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OUTDOOR RECREATION AND SKI PERMITS
ON NATIONAL FOREST LANDS
HEARINGS
BEFORE THE
SUBCOMMITTEE ON THE
ENVIRONMENT AND LAND RESOURCES
OF THE
COMMITTEE ON
INTERIOR AND INSULAR AFFAIRS
UNITED STATES SENATE
NINETY-FOURTH CONGRESS
FIRST SESSION
ON
S. 2125
A BILL TO PROVIDE FOR THE ISSUANCE OF PERMITS ON
PUBLIC DOMAIN NATIONAL FOREST LANDS FOR COMMERCIAL
OUTDOOR RECREATION FACILITIES AND ACTIVITIES, AND
FOR OTHER PURPOSES
ASPEN, COLO., OCTOBER 4, 1975
DENVER, COLO., OCTOBER 6, 1975
WASHINGTON, D.C., NOVEMBER 17, 1975
0
Printed for the use of the
Committee on Interior and Insular Affairs
U.S. GOVERNMENT PRINTING OFFICE
67-5120 WASHINGTON : 1976
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COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
FRANK CHURCH, Idaho
LEE METCALF, Montana
J. BENNETT JOHNSTON. Louisiana
JAMES ABOUREZK, South Dakota
FLOYD K. HASKELL, Colorado
JOHN GLENN, Ohio
RICHARD STONE, Florida
DALE BUMPERS, Arkansas
GRENvILLE GARSIDE, Special Counsel and Staff Director
DANIEL A. DREYFUS, Deputy Staff Director for Legislation
WILLIAM J. VAN NESS, Chief Coun.sel
D. MICHAEL HARVEY, Deputy Chief Counsel
OWEN J. MALONE, Senior Counsel
HARRISON LOESCH, Minority Counsel
SUBCOMMITTEE ON THE ENVIRONMENT AND LAND RESOURCES
FLOYD K. HASKELL, Colorado, Chairman
HENRY M. JACKSON, Washington JAMES A. McCLURE, Idaho
FRANK CHURCH, Idaho MARK 0. HATFIELD, Oregon
LEE METCALF, Montana CLIFFORD P. HANSEN, Wyoming
JAMES ABOUREZK, South Dakota DEWEY F. BARTLETT, Oklahoma
JOHN GLENN, Ohio
DALE BUMPERS, Arkansas
STEVEN P. QUARLES, Counsel
THOMAS B. WILLIAMS, Professional Staff Member
HENRY M. JACKSON, Washington, Chairman
PAUL J. FANNIN, Arizona
CLIFFORD P. HANSEN, Wyoming
MARK 0. HATFIELD, Oregon
JAMES A. McCLURE, Idaho
DEWEY F. BARTLETT, Oklahoma
(II)
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CONTENTS
Hearings: Page
October 4, 1975 1
October 6, 1975 191
November 17, 1975 337
S. 2125
Executive communications:
Department of Agriculture 16
Office of Management and Budget 23
SATURDAY, OCTOBER 4, 1975, ASPEN, CoLo.
STATEMENTS
Accetta, Anthony T., first assistant attorney general, consumer affairs,
State of Colorado 30
Bates, Ray, Aspen Skiing Corp., Aspen, Cob 177
Blake, Tom, general manager, Snowmass Resort Association 145
Bbomquist, Allan, county manager, Pitkin County, Cob 62, 66
Brendes, Ralph, attorney, Roaring Fork Citizens, Inc 123, 129
Brown, D. R. C., president, Aspen Skiing Corp., Aspen, Cob 139
Carlson, John, attorney, representing Aspen Skiing Corp 158
Christensen, David, rancher, Pitkin County, Cob 149, 150
Green, Stephen, vice president, Western Ski Vacations, New York, N.Y__ 144
Haskell, Hon. Floyd K., a U.S. Senator from the State of Colorado 1,24
Irwin, Ed, marketing director, Bank of Aspen, Cob 153
Jaffee, Wilton, Sr., Aspen, Cob 152
Jaffee, Wilton, Jr., W/S Ranch, Aspen, Cob 154
Kalish, Charles, member, Basalt Town Council 121
Kashinski, Ray, Aspen, Cob 174
King, Peter, representing the Sierra Club, Aspen, Cob 135
Kinsley, Michael, county commissioner, Pitkin County, Cob 59
Klein, Herbert, counsel, Roaring Fork Citizens, Inc 112, 116
Lemos, Don, Independent Ski Instructors Association, accompanied by Jill
St. John, Aspen, Cob.; Maggie McMahon, Professional Ski Instructors
Association; and Charlie Paterson, past president, Rocky Mountain Ski
Instructors Association 68, 70
Lucy, John, administrative director, Roaring Fork Citizens, Inc 110
McMahon, Maggie, Professional Ski Instructors Association, Aspen, Cobo__ 107
Mahoney, Dr. Philip S., city manager, Aspen, Cob
Strang, Michael, vice president, Bosworth & Sullivan, investment banking,
Aspen, Cob 156
Michaels, Jerome, attorney, Roaring Fork Citizens, Inc 120
Miller, C. W., executive director, Aspen Valley Improvement Association__ 138
Mojo, Francis A., Jr., director of transportation, Aspen, Cob 46
Monaghan, James E., Jr., assistant for natural resources to Governor
Lamm 26
Moore, Betty, Aspen, Cob 172
Moore Kenneth, Aspen, Cob 178, 180
Moran, James T., attorney, representing Aspen Skiing Corp 163
Paterson, Charlie, past president, Rocky Mountain Ski Instructors
Association 109
St. John Jill, Aspen, Cob 105
Sheilman, Dwight, Jr., chairman, Board of Commissioners, Pitkin County,
Cob 51
Silverman, Rick, Telluride, Cob 188
(III)
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Iv
Standley, Hon. Stacy, mayor, city of Aspen, Cob., accompanied by Dr.
Philip Mahoney, city manager; Yank Mojo, director of transportation; Page
Larry Simmons, economist, and Steve Wishart, city councilman 32
Stapleton, Don, president, Aspen Chamber of Commerce, Aspen, Cob 169
Thomas, Sim, representing the Aspen Ski Club, Aspen, Cob 175
Turner, Wava, coordinator, school programs, Aspen Skiing Corp~ 171
Whitaker, Francis, on behalf of the Aspen Skiing Corp 178
1,Vishart, Steve, city councilman, Aspen, Cob 45
MONDAY, OCTOBER 6, 1975, DENVER, CoLo.
STATEMENTS
Bowlds, Lou, president, Rocky Mountain Division, U.S. Ski Association,
Denver, Cob 241
Croak, Tom, county commissioner, Summit County, representing the
Northwest Council of Governments 204, 206
Dorworth, Dick, professional ski instructor 321
Farny, David, president, Little Annie Ski Corp., Aspen, Cob 320
Goetzman, Richard, president, U.S. Ski Association, Los Angeles, Calif____ 239
Haskell, Hon. Floyd K., a U.S. Senator from the State of Colorado 191
Hastings, Merrill, publisher, Colorado magazine and Colorado Business
magazine, Lakewood, Cob 245
Hill, Robert, assistant attorney general of antitrust division on behalf of
Hon. J. D. McFarlane, attorney general, State of Colorado 192, 198
Hubbard, Graydon D., Jr., audit division, Arthur Andersen & Co., Denver,
Cob 283, 287
Jennings, Rex, president, Denver Chamber of Commerce, Denver, Colo.__ 332
Kennedy, Wade, investment banker, Boettcher & Co., Denver, Cob 302
Kidd, Billy, former Olympic champion, Colorado 314
Martin, Tod, executive director, Colorado Ski Country, U.S.A 253, 256
Oppenheimer, Gladys, Parker, Cob 328, 330
Patch, Hans, Denver, Cob 334
Perl, Dr. Lewis, vice president, National Economic Research Associates of
New York City 207, 210
Peterson, Richard L., chairman, Board of Trustees, Colorado Ski Country,
U.S.A 250
Ranney, Sally, representing the Wilderness Society, Denver, Cob 310
Schafer, Charles, on behalf of the Sierra Club, Denver, Cob 317
Spiegel, Richard, president, LaMaur, Inc., Minneapolis, Minn 326
Swanson, Tom, vice president, United Bank of Denver, Denver, Cob 297
Vanderhoof, Gov. John, president, Club 20, Grand Junction, Cob 249
Walsh, Dr. Richard G., professor of economics, Colorado State Uni-
~ versity 224, 226
MONDAY, NOVEMBER 17, 1975
STATEMENTS
Adams, Sherman, representing Loon Mountain Recreation Corp., Lincoln,
N.H 364, 369
Allen, Donald R., counsel to the U.S. Ski Association 447,453
Branch, James R., president, Association of Ski Area Consultants, Fran-
conia, N.H
Butler, Gilbert, vice president, Trusts and Investments Division, Morgan
Guaranty Trust Co., New York, N.Y 360
Clusen, Charles M., Washington representative of the Sierra Club 427, 431
Corcoran, Thomas A., president, Waterville Co., Inc., Waterville Valley,
N.H 388, 390
Fry, John, editor in chief, Ski magazine, New York, N.Y 442, 445
Haskell, Hon. Floyd K., a U.S. Senator from the State of Colorado 337
McGuire, Hon. John R., Chief, Forest Service, Department of Agriculture;
accompanied by Melvin Loveridge, Forest Service 339, 354
Norton, William A., president, National Ski Areas Association, Inc., West
Hartford, Conn 371, 376
APPENDIX
Additional statements and communications submitted for the record 471
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OUTDOOR RECREATION AND SKI PERMITS ON
NATIONAL FOREST LANDS
SATURDAY, OCTOBER 4, 1975
U.S. SENATE,
SUBCOMMITTEE ON THE ENVIRONMENT AND LAND RESOURCES,
OF THE COMMITrEE ON INTERIOR AND INSULAR AFFAIRS,
Aspen, Cob.
The subcommittee met, pursuant to notice, at 9:30 a.m., in the audi-
torium, Aspen Institute, Aspen, Cob., Hon. Floyd K. Haskell
presiding.
Present: Senator Haskell.
Also present: Steven P. Quarles, counsel; and Harrison Loesch,
minority counsel.
OPENING STATEMENT OF HON. FLOYD K. HASKELL, A U.S. SENATOR
PROM THE STATE OP COLORADO
Senator HASKELL. The hearing before the Committee on Interior
and Insular Affairs, Subcommittee on the Environment and Land Re-
sources, will commence.
Ladies and gentlemen, I think you all realize the importance of
skiing, from both the recreational and commercial standpoints. This is
true in Colorado, but it is by no means confined to our State. It's signi-
ficance is nationwide.
In the West, particularly, ski facilities are located on lands owned
by the U.S. Government. Of course, there are certain obligations that
accrue to a holder of a permit to develop ski facilities on Federal
lands-lands owned by all the people-_that would not accrue did the
permit holder own the land in fee simple or rent it from private indi-
viduals. The obligations, of course, are to the public generally and
also to the communities upon which the ski facilities have an impact.
I introduced S. 2125 as a working paper. There is nothing written
in concrete. I am sure there are sections in there that should be elim-
inated. I am also sure there are provisions which are not in there that
should be added.
The purpose of hearings, of course, is to receive comments from
anybody who is interested directly or indirectly and to obtain ideas.
As sometimes occurs in the drafting of legislation, this bill orig-
inated from a specific incident and several problems involving a
limited number of constituents. We sought to resolve these problems
through informal procedures, but found them to be indications of
a more fundamental issue which could only be addressed by legis-
lation.
Early this year numerous citizens of this county and elsewhere in
Colorado brought to my attention a proposal of three Colorado ski
(1)
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2
areas to simultaneously increase by 20 percent the daily adult tow
ticket rate. Skiing in Colorado is already a very expensive form of
recreation and I was concerned that so large an increase would put
skiing beyond the reach of many Coloradoans.
Therefore, I wanted to be sure that the requested increase was
justified. But I found it was virtually impossible to make such a
determination. The Forest Service does not hold public hearings on
requested rate increases nor does it release the financial data upon
which the permittee's request and the agency's decision are based.
I was astonished to learn that the decision on any rate increase
request is the province of the local forest supervisor and that he is
given no objective formula or criteria for making that determination.
It appears absurd, at least to me, that forest supervisors, usually
untrained in economic matters, are asked by the Forest Service to
make such decisions on apparently purely subjective grounds.
In the case of this particular rate increase request, one set of
rates was ultimately denied by the forest supervisor and another
was compromised. Yet even today. several months later, neither the
industry nor the public knows in detail what criteria Forest Service
personnel used in determining whether the rate increases were justi-
fied or unjustified.
As I began to explore the Forest Service's system of granting and
administering ski permits. I discovered that the lack of uniform
objectives and specific standards pervades the entire system. For
example, ski permits are often saddled with stipulations and con-
ditions which differ both among and within the national forest
regions. This absence of uniform standards can play havoc with the
financial planning of permit applicants and holders and may
jeopardize their existing and planned investment. It clearly frus-
trates any public review of the adequacy of Forest Service decision-
making.
I also learned that the statutory basis for the present permit
system is so full of holes that the Forest Service has adopted a
numbe.r of questionable practices to meet the public demand for
outdoor recreation facilities. Perhaps the most serious of these
practices is that of issuing to a single ski operator a 30-year permit
for 80 acres-the statutory limit-then supplementing it with a
large number of 1-year special use permits for additional acreage.
Of course, the maximum of only 80 acres is simply too small for
ski operations today.
I am reminded of the history of the Alaskan pipeline. After
much litigation over the adequacy of the environmental impact
statement, the entire pipeline project was brought to its knees by
a minor provision in the Mineral Leasing Act of 1920 which lim-
ited the width of rights-of-ways which could be issued by the In-
terior Department. In that situation the Department had attempted
to use special use permits to sidestep the statutory width require-
ments. The courts found invalid that use of special use permits. I
see no reason why, given that finding, the courts would not also
question the legality of using special use permits to avoid legal
roadblocks to the issuance of permits for ski areas.
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In short, after investigating the Forest Service permit system for
ski and other recreation facilities. I am convinced it needs reform-
ing. The system is based on two very antiquated laws: The Organic
Administration Act of 1915 and the Term Permit Act of 1915. The
latest amendment to either of these laws occurred in 1956. The
nature of the industry is far different today than when those laws
were first enacted and last amended.
Before this hearing begins, however, I want to emphasize two
things.
First: The bill before us is a rough draft only. On introducing
the bill on July of this year, I said that it was a draft bill to be
criticized and reworked during the hearing process. And I am still
of that opinion. I've already expressed my doubts concerning the
appropriateness and workability of a number of the bill's provisions
and have suggested provisions which might be added in supplement.
Second: I would particularly like to clarify the underlying pur-
pose of the legislation. I have heard described as the purpose of
this bill the regulation of the ski industry as a utility and the
forced reduction of the rates that industry may charge the public.
This is patently wrong. What I hope to achieve by the enactment of
this measure is not necessarily an increase in Forest Service regula-
tory powers, but rather the exercise. of existing powers in a uniform,
objective manner. If this is not clear in the provisions of the draft
bill, let's try to rewrite those provisions to meet that purpose.
I would like to introduce the gentlemen who are with me. Mr.
Quarles is the counsel of the subcommittee, and Mr. Loesch is counsel
for the minority.
I will insert at this point in the record the text of S. 2125, depart-
ment communications and my remarks upon introducing it on the
Senate floor.
[The information referred to above follows:]
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94i'ir CONGRESS
1ST SEssioN . 2 1 25
IN THE SENATE OF THE UNITED STATES
JULY 16 (legislative day, Jurx 1O~, 1975
Mi. 1L~sKELL ifltrO(luCed the following bill; which was read twice and referred
to the Committee on Interior and Insular Affairs
ABILL
To provide for the issuance of permits on pubhc domain na-
tional forest lands for commercial outdoor recreation facili-
ties and activities, and for other purposes.
1 Be it enacted by the Senate and house of Representa-
2 tires of the United States of America in Congress assembled,
3 Thal (a) The Congress hereby finds that appropriate de-
4 velopment and maintenance of commercial outdoor rccrea-
5 tion facilities and related services within the forest reserves
6 created from the public domain may be desirable to meet
7 the projected increasing demand for public recreation; and
8 that enhancement of these opportunities for recreation and
9 protection of environmental quality require prudent devel-
10 opment and substantial amounts of capital investment. It is
II
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2
~ the policy of Congress that, where such facilities and serv-
2 ices are determined to be advisable, by the Secretary of
~ Agriculture based upon longrange planning conducted by
~ the Forest Service and upon consideration of the views of
~ the relevant State and local governments and the public,
6 private development and management of such facilities and
~ services, on a competitive basis where appropriate, shall be
8 encouraged through issuance of permits. As the facilities and
~ activities authorized by any such permit, which has as' its pur-
10 pose the provision of essential public services on public lands,
are affected with a public interest, such permit `shall provide,
12 consistent with the policy and provisions of this Act and
13 subject to conditions which protect surrounding land, air,
14 and water and other public uses, for payment of reason-
15 able fees which reflect a primary objective of maintaining a
16 high quality of outdoor recreation facilities and i~elated `serv-
17 ices at reasonable prices for the public.
18 (b) For the purpose of this Act-
19 (1) "forest reserves" or "forest reserve lands"
20 means lands of that portion of the national forest system
21 which has been created from the public domain;
22 (2) "Secretary" means, the Secretary of Agrieni-
23 ture; and
24 (3) "permittee" means the holder of, a permit issued
25 pursuant to this Act or holder of such other permit
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1 as set forth, but subject to the exceptions, in section 7
2 of this Act.
3 PE1IMTT ATJTIIOIITTY
4 SEc. 2. The Secretary in isis discretion, is authorized
5 to permit any peisori, association, paitneiship, or corpora-
6 tion to use and occupy areas within the forest reserves which
7 are needed to provide commercial outdoor recreation facili-
S ties and services for the use and enjoyment of the general
9 public.
10 PEIIM1T TEEMS, FEES, AND CONI)ITTONS
11 SEC. 3. (a) The area of land to be covered by a permit
12 issued under the authority of this Act shall in each case he
13 determined by the Secretary, taking into consideration pre~-
14 ent and future public needs for all the multiple uses of the
I S forest reserves: Poorided, That-
16 (1) any permit under this Act for commercial out-
17 door recreation activities and facilities other than ski
18 activities and facilities shall not exceed eighty acres
19 of forest reserve lands;
20 (2) (A) Any permit under this Act for commercial
21 outdoor recreation ski activities and facilities designed to
22 nt.ilize more than one thousand two hundred and eighty
23 acres of fOrest reserve lands shall not l)e approved until
24 sixty days (not counting days on which the louse of
25 Representatives or the Senate has adjourned for moie
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4
i than three days) after the Secretary has submitted to
2 the Committees on Interior and Insular Affairs of the
3 house of Representatives and the Senate the proposed
4 permit, together with his detailed findings as to the terms
5 and conditions he proposes to impose upon the permit ap-
6 plicant, and only then if neither committee has adopted
7 a. resolution stating that the committee does not approve
8 of the issuance of the permit. Each committee by rësolu-
9 tion may waive the waiting period.
10 (B) Any permit under this Act for commercial out-
11 door recreation `ski activities and facilities designed to
12 utilize more than five thousand acres of forest reserve
13 lands shall not be approved until after (i) the Secretary
14 has submitted to the Committees on Iiiterior and Insular
15 Affairs of the I-house of Representatives and the Senate,
16 the permit, together with his detailed findings as to the
17 terms and conditions he proposes to impose upon the
18 permit applicant., and (ii) each committee has adopted
19 a resolution stating that the committee approves of the
20 issuance of the permit. .
21 (C) Within thirty days after the adoption of a. res-
22 olution disapproving the issuance of a proposed permit
23 puirsiTant to clause (2) (A) of this subsection and after
24 one huiidred and eighty days from the date of submis-
25 sion of a. proposed permit pursuant to clause (2) (B)
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5
of this subsection, which permit has not re~eived resolti-
2 tions from both Committees on Interior and Insular
3 Affairs approving its issuance, the Secretary, should lie
4 continue to deem the facilities and services to be advis-
5 able, shall submit to the Congress proposed legislation,
6 together with a report thereon, authorizing the issuance
7 of a permit for such facilities and services.
8 (h) Within six months from the date of enactment
9 of this Act, the Secretary shall publish in the Federal Reg-
10 ister and submit to the Congress proposed regulations
11 containing guidelines to be employed by him in determin-
12 ing whether a permit for commercial outdoor recreation ski
13 activities and facilities shall be issued to a particular permit
14 applicant or for a particular area. Such regulations, among
15 other things, shall require consideration by the Secretary
16 of all facilities to be developed by the permit applicant, all
17 housing, recreation, and commercial development which
18 will likely occur as a result of the development of the aIJ-
19 phicant's facilities, and all public services necessary for such
20 development, both 011 forest reserve land and private land
21 in the proximity thereof. Such consideration shall include
22 an assessment of the extent and nature of such development,
23 its compatibility with other uses for and the protection of
24 the resources on such forest reserve and private lands as
25 determined through Federal, State, or local planning prop-
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6
1 essos, and the authority and capability of the relevant
2 State aiid local governments to zone or otherwise regulate
3 such development to insure such compatibility. Such regula-
4 tions shall also set forth a specific procedure for consultation
5 with the relevent State governments prior to the issuance
6 of any such permit. Such regulations shall not be promul-
7 gated piior to sixty days from the (late of submission thereof
8 to the Congress.
9 (e) (1) The perniittee shall J)ay `to the United States
10 an annual fee for the use and occupancy of forest reserve
11 lands covered `by any permit issued pursuant to this Act.
12 Such fee shall he computed `so' a's to provide a reasonable
13 return on equity investment. In all case:s, fees and charges
14 shall be in accord with the principles set forth in title V of
1~ the Jiidepeiideiit Offices i~1)P1'0'P1~iations Act of 1952 (65
16 Stat. 290, ~i 1. U.S.C. 483a
17 (2) Within six month's from the date of `enact.mciA
18 of this Act, the Secretary shall coiiduct; a study aiid `submit
19 to the Congress a report on the results thereof of fees `charged
20 for permits issued pursuant to this Act and for permits for
21 commercial outdoor recreation activities and facilities on the
22 forest reserves prior to this Act. Such report shall be ac-
23 companied by a discussion of the `steps the Secretary `shall
24 take, and of any legislative action which lie de'ei'n~ necessary,
?~ to est&)hish o, single p~ hod 01 formula, `to,' i~ ~pphied uni~
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7
1 forinly throughout the forest reserves, for the detennination
2 of annual `fees for the use `and occupancy `of forest reserve
3 lands covered by any peim~it issued pursuant to this Act.
4 (d) The Secretary is authorized, in his discretion, to
5 issue permits under authority of this Act for such periods as
6 he deems desirable, but not to exceed fifty years. The See-
7 retary may terminate any pei~mit authorized by this Act for
8 breach of its terms after giving the permittee due notice and
9 a reasonable opportunity to conform with permit require-
10 ments, or if :~ll his judgment, in the public interest, the lands
11 are needed for another use: Provided, That, if any permit is
12 terminated by the Secretary for another use, the TJnited
13 States shall be obligated to pay an equitable consideration
14 for the improvements or for removal of the improvements
15 a.iid damage to the improvements resulting from their
16 removal.
17 (e) IDevelopnicnt, management, and operation of the
18 facilities and services covered by the perunt shall be the ic-
19 spoiisibility of the pcrniittee, subject to such teriiis and con-
20 ditioiis as the Secretary may prescribe, consistent with the
21 ` policy and provisions of this ActS
22 (f) Withiii any area covered by a permit issued under
23 this Act, the Secretary may permit other uses not incon-
24 sistent with the purposes of the permit.
25 (g) The Secretary shall not issue more than one permit
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8
1 pmsllallt to this Act for identical outdoor commercial recrea-
2 tion activities or facilities within an area of less than five
3 thousand eighty acres unless each such permit, irrespective
4 of the acreage involved, is issued in accordance with pro-
5 cedures provided in section 3 (a) (2) (B) or (C)
6 PERMITTEES' CHARGES TO TIlE PUBLIC
7 Si~c. 4. (a) ~ any other pl'o\Tision of law,
8 the Secretary shall make available for public inspection any
9 and all memoranda, (lata, financial statements, or other in-
10 formation or materials furnished to him or any official of
ii the Department of Agriculture in support of or in opposition
12 to proposed increases or decreases in charges to . the public
13 for use of facilities of perinittecs.
14 (b) Thirty or more days 1)r~or to the graiiting or deny-
15 ing of a request by a peiinittee for any increase in ally
16 charge to the 1lllblic for usc of the perinittee's facilities, the
17 Secretary or his designee shall hold a. Public hearing on such
18 request iii a location in the proximity of the area described
19 in the permit.
20 (c) Within six months of the date of enactment of this
21 Act, the Secretary shall publish in the Federal Register and
22 submit to the Congress proposed regulations which set
23 forth in detail the criteria the Secretary or his designee shall
24 employ to determine whether to peiinit or reject any request
25 by a permittee to increase or decrease any charge to the pub-
PAGENO="0016"
12
9
1 lie for use of the permittee's facilities. Such regulation shall,
2 among other things, require that the standard for any such
3 determination shall be reasonable return on the permittee's
4 equity investment. Such regulations shall not be promul-
5 gated prior to sixty days from the date of submission
6 thereof to the Congress.
7 TITLE TO IMPROVEMENTS; COMPENSATION
8 SEC. 5. Any structure, fixture or improvement which
9 is not owned by the United States and which is covered by
10 a permit issued pursuant to this Act shall not be deemed to
11 be the property of the United States. The permittee shall be
12 deemed to be the owner thereof, and may remove the
13 property and assign, transfer, encumber, or relinquish the
14 title thereto. Said title shall not be extinguished by expira-
15 tion or other termination of the permit and shall not be
16 taken for public use without just compensation: Provided,
17 That the use or enjoyment of any structure, fixture, or irn-
18 provement shall be permissible only so long ns the owner
19 thereof has a permit covering the area on which it is located:
20 Provided further, That within six months following either
21 the expiration or other termination of such permit, the
22 Secretary may order the removal of such structure, fixture,
23 or improvement and the restoration of the site, and upon
24 failure of the owner to comply with such order, lie may bring
25 an action for ejection and recovery of costs incurred by the
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10
1 Goveriiment in such removal and restoration: Provided
2 further, That in the event the Secretary does not order the
3 removal of such structure, fixtures or improvements and
4 permits the continued use thereof either by the United States
5 or by some party other than the permittee then the Secretary
6 will, before allowing such use to become effective, take such
7 action as may be necessary to assure the perinittee of just
8 compensation therefor, unless other arrangements for the
9 disposition of such facilities are mutually agreed upon be-
10 tween the Secretary and the permittee.
11 RECORDKEEPING; AUDIT AND EXAMINATION; ACCESS TO
12 BOOKS AND BECO~DS
13 SEC. 6. Each permittee shall keep such records as the
14 Secretary may prescribe in the permit to enable the Secre-
15 taly to determine that all the terms of the permit have been
16 and aie `beiiig faithfully peilorined, and the Secretary or
17 his duly authorized representatives shall, for the P111P0Se Of
~ audit and examination, have access to said records and to
19 other books, documents, and papers of the permittee per-
20 tinent to the permit and all the terms and conditions `thereof.
21 The Comptroller General of the United States or any of his
22 duly authorized representatives shall, until expiration of five
23 calendar years after t.he close of the `business year of each
24 permittee, have access to and the right to examine any
67-512 0 - 76 - 2
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14
ii
1 peitiiiciit books, docuniciits, papers, aiid recorcTs of the per-
2 mittec related to the permit involved.
3 EFFECT ON OTHER LAWS~ APPLICABILITY TO EXISTING
4 PERMIT HOLDERS
5 SEC: 7. This Act shall be construed as supplemental to,
6 and not in derogation of, the provisions of the Act of
7 March 4, 1915 (38 Stat. 1101, as amended, 16 U.S.C.
8 497) ; the Act of June 4, 1897 (30 Stat. 34, as amended,
~ 16 U.S.C. 551) ; the Act of April 24, 1950 (64 Stat. 84,
10 16 U.S.C. 580 (d) ), or any other Act authorizing special
~ usc permits, except that this Act shall be construed as the
12 sole authority for approval of new permits for the authori-
13 zation of ski activities and facilities. Existing special use
14 permits or permits for commercial outdoor recreation ifl"-
15 p~~s issued uiider such Acts, and pcrniits issued hereafter
16 pui'snaiit to this Act to holders of sudi existing peiii~~ts,
17 affecting areas of forest reserve lands the existiiig use of which
18 is for commercial outdoor recreation ski purposes, shall be
19 subject to all provisions of this Act except the acreage limita-
20 tion and review provisions set forth in subsections (a) and
21 (1)) of section 3 of this Act: Pro~ided, That the holder of
22 any such existing permit may apply to the Secretary
23 for cancellation thereof and issuance of a permit under this
24 Act~
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15
12
1 UTILITY SERVICES FOR CONCESSIONERS; REIMBURSEMENT
2 SEC. 8. The Secretary may furnish, on a reimbursement
3 of appropriation basis, all types of utility services to conces~
4 sioners, contractors, permittees, or other users of such scrv~
5 ices, within the forest reserves: Provitleci, That reimburse-
6 ment for costs of such utility services may be credited to the
7 appropriation from which the expenditure was made.
8 APPLICABILITY TO OTHER LANDS IN TIlE NATIONAL
9 FOREST SYSTEM
10 SEC. 9. (a) The provisions of this Act with respect to
11 forest reserves shall be applicable to all other lands now or
12 hereafter administered by the Secretary, through theForest
13 Service.
14 (ii) The provisions of this Act shall not be applicable to
15 any existing or future application for a permit for commer-
16 cial outdoor recreation ski activities and facilities on forest
17 reserve land in Mineral King Valley, Sequoia National
18 Forest, and shall not affect in any manner any litigation
19 pertaining thereto.
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16
DEPARTMENT OF AGRICULTURE
OFFICE OF THE SECRETARY
WASHINGTON, 0. C. 20250
November 14,, 197~
Honorable Henry M. Jackson
Chairman, Committee on Interior
and Insular Affairs
United States Senate
Dear Mr. Chairman:
As you requested, here is our report on S. 2125, a bill "To provide for
the issuance of permits on public domain national forest lands for commercial
outdoor recreation facilities and activities, and for other purposes."
The Department of Agriculture recommends that 5. 2125 not be enacted.
S. 2125 would supplement authorities available to the Forest Service of
this Department relating to the maintenance and development of commercial
recreation facilities on all lands administered by the Secretary, through
the Forest Service. It would, however, become the sole authority for
approval of new permits authorizing ski activities and facilities. The
bill would establish a procedure for the review and action by the Committees
on Interior and Insular Affairs of the Senate and House of Representatives
on proposed ski area permits involving more than 1,280 acres. It would
also provide for the issuance of detailed regulations containing guidelines
to be used by the Secretary, in determining whether a ski area permit should
be issued. The bill would provide for a study of fees charged for any
permit issued pursuant to the Act and provide a detailed review procedure
of permittee user charges. The Secretary would be authorized to issue
permits for terms up to 50 years. If a permit is terminated by the
Secretary for another use, the bill would provide that the Secretary
compensate the permittee for any permittee owned improvements. Finally,
the bill provides that it shall not be applicable to any existing or
future permit for lands in Mineral King Valley of California.
Under the Act of June 4, 1897 (30 Stat. 35, as amended, 16 U.S.C. 551)
the Secretary of Agriculture is authorized to regulate occupancy and use
of the National Forests. Under this Act, we have authority to issue a
permit for any proper and lawful use. Such permits are revocable at the
Secretary's discretion. In addition, the Act of March 4, 1915 (38 Stat.
1101, as amended, 16 U.S.C. 497) authorizes the Secretary of Agriculture
to issue permits for use and occupancy of suitable areas of land within
the National Forests for the purpose of constructing hotels, resorts, or
other recreation facilities. Permits may cover areas of land not exceeding
80 acres and may be issued for periods of not more than 30 years. We use
both the 1897 Act and the 1915 Act as authority for the issuance of permits.
PAGENO="0021"
17
Honorable Henry M. Jackson 2
Our recommendation that the bill not be enacted is based on a number of
considerations. First, we have adequate authority under the Acts of
June 4, 1897, and March 4, 1915, to issue permits for commercial outdoor
recreation purposes including permits for ski areas. In addition, the
bill contains a number of the provisions which appear unnecessary and
duplicate or conflict with existing procedures established under other
1 aws.
For example, the provisions of section 3(a) and (b) which provide for
Congressional review and publishing of regulations appear to be directed
at a concern that proposals for major ski developments be subject to
open public review and complete analysis of potential beneficial and
adverse effects prior to issuance of the permit. Such proposals are
now subject to detailed agency analysis and public review. Under guide-
lines issued pursuant to the National Environmental Policy Act, proposals
with significant environmental impacts are subject to a complete review
and analysis including the preparation of environmental statements.
Through this process officials of State and local government, interested
agencies and individuals are kept informed and given an opportunity to
review and comment on proposed actions. We view this review process as
providing the needed input by all interested parties in the consideration
of proposed ski developments and that the additional Congressional review
proposed in H.R. 2125 would likely not be necessary to insure full public
review.
The provision of section 3(c) which provides direction for establishment
of annual fees is duplicative and partially conflicting with Title V of
the Independent Offices Appropriations Act of 1952 (65 Stat. 290, 31 U.S.C.
483a) and Executive direction issued pursuant to that Act. As part of
the supplemental statement to this report, we have included a description
of the existing Forest Service system of determining annual fees. This
system applies to all our concession operations, and we believe it provides
for a fair return to the Federal Government while providing the permittee
reasonable profit opportunity on his fixed assets investments. In our
supplemental statement, we also raise a number of additional concerns with
regard to the provisions of the bill and provide additional background on
our present permit system.
The Office of Management and Budget advises that there is no objection
to the presentation of this report from the standpoint of the Administration's
program.
Sincerely,
]~eputy Under Secretary
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18
USDA SUPPLEMENTAL STATEMENT ON S. 2125
ADDITIONAL CONCERNS ON PROVISIONS OF 5. 2125
Congressional Review
We believe that present agency procedures provide an opportunity for full
public review of major ski development proposals and that the additional
Congressional review proposed in 5. 2125 would not be necessary.
In addition, we object to the provision of subsection 3(a)(2)(A) which
would allow either Committee on Interior and Insular Affairs by a
disapproval action to prevent the issuance of certain permits and the
provision of subsection 3(a)(2)(B) requiring the adoption by both
Committees on Interior and Insular Affairs of a resolution stating the
Committees approval of the issuance of permits involving more than
5,000 acres. The Department of Justice has consistently found that
legislative proposals which provide for disapproval or approval of actions
of the Executive Branch by concurrent resolutions, one-House vetos, or
committee vetos are unconstitutional. The Department of Justice testified
against such provisions as recently as May 15, 1975, in appearing before
the Senate Subcommittee on Separation of Powers of the Committee on the
Judiciary in a hearing concerning Executive Agreements.
Annual Fees
We are concerned that sections 3(c)(l) and 4(c) would base the annual fees
and allowable charges on "equity investment". Our present fee system is
based on a relationship between sales and gross fixed assets. This method
of fee determination was adopted after detailed study. Development of a
fee system based on equity investment would require a major revision of
our present system. We are not aware of any advantages which would
result from such a revision. We strongly urge that the present fee system
be retained. We also believe the study schedule set forth in subsection
3(c)(2) would provide inadequate time to establish new fee schedules and
evaluate existing and new fees.
Term of Permits
Section 3(d) would increase the maximum term for a commercial recreation
permit from 30 years to 50 years. While this would have some beneficial
effects for commercial developers in arranging longer term loans, it would,
however, make the task of analyzing the long-term impacts of a proposed
use more difficult. We believe the present 30-year term has been
satisfactory.
Permi ttee Charges
Section 4 provides that all data supplied by a permittee relating to a
proposed increase or decrease in charges to the public be made available
PAGENO="0023"
19
2
for public inspection. We believe the broad disclosure of all financial
information required in section 4 could act as a deterrent in securing
further private investment in developing needed public recreation facilities.
The Freedom of Information Act as amended now applies to the availability
to the public of such information. We strongly prefer that information
on all permits be handled under the existing law.
With regard to the review of permittee charges for services and use
of facilities, the terms of existing permits specify services to
be provided and provide for our approval of charges and inspection of
the quality of service. We view this approach as sufficient to protect
the public interest.
Mineral King Valley
We do not support the provision in section 9(b) which would exclude the
Mineral King Valley from the provisions of the proposed legislation. We
believe all areas should be subject to the same basic law.
PAGENO="0024"
20
3
BACKGROUND ON NATIONAL FOREST CONCESSIONER RECREATION PERMITS
General
The Forest Service is responsible for the development and administration of
public recreation facilities within the National Forest System, which covers
187 million acres of public land.
These facilities are provided through: (1) special-use permits granted to
concessioners; (2) agency maintenance of camp and picnic grounds; and (3)
the granting of permits to State and local governments.
At the present time, the Forest Service has about 1900 concessioner permits
currently in force for the construction and/or operation of recreational
facilities and services. Of this number, almost 200 relate to ski
activities and facilities. In addition, the Forest Service maintains
about 8,500 recreation sites.
The Forest Service has granted approximately 50 permits to State and local
governments for.the operation of picnic areas and organizational camp sites.
Payments to the Federal Government from such permits are nominal.
Concessioner facilities and services include hotels, motels, trailer sites,
restaurants, stores, gasoline and oil stations, boat docks, ski improve-
ments and wayside stands. Generally, the type of clientele using these
concessions include families and individuals camping, picnicking, swimming,
hunting, fishing, boating, sightseeing, and enjoying winter sports.
During 1974, the National Forest System received 193 million visitor days
of recreation use. Concession operations accommodated almost 12 million
of these days. It is estimated that these operations yielded $8 million
of profit from $146 million of gross sales. Concessioners' investment
in improvements totaled over $270 million and receipts to the Treasury
from fees was about $2.8 million. Based on present trends we estimate
that up to $200 million of concessioner investment could be made in the
next 10 years to meet anticipated demand for recreation use on the National
Forest System.
Fee System
In the past, fees paid tothe Federal Government have been based on a
percentage of net sales. In some cases these fees were converted to a
single flat fee. Some of the old permits require that fees be reviewed
and adjusted at 5-year intervals.
During the early 1960's we determined that the application of a single
percentage rate against sales developed inequitable fees. After an
exhaustive study of concession operations a new system of determining
fees was instituted in 1968. The new system was applied to winter
sports operations in 1972. It considers the amount of sales that are
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21
4
generated in relationship to the concessioner's gross fixed assets in
structures, fixtures, and equipment needed to generate income. Minimum
rates have been set which are applicable to all permits. Starting with
a minimum, rates progress upward as sales rise in comparison to gross
fixed assets. Rates as established give the concessioner an opportunity
to realize approximately 15 percent profit. This level of profit has
been calculated based on national averages and would apply to a concessioner
of average operating efficiency experiencing a normal season. The system
neither guarantees nor limits the profit of an individual concessioner.
It does, however, return a reasonable land rent to the landowner commensurate
with the value of the use authorized.
The current Forest Service fee system encourages added investment. Increased
investment results in lower rates being applied to sales until such time
as the anticipated increase in sales generated by the increased investment
is realized. The full text of our policy on fees is contained in chapter
2715 of the Forest Service Manual and can be made available to the Committee
upon request.
Public Information
The Forest Service requires an annual statement of sales from each concessioner,
and standard business records which can be audited at the discretion of the
Forest Service. Financial information is included in these records
which if disclosed could cause substantial harm to the competitive position
of the perniittee. Some of this information is exempt from disclosure under
the Freedom of Information Act. This information is needed by us to maintain
an equitable fee system.
Permittee Charges
The concessioner is subject to the approval of rates and services and to
inspection of service quality. The general specifications for services
and facilities to be furnished are provided by the Forest Service.
Improvements and Termof Permit
Structural improvements made on Federal lands are the property of the
permittee and may be sold on permit termination or be removed by the
permittee. Many Forest Service permits have experienced a change in
ownership and in nearly all cases a permit was issued to the new owner.
In a few cases, improvements have been abandoned and have become the
property of the United States.
Under present authorities, no extension or renewal beyond the permit
term is stated or implied. However, on expiration of the permit, if
the use responds to a continuing public need and is consistent with
established land use objectives for the area and if the permittee has
fulfilled his obligations, a new permit is normally issued to the
owner of the improvements. In those situations where it is necessary
PAGENO="0026"
22
5
to terminate a permit during its term for another use, the Federal Government
obligates itself to pay an equitable amount for the privately-owned improve-
ments. This obligation is expressed in each permit issued under the Act
of March 15, 1915. We have seldom found it necessary to terminate a permit
during its term except by mutual consent.
PAGENO="0027"
23
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C 20503
November 17, 1975
Honorable Henry M. Jackson
Chairman, Committee on interior
and Insular Affairs
United States Senate
3106 New Senate Office Building
Washington, D. C. 20510
Dear Mr. Chairman:
This is in response to your request of October 22, 1975,
for the views of the Office of Management and Budget on
5. 2125, a bill "To provide for the issuance of permits on
public domain national forest lands for commercial outdoor
recreation facilities and activities, and for other purposes."
The Office of Management and Budget concurs in the views
of the Department of Agriculture in its report on 5. 2125,
and accordingly recommends against enactment of the bill.
Sincerely,
/James M. Frey /
Assistant Director for
Legislative Reference
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24
[From the Congressional Record, Wednesday, July 16, 1975]
S. 2125. A BILL To PROVIDE FOR THE ISSUANCE OF PERMITS ON Pm3LIC DOMAIN
NATIONAL FOREST LANDS FOR COMMERCIAL OUTDOOR RECREATION FACILITIES
AND ACTIVITIES, AND FOR OTHER PURPOSES
Mr. HASKELL. Mr. President, I introduce today a bill to reform the system of
issuing and administering permits for ski facilities on national forest land
created from the public domain.
The present system serves no one well. Users may be paying unjustiflably
high charges for the use of skiing and other recreation facilities. Permittees may
be paying unjustifiably low fees to the public which owns the national forest
lands, considering the privileges the permits grant. In any event, the public is
certainly witnessing the unnecessary degradation of the productivity, environ-
mental quality, and value of its lands.
The permittees are concerned about the security and stability of their existing
investments which, in turn, influence their ability to make new investments.
The Federal Government finds itself criticized for a permit system which it
should have reformed long before now. That system is shrouded in secrecy. It
lacks a coherent set of standards and it fails even the most basic tests of uni-
form application.
Mr. President, I began investigating the present outdoor recreation permit
system for national forests last February when many of my constituents brought
to my attention a proposal by three Colorado ski areas to increase by 20 percent
the daily adult tow ticket rate. Skiing is already too expensive for many Cob-
radans. I was concerned that so large an increase would put skiing beyond the
reach of many more people, especially families. I wanted to be sure the increase
was justified.
As no public hearing is held on proposed rate increases, I asked the Forest
Service to delay its decision on the rate hike to permit a careful review by all
parties concerned. At the same time, to facilitate that review, I asked the Forest
Service to provide me the financial information the three ski areas supplied in
support of their requests.
The Forest Service did subsequently deny the full rate increase request and
reportedly offered instead a compromise increase. Yet, any meaningful review of
even this compromise proposal was frustrated by that agency. The Forest
Service denied access to the information I requested claiming that, under terms
of leases with ski areas operating in the national forest, such information is
confidential.
Mr. President, it is inconceivable that a Government agency can base a deci-
Sion which so fundamentally affects the leisure lives of citizens on information
which it refuses to make public. Not only is there no way for the public to ade-
quately review a proposed rate hike, but any appeal process from a Forest Serv-
ice decision to grant that increase would be a sham.
On May 16, 1975, I announced that the Subcommittee on the Environment and
Land Resources, which I chair, would hold hearings in Colorado in the fall on
the issue of ski permittees' charges to the public and public participation in the
determination of charges.
I stated: "Tow ticket prices have risen to the point that. it's very difficult for
a family to ski on any kind of regular basis; yet the public does not know
whether fees charged by companies operating on public land-for private profit-
are justified. It is absolutely essential that all of us have access to this infor-
mation-and that includes profits ski areas may be making, whether those profits
are too high, too low or just right. Further, I believe public hearings should be
held before any rate increases are granted. If, as the Forest Service contends,
present law provides for the confidentiality of financial information submitted
with rate increase proposals, then the law must be changed."
As any Senator would be, I was very gratified with the strong public support
which greeted this announcement. However, accompany this support was a sur-
prising number of communications on the matter from the public, skiers and
other users, and ski operators and other permittees. They detailed numerous ad-
thtional inefficient, inequitable, and financially or environmentally costly faults
in the Forest Service's system of issuing and administering outdoor recreation
permits.
Among these ~re the lack of standards to determine whether to issue or deny
permit applications by particular applications or for specific areas and to subse-
PAGENO="0029"
25
quently determine the fees to charge the applicants for the permits which are is-
sued. The absence of standards further frustrates public review of the adequacy
of Forest Service decision. Furthermore, the lack of standards inevitably leads
to a lack of uniformity in permit application and fee decisions both among and
within regions of the national forests. This lack of uniformity plays havoc with
the financial planning of permit applicants and holders and can jeopardize exist-
ing and planned investment. Substandard services to the public can result.
Our present permit system is so inadequate that the Forest Service is con-
strained to adopt a number of questionable practices to meet the public's dc-
mand for outdoor recreation facilities. Perhaps the most serious of these prac-
tices is that of issuing to a single ski area operator a 30-year permit for 80
acres and a large number of 1-year special use permits for additional acreages.
Existing law permits a maximum of only 80 acres for a recreation permit-an
area decidedly too small for most ski operations today.
To circumvent this antiquated requirement, the Forest Service is forced to per-
form the charade of issuing the speëial use permits on a yearly basis. The result
of this charade is that the operators are faced with serious threats to their in-
vestments. Certainly, annual permits do not provide sufficient security, especially
as the legality of those permits has been questioned, most prominently in the
well-known Mineral King litigation.
Mr. President, this long and growing list of problems with our present permit
system has convinced me that the fall hearings should not simply be oversight
hearings but should focus instead on concrete legislative proposals. The legisla-
tion I introduce today is designed to bring about the necessary reforms in our
outdoor recreation permit system for the national forests. Most of the provisions
of this bill were drafted by staff under my direction. The staff has also substan-
tially reworked the provisions submitted to me after my May announcement by
the ski area operators, environmentalists, and other interested parties. The bill,
however, should be regarded only as a draft to be critiqued and reworked during
the hearing process.
First, the bill lifts the 80-acre limitation for permits for ski facilities. How-
ever, permits over 1,280 acres would be issued only if neither Interior Committee
passes a resolution Of disapproval within 60 days of the submission of the permit
to the committees. And permits over 5,000 acres would be issued only if both
committees pass resolutions of approval. Furthermore, the bill would require the
Secretary of Agriculture to submit permits over 1,280 acres in the form of au-
thorizing legislation should they not pass the committees' review and would pre-
vent issuance of two or more permits for contiguous areas without congressional
review. Most important, the bill would require the Secretary to submit to the
Congress and the public within 6 months proposed guidelines to be employed by
him in determining whether a ski facilities permit should be issued to a partic-
ular applicant or for a particular area. The guidelines are not to be promulgated
until 60 days after their submission.
They are to take into consideration the effect of planned and unplanned
growth precipitated by the proposed recreation facilities on adjacent non-
Federal lands and provide a procedure for consultation with affected State and
local governments prior to any decision on a permit application.
Second, the bill would extend the life of ski permits from 30 to 50 years. This
provision, as well as removal of the 80-acre limit, was requested by the ski area
operators who saw the time and acreage limitations as threats to their invest-
ment. I can certainly understand the detrimental effect the inadequate acreage
allowance and the legally suspect methods of avoiding it have on the financial
environment of permittees. But I am not yet convinced of the need for extending
the permit period to 50 years. I have placed this provision in the bill, however,
in order to encourage the ski operators to provide me with detailed justifications
for this provision.
Third, the bill would require that annual fees for commercial outdoor recrea-
tion permits be passed on a standard of a reasonable return on equity investment
Furthermore, the bill would require a 6-month study and report to the Congress
by the Secretary of Agriculture on permit fees. The report would include steps
the Secretary plans to take, and legislation necessary, to establish a single
method or formula to be applied uniformly throughout all national forest lands
to determine fees from commercial outdoor recreation permits.
Fourth, the bill would require public disclosure of all financial data pertinent
to determination of permittee's charges for public use of his facilities. And it
PAGENO="0030"
26
would require public hearings on any permittee's request for increase in those
charges. A second 6-month study would be required of the Secretary, this one to
determine criteria to be used by the Secretary in rejecting or accepting pro-
posed rate hikes. Among the criteria would be that of reasonable return on
equity investment.
Finally, the bill contains several other provisions dealing with disposition of
permittees' improvements upon expiration or termination of permits; record
keeping audit and examination; and provisions to prevent the mooting of the
Mineral King litigation.
Mr. President, the holders of permits for commercial outdoor recreation facili-
ties are granted the privilege of pursuing private gain on public lands. But the
ultimate purpose of such permits is to provide high quality service at a reason-
able cost to the public which owns the land. Any business which holds such a
permit is uniquely affected with a public interest. It must expect vigorous en-
forcement of that interest. And that is achieved when the public is allowed to
participate.
At the same time, permittees are entitled to reasonable assurances as to the
security of their investment, not only for their protection but to insure that serv-
ices are provided. to the public.
The legislation I introduce today attempts to modernize the permit system in
accordance with these principles.
Senator HASKELL. We have, to say the least, a formidable list of
witnesses, and I would ask that, except for those people who are
elected officials or represent elected officials, all witnesses would con-
fine their remarks to 5 minutes each. If you have written testimony
and it is going to go longer than 5 minutes, it will be received and
reproduced in the hearing record in full.
Furthermore, if anybody would like copies of the hearings, if you
will just give one of the ladies at the desk just outside, your name and
address, you will receive a copy of the hearings.
Now, it is a great pleasure to welcome as our first witness Jim
Monaghan, who is representing Governor Lamm.
STATEMENT OF JAMES E. MONAGHAN, JR., ASSISTANT FOR
NATURAL RESOURCES TO GOVERNOR LAMM
Mr. MONAGIIAN. Thank you very much. It is an honor to be able
to represent Governor Lamm here today at these important hearings.
I might mention I appear here at Aspen because our staff is on the
western slope for the next few days.
Senator HASKELL. Furthermore, Aspen is a very pleasant place
to be.
Mr. MONAGHAN. It is tough to make ourselves come here. We are
actually dealing with energy during the next few days but many of
the public interests remain the same.
With respect to 5. 2125, we would like to strongly commend you for
introducing legislation which mandates further~ public input to the
management of our public lands. The issues surrounding use of the
public domain are complex and vitally important. It is absolutely
proper in our minds to facilitate this public scrutiny. The pricing of
lift tickets is an issue of specific concern to the State of Colorado. We
strongly feel that public input to this rate-setting process is extremely
healthy. We would like to note that the ski industry in Colorado is a
very important aspect of our economy and also way of life in the
Rocky Mountain West and we would hope that the proposed bill and
PAGENO="0031"
27
subsequent hearings would contribute to the health of that industry
and would diminish the misconceptions surrounding it.
I note that a number of people come to the hearings today to dis-
cuss various specific points within that piece of legislation. I would
like to beg your indulgence, however, to simply state some of the prob-
lems that occur with respect to the surroundings. And for purposes of
illustration, I would like to discuss the State's position on the develop-
ment of the Beaver Creek area by indicating why the State entered
that discussion, what the substance of subsequent negotiations have
been, as well as the status of that situation. Upon taking office on
January 14, 1975, Governor Lamm was faced with a pending decision
by the Forest Service to designate Beaver Creek as a winter sports
site. Although the previous administration only 2 hours before mid-
day inauguration had approved such designation, there remained half
a dozen State agencies, many of which were responsible for issuing re-
quired permits, who not only opposed the development, but in fact
predicted that the permits would not be forthcoming.
In examining the course of events which led us to a January 14
decision to oppose designation, we must be highly critical of the State
itself. It is clear that there was no State system for dealing with ski
area proposals. The developers were required to run from State
agency to State agency. The policies and standards which the State
applied over and above statutorily defined ones were unclear and
ever changing. This being the case, however, it must be said that the
U.S. Forest Service should not escape criticism. Although the State
was allowed an opportunity to comment upon the completed Environ-
mental Impact Statement, the State of Colorado was in fact never a
partner to the decision to develop Beaver Creek, a decision that had
obvious State implications. Despite the fact that the air pollution con-
trol division and the water quality control division of the State of
Colorado felt that they would not be able to issue the necessary per-
mits to develop Beaver Creek, the Forest Service pushed ahead with
designation of the area as a winter sports site. In addition, we felt
that the existing State laws were simply not adequate for dealing with
the possible offsite impact of the development. However, again Forest
Service officials, rather than yielding to the State's concern, judged for
us the adequacy of our own State laws and moved ahead with desig-
nation.
During the time in which we were appealing the designation to the
Chief Forester, we began a series of negotiations with the devel-
opers-Vail Associates, Eagle County officials, and the Forest Service.
*The purpose of these negotiations was to resolve our differences sur-
rounding the Beaver Creek controversy. Our intention was never to
precipitously stop Beaver Creek, but to insure that all impacts would
be manageable.
I'm happy to report that through the good will of Vail Associates,
the cooperative spirit of the Eagle County people and what I would
characterize as a new and very cooperative attitude on the part of the
Forest Service, we are now very close to resolution.
So that we will never again be caught at the 11 hour attempting to
respond after the decision has been made, the State of Colorado has
created a Citizens Advisory Board on Winter Sports Development to
PAGENO="0032"
28
work with the various State agencies and actually develop a State
winter sports development plan. This group was given two basic
tasks:
First of all: To develop a system by which a developer can go to one
agency in State government and receive a fast and fair indication as
to the status of his project.
Second: The board is charged with recommending a set of State
policies which will be applied within the decisionmaking processi
When this is completed, all parties will know by what measure they
are being evaluated, by whom, and within what time frame.
Senator, I have taken the time this morning to describe the Beaver
Creek situation because in our estimation there were inherent flaws in
the decisionmaking structure of both the Forest Service and our own
State government which aggravated the situation. More importantly,
however, if these structural and procedural problems within the For-
est Service are not corrected, it will render the State's new mechanism
for dealing with ski area development impotent. I must hasten to add
while debate has been raging on this issue, we have come a long way.
Mr. Bill Lucas, Regional Forester, has been extremely responsive to
our suggestions that Forest Service regulations be modified. It is safe
to say that we are on the road to agreement in defining discreet points
of entry by State and local government into that decisionmaking
process.
Upon reflecting this entire Beaver Creek episode as well as working
with our Citizens Advisory Board, which has been in existence for a
few months now, we would like to make the following recommenda-
tions with respect to the use of the public domain.
First of all: The Federal Government must recognize that its ac-
tions have a profound impact on land outside of its primary jurisdic-
tion. It must assume a responsibility for this offsite impact. The For-
est Service must be assured that when approving an activity on
Federal land that this offsite impact is manageable and acceptable.
Second: The Forest Service must recognize that all levels of govern-
ment, local, regional and State, have responsibilities, concerns, laws,
and regulations which cannot be overridden. All levels of government
must play a full role in these decisions surrounding the Federal land.
The issuance of any special use permit must be preceded in our esti-
mation ~by the concurrence of local and State government. I quickly
note that this arrangement could be misused and obviously the respon-
sibility is on our part to see that *a fair system of evaluation is
provided.
Third: The Forest Service must provide early notification as well
as meaningful and formal entrance into the decisionmaking system by
local, regional, and State governments. It is simply not enough to~ al-
low these units of government to respond to a final environmental im-
pact statement which in fact simply ratifies a decision that was made
many years ago. At this point in time, we also need to know well in
advance what areas are presently beingeonsidered by the Forest Serv-
*ice for potential development. We need to know what those priorities
are.
I would like to give you a couple of very specific examples of what
I mean when I talk about the State's entry into the decisionmaking
process, because we have spent a great deal of time talking about this.
PAGENO="0033"
29
First of all: We feel that a very early decision has to be made in
the development of a ski area with respect to maximum skier capacity,
because, indeed, the number of skiers we put on that hill determines
the economic influence. It is the economic determinant for the stir-
rounding development. This ski area capacity agreement should be
stipulated in a special use permit we feel and should be implemented
by cutoff points in the sale of tow tickets.
The second example: After the parties, local government and Forest
Service, agree on maximum ski area figures, we feel the base area
really should be identified in more precise terms than it is nowadays.
That is the land that's immediately affected by the development on
that hill. At the present time, the area considered the base area by the
Forest Service is only that which is owned by the parties developing
that hill, but as is obvious the primarily affected areas many times is
much broader than simply that small area.
Finally: Once the base area has been designated, the Forest Service
should see that a conceptual land-use plan of the affected area is
drawn and approved by local and State officials prior to the issuance
of the special use permit.
These changes in procedure, we feel, are straightforward and fair.
To the credit of the Forest Service, many of these are being seriously
considered by them at this time. These changes are extremely import-
ant to us because they will allow us to expedite, not delay, the exercise
of a rightful State role in the decisions surrounding. ski area develop-
ment.. This process must be streamlined and made more intelligible.
l,\Te feel that's only fair to the developer and public.
In conclusion, let me say that the ski industry is very important to
us all in Colorado. With the proper changes on the part of the State
as well as the Forest Service, the State of Colorado can take ourselves
out of a totally responsive role we find ourselves in and begin to de-
velop ski areas and those areas for that type of development. Thank
you, sir.
Senator I{ASKELL. Thank you, Mr. Monaghan. I have a couple of
questions and a couple of observations. As you are undoubtedly aware,
the permit system is now based on two Federal statutes. One-the
Organic Administration Act-was enacted in 1897 and the other-
the Term Permit Act-was enacted in 1915. The latest amendment to
either ocurred in 1956. I think times have changed since then.
The Forest Service will testify, of course, at the Washington hear-
ing, but in informal conversations that I have had with Chief Mc-
Guire, I am delighted to say that I find a responsive and receptive
attitude on behalf of the Forest Service, just apparently as you have
found in dealing with the Beaver Creek situation.
I am particularly pleased that in your testimony you emphasized
that as a condition precedent to issuing a permit there would have to
be a land-use plan adopted by the localities to be affected, because ob-
viously the effect of any ski area anywhere in the Nation goes far
beyond just what the folks involved own, and I think that would be
a great step forward, because there are certain areas in other States
where there has been virtually no planning. I am delighted to see here
in Aspen, officials of the city of Aspen and Pitkin County have been
very forward looking in this regard.
67-512-76--------3
PAGENO="0034"
30
If you have, Mr Monaghan, any suggestions on statutor~ language,
we would appreciate recei~ ing them The hearing record will stay
open for 2 weeks, if that's adequate So if you ha~ e any suggestions,
we would appreciate. receiving them.
Mr. MONAGIIAN. We do, and we will certainly tender those.
Senator HASKELL. Thank you very much indeed for coming. We ap-
preciate it very much.
Just as a matter of interest, to show how important skiing is to our
State, the staff has given me the figures that there are 178 special use
permits issued by the Forest Service for skiing nationwide and 24
of these, or 14 percent of the total, are issued in Colorado~ so I would
undoubtedly say that there were more issued in Colorado certainly
than any other State.
Our next witness is Mr. Tony Accetta, first assistant attorney gen-
eral for consumer affairs, and he appears here on behalf of the Honor-
able J. D. MacFarlane, attorney general of the State of Colorado.
STATEMENT OF ANTHONY T. ACCETTA, FIRST ASSISTANT ATTOR-
NEY GENERAL, CONSUMER AFFAIRS, STATE OF COLORADO
Mr. ACOETTA. Good morning, Senator. At the outset, I would like to
congratulate you for the interest you have taken in this business, and
to applaud you for continuing down the road toward a regulatory
plan and for continuing an interest which ultimately a lot of people
feel will go along as long as local problems can go on an ad hoc basis,
as the State has liked to approach and I think is going to be necessary.
I was encouraged a moment ago to hear you talk in terms of the
National Forest being responsive and being sensitive to the problems.
I regret to say, however, that however true that may be, I doubt very
much that that national attitude has found its way to Colorado and
to a local situation here.
The issues which bring us here together go far beyond the bound-
aries of Aspen, Cob. They reach, certainly, across this State, and ex-
tend to every State in which ski corporations are permitted to do
business on public lands. Our concerns are not just with whether a
lift ticket will cost a dollar more this year, or whether a corporate
monopoly will punish people who dare to speak against it by with-
holding favorable season pass privileges-although these issues are
certainly in the forefront of all the concerns to be discussed here to-
day-the more fundamental issue, the reason that corporate managers
enjoy virtually complete economic and social power, is the ineffective-
ness of an agency of the U.S. Government, the U.S. Forest Service.
As representative for Attorney General J. D. MacFarlane, it has
been my privilege to meet with officials of the city of Aspen and to
discuss the testimony they propose to give. As this testimony is pre-
sented, Senator, I think you will find that the concerns and frustra~
tions which will be~ expressed and neither parochial nor specious. The
testimony of the city of Aspen, I think I can assure you s represent'i
tive of the experience of many, both across the State of Colorado and
in other States.
As you know, Senator, the Forest Service is the ultimate authority
for decisions on the uses to which our public lands will be put. The
personnel in charge of decisionmaking, I am sure, are dedicated men.
PAGENO="0035"
31
But dedication alone is not enough. What is the way to use that ex-
pertise which will professionally, competently and effectively make
informed judgments concerning the impact Forest Service decisions
will have on the economy and demography of Aspen or other ski area
communities? I suggest, sir, that such expertise, if it exists at all, is~
not being applied in Colorado. I find it outrageous that an agency of'
government, an employee of the people, can arrogantly and callously'
deny citizens directly affected by their decisions a public hearing on.
the issues. That an audience with Forest Service officials was granted
at all last winter was the result of the courage and tenacity of the
Aspen community, and certainly not the expression of a public con-
science by the Forest Service. Perhaps this is understandable since
those in authority within the Forest Service in this area have been
here so long and have developed such obvious sympathies for the'
problems of the ski corporations they are supposed to regulate that.
it is humanly impossible for them to forget the early years of skiing
and to recognize that they are now the overseers of a multimillion dol-
lar industry in which financial manipulation is sophisticated, in
which economists, accountants, auditors, financial analysts and en-
vironmental experts are more relevant than are persons whose careers
have been spent in forestry. The day must be past when the regional
forester can deny a proposal from a concerned citizen on the ground
that, "Darcy will never sit still for it." The issue is not whether Darcy
or anyone else likes regulation-the issue is whether the Forest Serv-
ice can be made capable of making rational decisions based on the
objective facts presented in a record for all to see, and whether there'
can be standards and criteria, which are known and predictable, upon
which decisions can be reached. The day of seat-of-the-pants regula-
tion must end, Senator, and we urge you to help end it by this bill
and by further regulation of public lands by an enlightened, and not
an anachronistic, Forest Service.
We cannot, and, I submit, ought not, rely on private industry to
regulate itself, since, by definition, the ski corporations are designed
for, and try to, earn maximum profit. An illustration of this which
might be of interest to you is a feature of the current ski-price con-
troversy which has been largely forgotten; that is, during a year
which resulted in record profits, the Aspen Ski Corp. represented to
the Forest Service that it had need for an interim~ approximately
midseason, price increase. I-Tow such need could possibly be justified at
that time is beyond me, and to the credit of the Forest Service, the re-
quest was denied. I have no way of knowing whether the promise of
a lawsuit by the State of Colorado effected that decision. hut I do
know that the record supporting that request was replete with claims
of increased costs but was curiously devoid of information as to in-
creased revenues. No, I don't think we can rely on private industry to
be on the lookout for ways to make skiing cheaper for Mr. and Ms~
Colorado Skier, nor be able to expect that anything short of reason-
able regulation will produce a rate structure which will be based on
anything but the principle of maximum profit.
`We urge cooperation among Federal, State and local authorities.
Beyond that, we urge mutual respect and we ask that the Federal
Government become more sensitive to the needs of the people. Above
PAGENO="0036"
32
all, I believe, we ask for open, honest government where the cards are
on the table for all to see, where there is reason based on fact and not
Tesult based on whim, fancy, or ignorance. We ask nothing more than
to participate in government, to keep government open and accessible
~to all and to insure this we ask the Congress for detailed procedures,
:for due process of law, for at least, in the final analysis, a fair shake.
Senator HASKELL. Thank you very much, Mr. Accetta. As you
:know, S. 2125 provides for publishing of financial information as it
r~iates to ski operations and also it would provide for public hearings
ivith citizen and interest group input on the fairness of the rates, the
structure of the rates and that type of thing. I would gather that the
attorney general's office would support that concept ~
Mr. ACCETTA. Yes, sir; we certainly would. I know I can speak for
the attorney general that the present process of making decisions and
the present appeals processes which exist are a sham, because without
the underlying information upon which those decisions are made no
one can seriously or legitimately challenge a decision reached, and I
applaud your bill and I support it.
Senator HASKELL. Thank you, sir, very much indeed.
I might just observe at this point from region to region and State
to State there seems to be varying practices which I think is a mis-
take. I think there ought to be some kind of uniformity. There ought
to be some kind of guidelines that you can count on in arriving at a
decision, and that's one of the purposes for the bill.
I might say to you, as I did to Mr. Monaghan, if you have any sug-
gested statutory language I would be pleased to receive it. Thank
you~ sir~ very much.
We will now have a panel of individuals of elected officials of the
city of Aspen. The Hon. Stacy Standley, mayor of the city of Aspen,
accompanied by Mr. Philip Mahoney, the city manager, Mr. Yank
Mojo, director of transportation, Larry Simmons, economist, and
Steve Wishart, city councilman.
STATEMENT OP HON. STACY STANDLEY, MAYOR, CITY 0]? ASPEN,
COLO., ACCOMPANIED BY DR. PHILIP MAHONEY, CITY MANAGER;
YANK MOJO, DIRECTOR or TRANSPORTATION; LARRY SIMMONS,
ECONOMIST, AND STEVE WISHART, CITY COUNCILMAN
Mr. STANDLEY. Good morning, Senator. I think we in Aspen are
very pleased you have decided to launch your public investigation in
support of your bill in our community since we feel in some ways
we are perhaps one of the elements that inspired you to introduce such
legislation to the Federal Government.
Today, I would like to direct my comments to the impact upon the
local community of Forest Service decisions of the use of public lands
and ski area pricing. I am speaking as the mayor of the city of Aspen,
the community that provides the service base for 25 percent of the
skier visits of Colorado.
The most important element to recognize is the fact that local of-
ficials are excluded from significant land use policy decisions. We
merely react to the land use decisions made by the Federal Govern-
ment. This is a result of the fact in part that 80 percent of Pitkin
PAGENO="0037"
33
County and 66 percent of western Colorado and most other western
States is federally controlled. On these lands in-State highway cor-
ridors are located, oil-shale leases are secured, water diversion dams
are built, mineral exploration takes place, timber permits are issued,
and finally, recreation uses are permitted to become the focal points
of growth. The local government officials in these impacted areas are~
given the job of ordering the elements of growth in feeble attempts
to direct its impact in the most beneficial manner after the develop-
ment decision has been made, not before. Verification that local com-
munities frequently have not been considered is shown in a special
report in the summer, 1973 issue of "Ski Area Management," wherein
Chief John McGuire of the TJ.S. Forest Service stated and I quote:
Together we have recognized that the impacts of development are far broader
than just where and how to build a ski slope. Entirely new towns usually spring
up around each new ski development, such as Vail; and existing towns have ex--
panded around the older slopes, such as Mammoth, Sun Valley and Breckenridge.
Unfortunately, a number of these communities have grown in a helter-skelter
manner. Transportation and utility services for them have affected land far re-
moved from the resorts themselves.
Determining the development of resorts and related communities requires our
coordinated effort. We must become partners in resort area planning and man-
agement to assure order and compatibility of uses of our mountain forest lands.~r
The "we" Chief McGuire was referring to was the industry and the
TJ.S. Forest Service, not the local community. His statements have of
necessity been expanded over time to include~ the local community in
many instances. However, this does not mitigate the fact that many
communities, including Aspen, are currently suffering and will con~
tinue to suffer from some rather questionable land-use decisions that
were made prior to the establishment of a coordinated land use policy
by the Forest Service.
In Aspen, this remedial cleanup has included a $1 million expendi-
ture for an airport terminal, a $5 million hospital, the design of an
$11 million transit system, the acquisition of 11 acres of parking land
within the city's limits at a cost of $1.75 million, the development of a
$1.2 million pedestrian mall to overcome the choking construction of
our air quality by over 3,000 rental cars at any one time, the allocation
of over $600,000 per year, jointly the city and county, to provide
transit-related services to the Aspen community, and the expenditure
of over $200,000 per year for land use and economic planning, a func-
tion that was not even formalized in this valley until 1971. This is by
no means an exhaustive enumeration of the impact on our local gov-
ernment. It merely highlights the magnitude of pressure being placed
on the local community as a direct result of ski area planning de-
cisions made in a vacuum. To wit, the impact of Forest Service au-~
tonomy in the planning process.
Once again, let me quote from a Forest Service official. This quote
is from the 1971 winter issue of "Ski Area News" in which Gerald
Horton, branch chief in charge of recreation and lands for the
Wasatch National Forest near Salt Lake City said, and I quote:
For instance, planning and developing a major ski area is the most critical
problem we face. The problems are far-reaching; they include transportation
into the region, aesthetics of the area, water quality control, erosion control,
sanitation, parking.
PAGENO="0038"
34
To implement these problems into a finished product, the Forest Service has
found that communications is the key to cooperation between the land agency
and the developer.
Again, no comment, no recognition that the local community should
even be considered in land-use decisions and national policy decisions
regarding ski area management, the point being once again the local
community is relegated to a cleanup act for ski area development.
I feel that the time has come for the Forest Service, inspired by legis-
lation such as the Haskell bill, S. 2125, to start making more positive
and constructive contributions to the local community problems gen-
erated by recreation land-use decisions.
Specifically, economic assistance should be forthcoming. At present,
the Forest Service revenue from the Aspen ski areas is approximately
$210,000 per year. Only $37,00Q is returned to the local community in
the form of payments to the county bridge and road fund. In Aspen
alone, $37,000 will not support three policemen. It does not pay for
the winter snow plowing costs on Main Street, Aspen. Direct impacts
of an on-going nature that the Forest Service has a role in addressing
should include mass transportation, land use planning, facility peak-
ing. Of importance here is the fact that the skiing increased 840 per-
cent from the 1960-61 season through 1973-74 season. Correspond-
ingly, the seasonability of economic activity in Pitkin County in-
creased over that time, implying that ski area expansion aggravates
the peaking problem. These kinds of problems cannot be addressed
for $37,000. They cannot be addressed for $210,000. Many of them
cannot be addressed for $37,000. They cannot be addressed for $21,000.
Many of them cannot be addressed with money at all. They require
pre-planning by all agencies impacted by the ultimate decision, not
merely the developer and the Forest Service. However, dealing with
the economics of the impacts would be positive step in mitigating
many of the past unilateral decisions.
rFwo ways come to mind of monetarily contributing to the allevia-
tion of the problems previously identified. First, there could be an
increase in the concessionaire fee to the Forest Service with a com-
mensurate increase in the passthrough of the fee back to the local gov-
ernment. This is not only an untenable position to the ski area
developer, but may be unnecessarily regressive. The approach would
be far greater obviously on the least profitable areas and does not offer
a real solution, but merely identifies one end of the continual solutions.
A second and imminently fairer system would be the institution of a
user tax on the lift tickets directly rebated to the local cities and
counties. I would recommend that this be an amendment or an ex-
pansion of the Haskell bill. The user then would be contributing to
the maintenance and construction of the services and facilities he de-
mands in the local community. This proposal was introduced into the
Colorado Legislature in the last session. There through the efforts
of the Colorado ski industry in the form of Colorado Ski Country
and the Rocky Mountain Division of the U.S. Ski Association, the bill
was defeated. Perhaps Federal legislation is a more appropriate way
of bringing about the cost-sharing, of community services for tourist
skiers.
Let me now address the second element of the bill dealing with the
establishment of the lift ticket prices. In his responsive statement to
PAGENO="0039"
35
the city of Aspen's requests for administrative review, White River
National Forest Supervisor, Thomas Evans, identified many elements
of quality that went into his "subjective evaluation" of lift ticket
prices Among these items were the following "Parking facilities,
nearness to airports and highways, transit system, base area ameni-
ties-town, dining, lodging, shops, night life, `status symbol' aspects."
These above-identified elements are provided by the local commu-
thty and, except for parking, are never produced by the ski area op-
erator when functioning as an area operation rather than a developer.
Yet they are identified as elements of ticket pricing by the Forest
Service Clearly if these elements are going to be contributors in en-
h'rncing the i, alue of a lift ticket, the cost 0± providing them that must
be borne by the community should in commensurate part be borne
by the ski* area operator. In Aspen, we feel this is not the case. The
Aspen Skiing Corp. provides no parking facilities for the 3,100 skier
capacity Aspen Mountain. The base area amenities are totally contri-
buted by private businesses and the community at large. The county
is particularly responsible for the airport and the $1 million terminal.
The city and county together spend over $600,000 a year on transit
systems. The ski corporations run approximately 27 buses per hour
and use public parks and public streets for their right-of-way and
loading stations. No revenue to offset the maintenance of these facili-
ties is received from the skiing corporations. The proposed $11 million
rail transit system is grudgingly and tokenly being endorsed after 8
months of negotiations by the two skiing corporations with Pitkin
County officials and the final agreement is tantamount to blackmail.
it requires front-end commitment of $910,000 by the ski corporations
which is to be refunded by the city of Aspen and county of Pitkin
in the event a lift tax is imposed.
The status symbol aspects of the Aspen area are rather difficult to
identify. Perhaps they include Aspen Mountain. Certainly they do
not include Buttermilk. Perhaps they include the historic Hotel
Jerome and Wheeler Opera House as well as the myriad of other his-
torical structures within Aspen. Perhaps the very ambiance of Aspen
is its status. Most certainly it is something created by the community
and the people of the community, not just the skiing mountain. This
is one of the elements that determines the lift ticket pricing in our
community.
Let me point out that skiers spend 7 hours per day on the mountain.
They spend 17 hours per day. in the local community. If the Forest
Service is going to grant rate increases, let's see those rate increases
which are based in part on the communities' efforts show a responsive-
ness to the community commitment. The responsiveness éan take the
form of season passes for locals who help create many of the quality
elements identified by Mr. Evans, and they can take the form of mone-
tary contribution to the maintenance of these quality elements by the
local community.
I think it rather obvious from my discussion dealing with very
basic points of pricing that the Forest Service is entirely confused on
what should be included in lift ticket prices. Further confusion has
been shown in statements on what does and does not constitute "dis-
criminatory" pricing. For example, they insist upon defining the
product purchased as the right to unlimited skiing for a day. If two
PAGENO="0040"
36
people ski different amounts during the day one can hardly claim
nondiscrimination Perhaps vertical transport but per hour would be
a better method. Whatever the proper method ~for pricing should be,
the issue here is that there currently exists :fl° measure that is uni-
formly applied, nor does it appear that the Forest :Service. has prog-
ressed toward the de\ elopment of a measure despite their recognition
of needing ~one.
I wish to emphasize that I am not attacking any ski corporation's
right to a profit, nor am I contending that AspenSkiing Corp. or any
other is earning, abnormally high profits. That is not the purpose of
these hearings nor do I concur with that type of statement. However,
we should not be diverted from the real issue by subsidiary comments
The issue is a need for a process that incorporates the welfare of all
parties in a form in which all can be assured of fair treatment.
In conclusion, I would like to emphasize that Forest Service deci-
sions on land use for recreation and the prices charged therefore have
substantial impact on local communities that are .impr~perly con-
sidered under current procedures. These errors of omission relegate
local officials to the role of reaction to minimize undesirable impacts
rather than enabling them to take positive action to maximize the
desirable impacts. For the long-run viability of mountain recreation
areas, this must change and it must change now, not in the future. Let
us then continue work on the Haskell bill to incorpor'~te the concerns
of the affected local communities and place the Forest Service in the
position of haying to consider the well-being of all parties in their
decisions.
Thank you, Senator.
Senator HASKELL. Thank you very much indeed, Mr. Mayor, for a
thought-pr9voking statement. You brought up something that hadn't
occurred to me but which I think is valid. If you have a ski company
operating on Forest lands, the public facilities to support people
coming there and, of course, the money for them are derived from
taxes by the businesses and the residents of the community. If, on the
other hand, you have a ski corporation operating on private lands, as
is occasionally the case in the eastern part of the United States, the
services would be supported in part by taxes on private land which
was used for the ski facility purpose, and for that reason it would
seem to me that your comment on some kind of greater participation
from the ski permit holder to local services would be in order.
This is a thought, I mean this is a situation that really hadn't oc-
curred to me before your testimony, but I think it has a great deal of
validity. So, I thank you very much for your testimony, and as I said
to the other two gentlemen that preceded you, if you have any specific
suggestions for changes, let me know, and if your associates have
some comments I would be delighted to hear from them.
Mr. STANDLEY. Thank you, we will.
STATEMENT OP DR. PHILIP S. MAHONEY, CITY MANAGER, ASPEN
COLO.
Dr. MAHONEY. Senator Haskell, my name is Philip Mahoney. I am
the city manager of the city of Aspen, Cob. I am here officially rep-
PAGENO="0041"
37
resenting the City Council to make a statement regarding the pro-
ceedings whereby the Forest Service regulates an important industry
in our community.
Sir, I have a terminal degree in economics. I was a professor in the
Business School at the University of Colorado for 4 years. I was dur-
ing this time the Director of the NARA Commission Course. This
course is given to review fundamentals and review current issues in
the regulatory industries. As its Director, I believe I understand the
issues of regulations. I am completely confused at this point on reg-
ulation occurring in the ski industry.
In your introductory remarks to the Senate on Senate Bill 2125,
~`a bill to reform the system of issuing and administering permits for
ski facilities and other outdoor recreation facilities on national forest
land created from the public domain," Senator, you noted that the
"...system is shrouded in secrecy. It lacks a coherent set of standards
and it fails even the most basic tests of uniform application." We
agree. Darcy Brown in a letter to Tom Evans dated April 7, 1975,
stated: "The Forest Service has heretofore established no regulatory
procedures or standards regarding lift rates; and absent these, we
have serious doubts as to the validity of any regulatory efforts by the
Forest Service, which would of necessity be ad hoc or arbitrary." We
agree to this also and our statement that follows expands on these
two statements. We believe these to be the heart of the issue and the
other problems aired in the past are peripheral to this main issue.
They can be worked out if we are provided with legislation that gives
us a system and standards.
It is common knowledge that the process in the past has been one of
reaction to pressure and compromise by Forest Service personnel
who have been ill-equipped to cope with the complex issues.
For examples a ski corporation whose land sale division has been
losing money due to a failing market and scarcity of funds would
request relief from the Forest Sevice via a rate increase on lift tickets.
Once this is allowed it is the stated Forest ServiCe policy that no ski
area will be required to charge less than a competitor. A domino effect
would then occur in the price of the lift tickets in all areas. Thus,
prices were not established in Aspen according to any~ parameters in
Aspen, but reflect poor land sales at Cooper Mountain. The process
concerned a lot of meetings between area operators and the Forest
Service. Compromises were struck and essentially the Forest Service
acted as a "cartel agent." A canard was then presented to the public
in the form of a secret ritual whereby the public was informed they
were fairly represented at these luncheon meetings by the Forest
Service, but that confidential information precluded the public from
kn'~wing the details.
The Roaring Fork citizens, the city of Aspen and Pitkin County
objected to this secrecy in the spring of last year. They requested
from the Forest Service under the "Freedom of Information Act"
that the information used as the basis for the decision be made public.
This was done this past month and the information mailed to the
city of Aspen. We submit this information is a sham. It mocks us
that the Forest Service would suggest that they used this information
PAGENO="0042"
38
to make pricing decisions so important to this community and its
industry.
Let me point out that the Forest Service ws not even careful in its
hoax. In a certified letter to the Aspen City Attorney, Mr. Rexford A.
Resler, Associate Chief of the Forest Service, Washington, submitted
the financial data used by the Forest Supervisor, White River Na-
tional Forest, to determine whether or not to approve a ski lift ticket
price increase for the Aspen Skiing Corp. The data entitled "Aspen
Skiing Corporation Projections for Fiscal Year 1976" is attached to
this testimony. There are some immediate questions that need to be
answered by the Forest Service before one could begin to believe this
sham.
In this table, Senator, there. were a list of about 12 items that the
Forest Service used to base their decision, and in this list they used
some ratios. Their ratios were inverted.
Senator HASKELL. Excuse me, what do you mean by a ratio being
inverted, .just for my clarification?
Dr. MAHONEY. Well, for example, they had debt to equity, but in
presenting the figures it would be equity over debt. It should have
been equity to debt, and anybody familiar with using these ratios
should have picked them up, and it is questionable that it is really a
meaningful part of their decision process.
Senator HASKELL. Was this a table that the Forest Service stated
that it had prepared as a result of information provided by the com-
pany, or was it a reproduction of information provided by the
company?
Dr. MAHONEY. It is my understanding that they took information
provided by the ski corporations and developed this table themselves.
I have seen similar tables for Vail and Breckenridge.
Senator HASKELL. Similar inversion?
Dr. MAHONEY. Yes, the same.
Senator HASKELL. Thank you. I did not mean to interrupt you. I
just didn't know what you mean by inverted ratio. I see what you
mean now.
Dr. MAHONEY. Well, we wondered if they used these ratios to com-
pare other firms in the industry. It is not a major goof. It just sug-
gests that they are not equipped and were not equipped to handle it.
They also used fixed assets gross. We don't know how they computed
fixed assets gross. V~Te don't know if leases are capitalized into fixed
assets. These, are very specific questions, but they need to be answered.
Let me continue on with some of these questions.
Is real estate land included in fixed assets?
Do revenues gross include any complimentary passes?
What is included in "total expenses"?
Did the. Forest Service use accelerated depreciation in calculations
of cost?
Does accelerated depreciation reflect the true "waste" of the ski
corporation assets?
Does the Forest Service have compaTable "risk" ratios of other ski
firms in Colorado? Are they compiled over time? .
How does the Forest Service rate the Aspen Skiing Corp. in terms
of risk?
PAGENO="0043"
39
What is the Aspen Skiing Corp.'s "cost of capital"?
I might point out, Senator, that in the ski industry we have one ski
firm that perhaps might have a debt to equity ratio of 90 percent and
in another one it would be just completely reversed. We don't know
what the cost of capital is.
What is a fair rate of return on equity capital for the ski corpo-
ration?
Should the Forest Service allow discriminatory pricing for ski tow
service?
Does the Forest Service believe that skiers should pay for their
entire resort experience in the price of their ticket?
What is the relationship between costs and sales over time?
Is the market for tow tickets elastic or inelastic in terms of price?
The above questions are but examples of questions that the Forest
Service should have addressed and answered if they earnestly in-
tended to pursue a systematic approach to regulating the ski indus-
try's price.
12\Te found in discussing these issues with the Forest Service and
reading their correspondence that they were confused by such terms
as "return on capital ;" they were not clear whether they were using
the asset concept or the liability concept. These and other errors point
out that they are not equipped to handle the very difficult problem
of rate regulation. We understand the economic concept~ of "break-
even point." In economic terms it can be graphed using total cost and
total revenue curves showing the relationship of fixed and variable
cost. There are two "break-even" points-but, what does the Forest
Service mean that a break-even point can be determined by a fixed
relationship betwen sales and gross fixed assets?
In other material that they submitted to us, Senator, they used this
as a very fundamental equation to determine the products, and it is
completely meaningless to me.
Senator HASKELL. That a break-even point can be determined by a
relationship of gross sales to assets?
Dr. MAHONEY. Be determined by a fixed relationship between sales
and gross fixed assets.
Senator HASKELL. It's a new one on me.
Dr. MAHONEY. We believe that administrative procedure first must
accord with certain "rules of fair play," formally designated as pro-
cedural due process of law. The essence of this process, we believe, re-
quires that we be given adequate notice that a specified matter will be
subject to a public hearing, and we be given an opportunity at a pub-
lic hearing on that particular matter to present evidence and contra
evidence. We do not believe they have afforded us this process.
With respect to the Federal Administrative Procedure Act, it has
been stated authoritatively that the law was designed to "~ * * afford
parties affected by administrative powers a means of knowing what
their rights are and how they may be protected. By the same token
administrators must provide a simple course to follow in making ad-
ministrative determinations. We do not believe they have abided by
this act and developed a procedure by which this decision or future
decisions would provide us * * * a simple course to follow * * *"
In a letter from Mr. Tom Evans dated June 2, 1975, in which he
refused to rescind his approval of the Aspen Skiing Corp. rates dated
PAGENO="0044"
40
May 8, 1975, lie included a list of items which he considered in eval-
mating a proposed rate increase for the 1975-76 ski season for areas
in the White River National Forest. The Forest Service admits in this
list of items that the decision was primarily based on a subjective
evaluation of approximately 17 items, one of which was "Base area,
~amenities-town, dining, lodging, shops, night life."
Does the Forest Service believe we have been given the proper ad-
ministrative procedures and a simple course to follow when they have
determined a regulatory policy based on this list? To quote the last
sentence, "The above items of finance comparability and quality form
the basis of.the analysis leading to approval or disapproval of rates."
The decision, based on such loosely considered parameters is
nothing less than impractical to measure, imprecise, and subject to
~ibiise by arbitrary decisionmákers. We cannot but object to this
aspect of your procedure.
We would like to present at this hearing, Senator, what we believe
to be the essentials of proper rate regulation.
As stated in our objections, the Forest Service has used a method of
~allowing rates that are too subjective, perhaps whimsical, the criteria
defies measurement, and there would be no way to review or object to
conclusions obtained from the process.
We propose that the Forest Service adopt a system similar to that
developed over the years by utility regulatory agencies. A system con-
-tinually being reviewed by our court system and dynamically respond-
ing to changing technical and social conditions. Simply stated, we
recommend that the Forest Service use a "Cost of Service" basis for
regulating the ski tow industry.
The basis for ratemaking is to determine what is a firm's total cost
of service, or stated another way, this question asks: How much in
total revenue should the firm be authorized to collect through the rates
£harged for its sales or service?
The cost of service of a regulated firm is defined as the sum total
of: (a) Proper operation expenses; (b) depreciation expenses; (c)
taxes; and (d) a reasonable return on net valuation of property.
Thus, a regulated firm under a efficient and economical management,
requires revenues sufficient to, (1) cover proper operating expenses,
depreciation, and other expenses, and taxes that would be payable
if the authorized rate of return were earned; and (2) to provide rea-
sonable return on the net valuation of the property used and useful
in serving the public.
After the cost of service and revenue requirements have been deter-
mined, the next step in the ratemaking process involves pricing the
service or designing schedule of rates that are intended to produce
the total revenues that the firm is authorized to collect from the
public.
We have noted in past correspondence with the Forest Service that
the foregoing is not a simple process but one that provides a mechan-
ism for reasonable men to at least understand the process and arrive
~it similar conclusions based on measurable data. The process requires
that there be an understanding on what costs are to be allowed. Such
PAGENO="0045"
41
costs as sales promotion and advertising, payment to affiliates for
service and charitable contribution should be agreed upon as legiti-
mate and necessary to the business. Also, the question of proper "rate
base" is difficult to answer but there are guidelines and agreements
which can be reached that would allow answers to those questions~
Finally, an additional problem of the process is to determine a fair
rate of return, but we can look to the Hope Natural Gas Company
case as a foundation to solving rate of return.
One final comment and recommendation pertains to the Foresf~
Service's refusal to consider ski passes based on the theory that this
would be discriminatory pricing. It is an underlying principle of
ratemaking that relatively homogenous groups of customers, called
customer classes, be established, a different schedule of rates is applied
to each class and each rate schedule ordinarily offers the individuar
customers within each class a graduated descending scale of rates for
incremental blocks of service taken. Accordingly, the public utilities
engage in "differential pricing," rather than uniform or "super-mar-
ket" pricing. It should be made clear that public utility rates gener-
ally are not made for individual customers but for different classes of
customers and services. Thus, we have for example "student rates" on.
airlines and commercial and residential and industrial rates in elec-
tric utility pricing.
To quote from an authority:
Differential pricing is an entirely lawful and economically desirable form of
public discrimination, insofar as regulated public utilities are concerned. Three
conditions are necessary in . order for differential pricing to be possible: (1)
monopoly or near-monopoly on the supply side of the market, (2) a . total de-
mand, and (3) some means of insulating each market from the others, so that
those who buy at the lower prices cannot resell to those who would have to pay
higher prices.
Hopefully, we have demonstrated that we think there is a better
method of pricing, rather than the one which the Forest Service used
in its decision of May 1975.
Senator, the problem we are having in this community is directly
traceable to the Forest Service. We have many strong independent
entities in this valley, a strong ski industry, an equally forceable gov-
ernment sector. We have conservationists, developers. We have those
for the ski trade and those against it, and most of those issues we face
in this community, there are certain ground rules to the game. They
can he resolved in the marketplace, the courts or by the political proc-
ess. We understand this process, yet in this issue, we are facing today
there are no ground rules. We don't know what's going on. The Forest
Service says they are regulating the use of our public land. Everyone,
with the exception of the Forest Service, agree they are not.
We are left with the analogy of a football game with many trying
to carry a ball in an undefined area with no rules and no referee. N@
wonder we' are bickering in this comipunity. lVhat we need is legis-
lation to provide us with the rules, then a referee to interpret them..
That is the solution to our problem
PAGENO="0046"
42
Senator HASKELL. Thank you, Dr. Mahoney. One of the things that
led me to introduce this bill that we are having the hearing on was
the complete absence as far as I could find of standards applied by the
Forest Service, also the fact that individual Forest Supervisors ap-
Parently made decisions for their areas that weren't compatible with
other areas, and, of course, the absence of meaningful information,
~which we stressed at the beginning.
I would like to ask you a question to see whether you think this
4ype of solution might be desirable. It is not in the bill. It was sug-
guested to me by somebody else. Let's assume that there was applied
for and let's assume your first determination was, was this a truly
competitive situation in that particular area, call that area A, and
make further, of course, determination as to whether area A was in
fact not engaging in anti-competitive practices. Now, under those
circumstances, you would think that we are making that assumption
it would do what competition is meant to do, and that is regulate.
If you made that finding, then you wouldn't have to go any further.
Dr. MAHONEY. I agree.
Senator HASKELL. But if you couldn't make that finding, then you
would have to go into the type of thing you are talking about. Now,
it seems to me that there is some common sense to that and I just
wondered how you reacted to it.
Dr. MAHONEY. I agree with your statement, Senator, but we have
several markets in this community, in fact in all ski area communities.
We are entering the market in the international skiing market and
people that participate in that market are very nonresponsive to any
change in price. They will spend $1,000 to come to our community and
they could care less whether the price of a tow ticket is $20 or not.
They have other desires. They want good ski conditions, which our
ski corporation does provide them, but we have a Colorado market
and these people are very responsive to changes in price, and then we
have our local community and they are extremely-they have no
other recourse.
Senator HASKELL. Well, I think you obviously would have to have
a fair rate structure to provide, you know, across the board participa-
tion, but I was thinking, for example, of Arapahoe Basin, Loveland,
Berthoud, Winter Park. I would think assuming they didn't engage
in some kind of price fixing it would be truly competitive.
Now, it seems to me that if you have a situation where you do have
honest to goodness competition, then that obviates the necessity of
going that one step further. I'm just asking your reaction to the idea.
Dr. MAHONEY. Yes, sir; that's true. The Arapahoe Basin, Brecken-
ridge, Vail and all these ski areas that can be reached comfortably
by driving a car in 3 or 4 hours are competitive with each other for
the Colorado automobile skier, but for those people that can't work
the Red Onion at 10 o'clock in the morning and then hop down to the
Broadmoor and ski for $2.50, that's not the same market.
Senator HASKELL. I understand that. I understand that completely,
Dr. Mahoney. I was just advancing the general sort of theoretical
philosophical proposition to obtain your reaction to it.
PAGENO="0047"
43,
Dr. MAHONEY. Well, I agree.
Senator }IASKELL. Thank you, sir, for your excellent testimony. I
appreciate it.
LThe letter referred to by Dr. Mahoney follows:]
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., September 2, 1975.
SANDRA M. STULLER
City Attorney,
City of' Aspen, Bo~z, V,
Aspen, Cob.
DEAR Ms. STULLER: We have carefully reviewed the Freedom of Information
Appeal submitted by you on behalf of the City of Aspen. This appeal is identical
to that submitted by the Roaring Fork Citizen, Inc., and requests the release
of certain financial data used by the Forest Supervisor, White River National
Forest, to determine whether or not to approve a ski lift ticket price increase for
the Aspen Skiing Corporation.
Your appeal has been granted, and the requested data is enclosed. The infor-
mation is contained on the sheet labeled "Aspen Skiing Corporation Projections
for FY `76." The projections were compiled by Forest Service personnel, and
should not be construed as necessarily representing the permittee's anticipated
financial situation. In the event you decide to release or make public this in-
formation, we urge that you qualify or interpret it so that no misunderstanding
results.
As you know, the Forest Service Manual and the special use permits Speci-
fically exempt the enclosed data from release. However, the judicial criteria for
exempting material are specific on a case-by-case basis, and we must conclude
that this case does not qualify for exemption.
We trust this meets your request in full.
Sincerely,
REXFORD A. RE5LER,
Associate Chief.
Enclosure.
PAGENO="0048"
44
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0
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0
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0
0
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0
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E
PAGENO="0049"
45
Senator HASKELL. Mr. Steve Wishart, city councilman.
STATEMENT OP STEVE WISHART, CITY COUNCILMAN, ASPEN, COLO.
Mr. WISTIART. It is awfully early in the morning. I am just going
to read, a short note that I wrote yesterday, which is essentially not
addressed as a city. councilman but as a. working person in this town.
OK, short note about not skiing in Aspen, or how I came to love
cross country.
I should admit at the outset that I like big government only slightly
less than I like big business, which is not very much at all. Generally
speaking, both are not particularly responsive to individuals in the'
society, and Senator Haskell's proposed bill, S. 2125, certainly smacks
of all sort of government regulation and control,, but I support it.
There are a number of reasons, but it all boils, down to the single ex-
planation that continuing increases in the pricing structures of the'
ski corporation in this town and discontinuance of a reasonable break
for local people, local working people, has made it impossible for me
to downhill ski. Greedy me. I'm sorry. Just because I live here I
should be counting and handling my silver skiing, platter,, you know.
Well,, not really, you know, but it is people like myself, the long-
term local residents, and I am sure there are a bunch in the audience,
who makes this community more or less have the ambience that draws'
the people here. I don't know, I think I should be taken care, of in
some respect, because I won't stay here if I don't get a ski pass.
I happen to be an elected official and I will stay for my term,, but
beyond that I can't. see staying here, as this is a continually rising
place,.small inconveniences, housing. In.my case, you have to be skiing
on Aspen Mountain. That's why I came here,. not to. ski Highlands or
Buttermilk. Aspen Mountain.
But for my own personal reasons, they mainly evolve around the
bad me, and the less money I make, I don't ski any. more. I cross-
country.
Now, I want to ski in this town. I am more or less a tourist in my
own town,. and I don't know, that somehow doesn't. seem right. I'm
being priced out of a market that over the last 10 years I helped
create through my service into this town. To make enough money to
ski, to pay $11 a day, I have to work all of the time. I'm not particu-
larly fond of that. That's why I became a politician. It's a Catch 22.
You, are a perfect. example. If I am going to. make enough money to
pay $11 a day to ski, I have to work two or three jobs, in which case
I am too tired to ski. On the. other hand, if through some fiat I end
up with a job with a reasonableenough wage, I have to work so.much
that I don't have time to make the reasonable deals that we are getting
from the Ski Corp worthwhile You know, I would end up p'~ying $1~
or $16 a day fOr my 30.. days, whatever. Somehow, I don't know, it
doesn't seem right to go. This seems a little hard to take from; a. cor-~
poration that depends on the licensee to provide' a stable work force
67-512---76------4
PAGENO="0050"
46
that treats their tourists better than they can their work force as it
becomes even more transient, and it will be for sure.
I have lots, a lot of friends. I am sure you have, too. They have
gone someplace else that is a little bit easier to make it, and you lose
people like myself who are I guess generally working here and skiing.
