(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 investments related to providing required 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, visitor needs, and other factors the Director may deem appropriate.

(b) The Director may include in a concession contract, as advertised in the applicable prospectus, an optional term or terms in increments of at least one year and not to exceed three years in total, where the total term of the contract, including all optional terms, does not exceed 20 years. The Director shall specify in the contract the performance criteria (including evaluation ratings) the concessioner must meet to be eligible to exercise such option term or terms. Such contract also shall provide that the concessioner may exercise an optional term or terms only if the Director determines that the concessioner has met the performance criteria defined in the contract.

(c) When the Director determines, in his or her sole discretion, that 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, warrants lengthening the original term of a concession contract, the Director and the concessioner may amend the contract to add the amount of time to the term of the contract deemed appropriate by the Director, which in no case may be longer than three years and where the total term of the contract, including any added time, may not exceed 20 years.

Concession contracts will contain appropriate provisions for suspension of operations under a concession contract and for termination of a concession contract by the Director for default, including, without limitation, unsatisfactory performance, or termination when necessary to achieve the purposes of the 1998 Act. The purposes of the 1998 Act include, but are not limited to, protecting, conserving, and preserving park area resources and providing necessary and appropriate visitor services in park areas.

The Director may not segment or otherwise split visitor services authorized or required under a single concession contract into separate concession contracts if the purpose of such action is to establish a concession contract with anticipated annual gross receipts of less than $500,000.

(a) The Director may provide for new or additional services under the annual operating plan of the concessioner or through a contract amendment, as appropriate, where the Director determines the new or additional services are necessary and appropriate for public use and enjoyment of the park area in which they are located. New or additional services must be consistent to the highest practicable degree with the preservation and conservation of the resources and values of the park area. Such new or additional services shall not represent a material change to the required and authorized services as set forth in the applicable prospectus or contract. Changes may include, but are not limited to, extensions of seasons, operating hours and increases in capacity limitations.

(b) When considering whether to amend the applicable terms of an existing concession contract to provide new or additional services, the Director should consider the benefit to the visitor experience where other concessioners or holders of commercial use authorizations in the same park area already provide those services.

(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.

Concession contracts will not provide in any manner an exclusive right to provide all or certain types of visitor services in a park area. The Director may limit the number of concession contracts to be awarded for the conduct of visitor services in a particular park area in furtherance of the purposes described in this part.

(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, including any funds required to be placed in special accounts identified in § 51.81, and the obligations of the contract as described in the prospectus.

(b) Each prospectus shall include one of the following:

(1) A proposed franchise fee based on the probable value determination in the prospectus (“prospectus franchise fee”). The prospectus franchise fee should be set at a level to encourage competition for the concession opportunity through offers of either:

(i) Higher franchise fees; or

(ii) Lower franchise fees in combination with enhanced or higher quality service offerings that exceed prospectus requirements.

(2) Alternatively, when the Director determines that using a prospectus franchise fee is inappropriate for the particular concession opportunity, a minimum acceptable franchise fee based on the probable value determination and set at a level to encourage competition.

(c) In determining the minimum acceptable franchise fee or prospectus franchise fee to include in a prospectus, the Director shall use relevant industry data for similar operations (e.g., hospitality, recreation) and provide in the prospectus the basis for the determination of the minimum acceptable franchise fee or prospectus franchise fee. 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 services for public use and enjoyment of the park area in which they are located at reasonable rates.

(d) The franchise fee contained in a concession contract with a term of 5 years or less may not be adjusted during the term of the contract. Concession contracts with a term of more than 5 years will contain a provision that provides for adjustment of the contract's established franchise fee at the request of the concessioner or the Director. An adjustment will occur if the concessioner and the Director mutually determine that extraordinary, unanticipated changes occurred after the effective date of the contract that have affected or will significantly affect the probable value of the privileges granted by the contract. The concession contract will provide for arbitration if the Director and a concessioner cannot agree upon an appropriate adjustment to the franchise fee that reflects the extraordinary, unanticipated changes determined by the concessioner and the Director.

The Director may not waive the concessioner's payment of a franchise fee or other payments or consideration required by a concession contract, except that a franchise fee may be waived in part by the Director pursuant to administrative guidelines that may allow for a partial franchise fee waiver in recognition of exceptional performance by a concessioner under the terms of a concession contract. A concessioner will have no right to require the partial waiver of a franchise fee under this authority or under any related administrative guidelines.

If the Director awards more than one outfitter and guide concession contract that authorizes or requires the concessioners to provide the same or similar visitor services at the same approximate location or utilizing the same resource within a single park area, the Director will establish franchise fees for those concession contracts that are comparable. In establishing these comparable franchise fees, the Director will take into account, as appropriate, variations in the nature and type of visitor services authorized by particular concession contracts, including, but not limited to, length of the visitor experience, type of equipment utilized, relative expense levels, and other relevant factors. The terms and conditions of an existing concession contract will not be subject to modification or open to renegotiation by the Director because of the award of a new concession contract at the same approximate location or utilizing the same resource.

