Commercial Visitor Services; Concession Contracts, 43775-43785 [2020-15650]

Agencies

• DEPARTMENT OF THE INTERIOR
• National Park Service

[Federal Register Volume 85, Number 139 (Monday, July 20, 2020)]
[Proposed Rules]
[Pages 43775-43785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15650]


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DEPARTMENT OF THE INTERIOR

National Park Service

36 CFR Part 51

[NPS-WASO-29921; PPWOBSADC0; PPMVSCS1Y.Y00000]
RIN 1024-AE57


Commercial Visitor Services; Concession Contracts

AGENCY: National Park Service, Interior.

ACTION: Proposed rule.

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SUMMARY: The National Park Service proposes to revise regulations that 
govern the solicitation, award, and administration of concession 
contracts to provide commercial visitor services at National Park 
Service units under the authority granted through the Concessions 
Management Improvement Act of 1998 and the National Park Service 
Centennial Act. The proposed changes would reduce administrative 
burdens and expand sustainable, high quality, and contemporary 
concessioner-provided visitor services in national parks.

DATES: The NPS will accept comments received or postmarked on or before 
September 18, 2020. Comments submitted electronically using the Federal 
eRulemaking Portal (see ADDRESSES, below) must be received by 11:59 
p.m. Eastern Standard Time on the closing date.

ADDRESSES: You may submit your comments, identified by Regulation 
Identifier Number (RIN) 1024-AE57, by any of the following methods:
    (1) Electronically: Go to the Federal eRulemaking Portal: 
www.regulations.gov. Follow the instructions for submitting comments.
    (2) By hard copy: Mail to: Commercial Services Program, National 
Park Service, 1849 C Street NW, Mail Stop 2410, Concession Contracts 
Revised Rule Comments, Washington DC 20240.
    Instructions: Comments on the proposed rule will not be accepted by 
fax, email, or in any way other than those specified above. All 
submissions received must include the words ``National Park Service'' 
or ``NPS'' and the RIN 1024-AE57. Comments received may be posted 
without change to www.regulations.gov, including any personal 
information provided. The NPS will not accept bulk comments in any 
format (hard copy or electronic) submitted on behalf of others.
    Docket: For access to the docket to read background documents or 
comments received, go to www.regulations.gov and search for ``1024-
AE57''.

FOR FURTHER INFORMATION CONTACT: Kurt Rausch, Chief of Commercial 
Services Program, National Park Service; (202) 513-7202; 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

Authority and Purpose

    The National Park Service (NPS) enters into contracts with 
concessioners to provide commercial visitor services in over 100 units 
of the National Park System. Examples of such services include lodging, 
food, retail, marinas, transportation, and guided recreation. Each 
year, concession contracts generate approximately $1.5 billion in gross 
revenues and return approximately $135 million in franchise fees to the 
NPS. The National Park Service Concession Policies Act of 1965 (1965 
Act), Public Law 89-249, provided the first statutory authority for the 
NPS to issue concession contracts. Since the repeal of the 1965 Act, 
concession contracts have been awarded under the Concessions Management 
Improvement Act of 1998 (1998 Act), 54 U.S.C. 101901-101926. A revision 
to the 1998 Act was also included in section 502 of the 2016 National 
Park Service Centennial Act (Pub. L. 114-289). NPS regulations in 36 
CFR part 51 govern the solicitation and award of concession contracts 
issued under the 1998 Act and the administration of concession 
contracts issued under the 1965 and 1998 Acts. The NPS promulgated 
these regulations in April 2000 (65 FR 20630) and since that time has 
made only minor changes to them (see, e.g., 79 FR 58261).
    In August of 2018, as part of the Department of the Interior's 
implementation of Executive Order 13777, Enforcing the Regulatory 
Reform Agenda, and in response to a request for public input on how the 
Department of the Interior can improve implementation of regulatory 
reform initiatives by identifying regulations for modification (82 FR 
28429), the NPS's external concessions partners provided

[[Page 43776]]

the Secretary of the Interior (Secretary) with suggestions for 
improving existing concession regulations. The Department of the 
Interior has considered the suggestions provided by the concessions 
partners, and some of those suggestions are reflected in this proposed 
rule. In addition, Secretarial Order 3366, Increasing Recreational 
Opportunities on Lands and Waters Managed by the U.S. Department of the 
Interior, signed by the Secretary in April of 2018, directed the NPS to 
look for ways to streamline and improve the contracting process for 
recreational concessioners, as part of the Department's efforts to 
expand access to and improve the infrastructure on public lands and 
waters, including through the use of public-private partnerships. The 
directives set forth in that Secretarial Order are intended to provide 
the public with more recreational opportunities and memorable 
experiences on the Department's public lands and waters. The proposed 
rule is responsive to these directives, suggestions received, and areas 
for improvement identified by the NPS.
    Each of the proposed changes to 36 CFR part 51 are explained below 
and correspond to the subparts of the existing regulations that would 
change under this rule. In total, this rule proposes 12 changes to the 
existing regulations, which are numbered in the aggregate below to 
assist with public review and comment. Some of the changes will be 
implemented for new contracts while others will be effective for both 
current and new contracts as identified in the explanation for each 
change. The overall purpose of these changes is to update and improve 
the regulations governing concession contracts so that the public will 
be better served when visiting our nation's most cherished public lands 
and waters. The NPS welcomes public comment on this rule and hopes to 
receive meaningful input on these proposals.

Subpart C--Solicitation, Selection, and Award Procedures (36 CFR 51.4-
51.22).

    The regulations in Subpart C set forth the processes and rules 
governing the solicitation, selection, and award of concession 
contracts. The NPS proposes to make four changes to this subpart, as 
explained below.

