their money. 

Mr. FASSLER. Or maybe they don't know what they are getting into. . 

Mr. CHANDLER. Well, we will see. [Laughter.] 

Chairman VENTO. Well, time will tell that. But I think Yosemite 

is atypical. I think all of us would agree that it's fairly atypical. 

There are some parks that are atypical in the system where they 

have a significant visitor incidence. And, that helps, of course, lessen the risk. 

What do you think, Mr. Chandler, about the specific provisions 

of exemption that are in H.R. 1493 and H.R. 2146? The Bumpers 
164 

bill has an exemption for the services provided by the outfitters basically with some guidelines. 

Is there a difference here that we ought to distinguish between 

the type of guide service and some of the ·other activities? 

Mr. CHANDLER. Mr. Chairman, I've gone back and forth on this. 

I'm not an expert in all the intricacies of being in the guiding business. 

I fundamentally believe that small businesses and large businesses compete everywhere else in this country. And, there is no 

reason that small businesses and large businesses can't compete 

against their respective competitors in the National Park System. 

I think the point made by the river rafters is that they are basically in an allocated system already. They have five or six river 

rafters operating on the same river. 

And, they have basically been allocated the number of river days 

that they can get from the Park Service and so forth and so on. 

And, they allege that they are already competing against one another for services. 

And, I think that that would be the key point that you would 

have to look at in determining whether or not an exemption is specifically required for them. 

Chairman VENTO. Mr. Brown, do you think that this ought to be 

a condition in this particular exemption that dealt with the dollar 

amount, the incident or the value of the activity as well as some 

of the other factors that are indicated? 

Mr. BROWN. I think the dollar amount is a less favorable way to 

do it than the category of type of service and where their facilities 

are located. Most outfitters are required to capitalize facilities outside the park. 

And, that's the reason that I think preference is, you know, desirable there. They don't have facilities inside the park buildings 

from which they operate. 

I think the bill, as you've indicated, attempts to extinguish 

possessory interest. And, I think if you apply those terms, those 

same terms, to outfitters and guides you will extinguish the investment and facilities outside the park. 

So that I believe again the location and the lack of possessory interest and the fact that there is already competition is more important than the size of their gross revenues. 

Chairman VENTO. So, they are sayi~g, "Well, we really have an 

investment here which is dependent upon the good performance 

and renewal," which is not recognized. Actually, you've made the 

investment outside the park. You've got bank loans without 

possessory interest. 

Is that right? 

Mr. BROWN. That's correct. 

Chairman VENTO. And, so I think the point is that that again 

points up to the fact that it is possible. But, if we are using a range 

in terms of revenue raised, do you actually report to the Park Service or to the land management agency, the Forest Service, whoever 

it is, what your gross revenues are? 

Mr. BROWN. They certainly can audit the books of the outfitters. 

And, they do have that capability. 
165 

Outfitters, in general, pay somewhere between 3 percent to 7 

percent of gross on their gross revenues. 

I would like to say that the reason the investment has occurred, 

though, has been because of preference. And, you know, I'm not an 

expert on the possessory interest issue. 

Chairman VENTO. Do you have to actually bid in this process? 

How long are these contracts generally that we are talking about? 

Mr. BROWN. Generally for 5 years. And, the case is that, as in 

other concessions, the availability is published and the existing, 

satisfactory concessioner has the option to meet the terms offered 

by a higher bidder. Chairman VENTO. So, once it's bid, you are offered the opportunity to actually meet or exceed that particular bid; is that--

Mr. BROWN. That's correct. 

Chairman VENTO. I guess the concern is if somebody is going to 

go through the process of doing due diligence, examining all of the 

information, it costs some money to bid and then to not receive the 

bid, that might discourage them from doing so. 

Mr. BROWN. Well, that's possible. But, you know, I don't really 

think it's in the best interest of the public and the National Park 

Service to have turnover for the sake of turnover. 

I think if you've got a satisfactory concessioner who is providing 

good service to the public and a reasonable return to the government, then I think you would want to retain that concessioner. I 

think the Park Service would find itself with more problems than 

they really would like to take on if they were turning over concessioners every 5 years. 

I think, as Mr. Fassler has indicated, the complexities of keeping 

up with the rules and regulations for concession contracts requires 

2 or 3 years of study alone. And, so that I think the public and, 

of course, the stewardship of the resource would suffer. 

Chairman VENTO. Mr. Fassler, there has been some discussion 

about having differential policies based on service, guide service 

based on size. Do you have any comments about that, that maybe 

you should be expected to jump over bigger hurdles or deal with 

different problems than the small guy based on the type of guide 

service issue here? 

Mr. FASSLER. What I stated was I thought it was ironic that the 

bills, the Bumpers bill and the Meyers bill, where they talk about 

just giving preferential right to a single operator, I don't say they 

shouldn't have it. I'm saying the ironic part is when you take a 

major concessionaire who handles a lot of services, varying types 

of service, they also should have preference of renewal because of 

the added value the government gets. 

The government gets added value by being a good, satisfactory 

concessionaire. I cited an example. 

We spend 10 percent more than our contract requires us to do 

every year, because I want to be considered a good concessionaire 

because I want preference of renewal. I'm paying for it by adding 

that much more in capital. 

Why am I paying more capital? I want preference. 

Two. The government is not appropriating enough money to Glacier National Park, so we are trying to do it. We are considered a 
166 

good concessionaire because of it. That's added value to the goverqment. 

Especially if you take the last 3 or 4 years of a contract, when 

there is 3 or 4 years left on a contract, or 2 years left on a contract, 

if you know you don't have some incentive to get that contract 

again, right, why wou~.i anybody do anything but milk the operation? And, that's, in fact, what happened at Glacier National Park 

before we bought the contract and got in there. 

That's exactly the problem with Glacier National Park. That's, in 

fact, the same problem that you had at Yellowstone when General 

Host was there. 

That's why the government went out and spent $20 million plus 

to buy that contract. And, they are still spending the money because in the contract that the government has with TW Services, 

it's the government that is responsible for the capital and the 

maintenance. 

And, that's where that 22 percent originally came in from Lujan. 

He looked at a contract that the government was funding and 

looked at a 22 percent versus the normal concession contracts 

where the concessionaire is funding the investments. 

But, that was--

Chairman VENTO. I understand that particular issue. And that's 

a decision that has to be made. 

One of the problems is that I don't think that anyone has been 

well served by the fact that there have been these set-asides and 

these dollars expended on an individual basis, on a park-by-park 

basis almost, with poor records kept of what goes on, not even good 

records really. And it's difficult to keep a value of what is a fair 

market value, for instance, or a current fair market value with regards to possessory interest. 

Mr. Chandler. 

Mr. CHANDLER. Mr. Chairman, the incentive to perform is called 

"what's in your contract." And, if you don't perform what's in your 

contract, you should be terminated as a concessioner, as a tenant 

or anybody in that kind of a situation. 

That's the way it works in the business sector. You will hear 

from some other witnesses who deal with that kind of situation 

every day. 

But, this idea that you have to give a perpetual, preferential 

right to a concessioner so that he will do good in the last 2 or 3 

years of his contract is ludicrous. He is promising, when he signs 

that contract for 10 years, that he is going to meet certain Park 

Service standards, conditions and limitations. 

And, he is going to map out his business plan to do that and to 

make a profit. And, the idea that we have to give these guys a preferential right to perpetually renew their contract just to get them 

to not let their buildings run down at the last 2 or 3 years of the 

contract is something that is, I think, absolutely crazy. 

And, the Park Service, if they start doing that, they ought to--

Mr. FASSLER. I said they are exceeding their contract requirements. 

Chairman VENTO. I think the reality is that these problems have 

occurred. And, the reality is that we have to be realistic in terms 
167 

of understanding what the degree of regulation and the ability of 

regulation of the Park Service is and has been. 

I think that if we go this path, everyone is going to have to understand that there is going to have to be a more aggressive role 

of the Park Service in order to ensure the compliance with the contracts as opposed to some of the past patterns. I think Mr. Fassler 

makes a good point in terms of avoiding the types of pitfalls that 

have occurred in Glacier and/or Yosemite where you had these very 

large contracts and where there was not proper maintenance. 

But, we all know that that's a symptom of not having Park Service personnel or others that are more closely monitoring what is 

taking place. And, we have to be realistic in terms of policy change 

recognizing what needs to be put in place in terms of resourc~s to 

deal with that. 

That's a factor and that's a point scored for what has happened. 

That, incidentally, happened under the existing formula. 

Much of that happened during the 1965 to 1993 sequence here. 

So, it isn't exactly a cure for the problem. 

Well, it would be a lot easier if you would all agree for me. But, 

you all have your points. I think you've made your points. 

I think, though, that the issue is there are going to be some 

changes. I want to work to make certain that it's done in a fair 

way. 

I don't think everyone is going to agree necessarily on the final 

product. But, at least we want to be able to avoid the most egregious problems with the legislation so that it works. 

It's clear to me that Senator Bumpers, myself, the Administration, the will of the Congress is to move forward on these particular 

questions and try to resolve them. So, I hope to have cooperation 

even though there isn't agreement on the policy path. Thank you, gentlemen. Thank you very much. 

PANEL CONSISTING OF J. RICHARD HILL, FOUNDING PARTNER, HILL RETAIL PROPERTY SERVICES, AND PRESIDENT, 

HILL PARTNERS, INC., CHARLOTTE, NC; DON ROUSH, 

FORMER CHIEF OF CONCESSIONS (RETIRED), NATIONAL 

CAPITAL REGION, NATIONAL PARK SERVICE; MARY E. AMES, 

PRESIDENT, WRIGHT BROTHERS AIR SERVICE, INC., 

SOUTHEST AVIATION GROUP, INC., KILL DEVIL HILLS, NC; 

AND BOB GERSACK, PRESIDENT, FIRST NATIONAL PARK 

BANK OF LIVINGSTON, MT 

Chairman VENTO. The final witnesses this afternoon are Richard 

Hill with Hill Partners, Charlotte, North Carolina; Don Roush, 

Former Chief of Concessions, National Capital Region, National 

Park Service; Ms. Mary Ames, the Wright Brothers Air Service, 

Kill Devil Hills, North Carolina; and Bob Gersack of the First Bank 

of Livingston, Montana. · Thank you all for your patience. You would think with just a single person asking questions that things would go a little quicker. 

I have your statements before me, and I appreciate receiving some 

of them ;esterday so that I could review them. 

But, i you care to, if you would or could, summarize them each, 

it would help facilitate moving forward with the hearing. We are 
168 

going to probably be interrupted for some votes at some point here 

in the next 15 minutes. 

Mr. Hill, please proceed with your statement this afternoon. 

STATEMENT OF J. RICHARD HILL 

Mr. HILL. Mr. Chairman, the majority of the arguments against 

concession reform are based on extreme exceptions to the norm in 

commercial real estate. I strongly suggest that these issues can, 

and will, be put to rest with open, competitive bidding as outlined 

in the concessions reform proposal before you. 

Simply stated, the only way to know what the market can really 

pay is through competitive bidding. In order to achieve this, the 

concessions policy must be flexible to accommodate the unique situation of each park and the required services by the visitor, not the 

concessionaire. 

With the above comments as a reference, I would like to address 

two strategic but underlying themes concerning the proposed reform Act and simply compare them to my experience. 

In my business, there is nothing comparable to possessory interest. The merchants which we attract to our projects do not require 

a possessory interest to secure a loan nor would we ever give them 

one. 

Likewise, it reflects a gross misunderstanding of the facts to generalize that concessions operations in the parks cannot obtain financing without possessory interest. If this were the case, the only 

seasonal business operating in conditions similar to our parks 

would be in the national parks. 

In reality, there are far more merchants operating the same type 

of business outside of the parks as tenants even on a seasonable 

basis without possessory interest. In essence, good business sense 

will justify investment from normal cash flow without possessory 

interest. 

I work continuously with retailers who must finance their improvements. Ultimately, their loans are underwritten by the borrower's ability to repay the loan from the operations of its business. 

In the current real estate market, this will usually result in a 

loan's payoff within a 5- to 15-year period, not 20 to 30 years. This 

is sufficient time in which to amortize the required investment for 

the vast majority of concessions likewise. 

Additional loan security in commercial real estate is provided by 

tenant equity and then collateral on the furnishings, fixtures and 

equipment and, finally, corporate or personal guarantees when required. 