If you lose us every year, you are going to end up with people that
come in every year, and you are going to have a very unstable work
force and a less than desirable service pace for your community, you
know. Makes sense. They are coming out for something.
The other thing that bothers me is they are cutting me out of a
market I can't afford and they are also doing it to my land, our land,
and I think they ought to have some sort of a pricing review board,
and I hate the idea of another P1IJC or FCC or whatever. I don't like
that idea at all, but on the other hand I don't like them making
enormous profits on my land and forcing me out of their market.
Simple as that.
When I came here, that wasn't the case. It was really very easy
to make a living in this town. Wages were about the same as they are
now. Housing was a lot cheaper. Food was a lot cheaper. You could
get a ski pass. You could do something, sweep floors, whatever you
could do. Now you can't. You are to the position where you really
can't do it, and, you know, I'm going to stay here because I've been
elected and I have to do it, ya-ta-ya, but beyond my 3 years here I
can't see people like myself, and I assume a good portion of you, I
can't see us staying here. It is as simple as that. We are being priced
out of our own market.
Senator HASKELL. Well, Mr. Wishart, you have stated a classic
Catch 22-if you don't work, you don't have to go to enjoy yourself,
and if you just don't work you can't enjoy yourself. Maybe that's
why I went into politics too. I don't know. Anyway, thanks for your
testimony.
Mr. WISHART. You put the point a little bit wrong. I don't mind
working, but I do mind working to the point where I can't enjoy
myself.
Senator HASKELL. I understand. Thank you very much, sir. Thank
you, gentlemen, very much indeed.
Mr. Mojo has a statement for the record.
[The prepared statement of Mr. Mojo follows:]
STATEMENT OF FRANCIS A. Mo~o, Jn., DIRECTOR ~F TRANSPORTATION, ASPEN, COLO.
Inasmuch as it is a governmental responsibility to assist in the maximization
of national social welfare through the administration of public lands, the im-
pacts of administrative decisions affecting those lands must be understood,
evaluated and considered. In the following testimony, I will point out those
areas where, in my opinion, there exists potential impacts that have not even
been identified much less understood, evaluated and/or considered by the Federal
Agency charged with the administration of vast acreages of public lands and
NatiOnal Forests.
In the Aspen area, as in many resort areas throughout the country, a signi-
ficant portion of one's real (total) income is in the form of non-monetary
PAGENO="0051"
47
(psychic) income. "Psychic income" is a long held proposition in economics that
is used to describe or delineate the amount of non-tangible rewards that a
`worker receives for his labors. Psychic income is received by a worker instead of
monetary income because there is a personal reward value placed on a job be-
cause of the job, or the locale or for any other reason whereby the worker per-
*ceives that he is receiving something of value to him. The opportunity to ski,
or live in a certain area, or do a certain task, or live a particular lifestyle are
all examples of the form that "psychic income" can take. For example, it is
generally recognized that many highly educated people accept menial type labor
in order to be and ski in Aspen. The environment and life style of Aspen ai~e
attractive enough to induce the worker to "trade" a potentially high salary that
would accrue to him in another locale for the opportunity to live and ski in
Aspen. The amount of psychic income a worker receives is a personal choice
and hard to calculate, but is at least estimable. In 1972, the Bureau of Labor
statistics reported that the average (mean) income of a college graduate was
$20,055.00. Now it is reasonable to assume that a college graduate between the
ages of 21-30 should earn at least $10,000-$12,000 per year on the average. In
`Table No. 1 below, 56-57% of the Aspen/Snowmass employee population has a
college degree or more and yet only 11% of the Snowmass employees, and 20%
of the Aspen employees expected to received $10,000 or more this year. Combine
this information with the fact that Aspen has one of the highest cost of living
in the entire country, which would offset any cost of living considerations for in-
come substitution, and the inescapable conclusion is that some sort of "psychic
income" substitution is occurring within the labor force. Although it is difficult
to allocate so many dollars to environment, life style, and the opportunity to ski
for a season, the evidence is clear that some workers are foregoing some amount
of monetary income to have the opportunity to ski, and we can reasonably
assume that the remaining 35-45% of the college educated labor force expected
to receive $4,000-$7,000 in "psychic income" in the 1974-75 season.
If the opportunity to ski is reduced ,(or otherwise changed) by elimination
of the season pass then three potential impacts may result. First, the worker
may accept the "cut" in real income. His real incOme, which is made up of mone-
tary income and a level of psychic income, is reduced by the amount of psychic
income that the worker allocated to skiing. If he spends' the same total amount
iii a season for skiing as he has in the past, then he must accept less skiing,
which is a reduction in psychic income and therefore. a reduction of real in-
come. If be skis as much as he has in the past, then he must spend more of his
monetary income to maintain the previous level of skiing, or put another way,
he must spend monetary income to maintain a given level of psychic income, and
therefore, this also represents a reduction of real income. Historically within
the Aspen labor force, savings are low and dissavings are frequent. This implies
an inability to ski as much if monetary income remains the same, because redu-
tions in psychic income can not be adequately supplanted by reductions in sav-
ings, the net result being a real decline in. real income. In any case, this worker
is worse off in a welfare sense than he was prior to the elimination of the
pass, and a net decrease in social welfare may have occurred because of the
pricing decision by a Federal Agency to eliminate or reduce the worth of the sea-
son pass.
The second impact that could result from the decision to eliminate the season
pass is that the worker refuses to accept the "cut" in real income and demands
that the level of psychic income, be replaced with monetary income. This would
increase the cost of labor to the employer who would try to pass it on to the
tourist consumer. . If he were successful in passing it on, the tourist consumer
would pay a higher price for a ski visit even though the Forest Service might
not have allowed an increase in lift rates. This type of secondary impact is as
an important a consideration as are the primary impacts of administrative de-
cisions by Federal Agencies charged with `the administration of public lands
for the public good. If the employee couldn't pass on the increase in labor costs,
then a decrease in the employer's. profit level would occur, and in the case of
a business on a close margin, may cause the failure of the business. This then
has the potential of reducing the viability of the entire Aspen economy, as well
as creating `potential social impacts. ,
PAGENO="0052"
48
A third alternative in this example is that the worker would quit the job andl
a replacement worker would have to be found. who is willing to work at a lower
level of total income, since his monetary wage would remain the same and his
level of psychic income would have to be lower `due to the loss of skiing oppor-
tunity by elimination of the season pass. This would also represent a potential
decrease in social welfare.
All three alternatives can occur as a direct or indirect result of a decision
by the Federal agency, and yet, it is readily apparent by the lack of informa-~
tion used to reach lift ticket pricing decisions that the Forest Service has not
researched these potential impacts and has basically ignored the implications
of pricing decisions on any group but the concession company they are dealing
with. A corollary impact to these potential changes in real income is a potential
labor market distortion that could result from increased monopsony power as a
result of the pricing decision to eliminate or reduce the worth of the season
pass. "Monopsony" describes, a market condition in which there are many sellers
but only one buyer. The buyer can then set the price of goods by refusing to
pay more than a given price, and refusing to deal with those sellers who won't
sell at the price set by the buyer. A large or only employer in a one-industry
economic substructure is an example of a monopsony.
The Aspen Skiing Corporation, by being the area's largest single private em-
ployer, cannot avoid impacting employees and other employers by its employ-
ment policies. In particular, the policy of granting its employees season passes,
if combined with the elimination of purchased season passes, would place the
ski corporation in a different position vis-a-vis other employers than it is pres-
ently in.
The granting of the season pass to ski corporation employees and not to other
firm's employees could increase the supply of labor to the ski corporation and
this could potentially reduce the monetary wages paid or could change the
characteristics of the ski corporation employee, or the character of the em-
ployee available to the remainder of the employers. It is possible that some of
the better services personnel would become ski corporation employees to the
detriment of other employers and businesses, due to the availability of high
psychic. income in the form of a free season pass.. This encourages discrimination
in favor of the ski corporation and. represents a wage subsidy by the public in
that the costs of the passes to the ski corporation are passed on in the form of
lift ticket prices. It is quite easy to postulate a situation where a request for
an increase in lift ticket prices could be based on and justified by an increase
in costs to the ski corporation that are derived solely from an increase in free
skiing by ski corporation employees.
It is obvious that the Aspen Skiing Corporation, as the area's largest private
employer,, already has some monopsony power in the labor market and the
elimination of the purchased season pass would likely increase that monopsony
power. Monopsony power as well as monopoly power is subject to governmental
control on the basis of public interest.
Impacts on the labor force may not be limited to impacts on real income or
employment opportunities. The following table has been compiled from the em-
ployee survey that was conducted at the beginning of the 1974-7fi winter season.
It is broken into two parts: the first part `deals with those characteristics that
the employee brought with:him when he. arrived, in the Aspen/Snowmass area;
the second part deals with those characteristics that are attributable to the
employees' working situation and the result because of that. situation. The
intent of this separation is to reveal, the nature of the employee as he enters'
the Aspen/Snowmass economic system and then to compare the effects that"
the two elements (Aspen and Snowmass) of .that system, have on him and his
level of welfare.
TABLE NO. 1-CHARACTERISTICS NOT RELATED TO AREA. EMPLOYMENT
[Percenti'
`
Snowmass
group
(N=45i)
. Aspen'
group
(N=1310)'
Age 21to30
Single
Sex (male)
College degree or better
76
69
53
57
70
63
52'
56
PAGENO="0053"
49
CHARACTERISTICS RELATED TO AREA OF tMPLOYMENT
Snowmass
group
(N=451)
Aspen
group
(N=1310)
Percentage:
More than 1 year in Roaring Fork Valley
Seasonal employees
Live 10 miles or more from work
Live in or around place of work
Drive to work
Type of work (primary):
Bar and restaurant
Lodging
Retail
Professional
36 or more hours per week of work
~Average annual income:
Bar and restaurant
Retail
Lodging
Overall
Percentage:
Monthly wages:
$200to $600
Over $600
Annual expected incomes:
$8 000 or less
$8,000 to $10,000
$10,000 or more
Average rent (per month)
51
60
38
51
63
31
31
11
5
78
63
63
7
81
54
24
14
16
L~
76
$5, 816
4,808
5,284
5,953
$5, 881
6,518
5,203
7., 500
72
24
80
9
11
56
40
68
12
20
$245
$246
Without delving into a detailed analysis at this point it is obvious on the
face of the chart that there is not much difference in the characteristics of
the employee as he enters the working population of the two areas, but once he
enters that population he is easily differentiated by how much he makes, where
he lives, how far he must commute, if he is seasonal or not, and what kind of
establishment he works at. The point here is that we are dealing with two ski
areas, ten miles apart, administered by the same Forest Service District, run
by the same ski corporation, with access to the same labor market, subject to the
same price schedules by suppliers, and yet the characteristics of the labor force
are significantly different. Why? Why is the cost-of-service to one area as rep-
resented by wage levels different from the cost of service to the other area?
~What impact does one area have on its .labor force that the other doesn't?
More important, what impact do the different labor forces have on the gen-
eral viability of the economy in terms of income multipliers, consumer spend-
ing patterns, local, state and Federal governmental spending decisions, et cetera?
Are the characteristics of the Snowmass population a prophecy of the character-
istics of Aspen area labor populations to come? How much and what kind of
changes in the labor population characteristics can we expect as a result of the
decision to remove or reduce the season pass? These are but a few of the many
~basic economic questions that must be answered in any analysis of price de-
cisions affecting the utilization of public lands. A cursory review of the pricing
decision data and criteria reveals that none of the basic questions have even been
asked, much less answered.
There are a variety of other impacts outside the economic sphere that must
he considered in pricing decisions. True to the concept of systems, these im-
pacts are invariably expressed as secondary or tertiary components, elements
and/or constraints of the economic sphere, but have significant consequences for
other spheres.
Table No. 1 points out that the potential for significant impacts on traffic
congestion, land use patterns, air quality and social patterns. For example, 38%
of the employees at Snowmass travel 10 miles or more to work while only 7%
of the Aspen group must commute that distance. Along this same line, 51% of
the Snowmass group live in or around their area of employ mostly in an em-
ployee housing project or employee quarters, while 81% of the Aspen group live
in or around the Aspen area. The important consideration here is that if the
Aspen group were to exhibit the same characteristics as the Snowmass group
the end result would be approxima~tely 500 additional people commuting more
PAGENO="0054"
50
than 10 miles and an out migration of about 400 people from the Aspen area to
surrounding residential complexes within 10 miles. The resultant consequences
would be approximately 500-600 additional commuting vehicles added to the'
peak commuting traffic flows and that would have to be accommodated and
stored in town. Given the present shortage of existing parking spaces and the
already over capacity traffic loads that the area street and road system must
accommodate, the impact on the Aspen area would be of a severe magnitude..
On cold wintery mornings the added pollutants would increase the already
ominius smog layer that greets the traveler from the northwest as be ap-
proaches the Aspen area. A recent report by the Air Pollution Control Division.
of the Colorado Department of Health indicated that a car operating in high
mountain valleys, such as the Roaring Fork Valley, bad a pollution impact
eight (8) times that of a car operating in Denver. In terms of pollution impact,
this means that the additional generation is in the order of 4,000-5,000 vehicles.
The environmental strain that this type of impact would place on the Roaring
Fork Valley is surely worth some type of environmental impact analysis. A cor-
relary impact to the additional vehicle generation is that the Federal High-
way Administration may have to allocate funds to up-grade or four-lane highway
82. It would be an interesting situation indeed if the decision of one federal
agency in favor of one firm of the private sector forced another federal agency
to expend public sector funds to rectify an unintended and unconsidered conse-
quence of the former agency's decision.
Referring to Table No. 1 again, it can be seen that while the SnowmaSs em-
ployee works approximately the same amount of hours be is paid less on a
weekly basis, and his annual income expectation is significantly less. If only
those areas of high tourist utilization (bar and restaurant, lodging and retail)
are considered the wage differential is about 11% with only the Snowmass
lodging category surpassing the Aspen wage level. .This is not surprising since
lodging is the major component of the Snowmass economy and therefore the
lodges must bid competitively in order to maintain their accommodations in
rental revenue generating condition. It is interesting to note that the overall
annual income level in Aspen is about 25% greater than that of Snowmass,
while the average rent that each group must pay for living quarters differs by
only one dollar per month. This is significant in that since the Snowmass em-
ployee tends to commute more and over longer distances, be must bear the corn-
muting expenses without the benefit of wage or cost-of-living differentials signi-
ficantly in his favor. If the Snowmass labor force characteristics are indicative
of characteristics of future Aspen area labor forces then there could be signi-
ficant, economic, environmental, and social costs that would accrue to these
labor forces as a result of a shift in labor force characteristics that is perpe-
trated by a pricing decision by a federal agency that has all but ignored the
welfare of any group other than the Aspen Skiing Corporation.
The impacts on land use patterns can only be hypothesized at this point, but
it is not unreasonable to assume that as a result of out-migration and changing
commuter patterns that employee related complexes will proliferate in the down
valley areas leaving current long term housing open to the short term market
which when utilized as lodging increases the peaking of demands for City serv-
ices and decreases the support, base during off season. This has the effect of
creating blocks of empty units during the off season which in a time of re-
source shortages is an atrOciously poor utilization of resources and creates the
potential for increased crimes against property. The net result is increased
economic, social and environmental costs to the skiing public and labor force
populations, not to mention the permanent residents of the valley.
An alternative hypothesis to this down valley migration pattern is an out-~
of-valley migration pattern. In essence. the ski oriented employee could leave
`the valley citing high costs and low real incomes as the motivating factors. This
would create a void in the labor force. Historically, voids in the low income
labor market have been ified with culturally denrived or newly emigrated
groups. The social impact of integrating a culturally different working popula-
tion into a rural mountainous area is certainly a consideration that should be
explored. Even if history were not to repeat itself in the Roaring Fork Valley,
some type of labor force would have to be recruited. The probability that the
new or replacement labor force has different recreational demands and patterns
is fairly high Given that the majority of Pitkin Coimtv is federally admini~
tered National Forest and recreational' areas, it would appear on the face of
it that this potential change would 1~ave a large impact on Forest Service man-
agement decisions. If the "down-hill" skiing work force was replaced by a
PAGENO="0055"
51
"cross-country" skiing or snowmobiling work force, then the potential impacts
on critical winter ranges and wilderness areas surely warrants investigation.
I have alluded to many potential impacts that may or may not result. They
may be beneficial or they may be detrimental in the short or long run. It has
not been my objective to analyse or pass judgment on these impacts; but to
raise the issue of their potential presence and my concern that it does not ap-
pear that they have been addressed in the recent pricing decision by the Fqrest
Service relating to the Aspen Skiing Corporation's request for lift rate in-
creases and elimination of the season pass. In a recent letter from the Super-
visor of the White River National Forest, the following items were listed as
the basis for analysis leading to approval or disapproval of rate proposals: (I)
Financial, (2) comparability of areas, and (3) quality of area.
In essence, my point is that there are many other important factors, elements,
and impacts that must be evaluated, analyzed and considered. The narrow scope
of the pricing decision parameters listed above is not in the best interests of
the public, and must be expanded to maximize the social benefits derived, from
the effective administration of public lands.
The current Forest Service procedures and criteria do not reflect any concern
or consideration for any group other than the instant concession company and
they are constructed and used in a way that ignores the short and long im-
pacts of their pricing deci~ions. An agency of the Federal Government that is
charged with the beneficial administration of public lands for the people must
consider the benefits to be derived by all the people and not just their partners
in the ski industry. The current pricing procedures and criteria benefit only the
stockholders of the various ski area operations and, in my judgment, work to
the detriment of the general public.
Senator HASKELL. Our next witnesses are Mr. Dwight Shelirnan,
Chairman of the Pitkin County Commissioners, and Hon. Michael
Kinsley, County Commissioner, and Alan Blomquist, Pitkin County
Manager
STATEMENT OF DWIGHT SHELLMAN, 3~R., CHAIRMAN, BOARD OF
COMMISSIONERS, PITKIN COUNTY, COLO.
Mr. SIIELLMAN. Senator Haskell, I don't think anybody said "wel-
come," but we would like to welcome you.
Senator HASKELL. Thank you.
Mr. SHELLMAN. And we would like to thank you for the support
you have given this community in some of our very important specific
projects. For the record, then, Senator, my name is Dwight Shellman.
I am the Chairman of the Board of County Commissioners of Pitkin
County. Our governmental responsibility is to provide a government
and government services in the unincorporated area of the county,
which includes the entire county except for `Aspen, Cob. My colleague,
Joseph Edwards, and I are both attorneys. We ran on a platform of
getting control of runaway second-home construction before the pur-
suit of windfall development profits~ destroyed `the valley and the
recreation and lifestyle amenities which we, and the majority of our
residents, treasure.
I would like to just summarize `the recommendations I make' and
then treat them in more detail. `
`I am ,here to commend your perception ~in incorporating section
2(b) of S.2125, which requires the Secretary~ to' promulgate regula-
tions requiring assessment and coñsidération of:'
First: All facilities to be developed by the applicant. ` ` "
Second: All housing, recreation and commercial developments'
which will likely occur as a result of the ski area `development. `
`Third: All public services necessary for such development.
PAGENO="0056"
52
Fourth: Assessment of compatibility with other uses of adjacen~
private lands.
Fifth: The authority and capability of State and local governments
to zone to achieve such compatibility. That is an enormous insight
on your part because many, if not most of these ski areas occur where
governments are by definition extremely weak and do not have plan-
fling capability. I want to commend you specifically for that.
Sixth: Consultation with relevant State governments. I would hope
that would includelocal governments.
Senator I]IASKELL. Yes, it would, and would include local govern-
ments, plural.
Mr. SHELLMAN. Right, I noticed they were used together in one case
and in the other case the reference was only to the State governments.
Senator HASKELL. Right, that's probably an error.
Mr. SI1ELLMAN. I hope that you will retain and enlarge this section
to include the following:
First: The language of the National Environmental Policy Act,
including requirements for standard EPA circulation, hearing, and
mitigation processes, since I believe that the present language may be
read as excluding assessment of social impacts, that is the single
economic class community which Vail is, and Pitkin County is be-
comm~r expressly grant comity, that's c-o-m-i-t-y~ to State and local
regulations where they are more stringent than Federal regulations
and a requirement for consideration of the offsite economic impacts
and the tax and private sector capital-ready cash flow-lag.
This is something we have very recently become aware of in our
oil shale when we could calculate what capital needs might be. We
failed to calculate when the cash for those capital needs might mate-
rialize, and there are some studies in Colorado dealing with that
aspect in the shale industry. In other words, one is lags which occur
in the activities on the Forest.
Second: Acknowledge the standing of local governments to par-
ticipate in and contest the issuance, material modification, including
ski lift rate changes, extensions and termination actions by the Secre-
tary judicially. I put in "termination" because were that to occur
here, obviously the community would have a very significant interest.
Third: I wanted to request that the act not grant 50-year, or even
20-year, permits, but rather follow the Federal Communications Com-
mission procedure of frequent renewal evaluation after shorter peri-
ods, perhaps 5 years, after testing for community responsiveness.
Senator `HASKELL. I might `comment there. if I may, Mr. Sheliman.
The bill has 50 years in it; I think 30 would be more like it. But the
problem is it seems to me that if you are going to put in a ski lift
you have got an immense capital investment, and I don't know
whether you can finance it, if you might be disposed to, in 5 years.
That's the problem.
Mr. SITELLMAN. I was aware of that as a consideration. I think
that's quite valid. That was one of the reasons I used the FCC anal-
ogy. It seems to me that the Federal Communications system, regard-
less of enormous investments made in the cOmmunications industry,
Tlevertheless, subject their permittees to at least the possibility of term-
ination on shorter periods of time.
Senator HASKELL. You would limit it more to a community re-
sponsiveness?
PAGENO="0057"
53
Mr. SIIELLMAN. Yes, I want to mention also that your bill does tend
to treat what happens when the permit is terminated, and I `think
you `have a mechanism for evaluation and reimbursement. That might
be the `appropriate way to deal `with the `risk created by shorter eval-
uation periods. The point of the shorter evaluation period, and I am
not necessarily asserting that ski area permits be 5 years of duration,
but rather `than the permit conditions acknowledge that few planning
assumptions remain valid for `longer `than 5 years~ I guess I am more
likely `to talk about `a need for reevaluation periodically, but a mean-
ingful reevaluation, regardless `of the term. I `just `wanted `t'o throw
that `out and the FCC "analogy, because I thought that `was very in-
teresting in a somewhat'similar situation.
Fourth: I want'to on our behalf commend this legislation generally
for adoption.
Fi'fth: Recommend that this subcommittee be an agent in `modify-
ing the attitudes reflected by Forest Service personnel and manage-
ment practices locally; and that would really be the balance of my
remarks, and, sixth: In the preliminary outline although the bill ap-
pears `to relate `to new permits, it should apply the same `criteria to'
present permits to `allow mitigation of past `Federal management over-
sights, `such as those being experienced in this rather mature skiing
community.
Senator HA5KELL. If I could stop you there, this bill as it becomes
law perforce would `apply to existing ski areas, not the things that
they do when they begin, but the publication requirements, because
right now the Forest Service issues permit for 80 acres and 30 years
and Then the balance of the acreage is issued to the ski areas on a
year-to-year basis. So these provisions `would be applicable.
Mr. SHELLMAN. I see. Just by way of recent history, and perhaps'
we are too introspective here, but I think we all want you to know
what's been going on in this community, I would just like to deal
with that in a summary fashion and most' of it is from a Ski Corpora-
tion Commission study at Colorado University called "Quality Skiing
in Aspen." I won't give you all the citations, but I will quote from
that.
The increase in skiing activity in Aspen is the primary source of economic
change and a predictor of employment levels, retail sales and total personal
income. While it may seem that Aspen is profiting from the economic boom
caused by the ski industry, the community is also realizing that it is becoming
solely dependent on recreation and is now facing the long-term problems of en-
vironmental pollution, traffic congestion, shortages of low and moderate income'
housing, land speculation, inadequate services such as hospital and airport fa-
cilities, and specializing itself as a young wealthy community. In addition, a
fear exists that the ski slopes are becoming overcrowded since the number of'
beds for tourists already exceeds the physical capacity of the ski area, particu-
larly at Aspen Mountain.
An immediate solution of these problems sought by a majority of the com-
munity is a mandate to control growth. This is reflected by the election in l97~
of two county commissioners who based their platforms on ~ontrolIing growth.
Therefore, a majority of the community seems to favor little or no expansion
of the ski area at `the present time. This position reflects the community's fears'
that an expanded ski area will attract a larger skier population and will con-
sequently cause an expansion of base facilities and further deterioration of the
environment.
That is the conclusion of that historic quotation.
PAGENO="0058"
54
In 1973, the county commissioned and obtained a report; from the
Denver Research Institute, which is affiliated as you know with Den-
ver University, entitled. "The Evolving Political Economy of Pitkin
~County. Growth Management by Consensus in a Boom Community."
It was written by John S. Gilmore and Mary K. Duff.
This study concluded:
First: Skier day increases, that is uphill capacity increases, were
direct "drivers" of all other major elements of the local economy, and
direct control over skier-day growth should be attempted. It was
recommended that the county consider a NEPA suit against the For-
est Service for their transfer of the Snowmass permit to the Aspen
Skiing Corp. and their rather secretive permit practices.
Second: The study concluded that rapid skier day growth rates,
ranging between 15 and 20 percent per year, have already resulted
in rapid growth rates in all other service and facility demands and
had thrust local governments through major capital facility thres-
holds, requiring abandonment and replacement, or creation of new
high-cost facilities.
Senator, I have attached table I, which is an attempt to give you
fairly good data in terms of a number of local capital facilities rang-
ing from rail transit, sewer, water, hospital, local bus, open space,
~moderate income housing, transportation, and Snowmass county road
improvements, which I would like you to read at your leisure, but it
`is a bona fide attempt to try to show what the offsite impacts are.
Senator HASKELL. Thank you, sir.
Mr. SHELLMAN. Table I demonstrates that unless something is done
quickly, the Federal, State and local shares of the capital facility
shortfalls-as updated by current consultant estimates-total the
following: Federal 20.6 million; State 24.0 million; local 36.7 million.
This is capital only and only a partial list.
[Table I follows:]
TABLE l.-PITKIN COUNTY, COLO.-CAPITAL THRESHOLDS PASSED BY 1975
(To meet current demand levels and 3 percent growth per annum to 1990)
[In millionsj
Capital facility
Federal
State
Local
Total
Note
Skier rail transit 1
New sewer and water facilities
Hospital replacement
Local bus transit
Open Space purchase
Moderate income housing
Airport expansion 1
Highway 82 expansion1
Snowmass county road improvement 1__
Snowmass runoff correction
Total
$9. 6
3. 0
0
0
0
0
2. 0
6.0
0
0
0
0
0
0
0
0
0
$24.0
0
0
$2. 4
2. 0
5. 0
. 8
6. 0
13. 5
3. 0
0
2. 0
2. 0
$12. 0
5. 0
5. 0
. 8
6. 0
13. 5
5. 0
30.0
2. 0
2. 0
(A)
(B)
(B)
(B)
(B)
(C)
(B)
(C)
(C)
(C)
20.6
24.0
36.7
81.3
I Better airport access plus rail transit could reduce Highway 82 costs from $30 million (Interstate 4-lane) to $2.5 million
(improved 2-lane sufficient to meet reduced loading caused by aggressive rail transit diversion). In addition the installation
of rail transit could eliminate the Snowmass county road improvement of $2 million. The $2.5 million State Highway request
has been made each year since 1973 and has been made again for 1976 to the State Highway Commission. The State High-
way Commission receives on'y a 20 percent match from the Federal Government because of the secondary highway status
of Highway 82 and professes to be without sufficient funds to meet the State's share of 80 percent.
A=Applied for.
B=Built or installed.
C=Consultant estimate.
Note-This is a partial list only. See Transportation Implementation Program on file with March 12, 1975, Memo in
U.M.T.A. application. All public costs of operations of capital facililties and increased public services in perpetuity have
been excluded but are significant.
PAGENO="0059"
55
Mr. SHELLMAN. The continuing study indicates that rather than
adding to the increased prosperity of the valley, further skier in-
creases result under the present system at least in subtle fund trans-
fers which have the effect of placing windfall dollars in the hands of
land speculators; placing skier profit dollars in the hands of the ski
corporation; adding additional cash flow to the retail community;
moderately increasing Forest Service revenues of the magnitude of
~approximately $20,000 per year; and then thrusting approximately
$81.3 million of major capital improvements on Federal, State and
local governments without their knowledge.
`While the precision of the figures can be disputed, as can their al-
locations between the various governments, their magnitudes are
significant and roughly accurate. The problem is more confounding
when it is considered that local governments must assume the opera-
tional costs entirely from local funds in perpetuity. for operating
these increased capital facilities, as well as providing increased levels
of traditional government services, all at the cost of the local tax-
payer, sheriff and the like.
What we. have done is to have to take. some rather regressive actions
in the private sector to deal with these problems.
Although skier days were identified early as the driving force in
the economy, we began the process of growth control by (a) request-
ing help from the Forest Service, but (b) concentrating our efforts
~first in the private sector through use of local zoning and land use
regulations. This took the form of an alleged $30 million downzoning
and rigorous application of strict development standards that resulted
in the further denial of approximately $10 million of proposed new
condominium construction in the first 18 months of our administra-
tion. While we did not experience bankruptcies or financial collapses
of highly leveraged developments-because they were not built-as.
our neighbors did during the economic slump, this was clearly treat-
ing the accommodation investment symptoms rather than skier day
causes and added nothing for the financing of capital improvement
needs which were already known and which are summarized in table
I. These actions were essentially negative, and we submit that the
private sector has made substantially all of the contribution it can to
`preservation of the local environment, although further zoning ad-
justments are probably in order to correct for several growth miscal-
culations which were made at the time of initial downzoning. I think
~they have made their contribution is our point.
Our attempts with the Forest Service were considerably less sue-
cessful. The Forest Service has always given considerable lip service
to local government cooperation, but has consistently demonstrated an
`attitude which is locally regarded as a "sweetheart relationship" with
the local ski corporations.
As. observed in the previously, referred to ski corporation study
"Quality Skiing," I am quoting again:
It can be argued that this is a result of the Forest Service being caught be-
`tween the goals of full development desired by the Ski Corporation and protec-
`tion of the environment by inhibiting development desired by the town. More-
over, the Forest Service has developed a close rapport with the Aspen Skiing
`Corporation by working with them on any physical land management problems,
particularly on sites of new ski facility construction. As a result, the Forest
PAGENO="0060"
56
Service personnel believe that the corporation is making every effort to maintain.
and develop a quality ski area. In contrast, this type of rapport does not exist
between the Forest Service and the town (add county). Finally, it is apparent
that the Forest Service is in need of new management guidelines and a realistic,
explicit, long-term statement of goals for the development and use of the Forest
area for skiing.
Senator HASKILL. If I might observe there, and of course I will re-
ceive the official testimony in the Washington hearing, but I must state
that in my conversation that I had with Chief McGuire on this entire
problem there seems to be a recognition, even t.hough a belated recog-
nition, of the effect on local governments.
Mr. SHELLMAN. Thank you. Going on, and I am going to give you
a little more history of our relationship with the Forest Service, I
will just go ahead and read it.
I submit that after several initial disillusionments, the local gov-
ernments are rapidly moving into a position of opposition to the
local Forest Service managers. I would like to identify that as being
probably related to this area only.
One: Our repeated requests to obtain copies of ski area permits
for examination for growth control purposes have never been hon-
ored. I must amend that to say we got it yesterday. That's after
21/2 years.
Two: In 1973 we asked the Forest Service not to approve a transfer
of the Snowmass permit until it contained explicit mitigation meas-
ures by the permittee for needed employee housing. skier day growth
phasing at reasonable growth rates, and provision of skier transporta-
tion and constraint of ski area parking lots to encourage use of that
transportation. We appeared to be making progress through the
local forest ranger, John Burns, until he was abruptly "promoted"
just as he appeared to be requiring the skiing corporation to confront
the issue. Parenthetically, I would encourage an examination of the
swing in negotiations after his "promotion" if that record still exists.
I would also encourage an examination of a transfer of the forest
ranger who was abruptly removed from the Marble ski area when he
began to require the proposed permittee to address similar problems.
Senator HASKELL. Excuse me, would you be able to provide the'
committee with specifics?
Mr. SHELLMAN. I have the-
Senator HASKELL. Names, dates, letters, newspaper articles, the
specifics of this?
Mr. SHELLMAN. Yes. I will.
Senator HASKELL. Thank you.
Mr. SHELLMAN. Again continuing the parenthetical comment, the
Marble ski area was subsequently shut down by the Colorado Land
ITse Commission. It is most charitable to say that the Forest Service
apneared throughout this entire debacle to be an interested observer.
Three: In December of 1973 we were advised that "Darcy wouldn't
sit still for" the above considerations, that is the relationshrns to the
t.ransportation phasing and housing. and as you know Mr. Brown is
the president of the Aspen Skiing Corp.~ and that the permit would
be transferred without such conditions, that it was "too late." I elab-
orated on this transaction in my transmittal letter to Frank I-Terr-
inger, the UMTA administrator, March 15, 1975, and in the accom-
PAGENO="0061"
57
panying memorandum incorporated in that application at page
IV-46, UMTA Pitkin County Light Rail Transit System, CO-03--008,
in the context of a Federal impaction observation. The permit was
presumably transferred without any such conditions in December
of 1973.
Four: In 1974 the county signed an intergovernmental cooperation
and consultation agreement with the Forest Service, which has been
materially breached: (a) The Forest Service and the permittee re-
fused to obtain locally required building permits and special review
zoning approval for lift and parking lot expansions, either as a mat-
ter of comity or as a legal requirement. This is contrasted with the
assurance of the Forest Service that permittees would be required to
meet "all local regulations," and that's supposed to be set forth in
these permits, which may or may not be there; (b) the Forest Serv-
ice failed to consult with local governments in connection with the
proposed 1976 lift rate increases, and when confrOnted by local gov-
ernments, refused to take into consideration that the Vail permittee
was voluntarily contributing substantial funds to skier transporta-
tion, while tl.ie Aspe.n permittee refused to do so, but would receive the
same rate increase.
Five: The matter came to a head this summer when the county
manager, the city manager and I confronted Tom Evans, the Forest
Supervisor, White River National Forest, with what we regarded as
his history of evasion and insensitivity to impacts being caused by ski
area permit activities and suggested that unless the Forest Service
became far more responsive to these needs, we would officially request
his reassignment and the reassignment of Mr. Lucas, the Regional
Forester. Mr. Evans again professed himself powerless to intervene.
Perhaps he was, but our experience had been different with Mr.
Burns before he was abruptly "promoted" in the midst of the Snow-
mass transfer proceedings.
I submit that this is not a history of intergovernmental corpora-
tion, or has even fleeting attention been given to compliance with the
National Environmental Policy Act on questions of major social and
economic impacts affecting this community. On the contrary, it is a
history of intentional noncooperation, deflection, and evasion. Neither
the county commissioners nor the elected officials in the city adminis-
tration are novices in the governmental processes, State or local. We
know very well when we are being cooperated with, and we know very
well when we are required to file written interrogat.ories in order to
ask specific questions and obtain specific answers.
I would like to comment again or at some length, if I may, on the
relationship of the Skiing Corp. I have not and will not join in the
chorus of local people or others who have attacked the local ski cor-
porations, particularly the Aspen Skiing Corp. I might add our re-
]ationshi.ns have never been very good, hut I don't want to join that
chorus. I have not done this because I have no illusions that any
business organized for profit is going to protect the public interest.
That duty rests with the Forest Service. unpopular as it may seem
at the moment, I would like to commend the Aspen Skiing Corp. for
what they have done. They have shown far more sensitivity to their
local impacts than the Forest Service has, and it can be argued that
PAGENO="0062"
58
they have far less obligation to do so. The Aspen Skiing Corp. has
loaned the local government some of their top management personnel
to assist us in formulating a transportation plan, and have now
agreed, voluntarily, to share in the funding of the transit system
with substantial front-end capital contributions and equally substan-
tial long-term operating cost commitments. The same comments apply
to a somewhat lesser extent in the case of Aspen Highlands Skiing
Corp. Indeed a case can be made that these businesses have demon-
strated more tangible evidence of sensitivity to local problems caused'
by skiing activity than the Forest Service has. Unfortunately, had
the Forest Service had this sensitivity when requested, they couki
have suggested these contributions officially long ago. Why is it that
the Forest Service is not able to recognize these concerns when these'
for-profit corporations are
Unfortunately, the failure of the Forest Service to require the
various parties to address the problems of housing, growth phasing,
and transportation may well have jeopardized our ability to otbain
an U.M.T.A. grant, solely because of the delay in reaching agree-
ment with the skiing corporation. Hopefully Senator Haskell's recent
recommendation of our application, and his good offices will permit us
to see U.M.T.A. this fall and salvage the application.
In conclusion then, I suggest that section 2(b) of the proposed bill
be retained and enlarged to include clear references to the National
Environmental Policy Act; require compliance with it in case of
issuance; material modification and termination; and that the bill
provide an opportunity for local and other governments, to discipline
the process, judicially if necessary.
I further suggest that the history of administration of these mat-
ters does not justify 20- or 50-year permits. Rather, processes similar
to those used by the Federal Communications Commission requiring'
periodic and not less often than 5 years community assessment, miti-
gation, and revision should `be adopted, and others wishing to provide
the service should be given an opportunity to make their proposals'
for use of the permit facilities.
I further suggest that the concept of "Federal impaction" applies'
as equally to communities containing Federal ski areas as it does in
the case of those containing army bases. Under this concept, reim-~
bursements are made to local governments to defray the `ocal govern-
ment cost created by these Federal activities. Without intending to
suggest any particular mechanism, I would recommend consideration
of a requirement that accurate cost-benefit analysis must be made
periodically, and I would suggest by the, Forest, Service and the per-
mittee, and that the permittee be expressly required to mitigate en-
tirely as many of the housing, transportation, and other offsite capital
impacts as possible. To the extent thatthese costs cannot be mitigated
directly by the permittee. the Forest Service should either retain the
Forest revenues for reimbursement of local, StateS and Federal-State
support costs [see table I] before it remits any other revenues into
the National Treasury; or that local, State, and Federal governments
allocate the Forest revenues at the same ratio that they have contrib-
uted to providing the capital demands created by the activity.
PAGENO="0063"
59
I would further suggest that it is essential to have full and open
disclosure of the ratemaking process and the data on which it is
based; that this process should include questions of whether addi-
tional mitigation costs justify rate increases; and that this process be
subject to traditional administrative and judicial discipline.
I suggest that your influence might help to mitigate the 2-year
rotation of forest rangers, not to mention abrupt promotions and~
transfers of those whom we have successfully seduced into going-
native with us.
Finally, I suggest whatever revisions of Forest Service personnel
and management attitudes are necessary to eliminate the appearance
that ski area permittees are acting out of charity when they volun-~
tarily make contributions to mitigate their own impact. It is much
more forthright to have the Forest Service require them to acknowl-
edge these costs as a cost of doing business and to pass them on to-
the consumer wherever possible.
Where passing these costs on to the consumer would result in Un-
justifiably high rates, a serious look should be taken as to whether
the expansion of the recreation facility can be justified in the face
of such enormous local, State, and Federal support costs.
I again commend your attention to table I, which contains fairly
hard cost figures as to what the Pitkin County community is facing to
meet its perceived need today and accommodate approximately a 3
percent growth rate per annum until about 1990.
I appreciate very much the attention you have given to these ex-
tended remarks. I hope you have enjoyed your experience in Pitkin
County and it has impressed you sufficiently to take whatever steps
necessary for the enjoyment of subsequent generations. Thank you,
sir.
Senator 1-TASKELL. Thank you very much for a thoughtful presenta-~
tion. I think I have interrupted you as we went along and asked most-
of the questions I wanted to ask, so I will simply thank you very
much.
Mr. SHELLMAN. Thank you, sir.
Senator HASKELL. Our next witness will be the Honorable Michael
Kinsley, county commissioner of Pitkin County.
STATEMENT OP MICHAEL KINSLEY, COUNTY COMMISSIONER,.
PITKIN COUNTY, COLO.
Mr. KINSLEY. This is the first time I have been called honorable so~
far. My name is Michael Kinsley. I am a Pitkin County commis-
sioner. I have only been in that position 3 months. Previously to that
I was the director of the IRoaring Forks Citizen, whi~h was the or-
ganization which at least in part precipitated these proceedings,.
which I think maybe that description indicates some of my biases.
I am going to address primarily section 4(c) of 2125, which deals-
specifically with rate increases. My concern here is that the criteria
which will be set forth in the regulations promulgated by the Secre-
t.ary of Agriculture which deal with rate increases include that any-
proposal for rate increases take into consideration the impact of th~
increase upon all the~ commuiuity that shall be specified therein and
that such regulations be subject to the approval of this subcommittee.
PAGENO="0064"
60
Further, I propose that the regulations be circulated for review and
comment by the public.
I guess what this comes from is my fear that the regulations. could
be designed to do what they have been doing all along and so that
this review process would mitigate that possibility.
The purpose of these changes is to provide a mechanism for the
consideration of reasonable prices for residents in communities di-
rectly impacted by ski area operations. These reasonable prices should
be in the form of season passes available to everyone.
I might add here that if you look at it on its face,. especially pos-
sibly if you do not live~ in this community, it may seem unreasonable
to say that there should be a break given to local people, that these
people are saying they don't get much in wages and therefore they
should be given a break.
Well, first of all, to say that in mitgation of that is for the wages
to be raised really denies what is reality. When these people are will-
ing to do the kind of jobs that are being done, service jobs which
necessarily require very low wages for them to be viable with those
businesses, it is an inherent situation that these people be paid lower
wages and in addition to that these people are buying in a monopoly
ski market. That is there are four ski areas they are dealing with
and that is in effect a monopoly for the people in the local area.
I might add, too, that the people who created this, I think who
probably precipitated these proceedings, the kind of spirit and energy
that did that, is the kind of spirit and energy which is what Aspen
is and which is at least in part what attracts people to this community,
which is why people come here and sit at Cooper Mountain or Vail,
or wherever, that this is a unique community and they create that
uniqueness.
Senator Haskefl said, in introducing his bill, "Any business which
holds such a permit is uniquely affected with the public interest," and
what I am submitting is that this effect is most unique and most sig-
nificant in the community which serves the ski operation. A ski com-
munity is, in effect, a company town. It is. affected by the ski opera-
tion as dramatically as any community in the vicinity of a military
installation, for instance, in the vicinity where Federal assistance is
given. The impact of the ski operation upon the local community is
unique and therefore pricing with regard to that community should
be uniquely considered.
The ski operators should be particularly responsible to the ski
community which is probably where I diverge from Mr. Sheilman in
his opinion. I think that the ski operator is particularly responsible
to the people of the community and I am also generalizing in saying
ski community rather than saying Aspen, because I think this applies
probably to many if not most of those 170 ski areas on public lands
that you described, and that possibly those communities haven't come
up with the kind of opposition as has happened here just because of
the uniqueness of this community that has been precipitated by the
spirit and energy which I was talking about before.
The reason that I suggest that the bill snecify consideration of
local community impact and public review of the regulations is that
the Forest Service locally has a history of excluding the public. That
PAGENO="0065"
61
us (1) excluding the public fiom its decisions, and, (2) ignoring off
site impacts, and this is maybe a little bit redundant based on some of
the previous testimony, and I haven't really experienced some of the
responsiveness that the Governor has and the U.S. Senator has with
Chief McGuire.
The Forest Supervisor at first refused to write an environmental
impact statement on a proposed major ski area at Marble, Cob. After
finally formulating the EIS, he refused to hold public hearings. In
addition, the EIS totally ignored offsite impacts. In this case, it
would have included the expansion of the population of the town
from less than 100 to 25,000, which I submit is significant.
Senator TiA5KELL. Do you happen to know when that EIS was
prepared, what year?
Mr. KINsLEY. 1972, April, I believe. I can give you-
Senator I{ASKELL. This bird just plain ignored the law if lie didn't
take into consideration offsite impacts.
Mr. KINSLEY. Yes, sir, it is interesting if you read NEPA in the
very broad manner, I think you could put together a case to say in
this particular case of a rate increase an EIS would be required be-
cause NEPA applies to both social impact and offsite, and the court
has sustained the need for EIS's in both social impact situations and
offsite impact situations. It has not, however, yet sustained any case
for both-well, for an offsite impact which is only a social impact, so
that may or may not be the case here, which is marginal.
Continuing this history of unresponsiveness of the Forest Service,
the supervisor again refused public hearings on this particular con-
dition and when we went to see him, the Roaring Fork Citizen went
to see him, he said at that time, "This is not a voting situation."
That's how he responded to what he thought about a public hearing,
and what I would submit is that it is a voting situation, but the only
people who got to vote were the ski operators, simply the local com-
munity is not being represented, and I think this is a really funda-
mental issue and really appropriate to come up at the time of the Bi-
centennial. Do the closed decisions of a bureaucracy and a corporation
control the community or does the community control itself? And I
think that's what they were asking 200 years ago, and I suggest that
your bill answered the question the way it was answered 200 years
ago-creating government decisions which are responsible to the
community.
The Aspen Skiing Corp. has cited increased costs and overcrowding
as reasons for rate increase. In an initial letter to the Forest Super-
visor from the president of the Aspen Skiing Corp. dated December
:31, 1974, however, only rising costs are cited. There was no mention
of overcrowding, and I submit that the overcrowding was only an
excuse that was later put in in a response to the public outcry. Clearly,
increased profit was the reason for the rate increase application,
which is fine.. You know, certainly I wouldn't oppose reasonable
1)rofits.
In addition, I do not deny that there is a very real need to deal with
overcrowding, but then the question for me becomes do we .need mar-
ket restraints to reduce pressure on these public lands and in doing so
exclude the user who can least afford it, or do we use mechanical re-
straints and allocate the resource equitably?
67-512--76---5
PAGENO="0066"
62
The question is no different here than with any valuable limited
resource. Oil or skiing, each is in limited supply with great demand.
DO we simply raise the price, excluding those who can least afford it
and allowing a few corporations to reap the profit from those con-
ditions?
Skiing can be rationed. It is done elsewhere. The North Star Ski
Area in California allocates a certain percentage of their ski capacity
each day to season pass holders, the balance is provided for the visi-
tors. This specific operation is on private land, but I submit that the
Forest Service can provide a similar program on public lands. This is
only a suggestion as one possibility of a mechanical type of restraint.
The regulations promulgated by the Secretary of Agriculture as de-
scribed in section 2(c) should includeS mechanical restraints on skier
use. Thank you.
Senator HASKELL. Thank you. I might just mention, Mr. Kinsley,
that any regulations that would be published would require publica-
tion and a hearing under the Administrative Procedure Ac.t, and
whoever this guy was that did this Marble situation was just plain
ignoring the law. I appreciate very much your statement and your
suggestions, with particular emphasis on local impact, which I think
has to be taken into consideration, so thank you, sir.
Mr. KIN5LEY. Thank you, Senator.
Senator HAsKELL. Our next witness is Mr. Allan Blomquist, Pitkin
county manager.
STATEMENT OP ALLAN BLOMQUIST, COUNTY MANAGER, PITKIN
COUNTY, COLO.
Mr. BL0MQuIsT. Senator, I will vary some from my prepared re-
marks to cut it down.
Senator HASKELL. And your prepared remarks will be included in
full in the hearing.
Mr. BLOMQUIST. Yes. Basically, the goal that I am going to direct
my attention to is a possible mention of shifting some of the burden
of cost -for the various impacts on this particular community more to
the user. The burden often today is carried by the resident taxpayer
to a less than desirable extent, and in doing this I am going to first
recognize that Congress has recognized responsibilities of the United
States for what the Congress has variously been calling "Federal
impact," particularly as applied to tax exempt military bases, public
housing and so on, and in those cases the Congress has provided in
various enactments for payments in lieu of taxes for obvious cases of
Federal impact on Federal installations.
A second part of what appears to be Federal policy is that the
Congress tends to avoid the issue where it is asked to consider and
help alleviate the impact of Federal land without improvements. In
that case, the local response is the relatively weak association of public
land counties and their unanswered plea for significant payments in
lieu of taxes for the impact of Federal lands without improvements.
This is not to deny that Congress recognizes that timber cutting,
skiing, mining, grazing and other U.S. Forest Service permit activi-
ties by enterprise should and do pay something to local government,
PAGENO="0067"
63
but to~ argue that~ it only provides a very low level of inadequate
tokenism represented by certain U.S. Forest Service payments to
local government.
The third aspect of Federal policy is that the Congiess authorizes
the second-home condominium phenomena as a tax writeoff, also as
a method of accumulating capital for projects, and this is a stimulant
to frenzied construction in delicate mOuntaiim valleys such as ours,
the result often remaining vacant for many months at a time.
Fourth, the Congress owns the hills and has left the valleys in pri-
vate ownership in most of the mountain counties. The effect there is
to arbitrarily create a finite supply of private land upon which the
law of supply and demand can then go to work.
And, fifth, there is in various Federal criteria, particularly for the
categorical grants, very often discriminatory language against moun-
tain resorts and national recreation resource areas. It is substantial,
but, for example, the criteria on poverty in effect say that if the in-
come is such and such, then you have met the criteria, and does not
include provision for the effect as in Aspen of having the highest
cost of living in the Continental United States, which obviously has
an effect on what the local social problems might be and whether Or
not we should be eligible for particular Federal grants, so that there
seem to be at least five areas where a place like this particular valley
finds it is facing a combination Of some five policies or activities of
the Congress whiCh seem to be working at times with and against
each other to create part of the chaos we have been talking about this
morning.
I noticed just in the Federal Register that these policies are as-
sumed to be somewhat modified to the extent that the Office of Man-
agement and Budget proposes to amend Circular A-95 to encourage
~gencies, federal agencies granting licenses and permits affecting area
development or the physical environment, to "consult with the local
and State clearinghouses on applications for such licenses or permits."
I think it is significant that that 0MB circular does not propose
to require such activities and avoids consulting directly with each
local government, for it is the local government that provides the
services, has to raise the taxes, not the clearinghouse, but it is a start.
Now, let me just describe an example of what most people don't
want to talk about, and that's the indirect impact. For the last 7 years
I have been taking 35 college students in my urban studies institute
class in a bus over the mountains to look at Vail and Aspen which for
years had been heralded as new towns surrounded by greenbeits. This
was supposed to be several years ago the solution to all the urban
crises, a greenbelt town. In this case, these two towns, the only two
good examples in Colorado of this type of planning phenomenon nat-
urally are surrounded by a greenbelt of public lands, in this case
U.S. Forest Service lands.
I then showed the students a vibrant economy based on the combina-
tion of the Forest Service ski area permit and the condominium tax
write-off and other phenomena associated with that arbitrary growth
mechanism. I then showed them the effects of that Federal action on
land prices, how the law of supply and demand nushes the site for
one house in some cases to the $50 and $75,000 level, and the situation
PAGENO="0068"
64
is not near what it was 7 years ago, as most people in this room can
testify. There has been change taking place. .
Then I drive the student body through Minturn and Redçliff, where
the Vail worker lives. Finally, we drive to Aspen, through Basalt
and El Jebel and other places in the adjacent counties where the
Aspen workers live. As we drive the Highway 82, the student experi-
ences the only way, the daily dangers he has to face on this valley,
and observing this now every year for 7 years has been a most inter-
esting experience as change has been moving through the valley, and
I cite this as an example of an indirect impact which very often we
choose not to want to address.
Next, the 1975 Pitkin County. budget is at the 4.5 million level, and
of that the four ski mountains pay approximately $30,000 in property
taxes. This is toward the county budget. I am not including the pay-
rnent.s toward education and so on. About $12,000 to $15,000 in sales
taxes and an unknown percentage of the some $50,000 in U.S. Forest
Service payments.
My difference in the numbers from the ones Stacy gave is that I am
including some mining figures and so on, and this comes to an ab-
solute maximum of some $92,00 total, but probably more likely $70,000
to $80,000 when the Forest Service payment is discounted from min-
ing, lumber, grazing and so on. That total is less than 2 percent of
the county's $4.5 million budget, and we call*that federally sponsored
tax avoidanceby our largest industry, biggest payroll and user of the
biggest parcel of real estate and so on, and we know, of course, that
the bulk of this re.a.l estate for the ski industry is on tax exempt
property. ..
My conclusion and principal . recommendation for amending the
bill is that more than consulting or~ discussing or giving notice or
token payment should be required in the issuance of any permit for
a ski area.
First, no permit should be issued or renewed by the U.S. Forest
Serv cc unless and until all impacts have been identified and not
just the environmental impact. Physical impact analysis on the full
spectrum of local government services be inchided t.o be thorough and
complete, and not include just the direct impact like the parkinglots,
but also the indirect impact such as the price spiral on land.
Senator 1-JASKELL. Such as what?
Mr. BL0MQUIsT. The price spiraling on land, which I am using as
an indirect impact.
Second, no permit should he issued or renewed by the U.S. Forest
Service until and unless it has passed all local plannIng and subdivi-
sion tests and is specifically authorized by the local government hav-
ing jurisdiction.
The State winter resources planning effort that's going on now and
others have indicated that the development process starts at the local
level. This is where the first thing occurs. Then there. should probably
be a second level checkout at the State and finally a Federal action
at that point: later in the stage, rather than before. This references
the ti mi rig problem.
Third, no nermi.t should be issued by the USFS until and unless
all direct and indirect fiscal impacts have been evaluated and local
government levy in lieu of taxes has been added on the permit fee
PAGENO="0069"
65
structure. This structure should be in an amount or at a rate suf-
ficient to reasonably cause the permittee to help defray an equitable
proportion of the local government expenses attributable to the iden-
tified direct and indirect impacts..
I use the words "levy in lieu of taxes" because in the bill you pro-
vide for "fee," but that immediately works into the Forest Service
formula whereby the fees collected from all their permits are merged
into a general fund for the entire forest, then I believe reallocated
back to the counties in proportion to the acreage of the forest in each
county, rather than in proportion to the impact or equipment or in
proportion to the location of the source. of those fees, and so just
dealing with the fee alone automatically adopts the existing formula
for the distribution of those funds, which is really what I am talking
about at. this point.
Fourth, it seems to me that the bill should make the local, State and
Federal governments co-equal partners in the permit process~ not
just in the study statement, hut also in the decisionmaking process
itself, and here I see a very serious weakness in the bill as it currently
stands. It does not seem to strengthen our federalism and the partner-
ship concept in as strong a way . as I would like to see it.. In other
words. I . think the business of co-equal partnership at the permit
table would be to avoid much of this delayed reaction like the Beaver
Creek thing coming so late in the process, and one weakness. I felt in
the bill was that by sending it to the Congress immediately on the
two large area provisions that went for a 60-day period~ I think what
would happen is that it will get there. You might allow it to pass
without saying anything or you might possibly say t is a crood
proleet and it would he too early in the process and all of a sudden
Beaver Creek and Marble would erupt later, and if you are the local
Senator you would feel embarrassed at that point. I think there is a
way of getting a staging of review process so as the senior elected of-
fic~al in the chain of t.l~e Congress is really in a position to have the
full case before it before it were to be involved in such a process.
In conclusion, lOcal government is called upon to nrovide all man-
ner of services to rnitigat.~ the impacts of skiing. We do not believe
it is right to ask the local homeowner or local rancher to continue to
pay for all of those impacts. They have been doing that for years,
and as a consequence now in Pitkin County they tell me there are
only about 12 honest to goodness full-time ranchers . left in this
county. They tell me that some 30 percent of the work force in this
valley is living down-valley and that the number appears to he in-
creasing at between 10 to 20 percent a year in terms of the move
clown-valley, out of this high land price valley, and commuting from
the two adjacent counties. I would submit that is not a good track
record for the Aspen area ski permit imnact history.
We believe it is time the user~ especially the 92 percent. who come
from out. nf state for skiing. starts to pay for his impacts~ and while
the 21L000 skiers that come here in a season should nay more, we are
the first to admit that they are already doing better than the 1 million
summertime climbers. campers. hikers and si ghts~evs. and s'i on t.h at
come into this valley for shorter stays, and I would like at this point
to suggest or tell you that we have not fully studied this summer rec-
reation on Forest Service land and its impact and the costs related to
PAGENO="0070"
66
it. It is much easier to identify the skiing at this time, but we do have
studies now underway to try to determine exactly what the cost bene-
fit ratios are, what the impacts are of our summer business, and the
various ways in which we can begin to deal with them.
In conclusion, I would like to suggest that the committee look into
this question of the free summer use, and if there isn't some way,
whether it be through revenue sharing or some other tack to the in~
come tax or something of that sort, to help mitigate some of the ex-
penses associated with the summer visitor. We took a lady off of on&
of the mountains this summer. The helicopter bill was $3,000 to re-
move the body. This is not an expense associated with hiking and
camping and viewing the scenery in most folks' minds, but it is the
kind of expense that is associated with summer recreation, and per-
haps you might want to give consideration to the public service deficits
resulting from summer recreation, as well as skiing. Thank you.
[The prepared statement of Mr. Blornquist follows:]
STATEMENT OF ALLAN BLOMQUIST, PITKIN. COUNTY MANAGER
My name is Allan Blomquist. I am the county manager for Pitkin County. I
will not speak directly to the lift rate issue since our associates from the
city of Aspen are addressing that matter. In addition to the lift rate issue, the
Haskell bill (SB 2125) deals with other matters involving United States Forest
Service permits, and it is to such other matters that I will direct my attention.
Contrary to. the image created by our rich display of fall color, the roads of
Pitkin County are not paved with gold.
First my concern is with the relatively tax-exempt status of ski operations
on Forest Service land and the extent to which the United States thereby
encourages tax avoidance to the detriment of the services necessarily provided
by local governments impacted by ski area development.
Pitkin Countyservices 25% of all Colorado skiing, and also ranks as the largest
ski resoiir in the world. It would therefore seem that if anyone can speak to
the impacts of that innocent sport called skiing, we in Pitkin County can. Your
decision to hold the hearing here in Aspen reflects on that fact. I could take an
hour to describe those impacts, but let's go to the heart of the matter-tax
avoidance as enabled, mandated, and encouraged by the Congress of the United
States.
First, Congress recognizes its own responsibilities for what it calls the "Federal
impact" of tax-exempt military bases, public housing, etc. In those cases it pro-
vided for "payments in lieu of taxes" for obvious cases of Federal impact by
Federal installations.
SECOND, Congress deliberately avoids the' issue where it is asked to consider
and help alleviate the impacts of Federal land without improvements. The
local response is' the relatively weak association of public land counties, and
their unanswered plea for significant payments in lieu of ~taxes for the impact
of Federal land without improvements. This is not to deny that Congress
recognizes that timber cutting, skiing, mining, grazing and other United States
Forest Service permit activities by private enterprise should pay something
to local government, but to argue that it only provides a low level of inadequate
tokenism represented'by certain U.S.F.S. payments to local government.
THIRD, the Congress authorizes the second-home condominium, phenomena
as a tax write-off `and stimulant to frenzied `construction in delicate mountain
valleys such as ours.
FOURTH, The Congress owns the hills and has left the valleys in private
ownership in most of `the mountain counties. The effect is to arbitrarily create a
finite supply of private land upon which the law of supply and demand can then
go to work.
These four policies of the Congress work with and against each other to
create a local chaos comprising hundreds of subtle and expensive `impacts.
I am heartened that these policies are soon to be challenged by O.M.B.-OMB
proposes to amend circular A-95 to "encourage" agencies granting licenses and
PAGENO="0071"
67
permits affecting area development or the physical environment "to consult with
clearinghouses on applications foi such licenses or peimits
NOTE-That 0MB. does not "require" and avoids consulting direct with
each affected loca' government.. . . but it's a start!
For the last seven years I've been taking 35 Colorado college students in my
urban studies institute class in a bus over the mountains to look at Vail and
Aspen as examples of "new towns" surrounded by a greenbelt of public land,
in this case United States Forest Service land. I show them a vIbrant economy
based on a simple U.S.F.S. ski-area permit and condominuin tax write-off
rule. I then show them the effects of that Federal action on land prices-
how the law of supply and demand pushes a site for one house to the $50,000
and $75,000 level.
Then I drive them through Minturn and Redcliff where the Vail worker
lives. Finally we drive to Aspen through Basalt, El Jebel and other places in
adjacent counties where Aspen workers live. As we drive the 25 to 50 mile
commute on highway 82 the students experience the daily dangers that are
the only way a working man can make it if he works in Aspen and has to over-
come the Federal land price impacts on this valley.
The 1975 Pitkin County budget is $4.5 million. Of that, the four ski mountains
pay: about $30,000 in property taxes; about $12,000 in sales taxes, and an
unknown percentage of the paltry; $50,000 in U.S.F.S. payments-for an
absolute maximum of $92,000 total-more likely $80,000 when the U.S.F.S.
payment is discounted for mining, lumber and grazing. That total is less than
2% of the county's $4.5 million budget. We call that federally sponsored "Iaa
avoidance" by the valley's largest industry, biggest payroll, and user of the
biggest parcel of real estate.
We note, of course, that the~ bulk of the real estate used for a profitable ski
industry is United States Government tax-exempt property.
My conclusion and principle recommendation for amending the bill is that
more than consulting or discussing or giving notice or token payments should
be required in the issuance of any permit for a ski area.
FIRST, no permit should be issued or renewed by the TJ.S.F.S. unless and
until all impacts have been identified. . . . and not just environmental impacts.
Fiscal impact analysis on the full spectrum of local government services must
be included, and be thorough and complete . . . including not just direct impacts
but also indirect impacts.
SECOND, no permit should be issued or renewed by the U.S.F.S. until and
unless it has passed all local government planning, zoning and subdivision tests
and is specifically authorized by the local government having jurisdiction.
THIRD, no permit should be issued or renewed by the IJ.S.F.S. until and
unless all direct and indirect fiscal impacts have been evaluated and a local
government levy in lieu of taxes has been added to the permit fee structure.
This structure should be in an amount or at a rate sufficient to reasonably
cause the permittee to help defray an equitable proportion of the local gov-
ernment expenses attributable to the identified direct and indirect impacts.
In conclusion, local government is called upon to provide all manner of
services to mitigate the impacts of skiing. We don't believe it's right to ask the
local homeowner or local rancher to continue to pay for those impacts. They've
been doing that for years and as a consequence now there are only 12 full-time
ranchers left. 1/3 to i/2 of the workforce is living downvalley and commuting
daily from two adjacent counties. That's not a good track record for the Aspen
area ski permit impact history.
We believe it's time the user starts to pay for his impacts. While the 211,000
skiers should pay more, we are the first to admit that they already are doing
better than the 1,000,000 summertime climbers, campers, hikers and sightseers.
The law governing U.S.F.S. payments in lieu of taxes to counties was first
passed on May 23, 1908.
Folks weren't doing much skiing then. We believe, commensurate with condi-
tions prevailing now in the mid-seventies that it's time for a change.
Thank you.
Senator HA5KELL. Now, we have completed the list of public of-
ficials. I would like to remind you if we can keep each individual's
remarks to 5 minutes, it would be very helpful, because we do have
PAGENO="0072"
68
a lot of people to hear from. Anybody who has written testimony
who wants it to go in the record, please let us have it, because it will
be included in full in the record.
The first group is a panel of professional ski instructors, Don
Lemos of the Independent Ski Instructors AssociationS Jill St. John,
Aspen, Colorado, Maggie McMahon, Professional Ski instructors As-
sociation, and Charlie Paterson, past president, Rocky Mountain Ski
Instructors Association.
STATEMENT OF DON LEMOS, INDEPENDENT SKI INSTRUCTORS
ASSOCIATION, ACCOMPANIED BY JILL ST. JOHN, ASPEN, COLO.;
MACGTE McMAHON, PROFESSIONAL SKI INSTRUCTORS ASSOCIA-
TION; AND CHARLIE PATERSON, PAST PRESIDENT, ROCKY
MOUNTAIN SKI INSTRUCTORS ASSOCIATION
Mr. Lr~ios. Good morning, Senator Haskell, ladies and gentlemen.
Before I start, I would like to reassure you that while there is much
written testimony for tl e record, this p'tnel s testimony will be b~ ief
and is directed speôifically to the issue of independent ski instruction.
My name is Don Lemos. I reside in Aspen, Cob., with my wife and
two children on land I have owned for 10 years. I have lived here for
15 years. I am a fully certified ski instructor in both the United
States and France and have taught skiing for 15 years. I am a mem-
ber of the Professional Ski Instructors of Colorado. I have taught
skiing in Chile. I am able to conduct ski lessons in Spanish. I am an
avalanche qualified ski instructor by the U.S. Forest Service. I am
an expert in the field.
Senator, I want to begin by thanking you for taking an interest
and holding these hearings. A bureaucratic agency tends to hang on
to tradition, and I am enthusiastic about your proposed bill shaking
that tradition and creating a forest bill that is truly receptive t.o our
continued needs. My particular expertise regards the realm of ski
instruction and.I propose a change for the better regarding that field.
Presently if a ski instructor wants to conduct ski lessons, lie must be-
long to a school and cannot operate on his own. This system is be-
coming archaic and is holding back the ski instructor and depriving
the public. I propose a change in this tradition, a change that will
benefit without harming additional service, rather than a substitute
for what already is. As U.S. skiing growth accelerates~ there is room
and public need for an independent class of instructors as h~s long
existed in several of the advance alpine skiing countries of Europe.
I have proposed that the Forest Service grant independent teach-
ing permits to qualified skiinginstructors under controlled cond~tious,
and I will state some of the conditions. A ski instructor in order to
even apply for a permit must be fully certified. He must have liability
insurance. He must bring his own clientele and not solicit at the area.
He will be limited to private license only up to three students. He
will not hire other instructors to work for him, hut rather work as a
personal tutor. He will not start his own ski school. He will display
identification showing that he is a permitted independent. He will
negotiate with the ski area to pay them a fee in return for a lift ticket
and/or lift line-cutting privileges. However, if no terms can be
PAGENO="0073"
69
worked out, he may teach providing he~ buys a ticket or pass and
abides by all the rules and regulations of the area.
Sen'~tor, these stipul'ttions aie designed to protect the public, not
undermine the existing ski school, and upgrade the professional aspect
of ski i~Sti uction I behe~ e `my fears regal ding this system to be un
warranted. In Aspen there are oily about 40 fully certified ski in-
structors actively teaching skiing out of maybe 300. Realistically, say
ten percent of these fully certified instructors were independent, the
fear of the ski areas that "We will lose our ski schools" is unfounded.
My written testimony that has been submitted is quite extensive
and I hope you go over it carefully to understand the issue fully and
see what ski instructors have been battling for years through harass-
ment and arrests.
My intention however today is to provide you with a gut feeling of
the issue, an issue I believe to be at the very core of what our country
is all about, the issue of a right of an American citizen to earn his
livelihood and his chosen profession in a free enterprise system on
public land and the issue of the public's right to utilize a qualified
person of their choice to help them better enjoy that land.
The instructor can offer services not normally provided by the ski
schools to the rank of the public and lie can provide them with a price
alternative which is most certainly to the best advantage of the public.
Senator, I make the analogy of the fact that the ski area may have
the exclusive right to conduct certain businesses at the area like the
exclusive right to operate an onsite business such as a ski rental shop,
but does this preclude someone from renting skis from someone off
the area? Why cannot someone rent a ski instructor to be used on the
area just as rental skis rented off the area are used on the area?
The Forest Service can right now without changing any of its reg-
ulations institute the independent permit system, and I ask of you,
Senator, perhaps you can confer with the Forest Service to work out
an amicable solution. Also I urge that you include specific language-
there is mention of it and I would like it to be more specific-include
in your bill language that will definitely permit ski instructors to
conduct ski lessons in conjunction with the existing ski schools
Senator, I thank you for hearing me and if you have any questions,
I would certainly be glad to answer them.
Senator 1-JASKELL. Who says that, assuming I am qualified, which
I am not, hut assuiñing I am qualified, I can't teach on a ski area?.
Who says that?
Mr. LEMOS. Senator, there is a regulation that the Forest Service
has that says in order to conduct a business on government land you
need a permit. OK, I went to the Forest Service and I asked them for
a permit to teach skiing. They said, "We can give you one, but we
won't."
Senator HASKELL. Why not?
Mr. LEMOS. I would like to know.
Senator HASKELL. Well-
Mr. LEMOS. Senator, excuse me, they do give a reason. They say
that, "We have given the ski corporations a permit to operate a ski
area and included in that permit we have authorized them to conduct
ski lessons and we have to protect their investment and provide them
PAGENO="0074"
70
with complete control and power of everything that happens on the
area."
Senator HASKELL Well, it seems strange Th'tnk you very much
Mr. LEMOS. Yes, sir.
[The prepared statement Of Mr. Lemos and accompanying docu-
ments follow:]
STATEMENT OF DoN LEMOS, INDEPENDENT SKI INSTRUCTORS AssoCIATIoN,
ASPEN, CoLo.
My name is Don Lemos, Box 321, Aspen, Colorado 81611. Phone number:
303-923-4762. I have lived in Aspen for 15 years and have been a ski instructor
for 15 years, teaching in the Aspen area. I have been a fully certified ski in-
structor since 1963, a member of the Rocky Mountain Ski Instructors Assu.
(RMSIA) and of the Professional Ski Instructors of America (PSl~A) I taught
skiing in Chile, and am also a French Certified Ski Instructor. I attended several
U.S. Forest Service avalanche training schools and am "Avalanche Qualified"
by the U.S.F.S.
For seven seasons, 1961-67, I worked as a ski instructor under the various
existing ski schools in Aspen. In 1968, after leaving the Aspen Highlands to
teach skiing at Snowmass under Stein Erickson, I was informed by Stein that
because of a hassle I had with Curt in 1964, his boss, DRC Brown, the President
of the Aspen Skiing Corp., and Curt Chase, the Director of the Aspen Ski
School had gotten together and "blackballed" me. I continued to teach, how-
ever, on my own, "underground." I did this for three years without much con-
cern from anyone, other than an incident at Snowmass in Dec. of 1968 where
I was told I could not ride the lift, but insisted and won, until a news item
was released by the local forest ranger declaring that conducting ski lessons
with out a permit was illegal. This was published in the Spring of 1970.
Next, I applied for a permit to teach skiing on areas already under permit,
as there is no other place to teach Alpine (downhill) skiing. I was told I could
not have that permit, but could have one to teach in other parts of the Forest. I
applied for that, hut when I received my copy it was so prohibitive that I did
not accept it. It prohibited the teaching of alpine skiing by its restrictions, such
as not being allowed to use any form of uphill transportation in connection with
the permit. I then, for a year, pursued the Forest Service administrative chan-
nels to re-consider and grant me a permit. This they refused to do, and a law
suit was filed asking that they grant the permit. The suit was filed in Wash-
ington D.C.~ transferred to Denver, Ruled adversely, upon summary judgement,
and then appealed to the 10th Circuit Court of Appeals. The 10th Circuit re-
manded the suit to District Court for a re-hearing on the anti-monopoly grounds,
and it has not as yet been re-scheduled. I am working on not having it re-
scheduled. but rather on having the suit returned to the Forest Service for re-
consideration. I presented guidelines to the court and to the F.S. under which
the competency of the Independent Instructor would he guaranteed, and the
public protected. One of my proposed conditions is that the Independent would
have to purchase insurance. The District Court held that this would be un-
feasible. I enclose a copy of the insurance that I am now purchasing.
Prior to the 1970-71 ski season I negotiated a deal with the President of
Aspen Highlands to teach skiing on an Independent basis. This worked just fine
for about one month, until he cancelled out on our deal. This led to an alterca-
tion at the Highlands and a lawsuit in which I did not prevail.
On Feb. 15, 1971, while skiing with three girls. friends. I was told by Pick
McCriidden, an Aspen Ski School Assistant Director and head of the ski school
at Buttermilk where this incident took place, to "knock off the teaching ri~ht
now, or you'll be denied use of the lift." I informed Mr. McCrudden that I hail
a valid season pass and to not bother me. and continued on my way. When I
attempted to hoard the chair at Buttermilk West. which is entirely on Forest
Service land, the lift was turned off and I was told I could not go up. I refused
to move until the lift was started. Four ski patrolmen approached to physically
move me. amid I asked that the sheriff he called. They backed off. however sev-
eral touri~t~ removed their skis and two of them inmued m~ and a ~`niffle en-
sued in which I prevailed. After 45 minutes the lift was started and I boarded.
PAGENO="0075"
71
Two nights later I was pulled out of the restaurant where I worked as a wine
steward by the sheriff who had a warrant for my arrest on a criminal trespass
charge. I posted $100 bond and was released. The next morning I attempted to
go skiing on Ajax or Aspen Mountain as it is now called, and I was arrested
again. I'm still, to this day, not sure of the charge. This time my season pass
was confiscated, as it was not the night before, and I was released on $1,500
bond and had to put my land up in order to be released. This all happened on
the weekend, and on Monday, when I was scheduled to be arraigned and I
appeared in Court, there was no judge, but only the Deputy D.A. and the Ski
Corp. Attorney, James Moran. They said, "look, we want to avoid trouble
around here. If you'll sign a statement that you won't teach for money or for
free, we'll drop all charges and re-instate your pass." I refused to sign anything,
and the charges were dropped anyway. They did not return my pass, however,
but did permit me to buy a daily lift ticket at a great, double expense to my-
self. I also proposed that, since I wanted to teach skiing, the Aspen Ski School
permit me to do this and thus resolve our problems. Nothing ever came of my
efforts to negotiate a settlement and I continued to ski for the remainder of the
season by buying a daily lift ticket. I eventually hired an attorney to pursue
the matter and he got me a refund of $65.15 from the Corp. as a prorated
share of my season pass, after charging me $200.00 to do this.
There were two other incidences in the 1970-71 ski season. One, sometime
after my pass was confiscated and negotiations to teach skiing were dead, I
boarded the lift at Little Nell, Ajax, without purchasing a daily ticket. When
asked where my pass was, I said "call the ski corp. office, they have my valid
season pass." With this I quickly sat down to ride the chair. The chair was shut
off and I was once again arrested, this time by Bob Cornish the Ski Corp.
Security Officer on a disturbing the peace charge. I posted $25 bond, was re-
leased, and once again, no charges were pursued. The previous two arrests
were by County Sheriffs. The other incident was at the Aspen Highlands, and,
after buying a ticket and making a run, I was denied further access and was
not even offered a refund.
During the course of all my problems regarding ski teaching, I consistently
pursued the Aspen Ski School to hire me. At one point, around 1969, when I
had many requests for lessons, I asked Curt Chase if I could bring those stu-
dents through the Aspen Ski School. He said he would hire me as a "beginning"
instructor. When I informed him of the various private lesson requests that I
had, and of my obligation to those students, he replied he "would think about
it." I went back one week later for his decision, and he said "I haven't thought
about it yet." Since the season was getting underway, this was an obvious "no"
answer. Prior to the 1971-72 season I again requested employment as an Aspen
Ski School Instructor with "no special deal." I was turned down. On Nov. 15,
1975 a letter was written to the Aspen Ski School requesting my teaching serv-
ices. It is interesting that the Aspen Ski School, Curt Chase, replied to this
letter in the negative, saying that "It is, therefore, not possible for me to ar-
range for his services," and that this negative letter was written the same day
I was written to, saying that I could not be employed. Is this filling the needs of
the public?
Once again, prior to the 1972-73 seasonT I requested employment with the
Aspen Ski School, and was once again turned down. I continued to teach with
no problem until I received a letter from the Corp. Attorney "demanding"
that I stop. This letter was written on March 20, 1973. I complained to the P.S.
that I was being harassed, and received no satisfaction. I then proceeded to seek
a solution and went and spoke with Tom Richardson, the Ski Corp. Vice Presi-
dent. I proposed that he intercede with Curt Chase on my behalf, and get me
hired as a ski school instructor. He seemed surprised that I was willing, and
said he would do what he could, and that he would get back to me. I waited a
week and then called him. He said he had instructed Curt to call me. I called
Curt, he was not in, and I left word with his Secretary to please return the call.
The season dwindled to an end with no return call.
In the 1973-74 season there were no problems, my rapport with everyone in-
cluding Curt was good, and I felt that my problems were over. In the past,
during the 1970-71 season, there were signs posted around saying that teaching
skiing was prohibited by any one other than the Aspen Ski School. These signs
had been removed after that one season, and not re-posted, further indicating
that the Corp. realized that they did not, indeed, have an exclusive right to
teach skiing on public lands.
PAGENO="0076"
72
For several years, daily tickets and season passes were printed with "miscon-
duct may result in revocation without refund." Finally, prior to the 1974-75
season, "misconduct" was defined.. Nowhere is there mention of no ski teaching.
So, with no signs, and no conditions imposed against independent instruction,
I further believed that I was free to pursue my profession.
I purchased my season pass for the 1974-75 season in July of 1974. There
were only a limited amount sold, and I did not buy one for my wife, as she in-
tended to take the clinic, a course where instructors are chosen, and teach for
the Aspen Ski School.
The lifts opened for the 1974-75 season on Thanksgiving day, late in No-
veml)er, and on December ), 1975, at about 12 noon, as I got off of the lift at
the top of Ajax Mountain with my skiing companion, Jill St. John. I was ap-
proaclied by Bob Cornish, the Corp. Security Officer. He told me that my season
pass had been revoked, and that I must surrender it to him on the spot, or be
arrested for trespassing. I told him no, I could not surrender my property just
like that. He then presented a badge, as he was a deputy sheriff also, and placed
me under arrest. He called for a toboggan on his two way radio, and I was
taken down the mountain and to the sheriff's station where I was booked on a
criminal trespass charge. My pass was taken from me, but ordered back the
next day by the judge who also granted more time to the D.A. for him to in-
vestigate whether or not to press charges. The D.A. did not press charges, and
I believe I was falsely arrested. Once again I attempted to negotiate a settle-
ment. Once again to no avail. The ski Corp. did not at first honor the pass
ordered back by the judge, then they even refused to~ sell me a daily ticket.
Then they made me sign a statement in order to use my pass, pending negotia-
tions, then they honored my pass. I never knew from day to day what they would
do. During this season there was also a four area discount ticket available, for
the days that the pass was not usable, during peak times. I purchased this dis-
count pass from the Aspen Chamber of Commerce, under the employee dis-
count program as I am employed as a wine steward at Andre's Restaurant, and
the Corp., after printing up this pass, refused to issue it to me. This prevented
me from skiing not only at the Corp. areas at a discount, but from at the Aspen
Highlands as well. They did sell me a full price ticket, however.
At the time of my arrest, Dec. 4, 1975, my wife Jeannie was participating
in the instructor's clinic. She did extremely well, and despite finishing, as we've
been told, in the top 20 out of 280, she was not hired. She had two conferences
with Curt Chase regarding this, and it was because of "Don's reputation" that
she was not hired. Why did she receive a refund when it is specifically stated
that no one would? Guilty conscience?
After pursuing the hopes of negotiations for about one month, until Jan. of
1975, with the Corp. I realized that they would not even talk to me, and I con-
tinued to ski for the remainder of the season with no further occurences, other
than having to pay a full price ticket during those times the season pass was
no good.
I also continued to receive support in a cause I truly believe in, free enter-
prise.
The Independent Instructor would offer services not offered by the existing
ski schools such as transportation, fiexiblity of schedule, choice of areas, choice
of techniques not to mention a choice of pricing. The existing ski schools are
oriented to class lessons, not private lessons, and there are indeed, peak periods
in Aspen when a member of the public cannot obtain a private lesson instructor
as they are all busy with classes.
I also include in my testimony an Aspen Ski Instructor pay scale. The top
instructor makes $9.55 per hour. This is based on a four hour day. He receives
time mmd a half if he works past 24 hours in one week. The bottom of the scale
is $6.05 per hour. with most instructors earning about $7.50 per hour. This scale
is for the 1974-75 season, last season. He makes the same whether working
classes or private lessons. A class lesson ticket. costs the public $10 per day. A
private lesson is $20 per hour, with it costing $25 for two persons and $30 for
three, per hour. Three people is. the limit for private lessons in Aspen. So the
average instructor makes $7.50 an hour for a four hour day, which is $30 per
day. It is most often that he will have a class of 10 students each paying $10.
So. he brings in $100 and gets paid $30. Who pays for this? The public. Who
can't make a living and is driven out of the trade? The ski instructor. Is this in
the l)eSt interests of the most Should sI 1 instruction be considered more of a
service to the public rather than a major source of revenue to a private corpora-
tion?
PAGENO="0077"
d. District (7-8) -
05
e. Use Number (9-12)
2720
f. Kind of use (13-15)
Aspen Touring and Guide Service,
____________of ~p~1s~n~coloradoel6l1
(3AME) (p~:t Of/i~s Ad.!,,:. not Zip Cnd.)
(hereafter called the permittee) is hereby authorized to use National Forest lands, as indicated below, in connection
with outfitter and guide operations within the Whi±tCRiYer ~National Forest
at the locations stated, subject to the GENERAL PROViSIONS on the reverse and to the SPECIAL PROVISIONS AND RE-
QUIREMENTS, items 1 to 8 on page(s) 1 to___j , attached hereto
and made a part of this permit. The locatiOn of camps, routes of travel, and grazing areas (where applicable) are shown
on the attached map(s), which Is (are) a part of thin permit.
1. CAMP USE:
CAMPSITE PERIOD OP USE MAXIMUM USE ` IMPROVEMENTS
Name or Number From To bays ___________________________
No overnight carps or structures of any type are authorized.
2. GRAZING USE:
LIVESTOCK PERIOD OF USE MAXIMUM USE GRAZING ALLOTMENTS
Number Kind From To Animal Mo. ______________________
No livestcck use is authorized. All transportation to be by foot, skis, or sncwshoes
For this use frcni 12/1 191Q.. to _AL15_ 19_7L. the permitlee shall pay to the Forest Service, U.S.
Department c-F A;rt:-~Tiare, the sum of TWOnty~fi3re_ dollars ($ 25.00
THIS PEP.NJT ISACCEPTED .&SSTATED. ~ ,.~,-------~~ ,
I ~- P __________
~
73
In June of 1971, Curt Chase wrote a letter in the Aspen Times stating his
philosophy about the subject, and I wrote an answer.
I include also, a letter written by the Corp's lawyer telling why I should not
receive a permit, and a rebuttal to that letter, I might mention that I just "hap-
pened" to get wind of the Corps letter, and it was not offered to me.
In conclusion, I would like to state that I feel most encouraged by these hear-
ings and by the fact that Senator Haskell has seen fit to review the whole For-
est Service Permit structure as it relate to ski areas, and I urge that strong,
specific language be included in the proposed bill to rectify the holding down of
the ski instructor, the subjection of the ski instructor to serfdom under the yoke
of oppressive corporations, and all this done at the expense of the public and to
the detriment of skiing and the people.
Thank you.
U.C. DEPARTMENT CF AGRICU ~E a. Record No. (1-2) b. Region ) c. Forest (56)
-~ FOREST SERVICE
OUTFITTER-GUIDE ________~- ~
PERMIT
LAND USE - GRAZING _________
AUTHORITY: Act: June 4, 1897 g. State (16-17) h. County(18-20) k. Card no, (21)
usrrucs:ons a-sir 2700 . C:opt.tr ,nd .tfoih f.r-oI,) -
2700.20,...! 7=~ :rgb~O~ann!Ss _0 5 0 2 L _________________L
67-512 0 - 76 - 6
PAGENO="0078"
74
SPECIAL PROVISIONS AND REQUIREMENTS
1. This permit authorizes the permittee to conduct guided foot, ski, or snow-
shoe trips on National Forest land. No overnight use or facilities of any type are
authorized.
2. This permit does not authorize the permittee to use lift facilities, within the
various ski areas located on National Forest land, in connection with the per-
mitted touring and/or guide operations.
3. The permittee, in conducting his touring and/or guide service, shall not
cross the ski partol boundary of any of the various ski areas located on National
Forest land without first notifying the appropriate ski patrol and obtaining
their clearance. It is understood that the purpose of contacting the appropriate
ski patrol is to prevent confusion and minimize the possibility of false searches
by the patrol. It is further agreed and understood that the patrol is in no way
liable or responsible for any accident or other occurrence following the granting
of clearance to cross the ski patrol boundary.
4. The permittee shall be solely responsible and liable for any and all acci-
dents, injuries, and other costs incurred as a result of the exercise of the privi-
leges granted in this permit.
5. Prior to each trip the permittee shall notify the Aspen District Ranger's
Office of the number of persons participating, destination, manner of travel, and
schedule. Such notification is solely for the purpose of maintaining use records.
6. The permittee shall be solely responsible for assessing the various natural
hazards of weather, avalanche, etc.; but agrees to cancel any trip upon request
of the Forest Service, or any other agency or organization having jurisdiction.
7. Use of aircraft or oversnow vehicles is not authorized.
8. The permittee shall carry emergency and first aid equipment appropriate
to the trip, area, and schedule involved.
NoTIcE To ALL PROFESSIONAL SKI INSTRUCTORS
Subject: Professional instructors' teaching permits.
As you may know, a year's effort has been made to persuade the U.S. Forest
Service to grant permits to qualified Professional Ski Instructors for inde-
pendent teaching on the U.S. public lands served by ski lifts under permit from
the Forest Service.
That effort has now been abandoned as unsuccessful, and a civil suit is being
filed in Washington, D.C. seeking to have the Forest Service refusal of such
permits declared unlawful.
The conditions we now propose for issuance of such permits include require-
ments that an Independent Instructor must:
(1) Have five years prior teaching experience in an "area" school and a "mas-
ters" or other higher certification if that is offered in the future.
(2) Bring his own clientele, not solicit at the area.
(3) Be limited to private lessons only, for no more than four students.
(4)Not hire other instructors to work for him, but conduct himself as a per-
sonal guide only. He will not start his own ski school.
(5) Purchase appropriate insurance and pay fees set by the Forest Service.
PAGENO="0079"
75
(6) Pay a fee to be negotiated with area ski school in return for lift line
privileges.
(7) Wear identification badge and register with area ski school when working.
As U.S. skiing growth accelerates, there is room and public need for such a
class of instructors as has long existed in several of the advanced alpine skiing
countries of Europe. There would also be many benefits to the system and to
truly professional instructors individually if they have a job aspiration other
than that of ski school director.
When you examine the relevant information and the issues, we believe you
will have to agree. You are asked to express your affirmation to all concerned;
to the Board Members of your Division and to P.S.I.A., and generally "spread
the word".
Your much needed contributions to keep the ball rolling may be sent to:
Instructors Legal Fund
Box 321
Aspen, Colorado 81611
For additional information or for details on how to apply for a permit, write
the above address.
Thank you.
Sincerely,
DON LEMOS, 1?MSIA.
PROFESSIONAL SKI INSTRUCTORS OF AMERICA,
INSURANCE PLAN MANAGERS,
J & A INSURANCE ASSOCIATES,
Billings, Montana, September 25, 1975.
Mr. DON LEMOS,
Boa, 321,
Aspen, Cob.
Dear Don: This letter is to serve as a commitment to provide for you a Com-
prehensive General Liability Policy insuring your Ski school operation as out-
lined recently to me in your phone conversation. This policy will provide
$300,000 Bodily Injury and $25,000 Property Damage Liability protection for
your Ski School, yourself, and any other persons employed by your Ski School
for the period of November 1, 1975 to November 1, 1976. The annual premium
will be $100.00 based on the underwriting facts that there will be only two or
three instructors composing your Ski School. This policy is underwritten by the
American Home Assurance Company of New York. It will be part of the Master
P.S.I.A. Liability Insurance Plan, which has been administered by our office
since 1967.
In the very near future we will be sending you the necessary applications for
your completion. I am happy that we can assist you in this matter. Looking
forward to serving you in the future, I remain
Sincerely yours,
JACK LAWSON,
P.S.LA. Insurance Manager.
PAGENO="0080"
76
CP.TJ'IINAL CASC
AIATIS OF COLONM)0 III TIUS COUNTE COURT.
Pithin
C~:oty of-
PEOPLE OF TIlE STATE OF COLORADO
DON LEIIOS
Tioa of Filiog j..~d.... Odook...... M.
COMPLAINT
Oclo, SI~~pIiE~d C~iooioII Pocoodooe
TIlE PEOPLE OF TUT !.TiS OF COLORADO.
TlrcvvpIeotO.~dlofe~tiev~f -
j.dnaa Eauker ~ ~ir~ ~ ~ ~ ~Ad ~
18th - ~ Fc-hruary A.D.I92~1 bgde7ysvvoth$~Y~tk~t.
DON LENOS
- ye, sooN: tSr ~ ~ .~. ~ . A. 0.
71 1- ~... ~ Fithin 5"- *~ did unlawfully and
lflSCdt3.OOalIy t~pas3 olt the ~refi~eo oi~ ~utteti~i1k Pount~ifl
Skiing Corporation, and intentionally and without regard for
the rights of Outterelilk fountain Dk~inq Corpor~Ition, uced,
occupied and CCOItRed the preaises of Outtermilk fountain Skiing
Corporation without authority :-o do so frost Catterailk `ouptain
skiing Corporation in violntion of C.fl.S. 1953, 40-3-6, 30
ai~tiided, and arsaiIist the poaco and CAPfnlty of the People of the
State of Colorado.
For a Second Count, it is further charged that in the County of
Pitkin, State of Colorado on the 15th day of Pckruary, 1971, Do~
Lemos did unlawfully and intentionally deprive Outternilk Nount~in
Skiing Corporation of the use, benefit and enjoyrsent of certain
real property of which Sutteroilk fountain Skiing Corporation was
the lawful occupant, in vIolation of C.P.9. 1963, 40-3-8, cc aeced
ogtthrpre,ddigvjty otth. Poop!, of tSr Sot,
OO,y Sr eyrr,trd ed doeR v-itS cyvordioC to - -. -- -
Sobryribvdoedeoo:o tobrfvv,~e this 18th ..-~7
rLl laCy A 0 7l~ ~ I
p:: -- CUTER
.. -..-.--...-.~..... DEPUTY
Dole J -/~~1 `~Ll92L No. 3532
Received From __p~~U.J/?.Zr~ )~o',°?. ,J a',.:;,~,5
Address ~ 30j gc.ris.~.i ("~vJ.p.
_~9~7p c~> ., ~ Dollars $
PAGENO="0081"
77
an ON C ow~ww eoS~0J~,,5,,
IN ~ COURT fiSK No....
IN AND FOR ~ ~
STATE OF COLORADO
The People of the State of Colorado
DEFENDANT'S
Defendant - / RECOGNIZANCE BOND
KNOW ALL MEN BY THESE PRESENTS, That we,.~...
P9~ ... us principal. and
jointly end rev rally held and freely hoaRd node the People of the State of Coloreids Li the Penal sum of
~.° ~ ~?.~2~olisrn, lawful mosey of the United States, to bo levied upon
our and each of our goadn and chattels, antIs sod tenrmests onto the eve of said People, if default be made
in the fellawis' conditionn, svhich conditiono are these: That if the ubave lsouoden
Don `Lemon
shall personally be and appear at the ~ ~ Court, ritting within nod for the
County of State of Colorado, on the i~2.~hd day of SL~NR~.Y
A. D. 19.2). end from day to day and teriR toteroa thereafter, and not depart the Court without leave,
tlsea sod there te answer unto a certain ~NZ.9e therein
pending agaiunt the raid.
INn
for the
crime of ~FP.R2°
then this reeo'isieance to be void otheewise to be.and rereain in fall force and effect.
Given uader our hands and reals this day of ~ A. D.
~ (SEAL)
STATE OF COLORADO
Count.° of..
the surety whose name in suhscrihsed to sue aoove
undertaking, tiring duly snore, apse his oath says. Thathe isa resident and reslty holder svithin Ike Crusty
Pd.Lle.i.n and that he is worth the sum specited in Ike raid undrrlsking en the
penalty thr,esf over and above Isis jest dehsts and liabilities in lees sets' not by law rsrmpt from correction
i this Stale raid p operty csn'isti of. ~ ~IN'Lt Of' lena [n the SE bi of Sec 16
C S.'R. t~t, W. of t~o ~ ntaiindJiiS~2:oo
INsa "" b~có~dff6 TI~ INök 234~E~ 27005 tile ~
County Colorado
Suhiscribesl send sworn to before me Ilsis
~r}ly nf...INk A. D. if'?)... 3.dIN- /t?:u-.d? w.....,. (SEAL)
Clerk ~... ~
STATE OF COLORADO
County of
the nuecly whose noose is rs,lsseribed to the abuse
undertaking, being duly rworn, sepon lutsoatls says. That lie is o rrsislent and rrelly holderssiil,in the Cously
ef ond that he is worth the esim spreifed is Ike said esslrrleskisg as Ike
penally thereof, over and obese his jest debts and liabilities, in property sot by lass esreept. fross esecs lion
~ .rasserte runostese n5.~..
Dl /9/ No 3628
~ 2
PAGENO="0082"
78
HOLLAND & HART,
ATTORNEYS AT LAW,
Aspen, Cob., February 2~, 1971.
Mr. DON LEMOS,
P.O. Boa~ 321,
Aspen, Cob.
DEAR DON: On Monday, February 22, you and your attorney, Ken Jensen,
were in my office to work out an interim arrangement under which you would
be allowed to use the ski lifts and slopes operated by Aspen Skiing Corpora-
tion (ASC). I agreed to recommend that my client go along with the temporary
agreements which you proposed. It was my understanding that you would call
me before you went skiing in order to verify that ASC had followed my recom-
mendation. I did not hear from you but I assume that you were granted access
to ASC's lifts and ski areas.
In order that there be no future misunderstanding, I think it is appropriate
for me to let you know what my understanding of our agreement is.
1. You requested that ASC sell you lift tickets during a short period (4 or 5
days) while you attempt to get reinstated as an instructor in the Aspen Ski
School;
2. During this period of time you promised that you would not teach skiing
to anyone at any of ASC's ski areas; and
3. If you are not successful in your efforts to rejoin Aspen Ski School during
this period there are no promises on either side following the expiration of the
agreed upon time period.
At my request, ASC went along with this arrangement. Although we didn't
specifically agree on the time involved, you asked for 4 or 5 days. I am willing
to go 7 days, that is until the close of business on Monday, March 1, 1971. If
nothing definite has been established by then I wish you would come in for a
talk so that we at least know what position each party to this controversy is
taking from then on.
I can tell you that I am willing to recommed continued access to ASC's facili-
ties so long as there is no teaching activity on your part. If we are able to make
a "rest of the season" agreement on this point, I will also recommend return of
your season ticket. If such an agreement is made and subsequently breached
by you, I will advise ASC to deny you access to its facilities for the rest of this
season. It is understood that the present temporary agreement and any subse-
quent agreement are not to be construed as a waiver of any claims or defenses
that may be available to you or to ASC regarding independent ski instruction
on public lands.
Yours very truly,
JAMES T. MORAN.
J. KENNETH JENSEN,
ATTORNEY AT LAW,
La Jolla, Calif., March 1, 1971.
JAMES T. MORAN,
Attorney at Law, Moantain Plaza Building,
P.O. Bo~v 1128, Aspen, Cob.
DEAR MR. MORAN: As you know this office represents Don Lemos to whom you
sent a letter on February 24, 1971. This is a reply to that letter.
Apparently there is some misunderstanding as to the conference we had on
February 22, 1971. My client did not wish to "rejoin" or obtain "reinstatement"
as an instructor in the Aspen Ski School. Instead, Mr. Lemos was exploring the
possibility of some kind of an agreement with the Aspen Skiing Corporation to
resolve the dispute which had arisen. Aspen Skiing Corporation agreed not to
interfere with Mr. Lemos' skiing while an attempt was made to resolve this
dispute.
As I stated during our last conversation, I do not believe Aspen Skiing Cor-
poration can arbitrarily refuse Don Lemos, as a member of the public, the use
of the skiing facilities. Furthermore, the course of conduct taken by Aspen Ski-
ing and others to deny Mr. Lemos the use of the skiing facilities is incredible.
This letter is notice that any further interference with Mr. Lemos' skiing or
use of the facilities will be done at your peril. This letter is also a demand that
any and all passes or tickets purchased by Mr. Lemos and held by you be re-
turned to him immediately or you will incur a greater liability than you already
have.
Very truly yours,
J. KENNETH JENSEN.
PAGENO="0083"
79
SHELLMAN, CARNEY, & EDWARDS,
LAW OFFICES,
Aspen~, Cob., August 6, 1971.
