National Park Service Bungling Could Squeeze Grand Canyon Visitors, Concessionaire Says

(CN) - The National Park Service is kicking hundreds of employees out of their homes at the Grand Canyon's South Rim, while making it impossible for a long-established concessionaire to turn a profit, the company claims in court.

Colorado-based Xanterra South Rim operates several historical landmarks in Grand Canyon National Park, including El Tovar hotel, the Bright Angel Lodge, and Phantom Ranch, at the bottom of the canyon.

The company, which along with its predecessor Fred Harvey has operated many of the park's lodges and restaurants for more than 100 years, sued the National Park Service on Oct. 7 in Denver Federal Court, seeking to halt the current contract-renewal process.

"NPS has so seriously mismanaged efforts to award two new concession contracts to provide lodging, dining and other services that park visitors may arrive in January 2015 (when Xanterra's contract terminates) to find many of the park's iconic facilities shuttered," the complaint states. (Parentheses in complaint.)

Xanterra claims that the agency more than tripled its franchise fee in a new concession contract, from 3.8 percent to 14 percent, and inexplicably allocated too much employee housing to a smaller concessionaire that does not need it.

The closest town of any size to the park is Flagstaff, Ariz., about 70 miles from the South Rim, making out-of-park housing economically unfeasible, the company says.

This has resulted in a stalemate, with Xanterra refusing to submit bids for the larger of the park's two concession contracts by the deadline. The smaller of the park's contracts was awarded in August to DNC Parks & Resorts at Grand Canyon.

"In its recent efforts to award follow-on concession contracts at the park, NPS arbitrarily decided that a large percentage of the concessionaire's employees, many of whom have worked and lived for decades in the park, cannot remain in their homes," the complaint states.

"NPS's decision will result in the eviction of up to 224 employees and their families. And these people, all of whom are critical to operation of the park's lodges, restaurants, and other guest services, have no place to go."

Federal law requires that the National Park Service provide its concessionaires with a "reasonable opportunity for net profit," but the employee-housing shortage and tripled franchise fees included in the new contract will make that impossible, Xanterra claims.

The company also says that park visitors could be hurt by the standoff. With no concession contract in place by the new year, Xanterra will cease operating the park's lodges and restaurants.

The park could also be forced to raise its $25 per car entrance fee, according to the lawsuit.

The NPS is allegedly planning to spend $100 million to pay off Xanterra's interest in several Grand Canyon landmarks, a move Xanterra says resulted in the increased franchise fee.

"To make matters worse, draining $100 million from the National Park System to facilitate this 'buy down,' by NPS's own admission, will result in layoffs and hiring freezes involving NPS's own employees and drastic reductions in guest services at numerous parks across the nation," the lawsuit states.

"On top of that, NPS has announced yet another consequence of its arbitrary and unlawful decisions: the need to raise entrance fees charged by NPS that the public must pay when visiting parks across the United States. The harm to the public is clear, but this increase in fees also will hurt the concessioners by reducing the amounts spent on other amenities, further reducing the likelihood of eking out a net profit. Thus, NPS's actions not only violate the law, they are a model of government mismanagement and impose heavy collateral damage on everyone associated with the national parks."

Xanterra seeks to enjoin the NPS from proceeding with all of its concession contracts until they are modified.

It is represented by Daniel Dunn of Hogan Lovells in Denver.

The National Park Service did not return a request for comment.

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