The new law proposes a recapture of concessionaires' cost, less 

depreciation, in the event that a contract expires prior to the recovery of that cost. This is still considerably better than the private 

real estate market where merchants simply amortize their investments over the guaranteed lease term. · My next point concerns preferential rights. In my business, I 

have never granted a preferential right of first refusal even to a 

small business owner. 

Rights of first refusal in commercial real estate only accrue to 

the benefit of the tenant. It is our responsibility to consider the interests of a much broader group than the individual merchant. 
169 

Likewise, in the national parks, the government must consider 

the interest of the park visitor and the taxpayer. The concessionaires in the park have a captive market. More active competition in the contract cycle will help ensure that the visitor and fed- eral taxpayer are being best served. 

The price controls are not restrictive in comparison to the free 

market. I've heard continuously about the controls of the price 

within the national parks. In the real world, today's consumer is 

very price conscious. They will not pay more. 

However, once a concessionaire obtains a contract in a national 

park, it has a monopoly and one J believe is an implied exclusive. 

Once again, when contracts are due for renewal, they should be 

subject to rigorous competition by qualified bidders. 

In closing, profitability cannot be guaranteed through legislation. 

A concessionaire must offer its products or services at a price that 

the visitor will accept, which will hopefully include all costs and a 

fair profit. 

My experience indicates that the present system may survive at 

the expense of taxpayers and to the exclusive benefit of existing 

concessionaires. Our national parks and the visitors require the 

best possible service, which can only be achieved through free and 

open competitive bidding as outlined in the legislation before you. 

Thank you. 

[Prepared statement of Mr. Hill follows:] 
170 

STATEMENT OF J. RICHARD HILL 

FOUNDING PARTNER 

HILL RETAIL PROPERTY SERVICES 

AND 

PRESIDENT 

HILL PARTNERS, INC. 

CHARLOTIE, NORTH CAROLINA 

ON 

H.R.1493 

THE NATIONAL PARK SERVICE CONCESSIONS POLICY REFORM ACT OF 1993 

OCTOBER 19, 1993 

THE NATIONAL PARK SERVICE CONCESSIONS POLICY REFORM ACT OF 1993 

TUESDAY, OCTOBER 19, 1993 
171 

Mr. Chairman and distinguished members of the Subcommittee, I am J. Richard Hill, 

Founding Partner of Hill Retail Property Services, and President ·of Hill Partners, Inc. 

have eighteen years experience in managing, leasing and operating multi-tenant shopping 

facilities and retail complexes. In this capacity, I have personally leased space to numerous 

small, independent merchants and large national credit merchants. Many of these leases have 

been in locations which are highly seasonal in nature. The types of merchants attracted to 

my projects include cinemas, cafe/restaurants, gift shops, supermarkets and apparel specialty 

stores. I have completed lease transactions totaling in excess of I ,000,000 square feet of 

space with merchants from most retail categories. 

I am here today speaking from a landlord's perspective. Currently, in that regard, my 

company manages eighteen retail properties totalling approximately 4,000,000 square feet of 

space, in seven states. Additionally, Hill Retail Property Services, which is an equal 

partnership between GE Investments and Hill Partners, Inc., is conducting strategic planning 

for retail marketplaces in Seattle, Houston, Dallas, Chicago, Atlanta, and Ft. Lauderdale . . 

Collectively, between these companies, our current projects range from the retail portion of 

the Northwestern Atrium, Chicago's primary commuter rail terminal, to Jackson Brewery, a 

six level festival retail center in the French Quarter on New Orleans. Additionally, we are 

providing research and planning services concerning spectator, sponsor, and community 

activities for the 1996 Olympics in Atlanta. 

Overview 

Extensive debate has been directed towards what concession businesses require to make a 

reasonable profit in our National Parks. The majority of arguments against concessions 

reform are based on extreme exceptions to the norm in commercial real estate. I strongly 

suggest that these issues can and will be put to rest with open, competitive bidding as 

outlined in the concessions reform proposal before you. Simply stated, the only way to 

know what the market can really pay is through competitive bidding by qualified bidders. 

The emphasis in H.R. 1493, the Concessions Policy Reform Act, is on the requirements of 

the park and visitor in context of the park experience. In order to achieve this, the 

concessions policy must be sufficiently flexible to accommodate the unique situation of each 

park and services required by the visitor, not each concessionaire. With the above comments 

as a reference, I would like to address several strategic, but underlying, themes concerning 

the proposed Reform Act and simply compare them to my experience. 

Possessory Interest 

The arguments in favor of possessory interest include requirements to obtain financing for 

improvements, to serve as an incentive for a concessionaire to maintain its facility during the 

later period of an agreement, and provide additional incentive to compensate for lower 

profits as a result of certain conditions unique to the park or its particular operation. My 

response is as follows: 
172 

t In my business, there is nothing comparable to possessory interest. The 

retailers whic~ we attract to our projects do not require anything like 

possessory interest to secure a loan. Likewise, it reflects a gross 

misunderstanding of the facts to generalize that concessions operations in the 

parks cannot obtain financing without possessory interest. If this were the 

case, the only seasonal business operating in conditions similar to our parks 

would be those in our national parks, with possessory intereSt. In reality, 

there are far more restaurants and retailers operating the same type of business 

outside the parks, as tenants on a seasonal basis, without possessory interest. 

In essence, good business sense will justify investment from normal profits 

without possessory interests. 

t I work continuously with retailers who must finance their improvements. 

Ultimately, their loans are underwritten by the borrower's ability to repay the 

loan from the operation of its business. In the current real estate market, this 

will usually result in a loan's payoff within a ten to fifteen year period, not 

twenty or thirty years, as suggested by others. This is sufficient time in which 

to amortize the required investment for a park concession. 

Additional loan security is provided by tenant equity, then collateral on the 

furnishings, fixtures and equipment and, finally, corporate or personal 

guaranties. 

The new law proposes a recapture of concessionaires' cost, less depreciation, 

in the event that a contract expires prior to recovery of such cost. This is still 

considerably better than in the private real estate market, where merchants 

simply amortize their investment over the guaranteed lease term. 

Preferential Rights 

My next point concerns a preferential right to provide new or additional services and, 

essentially, a right of first refusal on renewals. I understand and appreciate the concerns of a 

small independent operator who has built his or her business and derives his or her sole 

livelihood from the business. My response is as follows: 

t In my business, I have never granted a preferential right of first refusal, even 

to the small business owner. It is our responsibility to consider the interests of 

a much broader group than the individual merchant. Similarly, in the national 

parks, the government must consider interests of the park visitor. The 

concessionaires in the parks operate in a captive market. More active 

competition with each contract cycle will help ensure that the visitor and 

federal taxpayer are being best served. 

t The price controls are not restrictive in comparison to the free market, which 

has its own competitive price controls, and do not prevent substantial profits. 

Once a concessionaire obtains a contract in a national park, it has a monopoly 
173 

guaranteeing that business has a highly advantageous position. Minimally, 

once contracts are due for renewal, they should be subject to rigorous 

competition by qualified bidders. 

In closing, profitability cannot be guaranteed through legislation. The concessionaire must 

offer its product or service at a price that visitors will accept, which, hopefully, will include 

all costs, i.e., cost of goods sold, laborl utilities, concession fees and amortization of capital 

costs. · 

My experience indicates that the present system may survive at the expense of taxpayers and 

to the exclusive benefit of concessionaires. Our national parks and the visitors require the 

best possible services, which can only be achieved through free and open competitive bidding 

as outlined in the legislation before you. 
174 

Chairman VENTO. Thank you very much, Mr. Hill. Mr. Roush. 

STATEMENT OF DON ROUSH 

Mr. RousH. Mr. Chairman and members of the· subcommittee, 

my name is Don Roush. I recently retired from the National Park 

Service after 30 years of service, 25 of which was working in the 

concessions management program. 

I am here in the interest of preserving a program which has succeeded in developing administrative programs that are the best in 

the Federal Government. Namely, these are the rate approval program and the annual inspection and evaluation program. 

These programs are crucial to the overall management of concession operations. I mention these because both may be at risk if current legislative proposals become a reality. 

I would also like the record to show that I am here on my own 

time and at my own expense. For 25 years, I have witnessed the 

evolution and development of a concession program based on the 

concepts and philosophies contained in the Concessions Policy Act 

of 1965. 

This evolution has occurred because of a positive relationship between government and the private enterprise. The point I would 

like to emphasize is that the National Park Service has a good concessions program. 

It can and it should be made better. Current-day issues and controversies are not the result of bad legislation but rather other administrative and managerial issues. 

In the last three years, I have also witnessed efforts to eliminate 

potential liabilities to the government. I have witnessed the effort 

to substantially increase franchise fees. And, I have witnessed the 

effort to eliminate or redefine the right of renewal so as to create 

competition. 

Relative to competition, it is apparently felt that by eliminating 

sound value compensation that, too, will promote competition. The 

proposed legislative initiatives in H.R. 1493, H.R. 2146 and H.R. 

7 43 will not create positive competitive forces. 

It will not improve the quality of services to our visitors. It will 

be counterproductive, I do believe, by creating additional work 

loads, adding to the time required to process and negotiate contracts. 

I fully believe these legislative proposals will create consequences 

unimagined to date. 

For your consideration, I would like to speak generally to each 

of these issues mentioned above in a way that will demonstrate 

that by isolating these individual issues from the total picture will 

have far reaching consequences. There are better ways to improve 

the program and achieve better service to visitors without creating 

additional bureaucracies, without extending the time to execute 

contracts and without added cost to the taxpayer. New legislation 

I fully do not believe is the answer. 

Regarding each of these issues, a few brief comments. Eliminating sound value compensation is a non-issue. The so-called potential liability is a paper liability only for the most part. 
175 

While it may be a non-issue to the government, it is critical to 

an investor. A cause-and-effect analysis should be completed on 

this matter, considering all the other proposals at the same time. 

Increasing franchise fees is one that must stand alone on a caseby-case basis. The emphasis for this, unfortunately, is based on isolated examples of contracts executed 30 years ag<r-very large operations, et cetera. 

Franchise fees can and should be increased in many cases. I 

think there is no question~ 

The primary purpose of the park must not be compromised in 

favor of increased revenues. Revenue must remain as a secondary 

consideration. 

Regarding the third point. The NPS existing policy of 15 years 

with the option of 20 years with the Director's approval seems to 

be serving everyone's needs very nicely. 

If I might digress just a minute with regard to franchise fees. I 

find it very difficult to accept the fact that today the National Park 

Service is reducing revenues to the government in favor of paying 

off a so-called potential liability, 95 percent of which never has to 

be paid off, maybe 99 percent never has to be paid off. 

But, nevertheless, we are reducing revenues to the government 

for that purpose. 

With regard to the fourth issue regarding competition for new 

contracts, creating competition just because it's the American way 

may not serve the unique responsibilities of the National Park 

Service to preserve park values. Whatever direction the concessions 

program takes in the future, it is imperative that new policy directions or legislative changes be synchronized with the whole. 

I am referring to the possibility that rates to the public will increase to meet the visitor needs of private enterprise to recover investments over a shorter period of time. Comparability may be at 

risk in those situations. 

The inspection and evaluation program will need to be altered to 

account for some operators enjoying a right of renewal while others 

do not. The proposals in H.R. 1493, H.R. 2146 and H.R. 743 will 

place the NPS in an untenable position as to why some operators 

enjoy a right of renewal and others do not. 

As a matter of fact, I feel this is rather diametrically opposed to 

where the National Park Service should be proceeding, as many of 

these operators have no investment within park areas. This will no 

doubt create a different set of procedures and legal considerations 

to be articulated in more guidelines. 

The franchise fee system will no doubt require change. How do 

industry standards relate to operations restricted to short-term 

contracts or short-term 10-year contracts? How are franchise fees 

established when a competitor can buy in cheap and offer more fees 

at the expense of the existing concession? 

This will require a great deal of analysis and no doubt cause contract controversies. 

Appraisals will be required to establish the amount of sound 

value associated with the existing operation. When a competitor 

prevails on a contract renewal, the NPS will be controlling, to a 

large degree, the sale price. 
176 

Will this drive the parties under the table to make a separate 

deal? The NPS will have destroyed a willing buyer/willing seller relationship and will no doubt be an active participant in the transition. 

These and other questions will require review and resolution. 

Several existing and successful programs are effected by the new 

legislative proposals. 

In closing, Mr. Chairman, I very much appreciate your concerns 

to improve the program. However, it is my strong belief that new 

legislation is not the answer. 

There are better ways to improve the program and achieve many 

of the efficiencies that we all seek. I must be frank, and at the risk 

of sounding like an alarmist, I am going to say it anyway, but I 

see paralysis by analysis and controversy if the new legislative proposals go as they are presented. 

