we reported at that time, these rates were not designed to reflect 

 fair market value but to generate fees comparable to the fees col- 

 lected under the existing system. 



Forest Service officials acknowledge that they do not know 

 whether the fees collected under the existing system reflect fair 

 market value. As such, any fee system designed to collect com- 

 parable fees will likewise not ensure that fair market value is re- 

 ceived. Mr. Chairman, this concludes my statement, and we would 

 be glad to respond to questions. 



[The prepared statement of Mr. Duffus can be found at the end 

 of the hearing.] 



Mr. Hansen. Thank you, Mr. Duffus. Do either of your colleagues 

 have anything they would like to add to that? 



Mr. I-LvLMAR. No, sir. 



Mr. Woodward. Not at this time. 



Mr. Hansen. Mr. Allard. I will recognize members of the commit- 

 tee for five minutes each to ask the witness questions. 



Mr. Allard. You say that all three of these bills keep the conces- 

 sion process more competitive than what it is now. Is that correct? 



Mr. Duffus. That is correct. 



Mr. Allard. Which one of the pieces of legislation in your view 

 opens up the free market the most? 



Mr. Duffus. Well, as were reported in the past, the preferential 

 right of renewal is a right which, in our view, impeded competition 

 because that gives the concessioner the right to better any offer 

 that is received on a new concessions contract. 



H.R. 2028 would essentially remove preferential right of renewal; 

 whereas, the other two bills still have a guaranteed right. So from 

 the standpoint of preferential right of renewal, H.R. 2028 would do 

 a better job. 



Mr. Allard. How do you address the area where you have a con- 

 cessioner who made a substantial investment just to be there? How 

 do you assure that he gets back — or is there a way of provision 

 there where there can be a contract with the Forest Sen-ice where 

 that contract can be of sutTicient length where he can get a return 

 on his investment? Or are you going to compact that down so that 

 he has to charge an exceptionally high fee on maybe the goods or 

 services that he provides in order to recoup a profit on that? 



Mr. Duffus. Well, I guess you are talking about possessory in- 

 terest to some extent? 



Mr. .Ai.l.\rd. Yes. 



Mr. Duffus. Possessory interest is unique to the Park Service. 

 It doesn't exist in any of the other agencies. 



Mr. All.\rd. Yes. 



Mr. DlTFFUS. These other agencies are able to deal with conces- 

 sioners' investment in a way without ofTering possessory interest. 

 We favor possessor^' interest not being included in concessions con- 

 tracts. We think it has associated problems. The issue of what do 

 you do with existing contracts with possessor>' interest is some- 

 thing that needs to be looked at rather carefully in terms of wheth- 

 er or not acquiring the ownership interests of concessioners could 

 result in less fees. 



It seems reasonable that if the government is to acquire a conces- 

 sioner's ownership interest then the concessioner would want some- 



