In a strongly worded response to Xanterra Parks & Resort's request for an injunction to remain in business past year's end on the South Rim of Grand Canyon National Park, lawyers for the National Park Service argue that the concessionaire is trying to thwart competition and feels its history on the rim entitles it to remain there.
Less than three weeks remain until Xanterra's current contract to operate lodging and dining facilities on the South Rim expires, and there is no temporary contract in place to ensure continued operation of the El Tovar Hotel, Bright Angel Lodge, Maswick Lodge, and other lodgings and restaurants beyond New Year's Eve.
On December 16 a U.S. District Court judge in Denver is scheduled to hear arguments over Xanterra's request that the Park Service be barred from closing the South Rim lodging and dining operations on December 31 and allow the concessionaire to remain in business there until a new 15-year contract is awarded.
Doing so, the federal government counters in its 48-page response, would not maintain the "status quo," but rather upset it, cause competitive harm, and prevent the Park Service from making concessions contracts more competitive as Congress directed it to through the National Parks Omnibus Management Act of 1998.
"In its Complaint and Motion for a Preliminary Injunction, Xanterra stresses that it has operated at the South Rim of the Grand Canyon for over a century, as though this history constituted an entitlement to continued operations," the government's response reads. "Xanterra has resisted the Park Service's efforts to enhance competition for the South Rim concessions, complaining, for example, that the Park Service's $100 million buy-down of its LSI was 'not requested nor welcomed by Xanterra.'
"In an effort to maintain its advantageous position, Xanterra now seeks a preliminary injunction that would allow it to continue operating nearly all of the South Rim concessions, deprive Delaware North of the benefit of its successful bid for a new contract that includes some concessions that Xanterra now operates, prevent the Park Service from entertaining bids from any competitors, and limiting the terms of a temporary contract to essentially the terms of Xanterra's expiring contract ' all for the duration of this litigation."
The clock is winding down on efforts to keep the El Tovar Hotel open past year's end/Xanterra Parks & Resorts
The standoff between the Park Service and Xanterra has been brewing for more than a year, and has laid open the problem of possessory interest, or "leaseholder surrender interest," in the National Park System. That interest essentially is built up as a concessionaire invests in properties it operates for the Park Service. If a new concessionaire is awarded a contract, it must pay the outgoing concessionaire the amount of LSI it has accumulated.
At the Grand Canyon, Xanterra's LSI was determined in 2013 to stand at $198 million -- "the highest amount associated with a single contract in Park Service history," according to the government's response to Xantera's request for an injunction. Park Service officials viewed that amount as a barrier to other companies that might be interested in operating the South Rim concessions, and a decision was made to 1) break the single concessions contract for the South Rim in two, and 2) buy down Xanterra's LSI by $100 million, a sum 88 park units contributed to earlier this year.
It was in 2013 that the Park Service announced that it would split the single South Rim contract into two, and both Xanterra and Delaware North bid on the smaller of the two. This past August the Park Service announced that it was awarding the contract to Delaware North. That left the larger contract, known as the "001 Contract," up in the air. That contract had been extended three times to Xanterra after the initial contract expired. The third extension, which runs out this Dec. 31, is the last one allowed by law.
It's the contractual expiration of the 001 contract that is the "status quo," the government argues, not Xanterra's right to continue to run the concessions. If the court grants the injunction, it would go against the status quo, the government contends. Granting of an injunction also would deny Delaware North the contract it rightfully won for the other concessions on the South Rim, the motion argues.
"...Xanterra fails to show that it will suffer irreparable harm because of any actions by the Park Service. Instead, the alleged harms are the result of the expiration of Xanterra's existing contract (which has already been extended for the maximum period allowed by law) and its failure to be the successful bidder on one of the new contracts," the motion reads. " In addition, the balance of equities favors the Park Service. In contrast to Xanterra, whose alleged injuries are not traceable to any NPS action and are therefore illusory, an injunction would prevent the Park Service from exercising its lawful authority to execute a contract with Delaware North.
"In the larger scheme, it would also thwart the goal of fostering competition among prospective concessioners, and would introduce uncertainty into the concession contracting process going forward. Moreover, an injunction would be adverse to the public interest, because it would stymie the competitive process that helps ensure satisfactory service to Park visitors and a fair return to taxpayers."
Park officials did not respond Thursday to an inquiry into whether they have a plan for managing South Rim concessions if the injunction is denied and if a temporary 1-year contract is not awarded. However, in the government's response park officials said they were working hard to negotiate a temporary agreement. Too, they denied that visitors to the park would be greatly impacted if there's a lapse in hotel and restaurant operations.
"Even in the unlikely event that the Park Service is unable to enter into a temporary contract to address the services covered by the 001 Prospectus before the existing contract expires on December 31, 2014, the Park itself will remain open to day visitors and tent campers, and the concessions under the new 003 (Delaware North) Contract would be available, including an RV campground," the motion notes.
"Visitors may be inconvenienced by restaurant and other closures, but only a small minority will have planned to stay in concessioner lodging, and given the time of year, they will doubtless be able to find accommodations nearby. Nonetheless, even a short interruption of some services in the Park is not a desirable outcome, and NPS is working hard to prevent this. However, it is not in the public interest to keep all of the South Rim concessions open at any cost."
Comments
JThomas...
Agreed. It is nearly universally agreed on the causes of the economic collapse, other than those who are have their pound of flesh invested deeply in Wall Street.
Isn't it amazing how those who made such a bumper sticker talking point out of being "job creators" now decry that as having anything to do with them.
Yes, and anyone that has any knowledge of the events knows it was government intervention. Look up the CRA or try reading "The Great Bank Robbery".
Really? where did anyone do that? More empty accusations.
"Wall Street and the banks in the aggregate have paid back more than 100% of what was loaned and or invested in them."
As well they should have! The point is what would have happened to some of those banks, big insurance companies, auto companies and others if there had been no bailout to keep them afloat, in the aftermath of poor business decisions designed to maximize profits at the expense of employees.
Just one example of the impact of bad decisions: AIG cut 20,000 jobs in 2009 as a result in part of "The derivatives unit that brought AIG to the brink of collapse with bets on mortgages."
I've not suggested that people should be "given" a job if it's not needed by a company. The original discussion was whether employees are valuable resources and should be treated as such in company decisions vs. being regarded as merely "expendable."
In the case at hand, that view of employees as valuable resources ought to be considered by a concessioner as part of the decision on a contract bid. Is Xanterra "playing chicken" with the NPS in the contract dispute in order to increase their profit margin, or could they in fact not turn a reasonable profit under the NPS proposal? I have no idea, but if they're playing hardball just to push up profits, and employees end up getting pink slips as a result, that would be an example of what some comments on this thread have criticized.
JT- do you know why those derivatives brought them to the bring of collapse? Because the government was forcing the banks to make the loans and then providing "guarantees". The government was then reselling the loans to the banks to be tranched into derivitive securities. Had the government not been involved, there would not have been a Fannie Mae or Freddie Mac, there would not have been government guarantees and there would not have been the derivitives market that collapsed.
Yes, the banks made mistakes and some went out of business for it but loans and investments aren't bailouts. They are loans and investments. And while Wall Street and the banks paid it back in full, others - like GM - haven't.
As to Xantarra "profits", why shouldn't they attempt to push up profits? What level of profit is appropriate and who should determine that? In the capatilist system - its the market that makes that determination. The business has no obligation to lose profits to keep someone employed.
Looks like Xanterra and NPS may have worked something out.
http://www.kpho.com/story/27649830/grand-canyon-concessionaire-nearing-s...
This sums it up pretty well. As a Xanterra employee here I can agree with what he says.