Mr. JAMES T. MORAN,
Holland ~ Hart, Mountain Building,
P.O. Boa, 1128, Aspen, Cob.
DEAR JIM: This will acknowledge receipt of your letter of August 3, 1971, in
which you declined, on behalf of the Aspen Skiing Corporation to remit funds
to Don Lemos for daily lift tickets which he was required to purchase after his
season pass was seized. It is our position that the seizing of his season pass was
wrongful, and that he was under no obligation to make any promises to the
Aspen Skiing Corporation in order to obtain the right to ski at its areas. The
appropriate remedy, If Mr. Lemos is found teaching skiing without special use
permit, appears to be under the Forest Service's Trespass Regulations, rather
than having the area operator extract special covenants from one skier which
are not required of all other skiers on the mountain. We might further suggest
that the double charges which Mr. Lemos was forced to pay constitutes fees
which are well in excess of the schedule approved by the Forest Service for
Aspen Skiing Corporation's mountains and are thus unauthorized under Aspen
Skiing Corporation's Term Special Use Permit.
In view of these considerations, I hope that you will reconsider your rejection
of our claim.
Very truly yours,
WILLIAM J. CARNEY,
(for Shellman, Carey & Edwards).
SHELLMAN, CARNEY & EDWARDS,
LAW OFFICES,
Aspen, Cob., September 9, 1971.
Mr. JAMES T. MORAN,
Holland ~ Hart, Mountain Pia~a Bldg.,
P.O. Boa, 1128, Aspen, Cob.
DEAR JIM: This will acknowledge your letter of August 12, 1971, and the offer
of the Aspen Skiing Corporation to refund the amount of $65.15 to Don Lemos
as a prorated share of his season pass.
However, your statement of the facts leading up to Don's arrest and seizure
of his season pass is something Don feels requires a response. Don categorically
states that he did not teach for money on mountains operated by the Aspen
Skiing Corporation during the winter season of 1970-71. Your letter refers to
Don's having been seen teaching on February 17 and 18, 1971. On February 17,
Don was with his wife on Little Nell. On February 18, 1971, Don did not ski.
O~i February 19, at the time of his arrest, Don was alone and was not skiing
with anyone. Since Don had at that time in his possession both a season pass
and a daily lift ticket, it is our opinion that there was no justification whatever
either for Don's arrest for trespass or for the revokation of his season ticket.
We have advised Don that as a result of these facts he has an action against
the Aspen Skiing Corporation and those who acted in concert with it for abuse
of process.
However, at this time Don wishes to take a constructive approach to solving
his dispute with the Aspen Skiing Corporation, rather than to pursue litigation.
For the 1971-72 season, Don is willing to apply for employment as an instructor
with the Aspen Ski School. Don would expect to abide by all of the rules and
regulations imposed by the school, but would request that his only requirements
as to lessons be those lessons which he brought to the school himself. In other
words, Don is not interested in teaching regular classes, but would simply bring
to the Aspen Ski School those persons who wish to receive instructions from
Don. Don would be willing to share his lesson fees with the Aspen Ski School
on the same basis as other instructors. In short, the Aspen Ski School would
probably obtain revenue from lessons which would not otherwise have been
available to it rather than enter into lengthy litigation.
You should be advised that Don will continue to pursue his attempt to be
independently licensed as an instructor on ski areas located on national forest
lands. However, this effort will -proceed through legal channels, and I would
think that our proposal would eliminate the direct conflicts between Don and
the Aspen Skiing Corporation.
PAGENO="0084"
80
A refund check can be sent to Don at Post Office Box 321, Aspen, Colorado
81611.
I hope that this will be the start of a more cordial relationship between our
respective clients.
Very truly yours,
WILLIAM J. CARNEY,
(for Sheliman, Carney & Edwards.
ASPEN, CoLo., September 13, 1971.
CURT CHASE,
Director, Aspen Ski School,
Aspen, Cob.,
D131&R CURT: With the approach of the coming ski season I'm writing to you
in the hopes of resolving our past difficulties, and preventing any future ones.
As you know I've been pursuing the U.S. Forest Service to grant a limited num-
ber of individual use permits to teach Alpine skiing on Government lands serv-
iced by ski lifts. So far I've met with no success, and as I've many students who
have requested my teaching services, I'm applying to you for a job in order that
their needs be met.
Several persons who have requested that I~ be their teacher happen to be
mutual friends of Yvon Tache and myself. One of these persons recently spoke
with Yvon and made this request known. These people are all connected with
Henri Moreault. I skied with them last season and they requested that I teach
them at Vail. They now plan to come to Aspen and would like me to teach them
here. This includes Henri himself. I spoke with Yvon and informed him of my
wish to teach my own clientel as an Aspen Ski School Instructor. He told me
that if I wished to teach for the Aspen Ski School I could not just teach my
own clientel and arrange my own lessons, but would have to coordinate all
lessons through him, and be would make the proper arrangements and super-
vise me, all contingent upon your approval.
Curt, I propose to you that you hire me as a private lesson instructor with
no special deal. I will attend your clinic, abide by all your rules, and will spread
no "subversive" ideas. I will back you Curt, and if unable to, will speak only
with you about it.
I will be working nights and shall desire a flexible daytime schedule, thus the
request to teach only private lessons, not to mention that I feel my talents can
be best utilized in this field.
Curt, if you can accept my proposal it can only benefit everyone. It's a deal
where everyone wins. The student who so desires my services will be happy,
I will be working in my profession rather than fighting to do so, and the Aspen
Ski Corporation and yourself will remove a thorn in its' side and turn it into an
asset. Psychologically speaking it will be a win for you. Don Lemos could not
beat you, so he must join you.
Curt, please let me know what you think. My attorney has been confering
with Jim Moran on this matter, hut ultimately the matter of my employment
is between the two of us, thus this letter.
I would be most happy to meet with you and discuss things further. Thank
you Curt for your consideration.
Most Sincerely,
DON LEMOS,
ASPEN SKIING CORP.
ASPEN, CoLo., September 17,1971.
Mr. DON LEMOS,
Boco 321,
Aspen, Cob.
DEAR DON: Thank you for your letter of Sepember 13th. We have for some
time now been on opposite sides of the fence in regard to basic philosophies
about ski teaching, ski schools, private ski companies, public land and Forest
Service policies. It is nothing persona' as far as I am concerned, and I hope you
know that I hold no animosity toward you. You must realize that I didn't make
the rules, organize the system or create the establishment. During the past 20
years I have chosen to work within the established order of the ski teaching
business with some degree of success. I have found it to be not perfect, but cer-
tainly a workable and orderly system. You, on the other hand, have chosen
PAGENO="0085"
81
to reject this system, and to work around and outside it. In doing so, you have
been something of a "thorn in our side" as you put it.
You will remember that as recently as two years ago I did agree to reinstate
you as an instructor in the Aspen Ski School if you would agree to the same
conditions of employment as the other instructors in the organization. You
chose then not to agree to such conditions. What has happened since that time
is well known to all concerned. In light of the attitudes and actions you have
expressed and exhibited, you must realize that you now ask quite a lot.
As I see it, there are presently three major obstacles to my favorable con-
sideration of your request for employment by the Aspen Ski School. Number
one is the fact that the school is already overstaffed. We have recruited and
trained many fine instructors in recent years, and are now faced with a situa-
tion where consolidation, streamlining and cutting down the size of our staff is
our primary consideration rather than adding to it.
The second problem area is that of morale within my ski school organization.
We have worked hard at developing the happy family we now have, and main-
taining it is essential to our continued success. I have a lot of instructors who
have worked faithfully and loyally within the ski school structure for the past
seven years while you have been engaged in doing your thing outside of it. I
strongly feel that there is an important question of fairness to them involved.
The attitude and reaction of my staff to any action I might take in this matter
is something I have to evaluate very carefully.
The third, and perhaps most important consideration is the fact that as di-
rector of the Aspen Ski School I must assume responsibility for the actions and
performance of the instructors I employ. This is a responsibility that I do not
take lightly. During the seven years that I have known you, Don, including my
experience as your employer in the Aspen Ski School, you have displayed a
pattern of unpredictable, irrational and sometimes violent reaction to situations
and events that don't go quite the way you think they should. Stress situations
are quite common in our business. Unfavorable reaction to such situations could
have most seriOus results. Frankly this is a risk that I would be most reluctant
to assume.
This is my side of the picture, Don. I don't view your proposal as a simple
answer to everybody's problems, but rather as a final resort solution to your
problems, which in fairness I think you have to recognize are a direct result of
your own attitudes and actions over a long period of time. In your letter you
say that if I accept your proposal it will be a "psychological win for me". I
don't feel that I am, or have been fighting you. There is no question of winning
or losing involved as far as I am concerned. My decision will be based solely
on what I consider to be in the best interest of the Aspen Ski School.
I would be happy to talk with you, Don, but I thought you ought to be aware
of these points which I will have to consider. If our positions were reversed, I
am sure you would see things the same way I do.
Sincerely,
CURT CHASE,
Director, Aspen Ski School.
ASPEN SKIING CORP.,
Aspen, Cole., November 22, 1971.
Mr. DON LEMOS,
Boa, 321,
Aspen, Cob.
DEAR DON: I have met recently with a representative group of my super-
visors and instructors and discussed with them, according to my agreement with
you, your proposal of September 13th.
At this meeting no one chose to speak in support of your request, and no one
indicated that they felt I should further consider my position as stated in my
September 17th letter to you. I am sorry, Don, but I do not feel that it is in the
best interest of the Aspen Ski School to offer you employment.
Sincerely,
CURT CHASE,
Director, Aspen Ski School.
PAGENO="0086"
82
PENDLETON WOOLEN MILLS,
HIGH GRADE WESTERN WOOLENS,
Portland, Oreg. November 15, 1971.
Mr. CURT CHASE,
Director Aspen Ski School;
Aspen, Cob.
DEAR MR. CHASE: My family along with myself are planning to be in Aspen
for 2 weeks during the Christmas holidays. It would be our intentions to ar-
range lessons with your ski school. A special request would be for the services
of Mr. Don Lemos. I would appreciate you advising me of his prior schedule and
the possibility of his services.
Looking forward to your reply.
Best regards,
M. J. ALESKO.
ASPEN SKIING CORP.,
Aspen, Cob., November 22, 1971.
Mr. MIKE ALESKO,
California Mart, Suite 1129, California Mart, 110 B. 9th Street, Los Angeles, Calif.
DEAR MR. ALESKO: Thank you for your letter of November 15th. We are
happy that you will be in Aspen for the holidays.
Don Lemo~ has not been associated with the Aspen Ski School since the win-
ter of 1964. It is, therefore, not possible for me to arrange for his services. If
you will advise me specifically in regard to your requirements, I will be happy
to make the proper arrangements and confirm them to you.
Sincerely,
CURT CHASE,
Director, Aspen Ski School.
ASPEN, CoLo., October 3, 1972.
CURT CHASE,
Director, Aspen Ski School,
Aspen Skiing Corp.
Aspen, Cob.
DEAR CURT: Another ski season is approaching, and once again I come to you
with the hopes of teaching skiing with your ski school.
Many people have contacted me in regards to my being their instructor.
Please let me know if my employment is possible.
Thank you.
Sincerely,
DON LEMOS.
ASPEN SKI ScHooL, NOTICE
The Aspen Ski School has an exclusive franchise to conduct ski instruction
in the ski areas controlled by the Aspen Skiing Corporation. Bona fide instructors
from ski schools outside the Aspen area who may be visiting with private clients
are welcome if they will register with the ski school office.
Unauthorized persons conducting ski instruction in the ski area controlled
by the Aspen Skiing Corp. will be denied further access to these areas.
D. R. C. BROWN,
President Aspen Skiing Corp.
Posted Aspen Corp. Property at Little Nell. Poster filed as evidence in T.R.O.
hearing health case.
PAGENO="0087"
83
This was attached to all season pass application contracts, July 1974.
REGULATIONS GOVERNING SEASON TICKETS
REVOCATION FOR MISCONDUCT
Any Season Ticket or Discount Card may be suspended or revoked without
refund as penalty for fast or reckless skiing, skiing out of bounds, or any other
misconduct on the part of the skier which might constitute a danger to himself,
other skiers, or the personnel and/or property of the Aspen Skiing Corporation
or the Aspen Highlands Skiing Corporation.
REFUND POLICY
Refunds will be subject to a $10 minimum service charge if no photo has been
taken, or a $15 minimum service charge if the ticket has been made, provided
the refund is requested prior to the opening of the season.
Other refunds will be made only in the event of incapacitating illness or in-
jury certified by a LOCAL physician on the following basis:
Three-area limited and four-area unlimited season tickets-Pass in possession
1 thru 30 days-refund will be 50% of cost; Pass in possession 30 thru 60 days-
refund will be 30% of cost; Pass in possession over 60 days-refund will be 20%
of cost. There will be no refunds for any reason effective March 1, 1975.
Exceptions-In the event that a charge of $10 per day for each day in posses-
sion should total less than 50% of the cost of the ticket, the difference between
this total and the cost will be refunded.
Discount cards :-A charge of $5 per day will be deducted from the cost of
the card for each day it has been in possession and the difference refunded.
To obtain your ticket please fill out the application below completely and
legibly and mail with payment in full to the Aspen Skiing Corporation, Box
1248, Aspen, Colorado 81611. Receipts will be mailed if a self-addressed, stamped
envelope is included with the application. If you wish to apply for more than
one pass, a photo copy (or reasonable facsimile) of the applicattion form, ac-
companied by full payment, will be accepted. Photographs will be taken and
tickets delivered at the Main Ticket Office of the Aspen Skiing Corporation be-
ginning November 5, 1974.
This was given with pass Nov. 1974.
DEAR PASS HOLDER: Aspen Mountain has a number of areas within its ski
area boundary that are potential avalanche paths and which are permanently
closed to public skiing. These areas in every case are directly above some of the
most heavily skied trails on the mountain. Aspen Mountain policy dictates that
the only people allowed in these areas will be members of the Aspen Mountain
Ski Patrol. The Patrol controls these areas before people are allowed on the
mountain, usually early in the morning.
Following is a list of the closed areas:
1. The west side of Spar Gulch from Zaugg Dump to the end of the Spar Cat-
walk below the International Trail;
2. The International Swing which leads to Silver Queen and the north-facing
slope above Little Nell;
3. The east side of No. 5 Lift above the Bingo Slot Trail and north of the new
Jackpot Trail;
4. On the west side of Aspen Mountain, the area north of the Aztec Trail on
the Trainor Ridge.
If you are not sure of the area, check with the Patrol before skiing.
The penalty for violating this policy is the loss of skiing privileges for the
remainder of the season.
Other offenses which will result in suspension or loss of skiing privileges
include skiing closed trails, reckless skiing, collisions, line crashing, fraudulent
use of ticket or pass, unloading from lift at any place except regular stations,
profanity, disorderly conduct, and drunkenness.
Thank you for your cooperation,
ASPEN SKIING CORPORATION.
PAGENO="0088"
84
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PAGENO="0089"
85
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PAGENO="0090"
86
MARTIN H. KAHN,
ATTORNEY AT LAW,
Aspen, Cob., December 23, 1974.
JAMES T. MORAN, Esq.
Holland ~ Hart,
Bo~v 1128,
Aspen, 0010.
DEAR JIM: I am writing regarding the situation involving my client, Don
Lemos, and yours, the Aspen Skiing Corporation (the Corp). As you know, we
have had numerous conferences regarding the matter in an attempt to explore
a resolution acceptable to the Corp, Don and the Forest Service, all apparently
to no avail by virtue of the Corp's rejection of all alternatives presented. I also
understand that you had a lengthy conference with George Morris of the For-
est Service, his assistant, and the Corp representatives, likewise resulting in
no progress. George Morris suggested to me that I write to you to indicate
again our willingness to resolve this continuing problem in a reasonable man-
ner, and to ask the Corp to present any alternative proposal in the event those
previously discussed are deemed unworkable. I should like briefly to restate the
proposals we have discussed and which the Corp has rejected.
Don has offered to become a member of the Ski School teaching staff, to be
treated as other top instructors who have a substantial number of persons in-
terested in private instruction with them. He would be bound by the rules ap-
plicable to such employees and expect to be treated on a par with them.
As an alternative to this approach (and, I would think, perhaps more accept-
able to both the Corp and Don) Don has offered to work out a system (similar
to that presently being utilized by the Vail Ski School with at least one inde-
pendent instructor) of an affiliation with the Ski School under which Don
would pay either a percentage of his income or a flat fee to the Ski Corp and
would be able to teach independently of the Ski School with the same privileges
as Ski School instructors, for example, lift line privileges with private lessons.
The Corp has thus far rejected any of these alternatives (and indeed, as you
know, has recently refused to hire Don's Jeanne, even though she was ap-
parently qualified, because she is a Lemos). Furthermore, the Corp has not
advanced any other proposal enabling Don to teach on the mountains for which
they hold temporary use permits.
I should like, ~both in the spirit of compromise and that of the season, to once
again urge that one of the foregoing alternatives be favorably considered by
the Corp. This would end the divisiveness between the Corp and the Lemos',
eliminate the possibility of further arrests under questionable circumstances,
and result in a situation whereby independent certified instructors could work
through and with the Corp rather than against or around it. It would also per-
mit the Forest Service (and District Attorney's office) peace of mind.
If the Corp feels that the foregoing alternatives (which I sincerely believe
are moderate and reasonable) are not viable, then we would ask the Corp to
propose an alternative which would enable Don to teach skiing forthwith with-
out being harassed.
In view of the time which has elapsed since we began our discussions and
the time which the Corp has presumably thus far devoted to considering the
matter, we will assume that unless we hear from you on or before January 2,
1975, the Corp has again rejected the alternatives we have previously discussed
and is not proposing any other alternative.
I hope that this will not be the case, and that we can avoid other approaches
to the problem which circumvent the Corp. Surely reasonable men, in good
faith, should be able to resolve this matter on terms satisfactory to all
concerned.
Very truly yours,
MARTIN H. KAHN.
DECEMBER 13, 1974.
I do hereby state that I will be pleasure skiing and not teaching for pay on the
Aspen Skiing Corp. served mountains this Dec. 13, 14, 15, 1974.
DoN LEM05.
DECEMBER 10, 1974.
Mr. Don Lemos has permission to ski this date using his ski pass, No. 3505.
BOB C0RNI5H,
Security Officer, Aspen Ski Corp.
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ASPEN SKI SCHOOL
GENERAL INFORMATION REGARDING SKI SCHOOL CLINIC DEC. 2-7, 1974
1. All new and apprentice instructors who have not previously been employed
by the Aspen Ski School are required to pay $50.00 registration fee. This covers
all clinic activities and use of lift facilities during the clinic.
2. In the event that candidates drop out of the clinic for any reason including
injury, refund will be made on the following basis:
After first day $30 refund.
After second day 20 refund.
After third day 10 refund.
After fourth day No refund.
3. Fully certified instructors who are retained as members of the Aspen Ski
School staff will receive full clinic refund at the end of the season if they teach
a minimum of 200 hours during the season.
4. All candidates in the clinic will wear their clinic number so that it is
easily recognizable at all times during the clinic. At all times includes during
lunch breaks, etc.
5. All candidates will remain with their assigned groups and group leaders
at all times during the clinic.
6. Candidates will be under constant observation during clinic in regard to
personal appearance, dress and behavior. We assume that the way you dress
and act during the clinic is what we might expect after the clinic.
So that there will be no misunderstanding-during this week of clinic we are
looking for a few people who we feel have the potential to eventually become
members of the Aspen Ski School staff. We are not looking for a specific num-
ber and we may not select more than 30 apprentice candidates. Those who are
selected will be expected to continue training and orientation on a daily basis
until their final disposition is determined.
Clinic will start promptly at 9:00 a.m. Monday, December 2nd at
BE ON TIME. BE READY TO SKI.
MARTIN H. KAHN,
ATTORNEY AT LAW,
Aspen~ Col., January 5, 1975.
Mr. GEORGE MoRRIs,
District Ranger,
U.S. Forest Service,
Aspen, Cob.
DEAR MR. MORRIS: As you know, I represent Don Lemos, of. Aspen, in connec-
tion with his attempt to be able to teach skiing on ski areas operated under
permit by the Forest Service. As you also know, we have made a serious and
sustained attempt to reach an amicable solution to this problem through the
Aspen Skiing Corporation (the Corp), which has rejected all proposed alterna-
tives and does not appear to have a proposal of its own. You have a copy of my
December 23, 1974 letter to the Corp's attorney, James T. Moran; I received a
response thereto on January 4, 1975, copy attached, which states they need
more time to reply. I have been advised, however, that the reply would be
negative. Consequently, it has become clear that any solution must come from
the Forest Service, and we are hopeful that you will see the merits of our case
and act accordingly.
I shall set forth in this letter several points, in relatively brief fashion, and
would hope to discuss these (and others) with you at greater length.
1. Complaint against the Corp. We should like to make formal complaint
against the Corp on at least three grounds: (a) On December 4, 1974, Mr.
Lemos was skiing on Aspen Mountain with Jill St. John, and was "arrested"
by Bob Cornish, a "security officer" for the Corp (and also a deputy sheriff),
allegedly for criminal trespass. Cornish's position was that Mr. Lemos' $250.00
season's pass had been revoked due to alleged underground ski teaching~ (b)
The Corp has refused to sell a $60.00 pass to Mr. Lemos unless and until he signs
a statement to the effect that he will not teach for pay; (c) The Corp refused
to hire Mr. Lemos' wife Jeanne as an instructor, athough she was one of the
top applicants in the recent clinic, because she is married to Mr. Lemos.
PAGENO="0092"
88
I would note that with respect to (a), above, the charge was dropped by the
District Attorney, who took the position before the Court that this was essen-
ially a private matter between Mr. Lemos and the Corp and had no place in
the criminal system. I would also note that Mr. Cornish's actions were taken
without any notice, hearing, or proof. Moreover the Corp's own rules setting
forth the conditions under which the pass can be revoked nowhere mention
teaching, but rather go to misconduct relating to safety (see copies attached
hereto).
With respect to (b), above, the Corp presumably does not require such a
statement of others desiring to purchase said pass, and it would seem that this
is clearly a case of discrimination against Mr. Lemos.
The Corp's actions against Jeanne Lemos seem particularly reprehensible.
To exclude an otherwise qualified applicant because of her marital status is
patently arbitrary and capricious.
2. Request that Forest Service Issue Permit. In light of the Corp's unwill-
ingness to enter into any arrangement pursuant to which Mr. Lemos might
teach, we must request the Forest Service to issue a permit to Mr. Lemos for
that purpose and to instruct the Corp not to interfere with the use thereof.
There are, we believe, several points to be considered in this regard.
(a) The Corp is manifestly unwilling to reach some amicable solution. We
have done all we reasonably could be expected to do to effect such a solution.
(b) Mr. Lemos is eminently qualified to teach sking. He is a certified instruc-
tor both in the United States (since 1963) and France (1974), and has seven
years experience with formal ski schools (Aspen Ski School and Aspen High-
lands Ski School), and teaching experience outside as well. He is a member of
the Professional Ski Instructors Association. There can be no question about
his credentials. And, of course, there are a substantial number of people who
very much desire his instruction.
(c) The Corp, of course, has not been granted the exclusive right to teach
skiing on the mountains it has a permit for. The permit itself does not grant
any exclusive right, and the Corp does not, I understand their position, claim
* any such right. The Forest Service can clearly issue such a permit to Mr.
Lemos, and there are compelling reasons for doing so, among which are the
opportunity for alternative teaching experiences by users (i.e. the public) of
public land, the opportunity for others than merely the permittee reasonably to
earn a livelihood thereon (which in no way is inconsistent with the recreational
use of the land), and the negation of the arbitrary use of power (ranging from
arrest to harassment) by a permittee. Mr. Lemos' desire to teach on the land
is no more incompatible with the use of the land than is the rental of skis to
be used on the land by the dozens of shops in town that derive considerably
more income therefrom than could any individual instructor from teaching. In
short, there are no compelling reasons against issuing the permit, other than
the protection of the Corp's asserted economic interests which, in reality, could
not be jeopardized by Mr. Lemos' teaching.
As I indicated earlier in this letter, we have tried to set forth some major points
in brief fashion and would be more than happy to discuss this matter in greater
detail. We will appreciate whatever consideration and attention you can give
to our request.
Very truly yours,
MARTIN H. KAHN.
Enclosure.
U.S. DEPARTMENT OF AGRICIJLTURE,
FOREST SERVICE,
ASPEN RANGER DISTRICT,
Aspen, Cob., January 27, 1975.
Mr. MARTIN H. KAHN,
Attorney At Law,
Roaring Fork Building,
Bo~v 3386,
Aspen, Cob.
DEAR MR. KAHN: I am in receipt of your letter of January 5, 1975 requesing
a permit for Don Lemos to instruct skiing on the existing ski areas and com-
plaining that the Aspen Skiing Corporation treated Don and his wife unfairly.
* I have delayed in making a formal reply, after discussing the matter with Don,
until Don had an opportunity to talk with Forest Supervisor Evans. This dis-
cussion occurred January 15.
PAGENO="0093"
89
I have discussed all three of the complaint issues with the Ski Corp. officials.
As you realize I have personally contacted Tom Richardson, Curt Chase, Bob
Cornish and Jim Moran to explore the opportunities for Don to instruct skiing
within the Aspen Ski School and to insure that Don is given fair treatment.
I am not in the position to issue a permit and Forest Supervisor Evans has
indicated that he will not issue the permit but is willing to permit the Aspen
or Aspen Highlands Skiing Corporation to sub-lease to Don or any other present
independent ski instructor.
Sincerely,
GEORGE A. MORRIS,
District Ranger.
COMPETITION SKI NEWS,
Olympic Valley, Calif., January 11, 1975.
GEORGE MORRIS,
District Ranger,
U.S. Forest Service,
Boa 359,
Aspen, Cob.
DEAR MR. MORRIS: I write you concerning Don Lemos and the issue of inde-
pendent ski instructors. My own qualifications for commenting on this matter
to you include: I am a certified ski instructor in both the U.S. and France; a
certified ski coach in the U.S.; I am a past U.S. Ski Team coach; I am an ex-
aminer for the Far West Ski Instructors Association and for the Far West Ski
Coaches Association; I am the editor of Competition Ski News, and a free lance
writer with articles printed in Ski, Skiing, Ski Racing, Skiing Area News, and
Mountain Gazatte. One article that appeared in the January 1973 issue of
Skiing Area News was about Lemos and his cause.
I have known Don Lemos since 1963, and know he is honest, sincere and
dedicated to the sport of skiing, and to the profession of teaching skiing. He is
also an outstanding teacher. I have been working as a ski instructor since 1963,
and am fully aware of the inequities of ski instruction in America. Personally,
professionally and philosophically, I am one-hundred percent behind Don Lemos
and his efforts. What he is attempting to do is the very best thing that could
happen to the working instructor and the paying customer. The majority of
working instructors, as opposed to ski school directors and management em-
ployees of ski corporations, are hoping that Lemos will help convince the F.S.
to issue land use permits to qualified independent ski instructors. Virtually all
of the paying customers I've discussed this issue with, are in favor of Lemos'
position.
Anything done to further the position of the qualified independent ski in-
structor in America should be supported. Anything you can do to help Don
Lemos get a land use permit will receive the complete backing of me and my
colleagues.
Thank you for your interest and time in the independent ski instructor issue.
Sincerely,
DICK DORWORTH,
Editor.
BEVERLY HILLS, CALIF., January 21, 1975.
District Ranger GEORGE MORRIS,
U.S. Forest Service,
P.O. Boa~ 359,
Aspen, Cob.
DEAR RANGER MORRIS: Recently, I, and my wife, Lynne, visited Aspen, where
we had the good fortune to meet Don Lemos who we prevailed upon to give us
some skiing instruction.
Don advised us in advance that he was unable to charge us for his time or
skill, but be kindly agreed to donate them to us in view of his friendliness with
my brother-in-law, who lives in Aspen.
Lynne and I had received other skiing lessons. But, we'd like you to know
that we found Don's methods, skill and patience, to be nothing short of superb,
and infinitely more rewarding than any other skiing instruction we have had.
It would not be an overstatement to say that through Don Lemos we fell in
love with skiing and with Aspen and look forward to returning as soon as we
67-512 O-76-----7
PAGENO="0094"
90
can. We found him to be safe, sane, cautious and articulate, and he helped
us immeasurably toward becoming skiers, in a very short time.
My wife and I believe that Don Lemos should have the right to teach skiing
at Aspen, and he should be able to receive compensation for his time and talents.
Don Lemos is one of those rare people who have both dedication and talent.
My wife and I respectfully urge you to help him so that be can continue to help
us and others to know and enjoy the world of skiing and receive just compen-
sation for so doing.
Very truly yours,
BARRY SCHOLER.
ASPEN SKIING CORP.,
Aspen, Cob., October 17, 1972.
Mr. DON LEMOS,
Bo~v 321,
Aspen, Cob.
DEAR DON: I have received your letter of October 3rd concerning your request
to be employed by the Aspen Ski School this winter.
Last year I answered your similar request in some detail and outlined the
reasons I felt I could not give it favorable consideration. For the same reasons
I gave you last year, Don, I have no choice but to give you the same answer
again this year.
Sincerely,
CURT CHASE,
Director, Aspen Ski School.
HOLLAND & HART,
ATTORNEYS AT LAw,
Aspen, Cob., March 20, 1973.
Mr. DON LEMOS,
P.O. Boai 321,
Aspen, Cob.
DEAR DON: It has recently become very apparent to the Aspen Skiing Cor-
poration that you are consistently, instructing skiing at Aspen Mountain, But-
termilk and/or Snowmass. Since we both know the legal ramifications of unau-
thorized instructing without a valid permit, I won't burden this letter with an
esoteric discussion of the legalities. On behalf of our client however I will notify
you that, if you are found instructing again on any of the three areas run by
Aspen Skiing Corporation, your pass will be pulled, you will receive a pro rata
refund, and you will be barred for the remainder of the season.
Yours very truly,
JAMES T. MORAN.
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
ASPEN RANGER DISTRICT,
Aspen, Cob., March 26, 1973.
Mr. DON LEMOS,
P.O. Box 321,
Aspen, Cob.
DEAR DON: After considering our conversation of a couple of days ago, con-
cerning the admonition you received from Mr. Jim Moran on instructing skiing,
I find there is little I can say to clarify the situation.
If you are not conducting unauthorized lessons, then it seems to me that you
need have no concern about the matter. On the other hand, I do not feel it
would be productive or helpful for us to engage in a debate on the propriety
of a possible action. Rather, it would seem more logical to consider a concrete
occurrence when all the facts are known.
I believe the current litigation will further clarify the situation for all of
us, and I'm sure you agree.
Sincerely,
JOHN E. BURNS,
District Ranger.
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U.S. SENATE,
Washington, D.C., March 25, 1975.
Mr. JOHN R. MCGUIRE,
Chief Forester,
U.S. Forest Service,
Washington, D.C.
Re: Use permits for independent ski instructors.
DEAR MR. McGUIRE: The question of the Forest Service's refusal to issue use
permits to qualified independent ski instructors has been called to our atten-
tion. We are aware of your previous position as expressed in your letter to Con-
gressman Wayne Aspinall, but the problem has become even more exacerbated
by recent incidents in Colorado. The situation is such that a review and revision
of your regulations and policies concerning exclusivity of winter sports area
permits appears to be appropriate.
Recent events involving the Aspen Skiing Corporation and an erstwhile inde-
pendent instructor are a cause of great concern. This instructor, Don Lemos,
was recently "arrested" on National Forest land by a Corporation security of-
ficer for "trespassing," but the prosecuting attorney refused to file charges. Mr.
Lemos was ostensibly arrested for conducting an independent skiing lesson,
although this was never proven. As you may know, the controversy between
Mr. Lemos and the Corporation is of long standing, but the underlying question
is not isolated to this single dispute. Confrontations of this sort have recently
occurred in other Colorado ski areas and the problem is~ a recurring one. At
least one area, Vail, has recognized the need for change and now agrees to allow
qualified independent instructors to operate in the Vail ski area in return for
a percentage of their fee.
Forest Service policy, as we understand it, is to refuse permits to individual
instructors for use at ski areas under permit to another party, without that
party's consent. This can, as illustrated by the Aspen situation, lead to abuses
of corporate power against overmatched individual citizens. For example, not
only has Mr. Lemos been arrested under questionable circumstances and pre-
cluded from independent instruction: both he and his wife, who are highly
qualified instructors, have been refused employment by the Aspen Skiing Cor-
poration as regular ski school instructors. The effect of the monopoly conferred
on the Corporation has been to deprive these people, and others, of the opportu-
nity to pursue their profession.
Such "company town" conditions not only affect the individual instructors in-
volved: the public's right to choose between competing instructors and/or tech-
niques is also impaired. The policy of exclusivity is at odds with the statutory
mandate that the general public be allowed full and free enjoyment of national
forest lands.
Furthermore, I can see no compelling justification for conferring monopoly
power over ski instruction on permittees such as the Aspen Ski Corporation or
Vail Associates, as they are financially sound operations whose economic inter-
ests could not possibly be seriously jeopardized by a relatively small number of
independent instructors.
Consideration should therefore be given to revising the practice of granting
only exclusive permits. This can be accomplished by either requiring all finan-
cially sound areas to make provisions for independents, such as those granted at
Vail, or by promulgating regulations revising section 2721 of the Forest Service
Manual to allow individual use permits for qualified instructors operating in
financially sound areas. Appropriate provision should be made to insure that
such instructors meet minimum standards of qualification, have liability in-
surance, keep adequate records, and if appropriate, compensate ski areas for
the use of facilities by both instructor and pupil.
The need for a review of past policy is both apparent and immediate. Please
advise us concerning your views on this matter.
Sincerely,
FLOYD HASKELL,
U.S. Senate,
GARY HART,
U.S. Senate,
PATRICIA SCHROEDER,
Member of Congress.
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ASPEN, COLO., April 20, 1975.
Mr. JOHN R. McGÜIRE,
Chief Forester,
U.S. Forest Service,
Washington, D.C.
DEAR MR. MCGUIRE: It must be about three years now since we met at Vail,
Colorado where my wife and I dicussed the Independent Ski Instructor Permit
issue with you. If you recall, I wrote you a follow up letter and your reply
to that was that you would not issue me a permit until the Court had its say
since I had filed suit.
Last week the 10th Circuit Court of Appeals ruled on the case and they re-
manded the case down to the District Court for a re-hearing. Their basis was
the anti-monopoly aspect of my suit. While not a total win for me this ruling
was certainly in my favor, and Mr. McGuire, I would like to now drop the suit
and negotiate a settlement and I feel that now is an appropriate time for the
Forest Service to do this. The "climate" has changed, new developments have
taken place. President Ford announced that he will vigorously enforce the anti-
monopoly laws to stir competition within the economy. What better place to
start than within the Government?
I've enclosed a package of papers to quickly review the situation without
having to go into the lengthy details, just to bring you up to date. I realize
you probably have seen some of these papers, however there have been
additions.
Also, I've been working closely with George Morris, the Local District
Ranger, and I've spoken with George Tourtillott of the Regional office. May I
suggest that you contact these men, especially Mr. Morris, to really get a pic-
ture of what is happening in the field.
Mr. McGuire, in view of the latest occurrences I really hope you will recon-
sider your former position so that we may finally settle this issue to the benefit
of all.
I look forward to your positive reply.
Thank you.
Most Sincerely,
DON LEM05.
CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Washington, D.C., April 28, 1975.
Mr. JOHN R. MCGIJIRE,
Chief Forester,
U.S. Forest Service,
Washington, D.C.
DJ~&R MR. McGUIRE: You were recently contacted by Members of the Colorado
Congressional Delegation concerning the problem revolving around the ap-
plication of one Don Lemos of Aspen, Colorado, for a permit to conduct inde-
pendent ski instruction at the Aspen Ski area.
After studying this matter with some care, I cannot escape the fact that there
is equity on both sides of this case.
There is no doubt in my mind that the Aspen Ski Corporation expresses a
valid objection to opening up its permit area and facilities to independent ski
instructors when its own ski instruction program is expected to provide a legit-
imate source of income for its total operation. It is not reasonable to expect any
business to purposely erode a source of income.
On the other hand, we are talking about public land and such things as the
right of the public to have a choice of services. These factors give a legitimacy
to Mr. Lemos' application.
In looking for some kind of compromise, I am wondering if the parties in-
volved, including the Forest Service, could consider an arrangement whereby a
fee could be charged for an independent ski instruction permit that would be
calculated to compensate the Aspen Ski Corporation for its loss of revenue. This
might mean the independent ski instructor would have to charge a premium
price for his services, but it would give the instructor the opportunity to practice
PAGENO="0097"
93
his profession while requiring him to compensate the Aspen Ski Corporation
for their loss of income.
I would appreciate having your comments on such a proposal.
Sincerely,
JAMES P. JOHNSON,
Member of Congress.
ASPEN, COLO., May 3, 1975.
Hon. JAMES P. JoHNSoN,
51.~ Cannon Boulevard,
Washington, D.C.
DEAR MR. JOHNSON: I was most pleased to receive your letter of April 28,
1975 along with a copy of your letter to Chief John McGuire of the Forest
Service. You asked for my comments and I will state a few thoughts and per-
haps pose some questions.
First I'd like to say that I think your letter is carefully thought out, designed
to be in the best interests of all, and I really appreciate that. As far as the In-
dependent Instructor taking revenue from the corporation, it could be argued
that this would be offset by the additional draw of people to the area to seek
the Independent's services, resulting in increased lift ticket sales. Also, many
of the students request the services of an Independent would not take lessons
from the area ski school in any case. This would indicate that the Independent
would not be a substitute for the existing ski school, but an addition to it. The
Independent provides services not normally provided by the existing ski schools
such as flexibility of schedule, pick up service, choice of different areas and a
choice of different techniques, not to mention a choice of price. Now even if the
Independent did cut into the revenue of the area ski school, should the area
be compensated? Rather than think of it as something that they're entitled tO,
may we not think of it as something that should never have been?
Mr. Johnson, from my viewpoint there are two aspects. One is the economics
involved; the other is the freedom to pursue my profession. Of the two, the
freedom is the dominant factor, and with that in mind, I support your solution
proposing a compromise. I've given some thought as to how this might work, and
the simplest way might be for the Independent to present himself along with
his permit to the management of the area where he desires to conduct a ski
lesson, pay a fee to them, or perhaps purchase a commercial lift ticket at maybe
twice the price of a normal one, and then proceed to conduct his business. He
would be obliged to display indentification advising that he is a permitted Inde-
pendent, and he would be extended lift line privileges like any other ski school
private lesson instructor. This could also be worked out on a seasonal basis
with a season pass.
I've proposed one way that this might work and I'm certainly open for ideas
and negotiation. My goal is to contribute something to the sport of skiing, and
in this spirit I will agree to any reasonable settlement.
~ I thank you for your interest and support Mr. Johnson, and I look forward
to hearing further from you.
Until then I remain,
Sincerely,
DON LEMOS.
Enclosure.
CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Washington, D.C., July 28, 1975.
JOHN R. MCGUIRE,
Chief,
UJg. Forest Service,
Washington, D.C.
DEAR MR. MCGUIRE: Please reference my letter to you of March 25, 1975 (also
signed by Senators Hart and Haskell) regarding the possibility of the issuance
of special use permits to qualified independent ski instructors. I also have read
with great interest Congressman Johnson's April 28 letter to you on this subject.
As Congressman Johnson wrote you, there appear to be legitimate concerns
PAGENO="0098"
94
on the part of both the ski companies and the independent instructors. The
ski companies fear a loss of revenues, but the independent instructors argue
that the public deserves a choice of services on these public lands.
I believe there is merit in Congressman Johnson's proposal for a compromise-
namely, that the Forest Service would issue the special use permits for qualified
independent instructors, but that the instructors would be charged a fee to com-
pensate the ski companies for their loss of revenue.
I would appreciate your comments on this proposal.
Please respond to my Denver District Office.
With kind regards,
Sincerely,
PATRICIA SCHROEDER,
Member of Congress.
LA MAUR, INC.,
Minneapolis, Minn., January 10, 1975.
DISTRICT RANGER,
U.S. Forest Service,
Box 359,
Aspen, Cob.
DEAR SIR: During my recent skiing vacation in Aspen, I became aware of a
situation that troubles me greatly. The situation concerns one Don Lernos. My
understanding of this situation is that be has all of the qualifications to properly
and safely instruct people in skiing, but has not been issued a permit to do so.
It is further my understanding that these permits have to be issued by the
Forest Service, and to date this has not been done.
I cannot understand why he has not been issued this permit. First, it appears
that he has more than adequate qualifications to properly execute his teaching
responsibilities. The second part which greatly disturbs me is that I do not
understand how the Aspen Ski Corporation can have a "lock" on the right to
teach skiing on public land. As a matter of fact, I believe that any person,
fully qualified, should be given the opportunity to teach skiing on public land.
It seems to me that a set of qualifications could be readily set up so that any
individual who meets the qualifications could be issued a permit for private
instructions.
It further seems to me that this country was built on the position that com-
petition is healthy, and that the public benefits are best protected by having
competition in every field of endeavor. As a business person, I am confronted
with competition on a daily basis, and I firmly believe in it.
While I was in Aspen I personally spent time with Mr. Lemos, and found
him to be a person of the highest integrity and responsibility, and I very
strongly feel that the sport of skiing needs this type of people.
I would appreciate an answer to this letter at your earliest convenience.
Very truly yours,
RICHARD G. SPIEGEL,
President.
PRYTANIA CLINIC,
New Orleans, La., June 18, 1975.
Senator J. BENNETT JOHNSON,
Rusxell Building, Washington, D.C.
Dear SENATOR JOHNsoN: I am writing to ask that you support a piece of legisla-
tion which I understand is to be proposed by Senator Gary Hart of Colorado.
Like many other Louisianians, I have become devoted to the sport of skiing
as a recreational activity. I also share with the vast majority of Louisianians, a
concern for the public lands and their fair utilization by the public, to whom
they "belong".
A situation has arisen in the community of Aspen, Colorado where the Aspen
Skiing Corporation rent public land from the Forest Service to provide the
necessary facilities for skiing.
An impasse has been reached in that the skiing corporation has been pre-
venting a highly qualified ski instructor or his wife (Don and Jeannie Lemos)
from earning a livelihood as professional ski instructors.
The Ski Corporation has been able to maintain this situation in what appears
to be an illegal manner, and at the same time the United States Forest Service
PAGENO="0099"
95
simply will not issue a permit to Mr. Lemos-although they certainly have the
right to do it and there appeared to be very compelling reasons for them to do it.
As Mr. and Mrs. Lemos do not have the financial resources to take this
matter through the courts, as I understand the situation, there is to be an
attempt to resolve the issue through appropriate legislation.
I am enclosing some correspondence which gives some detail and documentation
to the issue and I hope someone on your staff will have a chance to become
familiar with it. If and when the matter comes to your attention for considera-
tion, I together with the many Louisiana advocates of outdoor activities, fairplay,
and particularly skiing as a recreation will be very grateful.
Yours very truly,
ARTHUR 3. SILVERMAN, M.D.
ENGLEWOOD, CoLo., May 13,1975.
Mr. Joux R. McGuraE,
Chief Forester, U.S. Forest Services,
U.S. Forest Service,
Washington, D.C.
Re: Don Lemos and independent ski instructors.
Dear Mn. McGrnRE: I have followed the career of Don Lemos for over ten years,
and I have had the distinct pleasure of skiing with both him and his wife. They
are both highly accomplished and beautiful skiiers.
Over the years I have also skiied with many instructors at various ski schools
in this country and in Europe, and in my opinion, it is a great tragedy that
Don's ability in teaching has been denied to the American skiing public.
The slopes and lifts are ostensibly maintained for the benefit of the public,
but for all practical purposes, they are obviously being maintained for the sole
benefit of the lift operators, creating a monopoly against the small entrepreneur,
in this case, the independent ski instructor.
The lift operators maintain facilities for which they are well paid. That is
their compensation. However, if they wish to have a ski equipment rental
service, or a ski school, that is all right. But there is nothing in the Act
granting their permits which denies the right of teaching to other qualified
instructors, and nothing granting any monopoly to the operators.
The lift operators should not have the exclusive right of determining what is
best for the American public. What is good for the lift operators is not
necessarily good for America and I am glad to see that Vail has already agreed
to various changes, respecting the independent ski instructors.
The details involved in settling teaching qualifications, compensation for use
of ski facilities, liability insurance, are all technicalities which certainly can
be worked out by this country's various financial branches. That should not
be a problem.
What is necessary is the determination to permit the well-qualified, but
independent instructor, to teach; to allow the American public to choose their
own instructors and to see to it that the freedom of the American public is not
curtailed by selfish monetary interests.
I do hope that you will review this matter now with the major emphasis on
the need of the American public to have the full and free enjoyment of their
natioinal forest lands, and that independent ski instructors of the high calibre
of Don Lemos will not be denied to the American skiing community.
Sincerely yours,
Mrs. GLADYS OPPENHIMER.
SOUTH LAKE TAHOE, CALIF., May 26, 1971.
Mr. EDWARD P. CLIFF,
Chief U.S. Forest Service,
14th Street d~ Independence Avenue SW.,
Washington, D.C.
DEAR Sin: As a certified ski instructor and having taught skiing fulltime
for over nine years, I give my fullest support to this petition, for many reasons
which are not necessary to go into at this time.
PAGENO="0100"
96
At the present time, most ski-schools are controlled by the lift operator,
strictly for the purpose of financial gaiin. Also the instructors are financially
dependent on the lift operator. These instructors are then not able to improve
the quality of ski instruction to the public in the United States. At the present
rate, it will take too many years for our standard of ski instruction to equal
that of the leading countries.
I am asking the support of the United States Forest Service in rectifying
and improving this situation.
Yours, very truly
GUNTHER HOHLWEG.
P.S. Right on! Let's keep the movement going. The original went to R. Cliff
with the petition.
ASPEN SKI ScHooL, GENERAL INFORMATION-1974--75
INSTRUCTOR STAFF
The Aspen Ski School will employ a regular staff of approximately 200 in-
structors for the winter season 1974-75. Contracts will be signed with some in-
structors while others will work on a non-guaranteed basis. The staff will in-
clude apprentice instructors who undergo continuous instructor training in
preparation for spring certification exams.
PAY SCALE
Instructors are paid on the basis of certification status, experience, and value
to the Aspen Ski School. The teaching scale starts at $6.05 per hour for ap-
prentice instructors and goes to $9.55 per hour for our top instructors. Instruc-
tors receive pay at time and one-half for teaching in excess of 24 hours a week.
CLINIC
Instructors returning from last year will attend clinics scheduled before
Thanksgiving. Apprentice and experienced instructors who have not previously
been employed by the Aspen Ski School will clinic December 2-7.
The clinic is an indoctrination in the Aspen Ski School system and a period
of evaluation. Further training and evaluation is continued through the Christ-
mas holiday period and the ski school staff is finalized the first of January.
CLINIC REGISTRATION
See letter.
TEACHING SEASON
The Aspen Ski School operates every day from Thanksgiving until the area
closes in mid-April. From Thanksgiving until Christmas the class load is light
and there is enough work only for our returning contract instructors. During
the Christmas holidays our peak days will be over 2,000 students and there
is work for all instructors. Instructors should plan to supplement their ski school
income until such time as their status in the ski school becomes firmly estab-
lished. Most first-year instructors will receive no pay before January 1st.
On January 1st, our staff will be finalized at 200 instructors. A general work-
ing priority will be established for all instructors at this time. During January,
training is continued for apprentice instructors. Through February and March
there is reasonable steady employment for all.
UNIFORMS
Basic uniform (jacket and pants) are provided by the Aspen Ski School. Ski
school sweaters and pants may be purchased through the school at cost price.
PAGENO="0101"
97
IIOIJSING
Instructors must make their own housing arrangements. Housing is at a
premium in Aspen as in most resort communities.
HOLLAND & HART,
ATTORNEYS AT LAW,
Aspen, Cob., May 19, 1975.
Mr. GEORGE MORRIS,
Aspen District Ranger,
U.S. Forest Service,
Aspen, 0010.
Re: Independent ski instructors.
DEAR MR. MORRIS: At the request of Curt Chase, Aspen Ski School Director,
I am enclosing copies of a letter, dated March 25, 1975, from Senators Hart
and Haskell and Representative Schroeder to Chief Forester McGuire, together
with a copy of our reply, dated May 16, 1975, on behalf of Aspen Skiing
Corporation. This correspondence relates to the independent or underground
ski instructor question as it affects ski area permittees.
Your very truly,
JAMES T. MORAN.
HOLLAND & HART,
ATTORNEYS AT LAW,
Aspen, Cob., May 16, 1975.
Mr. GARY HART,
U.S. Senate,
Washington, D.C.
Re: Use permits for independent ski instructors.
DEAR SENATOR HART: As general counsel to Aspen Skiing Corporation (ASC)
we are writing in response to your letter of March 25, 1975 addressed to Chief
Forester, John R. McGuire. Since Senator Haskell and Representative Schroeder
joined as signatories to your letter we are sending copies of this letter to each
of them.
You have referred to the long standing controversy between Don Lemos and
ASC as an example of the corporate abuse of individual citizens which results
from the current Forest Service policy of refusing to issue special use permits
to individual instructors. You then conclude that the single permittee policy
impairs the right of the public to engage ski instructors of its own choosing
and contravenes the statutory mandate that the general public be allowed full
and free enjoyment of national forest lands.
Against this backdrop you urge the Forest Service to consider policy re-
visions which would either require ski area permittees to make provisions to
accommodate independent instructors or would provide for the issuance of
special use permits to "qualified" individual instructors. You state that the
need for review of past policy is both apparent and immediate.
I can appreciate your concern that governmental policy not become a vehicle
for abuses of corporate power or for denial of the public's full and free enjoy-
ment of national forest lands. I fear, however, that you have accepted Don
Lemos' "Robin Hood" theory of the independent instructor without fully con-
sidering how the skiing public's interest is best served and, certainly, without
full knowledge of the facts surrounding Don's particular situation.
The question of whether current Forest Service policy on ski instruction is
at odds with the public interest has been examined twice by the federal courts.
In Heath vs. Aspen Skiing Corporation, 325 F. Supp. 223 (D. Cob. 1971), the
Court expressly found and concluded that the "regulations and policy of the
Forest Service applicable to ski schools are reasonable, authorized, lawful and
in the public interest". In Sabin v. Butz,-F. 2d-(lOth Cir., No. 74-1060, April
9, 1975) the Court concluded that the relevant provisions of the Forest Service
Manual and the single permittee policy are within the scope of power granted
by Congress to the Secretary of Agriculture. The Sabin case has been remanded
to the District Court for a. determination as to whether the agency gave fair
consideration to the possible monopoly and anti-competitive aspects of the
single permittee policy. If the District Court concludes that the Forest Service
failed to consider all relevant factors the case will be further remanded. to
the Secretary of Agriculture for reconsideration.
PAGENO="0102"
98
My point is simply that the two District Court judges who have weighed the
current policy on the scales of public interest have both concluded the public
interest is better served by present policy than by the proposals advanced on
behalf of Mr. Lemos. The posture of the Sabin case will require yet another
examination of the public interest factor in terms of monopoly and anti-com-
petitive aspects.
Having been involved with this problem for several years I can assure you
that the Forest Service policy is not premised on a desire to confer economic
favors on the ski area permittees. It is based on long and careful consideration
of how to best serve the overriding interest of the public in the full and free
enjoyment of national forest lands. Your apparent assumption to* the contrary
seems unwarranted in view of the fact that the federal courts have so far con-
curred with the Forest Service. The close scrutiny of such problems which is
afforded by the judicial process is certainly entitled to greater weight than the
mere protestations of public interest which are continually advanced by Mr.
Lemos primarily because they appear to coincide with his own individual inter-
est. May I respectfully suggest that you will obtain a clearer understanding
of the specific elements that entered into the public interest determination by
carefully rereading Judge Winner's opinion in the Heath case.
You point out in your letter that there are "a relatively small number of
independent instructor". I take it that you have not been furnished with any
evidence that a substantial segment of the general public is protesting about
the unavailability of instruction from these few independents. Certainly we have
never been furnished with any such evidence. By way of contrast, let me in-
form you that the Aspen Ski School, with a staff ranging from 200-250 instruc-
tors, annually provides the following services to the general public:
1. 336,000 hours of class instruction;
2. 16,000 hours of private lesson instruction;
3. Free ski classes for local youngsters under thirteen years of age;
4. Coaching assistance for Aspen Ski Club junior racing programs;
5. Free instruction and guidance for blind and other physically handicapped
skiers;
6. Continuous training to maintain a high level of technical competence
among its instructors; and
7. Expertise and manpower for the conduct of one or two premier amateur
ski races such as the Roch Cup and the World Series.
To so serve the public demand for ski instruction and related services requires
an organized and efficient staff of ski instructors who are willing to be avail-
able at regularly scheduled times, who are willing to give class instruction or
private instruction, who are willing to instruct first timers as well as advanced
skiers, and who are willing to give additional time and effort to special events
such as packing and maintaining courses for amateur and junior race events.
On the other hand the so-called independent instructor uniformly proposes
preferential arrangements which benefit him at the expense of his professional
colleagues and serve oniy those few members of the general public whose de-
sires for preferential treatment coincide with his own. To illustrate let me sum-
marize the requests which have consistently appeared in the proposals ad-
vanced by Mr. Lemos over the past few years:
1. No fixed daytime schedule;
2. Private lessons only;
3. Privilege of "cutting" lift lines; and
4. Treatment on a par with the top instructors who are within the organized
ski school.
In short the independent instructor seeks more privileges than are accorded to
any ski-school instructor without undertaking any of the latter's obligations.
Which instructor better serves the general public?
I anticipate that you may ask: Cannot the independent be accommodated
without disrupting the organized ski school? In theory at least that, seems a
possibility which would allow the ski school to continue to serve the public at
large and the independent to serve his own restricted clientele. The answer is
that the theory has been disproved in actual practice. You may know that for
some years past the independent instructor was tolerated and was then euphe-
mistica.lly referred to as an "underground" ski instructor. The peaceful coexist-
ence (another euphemism) might have continued indefinitely but for the fact
that some of the underground instructors, Heath and Lemos foremost among
PAGENO="0103"
99
them, began to publicize their own activities by indulging in some attention pro-
voking conduct on the slopes and by promoting dissension among the instructor
employees. Their gospel was that the independent gets to keep the entire fee
paid by the pupil and thereby makes considerably more money than the poor
ski school instructor. This caused a great deal of understandable concern among
ski school personnel, viz "If Health and Lemos can get away with it, why
shouldn't we all do it?" The problems of maintaining an organized ski school
to meet the overrall public need in the face of that situation should be apparent
to you. The policing of the notorious independents was a direct result of their
own agitations among the regular instructors. Nevertheless, ASC has not closed
its corporate mind to the problem. Earlier this year in evaluating Mr. Lemos'
most recent'proposals I requested Curt Chase, director of the Aspen Ski School,
to once again consider the matter. Here is what he wrote to me: "The feasi-
bility of providing some ski school services through special arrangement with
independent operators has been evaluated in the past and is constantly being
evaluated on a current basis. It has been and continues to be our feeling that
this procedure would not improve our service to the public, that it would create
unacceptable problems of accounting and control, create a preferential treatment
for selected instructors and be disruptive to the morale and efficiency of our in-
structor staff."
The single permittee policy has resulted in "the greatest good for the greatest
number". The proven capacity of the organized ski school to meet the need of
the public for competent, efficient, organized and safe ski instruction should
not be subverted to Mr. Lemos' thesis that the public interest requires his serv-
ices above all else. Nowhere has the real essence of the public interest question
in this matter been better captured in one sentence than by Circuit Judge Mc-
Williams, who wrote: "It is abundantly clear to me that the Forest Service was
of the view, which I believe to be a rational one, that, all things considered, a
single permittee policy, as opposed to a multiple permittee policy, was more
advantageous for all concerned, except possibly these plaintiffs, and others
similarly situated, who in reality simply seek to benefit from the work of
others" (Separate opinion, concurring in part and dissenting in part in Sabin `i'
Butz, supra.)
Turning now to the specific facts surrounding Mr. Lemos' personal situation,
I don't believe that you have been furnished with an adequate or complete sum-
mary. This is not a case in which the corporate bully has abused the over-
matched individual citizen as you have apparently assumed. I cannot, in this
letter, detail the entire history of the Lemos-ASC controversy but I can sum-
marize some of the pertinent facets that you may not be aware of.
To begin with Mr. Lemos was given employment as a contract ski instructor
with the Aspen Ski School during the 1963-64 season. As the season progressed,
the school became concerned over a rash of pupil accidents occurring in Mr.
Lemos' classes, including two broken legs in a one week period. Observation by
qualified supervisors established that he was pushing or overskiing his pupils
relative to their ability and was exercising poor judgment in the selection of
terrain. He was apprised of this and, although he disputed the supervisory
opinions, did begin to slow his classes down somewhat. He was counseled about
his responsibility for the safety and welfare of his pupils. On the evening before
the 1964 Roch Cup he announced that he was going to take the following day
off to watch the competition, was reminded that his class was returning for
continued instruction and was told that be was expected to be available to
teach them. Both literally and in effect he told the ski school to "shove it" and
did not report for work the following day. Accordingly, he was terminated as
an employee.
He then moved on to Aspen Highlands where be was engaged under some
sort of special arrangements made with Fred Iselin who, at that time, was
Aspen Highland's Ski School Director. The exact details of the arrangement
were not known to the four Highlands supervisors who are now the directors
of the ski school. Apparently the agreement was similar in certain respects to
Mr. Lemos' current proposals for independent instructors. By the following
year Fred Iselln had left Aspen Highlands and his successors did not re-employ
Mr. Lemos.
There then followed several years of more or less open underground teaching
by Mr. Lemos.
PAGENO="0104"
100
In the fall of 1969, Mr. Lemos approached ASC with a request to resume
teaching under the auspices of the Aspen Ski School. He was offered employ-
ment on the same basis as all other instructors in the school. Mr. Lemos in-
sisted that he had to have special privileges and concessions that were not ex-
tended to the other instructors. 1~ianagement was unable to accede to such re-
quests and Mr. Lemos chose not to accept an offer of employment on the same
terms as were offered to all others.
During the 1970-71 season, Mr. Lemos for a short while taught at Aspen
Highlands under fee-spit arrangements which he and Mr. Heath bad separately
negotiated with the Highlands management. These arrangements, which are
described in the Heath decision, were terminated prior to the end of the season
because of conflicts with the regular ski school. The arrangements with Jack
Heath were terminated at about the same time and he promptly commenced
suit against Aspen Highlands, Aspen Skiing Corporation and the principal of-
ficers of each. Heath v. Aspen Skiing Corporation, supra.
At the beginning of the 1971-72 season, Mr. Lemos again approached the
Aspen Ski School, this time with a freelance type of proposal in which he would
teach only his own clientele, would arrange his own time schedule, and would
not be available for class instruction or any of the other regular duties under-
taken by the other instructors. This proposal was not accepted by the Aspen Ski
School. The same basic proposal has been submitted and rejected several times
since. In the interim there have been lift-line scuffles and various lawsuits of
which you probably have some knowledge.
Mr. Lemos has repeatedly turned down all offers of employment on a basis
consistent with other instructors. He has requested special treatment that can-
not in good conscience be given to him without being given to the entire ski
school. The preferences which he desires, if applied uniformly to all instructors,
would make it impossible for the Aspen Ski School or any other ski school to
give adequate instruction to the public.
With regard to Mrs. Lemos, you should know that about 3 years ago she was
engaged as an apprentice instructor by the Aspen Ski School. She was assigned
to teach at Christmastime and worked for two days. The next day, the busiest
of the season, she failed to show up for work and was not seen again for the
remainder of the season. This past course of conduct was a strong factor in
ASC's decision not to employ her this season.
As with any teacher in any school, the qualification to instruct is not solely
determined by proficiency in the subject matter. An appreciation and willing-
ness to undertake all of the responsibilities of the profession to the public and
to the employer are also required. In these areas Mr. Lemos has fallen so short
that it has completely outweighed any technical proficiency he might possess.
The independent instructor experiment has failed not on account of permittee
abuse of power nor on account of "company town" attitudes. It has been rejected
because of the deleterious effect which such arrangements have had upon the
ability of the organized ski school to effectively serve the public interest. Mr.
Lernos has played a leading role in reinforcing the wisdom of the single per-
mittee policy.
I hope that, in the future when you decide to espouse the cause of the seem-
ingly oppressed, you will spend more time collecting all of the facts in lieu
of accepting the protestant's version as the whole truth. Contrary to the version
supplied to you, Mr. Lemos was not arrested on National Forest land but on
private land leased to ASC. We are also advised through recent inquiry that
Vail does not have an independent instructor program as represented in your
letter.
Should you desire further information on any of the matters discussed in
this letter or in your letter of March 25, we will be happy to provide it.
Yours very truly,
JAMES T. MORAN.
MARTIN H. KAHN,
ATTORNEY AT LAW,
Aspen, Cob., Juby 3, 1975.
Hon. GARY HART,
U.S. Senate,
Senate Office Building,
Washington, D.C.
DEAR SENATOR HART: As you know, I represent Don Lemos and have been in
contact with members of your staff on prior occasions regarding our belief that
present Forest Service policy regarding independent ski instructors is unwise.
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101
I have recently received a copy of a letter sent to you by counsel for the Aspen
Skiing Corporation (Corp), and I would like to respond thereto in relatively
brief fashion.
The Corp contends that Forest Service policies are in the public interest and
cite as evidence the apparent approval thereof by two federal district courts in
cases involving Don Lemos and one Jack Heath.
I submit that a reading of either district court opinion manifestly demon-
strates that the policies in question were not, as claimed by the Corp, "afforded
close scrutiny," but rather were approved with but cursory analysis.
As you are a lawyer, I am certain you recognize that courts, in reviewing
administrative actions (except in circumstances not relevant here) in theory
and in practice give great (and, some would say, undue) weight to the agencies'
factual determinations. I believe that the two district courts in question did
that in their deliberations. Judge Winner's rationale that Forest Service policies
were "reasonable, authorized, lawful and in the public interest" seems to have
been based upon two points: (1) protection had to be given potential investors
in ski areas against "fly-by-nights" who have no permits; (2) the government
must realize a percentage of all income derived from permit areas, and "to allow
anyone and everyone to teach for hire would create a situation the Forest
Service could not police." I do not believe either argument justifes monopoly
power, particularly when the alternatives has never been tried in any formal,
open way.
The Corp contends that the Forest Service's policy is based on a "long and
careful consideration" of how to best serve the public interest and the "full
and free enjoyment of national forest lands." Our experience is that the Forest
Service has failed to give careful (if any) consideration to the alternatives
we have proposed. Rather, the Forest Service (as is unfortunately the case
with some other federal regulatory agencies) seems to view its mission as
protecting the industry it regulates-not the public.
So far as we can determine the Forest Service has never attempted to issue
permits to qualified independent instructors in order to assess the merits
thereof, and, therefore, it must be concluded that the Forest Service's "careful
consideration" must have been in a vacuum, so to speak. The Forest Service has
certainly never sat down with Mr. Lemos to discuss how such a system might be
set up to minimize or eliminate any of the "problems" arguably created by such
action.
It seems to me that at this point Congress should review the Forest Service's
policy, because it is apparent that the Forest Service is not prepared to do so.
I am aware that you and Senator Haskell have already indicated dissatisfaction
with the Forest Service's policies and procedures in other aspects of ski area
administration, and* that Senator Haskell will be holding hearings in the near
future. Perhaps it would be appropriate to include this question among the sub-
jects of inquiry, and to have representatives of the Forest Service, ski schools,
independents (or erstwhile independents) and members of the general public
testify.
The Corp, in its letter to you, sets forth services it provides "to the general
public." We have no quarrel with the fact that the Corp does many things
which benefit the public (and, of course, enhance its good will). We do not
wish to do away with the Corp's ski school. We believe, however, that just as
the fact that General Motors produces a number of good automobiles ought not
to preclude Ford, Chrysler (or, more appropriately here, American Motors)
from mnufacturing cars, so too, Don Lemos and others ought to be able to
teach skiing on public land. Indeed, as public land is involved, the case is all
the more compelling.
These activities of the Corp, by the way, are not exclusive to the Corp. Mem-
bers of the Aspen community voluntarily assist in some of these endeavors. (In-
deed, my wife has taught blind skiers as a volunteer, and, incidentally, had to
pay for her lift ticket to do so.)
I simply do not believe that if independents were given permits under the
types of conditions we have proposed in discussions with local Forest Service
officials (and, for that matter, with Corp representatives as well) there would
be an exodus of Corp ski school employees who, after all, are guaranteed some
economic benefits independents would not have (e.g. salary, workmen's comp,
stock options, group insurance, etc.)
And, with respect to the "preferential treatment." Mr. Lemos is allegedly
so insistent upon, I can only note that in my discussions with Corp representa-
tives, we have simply asked to be treated on a par with the Corp's other top
ski instructors who have a substantial following of their own.
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102
The Corp asserts that the accommodation of the independent without dis-
rupting the organized ski school has been "disproved" in practice. It does so by
implying that it "tolerated" underground instructors but could not continue to
do so because Mr. Lemos (and other) publicized their activities. Thus, they
would have a situation where the existence of a right would depend upon one's
not being able to exercise that right openly. We can but imagine how that
type of argument would have appealed to the framers of the Bill of Rights.
The Corp also asserts that the single permittee policy has resulted in "the
greatest good for the greatest number." I submit that this assertion is a
paraphrase of "what's good for General Motors is good for the U.S.A."
Finally, the Corp then sets forth some of the "specific facts" surrounding
the Lemos situation (Mr. and Mrs.). I shall not, in common with the Corp, at-
tempt to detail the entire history of the Lemos-Corp controversy, but will briefly
respond to what they set forth.
It is true that in the 1963-64 season here were several injuries in Mr. Lemos'
classes-ranging from a student who suffered a bruised (or dislocated) shoulder
as a result of being pushed by another skier while standing in a lift line to
one who fractured a leg, while making a traverse on an easy slope at But-
termilk. (Mr. Lemos does not recall two broken legs over any period, including
"a one week period.") Mr. Lemos does not believe that any of these accidents
were attributable to any action (Qr inaction) on his part. We would note that
in that same season Mr. Lemos was one of the two instructors assigned by the
Corp to teach members of the Kennedy family. One would think that the Corp
would not assign an irresponsible instructor for that task. I would further note
that Mr. Lemos had been employed as an instructor by the Corp for the two
seasons (1961-62 and 1962-1963) preceding the one in question, further sub-
stantiating the fact that he is not a careless instructor.
As to the Roch Cup "shove it" incident, apparently the Corp is confusing Mr.
Lemos with another instructor, Rick Carney, to whom that incident applies.
In fact, Mr. Lemos was not "terminated", but resigned, as a result of dis-
agreement with ski school policy. He went on to Aspen Highlands where he was
employed for four years as a top contract instructor with no "special arrange-
ments," as alleged by the Corp.
With respect to the question of Vail's permitting an independent to teach, we
did not fully understand the arrangement as reported to us by someone asso-
ciated with Vail Ski School. The person to whom they made reference is ap-
parently not "independent" as he is considered an employee of the Vail Ski
School. We do understand, however, that this individual works independently
of the ski school in that he books his own lessons with his clientele paying
Vail Ski School, and he receives 70% of what is paid with the ski school re-
ceiving 30% (unlike the other instructors, who are paid a salary). We regret
any problem caused by our not being fully informed. We think you will agree,
however, that this arrangement is more "independent" than "employee" in its
orientation, and is one which we would be happy to explore as a starting point
with the Forest Service.
We have other disagreements with the Corp's recitation of the facts (includ-
ing those asserted with respect to Mrs. Lemos). We do not believe, however,
that any purpose is served by endeavoring to recapitulate that history, because
of our conviction that the issue involved transcends the personal dispute be-
tween the Corp and Mr. Lemos.
The issues involved, we submit, concern fundamental aspects of governmental
policy. Freedom of competition, barriers to access, utilization of public land, al-
ternative teaching methods, prevention of corporate abuse are some of these.
These issues should be decided on the basis of a searching and impartial inquiry
with the public interest in mind.
We hope that you will see that such an inquiry will be made.
We are taking the liberty of forwarding copies of this letter to Senator
Haskell and Representative Schroeder, signatories to your original letter to
Mr. McGuire and receipients of copies of the Corp's letter, and to Mr. McGuire
and Mr. Morris (local Forest Service) and the Corp's counsel as well. Should
you need any fuurther information, please contact us at your convenience.
Very truly yours,
MARTIN H. KAHN.
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103
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., April 11, 1975.
Hon. GARY HART,
U.S. Senate.
DEAR SENATOR HART: This is in reply to your letter of March 25 concerning
use permits for independent ski instructors. You have asked that we review our
policies, particularly as they relate to independent ski instructors and exclusivity
of permits.
In administering National Forest winter sports sites, we have been guided
by several important principles. Three which seem to have particular applica-
tion in this.instance are:
All commercial uses of the National Forests must be covered by a formal
contractual agreement or permit for which a commensurate fee or charge is
collected.
The responsibility for public service and safety through quality ski school
instruction rests with the basic permittee.
When more than one related use takes place on the same area, experience
argues for a prime permittee who can be held accountable for the development
and use of that area.
We believe the situation you describe at Vail responds satisfactorily to
these principles. The presence of independent instructors is mutually agreed
to by the permittee and the Forest Service, and, of course, a fee is recovered.
The Forest Service, under this arrangement, can fairly hold the permittee ac-
èountable for the full term of occupany. This is being accomplished with little
or no need for arbitration between Vail Associates and the independent ski
instructors.
The situation regarding Mr. Lemos at Aspen is somewhat different. For
reasons beyond our knowledge, the corporation has refused to utilize the serv-
ice of Mr. Lemos and other independent ski instructors. Our principle concern
is to assure the permittee redeems his responsibility for everything that hap-
pens on permitted areas. We do not feel it appropriate to inject the Government
into the personnel policies of a permittee, providing permit terms are met and
laws such as those pertaining to Equal Employment Opportunity are followed.
The situation, although perplexing, at Aspen is not persuasive in itself for us
to change National direction. We continue to believe that all of the operations
on a permitted area must be the responsibility of the basic permittee. In light
of this overall area responsibility, we give the permittee every reasonable private
right to carry out his operations.
You may know this whole matter of independent ski instructors is before the
courts. The suit essentially challenges the authority of the Secretary of Agricul-
ture. Under law, he has discretionary authority to grant permits for use and
occupancy of National Forest lands under terms and conditions he may pre-
scribe. Currently, he is not required to accede to the wishes of every applicant.
Since a decision may bear on the subject, the results of this suit, of course, may
require modification of these procedures.
We appreciate the effect that Aspen Ski Corporation policies can have due
to their size. On the other hand, they do not represent the sole opportunity for
professional instructor employment in this area. Hopefully, those unable or
unwilling to work for the corporation will find satisfactory alternatives.
Thank you for taking the time to give us your thought. We are sensitive to
your concerns and will work diligently within our guidelines to maximize em-
ployment and equity in service operations.
Sincerely,
JOHN R. MCGUIRE,
Chief.
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., July 3, 1975.
Hon. TOM RAILSBACK,
House of Representatives.
DEAR MR. RAILSBACK: This is in reply to your May 12 letter which enclosed
correspondence and newsclippings about Don Lemos, a ski instructor from
Aspen, Colorado. You asked for information about the case.
PAGENO="0108"
104
The question at hand is related to the law suit styled Sabin v. Butz, et al.,
Court of Appeals 10, Civil No. 74-1060. The Circuit Court ruled in favor of the
Government on three counts. The fourth count, involving consideration of a
monopolistic situation, was remanded to the District Court. Our plans are to
proceed with the decision of the Circuit Court, and to provide additional infor-
mation to the District Court so they can proceed with the case. Mr. Lemos has
suggested dropping the case and settling out of court by allowing him to teach
skiing at a ski area of his choice. We believe it is appropriate, however, that the
Court issue a decision in this instance.
Public skiing on the National Forest is provided by issuing special use per-
mits to private investors. They are required to develop and operate the fa-
cilities and provide services defined in the permit. To accomplish this, they are
authorized to conduct a variety of exclusive business operations. These include
uphill transportation lifts, food and lodging operations, ski schools, and other
services. These operations generate the profit needed to build and operate the
area, and to provide a variety of services which are required but which earn
no income. Consequently, our policy recognizes the permittees need for exclusion
control of key elements of the business on the permitted areas.
We are amenable to having several entreprenuers operating at a ski area, pro-
vide they are there with the concurrence of the permittee and are under his con-
trol as sublesses under his permit. We believe that other arrangements could
result in poorer services to the public. Profit centers in this type of business
must pay for numerous necessary expenses and services for which there is no
direct charge. Without a single permit policy, all profit centers such as ski
schools, ski lifts, and food services could conceivably be operated by individuals
who would have no responsibility for providing other services. These services
include plowed road access and parking lots, well maintained ski slopes, ski
patrol, avalanche control, public restrooms, warming shelters, information, and
others. Liability insurance, taxes, overhead, and other items add to expenses.
Most businesses must have control over their operations, including hiring
and standard setting for their personnel. When the general public visits a ski
area, they look to the principal operator to provide satisfactory accommodations
and services. If they are unhappy with a segment of the services, this dissatis-
faction is reflected upon the operation as a whole. Ski area operation is com-
petitive, and area managers need to have control or risk losing customers. This
situation could affect all ski area and public service operations.
While we are sympathic with Mr. Lemos and other qualified instructors, we
believe the objectives of our policy remain sound and in the public interest.
We appreciate your inquiry and hope that this gives you sufficient background.
We have conveyed these same reasons to Mr. Lemos and others who have been
interested in the case.
Sincerely,
JOHN R. MCGTJIRE,
Chief.
Enclosure.
ASPEN, CoLo., September 25, 1975.
ZANE G. SMITH JR.
Director, Division of Recreation
U.S. Forest Service,
Washington, D.C.
DEAR Mn. SMITH: Throughout the course of the summer I've received copies
of letters written by you, on behalf of Chief McGuire, to various members of
the public and to various legislators. These letters were in response to inquiries
by them on behalf of the Independent Ski Instructor Permit issue. Virtually all
of the inquiries were supportive of the ski instructor receiving an Independent
Teaching Permit on some basis. While your letters to them varied a bit, the
same theme pervaded all, and it is this that I shall comment on in general,
choosing your letter of July 3, 1975 addressed to Congressman Tom Ralisback,
Illinois, in particular.
In the second paragraph of that letter, in response to the suggestion of
settling the court action that has recently been returned to the District Court
from the 10th Circuit Court of Appeals on monopoly grounds, you state: "We
believe it is appropriate, however, that the Court issue a decision in this in-
stance." I point out, in regard to this, that the Forest Service has the power
PAGENO="0109"
105
to grant the permit under its existing rules, without changing anything or hav-
ing to receive a Court decision, and I once again urge this settlement, and
perhaps after reading my rational in this letter a new position can be adopted.
In your third paragraph you go on to explain that special use permits are
issued to private investors, and ". . . they are authorized to conduct a variety
of exclusive business operations." Nowhere are they authorized to conduct "ex-
clusive" operations, and, in fact, some permits even state "non-exclusivity"
clauses. In essence, however, the Forest Service, by its refusal to issue me a per-
mit, has granted exclusivity to these permittees. Another way to view this is
that the permittee has the exclusive right to operate an on site business, such
as a ski rental shop, but does this preclude someone from renting skis at a
shop off of the area? Why then cannot a member of the public rent a ski in-
structor off of the area, to be used on the area, just as rental skis rented off of
the area are used on the area? The denial of this right to the ski instructor
and the public would seem to me to certainly be an abuse of exclusivity result-
ing in an unnecessary monopoly.
In paragraph four you say that "We are amenable to having several entre-
preneurs operating at a ski area, provided they are there with the concurrence
of the permittee and are under his control as sublesses under his permit." You
~ay it would be all right to have a system whereby there are, in fact, several
entrepreneurs, thus agreeing with a splitting of service, yet you say it must
he all controlled by one company. This, by logic alone, is what monopoly laws are
designed to oppose. And, in your ". . . belief that any other arrangement would
result in poorer services to the public," I ask, try it and see? I believe not. This
country is based on the free enterprise system and competition results in just the
contrary, better services to the public. Also, in paragraph four, you make a point
that an Individual with a permit would have no responsibility for providing
other services such as ". . . plowed road access and parking lots, well maintained
ski slopes, ski patrol, avalanche control, public restrooms, warming shelters, in-
formation, and others." Mr. Smith, a very small percentage of skiers at a given
area buy ski lessons. So then, where does the compensation come from to cover
these services? It comes from lift ticket sales, that's where. All these extras are
included in the price of a lift ticket, which, of course, the Independent Instructor
would have to purchase, as would his student. I pose the question, should not
ski instruction be considered a service to the public rather than a profit oriented
exclusive business for a private corporation? Which would be in the best inter-
ests of the public?
In paragraph five, you state: "Most businesses must have control over their
operations, including hiring and standard setting for their personal." Fine, they
can have control over their business. If they don't want to hire an instructor.
I grant them that right. Provide an alternative, however, for the qualified
instructor and the public. It is a fact that in Aspen, and at most ski areas, a
*ski instructor is not permitted to have a beard. I grant the ski school the right
to set that standard. Does that mean, though, that the bearded, qualified ski
instructor should not have the right to work independently, teaching someone
to ski who will accept his beard? And, I might add, on public land?
* Mr. Smith, I don't believe that present Forest Service policy regarding this
situation is what this country is all about, and I respectfully request that you
once again re-consider your position. In paragraph six you say you ". . . are
sympathetic with Mr. Lemos and other qualified instructors . . ." and, with
respect to that feeling, I ask that you please confer with Mr. McGuire and Mr.
Tom Nelson, whom I bad the pleasure of. coifferring with here in Aspen, and
truly consider granting Independent Teaching Permits.
I look forward to bearing from you, and I thank you in advance for your
~openmindedness.
Sincerely,
DON LEMOS.
Senator HASKELL. The next witness is Miss Jill St. John.
STATEMENT OF JILL ST. JOHN, ASPEN, COLO.
Miss ST. JOHN. Thank you, Senator. Mv name is Jill St. John. I
reside in Aspen, Cob. I am an avid skier with a sincere interest in the
betterment of the sport of skiing.
67-512-76--S
PAGENO="0110"
106
Senator, there is an existing situation that is not in the best inter-
ests of skiing, and I refer to the lack of choice, by the public, of quali-
fied ski instructors. Right now, if I want a ski lesson, I am forced
to seek the services of an affiliated ski school instructor of the area.
Now, I have done this in the past, and have not been satisfied. I then
came in contact with a ski instructor who was not connected with a
ski school, but rather "did his own thing." I found the freedom of
ideas and instruction offered me to be far superior to the methods of
the ski school, and through this instructor found the joys of skiing
that had been hitherto escaping me. This instructor and I skied to-
gether for three winters, until December 4, 1974, when this relation-
ship was most rudely interrupted by the arrest of my skiing com-
panion for alleged "underground" skiing activities.
Senator HASKELL. Underground?
Miss ST. JOHN. That was the term used, underground. We were
skiing together that day when an Aspen Skiing Corp. security officer
removed' my friend, Don Lemos, from the mountain under arrest. At
this time I protested to the officer that I felt my civil rights were
being violated, and that as a citizen and member of the public I had
the right to ski with anyone I CloSe to. My protest fell on deaf ears,
and Mr. Lemos was taken away in a toboggan.
Senator HASKELL. That's because he tried to ski underground.
Miss `ST. JOHN. Since many ski areas, and those in Aspen, are on
Forest Service land, I proceeded to write the Chief of the Forest
Service, Mr. John' McGuire, on behalf of Mr. Lemos, and of course
myself, representing a member of the public, asking that he remedy
the situation. Once again my protests fell on deaf ears. I did not re-
ceive a reply from Mr.. MeGuire, and that letter, which I include a~
copy of with my testimony, was written on April 21, 1975.
I truly enjoy skiing with a ski instructor who is not affiliated with
an organized ski school, and I have other friends and acquaintances
who share in those feelings. It is a pleasure to receive instruction from
an instructor dressed in normal ski attire rather than a ski uniform,
as all affiliated instructors are'required to wear. It has been my choice
to ski in the style taught by Don Lemos rather than the method in-
sisted upon by the Aspen Ski School. The unaffihiated instructor has
offered services above and beyond any offered by the ski school, and
this informal arrangement is much more satisfactory, and is unob-
tainable through a ski school.
Since it is obvious, that at this point in time, neither the Forest
Service nor the ski areas `will take steps' to remedy this situation, they
will not permit qualified independent instructors to teach, I see no
alternative but to correct this problem through congressional legisla-
tion, and I respectfully request that you, Senator Haskell, take meas-
ures to include this issue in your bill.
Thank you.
Senator HASKELL. I understand from Mr. Quarles that this business
of having an exclusive right to teach skiing isn't even in the Forest
Service permit. I just give that for your information. This is some-
thing brand new to me. I never heard about it before and it hardly
seems right that just because you get a permit you have a right to ex-
clude instruction or anything else from the public's land. It is a brand
new idea to me, Miss St. John, so thank you very much for appearing.
PAGENO="0111"
107
Miss ST. JOHN. Thank you, Senator.
[The letter referred to by Miss St. John follows:]
ASPEN, CoLo., April 21,1975.
DEAR Mn. MCGUIRE: It is my understanding that you are fully aware of the
issue being brought forth by Don Lemos of Aspen, Colorado. This is in regards
to the right of an independent instructor to teach skiing on public land, and
the right of the public to choose such a qualified teacher.
I strongly support Mr. Lemos' position and respectfully request that you
grant him a permit. I would like to hear from you as to what is being done in
this matter.
Thank you.
Sincerely,
JILL ST. Joux.
Senator HASKELL. Our next witness is Maggie McMahon.
STATEMENT OF MAGGIE MeMAHON, PROFESSIONAL SKI INSTRUC-
TORS ASSOCIATION, ASPEN, COLO.
Miss MCMAIION. Senator Haskell, I want to welcome you to Aspen
and thank you for the opportunity to testify here today. My name
is Maggie McMahon. I am a professional skiing instructor. I have
taught skiing for 8 years. I was fully certified here in Aspen in 1971.
I have worked for an Aspen ski corporation for 2 years. Last year I
went to Japan and taught skiing for Hart, and when I came back I
became interested in the possibility of working as an independent in-
structor in the Aspen area. As you know, the Aspen Skiing Corp. cur-
rently holds the only permits to teach skiing in the three Aspen ski
areas serviced by corporation lifts.
Senator HASKELL. I think we better correct that statement. My
understanding, and I am depending upon Mr. Quarles here, is that
the Aspen Skiing Corp. holds a permit which allows them to teach,
but there is nothing said about exclusively, and I think that is very,
very important.
Miss MCMAH0N. Well, it is my feeling that since they hold the onTy
permit, they are the exclusive-
Senator HASKELL. As a practical matter, you are dead right, but I
don't know about the authority they have to enforce exclusivity.
Miss MCMAH0N. I see. All right, may I continue?
Senator HASKELL. Yes; excuse me.
Miss MCMATIoN. I think I may answer that question. The U.S.
Forest Service has denied special use permits to teach skiing to any
other qualified applicants. thereby granting a monopoly. The Forest
Service rationale preserving a monopoly in skiing instruction, as
stated in a letter to me from former Aspen area district ranger George
Morris, "rests with the belief," and I quote, "that the public is best
served by granting permission only to the ski area perinittees and to
honor their physical investments such as slope maintenance, lifts,
restrooms, and the like," end of quote.
Now, you, Senator Haskell, have stated,
The holders of permits for commercial outdoor recreation facilities are granted
the privilege of pursuing private gain on public lands. But the ultimate purpr~se
of such permits is to provide high quality service at a reasonable cost to the
public which owns the land. At the same time, permittees are entitled to reason-
PAGENO="0112"
108
able assurances as to the security of their investment, not only for their protec-
tion but to insure that services are provided to the public.
That is a quote from the Congressional Record on July 16 of this
year.
It seems clear that the primary purpose of issuing Forest Service
permits is to provide service to the public and that private gain of
the perinittees should be merely a result of that goal, not an end in
itself. In granting permits to teach skiing on public lands the Forest
Service must consider first and foremost the question of what will
serve the public interest and needs. Second they must consider the
permittees' needs for security and profit to insure that high quality
services will be provided. It is my belief that monopolies in ski teach-
ing by skiing corporations do not best serve the public interest, and
that corporation needs for security and profit can be met while al-
lowing independent ski instructOrs to provide additional services on
public lands served by corporation lifts.
The monopoly in ski instruction by skiing corporations rules out
price competition and a choice of ski techniques; prospective students
either learn ski school technique or they don't learn how to ski; they
pay ski school prices or they don't get a lesson. If instruction is sought
elsewhere the public risks the hazards of inferior instruction by un-
qualified instructors.
One solution to this problem is for the Forest Service to issue
multiple special use permits for teaching skiing to qualified instruc-
tors. Allowing independent instructors to teach skiing in the Aspen
area would restore a competitive pricing system, provide a choice
of ski techniques and improve the qualify of instructions offered by
both ski school instructors and independents alike.
I propose that the following qualifications be required of all appli-
cants seeking such a permit:
Full certification status or its equivalent from a regional or na-
tional professional ski instructors' association.
Also full insurance coverage for liability to protect both the in-
structor and the client, and also submission of yearly financial state-
ments of profits and operating expenses to the Forest Service for
public review.
Special use permits to independent instructors could be limited to
the private instruction of one to three students. Larger classes would
be offered exclusively by corporate ski schools, thus assuring adequate
profits. In proposing these changes for granting Forest Service per-
inits I do not suggest that the ski school be abolished in favor of in-
dependent instructors. I believe that the additional service provided
by independent instructors can augment the services presently pro-
vided by the corporation ski school.
The public is entitled to a wider choice of instructors, techniques,
and prices than is offered under the current monopolistic system.
Therefore, I urge you to give careful consideration to these proposals
:as amendments to your bill. Thank you very much.
Senator HASKELL. Well, I will. I certainly will. I had forgotten
~this. I remember actually when Mr. Lemos was arrested, I don't know
what for. and I did write Chief McGnire a letter on the subject.
~Reafly, this kind of smacks of the company town.
PAGENO="0113"
109
Miss MOMAHON. Yes.
Senator HASKELL. And I wrote Chief McGuire on March 25 anct
there hasn't been much skiing since then. When I see Chief McGuire
in Washington, I will ask him what's been the result, what is the
ultimate upshot.
Miss MCMAHON. I certainly hope something can be done for the
forthcoming winter, Senator. Thank you.
Senator 1-IASKELL. Thank you very much for appearing. Our next
witness is Mr. Charlie Paterson, past president of the Rocky Moun-
tain Ski Instructors Association.
STATEMENT OP CHARLIE PATERSON, PAST PRESIDENT, ROCKY
MOUNTAIN SKI INSTRUCTORS ASSOCIATION
Mr. PATERSON. Thank you. Senator Haskell. Welcome to Aspen.
My name is Charlie Paterson and my qualifications to speak on this
issue are that I have been a ski instructor for 17 years in the Aspen
Ski School from 1952 to 1969, and spent the last eight years as top
class instructor on Aspen Mountain. I am Past-President of the
Rocky Mountain Ski Instructors Association, served two terms, in
1967 and 1968. I have been a lodge owner since 1965 in Aspen and in
daily contact with the skiing public.
Incidentally, I am also a small stockholder in Aspen Skiing Corp.
for the last 15 years, and I have lived here for about 26 years in
Aspen.
The way I feel about it basically is that knowing ski instruction
intimately and understanding how inside politics in ski schools can
be used to drive qualified ski instructors from schools to the detriment
of the profession and the public, I see a definite need to rectify the
situation.
The system in existence has a monopoly power over ski instructors.
I know of scores of cases where excellent, qualified, fully certified in-
structors were deprived of their right to make a living as instructors.
Usually it is due to slight disagreement with management regarding
teclinique~ schedules, pay disputes, small things.
Seiiator HASKELL. Let me ask you this, if I may. What, for example,
would a ski instructor employed, let's say, in a private or single half-
day lesson, get paid if he worked for a ski corporation?
Mr. PATERSON. Senator Haskell, I left the ski school in 1969. At that
time lessons were about $12 an hour. A ski instructor, a top ski in-
structor, was paid about half of that, about $6 an hour, basically on
private lessons.
Senator I-IASKELL. You don't know whether that condition prevails?
Fifty percent of it, roughly, does it prevail now? Maybe I should-
Mr. PATERSON. I should actually qualify that because a ski instruc-
tor is paid according to his tenure, whether he is fully certified or not
fully certified or just coming into the sport, so there are contracts
given by ski schools according to the qualifications of the individuals.
The top instructor will earn so many dollars a day for so many hours.
Usually if he works over 4 hours, for instance, there is additional pay.
Very often there are disputes in ski schools regarding contracts
which are made for standby conference. When a ski instructor who
PAGENO="0114"
110
is a top instructor is not in use, he is paid about half rate for standby.
At least, this was the way when I was in the school about 6 years ago.
\` cry often that comes into dispute and does cause problems, and some
`of those disputes cause a ski instructor to be fired quite summarily
because he feels he should be paid for his standby time. I quote this,
because this is exactly what happened to me.
Senator HASKELL. I guess you know of your own knowledge.
Mr. PATERSON. Well, as a matter of fact, that season I was on
standby probably eight hours the whole season, and that was the
dispute.
Senator HASKELL. I see.
Mr. PATERSON. As I was saying, a lot `of the j ohs were lost and no
recourse then is available to these instructors when the present Forest
Service system allows a one-company mountain on public lands, and
that's really what has happened.
A fully certified independent ski instructor could offer the skiing
public a choice of being-I am a little redundant, but I am repeating
what's been said-a choice of teaching techniques, cost paid for les-
sons, flexibility of schedule and a choice of ski area and personalized
attention to the customer.
I am aware of efforts being made in this direction and to the opposi-
tion to these efforts, and I earnestly urge this committee to take posi-
tive steps to correct this situation. Thank you.
Senator HASKELL. Thank you. I think this might be an appropriate
time to break for lunch and come back at 1 :30 p.m.
AFTERNOON SESSION
Senator HASKELL. The hearing will recommence, and we have a
panel of Roaring Fork citizens: Herb Klein, counsel; John Lucy,
president; `Ralph Brendes, attorney; Jerome Michaels, and Charles
Kalish. I believe John Lucy is the first witness.
STATEMENT OP JOHN LUCY, ADMINISTRATIVE DIRECTOR;
ROARING POlK CITIZENS, INC,
Mr. Lucy. Yes, Senator, thank you. First of alL I would like to
welcome you to Aspen and also thank you for this opportunity to
testify.
Senator HASELELL. Thank you, sir.
Mr. Lucy. Before I start, I am just going to start things off in a
light mood. I would like to thank you for your well-timed lunch
recess. Jill St. John is certainly a tough act to follow.
What I have to say I have not prepared extensively because basi-
cally it is personal in nature. I direct my testimony to your subcom-
mittee as an appeal on behalf of myself and the group of people that
I represent, and I would' also like to address this testimony to the
specific nature of section 4 of your proposed bill.
My name is John A. Lucy. I am a resident of Aspen, Cob., and I
am current administrative director of the Roaring Fork Citizens,
Inc. I first came to Aspen from the east coast almost 3 years ago. I
have called it home since then and hope to do so for many more years.
Some people call me a ski bum. I do not consider myself one. I
PAGENO="0115"
`Ii
bave a bachelor of arts degree from Hamilton College. I perform use-
fiil and necessary service as a waiter in a restaurant. My life is not
contained within the bounds of this occupation. It is not a career. It
is a job which I hope I do well in order to live here. This allows me to
pursue my life, my career, if you will, in the limitless potential of
this area.
Probably the most important facet of my life here is skiing. I have
owned some form of season pass for the last three seasons. During
the 1974-75 season I purchased not only the $~5Q season pass but also
the $60 employee discount pass. I ski an average of 4 days a week
for a few hours at a time and having bought passes permitted me
the convenience of not purchasing daily bought passes permitted me
still being able to ski during the 4 weeks of restricted periods.
I am not alone in my love for skiing. I think, Senator, that you
are probably by now familiar with the character of the town and its
unique nature, that is based predominantly on a tourist-skiing
oriented society. I think enough people have already gone into this,
so I won't dwell on it.
People like myself give up a great deal by living in Aspen, but we
gain a great deal more in return. It is our choice not to pursue more
lucrative careers in localities with greater opportunities, even though
for many that potential exists. At the same time, we have not sur-
rendered any of our personal rights or dignity simply by adopting
a different life-style.
It is thus with indignant feelhigs that we sit by and watch the
relationship between the public agency, the U.S. Forest Service, and
a private corporation, the Aspen Skiing Corp., grow dangerously
close to a partnership. The resentment in this town has been build-
ing tremendously over the last several years, sporadically erupting in
senseless, frustrating violence. The town of Aspen and its residents
have been transformed from an encouraging post to a meek petitioner
seeking alms from the corporation prospering in its midst. Each year
decisions are made which affect our survival and lifestyle with no
local input whatever. It is not enough where we are subjected to the
profit motives of a huge corporation. We must at the same time be
subjected to the indifference of a public body designed and entrusted
to protect us as citizens.
I think it is therefore understandable why the Roaring Fork Citizen
was formed and incorporated. It has become the only public action
forum to which the Aspen residents can turn. Its basis of support is
the nearly 4,400 ski passholders in the area. Our membership includes
people ranging from dishwashers to business owners and businessmen
in the community. We have adopted the position that all increases in
lift rates should not only be thoroughly justified but that they should
be subject to a definitive form of regulation. We also maintain that
without a means of consideration or local input concerning the specific
needs of a skiing community, rate determinations will continue to be
made in the name of some indefineable, amorphous body called the
American public.
If this situation persists, the entire character of Aspen will change.
~\Vithout a reasonably priced skiing discount for local citizens, Aspen
will become a ghetto for the wealthy and a haven for transients wish-
PAGENO="0116"
112
ing only one season's employment. If some form of season pass is not
restored, I, along with a great number of residents like myself, will
be forced to leave. Even though I love Aspen, I will not remain here
indirectly serving the profitability of the Aspen Skiing Corp. when
I cannot afford to partake in the tremendous skiing available. I can
live in Aspen with gratitude, but not with servitude.
Senator HASKELL. Thank you, Mr. Lucy, very much indeed. Mr.
Klein.
STATEMENT OF HERBERT KLEIN, COUNSEL, ROARING FORK
CITIZENS, INC.
Mr. KLEIN. Senator, greetings. My name is 1-lerbert Klein. I am
the counsel for theBoaring Fork Citizen. Senator, you have proposed
legislation that would greatly extend the duration of permits for ski
area operators on public land and which would also increase the al-
lowable acreage for ski area permits. Your bill at the same time ad-
dresses substantial problems in the existing permit system and at-
tempts to create a realistic legislative standard for administering
permits for the use and exploitation of public lands. However, before
such far-reaching grants of monopoly power are put into law a care-
ful review of the present system and its problems is warranted.
We need to know whether or not the ski area operators are com-
mitted to a judicious use of public land. Will they serve the public as
trustees of those lands, or are we merely legislating a land grab to
freewheeling entrepreneurs? What price will citizens have to pay for
the recreational use of the public land and in whose hands will such
economic decisions be placed? Your proposal to extend the term of
the permits for ski areas from 30 years to 50 years and increase the
allowable acreage from 80 acres to an unlimited allotment defies the
public trust when you consider that the present ski area permittees
refuse even to admit that the Government has a right to regulate the
prices that are charged to the public. Senator, your bill addresses
problems of the 1970's and the potential exploitation that is possible
through large scale modern industries, but those to whom you wish to
grant longer term permits and greater acreage allotments possess
a 17 century merchantilistic mentality. They will procure vast areas
of public land at less than fair market value and then call upon the
shibboleth of the "free market" when the issue of governmental regu-
lation of those lands is raised..
Until we are certain that there exist guidelines and procedures
which will insure that the public interest will be protected, it would
be folly to implement a new plan which could result in an even
greater exploitation of resources than is possible under the present
system. If we do not take a close look at these issues now, we may be
creating cartel entities over vast areas of prime public land which
will endure well into the next century.