That concludes my oral summary. And, additional comments are 

included for the record as Attachments A and B. 

Thank you very much. 

[Prepared statement and attachments of Mr. Roush follow:] 
177 

STATEMENT BY 

DON ROUSH 

******** 

UNITED STATES HOUSE OF REPRESENTATIVES 

SUBCOMMITTEE ON NATIONAL PARKS 1 FORESTS 1 AND PUBLIC LANDS 

COMMITTEE ON NATURAL RESOURCES 

******** 

HEARING ON H.R. 743 1 H.R. 1493 AND H.R. 2196 

******** 

OCTOBER 19 1 1993 
178 

Mr. Chairman and Members of the Subcommittee: 

My name is Don Roush. I recently retired from the National 

Park Service with thirty years of service, twenty-five of which 

was working in the concessions management program. I am here in 

the interest of preserving a program which has succeeded in 

developing administrative programs which are the best in the 

Federal Government. Namely these are the rate approval program 

and the annual inspection and evaluation program. These programs 

are crucial to the overall management of concession operations. 

I mention these programs because both may be at risk if current 

legislative proposals become a reality. I would also like the 

record to show that I am here on my own time and at my own 

expense. For twenty-five years I have witnessed the evolution 

and development of a concession program based on the concepts and 

philosophies contained in the Concession Policy Act of 1965. 

This evolution has occurred because of a positive relationship 

between government and private enterprise. The point I would 

like to emphasize is that the NPS has a good concession program. 

It can and should be made better. Current day issues and 

controversies are not the result of bad legislation (PL 89-249) 

but rather other administrative and managerial issues. 

In the last three years I have also witnessed efforts to: 

1. Eliminate "potential" liabilities to the government by 

removing the sound value compensation from all contracts as well 

as Public Law 89-249; 2. Substantially increased franchise 

fees; 3. Reduce the term of all contracts to ten years, and 

4. Eliminate or redefine the right of renewal so as to create 
179 

competition. Relative to competition, it is apparently felt that 

by eliminating sound value compensation that, too, will promote 

competition. The proposed legislative initiatives H.R. 1493, 

H.R. 2196, H.R. 743 will not create positive competitive forces, 

will not improve the quality of services to our visitors, will be 

counter productive by creating additional workloads and adding to 

the time required to process and negotiate contracts. I fully 

believe these legislative proposals will create consequences 

unimagined to date. 

For your consideration I would like to speak generally to 

each of the issues mentioned above in a way that will demonstrate 

that by isolating these individual issues from the total picture 

will have far reaching consequences. There are better ways to 

improve the program and achieve better service to visitors 

without creating additional bureaucracies, without extending the 

time to execute contracts, and without added cost to the 

taxpayer. New legislation is not the answer. 

Regarding each of the four issues mentioned above, I would 

highlight my comments as follows: 

1. Eliainating Sound yalge CQWpensation will be counter 

productive to iwproying visitor atrvices. Eliminating sound 

value compensation will preclude many small operators from 

securing needed financing and securing contracts. 

Eliminating sound value compensation is a non issue today. 

The so called potential liability is a paper liability only. 

While it is a non issue to the government, it is critical to an 

investor. A cause and effect analysis should be completed. 
180 

2. Increasing franchise fees is one tbat aust stand alone on a 

case by case basis. The emphasis for this effort is 

unfortunately based on isolated examples of contracts negotiated 

thirty years ago . Franchise fees can and should be increased in 

many cases. The primary purpose of the park should not be 

compromised in favor of increased revenues. Revenue must remain 

as a secondary consideration in the negotiation of contracts. 

3. Liaitinq tbe tera of contract to ten years will oot be 

adequate in wany cases. The NPS existing policy of fifteen years 

with the option of twenty years with the Director's approval 

seems to serve everyone's needs. 

4. creating ca.petitioo for new contracts will not necessarily 

iaproye visitor services. Creating competition just because it 

is the American way may not serve the unique responsibilities of 

the NPS to preserve park values. 

Whatever direction the concessions program takes in the 

future it is imperative that new policy directions or legislative 

changes be synchronized with the whole. I am referring to the 

possibility that rates to the public will increase to meet the 

needs of private enterprise to recover investments over a shorter 

period of time. Comparability may .be at risk in those 

situations. The inspection and evaluation program will need to 

be altered to account for some operators enjoying a right of 

renewal while other do not. The proposals in H.R. 1493, H.R. 

2196 and H.R. 2196 will place the NPS in an untenable position as 

to why some operators enjoy a right of renewal and others do not. 

This will no doubt create a different set of procedural and legal 
181 

consi derations to be articulated in more guidelines. The 

franchise fee system will no doubt require change. How do 

industry standards relate to operations restricted to short term 

ten year contracts? How are franchise fees established when a 

competitor can buy in "cheap" and offer more fees at the expense 

of the existing concession? This will require a great deal of 

analysis and no doubt cause contract controversies. Appraisals 

will be required to establish the amount of sound value 

associated with the existing operation. If a competitor prevails 

on a contract renewal the NPS will be controlling to a large 

degree the sale price. Will this drive the parties under the 

table to make a separate deal? The NPS will have destroyed a 

willing buyer/willing seller relationship and will no doubt be an 

active participart in the transition. These and other questions 

will require review and resolution. Several programs are 

effected by the new legislative proposals. 

In closing, Mr. Chairman, I appreciate your concerns to 

improve the program. However, it is my strong belief that new 

legislation is not the answer. There are better way to improve 

the program and achieve many of the efficiencies you seek. I 

must be frank and say that I ca·n see paralysis by analysis and 

controversy which will bring the program to a standstill. 

That concludes my oral summary and additional comments are 

included for the record as Attachment A. 
182 

ATTACHMENT A 

Issue One: Eliainate Sound Value as a Potential Liability to the 

Government 

If I were John Doe citizen on the street, I could fully 

understand why this appears to be desirable. Who can argue 

against reducing even a "potential" liability to the taxpayer . This is more like a "red herring" issue designed to throw the 

opposition off track. It is a paper liability only. It is a meaningless issue to the government, but it is critical to a concessioner because it provides the only means for the small 

business man to secure capital and maintain an incentive for 

doing a good job. It is of such importance that a cause and 

effect analysis should be made. 

With but one exception, the NPS has never paid sound value 

compensation to a concessioner. In that one exception, which is 

always held up as a glaring example as to why this is a bad 

provision, the NPS did pay approximately 20 million dollars as sound value to rid itself of a bad operator and then secure a successor operator. That occured because the operator was milking the operation, money was not being reinvested in 

facilities, and the NPS lacked the ability, at that time, to 

determine the operator unsatisfactory and in default, and thereby 

reduce the government liability to a very low figure in that case. That type of problem has been solved with new contract 

provisions and would not occur today . The question remains, why 

is it being proposed to eliminate sound value compensation? Is 

it to create competition? If so, I submit that more competition 

for a ten year contract will not result in improved services to our visitors. The private entrepreneur in the real world is 

competing on a day to day basis as to price and quality of 

services delivered. This type of competition does not exist in a National Park, nor can we manufacture it through policy, 

regulation, or legislation. 

Eliminating the sound value compensation may (or may not) 

create more offers on a contract by contract basis. Preventing a business man from realizing a sound value compensation flies in 

the face of real competition and provides no incentive to stay 

for the long haul. Once the competition is over for a short term 

contract the race begins against the clock to secure a return on the money invested. The private investor, mom and pop, the sole 

proprietorship, the partnership, or the corporation must do 

whatever it takes to recover its investment and earn a profit. 

This scenario assumes that the private investor can secure the 

needed financing to purchase the operation and make needed 

improvements. If the effort to eliminate sound value 

compensation is successful, the only alternative is to find 

competitors with deep pockets. Small operators rarely have deep 

pockets. The NPS concessioners are predominately small operators 

and securing the needed capital for improvements will not be 

possible. 
183 

on three occasions since 1990, I sat with bank offi cials and 

concessioners who needed to secure financing. The bank officials 

flatly said that without sound value compensation the loans would 

not be made. In late 1992, with the economy as it was, financing was not available to the concessioner even with sound value 

compensation. That is precisely the reason why Public Law 89-249 

has that provision · in it. It was recognized 28 years ago that 

private enterprise must have a mortgageable interest in order to 

obtain loans and that protection against unreasonable taking was essential. 

Why is this a "red herring" issue. In reality the 

government will never have to pay off on a sound value basis. 

Since the late 70's concession contracts have contained language 

whereby if an operator defaults, book value compensation will be 

just compensation. Also concession contracts contain the 

provision that if services are discontinued due to resource protection issue, etc., book value will be just compensation. 

Concession contracts also contain the provision that if services are to continue the successor pays the existing concessioner the 

fair value compensation. There are no other anticipated events 

where the government would have to pay. Thus, it is a non issue 

to the government and critical to the operator. 

The impact which lack of financing can have on visitor 

services is no small matter. Trying to finance long-term 

projects on a cash flow basis is simply not feasible in most 

cases, especially for small operators. Large corporate 

concessioner may or may not be in any better position. When one considers that there are 679 concession authorizations (195 

contracts and 484 permits) with gross annual receipts of $625 

million and that literally a dozen business entities constitute over half of the gross receipts, it becomes obvious that policy 

changes directed toward big business may be terminal to small 

operators and create unintended consequences. If small 

businesses are categorized as $3 million or less, 643 

authorizations out of the total 679 service wide would be 

classified as such. 

Most business opportunities in a national park area are substantially different from the real private entrepreneurial 

world. Many constraints weigh heavily on the concessioner's 

opportunity for profit and investments on park land. The primary 

constraints are: extraordinary precautions must be taken to 

protect the resource and visitor; only those services that are "necessary and appropriate" will be provided; the concessioner 

does not have a free hand to maximize profits; title to all 

facilities on park land ~~sts with the Government; business 

operations may be terminated for convenience or other reasons; 

safety standards and visitor safeguards must be maintained under 

park situations; and rates to the public must be comparable to 

those found outside the park boundary. In addition, the 

concessioner must assure that at least minimal services are provided during the off season and is responsible for all 
184 

maintenance, repair, and capital improvements to Government 

assigned facilities that may be used. Also concessioners must 

insure the facilities for the full replacement costs, absorb all 

utility costs, and absorb extraordinary planning and design 

costs. 

Because of these constraints, the NPS must equalize its 

program to provide incentives for private investment and to 

enhance a positive relationship between Government and business. 

The cumulative effect of proposed legislative changes will have 

dramatic effect on future relationships with private business. 

It will eliminate incentives for investment, for maintaining 

facilities, for reasonable rates to the public and for the small 

operator to enjoy the fruits of his or her labor. 

The ability of the NPS to attract private investment has 

remained rather stable since the passage of PL 89-249. (This was not ~he case prior to that time). Every decade or so the general 

economy has gone through different cycles brought on by 

fluctuating interest rates, increased labor costs, etc. It is 

fair to say that visitor services in park areas has been 

minimally affected by these swings in the economy and it is due 

to consistent contracting policies that have not inhibited 

investment. To remove the concessioners ability to provide 

security for financing improvements is taking a large step in the 

wrong direction. 

All things being equal the concession program is essentially 

built on comparability (rates to the public). Taking away the 

ability to finance long term investment, coupled with short term 

contracts and a high turnover of operators may render the 

comparability program inoperative. Short term and short sighted 

policies will not serve our visitors well in the next century. 

Issue Tw9: Substantially Increased Franchise Pees 

It would be pointless to argue the amount of franchise fees 

that should be charged concessioners. Each contract must stand on its own merits in terms of revenue, investment, profits, and 

other considerations. So long as the consideration of revenue to 

the government is subordinate to the objectives of protecting and 

preserving the park area and providing adequate and appropriate 

services for visitors at reasonable rates, the statutory 

guidelines are met. 

Issue Tbree: Re4Yce tbe Tera of all Contracts to Ten Years 

The NPS must be allowed some flexibility to determine the 

length of contracts based on the investment required and other 

obligations. Limiting the term of contract to ten years will be 

inadequate where major improvement programs are required. Once a contract has been negotiated and executed it is the 
185 

-:cnc::s.:; .:. :: ~.c~-s ' r"';:;pons ibili t y to s ubmi t preli mi nar y desi gn and 

concepts to the NPS for approval, and eventually submitting final 

construction drawings for approval before construction can begin. 

(as another related issue it is at this stage that a financial 

institution can make a determination on the terms of a loan.) 