(a) The Director may not include in concession contracts “special account” provisions, that is, contract provisions which require or authorize a concessioner to undertake with a specified percentage of the concessioner's gross receipts the construction of real property improvements, including, without limitation, capital improvements on park lands. The construction of capital improvements will be undertaken only pursuant to the leasehold surrender interest provisions of this part and the applicable concession contract.

(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. The anticipated timing and estimated costs of component renewal projects should be identified in the prospectus. 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 as identified in the contract and assigned to the concessioner by the Director for use in its operations. The component renewal reserve provides a mechanism for a concessioner to reserve monies to fund component renewal projects. Concessioner obligations to maintain assigned concession facilities including component renewal are not limited to the monies in the component renewal reserve.

(c) A concession contract must require the concessioner to maintain in good condition through a comprehensive repair and maintenance program all of the concessioner's personal property used in the performance of the concession contract and all real property improvements, including, without limitation, capital improvements, and, government personal property, assigned to the concessioner by a concession contract.

(a) Concession contracts will permit the concessioner to set reasonable and appropriate rates and charges for visitor services provided to the public, 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 unburdensome 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 charges 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 comparability method. Unless the Director determines that market forces are not sufficient to determine reasonable and appropriate rates, the Director shall make a competitive market declaration as the means of comparability, 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.

(d) Each contract shall include a schedule for rate requests and describe the information necessary to include in a complete rate request. Upon receipt of a request for a change in rates or charges the Director shall, as soon as practicable but not more than 20 days of receipt of the request, provide the concessioner with a written determination that the request is complete, or where the Director determines the request incomplete, a description of the information required for the request to be determined complete. Where changes in rates and charges have been requested and the request has been deemed complete, concessioners shall be allowed to notify visitors making reservations 90 or more days in advance of the anticipated rates. Those rates are subject to adjustment prior to the visit based upon the Director's review and final decision about the requested rate change . The Director shall issue a final decision approving or rejecting a request by a concessioner to change rates and charges to the public within 10 days of receipt of a complete request in accordance with the conditions described in the contract, except for those change requests requiring a full comparability study, for which the Director shall issue a decision as soon as possible and in no event longer than 30 days after receipt of the complete request. If the Director does not approve of the rates and charges proposed by the concessioner, the Director must provide in writing the substantive basis for any disapproval. These timeframes will be exceeded only in extraordinary circumstances and the concessioner must be notified in writing of such circumstances. If the Director fails to meet the timeframes described above, and has not notified the concessioner in writing of the existence of extraordinary circumstances justifying delay, a concessioner may implement the requested change to rates and charges until the Director issues a final written decision. If the Director denies the requested change to rates and charges after implementation by the concessioner, the Director will not require the concessioner to retroactively adjust any rates or charges for services booked prior to the Director's denial.

(a) Where authorized by an applicable concession contract, concessioners are encouraged to sell authentic native handicrafts appropriately labeled or denoted as authentic that reflect the cultural, historical, and geographic characteristics of the related park area. To further this objective, concession contracts will contain a provision that exempts the revenue of a concessioner derived from the sale of appropriately labeled or denoted authentic native handicrafts from the concession contract's franchise fee.

(b) The sale of products as authentic native handicrafts is further regulated under the Indian Arts and Crafts Act, Public Law 101-644, as amended.

(c) Definitions. (1) Alaska Native means any citizen of the United States who is a person of one-fourth degree or more Alaskan Indian (including Tsimshian Indians not enrolled in the Metalakatla Indian Community), Eskimo, or Aleut blood, or combination thereof. The term includes any person so defined either or both of whose adoptive parents are not Alaska Natives. It also includes, in the absence of a minimum blood quantum, any citizen of the United States who is regarded as an Alaska Native by the Alaska native village or native groups of which he or she claims to be a member and whose father or mother is (or, if deceased, was) regarded as an Alaska Native by any village or group.

(2) Arts and crafts objects means art works and crafts that are in a traditional or non-traditional style or medium.

(3) Authentic native handicrafts means arts and crafts objects created by a United States Indian, Alaska Native, Native Samoan or Native Hawaiian that are made with the help of only such devices as allow the manual skill of the maker to condition the shape and design of each individual object.

(4) Native Hawaiian means any individual who is a descendant of the aboriginal people that, prior to 1778, occupied and exercised sovereignty in the area that now constitutes the State of Hawaii.

(5) United States Indian means any individual that is a member of an Indian tribe as defined in 18 U.S.C. 1159(c)(3).