The situation in Aspen provides an insight into the present rela-
tionship between the Forest Service and ski area permittees. The
public, in a sense, is a third party in this relationship. Only recently
has the public's voice been heard. Our concern and opposition to the
new ski lift rate increase has been met with indignation, we have been
PAGENO="0117"
IIC)
I L~)
labeled "yahoos" by the permittee, we have been ignored by the Forest
Service. Somehow the years of familiarity between the permittee and
the Forest Service have allowed our interests to be forgotten. When
we remind our trustees that they must consider our interests, we find
that they are incapable or unwilling to respond. In some instances,
regulations exist to protect the public interest but local Forest Service
officials unfamiliar with their application stubbornly refuse to change
old ways of doing business," in other situations, there are no regula-
tions at all. But, by and large, a relationship exists where the per-
mittee proposes and the Forest Service disposes.
The lack of procedures to explore the public need, the absence of
pricing methodology, and no explanation of the relative weights to
be given to each factor considered render the present decisionmaking
system completely arbitrary.
At one point in the meeting with members of the Roaring Fork
Citizen and mayor of Aspen held last February, the Forest Super-
visor was asked what he considered a reasonable return on investment
to the ski area operator. He responded, oh, about 15 percent. When
asked why that was an appropriate figure, he replied, "That's what'
we allow timber contractors."
The Forest Service also applies no guidelines to regulate discount
ticket programs. This is probably due to the Forest Service broad.
view of the national interest to the exclusion of the particular interest
of local communities. By its failure to provide for reasonably priced.
skiing for local residents, your legislation supports this one-dimen-
sional concept of Government regulation. Certainly, Senator, you can
appreciate that the impacts of Forest Service policies are most
strongly felt in those communities like us which are contiguous and
dependent on the use and administration of public lands. Your bill
makes no provision for the consideration of local needs. You haveS
heard testimony today from members of the city of Aspen govern-
ment detailing the impacts on our community due to the Forest Serv-
ice pricing policies. There is clearly a need for reasonably priced ski-
ing for local residents. At present, the consideration of our needs is
diluted by this concept of a singular public need. We believe that the
public interest requires the Forest Service to address itself to con-
sideration of the public need wherever it is identified. There is pres-
ently Forest Service policy which requires that permittees provide
social and economic benefits to the local communities, but this may be
satisfied by any number of programs, a ski club, a bus system, a
charity ball, but when it comes down to a need as basic as discount ski
rates, the Forest Service claims they cannot require a discount
package.
Your bill provides for public hearings prior to any rate increases
so citizens will have an effective voice in Forest Service regulations so
that the public interest will be protected.
Senator, we have informed the Forest Service of our need for rea-
sonably priced rates, but our requests have been ignored. The Forest
Service presently has authority stated in their U.S. permits held by
the Aspen Skiing Corp. and other permittees to regulate the rates:
and character of services offered to the public as the public interest
requires, but the Forest Service refuses to respond to this need.
PAGENO="0118"
114
The paralysis of the Forest Service to be responsive to the needs of
~Lhe local community is evidenced by the following statement from the
letter of approval of rate increase from the Forest Service to the per-
mittee, Aspen Skiing Corp., from Tom Evans:
The Aspen Skiing Corporation has a wide latitude in merchandising proce-
dure that can be used and that would be approved to balance quality skiing
with community needs and goals. With the strong interest in Aspen concerning
your season ticket use and rates, I am sure that you will do what you can to
offer quality skiing, and at the same time meet the needs of the people who
provide the services that have made Aspen famous.
The Forest Supervisor is aware of the needs of the community. He
expresses what he feels and sees as the public interest, but, unfortu-
nately, the Forest Supervisor leaves the decision of whether or not
the interest will be protected in the hands of the permittees.
Therefore, Senator, there must be more than just consideration of
public interest through hearings. The Forest Service is aware of this
need, but will not exert its authority. There must be le~isl.ative lan-
guage which requires the differential pricing to be utilized to meet
the needs of the community.
Senator HASKELL. I'm sorry, Mr. Klein, but that bell was the 5-
minute bell, and if I waive it for one, I am going to have to waive it
for all, and we have got a lot more witnesses.
Mr. KLEIN. Excuse me, Senator, I was wondering, the impression
was we were granted a block of time.
Senator HASKELL. Well, you are, but I thought those folks were
going to speak.
Mr. KLEIN. They are, but they have shorter statements.
Senator HASKELL. Well, if you will keep within however number of
people you have times 5 minutes, that's swell.
Mr. KLEIN. Thank you. As I was saying, therefore, Senator, there
must be more than just consideration of public interest as the Forest
Service is aware and need but will not exert its authority. There must
be legislative language that requires the differential. Differential pric-
ing is uniformly accepted as being appropriate in ratemaking where
various classes of users are identified, and here where the impact is
so significant, as you have heard people being forced to leave their
homes, it cannot be overlooked.
The Forest Supervisor eventually approved an increase from $10
to $11 for the daily ticket price and a discount ticket program.
There is no season pass for Aspen Mountain this year but the dis-
count program provides for the purchase of a $200 discount card
which will allow a person to ski Aspen Mountain for $8 per day. Last
year, a season pass was available for $250 and the discount card cost
$60 and it only cost $5 to ski Aspen Mountain. The new pricing sched-
iile represents a significant increase in the cost of skiing to local
residents.
If a skier were to ski Aspen Mountain for 100 days on the new dis-
count card, his average cost per day would be $9. Last year the full
price ticket was $10 per day. This year his seasonal cost of skiing is
$900. Last year the season pass was $250. That is not what we con-
sider responsive differential pricing.
If the permittee is not economically able to continue the traditional
season pass or discount ticket program, or if the permittee alleges
PAGENO="0119"
115
that the carrying capacity of one of its ski areas can no longer handle
the usage of both local and tourist skiers, then such financial data and
local factors must be presented to the forest supervisor and examined
through the application of sophisticated evaluative techniques and
expertise. They should also consider alternative approaches to the
problem.
Once the public interest and need is recognized, it cannot be sacri-
ficed to expedience, inarticulated standards of analysis or the timidity
of Forest Service personnel.
In light of the severe economic impact and social dislocation to the
community of Aspen resulting from the elimination of the season
pass and especially where the needs of the public are so apparent and
compelling, the Forest Service bears a heavy burden to deny its au-
thority to protect that public need. Your bill must include provisions
for discount programs and any formula for determining fees paid
by the permittee should not require that discount tickets be computed
at full daily ticket value.
Among the three categories the forest supervisor considered in
making his decision, the category entitled "Comparability" deserves
some mention. Once an applicant ski area is judged, in the unguided
opinion of the forest; supervisor, to be comparable to some other ski
area, the forest supervisor reasons that he is confracturafly prevented
from requiring the permittee to set his rates lower than the com-
parable area. The forest supervisor is thereby precluded from any
`analysis and from seeking any justification for a rate increase from an
`applicant where the applicant can show that a comparable ski area
i~as been allowed a higher pricing structure than the applicant. The
Forest Service bases such `comparability upon completely subjective
`standards that seem to relate only to the type of facilities and the
quality of skiing. There is no cost component. In the rate increase
approved here. it has been stated that since Vail got an $11 rate,
Aspen was entitled to the same rate. We must note that the facilities
differ greatly and one wonders, then, how Buttermilk, a beginner's
mountain is entitled to the same $11 rate. In addition, Vail offers a
reasonably priced season pass to local skiers while there is no such
Pass available for Asnen Mountain. But, the Forest Service states that
because Vail got their rate increase, Aspen skiers will be paying a
hi&'ier price.
Your bill also provides for the consideration of the potential growth
impacts of new developments. We strongly urge that the environ-
mental effects of administrative policies on existing permits be in-
cluded in this review.
Most ski areas are in pristine alpine ecology systems which react
more severely to encroachments by man than do the environments
found closer to urban areas. These environmental impact.s must be
evaluated before long-term commitments of resources are authorized.
The preparation of an environmental impact statement simil ar to
that required by the National Environmental Policy Act should be a
prerequisite to Forest Service decisions.
No action has been undertaken by the Forest Service to solicit corn-
rn~inity views or to minimize the adverse effects of its decision. 0niy
through the adoption of procedural guidelines, developed with the
PAGENO="0120"
116
public interest as a paramount consideration, and utilizing sophis-
ticated analytical techniques can such decisionmaking by the Forest
Service be lawful and fair to both the public and the ski industry.
The guidelines should canvass, all relevant factors-economic, tech-
nical, environmental, social and political-and must provide for dif-
ferential pricing to be responsive to the particular needs of local
communities whose economic and social survival depends most di-
rectly on Forest Service administrative policies.
Without these provisions, Senator, Aspen will become just another
overpriced honky-tonk resort town. Thank you.
Senator HASKET. Thank you, Mr. Klein.
[The prepared statement of Mr. Klein follows:]
STATEMENT OF HERBERT S. KLEIN, COUNSEL, ROARING FORK CITIZENS INC.
My name is Herbert S. Klein, I am counsel to the Roaring Fork Citizen. Sena-
tor, you have proposed legislation which would greatly extend the duration of
permits for ski operators on public land and which would also increase the al-
lowable acreage for ski area permits. Your Bill at the same time addresses sub-
stantial problems in the existing permit system and attempts to create a realistic
legislative standard for administering permits for the use and exploitation of
public lands. However, before such far reaching grants of monopoly power are
put into law a careful review of the present system and its problems is
warranted.
We need to know whether or not the ski area operators are committed to a
judicious use of public land. Will they serve the public as trustees of those
lands, or are we merely legislating a land grab to freewheeling entrepreneurs?
What price will citizens have to pay for the recreational use of the public land
and in whose hands will such economic decisions be placed? Your proposal to
extend the term of the permits for ski areas from thirty years to fifty years
and increase the allowable acreage from eighty acres to an unlimited allotment
defies the public trust when you consider that the present ski area permitteea
refuse even to admit that the government has a right to regulate the prices
that are charged to the public. Senator, your Bill addresses problems of the
1970's and the potential exploitation thatis possible through large scale modern
industries, but those to whom you wish to grant longer term permits and greater
acreage allotments possess a seventeenth century merchantilistic mentality. They
will procure vast areas of public land at less than fair market value and then
call upon the shibboleth of the "free market" when the issue of governmental
regulation of those lands is raised.
Until we are certain that there exist guidelines and procedures which will
insure that the public interest will be protected, it would be folly to implement
a new plan which could result in an even greater exploitation of resources than
is possible under the present system. If we do not take a close look at these
issues now, we may be creating cartel entities over vast areas of prime public
land which will endure well into the next century.
The situation in Aspen provides an insight into the present relationship be-
tween the Forest Service and ski area permittees. The public, in a sense, is a
third party to this relationship. Only recently has the public's voice been heard.
Our concern and opposition to the new ski lift rate increase has been met with
indignation, we have been labelled `yahoos' by the permittee, we have been
ignored by the Forest Service. Somehow the years of familiarity between the
permittee and the Forest Service have allowed our interests to be forgotten.
When we remind our trustees that they must consider our interests, we find
that they are incapable or unwilling to respond. In some instances, regulations
exist to protect the public interest but local Forest Service officials unfamiliar
with their application stubbornly refuse to change old ways of "doing business",.
in other situations, there are no regulations at all. But, by and large, a rela-
tionship exists where the permittee proposes and the Forest Service disposes.
An example of the benevolent attitude toward permittees that the Forest
Service takes at the expense of the public concerns our efforts to obtain the
financial data that the Forest Service relied upon to approve the rate increase
for the coming ski season. Your proposed Bill provides for the disclosure of the
PAGENO="0121"
117
financial data relied upon by the Forest Service in determining rate increase
requests, an issue which the Roaring Fork Citizen became involved with as we
attempted to obtain a review of the rate increases approved for the Aspen area.
Our request pursuant to the Freedom of Information Act for such financial
data was rejected by the local Forest Supervisor and his superior, the Regional
Forester, on the grounds that such information was confidential under the
terms of the permits held by ski area operators. We appealed this denial of
disclosure to the Washington office of the Forest Service where they did not
take a position as protective of the permittees as did the regional office.
The data was ordered released by the Washington office. The data supplied
and presumably relied upon by the Forest Service was rudimentary and clearly
superficial. The financial figures supporting the rate increases were submitted
by the permittee last March and contained projections for the 1974-1975 ski
season in progress at the time of the rate increase request. The Forest Service
decided to approve a rate increase based on these figures on May, 1975. The
actual figures for the 1975 season were available near that time but due to pres-
sure from the permittee for an early decision so that the permittee could con-
tract for promotional advertising for the following ski season, the Forest Service
did not consider the actual revenues for the 1975 season. The data disclosed
revealed that the projected revenues upon which the increase was based, were
almost 1.5 million dollars lower than the revenues actually received, yet, the
Forest Service approved the rate increase to accommodate the permittee. There
has been no re-evaluation of the rate increase in light of the actual figures. Any
legislation detailing procedures to be applied in determining rate increases must
include a requirement that actual figures be used. There is no excuse for this
windfall to the permittee at the expense of the taxpayers for whom the Forest
Service holds the public land in trust.
Even if proper financial figures were available, there exist no guidelines to
aid the Forest Service in determining whether or not to approve a requested
rate increase, nor is any procedure available to assess the public interest.
In January, 1975, the permittee requested that the Forest Service grant a rate
increase. Substantial controversy developed due to the impact that local resi-
dents believed would occur to the community if the requested rate structure
were to be approved by the Forest Service. Aspen is economically dependent
upon Forest Service administrative policies concerning the contiguous National
Forest lands. The Roaring Fork Citizen, Inc. attempted to provide input into
the Forest Service decision-making process in order to call to the attention
of the Forest Supervisor the concerns of local residents and business people
who are most directly affected by his administrative determinations. Letters
were sent, petitions were circulated asking for a public hearing and an airing
of community views, and countless meetings were held. Although the Forest
Supervisor refused to provide a public forum for the community, he agreed to
attend a private meeting with representatives of the Roaring Fork Citizen, Inc.
and the Mayor of Aspen on February 7, 1975. The information exchanged at
this meeting was abbreviated and certainly was no substitute for a formal
public hearing. However, one consistency prevailed throughout the discussion;
the Forest Supervisor had no guidelines or regulations to consult in determining
whether or not a rate increase was (1) justified, or (2) in the public interest.
At one point, the Forest Supervisor was asked what he considered a reasonable
return on investment to a ski area operator. He responded, "Oh, about fifteen
percent". When asked why he felt that was an appropriate figure he replied,
"Well, that's what we allow timber contractors".
The Forest Supervisor eventually approved an increase from $10.00 to $11.00
for the daily ticket price and a discount ticket program.
There is no season pass for Aspen Mountain this year but the discount pro-
gram provides for the purchase of a $200.00 discount card which will allow a
person to ski Aspen Mountain for $8.00 per day. Last year, a season pass was
available for $250.00 and the discount card cost $60.00 and it only cost $5.00
to ski on Aspen Mountain. The new pricing schedule represents a significant in-
crease in the cost of skiing to local residents.
If a skier were to ski Aspen Mountain for 100 days on the new discount card,
his average cost per day would be $9.00. Last year the, full price ticket was
$10.00 per day. This year his seasonal cost of skiing is $900.00. Last year the
season pass was $250.00. That is not what we consider responsive differential
pricing.
PAGENO="0122"
118
The Forest Service applies no guidelines to regulate the discount programs
because it does not construe its authority to regulate prices as including discount
programs. This is probably due to the Forest Service's broad view of a national
public interest to the exclusion of consideration of the particular interest of
local communities contiguous to Forest Service land. By its failure to provide
for reasonably priced skiing for local residents, your legislation supports this
one dimensional concept of government regulation for the public interest. Cer-
tainly Senator, you can appreciate that the impacts of Forest Service policies
are most. strongly felt in those communities like Aspen which are contiguous
to and economically dependant upon the use and administration of local public
lands. Your Bill makes no provision for the consideration of local needs. You
have heard testimony today from members of the City of Aspen government
detailing the impacts on our community due to the Forest Service pricing
policies. There is clearly a need for reasonably priced skiing for local residents.
At present, the consideration of our needs is diluted by this concept of a singular
public need. We believe that the public interest requires the Forest Service to
address itself to consideration of the public need wherever it is identified. There
is presently Forest Service policy which requires that permittees provide social
~tnd economic benefits to the local communities, (FSM 2711.2(4)) but this reg-
ulation may be satisfied by any number of community benefit programs, a ski
club, a bus system, a charity ball, but when it comes down to a community need
as basic as discount ski rates, the Forest Service claims they cannot require a
discount package because that defies the public interest (see also FSM 2301.1).
The paralysis of the Forest Service to be responsive to the needs of the local
community is evidenced by the following statement from the letter of approval
of rate increase from the Forest Service to the permittee, Aspen Skiing Corpora-
tion. (May 8, 1975)
"The Aspen Skiing Corporation has a wide latitude in merchandising proce-
dure that can be used and that would be approved to balance quality skiing
with community needs and goals. With the strong interest in Aspen concerning
your season ticket use and rates, I am sure that you will do what you can to
offer quality skiing, and at the same time meet the needs of the people who
provide the services that have made Aspen famous." The Forest Supervisor is
aware of the needs of the local community; he expresses what he feels the
"public interest" requires. But, unfortunately, the Forest Supervisor leaves the
decision of whether or not the public interest will be protected in the hands of
the permittee.
If the permittee is not economically able to continue the traditional season
pass or discount ticket program, or if the permittee alleges that the carrying
capacity of one of its ski areas can no longer handle the usuage of both local
and tourist skiers, then such financial data and load factors must be presented
to the Forest Supervisor and examined through the application of sophisticated
evaluate techniques and expertise. The Forest Supervisor should also consider
alternative approaches to the problem as posed by the permittee.
Once the public interest and need is recognized, it cannot be sacrificed to ex-
pediency, inarticulated standards of analysis, or the timidity of Forest Service
personneL
If the Forest Supervisor feels that he has no authority to require a season
pass, the Forest Service must define why his authority extends oniy to regula-
tion of the daily lift ticket. The Forest Service must develop procedures and
guidelines which articulate what is and what is not a permittee marketing de-
cision within the purview of its statutory authority to regulate.
In light of the severe economic impact and socthl dislocation to the community
of Aspen resulting from the elimination of the season pass and especially where
the needs of the public are so apparent and compelling, the Forest Service hears
a heavy burden to deny its authority to protect that public need. Your Bill must
include provisions for discount programs and any formula for determining fees
paid by the permittee should not require that discount tickets be computed at
full daily ticket value.
In addition to the absence of mandatory language authorizing Forest Service
regulation of discount programs to meet the needs of local resort communities,
the methods consulted by the Forest Service in passing on the propriety of re-
quested rate increases are confused and inadequate. As previously stated, the
Forest Supervisor has no criteria or guidelines to aid him in such determina-
tions. There is statutory authority for the use of pricing procedures, but once
PAGENO="0123"
119
again, tile Forest Service's attitude of beneficience toward permittees has
thwarted any commitment to a well articulated, reasoned decision.
The mandate to Forest Service officers in their administration of special use
permits is ample authority for requiring the application of specialized techni-
ques to determine whether or not a rate increase is(1) justified, and (2) in the
public interest. See, 36 CFR 251.1(5). When authority is given to a Forest
Service officer to require that the permittee charge reasonable rates and furnish
such services as may be necessary in the public interest, that authority carries
with it the correlative obligations to develop procedures whereby the public
interest can be determined and for a calculus of factors and a balancing of
weights to be given in aid of the determination of reasonable rates. Especially,
where the permit itself indicates a test of reasonable return on investment,
such an economic evaluation cannot be satisfied by criteria wholly lacking the
application of accepted accounting and utility pricing techniques. The Forest
Service has improperly delegated this complex task to the judgment of the local
Forest Supervisor. The Forest Supervisor proceeds on his own, without guid-
ance of any sort with respect to the procedural or substantive considerations
necessary for an informed decision.
The administrative rationale for the Forest Supervisor's decision to approve
the rate increase contains no criteria for assessing the public interest. The Forest
Supervisor narrowed his consideration of the reasonableness solely according
to ski industry profits. This action is contrary to law and existing Forest Serv-
ice policies and procedures. The Supreme Court has held that "Rates must be
intended to balance investor and consumer interests", and the FSM states that
"Concession permits are issued to provide an essential public service and not
primarily to afford a profitmaking venture for the permittee." FSM 2721
The lack of procedures to explore the public need, the absence of pricing
methodology, and no explanation of the relative weights to be given to each
factor considered rendered the present decision making system completely
arbitrary.
Among the three categories the Forest Supervisor considered in making his
decision, the category entitled~ "Comparability" deserves some mention. This
category apparently restricts the Forest Supervisor from any balancing and
weighing of relevant factors in his decision to approve or disapprove a rate in-
crease. Once an applicant ski area is judged, in the unguided opinion of the
Forest Supervisor, to be comparable to some other ski area, the Forest Super-
visor reasons that he is contracturally prevented from requiring the permittee
to set his rates lower than the comparable area. The Forest Supervisor is
thereby precluded from any analysis and from seeking any justification for a
rate increase from an applicant where the applicant can show that a comparable
ski area has been allowed a higher pricing structure than the applicant. The
Forest Service bases such comparability upon completely subjective standards
that seem to relate only to the type of facilities and the quality of skiing. There
is no cost component. In the rate Increase approved here, it has been stated that
since Vail got an eleven dollar rate, Aspen was entitled to the same rate. We
must note that the facilities differ greatly and one wonders, then, how Butter-
milk, a beginners' mountain is entitled to the same eleven dollar rate. In addi-
tion, Vail offers a reasonably priced season pass to local skiers while there is no
such pass available for Aspen Mountain. But, the Forest Service states that be-
cause Vail got their rate increase, Aspen skiers will be paying a higher price.
Not only is this concept of decision making contrary to law and Forest Serv-
ice regulations, but it is wholly inconsistent with the requirement of a reasoned
decision. This element of comparability totally negates the meaning of Section
2342.42 of the Forest Service Manual: "Lift and tow rates will be regulated to
ensue the lowest possible charges to the public and an equitable return to the
Owner."
Your Bill also provides for the consideration of the potential growth impacts
of new developments. We strongly urge that the environmental effects of ad-
ministrative policies existing permits be included in this review.
Most ski areas are in pristine alpine ecology systems which react more
severely to encroachments by man than do the environments found closer to
urban areas. For example, air pollution may be eight times more toxic at Aspen's.
altitude than, at Denver. Also, many potential recreation areas lie in wildlife
habitats and migration routes. These environmental impacts must, be evaluated
before long-term commitments of resources are authorized. The preparation of
PAGENO="0124"
120
an environmental impact statement similar to that required by the National En-
vironmental Policy Act should be a prerequisite to Forest Service decisions
which may cause adverse environmental effects on local populations and fragile
ecosystems. Citizens seeking review of such Forest Service decisions must pres-
ently base their arguments on the National Environmental Policy Act which
requires that impact statements be prepared only for "MAJOR" federal actions
significantly effecting the human environment. Most court decisions, however,
look for millions of dollars invested in a project, or millions of acres, or thou-
sands of tons of pollutants before this threshold criteria of major federal action
is attained. A citizen suing for environmental review of a Forest Service de-
cision that impacts a relatively small mountain community may have dif-
ficulty meeting this standard, although the actual harm to the ecosystem may
be substantial. Therefore, your Bill should define Forest Service decisions which
may cause environmental degradation as major federal actions which signi-
ficantly effect the human environment for purposes of the National Environ-
mental Policy Act. Such a provision should also include consideration of the
environmental effects of resource restriction through price discrimination. The
recreational resources of our nation are as important to the quality of the
human environment as are the trees, water courses and wildlife located on
public lands. The isolation of these resources from those members of the public
desirous of their use through price discrimination is environmental degradation
which ought to require complete review and consideration by the Forest Service
before such decisions are made.
No action has been undertaken by the Forest Service to solicit community
views or to minimize theadverse effects of its decision. Only through the
adoption of procedural guidelines, developed with the public interest as a
paramount consideration, and utilizing sophisticated analytical techniques can
such decision making by the Forest Service be lawful and fair to both the
public and the ski industry. The guidelines should canvass all relevant factors
-economic, technical, environmental, social and political-and must provide
for differential pricing to be responsive to the particular needs of local com-
munities whose economic and social survival depends most directly on Forest
Service administrative policies.
Senator HASKELL. I will maybe ask some questions, but I will
wait until everybody gets through. The next witness will be Jerry
Michaels.
STATEMENT OF JEROME MICHAELS, ATTORNEY, ROARING FORK
CITIZENS, INC.
Mr. MIOHAELS. Senator, thank you. I am Jerome Michaels and
I am an attorney and operator of a restaurant here in town. The
restaurant has been functioning for 4 years.. I am primarily going
to direct my comments to what I have learned and what I have
found to be our work force.
It is my feeling that as opposed to what one might think the work
force here is a very stable one. The average of my employees have
lived here from 5 to 7 years and they conduct their lives far from
being one of the old ski bum. It is my understanding some statistics
a.re that persons move once every 5 years. These people seem much
more stable than that. The.y came here and they remained here al-
most without exception to ski.
With daily increases in the price of tickets and the absence of any
real seasonal discount pass I foresee many of those that have lived
and worked here for many years leaving in a slow but constant
deterioration of our work force. We will evolve int.o a town of
seasonal employees. There will be a crowd every spring and a crowd
that will come every November. and with this a definite downgrading
in quality of service and products.
PAGENO="0125"
121
The seasonal employees, and I have tried in my business to avoid
hiring them, have no commitment. They have no real involvement.
They just move in. They ski their 100 days and they leave. It is a
bad situation for everybody involved from management point of
view and tourist point of view.
I would be the last to say that I would be here were it not for
the skiing and for the contribution in terms of skiing of the Aspen
Skiing Corp. However, there are other things involved. The tourists
have to be fed and they have to be housed, and one of the comments
that we hear year-round is the quality of the service, and the friend-
liness and the affability of the employees. I think it comes from a
stability in the community and a stability in the working life that
these people have.
I really don't see this being maintained. It is my great fear that
5 or 10 years from now, many of these people will have moved on.
They can make more money and in many ways they can have a more
comfortable life. However, they have selected to come here and be
here because of the mountains, because of the community, and very
definitely because of the skiing.
I think that certain accommodations need to be made and should
be made and some relationship between the community and the
Forest Service should be established whereby we can maintain this
quality that Aspen has become known for. Thank you.
Senator HASKELL. Thank you, sir. The next witness is Charles
Kalish.
STATEMENT OP CHARLES KALISH, MEMBER, BASALT TOWN
COUNCIL
Mr. KALISH. Senator, we are running out of time, and I am a
public official from Basalt. I was wondering whether I could speak
longer?
Senator HASKELL. I guess under those circumstances I cannot
deny you the occasion. Good thinking.
Mr. KALISH. My name is Charles Kalish. I am an elected member
of the Basalt Town Council, and I was appointed by Governor
Lamm to the citizens advisory bill on mutual recreation in Cob-
~ado, which Mr. Monaghan mentioned at the beginning of these
proceedings. I am also a professional ski instructor and work for
the Aspen Skiing Corp.
I asked to speak as a part of the group relating to the Roaring
Fork Citizen because I felt they are addressing problems that relate
to all of us in this valley. I realize that I might be placing my job
with the ski corporation in jeopardy by doing so, and I feel that
I am obligated to take that risk.
As you may or may not know, Basalt was a town that originally
developed as a railroad town around the turn of the century. The
railroad pulled out of the town approximately 50 years ago, and
with it nearly all the residents. Those who stayed, lived and de-
veloped the community lived more or less at a subsistence level.
The oldtimers who still live in town talk of pulling together through
hard times. The surrounding ranchers and farmers helped them.
67-512 O-76----9
PAGENO="0126"
122
I moved into Basalt nearly 7 years ago. When I arrived, the town
could still be described as sleepy. The dust blew down Main Street
meeting little opposition along its way. Saturday nights the streets
were empty. Seven years later, we have a community seeking an
identity. We have literally no cohesive community spirit, which is
not to say we are not working at it. Various civil groups are either
operating or developing to face our problems.
The problem is that we largely serve as a bedroom community
for Aspen. We get a lot of lower income people hying in and around
our community who simply cannot afford to live in Aspen. They
tend to be in large degree transients. The result is that we have
many of the problems that are caused by people that have no roots,
no involvement, no stake in the community. For those of us who
live in Basalt as permanent residents, this causes a tremendous
difficulty to identify and work within our community. We in the
small town are literally uncertain as to what our community really
is or if indeed a conununity does exist or simply a lot of small links.
My point is that there are tremendous advantages to living in
our end of the valley. The proximity to Aspen is one of these. The
work provided by Aspen falls into that category, but work is not,
cannot be the be-all and end-all of existence for healthy communities.
A bedroom community with no advantages in its quality and life
tends to turn to more demeaning forms of diversion. Alcohol and
hard drugs are two of these. We have a serious alcohol problem in
our town.
One amenity to living in Basalt I feel the Forest Service should
be addressing itself to is skiing. There is a negativism about the
sport in our town that is derived totally from its prohibitive cost.
Many, many people come to the Aspen area in order to work and
ski. They wind up out in Basalt and not being able to afford to ski.
The result is that they turn to the bars, to negativism and to lust
plain ripping off the energy of our town and our valley.
I am not asking the Aspen Skiing Corp. to subsidize these people.
I am asking the U.S. Forest Service to function as a business repre-
senting its stockholders, one of whom is our community, in negoti-
ating a contract that involves affc~rdable costs to local people.
What I am saying is that the Forest Service should stop thinking
of itself as the adopted child of industry and start thinking of
itself as a separate business, one of whose purposes is the leasing
of the shareholders' land. The profits that the Forest Service should
be looking to are not monetary necessarily but should be seen in
terms of the amenities that the public designates as its profits.
These amenities should be totally determined by the public will,
not by a bureaucracy. The Forest Service should think of itself as
a company hired to maximize the gross profit of its client, we the
public. They should initiate these as simply as any other real estate
leasing company would. It is absurd to be engaged in business trans-
actions, that is leasing, when you are not coming from a business
point of view, that is profits.
One of the amenities that I am suggesting is in the interest of
our community is the season pass. Without it, the skiing and its
PAGENO="0127"
123
traditional meaning to local people is destroyed. Traditionally, a
ski town or ski valley is composed of two types of skiers, those
who ski a few hours many times a week and those who are serious
skiers skiing all day nearly every day. In both cases, they need
to have a season pass in order to do so. When those people, the
very same people that have contributed to the charm and atmo-
sphere that has made Aspen so special, are driven out of the area
because of a lack of a season pass, the result I observe is the ever-
increasing deteriorating and debilitating pressures that we are now
facing in Basalt.
The ski pass is not the only answer, but it is one of the important
instruments to a solution. Thank you.
Senator ITASKELL. Thank you. Our next witness is Ralph Brendes.
STATEMENT OP RALPH BRENDES, ATTORNEY, ROARING PORK
CITIZENS, INC.
Mr. BRENDES. Brendes, thank you. I was just reading a note I just
got handed. I will try to be brief and I will submit my entire state-
ment in writing to the subcommittee.
Senator HA5KELL. It will be reproduced.
Mr. BRENDES. I know that we are pressed for time. I would like
to use my part of the testimony today to show you just briefly how
the Roaring Fork Citizen-Aspen Skiing Corp. controversy has
evolved, and in so doing to illustrate to you why it is so vital that
future rate increases be granted only after full disclosure and a
meaningful public input through a public hearing. I will do this
with my actual written testimony and with articles from the Aspen
Times and so on and so forth.
It all began on New Year's Eve, 1974, when D.R.C. Brown-
by now everyone knows who D.R.C. is-announced the proposed
rate increase, and basically there are two things I will discuss
quickly. The Aspen rate increased from $10 to $12 per day and
a season pass from $250, restricted 28 days, to $550, unrestricted.
A group of concerned citizens met in my office to determine what
if anything could be done, and at that meeting concern was ex-
pressed about the effects of bucking D.R.C., so to speak. In fact,
some people preferred to remain anonymous initially, and I think
one of them was Mr. Kalish, and the statement handed me was Mr.
Brown said "former ski instructor" when Mr. Kalish announced
himself.
Well, people were concerned about that and so were other people
about losing the complimentary passes, so as a result we had to
tread lightly. The first thing we did was circulate a petition and we
asked for three things, now in your bill, by the way. We asked for
a public hearing in connection with this rate increase. We asked that
any rate increases which were not justified financially be disap-
proved and we asked for some consideration of the local input.
Now, we met with Tom Evans on February 7 and we presented
our petition, which had 3,800 signatures, about 1,000 of those people
from people not from Aspen, by the way. We asked for a hearing.
PAGENO="0128"
124
Mr. Evans told us what Michael Kinsley told you earlier, "This is
not a situation where there is going to be any vote taking." We
asked the Forest* Service to take steps to establish some standards,
and I will point out that the Forest Service is beginning to take
some steps to establish criteria for future rate increases. We also
asked for financial information. We were told the Ski Corp.'s costs
had gone up 20 percent and the revenues were confidential infor-
mation. When I discussed the proposed program with Tom Evans,
he said to me, "D.R.C. is running the show," and he said to me that
D.R.C. had said to him, "I am running this thing."
Now, as a result of that, we tried to have our own public hearing.
We did have a hearing. Our committee is not a bunch of yahoos. It
is a very hard-work committee. We did a computer printout on every
pass proposal the corporation made and every one we made so peo-
ple could analyze the real costs. No one came to that meeting from
the Ski Corp. The biggest problem was no one was required to come
to the meeting or listen to us. It was a total exercise in futility, as
has been much of our effort vis-a-vis the ski pass to date, because
no one has to listen to us, the people most affected.
When the Aspen daily newspaper asked the Ski Corp. why they
failed to send a representative to our hearing, Tom Richardson said,
"We discussed it and felt it would be a waste of our time and their
timc~. These are the only changes we are going to make. We are not
going to compromise," in the Aspen newspaper of February 18,
1975.
We were totally frustrated in trying to get any kind of input or
results, so as you know we have requested your office to assist us in
obtaining the financial information, because when we met with the
Ski Corp. they would not tell us anything about their revenue, and
we asked your assistance to obtain that information from the U.S.
Forest Service, and on March 25, 1975, you did in fact request that
information from the U.S. Forest, and as you also know you were
denied that information, so that July 29, 1975, the Roaring Fork
Citizen through its trial counsel, Herb Klein, filed an appeal with
the U.S. Forest Service in Washington, D.C., under the Freedom
of Information Act for the release of that information.
In September we received a call from John Burns, former Aspen
district ranger and now with the Forest Service in Washington, and
he told us that the Forest Service had made an error and were
trying to release the financial information used in passing upon the
rate increase. One of the first things we discovered was the estimate
of revenues for the Ski Corp. upon which the Forest Service based
its approval was $1i/2-million too low, and we would never have
known that information but for the Freedom of Information Act
and our appeal.
Now, the information that we did get from the Forest Service
was sketchy at best. The city economist stated that there is no way
these figures could be used as a. basis for any kind of rational
decisionmaking. They are very, very sketchy.
A little while later, Mr. Brown will probably testify that Aspen
Mountain is the Cadillac of mountains in the U.S. ski industry.
PAGENO="0129"
125
We feel the U.S. Forest Service is the Edsel of regulatory agencies.
I am trying to be brief. I am beginning to summarize. Now, what
does this chronology show? I haven't traced what's actually hap-
pened in the past except to say as a result of our efforts to try and
get a lower price we now have no pass for Aspen Mountain, and
when we asked the financial numbers we were told the corporation
was a private business and it was confidential information by both
the~ Forest Service and th Ski Corp. and, of course, under the
Freedom of Information Act we find that is not true.
When we asked for the public hearing, we were told that is not
a vote-taking situation. Clearly, without Federal legislation no one
is going to listen to us, if anyone is Tepresentrng the public, and if
they do listen to us they won't pay attention to what we have to
say. Public hearings in my mind are the only way to keep them
honest, and that's all of us, not just the Ski Corp., but the Forest
Service as well. Private enterprises who would be monopolies on
public lands must be put to the test of justifying their rates to the
public in general and not leave the fate of entire communities and
states to a few executives and bureaucrats operating behind the
closed doors.
The Roaring Fork Citizen would like to thank you for respond-
ing to our petition requesting public hearings and full financial
disclosure, as well as the establishment of standards by which the
future rate increases will be made, since they seem to have fallen
on deaf ears in the U.S. Forest Service. Make no bones about it,
without your legislation Aspen will remain a one-company town
with a one-man rule and with that one man accountable to only
one other man, Tom Evans, and both of them able to ignore the
public whose destiny they control.
In conclusion, at each juncture in our path to oppose what we
feel are the unjustified rate increases, we had been warned about
"pushing D.R.C. too hard." "If you don't watch out, you won't
have anything," we were told. Apparently we didn't watch out for
D.R.C., because we don't have anything.
At this time or at times the Roaring Fork Citizen feels ilke the
young child that is told by his daddy if he does not behave he won't
be able to go to the movies. That's just what happened to us, Daddy
D.R.C. and the Aspen locals, but the Ski Corp. must now be put on
notice that this child, Aspen and Pitkin County, have ëome of age.
No longer are a few powerful men going to run the town. We de-
mand to be acknowledged and not ignored. The only chance we
have as children to stand up and be counted is your Senate bill.
Citizens freely volunteer their time and efforts to make democracy
work here. The participation in today's hearing shows that. We are
only asking to be heard and reckoned with in matters that control
our destiny.
In closing, I would say "Power to the People."
Senator HASKELL. Thank you, gentlemen. I think that I would
like to recite how the situation came to my attention. I read in the
newspapers, of course, that three areas, and this was one of them,
were simultaneously applying for rate increases, and I believe it was
PAGENO="0130"
126
an unusual time of the year. I think it was in the spring, and I wrote
to the Forest Service, actually assuming that they, would have public
hearings and financial information would be provided that the
public could examine, and got again to my somewhat surprise a
"kiss-off" letter.
Mr. BRENDES. We know the feeling, Senator.
Senator HASKELL. It said, "We are quite concerned about making
public the specific financial information about individual operations.
Over the years we have developed a level of confidence and trust
with our concessionaires which has allowed us to study and respond
to the financial world they live in."~
I will put my letter to Chief McGuire and his response in the record
at this point.
[The letters follow:]
U.S. SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washington, D.C., February 26, 1975.
Hon. JOHN R. MCGUIRE,
Chief, U.S. Forest Service,
12th and Independence Avenue SW.,
DEAR CHIEF MCGUIRE: It ` has come to my attention that several ski corpora-
tions in Colorado-Vail Associates, The Aspen Ski Corporation, and Aspen High-
lands- have applied to the Forest Service for authority to increase their present
$10 daily ski two ticket rates to $12. This, of course, is a sizeable percentage
increase.
I am quite concerned over the continuing rise in the cost of this important
Colorado recreational activity to consumers. I fear that, if the present trend
continues, it will be priced out of the reach of the average citizen. Indeed, I
suspect the present rates already preclude participation by many Coloradoans
and out-of-state visitors.
For this reason, I am requesting that you initiate a careful study of the
applications of these firms before you grant their request and would appreciate
receiving a report of your findings.
I am particularly disturbed to learn that the financial information submitted
to the Forest Service to justify requested increases in rates, such as these, are
withheld from the public under provisions contained in your special use permit
contracts. I would like to see this changed in all such future contracts and a
vigorous attempt to renegotiate existing contracts in this regard.
I find it difficult to understand why any contract involving public lands should
not, by their very nature, be made public. It would seem to me to be only proper
that the financial justification for such rate increases be made available for
public inspection and, if necessary, `public hearings. Only this way, I feel can
the public be assured that the requested increased revenues are necessaf~r for
the continuation of normal operations and needed improvements.
I understand that the decision on whether or not to grant the current rate
,increase requests is to be quite soon. I would appreciate it, therefore, if you
would look into the matter immediately and either delay the proceedings until
more information can be made available to the public or adequate justification
can be given to satisfy the very real concerns of myself and many of my
constituents.
You will agree, I am sure, that it is always important for government to
protect the consumers' interests wherever possible. In my opinion, this respon-
sibility is absolutely mandatory in matters involving the oversight of public lands
entrusted to the Forest Service.
Best wishes.
Sincerely,
Fi~o~n K. HASKELL,
U.S. Senator.
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127
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., Marelt 11, 1975.
Hon. FLOYD K. HASKELL,
U.S. Senate
DEAR SENATOR HASKELL: This is in reply to your February 26 letter and one
from Mr. Kenneth A. Senn of Aspen, Colorado. Both letters express concern
over proposed lift ticket and season pass prices at some Colorado ski areas.
Departmental regulations require that concessioner services and facilities
be made available to the user at reasonable rates. Accordingly each National
Forest concession permit provides that user charges are subject to Forest Serv-
ice review. Each Forest Supervisor is responsible for these reviews within his
area of jurisdiction. When price changes are proposed which involve more than
one operation, as it this case, State-wide or industry-wide studies are insti-
tuted by the Regional Forester so that a broad market base can be established.
Just such a study is underway. Since many operators are already making plans
for the next ski season, we can expect decisions on the proposals to be made
shortly. You will be interested to know that requests to institute the new rates
for the remainder of this season have been denied for both Aspen and Vail.
The development of skiing in Colorado has been made possible by the private
individuals or corporations ~ho have invested millions of dollars in facilities.
Private enterpri~e cannot, of course, continue to serve the public without a
reasonable profit opportunity on its investment. Naturally there is a profit varia-
tion influenced by such variables as managerial ability. We do Rot feel we should
either limit or guarantee a particular level of profit. We do, however, feel that
pricing, should reflect the added cost of doing business and that it can legitimately
be passed on to the user.
When an operator serves the same number of customers with no additional
investment, a raise in price to the user to simply increase profit would gen-
erally be disallowed. On the other hand, we would not restrict profit if it was the
result of efficiencies in management, economics in operation or an increase in
number of participants. We are mindful that any program involving price con-
trol is quite complicated and that there are no easy answers. In that respect,
we are most interested in the studies being made and will assist and counsel
the Regional Forester so that local decisions reflect consistency as well as
equity.
We are quite concerned about making public the specific financial infor-
mation about individual operations. Over the years, we have developed a level
of confidence and trust with our concessioners which has allowed us to study
and respond to the financial world they live in. This has been developed by
maintaining, as confidential, all financial information secured. We have and
will continue to make public the results of studies reflecting average or industry-
wide data in a manner that individual respondents cannot be identified. Useful
information regarding appropriate levels of fees for the use or data to analyze
proposed* changes in charges relies on this confidentiality. Further, exposure
of individual private costs and operating procedures could place that permittee
in an unfair position vis-a-vis competition.
We believe there are sufficient factors including the market place which
will assure a range of ticket rates in Colorado. This, we hope, will allow a maxi-
mum number of skiers from different economic levels an opportunity to par-
ticipate. Those enterprises which provide more and higher quality facilities and
services will naturally command higher prices.
Thank you for the opportunity to comment on this important matter. We
will, as you suggest, monitor carefully the appropriateness of decisions issued
in the field and be alert to any needed adjustments.
JOHN R. MCGUIRE,
Chief.
It occurred to me then that these lands tha.t they are oper-
ating on belong to the people of the United States, and that's how
I happened to get involved in this. My bill, as you know, would
provide for public hearings and would provide for preplanning. It
would provide for public, community, local government, adoption
of a satisfactory overall land-use plan covering the entire area.
PAGENO="0132"
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I have learned a lot of things today. I did not realize that the
feelings in the community had raised to the level that they ob-
viously have. It has been brought to my attention that there is a
substantial burden which any community-let's try and not separate
ourselves from this community-any community has to provide the
public services when you have a high density operation on public
lands. I am not quite sure that my bill addresses itself to that point
the way it should, but I appreciate your testifying, and again I say
I guess to Mr. Klein, you are the counsel for the group, if you have
any suggestions as to statutory changes, you might want to send
them in, as the other people have.
I think in fairness to the opposition, and the opposition appears
to be Mr. Brown, I should not confine him to the 5-minute rule.
Steve Quarles tells me that excluding the testimony of Mr. Kalish who
is a public official your time ran by 5 minutes, so I will then allocate
10 minutes to Mr. Brown instead of 5 minutes just in simple fairness.
Thank you, gentlemen, very much.
[The prepared statement of Mr. Brendes follows:]
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129
TESTIMONY OF RALPH C. BRENDES, ATTORNEY FOR THE ROARING FORK CITIZEN,
INC., BEFORE SENATE INTERIOR SUB-COMMITTEE ON ENVIRONMENT AND LAND
RESOURCES CONVENED IN ASPEN, COLORADO, SATURDAY, OCTOBER 4, 1975.
Senator Haskell and counsel to the sub-committee: First let
me thank you for the opportunity of appearing before you today to
outline some of the views of the Roaring Fork Citizen, Inc. regarding
your proposed bill S.B.2l25. I would like to use my part of the
testimony presented by the Roaring Fork Citizen to show you how the
Roaring Fork Citizen and Aspen Skiing Corporation controversy has
evolved. In so doing I hope to illustrate to you why it is so vital
that future rate increases be granted only after full disclosure of
all financial and other information and a meaningful public input
at some public hearing that should be held by the United States
Forest Service.
As has been stated earlier, the Roaring Fork Citizen, Inc. is
comprised of approximately 500 local residents who joined together to
try to preserve some type of season pass for skiing on Aspen Mountain.
This is a result of am announcement New Year's Eve, 1974, made by
D.R.C. Brown, President of the Aspen skiing Corporation, in which he
set forth the corporation's rate increase request for the 1975-1976
ski season. In its request to the Forest Service, the Aspen Skiing
Corporation requested that the daily rate for skiing on Aspen Mountain
be increased from $10 to $12 and that the season pass be increased
from $250 to $550; further that the employee discount program initiated
awhile ago be increased on a daily validation basis from $5 to $6 per
day. As a result of this announcement, a group of concerned citizens
met in my office to determine what, if anything, could be done to
resist the requested rate increases. At the time this meeting was
held, a great deal of concern was expressed concerning the effects
of "bucking D.R.C. Brown," in fact some people preferred at that time
to remain anonymous for fear of losing their jobs with the Ski Corp;
others were concerned that they might lose their complimentary passes
given by the Ski Corp (That is to say people who received a free
discount pass, instead of paying the $100 would not find themselves
having to pay the $100 for such a discount pass).
The group decided that the first thing it should do is to circulate
a petition to the United States Forest Service. 1 have appended a
copy of this petition to my written statement which will be presented
to the sub-committee. Part of that petition states, "Whereas, we
believe the proposed increase rates, specifically those with respect to
season passes, are unjustified, arbitrary, capricious, indiscrimatory
in that they are designed to, and will effectively, make use of the
ski facilities prohibitively expensive for local residents; now therefore,
we, the undersigned, do hereby petition the United States Forest Service
PAGENO="0134"
130
to hold a public hearing in connection with its evaluation of the
proposed rate increases and to disapprove any rate increases which
are not fully justifiable by increased costs directly attributable
to the operation of the facjlities with respect to which the increases
are intended to be applied and which tend to unreasonably increase
~the cost to local residents of the use of those facilities.'
This petition was circulated through Aspen and Pitkin County
and approximately 3400 names were subscribed thereto. Officers of
the Roaring Fork Citizen met with Tom Evans of the United States
Forest Service on February 7, 1975, to present the petition and to
recjuest a public hearing. Mr. Evans informed us that this was not
a `vote-taking" situation and that no such hearing would be held.
We had been informed that the Ski Corp had asked for a 2O7~ rate
increase because its cost had increased by 207.. We requested to see
financial information regarding the revenues of the corporation in
order to determine the. correlation. This financial information was
not released to us. Lastly, we requested the Forest Service to take
steps to establish standards to review rate increase requests in the
future. I understand that some steps in this direction have, in fact,
been taken.
On February 10th, the following Monday, members of the Roaring
Fork Citizen met with Tom Richardson and George Madsen of the Aspen
Skiing Corporation. At that time we presented our views on the
situation and were essentially told that we had no vote in the matter.
Mr. Madsen asked us why we hadn't talked to the Ski Corp first. I
responded, "Would it have made any difference?". Mr. Madsen replied,
"Well, no, but you `yahoos' are going to hurt Aspen if you persist
in your actions." Here also we were denied any financial information
concerning any revenues of the Corporation.
On February 12, 1975, I discussed the situation with Tom Evans
and his reply was, "D.R.C. `s running the business". In fact, he stated
to me that Mr. Brown had stated to him, "I'm running this thing".
This is just the first of many examples in which it becomes increasingly
clear that Aspen remains a one-company town, subject to the whims of
one man as to the fate of that town.
On February 13, 1975, the Aspen Skiing Corporation modified its
request for the rate increase after talking to Tom Evans. Instead of
thanging the season ski pass from $250 to $550, the corporation
eliminated the season pass completely! Consequently, as a result of
our speaking out, we were treated like little children and got our
hands slapped for standing up to D.R.C. Brown!
On February 21, 1975, the Roaring Fork Citizen held its own
(non-binding) hearing to review with the public its potential counter-
proposal,that it planned to make to the Forest Service regarding a
more fair rate structure for Aspen in the future. Although the Aspen
PAGENO="0135"
131
District Ranger attended that meeting, he stated that nothing said
there would be binding upon the Forest Service nor did anyone appear
from the Ski Corp to discuss their point of view. The biggest problem
with our whole hearing was that no one in a position to act was
required to attend or to listen to us, the people most effected. It
was truly an exercise in futility as has been much of our efforts.
In an article in ~ ~y, February 28, 1975, Ton Richardson
of the Aspen Skiing Corporation, when asked why the Ski Corp failed
to send a representative to the Roaring Fork Citizen's hearing, stated
that, "We discussed it and we felt that it would be a waste of their
time and our time. These are the only changes we are going to make.
We are not going to compromise." Again, the Ski Corp was shoving its
views down the throats of the community, without discussion or input
from its citizens.
On March 4, 1975, George Madsen of the Aspen Skiing Corporation
met with members of the Aspen Chamber of Commerce. He stated that if
the Ski Corp did not receive their rate increase to $12 a day, there
would be no Buttermilk and Snowmass Mountain pass (this $250 pass woulc
have replaced the former three-mountain $550 requested pass under an
amended application they had filed with the Forest Service). Further,
there would also be no employee discount pass if the Roaring Fork Citizen
were successful in keeping the price of the daily ticket down. In other
words, if the Ski Corp did not get its request from the Forest Service,
and the Roaring Fork Citizen and others blocked it, all the people
would have to pay the full daily price to ski Aspen Mountain.
Because of our utter frustration in this matter, the Roaring
Fork Citizen in March of 1975 requested the assistance of your office,
Senator Haskell, to obtain some redress for our grienvances. We asked
you to obtain for us the financial information from the Forest Service
by which the Ski Corp was justifying its proposed rate increase. As
you know, you were denied this request by the Forest Service, and,
partially as a result of this, decided to draft S.B.2l25 and hold today's
hearings.
On March 6, 1975, the As~.R Times reported that the thirdquarter
financialreport of the Aspen Skiing Corporation showed after tax profits
of $592,200.00 for the first nine months of the current fiscal year.
This represented increase in net profits of 75.67~ over the record profit
levels of the prior yearn This is the first indication we got at all
concerning the Ski Corps revenues and profits; it showed that although
their costs had increased by 207~, operating. revenues had also increased
by 27.47W, more than making up the increased cost, and in fact resulting
in dramatically increased profits for the corporation. It was Roaring
Fork Citizen's position that based on these results, no increase what-
soever was necessary for the current or next ski season.
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PAGENO="0136"
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On April 28, 1975, in a letter to D.R.C. Brown, Tom Evans rejected
the $12 daily rate, but indicated that he would approve a $11 daily
rate and stated some of the grounds on which he made his evaluation,
noneof which included local input or impact.
On July 29, 1975, the Roaring Fork Citizen filed its appeal
with the United States Forest Service in Washington, D.C., challenging
the rate `increase approval and demanding full disclosure of all financial
information by which this rate increase was approved under the Freedom
of Information Act. This topic has already been covered by Mr. Klein
in our testimony today.
On August 27, 1975, according to the pp~ Times, the Ski Corp
requested a "Vail-type" pass, which would involve~~OO purchase price,
with a $100 refund at the end of the season, plus a surcharge of $8 a
day to ski Aspen Mountain, $5 a day to ski Aspen Highlands and $3a day
to ski Snowmass and Buttermilk Mountains. This meant that someone who
skied Aspen Mountain for 80 days this season would have to pay $740 to
ski that mountain, which represented approximately a 300% increase
over last year's rates! Concerning the Vail-type pass, it is to be
noted that Vail does not require any daily validation fee and its prices
range from $175 to $325 maximum, depending on whether the person skis
on restricted days, when he purchased the pass and if he stays all season.
Early in September, the United States Forest Service in Washington,
D.C. granted the Roaring Fork Citizen'S appeal and agreed to release
financial information used in passing the rate increase request. This
financial information, which consisted of one 8-1/2 x 14 page of numbers
taken from the records of the Ski Corp, showed that the revenue figure
used by the United States Forest Service to grant the rate increase was
1.5 million dollars less than the actual income of the Ski Corp for
that season! Without our appeal, no one would have known this dramatic
error in the Forest Service's calculations upon which it had granted the
rate increase.' Meanwhile, regarding these numbers, the Aspen City
Economist has stated, "There is no way these figures could be used as
a basis for any kind of rational decision making. They are very, very
sketchy."
As of this hearing, we still have not heard from the Forest Service
regarding our appeal on the new rate structure, per se. Later on today,
you will hear D.R.C. Brown' state that. Aspen Mountain is the "Cadillac"
of ski mountains and therefore deserves to charge the highest price
in Colorado. Someone has said that if Aspen Mountain is the Cadillac
of skiing mountains, then the Forest Servicemust be the "Edsel" of
regulatory agencies, based upon methods by which they operate.
What does this chronology show? When the Roaring Fork Citizen
asked for financial information, it was told that the Corporation was a
private business and that financial information was confidential, even
though this was in violation of the Freedom of Information Act. When
we asked for a public hearing, we were told that this is not a vote-taking
matter; the Forest Service was not interested in our views. Clearly,
without federal legislation, no one is going to listen to us or the public
in general; and if they do, they won't pay any attention to what we have
to say, as history has already shown.
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PAGENO="0137"
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I have told this story to illustrate how difficult it has been
just to get listened to seriously by the two powers that be, Tom Evans
of the Forest Service and D.R.C. Brown of the Ski Corporation, even
though Tom Evans himself stated on February 12, 1975: "The further
you get from the people when making decisions, the harder the decisions
are to make. The closer you get to the people, the more sound your
decisions will be." Public hearings are clearly the only way to "keep
them honest", and that means all of them, not just the Aspen Skiing
Corporation, but the Forest Service, itself, as illustrated by the fact
that the 1.5 million dollar error would have never been discovered but
for our appeal under the Freedom of Information Aôt, no matter who was
responsible for that error. Without such public exposure the onus of
"secret bureaucracy" looms threateningly.
In conclusion, I would like to state that private enterprises
holding monopolies on public lands must be put to the test of justifying
their rates to the public in general. Otherwise the fate of entire
communities will be left to a few executives and bureaucrats operating
behind closed doors. We can already see what a small amount of public
disclosure has done. Imagine what benefits full disclosure and hearing
by the public would have.
I should point out, however, that just having a public hearing by
the Forest Service would not be enough, although airing the information
in public itself has some advantages, and would tend to make actions on
the part of both the Ski Corp and the Forest Service more visible subject
to scrutiny so that shamanigans of the type already discovered probably
would not happen in the future. In addition, however, the Ski Corp must
be made to publicly justify its request and the U.S. Forest Service
must be required to consider the public input, including the effect on
the communities, before granting any rate increases. Your bill appears
to do that - and we laud you for it.
The Roaring Fork Citizen again would like to thank you, Senator
Haskell, and your Senate Interior Sub-Committee on Environment and Land
Resources for responding to our petition to the United States Forest
Service requesting public hearings and full financial disclosure, as well
as the establishment of standards by which to pass on rate increases in
the future, since you seem to be the only parties in government or out
that will listen to us. All of our other requests have fallen on deaf
ears at the U.S. Forest Service and we are impotent without financial
disclosure and public hearings.
Make no bones about it, Senator Haskell, without your legislation
Aspen will remain a one-company town, with virtually total one-man rule,
with that one man accountable essentially only to one other man, and
both able to virtually ignore the public whose destiny they control. At
every junction in the Roaring Fork Citizen's path to oppose the unjusti-
fiable rate increases on Aspen Mountain, we have been warmed against
PAGENO="0138"
134
pushing D.R.C. Brown too hard. We were told, "If you don't watch out,
you won't have anything." Apparently we didn't watch out, for, in~
fact, we still don't have anything as a result of our opposition to
the $550 season pass on Aspen Mountain. We now have no such season
pass at all! The Roaring Fork Citizen feels like the young child that
is told by his daddy that if he does not behave he will not be able
to go to the movies. That is just what's happening with Daddy D.R.C.
andthe Aspen locals, but the Aspen Skiing Corporation must now be put
on notice that this "child" (Aspen and Pitkin County) has now come of
age. No longer are two powerful men going to run this town. We demand
to be acknowledged and not ignored; and we need the help of S.B.2l25
to do that. The only chance we "children" have to stand up against
"Daddy D.R.C." is your legislation, and we thank you for it.
Aspen has always been a community where the people have been
actively involved in the democratic process. Its citizens freely
volunteer their time and energies to make democracy work here; the
participation at today's hearings demonstrates that fact. We are only
asking to beheard and. reckoned with in matters that shape our destinies.
Isn't that our constitutional right?
Thank you very much, Senator Haskell.
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PAGENO="0139"
135
Senator HASKELL. Our next witness is Mr. Peter King of the
Sierra Club, Aspen.
STATEMENT OP PETER KING, REPRESENTING THE SIERRA CLUB,
ASPEN, COLO.
Mr. KING. Thank you, Senator. My name is Peter King. I am
actually from Steamboat Springs. I am an attorney up there. I am
representing the Sierra Club. We have about 150,000 members, and
as the official witness for them I don't know if I am confined to the
5-minute rule.
Senator HASKELL. Yes.
Mr. KING. I will try to keep my remarks brief. I would like to
outline a few of our concerns today. We will submit a detailed
statement to your office later.
As you may know, the Sierra Club is currently involved over
the closed ski areas of Beaver Creek and Mineral King in Cali-
fornia. This involved the apparent ignoring of the Wilderness Act
by certain members of the Forest Service, and particularly Mr.
Lucas in the Beaver Creek area. The Beaver Creek area was desig-
nated as a proposed winter site area, winter sports site area, when
the wildrness area study had not~ yet been completed. Your pro-
posed legislation at this time does not address itself to this kind
of problem. We hope that when your bill is rewritten that you
would attempt to put in there provisions which would lessen the
possibility of the Sierra Club or other organizations having to go
to the court again over proposed ski areas, and we think that it
would be very simple to say in the legislation that no permit would
be appproved until the completion of a wilderness study for a pro-
posed area. The wilderness study had not yet been completed for
Beaver Creek, and, of course, not for Mineral King.
Senator HA5KELL. Let me interrupt you. This won't go against
your time, but is there a study bill approved and passed Congress
for this area?
Mr. KING. It was included in the inventory for proposed wilder-
ness areas.
Senator HASKELL. Oh, I see.
Mr. KING. This does require a study to be completed.
Senator HASKELL. I see. It was included in the Forest Service
inventory?
Mr. KING. Yes, and redesignated as a winter sports area before
the completion of the wilderness study. This is the reason why the
Sierra Club has had to go to court in the past, and we hope your
legislation will correct this problem by simply putting in a require-
ment that proposed areas would be either designated or not desig-
nated as wildnerness areas before they are considered for winter
sports sites.
We have some problem with the Congressional Review provisions
in the bill as it stands now. From 1,280 acres to 5,000 acres, congres-
sional approval would be presumed from the failure of certain
committees to act in the 60-day time frame. We have three major
problems with that.
PAGENO="0140"
136
First: We think it is unrealistic to expect a congressional com-
mittee will ever pass a resolution of disapproval.
Second: If confined to substantially private lands below the pub-
lic lands, a major ski area such as Beaver Crek of approximately
3,000 acres can easily be approved without any affirmative action
under the system.
Third, and I think most objectionable: This may preclude judicial
review. If Congress is deemed by the courts to have reserved final
benefits even by inaction, the court may not be willing to review
the inaction of Congress under the separation of powers doctrine,
and we think it should be made clear that judicial review will be
available in any case whether Congress has acted, or not, and we
hope that there will be some changes in your legislation to make
that clear.
We strongly oppose the extension of permits from 30 to 50 years,
and we will submit what we think will be an alternative that will
be fair to the ski operators and will make the permit system a little
bit more realistic, perhaps giving preference to existing operators
over other potential operators, at the end of the, say, 10-year period,
for the renewal of the permit, that the permit would not be revoked
unless there was a substantial violation of the permit, and I think
this would take care of the financing problems.
One of our biggest objections to the bill is it almost seeks to
guarantee a profit to the ski operators. It doesn't quite do that, but
it gets very close. It says, "a reasonable rate of return on equity
investment," and we think the government has no business legislat-
ing anything that comes close to a guaranteed profit. There is a lot
of rhetoric coming out of Washington these days concerning the
evils of too much government interference and too much regulation
of private business, and we feel that this guaranteeing a reasonable
rate of return or coming close to it is not what the government
should be doing.
We are also concerned about the discrimination in the access pro-
vided the public to public lands by the Forest Service and ski oper-
ators. We believe the trend is toward the phasing out of the day
skier and local area in favor of the weekly package skier who spends
money in the condominiums and the ski shops, rather than the local
skier, who may brown bag, and the local skier doesn't have much
money anyway. `We hope there can be equal treatment for all citizens,
or in the alternative, as Dr. Mahoney suggested, regulating them
under some sort of public utilities system.
`We would like you to look into the discounting practices of air-
lines and chambers of commerce. I don't have much information on
this, but I know it does go on. I don't know who takes an actual loss
on that. ,The public must take it somewhere. Certainly, people in
the public are being afforded a preferential treatment in the access
to public lands.
I could say a great deal more, but I would like to conclude by
commending you for your initiative in this area, and I am grateful
on behalf of the Sierra Club for being able to present some of our
ideas to you today. We would hope you could continue to hold hear-
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137
ings in other parts of the country; namely, California and also in
New England, we would suggest, because these areas of the country
in addition to the Ski Country-U.S.A. are affected by any legis-
lation that you will propose to Congress. Thank you very much.
Senator HASKELL. Thank you. Before you go, Mr. King, actually
I do intend to hold hearings, obviously in Washington. I was also
thinking of New England and out in California, because I would
like to get this bill moving. What do you mean by preferential
access to public lands?
Mr. KING. Well, I think this goes to the pricing or how much
people pay for it. There are package deals in which they get not
only skiing privileges but also condominium and travel privileges
through the airlines, and somewhere along in here the price is dis-
countable anywhere below what it would be ordinarily. I don't know
whether the airlines take the loss on this, the condominium owners,
the operators themselves, but in any case the money is discounted
and doesn't get back into the public funds, the amount of money
that is designated to be returned to the public, and we don't know
that much about it yet but we would hope you would look into this
and take some sort of investigative action on it.
Senator HASKELL. Well, yes, it seems to me at least what I am
trying to do in this bill is set down general principles that should
be followed, and obviously the Forest Service has clearly, from all
the testimony here and from things I have heard elsewhere, not done
its job. In talking to its Chief, however, he realizes this deficiency
and I think sincerely wants to do his job. But when you get into
such details or such things as package tours. I don't think that's the
kind of thing I ought to get into in this legislation.
Mr. Loesch has called my attention to something. You indicate that
the bill guarantees a rate of return.
Mr. KING. Senator, I think I said it comes close to that. It doesn't
actually do that. It does talk about a reasonable rate of return being
a factor to be considered.
Senator HASKELL.. Obviously you have got to give a person a
reasonable rate of return, even though he has got a monopolistic
situation or the opportunity to make it. He may not make it. Some
go bust, you know.
Mr. KING. Of course, we don't have any utility regulation at this
point.
Senator HASKELL. Well, you see, that's what we are thinking of.
As I mentioned earlier, and perhaps you weren't in the room, I
mentioned to one of the economists, I think it was Dr. Mahoney,
that where you have a truly competitive situation, then the economic
theory which I think works is you will have regulation by com-
petition. So, if you had a finding that in a given situation, A and B
ski areas were truly competitive, you wouldn't need to go any
further. It is only when you find that there either isn't competition
or they are operating in cahoots that then you need to go into the
utility-type regulation, which I think you have to do at that time,
but that's the thinking behind it. Anyway, Mr. King, I assume
that what you will do on behalf of the Sierra Club is you will sub-
67-512 0 - 76 - 10
PAGENO="0142"
138
mit any specific statutory changes that your organization may wish
to put forth.
Mr. KING. Yes; we will.
Senator HASKELL. Am I correct in that ~
Mr. KING. Yes.
Senator HASKELL. Thank you very much. I appreciate it.
Mr. KING. Thank you, sir.
Senator HASKELL. Our next witness is C. W. Miller, executive
director,. Aspen Valley Improvement Association.
STATEMENT OP 0. W. MILLER, EXECUTIVE DIRECTOR, ASPEN
VALLEY IMPROVEMENT ASSOCIATION
Mr. MILLER. Senator Haskell, ladies and gentlemen: I am the
executive director of the Aspen Valley Improvement Association,
which is a citizens organization whose approximate 100 members are
taxpayers in Pitkin County. Over the period of 9 years in which
this association has been actively engaged in civic, city, and county
affairs, the board of trustees has developed a list of nine guidelines
for approaching problems of the area and accepting projects for
consideration. Of these nine guidelines, three give us concern in
relation to the proposed Senate bill 2125.
May I explain: The AVIA reviewing committee on 5. 2125 has
concluded that this proposed bill is probably a good bill, is very
much needed and should help strengthen relations between ski
facility permittees, the U.S. Forest Service, and the public. It
attempts to establish fair regulations for use of public lands and to
establish reasonable economic basis for permit costs, public charges,
terms, and protection of the permittee's equity investment. It ap-
pears to be an improvement over existing legislation and should
vastly improve communications between permittees and the public
with a resulting improvement in understanding. Since many areas
of this bill are necessarily broad at this juncture, we would like
to caution Senator Haskell and the proponents of this bill to give
full consideration to the following three AVIA guidelines:
Our guideline No. 9: "To foster the concepts of free enterprise
that it will continue to be a delightful place in which to live and
visit."
Our remark: This is a successful resort community with the
economy based upon skiing. Our citizens love it and our guests love
it. Any provisions of this bill that might lessen this lifestyle should
be avoided.
Our guideline No. 4: "To maintain a healthy economy and en-
courage a balance between guest facilities and recreational capaci-
ties."
Our remark: If this bill should in any way tend to discourage
the very best in operation and performance by the permittees or
should inhibit them from utilizing the land and facilities to the
greatest advantage of the public, it no longer would be a good bill.
*Our gmdelme No. 9: "To foster the concets of free enterprise
with minimum governmental controls in a manner that will be con-
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139
sistent with our constitutional rights and with the desires of the
citizens of our county."
Remark: S. 2125 is a governmental control bill and it does attempt
to establish what "reasonable return on equity investment should
be, what reasonable fees should be charged and what reasonable
prices to the public should be. It directs the Secretary of Agricul-
ture to make all records and information available for public in-
spection. These proposed regulations are contrary to the principles
of the free enterprise concept. They do, however, affect leasing of
public lands and may be necessary for the public good. In the
consideration of these controls and regulations we urge recognition
that the permittees are competitive with each other on the open
market, that they must perform efficiently to satisfy the public
needs, that they must seek the public's continued support, and that
the stockholders of the permittees must be encouraged to keep their
money invested in the enterprise rather than redirct it elsewhere.
Let us not kill the goose that laid the golden egg and let us assure
ourselves that the contents of this bill are not only strongly in favor
of the general public but also encourage the existence of a strong
and successful recreational ski industry.
Thank you, sir.
Senator HASKELL. Again, Mr. Miller, as I started out with saying
today, this is a working document. If you have any specifics, any
language, we would appreciate having it.
Mr. MILLER. Thank you very much.
Senator HASKELL. Thank you very much, sir. Now, we have Mr.
D. R. C. Brown. Mr. Brown will have 10 minutes instead of the usual
5 minutes.
STATEMENT OP D. R. C. BROWN, PRESIDENT, ASPEN SKIING
CORPORATION, ASPEN, COLO.
Mr. BROWN. Thank you, Senator. My name is D. R. C. Brown
and I am the ogre that's been referred to here quite frequently today,
and I had intended to confine my testimony to the meat of this bill,
but there has been one statement that has recurred frequently in
the testimony of other witnesses which I feel it is necessary to re-
fute, and that is they say or I have heard time and again today
financial information was not available. The financial information,
Annual Report of the Aspen Skiing Corp., including all the infor-
mation given the Securities and Exchange Commission, is readily
available in our office to anyone for the asking and always has been,
and I think it is as complete a set of financial disclosure as anyone
could ask for. I will not return to my prepared text, if I may.
Mr. Chairman, I apreciate the opportunity which you have given
me to appear before you and testify with regard to Senate bill 2125,
and I would like to say that in one area in particular it would go
far toward resolving a matter which has long been a source of con-
cern to those ski areas operating on the National Forest. That is
the provision in the bill which eliminates the 80-acre limitation on
permits. As you know, most ski areas cover far more than 80 acres
and the Forest Service has gotten around this by granting a 1-year
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140
term permit on the balance of the land involved. This is not a satis-
factory solution from either the viewpoint of the area operater, his
banker, or the Forest Service and I am* sure that every ski area
operator with a Forest Service permit will appreciate your efforts
to solve one of our major problems. There are three areas of par-
ticular interest to me in your bill to which I would like to address
my comments. The first is section 3, subsection (C) (c) 1, regarding
the fees to be charged. The second is a more generalized comment
on the lack of consistency from one National Forest to another in
the adoption and enforcement of rules and regulations. In view of
the cozy relationship imputed by several speakers between me and
the Forest Service, I am sort of reluctant to take off on this regard,
but I am already committed. Lastly, I should like to allay the fear
you expressed that Colorado ski areas are pricing themselves out of
the reach of the skiing public.
Section 3(C) (c) 1 of Senate bill 2125 states in part:
The permittee shall pay an annual fee for the use and occupancy of forest
reserve lands covered by this permit. Such fee shall be computed so as to
provide a reasonable return on equity investment.
Senator HASKELL. May I interrupt you there, Mr. Brown? That
has already been called to my attention and that was certainly not
the way to compute the fee to the U.S. Government, and the Forest
Service recently appears to have adopted a formula which is more
precise so that particular section will no longer really be considered
seriously.
Mr. BROWN. Thank you. Well, I will save your time and mine.
For many years, the Forest Service charged the permittee a rental
based on a straight percentage of gross sales. It had the advantage
of being simple to compute and difficult to cheat on. The big prob-
lem with it was that there was no consistency in the percentage
charged. It varied from 1/2 to 5 percent for little apparent reason.
As an aside, the only area I know of which was in the 5 percent
bracket went bankrupt.
Recently, the Forest Service has gone to what they refer to as
the graduated rate fee system. This system is a complicated formula
which relates gross sales to gross fixed assets and then comes up with
a graduated percentage fee. It requires seven pages of explanation
in the permit and one almost has to be a CPA to understand it. It
requires the permittee to keep two sets of books, one for the Forest
Service and one for the Internal Revenue Service. It discriminates
against older areas with lower capital investment costs. For ex-
ample, Aspen Mountain with lifts dating back almost 20 years has
a low gross fixed asset base and consequently pays a high percentage
rental. If it were to be sold at its fair market value, the new owner
would find his percentage rental greatly reduced from what we pay
merely because his gross fixed asset base would be the price he paid
for it. It also discriminates against an efficient operator who keeps
his construction costs down and it encourages inefficient and wasteful
construction practices since the more money an operator spends on
his capital improvements the higher his gross fixed assets and the
lower his percentage fee. In many cases, the graduated rate fee sys-
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141
tern is resulting in a lower return to the Governrnent than it pre-
viously received.
May I suggest that you consider including in your bill a clause
which would establish a straight percentage rental along with a
minimum per acre fee. I am sure that 2 percent of a ski area's gross
with a minimum charge of $10 per acre would bring in more to
the Government than it is presently receiving and would constitute
a far greater return per acre than is received from timber sales or
grazing permits. It would be simple to compute and easy to ad-
minister and would eliminate the lack of uniformity in treatment
which the permittees now receive due to varying interpretations
from one forest to another as to what constitutes one's gross fixed
assets.
The second area of concern to me lies in the lack of consistency
shown by Forest Service officials in their dealings with ski area
permittees. Pricing changes, even in midseason, are granted rou-
tinely and without any request for economic justification in some
regions. For example, Discovery Basin in Montana notified the
Forest Service it was increasing prices 20 percent in January of
1975 and received immediate approval. While our request for a
similar percentage price increase made in January of 1975 to be
effective in March was flatly turned down although we supported
it with our reasons for it. I suspect that the Forest Service has be-
come overly sensitive to public pressure and that the protest raised
here in Aspen by a small, but vocal, minority of our customers whose
main concern was that they were no longer going to be able to ski
for $2 a day or less was responsible for the publicity campaign
which they mounted.
Another reason lies in the Forest Service's region IV definitions
of discrimination. For many years, we have provided a special
package of lifts and lessons on Saturdays to the schoolchildren of
Basalt and Carbondale. Last year, we were informed that this was
a discriminatory practice and must cease or make it available to all
schools everywhere. Since I considered this impractical, I reluctantly
informed the sponsors of the program that we were being forced
to give it up. The embattled mothers of Carbondale and Basalt
generated so much pressure on the Forest Service that the program
was restored with some rationalization that it fitted in with the
President's physical fitness program.
The whole area of special rates is one of concern to the ski in-
dustry in Colorado. Special rates are an important marketing tool
when you are competing in a national market. Good marketing pro-
grams are usually aimed at specific groups and when one cannot
make special rates as an inducement one frequently loses his business
to a competitor that can. For example, Killington, one of the East's
largest ski areas and located on private land, has several special
deals aimed at the New York and Boston markets which we are
unable to meet because of the Forest Service attitude in region IV
as to what constitutes discrimination. Other Forest Service regions
are not so strict. In fact, most New England areas operating on the
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142
National Forest enjoy the freedom to meet special deals offered
by their competitors on private land.
Lastly, I would like to address myself to a subject that, in your
remarks accompanying the introduction of your bill, you said~ con-
cerned you. You stated that you fear that ski areas are pricing
themselves out of the reach of part of the skiing public. I would
like to point out that not everyone can afford a summer vacation at
the Broadmoor, nor can everyone afford to buy a Cadillac, but
there are less expensive summer resorts in Colorado that cater to a
less well-heeled public and there are Fords, Volkswagens, and Chev-
roleth on the market as well as Cadillacs. The same is true of Colo-
rado ski areas. There are ski areas in Colorado priced to meet all
budgets. In Aspen, $11 will buy you the use of 31 chairlifts at four
areas with up to 3,500 feet of vertical descent; free bus service be-
tween all areas 10 on the mountain restaurants; the services of
over 100 ski patrolmen; and three-quarters of a million dollars
worth of over snow machinery for trail grooming. An assortment
of facilities unavailaible anywhere in the country. On the other hand,
one can buy a ticket at Cooper for $5, or Squaw Peak and Pikes
Peak at $4.50. Just as in vacation resorts or automobiles, there are
facilities to meet every purse.
In summary, I do not think that-I will skip that because you all
agreed to that.
The Forest Service from forest to forest and region to region has
applied regulation with little regard for consistency.
And, that our Colorado ski areas offer the consumer a wide range
of facilities and prices on which to spend his recreational dollar.
One last sugestion, if the intent of these hearings is to receive
input from the greatest possible number of people who ski at Aspen,
it would be more appropriate to hold them in Los Angeles, Chicago,
or Dallas. More skiers come to Aspen from each of these cities than
come from here. Thank you.
Senator HASKELL. Thank you, Mr. Brown, very much. I would
just like you to comment on a couple of things, if you would care
to. The bill that I have introduced provides for public hearings
to allow any interested party to comment on proposed increases
prior to the granting of increases with of course, access, it goes
without saying, to historical financial information. Do you have
any opinion on that or attitude?
Mr. BROWN. I think that if the public hearing is to be held, it
should be held where the greatest number of our customers are
located, and that isn't in Aspen.
Senator HASKELL. No, I am not talking about this hearing. I am
talking about if the bill were adopted. One provision of the bill
says that as a condition precedent to getting a change or increase
in lift ticket, prices, the public will have an opportunity to comment.
There will be made available financial information to the pub-
hc and this will be done prior to the granting of the change or
increase. A lot of people have commented on that. I wondered if
you had an opinion.
Mr. BROWN. I certainly have no objection to the complete dis-
closure of historical financial data. I think it is a healthy thing for
PAGENO="0147"
143
the industry as a whole and I think that the majority of ski area
operators will feel the same way. So far as public hearing on the
price raises, nobody likes to pay any more for any product than
they did last year, and I think you are going to find that the input
on that is bound to be largely negative, regardless of what justifi-
cation the affirmative puts out. If a public hearing were held on
grocery prices, I am sure you would find lots of protests.
Senator HASKELL. Well, do you think it would be a healthy thing
to do or unhealthy thing to do?
Mr. BROWN. I don't think it will accomplish much one way or the
other, but it will let some people let off steam, and possibly in this
respect it is helpful.
Senator HASKELL. Then just really two other things. The bill
could be changed to provide, among other things, that there will be
an overall local government adopted land use plan before the is-
suance of a permit. Let's take a brand new area. Let's take before
Vail went in. There would be an obligation to get some kind of a
land use plan adopted by Eagle County as a condition precedent to
the Forest Service giving Vail their permit. Do you consider that
desirable or undesirable?
Mr. BROWN. I consider it desirable in principle. I think the way
it will be administered will have a great deal to do with whether
or not it might effectively kill a potential ski area if you have to
go through too many different governmental entities before you
know whether you are going to get a permit or not. If you have
to go first to the county, then to the State and then to the Forest
Service, all with environmental impact statements-
Senator HASKELL. No, that's not really-I am just thinking of
the concept. In other words, right now, as you know, the Forest
Service says what you can do on the Forest Service lands and it
says what you can do on the so-called base land, which is a very
small area, and also as you are very much aware a major ski area
has a tremendous impact-even some folks from Basalt are testi-
fying here-so it occurred to me that before you, you being the
Forest Service, before the Forest Service granted a permit to a
major ski area there should be adopted an acceptable land use plan
involving the to-be-affected geographical area. Now, that's some-
thing new and I just wondered if you reacted favorably.
Mr. BROWN. I would react favorably to that. There is one thing
you mentioned just now, Senator, which I would like to attempt
to straighten out. You say that the base area is usually just a very
small bit at the bottom. At Aspen Mountain only 20 percent of the
land involved-19 percent of the land involved is Forest Service.
The other 81 percent is privately owned, yet the Forest Service
dictates everything that can be done on the 81 percent.
Senator HASKELL. Just one other question. I don't want to keep
you. What is your attitude on these independent ski instructors? I
don't mean any controversy, but do you feel very strongly that it
would louse things up to let them on the hill? If so, why?
Mr. BROWN. Senator, we have an expert witness here, who will
devote his entire testimony to that.
PAGENO="0148"
144
Senator HASKELL. That sufficeth. Let him talk then. Thank you
very much, sir, for appearing. The next witness is Stephen Green,
vice president of Western Ski Vacations, New York City.
Mr. GREEN. Senator.
Senator HASKELL. Mr. Green.
STATEMENT OP STEPHEN GREEN, VICE PRESIDENT, WESTERN SKI
VACATIONS, NEW YORK, N.Y.
Mr. GREEN. My name is Stephen Green and I am vice president
and principal stockholder of Western Ski Vacations, located in
New York City. I guess I represent different constituents, the
tourist who comes into Aspen as his destination, so maybe I will give
you a slightly different view as representing a little different type
of interest.
Just a little bit about Western Ski to put it in the frame of
reference. We are basically a tour wholesaler. We have a back-to-back
charter operation serving the cities of principally New York, Hart-
ford, Albany, Philadelphia, and Washington. We have approxi-
mately this year 45 charter aircraft with a total capacity of about
8,500 passengers that we will bring out to the West. In addition to
providing air transportation, Western Ski Vacations also has op-
tional packages for land and lift tickets. We service the areas of
Sun Valley, Utah and Aspen and Vail. We have certain people
going to other areas, but those are our principal areas.
Although Western Ski probably transports more ski charter
than anybody else in the country, we are really but a small portion
of Aspen's business. We will bring into Aspen this year about 4,500
tourists between Aspen and Snowmass, which I would suspect is
but a small fraction of the amount of guests that Aspen enjoys
during the course of a winter.
I think it would help to break down the component parts of a
typical tourist ski package. If so, we would see that the ski lift
ticket is by far the smallest part of his total cost and his expenditure
when he takes let us call a 7-day ski package. For example, charter
air fare round trip, New York to Denver, is $159 high season and
$149 low season. A typical land package on an economy basis, in-
cluding transfers, is $124, while we have been advised that the 6-day
lift ticket in Aspen is $64, which is obviously the smallest part of
the total package for the tourist coming into Aspen.
From a competitive standpoint, we deal with this constantly,
because as much as Aspen we are involved in Utah and we are in-
volved in Sun Valley and all throughout Colorado, and people really
tell us where they want to go. We. don't tell them where we want
them to go, but they choose it and we fit their needs and try to give
them the service to accommodate them.
Aspen in my opinion is a real value at $11 a day compared to
other areas that I have personally visited and that people who take
our charter flights have visited. By frame of reference, in the North-
east, where I have skied many years and where many of my customers
traditionally ski on weekends, you see areas such as Stratton with
vertical field about 1,900 who have advised us that their lift ticket
PAGENO="0149"
145
is $12. Stowe is $12 a day. Kington is $12 a day, and I maybe am a
little prejudiced because I love skiing in the West, but these areas
just can't compare to Aspen, not only in the vertical, but in trail
maintenance, lift facilities, lift line. You can go on ad infinitum.
So, from a competitive comparison standpoint, I do feel that the
product which is offered to the guests or my guests that are coming
into Aspen is well worth the price, vis-a-vis what other areas are
charging.
There are areas if we have people who come into the West on our
flights if they do not feel that they can afford an $11-per-day or
$64 6-day pass in Aspen, some of them will ski Copper Mountain.
Some will go to some of the other areas that offer lower price
packages. It generally follows that the areas that have lower priced
lift packages also offer lower price room accommodations. There
seems to be a certain type of customer that chooses Aspen, and I
might say Vail also, which is represented by the quality of the
mountain and hotels and food in the area.
So, looking at it from a consumer standpoint, the consumer who
comes from different points of the country, albeit I only have trips
from the Northeast, in our opinion Aspen is well worth the money,
and obviously the consumer who takes our trips thinks so because
this is by far our most popular area, and I think the quality of the
mountain, the way they keep the mountain, the lift practices, the
patrol, everything that goes into making a mountain great, Aspen
is far superior to any other area that I know, that I have skied any-
way, and I thank you very much for your time.
Senator HASKELL. Thank you, Mr. Green. Really, I would just
like to comment. The purpose of these hearings are not whether
Aspen ski tickets are too high or too low. It is whether' the system
under which permits are issued and administered is proper. You
know, I just wanted to be sure you understood the thrust of the bill.
Mr. GREEN. Well, we are really not privy and our interest as such
in the bottom line is what the consumer is going to spend.
Senator HASKELL. Oh, sure, I appreciate your testimony. I just
wanted to be sure you understand what the bill is about.
Mr. GREEN. I have read the bill and I understand, and to be
honest, just from the testimony this afternoon, I was a little confused
as to what the real issue was.
Senator HASKELL. The next witness is Mr. Tom Blake, general
manager of Snowmass Resort Association.
STATEMENT OF TOM BLAKE, GENERAL MANAGER, SNOWMASS
RESORT ASSOCIATION
Mr. BLAKE.. Thank you, Senator. My name is Tom Blake. I am
general manager of the Snowmass Resort Association. I have been
a member of this community for the past 6 years. From what I under-
stand, the purpose of these hearings will determine the feasibility
of regulation on the daily lift and season lift prices in Aspen and all
over the country.
Senator HASKELL. A lot more than that. It will be the issuance
of permits, the land use planning in the areas, what contribution,
PAGENO="0150"
146
if any, should the ski lift operation make to the local community. It
is a whole spectrum of matters.
Mr. BLAKE. I would like to address myself to just a couple of
those aspects.
Senator HASKELL. All right.
Mr. BLAKE. I would like to point out some factors which may affect
your decision on whether the lift rates have been reasonable his-
torically.
In some years of observation of increasing lift rates in the
Snowrnass-Aspen area, those of us in the lodging and base area
service industries have been able to note the lift rate increases have
been taking place at a slower pace than the general increase in
prices in the area. The other services in the community such as
lodging and restaurant services and those things which are in-
creasing faster than the lift rates haven't been increasing we don't
think because of capricious pricing policy but because of the definite
inflationary pressures in this country to raise those rates. I would
surmise that the lift rate increases in this situation, the daily lift
rate increases, are as a result of the same inflationary pressures in this
general community.
In addition to that general parity between the lift rate increases
here and the general increase i nprices in our specific community,
the increase in ski prices is substantially below the general cost-of-
living raises all over the country. If you could refer to that graph
that is a.ttached to my testimony you can see that using a base year
of April 30, 1972, the price of Aspen ski lift tickets has increased
approximately 20 percent, while the Wholesale Price Index has
increased over 50 percent. There are a number of other indexes
all on that ground, all of which indicate an increase in price over the
20 percent indicated by the Aspen Ski Corp.
Again, it seems to me that the pricing of skiing in this area is
directly r~eiated to the inflationary pressures evidenced throughout
the whole spectrum of costs of the tourists coming here and skiing
in the area.
Another facet which I know you are concerned with and which
the Government should concern itself with outside of economic
rationale is the availability of recreational opportunities on public
lands. The real factor limiting the number of people skiing in
Pitkin County is not the price of daily lift rates offered but
availability of beds to house the people who wish to ski in this
area. People here traditionally are not price sensitive to the lift
rates or rate of general services, but this is not to say that the
industry as a whole does not offer the public a great variety in
both lodging and lift rates. In Colorado alone, the lift and lodging
rates vary greatly from area to area. Wolf Creek, with which I
am sure you are familiar, lodging, for example, varies a great deal
from the Vail area.
The effect of the lift ticket price on the public's choice of an area
in which they ski depends very little on their choice of which area
to ski, since the net price, the daily rate price, is only about 10
percent of the expenditure made by a tourist to a destination resort
PAGENO="0151"
147
It seems in view of the above the public has a large choice of
varying vacation opportunities in both price and experience. In a
number of years of experience in dealing with guests in our area
I have received very few complaints on the price of the daily lift
ticket. In fact, this last year I can remember only two complaints
on that subject. It is possible to conclude there is no demand from
the guests, specifically in this area, and I do not know since I have
not been in contact with them in other areas if there is any demand,
for regulation in the price for daily lift tickets in any of the other
areas.
In analyzing this apparently reasOnable daily lift ticket. price
increase, it should be noted that the Aspen Ski Resort Corp. and
other entities in the area such as Snowmass Resort Association have
found it necessary to spend considerable amounts of money in the
area to transport skiers from Aspen, where most of the accommoda-
tions are, to Snowmass, where most of the skiing takes place. This
dislocation of skiing has cost the Aspen Skiing Corp. $250,000 a
year, and this cost must be absorbed in the daily lift price.
As to I think the subject of most of this morning's testimony,
the seasonal lift rate, especially to the employees season lift rate,
the Snowmass community in the past in view of that has received
a fairly equitable rate. This year is a case in point. A skiing Snow-
mass resident has a fairly reasonable lift rate. The ski pass problem
in the Aspen community, correctly relating the Aspen community
to Aspen Mountain, possibly may be one which has problems of
demographics, bed capacity and lift capacity in the immediate area,
and that is a problem along with the pricing. Thank you.
Senator HASKELL. Thank you very much, Mr. Blake. We appreciate
your analysis.
[The graph referred to follows:]
PAGENO="0152"
148
- / -
-- -~ -
I ~ ~ -
1~
/~oc~ -~~):
~./1'
/
/
/ ,. /
/
/1 /
/
~
/ I' / / -, -
PAGENO="0153"
149
Senator HASKELL. David Christensen is our next witness. Is Mr.
Christensen here?
STATEMENT OP DAVID CHRISTENSEN, RANCHER, PITKIN COUNTY,
COLO.
Mr. CHRISTENSEN. Thank you, Senator Haskell. My name is
David Christensen and I wish to address my testimony, Senator,
to little known and lightly considered facts concerning the Aspen
Skiing Corp. development programs and policies, things that seem
currently overshadowed and easily forgotten during times of con-
troversy and preclude proper recognition.
I am engaged in sheep and cattle ranching in Pitkin County. I
came to the Aspen area and acquired my first ranch properties in
1946, which was prior to any serious ski development. Subsequently,
I acquired Forest grazing permits that either bounded or encom-
passed what ultimately became the Forest ski area in Aspen. As
a result, I have grazed sheep or cattle on every part of each area
using them in common with the Aspen Skiing Corp. I believe that
unquestionably I know more about the physical activities of the
corporation than anyone else outside their own organization.
During the initial stages of development of the ski slopes, I
probably represented the only vehement opposition to the develop-
ment. To me, it represented competition and infringement to my
personal use. I was skeptical of this new change because I was very
much aware that development of a ski area meant roads, clearing
and leveling land, lift line installations, buildings, disturbance of
top soil and vegetation of top soil and vegetation, erosion, all con-
tradictory to my interests.
As a rseult of the early mining practices and overgrazing in
the early range war days, I had seen how very slow, if ever, rehabili-
tation of top soil and ground cover was, particularly if left to nature
alone.
Thinking back, I believe the most serious threat of all was the
awareness that most of the people in the community saw the ski de-
velopment as new lifeblood, business opportunities and jobs for a
town that had for many years laid dormant. What I feared in
this atmosphere was that the community was more interested in
skiing becoming a reality than in how and at what environmental
expense it did become a reality; therefore, little or no ecological
concern as to how the ski corporation developed it. As a result
of these things, I probably viewed the ski area development with
a more critical and juandiced eye than most.
During the years of development that followed, however, my
fears were arrested and I have been pleasantly surprised at the
concern and inexhaustible efforts aimed at environmental policies.
I have watched in amazement their experimentation with techniques,
with equipment and manpower, their extensive planning and the
expenditure of vast sums of money, all because of a dedication
and corporate policy of finding solutions to existing environmental
problems. I have seen them succeed in their reseeding and erosion
control projects where similar efforts by other industries, highway
PAGENO="0154"
150
departments, railroads, ranchers, Forest Service and Bureau of
Land Management agencies have met with little or no success. The
Aspen Skiing Corp. has truly been a pioneer in rebuilding and
reseeding this type of terrain and has employed many inventive
and imaginative practices to create suitable seed beds for revegeta-
tion of disturbed areas, cost notwithstanding. As a result of these
efforts, I can clearly show anyone concerned areas that now have
productive ground cover where it was previously completely devoid
of vegetation.
It seems that we are experiencing a period in our lives when all
that is necessary to be heard loud and clear is to mention ecology
or wildlife. For those individuals concerned but not informed about
the ski corporation's activties and its effect on wildlife, let me
assure you of a few facts. The deer and elk, if they are any one
thing, they are adaptable. I have~ seen them adapt to many pressures
over the years, hunting pressure, development, people, livestock,
and certainly not least to weather. In spite of these pressures elk
herds in this area are at historical record numbers. This has to
suggest adaptability.
Trail-clearing and seeding through heavier timber stands has
created an abundance of feed within the protected area they seek,
Normally, the heavy timber stands provide only protection for them
as they produce very little vegetation and because of a lack of sun
is not palatable to them.
Through consultation, study, trial and error, the Ski Corp. has
selected the best domestic grasses for the various soil conditions
and elevations. Grasses that are far more resistant to adversities,
that are far more productive and palatable to both wildlife and live-
stock than native grasses. Iii short, wildlife never had it so good.
Development of the ski slopes in this area has unequivocally been
no deterrent to wildlife migration habits.
In spite of the increased productivity of grasses on the ski slopes,
surprisingly enough, they do not represent a substantial need or
use by livestock or by wildlife. This whole area now as always is
blessed with an abundance of summer grazing. The critical grazing
periods and controlling factors to wildlife population are late fall,
winter and spring, all at elevations below ski area development.
As a result, the ski areas represent only a pass-through area in the
migration from spring to summer ranges.
Senator HASKELL. Sorry, Mr. Christensen, but we do have to
observe the bell. Your full testimony will be reproduced.
Mr. CHRISTENSEN. Fine, just in summary, Senator, having seen
and experienced in total the development of these mountains by
the Aspen Skiing Corp., I must conclude that from the following
points of view, esthetically, from the standpoint of utility, wildlife,
livestock, and multiple use, these mountains are far better today
for all concerned than they were 30 years ago.
Senator HASKELL. Thank you very much, Mr. Christensen.
[The prepared statement of Mr. Christensen follows:]
STATEMENT OF DAVID CHRISTENSEN, RANCHER, PITKIN COUNTY, CoLo.
My name is David Christensen; I am engaged in sheep and cattle ranching
in Pitkin County. I came to the Aspen area and acquired my first ranch
properties in 1946, which was prior to any serious ski development. Subse-
PAGENO="0155"
151
quently, I acquired forest grazing permits that either bounded or encompassed
what ultimately became the four ski areas here in Aspen. As a result, I have
grazed sheep or cattle on every part of each area, using them in common with
the Aspen Skiing Corporation. I believe that unquestionably I know more
about their physical activities than anyone else outside their own organization,
and I have personally witnessed the vast transformation of the past 30 years,
from rangeland to the present.
During the initial stages of development of the ski slopes, I probably repre-
sented the only vehement opposition to development. To me, it represented
competition and infringement to my personal use. Traditionally and his-
torically, change has come slowly and been hard to accept for agriculture
and those involved with it. I was skeptical of this new change because I was
very much aware that devlopment of a ski area meant roads, clearing and
leveling land, lift line installations, buildings, disturbance of top soil and
vegetation, erosion, etc. All contradictory to my interests.
As a result of early mining practices and overgrazing in the early range
war days, I had seen how very slow, if ever, rehabilitation of top soil and
ground cover was, particularly if left to nature alone, and especially on steep
slopes and the general topography of the land involved. Where top soil is
shallow or totally absent, it represents a truly delicate situation.
Thinking back, I believe the most serious circumstance of all was the aware-
ness that most of the people of the community saw the ski development as new
life blood, business opportunities, and jobs for a town that had for many
years laid dormant. There was an excitement in the community that had been
absent since the mining days. What I feared in this atmosphere was that
they were more interested in skiing becoming a reality, than in how and at
what environmental expense it became a reality. Therefore, little or no co-
logical concern as to how the Ski Corporation developed It. As a result of these
things, I probably viewed the ski area development with a more critical and
jaundiced eye than anyone.
It has been said that "the only thing in life that is constant is change".
Ski development was inevitable and change did come. During the years of
development that followed, my fears were arrested and I have been pleasantly
surprised at their concern and inexhaustible efforts aimed at environmental
problems. I have watched in amazement their experimentation with tech-
niques, with equipment and manpower, their extensive planning, and the
expenditure of vast sums of money. All because of a dedication and corporate
policy of finding solutions to existing environmental problems. I have seen
them succeed in their reseeding and erosion control projects where similar
efforts by other industries, highway departments, railroads, ranchers, Forest
Service and Bureau of Land Management agencies have met with little or
no success. The Aspen Skiing Corporation has truly been a pioneer in re-
building and reseeding this type of terrain and has employed many inventive
practices to create suitable seed beds for re-vegetation of disturbed areas-
cost not withstanding.
To mention a few methods that have been particularly successful for them
and ultimately adopted by other confronted with similar problems are:
Relocation of top soil.-Actually hauling soil to areas in need; mine dumps,
rocky outcroppings, barren ridges.
Chipping.-Utilization of some of the smaller cleared timber and placing it
as mulch for erosion control.
Chopped hay-Extensive use of equipment that chops and blows in place a
protective ground cover of fine hay particles for seeded areas and also pro-
vides much needed humus for the soil.
Fish neting.-On extreme slopes where the above methods have failed,
they have covered the surface of the area to be seeded with a webbed ma-
terial, a very expensive but certainly effective means of holding seed and
mulching material in place until seed his germinated and established itself.