The NPS approval process from design to construction will consume at lea st one year, often two years, and sometimes longer. 

considering another year for construction the concessioner is 

left with six to eight years in which to reap the benefits of its 

investment. Added to this situation is the NPS contract renewal 

process which will no doubt require more time due to other 

matters related to the elimination of sound value provision. At 

best , process must begin one year prior to expiration and in most cases will require two years. With no right of renewal the 

concessioners' future is in question during the last two years of a contract. Using the example given above a ten year contract 

has produced five or six good years before it has to contemplate 

the future; continue with adequate maintenance, maintain quality 

of services or begin to cut corners and leave at the end of the 

contract. Often unnoticed is the matter of concessioners being 

able to hire and maintain a quality staff. The lack of security 

and continuity causes a high degree of turnover and more operational problems at the park level. 

Neither term of contract, nor the ability to secure financing and long term commitments, nor franchise fees, nor continuity of operations (right of renewal) can be reviewed 

exclusive of other constraints associated with operations on park 

lands. Neither short term contracts nor competition for short 

term contracts will improve visitor services. There are better 

ways to improve the program. Any new legislation must permit the 

NPS sufficient flexibility to make sound professional judgements on each potential business opportunity. The current policy of 

fifteen years but not to exceed twenty seems to be serving 

everyone's needs. 

Issue Four: Eliainate or Rectefine Right of Renewal so as to 

ereate coapetition 

creating competition, because it is the American way is one thing, but establishing additional constraints beyond those 

already in place for concessioners compounds the problems 

encountered to attract private investment. The inability to 

receive sound value compensation for the blood, sweat and tears 

that go into a business operation, a limited time to operate, and an uncertain future adds to the constraints already placed on concession operations in park areas. 

While we may be able to say that we are doing the· American 

thing and competing our contracts, it is my strong feeling and 

conviction that the mi ssion of the NPS will not be better served. 

The NPS has a unique mi ssion to fulfill. The preservation of 

park values and the need to manage park areas to meet these 

objectives outweigh the benefits of creating competitive contract 

procedures. 
186 

,... l lACHHENT B 

Observations: 

'!'he c oncession program lacks definition, purpose and 

direction. The program has not been described as to how the 

system works and how one program interacts with all the others. 

Few people understand it. Certainly the average citizen does 

not. Directors and Secretaries who come and go on a short term 

basis have not understood it. The program has not been 

articulated on paper in a way that is understandable. The 

supporting evidence that the program lacks definition, purpose 

and direction is the fact that individual programs have been 

reviewed and are being proposed for revision without understand 

or evaluating the cause and effect on the "whole". As evidence I 

submit the following: 

1. Contracts are not being crafted to suit individual parks. 

(resource issues, necessary and appropriate services, and 

local or regional impacts) 

2. Confusion abounds as to how to calculate building use fees 

and its relationship to the gross receipts percentage fee. 

3. New standard contract language was formalized on January 7, 

1993 limiting compensation to a concession at the book value 

level. 

4. Legislative proposals are now being considered to limit the 

term of contracts to ten years. 

5 . Legislative proposals are now being considered to eliminate 

right of renewal for some concession operations but retain it 

for others. 

6 . New regulations were issued stating that any goodwill or 

other intangible asset associated with the sale or transfer 

of a concession operation is an asset the belongs to the 

government. 

7 . The new regulations mentioned above redescribe how the right 

of renewal will be applied. 

a. The matter of organizational authority to execute contracts 

is a critical issue that must be resolved . 

While the above actions were being pursued, certain other 

"non-apple pie" issues were identified but ignored. The report 

issued by the Secretary's Task Force on March 1, 1990 stated: 

"Continued close cooperation and an effective working 

relationship with concessioners is essential to the successful 

operation of the parks for public benefit." 
187 

~ni ;;..:. ~-:;y ;:1e a sures adopted by the Uational Park Servic e must take careful account of their impact on concession 

operations." 

"Possessory interest, accordingly, places on the Government a possible burden of payment that on occasion has been realized." 

("NOTE: only Yellowstone) 

"Compensation for possessory interest should be set at a level no higher than necessary to attract investment capital." 

"The Task Force finds that there is a complex 

interrelationship among the elements of the concession system. 

Concession contracts for Park Service units involve *** the 

following key provisions: 

Contract length 

Preferential right of renewal 

Possessory Interest 

Contract transfer provisions" 

"They also are a major factor in the security of investment 

and the financial incentives to maintain the properties of the 

concessioner. Changes in one provision of the contract interact 

with and can effect the workings of other provisions." 

"The use of book value compensation for possessory interest 

has potential implications for other terms and provisions of 

concessioner contracts. The Task Force believes that a detailed 

financial analysis should be conducted on this issue. The _analysis should consider the feasibility of book value and 

whether and to what degree increased contract length, lower 

franchise fees, lower investment commitments, higher visitor 

prices and charges andjor other factors might have to be adjusted 

to make available a fair rate of return on investment equity to 

the concessioner signing a new contract." 

Unfortunately, and for whatever reason, the NPS has pursued 

the popular money issues that are more saleable on the "street" 

i.e . franchise fees are too low and revenues to the government · should be increased, eliminate potential liabilities, reduce term 

of contract. The secretary's Task Force report clearly recognize 

the need for a cause and effect analysis before implementing 

these crucial issues. 

Program Improvements: 

There are several actions which could be pursued by the NPS 

to improve the program and achieve the objectives of increased 

competition, increased franchise fees and improve the quality of 

services to visitors where needed. 

1 . Improve the standards for satisfactory performance. The NPS 

has developed and implemented over the last several years 

good performance standards. I would refer to it as pricing 

and evaluation 101. Those standards andjor their 
188 

i mplementa t ion could be improved or elevated to pricing and 

evaluation 404 to better insure quality services and improved 

performance by concessioners where needed. 

2. use different contract procedures for those operations which 

have no investment within the park boundary, except for those 

transportation services where access to park areas must be 

assured. Those types of authorizations would have no right 

of renewal, are competed on an equal basis, no compensation 

of any kind, no sale or transfer for any reason, term is for 

five years only, and may be terminated at any time for 

unsatisfactory service or failing to meet the terms and 

conditions, etc. 

3. In the interest of removing even the "potential" liability to 

the Government sound value compensation could be made 

applicable only for the purpose of providing security for the 

financing of park improvements. The sound value compensation 

provision could be written into contracts in such a way that 

when the loan has been satisfied, the sound value compensation by the government becomes inoperative and book 

value kicks in. Sound value by a successor operator would 

still be valid. 

As can be seen from the above the program can be improved to 

meet several objectives without throwing the baby out with the 

bath water. 

These actions would improve the quality of services to the 

public, would increase competition, would eliminate right of 

renewal where not needed, would increase franchise fees, and 

reduce even the potential liabilities to the government. 
189 

Chainnan VENTO. Thank you, Mr. Roush. We have Mary Ames, 

who is with the Wright Brothers Air Service. 

Mary, welcome. And, please proceed with your statement. 

STATEMENT OF MARY E. AMES 

Ms. AMES. Thank you. Good afternoon to you, Chainnan Vento, 

and to your distinguished colleague. 

You are to be commended not only for keeping the light of democracy burning but also for your endurance. 

My name is Mary Ames. I have for 16 years been the principal 

owner and operator of various small businesses that serve vacationers at the beaches in North Carolina and Florida. 

I am also a pilot. And, I began one of these businesses, Wright 

Brothers Air Service, 12 years ago in response to a prospectus from 

the National Park Service for an air tour concession at the Wright 

Brothers National Monument. 

This afternoon, I will be recounting some experiences in trying 

unsuccessfully to compete for that concession. It was a long and 

frustrating effort that has convinced me of the need to completely 

overhaul the Concessions Policy Act of 1965 beginning, and most 

importantly, with elimination of the concept of preferential right of 

contract renewal. 

I think my testimony will serve as the kind of evidence Mr. Hansen is speaking-I'rn sorry he's not still here-about, that visitors 

are not necessarily getting the level of services they deserve in the 

national parks. 

The Wright Brothers National Monument is located in the seaside town where I make my horne. It's a modest but beautiful park 

which commemorates that world-changing moment when the first 

airplane left the ground with somebody on it. 

Regardless of the propriety of sightseeing flights at other national parks-! know that's a separate issue-here at Wright 

Brothers National Monument, people want to fly, many for the very first time, because doing so conveys the significance of the Wright 

Brothers achievement in a way that nothing else can. 

I've been a fan of the national park since childhood. My parents, 

of course, convinced me that they owned a little piece of each one. 

And, so when the flight concession opportunity arose, I was very 

fired up by the idea of sharing my interest in aviation and its remarkable origins with visitors, particularly children and first-time 

adult fliers. I prepared the lengthy application required, complete 

with letters of recommendation from people whose support I 

thought would count, for example, a fonner general manager of 

concessions in the Shenandoah National Park and the Secretary of 

Finance for the Commonwealth of Virginia. 

In what I considered at that time a bizarre set of circumstances, 

but what I now know just to be the predictable result of the flawed 

system that we now have, my company's proposal was nosed out 

by another applicant who runs the concession to this day. Here are 

the details relevant to your consideration of legislative policy.' 

The chosen concessioner had been flying for at least two years 

from an airstrip within the park, despite repeated written notices 

from the Park Service that this was illegal. One of his pilots had 

gone off the runway and crashed into a tree two years before. 

75-380 - 94 - 7 
190 

Just recently, before the concession was let, his company had 

been cited for, and found in violation of, the federal law against 

commercial operations in parks. I . expected those documented 

events to rule out that particular applicant or at least to work 

against him. 

Instead, they worked in his favor, incredibly enough, making him 

the top choice out of a field of four candidates. I just had to get 

to the bottom of that and know why. 

So, I requested and obtained a copy of the official evaluation. It 

was just a one-page document, that's all. 

On it, my company's proposal and that of the successful applicant 

had tied in a system of numerical rankings. We had been docked 

for lack of prior experience, he for deficiency in managerial ability. And, a category labeled "safety" had been deleted because the 

evaluation team didn't feel they had sufficient information. The decisive factor in breaking the tie, according to this evaluation report that I obtained was, and I quote, "The experience of the chosen applicant in previously operating a sightseeing flight service similar 

to the one we proposed." 

Well, gentlemen, overlooking the fact that it was the other way 

around and actually the Park Service had at its disposal after what 

was already going on, it's hard to miss the point here that our company proposal was penalized twice in the evaluation because we 

had not been in the business of air tours at that park. So, there 

I had it. 

The choice of who would fly these tours was based not on the 

quality of service or the level of safety the concessioner was likely 

to provide or even on .his ability to manage a business, but it was 

based on the fact of prior experience in the park again, though it 

was in violation of federal law and marred by a crash serious 

enough to warrant an FAA investigation. . Incidentally, the fee attached to this privilege was $500, which 

turned out to be .6 percent, six-tenths of one percent, of his gross 

revenues. 

Until recently, the rest of my encounters with the Park Service 

have been replays of this early event. I won't go into the details. 

They are in my written testimony. 

But, to briefly summarize, I didn't give up on getting the concession at this point. After the initial rebuff, I went into the air tour 

business full blast in order to establish not only that record of experience that was so important to the Park administrators but to 

establish a superior record. 

This was in anticipation of competing one year later when the 

concessioner's temporary permit expired. Operating from the County airport, a half hour drive away, my company did establish a totally incident-free and complaint-free record, while the concessioner's record continued to include complaints about unsafe operations and maintenance in violation-lack of maintenance really in 

violation of Federal Air regulations. 

Among the few of these reports that made it to the Superintendent's desk in writing, two were from private pilots recounting near 

misses in flight due to the tour pilot's common practice of flying 

non-standard traffic patterns and one was a report from the Park 

Service's own pilot who, during a flight check, had found a tour 
191 

plane in operation 20 hours beyond the 100-hour required maintenance inspection. 

All of these violations are considered very serious by pilots. And, 

the 20-hour violation of the normal inspection requirement is not 

at all normal or acceptable in the industry. 

Nevertheless, the Park Superintendent judged the concessioner's 

performance satisfactory and advertised his intent to renew the 

permit, this time for a longer period. He sent me excerpts from administrative rules that made it absolutely clear that it was futile 

for me to compete even if I had a better proposal to offer. 

At that point, I was completely discouraged. I gave up on the 

idea of the concession. 

I continued in business. I paid far more to the County than he 

paid to the U.S. government as a percentage of receipts. 

I charged less for my services. I was really hoping to give people 

a better alternative and giving the Park Service time to change 

their ways of operating. 