Proposed Change 1: New Concession Opportunities

    The NPS recognizes that the needs for commercial visitor services 
in parks may change over time, including the need to provide new 
services that are not currently provided. Recent examples include 
wireless connectivity services at Lake Mead National Recreation Area, 
parking management at Muir Woods National Monument and bike rentals at 
Grand Canyon National Park. The NPS considers evolving visitor needs 
through its commercial services planning processes. Each unit of the 
national park system is required to have a formal statement of its core 
mission, titled the park foundation document, that provides basic 
guidance for all planning and management decisions and from which a 
park's planning portfolio is developed. The planning portfolio is the 
assemblage of individual plans, studies, and inventories which guide 
park decision-making. For commercial services, these may range from 
broader planning such as visitor use studies and commercial services 
strategies to more focused studies such as climbing or horse management 
plans. Commercial visitor services planning occurs further through the 
concession contract prospectus development process. During this 
process, the NPS reviews the current services being provided, conducts 
market studies and may solicit public comments to assess new commercial 
visitor service opportunities.
    This planning framework is not recognized in the current concession 
regulations, and the regulations do not explicitly address that the NPS 
will consider evolving visitor needs that are not being addressed by 
existing concession contracts. In order to better recognize NPS 
planning to address evolving visitor needs, the proposed rule would add 
paragraphs (c) through (h) to Sec.  51.4 in subpart C that would apply 
to new concession opportunities. Paragraph (c) would state that the 
Director will issue a prospectus for a new concession opportunity when 
the Director determines that a new concession opportunity is necessary 
and appropriate for public use and enjoyment of the unit and is 
consistent to the highest practicable degree with the preservation and 
conservation of the resources and values of the unit. This standard for 
evaluating new opportunities is consistent with the 1998 Act. 54 U.S.C. 
101912(b)(1)-(2). Paragraph (d) would require the NPS Director to 
establish procedures to solicit and consider suggestions from the 
public, including from potential concessioners, for new commercial 
services in NPS units. The procedures would not be specified in the 
regulations. Instead, they would be developed by the Director as a 
component of the existing NPS planning process. This would allow the 
processes to evolve over time as the NPS confronts emerging and 
unanticipated visitor needs. Paragraph (e) would establish relevant 
factors that the Director would consider when evaluating a suggested 
concession opportunity. These factors would include whether the 
suggested concession opportunities are already being provided within 
the unit or nearby communities; the feasibility of the suggestions; the 
compatibility of the suggestions with governing law and policy; the 
innovative quality of the suggestions; and the potential impacts of the 
suggestions on visitation and on the economic wellbeing of local 
communities. Paragraph (f) would clarify that the NPS may not give 
preference to any party that suggests, or fails to suggest, an 
opportunity that is subsequently offered by the NPS; in other words, 
the fact that a party has submitted, or has failed to submit, such a 
suggestion will neither enhance nor diminish the party's chances of 
obtaining a contract. The 1998 Act recognizes only two categories of 
concession contracts that provide preferential rights to incumbent 
concessioners. 54 U.S.C. 101913(7)(A). Paragraph (g) would state that 
nothing in the new processes to be established by the Director would 
prevent the Director from amending an existing contract to allow a 
concessioner to provide new or additional services under 36 CFR 51.76, 
as discussed below. This preserves the authority of the Director to 
make adjustments to the services being provided in response to changing 
visitor needs over the term of the contract, consistent with the 
fundamental business opportunity that was offered in the concession 
prospectus.

Proposed Change 2: Timing of Issuing Prospectuses

    Section 51.4(b) of the existing regulations states that the 
Director will not issue a prospectus for a concession contract earlier 
than 18 months prior to the expiration of a related existing concession 
contract. The original purpose of this restriction was to ensure that 
an existing concessioner would not have to compete for a new contract 
in circumstances where assessment of the feasibility of the terms and 
conditions of the new contract would be unduly speculative (65 FR 
20637). The proposed rule would eliminate this restriction for new 
concession contract prospectuses. The NPS has found that the ability to 
provide lead-time to potential offerors of greater than 18 months may 
be helpful in circumstances where there are unusually significant 
commitments required of potential offerors to acquire personal 
property,

[[Page 43777]]

such as vessels, or to obtain financing or to manage reservations. This 
additional lead time opens the possibility of more offerors which 
benefits the NPS and the public because increased competition generally 
results in higher quality offers.

Proposed Change 3: Publishing Notice of a Prospectus

    Section 51.8 of the existing regulations states that the Director 
will publish notice of the availability of a prospectus at least once 
in the Commerce Business Daily or in a similar publication if the 
Commerce Business Daily ceases to be published. The Commerce Business 
Daily is no longer published and available. As a result, the proposed 
rule would update this provision to instead require the Director to 
publish notice of the availability of a prospectus in the System for 
Award Management (SAM) where federal business opportunities are 
electronically posted for future concession prospectuses. The NPS also 
proposes to expand the description of the types of electronic media 
that will be used to advertise opportunities to include websites and 
social media. Publishing in the SAM and through websites and social 
media is consistent with the NPS's current practice and continued use 
of these sources will help ensure that interested parties are aware of 
solicitations, which could increase competition and result in higher 
quality offers.

Proposed Change 4: Weighting Selection Factors

    The fourth proposed change is to Sec.  51.16 of the existing 
regulations. Section 51.16 is closely related to Sec.  51.17 of the 
existing regulations, which identifies selection factors that must be 
applied by the Director when assessing the merits of a proposal. 
Paragraph (a) of Sec.  51.17 lists five primary selection factors:
    1. The responsiveness of the proposal to the objectives, as 
described in the prospectus, of protecting, conserving, and preserving 
resources of the park area.
    2. The responsiveness of the proposal to the objectives, as 
described in the prospectus, of providing necessary and appropriate 
visitor services at reasonable rates.
    3. The experience and related background of the offeror, including 
the past performance and expertise of the offeror in providing the same 
or similar visitor services as those to be provided under the 
concession contract.
    4. The financial capability of the offeror to carry out its 
proposal.
    5. The amount of the proposed minimum franchise fee, if any, and/or 
other forms of financial consideration to the Director.
    The Director is required to consider these five factors under the 
1998 Act. 54 U.S.C. 101913(5)(A). Paragraph (b) of Sec.  51.17 lists 
one secondary selection factor and allows the Director to adopt 
additional secondary selection factors where appropriate and otherwise 
permitted by law. The enumerated secondary factor is the quality of the 
offeror's proposal to conduct its operations in a manner that furthers 
the protection, conservation and preservation of park area and other 
resources through environmental management programs and activities, 
including, without limitation, energy conservation, waste reduction, 
and recycling. This factor can be excluded for small contracts and 
those expected to have limited impacts on park resources. Secondary 
factors are permitted, but not required to be considered under the 1998 
Act. 54 U.S.C. 101913(5)(B).
    The 1998 Act is silent on how the Director should weigh each 
factor. This question is answered by the regulations in Sec.  51.16, 
which requires the Director to assign a score for each selection factor 
that reflects the merits of the proposal compared to other proposals 
received, if any. Under the existing regulations, the first four 
principal selection factors will be scored from zero to five. The fifth 
selection factor will be scored from zero to four (with a score of one 
for agreeing to the minimum franchise fee contained in the prospectus). 
The secondary factor set forth in paragraph (b)(1) will be scored from 
zero to three. Any additional secondary selection factors set forth in 
the prospectus will be scored as specified in the prospectus provided 
that the aggregate possible point score for all additional secondary 
selection factors may not exceed a total of three.
    The NPS proposes to revise the rules found in section 51.16 for how 
the Director may score each selection factor. Rather than setting the 
maximum scores for each selection factor in the regulations, the 
proposed rule would allow the NPS to determine the maximum score of 
each selection factor in the prospectus, subject to the following 
criteria:
    1. The maximum score assignable for the fifth selection factor (the 
amount of the franchise fee and other forms of financial consideration 
to the NPS) would not be higher than the maximum score for any of the 
other principal selection factors. This limitation complies with a 
requirement in the 1998 Act that the consideration of revenue to the 
United States shall be subordinate to the objectives of protecting, 
conserving, and preserving resources of the System unit and of 
providing necessary and appropriate facilities to the public at 
reasonable rates (54 U.S.C. 101913(5)(A)(iv)).
    2. The maximum score for the enumerated secondary factor in Sec.  
51.17(b)(1) (furthering the protection, conservation and preservation 
of park area and other resources through environmental management 
programs and activities) would not be higher than the maximum score for 
any principal selection factor.
    3. The maximum scores for any additional secondary selection 
factors would be such that the maximum aggregate score assignable for 
all additional secondary selection factors will not be higher than the 
maximum score for any primary selection factor. Limiting the maximum 
scores assigned to secondary selection factors in this manner 
acknowledges that they should be subordinate to the primary selection 
factors that Congress felt were important enough to articulate in the 
1998 Act.
    The proposed revisions to Sec.  51.16 would be for all future 
prospectuses. The revisions would provide the NPS with greater 
flexibility to weigh the factors according to how important they are to 
the NPS and for the specific contract. For example, under the existing 
regulations, the Director must assign the offeror that best satisfies 
selection factor one (resource protection) up to five points. This can 
account for approximately 20% of the total maximum score. Because of 
the NPS practice to include specific requirements in the contracts and 
its exhibits (primarily the operating and maintenance plans), 
frequently there is little room for offerors to provide substantive 
proposals on how to exceed those baseline requirements. Reducing the 
available points for this selection factor and instead offering more 
points for creative ideas for visitor services would provide the NPS 
with flexibility to clearly illustrate its priorities, which in turn 
would provide information to interested parties on how to present their 
ideas. For some services resource protection may not be as important 
compared to other selection factors, such as primary selection factor 
three (experience and background). For example, when a concession 
operation occurs wholly within a park visitor center, the concessioner 
has little, if any ability to manage its operation to protect park 
resources. Under the proposed rule, the Director could set the maximum 
score for factor one (resource