As a result of these efforts, I can clearly show anyone concerned areas that
now have productive ground cover, where it was previously completely devoid
of vegetation.
It seems that we are experiencing a period in our lives when all that is
necessary to be heard loud and clear is to mention ecology or wildlife. For
those individuals concerned, but not informed, about the Ski Corp's activities
and its effects on wildlife, let me assure you of a few facts:
1. They are extremely adaptable-if deer and elk are any one thing, they
are adaptable. I have seen them adapt to many pressures over the years,
PAGENO="0156"
152
hunting pressure, development, people, livestock, and certainly not least,
weather. In spite of all these pressures, elk herds in this area are at his-
torical record numbers. This has to suggest adaptability.
2. Trail clearing and seeding through heavier timber stands has created
an abundance of feed within the protected areas they seek. Normally the
heavy timber stands provide only protection for them as they produce little
vegetation and because of a lack of sun is not palatable to them.
3. Through consultation, study, trial and error, the Ski Corporation has
selected the best domestic grasses for the various soil conditions and elevations.
Grasses that are far more resistant to adversities, that are far more pro-
ductive and palatable to both wildlife and livetock than native grasses. In
short, wildlife never had it so good.
4. Development of ski slopes in this area has, unequivocally, been no de-
terent to wildlife migration habits.
5. In spite of the increased productivity of grasses on the ski slopes, sur-
prisingly enough, they do not represent a substantial need or use by wildlife.
This whole area now as always is blessed with an abundance of summer
grazing. The critical grazing periods and controlling factors to wildlife pop-
ulation are late fall, winter and spring, all at elevations below ski area de-
velopment. As a result, the ski areas represent only a pass-through area in
the migration from spring to summer ranges.
I feel that we have come through what I call the critical period of ski
area development unbelievably well. The period when most of the mentioned
conservation practices were adopted only because of the Ski Corporation's
philosophy to conserve, preserve and rebuild the lands they develop-not
because of the various pressure groups that are so actively breathing down
their necks today.
It has been a pleasure for me to cooperate with them and I am proud to
have in effect been a partner with them in the common use of these ranges.
I must attribute a great deal of the environmental concern the Ski Corporation
has displayed to a man who because of his agricultural background was a
conservationist and ecologist long before they became household words. This
man is President of the Aspen Skiing Corporation, Mr. D. R. C. Brown.
If we were to look beyond personal interest, I honestly believe everyone
would concur that the Corporation has had a unique attitude among cor~ora-
tions in that even after abundantly providing the finest facilities, the finest
groomed and manicured slopes, the finest maintenance of trails, equipment
and facilities, and the finest service-combined providing the best quailty
skiing the world has known, they still choose to continue upgrading existing
facilities and equipment, to build new facilities and trails as opposed to
funneling all their profits into divided payments to their stockholders.
Having seen and experienced in total the development of these mountains
by the Aspen Skiing Corporation, I must conclude that from the following
points of view: aesthetically, utility, wildlife, livestock, and multiple use,
they are far better mountains today for all concerned than they were 30 years
ago.
Senator HASKELL. Our next witness is Wilton Jaffee, Sr.
STATEMENT OP WILTON JAPPEE, SR., ASPEN, COLO.
Mr. JAFFEE. Senator Haskell, Ladies and Gentlemen: My name
is Wilton Jaffee, Sr. I came to Aspen in January of 1947 because
Fred Iselin, one of the codirectors of the ski school and an old
friend, had told me he thought Aspen had the best skiing in this
country. When I found this to be so, I soon became a part-time
Aspenite and eventually became a full-time Aspenite.
I was, and am, an officer of the AVIA and I was a member of
the Aspen Valley Hospital Board, and I now am a trustee of the
new district hospital board that is responsible for the construction
of the new hospital.
PAGENO="0157"
153
I am also a member of the Aspen Medical Foundation that has
undertaken to raise $1,500,000 in. private contributions to help fund
the cost of the new hospital. For the record, you should know that
on one night in 1974, the Aspen Hospital with 27 beds, had to
house 53 patients, obviously an impossible situation.
I have given you these scant details to emphasize one major point.
The Aspen Skiing Corp. has pledged $250,000 over a 5-year period,
the largest contribution to be made, and with the full knowledge
that only 30 percent of the hospital's patients over the last several
years have been orthopedic in nature. Additionally, the Ski Corp.
gave special rates to hospital employees until forbidden to do so by
the Forest Service.
If a bill such as 2125 becomes law, then the Ski Corp. may be
forced to sell its product at lower rates than prevail elsewhere, as
high as $12 per day, and the Ski Corp. will have to cut back on
unessential expenditures such as the new hospital and the community
in the `ong run will be the loser.
Section 3B (b) of the bill states in part:
Such regulations, among other things, shall require consideration by the
Secretary of all facilities to be developed by the permit applicant, all housing,
recreation, and commercial development which will likely occur as a result
of the development of the applicant's facilities, and all public services neces-
sary for such development, both on Forest reserve land and private land in
the proximity thereof. Such consideration shall include an assessment of the
extent and nature of such development, its compatibility with other uses for
and the protection of the resources on such Forest reserve and private lands
as determined through federal, state or local planning processes, and the
authority and capability of the relevant state and local governments to zone
or otherwise regulate such develOpment to insure such compatibility. Such
regulations shall also set forth a specific procedure for consultation with the
relevant state governments prioD to the issuance of any such permit.
One is forced to the conclusion that the Federal, State, and local
government will become involved in private enterprise with disas-
trous results.
I suggest in the name of commonsense and for the benefit of
the~ new hospital in Aspen that the bill be amended to permit the
free enterprise system to function for the overall benefit of the
community as it has in the past.
Senator HASKELL. Thank you, Mr. Jaffee. I must observe that
the Forest Service is already involved in the ratemaking process.
What we are attempting to do here is inject some consistency and
some standards that you can feel and touch so I just make that obser-
vation, but I appreciate very much your testimony.
Mr. JAFFEE. Thank you very much.
Senator HASKELL. Our next witness is Ed Irwin of Aspen.
STATEMENT~ OP ED IRWIN, MARKETING DIRECTOR, BANK OP
ASPEN, COLO.
Mr. IRwIN. Senator,. my name is Ed Irwin. I have been the'
marketing director at the Bank of Aspen for a' period of 31/2 years.
In my opinion, the ski industry is an essential contributor to the
economic welfare of the Aspen community. We will first look at
the direct impact. In terms of dollars, the `ski industry in' the Aspen
6'7-512-76----i1
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area has a payroll of approximately $4 million. In terms of
employment, this $4 million is paid to an estimated 800 employees,
which I consider essential factors of our business community. These
two factors alone in my opinion are ~very significant inputs, not
considering the industry's investment in buildings, equipment and
supplies.
As far as indirect impact, the~ winter visitor in Aspen is here
primarily due to skiing, and according to a survey by Colorad&
University Professor Dr. Goeldner, the average winter visitor
spends from $52 to $53 a day. If we consider skier visits in the
number of 1,356,000, on expenditures per person at $52 per day, this
amounts to an estimated total of $70.5 million pumped into the
Aspen community each ski season. It is the quality of skiing that
attracts the visitor and brings this large dollar volume to the
economic community.
The increase from year to year in the number of skier visits
as a result of the quality of skiing is a factor that provides the
growth of our economic community, as demonstrated by the follow-
ing figures. Commercial bank deposits in 1963 $4,164,000. In 1974,
it was increased to $35,858,000. In terms of sales tax collected in
1963, the figure was $668,000, increased in 1974 to $2 million. Spent
on meals and lodging, in 1963, $3,735,000. The figure in 1972 is.
$19 million as compared to $3 million in 1963, so in 9 years there
was a significant increase.
It has been argued that the Aspen community is a self sufficient.
community, it is economically independent of the ski industry, but
according to . a survey of the summer visitor conducted this past
summer, it is. estimated that the summer visitor spends on the
average of $22 or $23 a* day, approximately half the average'
amount of the winter visitor. This smaller or one-half the amount
of an expenditure for the summer visitor, coupled with many fewer~
visitors in the summertime tends to refute the self-sufficient economic
theory.
From the previously mentioned figures, stating the direct impact.
to the ski industry and the indirect impact to the ski industry,;
I conclude that the ski industry's input is not only essential but.
vital to the economic welfare of the Aspen community. If the ski
industry is subject to over-regulation and price controls, the quality
of skiing, the businses community, the city and county governments
and the Aspen resident will be jeopardized. Thank you.
Senator HASKELL. Thank you. The next witness is Wilton Jaffee,.
Jr.
STATEMENT OP WILTON JAPPEE, TR, W/S RANCH, ASPEN, COLO
Mr. JAFFEE. My name is Wilton Jaffee, Jr. I reside at W/J~
Ranch, Aspen Cob. I am a landlord providing employee housing
and residential housing in the Aspen locality.
Senator, before I start my remarks, this is my. home and this is~
my community, and you have heard many, many arguments on
both sides and you will continue to hea.r them, but there is a lot of'
dissention in. this community and it is unpleasant and it is really'
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not necessary. I don't know if your bill will help solve it, but I
would like to make a request of you-I know it is not in'your normal
course of activities-that before you are through with this hearing
we call a 30-day moratorium on this kind of political activity and
you make a request to the Ski Corporation and your duly and
properly elected officials to somehow get together and work out the
outstanding issues that are causing these kinds of problems.
Senator HASKELTJ. Well, thank you. I am not sure that I have
the right to do that, but I would hope they would, because ap-
parently there are some local issues. The particular one is the
great deal of high feeling on the season pass, and I would certainly
hope that some accommodation could be made there. The rest of
these things that are of more broad applicability don't seem to be
as controversial as that, I mean judging from the testimony of, for
example, Mr. Brown. He did not seem to be terribly upset. He
probably doesn't like a lot of the things in the bill, but he doesn't
seem to be terribly upset about it, so I would hope that that one
particular thing, that the two sides could sit down and work some-
thing out, because that affects an awful lot of people.
Mr. JAFFEE. Senator, I would like to quote a well-known Aspen
philosopher by the name of Spinoza in reference to your bill. 1-le
said, "He who seeks to regulate everything by law is more likely to
arouse vices than to reform them."
With that in mind, I have skied in the Aspen area for many
years and Aspen offers more for your money than most other areas
I know of, which has been covered, both in snow conditions, climate,
also the town. Colorado is definitely the best skiing in North America
in my opinion, and Aspen is one of Colorado's top areas.
Now, to the meat of the matter, in my opinion, it is my opinion
that the Ski Corporation has the right to select for preferential
treatment those categories of its employees that in its opinion
benefit the economy of the area. As an example of the categories
of people that should., be given special passes or discount passes, I
would say would be doctors, ambulance drivers, nurses, hospital
attendant. school teachers, paying members of business groups,
advertising and promotional people, et cetera. The responsibility to
provide discount, ski discount passes, to the general employee in
the community might be a laudatory aim and it might even be in
the community's interest,, but the costs should be borne `by the
owners and partners of going businesses. It is not the function of
the Ski Corporation to subsIdize area businessmen through dis-
count passes any more `than local residents or employees have ~
right to cheap discount for food or shelter.
However, even if one disagrees with my moral and legal position.,
the harm done to this area and the quality of ,skiino and life by
making the rate qi~iestion a political football is devast~ting. Carried
to its logical political conclusion, by forcing the Aspen Skiing' Corp.
to provide a low cost season ticket, Aspen' Mountain would he
skied by local residents, expert skiers, paying a nominal or very
very small rate to the exclusion of a lot of tourists who pay
full price, but are crowded off the mountain by the local experts.
The facts and figures will substantiate the above statement by
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analysis of skiers on Aspen Mountain. During almost any given
time, any kind of random sample a statistician might choose will
show that the vast amount of skiers on Aspen Mountain are expert,
local skiers. Therefore, the conclusion that, we have to draw is
an analysis of the problem of Aspen Mountain, not the problem of
skiers, not the problem of passes, but who skies Aspen Mountain.
Strict attention must be paid to the fact that this whole fury, this
tempest in a teapot, is how a ration skier days on Aspen Mountain
and Aspen Mountain alone. The ski corporation's position in my
opinion as a resident and stockholder is more than generous. I
received my first dividend, after 20 patient years of waiting, whereas
a 31-day resident employee believes the first year he has a right
to use our facilities at a discount. Only a relative few are really
causing all this trouble. I believe the intermediate skiers and be-
ginning skiers are satisfied with the pass system offered by the
~ki corporation which covers all three ski areas.
Last, but not least, to prove my point, a season pass is offered at
the Highlands Ski Area for roughly $2.50 per hundred skier days
~or local residents. Highlands Mountain in any other part of the
Western ski world would be a star attraction in itself; here, it is
taken for granted. In fact, a lot of local people, people who are
expert skiers, consider it barely adequate. We must see, Senator,
this issue as it really is-a fight as to who will ski Aspen Mountain-
economic rationing or po1itic~1 rationing. Is is a group of gentlemen
and ladies who are expert skiers and want to ski a mountain and
are not willing to pay the going rate. There are many other expert
skiers in other parts of the country who would like to ski this
mountain and who will pay the going rate. And that't all it is.
There are no other side issues. How you are going to determine
who is to ski Ajax Mountain is something I can't determine, but
if you have any other system other than an economic system, I
think in the long run the whole area will suffer for it. Thank you.
Senator HASKELL. Thank you, Mr. Jaffee. I want to assure you
that it is not my intent to determine who skis Ajax Mountain, and
I want to remind everybody that lift tickets are basically already
regulated. What we are trying to do is develop objectivity and
uniformity, and that's the purpose of the bill.
I first skied Ajax Mountain in 1946, as I remember. There wasn't
much in the way of ski lifts at that time.
Our next witness is Michael Strang, if Mr. Strang is present,
and in view of the fact that he is a distinguished former Colorado
State legislator there will be no limit on time.
STATEMENT OP MICHAEL STRANG, VICE PRESIDENT, BOSWORTH
AND SULLIVAN, INVESTMENT BANKING, ASPEN, COLO.
Mr. STEA~G. Mr. Chairman, I will be brief because I am no
longer in politics. My purpose in being here today is to talk about
a kind of a technical aspect of your bill which relates a little bit
to the~ investment problem that ski operators face mostly away
from here.
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My name is Michael Strang. I live on the Mill Iron Lazy W.
Ranch in Missouri Heights. I have been associated with the invest-
ment banking firm of Bosworth & Sullivan and Co. for 10 years,
and am presently a vice president and Director, responsible for the
operations of the Aspen and Glenwood Springs offices.
From an investment standpoint, the track record of the ski area
lift companies has been a very poor one. distinguished more by
severe financial difficulties than by shining success. One can point
to Mount Snow in Vermont, Waterville Valley in New Hampshire,
Snowbird in Utah and Telluride and Crested Butte in Colorado, to
name a few that have really had bad times.
Because of the high risks in the lift operating business, I as an
investment banker have never recommended Aspen Skiing Corp.
common stock for any investor-when D.RC. asked me to testify
in this, I said, "I thought you would never ask me"-despite the
fact that this is, in my view, the best-managed lift operating com-
pany anywhere. The national offering of stock in 1973 was at $20
a share. This week it' is about $11.50 a share. I believe yesterday
the bid was $10.73, a rather disastrous beating for somebody who
made that investment in the national offering. It should be recog-
nized thatthis is basically a transportation company, whose function
it is to move people up mountains. There is a finite limit to the
amount of people willing to pay for tickets, `~but recent history has
shown that the cost of providing this service has no apparent
limit.' The present return on equity for the Aspen Skiing Corp. is
about 12 percent. That's all right for a utility company.. It's far
too low, for a high-risk business.
The provision of S.2125 which attempts to resolve the acreage'
problems should help the industry. The proposal that the Secretary
of Agriculture conduct a study of fees charged could possibly be
an improvement over the present situation. Parenthetically, I would
draw the committee's attention to the fact that it is operating ex-
penses, not permit fees, which bear directly on' investment return,
and I think you have already talked about that.
*Mr. Chairman, I would like to mention a few worries I have
with S. 2125 as drafted. The language in section .3 `(2) (c) (b) is
too broad. It imposes an unreasonable burden on the applicant
which could well stifle any further investment. If local, regional,
in this case the county, State or Federal Governments require the
impact data outlined in this section, then the law must require that
each pay its share of the `high cost of obtaining such impact informa-
tion because it can be almost limitless.
The frequent use of the phrase "reasonbie return on equity in-
vestment" in the bill has an appealing ring to it, but one woi~iders
a little who is to define this criterion. The industry? The city
council? The Secretary of Agriculture? The Senate?
The uncertainties raised by those problems could pose grave
threats to the financial future of all ski area operators, the weak
as well as the strong.
I would like to thank you for letting me appear, Senator, and
I would raise one other question. In the bill it requires your hearing
procedure, as the `bill is at `least drafted in `my ver~ion, requires
PAGENO="0162"
158
that you also go through this procedure for a decrease in rates.
I didn't quite understand that. It says decreases as well as increases.
That was just a conclusion.
Senator HA5KELL. Let me ask you a completely irrelevant question
that hasn't come up in these hearings, that has absolutely nothing
to do with Aspen, but as a former legislator I would be interested
in your opinion.
Prices all across the Nation in the last ~0 years, 10 years, whatever
you want to say, have gone up. A great many people are priced
out of the ski market, and not through any fault necessarily of
the ski company. It is happenstance and I think it is a terrible
shame that young people with kids that are just learning to ski
can't afford to take those kids skiing the way I could my kids.
Should, as a matter of public policy, we urge the Forest Service
to issue permits to an organization that will design low-cost skiing?
It won't be as magnificent as the facilities you have on this mountain.
They may be the old T-bar, just so a broader spectrum of the
people of Colorado can learn and enjoy skiing.
I mean this is not in this bill now. It hasn't come up in this
hearing, but it has been something that has been bothering me.
Now, as a former member of the Colorado State Legislature, if
you have a reaction to that, I would appreciate it. If you do not,
I would appreciate it if you would write me a letter.
Mr. SmANG. What I would suggest to you, Senator, briefly, is
that we already have in Colorado one publicly owned ski area and
there is one in New Hampshire. The one in Colorado is the one
that belongs to the city and county of Denver, namely Winter
Park. I started there in 1939 and 1940 and it was cheap. I think what
you propose very definitely makes a lot of sense, but only where
you have a very large metropolitan population.
Senator HASKELL. Oh, absolutely.
Mr. STRANG. And it might tend to have an effect on this problem
here, which is really the rates of local people who have been denied
by the Forest Service a right to have a preferential rate.
Senator HASKELL. Thank you. I appreciate it. The next witness
is John Carison.
STATEMENT OP JOHN CARLSON, ATTORNEY, REPRESENTING ASPEN
SKIING CORP.
Mr. CARLSON. My name is John Carison. I am an attorney for
the firm of Holland and Hart, and we represent the Aspen Skiing
Corp. Before I launch into my prepared remarks, I would like to
share an observation with you, Senator, and that si what I perceive
you to be grappling with is the great issue that the country as a
whole faces, how shall the public lands be used? Are they to be
used on a national basis? Are there to be given special considerations
to local interests? What are the economic rates and bases that are
to apply in determining who uses the land? This rate case here~
and the furor in Aspen is but a reflection of that great sort of
national drama, if you will. I am sure that there are many people
in the Senate of the United States from the Eastern States that do
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not have public lands that would be furious with the concept of
Colorado interest being preferred. They think we have enough
preference perhaps by the* fact that we live midst this great beauty,
and I attended hearings in Washington where the bases of Colorado's
economic reliance oii public lands has been attacked left and right,
and I am sure you are aware of this.
Second, I would like to address a small remark to the problem
you addressed earlier, how can the great bulk of the Colorado
Qitizenry maintain skiing proficiency? I think we all want that. I
don't think that the lift ticket, though, is the problem that affects
the mass of the citizens. I suggest you will not only have to provide
a fairly low cost rate, but you will have to provide skis: You will
have to provide public transport. You will have to provide all the
equipment and gear that are associated with skiing today.
Senator }IASKELL. I don't know if I would go that far with
you, Mr. Carlson. You know kids do hand down skis and ski boots,
like everything else, and when I was talking to Mr. Strang it was
an idea that I have had in the back of my head if we somewhere
in all this vast National Forest had, not gondolas, not chair lifts,
but cheaper facilities, and Mr. Strang is right, it has got to be close
to a centerof population, maybe more folks could enjoy the sport.
Mr. CARLSON. Well, I am with you. I suggest there are a lot of
other costs in going skiing, and as a father of children that seem
to go through boots with too much rapidity, I find those costs to
be the ones that terrify me these days.
Senator HASKELL. I see.
Mr. CARLSON. Senator, you also posed as a principal problem
in this bill the nature of regulation of permittees' rates, and the
tack that you are adopting is that of classically a public utility.
The testimony that's been given here today I think should cause
you to back off and reexamine that whole concept, the underlying
concept of the bill, if you will,, and what I have in mind is the
fact that Aspen competes on the national market for the bulk of
its ski areas. It draws people from~ Dallas. It draws people from
Chicago, from the West Coast. Those people pick and choose over
the Nation as a whole as to where to ski, and when one bears that
bulk of the skiing public that uses Aspen Mountain in mind, one
can recognize that this is not a monopoly. This is an industry
that is subject to intense competitoin. It is an industry that is
not particularly healthy either.
In January 1972, United Bank of Denver found that the average
pre-tax return on investment for ski area operators was 10 percent,
or less than that obtained by your classic public utilities. The
March 1972, Monthly Review of the Federal Reserve bank of
Kansas City reported that 44 percent of the ski areas surveys lost
money. A study entitled "Winter Sports Ski Review" published
by the Forest Service in 1971, stated that 62 percent of the ski
areas reviewed were unprofitable. I think these facts demonstrate
that there are not exorbitant profits made in the ski industry and
there is not sluggish competition. . ,, . . . .
Aspen, in competing for destination-type tourists,' is subject to
this.. national competition. It is subject to~ competition from resorts'
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that do not bear the liability or expense, if you wifl, of operating
on the public lands.
Senator HASKELL. You know-excuse me.
Mr. CARLSON. The principal resorts-
Senator HASKELL. Excuse me, let me give you one thought. Your
time isn't running because I am talking. You are right, Aspen
competes with Vail and probably competes with Switzerland, and
in that sense there is competition, but for people that live in Aspen
However, in the economic surveys that were made by the reserve
it is a monopoly, you know. This isn't lust Aspen, goodness knows. We
happen to be sitting in Aspen. It would be true in other destination ski
areas as well. This is something you have to take into consideration.
Mr. CARL50N. I acknowledge you have to take it into consideration.
You have to also take into consideration what comes first, the
chicken or the egg. Would there have been a community here, but
for the ski development, and there is a point.
Senator HASKELL. Now, go back one step further. Would there
be a community here had it not been for the miners?
Mr. CARLSON. Well, they didn't sustain themselves, as you know.
Senator HASKELL. No, in 1946 it was a pretty small community,
that's right. Excuse me, I did not mean to interrupt you.
Mr. CARLSON. But I am advancing today what I fear or perceive to
be an old-fashioned attitude; namely, that the public welfare is
best served by these market mechanisms that I have described, and
I would urge the Senate subcommittee to take those considerations
into account.
Mr. Brown mentioned earlier some of the considerations that
have been applied in the past in establishing rates and imposing
costs to permittees. I recommend a return to those tactics on the
part of the United States of America, our principal landlord here
in the West. The United States holds the national forest in some~
thing of a dual capacity. it functions as a proprietor of landed
estates of just enormous value. In this role it seeks income consonant
with proper environmental considerations.
The United States is also the government, and as sovereign it
is obligated to protect and advance the public welfare. Now, if
it is the public welfare of the Aspen community to offer a quality
operations here, then the bill must encompass the kinds of rates
of return that allow a quality operation to be maintained, and I
am fearful that if you adopt the classic standard rate of return
there is no place for maintenance of a quality operation.
Another factor that should be borne in mind in determining
the U.S. role in these proceedings, rate proceedings, is what is it
about the U.S. holdings that entitle it to a rate of return? Well,
the United States holds the land on which the snow falls. It has
a monopoly, if you will, in the West on suitable lands for ski areas,,
and it is this monopoly that entitles it to a profit and a return for
its own lands.
However, in the economic surveys that were made by the reserve
bank in Kansas City, it was determined that the actual snow
conditions and the geologic and weather conditions that obtained
in various western ski resorts were not so significant in establishing
PAGENO="0165"
161
profitability in a particular area. The profitability and the quality
of `the area depended on the managerial service, and I fear as a
citizen that when you move to the completely regulated kind of
public utility that Mr. Spinozza of former fame was speaking of,
you suffer a loss in quality and you suffer increased costs that are
ultimately borne by the taxpayer and by the persons who participate
in the rate hearings.
Mr. Brown mentioned one other thing that I would like to call
your attention to, and that is the position of the Forest Service in
this very community. The United States owns the title to approxi-
mately 90 percent of the land of Aspen Mountain. The Ski Corp.
owns in fee simple the remainder of those lands. The Ski Corp.
has attempted numerous times to trade other lands sought *by the
Forest Service has been extremely reluctant to even entertain
serious negotiations. They do not wish to let loose of what is in their
hands a monopoly. By the ownership of their small amount of land
they control an entire industry here in Aspen. This is the tail
cwagging the dog.
Well, I have two very small other points about the bill in ques-
tion that I would like to share with you. Sections 3(a) and 3(b)
allow issuance of recreation permits, embracing the larger acreage
only after consideration of the permit applications by Congress.
Obviously, I agree that large acreage permits need to be confirmed
in cases and should be authorized. However, the procedure called
for by the bill represents in my mind an aberration from normal
patterns of statutory legislation. The legislature should delegate
to an administrator the laws, the enforcement,, and execution of
laws, that it wishes to pass. Sections 3(a) and 3(b) in effect reserve
to Congress those administrative duties and thus combine' the
legislative and executive functions in one branch, and I think that's
an unwise and unhistoric compounding of the separation of powers.
Additionally, it will make each question a large question. The
loser or winer will not have the recourse to judicial review and
will not have the benefits of a firm standard by which they can
measure their actions and by which they can plan their destiny.
Second, I would call your attention to section 3(d) of the bill,
which says that in the event of a permanent termination without
cause, the United States must pay the permittee an equitable con-
sideration for his improvements. As a lawyer with long experience,
not long, in years but intense experience in recent times, I should
say, in dealing with governmental actions affecting citizens' property
rights, I feel very strongly that the best standard is that contained
in the U.S. Constitution. When we talk about cancellation of per-
mits without cause, I suggest that payment be what the Constitution
calls for, just compensation. Thank you, Senator.
Senator HASKELL. Thank you.
Mr. CARLSON. And I wish you well in your efforts to solve the
public l,ands question. That's a dilly.
Senator HASKELL. All right, I have one other question. If anybody
in the audience belongs to Mountain Rescue, would you `please go to
the lobby. Mr. Carlson-
Mr. CARLSON. Yes, sir.
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162
SenatOr HASKELL. You obviously don't care for the rate of return
standard. Do you prefer the standard employed by Tom Evans of
the Forest Service, who refused the Ski Corp.'s interim rate hike
and also lowered the proposed rate hike for this season? Which do
you prefer?
Mr. CARLSON. Am I limited to those two choices?
Senator HASKELL. Well-
Mr. CARLSON. I do not mean to be coy with you, I'm sorry, Senator.
What I am saying-
Senator HASKELL. I would like to know which one you prefer. You
may not like either. Which one do you find less obnoxious?
Mr. CARLSON. If you are going to adopt a standard utility-type
operation, then it must be a reasonable standard of return. I per-
ceive all the problems that have been mentioned here today.
Senator HASKELL. But really, Mr. Carison, do you prefer Mr.
Evans' standards that he employed in refusing the Aspen Skiing
Corp.'s requested rate increase as opposed to a rate of return stand-
ard?
Mr. CARLSON. No, I thought I was saying that if you become a
completely regulated utility, then you must have a reasonable rate of
return. What I am asking you to do is to consider whether the public
will of this country is served by making this the classic regulated
utility. The airlines have faced this problem.
Senator HASKELL. Mr. Carlson, you still haven't answered my
question, and that is, there is the status quo which is embodied in
i\fr. Evans' standards that he employed to refuse your client an in-
terim rate. Now, he employed some standards. Do you find them pref-
erable to the standards that we have been discussing?
Mr. CARLSON. I would think-I thought I was answering the ques-
tion. If we are moving down the road that you described and the
choices are between the standard and the one that you are proposing,
I prefer your standard because it includes a reasonable rate of return.
lTVhat I have tried to do today-
Senator HASKELL. You don't like either?
Mr. CARLSON [continuing]. Is to ask you to reconsider what the
general thrust should be. Now, I don't-I think it woudl be easy to
throw a lot of bricks at the Forest Service.
Senator HASKELL. Now, we have had plenty of bricks thrown at
the Forest Service, but I gather then that what you are saying is at
least you would prefer the rate of return standard over the stand-
ards employed by Mr. Tom Evans, but really you don't like either
of them. Is that basically it?
Mr. CARLSON. That's true, Senator, and I think maybe I have
failed to make it clear. I think you are trying to deal with what is
a gap in the law right now. The Forest Service does not really have
satisfactory vehicle to operate under and I have made that point and
I agree with you. What I am questioning is if we are moving in the
right direction with your bill.
Senator HASKELL. Thank you very much, sir. I appreciate it.
Mr. CARLSON. Thank you, sir.
Senator HASKELL. Mr. James Moran of Aspen. Is Mr. Moran here?
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163
~STATEMENT OP JAMES T. MORAN, ATTORNEY, REPRESENTING
ASPEN SKIING CORPORATION
Mr. MORAN. Good afternoon, Senator, my name is James T. Moran.
I am a member of the law firm of Holland & Hart and we are Den-
-ver counsel to Aspen Skiing Corp.
I would like to address myself briefly this afternoon to the issue
~of the single permittee policy as it applies to ski school operations.
While this is not specifically treated in your bill, it does come in I
suppose when one considers 3(f) and 3(g). In 3(f) the Secretary is
`authorized to issue permits within the ski area for uses not incon-
sistent with the existing permit. That, of course, has been done a
number of times in this area. 3(g) says that the Secretary shall not
issue more than one permit pursuant to this act for identical outdoor
* commercial recreation activities or facilities within an area of less
than. 5,080 acres unless each such permit irrespective of acreage is
`issued under the provisions and procedures set forth in 3(a) (2) (b)
`or (c), which is the Joint Congressional Committee procedure.
The problem comes to focus because of the earlier testimony from
Don Lemos and the independent ski instructors. Now, instruction in
skiing is an integral part of ski area operation in all but the smallest
areas. There is public demand for it. Special use permits typically
authorize the permittee to provide it and area operators generally
`have invested substantial sums in staffing, training, and outfitting
`a ski school of sufficient size to meet the demands of the public. kt
Aspen, for example, a class of private instruction is available at all
levels' from the very first-time beginner to advanced racing tech-
niques. Revenue from ski school operations is included in the base
on which permit fees are computed and paid to the Forest Service.
There are a small number of ski instructors who insist that they
have' the right to teach schooling for hire at a permittee area inde-
pendently of the established permittee's ski school. Historically, there
`are various reasons for this position. One of the obvious ones is that
`an aggressive independent can make more money if he uses the estab-
lished area facilities, the lifts, the trails, the availability of ski
patrol protection, the grooming, the restaurants, for his private
business purposes without payment to the area operator or the Forest
`Service. Now, this was the issue that was litigated in Heath v. Aspen
AS'lciing Corp., and I would commend that case to you for an eluci-
dation of what problems can be created. Another reason for the inde~
`pendent ski instructor is probably the desire to avoid regular sched-
ules' in the real or imagined tedium of teaching beginners. A third
`could be the fact that certain instructors by their past conduct or
misconduct have rendered themselves unemployable by the existing
`ski schools. `
* The problems created by the conduct and `demands of relatively
few independents have been previously discussed at some length in
`correspondence between Senator Hart and myself, and in order to
conserve time at these hearings, I would ask, * Senator, that there
~be here inserted in the record copies of the letter to Chief Forester
John McGuire of March 25, 1875, which was signed by Senator Hart
`and yourself and Representative Schroeder, as well as the letter
PAGENO="0168"
164
dated May 16, 1975, addressed to Senator Hart and signed by me~
and copies of those letters to Senator Hart and signed by me, and
copies of those letters are attached to the written testimony which
I have submitted.
Senator HA5KELL. It will be included.
Mr. MOEAN. You have previously received them. The position of
the. Aspen Skiing Corp. has been and continues to be that meeting
the public demand for ski instruction requires the permittee to main-
tarn a sizeable, highly trained and loyal staff of instructors. By in-
vesting substantial capital in lifts and other area facilities, the per-
mittee creates an ideal and safe vehicle for teaching of skiing. `We
believe that the so-called independent simply seeks to capitalize on
th permittee's investment without similar capital risk on their part,
and that the permittee is entitled to protection against such profiteer-
~ng both in the permittee's own self-interest and in he public interest.
As Judge Winner pointed out in his opinion in the Heath case:
It is clearly in the public interest to have well developed, financially sound
ski areas, and unless investors who are willing to abide by Forest Service
regulations are given some protection against fly-by-nights who have no per-
mit, such investors cannot be expected to risk their capital in the development
of a new and unproven area.
The suggestion now is that there should be multiple permits cre-
ated with specific reference to ski instruction. At least, that is the
suggestion of the independents. This is a more rational approach
than they had 4 or 5 years ago, and I think the Heath case was an
educational process for them, but we believe that the creation of
multiple instructor permits at a single permittee area would indeed
play havoc with the financial planning of permit holders, would
~eopardize existing and planned investment and result in substand-
ard services to the public, and, Senator, I call your attention to your
own remarks in the Congressional Record that it is this type of these
disadventages that you are trying to alleviate by 5. 2125.
`W'e believe that the present policy of entrusting ski instruction to
the area permittee best serves the public, while at the same time
minimizing administrative burden on the Forest Service. If inade-
quacies develop, the single permittee is answerable to the Govern-
ment. Commercial ski instruction at developed ski areas should not
be permitted execpt under the auspices of or with authorization from
the ski area operator who bears the capital risk, the area operating
cOsts and the potential liability for accidental injuries.
Senator, that concludes my prepared remarks. I thank you for
this opportunity. You indicated to Mr. Brown that you might want
to pursue this particular problem a little bit, and I would be happy
to try to.
Senator HASKELL. No, I think you have articulated your viewpoint
on this very nicely and I appreciate it, Mr. Moran. Thank you very
much.
Mr. MORAN. Thank you very much, Senator.
[The letters referred to by Mr. Moran follow:]
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165
U.S. SENATE,
Washington, D.C., March 25, 1975.
Mr..J0HN R. MCGUIRE,
Chief Forester,
U.S. Forest Service,
Washington, D.C.
Re: Use permits for independent ski instructors.
Dear Ma. MCGUIRE: The question of the Forest Service's refusal to issue
use permits to qualified independent ski instructors has been called to our
attention. We are aware of your previous position as expresed in your letter
to Congressman Wayne Aspinall, but the problem has become even more
exacerbated by recent incidents in Colorado. The situation is such that a
review and revision of your regulations and policies concerning exclusively
of winter sports area permits appears to be appropriate.
Recent events involving the Aspen Skiing Corporation and an erstwhile
independent instructor are a cause of great concern. This instructor, Don
Lemos, was recently "arrested on National Forest land by a Corporation
security officer for "trespassing," but the prosecuting attorney refused to file
charges. Mr. Lernos was ostensibly arrested for conducting an independent
skiing leson, although this was never proven. As you may know, the contro-
versy between Mr. Lemos and the Corporation is of long standing, but the
underlying question is not isolated to this single dispute. Confrontations of
this sort have recently occurred in other Colorado ski areas and the problem
is a recurring one. At least one area, Vail, has recognized the need for change
and now agrees to allow qualified independent instructors to operate in the
Vail ski area in return for a percentage of their fee.
Forest Service policy, as we understand it, is to refuse permits to indi-
vidual instructors for use at ski areas under permit to another party, without
that party's consent. This can, as illustrated by the Aspen situation, lead to
abuses of corporate power against overmatched individual citizens. For ex-
ample, not only has Mr. Lemos been arrested under questionable circumstances
and precluded from independent instruction: both he and his wife, who are
highly qualified instructors, have been refuse demployment by the Aspen
Skiing Corporation as regular ski school instructors. The effect of the monopoly
conferred on the Corporation has been to deprive these people, and others, of
the opportunity to pursue their profession.
Such "company town" conditions not only affect the individual instructor
involved: the public's right to choose between competing instructors and/or
techniques is also impaired. The policy of exclusivity is at odds with the
statoutory mandate that the general pulilic be allowed full and free enjoy-
ment of national forest lands.
Furthermore, I can see no compelling justification for conferring monopoly
power over ski instruction on permittees such as the Aspen Ski Corporation
or Vail Associates, as they are financially sound operations whose economic
interests could not posibly be seriously jeopardized by a relatively small
number of independent instructors.
Consideration should therefore be given to revising the practice of granting
only exclusive permits. This can be acomplished by either requiring all finan-
cially sound areas to make provisions for independents, such as those granted
at Vail, or by promulgating regulations revising section 2721 of the Forest
Service Manual to allow individual use permits for qualified instructors oper-
ating in financially sound areas. Appropriate provision should be made to
insure that such instructors meet minimum standards of qualifications,, have
liability insurance, keep adequate records, and if apropriate, compensate ski
areas for the use of facilities by both instructor and pupil.
The need for a review of past policy is both apparent and imediate. Please
advise us concerning your views on this matter.
Sincerely,
GARY HART,
U.S. Senate,
* FLOYD HASKELL,
U.S. Senate,
PATRICIA SCHROEDER,
Member of Congress.
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166
HOLLAND & HAnT,
ATTORNEYS AT LAW,
Aspen, Cob., May 16, 1975.
Mr. GARY HART,
U.S. Senate,
Washington, D.C.
Re: Use permits for independent ski instructors.
Dear SENATOR HART: As general counsel to Aspen Skiing Corporation (ASO)
we are writing in response to your leter of March 25, 1975 addressed to Chief
Forester, John R. McGuire. Since Senator Haskell and Representative
Schroeder joined as signatories to your letter we are sending copies of this.
letter to each of them.
You have referred to the long standing controversy between Don Lemos.
and ASC as an example of the corporate abuse of individual citizens which
results from the current Forest Service policy of refusing to issue special
use permits to individual instructors. You then conclude that the single per-
mittee policy impairs the right of the public to engage ski instructors of its.
own choosing and contravenes the statutory mandate that the general public
be allowed full and free enjoyment of national forest lands.
Against this backdrop you urge the Forest Service to consider policy re-
visions which would either require ski area permittees to make provisions to.
accommodate independent instructors or would provide for the issuance of'
special use permits to "qualified" individual instructors. You state that the
need for review of past policy is both apparent and immediate.
I can appreciate your concern that governmental policy not become a vehicle
for abuses of corporate power or for denial of the public's full and free en-
joyment of national forest lands. I fear, however, that you have accepted.
Don Lemos' "Robin Hood" theory of the independent instructor without fully
considering how the skiing public's interest is best served and, certainly,.
without full knowledge of the facts surrounding Don's particular situation.
The question of whether current Forest Service policy on ski instruction.
is at odds with the public interest has been examined twice by the federal
courts. In Heath vs. Aspen Ski'ing Corporation, 325 F. Supp. 223 (D. Cob.
1971), the Court expressly found and concluded that the "regulations and,
policy of the Forest Service applicable to ski schools are reasonable, author-
ized, lawful and in the public interest". In Sabin v. Butz, - F. 2d - (10th
Cir., No. 74-1060, April 9, 1975) the Court concluded that the relevant pro-
visions of the Forest Service Manual and the single permittee policy are
within the scope of power granted by Congress to the Secretary of Agricul-
ture. `The Sabim case has been remanded to the District Court for a determi-.
nation as to whether the agency gave fair consideration to the possible
monopoly and anti-competitive aspects of the single permittee policy. If the~
District Court concludes that the Forest Service failed to consider all rele-
vant factors the case will be further remanded' to the Secretary of Agricul-.
ture for reconsideration.
My point is simply that the two District Court judges who have weighed'.
the current policy on the scales of public interest have both concluded the
public interest is better served by present policy than by the proposals ad-
vanced on behalf of Mr. Lemos. The posture of the Sabin case will require
yet another examination of the public interest factor in terms of monopoly
and anti-competitive aspects.
Having been involved with this problem for several years I can assure you
that, the Forest Service policy is not premised on a desire to confer economic
favors on the ski area permittees. It is based on long and careful consideration
of how to best serve the overiding interest of the public in the full and free
enjoyment of national forest lands. Your apparent assumption to the contrary
seems unwaranted in view of the fact that the federal courts have so far"
concurred with the Forest Service. The close scrutiny of such problems which.
is afforded by the judicial process is certainly entitled to greater weight than
the mere protestations of public interest which are continually advanced by'
Mr. Lemos' primarily `because they appear to coincide with his own individual
interest. May I respectfully suggest that you will obtain a clearer under-.
standing of the specific elements that entered into the public interest determi-~-
nation by carefully rereading Judge Winner's opinion in the Heath case.
PAGENO="0171"
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You point out in your leter that there are "a relatively small number of
independent instructors". I take it that you have not been furnished with any
evidence that a substantial segment of the general public is protesting about
the unavailability of instruction from these few independents. Certainly we
have never been furnished with any such evidence. By way of contrast, let
me inform you that the Aspen Ski School, with a staff ranging from 200-25G
instructors, annualy provides the following services to the general public:
1. 336,000 hours of class instruction;
2. 16,000 hours of private lesson instruction;*
3. Free ski classes for local young~ters under thirteen years of age;
4. Coaching assistance for Aspen Ski Club junior racing programs;
5. Free instruction and guidance for blind and other physically handicapped
skiers;
6. Continuous training to maintain a high level of technical competence
among its instructors; and
7. Expertise and manpower for the conduct of one or two premier amateur
ski races such as the Roch Cup and the World Series.
To so serve the public demand for ski instruction and related services requires
an organized and efficient staff of ski instructors who are willing to be avail-
able at regularly scheduled times, who are willing to give class instruction
or private instruction, who are willing to instruct first timers as well as ad-
vanced skiers, and who are willing to give additional time and effort to
special events such as packing and maintaining courses for amateur and
junior race events.
On the other hand the so-called independent instructor uniformly proposes
preferential arangements which benefit him at the expense of his professional
colleagues and serve only those few members of the general public whose
desires for preferential treatment coincide with his own. To illustrate let me
summarize the requests which have consistently appeared in the proposals
advanced by Mr. Lemos over the past few years: (1) No fixed~ daytime sched-
ule; (2) Private lessons only; (3) Privilege of "cuting" lift lines; and (4)
Treatment on a par with the top instructors who are within the organized
ski school.
In short the independent instructor seeks more privileges than are accorded
to any ski-school instructor without undertaking any of the later's obligations.
Which instructor better serves the general public?
I anticipate that you may ask: Cannot the independent be accommodated
without disrupting the organized ski school? In theory at least that seems a
possibility which would allow the ski school to continue to serve the public
at large and the independent to serve his own restricted clientele. The answer
is that the theory has been disproved in actual practice. You may know that
for some years past the independent instructor was tolerated and was then
euphemistically referred to as an "underground" `ski instructor. The peaceful
coexistence (another euphemism) might have continued indefinitely but for
the fact that some of the underground instructors, Heath and Lemos foremost
among them, began to publicize their own activities by indulging in some
attention provoking conduct on the slopes and by promoting dissention among
the instructor employees. Their gospel was that the independent gets to keep
the entire fee paid by the pupil and thereby makes considerably more money
than the poor ski school instructor. This caused a great deal of understand-
able concern among ski school personnel, viz "If Heath and Lemos can get
away with it, why shouldn't we all do it?" The problems of maintaining an
organized ski school to meet the overall public need in the face of that
situation should be apparent to you. The policing of the notorious independents
was a direct result of their own agitations among the regular instructors.
Nevertheles, ASC has not closed its corporate mind to the problem. Earlier
this year in evaluating Mr. Lemos' most recent proposals I requested Curt
Chase, director of the Aspen Ski School, to once again consider the matter.
Here is what he wrote to me: "The feasibility of providing some ski school
services through special arrangement with independent operators has been
evaluated in the past and is constantly being evaluated on a current basis.
It `has been and continues to be our feeling that this procedure would not
improve our service to the public, that it would create unacceptable problems
of accounting and control, create a preferential treatment for selected in-
PAGENO="0172"
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strñctors and be disruptive to the morale and efficiency of our instructor
staff."
The single permittee policy has resulted in "the greatest good for the
greatest number". The proven capacity of the organized ski school to meet
the need of the public for competent, efficient, organized and safe ski instruc-
tion should not be subverted to Mr. Lemos' thesis that the public interest
requires his services above all else. Nowhere has the real essence of the public
interest question in this matter been captured in one sentence than by Circuit
Judge McWilliams, who wrote: "It is abundantly clear to me that the Forest
Service was of the view, which I believe to be a rational one, that, all things
considered, a single permittee policy, as opposed to a multiple permittee
policy, was more advantageous for all concerned, except possibly these
plaintiffs, and others similarly situated, who in reality simply seek to benefit
from the work of others" (Separate opinion, concurring in part and dissent-
ing in part in Babin~ v. Butz, $upra.)
Turning now to the specific facts surrounding Mr. Lernos' personal situation,
I don't believe that you have been furnished with an adequate or complete
summary. This is not a case in which the corporate bully has abused the
overmatched individual citizen as you have apparently assumed. I cannot, in
this letter, detail the entire history of the Lemos-ASC controversy but I can
summarize some of the pertinent facets that you may not be aware of.
To began with Mr. Lemos was given employment as a contract ski instructor
with the Aspen Ski School during the 1963-64 season. As the season prog-
ressed, the school became concerned over a rash of pupil accidents occurring
in Mr. Lemos' clases, including two broken legs in a one week period. Obser-
vation by qualified supervisors established that he was pushing or over-
skiing his pupils relative to their ability and was exercising poor judgment
in the selection of terrain. He was apprised of this and, although he dis-
puted the supervisory opinions, did begin to slow his closes down somewhat.
He was counseled about his responsibility for the safety and welfare of his
pupils. On the evening before the 1964 Roch Cup he announced that he was
going to take the following day off to watch the competition. He was re-
minded that his class was returning for continued instruction and was told
that he was expected to be available to teach them. Both literally and in
effect he told the ski school to "shove it" and did not report for work the
following day. Accordingly, he was terminated as an employee.
He then moved on to Aspen Highlands where he was engaged under some
sort of special arangements made with Fred Iselin who, at that time, was
Aspen Highland's Ski School Director. The exact details of the arrangement
were not known to the four Highlands supervisors who are now the' directors
of that ski school. Apparently the agreement was similar in certain respects
to Mr. Lemos' current proposals fOr independent instructors. By the following
year Fred Iselin had left Aspen Highlands and his successors did not re-
employ Mr. Lemos.
There then followed several years of more or less open underground teach-
ing by Mr. Lemos~
In the fall of 1969, Mr. Lemos approached ASC with a request to resume
teaching under the auspices of the Aspen Ski School. He was offered employ-
ment on the same basis as all other instructors in the school. Mr. Lemos in-
sisted that he had to have special privileges and concessions that were not
extended to the other instructors. Management was unable to accede to such
requests and Mr. Lemos chose not to accept an offer of employment on the
same terms as were offered to all others.
During the 1970-71 season, Mr. Lemos for a short while taught at Aspen
I-Iighlands under fee-split arangements which he and Mr. Heath had sep-
arately negotiated with the Highlands management. These arrangements,
which are described in the Hcatlb decision, were terminated prior to the end
of the season because of conflicts with the regular ski school. The arrange-
ments with Jack Heath were terminated at about the same time and he
promptly commenced suit against Aspen Highlands, Aspen Skiing Corporation
and the principal officers of each. Heath `v. Aspen ~Skiing Corporation, supra.
At the beginning of the 1971-72 season, Mr. Lemos again approached, the
Aspen Ski School, this time with a free-lance type of proposal in which he
would teach only his own clientele, would arrange his own time schedule,
PAGENO="0173"
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and would not be available for class instruction or any of the other regular
duties undertaken by the other instructors. This proposal was not accepted
by the Aspen Ski School. The same basic proposal has been submitted and
rejected several times since. In the interim there have been lift-line scuffles
and various lawsuits of which you probably have some knowledge.
Mr. Lemos has repeatedly turned down all offers of employment on a basis
consistent with other instructors. He has requested special treatment that
canot in good conscience be given to him without being given to the entire
ski school. The preferences which he desires, if applied uniformly to all in-
structors, would make it imposible for the Aspen Ski School or any other
ski school to give adequate instruction to the public.
With regard to Mrs. Lemos, you should know that about 3 years ago she
was engaged as an apprentice instructor by the Aspen Ski School. She was
assigned to teach at Cbristmastime and worked for two days. The next day,
the busiest of the season, she failed to show up for work and was not seen
again for the remainder of the season. This past course of conduct was a
strong factor in ASC's decision not to employ her this season.
As with any teacher in any school, the qualification to instruct is not solely
determined by proficiency in the subject matter. An appreciation and willing-
ness to undertake all of the responsibilities of the profession to the public
and to the employer are also required. In these areas Mr. Lemos has fallen
so short that it has completely outweighed any technical proficiency he might
possess. The independent instructor experiment has failed not on account of
permittee abuse of power nor on account of "company town" attitudes. It has
been rejected because of the deleterious effect which such arrangements have
had upon the ability of the organized ski school to effectively serve the public
interest. Mr. Lemos has played a leading role in reinforcing the wisdom
of the single permittee policy.
I hope that, in the future when you decide to espouse the cause of the
seemingly oppressed, you will spend more time collecting all of the facts in
lieu of accepting the protestant's version as the whole truth. Contrary to the
version suplied to you, Mr. Lemos was not arrested on National Forest land
but on private land leased to ASC. We are also advised through recent inquiry
that Vail does not have an independent instructor program as represented
in your letter.
Should you desire further information on any of the matters discussed in
this letter or in your letter of March 25, we will be happy to provide it.
Yours very truly
JAMES T. MORAN.
Senator HASKELL. I am going to go a little bit out of order from the
witness list. Apparently the mountain rescue unit does have an emer-
gency and Mr. Stapleton is part of that unit and he has made a request
to appear at this time, so if there is no objection I would ask Mr. Don
Stapleton to come forward if he is still here.
STATEMENT OP DON STAPLETON, PRESIDENT, ASPEN CHAMBER OP
COMMERCE, ASPEN, COLO.
Mr. STAPLETON. Thank you, Senator. My name is Don Stapleton.
I was born and raised in Aspen, approximately 33 years ago, and I
would like to acknowledge the Aspen Ski Corp.'s cooperation with and
participation in the Aspen Chamber of Commerce in the following
projects and events.
First of all, what we call Winterskol Ski Day. The Aspen Ski
Corp. allows the chamber of commerce to go to Snowmass and sell
old Winterskol pins for $5. This enables the purchaser to ski all day
long. Last year this money, which amounted to $1,200, was turned
over to the Winterskol Fund. I might add at this time it takes about
$6,000 to put on Winterskol.
67-512 0 - 76 - 12
PAGENO="0174"
170
The employee orientation seminar is something we have worked on
for several yeas. In this seminar, the chamber tries to inform all
the employees of Aspen about Aspen itself, how much snowfall we
have, the typical questions that the employees might be asked by
tourists. This employer, the Aspen Skiing Corp., was the primary
contributor to an orientation film called, "We're the Hosts," which
is available through the Aspen Skiing Corp., and we will use this
this fall in our seminar towards all employees.
June Days, the Aspen Skiing Corp. always promotes and funds the
golf tournament. This year it conflicted with Aspen arts festival and
we did not have it.
The Aspen employee discount ticket, last year this ticket was spon-
sored by over 40 businesses in and around Aspen and it offered spe-
cial discounts to chamber members and their employees. This pro-
vided a discount ski pass which cost $60 to purchase and an added
daily use fee. The pass was set up for the purpose of improving em-
ployer and employee relationships and to help relieve some of the
burden that is placed on the employee that lives in this area because
of our high cost of living. Last year we sold over 3,000 of these ski
passes and it generated $13,000 for the Aspen Chamber of Commerce.
This year, Senator, I believe we are the recipients of a $200 ski
pass, $100 of it to be refunded at the end of the ski year. It would
cost $8 a day to ski on Ajax, $5 to ski at Highlands and $3 to ski
at Buttermilk and Snowmass. I believe that this pass for a business
community is well accepted by the chamber and chamber members,
and the Chamber of Commerce, as you know, is not set up to set
guidelines for the control of prices, et cetera. For the business com-
munity, for those that ski Buttermilk and Snowmass, it is a fine
pass. Thank you, Senator.
Senator HASKELL. Thank you very much. I am sure you under-
stand that nothing in this bill would prevent the corporation from
continuing those worthwhile services. Thank you.
Is Mr. Moran still in the audience?
SPECTATOR. He is in the lobby.
Senator HASKELL. Mr. Moran, I would just like to get one ques-
tion on the record. I can ask you from here. I am told, but I have
never skied in Europe so I don't know, I'm told that in Europe it
is com,rnon to have independent ski instructors. Am I right or
wrong?
Mr. MORAN. I don't know, Senator.
Senator HASKELL. You don't know either? Well, we will have to
ask somebody that does. All right, thanks a lot.
Mr. DAVE FARNUM. Senator, could I answer that?
Senator HASKELL. Yes.
Mr. FARNUM. There are independents, but they are normally af-
filiated with a ski school. Having been with Aspen Highlands Ski
School for a number of years, we have ski instructors from Vail,
Steamboat Springs, and they introduced themselves and we always
gave them a pass.
Senator HASKELL. Well, I will get exactly what happens in Eu-
rope. What is your name so the reporter can have it?
Mr. FARNUM. Dave Farnum.
PAGENO="0175"
171
Senator HASKELL. Thank you, Sir. Our next witness is Wava
Turner of Aspen.
STATEMENT OP WAVA TURNER, COORDINATOR, SCHOOL PROGRAMS,
ASPEN SKIING CORPORATION
Mrs. TURNER. Thank you, Senator. Senator, I am Wava Turner.
I came to Aspen in the fall of 1961 as an employee of the Aspen
School District, and my first task here is to give a little bit of back-
ground on the ski programs that we. have generated `along with
Aspen Skiing Corp. and the Highlands at times, of course, for
our students in our schools. When I came here I became involved
in the Aspen School Ski program which was sponsored by the
schools, Aspen Skiing Corp and Aspen Highlands Skiing corp. I
have remained active in the skiing programs during the past 14
years and now coordinate the school programs for the Aspen Skiing
Corp. This involves student ID's, student rates, et cetera.
The Aspen Skiing Corp has given special discount rates to stu-
dents and teachers during the years. Our students have had free
instruction and lift privileges. At one time the instruction was
furnished by Aspen School teachers who received a complimentary
pass for their services. During the past 5 years, the instruction and
lift have been taken care of through the Aspenaut program. This
program provides free instruction by Aspen Skiing Corp.'s certi-
fied instructors and lifts for all Aspen children ages 6 through 12
during Saturdays in January and February.
The following is a summary of the last 5 years of student rates
and teacher discount rates. In 1970-71, teachers skied for one-half
price, either daily or season pass. Students through high school
were permitted child rates, $4 daily.
In 1971-72, the teachers skied for half price by purchasing a $20
use ticket or a three area season ticket. Students through high
school were permitted child rates of $4 daily at Aspen Mountain
and Snowmass and free skiing all at Buttermilk. Students also
were given a special rate on a season ticket.
In 1972-73 teachers were permitted to ski at student rates at
Buttermilk and $4 at Aspen Mountain and Snowmass. Students
through high school were permitted to ski for $2 at Buttermilk and
$2 at Aspen Mountain and Snowmass.
In 1973-74, teachers were given a four-area complimentary dis-
count card which permitted them to ski for $5 per day. Students
through high school skied Aspen Mountain for $5 and Buttermilk
and Snowmass for $3 a day.
Last year, teachers were eligible to purchase a $60 discount card
which permitted them to ski for $5 a day. Students through high
school were permitted to ski Aspen Mountain for $5 per day and
Buttermilk and Snowmass for $3 per day.
I feel the Aspen Skiing Corp. has tried to make skiing possible
for our students and teachers.
Perhaps this has at least in part been possible by subsidizing
student-teacher programs from regular daily ticket sales and season
PAGENO="0176"
172
passes. We have been fortunate in having some of the finest mainte-
nance and help from the employees of Aspen Skiing Corp. in
working with our youngsters out on the slopes. We also have had
many of our students employed part time and full time. I feel that
I have always had a congenial working relationship and good co-
operation in the years that I have been in the school program.
Hopefully, the Aspen Skiing Corp. can be considered a positive.
part of our community and can function as a dynamic force in our
area. Thank you.
Senator HASKELL. Thank you, ma'am, very much indeed. The
next witness is Betty Moore of Aspen.
STATEMENT OP BETTY MOORE, ASPEN, COLO.
Mrs. MOORE. Senator Haskell and few remaining long-suffering
fellow skiers. My name is Betty Moore. I have lived in Aspen for
nearly 20 years, having moved here with my husband and small
children in 1956. We had discovered this place in 1952 while on
our first ski~ vacation, after which we couldn't wait to abandon
Long Island and move here, hoping but not at all assured that we
could make a living in the precarious economy of this remote resort.
Naturally, we were looking forward to the "good life," super
skiing in the glorious mountains of Colorado, but unfortunately we
could not afford to go sking all day and every day, even though it
was pretty cheap and there was plenty of space on the mountain.
We had to build our little lodge business, doing our best to entice
customers through assiduous letter writing at the chamber of
commerce and half-inch ads in "Skiing," magazine and sending out
reams of postcards every time it snowed, and gradually these poli-
cies succeeded in their aim of getting us off the poverty level. Our
business prospered and so did the economy of the town, and I sup-
pose the skiing corporation.
But, right at the beginning, when a season pass cost $75, I liter-
a1ly couldn't afford one, and then in 1961 as prices began their
gradual upward erosion, there was a typical Aspen crisis precipi-
tated by a sudden hike in children's lift rates from 75 cents to $2
a day. Local mothers banded together in outrage. Why, it was
traditional that school kids got to ski free every Wednesday after-
noon. How could the skiing corporation ruin their weekend fun?
I too was indignant. With two children clamoring to ski on week-
ends this was a cruel blow, but when the affair mounted into a
street march to burn D.R.C. Brown in effigy, I began to wonder,
who did we think we were? What had we done to deserve a subsidy
for our skiing pleasures? Why not demand also a discount from
the grocery store and drugstore and sport shop?
Well, some time went by and each year our expenses mounted,
but so did our income, and each year, whether it is $75, $175, or
even $250, the price of the season pass still seems worth struggling
for, a special privilege. It was fine to ski into the lift at any time
of day for a few runs, flash that magic card and roll away up the
mountain with no demeaning wait in a ticket line and no drab
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passing filthy lucre. With a glorious "in" feeling to be a resident
of this blessed valley, to ski better and more often at less cost than
all the poor souls who had not arrived yet.
But "yet" is the key word to making my point. They hadn't
arrived yet. If my story up to now has sounded somewhat trite, it
is because there is nothing unique in our experience. We only had it
sooner. Almost everybody who arrived at Aspen after we did felt
exactly as we had, what a place to lead the good life, and as the
sixties boomed on, more and more and more lucky people could
afford to move here, too. Obviously, the effects have been exponen-
tial. Real estate values, businesses of every sort and, of course, local
population problems have multiplied and expanded beyond our
ability to comprehend. Still the skiing corporation looms over us
all, and their profit figure is one statistic we do seem able to grasp.
Unfair. Exorbitant. How dare they get rich at our expense? We,
the beautiful people of Aspen, rebel.
OK, we are rebelling. We, and how many others? Actually, there
were 1,125 $250 season pass holders last year, and to tell the dismal
truth, for several years we privileged folk have been jostling fo:
space on Aspen Mountain with some almost outnumbered, paying
customers. Evidently, what has finally happened is that the powers-
that-be have counted us up, measured the space available, and de-
cided that the days of wine and roses are over.
This is very sad. My own sense of personal loss is acute. Twenty
years of the good life ends and this season I will have to queve up
pay $11 a day along with all the other owners of the national
forest.
But, wait. This is a democracy. Why can't the Forest Service
prevent this dismal ending? Why don't, we pass Senate bill 2125
and legislate ourselves healthy, wealthy, and wise?
Our local government wants to help, too. Stop growth, they say,
and keep up the quality of life in this valley. Maybe the govern-
ment should buy up the sking corporation and let the bureaucrats
run the areas?
Well, if government is capable of such benevolence, why hasn't
it held down the price of everything else? Food, housing, fuel,
manufactured goods, even tennis and golf are now luxury past-
times. What's so different about skiing?
I'll tell you what. The skiing corporation has kept-
[Bell rings.]
Mrs. MOORE. May I finish, sir, 2 minutes?
Senator HASKELL. No. I'm awfully sorry. We would have to ex-
tend it for everybody.
Mrs. Moom~. Is that kind, when you allowed everybody from the
Roaring Fork Citizen's group to finish everything they chose? I
could finish in 11/2 minutes, sir?
Senator HASKELL. Go ahead. I did not let them speak `as long as
they chose, but go ahead.
Mrs. MOORE. Well, I will tell you what's so different about skiing
and the cost of skiing is .the skiing corporation has kept it different
to a degree. The cost of an Aspen ski ticket has not gone up nearly
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so much as the cost of everything else, and that's documented al-
ready. What I have to point out in all honesty is in my 20 years in
Aspen I haven't seen much else as well managed as the skiing
corportion or as generous. That traditional Wednesday free ski
afternoon of the 1,950 schol children has grown into the Aspenaut
program of today, when at least 300 kids get to free ski all Satur-
day with free coaching from the ski school instructors and the Aspen
Ski Club receives $25,000 cash a year from the corporation to sub:
sidize their racers, and all kids, not just local ones, get to ski
Buttermilk or Snowmass for $3 a day.
Now, if anybody knows where they can beat that, maybe they
better go there. As a matter of. fact, if all the people who want
something for nothing left Aspen, then many of our problems would
disappear with them, and if all these people refused to vote their
selfish interests foolishly, legislation like Senate bill 2125 would
die in committee.
Senator HASKELL. Thank you very much.
Mrs. Mooim. Thank you.
Senator HASKELL. Our next witness is Mr. Ray Kashinski.
STATEMENT OF RAY KASHINSKI, ASPEN, COLO.
Mr. KASHINSKI. Thank you, Senator Haskell. My name is Ray
I have lived in Aspen for 14 years. I am married and have three
small children, 5, 7, and 9, and it is the children that prompt me
to come here. I am going to deviate somewhat from my prepared
statement, because Wava Turner has gone over this. I would just
like to express that my children have always enjoyed very favorable
ski rates, as outlined by Wava, and I appreciate this and I would
hope that any intervention in the price-setting policy would not
jeopardize favorable rates that have been extended to the children.
I have no problem with the adult rate, because I feel that adults
are able to make the value judgment. As Mr. Brown brought out,
I do not drive a Cadillac either. I also have a problem with my
grocery bill, but I am able to make my value judgment myself.
It is, however, difficult for me to explain to my children when I
can't afford to send them skiing when the kids next door can.
Fortunately, I do not have to make that value judgment.
I would also like to say that it has become apparent that rising
prices have become a major portion of this hearing. I do not think
that was the original intent, but it seems to me that rising prices
are in general caused by the inflationary spiral which is brought
about by Government spending. I would hope that Senator Haskell
would do everything he could to cut down a little bit on Govern-
ment spending.
[The prepared statement of Mr. Kashinski follows:]
STATEMENT OF RAY KASHINSKI, ASPEN, COLO.
Senator Haskell, let me take this opportunity to thank you for the oppor-
tunity to testify concerning the ski industry and particularly the Aspen Skiing
Corporation. My name is Ray Kashinski. My wife and I have been Aspen
residents for 14 years. We have three children, aged 5, 7, and 9. My wife and
PAGENO="0179"
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the children are avid skiers as I used to be, but the requirements of earning
a living leave little time for skiing.
In any event it is my concern for the children that prompts my testimony
before this subcommittee. The Aspen Skiing Corporation has, ever since my
oldest child began skiing, offered skiing to children on a no cost basis or at
very reasonable rates. Let me outline these rates.
The Aspenaut program under which children from ages 6-12 are provided
with a free ski ticket and free ski instruction on Saturdays from December-
February. It is a fine learn to ski program as well as a recreational ski pro-
gram as the children progress to the point where they require less instruction.
One of my children is involved with the Aspen Ski Club racing program
and is provided with free tickets on race days.
With all the free skiing opportunities, I estimate that I only have to pay
for about 1/2 of the days that my children ski and then it is at the very
nominal rate of $3.00~ per day, which I might add, is down from $4.00 per
day during the 70-71 ski season. The one exception to the inexpensive rates
is Aspen Mountain where no children's ticket is offered except to Aspen school
students who have a $1.00 school identification card. This financial deterent
is in my opinion good as Aspen Mountain is no place for inexperienced skiers
due to the excessively fast and reckless skiing which prevails there. This
situation will probably improve in the future due to the fact that the Aspen
Skiing Corporation has changed its season pass policy.
In summary, let me say that I am concerned that intervention in the rate
seting process might make the Aspen Skiing Corporation less disposed or less
able to continue its favorable treatment of children under 12.
At this point in time, I am not concerned with the adult lift rates as I
believe them to be fair in relation to other recreational pursuits. Also, adults
are better able to make value judgments concerning how they spend their
money; childrn, however, are not and I feel that the Aspen Skiing Corpora-
tion's pricing policy and free skiing has made all children in Aspen equal so
far as being able to ski is concerned. Parents in Aspen do not have the diffi-
cult job of telling their children that they can't go skiing for financial reasons
because there are plenty of free opportunities or the reasonable $3.00 ticket.
Senator ETASKELL. Our next witness is Mr. Sim Thomas of the
Aspen Ski Club.
STATEMENT OP SIM THOMAS, REPRESENTING THE ASPEN SKI
CLUB, ASPEN, COLO.
Mr. THOMAS. Senator Haskell, I seem to be joining a parade on
this one issue, `and I would like to call to your attention perhaps
right off the bat my last paragraph, which is possibly unfair, as
clarified, but it might not be if you consider it in terms of omission,
and it also concerns rates to some extent.
I am manager and Alpine program director for Aspen's amateur
ski competition programs. I am speaking as the official representa-
tive of the Aspen Ski Club and the Aspen Skiers Educational
Foundation at the request of the Aspen Skiing Corp.
The Aspen Ski Club since 1937 and with the Aspen Ski Club
Educational Foundation since 1963 has been providing our com-
munity with Alpine and Nordic ski competition programs. Over
200 youngsters compete on every level from the local Aspen Cup
circuit to the world Cup, World Championship, and Olympic
Games.
Most of Aspen's youngest skiers begin their participation in the
sport in the Aspen Ski School Aspenaut program. Those interested
in competition progress through the Aspenaut Cup circuit to the
club's local Aspen Cup program and on to the regional, collegiate,
PAGENO="0180"
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national and international series. They are coached by the founda-
tion's staff from the time they start in the Aspen Cup.
Competitive skiing is an incredibly expensive sport, and through
many individuals and businesses in the Aspen community con-
tribute enormously to the development of our programs, these pro-
grams quite simply could not exist without the support of Aspen's
skiing corporations. I am including both. Aside from outright do-
nation of between $16,000 and $25,000 by the Aspen Skiing Corp.
for each of the last 4 years, the skiing corporations have made lifts
available free or at discounted rates for training or racing for a
cash value easily exceeding $250,000 for the last 4 years. This figure
does not include the contribution of services of a part-time coach
by the Aspen Ski School, the construction and maintenance of a
racing trail for our use at Buttermilk Mountain, the preparation
and periodic closing of other trails for top level competition, the
services of specialists in skiing-related expertise, and I could con-
tinue on for another 5 minutes.
Much has been stated recently about the relative importance and
value of organized amateur sports. I think there has been quite a lot
of attention paid to that recently within the Congress and the
Senate, and I think this is a personal aside that it might well be
worthwhile spending a little more time on it. Quite obviously, we
believe strongly in the educational possibilities and opportunities
for direction and accomplishment available in sports. The Aspen
community's competitive skiing programs provide each participant
a chance to discover his or her individual level of excellence and
the opportunity to choose what role athletics and physical fitness
should play in his or her life. These programs are among the very
finest in the country and their high quality is largely due to the
strong support of the Aspen skiing corporations. No other sector
of the community either seems willing or able to give such extensive
support.
Therefore, Senator, we urge you to consider the adverse effects
and again I think this might be unfair in view of what you have
explained before, in view of the bill not meeting this particular
problem head-on, but again I think omission might indicate it
might be good to have something involved in this.
Senator HASKELL. I `appreciate-
Mr. THoMAs. We might consider the effect a bill by omission, if
I might put it that way, would have on athletic programs in the
whole.
Senator HASKELL. I appreciate your statement. I am a little
puzzled by a little of the recent testimony. This is not a hearing on
rates. It is not a hearing on the Aspen Skiing Corp. It is a hearing
on whether the present system employed by the Forest Service to ad-
minister ski facilities and services permits is satisfactory or is not.
Mr. THOMAS. If I may, the only thing I could say is our ignor-
ance of the possible ramifications of a possible bill dictate us to
bring to your attention-
Senator HASKELL. Right.
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Mr. THOMAS. [continuing], that we are very concerned about our
ability to continue with such a program. I believe very strongly
in its value.
Senator ETASKELL. I understand. Thank you very much indeed.
Our next witness is Ray Bates of Aspen.
STATEMENT OP RAY BATES, ASPEN SKIING CORP., ASPEN, COLO.
Mr. BATES. Senator, and the few hardy souls that are left: My
name is Ray Bates. I am a resident of Aspen and employed by the
Aspen Skiing Corp. as a lift operator in the winter and as a lift
construction supervisor in the summer. I started to work for the
corporation in December of 1947 and I left the company about
1955 to work elsewhere. In December of 1966, I returned to work
for the company as a lift operator in the winter and on lift con-
struction in the summer. The pay in 1947 was $1 an hour, and
there was no such thing as overtime then. In 1966, the hourly wage
scale was $2 per hour for the first-year employees, $2.25 for the
second year, $2.45 for the third and fourth years, and $2.50 for
the fifth year and over. I can't remember what the fringe benefits
were, but they were minimal at best.
Presently, the lowest hourly rate is $4.10 per hour and the corn-
fringe benefits are substantial. All my Blue Cross, Blue Shield and
major medical insucance is paid by the present company. In addi-
tion, the company pays the complete cost of my disability and life
insurance premiums. The annual cost of these items to the com-
pany is $372. The company pays the complete cost of my pension
plan and the annual cost of this to the company is, I believe, ap-
proximately $939.
The company's sick leave policy allows me to accrue up to 12
days of sick leave and this leave commences on the second day
pf absence when I am sick. I am also entitled to 3 weeks of paid
vacation, and after 10 consecutive years of seniority, I am entitled
to a month's paid vacation and to an annual $500 bonus that is
increased $50 a year after every additional year of seniority.
Also, employee housing is provided for new employees who are
unable to obtain housing elsewhere at extremely reasonable rates.
I believe the company has approximately $400,000 tied up in em-
ployee housing units.
Presently, the lowest hourly rate is $4.10 per hour and th com-
pany has a policy of increasing the pay scale on May 1 of each
year commensurate to the increase in the Consumer Price Index.
This year's wages were increased 12.2 percent.
I feel it is necessary to point out these facts since the Aspen
Skiing Corp. is coming under constant criticism. Aspen is an expen-
sive place to live in and the Aspen Skiing Corp. makes every effort
to pay its employees well. In my opinion, the Aspen Skiing Corp.
is about the only business in town that pays its employees a living
wage.
Some of the people in this community expect the Aspen Skiing
Corp. to subsidize them and their employees with various types
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of local discounts. For the most part, these people could care less
what the tourist has to pay and their only concern is that they pres-
sure the Aspen Skiing Corp. into offering give-away skiing to the
local community. In large part this group is made up of transient
people who have no stake in the community and have only their own
selfish interest at heart. Thank you.
Senator }IASKELL. Thank you. Our next wetness is Francis
Whitaker.
STATEMENT OF FRANCIS WHITAKER, ON BEHALF OF THE ASPEN
SKIING~ CORP.
Mr. WHITAKER. I would like to speak on behalf of the benefits
offered by the Aspen Skiing Corp. to a number of groups in the
community, and one that I don't believe that has been mentioned
yet, and that's the senior citizen, youth, old age, those who devote
much of their time to the community and the city council, county
commissioners, hospital workers and so on.
It has been my privilege to receive some of those benefits while
2 years as a city councilman and 3 years as a senior citizen. While
these programs do not pay in the revenue received versus the bene-
fits we get, it is my impression that they are mostly paid for by
the one-day ticket purchaser, t'ae visitor skier. I would very much
regret having the Aspen Skiing Corp. hay to drop these programs
due to the present attempt to rollback the price of any type of
lift ticket.
If I may give a word of advice to those most critical of the
Aspen Ski Corp. it would be, "If you want to run it, buy it."
Thank you.
Senator HASKELL. Thank you, sir. The next witness is Kenneth
Moore of Aspen.
STATEMENT OF KENNETH MOORE, ASPEN, COLO.
Mr. Mooiu~. Thank you, Senator. I am going to depart from my
prepared text a little bit because the distinguished Smoky Bear
hasn't spoken this morning. I wear many hats. I should have my
Smoky Bear hat on today.
I am a member of the White River advisory council. This is un-
official. I am not speaking for the councol and, of course, not speak-
ing for the Forest Service, but I hate to see a bear made into an
underdog. Let me take you through Aspen in terms of the bill
through a bear's eyes.
Now, when the bear looks at the bill and looks around Aspen
and tries to put it together, he sees in here an assessment of the
extent and nature of such development, skiing, its compatibility
with other uses and the protection of the resources of such forest
reserves and private lands as determined through Federal, State or
local planning processes. Well, this bear has been looking around
Aspen very hard for 2 years and has yet to find any planing.
Now, we get into the accounting field. This bear can tell `you that
the other night the city council met and only one citizen appeared
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at that city budget meeting, and that citizen's comments were not
put in the paper. It is pretty hard for a Forest Service employee
bureaucrat who has been trained in the great outdoors, who is really
not brought up in any way, shape or form into top management,
especially as it applies to Government administration, and then he
~says, "Why me? Why do I have to do all this sort of thing? Why
do you have to go to the Federal Government and find out what
they have spent, and the State government and the county govern-
ment?" There are 22 taxing entities in Pitkin County. Never have
I seen all of those budgets of those taxing entities in one place, and
to my knowledge no one has ever tried to make sense or evaluate
each one, and no one has ever put them in concert to find out what
the overall impact would be.
Putting 63 counties in the State, the bear looks down at Denver
and says, "Boy, they must be in a mess down there. We don't know
what we are doing and we are the most sophisticated county."
Smoky Bear can't go out and straighten out the citizens and can't
get the citizens to go to the city budget meeting, but in order to
get the full extent and meaning of the bill it implies these struc-
tures which have been mentioned and these processes such as audit-
ing, economic and social and environmental exist. I would be very
pleased if any number of the audience or the Senator's staff could
present me with any such accounting.
Now, when we get into the problems of Aspen, Dwight Sheilman
mentioned a very good study. I attached a copy of it in my report.
It is by John Gilmore and Mary Duff and it is on "Growth Manage-
ment by Consensus in a Boom Community," and I will tell you
my interpretation of it. It says given a lack of good data on this
and many other aspects of Pitkin County, there is a real need for
the staff and business community to cooperate in building a good
data base. It goes on to say some of the problems have been aggra-
vated, not by mismanagement but by nonmanagement.
It would be interesting for you to realize in 1974 we had a growth
in Pitkin County of what? Smoky Bear goes down to the court-
house and says, "How are we?" They say, "We haven't got the
figures again. Maybe by September." He goes down and asks the
same question. They still don't have the indices of growth. They
don't have any statistical matter and we are 9 months into 1975, so
really Smoky Bear can't get everybody hot and interested about
facts that just aren't there.
Now, auditing in Aspen isn't a standard procedure. It is a double
standard. We don't have the Ski Corp. and the Forest Service to do
a lot of educating, and I am sure nobody has ever put together the
Federal programs that work in this area over the past 12 years
and their effect in concert, so to go to Smoky Bear and expect him
to solve everybody's problems on all these levels is not quite
realistic.
It is interesting to note that on impact studies, the county has
written to the State asking for powers to levy a local inconie tax
and use taxes and real estate transfer taxes, and they want more
States and revenue sharing and subsidies and greater and more
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flexibility in the laws. Even if we had the adverse effects known,
you could politicize it and with an applause meter, if we had one
in this room today or a vote, we could vote a policy that wasn't
prudently sound financially, just like New York City did, so reason
and reasonableness and structures really can't be elected. I mean
it is common sense. They are all here.
Local government has no plans to allow for more ski develop-
ment in Pitkin County. There are no evidences of any growth of
more ski areas. Yet they say they are going to grow at 3 percent a
year.
Well, if you look at the hospital service plan, you will find that
the residential growth, because it is already zoned, will exceed the
present ski capacities in 1980, and from then on increase like crazy
until it is like 50,000 people in 1995 and the projected skiing is like
36,000 people, and the 36,000 people skiing in Aspen came from the
airport master plan, which is a federally supported, environmentally
impacted, approved, accepted local statement.
What in the world are we going to do to the tourist industry when
the resident population is clearly planned to continue to grow and
outgrow the tourist and the ski facilities?
So, the sking is only one part of it. We are a full-time community.
We are an all-year-round community. In addition to controlling the
largest and most productive land area, the Federal Government,
although there is no complete accounting for the total amount of
money spent and expected, it is clear that millions are involved.
Like a shell man's hand out is a pretty good summary of that.
The growth control policies of local government are using Federal
resources in a way that has made the Aspen area an exclusionary
rich man's resort and residential community. What are the social
costs annually in subsidizing Aspen? I think the subcommittee-
Senator HASKELL. Sorry, Mr. Moore. The time has expired, but
you have a written statement and that will be included in the
record.
Mr. MOORE. Thank you, sir.
[The prepared statement of Mr. Moore follows:]
STATEMENT OF KENNETH MOORE, ASPEN, COLO.
SUMMARY
My comments on S. 2125 are specifically concerned with Section 3(b) and
Section 6.
Section 3(b) implies that there are "Federal, State or local planning
processes" operating in the Aspen District of theWhite River National Forest.
This is incorrect. There are no planning processes here.
Section 6 assumes taht Recordkeeping and Audit are standard practices
in comon use by private industry and government. This is incorect. There are
very few audits available in the region around Aspen that would be useful
to the purposes of 5. 2125.
CONCLUSION
The proposed Bill gives authority to the Secretary. He needs ability. It is
beyond the capability of legislation to produce cooperation and reasonable
practices on a national level.
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RECOMMENDATION
Senator Haskell and the Subcommittee might consider providing the national
leadership to work for and produce the planning and accounting presumed in
S. 2125.
METHODOLOGY
The lack of planning and accounting processes in the Aspen winter resort
is presented to give the Subcomittee prespective on the problems facing the
Secretary of Agriculture in administering S. 2125.
THE STATE OF THE ART
The writer has spent the past twelve years as a political analyst and re-
searcher in the Aspen area. The scale and nature of this resort provides a
highly visible and concentrated view of the leisure industry in affluent
America. The author has substantial evidence to support the following obser-
vations. However, the Subcommittee can easily checkout the validity of the
following statements by asking its staff to produce the information that I
claim does not exist.
The state of the art of multi government planning in Colroado is expressed
very well by the title: The "Who's In Charge Here?" Puzzle-Environmental
Planning and Management for Colorado's Second Century, League of Women
Voters of Colorado.
Public management is not organized in Colorado. The chief job of top
management is to plan. Auditing is the tool used for evaluating management's.
performance and progress towards its goals and objectives. This excellent
job by the League details the problems faced in just trying to organize
responsible public management. Filling the managers' positions is another
story.
So much for the State of Colorado.
The Federal atempt to aid state land use planning has taken the form of
the council of governments in Colorado. Aspen and Pitkin County are active
members in the Northwest Colorado Council of Governments. This organization
of five counties contains most of the prime winter recreational resources in
the State. The NWCCOG is typical of the Federal `carrot and stick' approach
to planning from the top down. Regional government becomes fascinated with
grantsmanship. Regional planning becomes a mutual backscratching scramble
for money and hardware. No planning or auditing is performed on any sophisti-
cated level.
The best way to dismiss regional planning from the discussion is to ask
the Subcommitee's staff to come up with an inventory of all the Federal
agencies, budgets and plans in Ski Country COG. Find the total dollars in-
volved over the past 12 years. Evaluate the performance and progress of the
individual programs, grants, etc. Judge the cumulative effect of public plans
and spending with a cost-benefit accounting of the tangible and intangibles
in the economic, social and environmental areas.
The lack of plans and auditing in the State and region is reflected in Aspen
and Pitkin County. There is no information on public plans and spending in
the Aspen area. The Subcommittee might ask its staff to find a copy of the
budget summarizes, revnues, expenditures and forecasts of the 22 taxing
entities on Pitkin County. Who's in charge here?
The situation in Aspen is well described by John Gilmore and Mary Duff
in their Report: The Evolving Political Economy of Pitkin County: Growth
Management by Consensus in a Boom Community, Denver Research Insti-
tute, University of Denver.
The authors of this excellent (and unused) analysis of Aspen's growth
state the local lack of planning and auditing this way: "Given the lack of
good data on this and many other aspects of Pitkin County's economy, there
is a real need for county and city staff and the business community to
cooperate in building a better data base."
Commenting upon the quality of growth management, the Report states:
"Some of the impacts of Pitkin County's growth have been aggravated, not
by mismanagement but by nonmanagement."
The same inadequate data and nonmanagement is the case today in Aspen.
The "County's Indicies of Growth", a local statistical index published by the
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County in 1973 has not been repeated for 1974. We are in our ninth month and
last year's performance has not been reported (or missed) by our public and
private managers. Aspen shows no interest in a continuing facts, analysis,
discussion method of measuring local progress and cost effectiveness. Fore-
casting is something else.
Auditing in Aspen is not a standard procedure, it is a double standard
process. Calculating the impact of lift ticket prices is important emotionally
and politically. However, no impact studies where requested (or thought
about) when the City adopted a 7% sales tax. This tax was pased by the
voters in the belief that the tourists should pay their share for the use of
the resort. This 7% tax did not stop the tourists from coming to Aspen, in
fact tourist volume and the sales tax has increased. This tax increased the
visitors' daily costs by an estimated two dollars.
The impact of a 10% proposed recreation tax in the County was not con-
sidered significant by local or state government. This was the "lift tax" that
would have added $1.00 to the tourists' lift ticket cost each day.
It is also interesting to note that the County's request to the State for more
taxing and borrowing power is not concerned with any economic impact. Other
sources of revenue sought include locally levied income taxes, use taxes, real
estate transfer taxes, more State and Federal revenue sharing and subsidies,
and greater and more flexible borrowing powers. Adverse economic impacts
are not considered in these matters of public costs. Even the knowledge of
unsound financial policies could be ignored at the polls. The experience of
New York City was that emotion and politics won out over prudent fiscal
advice.
The Federal government plays a big role in Pitkin County. The US Forest
Service controls 80% of the land area. The prime alpine ski terroin is located
in the White River National Forest. The ski development has taken approxi-
mately 2,500 acres of the estimated 15,000 acres of quality ski slopes inven-
toried by the US Forest Service. Optimum ski growth would use no more
than 3% of the public domain. Local government has no plans to allow any
more ski development. The residential growth in the Aspen area will exceed
the present ski capacities by 1980. What will happen to the tourist industry
as the "local population" continues to outgrow the ski facilities?
In adition to controlling the largest and most productive land area, the
Federal government also has a large stake in its grants programs in Pitkin
County. Although there is no complete accounting for the total amount of
monies spent and expected, it is clear that millions of dollars are involved.
What is the Federal government getting as a return on its investment? The
growth control policies of local government are using Federal resources in a
way that has made the Aspen area an exclusionary, richman's resort and
residential community. What are the social costs and benefits involved in
subsidizing Aspen? The Subcommittee might ask their staff to come up with
social and economic cost accounting that will answer these two questions.
EPILOGUE
I have seen the future of 5. 2125 and it does not work. That is because it
legislates authority to solve problems that cannot be solved by the force of
regulation. The Bill will exacerbate the national trend toward decision
making based upon politicization. The larger problems of life cannot be solved
by laws, votes or subsidies.
There's good news and there's bad news for the Subcommittee.
The good news is that they can act in the public interest and withdraw
5. 2125. The bad news is that it will take hard, productive work to create
the leadership we need to set the example for quality and excellence in public
management. That will take courage. That hard choice is easy to explain:
"I suggest, that the public interest may be presumed to be what men would
choose if they saw clearly, thought rationally, acted disinterestedly and
beñevolently."-Walter Lipmann, The Public Philosophy.
"The ultimate justification for the study of politics, however, is certainly
not a practical one. Perhaps the most intrinsically satisfying of men's activi-
ties is trying to understand the world he~ lives in. Politics being one of the
most difficult things to understand, is therefore particularly challenging.
Responding to the challenge is, we think, its own justification and reward."-
Edward Banfield, City Politics.
Be brave comrades.
KENNETE NOB MooRE.
PAGENO="0187"
183
PAGENO="0188"
184
ABSTRACT OF ASSESSMENT-PITKIN COUNTY
Number of Average per
Property classification acres acre
Valuation
Residential:
Platted or unplatted land, unimproved
Platted or unplatted land, improved
Improvements
Movable structures
Household furnishings and personal effects, productive of income
Commercial:
$6, 365, 670
8, 917, 680
25, 094, 720
40, 420
1, 272, 790
Platted or unplatted land, unimproved
Platted or unplatted land, improved
Improvements
Merchandise, materials and supplies
Furniture, equipment, etc
Oil and gas (production):
Oil or gas leaseholds or lands
Surface equipment, etc
Mining and mineral:
Coal:
Producing 200.00 $450. 50
Nonproducing 1,219.00 15.50
Improvements
Materials and supplies and machinery and equipment
Metalliferous:
901, 390
4, 246, 250
11, 253, 830
542, 900
2, 005, 730
82, 440
4, 250
90, 100
18,900
247,940
213, 180
Producing 372. 17 352. 39
Nonproducing 10,060.00 13.04
Machinery and equipment
Improvements
Mineral reserves:
Mineral reserves 7, 163. 00 1. 01
131, 105
131,220
173, 950
33, 630
7, 190
Nonmetallic land:
Producing 6.70 5, 673
Equipment
Stockpile
38, 010
28, 470
7,740
Agriculture:
Land classification:
Irrigated land 5, 528. 00 50.04
Meadow and irrigated pasture 2,633.00 25.98
Grazing land 45, 886. 00 3.35
Improvements
276, 630
68, 410
153, 830
636, 250
Agricultural-personal property
Total
Livestock: valuation
Cattle $155, 120
Sheep 10,490
Horses 47, 430
Other livestock 350
Machinery, equipment, etc.-agricultural 61, 290
Public utilities assessed by Colorado Division of Property Taxation
Denver & Rio Grande Western Railroad Co $346, 540
Mountain States Telephone & Telegraph Co 1, 823, 300
Western Union Telegraph Co 600
Public Service Company of Colorado 317, 370
Colorado-Ute Electric Association, Inc 122, 910
Holy Cross Electric Association, Inc 457, 070
Rocky Mountain Natural Gas Company, Inc 427, 910
Aspen Airways, Inc 108, 150
Rocky Mountain Airways, Inc 140, 530
Western Air Stages, Inc 1, 300
Railroad Car Line Companies 5, ~
Total 3, 751, 590
PAGENO="0189"
Fund Valuation Levy (mills) Revenue
1974 CERTIFIED VALUATIONS-SCHOOL DISTRICTS
Fund Valuation Mill levy
Revenue
Aspen No. 1 re:
General 24.05
Capital reserve 3. 00
Bond redemption 4. 60
Total $60, 780, 480 31. 65
Roaring Fork District No. 1 re: joint 1 portion:
General 31. 10
Capital reserve 4. 00
Bond redemption - 11.70
Total 3, 869, 860 46. 80
Roaring Fork District No. 1 re: joint 12 portion:
General 31. 10
Capital reserve 4.00
Bond redemption 11.70
Total 2, 360, 600 46. 80
Total school revenue (as separated above)
Colorado Mountain Junior College 67, 010, 940 5.56
Total school revenue from county ad valorem taxes
$1,461,771
182, 341
279, 590
1, 923, 702
120, 353
15, 479
45, 277
181, 109
73, 415
9, 442
27,619
110, 476
2, 215, 287
372, 581
2, 587, 868
SPECIAL DISTRICTS
Valuation Levy (mills)
Revenue
District:
Aspen Fire Protection $45, 306, 270 1. 55
Aspen Sanitation 20, 216, 650 4. 00
Highlands Water and Sanitation 865, 720 21. 50
Basalt Water Conservancy 1, 345, 530 . 42
West Divide Water Conservancy 1, 411, 450 . 49
Carbondale and Rural Fire Protection 2, 360, 600 2. 00
Colorado River Water Conservancy 67, 010, 940 . 55
Aspen Metropolitan Sanitation District 16, 349, 960 8. 00
White Horse Springs Water and Sanitation District 364, 890 3. 50
Snowmass Water and Sanitation District 14, 293, 730 18. 50
Basalt and Rural Fire Protection District 3, 374, 900 1. 90
Aspen Wildcat Basin Water and Sanitation District 413, 440 none
Snowmass Wildcat Fire District 14, 077, 480 6. 50
Basalt Sanitation District 7, 690 3. 89
Town of Basalt 3, 200 13.90
Redstone Water and Sanitation District 388, 600 20. 00
Incorporated towns:
City of Aspen 29, 235, 520 3. 60
Name of fund:
State Predatory Animal Fund 10, 490 40. 00
$70
80
18
4
36
130
264
6
none
91
7
105
Movable Structure Valuation. $40,420=Tax $2,632 collected by county clerk.
Pitkin County Predatory Animal Fund, 200 per head on all sheep and goats, 1974 Total= 1,852 Sheep at 200=$370.
Grand total assessed valuation of Pitkin County for 1974 $67, 010
Grand total ad valorem taxes frOm all sources to be paid in 1975 4, 621
185
PITKIN COUNTY FOR THE YEAR
County General Fund $67, 010, 940
Contingent Fund
Road and Bridge Fund
Social Services Fund
Public Hospital Fund
Retirement Fund
Public Works Fund
Public Library Fund
67,010,940
4.25 $284,796
1.00 67,011
5.20 348,457
.35 23,454
3.00 201,033
.10 6,701
3.00 201, 033
1.20 80,413
18. 10 1, 212, 898
67-512 0 - 76 - 13
PAGENO="0190"
186
REPORT, THE EVOLVING POLITICAL ECONOMY OF PITKIN COUNTY: GROWTH
MANAGEMENT BY CONSENSUS IN A BOOM COMMUNITY BY JOHN S. GILMORE
AND MARY K. DUFF, DENVER RESEARCH INSTITUTE,
UNIVERSITY OF DENVER
PITKIN COUNTY,
BOARD OF COUNTY COMMISSIONERS,
Aspen, Cob., October 28, 1974.
Mr. GENE PETRONE,
E~vecutive Director, Office of Planning and Budgeting,
State of Colorado,
State Services Building,
Denver, Cob.
Dear Mn. PETRONE: Pitkin County would like to enter the following into
the hearing on the State Budget scheduled for Grand Junction, 1 :30-4 :30 p.m.,
at Mesa College on October 29, 1974:
(1) We request legislation allowing each county to set its own salary sched-
ule for elected officials, so that the best posible candidates can be encouraged
to so serve and contribute more effectively to local budgetary and fiscal prog-
ress. The needs of each county differ. For example, the Pitkin County Sheriff
handles more cases each year than does Mesa County, simply because of
Pitkin's tourist economy. The point is that "population" is not necessarily
the best basis for County salary determinations.
(2) We request and support the funding of a County Agent for Pitkin
County as provided in CSU Extension Service budget proposal.
(3) We support the CSU request for an improved salary scale for County
Agent, especially for the position proposed for Pitkin County.
(4) We urge continuation annually of the $25,000 to each county for land
use administration pursuant to HB 1041 with some escalation each year to
account for rising costs and the truer measurement of the size of the problem
resulting from the first year's experience.
(5) We recommend that the State Highway budget be required to include
funds for bicycle trails, horse trails, and other pedestrian safety alternatives,
on a budgetable formula basis, with some matching required by the affected
cities and counties. Such trails can draw pedestrians away from roads and
can become energy conserving where the trail systems become large enough
to convert car trips to walking trips or bicycle trips.
(6) We recommend creation of a Department of Transportation, to include
roads, trails, air and transit, and a unified budgetary approach to each indi-
vidually and to all four together, and a policy approach that recognizes the
impacts of each and all of the transportation modes on each other and on
land use, the environment, and the social and economic facts of life.
(7) The State should enact legislation and allow counties to close roads
and perhaps even highways where they are non-esential links and where it is
beneficial to the local community to do so.
(8) We request legislation, which effectively opens the income tax, real
property tax, ski life tickets and/or other new sources or revenue to County
Use, reducing thereby the need for counties to rely so heavily on the regressive
property tax.
(9) We recommend a program of State Revenue Sharing similar to the
Federal Revenue Sharing. The counties at present time have very limited
source of funds through the inequitable and regressive property tax system
and the State apparently has an excess of unappropriated funds from its
income tax revenues. Some State income tax money should be redistributed
to the local bodies in the same manner as the federal funds are, as the local
authorities are best qualified to know the problems of each area and the best
application of these funds.
(10) We recommend improved state funding for the several district COGs,
including NWCCOG, and that the Committee urge each applicant State De-
partment to locate its district offices as close as possible to the COG offices
to the extent that the "little capitals" idea is furthered to the convenience
of the local government official.
(11) We recommend a Constitutional change to limit the right to divert
water to the amount necessary to maintain a minimum stream flow to main-
tam ecology of the stream. Recognizing the value of tourism for the State of
PAGENO="0191"
187
Colorado and the value of preserving the ecological systems, the minimum
stream flow maintenance should be made mandatory and diversions in excess
of that should not be allowed. This may make necessary condemnation or other
activities but should be given high priority. One mechanism might be to give
the Colorado Water Conservation Board instructions and a timetable for filing
minimum stream flows for all streams in the State and provide them with
adequate funds for engineering back-up to do this quickly together with a
legislative mandate the dates of appropriation may revert back to the earliest
times.
(12) Functional Home Rule in the same manner that City Home Rule has
been allowed should be granted to counties to allow them to pick up reserve
and residual powers which have been retained by the State in order to give
them a free flexibility to deal with many problems. arising for local govern-
ment.
(13) The State should adopt a "go-slow growth policy' to allow for ade-
quate planning and to evaluate the effects of future growth and also con-
sider limiting the size of urban areas due to the statistical increase in crime
and other undesirable social conditions which increase per capita costs for
services.
(14) The State should consider enacting regulations establishing trailer
construction standards to make these living units safe in the form of ad-
ditional firewalls and further provide for insulation to conserve energy and
should also adopt a policy of energy conservation and encourage rail and
mass transit.
JOSEPH E. EDWARDS, JR., Chairman.
LooKING To THE FUTURE-SKIER MARKET PREDICTIONS SHOW SLOWDOWN
Based on reports by consultants Briscoe, Maphis, Muray, and Lamont,
Inc., of Boulder, Cob, and Glendinning Associates of Westport, Conn., which
conclude growth in the national skier market is leveling off, the town council
is discussing several future means of expanding tax revenues, should the
need become reality in the foreseeable future.
Jim Muray of the Boulder consulting firm explained how national trends
show a leveling of skier growth which will probably affect Vail significantly
within the coming five years. Since even immediate attempts of diversication
of Vail's recreational offerings would have no effect in the coming five years,
Murray outlined a variety of ways to keep the municipal coffers full while
skier, trends change.
Acording to Muray, "the most popular candidates" for new sources of
revenue would be a use tax, a bed-room tax, a lift tax, and a real estate
transfer tax. The most popular among the council members were the last two.