Last year, I noticed that the permit period had reverted back to 

one year. It was up to four years long. 

I inquired of the Park Superintendent, and he told me this 

wasn't because they were able to make changes in the administrative rules but because concession policy reform legislation was in 

the Senate. It was not until then, I have to admit to you, that I 

read the full 1965 Act. And, in it, I saw the policies that had led the Superintendent and 

his staff to make and then later, of course, justify the entire series 

of administrative decisions I had considered so abhorrent. 

I commend those of you who are here today who understand that 

the legislation must be promptly and thoroughly changed. I feel 

sorry for you, because the effort is going to be very tremendcus. 

The details of it are going to be difficult. 

But, if it is not changed, concessioners and the Park administrators will continue to be tempted to use the tools of preferential right and possessory interest to hit below the belt, knock out 

healthy competition and defend park concessioners from all the 

normal market pressures that cause businesses to improve their 

services to the public. 

[Prepared statement of Ms. Ames follows:] 
192 

STATEMENT OF MARY E. AMES 

PRESIDEI"JT, t~RIGHT BROTHERS AIR SERVICE, INC. 

SOUTHEST AVIATION GROUP, INC. 

KILL DEVIL HILLS, NC 

on 

H .R. 1493, NATIONAL PARK SERVICE CONCESSIONS POLICY REFORM ACT 

3.nd 

H.R. 743, NATIONAL PARK REVITALIZATION ACT 

before the 

SUBCOMMITTEE ON NATIONAL PARKS , FORESTS AND PUBLIC LANDS 

of the 

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATI VES 

OCTOBER 19, 1993 
193 

PAGE 1 --

Chairman Vento and distinguished members of the Subcommittee, 

good morning. My name is Mary Ames. My intent, in the brief period 

allotted, is to illuminate how thoroughly the provisions of the 

Concessions Policy Act of 1965 prevent small businesses like mine, as well as larger ones, from providing superior service to National Park 

visitors and a fair return on the public investment in the Park 

system. I hope to reward your attention with sound suggestions, based 

on real experience, for consolidating the proposed reform legislation 

before you today into an effective statement of policy. 

For 16 years, I have been the owner and operator of various small 

businesses that serve vacationers along the beaches of North Carolina 

in summer and Florida in winter. One of these provides air 

transportation to and from the Outer Banks of North Carol ina and 

sightseeing flights along the historic Cape Hatteras National 

Seashore. 

I live two miles from the spot where the Wright brothers flew the 

first airplane 90 years ago. There, the Park Service maintains the 

Wright Brothers National Monument, a modest but lovely site to 

commemorate that world-changing event. Through a concessioner, the 

Park offers air sightseeing flights of the type my company conducts 

from the County airport, a half-hour drive distant. Regardless of the 

desirability of air tours at other National Parks, flights from this 

site serve to interpret the Park, particularly since many of the 

visitors are first-time flyers. 

Twelve years ago, after I had become a pilot and acquired an 

airplane, the Park Superintendent advertised the new flight 

concession. My enthusiasm for aviation and a life-long admiration for 

the National Park system combined to make this an exciting 

opportunity. So I prepared the lengthy proposal required and obtained 

letters of recommendation from people whose support I thought would 

count, I ike a former general manager of concessions in Shenandoah 

National Park and the Secretary of Finance for the Commonwealth of 

Virginia. 

In what I considered, then, a bizarre set of circumstances, but 

what I know, now, to be the predictable result of a seriously flawed 

system, my company's proposal was edged out by another applicant who runs the concession to this day. 

Here are the details relevant to the questions of policy before 

you today: The chosen concessioner had been flying paying customers, 

for at least two years, from an airstrip within the Park, despite 

written notice from the Park Service that this activity was illegal. 

One of his pilots had gone off the runway and into a tree two years 

before. His company had recently been cited for, and found in 

violation of, the federal law against commercial operations in 

National Parks. Those facts, which I thought would surely work 

against this applicant, helped him instead, making him the top choice 

out of a field of four. 
194 

PAGE 2 --

Surprised by this outcome, I obtained a copy of the official 

evaluation. On it, my company's proposal and that of the successful 

applicant had tied in a system of numerical ratings by a group of 

local Park administrators. We were docked for lack of "flight 

operations experience" and they, for deficiency in "managerial 

ability." A category labeled "safety" had been deleted from the 

evaluation due to "lack of information." To break the tie cat this 

point, remember, our proposal had already been penalized ,for lack of 

prior experience with air tours) the evaluation report said "the group 

considered the experience of [the chosen applicant] in previously 

operating a sightseeing flight service similar to the one we proposed 

as an important factor ••• " 

In fact, it was the decisive factor: this record of prior 

experience in the Park, gained in violation of federal law and marred 

by a crash serious enough to require an FAA investigation. 

The entire process seemed to me so improper, unfair, and harmful 

to the public welfare that I sought legal advice. I was counselled 

not to challenge the Park Service decision, for risk of interfering 

with a contract. I was advised to make another attempt, if I chose, 

at the time of permit renewal. This course seemed practical since the 

permit was a one-year, temporary arrangement. I knew our company 

could outperform the concessioner on every item of importance to the 

Park administrators. I went full-bore into the air tour business and 

established an incident-free, complaint-free record. 

At renewal time, documents supplied to me by the Park 

superintendent suggested that, despite a legally mandated bid process, 

in actual practice the current concessioner's permit would have to be 

renewed unless he were declared "unsatisfactory." Dur1ng the year, my 

company had received complaints about the operation at the Wright 

Brothers strip. <This was probably due to our listing in the phone 

book under the trademarked name, Wright Brothers Air Tours.> Most of 

these complaints were from private pilots who claimed their safety had 

been jeopardized by tour pilots flying non-standard flight patterns. I 

thought the poor operating practices evidenced by these complaints 

•ight well result in an unsatisfactory rating. 

I, therefore, requested and obtained a copy of the concession 

evaluation. Attached to it were two written complaints of the type we 

had received in far greater volume by phone and two Park Service 

letters urging the concessioner to comply with the terms of his 

contract. Also attached was a report by the Park Service pilot of a 

site check during which he had discovered a tour plane being operated 

in violation of the maintenance requirements of Federal Air 

Regulations. This aircraft had been run 20 hours beyond its normal 

100-hour inspection time, a serious infraction not at all normal or 

acceptable in the industry. 

The Park superintendent nevertheless did not consider any of 

these problems serious. He noted that the concessioner had willingly 
195 

-- PAGE 3 --

remedied all discrepancies brought to his attention. He rated the 

concession operation satisfactory. As far as I could determine, the 

rating system was very simple and entirely subjective. The 

concessioner was assigned a rating of "four" on a scale of five and 

the permit was renewed for a period of five years. 

That's when I gave up trying to compete for the concession. 

decided to continue the tour service at the County airport to give 

people a safer alternative, a l.onger flight for their money, and 

hoping to give the Park Service enough time to change its ways. 

Last year, the permit period reverted to one year. I met with 

the superintendent and concession specialist to see if this signaled a 

new approach. They said no administrative change had been made but 

contract renewals were "on hold" because concession policy reform 

legislation was being considered in the Senate. It was not until then 

that I read the 1965 Act and discovered in it the policies that had 

encouraged and, in the case of the preferential right of contract 

renewal, had mandated the whole series of administrative decisions I 

considered so wrong. 

The crux of the problem is that nowhere in the law is the Park 

Service required to seek concessioners who will serve the public best; 

NPS is required only to keep existing concessioners in business, even 

if their performance is inferior to that of a competitor. Add to that 

the inflated "purchase price" a concessioner's possessory interest 

creates, and just about all normal market forces that typically create 

improvement in service businesses are eliminated from the concessions 

in our Parks. 

This one-two combination -- preferential right and possessory 

interest-- constitutes more than a slap in the public face. It 

produces a knock-out punch, delivered below the belt. These dual 

protections allow tenants on public lands to control their own rents, 

keeping them artificially low and robbing the public treasury. They 

encourage substandard service to Park visitors, to whom the Parks 

really belong. And these policies reinforce the view, already widely 

held among business people and all who work in this land, that the 

government doesn't have to operate by the principles of free 

enterprise the rest of us follow, and still believe in, for the simple 

reason that they work so well. 

I commend you for your recognition that the existing legislation 

must be promptly and thoroughly changed. May I suggest that 

legislation, embodying the following concepts, would introduce 

positive market forces into National Park concessions while protecting 

superior concessioners from being pushed out by wealthier competitors: 

o Eliminate the concept of preferential right and replace it 

with a process for soliciting and reviewing competitive proposals in 

which money is excluded from consideration. Require that the 

evaluation of proposals carefully weighs every aspect of visitor 

services to be provided but that the Park Service refrain from 
196 

-- PAGE 4 --

specifying the minutia of concession management, such as the type of 

soap to be used in Park lodgings. 

o Require that all payments from a concessioner be established 

at each Park prior to the renewal of each contract or permit, but do 

not establish the amounts of franchise fees or rents legislatively. 

Franchise fees should be a percentage of gross revenues and a 

separate, and significantly lower, amount than rents figured as a 

percentage of gross. Rents should be based on comparable rents 

outside the Park, adjusted, if necessary, for the greater desirability 

of the Park location. 

o Eliminate the concept of possessory interest. Replace it with 

a valuation of assets based on cost less depreciation, with a 

reasonable depreciation period assigned to the assets as they would be 

on Federal tax returns. Instead of acquiring expensive possessory 

interests directly, require new concessioners to purchase assets at 

their "cost less depreciation" value and have the government pay the 

difference, if any, between this and the value of the possessory 

interest. In cases with no change in concessioner, the government 

could pay the difference to the existing concessioner and allow the 

concessioner to retain an interest figured the new way. At the end of 

the established depreciation period, each asset would revert to the 

government and no concessioner, existing or future)would retain an 

interest. Concessioners thereafter would negotiate long-term leases 

of the government-owned assets. 

o Mandate a system by which Park visitors evaluate the services 

they receive and are provided an easy method for sending these 

evaluations directly to the Park administrator in charge of overseeing 

the concessioner. 

I sincerely appreciate the opportunity to share my views with you 

this morning. 
197 

Chainnan VENTO. Thank you, Ms. Ames. 

Ms. AMES. You are welcome. 

Chainnan VENTO. And, finally on this panel, Mr. Bob Gersack of 

the First Bank, Livingston, Montana. 

Mr. Gersack. 

STATEMENT OF BOB GERSACK 

Mr. GERSACK. Thank you. Mr. Chainnan, I am Bob Gersack, 

president, First National Park Bank of Livingston, Montana. 

I have been in banking for the last 30 years. During my career 

in banking, I have been personally involved in the bank's lending 

functions, as a loan officer and as a senior loan portfolio manager. 

I appreciate this opportunity to appear before you today to express some of the feelings I have as a banker who has been closely 

acquainted with the financing of concessioner's investments in facilities in a national park. 

Our bank is located in Livingston, Montana. And, we have a 

branch facility located in Gardiner, Montana. 

As you may know, when people first started visiting our oldest 

national park, they would depart from Livingston to Gardiner, a 

journey of only 50 miles to the first established entrance to Yellowstone National Park. We know the park trade very well, because 

for the last 100 plus years we have provided some fonn of banking 

services to a majority of the businesses operating in Yellowstone. 

As you may also know, visitations at Yellowstone Park are in the 

top 20 among all our national parks. Because of this, and for many 

other reasons, the financial needs of the concessioners within the 

park are many, such as loans for general operations and capital improvements required and/or approved by the National Park Service. 

Our bank became associated with Hamilton Stores, Inc., one of 

the major concessioners in Yellowstone, decades ago. We have 

served as a major source of financing for both their operational and 

capital improvement needs for many years. 

We know that businesses in the park are seasonal and are subject to many changes in weather, which is sometimes very adverse 

in our part of the country, and that they are closely regulated in 

many ways by the National Park Service. We are, and always have 

been, interested in the regulations and laws that govern our borrowing customers. 

Of major concern to any lending institution is the nature of the 

customer's ability to repay a loan. Also of primary concern is the 

nature of the collateral available to secure the requested loan. 

Financial institutions do provide unsecured borrowings to creditworthy companies, usually on a very short tenn basis for general 

operating or inventory purchases. However, prudent lending practices require longer tenn loans, such as capital improvement loans, 

be secured by pledgable assets. 