[[Page 43778]]

protection) at three points and the maximum score for factor three 
(experience and background) at eight points to reflect the relative 
importance of those factors. In contrast, protecting resources is a 
significant concern for marinas with boat fueling services. In this 
scenario, the proposed rule would allow the NPS to set the maximum 
score of primary selection factor one (resource protection) higher than 
the other selection factors. Allowing the Director to adjust the 
maximum scores for each selection factor depending upon the offered 
services would also help offerors prepare proposals that focus on the 
relative importance of each factor. This should result in the selection 
of the best offeror and better services for visitors.

Subpart G--Leasehold Surrender Interest (36 CFR 51.51-51.67).

    The regulations in Subpart G explain how a concessioner can obtain 
leasehold surrender interest (LSI) in capital improvements to visitor 
service facilities that are made under the terms of a concession 
contract. The NPS proposes to make one change to this subpart, as 
explained below. This change would apply to future concession 
contracts.
    The NPS manages concession contracts to ensure concessioners 
maintain and repair the facilities assigned as required under the terms 
of their contract. The NPS also seeks to encourage concessioners to 
make capital improvements in order to ensure facilities are 
structurally sound, updated, and adequate to meet the needs of the 
visiting public. When the NPS requires the concessioner to fund and 
construct capital improvements to expand, update, and rehabilitate 
facilities, the concessioner receives LSI in each capital improvement 
as compensation for the associated costs. The NPS considers the costs 
associated with these improvements, as well as the opportunity for 
receiving LSI, when it determines the concessioner's reasonable 
opportunity for net profit and the minimum franchise fee for the 
contract. The 1998 Act outlines, in general terms, what constitutes a 
capital improvement eligible for LSI and how LSI should be valued (54 
U.S.C. 101915). Details about which types of construction activities 
are eligible for LSI and how it is valued are found in subpart G.
    LSI is unique to NPS concession contracts and is not used in the 
private sector. In the private sector, an owner may realize a return on 
its investment for capital improvements when it sells an improved 
property, if the value has appreciated. The owner may lose money if it 
sells an improved property that has declined in value. In contrast, 
under concession contracts with the NPS, the concessioner invests in 
facilities they do not own. As a result, the concessioner cannot 
receive a return on the investment through a sale of the property. LSI 
provides them that opportunity in the form of a guaranteed return to 
the concessioner on its investment.
    Although the NPS seeks to encourage concessioners to make capital 
investments, it must balance the benefits of such investments with the 
need to address the LSI generated from such investments. If the 
incumbent concessioner wins the new contract, the LSI is retained by 
the concessioner and continues through the term of the next contract. 
If there is a new concessioner, the LSI is often transferred to a new 
concessioner, but the new concessioner must compensate the outgoing 
concessioner for the value of the LSI. This can create a significant 
investment hurdle that limits competition on the contract. A higher 
initial investment can lead to reduced competition because fewer 
entities have access to the large buy-in amounts for certain contracts 
or because the return on their investment does not make sense for these 
entities in comparison to other opportunities. When there is the 
likelihood of less competition, the incumbent may also not be 
incentivized to offer as many new practices or benefits when providing 
the services required. This can adversely impact the visitor 
experience. If, instead, the NPS pays the value of the LSI to the 
outgoing concessioner, then the funds expended are unavailable to 
support other NPS needs, such as prospectus development or managing the 
new concessioner during the term of the contract and improving visitor 
operations and facilities.

Proposed Change 5: Definition of Major Rehabilitation

    Section 51.51 of the existing regulations contains definitions of 
special terms that are used in Subpart G to explain how LSI works. One 
of those terms is ``major rehabilitation,'' which means, under the 
existing regulations, a planned, comprehensive rehabilitation of an 
existing structure that:
    (1) The Director approves in advance and determines is completed 
within 18 months from start of the rehabilitation work (unless a longer 
period of time is approved by the Director in special circumstances); 
and
    (2) The construction cost of which exceeds fifty percent of the 
pre-rehabilitation value of the structure.
    The meaning of this term is important for several reasons. Under 
Sec.  51.64, a concessioner that undertakes a major rehabilitation to 
an existing structure in which the concessioner has LSI, will increase 
its LSI in the structure by the construction cost of the major 
rehabilitation. Under Sec.  51.66, if a contract requires a 
concessioner to undertake a major rehabilitation of a structure in 
which there is no LSI, upon completion of the major rehabilitation the 
concessioner will obtain LSI in the structure for the amount of the 
construction costs.
    The NPS proposes two changes to the definition of ``major 
rehabilitation'' in order to simplify and broaden what qualifies as a 
major rehabilitation with the intent of encouraging capital investment 
by concessioners. These changes would apply for future concession 
contracts.
    First, the NPS proposes to eliminate the requirement that, unless 
special circumstances exist, the Director must determine the 
rehabilitation project is completed within 18 months from the start of 
the rehabilitation work. Projects must be approved by the Director and 
any approval would include a project schedule. Eighteen months is a 
timeframe typical for such projects. In practice, however, the Director 
approves the timeline for major rehabilitation projects based on the 
complexity and scope of the project. The result is that the 18-month 
requirement in the existing regulation has been rendered superfluous 
and does not provide any benefit to the public. Removing this 
requirement would simplify and clarify the definition to match existing 
practice.
    Second, the NPS proposes to decrease the construction cost 
threshold for what constitutes major rehabilitation from 50% of the 
pre-rehabilitation value to 30% of the pre-rehabilitation value. This 
would allow more construction projects to qualify for increased LSI 
under Sec.  51.64 or new LSI under Sec.  51.66.
    The NPS selected the 30% threshold through industry research. The 
International Facility Management Association identifies 30% as the 
threshold for when a rehabilitation is ``critical'' to the structure 
(see https://community.ifma.org/fmpedia/w/fmpedia/2459). The NPS 
proposes the 30% threshold because it better aligns with this industry 
standard than does the 50% threshold in the existing definition. 
Further, the NPS believes that broadening the opportunities under which 
LSI may be obtained would facilitate important and needed capital 
improvement projects. This would improve the conditions of facilities 
and