USE TAX
Generally, a use tax says if a Vail resident buys something outside Vail's
taxing jurisdiction, then brings the item to Vail and uses it, a use tax can
be levied. Since most such purchases are difficult to. trace, the tax has his-
torically been used only on building materials which can be collected through
the isuance of a building permit, and vehicles, which can be collected through
county licensing. A maximum 4 percent use tax could be levied in Vail without
a public vote. However, because it would primarily bear on local Vail resi-
dents, this form of taxation might be very unpopular, Murray noted.
BED-ROOM TAX
A bed-room tax could be either an excise tax on the consumer or an occu-
pation tax on the business. Since any type of municipal income tax is pro-
hibited in Colorado, the tax could not be based on sales, but must be fairly
fixed. If levied as an excise tax, the cost could be passed on to the consumer
in a tight availability market. However, since most times of the year Vail
has an oversupply of beds, the tax would probably have to be absorbed by
the businesses. Levied as an occupation tax, it could be similar to Denver's
head tax per employee which would also have to be absorbed locally. A bed-
room tax. would require a public vote and Murray felt it would not receive
"good citizen acceptance."
PAGENO="0192"
188
BEAL ESTATE TRANSFER TAX
Most popular with the council was the suggested real estate transfer tax,
which would be unique in Vail by state standards, although other states are
using this type of tax. Basically, it's like a sales tax on land. It would require
the cooperation of Eagle County for collection, and would not require a public
vote. Since the tax would mostly be borne by non-resident investors and
speculators who benefit from the Town's "infrastructure development," the
real real estate transfer tax won the popularity straw vote with the council.
LIFT TAX
Another popular method of beefing up municipal revenues was the lift tax.
Presently, Vail Associates donates 4 percent of its lift revenues to the Town
of Vail voluntarily. This could be made into law, and the Town could raise
the tax, since there is no statutory rate limitation as there is with sales tax.
Lift tax is considered a specific occupation tax, and can be levied without a
public vote. The tax would be borne mainly by Vail Associates, since Forest
Service ticket price regulation limits the lift operator's ability to pass the
tax on to the consumer. Although it might limit Vail Associates future develp-
ment of Vail, Murray noted, "Citizen acceptance might be poor of if, the tax
increase were perceived as threatening Vail's future economic health." Al-
though the council did not seem convinced to increase the lift tax, it made
definite noises toward legalizing the lift tax which is now a donation.
Other forms of revenue suggested but not elaborated upon included alcoholic
beverage tax, amusement tax, occupation tax for professional services, sales
tax on services, and utility taxes.
PREPABE FOR CHANGE
At the conclusion of the $8,000 report, the consultants noted, "As Vail has
repeatedly done in its short life, it must lead with the development plan and
anticipate change and prepare for it, rather than wait for it to occur and be
forced to react. Vail is unique in that it is in a closed system in which con-
tinuous physical growth is imposible. It must, therefore, be particularly care-
ful, in its developing years while there still are options, that it decides what
it wishes to be when the growth stages are completed. To continue to build
buggy whips when the market is changing will only necessitate severe adjust-
ments in the future. While the potential revenue growth continues to expand,
the expenditures must be wisely made in anticipation of the mature economy
that is coming.
Senator HASKELL. Our last witness is Mr. Rick Silverman, city
councilman from Telluride, Cob.
STATEMENT OP RICK SILVERMAN, TELLURIDE, COLO.
Mr. SILVERMAN. I will have to disallow that last label.
Senator HASKELL. I see. Somebody wrote it down.
Mr. SILVERMAN. The present city councilman that appeared earlier
gave me such a gloomy prospect of that. I am Rick Silverman from
Telluride, Cob., a community as distant from Aspen in miles as it
is socially and financially. I have lived there since before the advant
of the ski area and I have been there since that time and watched
what's occurred in that community in the course of the last 31/2 years.
I have great misgivings about appearing at these hearings. Similar
appearance on behalf of wild rivers and wild areas have done littile
to reassure me the system resolves its problems consistent with my
notion of what majoritarian views are.
I am encouraged, however, that for the first time I am appearing
at a hearing chaired by someone I elected, a man who had the initia-
tive to pursue a matter first raised by the much ballyhooed Aspen
PAGENO="0193"
189
yahoos, and firmly counterposing his stance with some of western
Colorado's best financed and most arrogant entrepreneurs.
Mr. appearance here is designed to lend support to my friends in
Aspen, not so much because they are the victims of punitive actions
from the Aspen Skiing Corp., but actions occasioned I believe be-
cause of the vanguard behavior of both Pitkin County and Aspen
city government in the realm of land-use planning and the more in-
sidious propositions represented by their insistence that the Ski Corp.
must recognize its responsibilities for picking up a fair share of the
costs its venture had been passing on to the local industry. In fact,
however, it is the people of Aspen represented symbolically by the
Roaring Fork Citizen who are supporting me.
`What has gone on in Aspen is not a unique phenomena, it is a
microscopic forerunner of the situation in Telluride, Steamboat
Springs, Breckenridge, and Dillon, and probably most of the 170
other areas where the Forest Service issues special use permits for ski
areas.
In Telluride, however, there are distinct differences, and they are
worth noticing. In contrast to Aspen's resplendent success, we are a
struggling failure. Where there are 30-plus lifts, excellent grooming,
patrol, and massive ventures in Aspen, we in Telluride ha.ve five
ill-placed lifts, no on-the-mountain facilities and essentially no pro-
motion. Aspen is synonymous with being a site of skiing excellence,
Telluride appears to be more and more an ill-conceived appendage
to real estate scandal. Yet, the impact is essentially the same. Local
government units are inundated by demands. The Forest Service is
again an unwitting accomplice.
In Telluride, we are part of the TJncompahgre National Forest. and
it might be assumed that this would insure sophisticated scrutiny,
but to the contrary it has apparently resulted in a cozy Forest Ser-
vice relationship. In Telluride, a mountain where last year it took
35 minutes tO get from the bottom of the mountain, runs back to a
chair lift, a bus paid for by the skier, and another 55 minutes to re-
turn to the top. The seasonal rate has now gone to $275, an increase
of some 80 percent in a single year. We believe this increasing to be
capricious and dangerous, dangerous because as has been stated by
earlier speakers the "push-me-pull-me" domino effect whereby rates
seem to go according to the Forest's notion of uniformity, in Teilu-
ride this is particularly disheartening because the Forest Service has
evidenced not merely a willingness to extend profits of successful
areas, which, of course, is the case in Aspen, but to reward incom-
petency, most specifically passing on an unsheltered day skier load to
those skiers, the former season pass holders, who have supported the
area since its inception support rendered not only in the form of
money, but support in the form of city lands, support in the form
of effort that's been needed to restore the area to its historical love-
liness that is Telluride.
Tefluride, again counterposed to Aspen, offers high quality, fair
prices, historical past going beyond what one could expect to be
offered to so-called subjective amenities referred to by earlier speak-
ers. Based on my experience in Tellurid, I would like to offer the
following suggestions very briefly.
PAGENO="0194"
190
No. 1: That permits not be granted for more than 10 years. We are
in Telluride to a situation where a community becomes essenially
indentured, in a. state of continuing slavery to an incompetent oper-
ator, and I expect this is not a unique siuation and one which you
are now in a position to correét.
No. 2: That rates be increased subjectively and with full use par-
ticipation.
No. 3: A guarantee of local participation in all states of impact
analysis.
I am a layman by education and design, and as such am not quali-
fied to proffer specific formulas for these positions. I am convinced
that expertise does exist for these. I do believe it is time to get the
Forest Service out of bed with its ski area consorts. Ultimately we
are talking about public lands and a commensurate public trust. I
sympathize with the ill-informed local ranger, as was the case in
Telluride. I do not think he is culpable for complex actions, decisions
that are far beyond his specific training as a forester. I am not near-
ly as sympathetic about his superiors and I demand considerably
more from his congressional mentors. This is not mere Aspen hippy
diletantism. It is a public question. Are the public lands to remain
within the reach of the public? Can public hearings be directed in
such a way as to `lead to participation by an informed public and
an honest permittee and a Forest Service arbiter who is not ashamed
to represent nothing more than the American public. Thank you.
Senator HASKELL. Thank you, Mr. Silverman. This concludes the
hearing. I should announce that the most longsuffering gentleman at
this hearing is Mr. George Tourtillott of the Forest Service, who
came here to provide any expert information, and I appreciate very
much, George, your being here. Thank you very much indeed. The
hearing is recessed.
[Whereupon, at 4:45 p.m., the hearing was recessed to reconvene
Monday, October 6, 1975.]
PAGENO="0195"
OUTDOOR RECREATION AND SKI PERMITS ON
NATIONAL FOREST LANDS
MONDAY, OCTOBER 6, 1975
U.S. SENATE,
SUBCOMMITTEE ON THE ENVIRONMENT AND LAND RESOURCES,
OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Denver, Cob.
The subcommittee met, pursuant to notice, at 9 a.m., in the audi-
torium, Post Office Building, Denver. Cob., Hon. Floyd K. Haskell
presiding.
Present: Senator Haskell.
Also present: Steven P. Quarles, counsel; and Harrison Loesch,
minority counsel.
Senator HASKELL. The subcommittee will come to order.
OPENING STATEMENT OP HON. FLOYD K. HASKELL, A U.S. SENATOR
FROM THE STATE OF COLORADO
Senator HA5KELL. The hearing on S. 2125 of the Subcommittee
on the Environment and Land Resources of the Senate will open. Be-
cause of the tremendous number of witnesses, I would ask everybody
except those representing elected officials and those who have been
specifically invited to testify-that would be Mr. Hill and Mr. Croak,
the Honorable John Vanderhoof, and Mr. Kennedy-to confine their
testimony to 5 minutes. I wish to assure all witnesses that their written
testimony will be included in the record in full.
The purpose of S. 2125 is to provide a working draft for the reform
of procedures for the issuance of permits for ski areas on National
Forest lands. I think most of us are aware, certainly in our State,
of not only the tremendous pressure for increased use of public land
for skiing, but also of the environmental and economic impacts on the
State and its citizens. I should mention that there are 170 special use
permits issued nationwide for skiing on National Forestland and 24
of these are within our State. This, if my mathematics-or rather Mr.
Quarles' mathematics-is accurate, represent 14 percent of all
national forest ski permits issued nationwide. Since the permits are
on public lands, that is land owned by all of us U.S. citizens, there
are obviously special obligations which attach to those who seek to
use public lands for private profit.
The bill addresses principally three areas. One is the area of public
access to financial information, with the concomitant right of hear-
ings on various and sundry rate structures, increases and the like, so
that the public will have an input into the process. Right now, of*
course, the Forest Service has to give its approval to rate increases,
(191)
PAGENO="0196"
192
but this appears to be done on an ad hoc basis and depending upon the
beneficence of the particular forest supervisor the area may or may
not obtain its in6rease. The public, of course, has no way of knowing
under the present set of circumstances whether the increase is or is
not justified.
Second, the `bill addresses the whole `problem of when permits are
granted. Under permits as they are now granted, the use of the forest
area and a small base area is prescribed in the permit. However, when
you bring a great many people in for the purpose of skiing, you affect
not only the smaller area where skiing actually occurs but also a
much greater geographical ~area of both public and private lands,
creating all sorts of impacts on `the local area. For this reason, the
bill as originally drafted, requires Forest Service and State and local
government consideration of all secondary impacts on both public
and private land which may occur as a result of development of ski
facilities. The purpose of this is to reduce ill-considered growth, and
encourage planned and control growth.
Another issue addressed by the bill is the extent of the area covered
by a permit. Right now, the permi't applies to a small area of
80 acres for which use is granted for 30 years. Of course, the ski
areas use much more than that, and for that reason the Forest Service
has adopted the practice of issuing special use permits on a year-to-
year basis to encompass substantial peripheral acreage. The legality
of this practice of the Forest Service is being challenged in the Mineral
King litigation in California. Of course if it is found to `be illegal, the
investments of the entire industry will be threatened.
So, without anything further, I would like to proceed to the first
witness, Mr. Robert Hill, who is the first assistant attorney general
of the antitrust division, and who is appearing on behalf of the Honor-
able J. D. MacFarlane, attorney general, State of Colorado. Mr. Hill,
it is a pleasure to have you.
STATEMENT OP ROBERT HILL, ASSISTANT ATTORNEY GENERAL
OF ANTITRUST DIVISION, ON BEHALF OF HON. J. D. McFARLANE,
ATTORNEY GENERAL, STATE OF COLORADO
Mr. HILL. Thank you. I think it perhaps best to begin with the
request that I have prepared and submitted a formal statement-
Senator HASKELL. That will be included in the record in full and,
of course, as you know, Mr. Hill, you do not have a time limit.
Mr. HILL. I realize that. I will attempt to keep within the time
structure.
Our antitrust section was formed this past summer. At the present
time I think it is fair to say the number of complaints we, have re-
ceived arising from the operation of ski areas in the State of Cob-
* rado far surpass that of any other areas of commercial practices in
the State. For this reason, we have taken an investigation into a
number of these comp'aints and I would like to give the committee
the benefit of some of the conclusions we have drawn from these in-
vestigations. I think it is fair to say that the basic conclusion is that
the Forest Service policies today operate to operate a monopoly and
as to which a lot of people in the State of Colorado object, and, fur-
PAGENO="0197"
193
thermore it is not a regulated monopoly at the present time. It is not
effectively regulated. To me, what we have is sort of the worst of the
worst worlds. We don't have competition and don't have regulated
monopoly. We have something sort of in between.
I can sort of summarize today some of our investigations that are
underway. I would, however, like to point to certain basic I think
procedural matters which I do feel is appropriate. The first is the
one that you have alluded to in the past, and that is the veil of sec-
recy. The Forest Service is operated in a fashion completely shielded
from public scrutiny at the present time. During the past rate in-
creases, when there was a large outcry in opposition, it was impos-
sible for citizenry, congressional inquiry or State inquiry to obtain
any kind of information which would allow anyone to make an in-
formed judgment as to whether or, not the proposed rates were lusti-
fled. This practice I suppose was highlighted at that time, but it is
a practice which has continued throughout in terms of other policies
as well. We have at the present time extensive freedom of informa-
tion requests pending before the Forest Service.
Senator HASKELL. Not to interrupt you, Mr. Hill, but not only do
we have the veil of secrecy on the basis upon which increases may
be granted, but we have a veil of secrecy on the conditions attaching
to various permits. We have no uniformity.
Mr. HILL. No question. As a major portion of our freedom of in-
formation request, which is now pending, is to understand the con-
tractural relations and other relations which exist between the area
operators, the permittees, and the Forest Service. In litigation in
the past, even in court opinions, there has been controvery and con-
fusion over what in effect the contracts do provide, and in this area
it simply extends across the board to all the policies to whether or
not new, ski areas are going to be opened, who is going to be the re-
cipient of the operating permit for the new ski area. It simply goes
across the board.
At the present time, as 1 say, we have a freedom of information
request. We are meeting with the Forest Service next week and per-
haps we will have additional information that I don't know. In the
past, they have either refusel flatly to provide information to various
public entities and other private parties or have supplied pursuant
.to' the Freedom of Information Act some very limited number of
documents, and it is a very limited number at the present time.
It seems to us that the secrecy is not simply a procedural fault.
It affects the substantive policies which are adopted. Decisions ar~e
made. Standards are not in existence which would have to be in exis-
tence if these procedures were subject to public scrutiny. You simply
couldn't go on operating on an ad hoc basis if in fact `there was
public scrutiny looking over your shoulder. You would have to
rationalize your decisions, and it seems to us as a result that it is not
a procedural problem we are talking about but a substantive prob-
lem, and the first step would be to open it up. It seems to me that's
just the first step. That's simply procedural. The one that would
follow is what would result from public scrutiny once these policies
or lack of policies are open to the public view.
The second problem that we have encountered, and that is in pur-
porting to regulate what is in effect a~ government created monopoly,
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the Forest Service has simply shown no consideration whatsoever
for the anticompetitive effects of this operation. It creates at the
present time one large monopoly and it seems most comfortable deal-
ing with one large monopolistic in that region, and I suppose in
regions of administration there are reasons. If you have one steel
company to deal with, you know where to go to get your steel. You
have no problems. That is basically what we have. They dealt to one
person absolute discretion to run the ship as they see fit. That may
be appropriate when a private enterprise takes over and runs its own
business, but it seems to me inappropriate for Federally controlled
land providing the impetus and sole basis for the operation itself.
These Federal lands are common to the people of the United States
and I think it is inappropriate to put that kind of control over these
lands in the hands of very few corporate executives.
Senator HASKELL. Let me interrupt you there, and I in large part
concur. However, a two step procedure has been suggested-please
bear in mind this bill is just a working draft and was introduced so
people would have input. The first step might be a hearing to deter-
mine whether the ski area asking for a rate increase is truly competi-
tive with several other ski areas. If that determination is favorable-
that is that there is true competition-the next finding is whether
the area is exercising competition without anticompetitive practices.
Now, if you make those two findings and those two findings are
favorable, it seems to me that competition is regulating the prices
and regulating the practices and, therefore, perhaps nothing further
would have to be done. On the other hand, if those findings are not
favorable, you would then utilize a formula to determine reasonable
rate of return on invested capital, which would be more or less a
utility concept. However, you woudn't have to go that second step,
the suggestion is made, if you make the finding of true competition
truly exercised.
Now, you may not want to respond to that off the top of your head,
but if you do, fine. If you don't, I woul4 appreciate perhaps some
comments for the hearing record later on.
Mr. HILL. I would like to respond. The proposal as you suggested
as to the possibility of avoiding what I would call a rate type regu-
lation in the formal sense by the existence of competition, which I
take it takes place on a nationwide basis-
Senator HASKELL. To name a couple of areas in Colorado, I would
say that Arapahoe Basin and Loveland are probably very competi-
tive because they are close and they draw from the same market.
That's the kind of thing I'm talking about.
Mr. HILL. I guess I have two reactions to that. One, when you are
talking about these areas, there is very little competition between
the major ski areas. The Aspen Ski Corporation dominates a great
portion of our State.
Senator HASKELL. I am really talking about a case-by-case basis.
You might find that the Aspen Ski Corporation by its very nature
could not be competitive. This might be a finding. You might find
that Loveland, because of its proximity to other ski areas, is com-
petitive.
Mr. HILL. The problem I have with that approach-and I would
like to use the Aspen Ski Corp.-they have several mountains in
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effective operation in the area of Aspen, Cob. For the citizenry of
Aspen and for the surrounding area, there is no competition what-
soever.
Senator HASKELL. That's true.
Mr. HILL. And in large part that is a substantial portion of the
complaints we receive from the citizens of Colorado. They are from
people who live within the shadow of a very large and very powerful
monopoly, and do not like living in that shadow.
Senator HASKELL. You are postulating one set of. facts. I am ask-
ing your reaction to a different set of facts where you have, say, four
ski areas all close together. Maybe it has to be near a population
center so people have freedom of choice. You could have a finding
there that they might be competitive.
Now, my suggestion is if you make that finding, then tha.t's as far
as you have to go, and I was wondering what your reaction is.
Mr. HILL. I would agree with that, if one could make that finding.
I would agree with it. The second problem one encounters in trying
to make that other than the one I have just mentioned is that one has
to limit the market in such a way that you don't imply a national
market.
Senator HASKELL. Oh, yes.
Mr. HILL. It seems~ to me that would be the effective one. The
second problem we come to is almost impossible given Forest Service
policies.
Senator HASKELL. That I agree.
Mr. HILL. They simply are not allowed to compete. What the
Forest Service in effect seems to be attempting to do is maintain uni-
formity and obviate competition, and through practices today what
little competition might otherwise exist is almost by definition
squelched by what little they do. In other words, not only do they
not seem to me-if they are going to regulate or provide competition,
they haven't chosen which fork they are going to take, but in going
down the middle they have avoided effective regulation and also
effective competition.
Senator HASKELL. That's very interesting. I would hope either in
your prepared statement or subsequently you could detail the type
of Forest Service regulations that prevent competition. I would
really appreciate that.
Mr. HILL. I think one example also is the recent rate hike. For
instance, the Forest Service refers to comparable rates for all ski
resorts in the State of Colorado, in effect not allowing differeñtia-
tions for whatever an individual businessman might choose to differ-
entiate, not allowing one to go the cheaper route, but in effect at-
tempting uniformity, and if you look at the different rates across
the State, that's very obvious.
A second thing we would like to point to in terms of lack of con-
cern is the policy of regulating in turning over the entire area and
all associated businesses to a single permittee. Our problem here, it
seems to us, in some senses the operation of any given ski slope per~
haps, any given mountain, is probably close to what we call a natural
monopoly. It simply doesn't make sense to balkonize it and have
three operators operating. It may be certain enabling areas ought to
be broken up, but certainly not to the one individual ski slope.
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On the other hand, in setting forth this policy, the Forest Service
has created a monopoly in all related businesses, since it is their
policy to grant one permit and allow that person to operate all asso-
ciated services as, for instance, you are probably well aware, ski in-
struction, about which there is a great dea.l of controversy. That's
the second problem.
It seems to me the third problem. in this area in terms of the
Forest Service's lack of concern with competitiveness is their seeming
willingness to automatically renew existing leases and allow existing
permittees to expand to completely encompass the related areas, so
you don't have in Aspen five companies operating five different moun-
tains, all healthy, vigorous and competing, but one corporation domi-
nating the same scene, and it is this lack of concern, lack of oppor-
tunity.
It is very hard to say what arrangements have been made, for
instance, in the past with how a new slope permittee is designated,
simply because that information is not publicly available.
On the other hand, simply viewing the practice of the Forest
Service historically has been to suggest there is very little opportun-
ity for another corporation or its group of businesses within the
State of Colorado to in this day and age come in and say, "We want
to operate that next ski area. We don't want an existing company to
do it. We want to come in and compete, knock heads with them. We
think we can do it for better, for less, and do more." There is simply
no opportunity for that sort of voice to be heard as it now exists.
Those three areas are simply examples it seems to me on which
I would like to see input in terms of concern that what you are try-
ing to do here is provide a variety of services in fashion which we
provide almost all other services, and that is through competition.
In the absence of that, I think as a last resort we ought to go to a
very complete and thorough and open, and I emphasize open, method
of public regulation. My own preference would be that we think
through various devices, insert enough competiton that we don't have
that conflict relationship, but at least to the extent it exists now there
is no competition, and I would answer that sub4uestion. It seems~
Senator HASKELL. Because of the method of regulation?
Mr. HILL. In large part because of the method of Forest Service
regulation, because of their willingness to grant all new ski areas to
existing companies, so you have contiguous areas completely devel-
oped by one ski corporation, in terms of their willingness to auto-
matically renew new leases, in terms of the inability because of the
secrecy of regulations to provide a forum for new people to come
in in terms of development.
If there is going to be development, we would certainly like to see
some form of competition in this area, and with these sorts of views
in mind we have suggested in our statement certain considerations
to the committee in terms of amendments to the pending bill, the
first of which would be to award all new permits on the basis ~f
open and competitive competition. A second corollary would be when
renewals come up we would suggest they be done on the basis of open
competition with due compensation to the development of the prop-
erty in advance. .
I. would. also .like..to see. the assocj~ated businesses separated out and
to the extent possible competition in those areas~ permitted, evei~ if
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the conclusion is drawn that the area has to be operated as a monop-
oly.
I also would like to see any public hearings in terms of rate in-
creases, if we are going to have that, that there be some basic guide-
lines for calculating how those are to be determined. It is now simply
impossible in my view to determine how those calculations are made,
and I think Congress ought to have some at least benchmarks pro-
vided for the Forest Service.
Senator HASKELL. I agree with you, Mr. Hill, and as you may be
well aware when these rate increases occurred, I saw in the news-
paper a rate increase simultaneously in three areas. I wrote the Forest
Service and made the assumption erroneously that there would be
public hearings and I also made the assumption erroneously that the
financial information would be available. In response I got what I
can call nothing but a "kiss-off," of one *or two sentences:
"We're quite concerned about making public the specific financial
information about individual operationst. Over the years we have
developed a level of confidence and trust with our concessionaires
which has allowed us to study and respond to\the financial world
they live in."
And it was this letter that precipitated this bill. This was sent to
me by Mr. Thomas Nelson for the Chief of Forest Service.
Mr. HILL. It is that same attitude that prompts our* appearance
here today. I would also like to request that in terms of amendments
or. possible consideration for amendment to the bill that some con-
sideration be given to specifically obtaining input from the U.S. De-
partment of Justice, Antitrust Division, with regard to permits
which are going to be issued with anticompetitive consequences.
There are a number of bills which are now either in existence or
under consideration which do make putting that kind of requirement
in. I think this is an appropriate occasion for that kind of scrutiny
apart from environmental impact, which we now have a requirement
that would be considered. I would like to have some consideration of
theT anticompetitive consequencs of the permits, if the permit is going
to be in a contiguous area whether or not it ought to issue to that
ski area or perhaps an operator in Sun Valley, Idaho, or perhaps
someone simply seeking to enter the industry, but as it presently
exists in terms of the way these things are handled I think that is
pra~tically nonexistent as far as we can tell.
Those kinds of consideration in terms of putting competition into
this industry it seems to me would solve a lot of the problems that
we see in terms of coming to us in complaints and those are as I say
simply the arbitrariness it seems to me in some cases, but perhaps
justified, of monopoly power, and many people in our country have
already made that decision a long time ago that that is an unattrac-
tive prospect, and providing some alternative to me it seems is some
device other than~some huge regulatory agency. If we could provide
some input in terms of competition, I think that would be the most
attractive alternative.
On the other hand, I don't simply want to say competition pro-
vides competition and walk away, because it would come very slowly.
It would change hands and so forth, but I do think the present sys-
tem is simply indefensible
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198
As you have alluded to, the present system in my view of operat-
ing these things on special use permits Oh an annual basis is illegal.
It seems to me what we are now talking about, if you take that posi-
tion, as I mentioned in our comments, in related areas, mineral
leases, the courts have consistently made a determination where there
is an acreage limitation of awarding Federal land that those were
intended for the express purpose of avoiding monopolistic practice,
avoiding the Federal Government creating monopoly around the
country, and it seems to me what the Forest Service did was not to
live by that, which agreed would be difficult in the present circum-
stances. They didn't seek amendatory language, but simply to circum-
vent it, and I think some legislative response at least to that which
would express concern over monopolistic problems and over present
policies is highly appropriate.
Senator HASKELL. Thank you, Mr. Hill. I would like to ask you
one more question. This idea is not in the bill, but one thing occurs
to me, and that is that many ai~eas because of their very substantial
investment have to perforce make a rather high charge to the public,
whether too high or too low, I don't know, but they have to recoup
their investments. This really eliminates from the opportunity of ski-
ing a large segment of the public, and it just occurred to me during
the course of the hearings at Aspen on Saturday that perhaps the
Forest Service should be urged to give consideration to permittees
who are going to put in perhaps a less expensive capital plant-I
don't mean unsafe, but maybe T-bars instead of chair lifts and gon-
dolas-which would allow them to charge less and still make
money. Perhaps this would be a socially desirable end so that more
people could take their kids up and ski. Now, do you have a reaction
to' that?
Mr. HILL. I do. I think that's absolutely the kind of thing we
would like to encourage and it is that sort of dampening effect of
the present Forest Service policies we most object to. That can't take
place under the present. policies, but it ought to be taking place and
it is not.
Senator HASKELL. Well, thank you, Mr. Hill, and I will look for-
ward to studying your statement in full. Do I understand you have
specific statutory suggestions for change.?
Mr. HILL. We have specific suggestions and we are in the process
of drafting specific language.
Senator HASKELL. Fine, and the hearing record will stay open for
2 weeks for you or anybody else to submit information for the record.
Thank you.
Mr. HILL. Thank you very much for the opportunity.
[The prepared statement of ]\`Ir. Hill a.nd letter referred to fol-
low:]
STATEMENT OF ROBERT F. HILL, ASSISTANT ATTORNEY GENERAL, ANTITRUST Divi-
SION, ON BEHALF OF HON. J. D. MOFARLANE, ATTORNEY GENERAL, STATE OF
COLORADO
During the brief existence of the Colorado Attorney General's Antitrust
Section, we have received more complaints with regard to the practices of
certain corporations operating major ski areas in the State of Colorado than
with regard to any other problem. Our investigation of . these complaints has
forced us to conclude that most of these grievances stem . from the present
policies of the Forest Service in administering, our federal lands. We would
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like to take this opportunity to pass on to you some of our observations re-
garding present Forest Service practices as well as some specific comments
and suggested changes regarding 5. 2125.
It would be imposible for me to detail to you today the full spectrum of
the complaints we have received. I will, therefore, attempt to focus my remarks
on three aspects of the present policies of the Forest Servic that we find most
disturbing.
1. The Veil of secrecy. Forest Service policies in this area have historically
been shielded by a veil of almost complete secrecy. As you well know, as
recently as this past spring, the Forest Service flatly refused all public access
to the financial information upon which the rate increases for ski lift tickets
were based. More recently, in response to a flurry of requests filed under the
Freedom of Information Act, 5 U.S.C.A. § 552 (1974), the Forest Service has
begrudgingly supplied a very limited number of items. Our office has filed
an extensive request under the Freedom of Information Act and we are
presently awaiting a reply. We, of course, will be glad to share any possible
fruits of that inquiry with this subcommittee.
This veil of secrecy is more than merely a procedural fault. In our view it-
and the corollary lack of opportunity for informed public scrunity-has con-
tributed greatly to the development of many of the policies of the Forest
Service that we find most offensive. And, perhaps more importantly, it has
allowed the Forest Service to proceed to make decisions of the utmost sig-
nificance to this State without any rational or consistent policies. I know
of no other regulatory agency operating in this day and age that has com-
parable discretion to make decisions in the absence of standards and shielded
from public scrutiny. These conditions are further compounded by the archaic
and inadequate review procedure now in existence-a procedure that can only
be described as a bureaucrat's dream and a lawyer's nightmare.
2. The Complete Lack of Concern the Forest service Has ~Shown for the
Anticompetitive Consequences of Its Policies. While the anticompetitive conse-
quences of the present Forest Service policis are legion, I will limit my re-
marks to two areas which we see as having the most serious anticompetitive
impact.
A. In granting permits for the development of new slopes and in renewing
permits for existing slopes, the Forest Service has totally ignored the benefits
to be provided by diverse and vigorous competition. Instead, the Forest
Service seems to prefer to operate in the "quiet waters" of the monopolist
giving existing ski companies the right to open adjacent new areas and
routinely renewing existing permits. We think it is indefensible that control
over federal lands-lands owned by the citizenry of this country in common-
is allowed to accumulate in the hands of the few.
B. The Forest Service presently relies exclusively upon the "single per-
mittee" to operate ski areas and all related businesses on federal lands. In
response to an inquiry by former Congressman Aspinall, the Forest Service
stated that the permittee is "responsible for all activities on the area" and
has "the exclusive right to carry on himself or under his immediate direction
the asociated businesses." Sabin v. Butz, No. 74-1060 (Tenth Circuit, April 9,
1975), Slip Op. at 15 n. 8. In other words, at the present time it is the policy
of the Forest Service not only to routinely create monopolies in the area of
the ski lift service but in all related areas as well.
The Sabin case provides an excellent example of the type of situation
created by present Forest Service policies. While there does not appear to be
any legitimate reason for not allowing independent ski instructors to provide
instruction so long as they are able and willing to meet certain reasonable
conditions, at the present time the Forest Service policy is to make no effort
to assure competition in ski instruction on federal land leaving this, along
with all other related businesses, within the sole discretion of the permittee.
This, in turn, means that there is no price competition in ski instruction and,
perhaps more importantly, there is the resultant stifling of competition in the
quality and variety of ski instruction.
3. The Present Leasing System for Major Ski Areas Is Unlawful. As I
previously advised your office this past June, one threshold problem that
the Forest Service confronted in the administration of ski areas is that by
statute the Secretary of Agriculture is limited to permitting the "use and
occupancy of suitable areas of land within the National Forest not ececeeding
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eighty acres" (emphasis added). 16 U.S.C.A. § 497 (1974). When confronted
with this statutory limitation, the Forest Service chose not to comply with
the clear limitations of the statute, nor to seek statutory amendment. Instead
the Forest Service chose to circumvent the statutory limitation through the
device of a series of special use permits issued on an annual basis.
There is no statutory authority for such an approach and the propriety of
proceeding in this manner is, at best, highly questionable. While we are not
aware of any cases interpreting this specific statutory language, in related
areas where Congress has imposed similar acreage limitations the United
States Supreme Court has consistently held that attempts to circumvent the
statutory limitation were invalid. Thus, in United States v. Trinidad Coat
~ Coking Co., 137 U.S. 160 (1890), Mr. Justice Harlan held, in a case in-
volving coal leasing on federal lands in Colorado, that the object of the
limitation to 160 acres for individuals and 320 acres for associations "was
manifestly to prevent monopolies in these coal lands." 137 U.S. at 169. The
Court's opinion emphasized that it "was for Congress to prescribe the con-
ditions under which individuals . . . might acquire these lands. . . ." See also
United States v. Ml2nday, 222 U.S. 175 (1911).
While we certainly do not want our remarks to be interpreted as opposition
to the concept of any aggregation in excess of eighty acres-a position that
would make it extremely difficult to operate any of the major ski areas-we
do think the present system is illegal and strongly endorse your suggestion
that new legislation is absolutely essential.
My primary concern is that in drafting any new statute, careful con-
sideration be given to the elimination of the anticompetitive aspects of the
present system. Fair and vigorous competition is the foundation of our
economic system and government created monopolies are no less offensive
to our economic system than privately created monopolies. I, therefore, would
like to urge this subcommittee to consider certain amendments to S. 2125
to assure that the actions of the federal government provide the maximum
possible competition in the development of these lands.
With these considerations in mind, I would propose that S. 2125 be amended
as follows:
(1) All new permits should be awarded on the basis of open and corn-
petive bidding with an express requirement limiting the number of slopes
within any given geographical area that can be held by any one corporation
or individual; existing permits should be renewed only after open and com-
petitive biding with due regard to the compensation of the previous permit
holder for the fair market value of the existing improvements;
(2) The "associated businesses" should be separated out from the basic ski
lift operations, and the right to conduct such businesses should be awarded
on a competitive basis with all possible steps being taken to provide for the
maximum possible competition;
(3) The provision contained in S. 2125 requiring a public hearing prior
to any increase in charges to the public should be modified to provide guide-
lines for determining how such rates ought to be calculated as well as for a
formal hearing before an impartial hearing examiner;
(4) The present thirty (30) year maximum term of a permit ought not be
extended to fifty (50) years as now provided in 5. 2125;
(5) There should be a requirement that the Antitrust Division of the United
States Department of Justice provide both Interior Committees with a report
regarding the anticompetitive consequences of each permit in which the
Forest Srvice proposes to award more than 1280 acres to a single individual
or corporation.
With these few changes I feel that 5. 2125 will provide a sound basis for
the development of a vigorous and healthy system for providing the best
posible variety of skiing facilities and services to the public at the most
reasonable cost.
PROPOSED AMENDMENTS TO S. 2125
Add to Section 1(b): (4) "local government" means each and every county
or municipality in which all or part of the commercial outdoor recreation ski
facility or related project is to be located;
(5) "appropriate state agency" means the state agency designated by state
statute for this purpose of the state in which the commercial outdoor recre-
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201
ation ski facility is to be located, or in the absence of such designation, the
governor or his designee;
(6) "independent ski instructor" means any person who instructs skiing
for hire on or partially on Forest Service property that is designated as a
commercial outdoor recreation area, and who is neither an employee of the
primary permittee nor the area ski school;
(7) "associated businesses" means any commercial services or facilities to
be located or conducted on the permitted National Forest lands, except ski
lift facilities;
(8) "competitive bidding" means the highest dollar bid by any responsible
bidder, whose proposal is consistent with the general development of the
commercial outdoor recreation ski facility.
Amend Section 3(a) (2) (A) as follows: Delete the language "one thousand
two hundred and eighty" and substitute "eighty."
Amend Section 3(a) (2) (B) as follows: Delete the word "five" and substi-
tute "two."
Amend Section 3(d) as follows: Delete the word "fifty" and substitute
"thirty."
Ad as new Section 3(h): The Secretary shall immediately notify the ap-
propriate state agency and the local government whenever consideration is
given to the development of comercial outdoor recreation ski facilities and
shall include the appropriate state agency and local government in any plan-
ning efforts related to the development of commercial outdoor recreation ski
facilities. No permit shall be issued unless it complies with all applicable
federal, state and local plans, regulations and statutes.
Add as new Section 3(i): No permit shall be issued pursuant to this Act
without the express concurrence of the appropriate state agency.
Add as new Section 10:
INDEPENDENT SKI INSTRUCTORS
Section 10(a)-Within six months from the date of enactment of this Act,
the Secretary, shall publish in the Federal Register and submit to the Con-
gress proposed regulations containing guidelines to be employed by him in
determining whether a permit shall be issued to an independent ski instructor
at any comercial outdoor recreation ski facility which is located partially
or entirely on National Forest land.
(b) Such regulations shall require proof of ability as a ski instructor,
liability and indemnity insurance, but shall in no case require the approval
of the permittee operating the commercial outdoor recreation ski facility.
(c) The Secretary may also promulgate reasonable rules regulating the
manner in which independent ski instructors conduct themselves on Forest
Service lands.
(d) Each and every permit for a commercial outdoor recreation ski facility
isued under this Act shall expressly include a provision recognizing the rights
of such independent ski instructors to conduct skiing for hire on the entire
commercial outdoor recreation ski facility, including private land and Na-
tional Forest land, and agreement to such a provision shall be a condition
precedent to receiving a permit for a commercial outdoor recreation ski
facility.
Add as new Section 11:
ANTITRUST
Section 11(a)-The secretary shall consult with the Antitrust Division of
the United States Department of Justice and give due consideration to the
views and advice of that Division in the formulation and promulgation of
rules and regulations pursuant to this Act, and in the issuance and renewal
of permits under this Act.
(b) At least sixty days prior to any submission required under clauses
3(a) (2) (A) or (2) (B) of this Act, the Secretary shall advise the Antitrust
Division of the United States Department of Justice of the proposed permit,
together with his detailed findings as to the terms and conditions he proposes
to impose upon the permit applicant. Any response received by the Secretary
from the Antitrust Division shall be included in his submission pursuant to
clauses 3(a) (2) (A) and (2) (B) of this subsection.
67-512 0 - 76 - 14
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202
(c) The Secretary may not issue a permit pursuant to this Act to any
person, association or corporation, which, directly or indirectly, has an
interest in any other ski area, any part of which is located within 50 air
miles of the area encompased by the proposed permit.
(d) Permits for the operation of associated businesses on Forest Service
lands shall be awarded on the basis of competitive bidding, with no preference
being given to the commercial outdoor recreation ski facility primary per-
mittee.
(e) Nothing in this Act shall be deemed to convey to any person, association,
corporation, or other business organization, immunity from civil or criminal
liability, or to create defenses to actions under any antitrust law.
U.S. SENATE,
COMMITTEE ON INTERIOR AND INsULAR AFFAIRS,
Washington, D.C., February 26, 1975.
Hon. JOHN R. MCGUIRE,
Cli'ief, U.S. Forest Service,
12th and Independence Avenue SW., Washington, D.C.
DEAR CHIEF McGuiaE: It has come to my attention that several ski corporations
in Colorado-Vail Associates, The Aspen Ski Corporation, and Aspen Highlands-
have applied to the Forest Service for authority to increase their present $10 daily
ski tow ticket rates to $12. This rate, of course, is a sizeable percentage increase.
I am quite concerned over the continuing rise in the cost of this important
Colorado recreational activity to consumers. I fear that, if the present trend
continues, it will be priced out of the reach of the average citizen. Indeed, I
suspect the present rates already preclude participation by many Coloradoans
and out-of-state visitors.
For this reason, I am requesting that you initiate a careful study of the
applications of these firms before you grant their request and would appreciate
receiving a report of your findings.
I am particularly disturbed to learn that the financial information submitted
to the Forest Service to justify requested increases in rates, such as these, are
withheld from the public under provisions contained in your special use permit
contracts. I would like to see this changed in all such future contracts and a
vigorous attempt to renegotiate existing contracts in this regard.
I find it difficult to understand why any contract involving public lands should
not, by their very nature, be made public. It would seem to me to be only proper
that the financial justification for such rate increases be made available for
public inspection and, if necessary, public hearings. Only this way, I feel can
the public be assured that the requested increased revenues are necessary for
the continuation of normal operations and needed improvements.
I understand that the decision on whether or not to grant the current rate
increase requests is to be quite soon. I would appreciate it, therefore, if you
would look into the matter immediately and either delay the proceedings until
more information can be made available to the public or adequate justification
can be given to satisfy the very real concerns of myself and many of my
constituents.
You will agree, I am sure, that it is always important for government to
protect the consumers' interests wherever possible. In my opinion, this respon-
sibility is absolutely mandatory in matters involving the oversight of public lands
entrusted to the Forest Service.
Best wishes.
Sincerely,
FLOYD K. HASKELL,
U.S. Senator.
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., March 11, 1975.
Hon. FLOYD K. HASKELL,
U.S. Senate
Dear SENATOR HASKELL: This is in reply to your February 26 letter and one
from Mr. Kenneth A. Senn of Aspen, Colorado. Both letters express concern
over proposed lift ticket and season pass prices at some Colorado ski areas.
Departmental regulations require that concessioner services and facilities
be made available to the user at reasonable rates. Accordingly each National
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203
Forest concession permit provides that user charges are subject to Forest
Service review. Each Forest Supervisor is responsible for these reviews within
his area of jurisdiction. When price changes are proposed which involve more
than one operation, as is this case, State-wide or industry-wide studies are
instituted by the Regional Forester so that a broad market base can be estab-
lished. Just such a study is underway. Since many operators are already
making plans for the next ski season, we can expect decisions on the pro-
posals to be made shortly. You will be interested to know that requests to
institute the new rates for the remainder of this season have been denied
for both Aspen and Vail.
The development of skiing in Colorado has been made possible by the pri-
vate individuals or corporations who have invested millions of dollars in
facilities. Private enterprise cannot, of course, continue to serve the public
without a reasonable profit opportunity on its investment. Naturally there
is a profit variation influenced by such variables as managerial ability. We
do not feel we should either limit or guarantee a particular level of profit.
We do, however, feel that pricing should reasonably reflect the added cost
of doing business and that it can legitimately be passed on to the user.
When an operator serves the same number of customers with no additional
investment, a raise in price to the user to simply increase profit would gen-
erally be disallowed. On the other hand, we would not restrict profit if it was
the result of efficiencies in management, economics in operation or an increase
in number of participants. We are mindful that any program involving price
control is quite complicated and that there are no easy answers. In that
respect, we are most interested in the studies being made and will assist and
counsel the Regional Forester so that local decisions reflect consistency as
well as equity.
We are quite concerned about making public the specific financial infor-
mation about individual operations. Over the years, we have developed a
level of confidence and trust with our concessioners which has allowed us to
study and respond to the financial world they live in. This has been developed
by maintaining, as confidential, all financial information secured. We have
and will continue to make public the results of studies reflecting average or
industry-wide data in a manner that individual respondents cannot be identi-
fied. Useful information regarding appropriate levels of fees for the use or
data to analyze proposed changes in charges relies on this confidentiality.
Further, exposure of individual private costs and operating procedures could
place that permittee in an unfair position vis-a-vis competition.
We believe there are sufficient factors including the market place which
will assure a range of ticket rates in Colorado. This, we hope, will allow a
maximum number of skiers from different economic levels an opportunity
to participate. Those enterprises which provide more and higher quality
facilities and services will naturally command higher prices.
Thank you for the opportunity to comment on this important matter. We
will, as you suggest, monitor i~arefully the appropriateness of decisions issued
in the field and be alert to any needed adjustments.
JOHN R. McGunm,
Chief.
Senator HASKELL. I should have introduced the gentlemen with
me. On my left is Mr. Quarles, counsel for the subcommittee. On my
right is Mr. Loesch, who is the minority counsel for the Interior
Committee. Also present in the room is Mr. George Tourtillot from
the Forest Service, who will be glad I am sure to answer any questions.
Also, if anyone wants a copy of the hearing record, if you will
sign up at the table just outside the hearing room and leave your
address there, you will receive a copy of the hearing.
NOW, our next witness is the Honorahie Tom Croak, the county
commissioner of Summit County, who also represents the Northwest
Coimcil of Governments. It is nice to have you here.
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204
STATEMENT OP TOM CROAK, COUNTY COMMISSIONER, SUMMIT
COUNTY, REPRESENTING THE NORTHWEST COUNCIL OP GOVERN.
MENTS
Mr. CROAK. Basically, as far as the Northwest Council of Govern-
ments is concerned, this statement was adopted a.fter three drafts
and much discussion on the 26th of September, about a week ago.
Basically, one of the principal things, we can generally support the
bill with the one main exception I think, and that is with regard
to what we fear will be the creation of .another Federal governmental.
regulatory agency. I think from the comments that were made at
the meeting the consensus was that Federal regulation in many areas
has been* a pretty dismal failure. I think we have recently been
attempting to get passenger rail service to the western slope through
the Moffat Tunnel and so forth, and there we are dealing with the
PIJC and I think the ICC has some influence in that area also. Our
efforts have been a total failure at this point.
Senator HASKELL. I should point out, Commissioner, that right
now we do have regulation of charges by ski industries, but that we
don't know on what basis it is conducted, so we are really talking
about a choice between a present regulatory system which nobody
can find out how it is operated, and some other. That really is the
choice.
Mr. CROAK. Right. I would say that here I am dealing specifically
with Summit County, and to refresh your memory perhaps that we
have four ski areas in Summit County. We have Breckenridge, Arap-
ahoe, A Basin, Copper Mountain, and Keystone. I notice that none
of them are charging the same rates this year. The highest rate is
$10 per day. The lowest, I believe, is $6.50, if I recall correctly from
the paper.
Senator HASKELL. None of them are owned by the same group,
isn't that correct ~
Mr. CROAK. That's correct. The Aspen Corp. owns the Brecken-
ridge Ski Area.. which has the lowest rates in Summit County, and
Ralston Purina owns Keystone Arapahoe and Copper are owned by
other people. I'm not sure. who.
Senator ~ Here is. wher~ you might find that you have
honest. competition and not go any further.
Mr. CROAK. We sort of feel that way. I think of the experience we
have had in Summit County, admittedly we don't sit in when they
are setting the rates and so forth, which maybe would not be so good,
I don't know. Would any system of regulation work is the question,
particularly at the Federal level. Admittedly, these are Federal lands
and the Nation obviously has a very, very deep interest in the matter
and should be interested in protecting the consumer.
We in Summit County are certainly interested in protecting the
consumer also, in that the visitors that come to Summit County,
whether to ski or to recreate on for the most part 80 percent of
Summit County's Federal land, come there, and. that's our basic
economy', really. We have a healthy agricultural economy, which is
ve~'y,; very sr~all, so w~ definitei~ want the lands managed, properly.
We want the ski areas to operate as well as possible The question is
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205
whether or not the establishment of regulatory skiing could effective-
ly do that.
Another thing that we suggest is this statement as an amendment
to the bill has to do with the fees that the permittees, the ski areas,
are charged by the Federal Government. In other words, what they
have to pay the Federal Government. We would like to see that per-
haps increased, so at the same time we would like to see it go directly
to local government to meet some of the added costs that we incur
in helping to make the Federal lands accessible to the citizens of the
Nation, and I think this is a real service that we are performing
and it's very difficult to do when we have about 20 percent of the
county that is subject to ad valorem taxation and at the present time
get approximately 25 or 30 percent of the fees that are taken~ but
they are pretty minimal. I think in our budget for our year we are
anticipating $150,000.
Senator HASKELL. I think, Commissioner, this is something that
came through loud and clear at the hearings in Aspen, that you have
a business operating on real estate that's not on the tax rolls but
causing in your case the towns in your county have to supplY the
water, fire, police protection, and the like, and yet you don't have
the benefit of taxing the real estate upon which it is operating, and
therefore some much larger percent of the fee should go to the local
government units.
Mr. CROAK. We would appreciate it. We do not have a draft of any
language, but we would appreciate something along those lines to
be included in the bill. We do have very great expenses in order to
provide basically a good experience for the people that come to
Summit County, visitors that w need to be able to provide that~ and
that we need financial assistance to provide it.
I might comment also, and I am not sure exactly how the Forest
Service does operate on this rate fixing thing, but I would suggest
that with regard to the personnel in the Forest Service that we come
in contact with dealing at the local government with the Forest Ser-
vice, which is the largest landlord in the county, that we have had a
great deal of good cooperation from them, from Mr. Lucas to Mr.
Evans down to our district ranger, Larry. Larson, that they coopera-
ted with us in a great many ways, which I think is beneficial fo us
as a local government, but I think at the same time beneficial to
those people that are using the national resources through ski areas
or wildnerness areas, which we would again like to throw into this
bill in favor of that expanded wildnerness area in your bill, too.
But, that I think basically is the position that we would like to
express, and urge that the Senator and the committee consider that
we are kind of in a position that we don't want to kill the goose as
far as we are concerned with regulations. Perhaps it is a little bit
too simple, I guess you might say, that I wonder what would be
really the difference other than that they would, as I think recent
publicity with regard.. to the utility companies has shown, just
create different sets of books and hire a few more accountants to
justify different accounting methods to show that they are losing
money and they do need to raise rates. I think that they were charg-
ing off taxes that they are not really paying as justifying an increase
in their rates.
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2O~
Yet, I dont't like to be cynical about. it, but .1 think that experience
has been not that great as far as really achieving the goals of the
regulatory systems that have been enacted, and that they just add
another cost to the businesses.
Senator HASKELL. Well, I appreciate your remarks on that. We
stress that we are regulated now, but the question is we don't know
how.
I would like to comment on one part of your statement. You* have
mentioned a possible change in section 7, to permit the bill to override
the provisions of the United States Code which require that the funds
which go to the States can be spent only for roads and education. I
would agree with you 100 percent. As a matter of fact, I have drafted
legislation to do this for oil shale and have got it passed through the
Senate three times, and I am going to do the same thing in this case.
Thank you very much, Commissioner.
Mr. CROAK. Thank you very much, sir.
[The prepared statement of Mr. Croak follows:]
STATEMENT o' Trio~&~ E. CROAK, CHAIRMAN OF THE SUMMIT COUNTY BOARD
OF COMMIssIoNIRs, ON BEHALF THE NORTHWEST COLORADO COUNCIL OF Gov-
ERNMENTS AND ALSO ON BEHALF OF SUMMIT AND EAGLE COUNTIES, INDIVID-
UALLY
The Northwest Colorado Council of Governments, Colorado Planning and'
Management Region XII, is comprised of the' six counties of Eagle, . Grand,
Jackson, Pitkin, Routt and Summit and the twenty-two municipalities `there-
in.. The region contains approximately 75% of all ski capacity in the State
of Colorado. For this reason, it is approporiate that we present testimony
at this hearing concerning Senate Bill 2125.
Colorado's. Ski Industry has grown drastically during the last fifteen years.
Existing communities have expanded, new communities have been created
and significant sOcial and economic impacts have occurred as a result of the
industry's growth.
We would like to present for your consideration these comments concerning
use of the public domain for recreation. Because of the existence of the ski
industry, we have seen many. of our communities achieve a stable economic
basis. Cultural activities, such as the Aspen Institute, The Keystone Center,
and the Vail Symposium, provide opportunities for access to services which
did not exist before. The Industry has attracted top caliber administrative
personnel, who have made positive contributions in both the public and private
sector, in improving the capabilities of local government and business. In most
cases, a healthy. relationship exists between local government and the indus-
try working in partnership with the federal government to meet the nation s
recreation requirements. Significant improvements in public services and
ptilities have been funded to a large extent by the presence of the Industry.
The many recreational activities available in our region, including ski
areas, have brought many new permanent residents to our region as well as
n~iany vacationing visitors. This ingress of people has and does strain our
local governments' financial ability to provide public services. There is no
provision in the pending Bill concerning increased funds for local government.
Increased funding would enable local governments to better serve the needs
of visitors using the nation's recreational lands and facilities.
erequest that a section be added to. the Bill providing for the return to
the local governments affected, of all permit fees collected and that they be
set at a level which will pay the proportionate share of local government costs
attributable to the ski industry. The addition of such a section will require
the changing of Section Seven to permit this Bill' to override present provisions
of the United States Code which requires that. such funds `be spent for roads
and education. . .
We also :~equest that a section' be' added to the Bill to provide that the
industry may maintain speciai rates. which customarily are offered to orga-
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207
nized groups, such as school sponsored physical education programs and
special group discounts for the handicapped, underprivileged and similar
organizations. .
Section 4 and subsection 2(c) (1) of the Bill are a first step in establishing
a regulatory agency such as the I.C.C. or F.P.C. Although such agencies were
established with good motives, their performance in protecting the consumer
leaves a great deal to be desired. There is not sufficient evidence at present
to believe that the controls proposed would achieve the goals suggested.
We oppose the inclusion of Section 4 and Subsection 2(c) (1).
With the exception noted and the additions suggested, we strongly urge that
Senate Bill 2125 be passed.
Senator ETASKELL Now we start with the private witnesses, and 1
would remind each of you of the 5-minute time limitation. The
statements will be concluded in full in the record if they can't be
completed in 5 minutes. Our first witness will be Dr. Lewis Perl of
the National Economic Resea.rch Associates of New York City. Dr.
Perl, it is a pleasure to have you here.
STATEMENT OP DR. LEWIS PERL, VICE PRESIDENT, NATIONAL
ECONOMIC RESEARCH ASSOCIATES OP NEW YORK CITY
Dr. PERL. Thank you very much, Senator Haskell. I very much
appreciate the opportunity to appear here and testify with regard
to S. 2125. Before presenting my testimony I would like to say that
I am here on my. own behalf and that I don't represent any organized
group of skiers or the ski industry.
The recent rise in ski rates in the Aspen ski area has raised a
storm of protest. Why has that been the case? Daily rates have risen
from $10 to $11. It seems to me in this inflationary period hardly
anybody views that as extraordinary. On the other hand, the season
skier finds this year he must pay $500 and $750 a year for what
they were paying $250 a year last year. This represents something
between a 200 and 300 percent increase. It is this change of rate
structure which has aroused the wrath of skiers in the area. The
question is, is their complaint legitimate? Secondly, we can reason-
ably expect 5. 2125 to alleviate that grievance?
I will try to summarize briefly because the time is short and other
people have commented on may of these issues. I would like to
comment on two aspects. First, I think it is worth considering
whether the structure of the ski industry and its competitive industry
structure justifies regulation, and, secondly, if there is to be regula-
tion, I would like to suggest one kind of thing in addition to that.
The conclusions of my review are despite the competitiveness of
the ski industry nationally, the local market is not sufficiently com-
petitive to assure reasonable rates for all skiers.
Secondly, it seems to me that S. 2125 could alleviate this difficulty,
but only if it included a provision for nondiscriminatory rates in
addition to providing for reasonable rates of return, and, finally I
would like to point out that I think regulation of ski rates if it is
done in an equitable and reasonable way is an extremely costly
proposition as we who work in the utilities industries have found
out, and you might want to consider ways in which the Forest Serv-
ice regulation could be altered to encourage increased competition
and thereby obviate the need for regulation.
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208
Senator HASKELL. Similar to what Mr. Hill suggested ~
Dr. PERL. Yes, since it is a point I .think not brought out by others
I would like to elaborate on the principle of nondiscriminatory
price a little bit. I think it is confused with the idea that rates have
to be uniform. I think it does not mean. that at all. It rather means
the rates for individual users should bear some reasonable relation-
ship to the individual users on the slopes, since the skiing is really
a multitype industry, not ony ski lessons but skiing of varieties of
different sorts. Simply assuring the rates of return are adequate
doesn't necessarily assure that each of the rates that make up. that
overall rate of return will be equitable and you can have a situation
in which one class of skiers are in effect subsidizing another class.
Just very briefly, I would like to comment on the relevance of
nondiscriminatory prices. As regards the season pass, season passes
in effect form a volume discount for skiers. The ski corporation it
seems to me treats it as simply a discount it graciously gives to the
local area to be taken away with some discreation. In reality it
seems to me it is an effect of the price that emerges under competitive
circumstances and therefore has a legitimate place in the structure.
A season skier poses smaller administrative costs of the ski area,
reduces the risks of the ski operators, improves their cash flow
position, and I think most importantly has a far better load factor
on the slopes, to use a term familiar to the utilities, than does the
daily user. By that I mean much more use occurs during the off
period. The question of this in the electrical situation is a critical
one for setting rates. Clearly the capital costs much more frequently
function than off season and costs of skiing ought to reflect that
differential.
I think this goes to a point you raised both in your introduction
to the bill and your comments earlier. One way I think of dealing
with the difficulty of skiing becoming so expensive that it is be-
coming priced out of the range of low-income skiers is very simply
defined peak and off-peak differentials which provide the opportunity
for the low-income skier to ski during the off season period or for
skiing during the peak periods.
If I might, I would like to elaborate for another minute on this
question of the competitiveness in the rate structure, because I do
think that when you begin to become aware of all of these rate
differentials and reasons for rate differentials the costs of providing
regulation becomes apparant, and the utilities industry, taken col-
lectively, spends several billion dollars a year in the process of
setting adequate rates, and it doesn't seem to me the process of setting
rates in the ski industry is inherently less complicated than that. It
does seam some alternatives here are, one, in the process people have
mentioned before attempt to make that hearing process simple enough
that people can get into the ski business, and it seems to me that.
as it becomes more complicated it certainly favors the wealthy, large
ski operator, who understands the process.
Secondly, it seems to me that it would be desirable in this bill
that you have suggested to have a dual rate structure or a dual rate
review process, one in which you consider the question of whether
the areas are adequately competitive to begin with, and having
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resolved that question satisfactorily, there might be no need for rate
regulations, and so there my testimony I think supports the point
you are making, but the last point I would make, and I think it
supports Mr. Hill's earlier remarks, is that there ought to be pro-
visions in the regulatory procedure which actively discourage the
Forest Service from permitting multiple ownership of ski areas by
single owners. It seems to me the process now is designed to en-
courage that, and if it could be discouraged it might be cheaper
and better to get more competition.
Senator HASKELL. While I am extremely interested in your presen-
tation, there is no question about it that the bill I think is effective
maybe not in other regards, but certainly in insuring uniformity o~
rates.
What would you suggest-let's assume, or let's make the assump-
tion that we can adopt Mr. Hill's suggestion and your suggestion
and that we not have multiple ownership, but we really have a situa-
tion such as we have in Summit County, where we have four ski
areas operated by four different people. That seems to be quite
ideal, but suppose we come to the very difficult situation, which
might be the case, for example, in Sun Valley. I don't believe there
are any ski areas in the vicinity, and I suppose the fOlks in Sun
Valley have pretty much of a monopoly and can charge whatever
they want. What standards then would you apply for determining
the adequacy or inadequacy of rates generally? Would there be some
standard you would require?
Dr. PERL. Well, I think this principle that I am alluding to of no
undue discrimination or rates that bear a reasonable relationship
to costs is about the closest I can come~ I must say as I circulated
this testimony among my colleagues, they all agreed these are difficult
principles to apply in actual practice. I don't think there is any way
around that.
I would like to make one point on this, if I may, and that's one
of the controversies that came up in Aspen on Saturday and was
this question of whether discounts are consistent with nondis-
criminatory pricing. The ski corporation pointed out at one time they
had distcount rates for schoolchildren and it still has discount rates
for older people and there is a discount for employees, and the Forest
Service in its provisions said that was clearly discriminatory and
they ought not to have that. I dOn't think those based on cost dif-
ferentials would consider those groups and nevertheless I think
there is no reason not to have them. The point I would like to make is
that rate regulation in the ski industry ought to be setting maximum
rates for individual classes of users and not minimum rates,. and that,
secondly, rate of return, acceptable rate of return, should be based
*on maximum rates. If a ski operator decides he wants to cut his
own profits and offer skiing to some class of users at a cheaper rate
without penalizing any other class of users that's his prerogative.
He is paying for it and I don't think there is anything inconsistent
there.
Senator HASKELL. Thank you, Dr. Perl. I look forward to reading
your testimony, and if you have any specific changes in the bill
itself, I would appreciate it if you would submit them. Thank you, sir,
very much indeed.
[The prepared statement of Dr. Perl follows:]
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TESTIMONY OF LEWIS J. PERL
Senator Haskell, ladies and gentlemen. My name is
Lewis J. Perl and I am Vice President of National Economic
Research Associates, an economic consulting firm located in
New York, Washington, Los Angeles, and Philadelphia. Our
firm specializes in the areas of rate regulation, antitrust
economics, labor economics, and the economics of energy and
the environment. I very much appreciate the opportunity to -.
appear before you today to testify on Senate Bill 2125. Be-
fore presenting this testimony, I would like to say that I am
appearing here at Senator Haskell's request and that I do not
represent any organized group of skiers or the ski industry.
I am an avid skier and part time economist and I am very much
interested in the principles of regulation as they might ap-
ply to the ski industry.
The recent rise in ski rates in the Aspen ski area
has raised a storm of protest. Why? Daily rates for skiing
have risen from $10.00 to $11.00. I doubt that a 10 percent
increase in the per diem rate strikes anyone as outrageous.
However, season ticket holders skiing 50 days or more per
year find that they now must pay $500 to $750 per year for
what formerly cost them $250. It is this change in the rate
structure which has aroused the wrath of skiers, particularly
those in the local area. Is this grievance a legitimate one?
If it is, can one reasonably expect Senate Bill 2125, if
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211
enacted, to eliminate this grievance? These are the questions
I would like to address inmy testimony.
I would particularly like to comment on two aspects
of Senate Bill 2125. First, I think it is worth considering
the general question of whether rate regulation can be justi-
fied in the ski industry given the structure of this industry.
Second, I would like to suggest some general principles of
rate regulation which might be applied in setting rates for
the ski industry. My conclusions are:
1. Despite the competitiveness of the ski industry
nationally, the local market is not sufficiently competitive
to assure reasonable rates for local skiers.
2. Senate Bill 2125 could alleviate this diff i-
culty, but only if it included a criterion for nondiscrimina-
tory rates in addition to providing for reasonable rates of
return.
3. Regulation of ski rates could be a very costly
proposition and the Senate might also consider ways in which
Forest Service regulation could be altered to encourage in-
creased competition.
One part of Senate Bill 2125 calls for criteria to
be established for the regulation of rates charged consumers
by the ski operators who lease federal lands. Clearly, there
can be no legal question as to the ability of the federal
government to regulate these charges in this way. However,
there will be those who will argue that regulation is
PAGENO="0216"
212
inappropriate or unnecessary given the highly competitive
nature of the ski industry. Since there are at least 900 ski
operators in the United States, the contention that this is a
competitive industry seems, on its face, reasonable. Indeed,
if one considers the world market for skiing, which is the
relevant market for some purchasers of ski services, the num-
ber of competitors grows even larger. -
Despite the large number of firms, however, I think
that the contention that competition is likely to work suff i-
ciently well in this industry to assure a reasonable relation-
ship between the rates charged for ski services and the cost
of those services is misleading. This is true for several
reasons. First, the quality of the commodity or service
being supplied varies widely from ski area to ski area. Many
ski areas are appropriate only for intermediate or novice
skiers, whereas others are suitable only for advanced skiers.
Consequently, the market for skiing of a given quality is
considerably more limited than would appear from the national
market.
In addition,.many ski areas--particularly on the
far East and far West Coasts--have become extremely over-
crowded or have unsuitable ski conditions much of the year.
Consequently, the market for high quality, relatively un-
crowded skiing conditions is also limited. Finally, and I
think most important, while some skiers are willing and able
to travel widely in search of good skiing conditions, for
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others the market is much more limited to areas within a
short distance from their home. These people may have chosen
to live near a ski area in order to be close to high quality
skiing and consequently have a high investment in that ski
area, or their income may be insufficient to permit wide
travel in search of good ski conditions. For these people,
the national market is irrelevant and the relevant market
consists only of ski areas within a short travel distance of
their homes. While in the East even this market may be highly
competitive, in the West good skiing areas are more widely
dispersed and less numerous. Consequently, the number of
competitors is severely limited. Thus, the market for skiing
services may be viewed as one which is partly competitive for
one class of customers and highly monopolistic for another
class of customers.
Even this market restriction would present no seri-
ous difficulties to the establishment of a competitive price
if skiing services were a homogeneous commodity and if ski
services, once purchased, could be transferred among users.
Under such circumstances, a single price would exist for all
ski services and that price would be the competitive price.
In the case of skiing, since the service is not transferable
from user to user, it is possible for multiple prices to
emerge and while competitive conditions for skiing conditions
may prevail in one market, monopoly profits may be earned in
another. If the objective of the Forest Service is to assure
PAGENO="0218"
214
reasonable rates for all users, then either rate regulation
or increased competition in the local skiing market is essen-
tial.
Assuming that there is to be rate regulation for
that part of the ski industry operating on federal land, I
would like to address the question of appropriate criteria
for setting rates. Senate Bill 2125 explicitly mentions the
provision of a reasonable return on equity as the basis for
setting both leasing fees and rates, but leaves other cri-
teria to be established by the Secretary of Agriculture. I
would like to suggest an additional principle which might
well be included in the legislation and on the basis of which
more detailed specific regulations might be developed by the
Forest Service. This is the principle of "no undue discrimi-
nation" in setting individual skiing rates. While not neces-
sarily always given the same definitions by practitioners,
this principle certainly is a common one in utility rate regu-
lation. Its application would not mean that the prices for
ski services must be uniform, but simply. that the prices
charged for individual skiing services must bear a reasonable
relationship to the cost of providing those services. This
principle would provide a mechanism for establishing an equi-
table price structure for skiing services.
In this regard, I think I should point out that
much of. the debate in Colorado over the appropriateness of
rates currently charged appears to be less concerned with the
PAGENO="0219"
215
overall returns earned by the ski corporation than with the
equitability of the rate structure. Having stated this prin-
ciple, I think it is worthpointing out that establishing
nondiscriminatory rates is likely, in practice, to prove to
be extremely difficult. The true economic cost of supplying
skiing services is likely to vary with the specific slope
being skied upon, the time of the day in which the skiing
occurs, the time of the year in which the skiing occurs, the
volume of a particular skier's use in any one day and in the
season, and in the intensity of that use. Assessing how
costs would vary with each of these factors can be extremely
complicated. On the other hand, establishing a rate struc-
ture which ignores these factors is an important cause of
community dissatisfaction with the rate structure and with
skiing conditions.
Some examples may serve to illustrate this point.
Prior to the most recent proposed change, the structure of
rates in Aspen provided a flat rate of $10.00 per day for
skiing. A $7.00 half-day rate (beginning at 1:30 p.m.) was
available and there were modest discounts on four-day and
six-day ski tickets. A $250 season pass was available which
permitted unlimited skiing, except for 20 to 30 days at the
height of the season. In addition, there was a discount
pass for $100 which enabled skiers to purchase daily passes
for $5.00 per day on all slopes. In addition, there were
discounts for children, people over 65, students, and
PAGENO="0220"
216
employees. Is this rate structure unduly discriminatory?
If it is the case, as some argue, that the true costs a skier
imposes on a ski area are directly proportional to the number
of runs he takes in a single day, then the rates are, at
least in one sense, discriminatory. People who by their
nature ski at a leisurely pace and therefore take few runs
are being overcharged. People who make a large number of
runs are being undercharged and, in fact, the rates ought to
be charged, if possible, on a per ride basis rather than on
a per day basis.
If one accepts the notion that charges for skiing
can best be allocated on a per run basis,. it is probably the
case that the user that chooses to buy 100 rides does not im-
pose 10 times the cost of the user who chooses to by 10 rides.
This is presumably the basis for the volume discounts associ-
ated with weekly or season passes and the disparity in costs
per ride associated with half-day and full-day tickets. The
high volume user imposes proportionally fewer administrative
costs, improves the ski area's cash position and, in the case
of season passes, significantly reduces uncertainty which
thereby improves planning. If the decline in cost per ride
which occurs as usage rises is rather pronounced, even the
volume discounts which have existed in the past may represent
discriminatory pricing against the high volume user. On the
other hand, if costs decline only modestly with usage, the
reverse might be the case and historic rates may reflect
PAGENO="0221"
217
discrimination in favor of the high volume user and at the
expense of the low volume user. It is clear, then, that the
question of whether ski rates are discriminatory cannot be
resolved without a careful study of costs and their relation-
ship to volume of use.
Costs may also vary in a ski area among the various
types of slopes being used and the types of people who ski on
these slopes. Thus, it is often alleged that maintenance
costs per skier are likely to vary with the steepness of the
slope and the intensity with which the slope is used. If
some slopes within a ski area are steeper or more intensively
used than others, it might be desirable to establish rate
differentials for using these areas. Uniform rates in all
areas would discriminate against skiers using low cost areas
in favor of those using high cost areas.
The cost of skiing services may also vary depending
upon the time of the day and the time of the year. This is
because the volume of demand for skiing services is likely to
vary with time. Cost will vary with the level of demand for
at least three reasons. First, as the volume of demand on a
particular slope increases, operating costs of the slope may
increase as additional maintenance may be required to main-
tain slope quality. Second, if increasing demand for the
slope produces crowding, the crowding itself will reduce the
quality of the skiing experience. Thus, once crowded condi-
tions occur, one of the costs imposed by each additional
67-512 0 . 76 . 15
PAGENO="0222"
218
skier is the reduced quality of the skiing experience for
other skiers.
The third aspect of the difference in costs between
high demand and low demand periods can best be seen by dis-
tinguishing between the average and the incremental costs of
supplying skiing services. In computing average costs, one
simply divides the total cost of supplying all skiers by the
number of skiers involved. In computing incremental costs,
one determines the effect on total cost of a unit increase in
the number of skiers to be serviced. As a general rule, rates
based upon charging all users the incremental costs of supply
will produce a more efficient level and distribution of usage
than if rates are based upon average costs.
As demand for a ski area increases, up to a point
this demand can be accommodated, without reducing skiing
quality, by increasing the facilities in the area--building
more liftlines, opening new trails, etc. In planning capital
additions for ski slopes, these additions are sized to accom-
modate peak demand for the ski area. As peak demand increases,
additional capital facilities must be built or new ski areas
opened. Thus, the incremental cost of serving an additional
unit of demand during peak periods of usage include the costs
the capital facilities needed to serve the greater peak demand
and thus, ski rates duringperiods of peak demand should re-
flect these costs. During off-peak periods, when demand is
less than what the ski area can accommodate and still maintain
PAGENO="0223"
219
desired quality, the cost of additional skiing demand does
not include any capital costs since incremental skiers can be
serviced without increasing capital expenditures. Rates
during off-peak periods should reflect only the additional
costs associated with operating existing facilities. Thus,
during periods of *slack demand, a ski operator could shut
down particular ski lifts and save on the operating costs of
those lifts and the maintenance costs of the slopes which
they serve. As demand increases, additional lifts can be
opened, thereby increasing operating costs. Charges during
these off-peak periods should reflect the incremental cost
of operating additional lifts.
This difference in the cost of serving peak and
off-peak demands is to some extent reflected in the current
pricing structure in that season tickets are not applicable
during particular seasons of the year, thereby requiring the
season ticket holder to pay an additional cost for using the
slopes during those periods. Discriminatory pricing may
nevertheless exist in that only high volume ski users (those
that buy season tickets) are charged differentially during
different seasons of the year. Low volume users (those that
pay the per diem rate) are charged the same price regardless
of when they engage in skiing. Moreover, even such differ-
ences in rates which do existby time of year may not reflect
the true cost differential between the~ supply of skiing serv-
ices during those periods. Finally, if there are variations
PAGENO="0224"
220
in skiing intensity during the course of the day, these are
not reflected in a measurable rate variation.
If historic rates raise questions about discrimina-
tory pricing, the rate increase for the coming year clearly
intensifies those questions. While the per diem skiing rate
has been raised only 10 percent (from $10.00 to $11.00), the
rate for a season ticket used in the off-season has risen
far more dramatically. In~ place of a $250 charge for unlimited.
skiing in the off-season, there is now a $200 charge ~ a
per diem rate of $3.00 to $8.00, depending upon the slope used.
Thus, a skier who used the slopes 50 days per season and used
only the Aspen Highlands ski area would now have to spend
$500 to purchase what he formally got for $250--a 100 percent
increase. A higher volume user who skied exclusively on Aspen
mountain would suffer an even higher rate in increase. On the
other hand, if one had previously skied during peak periods of
usage, the rate of increase in charges is more modest. A user
who previously had a season pass and skied 50 days off-season
and 30 days peak-season would spend $750 to ski. The same ski-
ing pattern this year would cost $840--a 12 percent increase--
even if all his skiing were on Aspen mountain. Thus, the ef-
fect of the current rate increase is markedly to reduce the
historic differences in rates between high and low volume use
and between peak and off-peak use, while increasing the cost
disparities among ski areas. Since costs are unlikely to have
changed in so dramatic a fashion over a single year, this clearly
PAGENO="0225"
221
reflects not a shift in costs but~a change in rate philosophy.
While it is impossible without a detailed cost study to determine
which of these structures is the more discriminatory, it is hardly
surprising that so dramatic a change in rate structure occur-
ring without public hearing or justification would bring
about widespread disaffection of local skiers.
What I hope to suggest by these comments is that
many of the issues which are currently being raised over the
equitability of rates charged by ski operators really reflect
the question of discriminatory pricing. If the legislation
is to deal effectively with these issues, it should include
as one of the criteria for ratemaking, the principle that
rates charged for skiing services should bear a reasonable
relationship to the incremental cost of supplying those serv-
ices.
If this situation is not already sufficiently com-
plicated, let me add an additional area of difficulty. In
his introduction to the legislation, Senator Haskell raised
the problem that total ticket prices for ski areas have risen
to the point where it is very difficult for a family to ski.
Undoubtedly, this difficulty increases depending upon the
size of the family and its income level. Nothing we have
said to date will necessarily solve this problem. Thus, even
after establishing an efficient set of prices such that people
are actually charged the true cost of serving them, it would
continue to be the case that the costs of going skiing would
PAGENO="0226"
222
be a greater burden on the poorer than the well-off and, for
a given level of income, a greater burden on large families
than on small families. Of course, if in the past rates have
been. too high because they have supported unreasonable rates
of return or rates charged particular users have been too
high because they have been discriminatory against, nondis-.
crirninatory pricing and reasonable rates of return will tend
to mitigate against this problem. But the problem of the
relative difference in the burden of prices on low income
and high income families will not necessarily be solved. I
do not really have any solution to this problem but I would
like to suggest two generalizations about it.
First, it is a problem which pervades any pricing
system and would exist with the same force if skiing services
were supplied in a completely competitive market. It is my
general feeling that this problem can most efficiently be
solved, not by manipulating the prices of individual goods
and services, but rather by using taxing policy to redistri-
bute income. Consequently, I would caution against including
in the legislation or in the ultimate guidelines for setting
rates any criteria which distinguish between one group of
rate payers and another, solely on the basis of differences
in their ability to pay. . .
However, having said this, I think, one should recog-
nize one particularly difficult anomaly with regard to the
setting of skiing rates. While most skiers prefer uncrowded
PAGENO="0227"
223
skiing conditions to crowded skiing conditions, the amount
which people are willing to pay to avoid crowding is likely
to vary from skier to skier. Consequently, the optimal
number of skiers using a slope is likely to be an issue about
which little consensus can be achieved. Clearly, if one is
willing to tolerate relatively crowded skiing conditions, it
is possible to have low costs and low rates for skiing.
Maintenance of uncrowded conditions will increase these costs.
Consequently, the Forest Service, in setting appropriate ski
rates, should give substantial consideration to the equity
consideration of.alternative definitions of optimal ski con-
ditions.
One final comment. As this review makes obvious,
the problem of setting cost based rates is intensely compli-
cated. Regulated industries such as telephone and electric
utilities spend billions of dollars each year on the question
of appropriate rate policy and this question is really no
less complex in the ski industry. It may well be that the
Forest Service, despite the best of intentions, is not
capable of setting nondiscriminatory ski rates without an un-
reasonable investment of time and effort. As an alternative,
a program might be developed to encourage more rapid develop-
ment of new ski areas and to assure wide distribution of,
ownership in these areas. The result might be sufficient
competition among local areas to assure a reasonable rate
structure.
PAGENO="0228"
224
Senator HASKELL. Our next witness' name was inadvertently
omitted from the witness list. Dr. Richard G. Walsh, who is a pro-
fessor of economics at Colorado State University.
STATEMENT OF DR. RICHARD G. WALSH, PROFESSOR OP
ECONOMICS, COLORADO STATE UNIVERSITY
* Dr. WALSH. Thank you, I am grateful to be here. I would like
to comment briefly on inflation and the cost of skiing and then the
proposal in that inflation that it is not just lift tickets, it is lodging
and a number of other things, and then I would like to comment on
the Forest Service policy with regard to fees and on the nature of
the subsidies that the Forest Service grants or other uses and re-
sources near Forest Service land. I would like to say something about
the need for public disclosure in your bill with regard to such things
as lift capacity. I would like to comment on pricing, as Dr. Pen,
and then something with regard to existing Forest Service policy.
Senator HASKELL. Please bear in mind the 5-minute limitation.
Dr. WALSH. I am sorry. The main thing was what appeared in
Skiing magazine, that skiing costs in Aspen have been running at
a percent greater than overall costs, and it is not only lift tickets,
it is in the area of lodging and other areas. Most ski area operators
do-or, excuse me, not most, a good proportion, 37 percent, do have
land development operations at their base for commercial and resi-
dential purposes and condominium purposes, but the main point in
my presentation, sir, is that I think the Forest Service should con-
sider including revenues from land development and rental revenues
from lodging in the determination of lift ticket prices for now these
very large external benefits-
Senator HASKELL. Now. wait a minute, suppose they had land
losses? Would you then make the skier pay for the land losses?
Dr. WALSH. No, I don't think so.
Senator HASKELL. I think you can't have it both ways.
Dr. WALSEL Okay, perhaps my thinking on this is not really
developed. I really don't know how to put it. I searched a number
of pieces of literature in the area of land resource development and
regulation and I just don't know how this could be done, but I feel
very strongly that large external benefits of Forest Service lift
ticket resources are captured by a few fortunate individuals and this
inflates ski lift ticket prices artificially, and I believe the principle
of equity suggests that part of this appreciation of land values and
land improvement should accrue to society, at least to the extent that
society's resources create these values, and this external value is
similar to grazing permits, which are bid-in prices.
Now, the other point I want to make is that the need for informa-
tion as to utilization of capacity and how that affects cost, it seems
to me on the basis of model plans that I developed, research that I
have done, that if you increase the use of ski lifts by 20 percent, and
many areas increased the use of ski areas by more than 20 percent
last year, then you get something like, and this is very rough, you
get something like a 6 or 10 percent reduction in the cost of opera-
PAGENO="0229"
225
tions. It seems to me that cost ought to be taken into account when
the Forest Service makes decisions about~ ski area pricing.
I think with regard to peak pricing that those people that benefit
from the peak, say, during the Christmas holiday, ought to pay
according . to principles developed in other industries, ought to pay
a larger proportion of the overhead costs than those users that pro-
vide the skiing during the entire season and ought to be charged
the direct varying price, and this is an established principle in
regulatory pricing, and I think that this results in much less capacity
and much less overhead and less need for increase in ski area prices.
Another problem that I do want to mention is that the agency has
the jurisdiction over the large development, over a large block of
land, but they do not have jurisdiction as I understand it over
existing land developers when these are scattered. There are a
number of them involved. When the land developers are not the
person operating the ski area, then I think your bill ought to remedy
that problem so the Forest Service can influence the land developers,
because they affect the overall cost and efficiency and overall efl~ects
of the operation just as much as do the decisions of the initial lift
developer and initial developer of the base commercial area. I think
in the long run in an era of resource scarcity and limits of growth
that it is very important to consider ways to reduce the investment
and reduce the costs of skiing in our society, because if the industry
is going to prosper and grow over the next few decades it will be
necessary to limit investment and costs, because the way it is going
now it is one of the highest users of irreplaceable resources and
recreational activities.
Senator HASKELL. Thank you very much for your comments, and
your statement, of course, will be included in full. I would like, to
comment that one of the purposes of the bill is one of the things
that you suggested, and that is that before a permit is issued a
land use plan prepared by the local county or counties and satisfactory
to the Forest Service be adopted to take care of just the situation you
were talking about where either the owners of the area themselves or
somebody else would go in and construct facilities which would
place an intolerable burden on public services-perhaps some kind
of real estate development. The bill's provisions may not be suf-
ficiently rigorous, but that's certainly the intent.
Dr. WALSH. Yes, sir; I agree with that very much.
Senator HASKELL. Thank you for appearing very much indeed, sir.
[The prepared statement of Dr. Walsh follows:]
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226
TESTIMONY AT HEARINGS OF THE SENATE INTERIOR SUBC0MMIT1~EE
ON THE ENVIRONMENT AND LAND RESOURCES, ON S 12690,
A BILL TO PROVIDE FOR THE ISSUANCE OF PERMITS ON PUBLIC
DOMAIN NATIONAL FOREST LANDS FOR COMMERCIAL OUTDOOR RECREATION
FACILITIES AND ACTIVITIES, AND FOR OTHER PURPOSES.
DENVER, OCTOBER 6, 1975.
I am grateful for the opportunity to comment on the proposed legislation.
My name is Richard G. Walsh. I am a Professor of Economics at Colorado State
University in Fort Collins. My work is primarily in recreation economics and
consists of teaching, research and consulting governmental agencies. Most
recently, I completed studies of land development near the base of several
ski areas in Colorado. Areas studied were Aspen, Estes Park, Breckenridge-
Dillon, Steamboat Springs, and Vail. In my testimony, I will draw on the
findings in several of these ski areas and on other research that I have done
on the costs of resort and ski area operations.
Inflation in the Cost of Skiing
The average total cost of skiing has been increasing faster than the rise
in the consumer price index since 1968. Skiing costs including lodging have
risen at a rate nearly 50 percent greater than the index of all consumer
purchases. The consumer price index rose by about 55 percent from 1968 to
1974 compared to the costs of skiing at Aspen which climbed 81 percent over
the same period of time (Farwell, Ski Area Management, Fall, 1974). Most
(92.5 percent) of the Aspen skiers were out-of-state so this comparison does
not apply to Colorado resident skiers, for which data are unavailable.
The concern about the high cost of skiing in Colorado has led the U.S.
Senate to schedule these hearings on a proposed bill to provide full disclosure
of the relevant economic data and to allow for more public input in rate making
decisions by the U.S. Forest Service. My studies suggest that the price.of
PAGENO="0231"
227
lift tickets is only a part of the problem of increased costs of skiing.
Costs of condominium ownership and of rental by skiing families are also
important. Of 132 ski areas responding to the 1974 survey (Goeldner, Eco-
nomic Analysis of North American Ski Areas, 1974), over one-third (37 percent)
were engaged in land development, either second home, condominium or commercial
land development at the base of their ski slopes. Average total revenue from
real estate sales and leases exceeded revenues from ski lift operations,
$780,700 compared to $686,500. In addition, over one-fifth of the ski areas
surveyed provided lodging accommodations, with average revenues of $214,800
equaling nearly one-fifth of revenues from ski lift operations.
The Forest Service should consider including profits from land develop-
ment and.rental revenues from lodging in the determination of lift ticket
prices. For now these external benefits of Forest Service administered
resources are captured by a few fortunate individuals. This inflates ski
lift ticket prices artificially. The principle of equity suggests that
part of appreciation in values of land and improvements should accrue to
society to the extent its resources create these values. This external
benefit is similar to the benefit of grazing permits on Bureau of Land
Management land, which are bid into the prices of ranches holding BLM permits.
At a 1974 cost of $205 per day for a family of 3, skiing in Colorado
is becoming less and less accessible to the out-of-state middle class. Con-
dominium ownership reduces this cost somewhat. The lodging portion of the
average costs per day for Aspen skiing families was $50. Condominium ownership
~in three areas, Vail, Steamboat Springs, and Breckenridge-Dillon, reduced
this average of $37 per day. This was about $5.00 per day more than the
average rental rates charged for the same condominiums of $32.17. This weights
PAGENO="0232"
228
winter and summer rates by owner use in the two seasons. Lodging costs of
owners in Breckenridge~.Di11on at $63.60 per day were more than double the
rental. alternative, with costs $36.80 more than average rental rates of $26.80
for the sane units. The situation in Vail was in sharp contrast to this.
Vail owners have had free use of their condominiums in the past. In 1973,
their condominium benefits contributed $10.50 per day of use toward other
recreation and.travel expenses. In Steamboat Springs, lodging costs to
condominium owners were $11 per day less than the weighted rental rates of
$40.50 for the sane units.
Nearly 40 percent of the skiers interviewed rented a condominium, compared
to 44 percent who rented a lodge, motel, or hotel. Average daily rental rates
for the condominiums surveyed were $40.50 in the winter ski season and $23.40
in the summer season. Vail had the highest average winter rates with $51.00
and Breckenridge-Dillon the lowest with $30 per day. Steamboat Springs
winter rates were $50. Vail had the lowest summer season rates with $21.50
per day compared to $24 in Steamboat Springs and Breckenridge-Dillon where
opportunities for summer recreation may be somewhat greater. The lower summer
rates in Vail may also reflect the fact that they were more successful in
obtaining renters who occupied the units for longer periods of time. Forty-
four percent of Vail rentals were for 180 days or more, while this was the case
for only 23 percent of Breckenridge-Dillon and 13 percent of Steamboat Springs
rentals. It seems ironic that these savings tend to go to families whose
ability to pay is much greater than for most skiers. Skier incomes tend to
be above average U.S. household income. Yet, incomes of condominium buyers
in Colorado ski areas were even higher than for skiers. Approximately one-
half of Aspen skiers had incomes of $25,000 or greater, compared to nearly
90 percent of the condominium owners we sampled in the three study areas. The
estimated average income of Aspen skiers was $40,500 compared to $56,400 for
PAGENO="0233"
229
Table $. Average annual costs of condominium ownership under recent increases in investment
prices and alternative steady and falling investment price trends, Breckenridge-
Dillon, Steamboat Springs, and Vail, Coloradol/
Costs Under Alternative
Price Trends
Breckenridge-
Dillon
Steamboat
Springs
Vail
Areas
Combined
Average Total Costs Per Year
$5,488.25
5,910.31
7,481.59
$5,310.35
6,776.66
8,470.10
$5,532.49
6,865.71
8,786.78
$5,501.06
6,352.15
8,050.08
Inflationary Prices
Steady Prices
Depressed Prices
Average Total Costs Per Day
129.75
139.72
176.87
187.64
239.45
299.30
.
147.83
180.20
230.62
142.51
164.56
208.55
Inflationary Prices
Steady Prices
Depressed Prices
Average Lodging Costs Per D~y~/
63.62
73.76
110.90
29.45
81.26
141.10
(-10.47)
21.90
72.32
37.23
59.29
103.28
Inflationary Prices
Steady Prices
Depressed Prices
`fAnnual occupancy was slightly higher for respondents included here who gave complete
cost information than for the entire sample of 99.
Breckenridge-Dillort: 42.3 days of owner use, 60.7 days of renter use;
Steamboat Springs: 28.3 days of owner use, 46.4 days of renter use;
Vail: 38.1 days of owner use, 133.4 days of renter use; and
Areas Combined: 38.6 days of owner use, 79.9 days of renter- use.
- 2/To calculate average cost per user day, divide through by average household size of
3.0 in Breckenridge-Dillon, 3.4 in Steamboat Springs, 3.7 in Vail, and 3.3 overall.
PAGENO="0234"
230
condominium owners, Fully 20 percent o~ the skiers had incomes below $15,000
compared to only two percent of the condominium owners studied.
If future prices were to stabilize eliminating benefits from annual
appreciation in investment values, costs of lodging to condominium owners
would rise to $59.30 per day, or $27 more than weighted rental rates for the
same units. Vail owners would still incur costs about half those of renting
but costs of Breckenridge-Dillon and Steamboat Springs owners would be more
than twice those of renting.
If the economy became depressed and the market price of condominiums
fell 5 percent annually,1 lodging costs to owners would rise to $103.30 per
day, or $71 more than weighted rental rates. Under these conditions, Vail
owners would incur costs $32 per day greater than rental rates for the same
lodging. Breckenridge owners would pay $84 per day more than the renting
alternative. Steamboat Springs owners would pay more than $100 per day over
rental.
Governmental Subsidies to
Condominium Develôpment
Land developments near the base of ski areas in Colorado have received
subsidies from various units of government.. The estimated subsidies to
condominium owners totaled over $2,000 per year or over $8 million annually
in the three study areas. Careful consideration should be given to whether
these subsidies achieve socially beneficial results, and whether they should
be continued in the future.
Local units of government in these areas provide a property tax subsidy
estimated at approximately $520 per y~ar~ Thi is the difference between the
was reported this summer that prices on vacation homes including
condowiniums were running 10 to 15 percent less than in 1974 (Business Week, 1975).
PAGENO="0235"
231
average actual level of 1.2 vs. 2.5 percent (Shelton, Land Economics, 1968)
for residential property elsewhere in the nation, on $40,000 market value.
This affects the ability of local government to provide necessary services.
Reassessment is underway in some areas.
The Federal and State income tax laws allow deductions of property taxes
and mortgage interest, and a proportion of operating expenses and deprecia-
tion, up to total rental income. This subsidy was estimated as an average of
$785.70 in the three study areas, and nearly $1,300 annually in Vail. There
were some offsetting operating costs from rental use, not separable in this
study. With a total of 4,145 condominiums in the three study areas, the
U.S. Treasury provided about $3.3 million in 1972-1973 to help these rather
high income investors buy their condominium properties. In Vail with 1,500
condominiums in 1972-1973, the subsidy was estimated as nearly $2.0 million.
Congress may ponder whether to continue the deduction of property taxes and
mortgage interest on a second home. In addition, a question may be raised
whether any portion of operating costs and depreciation are reasonable deduc-
tions on second homes rented out only 80 days per year, the average reported
in the three areas.
The Federal and State income tax laws also allow capital gains income
to be taxed at 50 percent of the tax rate on ordinary income of individuals.
This would have averaged at least $648 annually in the three areas, a minimum
of $894 in Vail. This subsidy, like the others, is limited to individuals
who can afford to invest in real estate, and discriminates against lower and
middle income taxpayers whose ordinary income is primarily salary or wages.
The Federal and State income tax laws also allow deduction of the cost
of travel for business purposes. This subsidy was estimated as $41 per
household annually. It averaged $124 in Vail and $63 in Steamboat Springs.
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232
A substantial part of the travel by condominium owners in Steamboat Springs
and Vail was for business purposes, a minor part of which was to attend con-
dominium association meetings and inspection of property. Recently, IRS
tightened up allowable travel deductions for condominium ownership meetings
and property inspections. Overall, business purposes accounted for 28 percent
or two trips by condominium owners to Vail, and 18.4 percent or one trip to
Steamboat Springs, but only 9 percent or one trip to Breckenridge-Dillon where
most Denver residents engage in year around recreation on weekends. In
comparison, a sample of all Aspen skiers showed that business purposes accounted
for only 12 percent of their trips (Goeldner, The ~ Skier, 1974).
Existing Forest Service regulations with respect to development of ski
areas provide a subsidy to owners and developers of private land at the base
of ski lifts which are located primarily on public land in the West. Forest
Service fees average 2 to 3 percent of gross. receipts from ski lift tickets,
ski school and equipment rental, based on the proportion of the lift on public
land. This allows base area developers to capture a substantive external
benefit from land development. The extent of this subsidy is not known. It
would be the annualized difference in the value of land and improvements
with and without the opportunity ski on public land nearby, all other things
equal. No information was collected in this survey on condominium develop-
ment in mountain areas away from ski areas on public land. However, most
Dillon condominiums were located a considerable distance (5 to 10 miles) from
the Breckenridge Ski area, while most Steamboat Springs and Vail condominiums
sampled were within walking distance of the ski slopes there. Comparing
Dillon to the other areas provides a very rough estimate of the extent of
this Forest Service subsidy to base area condominium development. The differ-
ence in the market value of condominiums annualized at 8 percent was $384
PAGENO="0237"
233
for Steamboat Springs and $1,152 for Vail, compared to Dillon, This cannot
be considered more than a mere estimate because the proportion of sample
condominiums located in Breckenridge and Dillon has not been determined,
quality and size varies among areas, and although Dillon condominium owners
cannot walk to a ski slope, they can drive to several in less than 20 minutes
(Breckenridge, Keystone, Cooper Mountain, Arapahoe Basin, and Loveland).
Energy Conservation
Condominium owners and skiers who live out of state consumed considerably
more energy in travel than those who live in Colorado. Future governmental
policies to conserve energy may reduce less essential long distance travel.
This could lead to fewer out-of-state skiers in Colorado, with more downhill
and cross-country skiing closer to home.
Skiers and condominium owners commonly reside in either (1) Denver and
drive to the slope on the weekend, or (2) in the Midwest or East and fly in
several times a year staying about a week each time. If each household
spends 38 days per year at the ski area (Vail, for instance), the Denverite
makes about 19 trips while the distant owner, if from Washington, D.C., may
make five trips. With average household size at three, and plane occupancy
rate at 50 percent, a travel energy consumption per skier-day can be computed:
the Denver condominium owner will use 420,000 BTU's per skier-day. The
Washington, D.C. owner consumes 4,447,000 BuT's per skier-day. Despite the
fact that the owner living 1,800 miles from Vail only makes five trips per
year, his energy use is more than 10 times greater than the Denver owner.
The travel energy consumption of a condominium owner from Chicago, 1,100
miles away, is 6,5 times that of the Denver skier. The average condominium
owner in the three study areas traveled 1,100 miles round trip, thus his
travel energy consumption was 3.25 times that of th Denver skier.
67-512 0 - 76 - 16
PAGENO="0238"
234
.
Passenger
Mode
Energy ~
Intensiveness
at 100% Load
~
Average
Load~ 1970
(o)~
In
at
Energy ~
tensiveness
Average Load
Average
Speed
(mph)
Bus
740
46
1.600
45
Railroad
1,100
37
2,900
40
Automobile
1,600
48
3,400
-50
Air
4,100
49
8,400
400
1BTU per passenger-mile. See: (1) Hirst, Eric and John C. Moyers,
"Efficiency of Energy Use in the United States," Science 179:1299-1234, 1971;
(2) Hirst, Eric, "Transportation Energy Use and Conservation Potential,"
Science and Public Affairs, Bulletin of the Atomic Scientists 29:36-42, 1973;
and (3) Giller, D.P. and K. Luszczynski, "Lost Power," Environment 14:14-22,
1972.
Utilization of Lift Capacity
There is a need for public disclosure for each division of the ski cor-
poration the average total revenue, operating expenses, and the allocation of
overhead costs. One important application of such information would be to the
question: what are the differences in average cost per skier a-tributable
strictly to differences in degree of lift capacity underutilization, and not to
differences in size of operations, use of obsolete technologies, or substandard
management practiced?
U.S. Forest Service data show that Vail operated at 75.7 percent of capacity
on its peak day in 1973-1974, Aspen Mountain at 54 percent, Breckenridge at
49.8 percent and Steamboat Springs at 57.8 percent. Utilization of lift capacity
was substantially less during the rest of the year. Whether these levels of
underutilization of lift capacity, even considering growth last year, should
be rewarded with higher lift ticket prices seems questionable. A possible
exception is Vail, with about 76 percent utilization of capacity before the
growth last year.
PAGENO="0239"
235
Also, in a year when utilization of ski areas increases by more than 20
percent as it did in a number of Colorado ski areas in the l976~l975 ski season,
economies are realized through increased utilization of existing lift capacity.
To estimate the extent of cost savings attributable to this growth in
skiing, I developed budgets for hypothetical ski areas using the best available
estimates of resource requirements and prices for resources. Hypothetical ski
areas of varying sizes were developed in much the same way that an engineer
bidding for a construction contract designs a proposed bridge, and estimates
the cost of constructing and operating the finished product. This approach
was adopted because full cost data are currently unavailable from either the
Forest Service or the individual ski corporations. My best estimate from the
application of the budgeting technique is that a 20 percent increase in utiliza-
tion of ski lift capacity would reduce costs by 6 to 10 percent.
This seems to be a large enough savings to offset substantial increases
in costs of labor, materials and other costs affected by inflationary pressures.
Moreover, the policy of granting the Aspen Ski Corporation a competitive
price rise' under conditions where their operations are earning substantial
profits, seems questionable.. The practical effect is to make ski ticket prices
sufficient to cover the costs of the least efficient competitor. This is
hardly a viable standard for public decision making in a competitive economy.