In the case of park concessioners who conduct their businesses 

in national parks on land wholly owned by the Federal Government 

and/or in facilities which the title is held by the Federal Government, although improved and maintained by concessioner's money, 

there is little, if any, of the usual type of collateral pledgeable 

under these circumstances. Therefore, we have learned to carefully 

evaluate and understand the statutory grant of possessory interest 
198 

to the concessioners to secure their loans in needed or required facilities. 

And, so as we have studied this concept, which is unknown to 

any other kind of business transaction, we have been assured that 

it offered a very important security for those investments in government properties. Without the possessory interest granted to concessioners, it would be impossible for our bank, and I believe any 

other bank, to grant such loans. 

We recently concluded a loan with Hamilton Stores, Inc. for some 

required and some approved capit;al improvements within the park. 

In the process of granting the loan, we required reassurances from 

them regarding the continuation and the reliability of their 

possessory interest rights granted under their contract, because 

without that provision remaining in their contract they did not 

have the ability to pledge their possessory interest. 

And, companies such as Hamilton Stores would have to be in a 

position to provide personal assets in order to borrow for required 

or approved in-park improvements. To me, this appears to be unfair, especially to the small or privately held concessioner company 

who must be willing and able to pledge their own personal assets 

in order to acquire funds to make improvements to government 

owned property. 

As I read the proposed legislation, it appears to me that, if 

passed, it would extinguish possessory interest or not grant it to 

new concessioner's contracts or amortize it through the life of the 

contract with an existing concessioner, or change the valuation 

process of possessory interest. Thereby, in my opinion, this would 

jeopardize the ability of most concessioners to borrow money to 

meet required and/or approved expenditures. The laws being proposed to redefme possessory interest are going 

to destroy the very purpose for which it was originally included 

within the contracts, thus eliminating it as security for the fmancing of investments in park facilities. 

For all of these reasons, I would ask you, Mr. Chairman, and 

members of the subcommittee, not to alter this very important aspect of the concessions policy, because it does continue to serve a 

very important need in the fmancing of improvements in park facilities. Our Federal Government does not appear to be able to 

carry much more, if any, fmancial burden at this time. 

Why then should we shift this responsibility in our parks to the 

federal budget when the private sector can and will continue to 

handle this satisfactorily? It makes sense to stay with what works. 

And, I trust that you will do so. 

Thank you for the opportunity to share my views. 

[Prepared statement of Mr. Gersack follows:] 
199 

STATEMENT BY 

BOB GERSACK I PRESIDENT 

FIRST NATIONAL PARK BANK OF LIVINGSTON MONTANA 

******** 

UNITED STATES HOUSE OF REPRESENTATIVES 

SUBCOMMITTEE ON NATIONAL PARKS 1 FORESTS 1 AND PUBLIC LANDS 

COMMITTEE ON NATURAL RESOURCES 

******** 

. HEARING ON H.R. 743 1 H.R. 1493 AND H.R. 2196 

******** 

OCTOBER 19 1 1993 
200 

Mr . Chairman and Members of the Subcommittee: 

I am Bob Gersack, President, First National Park Bank, of 

Livingston, Montana. I have been in banking for the last thirty 

years. During my career in banking, I have been personally 

involved in the banks's lending functions, as a loan officer and as 

a senior loan portfolio manager. I appreciate this opportunity to 

appear before you today to express some of the feelings I have as 

a banker who has been closely acquainted with the financing of 

concessioner's investments in facilities in a National Park. 

Our bank is located in Livingston Montana and we have a branch 

facility located in Gardiner Montana. As you may know, when people 

first started visiting our oldest National Park, they would depart 

from Livingston to Gardiner, a journey of only fifty miles to the 

first established entrance to Yellowstone National Park. We know 

the Park trade very well, because for the last one hundred plus 

years we have provided some form of banking services to a majority 

of the businesses operating in Yellowstone. As you may also know, 

visitations at Yellowstone Park are in the top twenty among all of 

our National Parks. Because of this and for many other reasons the 

financial needs of the concessioners within the Park are many, such 

as loans for general operations and capital improvements required 

and or approved by the National Park Service. 

Our bank became associated with Hamilton Stores, Inc., one of 

the major concessioners in Yellowstone decades ago. We have served 

as a major source of financing for both their operational and 

capital improvement needs for many years. We know that businesses 

in the Park are seasonal and are subject to the many changes in 
201 

weather, which is sometimes very adverse in our part of the 

country, and that they are closely regulated in many ways by the 

National Park Service. We are and always have been very interested 

in the regulations and laws that govern our borrowing customers. 

Of major concern to any lending institution is the nature of 

the customer's ability to repay a loan. Also of primary concern is 

the nature of the collateral available to secure the requested 

loan. Financial institutions do provide unsecured borrowings to 

credit worthy companies, usually on a very short term basis for 

general operating or inventory purchases. However, prudent lending 

practices require longer term loans such as capital improvement 

loans be secured by pledgable assets. In the case of Park 

concessioners who conduct their businesses in National Parks, on 

land wholly owned by the federal government and or in facilities 

which the title is held by the federal government, although 

improved and maintained by concessioner's money, there is little if 

any of the usual type of collateral pledgable under these 

circumstances. Therefore, we have learned to carefully evaluate 

and understand the statutory grant of "possessory interest" to the 

concessioners to secure their investments (loans) in needed or 

required facilities. As we have studied this concept, (which is 

unknown to any other kind of business transaction) we have been 

assured that it offer:ed a very important security for these 

investments (loans) in government properties. Without the 

"possessory interest" granted to concessioners, it would be 

impossible for our bank, and I believe any other bank to grant such 

loans. 
202 

We recently concluded a loan with Hamilton Stores,_ Inc. for 

some required and some approved capital improvements within the 

Parle. In the process of granting the loan we required reassurances 

from them regarding the continuation and the reliability of their 

"possessory interest" rights granted under their contract. Because 

without that provision remaining in their contract, they do not 

have the ability to pledge their •possessory interest" companies 

such as Hamilton stores would have to be in a position to provide 

personal assets in order to borrow for required or approved "in 

Parle" improvements. To me this appears to be unfair especially to 

the small or privately held concessioner company who must be 

willing and able to pledge their own personal assets in order to 

acquire funds to make improvements to government owned property. 

As I read the proposed legislation it appears to ae that if 

passed it would extinguish •possessory interest" or not grant it to 

new concessioner's contracts or amortize it through the life of the 

contract with an existing concessioner, or change the valuation 

process of •possessory interest". Thereby, in my opinion, this 

would jeopardize the ability of most concessioners to borrow money 

to meet required and or approved expenditures. The laws being 

proposed to redefine •possessory interest" are going to destroy the 

very purpose for which it was originally included within the 

contracts, thus eliminating it as security for the financing of 

investments in Parle facilities. 

For all of these reasons, and many others, I would ask you, 

Mr. Chairman, and Members of the Subcommittee, not to alter this 

very important aspect of concessions policy because it does 
203 

continue to serve a very important need in the financing of 

improvements in park facilities. Our federal government does not 

appear able to carry much more, if any, financial burden at this 

time. Why then should we shift this responsibility in our parks to 

the federal budget when the private sector can and will continue to 

handle this satisfactorily? It makes sense to stay with what works 

and I trust that you will do so. 

Thank you for this opportunity to share my views with you. I 

would be pleased to answer any questions you may have. 
204 

Chairman VENTO. Thank you. We have got a disagreement between Mr. Gersack and Mr. Hill. 

Mr. Hill is suggesting that the normal course of business is, you 

go into a shopping mall and you lease a space and you get a lease 

for 10 years and you have a certain amount of inventory, a certain 

amount of capital that you operate, and you go to the bank and you 

get a loan; and, that if you put improvements or fixtures or anything into that particular property-you may even build a building-at the termination of the lease it becomes the possession of 

whoever owns the land, whoever is the proprietor of the shopping 

center. It's a normal course of business, the normal way to do it. 

Ms. AMEs. Mr. Chairman, I can address that from my experience. 

I was required by the Airport Authority at the County Airport 

where I fly to build a building as part of my lease. I built it. 

I was able to borrow the money from the bank, because I had a 

good record in business. I have to put up my personal assets as collateral and my good name for every loan I take out. 

Chairman VENTO. You don't have any possessory interest in it, 

so it becomesMs. AMES. Not any. The building reverts to the County after the 

lease expires. 

Chairman VENTO. Did you have to go to a bank to get this loan 

or did you have the cash? 

Ms. AMEs. No, a bank. 

Chairman VENTO. Who is that banker? I guess Mr. Gersack--

Ms. AMEs. I will share that with you later on. [Laughter.] 

Chairman VENTO. It wasn't Mr. Gersack. Well, Mr. Gersack, my 

other role in life is to work on the Banking Committee. 

I don't know if it's, you know, because of my trespasses earlier 

in life or why I am on the Banking Committee, but I suppose you 

can only have so much interest, so I really--[Laughter.] 

But, anyway I've been there. And, of course, I'm well aware that 

any banker· wants to get as much collateral and certainty as they 

can in terms of making a loan. 

And, maybe you would like to reflect on that a little further at 

this time. Did you want to say something at this point? 

Mr. GERSACK. You mean from the standpoint of available collateral? I do appreciate your position on the Banking Committee. 

[Laughter.] 

Chairman VENTO. Sometimes I expect you do, yes. 

Mr. GERSACK. We do hear the term "regulatory burden" at times. 

And, I certainly hope that you will strive to remove some of that. 

As far as the difference of opinion between where we loan on a 

secured basis inside the park and loan on a secured basis outside 

of the park, the comments from the previous gentleman, yes, you 

can loan within the park on an unsecured basis. But, to loan within 

the park on a secured basis, there must be that right to be able 

to take some attachment, to take some security. 

And, possessory interest is what is available there. I don't think 

it's comparable to lending to a merchant who is putting a business 

into a mall. You have certainly other avenues that you can pursue 

in that area. · 
205 

Chairman VENTO. But, isn't the fundamental issue here the 

amount of capital that the individual borrower puts up to determine whether. or not they are creditworthy or not? 

Isn't that the fundamental issue? You've got some problems in 

terms of being able to take a security against a property on land 

you don't own, and maybe they wouldn't perform within · the 10- or 

15-year lease. 

But, isn't the fundamental issue here one in terms of saying, 

"You need the amount of down payment or the amount of collateral 

that's there?" 

Mr. GERSACK. You know, as I stated, I think the primary issue, 

of course, is the establishment of the ability to repay. The second 

is naturally, of course, what is the security. 

And, I think prudent banking, as you would know from the 

Banking Committee, we have to have security. And, that is the primary security in most cases. 

Chairman VENTO. Of course, the security could be whoever is the 

successor to the lease in terms of extinguishing whatever depreciation would occur, because I guess you are concerned about whether 

there is a 10- or 15-year lease on a piece of property or a loan payment that that would be extinguishable, that that person wouldthat somebody else, the successor, would, in fact, then need to pay 

back that particular loan. . Mr. GERSACK. It would be a source of funds from that asset. 

Chairman VENTO. That's right. You would have to have a flow 

of revenue stream. 

Mr. Roush, I appreciate your coming forward on your own to 

share with us the experiences and insights that you've gained in 

your professional career at this time. I note that you feel many of 

the problems are administrative-that they are not legislative problems. 

But, I think part of the picture is that when you listen to the experience that Mary Ames has had here with regards to preferential right of renewal and sonie of the indices, how would you characterize that? 

Mr. RousH. I very much appreciate the question. And, I would 

like to respond to her. 

And, I feel very apologetic that she ran into that kind of a circumstance. And, that's very unfortunate. 

I've heard throughout the morning about the quality of services 

to our visitors. And, if what she has said is accurate, obviously the 

quality wasn't there. 

And, assuming that she had it, something went awry in the selection process. And, that should not occur. 

I don't believe that legislation will cure that. Our next system, 

if there is a next one, will only be as good as the people who administer it and the kind of procedures that we establish. 

Chairman VENTO. So, you fundamentally think that some of this 

is a misinterpretation of preferential right of renewal? 

Mr. RousH. Misinterpretation? 

Chairman VENTO. Or mis-administration of it. 

Mr. RousH. Mis-administration, yes, assuming the facts are as 

stated. You know, that's unfortunate. 
206 

Chairman VENTO. I think there are a lot of positives that obviously have come up. One of the other problems you pointed out to 

me and I thought of this, too, is that the reduced revenues to the 

government, you know, for a liability that would never have to be 

paid off, but the other problem with this because of the sound 

value and the current value basis of properties constructed, as Secretary Cohen had indicated, is pretty much, as realtors say, location in big letters. 