[[Page 43779]]

help ensure a safe and enjoyable experience for park visitors.
    While the 1998 Act intended to promote private investment in 
concession structures by providing LSI to concessioners, the 50% 
threshold contained in the existing regulations limits concessioners' 
opportunities to make investments of the type envisioned by Congress. 
Concerns have been raised that the current regulations actually 
discourage investment in concessions structures. The NPS seeks to 
improve the regulations to encourage concessioners to invest in capital 
improvements. The NPS seeks comment from the public on other ways it 
can incentivize concessioners to make capital investments that improve 
the quality of facilities for the public.
    Broadening the scope of projects encouraged by the availability of 
LSI would have other consequences to the concession contract and its 
management. For example, the utilization of LSI for more rehabilitation 
projects allows for the recovery of investment by the concessioner, 
lowering the risk of that investment to competitive levels. This lower 
risk will be considered in the NPS analysis of the opportunity and may 
result in a higher minimum franchise fee set in the contract consistent 
with the statutory requirements to set a fee appropriate to the 
probable value of the contract and thus result in a higher franchise 
fees paid to the government. Franchise fee revenue may also increase if 
increased concessioner investment results in increased visitor demand 
for NPS concessions. The NPS could use the new fee revenue for other 
NPS needs or when appropriate to buy down LSI incurred on the contract 
as a result of the concessioner investment. This assumes that revenue 
projections for the contract are realized and adequate franchise fees 
are available, since franchise fees are calculated as a function of 
revenue. The use of franchise fees for this purpose means they are not 
available for other NPS needs. An analysis of the expected relationship 
between LSI and franchise fees as a result of this proposed change can 
be found in the report entitled ``36 CFR 51 Concessions Contract 
Revisions Regulatory Impact Analysis (RIA) and Initial Regulatory 
Flexibility Analysis (IRFA)'' that can be accessed at 
www.regulations.gov by searching for ``1024-AE57''.
    The proposed changes to the definition of ``major rehabilitation'' 
do not remove the requirement that the Director must approve in advance 
any major rehabilitation project. Although the changes to the 
definition will likely increase the opportunities for concessioners to 
seek approval for major rehabilitation projects, the NPS retains the 
discretion to determine that using that source of capital is not in the 
best interests of the public. The NPS considers many factors when 
deciding whether to approve a capital investment. For example, the NPS 
may decide that the value of LSI that would result from the capital 
improvement would decrease competition for future contracts, 
outweighing the benefit of the improvement. As a result, the 
availability of LSI may not generate the desired outcome of increased 
investment in all cases. However, in these cases the NPS may pay for 
the capital improvements itself to avoid generating imprudent levels of 
LSI. The NPS would need to evaluate the benefits of the investment 
against the opportunity costs of diverting funds from other projects, 
and how that would impact the quality of other concession facilities 
and visitor services.

Subpart I--Concession Contract Provisions (36 CFR 51.73-51.83).

    The regulations in subpart I govern key provisions in concession 
contracts. The NPS proposes to make six changes to this subpart, as 
explained below.

Proposed Change 6: Term of Concession Contracts

    Section 51.73 of the existing regulations governs the terms of 
concession contracts. Consistent with the 1998 Act (54 U.S.C. 101914), 
the existing regulation says that contracts may not exceed 20 years in 
length and will generally be awarded for ten years or less, unless the 
Director determines that the contract terms and conditions, including 
the required construction of capital improvements, warrant a longer 
term. The regulations also say that it is the policy of the Director 
that the terms should be as short as prudent, taking into account 
financial requirements of the concession contract, resource protection 
and visitor needs, and other factors the Director may deem appropriate.
    The NPS proposes to make several changes to this section for the 
purpose of clarifying that it may issue contracts for shorter or longer 
than ten years, never to exceed 20 years, depending upon the particular 
circumstances of the contract. The rule would state that the Director, 
when circumstances warrant, may award contracts for longer than 10 
years. The stated preference for terms to be ``as short as is 
prudent,'' which is not found in the statute, would be removed. In 
practice, the NPS has found that a ten-year term or longer is often in 
the best interest of the public because it helps ensure a reasonable 
opportunity for return on investment for offerors thereby generating 
more interest in the opportunity when a shorter term might make the 
opportunity commercially unviable.
    The NPS also proposes to revise Sec.  51.73 to allow the Director 
to include contract provisions allowing for an optional term or terms 
of one year or more, provided that the total term of the contract, 
including all optional terms, does not exceed 20 years. Optional terms 
may be exercised when the concessioner has received favorable annual 
ratings during the term of the contract and has met other performance 
criteria defined in the contract, such as increasing occupancy or 
improving other aspects of the service. The availability of optional 
contract terms could incentivize the concessioner to focus on high 
performance under the contract. This new provision would also recognize 
that optional terms may be exercised when there has been a substantial 
interruption of or change to operations due to natural events or other 
reasons outside the control of the concessioner. These could include, 
for example, cessation of operations due to forest fires, hurricane 
damage or administrative closures ordered by the government. This would 
allow concessioners to receive the term that the NPS and concessioner 
both anticipated during the solicitation process and upon execution of 
the contract. This change would apply to current concession contracts 
if the contract was amended as well as future contracts. The NPS 
expects that this assurance would increase competition for contracts 
and avoid situations where concessioners reduce services, facility 
management or other aspects of their contracted requirements to cover 
lost revenue. In all cases, the Director would determine whether the 
criteria for exercising an option year or years have been met.

Proposed Change 7: New or Additional Services

    Section 51.76 of the existing regulations states that the Director 
may not grant a concessioner a preferential right (e.g., a right of 
first refusal) to provide new or additional visitor services beyond 
those already provided by the concessioner under the terms of a 
concession contract. This statutory basis for this prohibition is found 
in the 1998 Act. 54 U.S.C. 101913(9). Section 51.76, however, does 
allow the Director to amend a concession contract to authorize the 
concessioner to provide minor additional services that are a

[[Page 43780]]

reasonable extension of the existing services.
    The NPS Centennial Act revised 54 U.S.C. 101913(9) concerning the 
authority to amend an existing contract to provide new and additional 
services, allowing the NPS to do so if the new and additional services 
do not represent a material change to the required and authorized 
services under the contract. The NPS proposes to change Section 51.76 
to align the language in the regulation with that in the Centennial 
Act. This broader language may provide new opportunities to enhance 
commercial services under existing contracts allowing concessioners to 
meet changing visitor needs where appropriate. This change would apply 
to current and future concession contracts. Before the Director 
authorizes such new or additional services under a contract, the 
proposed rule would continue to require the Director to determine that 
the services are necessary and appropriate for public use and enjoyment 
of the NPS unit where they will be provided and are consistent to the 
highest practicable degree with the preservation and conservation of 
the resources and values of that unit in accordance with the Centennial 
Act and the 1998 Act. 54 U.S.C. 101912(b) and 10913(9).