Peak Load Prn
Another important application of information about operating and overhead
costs of ski corporations is to peak load pricing. Most ski areas have a dis-
tinct seasonal peak, or series of peaks as, for example, during the Christmas
holidays. For purposes of rate making, the peak is defined as those days in
which the lift capacity is operated at or close to maximum available lift
capacity.
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Standard models for peak load pricing allocate overhead costs to the peak
hours. No capacity costs are assigned to off peak consumption, which is instead
charged off peak operating or variable costs. This suggests that the Forest
Service should explore the merits of a variable pricing schedule in which
regular off peak skiers would pay lift ticket prices substantially below those
paid by peak load skiers. This is because peak skiers require substantial
investment in lift capacity which stands idle or only partially used during
most of the ski season. Also, under peak load pricing, total lift capacity
may be substantially reduced. Less capacity is required to meet demand under
peak load pricing systems than under uniform pricing systems, as consumers
shift from peak time skiing to Off peak skiing to save money.
Interest Costs
Another important application of information about the operating and
overhead costs of ski corporations is to interest on borrowed money. When the
prime rate declined recently, interest charges on borrowed capital should have
fallen substantially. Colorado Businessmagazine (Sept.-Oct., 1974) reported
that Vail paid 12.75 percent interest to the United Bank of Denver, about
$427,000 on their investment in 2,200 acres at the base of the proposed Beaver
Creek ski area. This was reported as three-quarters of a point over the prime
interest rate. When the prime rate fell to 8 percent, interest on borrowed
money should have fallen by about one-third (31.4 percent). So long as the
Forest Service ski area rate making process takes place under a cloak of confi-
dentiality, neither Congress nor the consumer will know whether reduced interest
charges are taken into account in lift ticket pricing.
Forest Service Policy
The Forest Service has the responsibility to consider ways to protect the
public interest in moderate costs of private land development and construction
PAGENO="0241"
237
of seasonal housing units in mountain subdivisions at the base of ski areas
on Forest Service administered land.2 Priority should be given to develop-
ments offering medium-priced accommodations and ski services, to both skiers
and employees~ The Forest Service can influence the availability of low and
medium priced accommodations (condominiums, lodges and apartment rentals)
serving some ski slopes on Forest Service land. The agency has jurisdiction
over the original ski slope developer who may own a substantial portion of the
private land located at the base of the ski slope. However, when ownership
of much of the base area land is in the hands of others, the Forest Service
may have little or no influence on development decisions. The proposed Senate
bill should remedy this deficiency. Meanwhile, other government agencies and
private interests should cooperate with the Forest Service in planning low cost
housing for skiers and employees and their families, and necessary public
services. Local housing codes can require new construction of large condomin-
ium or lodge complexes to include quarters for employees and their families.
To the extent that increased summer rental of condominiums and lodges in
ski areas occurs, it may result in losses of revenues to summer resorts located
wholly on Forest Service administered land. The Forest Service has written
into its regulations the obligation to consider the effect of its actions on
existing concessioners.
In an era of resource scarcity and limited growth in the U.S. Economy,
forms of outdoor recreation should be encouraged that do not require large
2UPriority will be given to developments offering medium-priced accom-
modations and services. A National Forest concession is designed and devel-
oped to furnish services to those seeking forest recreation. The facilities
themselves do not constitute the recreation attraction. Hence, they will be
adequate to provide reasonable comfort and convenience, but with no elaboration
which would be out of keeping with the forest environment. They will normally
offer accommodations at moderate cost, and special justification will be required
for a permit covering exclusively high-priced accommodations and services."
Forest Service Manual, Section 2344.03. Amend. 31, December 1968.
PAGENO="0242"
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flows of irreplaceable resources or produce severe environmental degradation
(Meadows et al., The Limits to Growth, 1972). Many forms of athletics should
be encouraged for this reason. Downhill skiing does not appear to qualify
under current investment and cost conditions in the three study areas. Ski-
ing may rank among the highest users of irreplaceable resources compared to all
outdoor recreation activities. If the industry is to prosper and grow in the
next few decades, it will be necessary to seek ways to limit investment and
minimize costs, while avoiding severe environmental degradation.
PAGENO="0243"
239
Senator HASKELL. Our next witness is Mr. Richard Goetzman,
president of the United States Ski Association, Los Angeles, Calif.
Mr. RICHARD GOETZMAN. Thank you, Senator.
Senator HASKELL. We are pleased to have you with us, Mr.
Goetzman.
STATEMENT OF RICHARD GOETZMAN, PRESIDENT, U.S. SKI
ASSOCIATION, LOS ANGELES, CALIF.
Mr. GOETZMAN. I am president of the United States Ski Associa-
tion, commonly called the USSA. The USSA is composed of nine
divisions represenitng all parts of the United States and has a
membership of approximately 110,000 skiers. The USSA over, the
last few years has been very much involved in many facets of the
development of public lands for skiing.
The general position that the USSA has taken in regard to S. 2125
has been put together by our staff, by our officers and directors, and
specifically those officers and directors that are knowledgeable in the
public land areas. The USSA has taken the overall position that we
desire to have a bill or rules and regulations for the Forest Service
that give the lowest possible cost for skiing consistent with the
absolutely best skiing experience. If we follow this preference, it is
our opinion that this is best accomplished by the development of an
additional skiing facility, winter recreation facilities including both
the Alpine and Nordic disciplines. It is our further premise that with
the addition of these additional faciliites that the laws of supply
and demand and the laws of competition would probably keep the
lift ticket prices down to a reasonable level and that rather than
having extensive rules and regulations we would prefer to have the
laws of competiiton and laws of supply and demand rule.
In discussions with our office manager here in Denver, she asked
that we comment specifically on several positions or several points
made in the bill and that we offer our suggestions if we see that
there are other areas that we would like to have covered, so let me
with your permission just touch on three or four points within the
bill.
The USSA is in strong support of your suggestion to increase the
term permits from 30 to 50 years. We see that increasing this frankly
makes it more bankable. It makes it easier, more feasible for ai~
area operator to go to the bank and to evolve funds that make it
reasonable for him to expand his facilities.
Likewise, in the acreage, we find it is again a very desirable
feature. We are pleased to see the additional acreage proposed under
your bill here. It is again our position with this additional acreage
again a banker or lender is much more prone to want to make a
loan to a ski area. We find that formalizing the situation of having
a specific number of acres on a specific term is preferable as against
the current situation of the 80 acres and having the balance on the
1-year renewable and revocable permits.
It is generally the position of the USSA as far as the public dis-
closure and as of the rate increases that we would like to see the
PAGENO="0244"
240
Forest Service issue a set of standards or at least guidelines as to
how and what the criteria is for issuing various ski area permits,
and again we would like to see the Forest Service put in a position
or at least again promulgate those rules and regulations they use to
find it fairly reasonable to increase the lift ticket price. However, I
allow a lift increase. In these days of increasing costs of living, we
think it is again reasonable for the consumer to find that we know
exactly what the rules or ground rules for these decisions made by
the Forest Service are.
On the equitable fees, at the current moment it is because of the
variety of ski permits that are out very difficult to decide what is a
reasonable return, and in your bill, Senator, you have at least what
we interpreted as a somewhat of a contradiction in which there is
a requirement for a reasonable return to the government and-
Senator HASKELL. That part of the bill is erroneous and, as has
been pointed out before, it will be changed.
Mr. GOETZMAN. All right, fine. I spent quite a bit of time trying
to figure out-
Senator HASKELL. That was a mistake.
Mr. G0ETZMAN. Ok, it would be our position that we would like
to see a much larger share of the gross fees to the Forest Service
returned to local governments. There is probably little point this
morning in my reiterating what has already been said, but these
local governments do have substantial additional costs. We would
find it desirable that a larger percentage, if you wanted a specific
suggestion, it would be our thought 60 percent, go back to the local
government.
It is also our suggestion that before the Forest Service be required
to return to winter recreation, and I again am specifically speaking
of the Alpine and Nordic skiing winter recreation, a much larger
percentage of overall fees that go to the Forest Service from winter
recreation. It is our understanding at the current moment that a
relatively small amount of the user fees that are paid by the ski
areas on their rate schedules are actually returned to winter recrea-
tion, and it seems fairer to us if you are taxing skiers indirectly that
the skiers ultimately as the people that are being taxed should have
the benefit of those fees.
The last point I would like to make this morning is the last
section of your proposed bill, and that regards the exclusion of
Mineral King. It is our feeling that when you have a general rules
and regulations, an organization type bill such as this, that it is prob-
ably not appropriate and not in the best interest of what you are
attempting to accomplish here by excluding the possibility of issuing
a permit to any more than a ski area. As I am sure the Senator is
aware, the Mineral King situation is complex. It has been the subject
of substantial discussion and substantial litigation and it appears
to us probably the best place to solve this situation, rather than any
general legisation on this.
Senator HASKELL. I quite agree with you. The purpose, of course,
of the Mineral King provision is that I didn't want this legislation
to have any effect, favorable or unfavorable or in any way, on that
PAGENO="0245"
241
litigation, and I was afraid that if we didn't provide a specific Mineral
King exclusion the bill might be interpreted as mooting the case one
way or the other. If you have got any suggestions as to how we can do
it better, please let me have them.
Mr. GOETZMAN. Well, it appears to me that there are periodically
bills that crop up in Congress that either address themselves favor-
ably or unfavorably to the Mineral King situation, and that where
we have a general organization of rules and regulations bill such
s this, it doesn't appear that't the appropriate place.
Senator HASKELL. Well, I don't want to affect the Mineral King
litigation in any way, shape or form. I don't think it is appropriate
that the legislation do that. The intent was not to affect it.
Mr. GOETZMAN. I see. We have difficulty ascertaining the exact
intent here. It was our feeling that this could very easily open
up a Pandora's box in which some small special interest group
that didn't want a ski area or a winter recreation area in any one
location would very easily find it appropriate and based on this
precedent to exclude it and be included in some future language.
Senator HASKELL. Please submit some language to keep Pandora's
box closed then.
Mr. GOETZMAN. It will be our pleasure. Thank you very much.
Senator HASKELL. Thank you very much for coming to testify.
Our next witness is Lou Bowids, president of Rocky Mountain Divi-
sion of the U.S. Ski Association, Denver, Cob., accompanied by
Marion Robels, Randy Boyd and I~land Sedberry. They are with
Thorne Ecological Institute, THK, Inc., and Southwest Ski Council,
respectively
STATEMENT OP LOU BOWLDS, PRESIDENT, ROCKY MOUNTAIN
DIVISION, U.S. SKI ASSOCIATION, DENVER, COLO.
Mr. Bowus. Senator, Mr. Sedberry, I believe, could not be here,
but I do have the good fortune of being accompanied by two young
ladies to back up my testimony.
Senator, the Rocky Mountain Division is one of nine regional divi-
sions of the U.S. Ski Association and is a growing organization with
over 12,000 members, 80 percent which reside in Colorado. Our or-
ganization speaks for a wide segment of the skiing public, as our
membership ranges from ski town inhabitants, flatland ski clubs,
Denver day skiers, to licensed competitors. In addition to organizing
all sanctioned Alpine and Nordic ski races in the Rocky Mountains,
we are indeed providing a variety of services to recreational skiers.
Within the last year, the RMD has recognized a growing need for
skiers to be represented on matters of public importance such as this
hearing. To this end we have created a Public Affairs Committee to
develop the policy of RMD on public issues. It is through their study
of 5. 2125 that this testimony has been prepared, and reaching a
consensus was not easy. Our group represents skiers with many differ-
ent and sometimes conflicting interest. We have, however, determined
a policy which speaks to the needs of all skiers insofar as that is
possible We appreciate the opportunity to express our opinion on
the draft legislation now being studied by your committee
PAGENO="0246"
242
The Rocky Mountain Division applauds your interest in resolving
the problems which currently concern all of us who have an interest
in the sport of skiing. That sufficient ski area terrain be developed
to meet the ever-growing demand is among the vital concerns of the
RMD. Hopefully our comments on S. 2125 will help develop a policy
which will both protect our mountain environment and recognize the
need for further recreational development.
We read with interest your comments in the Congressional Record
regarding this legislation. We too feel it is time to require that ForestS
Service policies regarding the issuance of special use permts be re-
viewed. As a spokesman for skiers,' the RMD is also aware that
skiers are asking to have a voice in determining that policy. We must
question, however, the. transfer of authority from the. Forest Service
to Congress which is inherent in this bill. It is our opinion that the
interests of the public would be better served by requiring a reevalu-
ation of Forest Service policies.
The questions we are considering today are complex. Even those
of us who have watched the development of skiing in this region
for over 30 years have had difficulty staying abreast of the changing
picture within the sport. We must conclude, then, that the U.S. For-
est Service, with its long experience in dealing with all aspects of
the management and development of public lands, is the most quali-
fied body to determine policy. We feel, however, that Congress should
give some direction in the following areas.
There is a glaring need for the permit process to be streamlined.
The conflict between its two primary goals, to protect the environ-
ment and to provide for the public demand for recreational facilities,
has caused problems for developers. As a group of sportsmen~ we
are concerned that future development continue, but that it be along
prudent and proper lines. We stress that those who wish to invest
in the prudent development of recreational facilities `must be en-
couraged. No provision of 5. 2125 speaks to current problems caused
by the need to invest large sums of capital before a developer in any
way is assured a permit will be issued. Consider the dual problem
illustrated by the investment of approximately $1 million by Vail
Associates in the preliminary phases of Beaver Creek. Fewer and
fewer investors are willing to risk that level of capital commitment
without some assurance that a permit will be issued. Yet, it is equal-
ly difficult for any government agency including the Forest Service
to refuse a. permit to an organization with that level of investment.
As you can see, the current system defeats both purposes of the per-
mit process by pressuring the permit decisions made by the Forest
Service and discouraging future investment. The RMD feels that
this should be an area of your concern. There is also a need for includ-
sion of State and local government in the decisionmaking process
and in determining policy.
As we understand it, there is currently a system for determining
the fees charged to permittees based on a percentage of the permit-
tee's return on investment. We also understand that about 25 percent
of the fees collected are returned to the counties based' on the amount
of public land and use within that county.
We would like to see that situation reversed, with the impacted
counties receiving 75 percent of the fees charged for ski areas. The
PAGENO="0247"
243
concentrated development characteristic of destination areas requires
a high level of public services to be provided by communities and
counties. Yet these services are used primarily by out-of-State skiers.
This point can be~ illustrated by the difference in services needed at
the day skier areas like Loveland Basin and a destination area such
as Aspen. We acknowledge the need of counties to raise funds for
these secondary effects of ski areas. Currently within the State, it
has been proposed that counties be allowed to levy a tax on amuse-
ments to cover these costs. The RMD feels that a much more equit-
able approach would be for a larger portion of the fees paid by ski
areas to be* returned to the counties. After all, the need for recrea-
tional facilities is a national need, and if that need is to be metS the
counties which are impacted need national support to deal with
those impacts. A tax on amusements also taxes the State and local
residents who are already bearing increased tax assessments due to
the increased value of their property. This situation has been espe-
cially difficult for long-time residents of ski towns who wish to re-
main in their homes, yet must bear the higher levels of taxation.
We also suggest your committee investigate the feasibility of a
national recreational license covering all sports on public lands. Such
a license could be sold annually to sportsmen and women over 16
years of age. Revenue would be returned to the counties where public
lands are located on the basis of the amount used.
Many of our members are rightfully concerned that they are about
to be priced out of their favorite sport. Thus, the RMD is extremely
concerned that lift ticket prices be fair and equitable. We therefore
applaud your interest in public hearings. We are concerned, however,
that as written the bill would create an untenable management situ-
ation and add to the price the. consumer must pay for skiing. We
recommend that public hearings should not be required in every case,
as the bill would now provide, but should be scheduled when a re-
quested rate increase is out of line with the cost-of-living index, for
example, or when initiated by the public.
In the area of public involvement, the RMD has as one of its
primary aims the creation of an enlightened public. As you are no
doubt aware, the information used in making lift ticket pricing de-
cision is already available to the public through the Freedom of
Information Act. We believe this makes the public disclosure portion
of the bill unnecessary and could in fact develop a conflict-
IBell rings.]
Senator HASKELL. I'm sorry, I don't know whether your fellow
panelists are going to testify or not, but you have an aggregate of
time, 15 minutes between the three of you. I don't know how you
would like to divide it up.
Mr. BowLDs. I have a very short summary.
Senator HASKELL. Go ahead, and we will charge your associates.
Mr. Bowiis. Thank you. We also fear it will result in increased
costs to skiers through the prices they pay for lift tickets. It is our
concern that any regulation of the ski area operators be done in a
way which does not increase costs to the skier.
Hopefully, through our monthly newspaper and other media, the
RMD hopes to develop an informed public. In this way, we hope to
make our contribution to the quality of input expressed at these
PAGENO="0248"
244
public hearings. On the positive side, we do support the extension of
permit lifts from 30 to 50 years. We would suggest, however, that a
5-year review policy be instituted so that out-of-State conditions
of permits could be brought in line with present situations.
The bill, however, does not in its present form speak to many issues
which are at the heart of current difficulties. No consideration is
made of the secondary growth caused by ski areas. This is the issue
which is causing all the problems in ski area development. Likewise,
no consideration is given to how much secondary growth, normally
on private land, is to be paid for. We have suggested possible meth-
ods through the fee structure and recreational license. It is our hope
that this issue will be an area of further concern for those of you
on this subcommittee.
Skiers are deeply concerned about the effect of rising energy costs
on their ability to enjoy their sport. The RMD is test-marketing a
scheduled bus service for Denver skiers, but those who come to the
Rockies from out of State face ever-increasing transportation cost.
We fear that in the future it may be the cost of energy and not the
price of lift tickets which will be the primary concern of skiers.
Hopefully your committee will investigate the effects of this problem
on the national need for recreation.
In summary, the Rocky Mountain division, ironically representing
the group which should most benefit from this legislation, must op-
pose this legislation in its present form. Over the past 30 years we
have watched the improvements made by the private investors on
public lands. We have seen gondolas replace rope tows and trail
grooming become a common practice. These things have come about
through fierce competition between areas, not Government regula-
tion, a.nd in the face of a recession the ski industry continued to grow.
It is in the best interest of all skiers that ski area growth continue
and we need more development of public land for recreation, and
the RMD favors action which will attract private capital to ski area
development.
We have given you a synopsis of the concerns of skiers for the
future of their sport. We hope Congress will look to the long-term
health of the ski industry and institute policies which require re-
evaluation by the Forest Service of their current policies. As a group
which is vitally concerned on the issues we have discussed today,
we wish to thank you for the opportunity to be heard, and I would
just like to add as a private citizen with over 25 years of participa-
tion. in the sport it is now my concern that it costs twice as much to
drive to a ski area as 4 years ago and takes 125 percent longer. This
~s far more serious to the average skier than the slight increase in
the ski lift prices, and I think the private citizen would rather see
an investigation into the profits of oil companies. I imagine Exxon's
oil profits over the last year would exceed ski profits over the next
20 years.
Senator HASKELL. I am sure you are right.
Mr. BOWLDS. As I am sure I think it would take a lot of guts to in-
vestigate the oil iiidustry.
Senator HASKELL. That's being undertaken. Thank you~ sir. I
would like to make one observation. You say the Freedom of Infor-
PAGENO="0249"
245
mation Act allows the financial information to become' public. The
Forest Service takes the position that the Freedom of Information
Act doesn't do that because they say they are included in the excep-
tion for trade secrets and commercial and financial information
obtained as privileged or confidential. Therefore, they take the posi-
tion that none of it would be made public.
Mr. BowLDs. But if there is a genuine reason for needing infor-
mation, I believe the law requires it be given. Also, I think-
Senator HASKELL. I agree with you, and the Forest Service doesn't.
Mr. Bowiis. I see. The point is valid, though, that the ski areas
are in competition and anyone who has been around the skiing scene
for very long would have to realize there is fierce competition be-
tween the various ski areas.
Senator HASKELL. Thank you, sir, very much. The ladies?
Mrs. ROBELS. I think we are here primarily to clarify any ques-
tions you might have from our particular viewpoint.
Senator HASKELL. Well, I don't have any right now, and if I have
any I will write to you.
Mrs. ROBELS. Thank you.
Senator HASKELL. Thank you very much. Our next witneess is
Merill Hastings, publisher, Colorado Magazine. Good morning,
Mr. Hastings.
STATEMENT OP MERRILL `HASTINGS, PUBLISHER, COLORADO
MAGAZINE AND COLORADO BUSINESS MAGAZINE, LAKEWOOD,
COLO.
Mr. HASTING. Mr. Chairman, my name is Merrill Hastings. I am
the publisher of Colorado Magazine, and Colorado Business Mag-
azine. I am here to testify in regard to your proposed legislation
concerning the Federal licensing of ski operators on public lands,
as outlined in your address to the Senate on July 16 of this year.
Accordingly, I would like to place several observations on the record
in respect to four separate considerations relevant to the matter
under review.
First, I wish to state that it is my unqualified belief that the
U.S. Forest Service in this region, namely, region 2, headquartered
here in Denver, has been conscientiously exercising its local admin-
istration and supervision of Colorado ski areas in a highly responsible
The skiing public has been the benefactor of this careful practices
and as a result Colorado has become the skiing center of our Nation,
and in fulfilling this mandate of custody of the public lands, the
Forest Service has overseen the development of some of the world's
finest ski areas right here in Colorado.
The agency's standards of operation and criteria for the permit-
tees have been consistently based upon the recreational needs of the
skiing public, while at the same time protecting the natural resources
of the land. Ski area planning and operations by the private sector
have regularly involved Forest Service personnel at regional head-
quarters as well as week-to-week on-site activity by local Forest
supervisors and district rangers. This is clear both in-season and
off-season. The standards of winter maintenance, onsite lifts and
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restaurants, lift safety, crowd control, first aid, public sanitary facili-
ties et cetera are of the very highest and are kept that way at the
insistence of the regional officer of the forest service, who constantly
watches the daily operations. I don't think anywhere else in our
country will one find a recreational business on private or public
land where there is greater efficiency of operation or greater run-
fling or cleaner services than that which the Colorado ski industry is
providing for the winter outdoor enthusiast.
As the former owner and publisher of the world s largest skiing
publication, for over a decade I covered the ski resorts around the
world. Nowhere have I ever observed finer skiing opporturnties,
neater sanitary facilities, better food service, better medical assist:
ance, than those provided to the American public by Colorado ski
operators. I know as a fact from the regional forester right down
to the local rangers that the quality of ski operation in Colorado is
a foremost concern of that agency's daily administration and super-
vision, and not only to the ski areas themselves in the wintertime but
national summer resorts for millions of Americans who ride the
gondolas and chairs to observe the splendors of the Rocky Mountain
West and walk down the carefully maintained, vegetated ski runs,
where elk and other wildlife browse.
In truth, the development of Colorado ski areas under the aegis
of the T5.S. Forest Service has brought a new dimension to the
mandates of multiple use, that being recreational enjoyment on
public lands with an annual harvest of healthy outdoor exercise and
aesthetic privileges which these privately developed ski areas make
available to millions of citizens.
`~I'his brings up my second point, that of public domain. It seems
to raise a specter of private enterprise seeming to raise monopolistic
businesses at the public's expense. Such a myth is sheer myth and in
truth if examined closely proves to be quite the opposite. Any citi-
zen, regardless of race, color or creed and at any income level,
whether he be wealthy or on welfare, can go to any one of the
Qolorado ski areas and enjoy a full day of skiing at absolutely no
expense. He can park his car at no charge, he can put on his skis
and walk out onto the clear slopes at no charge. He can climb up
the manicured trails and ski down at no charge. He can tour cross-
country around the area at no charge. He can use expensive and
expansive restroom facilities and get a drink of water and warm his
hands and get inside at no charge.~ In fact, he and his whole family
can eat luncheon they bring along with them and enjoy spectacular
views from outside sun decks and inside modern ski shelters at no
charge. He can even fall down and break his leg and get immediate
help and first aid assistance at no charge. In summary, the citizen
can enjoy a full day of outdoor recreation activity on the snow-
covered slopes of the land plus many conveniences and amenities
completely free of any cost, yet it is the private developer~ the
permitholder, the ski area operator, who makes this all possible
by gambling with his investment in the free marketplace that others
will come to buy his goods and services so that he may operate
profitably withi nthe free enterprise system, all of which allows
you or me or anyone else to go to any ski area and enjOy a winter
holiday of healthy outdoor activity at no charge.
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Yet, without this prime investment by the ski operator, such
opportunity for this type of winter enjoyment by the public would
be greatly limited. The people have always been here. The mountains
have always been here and snow has, but not until the private enter-
prise came along and developed the areas could the public fully
utilize these natural resources.
There has been a lot of talk about whether or not private business
should have exclusive permits to operate on Federal lands to the
exclusion of others, should the permitholder cut the monopoly on
the ski school, on the lifts, on the restaurant concessions, et cetera.
Yet, it is the ski area operator who has developed the overall facili-
ties and his investment must be given some protection or else there
is no incentive for him to sponsor a public playground. I am sure
the senior Senator from Colorado regularly pays his rent for his
office space in the Federal building across the street and I am iust
as sure the Senator, even though he is in public service and is rent-
ing his office space from the Federal Government, would not allow
someone else to come into his office and conduct another business
there. One can readily imagine what the Senator's staff might say
if one particular morning Representative Bill Armstrong came in
with a folding chair and card table and started interviewing his
constituents inside your office doors. [Bell rings.]
Senator HA5KELL. You weren't in the room, Mr. Hastings, to hear
the 5-minute limitation, so go ahead.
Mr. HASTINGS. Thank you, sir. In regard to the issuing of permits
and fixing of fees charged the public, namely the price of lift tickets.
it would seem to me that under our American system all operating
figures of a permittee doing business on Government land should
be readily available to the public, let alone to a U.S. Senator. If the
ski area operator does not wish the surveillance of his business by
public exposure, then he has the right of independent election to
operate on private land and keep his business strictly to himself. but
anyone doing business on, with or through any form of publicly
owned resources, namely Federal Government land in the case of
the ski industry, elects to relinquish the veil of permanent privacy.
However, this should apply only to historical figures of actual oper-
ation and contractual agreements. Projected figures and statistics
which are not part of the contractual agreement should not be in the
public domain, since it would be competitively unfair to require a
ski operator to disclose his anticipations.
The same criteria should be applied to all private users, Senator,
all private users of U.S. Forest lands, and perhaps the Senator may
wish to look into the public availability of such figures or lack
thereof for the timber industry, mining, and grazing permittees and
others operating on Federal lands.
In regard to profitability of a ski developer's operation as tied
into his permit agreement with the Forest Service, certainly the
public price of a lift ticket should remain discretionary so as to
complete in the open market as long as there is no conspiracy to
monopolize and thereby no violation of the antitrust, but under the
present contractural procedures there appears to be a method of
evaluation which may be unfair to the public customer. It is called
comparability, and ski areas of like profile and amenities have a
PAGENO="0252"
248
built-in security guarantee of equal opportunity based solely on
similarity rather than on performance and efficiency. Let me quote
from a typical current 30-year term personal use permit for ski
area operators, and I quote:
The character of service rendered and rates charged shall be subject to
regulation by the Forest Supervisor, provided that no reduction in rates shall
be required that will be below a point necessary for a reasonable return
on investment or lower than rates charged by comparable private winter
sports enterprises.
Such language inadvertently sets up the posture of a potential
cartel among comparable ski area operators. Under this method it
appears that if the Vail ski area is granted a lift ticket increase by
the Forest Service because of a justified financial need, then a com-
parable area, say at Aspen, is automatically able to raise its lift
rates, quite irrespective of that Aspen area's operating margin of
profit, and the Forest Service under the present contractural lan-
guage is not in a position to deny such a rate increase. Thus, this void
in ticket price determination or actual lack of control through a
qualitative practice of comparability destroys the free marketplace
and there becomes a~ tendency to have a fixed cost of life tickets at
the same price among ski areas of like size. This, of course, is con-
trary to the antitrust spirit and lends some veracity to the question
of whether or not the big ski areas are benefactors of Government-
supported prices in the form of parity.
In closing, Senator, I wish to state that the Government itself
should not be in the ski recreation business, since already private
enterprise is providing adequate opportunity. and benefits through
their industry. The ski area operators should be allowed to compete
freely and openly in the marketplace with a fair return on their
investment, without Government restrictions or regulatory controls.
For those in the industry that might feel incumbrance by Govern-
ment administration and wish to dissent, let them withdraw from
operations on public lands and undertake the same risks of other
private business by operating on 100 percent privately owned re-
sources, but for those who wish to operate under public scrutiny and
compete openly and fairly in the marketplace, then they should be
allowed to further develop the public land resources under our free
enterprise system in a manner to further increase the opportunities
for the enjoyment of public outdoor recreation.
Thank you, Mr. Chairman, for this opportunity to testify and a
dozen copies of my remarks will be delivered to your Denver office
within the next 24 hours. I shall be glad to respond to any questions
which you might have.
Senator HASKELL. Thank you very much, but just to make an ob-
servation, our problem here is not really whether ski area services or
Forest Service policing of the services is adequate. The real problem
i~ apparent lack of objectivity, uniformity in the Forest Service's
anplication of its authority to regulate activities on public lands-
That is one of the reasons for this hearing to determine the differences
in regulation such as you say where the Forest Service states you
have got to charge what the next fellow charges (and I don't think
that is in the interests of competition). Our problem is not criticism
PAGENO="0253"
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of the services provided. It is the adequacy of the procedures and
policies employed in granting permits and in permitting increases in
charges for various service which brings this bill into consideration.
I just~ wanted to make that observation, Mr. Hastings. I appreciate
your remarks very much.
Mr. HASTINGS. Thank you, Senator.
Senator HASKELL~ Our next witness will be out of order, but I
understand Governor Vanderhoof has a time problem. Therefore, I
would like to call Hon. John Vanderhoof, president of Club 20,
Grand Junction, Cob. I can see, Governor, that you have been skiing.
Hon. JOHN VANDERHOOF. Golfing.
Senator HASKELL. Golfing, okay.
STATEMENT OP GOV. ~1OHN VANDERHOOF, PRESIDENT, CLUB 20,
GRAND rUNCTION, COLO
Governor VANDERHOOF. Senator Haskell, I appreciate the oppor-
tunity to appear here and be out of order. My name is John Vander-
hoof, president of Club 20, which is a. federation of county, city, and
business interests of the 21 counties of Western Colorado. Also I
work in organizations which have worked very closely with Colorado
Ski Country and all of the other ski federations.
Our 21 counties do 90 percent of the ski business in Colorado. This
is a very major part of the economic viability of the Colorado West.
Without this winter business, our great summer business couldn't
carry the load that it does, carry the load financially, so that our
citizens can enjoy a fairly decent ecenomic level of activity. So, it
means a lot to us and it means a lot to us when we try to determine
why do so many skiers come to Colorado, and I think Mr. Hastings
hit upon it. I know we have the best snows available and some of
the best range, but the management of our ski resorts is unexcelled
anywhere in the world. Consequently, we wish to do all, that we can
to see that we progress and continue to provide the very finest in
skiing for the visitors who come to us and mean so much us.
You have I think through these hearings and. through some of the
activity focused on some problems that ought not to exist in simply
granting the permits, the establishment of rates and so forth. Hav-
ing served for some period time in governmental management, there
is so great a tendency today to throw another law at a problem. I
think that when you discover problems they can be attacked admini-
stratively, and you certainly have brought it to the attention of the
administration and to the department affected that there are some
I think very weak points in the establishment of the permits, of the
fees: and so forth. To throw another law in frightens me because
today in Western Colorado we in attempting to improve our trans-
portation systems and trying to develop the energy systems, trying
to develop water systems, the little projects that 10 or 15 years ago
could be funded and moved ahead now take one, two, three times as
long due to the bureaucratic red tape which we go through. A little
matter of making a four-lane road out of Steamboat out of the ski
area has been tied up now and five lives lost over a 2-year period of
time while we go through all the redtape that it takes to get that
- 67-512 0-75-17
PAGENO="0254"
250
approval for that type of construction, so to me adding, Senator,
another law and another regulation-we never intend for them to
grow beyond a certain amount, we think they are going to work very
effectively and quickly, but when you get down to the operating end,
you will find that most of the laws that we have passed in Colorado
or passed nationally have a great tendency to hurt the consumer be-
cause by the time we ever get around to coming to the same decision
2 years later the cost is escalating 600. We could have built certain
highways, Glenwood Canyon, water projects. Prices have doubled,
as you well know, on these projects.
I feel the same way if we could invite you to do what you can do
to try to improve the administration of the Forest Service. Public
disclosure, I think all of these things, can be done and I think you
can provide it with the pressure you have brought with these hear-
ings and at this time I would make an administrative protest and
see if it works, and if it doesn t then it may be necessary to carry
through with the law. Thank you, Senator.
Senator HASKELL. Thank you, Governor Vanderhoof, very much
indeed. I appreciate it very much. Thank you.
All right, Richard Peterson, Chairman of the Board of Trustees of
Colorado Ski County U.S.A.
STATEMENT OP RICHARD L. PETERSON, CHAIRMAN, BOARD OP
TRUSTEES, COLORADO SKI COUNTRY, U.S.A.
Mr. PETERSON. Senator Haskell, as Chairman of the Board of
Trustees of Colorado Ski Country U.S.A., I speak today for the 31
ski areas who comprise the membership of this 12-year-old organiza-
tion. You can appreciate, there were some honest differences of opin-
ion regarding the various elements of the proposed bill, but to the
extent that I have dealt with its~ provisions in my testimony, which
I submit and am trying to summarize here, you may consider this
the organization's official position on the proposed legislation.
On the balance, we believe the bill is a thoughtful piece of draft
legislation and incorporates a range of concerns and proposals which
represent the public interest, skiers, environmentalists and local and
Stat egovernment officials, the management agency, and ski area
operators.
Perhaps the two provisions which most obviously address the
long-term concerns of the ski industry are, first of all, to lift the
obsolete 80-acre limitation and, second, to extend the permit from
30 to 50 years.
While we note you have questioned the need for a 50-year lease, we
think both of these provisions have the effect of providing ski area
operators with an essential quotient of long-term security.
In order to more fully develop the rationale for these two provi-
sions, we have asked officers of a leading regional commercial bank
and a prominent regional investment banking firm to address these
issues, so I won't go any further on them.
I also have some comments in my official testimony regarding re-
turn standards. Since other witnesses are also addressing that issue,
I shall just state that it is our conclusion and our position that rea-
PAGENO="0255"
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sonable return standards are both unnecessary and nonproductive
because we believe in our opinion the free marketplace is working
in the ski industry in Colorado. This. is true both for setting of fees
paid by ski areas to the Federal Government and to the determina-
tion of fees charged to the public.
We support wholeheartedly, however, with relationship to our
fees that we pay to the Federal Government. The suggestion has al-
ready been made to you many times and I have heard it this morn-
ing a couple of times that the amount of the fee that we pay that
is returned to the county be increased substantially and that the
restrictions on those fees, which are now as you know limited to
schools and roads, be modified so. that that money can be used for
whatever way the county determines is in the best interest of the
county. We wholeheartedly support that recommendation and hope
that can be put into your legislation.
In just a minute I shall read for you a resolution unanimously
adopted by the Board of Trustees of Ski Country regarding the
issue of public disclosure, but first, let me put it and an allied issue,
that of public hearings for rate requests, in some perspective.
In reviewing the current language. of 5. 2125, we note that the
rate review process provides for public hearings. In our judgment it
i~ neither realistic nor feasible to hold public hearings on each and
every rate request for the multitude of ski areas in this country who
operate on public lands.
However, we do believe that the public should have an opportunity
to participate in the development of the criteria which you have
instructed the U.S. Forest Service to develop, and which we agree
shoud be developed, and pursuant to which they shall carry out their
administrative responsibilities for the rate review process.
We believe, moreover, that the oversight function of the Congress
coupled with the financial disclosure provision of the bill is adequate
protection of the public interest in providing assurances that feder-
ally owned lands are being properly managed and that commercial
operations are being adequately supervised.
At recent meeting of the Board of Trustees of Colorado Ski Coun-
try, the following resolution was unanimously adopted:
Resolved that the Board of Trustees of Colorado Ski Country endorses a
concept of `publi(c disclosure' of historical financial operating data for those
companies which operate wholly or in part on federally owned public lands,
and that the industry's specific comments on the precise language of this
provision of the bill will be made available for the committee's consideration
in time for the Washington hearings.
In closing, may I say on behalf of our members that we hope this
response and the public disclosures resolution jn particular are inter-
preted by the public as a commitment from the ski resort industry of
Colorado to have a positive and progressive ongoing involvement in
responsible public policy.
Thank you for providing us with this opportunity to respond to
your inquiries and to make our position a matter of public record.
I would be glad to answer any questions you might have.
Senator HASKELL. Thank you, Mr. Peterson, very much. The prob-
lems that Mr. Evans of the Forest Service has apparently set some
standards for declining one rate increase and compromising several
PAGENO="0256"
252
others. The question really is what are those standards. Is the industry
satisfied with them, and, assuming the industry isn't satisfied with
them, what standards would you suggest? I suppose I have asked you
several questions in one sentence, but are you satisfied-well, first, do
you know what the standards were in establishing-
Mr. PETERSON. Well, we received a letter. I think it ~ similar to
the one I understand you read in Aspen regarding the kind of stand-
ards that he used and looked at, made his judgments on rate requests.
I think the problem that you brought out, you know, is that there
are no criteria nationwide for the application of these standards and
we endorsed the fact the Forest Service has these criteria developed.
Senator HASKELL. And what criteria wolud you suggest?
Mr. PETERSON. The Colorado ski industry is not as much-we are
not in a position to comment on that. We have not had the time to
review the kind of criteria that we would suggest. As I mentioned,
we endorse the concept of the development act criteria. We will par-
ticipate in that and we will make our recommendations at that time.
Senator HASKELL. You see, here is the problem, Mr. Peterson. No-
body seems to be terribly satisfied with what I consider extremely
vague standards articulated by one local forest supervisor-people
agree that there is no nationwide determinable standard for review-
ing rate increase requests-and yet people don't like the suggestion
we have made. If you do have real competition, then that's fine but
if you don't have real competition I have suggested reasonable re-
turn on equity invested capital and some people have objected to
that, but I have not seen anybody come forward yet with what we
ought to do. You know, it is easy for folks to say no, but I would
like to have some suggestions.
Mr. PETERSON. If I could, I would like to-I am also president of
Vail Associates.
Senator HASKELL. Yes; maybe in that capacity you could speak.
Mr. PETERSON. In my opinion, Senator, that is the first determina-
tion, and I think you have talked on this several times, whether or
not the marketplace is operative and whether or not competition is
operative, and as I say it is our opinion and conclusion in the testi-
mony that you will see that will follow me that it is operating in
Colorado and therefore if it is operating we don't see the need for
different standards, so I really haven't carried that thought process
any further with regard to that.
Senator HASKELL. You know, this is a real problem. I hope you
will carry it forward, because you know the individual forest super-
visors each adopt their own standards and sometimes it almost ap-
pears that they kind of operate on hunches by the seat of the pants
and I don't think this is very fair to a ski area nor to the public.
What it lends itself to is if you get along with your local forest su-
pervisor things are peachy, if you don't get along and you are an
operator of a ski area, things are tough. So I would hope that either
in your capacity as president of Vail or in your capacity as repre-
senting Colorado Ski Country you might come forward for the rec-
ord with some suggestions. I realize you can't just manufacture them
sitting at that table. It takes a lot of thinking, but I would appreciate
some suggestions to solve this problem. I think it would be very help-
ful if you could. Thank you, Mr. Peterson.
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I understand that Tod Martin, who is executive director of Col-
orado Ski Country, Inc., will precede rather than follow Mr. Hub-
bard, so if Mr. Martin is here, please come forward.
STATEMENT OP TOD MARTIN, EXECUTIVE DIRECTOR, COLORADO
SKI COUNTRY, U.S.A.
Mr. MARTIN. Thank you, Senator. A detailed statement of my pres-
entation has been presented. My remarks are in summary.
Senator HASKELL. And your statements will be in the record.
Mr. MARTIN. Fine, thank you very much. As executive director of
Colorado Ski Country, the purpose of my testimony is to present his-
torical information concerning several of the issues which you have
raised, and I will discuss the effectiveness of the marketplace and
the Colorado ski business, the cost of measurements.
The first chart which we would like to show you, and incidentally
there is a black-and-white copy attached to your statement and it
might be easier for you to follow, shows that the cost of lift tickets
range from $3.75~ up to $11, and that's for an all-day lift ticket. Thern
concentric circles shown here are in 50-mile increments and they
show a lot of price ranges with that 50- to 100-mile range of the
Denver metropolitan area, and then to show what the customer sees
the areas are shown by their skier day volumes.
The indication down here, that means that the circle shows there
were 250,000 or more skier visits in a year. The square means that
there were 100,000 up to 250,000 skiers here and the triangle would
indicate 0 to 100,000 for small areas. This analysis indicates that
the higher priced areas are also among the most popular. Skiers tend
to look for a wide range of quality facilities and services.
Colorado ski areas must also compete with resorts throughout this
country and the entire world. A survey recently conducted by the
National Ski Areas Association show the average adult lift ticket
at some 73 areas both on public and private land was $9.22. By com-
parison, at 16 Colorado areas. which were included in that survey,
the average was only $8.66. or about 6 percent less than the national
average.
Another element of competition is the appeal for discretionary
knowledge made by many other recreatoinal interests. The Univer-
sity of Colorado recently conducted a study entitled "The Cost of
Recreation and Leisure Activities. A copy also has been submitted
for the official record of the hearings and for your review, Senator.
It shows that skiing compares quite favorably with other recreational
pursuits. A few examples, the cost of skiing in 1974 and 1975 on a
per-hour basis ranged from 80 cents to $2. That's assuming 5 hours
of skiing and a~ normal 8-hour lift operating day. The cost for an
hour of tennis ranges from no charges to as much as $6 at private
indoor clubs and the cost of an hour of golf ranges from 50 cents up
to $2.50 at a variety of municipal courses throughout the State.
* Lift tickets are also in line with a number of widely accepted cost
price indices. We did a 10-year comparison comparing them with
the Consumer Price Index, the construction cost index and the aver-
age hourly earnings index, and if I could have somebody help me
maybe put that chart right quickly there, the lift ticketing prices
PAGENO="0258"
254
which are shown in the black line since about 1967 and 1968, even
though they have been increasing faster than the Consumer- Price
Index, which is shown by the blue line here, the trend appears to
have reversed commencing in about 1973. The hourly earnings, or
let's take the composite construction index next, that's the red line
and includes labor and materials and so on, that shows ski ticket
prices have not increased as rapidly as have the costs.
The ski industry, of course, is capital-intensive, meaning that sub-
stantial facilities investment must be made before you can start
revenue.
The last is hourly earnings index. That's the green line here. That
includes things like nonsupervisory workers. There is a high degree
of comparability between the earnings index and ticket prices.
In summary, this testimony I believe shows that the Colorado ski
industry offers a competitive marketplace which has produced a wide
range of products and prices and recreational experiences for the
consumer. In the past 25 years, the number of areas has increased
from 6 to 31 here in the State of Colorado, and the quality and quan-
ity of the capital improvements, such as lifts and trails and so on,
have grown dramatically. This growth has been necessary to meet
the demands of the expanding number of skiers and compete against
new and different recreation activities.
In the process of being competitive, we think the ski areas have
maintained a free and open marketplace on which the consumer con-
trnues to have a wide and variable array of options. Thank you for
the opportunity to appear before the subcommittee on behalf of the
Colorado ski area industry.
Senator }]IASKELL. May I ask you the same question, Mr. Martin,
that I asked Mr. Peterson? The Forest Service now, or at least one
region of the Forest Service or perhaps only one national forest
within the State, has certain standards as set forth in Mr. Evan's
letter. Now, are you satified with the standards he articulates in his
letter?
Mr. MARTIN. Senator, that's somewhat of a difficult question for
me to answer. I am a little bit in the position like you of having ovet
2 million constituents and I have 31 areas here in the State. To be
honest, I don't know what the standards should be. It is the type of
cjecision that I-
Senator IJASKELL. Let me ask you as an economist.
Mr. MARTIN. I would again pass. I am not an economist, sir.
Senator HASKELL. Let me ask you as an individual citizen.
Mr. MARTIN. All right, that I am.
Senator HASKELL. As an individual citizen, are you satisfied with
at least the standard referred to in Tom Evans' letter?
Mr. MARTIN. Again, not really being a lift operator, I would say
probably not, although I think that we are working in that direction.
As Mr. Monaghan for the Governor's office had mentioned yesterday,
the Governor has asked the State be better represented in this whole
process.
Senator HASKELL. Well, moving in what direction?
Mr. MARTIN. I think in just moving out the entire process, making
sure that the individual citizen has an input earlier.
PAGENO="0259"
255
Senator HASKELL. No, that's not what I asked. As an individual
citizen, do you think Tom Evans' standards are the right standards
that should be used?
Mr. MARTIN. I guess I woud just have to say I don't know, because
I represent 31 different-
Senator HASKELL. Now, answering as an individual citizen, not
as representing 31 ski areas.
Mr. MARTIN. I would say definitely maybe, not to be facetious, but
I think probably part of those are probably important, but I think
overall there is much room for improvement, I would say.
Senator HASKELL. All right, next question. We all know that
standards will vary with whomever happens to be in a different
region, maybe some different standards are applied, so it depends on
what region you are in. Now, do you think that's a satisfactory situ-
thou as an individual citizen?
Mr. MARTIN. I guess I would just have to refer back to the-
Senator HASKELL. No, let's forget about the charts. Every individ-
ual forest supervisor has his own set of standards. Now, do you
think that's a good healthy situation?
Mr. MARTIN. Well, I would have to base my answer on the fact
that if apparently, and I am not sure that really is the case, because*
I don't really deal with it, I think there should be the opportunity
for local differences to be ádjusted~ for. I think there ought to be
basic standards which draw up and encompass the base rating pro-
cedures but I think probably small individual characteristics in local
communities should be adapted to.
Senator HASKELL. Now, what broad standards would you apply as
an individual citizen?
Mr. MARTIN. Referring specifically to the permit itself, sir?
Senator HASKELL. To the rates that are charged. What standards
would you apply? You know, the Forest Service says that they are
going to review rate increase requests. We don't have any standards.
Now, I am asking you as an individual citizen to suggest to me what
would be the appropriate standards in either granting or denying
rate increase requests?
Mr. MARTIN. I would have to say I don't know. If I did, I would
probably be able to solve a lot of problems, but that is something
we are working on through Colorado ski country. I think it would
make everybody happier from the consumer to the operator to the
stewards of the public lands, and I am afraid I don't have that
answer.
Senator HASKELL. You see, that's my problem.
Mr. MARTIN. With you we are working on it, sir, with all things
involved, and I guess if it-
Senator HASKELL. Do you think a standard such as a reasonable
return on equity invested capital sounds like a good idea?
Mr. MARTIN. That certainly should be one component of an overall
plan, yes.
Senator JIASKELL. All right, sir, thank yOu. I didn't mean to put
you on the spot.
Mr. M4RTIN. It was a difficult question.
Senator I ASKELL. Thank you very much indeed.
Mr. MARTIN. Tha~ik you f~r the opportunity, sir.
[The prepared statement of Mr. M artin follows:]
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OFFICIAL TESTIMONY
OF
TOD MARTIN
EXECUTIVE DIRECTOR
OF
COLORADO SKI COUNTRY USA
DELIVERED TO
ENVIRONMENT AND LAND RESOURCES SUBCOMMITTEE
OF
SENATE INTERIOR AND INSULAR AFFAIRS COMMITTEE
ON
MONDAY, OCTOBER 6, 1975
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ThE SKIER'S MARKETPLACE
Mr. Chairman, I am the Executive Director of CSCUSA. The purpose of
my testimony is to present data concerning the dual and related subject of
pricing and competition. In that regard, I shall discuss:
(1) The effectiveness of the marketplace in the Colorado
ski area business, and, in particular, a focus on
pricing structure;
(2) A brief look at the cost of skiing as compared with
other forms of recreational and leisure activities
(3) A historical comoarison of Colorado lift ticket prices
as measured against other national cost and price indices
ThE SKIER'S MARKETPLACE--DOES IT OPERATE EFFECTIVELY?
We hear a great deal of discussion about the free market system and the
role of competition in business. But, not all businesses are competitive,
and therefore the need is to determine which have the essential elements of
competition and which do not. In the case of the Colorado ski area industry,
we think the data regarding "consumer options" tell an interesting story
about:
- -The number of firms and products competing for the
consumer's discretionary leisure dollars;
- -The location of the areas;
--The degree of product differentiation and market segmentation
within the state;
- -And, the implications to be drawn from an analysis of ski
resort popularity as measured by "skier days" at each area.
Let me focus your attention briefly on a chart which visualizes these
factors.
On the Skier's Marketplace chart, we show the name, location and
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-2-
highest lift ticket price to be charged (i.e. the all-day adult ticket) by
each of the 31 areas of Colorado in the 1975-76 season. The color-coding
system categorizes the areas in terms of the "price submarket" to which, they
belong according to their all-day adult ticket price--low ($6 and under),
medium ($6 to $9) and high ($9 to $11).
The chart shows that the cost of these products in the upcoming ski
season will range from $3.75 to $11.00 for an all-day adult lift ticket. As
you might, expect, these areas vary in scope and dimension from large,
international destination resorts like ~Aspen, Vail and Steamboat to smaller,
day-skier areas such as Squaw Pass, Berthoud Pass and Lake Eldora. The
point to be made is that the market is composed of a wide range of price
and facility options.
Having shown the extent of market segmentation, the next questions to
address are those of proximity and geography. That is, do these resorts show
any geographical pattern according to price categories--so that, for instance,
higher priced areas are located in a particular section of the state, or
whether the sane might be true for the lower priced areas.
The concentric circles on the chart indicate distances of 50 miles
moving from the Denver metropolitan market to the Western slope.
The data show that there are a range of price options (refer to the
color code) within a 50 and 100 mile radius of the major metropolitan markets
of the Front Range. (These are considered acceptable driving distances for
the day-skier market). In addition, it shows that there does not appear
to be any strong or distinct pattern with respect to geographic concentration
within any of the three price categories.
Finally, having established;
--How many areas there are;
- -How much they charge;
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-3-
- -And where they are located.
Now, we will show;
--IVhere the customer skis.
This additional categorization of the 31 ski areas can be matched
against the first measure--ranking resorts according to price.
The outlined color code on this chart rank areas by their skier-day
volume.
RED 250,000 or more per day
BLUE 100,000 to 249,999
GREEN 0 to 99,999
One result of. this analysis is tc) see that the higher priced areas are
generally the most popular. We do not pretend for one moment that this is
because skiers favor higher prices but rather that they tend to look for a
wide range of quality facilities and services--efficient, modern lifts, a
well groomed network of interesting trails--for which they are willing to phy
more money, and for which the area operator had to expend substantial capital.
IS SKIING (YJMPETITIVE WITH OTHER FORMS OF RECREATION/LEISURE?
On the subject of competition, let me also point out that Colorado
firms must compete with resorts throughout this country and other sections
of the world, especially Canada and Europe. By way of comparison, in a survey
recently conducted by the National Ski Areas Association, it was shown that
the average adult daily lift ticket at 73 areas across the country was $9.22.
By comparison, at the 16 Colorado areas included in the survey, the average
was $8.66 or about 6~ less than the national average.
Another element of competition which we think is germane to an
examination of the ski industry, is the appeal for discretionary dollars made
by other recreational and/or leisure interests - - indoor tennis, warm weather
vacation packages and the like.
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-4-
While I shall not deal in any detail with this subject in my testimony
before you today, I will highlight a few findings from an August, 1975 study
conducted by the Business Research Division of the~ Graduate School of Business
Administration of the University of Colorado entitled, "The Cost of
Recreation and Leisure Activities.t A copy of this has been submitted for
the official record of the hearings and for your review.
The study shOws, for example, that the cost of skiing compares very
favorably with other participatant sports on a per day, per hour or per event
basis. To cite a few specifics:
--The cost of skiing in 1974-75, on a per hour basis, ranged from
$.80 to $2.00; this by the way assumes only 5 hours of skiing
in a normal 8 hour lift operating day;
--The cost of an hour of tennis, by comparison, ranges from no
charge at outdoor public facilities to as much as $6.00 at
private, indoor clubs(which sometimes require additional charges
for initiation and membership fees).
--The cost of an hour of golf ranged from $ .50 to $2.50 at a
variety of municipal courses throughout the state.
Other data in the study relate to a wide range of activities- -in
public facilities and on private land; for participatory activities and
spectator events; for athletic pursuits and cultural offerings. In sum, we
think the results indicate another important measure of public concern--whether
or not the cost of skiing is comparable with other activities which can be
done in place of, instead of, or for the sane benefits as the sport itself.
HOW EXPENSIVE HAS SKIING BECONE?
Another way to analyze the issue of lift ticket prices is to compare
them with other widely accepted national price and cost indices. While we
understand that the inflationary trends of the recent past have had a
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-5-
spiralling effect on many aspects of our leisure life, we should determine
whether ski lift ticket prices are generally in line with~ these national
trends.
In order to address this question, a study was made comparing the consumer
price index, composite construction cost index and the average hourly earnings
index. The weighted averages for lift ticket prices were used to mere
accurately and fairly reflect the average prices being paid by Co'lorado skiers.
The Historical Comparison chart shows that lift ticket prices rose faster
than the Consumer Price Index from 1967-1973, but that since that time the
trend appears to have reversed.
With regard to the Composite Construction Cost Index (labor, materials, etc.)
the trend shows that ski ticket prices have not increased at as rapidly as
have costs in this sector of the economy. As you know, the ski resort industry
is highly "capital intensive" in nature, meaning that substantial investments
* in facilities must be made in order to produce operating revenues. Thus a
* comparison with construction costs in meaningful.
The hourly earnings index monitors increases in labor costs for all
non-farmer, non-government, non-supervisory workers. Since the ski industry,
like all "service" businesses, is also labor intensive, this comparison is
relevant. The data show that there is a high degree of comparability between
the earnings index and lift ticket prices, but that earnings have increased at a
slightly faster rate.
SUM'~kRY *
It is my hope that this testimony has shown that the Colorado ski area
industry is a competitive marketplace which has produced, over the years, a
wide range of products, prices and recreational experiences for the consumer.
In the last 25 years, the number of areas has increased from 6 to 31; and,
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-6-
the quality and quantity of necessary capital improvements--lifts, trails,
etc. has also grown dramatically. This growth has been necessary to meet the
demands of the expanding number of skiers, and to effectively compete against
new and different recreational and leisure-time activities.
In the process of being competitive, we think the ski areas have
maintained a~ free and open marketplace in which consumers continue to have
a wide and enjoyable array of options at prices comparable to other types
of recreation.
Thank you, Mr. Chairman, for this opportunity to appear before your
Land And Environmental Resources Subcommittee on behalf of the Colorado
ski area `industry.
Attachments: 2 Charts
Survey.
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THE COST OF RECREATION AND LEISURE ACTIVITIES
by
C. R. Goeldner
Working Paper #1
Business Research Division
Graduate School of Business Administration
University of Colorado
Boulder, Colorado
PAGENO="0268"
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THE COST OF RECREATION AND LEISURE ACTIVITIES
Introduction
The purpose of this paper is to examine the cost of various recreation
and leisure time pursuits. The objective of this endeavor is to make com-
parisons of the costs of certain recreation and leisure tine activities to
determine if they rank high or low on a cost basis. The effort was under-
taken at the request of Colorado Ski Country U.S.A. in an attempt to answer
the question: Is skiing really a high-cost sport in comparison with other
recreational activities? There is little question that skiing has the image
of being "high cost," but is this image really justified?
The following pages present cost figures which were obtained by tele-
phoning various organizations during the month of August 1975 in an attempt
to provide some cost comparisons. While the question raised above appears
to be relatively simple, like most things in our society one finds the
answer somewhat complex. Comparisons prove difficult, selection of items
to be compared is arbitrary, consumers' value systems differ, and one can
argue over what standard should be used for measurement purposes.
In the marketplace for recreation and leisure time activities one finds
many levels of costs, with both public and private organizations offering
activities and appealing to many market segments. It appears that the
recreation-leisure industry is similar to the other service industries with
establishments catering to various market segments. In retailing we have a
range from Neusteters and Gano Downs to K-Mart. In lodging we find a range
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2
from the Broadmoor to Motel 6. This same range or appeal to various market
segments exists in the recreation industry as well, hut with one noticeable
difference. A great deal of recreation is publicly supported or subsidized.
It is quite common for cities to have a parks and recreation department and
offer activities free or at a very low cost.
Recreation activities run. the cost gamut from expensive country clubs to
free municipal programs. Virtually whatever activities are discussed are
available at a wide range of prices and quality. This makes comparisons dif-
ficult, but the presentation of some of the costs adds considerable dimension
to the situation and will allow the reader to draw his own conclusions, or
restructure the data to do further analysis.
Appendix A presents results from the National Recreation Survey con-
ducted in 1972 showing popular recreational activities. This table (1-A)
was used as a guide to select popular activities and determine participation
times for activities. When Colorado organizations could provide more pre-
cise participation times these were used. Many of the popular high parti-
cipation activities as picnicing, sightseeing, driving for pleasure, and
walking for pleasure are available without charge. Others are available at
varying charges. Tables 1-9 present costs of various recreation activities,
and Tables 10 and 11 summarize this information on a cost per day or event
and a cost per hour basis. All tables follow the text material.
SkiinA
Just as -is the case with other products and services, the Colorado ski
industry offers the consumer a fairly wide range of prices and amenities.
Lift ticket costs for the 1974-1975 season are shown in Table 1. The cost
of an all-day ticket at Aspen and Vail was $10 while the cost at Squaw Pass
was $4.00. Half-day prices ranged from $7 at Aspen and Vail to $3.50 at
67-512 0 - 76 - 18
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3
Berthoud, Ski Cooper, and Squaw. Children's all-day tickets ranged from
$5 at Vail to $3 at Aspen to $2.75 at Squaw Pass. Since many recreational
activities are charged for on an hourly basis, Table 1 also presents the
cost per hour for a day's skiing. Most Colorado ski areas operate from
9:30 a.m. to 4:30 p.m. or a 7-hour period. A hearty skier can manage 7
hours of skiing on an all-day lift ticket if he chooses; however, it is
considered more realistic to consider a 5 or 6 hour day for the recreational
experience. Table 1 presents costs on the assumption "the crack of dawn
and no lunch skiers" is not typical and calculations are made on the basis
of a 5-hour day. On half-day tickets, a 3-hour time period was arbitrarily
chosen for calculation purposes.
Oman hourly basis, assuming a 5-hour day, it costs $2 an hour to ski
at Vail and Aspen, based on 1974-1975 rates. If one were to assume a full
7-hour skiing experience, the rate would be $1.43 per hour. For a 6-hour
day the rate would be $1.67 per hour. In examining Table 1, a dilemma
arises as to what figures to use for comparison purposes with other
recreation-leisure time activities. Should one choose the "Cadillac level"
such as Vail and Aspen, or the "compact car level" such as Hidden Valley,
Ski Cooper and Squaw Pass? For comparison purposes, it was decided to use
Aspen and Vail lift ticket prices for most comparisons.
Tennis
Tennis, called by many as America's fastest growing sport, can be played
on municipal courts without charge or at a nominal charge; at racquet clubs
oriented toward tennis with membership fees and charges for court time; at
vacation resorts; and at swank country clubs. Table 2 shows some charges
for playing tennis at various locations in Colorado. Tennis is typically
charged for on a per hour basis and for this reason per hour costs for other
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4
recreational leisure activities have been calculated to facilitate compari-
son. It appears that when one plays tennis at private facilities the cost
per hour exceeds that of most other recreational activities.
Golf
The cost of playing golf varies substantially as with tennis. It can
be played at country clubs with high membership fees or at relatively in-
expensive municipal courses. Table 3 presents some information on the cost
of playing golf at various Colorado locations. Since it is difficult to
determine how long it will take to play a round of golf, cost per hour
figures were calculated assuming that 18 holes would be played in 4 hours,
and weekend rates were utilized.
Horseback Ridin~g
* Horseback riding is a popular activity participated in by 5 percent of
the National Recreation Survey respondents. Horseback riding is usually
purchased by the hour with Colorado rates ranging from $3.00 to $5.00 for
the first hour, as shown in Table 4. A full day ranges from $15.00 to
$25.00.
River Raft Tr~p~
Table 5 presents information on river raft trips at selected locations
for trips of one day or less. A one day trip typically costs about $18.00
and includes lunch.
Jeep Tours
Jeep tours are offered in most mountain recreation communities and are
handled in several ways. Specific tours have been organized to various loca-
tions with individual charges while other tours operate only with a minimum
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5
of four people. A typical all-day jeep tour would run $20 per person. Some
jeep tour price information is shown in Table 6.
Other Activities
Swimming is one of the most popular activities in the country from the
standpoint of participation. It is also one of the most economical activi-
ties to engage in. Some typical swimming costs are shown in Table 7, along
with some ice skating rates.
Spectator Sports
The costs of attending some of the more popular spectator sports are
shown in Table 8. There is a wide variation in prices depending on the level
of competition and seating arrangements. The best seats at a Bronco football
game cost $8.50, at a Spurs hockey game $13.20, and at a Nuggets basketball
game $7.70.
Other Entertainment
Table 9 shows information on some other popular entertainment activi-
ties in Colorado. Again, one will note there is a broad range of prices
among performances and seat location. The best seats at the Central City
Opera are $15.00, while the less desirable ones are $6.50. At the Denver
Auditorium Theatre prices range from $3.00 to $12.00, while at Elitch's
Theatre they range from $4.75 to $7.25.
Summary
A host of activities and their prices have been shown in Tables 1
through 9. Some of this information is summarized in Tables 10 and 11.
Table 10 shows the cost of selected recreation activities per day or per
event and permits the comparison with a cost of a day's skiing at Aspen or
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6
Vail. Table 11 compares the activities on a per hour basis and gives the
ranges based on the lowest cost to engage in the activity to the highest
cost without regard to quality. It appears that a day's skiing at Aspen
and Vail is comparable to a round of golf at a resort area such as the
Broadmoor, Vail or Snowmass and on a per hour basis, skiing compares favor-
ably with many recreational opportunities.
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a Weekend rate
TABLE 1
COST TO SKI, 1974-1975 RATES
Weekend Day Halt-Day Child -
1974- Cost/hour 1974- Cost/hour 1974- Cost/hour
1975 5-hour day -~ 1975 3-hour day 1975 5-hour day
VACATION AREAS
Aspen Highlands
$10.00
$2.00
$7.00
$2.33
$3.00
$ .60
Aspen Ski Corp.
10.00
2.00
7.00
2.33
3.00
.60
Breckenridge
7.50
1.50
5.00
1.67
3.00
.60
Copper Mountain
9.00
1.80
6.00
2.00
4.00
.80
Crested Butte
9.50
1.90
7.50
2.50
5.00
1.00
Keystone
8.00
1.60
6.00
2.00
4.50
.90
Steamboat
9.50
1.90
7.00
2.33
4.50
.90
Vail
10.00
2.00
7.00
2.33
5.00
1.00
Telluride
8.50
1.70
6.50
2.17
4.00
.80
Winter Park
7.50
1.50
5.00
1.67
3.50
.70
9.14 1.83 6.50 2.17
3.86 .77
Average
OTHER DAILY AREAS
A-Basin
Geneva Basin
Hidden Valley
Lake Eldora
Loveland Basin
Monarch
Powderhorn
Purgatory
Ski Broadmoor
Ski Idlewild
Stagecoach
Sunlight
Wolf Creek
Average
WEEKEND AREAS
Berthoud Pass
Ski Cooper
Pikes Peak
Squaw Pass
Average
$ 7.50
$1.50
$5.50
$1.83
$5.00
$1.00
6.00
1.20
4.50
1.50
3.50
.70
5.50
1.10
4.00
1.33
4.00
.80
6.50
1.30
5.00
1.67
4.00
.80
7.50
1.50
5.50
1.83
4.00
.80
7.00
1.40
5.00
1.67
4.50
.90
8.00
1.60
6.00
2.00
4.00
.80
8.00
6.00
1.60
1.20
6.00
350a
2.00
1.17
4.00
-
.80
-
6.00
1.20
4.50
1.50
4.00
.80
7.00
1.40
5.50
1.83
4.00
.80
6.50
1.30
4.50
1.50
3.50
.70
7.13 1.43 5.20 1.73
4.07 .81
$ 4.50
5.00
5.00
4.00
4.63
$ .90
1.00
1.00
.80
.93
$3.50 $1.17
3.50 1.17
4.25 1.42
3.50 1.17
3.69 1.23
$3.00
2.50
2.75
2.75
$ .60
.50
.55
.55
Source: Colorado Ski Country U.S.A., 1461 Lariner Square, Denver, Colorado 80202.
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8
TABLE 2
COST TO PLAY TENNIS
Hourly Court
Membership Fee Time Charge
Cost
Per
Per Person
Hour/Singles
Aspen Highlands (members) $70 $ 4.00 $2.00
(others) 6.00 3.00
Aspen Meadows 4.00 2.00
Aspen Municipal Tennis Court 3.00 1.50
Aspen Racquet Club 6.00 3.00
Plum Tree 3.00 1.50
Snowmass Country Club (guests) 6.00 3.00
(others) 10.00 5.00
Boulder
Boulder Valley Racquet Club $100 $ 9.00 $4.50
7.00 3.50
City Courts Free .00
University Courts Free .00
Breckenridg~, (weekdays) $ l.OO $ .50
(weekends) 2.00 1.00
Broadmoor (must be in hotel) $ 6.00 $3.00
Copper Mountain ($4.00/l.5 hours) $ 2.67 $1.34
Denver
City Courts Free $ .00
Heatheridge $350/year $ 6.00 3.00
8.00 4.00
Meadow Creek $80 8.00 4.00
Tennis World $100 + 10.00 5.00
$50 initiation 12.00 6.00
Keystone
John Gardiner (guests) $ 3.00 $1.50
(others) 5.00 2.50
Steamboat Spring~
City Courts $ 1.50 $ .75
Cliff Bucholz Tennis Camp 12.00 6.00
Steamboat Village Inn (guests) 2.00 1.00
(others) 4.00 2.00
Vail
Eagle Vail $ 4.00 $2.00
The Murk 4.00 2.00
Racquet Club $1,200 + $15/month
Town of Vail Courts 4.00 2.00
Source: Telephone calls to organizations listed.
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a Mt rent cart for $10 as well.
Source: Telephone calls to organizations listed.
TABLE 3
COST TO PLAY GOLF
9
9
Holes
18
Holes
Cost/hr.
Weekday
Weekend
Weekday
Weekend
at 4 hrs.
Aspen Municipal Course
$3.25
$3.25
$ 5.50
$ 5.50
$1.38
Snowmass Country Club
5.00
5.00
10.00
10.00
2.50
Boulder
Flatirons
$2.50
$3.25
$ 3.50
$ 4.25
$1.06
Haystack
2.25
3.25
Lake Valley
4.00
5.00
1.25
Broadmoor (must be in hotel)
$10.00
$10.00
$2.50
Denver Area
Adams County
$2.00
$2.50
$ 3.00
$ 3.50
$ .88
Applewood
3.00
4.00
1.00
Aurora Municipal
2.00
2.50
3.00
4.00
1.00
Chatfield
2.00
2.25
2.75
3.75
.94
Denver - All City
Foothills
1.75
2.25
2.00
2.50
3.00
4.00
3.25
4.25
.81
1.06
Heather Gardens
2.25
3.25
Hyland Hills
Indian Tree
2.00
2.25
3.00
2.75
2.75
3.25
4.00
4.25
1.00
1.06
Kennedy
Lake Arbor
2.00
2.25
2.25
3.00
3.50
3.25
3.75
4.25
.94
1.06
Northglenn
Overland
1.75
1.75
2.00
2.00
3.00
3.25
.81
Park Hill
3.50
4.75
S. Suburban
2.00
2.50
3.00
4.00
1.00
Springhill
Twilight
Wellshire
1.25
1.75
2.00
2.25
2.00
2.25
2.00
3.50
(after 6 p.m.)
3.75
.50
.94
Steamboat
$6.00
$7.50
$ 8.00
$10.00
$2.50
Tamaran
a
$10.00
$2.50
Vail
Eagle Vail
Vail Municipal Course
(June 15-September 15)
$7.00
$7.00
$10.00 $10.00 $2.50
10.00 10.00 2.50
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10
TABLE 4
HORSEBACK RIDING
Addi-
Full Half First tional
Day Day Hour Hours
Elk Mountain Lodge (Ashcroft) $18.00 $12.00 $4.00
Pomegranate Stables 19.00 12.50 3.50
Snowmass Stable 20.00 15.00 4.00
T Lazy 7 20.00 12.00 4.00 $3.00
Boulder
Hidden Valley $18.00 $10.00 $4.00 $2.00
Sombrero Ranch 15.00 9.00 3.00 3.00
Breckenrid~
Breckenridge Stables N.A. N.A. $4.00
Denver
Flowing J & S Riding Academy - - $3.50 $3.00
Glora Coma Stables N.A. N.A. 3~00 N.A.
Ralston Creek Stables $25.00 - 3.50 -
Steamboat Spri~g~
Sombrero Stables $16.00 $11.00 $4.00 $3.00
Vail
Pioneer High Country - - $5.00 $4.00
Sombrero Ranches $15.00 $10.00 4.00 -
Vail Jeep Guides (1 hour
riding, 1 hour fishing) 14.75
Source: Telephone calls to organizations listed.
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11
TABLE 5
RAFT TRIPS
Adults
Children
Aspen
Aspen High Country River
Tours
$18.00
$12.50
Aspen Whitewater
18.00
Colorado River Trips
18.00
13.50
Half-day trip
12.00
Eclipse Enterprises
18.00
15.00
Snowniass Resort
18.00
15.00
Steamboat Springs
Colorado Adventure
$17.00
$14.00
Vail
Anderson River Expeditions (half-day)
Vail Jeep Guides
$15.00
$l4.75-17.75
$10.00
$l2.75-l4.75
Source: Telephone calls to organizations listed.
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TABLE 6
JEEP TOURS
12
*
Full
Day
Half
Day
Cost/
Hour
Elk Mountain Jeep Tours (minimum 4 people)
$ 7.50
$ 5.00
$ .94
Breckenri4g~ $5/hour/person (minimum 4 people)
$5.00
Steamboat Spripg~
Colorado Adventure
$20.00
$14.00
$4.00
Vail
.
Vail Jeep Guides
Benchmark
Red and White Mountain
Ptarmigan
$19.25
5.75 (2 hours)
8.50 (3 hours)
11.25 (4 hours)
$2.41
2.88
2.83
2,81
Source: Telephone calls to organizations listed.
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13
TABLE 7
OTHER ACTIVITIES
Cost!
Activity Cost Hour
Swimming
Aspen - James Moore Pool $1.00 Adults $ .36
.50 Children .18
Boulder City Pools .75 Adults .27
.50 Teenagers .18
.35 Children .13
Denver Celebrity Sports Center 1.00 Adults .36
.75 Children .27
Ice Skating
Aspen Ice Palace (approximately 2- $2.00 Adults $1.00
hour session) 1.50 Children .75
Boulder - Flatirons Ice Arena, Inc.
(approximately 4 hour session) 1.50 Adults .38
1.00 Under 18 .25
Source: Telephone calls to organizations listed.
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277
14
TABLE 8
SPECTATOR SPORTS
Single
Season
Cost/
Sport Game
Pass
Hour
a
Baseball
Denver Bears $ 3.00 $132.50 $1.50
2.25 l14~00 1.13
2.00 1.00
a
Basketball
Colorado State University $ 4.00 $1.50
3.00 2.00
Denver Nuggets 7.70 $291.06 3.30
6.60 249.48 3.30
5.50 207.90 2.75
4.40 166.32 2.20
University of Colorado 3.50 36.00 1.75
Footballb
Boulder High School $ 2.00 $ .67
Colorado State University 7.50 35.00 2.50
6.00 28.00 2.00
Denver Broncos 8.50 59.50 2.83
6.00 42.00 2.00
School of Mines 2.50 .83
2.00 .67
University of Colorado 7.00 42.00 2.33
University of Northern Colorado 3.00 20.00 1.00
2.50 .83
b
Hockey
Denver Spurs $13.20 $552.40 $4.40
9.90 413.80 3.30
8.80 367.60 2.93
6.60 275.20 2.20
5.50 229.00 1.83
4.40 182.80 1.46
a Cost/hour is based on a 2-hour single game.
b Cost/hour is based on a 3-hour single game.
Source: Telephone calls to organizations listed.
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278
15
TABLE 9
OTHER ENTERTAINMENT
Event
Ticket
Cost
Cost/
Houra
Bonfils Theatre
$ 4.50
$1.50
Broadmoor International Theatre
$ 8.00
7.00
6.00
$2.67
2.33
2.00
Central City Opera
$15.00
6.50
$5.00
2.17
Denver Auditorium Theatre
$12.00
3.00
$4.00
1.00
Denver Symphony (Average)
$ 7.00
$2.33
Elitch Theatre
$ 7.25
4.75
$2.42
1.58
a Based on a 3-hour performance.
Source: Telephone calls to organizations listed.
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279
TABLE 10
COST OF SELECTED RECREATION ACTIVITIES
PER DAY OR EVENT
16
Activity Cost
Skiing at Aspen or Vail
Play tennis at John Gardiner Tennis Camp,
Keystone (non-guest)
Play tennis at Broadmoor (guest)
Play golf at Sno~imass, Vail or Steamboat
Horseback Riding, Snowmass Stables
Horseback Riding, Vail
Raft Trips, Aspen
Jeep Tour, Vail
Swimming
Attend Bronco football game
Attend CU football game
Attend Nuggets basketball game
Attend Spurs hockey game
Attend Bears baseball game
Attend Central City Opera
Attend Denver Auditorium Theatre
Attend Denver Symphony (Average)
Attend Bonf ills Theatre
Attend Elitch Theatre
$10.00
5.00/hour
6.00/hour
10.00
20.00
15.00
18.00
19.25
1.00
6.00-8.50
7.00
4.40-7.70
4.40-13.20
2.00-3.00
6.50-15.00
3.00-12.00
7.00
4.50
4.75-7.25
Source: Tables 1-9.
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280
17
TABLE 11
COMPARISON OF RECREATION/LEISURE ACTIVITIES
ON A PER HOUR COST
Cost
Activity per Hour
Skiing $ .80-2.00
Tennis .00-6.00
Golf .50-2.50
Horseback Riding 3.00-5.00
Raft Trips 2.50
Jeep Tours .94-5.00
Swinuning .27- .36
Ice Skating .38-1.00
Denver Broncos (football) 2.00-2.83
Denver Nuggets (basketball) 2.20-3.85
Denver Spurs (hockey) 1.37-4.40
Denver Bears (baseball) 1.00-1.50
Central City Opera 2.17-5.00
Denver Auditorium Theatre 1.00-4.00
Denver Symphony 2.33
Bonfils Theatre 1.50
Elitch Theatre 1.58-2.42
Source: Tables 1-9.
PAGENO="0285"
281
190
180
170
160
150
140
130
C
C)
C)
C)
a. 110
100
90
80
Historical Comparisons
Lift Ticket Prices
vs.
National Price/Cost Indices
1966-1 975
70
60
50
This graph, covering a 10-year period, compares a
weighted average lift ticket price index to the con-
sumer price index, the coraposite construction cost
index, and an average houriy.earnings index. (Graph
provided by Colorado Ski Country USA)
67-512 0 - 76 - 19
PAGENO="0286"
The Skiers' Marketplace
282
The "Skiers Marketplace" rendering presents the 31 major
ski areas in Colorado, their da~.y adult lift ticket
prices, their approximate straight-line distance from
major Colorado population centers, and their popularity
based upon lift tickets issued (1974-75 ski season).
(Diagram provided by Colorado Ski Country USA)
PAGENO="0287"
283
Senator HASKELL. Our next witness is Graydon D. Hubbard Jr. of
Arthur Andersen & Co~
STATEMENT OP GRAYDON D. HUBBARD, 1R., AUDIT DIVISION,
ARTHUR ANDERSEN & CO., DENVER, COLO.
Mr. HUBBARD. Thank you, Senator. I appreciate the opportunity
to appear before you today. My principal purpose in being here is
to provide you with some hard facts. I understand you have some
difficulty in getting those on the operation of ski areas in Colorado,
dealing principally with profitability and ticket prices. I would also
like to pass along some general impressions and some of my own
comments on the proposed legislation. This is based upon 15 years
in providing, auditing and accounting services to the operators in the
area of Colorado.
First, as to the Colorado ski area profile on profitability, profit-
ability has not until recently been very attractive. Heavy losses are
typieal of the new Colorado area. The prospects of better than mar-
ginal operations are not good unless the area does have the potential
of developing into a resort on the magnitude of those operated by
Aspen or by Vail. The demand for higher facilities and a demand
for repayment of prior borrowings has caused those areas that are
profitable to continue to reinvest their earnings. Most areas have had
to develop new sources of capital to fund the expansion necessary
to meet demands. Distributions in the form of returns to stockhold-
ers to those who have provided the high risk equity investment have
been minimal.
For the last 5 years, detailed information on ski area operations
has been gathered and studied by questionnaires sent to area opera-
tors first by the United Bank of Denver for 3 years, the last 3 years
by the University of Colorado. During this period, Colorado skiing
visits measured by skiing man-days have increased the following
percentages. Beginning with the 1970-71 season, that year 9.4 percent
increases over the prior year; increased 8.7 percent the following
year; 21.8 percent the following year; dropped to an increase rate
of 8.3 percent the succeeding year and in this last season there was
an increase of 20.7 percent.
Profitability data for the first 3 years of this period has not been
accumulated in Colorado alone; so I do not have it to give you. How-
ever, a composite for all Rocky Mountain operators, which includes
some of the adjacent States, has been developed by these studies~
which indicates approximate return compared to investment and
gross fixed assets as follows: 1970-71, 1.4 percent; 1971-72, 7.9 per-
cent; and 1972-73, 1.4 percent.
SenatOr HASKELL. What would that be related to equity invested
capital?
Mr. HUBBARD. This is the capital investment in the facilities them-
selves as opposed to-
Senator HASKELL. Yes, do you have the figures on equity?
Mr. HUBBARD . Yes, I do.I have some figures on the current period,
not On the .~receding 2 years.
* SenatOr HAsKE LL~ You have developed them on the preceding 3
years? . .
PAGENO="0288"
284
Mr. HUBBAIW. I think that information is available, but I don't
have it with me.
Senator HASKELL. But you could provide it?
Mr. HUBBARD. Yes, I could.
Senator HASKELL. Thank you.
[Subsequent to the hearing the following information was re-
ceived:]
ARTHUR ANDERSEN & Co.,
Denver, Cob., October 23, 1975.
Hon. FLOYD HASKELL,
U.S. Senate,
Dirksen Senate Office Buibding,
Washington, D.C.
Re: Ski Area Hearings of Environment and Land Resources Subcommittee
of Senate Interior and Insular Affairs Committee.
DEAR SENATOR HASKELL: When I testified before your subcommittee hearing
in Denver on October 6, you requested that .1 provide your. offlee with informa-
tion as to the return on equity investment of the ski areas participating in
the ski area operator studies for the seasons 1970 through 1973.
The published rates of return on equity investment for the reporting ski
areas operating in the Rocky Mountain area (the study did not separate out
the Colorado ski area) were as follows:
Season: . Percent
1970-71 3.4
1971-72 23. 5
1972-73 3. 5
Complete copies of these studies, compiled by the United Bank of Denver,
for these years may have already been made available to your staff. If not,
I am sure additional copies can be obtained directly from the Bank.
Please let me know if I can be of further assistance.
Very truly yours,
G. D. HUBBARD, Jr.
Mr. HUBBARD. I do have the data for the last 3 years. This data
indicates that the industry operated ski area facilities at a loss in
1973-74. That was the year there was a dip in the increase of ski.
business to Colorado. The year 1974-75, however, was the best eco-
nomically ever reported by skiers in Colorado. The composite de-
posits of those reporting was 7.8 percent revenues, 11.8 percent of
stockholders investment, which is the figure you. asked abOut, and
6.6 perecent return on the investment of gross fixed assets, which is
the return comparable to the number I have for the preceding 3
years. In my view, there are more ways of determining low rates of
return to the enterprise.
At that, the picture presented by the data may be brighter because
of the absence of 1974-75 data from one large area, which is believed
to be operating at a loss..
In the area of prices, those who ski in Colorado may select from
a variety of areas and a variety of lift ticket prices. Lift revenues per
skier per day, which is a composite measure of ticket prices, and this
averages the higher price and lower price and discOunts, averaged
$6.80 for the 1974-75 season and $6.31 for the previous period. The
range was from $2.74 for the lowest area and $8.53 for the highest.
Interestingly, the prices charged by the major de~tinatiOii ski re-
sorts such as those operated by Aspen and Vail have .iiot increased
rn recent years as rapidly as those by other ski areas.
PAGENO="0289"
285
In reviewing the price data by one of the destination resorts, it is
apparent that the daily adult lift ticket price has yet not kept pace
with increases in the cost of operating facilities. Despite the general
observation that this is one of the more profitable operations in the
State of Colorado, the operating costs of this area have increased
per skier day 80 percent in the last 5 years, while it has been able
to increase the daily adult lift ticket price only 25 percent. I should
point out that this area has been able to increase its total revenues,
total mountain revenues per skier day by 60 percent during the same
period. They have been able to increase some of the other ticket
prices.
I can well understand the concern that downhill skiing may be
headed, toward the wealthy man's sport designation and this may be
in conflict with the objective of making facilities on Federal lands
available for the enjoyment of all. However, if downhill skiing is
destined to become mostly for the affluent, it will become so not be-
cause of increasing lift ticket prices. This is really only a minor part
of the cost to a citizen to participate in downhill skiing. The costs' of
equipment, transportation, food and lodging overshadow lift ticket
prices in impact on the skier's pocketbook. It is the behavior `of these
costs which probably determines who will and who won't go skiing,
both now and in the future.
With respect to public disclosure, I have spent most of my pro-
fessional `life in the public arena, so I would like to encourage the
ski area operators to authorize public access to historical financial
operating data furnished to the Forest Service. I would hope this
could be done without additional legislatiOn. Perhaps it cannot. We
seem to live in a time when the restriction of public access to data,
no matter how' sincerely motivated by desirable rights of confiden-
tiality, does breed suspicion, misunderstanding and loss of credibility,
frequently in unjustified proportions.
The release of financial data by the ski industry will make the
industry vulnerable to those few who seek only basic data which they
can use to support a preconceived judgment. However, I think this
is a risk worth taking in the interest of providing information to
`assess those seeking facts in advance of making `judgments and to
improve understanding of the financial operations of the industry.
I would also like to comment on the requirement that the Secre-
tary of Agriculture develop criteria or formulae for determination
of use fees and for permitting or rejecting price changes requested
by permitees. I think in this area the Secretary' and the Forest Serv-
ice must be left with considerable room for judgment. In `my view,
the individual components of this industry, namely each ski area,
simply do not have sufficiently uniform operating characteristics or
operating results to permit the reasonable development at this
time-
IBell rings.]
Senator HASKELL. Were you in the room when I announced the
5-minute rule?
Mr. HUBBARD. I don't know the fii~t time, but I have heard you
express that since then
Senator HASKELL. Well,, could you quickly summarize?
PAGENO="0290"
286
Mr. HUBBARD. All right. I would like to conclude then with a few
comparative observations on price regulation. Unlike many price reg-
ulated industries, this one does not provide a necessity of life. Un-
like many, this is no mutual monopoly serving a specific area. Unlike
some other industries which are price regulated, this one has not had
the benefits of substantial Government subsidies to fund losses dur-
ing the early years of service to the public, and I think the develop-
ment of criteria, detailed criteria, for evaluating price changes will
be very difficult for this industry, particularly because it is really
only barely out of its infancy, and it may in its application be the
most difficult practical problem in area operator regulation. I do
question if the Government is qualified to determine prices. I just
don't know who is expert enough to say what is the proper price to
charge for a life ticket. I do think the public is qualified to do that,
but only through its willingness to pay a lift ticket price that is
determined not by Government but by the traditional competitive-
ness created by the system.
I thank you for your attention today. I have provided copies of
my testimony before the committee.
Senator HASKELL. I appreciate it. Your testimony will be included
in the record. Certainly the rates of return that you wrote out that
your clients make are by no matter of means excessive. As a matter
of fact, I would say they were extremely modest. The problem, how-
ever, here is operating on public lands, concealing information from
the public, ad hoc decisions by the Forest Service, depending where
you are and I guess how you get along with the supervisor. Therefore,
I am glad to hear you say that you think in this day and age that there
should be disclosure of historical financial information. I gather I
heard you right, didn't I?
Mr. HUBBARD. Yes, I strongly advocate it.
Senator HASKELL. Because I think this could do a lot. Now, let me
point to a. problem. You say that free enterprise will determine
prices, but it doesn't now. The Forest Service determines prices. For
example, the Forest Service turned down an interim rate increase re-
quest of your clients and then compromised a prospective increase, and
if you read that letter from Tom Evans and you can tell me how he
arrived at his decision,if I had a hat I would eat it. I don't think this
is helpful. I think it is desirable that objective criteria be arrived
at for a number of different reasons, so your clients can have their
day in court if necessary, so the public can have its day in court if
necessary, and that's what this is all about, and if you don't answer
now off the top of your head-
Mr. HUBBARD. I have heard you ask the question a couple of times.
Senator HASKELL. Well, have you got any suggestions on what the
criteria ought to be?
Mr. HUBBARD. I have one and I don't know if it will really help.
I think the real problem here is that the Forest Service and the in-
dustry has growii up with a requirement which really may not be
applicable to many, many ski areas, and that is at the outset when
the area operators contracted or received their permits from the
Forest Service they did in different language give the Forest Service
PAGENO="0291"
287
the right to review and approve their prices, and I really think that
that's the problem, that in trying to deal with their responsibilities,
regardless of whether their control or approval of prices is justified,
hut in trying to deal with that responsibility the Forest Service has
developed a variety of what you might call criteria or standards, and
I would think in my own opinion that the thrust of any instruction
to the Forest Service adversely be along the lines, "Justify your ex-
erices of your right to improve prices before you start improving
them. If they are iiot justified, don't do it." I agree if they feel they
are justified, then you get into the problem of determining how they
do it.
Senator HASKELL. And that's the big problem.
Mr. HUBBARD. It is, and the return on irvestment concept, I know
some other areas of rate regulation get into that and they have had
great difficulties. If that's not done, I know the ski operators scream
beacuse they feel they are entitled to a faii rate of return.
*Senator~ HASKELL. If you can come up with something-well1 I
will tell you, I am looking for ideas. If you caii come up with some-
thing to help. We want public confidence. We want the industry to
make a healthy profit. We don't want the industry to monopolize
ticket prices and rip off the public. We are all agreed on that, but
we want to strike that balance where they are able to make a profit,
where we do have competition, where we don't have to perhaps resort
to regulation, because I think that's the best form of regulation,
competition. So if you have any ideas in this area I would certainly
welcome them and if you send them to me the hearing record is go-
ing to stay open.
Mr. HUBBARD. I will be glad to do that.
Senator HASKELL. Thaiik you very much.
[The prepared statement of Mr. Hubbard and subsequent informa-
tion follows:]
STATEMENT OF GRAYDON D. HUBBARD, JR., PARTNER IN CHARGE-AUDIT DIvIsIoN,
ARTHUR ANDERSEN & CO.-DENVER, CoLo.
I appreciate the opportunity to appear before you today. My principal
purpose in being here is to provide you with some hard facts on the opera-
tion of ski areas in Colorado, dealing principally with profitability and ticket
pricing. I would also like to pass along some general impressions and ~om-
ments on the proposed legislation based on my I~ years of experience in
providing accounting and auditing services to ski area operators.
PROFITABILITY
The Colorado ski area profile on profitability has not, until quite recently
been very attractive. Heavy losses for several years after opening are typical.
The prospects for better than marginal profits are not good unless the area
has the potential of developing into a resort on the scale of those operated
by Aspen or Vail. The demand for expanded facilities and the need to repay
prior borrowings has caused those areas that are profitable to continue to
reinvest their earnings. Most areas has had to develop new sources of capital
to fund the expanison necessary to meet demand. Distributions to those who
have provided the high risk equity investment in this industry have been
minimal. It was not until this year that the Aspen Ski Corporation was able
to return a first dividend to its stockholders, despite many years of profitable
operations.
Detailed information on ski area operations has been gathered and studied,
though questionnaires sent to area operators, for the last five years, first by
PAGENO="0292"
288
the United Bank of Denver and then by the University of Colorado. During
this period, Colorado skiing visits, measured by "ski man day," have in-
creased the following percent:
Season: Percent
1970-71 9. 4
1971-72 8. 7
1972-73 21. 8
1973-74 8.3
1974-75 20. 7
Profitability data for the first three years of this period has not been ac-
cumulated for Colorado alone; however, a composite for all Rocky Mountain
operators reporting was developed by the studies which indicated profit re-
turns compared to investment in gross fixed assets as follows:
Return on OFA
Season: (percent)
1970-71 1. 4
1071-72 7. 9
1972-78 1. 4
For the last two years, a composite on Colorado ski areas has been devel-
oped. This data indicates that the skiing industry operated its skiing facilities
at a loss in 1973-74.
The year 1974-75 was the best, economically, ever reported by ski areas.
Composite profits of those areas reporting were 7.8 percent of revenues, 11.8
percent of stockholders' investment, and 6.6 percent return on the investment
in gross fixed assets. These are low rates of return for this kind of high risk
enterprise.
At that, the picture presented by the data may be brighter than is actually
the case, because of the absence of 1974-75 data from one large area believed
to be operating at a loss.
During the last ski season, the reporting operators for each $100 Of profit
paid $169 in taxes and USFS fees and another $349 in salaries to those
directly employed in the operation of lift facilities. It is apparent that the
ski area owners are not retaining a large part of the skiers' lift ticket dollars
as profit.
PROFIT
Those who ski in Colorado may select from a variety of areas and a variety
of lift ticket prices. Lift revenues per skier day, which is a composite measure
of ticket prices, this year ranged from $2.74 to $8.53 for the reporting areas,
averaging $6.80 for the 1974-75 season and $6.31 for the previous period. In
general, areas closer to Denver also have lower lift ticket prices.
Higher prices are more characteristic of the "destination" ski resorts which
typically rely more heavily on the vacation skier and less on the casual day
skier driving over from Denver.
Interestingly, the prices charged by the major ski resorts operated by
Aspen and Vail have not increased, in recent years, as rapidly as those
charged by other ski areas.
In reviewing cost and price data of one of the destination resorts, it is
apparent that the daily adult life ticket price has not kept pace with in-
creases in the cost of operating the facilities. Despite the general observation
that this is one of the more profitable operations in the State of Colorado,
its operating costs per skier-day have increased 80% in the last 5 years while
it has been able to inicrease the daily life ticket price only 25 percent.
This area has, however, been able to increase its total mountain revenue
per visitor-day by 60 percent.
I can well understand the concern of many that downhill skiing may be
headed toward the "wealthy man's sport" designation and that this may be
in conflict with the objective of making facilities on Federal lands available
for the enjoyment of all. However, if downhill skiing is destined to become
mostly for the affluent, it will become so not because of increasing lift ticket
prices. This is really only a minor part of the cost to a citizen to participate
PAGENO="0293"
289
in downhil skiing. The costs of equipment, transportation, food and lodging
overshadow lift ticket prices in impact on the skier's pocketbook. It is the
behavior of these costs which probably determines who will and who won't
go skiing, both now and in the future.
THE PROPOSED LEGI5LATION
I would like to make some comments on the proposed legislation in two
areas:
I would encourage the ski operators to authorize public access to his-
torical finanp2ial operating data furnished to the Forest Service. I would hope
this could be done without additional legislation. Perhaps it cannot. We seem
to~ live in a time when the restriction of public access to data, no matter
how sincerely motivated by desirable rights of confidentiality, does breed
Suspicion, misunderstanding and loss of credibility, frequently in unjustified
proportions.
The release of financial data by the ski industry will make the industry
vulnerable to those few who seek only bits of data which they can use to
support a preconceived judgment. However, I think this is a risk worth tak-
ing in the interests of providing information to assist those seeking fa~ts
in advance of making judgments and to improve understanding of the finan-
cial operations of the industry.
I would also like to comment on the requirement that the Secretary of Agri-
culture develop criteria or formulae for determination of use fees and for
permiting or rejecting price changes requested by permittees. I think in this
area, the Secretary and the Forest Service must be left with considerable room
for judgment. In my view, the individual components of this industry, i.e.,
each ski area, simply do not have sufficiently uniform operating characteristics
or operating results to permit the reasonable development at this time of a
"single method" for use fees. Detailed criteria for evaluating price change
requests may also be impracticable.
Let me use an example. The use permits I am familiar with require the
Forest Service to allow the permittee a reasonable return on investment in
approving ticket prices. If the Forest Service in establishing detailed criteria
used say 20% as the requlated return rate, the Colorado area already report-
ing the highest ticket prices would be entitled to raise its prices several dollars
a day and another area already $2.50 per day lower would have to reduce
prices several dollars. That doesn't make a lot of sense. But if the Forest
Service does not establish a single return rate in response to the proposed
legislation, then they are probably faced with establishing and justifying dif-
ferent return rates for different areas, and oh what a mess that will be.
I think the problem is that there is really no correlation yet (and there
may never be) between prices, profits, and returns on investment in this in-
dustry. I doubt that we would see such a correlation even with a uniform
system of accounting. Until there is better correlation between these factors,
it will be virtually impossible for the Forest Service to develop uniform price
control criteria and be able to apply them consistently.
I would like to conclude with a few other observations on the price regula-
tion of this industry. The concept of "reasonable return" on investment is
widely used in rate regulation by government and I have tried to point out
some practical problems in its application to this industry.
I also have a concern that any reasonable return "guidelines" or "standards"
set by government for this industry, and that presently appears to be a re-
quirement of the proposed legislation, recognize the significant differences in
the characteristics of this industry compared with industries more conveniently
price regulated by government.
Unlike many price regulated industries, this one does not provide a necessity
of life. Substantial risks are taken by those who provide the money to develop
this kind of recreation facility and try to make a profit on a capital intensive
business which can operate only for about 150 days out of the year. The risk
period is still not over, even for those who have been in the business for many
years. Unlike many regulated industries, there is no virtual monopoly by one
company serving a specific area. The Denverite who wants to go skiing on
PAGENO="0294"
290
Saturday can still choose between a dozen or more operators. Unlike some
other industries which are price regulated, this one has not had the benefit
of substantial government subsidies to fund losses during the early years of
service to the public.
As I have indicated, the determination of "reasonable return" guidelines will
be very difficult for this industry, which is really only barely out of infancy,
and may, in its application, be the most difficult practical problem in area
operator regulation. I do not wish to antagonize anyone, but I do question if
government is qualified to make a "reasonable return" judgment. I just don't
know who is expert enough to say what is a reasonable return for risk in
this industry. I do think that the "public" may be qualified to do so but only
through its willingness to pay a lift ticket price which is determined not by
government but by traditional competitive free enterprise system.
Thank you for your attention this afternoon. I have previously provided
for the committee's use a package of statistical data on which much of my
presentation was based. I would be pleased to answer any questions you
might have.
CoLonADo SKI AREA SURVEY, FINANCIAL INFORMATION, AUGUST, 1975
SURVEY COVERAGE, IN TERMS OF SKIER DAYS
1973-74
1974-75
Total covered
Total colorado
Percent coverage
3, 636,335
4, 304, 787
84.47
4, 443, 816
5, 194, 720
85. 54
SOURCES OF DATA
All financial data relative to specific ski areas has been extracted from the
annual NSAA ski area survey conducted by the University of Colorado Busi-
ness Research Center. The survey is conducted under the direction of Dr.
Charles Goeldner who is in charge of activities at the research center. Written
authorizations have been obtained from all areas shown for the release of
the survey information.
Lift ticket prices by area as well as skier-days by area for the years 1960-66
were taken from statistics compiled by Colorado Ski Country USA from USFS
records. These figures may be unreliable as they are inconsistent and incom-
plete. The same information for the years 1967-68 through 1974-75 was com-
piled by Colorado Ski Country USA and is considered consistent and com-
plete. These figures may be found in CSCUCA's STATISTICS publication.