And trying to develop a value or an appraised value of that is 

very difficult, rrrst of all. And, secondly, that those, as they invest 

more and more, accumulate in terms of this so-called sound value. 

And, it can very quickly escalate into something that is going to 

be a phenomenal amount of dollars. In fact, I'm certain some in the 

concessions, some that have possessory interest, would argue even 

today that it's a phenomenal amount. 

But doesn't that really constitute a problem? I don't know if it 

was anticipated in terms of the 1965 Acl? I wasn't here. 

Mr. RousH. You know, I'm not really sure what the problem is. 

There is a possibility out there on the horizon somewhere, some 

time, that the government may have to pay off on a fair market 

value basis. I don't know what that circumstance might be. 

Contracts state now that if we want to discontinue the operation, 

the compensation is book value. If we want to terminate for resource issues, et cetera, it's book value. If the concessionaire defaults on his contract, the compensation is book value. 

Chairman VENTO. So, you think that that is a safeguard or remedy for book value, what they actually invested rather than sound 

value; is that correct? 

Mr. RousH. Yes. And, if it's going to continue, it's not the government that is g~ing to _pay it. It's going to be a successor. 

Chairman VENTO. Well, that's one of the problems, isn't it, that 

somebody has a $100 million investment in a park and you are bidding and you then have to actually bid on utilization and payment, 

or whatever the revenue stream is, in terms of that particular property? You may have to pick up not just a bid on a contract 

where you've got outstanding working capital of $3 million or $4 

million, but you also have to get into dealing with a $100 million 

problem here on which the interest today might be 6, 7, 8 or 10 

percent. 

Mr. RousH. Well, yes, that's certainly true. You have to deal with 

the fair market value of that property. 

Chairman VENTO. Yes. 

Mr. RousH. And, com~tition out in the real world has dealt with 

that very nicely. It hasn t inhibited them at all. 

So, I have a hard time understanding the real problem. 

Chairman VENTO. Well, I mean, the real problem is that you 

would have to obviously have the fixtures but you may have some 

that are there that-arriving at the appraisal value is something 

else again-it isn't certainly book value at that particular point. 

You are not just dealing with what you are going to invest; you are 

dealing with a hypothetical in terms of value. 

If it isn't a real problem, then there shouldn't be objection to removing it from the law. You know, if you have the remedies in 

terms of book value, as you suggest. How many instances are there 
207 

where the Park Service has, in fact, extinguished it on the basis 

of book value? · Glacier is about the only one I can think of. 

Mr. RousH. On a book value basis? 

Chairman VENTO. Yes. 

Mr. RousH. I am not familiar. I know there has just been one 

on a fair market basis, sound value, if you will. 

Chairman VENTO. Well, there has been one on sound market, 

yes. But, then that isn't exactly the point. 

So, in other words, it's a remedy that has not been applied, as 

is the case. So, it's a remedy that has not been effective. 

And, we have repeated testimony that this, combined with the 

preferential right of renewal, is a significant barrier. So, I appreciate the good faith effort in terms of explaining this. 

And, these are some questions that I have thought through. And, 

I appreciate seeing them coming from someone that has no interest, in essence, in this particular process, which is helpful. 

Mr. Roush. 

Mr. RousH. If I might just add a comment. You know, here again 

today as we sit here and I hear again about the Yosemites of the 

world, what are we going to do with-1 want to say "my," but it's 

no longer "my." But, the Park Service has got any number of small 

operators out there that, you know, gross a half a million dollars. 

And, that's very small money today. 

And, he needs to spend a half a million dollars on his operation. 

Where is he going to get it? 

I will say to you that it has been my experience he will not get 

financing. I have had experiences in the last two years of sitting 

with bank officials and convincing and coaxing and explaining. 

And, we have a bankable contract today-we know that-with a 

sound value kind of provision in it. And, I can tell you of late, in 

the last few months, of course, from banks it's very hard to get 

loans. 

And, even one that had sound value compensation in it, in the 

last few months the bank would not loan them money. That's not 

their main play at the moment. 

But, nevertheless we know we have a bankable contract. And, I 

don't know how the small operator is going to survive. Out of the 

670 or so concession operators, I think appropriately-if one considered $3 million and less as small business, I think about 640 of 

them would qualify as small business. 

But, I think SBA considers anything less than $6 million. But, 

anyway--

Chairman VENTO. Well, let's ask Mr. Hill. How is a small operator going to survive in this system if he doesn't have sound value? 

Mr. HILL. Well, let me make--

Chairman VENTO. And, you don't have it in any other business 

entity. I mean, this is something invented for the Park Service 

which, of course-1 say you have no financial interest, Mr. Roush, 

but obviously after working on this a long time you have a professional interest. 

Mr. HILL. I will make two statements. Number one, it is a fact 

of life that a very high percentage of small, independent entrepreneurial businesses will be out of business by the year 2000. 
208 

And, there's all sorts of statistics out there. Dunn & Bradstreet 

says that maybe half of all existing retailers will be out of business. 

We personally think that there is going to be a larger drop off 

than that in the next coming years. So, I don't think our national 

parks should be---

Chairman VENTO. Axe you trying to make me feel comfortable? 

[Laughter.] 

Mr. HILL. What I am saying--

Chairman VENTO. No, no. I understand what you are saying. 

Mr. HILL. All right. So, that's one point. The second point--

Chairman VENTO. That is to say that there is a normal evolution 

in terms of small businesses and new businesses have a big failure 

rate, is really what you are trying to say, isn't it? 

Mr. HILL. Well, I am also saying that in addition to the evolution, retail distribution is seeking its most efficient channel. And, 

that is more and more being done by larger corporations today. Chairman VENTO. Okay. 

Mr. HILL. And, you are not going to change that. No one is going 

to change that. 

In terms of within commercial real estate, the only liens or security interest that bankers are ever able to get into a landlord's 

property would be some sort of security interest on to the fixtures, 

furniture and equipment, what we call the FF&E. I certainly think 

that if fixtures and equipment are movable, it should be addressed 

as personal property and the concessionaires should, in fact, be 

able to take that back home with them at the end of the contract. 

So, bankers should have some .sort of a security interest in that. 

But, that should be totally separate of any major leaseholder improvement that remains permanently affiXed to the property. Chairman VENTO. Yes. I'm certain that from a standpoint of the 

evolution of the size of enterprise in America that probably there 

is a theme here. It isn't a very popular one, so not many of us probably would dare repeat it if we wanted to get elected. 

But, I suppose the fact is that in some retail operations and in 

some other segments of business that there is a tendency for larger 

institutions, larger retail outlets, larger banks, as a matter of fac~ 

Mr. HILL. But, don't misunderstand me. Because of that major 

drop off, there is a very intense effort on the part of landlords 

today to get the small businesses into their shopping centers, to 

find out who are going to be the surviving merchants and make 

sure you get them. 

So, we are working more closer with smaller merchants than we 

have ever worked, because we need them to fill up the space across 

the country. You have to have them. . But, every problem that I'm hearing, there is a solution that has 

been worked through in commercial real estate. 

Chairman VENTO. In other words, maintaining this environment 

with these sort of indices and so forth really is, in your view, Mr. 

Hill, a departure from what some of the forces are that exist and 

work in other types of market activities; is that correct? 

Mr. HILL. I'm not sure what you mean by indices. Can you--

Chairman VENTO. Well, the different preferences, the different 

requirements, the different criteria that are injected into this proc-
209 

ess don't exist in other instances and tend to cause some aberrations. 

If you didn't have possessory interest in this instance and the 

sound value provisions, you wouldn't have some of the dilemma 

that we have today. I mean, at the time, I guess it was perceived 

as needed to remedy something. 

But, nevertheless, there were investments that occurred prior to 

it. But it has obviously been a mixed bag. 

Well, anyway, the truth is today we are going to have a vote. 

And, we've got to get it moving along. 

And, Mary Ames mentioned that I had a long hearing. This is 

an easy hearing for us in terms of length. [Laughter.] 

Ms. AMEs. Mr. Vent;()--

Chairman VENTO. Yes. 

Ms. AMEs [continuing]. Could !--

Chairman VENTO. I intend to ask the Park Service to respond to 

your testimony, incidentally, in writing. And, yes, Mary, you can 

add. 

Ms. AMEs [continuing]. Respond to Mr. Hill's comment? 

Chairman VENTO. Yes. 

Ms. AMEs. I think when the preferential right of renewal is removed, it needs to be replaced with a system that is not based on 

money. I believe Mr. Synar's bill has that concept in it, that money 

would be excluded as a consideration. 

I agree completely with that, because the considerations for the 

bidding process should be the visitor services. Money matters 

should be fiXed ahead of time. 

The Park Service at each park should be able to say, "The franchise fee here needs to be 5 percent and the rents here need to be 

12 percent of gross revenues." They need to fix the rents and fees, 

and then let the bidding concentrate on what services will be provided. 

Chairman VENTO. Well, I think that that is right. I think today that there are so many different reference points in bidding that 

it makes for a really subjective assessment of what actually constitutes a successful bid and what does not. 

You had that experience because of the preferential right of renewal. You found, for instance, that they were giving experience for 

somebody that had been flying and had been doing something illegally. . Apparently, one criterion in that case was that you got the full 

sensation of flight including accidents. [Laughter.] 

Ms. AMEs. A ground loop at the end. [Laughter.] 

Chairman VENTO. Mr. Roush. 

Mr. RoUSH. If I may just quickly-and I think that goes along 

with simply the idea that legislation is not always the problem. 

And, I think she has pointed that up very well. 

With regard to franchise fees, we can solve those problems but 

we should not sal, "This is going to be a minimum franchise fee 

across the board. They have got to stand on their own merit on 

a case-by-case basis. 

Chairman VENTO. Well, I took that to mean that the Park Service should endeavor, from the standpoint of policy, to try and provide for an objective bidding, with these other things being equal. 
210 

You have to be FAA qualified. I think that the explanation herE 

and the issue that Ms. Ames is raising is a very good one, because 

it talks about safety and a whole host of factors that become vecy 

important and that the Park Service is faced with. 

It's easy to talk about this in the rarefied area of the committeE 

room when you don't have to worry about the airplane and the 

pilot and everybody else, but it becomes a very complicated service 

that is being delivered. It isn't just cut and dried. 

Mr. HILL. Mr. Chairman--

Chairman VENTO. Yes. 

Mr. HILL [continuing]. I think there is quite a few small, subtle 

issues across the board that are being missed. And, I encourage 

you and the rest of your committee to have some extensive conversations. 

I would second what Mary says. We seldom ever select a retailer 

restaurateur for a shopping center .based on somebody bidding the 

highest rent. We generally tell ·them, "This is the rent," and then 

we select the best operator. 

And, I believe that that should, in fact, work itself into this system somehow,.that the Park Service needs to determine what is an 

acceptable rent based on a specific user, a specific concessionaire's 

economics. Set that rate and then perhaps fix it as a fixed minimum rate. 

And, then have some sort of a percent override based on outstanding performance. And, that would let them share in the success. 

But, it really would allow them to focus on the best operators in 

lieu of being focused on the highest bidder. 

Chairman VENTO. I think the issue here is that the Park Service 

has attempted to shape the market according to its own recipe in 

terms of sound value, in terms of preferential right. And, lo and behold, then you come back and say, "Hey, there isn't any competition." 

Well, is that a big surprise if we think we are going to shape the 

market, you know, by virtue of what the Park Service does in 

terms of concessioners, not the Forest Service, not the BLM? Of 

course, they don't have the investment. 

I think it really is ludicrous to think that the Park Service somehow could shape the market. Now, if we don't like the way that the 

rest of the world works in terms of the free enterprise system in 

America, I suppose that's something we can address. 

But, I don't know that we should do it through the National Park 

Service concession contract procedures. That's really where the 

problem is. 

You have got to go out here and say, "This is the way it works 

in terms ofbanking." 

Mr. HILL. The only danger that I see out there is someone arbitrarily saying that it should be x percent. How do they know what 

that percent should be? 

Chairman VENTO. No, no. I think that that was picked up because it was a number that Secretary Lujan identified at Yellowstone as a number. And as the opponents or others today have raised, that's based 

on the fact that the Park Service is taking care of the utilities and 
211 

they are taking care of many of the other expenses that are, in fact, 

not the norm in many of the concession contracts across the country. You simply can't take this number and multiply it by 22 percent or set that in law. So, I think though that the question here is to try to shape as 

near as we can the activities of concession contracts to deal with 

the type of market that exists rather than, in essence, try to reverse it and say, "We can shape the market the way we want it." 

We can't do that. 