Proposed Change 8: Setting Franchise Fees

    Paragraph (a) of Sec.  51.78 of the existing regulations requires 
that concession contracts provide for payment to the government of a 
franchise fee in consideration of the probable value to the 
concessioner of the privileges granted by the contract. The regulations 
provide guidance on how probable value will be determined. As required 
by the 1998 Act (54 U.S.C. 101913(5)(A)(iv)), the regulations state 
that consideration of revenue to the United States will be subordinate 
to the objectives of protecting and preserving park areas and of 
providing necessary and appropriate visitor services at reasonable 
rates.
    The NPS proposes to add new language to paragraph (a) explaining in 
more detail how the Director will set the minimum acceptable franchise 
fee in the prospectus. The proposed rule would state that the minimum 
franchise fee will be set at a level that the Director determines will 
encourage competition among offerors and in a manner so that 
concessioners can provide the necessary and appropriate visitor 
services to the public. While Congress has charged the NPS with 
ensuring that the franchise fee reflects ``the probable value to the 
concessioner of the privileges granted by the particular contract 
involved,'' 54 U.S.C. 101917(a), the NPS has long implemented this 
directive by setting a minimum acceptable franchise fee in the contract 
prospectus and allowing the market to determine whether a higher 
franchise fee better reflects the contract's probable value to the 
concessioner. The proposed revision to the regulation emphasizes this 
appropriate role that competition between potential concessioners plays 
in fulfilling the statutory mandate. The proposed rule would also 
require the Director to use data, including data from the hospitality 
industry for similar operations, when determining the minimum franchise 
fee and to provide the basis for this determination in the prospectus. 
These proposed additions to the regulation are consistent with current 
NPS practice in prospectus development which already provides the basis 
for the minimum franchise fee but the addition to the regulation would 
further this transparency in the published prospectuses. The NPS 
already uses industry data to complete a financial analysis to set the 
minimum franchise fee that considers the probable value to the 
concessioner based upon a reasonable opportunity for net profit in 
relation to capital invested, obligations and privileges of the 
contract. The NPS also uses a competitive selection process and sets a 
minimum franchise fee which may be bid up by offerors. The proposed 
changes would state this explicitly in the regulations so that the 
public can better understand how the Director sets minimum franchise 
fees. These changes apply to all future prospectuses for concession 
contracts although, as noted, the changes are already consistent with 
NPS current practices.

Proposed Change 9: Special Accounts

    Paragraph (b) of Sec.  51.81 of the existing regulations allows 
concession contracts to require the concessioner to set aside a 
percentage of its gross receipts in a repair and maintenance reserve to 
be used, at the direction of the Director, solely for maintenance and 
repair of real property improvements located in park areas and utilized 
by the concessioner in its operations. Repair and maintenance reserve 
funds may not be expended to construct improvements that would be 
eligible for LSI. Paragraph (a) requires that construction of capital 
improvements must be undertaken pursuant to regulations and contract 
provisions regarding LSI.
    The NPS proposes to revise paragraph (b) by replacing the term 
``repair and maintenance reserve'' with the term ``component renewal 
reserve.'' The purpose of this change is to reduce confusion about how 
the funds in this reserve may be used. This change would apply to 
current concession contracts if the contract was amended as well as 
future contracts. The NPS seeks to clarify that this reserve is not 
intended to be used for routine maintenance and repair activities. The 
component renewal reserve (CRR) may be used to fund projects to replace 
systems and components that have reached the end of their design life, 
are non-recurring within a seven-year time frame and are not part of an 
LSI-eligible capital improvement project (i.e., new construction or 
major rehabilitations). Examples of components are roofs and sprinkler 
systems. The CRR may not be used for routine maintenance (e.g., 
painting) and repairs (e.g., heating system parts replacement) or 
grounds keeping.
    The NPS determines the amount of the CRR by estimating the 
anticipated component renewal needs for facilities during the term of 
the contract. The expected cost to meet those needs is amortized over 
the term of the contract and then specified in the contract to be set 
aside by the concessioner as a percentage of revenue. This reserve 
percentage is deducted from the franchise fee that would otherwise be 
paid to the government. The reserve is meant to cover those 
replacements that do not qualify for LSI so that there is no overlap 
between CRR and LSI projects. Because the contracts require the 
component renewal reserve to be set aside, the funds in the reserve 
cannot be received by the concessioner as profit and therefore must be 
used to renew components of facilities. To encourage utilization of 
these replacement reserves, in more recent contracts, reserves are 
required to be set aside, not available for profit and remaining 
unobligated balances are paid to the NPS as franchise fees at the end 
of the contract.
    The NPS seeks comment from the public on other ways it can 
incentivize concessioners to complete component renewal activities that 
are practical and compliant with legal requirements. For example, the 
NPS seeks comment on whether concession contracts could contain 
provisions that allow the concessioner to deduct from its periodic 
franchise fee payments, amounts that were expended by the concessioner 
during the preceding period for component renewal activities.

Proposed Change 10: Concessioner Rates

    Paragraph (a) of Sec.  51.82 of the existing regulations states 
that concession

[[Page 43781]]

contracts must allow concessioners to set reasonable rates and charges 
to the public for visitor services, subject to approval by the 
Director. Paragraph (b) explains how the Director will determine 
whether rates and charges are reasonable, by comparison with rates and 
charges for facilities and services of comparable character under 
similar conditions with due consideration to the following factors: 
Length of season, peakloads, average percentage of occupancy, 
accessibility, availability and costs of labor and materials, and types 
of patronage. Rates and charges may not exceed market rates and charges 
for comparable facilities, goods, and services, after considering 
certain factors. These requirements are taken directly from the 1998 
Act. 54 U.S.C. 101916.
    The 1998 Act also states that the rate approval process must be as 
prompt and as unburdensome to the concessioner as possible and rely on 
market forces to establish the reasonableness of rates and charges to 
the maximum extent practicable. 54 U.S.C. 101916(b)(1). The NPS 
proposes several changes to Sec.  51.82 to meet these requirements. 
These changes would apply to current and future concession contracts.
    First, the NPS proposes to use the language in the 1998 Act and 
state clearly in the regulations that the Director will approve rates 
and charges that are reasonable and appropriate in a manner that is as 
prompt and as unburdensome as possible and that relies on market forces 
to establish the reasonableness of such rates and charges to the 
maximum extent practicable.
    Second, the NPS would add a new paragraph (c) that would require 
the Director to identify the rate approval method for each category of 
facilities, goods, and services in the prospectus. If the Director 
determines that market forces are sufficient to establish the 
reasonableness of rates and charges, the rule would require the 
Director to make a competitive market declaration (rather than using 
other NPS annual rate approval methods), and rates and charges would be 
approved based upon what the concessioner determines the market will 
bear. The Director would determine this by reviewing the services being 
provided by the current concessioner relative to the comparable set of 
offerings in the market. The Director may make a competitive market 
declaration when the Director determines, based upon this review, that 
there are an adequate number of alternatives in the same market as the 
concessioner that are offering similar services, such that visitors may 
choose to use those alternative services rather than those of the 
concessioner based upon rate differences. Other rate approval methods 
would be used only when the Director determines that market forces are 
inadequate to establish the reasonableness of rates and charges for the 
facilities, goods, or services. For example, this may occur for 
overnight stays at iconic lodges, food and beverage outlets where there 
are no easily accessible alternatives, guiding services for one-of-a-
kind recreational experiences and transportation to NPS units where 
there is only one way to access the site (e.g. ferry service to the 
Statue of Liberty). The rule would require the Director to monitor 
rates and charges and competition and would allow the Director to 
change the rate approval method during the term of the contract to 
reflect changes in market conditions. This last provision would allow 
the NPS to respond to market pressures on rates for concessioner 
services that did not historically exist. This has occurred where 
lodging and other visitor services have expanded in gateway 
communities, aided by online searches and booking methods that provide 
more options for visitors. In addition, competitors in some locations 
use dynamic pricing to set rates, which means that prices are adjusted 
to reflect demand. The task of approving reasonable and appropriate 
rates and charges in these scenarios is burdensome. Unlike private 
sector companies, concessioners must undergo an annual rate approval 
process each year where maximum rates are set through a complex 
comparability process that occurs months in advance of the season. The 
concessioners are then not as able to quickly and efficiently adjust 
rates, particularly in times when visitor demand is higher than was 
forecasted. The proposed changes acknowledge this fact and would allow 
the NPS to more fully consider competitive, demand-driven pricing 
methods where it makes sense to lessen this burden. The NPS monitors 
the rates of the concessioner. In the event that the concessioner's 
rates set based upon a competitive market declaration no longer reflect 
those of the competitors, the Director may determine that this rate 
approval method is not acting to provide reasonable and appropriate 
rates and may change the rate approval method to one that offers 
greater assurance that these conditions will be met.
    The enhanced use of competitive market methods may result in 
increased rates and revenue with no change in expenses to the 
concessioner. These changes in the financial opportunity of the 
contract will be accounted for through contract requirements that would 
benefit the public using the concession services. An analysis of the 
expected relationship between rates and such contract changes can be 
found by reading the report entitled ``36 CFR 51 Concessions Contract 
Revisions Regulatory Impact Analysis (RIA) and Initial Regulatory 
Flexibility Analysis (IRFA)'' that can be accessed at 
www.regulations.gov by searching for ``1024-AE57''. The NPS notes that 
the competitive market declaration and other rate methods establish 
reasonable and appropriate rates for the services that are being 
offered. This is separate than the determination of what services are 
necessary and appropriate, including the range of offerings and 
associated price points. That determination is conducted through the 
NPS planning process.
    Third, the NPS would add a new paragraph (d) that would establish 
rules for how the Director responds to requests from existing 
concessioners to change rates and charges to the public. The new 
language would require the Director to issue a response to a request by 
a concessioner to change rates or charges within 30 days of receiving a 
complete and timely request under the terms of the contract when 
possible. The NPS currently responds within 45 days as a matter of 
policy so this would accelerate the process and provide more certainty 
to concessioners. The rule would require the Director to explain in 
writing any finding that the requested changes are not adequately 
justified under the circumstances. This provision would ensure that the 
Director provides prompt and transparent decisions to the concessioner 
regarding rates and charges.

Subpart J--Assignment or Encumbrance of Concession Contracts (36 CFR 
51.84-51.97)

    The regulations in Subpart J set forth rules for executing 
assignments and encumbrances of concession contracts. The NPS proposes 
to make one change to this subpart, as explained below.

Proposed Change 11: Timing of Assigning Contracts

    Section 51.87 of the existing regulations states that approvals of 
assignments or encumbrances of concession contracts are subject to 
several determinations by the Director.
    The NPS proposes to add a new requirement that the request for 
approval of the assignment must be received 24 months or more after the 
effective date of the contract unless the requested assignment is 
compelled by

[[Page 43782]]

circumstances beyond the control of the concessioner. This would 
prevent concessioners with a preferential right of renewal from using 
that right to win a contract with the intention of then promptly 
assigning the contract to a new operator that did not compete for the 
contract. This change would apply to current concession contracts that 
are amended after the effective date of this rule as well as to future 
contracts.

Compliance With Other Laws, Executive Orders, and Department Policy 
Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order 12866 provides that the Office of Information and 
Regulatory Affairs (OIRA) in the Office of Management and Budget will 
review all significant rules. OIRA has determined that this rule is 
significant.
    Executive Order 13563 reaffirms the principles of Executive Order 
12866 while calling for improvements in the nation's regulatory system 
to promote predictability, to reduce uncertainty, and to use the best, 
most innovative, and least burdensome tools for achieving regulatory 
ends. The Executive Order directs agencies to consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public where these approaches are relevant, feasible, 
and consistent with regulatory objectives. Executive Order 13563 
emphasizes further that agencies must base regulations on the best 
available science and the rulemaking process must allow for public 
participation and an open exchange of ideas. The NPS has developed this 
rule in a manner consistent with these requirements.

Regulatory Flexibility Act (RFA) and Small Business Regulatory 
Enforcement Fairness Act (SBREFA)

    The proposed rule is likely to affect a substantial number of small 
entities under the RFA (5 U.S.C. 601 et seq.); however, the NPS lacks 
the ability to quantify the potential size of this impact. An Initial 
Regulatory Flexibility Analysis (IRFA) has been prepared pursuant to 
the Regulatory Flexibility Act (RFA) and the Small Business Regulatory 
Enforcement Fairness Act (SBREFA). The NPS concludes that the potential 
impact on small concessioners is likely to be positive. The NPS 
estimates that the majority (96%) of the entities that have concession 
contracts are small businesses and that this makeup is likely to be 
similar in the future. Furthermore, the NPS conducted a qualitative 
analysis to determine the likely impacts of the rule on concessioners 
that focused on key changes to the rule related to LSI, rates and 
franchise fees. While the NPS lacks the ability to quantify the impact, 
the NPS found that the impacts are likely to be beneficial to 
concessioners in general, without any particular bias toward small or 
large businesses. Since the majority of contracts are held by small 
businesses, the NPS concluded that the impacts to small businesses 
would be therefore be positive. The analysis is available in the report 
entitled ``36 CFR 51 Concessions Contract Revisions Regulatory Impact 
Analysis (RIA) and Initial Regulatory Flexibility Analysis (IRFA)'' 
that can be accessed at www.regulations.gov by searching for ``1024-
AE57'', specifically Chapter 5 of that report.

Unfunded Mandates Reform Act (UMRA)

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local or tribal governments or the private sector. This rule clarifies 
NPS procedures and does not impose requirements on other agencies or 
governments. A statement containing the information required by the 
UMRA (2 U.S.C. 1531 et seq.) is not required.

Takings (Executive Order 12630)

    This rule does not effect a taking of private property or otherwise 
have takings implications under Executive Order 12630. A takings 
implication assessment is not required.