I mean, even though the intentions were good and the work that 

was done on it was generally appropriate, I think there are all 

kinds of problems in terms of record keeping, in terms of making 

the judgments. It involves a sort of anomaly that Mary Ames has 

pointed out here just with regards to one issue, not even dragging ·in some of the others in terms of possessory interest and other factors that exist. 

We haven't talked much about the idea of just extending service, 

when there is an opportunity for extension of service that the concessionaire that is in that particular position does receive a preference with regards to that. And, that again tends to push out 

something-the competition that might exist there. Now, a shopping center is set up on a different basis obviously, 

a different purpose in terms of serving people. But, there are some 

common touchstones that we can use here that I think will serve 

the Park Service. 

And, we are not going to be involved in the micro-management 

of this. That's for certain. 

The question that Mr. Roush has is that it isn't just legislation. 

I understand that. 

But, sometimes to reinvigorate, you have to legislate. Sometimes 

you have to do that in order to get things moving. 

And, I think that in order to resolve this, if we just leave things 

out there on a rule and regulation basis running along, we may end 

up with more uncertainty than certainty. So, I don't think that we 

want to throw the baby out with the bath water here. That's for 

sure. 

Mr. RousH. Yes, sir. 

Chairman VENTO. Mr. Roush. Mr. RousH. I very much appreciate that. And, you know, there 

is an awful lot that is involved in a park setting with a concessioner. 

And, I will be very, very frank with you. When I had a good concessionaire, I had no desire to change. Do you know why? I will tell you very frankly. The time it takes 

to orientate, the time it takes to train is not a short time process. 

You know, that's long term. 

It takes a year-you know, a sizable operation, to get the employees up-to-speed on what our park programs are, how they are supposed to react. Be it motor vehicle accidents and how you are going 

to treat the lost and found box or, you know, you just don't go out 

and spray the azaleas with DDT because we've got an IPM program that dictates things. And, there are many, many programs 

that they have to comply with. 
212 

And, so it's no small matter to educate and train a new operator. 

And, so, you know, that's in the park. 

Chairman VENTO. I hear you. No, I understand. We are not operating a burger franchise. 

Well, I think that the key, as my staff is commenting, is to try 

to find the way of providing renewed competition and taking continuity into account and those factors. We don't want to simply 

change this on the basis of a few cents one way or the other. 

Mr. RousH. Ten year contracts, if I can say, will not do the job 

in most cases. And, this has nothing to do with investment and 

payback. 

Where you've got a building program, you know, the Park Service 

they have their own approval process. And, this process is no shortterm matter. 

This process can take a year. It can take two years. And, it has 

taken three years and more just for the approval of a structure, if 

you will. 

And, so once you've got it approved and you've got another year 

for construction, you've got about · six years left on your contract. 

And, then, of course, you are going to have to start two years before 

it expires. So, in many, many cases, 10 year contracts are just not going to 

be adequate. And, small operators need long-temi contracts as well 

asChairman VENTO. Some of that is being decided by the rules and 

regulations process in terms of when you have a 10 year, how you 

extend it, when you extend it. Small contracts, especially in terms 

of where there is a limited visitorship or an opportunity to serve 

clients, are key. I understand that. 

Well, you've all been helpful, although you don't agree. As I said 

to the last panel, it's making my job difficult. 

So, the record is there. If you want to submit any more materials 

for the record, it will be open for 10 days. . And, with that said, the meeting stands adjourned. Thank you. 

[Whereupon, the hearing is adjourned at 1:22 p.m., Tuesday, October 19, 1993.] 
APPENDIX 

OCTOBER 19, 1993 

ADDITIONAL MATERIAL SUBMITTED FOR THE HEARING RECORD 

~.351. .,oust of 1\tprtstntatibts 

(:ommitttt on ~atural l\tsourcts 

R!Ubingtnn. Jl(: 20515-6201 

October 25, 1993 

~oger Kennedy , Director 

National Park Service 

Department ot the Interior 

Washington, DC 20240 

Dear Director Kennedy : 

-.. -, ___ 

=== ~.;::::ICT'QII 

As you may know, on October 19 the Subcommittee on National 

Parks, Forests, and Public Lands 'held a hearing on several 

pending bills that would revise current law applicable to the award and manaqement of contracts for concessions in units of the 

National Park System. 

one ot the wit~esses at that hearing was Ms. Mary E. ·Ames, President o~ an air services company based in Kill Devil Hills, 

North Carolina. I am enclosing a copy ot her prepared testimony. 

The testimony indicates that Ms. Ames was an unsuccessful 

applicant tor a contract to provide !light services at the Wright 

Brothers National Monument, but that the contract was instead 

awarded to another applicant who allegedly was known to the 

National Park Service to be operating illegally and that had 

operated unsately . 

Ms. Ames cited this history as evidence of the need to change the 

requirements of current law related to concessioners' 

preferential riqhts of renewal. However, her testimony obvio~sly 

also raises questions about the adequacy ot the National Park Service's implementation of the current law. 

I would appreciate it it you would arrange tor a review ot the events described in Ms . Ames's testimony . I would like to know whether her account is accurate and, if so, whether it indicates 

shortcomings in National Park Service procedures that have been or should be corrected . 

(213) 
Director Roger Kennedy 

Page 2 

214 

I look forward to timely receipt of a report concerning the 

results of this review. 

BFV:tm 

Enclosure 
215 

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• 

United States Department of the Interior 

. 

. IS REPLY Uf'Eit TO· 

C3823(202) 

Honorable Bruce P. Vento 

:-:AT!ONAL P.-UU<: SERVICE 

P.O. Box 37127 

Washinglon. D.C. 200 ~7 27 

IE 8 11m 

Chairman, Subcommitt .. on National 

Parka, Poreata, and Public Landa Bouae of Repreaentativea 

waahington, D.c. 20515-6201 

Dear Kr. Chairman: 

We are pleaaed to reapond to your letter of OCtober 25, 1993, and provide you with a review of the background and eventa involving the aalection of kitty 

Hawk Aero Toura, Inc., aa the concea~ioner authori&ed to provide air 

aiqhtaeeing toura from the Firat Flight Airatrip, Wright Brother• National 

Monument . We alae appreciate th• opportunity to offer our commenta on the teat~ny given by Ma . Mary &. Amea in hearing• before your aubcommitt .. on 

OCtober 19. 

While acme of the document• prior to 1978 have been deatroyed, recorda involving kitty Hawk Aero Toura and Ma . Amea appear complete aince that time. conaiatent with Ma. Amea• teatimony, our recorda indicate that ahe and her aaaociate, Mr. John R. Stubbing• of Wright Brother• Air Service, did in faCt aubmit an offer to conduct the aightaeeing air toura ~rom· Firat Flight 

Aintrip in r .. ponae to a aolicitation haued Karch 1, 1982. Of the four offera aubmitted11 the National Park Service (NPS) evaluation team aaaigned the aame rating acorea to kitty Hawk Aero Toura' offer and the Amea and Stubbing• 

propoaal. Again, aa Ma. Amea indicated, the determining factor uaed in awarding the conceaaion permit to Kitty Hawk Aero Toura waa operating 

experience. 

The record indicatea that Mr. Jay Kankedick, Preaident of Kitty Hawk Aero Toura, had been conducting commercial aighta .. ing air toura of the OUter Banke for acme 6 yeara out of the Dare COunty Airport. Converaely, Ha. Amea had only recently obtained her pilot'• licenae. Comparatively, we auggeat that the flight operating experience factor waa heavi ly in favor of the aelected applicant. While the Amea/Stubbinga offer waa rated higher on management 

capability, flight experience waa a higher priority. 

Ma. Amea auggeated that Kitty Hawk Aero Toura gained auperior flight operating experience by illegally operating from thia aite. Undoubtedly, Mr. Mankedick did uae the Firat Flight Airatrip prior to · l978, aa did other air taxi and aighta8eing operatora; however, the record indicatea that it waa not until 1981 that the NPS firat adviaed him that hia activities were in violation of Federal requlationa. 

The record ahowa that Mr. Manked i ck met with the auperintendent and requeated a permit to uae the airatrip on September 29, 1978. He waa told that thia type of aervice waa not neceaaary and no permit would be iaaued . Similar 

requeata were made on June 3, 1980, and again on April 15, 1981. At the third meeting, Mr . Mankedick waa advised that hia operation• were in violation of Federal requlationa and that continued diaregard would reault in the iaauance of a citation. Thia waa confirmed by letter of April 22, 1981, the firat written notification of the aituation. On June 9, 1981, an employee of Kitty Hawk Aero Toura, David Shafer, waa cited by a national park ranger for violation of the regulation. At that point, Mr. Shafer indicated that 
216 

Honorable Bruce F. Vento 

Mr. Hankedick wanted the citation eo the matter could be resolved by the courts. The case was heard on November 19, 1981, by the U.S. Magistrate who 

entered a judgement of guilty, and suggested that the NPS could or should 

"work something out.• 

2 

This suggestion prompted the NPS to review the situation, and resulted in a reversal of the previous position that air sightseeing services ware necessary. Ae we indicated previously, Mr. Mankedick and other operators had 

been using the site for some time. A prospectus was issued and Kitty Hawk 

Aero Tour• was eelected. 

With regard to the unsafe operations, we cannot confirm or deny Me. Ames' statement that one of the Kitty Hawk Aero Tours planes had •gone off the 

runway and into a tree 2 years before." We ware able to document her statement regarding an overdue 100-hour inspection of one of the Kitty Hawk 

Aero Tours aircraft. On June 13, 1982, the NPS pilot made an inspection which 

indicated a 20-hour deficiency, at which time the entire operation was ordered 

closed. The next day, June 14, 1982, a follow-up inspection found that the 

discrepancy had been corrected and operation• were reeumed. 

Me. Ames refers to two letters in which the NPS urged the conceseioner to comply with the terms of hie contract. The superintendent, by letter of 

August 27, 1982, advised Mr. Mankedick to take immediate steps to prevent 

incidents such as described in a complaint entered by a Mr. Paul Shaver. In 

that instance, we are advised that Mr. Shaver later apologized to Mr. Mankedick and admitted that his complaint was not valid. We were advised 

by Hr. Stubbing& of a second complaint which had been filed by the Chief of 

Police, Kill Devil 'Hilla, ' regarding low flying aircraft • . After attempting to verify the complaint with the FAA in Raleigh, we ware advised that the 

incident in no W4¥ involved the Kitty Hawk Aero Tours operation, and in fact 

the plane was identified as being from New Jersey. 

Finally, Ms. Ames indicated that she gave up trying to compete for the 

concession upon learning that Kitty Hawk Aero Tours had received a rating of 

four out of a possible five on ita evaluation report, and would, therefore, be 

entitled to a preference for a renewal or new authorization. While the 

preference may have been the determining factor, we note that Me. Ames' letter 

of January 27, 1982, to the superintendent suggests that another factor may 

have also been significant. In her letter aha questioned a provision 

specifying the applicability of Section 135 of the Federal Aviation 

Regulations as to whether the individual pilots and aircraft, or the permit holder had to have a •action 135 operator certificate. She indicated that the 

reply .would be the basis for deciding whether to pursue the concession 

authorization or to channel their energies elsewhere. 

In summary, we would like to emphasize that the concession operations 

conducted by Kitty Hawk Aero Tours has been operated in a very satisfactory manner since the first permit was awarded in 1982. Since that time, the NPS 

has not received a single complaint from a patron regarding the services 

provided. There have been acme complaint• from former pilot• who were fired 

for not following instructions, some general complaint• regarding aircraft 

noise, and the violation of FAA regulations regarding the 20-hour overrun for 

inspection. While we agree with Me. Ames that the latter is a serious matter, we also consider the prompt action taken by Kitty Hawk Aero Tours to comply 

with the regulations to be acceptable and indicative of the concerns for the 

public and cooperative efforts shown by Kitty Hawk Aero Tours. 

Ae a final matter, we assure you that neither the superintendent, nor the 

concessions management specialist told Me. Ames, or any other party that there was no need to submit a proposal for this or any other concession opportunity 
217 

Honarable Bruce r. Vento 3 

in .reaponae to a public notice tor a renewal. While in the proceaa ot renewing any conceaaion authorization, NPS otticiala are repeatedly reminded to diacloae the proviaiona ot Public Law 89-249 along with explaining the 

procedure& followed tor all conceaaion contract and permit renewal• and new authorization&. 

Again, we appreciate your peraonal intara•t in thi• matter and your continued 

•upport tor the NPS. 

0 

75-380 (224) 


ISBN 0-16-043427-0