Federalism (Executive Order 13132)

    Under the criteria in section 1 of Executive Order 13132, the rule 
does not have sufficient federalism implications to warrant the 
preparation of a federalism summary impact statement. A federalism 
summary impact statement is not required.

Civil Justice Reform (Executive Order 12988)

    This rule complies with the requirements of Executive Order 12988. 
This rule:
    (a) Meets the criteria of section 3(a) requiring agencies to review 
all regulations to eliminate errors and ambiguity and write them to 
minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring agencies to 
write all regulations in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (Executive Order 13175 and Department 
Policy)

    The Department of the Interior strives to strengthen its 
government-to-government relationship with Indian tribes through a 
commitment to consultation with Indian tribes and recognition of their 
right to self-governance and tribal sovereignty. The NPS has evaluated 
this rule under the Department's consultation policy and under the 
criteria in Executive Order 13175, and has determined that it has no 
substantial direct effects on federally recognized Indian tribes and 
that consultation under the Department's tribal consultation policy is 
not required.

Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.)

    This proposed rule contains no new information collections. All 
information collections require approval under the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.). The NPS may not conduct or 
sponsor and you are not required to respond to a collection of 
information unless it displays a currently valid Office of Management 
and Budget (OMB) control number.

National Environmental Policy Act (NEPA)

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. A detailed statement 
under NEPA is not required. The NPS has determined the rule is 
categorically excluded under 43 CFR 46.210(i) because it is 
administrative, financial, legal, and technical in nature. In addition, 
the environmental effects of this rule are too speculative to lend 
themselves to meaningful analysis. NPS decisions to enter into 
concession contracts will be subject to compliance with NEPA at the 
time the contracts are executed. The NPS has determined the rule does 
not involve any of the extraordinary circumstances listed in 43 CFR 
46.215 that would require further analysis under NEPA.

Effects on the Energy Supply (Executive Order 13211)

    This rule is not a significant energy action under the definition 
in Executive Order 13211. A Statement of Energy Effects in not 
required.

Clarity of This Rule

    The NPS is required by Executive Orders 12866 (section 1(b)(12)) 
and 12988 (section 3(b)(1)(B)) and by the Presidential Memorandum of 
June 1, 1998, to write all rules in plain

[[Page 43783]]

language. This means that each rule the NPS publishes must:
    (a) Have logical organization;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Have short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you believe that the NPS has not met these requirements, send 
comments by one of the methods listed in the ADDRESSES section. To 
better help the NPS revise the rule, your comments should specifically 
identify where the NPS could improve. For example, you should tell the 
NPS the numbers of the sections or paragraphs you find unclear, which 
sections or sentences are too long, the sections where you would find 
lists or tables useful, etc.

List of Subjects in 36 CFR Part 51

    Commercial services, Government contracts, National parks, Visitor 
services.

    In consideration of the foregoing, the National Park Service 
proposes to revise 36 CFR part 51 as follows:

PART 51--CONCESSION CONTRACTS

0
1. The authority citation for part 51 is revised to read as follows:

    Authority:  54 U.S.C. 101901-101926 and Title IV of the National 
Parks Omnibus Management Act of 1998 (Pub. L. 105-391).

0
2. Amend Sec.  51.4 by revising the section heading and paragraph (b) 
and adding paragraphs (c) through (h) to read as follows:


Sec.  51.4   How will the Director invite the general public to apply 
for the award of a concession contract and how will the Director 
determine when to issue a prospectus for a new concession opportunity 
where no prior concession services had been provided?

* * * * *
    (b) Except as provided under Sec.  51.47 (which calls for a final 
administrative decision on preferred offeror appeals prior to the 
selection of the best proposal) the terms, conditions and 
determinations of the prospectus and the terms and conditions of the 
proposed concession contract as described in the prospectus, including, 
without limitation, its minimum franchise fee, are not final until the 
concession contract is awarded.
    (c) The Director will issue a prospectus for a new concession 
opportunity when the Director determines, in the Director's discretion, 
that a new concession opportunity in a System unit is necessary and 
appropriate for public use and enjoyment of the System unit and is 
consistent to the highest practicable degree with the preservation and 
conversation of the resources and values of the unit.
    (d) The Director will establish procedures to solicit and consider 
suggestions for new concession opportunities within units of the 
National Park System from the public (including from potential 
concessioners) as part of the System's planning processes for such 
opportunities.
    (e) In determining whether suggested concession opportunities are 
necessary and appropriate and whether to issue a prospectus for a 
concession contract to provide such opportunities, the Director will 
consider factors including whether the suggested concession 
opportunities are already being adequately provided within the System 
unit or the communities located near the System unit; the feasibility 
of the suggestions; the compatibility of the suggestions with governing 
law and policy; the innovative quality of the suggestions; and the 
potential impacts of the suggestions on visitation and on the economic 
wellbeing of communities located near System units.
    (f) No preference to a concession contract shall be granted to a 
party based on that party's having submitted, or failed to submit, a 
suggestion described in this section.
    (g) The Director may consider suggestions for new services as 
additional services to be provided through an existing concession 
contract as described in Sec.  51.76.
    (h) Nothing in this section shall constrain the discretion of the 
Director to solicit or consider suggestions for new concession 
opportunities or collect other information that can be used by the 
Director in connection with a new concession opportunity.
0
3. Revise Sec.  51.8 to read as follows:


Sec.  51.8   Where will the Director publish the notice of availability 
of the prospectus?

    The Director will publish notice of the availability of the 
prospectus at least once in the System for Award Management (SAM) 
system where federal business opportunities are electronically posted, 
or in a similar publication if these sites cease to be used. The 
Director may also publish notices, if determined appropriate by the 
Director, electronically on websites including social media and in 
local or national newspapers or trade magazines.
0
4. Amend Sec.  51.16 by revising paragraph (a) to read as follows:


Sec.  51.16   How will the Director evaluate proposals and select the 
best one?

    (a) The Director will apply the selection factors set forth in 
Sec.  51.17 by assessing each timely proposal under each of the 
selection factors on the basis of a narrative explanation, discussing 
any subfactors when applicable. For each selection factor, the Director 
will assign a score that reflects the determined merits of the proposal 
under the applicable selection factor and in comparison to the other 
proposals received, if any. Each selection factor will be scored along 
a scale assigned to that selection factor in the prospectus, subject to 
the following criteria:
    (1) The maximum score assignable for the fifth selection factor 
will not be higher than the maximum score for any of the other 
principal selection factors, with a score of one for agreeing to the 
minimum acceptable franchise fee contained in the prospectus;
    (2) The maximum score assignable for the secondary factor set forth 
in Sec.  51.17(b)(1) will not be higher than the maximum score for any 
principal selection factor; and,
    (3) The maximum scores assignable for any additional secondary 
selection factors set forth in the prospectus will be such that the 
maximum aggregate score assignable for all additional secondary 
selection factors will not be higher than the maximum score for any 
primary selection factor.
* * * * *
0
5. Amend Sec.  51.51 by revising the definition of the term ``Major 
rehabilitation'' to read as follows:


Sec.  51.51   What special terms must I know to understand leasehold 
surrender interest?

* * * * *
    Major rehabilitation means a planned, comprehensive rehabilitation 
of an existing structure that:
    (1) The Director approves in advance; and
    (2) The construction cost of which exceeds thirty percent of the 
pre-rehabilitation value of the structure.
* * * * *
0
6. Revise Sec.  51.73 to read as follows:


Sec.  51.73   What is the term of a concession contract?

    (a) A concession contract will generally be awarded for a term of 
10 years or less and may not have a term of more than 20 years (unless 
extended in accordance with this part). The Director will issue a 
contract with a term longer than 10 years when the Director determines 
that the contract terms and conditions, including but not limited to 
the required construction of capital improvements or other potential

[[Page 43784]]

investments related to providing both required and authorized services, 
warrant a longer term. It is the policy of the Director under these 
requirements that the term of concession contracts should take into 
account the financial requirements of the concession contract, resource 
protection and visitor needs, and other factors the Director may deem 
appropriate.
    (b) The Director may include in a concession contract an optional 
term or terms, in increments of at least one year, where the total term 
of the contract, including all optional terms, does not exceed 20 
years. Such a contract shall provide that an optional term may be 
exercised by the concessioner if the Director determines that:
    (1) The concessioner has received favorable annual ratings for 
every year during the term of the contract to date, as defined in the 
contract, and has met the performance criteria defined in the contract 
for the exercise of an optional term; or,
    (2) There has been a substantial interruption of or change to 
operations due to natural events or other reasons outside the control 
of the concessioner, including but not limited to government-ordered 
interruptions, and the exercise of an optional term is warranted in 
light of the interruption or change to operations.
0
7. Revise Sec.  51.76 to read as follows:


Sec.  51.76   May the Director amend a concession contract to provide 
new or additional visitor services or grant a concessioner a 
preferential right to provide new or additional visitor services?

    (a) The Director may propose to amend the applicable terms of an 
existing concession contract to provide new and additional services 
where the Director determines the services are necessary and 
appropriate for public use and enjoyment of the unit of the National 
Park System unit in which they are located and are consistent to the 
highest practicable degree with the preservation and conservation of 
the resources and values of the unit. Such new and additional services 
shall not represent a material change to the required and authorized 
services as set forth in the applicable prospectus or contract.
    (b) Except as provided above or in subpart E of this part, the 
Director may not include a provision in a concession contract or 
otherwise grant a concessioner a preferential right to provide new or 
additional visitor services beyond those already provided by the 
concessioner under the terms of a concession contract.
    (c) A concessioner that is allocated park area entrance, user days 
or similar resource use allocations for the purposes of a concession 
contract will not obtain any contractual or other rights to 
continuation of a particular allocation level pursuant to the terms of 
a concession contract or otherwise. Such allocations will be made, 
withdrawn and/or adjusted by the Director from time to time in 
furtherance of the purposes of this part.
0
8. Amend Sec.  51.78 by revising paragraph (a) to read as follows:


Sec.  51.78   Will a concession contract require a franchise fee and 
will the franchise fee be subject to adjustment?

    (a) Concession contracts will provide for payment to the government 
of a franchise fee or other monetary consideration as determined by the 
Director upon consideration of the probable value to the concessioner 
of the privileges granted by the contract involved. This probable value 
will be based upon a reasonable opportunity for net profit in relation 
to capital invested and the obligations of the contract. The Director 
shall set the minimum acceptable franchise fee in the prospectus at a 
level which the Director determines will encourage participation in the 
competition and so that concessioners can provide necessary and 
appropriate visitor services to the public, consistent with the 
foregoing requirements. In determining the minimum acceptable franchise 
fee, the Director shall use data including relevant general hospitality 
industry data for similar operations to determine the minimum 
acceptable franchise fee and provide a basis for the assessment of the 
minimum acceptable franchise fee in the prospectus. Consideration of 
revenue to the United States shall be subordinate to the objectives of 
protecting and preserving park areas and of providing necessary and 
appropriate visitor services at reasonable rates.
* * * * *
0
9. Amend Sec.  51.81 by revising paragraph (b) to read as follows:


Sec.  51.81   May the Director include ``special account'' provisions 
in concession contracts?

* * * * *
    (b) Concession contracts may contain provisions that require the 
concessioner to set aside a percentage of its gross receipts or other 
funds in a component renewal reserve to be used at the direction of the 
Director solely for renewal of real property components located in park 
areas and utilized by the concessioner in its operations. Component 
renewal reserve funds may not be expended to construct real property 
improvements, including, without limitation, capital improvements. 
Component renewal reserve provisions may not be included in concession 
contracts in lieu of a franchise fee, and funds from these reserves 
will be expended only for the renewal of real property components 
assigned to the concessioner by the Director for use in its operations.
* * * * *
0
10. Amend Sec.  51.82 by revising paragraph (b) and adding paragraphs 
(c) and (d) to read as follows:


Sec.  51.82   Are a concessioner's rates required to be reasonable and 
subject to approval by the Director?

* * * * *
    (b) The Director shall approve rates and charges that are 
reasonable and appropriate in a manner that is as prompt and as least 
burdensome to the concessioner as possible and that relies on market 
forces to establish the reasonableness of such rates and charges to the 
maximum extent practicable. Unless otherwise provided in the concession 
contract, the reasonableness and appropriateness of rates and changes 
shall be determined primarily by comparison with those rates and 
changes for facilities, goods and services of comparable character 
under similar conditions with due consideration to the following 
factors and other factors deemed relevant by the Director: Length of 
season; peakloads; average percentage of occupancy; accessibility; 
availability and cost of labor; and types of patronage.
    (c) The Director shall identify the rate approval method to be used 
for each category of facilities, goods, and services to be provided 
when preparing the prospectus for a concession contract. The Director 
will use the least burdensome and most market-based method that is 
appropriate. Whenever the Director determines that market forces are 
sufficient to ensure reasonable and appropriate rates, the Director 
will make a competitive market declaration, and rates and charges will 
be approved based upon what the concessioner determines the market will 
bear. Other rate approval methods will be used only when the Director 
determines that market forces are inadequate to establish the 
reasonableness of rates and charges for the facilities, goods, or 
services. The Director will monitor rates and charges and competition 
and may change the rate approval method during the term of the contract 
to reflect changes in market conditions.

[[Page 43785]]

    (d) The Director shall issue a response to a request by a 
concessioner to change rates and charges to the public within 30 days 
of receipt of a complete and timely request in accordance with the 
conditions described in the contract when possible. If the Director 
does not approve of the rates and charges proposed by the concessioner, 
the Director must provide in writing the basis for any disapproval at 
the time of the response by the Director.
0
11. Amend Sec.  51.87 by adding paragraph (i) to read as follows:


Sec.  51.87   Does the concessioner have an unconditional right to 
receive the Director's approval of an assignment or encumbrance?

* * * * *
    (i) That a concession contract may not be assigned within twenty-
four months following the effective date of the contract, unless the 
proposed assignment is compelled by circumstances beyond the control of 
the assigning concessioner.

George Wallace,
Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. 2020-15650 Filed 7-16-20; 8:45 am]
BILLING CODE 4312-51-P