All Consumer Price Index Figures were taken from the 1974 edition of the
U.S. Department of Labor publication entitled 1974 Labor Statistics. Figures
included in the Average Hourly Earnings Index prior to 1967 were computed
from average hourly earnings as shown in 1974 La1~'or Statistics, using the
1967 figure as 100%. Index figures from 1967-74 were computed by the gov-
ernment also using the 1967 figure as 100%. The Composite Construction Cost
Index was found in a periodical entitled Construction Review. Figures prior
to 1965 were computed using 1957-59 as the base period and then converted
to 1967-68 based percentages. Figures subsequent to 1965 were computed
using 1967-68 as the base year. The most recent 1975 figures have been in-
cluded where obtainable for all indices.
Before considering the data presented herein, it must be noted that the
survey information has not been audited except in the cases where publicly
owned companies have released audited statements. Consequently the infor-
mation must be regarded as unaudited.
This study was conducted by a committee of Colorado Ski Country USA.
PAGENO="0295"
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PAGENO="0296"
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PAGENO="0297"
293
COLORADO SKI AREA SURVEY-RETURN ON GROSS FIXED ASSETS,1 1974-75 SEASON
Area
Gross fixed
assets at
cost~ (thou-
sands)
Mountain net profit
interest3
before
(Thousands)
Percent
A
B
C
D
E
F
G
H
I
K
I
M
$16, 630
6,254
3,904
3, 345
2,221
8,049
9,258
1,978
1,716
1,061
1,148
1,442
822
$1, 330
854
703
489
279
420
147
190
107
71
50
49
18
7.9
13.6
18.0
14. 6
12.5
5.2
1.5
9.6
6.2
6.6
4.4
3.3
2.1
N
468
16
3.4
O
P
Q
R
2,556
5,241
5,699
3,046
75
162
182
(230)
2.9
3.1
3.2
(7.6)
Totals 1974-75
74,838
4,912
6.6
Totals 1973-74
61,213
2,145
3.5
1 Gross fixed assets. Gross fixed assets in this case are all fixed assets used to carry on the skiing business and related
activities excluding those used for accommodations or held as real estate.
Why is return on GFA used? The adequacy of earnings is generally measured in terms of (1) the rate earned on
sales, (2) the rate earned on the stockholders' eqwty, and (3) the rate earned on fixed assets.
However, the rate earned on fixed assets (return on GFA), is the most meaningful measure of the efficiency of operations
since its relates the dollars of profit to the dollars of assets used in the business, thereby measuring how efficiently the
assets are used.
2 Gross fixed assets, at cost. These figures are shown at historical cost, which in most cases is significantly less than today's
replacement cost.
3 Mountain net profit before interest. Net profit has been increased by the amount of interest expense (net of income
taxes) in order to remove the effect of leverage.
COLORADO SKI AREA SURVEY-RETURN ON EQUITY 1, 1974-75 SEASON
[Dollars in thousands]
Area
Net worth
or equity2
Net profit
Return on
equity
(percent)
A
B
C
D
E
F
G
H
$7,841
3,568
1,959
7,028
1,326
(352)
4,304
417
$1,241
843
677
488
278
268
147
144
15.8
23.6
34.6
6.9
20.9
(3)
3.4
34.5
I
156
86
55.1
568
62
10.9
K
414
34
8.5
L
406
9
2.2
M
161
7
4.3
N
99
4
4.0
O
P
Q
R
Totals 1974-75
Totals 1973-74
221
(480)
302
1,466
(8)
(86)
(231)
(429)
(3.6)
(3)
(76.4
(29.3
29, 404
3, 474
11.8
25, 320
543
2. 1
1 Return on equity. Return on equity, like return on gross fixed assets, acts as a measure of the adequacy of earnings,
but only when reviewed along side the return on sales (revenues) and the return on assets.
This rate of return reflects the use of leverage to generate net income. Rate of return on equity, however, can be a
misleading concept in situations where capital contributions and retained earnings are low and leverage is high. This is
especially true when borrowed funds are guaranteed by the stockholders.
2 Net worth or equity. Net worth or equity has been computed by adding (a) invested capital, and (b) retained earnings,
as reported on the NSAA questionnaires.
~ Not available.
PAGENO="0298"
294
COLORADO SKI AREA SURVEY-FINANCIAL STATISTICS PER SKIER-DAY, 1974-75 SEASON
Gross fixed
Lift
Mountain net
assets per
Area skier-day'
revenue per
skier-day2
profit per
skier-day
Totals 1973-74 16. 84
Total skier-days for areas surveyed 4,443, 816
Total gross fixed assets for areas surveyed $74, 838, 000
Total lift revenue for areas surveyed $30, 231, 000
Total mountain net profit for areas surveyed $3, 112, 000
1 Gross fixed assets per skier-day. "GFA per skier-day" is an attempt to show how much capital must be invested for
each skier for each day he skis. Generally speaking, this figure is higher for the newer areas since they have built facil-
ities at `today's" costs, whereas more mature areas have built the majority of their facilities at `yesterday's" costs. In
all cases the numbers are quite high, and these costs must be recovered over the course of time-over and above the
recovery of everday costs of doing business.
2 Lift revenue per skier-day. This rate is really the "effective" lift ticket rate at each area, often called the "average
revenue per skier." This effective rate shows the combined effects of child passes, package plans, and other marketing
incentives.
3 Mountain net profit per skier-day. This figure restates profit or loss in terms of skier-days to indicate the average profit
or loss generated by an area for each day an individual skied.
A
B
C
F
G
l~1
L
M
N
O
P
Q
R
Totals 1974-75
$20.40 $8.53 $1.09
11.00 7.91 1.48
8.84 5.93 1.53
12.19 7.77 1.78
10.36 7.87 1.29
18.40 6.68 .48
25.78 5.75 .41
11.45 5.54 .83
13.87 5.75 .69
16.32 2.74 .95
33.44 6.76 1.01
13.75 5.81 .09
18.83 4.74 .15
13.07 4.50 .11
15.78 5.22 (.05)
22.69 4.74 (.40)
19.18 6.84 (.79)
48. 72 5.23 (6. 86)
16. 84 6. 80 .70
6.31
(.07)
PAGENO="0299"
295
COLORADO SKI AREA SURVEY-SUMMARY OF PAYMENTS TO THE "PUBLIC", 1j974_75 SEASON
[Dollars in thousandsi
Direct labor
(excluding Percent of
Estimated marketing Total mountain
Property income and G & A payments net Mountain
Area USFS fees taxes2 taxes 3 to "public" revenues net profit
A $172 $214 $889 $2,817 $4,092 45.2 $890
B 111 43 843 745 1,742 38.7 843
C 88 48 678 590 1,404 48.9 677
D 13 32 487 1,255 1,787 52.9 488
E 66 16 277 378 737 37.9 278
F 34 67 208 969 1, 278 36.2 208
G 43 147 `~39 729 32.4 147
H 20 28 144 429 621 38.7 144
I 8 37 85 286 416 35.7 86
24 11 62 325 422 30.5 62
K 1 9 35 53 98 39.2 34
I 21 10 9 246 286 29.8 9
M 3 6 6 93 108 43.0 7
N 1 2 4 82 89 31.3 4
O 28 23 439 490 36.8 (8)
P 29 47 488 564 29.4 (92)
Q 50 44 948 1,042 37.9 (236)
R 4 18 165 187 50.5 (429)
Totals 716 655 3, 874 10, 847 16, 092 40. 5 3, 112
Percent of mountain net
profit 23.0 21.0 124.5 348.6 517.1 100.0
Percent of mountain
revenues 1.8 1. 6 9.7 27.3 40. 5 7. 8
I Payments to the "public". This schedule is an attempt to show the relative mangitude of payments by ski areas to
entities which may be considered to represent the public in one form or another.
Fees and taxes amount to a relatively small proportion of revenues but a significant percentage of profits. Most areas,
other than the few resort quality areas, could not pay more without experiencing even lower returns or even grcater losses,
as the case may be.
2 Propetty taxes. Some of these taxes may apply to properties held for real estate purposes because the questionnaire
failed to distinguish between taxes on mountain related property improvements and real estate property. In 1974-75,
only three areas reported any real estate activity at all and two of these reported only relatively minor activities. In addition,
most real estate taxes on land held for development are capitalized and therefore would not be included in property tax
expense.
3 Direct labor (excluding mat keting and G&A wages). It may be argued that direct labor is simply a cost of doing business
n the same sense that USFS fees are really just "rent." However, direct labor is shown simply to make the point that every
dollar spent on labor is re-spent by the laborer in the community near the area and in turn is re-spent several times in the
state, thereby generating additional tax revenues for the rest of the community (or state). Other costs essentially go to
individuals in the private sector in one form or another.
PAGENO="0300"
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~7 ç~-~ 9 70 7/ ~`Z 77 7d
U' t~7 ~? (`7 71~ 7/ 7z- 73 7~ 7~r' /~
NOTES
Lift Ticket Price Graphs
(1) Weighted average lift ticket prices are averages of the lift prices at
each area weighted by the number of skier-days at that area during the given `~
year. Weighted averages were used to more accurately and fairly show the
average prices being paid by skiers in Colorado.
The large dip in the weighted average lift ticket price index around 1967-68
was caused by large price decreases by Aspen in that year.
Note that the last point on the same line fails in 1974-75, while more recent
data has been obtained for the other indices. It can be readily seen that all other
indices are already well above the 1974-75 level.
(2) Ticket prices have increased (since 1967-68) faster than the Consumer
Price Index. But it can be seen that since 1973 the CPI has been raising faster
(the line is steeper) than ticket prices.
296
We igI- -/-ed ~4verag e L~ 1z~ Pr,c& f~c/ex
(2) 7? 1 /
Cansu~~ier rcice J-'1o~e)ç
(3)~~~ ~ ~
~ ~ #0U~/ //7i~yS ~
(2)
z
cj
70
PAGENO="0301"
297
(3) The skiing industry is capital intensire in that extreme `investm~ents in
facilities must be made befoj~e any revenue may be derived The cost of these
facihties are mirrored by the Composite Construction Cost Index labor ma
terials etc) and can be seen to be rising much faster than ticket rates The
industry must somehow be able to recover these costs in addition to the everyd~iy
costs of running the areas.
(4) These, everyday costs are :~ade up.of vario~is.costs-~but by~far the major
component is labor Thus skiing is labor intensive with respect to everyday
operating costs These labor costs are reflected by the Average Hourly Earnings
Index which monitors increases in labor costs for all non farm non government
non supervisory workers This index has been keeping pace with lift ticket prices
(or vice-versa) and already is seen to be very high in 1975
Senator HASKELL. Our next witness is Tom `Swanson, vice presi-
dent, United Bank of Denver. Mr. Swanson, good morning.
STATEMENT OP TOM SWANSON, VICE PRESIDENT, UNITED BANE OP
DENVER, DENVER, COLO.
Mr. SWANSON. Senator Haskell, I am appearing before you today
to discuss how one commercial bank views the risk inherent in
financing ski areas and resort complexes, the reasons the United
Bank of Denver supports this .type of business, and last, why I view
the lifting of the `80-acre limitation for permits for ski `facilities and
the extension of ski permits from 30 to 50 years as positive legislation
that will result in more viable and qualitative ski facilities
I am a group vice president. of the United Bank of Denver, which
is Colorado's second largest bank, and which we feel plays .a `leading
role in the State's economic development. In 1963, the bank under-
took, a study to determine whether lending depositors' funds to ski
area developers made good economic sense. Our conclusions were that
while loans to ski areas were of a high risk nature, the potential
contribution to the economic development of the State as well as our
confidence in our ability to structure and administer this type of
credit made it desirable for our bank to support the ski industry.
Since then, to the best of our knowledge, United Bank of `Denver has
invested more dollars in the ski industry than any other regional
`bank, and we feel we know its character well.
Because Colorado's skiing facilities' are acknowledged as being
among the finest in the' world `and because their acceptance has
resulted in tremendous growth of the industry in this State, some
of the early risks of financing ski areas have been lessened. Never-
theless, the risk to owners, investors, and lenders in this business
remain substantial. In my opinion these risks are;
First: Weather. Few other industries' success is as affected by the
elements as skiing. `The threat of a poor snow year is always a con-
sideration and will continue to be one of the prime risks within the
industry.
Secondly: Seasonality. Skiing begins in late November and ends
sometime in April. Therefore, the area operators must generate
most of their income in a short period of time, which in my opinion
increases the risk dramatically Hence, to protect against these two
uncontrollable risks of seasonality and weather, the ski area operator
needs to conserve any excess cash flow from a good year as a cushion
for use in a bad year.
67-~5i2-76----2O
PAGENO="0302"
~298
`Third: Th~ capital' intefl~iv~: nature of the business. Ski area
developments require abnormally high front end expenditures to
become operative In addition, funds must be generated not merely
to meet immediate needs but also to provide for future capital ex
penditures to build additional capacity as the number of skiers in-
crease Ski areas cannot ignore the need to plan and spend for
capacity to meet skier demand which may or may not materialize ~rt
some future time, but most probably will As previously mentioned,
this `high `initial investment `can only be recovered from cash flow
generated in a short 14- to `20-week period~ The heavy initial `and
`ongoing eapital requirements of `the industry, added to the high' risk
nature"of the business, make it reasonable that the operator be com-
pensated by a higher average rate of return.
Four Economic conditions Dollars spent on skiing vacations
and day skiing are disposable dollars. Historically, these dollars ~re
not only subject to negative economic impacts such as downturns
`in the ecOnomy, increased unemployment, and. gas shortages,, but
they are fickle dollars, dollars for which other forms of entertainment
compete heavily. It is in this area that the maintenance of a high-
quality recreational experience is paramount.
Lastly: The Forest Service permits. The present permit. system
~has always been of concern to the bank when analyzing ski resort
financing needs. Of particular concern is the special use perm:~t.
Because of the heavy term financing needs that' areas `have, bank
lOans normally have a maturity in excess of 1 year. We ba.nke ~s
find ourselves in a position where theoretically an annual ~erm'it
could expire prior to the loan being repaid, and, of course, without
the permit the loan would most likely not be repaid.
The 30-year permit is not as critical to the bank because we can
adjust our maturities to be prior to the expiration of the permit.
However, this flexibility would' not be available to long-term lender~,
such as insurance companies or bond holders or to equity investors
investing or making loans for an extended period of time~ It woull
also become much more difficult for banks to support ski companies
as the exepiration date for the term permit approaches. Basically,
the closer an area gets to the expiration date of the term permit, th~
more risk is inherent in providing funds to the development.
The United Bank of Denver has chosen to aggressively support
ski area companies despite' the current permit structure because of
our confidence in the areas. we finance and because of the Forest
Service's policy of renewing the initial special use permit annually. [
will say that we still are very selective in those areas we do busines~;
with. However, I do know of financial institutions, not as familiar
as United Bank of Denver with the industry, who view this as ~
serious problem. I also feel long term or prospective purchases of or
investors in ski areas would be much more comfortable with the pro
posed change in the system. .
`In conclusiOn, the United Bank of Denver views ski area financing
as high risk lending. We have supported and will continue to support
ski area development in Colorado. While the United Bank of
Denver's support: of the State's ski industry is firm but selective; I
PAGENO="0303"
299
PeeI ~t~hèYe is ~. continuing needS tO reduce the `risk of lending, ~Q, .in-~
vesting and managing this type of business
The minimization of risk should result in lower costs on borrowed
funds, and more attractive sources of equity moneys, with the hope
that the consumer would ultimately benefit from higher quality
faèilities and reasonable rates. 1 believe the proposed legislation as
it relates to increasing the 80-acre limitation . and extending the 30-
year permit will' go a long *ay toward encouraging continuity, and
stability within Colorado's ski industry.
Thank you for giving me the opportunity to appear before. the
committee. I shall be happy to anSwer any questions you may have.
Senator TIASKELL. Thank' you, Mr. Swanson. .1 do have some ques-
tions and I am going to ask you not to name your client, because
until this bill or some portion or some version thei eof becomes law I
can understand why you would be reluctant to. reveal the name of
any customer, but I am interested in how or what "the. . capital
structure of let's just take any one of your customers. is.' Let the ask
you this. What is the longest term loan, you . have ever made to a
Colorado ski area? . . . ` .
Mr. SWANSON. We have made a' combination of what we call work-
ing capital and term loan, which .is known in the. banking trade as~
revolving credit, for up to 8 years. Additionally, they would be
loans, that had little amortization in the first. 3, years because of the
high capital requirements and then would be amortized over a 5~year.
period, so I would conclude by saying 8 years . is the longest I have
known aily bank to make. a~ loan to a Bki area..
Senator IJASKELL. Okay., 8 years is the longest term your bank or
as far as . you know `any bank has made. In dealing with your
customer I presume you have knowledge of their other sources of,
financing? . ` , `
Mr. SWANSON. That's correct.
Senator HASKELL. Did that particular ski area borrow money from
other sources that had a longer term than 8 years?
Mr. SwANSON. In one case, .the. area did, yes. .. `
Senator HASKELL. Just what was the nature of the lending? Was it
an insurance compaiiy or what?
Mr. SWANSON. The nature, initially it was an insurance, company7
secondly borrowing through debentures, which is a form of equity~
Senator HASKELL. Right, but-. .
Mr. SWANSON. To a banker, who would be viewing the .loan as
sinking fund requirements and trust requirements.
Senator HASKELL. This was done with an insurance company?
Mr. SWANSON. One with an insurance company as well as through~
private investors~ who purchased bonds. ` . . .
Senator HASKELL. Let's take the insurance company. What was the'
term of the loan to the insurance company? ., . . .
Mr. SwANSoN. As I recall, the term of the loan was' approximately
15 years. , .
Senator HASKELL. And what was the magnitude of the insurance
company loan versus your bank's loan? .. . , . ` `
Mr. SWANSON. Because they didn't-they did overlap, Senator, the
insurance company loan was approximately twice the size' o~ the
PAGENO="0304"
300
bank credit in the beginning. As the insurance company loan paid
down, we began to build up in `the bank `loan, so they were nev~r
that-4he'maxithumofeither one was; not'outstanding: at any one. time.
Senator HASKELL. So the insurance company had earlier `amortiza-
tiOn?
Mr. SWANSON. That's correct. When we began to provide `our
funds, they were in the later years of amortization.
Senator HASKELL. Was that loan made by the insurance company
personally~ guaranteed by anybody?
`Mr. SWANSON. `No.
Senator HASKELL. So it was strictly a debt.
Mr. SWANSON. It was' secured, `however.
Senator HASKELL. Secured by the assets of the `ski corporation?
Mr. SWANSON. I believe it was. I would want to check that before
Iput that on the record.
Senator HASKELL. But not' secured: by `assets other than those be-
longing to the' ski company?
Mr. SWANSON. No guarantees or outside assets.
Senator HASKELL. ~So then to your knowledge there has only heeii
one situation where-correct me if I am wrong-where a loan
longer than 8 years has been made by any lender? Am `I correct in
that? I am trying to find `out what credit is available to ski areas.
Mr. SWANSON. I understand your question to mean our bank'a
participation.
Senator HASKELL. Yes.
Mr. SWANSON. I understand that there are areas both within
Colorado and outside of Colorado that have had longer terms than 8
years. I `would use as an example borrowing from SBA or possibly
with SBA guarantees. I understand that there were areas principally
in Wyoming for which the State of Wyoming provided economic
development loans.
Senator HASKELL. That's different. I am thinking of private
sources.
Mr. SWANSON. To. my knowledge, our only participation would
be what we have just discussed.
Senator HASKELL. So~ really, when we are looking at private
sources, we are looking at by and large the longest bank loan being
8 years and we are looking at one situation you know of when an~
insurance company made a longer term loan.
Mr. SWANSON. That's correct.
Senator HASKELL. And you do not know of any other insurance
company loan?
Mr. SWANSON. No.
Senator HASKELL. I think I have a great deal of sympathy with
the proposition of making the permit apply to larger land areas. I
am not sure how much sympathy I have with going beyond 30
years, because that's a long time, but I am in great sympathy with
the proposition of covering larger land areas, because I thii~k you
would be holding your breath as a banker from year to year a~ to
whether the yearly permit would be renewed..
PAGENO="0305"
301
Let me ask you this. As a banker, what interest differential do
you think could, be obtained if, for example, we had a larger land
area so you weren't holding your breath from year to year? Give
me a percentage, because it will bear obviously on the money market
at a given time, but give me a percentage idea.
Mr SWANSON I don't believe that the United Bank of Denver
at this time with the area that we do business with, that we. have
confidence* in that are more mature areas, successful areas, that the
lifting of the 80 acre limitation would result in an immediate re
duction. Rather, I feel that it might be more: important, in. their
search for equity moneys over a longer period of time whether those
equity instruments, either common stock or bonds, might be easier
to sell with this limitation removed.
Senator HASKELL. You think it would help an insurance company
loan?
Mr. SWANSON. I think it might. T think it certainly helps or would
be-have a greater impact on those companies that we are as con-
fident in their ability to structure and develop ski type areas as we
are and those companies making purely an investment. As I men-
tioned earlier, a partial reason for our commitment is because we
are in Colorado. We believe in the growth of skiing in Colorado, and
there are other reasons than just where we put our funds to get a
rate of return. I would also emphasize that in my opinion the term
is important, I think some of my associates would agree, as the
conditions under which the term could be terminated. We are very
much interested in understanding those conditions and feeling in fact
comfortable that the permit will be granted and be extended at the
time.
Senator HASKELL. Now, you mentioned what you call mature ski
areas and the fact that prob'ibly a permit for a lai ge land area
wouldn't affect rates. Have you ever loaned money initially to a
ski area trying: to start up.?
Mr. SWANSON. Yes, we have.
Senator HASKELL. Now, under those circumstances, would the
interest factor be affected: if the permit covered considerably larger
than 80 acres?
Mr~ SWANSON. I think it might have a bearing on it.
Senator HASKELL. Well, .thank you, Mr. Swanson .1 think you
have been very helpful I appreciate it very much indeed
I think in view of the fact that our next witness is going to dis-
cuss financing matters at considerable length and is exempted from
the 5-minute hmit we have had to apply to everybody, this would
be a good time to adjourn the hearings until 1:30 p.m.~
{ Whereupon the hearing was recessed, to reconvene at 1 30 p m]
AFTERNOON SESSION
Senator HASKELL We will reconvene the he'irmgs and Wade
Kennedy of Boettcher & Co is the first witness this afternoon Be-
c'tuse it was requested in adv'tnce Mr Kennedy, you have, within
reason, as much time as you want. In other words, the 5-minute. rule
doesn't apply... . .` ~.
PAGENO="0306"
02
~STATEMENT OP `WADE KENNEDY, INVESTME~T BANKER,
BOETTCHER & CO, DENVER, COLO
Mr KENNEDY Senator Haskell, I appreciate being able to give
this entire talk. I won't be too lengthy. I
Senator HASKELL. Could you pull the microphone a little closer
to you, and I think people will be able to hear
Mr KENNEDY As an investment banker, I have had the 0J)
pOrtunity to contrast and value the relative risks and' benefits' cf
long term capital investments in many industries This experience
has been from among the largest of this country's. public utilities
to among the smallest of Colorado's ski resorts.
I greatly appreciate this opportunity to present to the Senata
Interior Subcommittee on Environment and Land iResouices m ~
interpretation of certain of these experiences. I am appearing her3
at the request of the industry association,' Colorado Ski Country,
and it is my hope that these remarks will be both to your benefi;
as well as theirs. ,
As further~ background, with respect to my qualifications and
biases, you should know that I count certain of' the ski cirporation~
in this area as my friends and clients., Although, as, an investment
banker any financial interest' I might have' in the industry will be
earned only when it is successful at raising capital, to attract and
benefit its customers, the skiers.
The draft bill, 5. 2125, to be critiqued and `reworked during this
process, has very commendably `identified the time and acreage
limitations in, the present U.S. Forest Service permit system as a
serious concern of investors in the ski business. The best way to
articulate this concern is to cite certain passages of disclosure in-
cluded in a preliminary statement for a long-term bond financing
currently beiiig attempted by Vail Associates, Inc. I quote:
Term Special Use Permits are generally granted for 30-year terms b~t are
-`terminable upon 30 days' written notice by the Forest Service if it determines
--that the public interest requires such termination. Special Use Permits are
--terminable at will by the Forest Service. If the Forest Service were to termi-
- -nate the Company's permits, the Company could not continue to operate its
-`Vail ski area * * ~
The law does `not expressly provide for the granting of permits other than
`Term Special Use Permits to use up to 80 acres of National Forest land for
recreational purposes. The legality of the permit system presently used by the
-~Forest Service has recently been questioned in litigation * *
`The prospective investor in improvements to Vail's mountain
;~operations is being informed that the company, in effect, does not
own or control the single asset, the mountain, which is to pay for'
the prospective investment. What's more, the ski area's right to use
substantially all of that asset; (1) may not be legal and (2) may be
terminated each year regardless of performance by the company.
Fortunately, there is also considerable good news squeezed be-
tween' these disclosure passages,' and' we are confident that this
fianacing can be successfully accomplished. The buyers of the bonds'i
will put their money at risk on the faith, which isn't even stated,.
that the Forest Service use permits will be .renewed' and renewed
without ~ny limitations which would strain the company's. ability
PAGENO="0307"
303
totvice the `debt. It is inpbrtnnt.to not~, though, th~t ~a1e of these
bonds will in large part be due to the accommodation of the town of
Vail, Cob, that the bonds will be exempt from income tax Also, it
is unlikely that-
Senator HASKELL Excuse me, how would bonds issued by Vul
Associates be free of income tax ~
Mr KENNEDY The specific provision within the State statute for
sports facilities that is industrial revenue bond purposes The money
is all going to be used for expansion and addition to facilities on the
môuntain,"expanding its use and expanding employment in the State
of Colorado. `:
Senator HASKELL. So you say it' is* exempt from. ,not ]ust' Colorado
tax-
Mr KENNEDY Federal income tax
Senator HASKELL. Thank you.
Mr. KENNEDY. I think without that the interest rate required to
sell the bonds would probably be prohibitive for the company. It is
also unlikely that any but a few of the ski corporations in this State'
could succeed at such a financing.
I know `of no other industry which does not have . a noncancelable'
right to the use of its. principal earning asset. Public utilities, re-
gardless of the quality of their performance, including even those
operating as monopolies within their market, are not denied cle'ar
title to their considerable investment `in assets nor threatened with~
loss of their captive customer franchise. Even public broadcasters',.
operating under license from the FCC have a 3-year operating
period in which their license cannot be canceled, and renewal of that
license is disallowed only for proven cause.
Exp~nsi6n of the acreage cOvered by long-term Forest Service use
permits from 80 acres to cover the entire area actually in use would
not `significantly `impact the prospects for the Vail financing or most
any financing by established ski resorts. But rather, it is essential
to protect the good faith that past `and prospective investors'believe,
perhaps mistakenly, `is inherent in the existing permit system.
The other aspeët of the use permit system raised for considera-
`Senator `HASKELL. Are you saying or did you say that expanding
the 80-acre limitatiOn to some larger area wouldn't have any effect
whatsoever on financing? Is that what you told me?
Mr. KENNEDY. That's `what I said. I think that ,inherent in the
investments `which are made in these particular bonds and past
investments is the business assumption or belief that these 1-year
special use permits will in fact be renewed and if there were any
reservation or loss of this faith, none of these financings would be
available.
Senator HASKELL. I see, so you don't ~feel it is necessary then to
broaden the 80-acre base, I gather?
Mr. KENNEDY. No, `I think it is essential to protect investments
that have already been made. I think they have been made on a
business faith which doesn't exist in the law.
Senator HASKELL. Maybe I am misunderstanding you. I thought
you said-I thought~ that broadening' the acreage base would be
helpful, but I thought ~you just said~ that it wasn't necessary.
PAGENO="0308"
304
Mr. K NI~ithY. I think what you are trying; to do is something
isrhich i~ essential to protect and preserve the faith on which pa ~t
and current investments are actually being made If you will, ti e
financial markets are somewhat myopic. They like to look at-they
are willing to take business risks and then they measure that risk
on immediate experience If, as an example, a ticket ski area were to
have its 1 year special use permit terminated, it would be cats -
strophic to the financing of any future ski investments, so the point
is I thank that the market here has a certain faith which is not
substantiated' by the law at the present time, and the law clearly
should make that provision.
SenatOr HASKELL. So you do not object then to broadening the
acreage based on 80 acres?
Mr. KENNEDY. No, I very, very strongly endorse it. I think it is
essential.
Senator HASKELTJ. I misunderstood you. Excuse me.
Mr. KENNEDY. The reason I backed into that was simply to em~
phasize from my point of view the importance of this and it ha~
the essence of investments which are even being paid today. I think
if the investOr really believed the Forest Service were going to can-
eel any of these or it was a very real prospect, the laws today would
not allow for any balance in any type of industry.
The other aspect of the use permit system raised for consideration
is extension of the ski permit lives from 30 to 50 years. This con-
sideration is really a moot point at this time ;since most ski resorts
in the Western States are effectively operating* substantially under
1-year permits rather than 30. Clearly, after remedy. of the acreage
limitations, a longer permit life would give comfOrt to, and accord-
ingly facilitate attraction of, long-term investors in the ski business.
Ho'wever, consider, that regardless of its initial term every use
permit at some point in its life will have only 30 years, then 10
years, and finally 1 year left to run, and every use permit throughout
its life will be subject to cancellation. Therefore, our essential con-
cern should be the conditions under which these permits are con-
tinued rather than their theoretical term at date of issue.
The draft bill anticipates one aspect of this concern in' its provision.
that, in the event of termination of a lease, the United States shall
be obligated to reimbmu'rse the asset holders by an equitable cOn-
sideration. This' is an important recornmendaiton. If you will recall
th'e passages read earlier from the offering statement, conSider how'
differently, a.nd frOm an investor's viewpoint how mtich' better, they'
wOuld read if the provision for' equit'able reimbursement were appli-
cable to all the improvements on: the mountain.
In addition, I strongly urge that consider'ition of this provision
be am''~n'd~d by the additiOn of the following' two pOints. These
points would significantly expand the types and number of investors
that would entrust the savings of their family, shareholders" or'
fiducial beneficiary in the improvement of the ski industry:
One: Specification of those causes for which use permits may be
terminated;
Two If any of those causes are to be out of the control of the
management of the' respective ski: area, fOr exaiiple, as ciirr&itly'
PAGENO="0309"
305
provided, "in the public inetrest, the lands are needed for anpther
use," there should be required (a) a notice period of at least 5 years,
~and (b) a specified procedure for the affected public, including skiers
and residents as well as investors, to ratify the Forest Service's
determination of the public interest;
Again, it is my belief that these provisions are required, in the
first instance, just to substantiate the unstated good faith upon which
all past investments have already been made.
So far, my report has dealt with the imp'ict of land use regulation
by the Forest Service on the ability of the ski industry to attract
capital investment. I want now to consider another element of the
draft bill, the proposed regulation of lift ticket pricing While the
acreage and time limitations of the Forest Service's use permits cause
significant constraints on investment in the ski industry, these con-
ctr'unts are secondary to the business risks inherent in a seasonal
resort operation The theory and supportive evidence of these risks
have received considerable attention from many of the other wit-
nesses here today; and I will repeat those arguments only briefly to
emphasize those characteristics of the industry which have the
greatest impact on its ability, to attract long-term capital investment.
Ski resort operations are intensely competitive. They compete
with all forms of hobbies and leisure time activities and the many
ski areas across the country and throughout the world compete
amongst themselves for skier visits. The fact that skiing is seasonal
Loncentrates this competition into only about a third of the year,
which is actually concentrated even further into a few weeks around
Christmas and during the spring school vacations.
Let's consider that we are planning a day, a weekend or a week's
*skiing trip. Whether we are coming from Denver, Missouri, or
Mexico City, the number of ski resorts available to us is manyfold
larger than the total number of ski areas that any one of us could
list. How then do we choose? We could take into account how easy
it is to get to each resort and what it would cost to get there; also
there is the availability, cost and style of accommodations and the
`extent and condition of skiing trails. We might also consider lift
ticket prices which in the State of Colorado vary from as low a~
83.75 to $11 for one adult for 1 day. In my own experience, I would
`have considered first the cost of transportation and accommodations.
Next to those, lift ticket prices are an afterthought.
The experience of all of those skiers who visit resorts in Colorado
has been compiled by the industry association, Colorado Ski Country,
and presented here previously. The relative popularity of those
various resorts shows no correlation with the cost of lift tickets.
Instead, there is a very strong correlation with size and quality of
skiing terrain and accommodations. This quality is expensive to
the customer, but he' is obviously very willing to' pay for it and, ` if
not, there are very adequate les sexpensive alternaitves. It's in-
teresting to note that lift ticket prices available today at' some of
.the smaller ski areas in the State are equal to or less than what a
skier would h'tve p'ud at one of the larger are'Ls 15 years `~go
The quality and size of the ski resort is what the customer wants,
therefore, to compete effectively for these customers, the ski areas
PAGENO="0310"
306
must raise the extensive amounts of capitai investment required~to
provide for such facilities In effect, the industry competes `with
capital investment.
This then is an industry that operates in the public domian, which
on the one hand competes vigorously for its customers, and on I he
other hand makes use of national forest land, which is a limited
public resource and therefore regulated as to the location, extent,
and quality of use These characteristics provide an interesting con-
trast with~ other inajor regulated industries, utilities, broadcasters,
and transportatiOn. The utility industry provides an essental
product and, within a~ broad range, does not compete for the
customers who need that product. Price regulation is therefore
needed in this industry to assure that the monopoly operator cannot
take advantage of the dependent public.
Within the broadcasting industry, the competition for authenc~e
time is intense. The product makes advantage of a limited public
resource, airwave broadcast frequencies, but it is not an essenti iT
item. These characteristics are similar to those of the skiing bii~i-
ness. Broadcasters are regulated as to the accessibility and quality
of channel use, but pricing is not regulated but rather contained
by free competition.
The transportation industry, airlines and railroads, similarly
compete vigorously for their customers and use public air routes,
the availability of which is federally controlled. Unlike broa.dcastei~
and the skiing industry, though, we have also controlled the ahilit~
of the* airlines and the railroads to compete with price. What
techniques then do these businesses use as they compete between
themselves? The answer is simple. They use the quality of their
service and the capital investment required to provide that qualit~T
of service. When times are good, all works well. The airlines add
more and more new planes, each with a new degree of comfort in
the sky. The railroads improve roadbeds, upgrade eqiupment an~[
devise computerized scheduling efficiencies. This certainly seems to
be a desired result for the public customers. However, there arE
two very real drawbacks. Access to the business potential new
competitors is virtually prohibited because the existing operatorE
are already years and billions of dollars ahead in the capital in-
vestment competition and, too, when economic conditions are not
good, the only recourse these businesses have is, again, to adjust
their quality of service and the capital investment related to that
service. Railroads curtail roadbed maintenance, allow a greater
degree of equipment disrepair, reduce scheduling and, as we have
seen over the last couple of decades, ignore the passenger customer
enitrely. The airlines drop movies, then meals; then they significantly
curtail frequency of flights and, finally, they start selling~ their air-
planes or even seek ways to sell entire companies.
We can easily extend the consequences of this type of competition
to the ski industry. First, with respect to the ease of entry of new
competition into the industry, the greatest competitive advanage
a new ski resort could have would be that the competition priced
itself out of a great portion of the market. Imposition of lift ticket
PAGENO="0311"
307.
price, ceilings ~rill gr~atly disadvantage, the new and developing
resorts and measurably constrict sources of capital investment needed
to compete with the established resorts
Second, with respect to the quality and extent of the service
provided, there is no question that limitation of pricing flexibility
would affect the skiing experience of the pubic. If faced wth economic,
pressures like thOse of the past 5 years, together with an artificial
constraint on lift ticket pricing, ski resorts would have no choice
but to óffsét increasing costs by' reduced maintenance and invest-
ment in its ski facilities. Lift capacities and availability of accom-
modations would not compare with those now available; and. be-
cause thes~ are precisely those features that the skiing public wants,
there is no `question in my mind that it is the skiing' public that
would have been most disadvantaged' in these `circumstances. Let me
cite another disclosure passage from the Vail Associates offering
statement. "If the Forest Service were unwilling to approve In-
creases in lift rates `during periods' of rising costs and inflationary.
pressures, it could have a material adverse effect on the company."
We have all read and heard a great' deal ~of rhetoric regarding,
the inability of regulated industries to raise adequate amounts of
investment capital. Many of these arguments,. I believe, will prove
valid over' the long run. However, the immediacy of the problem
is very much clouded when one~ considers that, despite all. of this.
rhetoric, the public utility industry has successfully raised $24 biT-
lion of new investment capital during the' past 18 months. I will
conclude my remarks today' by emphasizing th~t the. attraction of
investment `capital to the skiing industry is not just a potentiaY
concern; it is a critical problem `right now.
* Thern very considerable business risks inherent in a ski resort:.
operation. are being discussed today in theory by other witnesses.~
During the past 2 years, I have ha.d certain practical experienceS
with the industry that I would like' to' summarize for you. Within
the Rocky Mountain States, there are at least nine ski resorts, of
which I am aware, that are for sal~, or are seeking investmeiit
partners. `In each case, the reason for sale is the need for large
amounts of capital. Now, what's even more remarkable is that most
of these ski areas cannot be sold. Virtually, all of the other' resorts
in these States have an interest in additional financing. Some may
be able to obtain short-term investment from their commercial banks,
but most will have to wait for a very significant improvement in
general economic conditions before they can raise any amounts. There
are a few of the ski resorts in the area that have recently or are
currently raising long-term funds. `But each of `these `has had to
rely upon benefits to the investor beyond the credit' worthiness of
the mountain operations themselves. They have used tax exemption
facilities of their local community, base~l the credit on guarantees
of significantly larger controlling corporations, or attached' lift
ticket passes to the financing- in effect selling their service rathei~
than their credit worthiness. Even with the added benefits, these
are still very difficult financing projects.'
Furthermore, the statistical financial summary of the Colorado
ski areas, prepared by Colorado ski country, reveals that several
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308
of these resorts lose money :or are only marginally profitable. This
fact alone, would be risk enough to inhibit most permanent invest-
ment in the business, and this concern becomes much greater whe~i
you realize that several of these areas are the newer `resorts whose
~xteiisive capital investments have been made at today's high costs
rather than at lower, historical costs. In effect, the rates of income.
today are inadequate to cover the costs of investment today. With
such financial pressures, I must conclude that many of the ski areas
in the State of Colorado would be charging more for their lifi;
tickets if it weren't for the free market competitive pressures withir~
the business.
The ski industry makes use of Naitonal Forest Land, which is a
limited public resource. Clearly the advisability and extent of this
usage deserves regulation and limitation, and perhaps pricing regu-
lation would be appropriate if the industry had monopolistic ad-
vantages and the skiing public did not have a considerable choice
among alternative costs and facilities. But, like the broadcasters
using the public air waves, these customers do have such choice and
they are competed for vigorously. Thank you.
Senator HASKELL. Well, now, specifically, Mr. Kennedy, what are
you recommending, in a nutshell?
Mr. KENNEDY. I think the provisions and maybe some additions
or amendment~s to those provisions with respect to the continuity
of ski area use permits would be most advisable. I would also
suggest that with respect to regulation of lift ticket prices that the
Forest Service, which is expert in protecting the Forest for those
like myself who love to use the National Forests, that they not be
involved in price regulation of the industry. In fact-
Senator HASKELL. Let me interrupt you there. Would you prefer
then, that the present system of regulating prices by the Forest
Service continue?
Mr. KENNEDY. Let me give a rather long answer to that. When
I look at this chart which is now lying sideways over here and see
that lift ticket prices have risen almost perfectly in line with the
increased cost of providing facilities as well as the average hourly
earnings in this country, I am not sure that there is any additional
pressure that needs to be brought to bear on these prices. That's
one-
Senator HASKELL.' question is simple. Would you prefer that
the present system continue vis-a-vis the way the Forest Service
grants or disallows rate increases?
Mr. KENNEDY. What has been happening I think works, as evi-
denced by the data, and it is also my understanding that-
Senator HASKELL. Excuse me, really, I am just trying to get a yes
or no answer. Would you recommend tha.t the present system con-
tinue? It is simple. Either you do or don't.
Mr. KENNEDY. Senator, it would be simple for me if I really
knew what the present system is. It has been my impression that
the Forest Service has in the past generally not been that involved
in the lift ticket pricing decisions until a year ago,' iii which a very
well publicized debate took place in which an application for $12
was denied and a compromise of $11 or $10 was allowed.
PAGENO="0313"
309
Senator TIASKELL. My question still stands. Would you like to
continue the present system ~ You know, I think you can answer it
yes or no
Mr KENNEDY If the present system is the $11 compromise ap
proach, I would not like that tO continue. If the ,present system has
been the basic, the majority of the experience in the ski industry
with lift ticket price applications, then that should continue. What
went on in the Aspen denial of the $12 price increase I think is
unfortunate. There are areas within Aspen Valley right now which
are considering development of ski areas down there and the greatest
advantage to those, to that added competition, would be that im-
mediate value would have been to allow Aspen to continue raising
prices.
Senator HASKELL. Do I understand then that you don't want the
present system to continue?
Mr. KENNEDY. I do. not want the present system to continue as it
was evidenced by this recent denial of the $12 request in Aspen.
Senator HASKELL. So what you are really saying is you don't
want the Forest Service involved in any way, shape, or form in
approving or disapproving rate increases?
Mr. KENNEDY. Except to the extent that they feel that it involves
the quality of the use of the national forest lands. I think that's
their expertise, and that's what I look to them for.
Senator HASKELL. But as far as pricing, you don't want them
involved in any way, shape, or form, is that correct?
Mr. KENNEDY. I think the pricing of the ski area affects the
quality, the crowding, et cetera. Therefore, I don't think they can
blind themselves. They should perhaps have a veto power and-
Senator HASKELL. Well, that's what they just exercised. I am
really trying to find out what you are recommending, and I may
be thick, but I'm having a heck of a time figuring it out. Do you
want them completely hands off as far as pricing goes?
Mr. KENNEDY. The answer would be no. I want that to be a
secondary. If that enters into their view of the quality of the use
of that area, then they should be involved. If it is their desire to
determine whether this is a competitive price or a fair price or
what the skier should pay, then they should have their hands off
that type of analysis.
Senator HASKELL. OK, I still don't think it comes through to
me. I think what you are saying is that they should have, their
hands off of anything to do with pricing, but they should say you
shouldn't let too many folks on the slopes, is that right?
Mr. KENNEDY. I don't know whether too: many-
Senator HASKELL. I am trying to find out what your thinking
is. Where should they specifically-where should they interfere?
Mr. KENNEDY. Their consideration of renewal and initial appli-.
cations should be involved with the quality of the use of the forest,
how much should be wild and how much recreation, and I wish `that
could he divorced from competitive pricing. I do* not necessarily
think it is The crowding or lack of use are functions of pricmg
Therefore, I . do not think we can take it com~ietely out of their
hands. ,: It should, be, a secondary `consideration in ~hich their
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310
mandate is the quality of the experience, not, whether the skier
spends too much.
Senator HASKELL. What do you mean by the quality of the e.~-
perience? You have got a hill and a tow. You are talking about
use of that hill. Would you want them to interfere and say, "You
are not maintaining it properly?"
Mr~ KENNEDY. Surely.
Senator HASKELL.. Would you want them to interfere and say,
"You are letting too many people on?"
Mr. KENNEDY. Surely.
* Senator HASKELL. OK, so you would permit them that, but you
wouldn't permit them to have anything to say about rate structurs
or rate amounts?
Mr. KENNEDY. Correct.
Senator HASKELL. OK, I get your point, and then to continue, dD
you feel that the permit should `encompass a broader territorial
area than the present 80 acres?
Mr. KENNEDY. Very much so.
Senator HASKELL. All right, sir, thank you very much.
Mr. KENNEDY. I appreciate it.
Senator HASKELL. Our next witness I understand is here~ She
wasn't here this morning but she was told she would be on this;
afternoon by the office, so I would hope that Miss Sally Ranney
would be `able to come forward. Glad to have you here. I under-
stand that the office told you you, would be on this afteronon rather
than this morning. ,
Mrs. RANNEY. Right, that's correct, I would also like to make au
apology for Ted T'omasi of the Colorado `Space Council. He is
out of town today and therefore won't be here.
Senator H~scari4. All right.
STATEMENT OP SALLY RANNEY, REPRESENTING THE WILDERNESS
SOCIETY, DENVER, COLO. -
Mrs. RANNEY. Senator Haskell, thank you for this opportunity
to express our views. I am Sally Ranney and I represent the
Wilderness Society.
The Wilderness Society strongly, supports your efforts to reform
the system of issuing `and administering permits for ski facilities
and other outdoor recreation facilities on national forest lands
created from the, public domain.
The present system, or lack thereof, is woefully inadequate, with-
out equitable standards or determining criteria of denial or issuance
of permits. It allows questionable practices regarding rate increases
to the public for~ skiing recreation use permit areas and does not
allow for public participation in the entire process of issuing per-
mits on public domain national forest lands.
We strongly support your efforts to reform the present permit
~system. However, Wilderness Society feels that some provisions of
±he bill need clarification, revision, or deletion.
in section 3(a) it appears that with only discretionary congres-
sional review of 1,280 acre to 5,000 acre permits within a 60-day
PAGENO="0315"
311:
tIme period, the l~urden of proof is. placed upon those opposed. to an
undesirable permit, instead of being placed properly on the appli-
cants It is our position that any permit over 1,280 acres should
only be issued on affirmative action of Congress If a resolution
of disapproval is not passed by the appropriate committees within
the 60-day period, it could be construed as congressional approval.
The 5,000 acre minimum for permits required to undergo man-
datory congressional review is excessive. For example, the contro-
versial Beaver Creek proposed development requires approximately
3000 acres of permitted national forest l~nd Vail in 1969 was only
6,707 acres and lays claim to being one of the largest ski areas in,
the country. Crested `Butte has a 2,121 acre permit; Loveland Basin
2,280 acres, Arapahoe Basin 1,300 acres, Keystone 2,280 acres, Aspen-
Snowmass 6,298 acres, Aspen-Highlands 4,221 acres, and Purgatory
1~500 acres.
`W~ feel that this acreage limit should be reduced to 1,280 acres
or maj or ski areas, such as most of those mentioned above, would,
evade review. Also, clarification of language `should be included
regarding intent, a.nd that the permit area be contiguous and com-,
pact which would mean all runs', facilities, cleared and developed
areas are contained within the external boundaries.
Specific `guidelines should be established and included as to the
requirements that must be met before a permit is issued, such as
the following: ..
The Secretary should' require a posting of bond to provide for
restoration of the area if the development fails, goes out of business,
or is abandoned. `
The Secretary should require a study to determine if there is,
nideed, a. need for the facility.
Before any part of a wilderness resource area-roadless area-
of 5,000 acres or more, including all those areas inventoried in the
U.S. Forest Service roadless area review of 1973, is included in a
permit area, a wilderness study in accordance with the Wilderness.
Act should be completed. No permit should be granted until Con-
gress has acted on the wilderness recommendations.
Now, an example is that there are presently 92 inventoried winter
sport sites in Colorado. Of these, 31 inventoried sites are within
nonselected roadless areas. In other words, those roadless areas are
not on `the wilderness study areas list.
SENATOR HASKELL. What do you mean when you say there are 92?
These' are' prospective?
Mrs. RANNEY. Bight.
Senator HASKELL. Ski areas in addition to the ones that now exist?
Mrs. BANNEr. In addition to the ones that exist. These are poten-
tial.
Senator HASKELL. And determined to be potential by whom? The
Forest Service?
Mrs. RANNEY. The Forest Service.
`Senator HASKELL. I see. Thank you.
Mrs. RANNEY. 16 are .within new wilderness study areas and one
has even been inventoried in a primitive area, so our primary con-
ceril is that these wild resource lands deserve a study and recom-
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312
inendation before any other type of use is permitted that would
foreclose the option of wilderness designation
A complete inventory and study of the developmental impacts~
on other forest lands and resources within the proximity of the per
mit area should be réqüired, such as impacts on watersheds and..
wildlife.
The Secretary should be required to show that local and State
governments have the authority and capability to regulate develop-
meñt on nearby private lands. Zoning and `development regulations
should be determined before the permit is issued to insure develop-
ment compatibility
Senator HASKELL. Now, the bill 1 believe does contain a provision.
that it would be a condition precedent to the Issuahce of the permit
that `a satisfactor~r overall land-use plan be adopted by the local
government-either county or city. I think that's in the bill right now~
Mrs. RANNEY. Does that specifically state that the zo!ning `as far
as-
Senator HASKELL. Probably doesn't state zoning. It probably does;
not, yo~ are right.
Mrs. R~**r~r. The Secretary shOuld be required *to show, that
rate adjustments, and we are talking about lift tickets, will not',
discrhniLtè against one type of `skier in preference to another type
Of skier, for example, `the day skier versus owners of accommodations
or lodging or participants in organized groups. The Wilderness
Society' strOngly endOrses public hearings `on rate increases charged
to the public for use of the permittees' recreational facilities, since'
it is the public's land the permittee has the privilege of using.
We feel that a 50-year permit `term is much `too long. As presently
written, 5. 2125 provides no provisions for reassessment of a permit
term. Specific language is needed to determine reevaluation of. a.
permit term. `ConditiOns change, the development may prove to be
not in the best `interest of the public, or cause too many adverse
environmental `effects. Permit requirements may need to be changed.
to accommodate new situations and future problems.
Possibly an alternative could be a permit term of 10 to 15 years,.
with a "preferential right of renewal" by the permittee could be an
alternative if the operations are meeting the requirements `of the
permit and `continuance is in `the best interest of the public.
We feel that it is unwise to be locked into a 50-year permit with-
oñt prOvisions for reevaluation, changes, `or termination.
Specific language and assurances should be outlined for the corn--
phance of air and water quality requirements.
The Wilderness Society feels that the U.S. Government, hence
the taxpayers, should not be required to compensate the permittee'
for improvements if the permit has to be terminated because' of
failure to comply with, the re4uirements of the permit. Also, `as;
stated in section 3(d), termination of such a permit `for another
use which may prove in the better interest `of the `public would te-
quire compensation by the U.S. Government. This `could cause such,,
financial burden `on `the U.S. taxpayer that `termination of `a permit~
would `become `almost impossible.
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3~:3
Sènato~r HASKELL. ~xcuse me, but don't you think th~t if the?
Goverñn~nt i~ininated the permit before the end and terminated..
it not through the fault o~f the ~pe~ktot, really, you could bankrupt
the operator unless you compensated him foi~ his investment? It
seems to me a little harsh to say that the Government couid~ say at
the end of 5 years terminate the permit because they wanted to use
the land for something else. That would be pretty tough, don't yow
think?
Mrs. RANNEY. Could there possibly be some arrangement made~
where the permittee could be compensated, for instance, if he is still
interested in continuing the Ski de~eiopffient of a~ alternative site
or something like that?
Senator HASKELL. Well, I thilik what you probably have to do-
it seems to me to be fair to compensate him if you kick him Off'
because you want to use it for something else and he has done
everything he can and he has in fact lived up to the permit. It
seems to me fair to compensate him for what his loss of investment
would be which probably would be the then appreciated cost of his im-
provements I am in accord with you that 50 years is too long I
don't have any trouble with tha~t, a~d if There ~s a termination
because of a failure to comply with his obligations then that presents:
a different situation. I ~ where I depart from your thinking
is where he has done everything he can and he has lived up to his
end of the bargain but then the Government decides it would be'
better to give it to, let's say, timber purchasers or better to put it
in wilderness or any number of uses. I just comment there. I think
maybe I depart from your thinking on that That's all
Mrs. RANNEY. Possibly language could be included to contemplate
how compensation could take place.
Senator HASKELL. Oh. yes.
Mrs. RANNEY. I think my disagreement with the bill in that is:
that there needs to be more specific language on many of the meas-
sures, including this compensation one, because we felt that it was
too open-ended the way it stood now.
Senator HASKELL. I see.
Mrs. RANNEY. Section 8 states that the "Secretary may furnish
on a reimbursement basis all types of utility services to conces-~
sioners, contracotrs, permittees, or other users of such services with-
in the National Forest reserves * * ~ This indicates that the TJ.S.
Goveinment, hence the taxpayers, will front end the cost of utility
services to the permittee for the f'tcilities which he will own in the
permit area. Since utility costs are one of the major expenses for
recreational development, I feel that this possibly encourages a.
policy of developed recreation versus nondeveloped recreation in.
sites where possibly it would be better to have nondeve~oped recre-
ation. Also, no specific language is included regarding type of reim--
bursement, interest rates, or duration of appropriation.
I feel that the bill should be specifically limited `tO ski area.
development permits only. As written now it appears that it would
allow and possibly promote other types of recreational develop--
ments.
67-512-76-------21
PAGENO="0318"
314
The bill should provide that permits would not be issued to in-
clude any or all of an area designated for or inventoried as a wild-
life. preserve, natural area, research area, or other areas established
to protect unimpaired natural values.
`Thank you.
Senator HASKELL. Thank you' very much. Let me ask you a ques-
tion This is not in the bill at all I would just like to have your
reaction. Many of the areas in our State and throughout the Nation
because `of the tremendous investments that the people have put
into them have to `charge a fairly high price just to recover their
investment and make a reasonable profit, and this has eliminated
a lot of people at least in my view from access to skiing. I wonder
what your reaction and the reaction of your organization would be
if some language were included in the bill ~that the Forest Service
shall consider a~ipiopriate lower cost `are'a~ that have to `be adjacent
to or nearby population centers. These facilities would not be unsafe
facilities, of course, but just wouldn't be as fancy,, and thus would
allow more people `the opportunity to ski. In other words, urge the
Forest Service in this direction with the idea of providing accessi-
bility to skiing for more of the public. Do you have any reaction
to that?
Mrs. RANNEY. I feel that is a sound alternative and a good point.
However, in promoting a type of area like that, I would still say
that all the requirements, environmental protective requirements,
would have to-
Senator HASKELL. Oh, yes.
Mrs. RANNEY [continuing]. Still to be followed, and I feeL too,
that a nondevelopment type of recreation, specifically, skiing, should
have more emphasis or could have more emphasis than the develop-
ment type of skiing, which is, of course, cross-country, and that
requires trail' beds and trail development, trail access, but a rela-
tively primitive accommodation or facilities can accommodate those
`who are interested' in that activity.
Senator HASKELL. All right, thank you very much indeed~ and
thank you for appearing.
We are going, to have a recess here for a few minutes. I have a
telephone call I have got to make, but I will be back as soon as I
make it.
[Short recess.]
Senator HAsKEr~L. I apologize for the interruption. Our next wit-
ness I am very pleased to welcOme, Billy Kidd, who is a former Olym-
pic champion, and we look forward with a great deal of pleasure to
hearing from him.
STATEMENT `OP BILLY KIDD, PORMER' OLYMPIC CHAMPION,
COLORADO
Mr. KIDD. Mr. Chairman, I appreciate the opportunity to appear
before you on these hearings today. My purpose is ,to talk about the
value of skiing to the American public and the use of America
based on my lifelong experience in the' sport.
First, I would like to give you a brief background, personal back-
ground. I was born and raised and started skiing at age 5 in Ver-
PAGENO="0319"
315
mont. I competed interiiationally as ~ member' of the U.S. ski team
~for9 years,' won a silver medal `in the 1964 Olympics, the world
-championships in amateur and professional in 1970. I graduated
~from the University of Colorado and presenly am director of skiing
at Steamboat. I am a member of the President's Council on Physical
`FitiTess and Sports. I just~compleind `a bookon "How To Learn To
:Ski in Six Days," which should be coming off the press today.
Senator HASKELL. Put me on the list, will you ~
Mr~ KinD. In the last ~ years I have worked in various companies
developing equipment, coaching, talking to people all over the coun-
"try, both skiers and' not, and a general overview of skiing as a sport
and business.,
I would like to talk about the value of skiing to the individual,
:especiany kids. Unlike any sport American `kids are `encouraged to
participate in, you can ski all your life. For example, I *as coach-
ing at a racing camp in Montana and there was a 67-year-old man
`up there along with 12- and 14-year-old `kids. I thought he was born
on skis but he told `me he started skiing 2 years ago~ Kids like this
`sport because they can do it on their own and on their own speed
`and there is a strong feeling of individual freedom which is seldom
available in football or basketball.
It is a famil~ sport. The modern ski area. design has contributed
`to skiing as a family sport. There are trails for different `abilities
so that the whole `family can ski the same area and' have a. choice
of trails suitable to the excitement and pleasure for each individual.
When a family goes skiing, they share common experiences such as
*skiing a trail, riding a lift together or relating their skiing, experi-
ences. This sharing of common experiences can help bridge the gen-
* eration gap that we heard so much about' a short while ago. Most
-other sports are not shared in the same way. For example,. in base-
`bail the kids play and parents watch.
I would like to talk about the cost of skiing. It is not necessary
to go to major ski resorts to learn to skin, as you can learn just as
well on a small hill. I learned in my backyard in Vermont. Many
-ski areas are available in close proximity to major cities such as
Chicago, Detroit, et cetera, where the cost of life tickets and travel
is low. It is not necessary to have fancy ski equipment or expensive
clothing. I skied for many years `in my blue jeans. In my book. I
-suggest that beginning skiers ,rent their equipment instead of buy
it and kids use Scotchguard on their jeans to cut down the expenses.
Even good skiers can benefit by skiing on a small hill by practicing
`~to improve technique, by getting involved in competition racing,
such as Nascar and free-style competition. A good example is Cindy
Nelson, who won the Gold Medal in Innsbruck. Cindy received
`most of her training on a small hill in Minnesota that has a vertical
-drop of approximately 600 feet.
The other day in Dallas at the Dallas Ski Show, I met a young
lady about 17 or 18 who organized the high school ski club i~nd is
planning a trip to Aspen, and surprisingly price was not one of the
- -main considerations but she wants the best ski trip to combine good
``skiing and fun. `
There are many programs~ in the count'ry today where school kids
go skiing as part of the physical education program. The buses
PAGENO="0320"
316
take the kids to ski areas~ within, a, half hour. of the cities. I would:
like to see more similar programs developed to . give many more~
kids an opportunity ~to try the sport of skiing~,
As 1 mentioned previously, I am a. member of the President's;
Council on Physical Fitness and Sports. The. President's CounciF
tries to bring awareness of physical fitness and sports to the Amer-
ican people. It encourages and rewards participation rather than
stressing winning. `I encourage people. to get involved in skiing
because when they. do they know it is a physically demanding sport
and therefore set up an exercise program throughout the year t~*
keep in shape. A skier needs the strength and flexibility and this
promotes physical fitness all year around.
Other sports such as football and baseball are not participation
or live sports. The less opportunity there is to participate, the older
you get you become more of a. spectator, which contributes little
to your physical fitness.
New horizons are opened to new and different lifestyles. For in-
stance, 3 years I participated in the two drug rehabilitation pro-
grams at the Odyssey House in New York. I was reluctant at first
since they were mainly poor and black kids, but I felt if they de-
veloped interest in this sport they would provide a goal and thus;
help in getting out of the ghetto, perhaps a new way of life they
previously never thought about.
Regarding value, I think when you go skiing it is not only physi-
cally good, but .good for your mental health as well. Most people's-
lifestyles are hectic, full of pressure and confusion and congestiom
of the cities. You get completely~ away from these problems. You
enjoy the peace and tranquility of the mountains and clean air when
you go skiing. Also this sport takes complete concentration so you
can't be thinking of your business problems. You get totally in-
volved in the sport.
Skiing can survive the economic crunch because it is part of
people's lives. I was discussing this with a sporting goods owner
who said that he thinks people feel sports are now a necessary part
of their lives.. It is no longer a. .secondary requirement but a neces-
sity, not just for phyical activity but a chance to escape problems;
of every day life.
Ski resorts provide year-round recreation. Many people use ski
l~fts to get to `the top of the mountain even in .the summer. Ski resort
lifts provide an opportunity for those people who are not physically
able to ski to see the top of the mountain. People can get out in the
environment who understand environmental concerns much better
than only reading about them in the newspapers. Once .you . have
been to the mountains and experienced them, especially in the sport
of .skiing, you have a much stronger feeling of concern for the en-
vironment. Ski areas are not necessarily polluting or damaging: to~
the environment. People involved are very much concerned in the
`development since, they live in it' and take proper care in seeing'
,that planning will not pollute or, destroy .the mountain beauty.
The attitudes of peop'le who ski toward winter' have changed~
They no longer are irritated at having to shovel, snow~. but are~
happy to see it .for skiing. . , `
PAGENO="0321"
317
SenatOr~ I hope that my views have made a slight contribution to
your hearings and hopefully show the value of skiing to an indi-
vidual. I' sincerely hope `the `sport o.f skiing will grow and a lot
more people have the opportunity to enjoy and benefit from the
~spoi~t, as I have. Thank you.
Senator HASKELL. Thank you, Mr. Kidd. I share your views. You
would, never know it if you saw me ski, but I have skied since I
`was 6 years old and I'hope more and more people can enjoy it. I think
`that's one of the things we want to work for. Thank you very much for
:appearing.
Our next witness is Charles Schafer of the Sierra Club, Denver,
`Colo.
Mr.' SCHAFER. Good afternoon, Senator.
Senator HASKELL. Mr. Schafer.
`STATEMENT 0F CHARLES SCHAFER, ON BEHALF OF THE SIERRA
CLUB, DENVER, COLO.
Mr. SCHAFER. Senator, again I introduce myself. My name is
~Charles Schafer. I am appearing here at the request of Mr~ Sorenson
for the Sierra Club. I appreciate the opportunity to make a few
comments today. Incidentally, do you have a copy of the club's
written testimony?
Senator HASKELL. I don't know. We do not.
Mr. SCHAFER. Well, let me assure you it will be forthcoming with-
in the 2 weeks.
Senator HASKELL. For 2 weeks the hearing record stays open.
Mr. SCHAFER. I would like to make several brief comments with
respect to three aspects of the proposed legislation. No. 1, it seems
that you in writing your initial bill are very concerned, as you should
be, with emphasizing some form of reasonable assurance to per-
mittees as to security on their investment. This is a large invest-
ment and we all understand that. The 50-year provision I would
think is more the equivalent of an ownership than-
Senator HASKELL. I agree. I happen to think it is too long, too.
`Mr. SCHAFER. Thank you, and I believe the Chief Forester has
~already mentioned or written in, the form of a memorandum that
future ski areas will be considered major Federal actions and
thereby fall under the National Environmental Policy Act, and as
`a result there will be certain requirements that will have to be met
before these developments are okayed. Nevertheless, once the lease
is granted, we have to revert to the Organic Act of 1898 or as to
that `foTlowup act of March 1915, or any standards whatsoever that
insure some kind of continuing sensitivity to environmental stand-
~trds and considerations.
I know that I have `studied very carefully over the course of about
~ months, this was' `during 1973, some Of the alleged permit viola-
tions that had taken place at the Colorado ski areas,' and there were
quite a few instances where trees were cleared in a way than was
less favorable as opposed to more favorable and visual aesthetics
could have been given a major instead of a less major, priority in
certain cases. Erosion, revegetation, water, sewage, garbage disposal
PAGENO="0322"
318
present' `i~ problem in some areas, and yet~ once ~ pentht is grant~d~.
it seems we have to revert to these antiquated acts with very vague~
standards to be insured that these permits are maintained and the
regulations under those permits are maintained.
I have been told now by high Forest officials here in Denver at
the regional office level that dating from 1947 when the first Colorado
permit was issued to Winter Park until the season before last-
now, this does not include the 1974-75 season-that, no permit was
ever revoked and that ui: fact none `.of the special use permits~ of'
which there are many, were ever disallowed once they had been.
granted, so it seems that `if we were to allow this 50-year-old or
longer term lease provision to become a part of your bill that abuses
that have arisen in the past may arise again and they may persist
and that irreversible environmental damage may result, `lesser qual-
ity of service may result to the public, and we would really be in
the position where' effectively nothing can' be done until the expira-
tion of the lease terms.
As a suggestion, I am well aware that you are in need of some
suggestions today as to how to handle that provision, we would rec-
ommend that a 10-year lease be considered with a preferential re-
view ~for the original developer if no violations of the permit are
alleged. If there is a formal complaint that is registered with a body
that would be set up or designated by your secretary, opportunities
for public hearings might be made available at this time. Again, if
no violations were found, preferential review and treatment would
be afforded these original operators, and if violations were found
and were proven then perhaps other operators might be given' an
opportunity to step in their shoes and try to do better.
Second, I would like to speak also, as Mrs. Ranney did, to the
acreage provisions. The Forest Service regional official mentioned
to me, a.s they did to you, that an inventory has been made of pros-
pective sites within all of the national forests in Colorado and that
92 prospective sites have been listed. I believe at this point there
are two or three of those sites that are listed as outstanding. There
are larger sites for future development. Others have all. sorts of
problems, ranging from. geological instability .to aesthetic factors.
I think in light of what Forest Service officials have also suggested,
we don't see the development of the smaller areas in the future,
areas like Wolf Creek, like Monarch, Pikes Peak, Geneva Basin.
These aren't the areas that service or meet the increasing demand
of the public for outdoor recreational facilities. We will instead see'
the development of these four-season complexes like Aspen and
Vail, areas that encompass anywhere from 2,000 to 7,000 acres.
I would first of all define exactly what the acreage provisions.
pertain to. There is some question now and I know the argument
has been made in the case of Vail, for instance, only 20 acres of
their 80-acre permit have actually been used, these 20 acres being'
the acres upon which improvements were made, and the acreage'
provisions not having anything to do with the numbers of acres
cleared for trails, so I would suggest that whatever constitutes or
is made up on this acreage provision be very carefully set forth in.
the legislation, and I would also recommend on behalf of the Sierra
PAGENO="0323"
~3l9
Club that the limit of the outer boundaries be the definition of this
to be set forth
I also recommend that the special use permits be discontinued in
the future Now, as they are just right now retroactively nothing
can be done and should not be done, but in the future areas, to pre-
~ ent the possibility of expansion I think it would be a good idea
that these special use permits be discontinued in total.
I think it is obvious that this bill will have a tremendous impact
on the av'ulabthty of outdoor recreational facilities as well as im
pact on Colorado's diminishing ~wild country, and as a result-
[Bell rings.]
Senator HASKELL. Sorry, there is our 5 minutes. Finish your sen~
tence, and I will finish your thought.
Mr. SCHAFER. As a result, I think your pocket-needs or pocket-
approval idea is somewhat inadequate as these kinds of development
of this magnitude will certainly permit affirmative congressional
approval and we recommend in the case of an area the outer bound'--
aries. of which are to include more than 3,000 acres such Congres-
sional approval be recommended.
Senator HASKELL. The same as Ms. Banney?
Mr. SCHAFER. That's right. Senator, may I mention one thing. I
flew in from Durango and was not told about any 5-minute liin-
itation.
Senator HASKELL. The trouble is-I will, if you came in from'
Durango, and thei~i the next person has a perfect right, so please'
be as brief as you can.
Mr. SCHAFER. I will. Thank yOu very much. We are concerned.
over whether it is right and proper to guarantee a permittee the
reasonable rate of return in the bill through the manipulation of
.permittees and otherwise. Obviously, one of the identifying aspects.
of private enterprises is to gamble. If you are going to couple this
guaranteed return-
Senator HA5KELL. Just a second. I think your man that showed
`up in Aspen seemed tO have the s~tme misconception. The thought
is when you talk about a reasonable rate of return you do not guar-
antee them that. If the public won't pay-
Mr. SCHAFER. I apologize for that. That was not my under-
standing.
Senatoi HASKELL As suggested today, we may well modify that
to try to get in' a concept where you truly have competition, you.
make that finding, and that's all you have to make, because at least
my theory is that if you have got real . competition you have got reg-
ulation by ,competition and that, of course, would make it better..
If it is possible to amend the bill to only have a finding in it of no'
competition, then this formula goes into effect.
Mr. SOHAFER. That's fine. One of the other theories we wouli!
suggest is that, of course, books and financial records be made much
more readily accessible. I think a lot of people have agreed with.
that. Also public hearings be held in the event an area feels a rate'
increase is justived. If the rate is in fact justified, there should be
no hesitation to disclose this at a public hearing by the operators,
and one other consideration., that is I..would think that in the event
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320
futu~e areas are considered by promoters, when they get together
~with local Rangers on their initial stage 1 planning, public. work-
shops might be held at this point and might be very helpful to get
some public input. Thank you very much, Senator.
Senator HASKELL. Thank you very much, and you will submit
your organization's written testimony: that has comments on the
bill, your suggestions `is to changes and statutory language, that
`kind of thing?
Mr. SCHAFER. That's right.
Senator HASKELL. Our next witness is David Farny, president of
~Little Annie Ski Corp., Aspen, Cob.
STATEMENT OF DAVID FARNY, PRESIDENT, LITTLE ANNIE SKI
CORP., ASPEN, COLO.
Mr. FARNY. Thank you, Senator Haskell, for being allowed to
-speak at these hearings today. My interest is a little d~ffereiit from
those who have spoken before me. For the last 17 years I have
worked on the ski mountains of Aspen, Cob I hold certification as
`a ski instructor in the Rocky Mountain and professional and inter-
national techniques, and for the past 5 years I have been cothrector
~of the Aspen Highlands. Ski School.
At this juncture I am trying to open a new ski area in Aspen.
This I found to be a formidable task. The area in question is known
as Little Annie. I was given the go-ahead by the Forest Service as
early as 1966 and it comes to the ridge of south of Aspen Mountain.
The ski capacities, as everybody knows, of Aspen overexceeds the
-capacities developed for skiing. The Forest Service sees the need
for expanded skiing, but the growth rate this year is reaching 24
percent in the Aspen Valley. Little Annie is a logical expansion f9r
~skung for the town of Aspen. Today with all the environmental
advantage Little Annie has going for it, why is a permit so hard
to come by?
There seems to be no clearcut regulation, no governmental agencies
offering advice other than to come back in 3 years. Could it be that
~to start a new area one would need a nearby city or government as
a partner or be affiliated with a large ongoing corporation? I hope
-not.
The new Mary Jane area at Winter Park is advertised at so much
`a day. Since this is owned by the city of Denver, I wonder what
`taxes are paid to the city, State or local governments.
*Our sympathy goes out to the Forest Service. I can't always agree
with them. I do understand many of `the complex problems they
are trying to accommodate in this ever-changing world in which we
live. I welcome anyone in this room to prepare an environmental
impact study, or better yet to try to make the decision to okay or
`turn down a project after reading an EIS. The judgment of any
* individual can always be questioned by some one person or organiza-
-tion, and when it comes to ski areas it is really not too difficult to
find some criticism. There will be those who oppose it if they can't
~ski free. This is federally owned land that belongs to them, regard-
less of the gigantic `investment in opening the competitive ski area.
PAGENO="0325"
321
I ask you, if you are forced to ~nter, would you want to take on the'
criticism you would' receive in' granting any kind of ski area?
And this brings me back to my famous 17 years. We will give-
cOmpetition, ~iid we are located next to the two ~trongest areas iii
the world. Skiing really is a world market and I believe it is impor-
tant to keep American ski vacation dollars in America. It used to'
be Easter skiers found it ,cheaper to ski' in Europe. As' Europe be-
came more expensive, they found out our' skiing was better in many
ways. Let's stay competitive.
This bill we are discussing today has good points~ such as vears-~
and size of permits, but the parts I fear are possibly governmental
regulations' which `would be costly to have enforced. The people~
closest to the problems know them best, whereas a man in Washing-
ton might not. I do not propose giving a low season `pass to em-~
ployees of Aspen, or a discount, `but I do oppose the government~
stepping in' and telling me what I must charge on my investment.
I would see, as you said so well, Senator Haskell, in Aspen, a
marketplace in the competition~ If given a chance to build Little~
Annie we will live up to the standards set by nearby competitors.
We need more ski areas, but because of their basic fear of the
Forest Service I think we need to' once again come under an agree- -
ment of men working under trust to the benefit of all men and
women who love skiing.
I am reminded of the cowboy who sat on his horse atop a moun-
tain and'looked off and said, "This is your America, and this is my'
America. We don't own one damn bit of it." This is what skiing is~
all about, and the importance to the Americans who come and view'
the scenery and feel the country from the top of the mountain peak.
Thank you.
Senator HASKELL. Thank you very much indeed, Mr. Farny. I -
appreciate your coming.
Our next witness is Dick Dorworth of Olympic Valley, Calif.
SPATEMENT OP DICK DORWORTH, PROPESSIONAL SKI INSTRUCTOR
Mr. DORWORTH. I am glad to be here.
Senator HASKELL. Good to have you `here.
Mr. DORWORTH. I would like to thank you for the opportunity to'-
speak here today. My name is Dick Dorworth. I have been seriously
involved in skiing since 1950. As an amateur ski racer I was a
member of the all-American' ski team and the national training
team and I co-held the world record for speed on skis. I have been
a professional ski instructor and coach since 1963. I was certified by'
the Far West Ski Instructors Association in 1968. I was certified'
by the National Ski School of France~ in 1970.. I have., taught and'
coached skiing in Europe, South America, and North America. I'
was the Can-Am coach for the U.S. men's ski team in 1970-71. In
1973 and 1974 I was an examiner for the certification of ski instruc-
tors in the Far West Ski Instructors Association. In 1974 I ~as
selected to be one of two examiners for the first "masters" level of
ski instructors certification in the United States. In 197.5 I was an
examiner for the Far West Ski Coaches Association. I am a free--.
PAGENO="0326"
322:
lance' wHtei', and my `writings~ on skiing have appeared' in "Ski,"
"Skiing," and "Ski Ra~ing,"nnd "Mountain Gazette." I am presently;
editor of "Competition Ski News"
Ski `instruction in `the United States exists within a feudal system.
Because of the present Forest Service land `use. permit policy, the
~wnër of a permit has a' virtual strangehold on ski instruction in the
area, and despite all `of the testimony "about' the open market today,:
there is no open market in ski instruction. Most American ski schools.
exist under one of three systems: The school is owned outright by
the permit holder, and the' director, supervisors,,, and all instructors
`work for the ski area. Aspen and Sun Valley have this sort of sys-
`tern. Two, the school is leased as a concession to an independent
director or directors for `a' bargained for percentage of the gross,
~nd the `instructors work for the school. "Squaw Valley and Bear
Valley in California use this method. Three, a few areas don't want
to' bother with the problems of a school, though they recognize its
iiecessity. Some areas, either in place of or in addition to the reg-
ular ski school, open their slopes to any; organized ,group that wishes
to teach skiing. These operators recognize that whatever' brings
people to an area will sell lift tickets. The same areas that do allow
groups outside the regular ski school to teach skiing do not allow
individuals outside the regular ski school to teach' skiing.
The average working ski school instructor `is lucky to take home
one-third of the money paid the ski school by the customer, who is,
in fact, paying for~ the instructor's knowledge. Most instructors get
less' than one-third.
There are certification~ programs in all the geographical divisions
of U.S. skiing, but they are not unified. There is nothing in Forest'S
Service regulations that says a ski instructor, or even~ a ski school
instructor, has to be certified. In practice, many working instructOrs
are not certified, and there are even ski school directors, including
the directors~ of large ski `schools, who are not certified. Most ski
schools calling themselves "fully certified" are practicing false ad-
vertising. In every ski area in America' there ai~e `f idly certified ski
instructors who are unable to find employment because of political,
personality, philosophical or ` technical differences between them-
selves and the `ski school directors of and/or the management levels
of ski areas. There are many qualified ,ski teachers who have left
the profession because the economics of two-thirds for the ski school
and one-third for the working instructor makes life difficult not only
for the practical man, but as well for the man of conscience. A re-
lated practice of American ski schools is to hire non-U.S. citizens
to teach skiing while refusing to employ fully qualified and certified
resident instructors. This is, I believe, against U.S. Department of
Labor law, but is practiced in most ski areas of the country. One
major ski area sidesteps the law concerning hiring non-U S citizens
over resident ski instructors by including the `ability to speak' Ger-
man or French in the job requisites. `
Ski instruction in France, which, in my opinion, has the best
system in the world so far, is very different. Every instructor in
France goes through two 5-week courses at L'Ecole National de Ski
et Alpinisme in Cham'onix. This school is part of the Ministry of
PAGENO="0327"
323
~Sports, a department of the French Government. Once. a~ person
thas been certified in France, he has lifetime free lift privileges
anywhere in France, is fr?e to teach skiing at any area, either for
the local ski school or as an independent, and, unlike in America he
i~ a member of a profession through which he can earn his living
As a qualified person, he does not have to join .a ski school in order
to practice his profession. French ski school directors are elected
each year by the members of the particular ski school, a healthy,
democratic practice that eliminates severaL weaknesses of the Amer-
lean system. In France, about 90 percent of the money collected
from the paying customer goes to the. instructor. The other 10 per-
cent is used for ski school expenses, insurance, secretaries, et cetera.
~This has two beneficial aspects: the public pays less for ski instruc-
~tion, thus bringing skiing within the means of more people; and it
~gives the working instructor more money for his labors, thus giving
Thim a reliable profession.
The present system costs the public much more than it needs to.
`The lack of certificati~rn regulations eliminates the public's guarantee
`of quality. Because independent instructors are not allowed to work,
iregardless of their qualifications, the public is forced to hire instruc-
tors through the area ski school, which does not necessarily offer the
~best service available. The present system does not encourage. pur-
suing ski instruction as a profession, and the public loses many of
~the better instructors because of it.
The American instructor makes more money for the ski school
~than he does for himself. Since the money is paid for the instruc-
~ knowledge, this is not only offensive to any rational thought,
`but it discourages many of the best teachers from continuing ski
~teaching. Any t.eacher who does not agree with the local ski schoQl
`director is out of a job, regardless of. qualifications. This independent
ski instructor who, if he is qualified, can give better service to the
~sknng `public fo.r less. money is forced to practice his profession
underground. The ski school working instructor, completely de-
`pendent on the land use permit holder for his livelihood is, in most
~cases, reluctant to speak out or stand up for any movement toward
~changing t.he present system.
I have five points here that I would like to propose for you to
~think about that might improve this situation. The first one is to
~grant Forest Service land use permits to qualified independent in-
~structors who wish to work for themselves, instead of the local ski
:schools.
- Two, create a national school for training ski instructors, perhaps
based on the. French concept, perhaps federally financed, perhaps
:State financed, I don't know.
Three, make certification mandatory for ski school directors, su-
pervisors, . independent rnstructors, and for a certain percentage,
say 50 percent, of all ski school staff.
.Four, ski school directors should by law be elected through secret
ballot by members of the ski. school.'. . .
Five, price of ski school lessons should be cut down and a larger
percentage, say, 90 percent, should go to the instructor doing the
iwork. . . ` . . . .
PAGENO="0328"
324
Thank you. Any questions?
Senator HASKELL. Thank you, I do. I thought that, just to develop
these facts, instructors had to be certified.
Mr. DORWOETH. No, that's not true. That's up to the individual
ski school, the director of the ski school or whoever is running it,
and offhand I would say that presently less than one-third of the
ski instructors in the ski schools are fully certified. That would be
my hazard of a guess.
Senator HASKELL. Who now does the certification, if anybody?
Mr. DOJrSVORTH. Every division oft the PSIA, Professional Ski
Instructors of America, there are geographical divisions, and each.
division has its own program. I am from the Far West, Far West
Ski Instructors Association, and we have a program. There is one
in the Rocky Mountain, one in the East and one in the Central.
They are not unified and they come from the professional skiers
within each division, and they examine.
Senator HASKELL. A Rocky Mountain instructor would get cer-
tified by the Rocky Mountain Professional Ski Association?
Mr. DORWORTH. Right.
Senator HASKELL. And it is your suggestion that anybody who is
so certified be permitted to teach on any hill? That's basically-.
Mr. DORWORTH. Yes. Yes, I think that's the best that we have
right now, is our certification for quality, and I think that's it.
Senator HASKELL. And some of the people teaching in the various
and sundry ski areas all over the Nation are. not certified, is that
correct?
Mr. DORWORTH. Not some people. Most people. Senator, I have a
breakdown here of members of the PSIA, if you would like to hear
those.
Senator HASKELL. Yes, I would.
Mr. DonwouTH. Okay, these are approximate, but they are pretty
close. There are 6,000 members, PSIA~ There are-wait a minute-
okay, there are about 3,500 who are certified, and not very many of
those on a percentage basis, not all of those people, are working
instructors now. There are 600 of those that are ski school directors;
325 of those are assistant directors or supervisors, which means they
are not working instructors any longer. They are administrative ski
school, so that cuts it down considerably as to the number of certified
instructors who are eligible to be working, and there are a lot more
instructors than that in the country.
Senator HASKELL. Well, how about the people that-I suppose
in your view, all of the people certified by that association would
Obviously be eligible for a permit to teach on Forest Service land ~
That would be your view?
Mr. D0RWORTH. Yes, that's correct.
Senator HASKELL. It sounds reasonable to me. Now, how about
these people who work in the various ski schoo1s~ whether it be in
Idaho, Montana, Colorado or New England? What generally do
they get and how many hours do they work? How are they selected?'
Mr. DonwonTn. Well, their selection is up to the ski school direc-
tor, and that varies. You know, every ski school tries to get the best
people they can, of course, but as I mentioned there are people wh~
PAGENO="0329"
325
come on one level or another level. They will hire someone less
;qualified, hut once you ~work for a~ki school there are several ways
of doing it. There are more part-time instructOrs than full time,
and that's the way it has to be: But a ski instructor will work 4
hours .a day for the `ski school ~generally and tben t~he rest of the
time during the day he can work ou -private lessons. How .that's paid
for depends. I understand that Aspen pays by the hour, regardless
~f whether you aie teaching on regular ski school time or a piivate
lesson, and the top instructor in Aspen I believe gets $9 and the low
pay scale I ~believe is $6 an hour, something right ,aropnd there.
In the East, `if you are a. contract instructor, you are paid .a sal-
ary, for which you owe the ski school 4 hours a day, 6~ays a week,
and. then you can teach privates'.and you will get 50 percent of your
privates generally. This varies, too. You can get, say, 50 percent of
your privates on the other 2 or 3 hours a day that you, have.
Senator HASKELL. What would be the .mechanisn~ to keep ,inde-
`pendent instructors up to their previous certification? In other
words, I could see some concern. If I ran a ski area, I would :want to
he sure the people teaching on the area were competent. . Certainly
-they are competent if they .are certified, but who would keep . on
top of it. to see that they continue'to be?
Mr. DORWORTH. Well, I'm not familiar with the .Rocky Mountain,
but in the Far West every other year you must attend a. convention
that we have every spring, and . at . that . convention, which goes on
for 4 or 5 days, there . are a series of clinics you . must attend .and
you sign u.p and you are given credit for those clinics, race clinics,
avalanche clinics, technique clinics, all sorts of things I believe it
is the same in the :Rocky Mountain, but I am :not sure.
Senator HASKELL.' Well,, if the .Forest Service, for instance, en-
gaged in~ giving a permit; to an individual , as an~ instructor I am
sure there ought to be certain requirements such as carrying liability
insurance. Would you have any .other suggestiolis as to require-
`ment.s they ought to-
Mr. DORWORTIL Yes, I would say a person should , be fully certi-
fied at the time and must keep up~ with the credentials, must have
liability . insurance, must comply the. same as any other instructor,
must comply with the .~ same rules and regulations as any other pay-
ing member of the. public. 1 mean he can't go. out on the hill and
ski around. Probably it would be a. good idea for him to wear some
*sort of identification, not necessarily-personally, I think not even
wisely the same identification . as . the ski school~ in question-but an
identification~ that said he~~ wa.s teaching shiing as an independent,
so they would know.
Senator HASKELL. Well, thank . you~ very . much indeed. This~ mat-
ter came up in the hearing in Aspen. I don't .know whether you
`were there.
Mr. DORWORTU. ~ was there.
Senator HASKELL. .This matter came up and I think it .is some-
`thing that the Forest Service should pursue. I am not sure that
this is a matter to `put in the~ legislation but it would seem to. me to
be sort of healthy competition to .the operators of a- ski, school to
have this gomg on and for that reason it would be desirable I thank
you very . much `for coming: .and. testifying.
PAGENO="0330"
32~
Mr. DÔR~0RTH. Tknnk your
Senator HASKELL The next witness is Richard Spiegel, president
of LaMur, mc, Mmneapohs, Minn
STAThTY'IENT OP RICHARD SPIEGEL, PRESIDENT, LaMAUR, INC.,
MINNEAPOLIS, MINN
Mr SPIEGEL Good afternoon, Senator I thank you very much.
`for this oppOrtunity. My "nathe is Dick Spiegel. I am from Minne-
apohs, Minn, and I am here this afternoon to share with this
`hearing some' of `my thoughts as tO ~hy `I fe~l that a fully certified~
`qualified persOn' should be issued a skiing instructor's permit, when
`he Or `she is nOt employed by a particular `area ski school. I think
the' best way' for me to' do that is tO give you' a little history of' my
personal expèrieñce and the reasons' why' I feel the `way I do~
This really came to a. head for me last year when I was in Aspen
with my family over Christmas and I asked a friend `of mine there
who I could go to, who could I see to `get myself and my children
some `very `fihe skiing instruction. We had some not very pleasant
experiences' in `the past. I was told I' could contact an individual who
had just recently, though, had some~ trouble with the Forest Service'
in that he had been taken off the slope for teaching `without a per-
mit, and' his lift ticket had been `taken away. Even with that thought
in mind and the foreknowledge of that I did contact this individual,
and after talking with him I was really impressed with the type of
person he was, and when I first heard about it I `couldn't believe it
because I knew of his' qualifications and I felt, I really feel this way
and it may be anachronistic, if you will, that a. person should have
the ability within reasonable limits to use, their own creativity and
talent to run their own business, to be free to make a living in the
way he or she chooses, and I particularly felt strongly about this
in that these permits were given for use of public, lands, which I
amongst the general public feel that this type of use should be made.
I want you to know that I have used the Aspen Ski School in the
`past and they have always been very courteous, particularly when
I have called during the heavy times, during the Christmas season,
but it had been extremely difficult for me to arrange private lessons
there. The particular instructors that I wanted were very, very busy
and it would have been quite an inconvenience for me to call them
back. That's one of the things I liked about contacting this par-
ticular individual. I knew I could arrange some times ahead so I
could meet this individual' and have prescheduled those days" in-
structions for the times I would be there. In fact, I would be willing
to pay some slight extra. charge if that would be necessary. In my
case, that would be preferential.
I am really not in the way of what, you understand, is putting
down the sport, I mean the whole concept of ski schools, but I am
saying that I think a person should have the opportunity to either
go to the ski school or perhaps engage a. private instructor.
Another reason why I went to this particular individual is be-
cause I understood `that~ he had developed some several unique tech~
niques `that I thought would be advantageous to me. It seemed log-
ical and it turned out this was quite~ true and helped my skiing im-
PAGENO="0331"
327
mensely. ~I really feel that's `pa~t of private enterprise,' where som~-
body ~does have .greaterl incentive, it seems to me,.to. develop innov~-
five ways of, bringing in their business.' ,
Another reason I liked: this idea is that I could contact this mdi-.
vidual and he or she would meet me in an area ~ outside ~of* the
particular area where' they normally reside. For: example, if I
wanted' to. meet this individual in Salt Lake, where .1 ~,a.lso.happen
to like to ski, that could be possible and I could'. contmue the Same
type of instruction. .
I' reali'ze that `any corporation' developing an. area, has to make a
major investment. . I also' realize that they `are responsible for the
maintenance of the area, and I am sure that's. quite possible and 1
believe that' they. should have: the ability, at least if they `run their
business properly,' .to return a reasonable, amount on their `invest-
ment, but I also believe .for the' reasons I `have given that individual
instructors should also be in a position a earn a livelihood and,
* provide a. needed land worthwhile service to the public.
I am not suggesting that there be no fee charged of the individual
instructors. Perhaps that would `be necessary to avoid any undue'
hardships to the corporation. Also possibly there might want to be'
a limited number of individual permits issued, and certainly rigorous
standards must' be `met.
Due to the difficulties incurred' in this particular case~ of which
I have personal knowledge and attempted to work out with the'
Forest Service on an individual `skiing instructor permit, I feel
perhaps it might ~in some way be a.ppropriate in your legislation to..
state that, one of .the intended' uses of our public lands is to allow
the public' the .advantage of such private instructors. I really do
feel that is quite an advantage. , `
That ends my comments. I tha.nk you for the opportunity. If you
have any, questions, I will be glad to answer them.
Senator HASKELL. Thank you, Mr. Spiegel. I am interested, what':
is your primary business? Obviously, you are not in the ski instruc-
tor business.
Mr. SPIEGEL. I am in the cosmetic business.
Senator HASKELL. And so you are going to Aspen or places in:
Colorado and other places and you are an interested skier?
Mr. SPIEGEL. Yes, I am, both myself and my family. We find it".
a wonderful family sport.
Senator HASKELL. Well, I thank you for taking the time. Mr.
Loesch suggests, and it is probably an excellent question, you are
the only person notl connected with the industry" from out of town.
What do you think about the concept-have you sat through the
hearing today? ` " ` ,
Mr. SPIEGEL. Yes, I have.
Senator HASKELL. Well, you have' heard me ask a number of'
people the question and I haven't received an answer yet. There
doesn't seem to be a great deal of satisfaction with the way things are~
because the Forest Service hasn't seemed to evolve any dlefinitive~
standards for reviewing rate increase requests. Some people go over'
the, mountain maybe once. Other people visit the `community, and'
`up in Aspen there are very strong feelings that people that live in'
the community, since that's the only place they can ski, certainly'
PAGENO="0332"
328
~should have a season pass. The whole problem of when you ask
for a rate increase is what kind of objective standards should be
applied? Now, that's a series of questions I have asked you, but since
you are the only person who has shown up from outside the State
and not connected one way or the other with the industry, I would
be interested in your views. That's a lot, of questions, I know.
Mr. SPIEGEL. That sure is a lot of questions. I am going to think
before I am ready to start.
Senator HASKELL. Right.
Mr. SPIEGEL. First of all, I feel that there should be some very
objectionable criteria set up by the Forest Service and, No. 1, we
should get a permit, qualifications, financial as well as the limit on
the environmental impact. I think these are very necessary pre-
requisites to issuing a permit. I really can't shed much light on, you
Tknow, how the fees, the rate structure, should be. I really do not
think I am qualified to do that.
Senator HASKELL. `Well, Mr. Loesc'h would like me to ask the
question I am not sure that this goes to the issue Overall, not lust
in Colorado, but I assume you have skied in California and other
States as welb-
Mr. SPIEGEL. I skied in other States.
Senator HASKELL. Do you have any observations as to t'he reason-
ableness or unreasonableness of the various places of the price of
tickets?
Mr. SPIEGEL. I really can't say `that I do.
Senator HASKELL. Actually, really the thrust of this hearing is
not to say whether prices are reasonable or unreasonable. We don't
know this precisely' `because we don't have the financial information
or objective standards. I appreciate your coming and directing your
remarks to what you did, because there are very few places in the
TJnited States where you can be an individual entrepreneur with
very little capital. Running a taxicab is one of them. You don't-
Mr. SPIEGEL. Some places you do.
Senator HASKELL. In some places you do, I ,know.' Personal
services, however, is an area where you can, and ski instructing is
one of them, and I must say your viewpoint appeals to me a great
deal. Thanks very much `for coming.
Mr. SPIEGEL. Thank you very much.
Senator HASKELL. Our next witness is Gladys Oppenheiver of
Parker.
STATEMENT OP GLADYS OPPENHEIMER, PARKER, COLO.'
Mrs. OPPENHEIMER. Thank you, Senator Haskell, ,for permitting
me to appear today.
Senator HASKELL. I'm very glad to hear from you.
Mrs. OPPENHEIMER. The remarks I would like `to make are addi-
tional, to the. material which I already, submitted to your staff.
Senator H4sKELL. Right, and they will be included in full.
irs. OPPENHEIMER. Thank you, and what 1 am going to continue
on will, pertain to the independent qualified ski instructors and the
monopoly that seems to be exercised by the aki schools. Parenthet-
ically, I am not ,a member of the ski', industry in any way.
PAGENO="0333"
329
I think it is extremely important for us, the skiing public, myself
included, as well as for the independent qualified ski instructor,
that we have the opportunity to pursue this teaching profession.
It is absolutely unconscienable to me that a handful of corporations
can have complete control over the livelihood of all ski instructors.
Many of the ski slopes are operated by the same' corporation or
corporations, and these operations often cross state boundaries. The
control is loosely based on monetary investments, but sometimes it
does seem to be exerted by a certain kind of subtle pressure or
influence.
The independent ski instructor can only ski where the slopes are,
where the snow is, and during that short pe.riod for skiing. They
cannot exercise their professional skills at any other place nor at
any other time. If the decision about who teaches skiing is left en-
tirely to the corporations and the ski schools, there can be no free
private enterprise in this industry. The talents of these highly
qualified independent instructors are lost and their chances for a
livelihood are. destroyed on a national basis. The losers in all this
are we, the skiing public.
It is obvious that the independent qualified ski instructors must
be highly skilled technically. They must also have a unique ability
and the desire to establish good rapport and understanding with
their clients. They must be unusually skilled in their profession in
order to earn that kind of widespread excellent reputation which
makes clients constantly seek them out. I personally find them highly
motivated and appreciate the kind of special treatment and services
which they can extend. If they were not superior instructors, they
could never compete and never succeed.
It is not in the public's interest for the ski schools to exercise so
tight a monopoly on all ski instruction. It certainly does not stimu-
late the schools' desire to improce, but spurred by the high quality
of service offered by the independent the quality of all ski instruc-
tion is thereby raised and we the public will benefit from all of this.
I have never been able to understand why the discrimination on
public lands, why the independent ski instructor, a member of the
public, has to be relegated to the role of a pariah. As I have stated
in my original testimony, I feel sure tha.t the technicalities of this
problem can be solved. What is needed is a completely new approach
in establishing what is good for the public and in the public's in-
terest. Who is going to determine what that good is? The corpo-
rations using the public lands or the public itself, which is why
these hearings are so important.
I am definitely of the opinion that the independent ski instructor
performs a service for those members of the skiing public who desire
such services and skills. I hope that it will be possible before not too
long that I will be able to ski again with a highly competent pro-
fessional ski instructor of my choice, one of those particularly highly
qualified independents whom I am convinced, after everything I
have seen and with the many I have skied with, are the finest ski
instructors there are. I thank you.
Senator HASKELL. Thank you very much for appearing indeed.
We appreciate it.
[The prepared statement of Mrs. Oppenheimer follows:]
67-512 0 - 76 - 22
PAGENO="0334"
330
STATEMENT OF GLADYS OPPENHEIMER, PARKux, CoLo.
I appreciate your granting me the opportunity to appear before this Senate
Interior Subcommittee on Environmental and Land Resources, and to submit
written testimony.
I am greatly concerned about the permit system, with respect to ski in-
struction on the slopes and particularly the Independent Qualified Ski In-
structor.
I started skiing barely ten years ago, and have skiied at various areas in
Colorado as well as in Austria. I always prefer skiing with an instructor.
However, the past two or three years, I have hardly skiied at all, since my
right to ski with an independent qualified ski instructor of my choice has
been so sharply curtailed.
It seems to me that the problem which has developed between the ski slope
operators of the ski schools and the independent qualified ski instructors, is
not only unnecessary but not in the best interests of the American public.
I do not believe that the ski slope/lift operations and the ski schools should
necessarily have to be handled by the same corportaions. These two services
can be and should be viewed as completely separate and distinct enterprises.
However, if the ski slope operators do obtain authorization to conduct ski
schools, then that should not be the only authorized ski instruction.
A monopoly is created whenever all services are exclusively and solely held
by the same organization. The result is that the quality of services offered
has a decided tendency to deteriorate. Without the stimulation of healthy
competition, there is no incentive to maintain a high quality of service, much
less to strive to improve the service that is being offered. Therefore, if the ski
slope corporation is also authorized and permitted to maintain a ski school
at the site, other ski instructors such as that offered by the high qualified
independent ski instructors should also be permitted and available. This would
certainly be in the public's best interest.
There is no doubt that the ski slope/lift corporations do have a tremendous
investment in these operations. However, the price of the lift tickets should
be sufficient to remunerate them for the establishment and maintenance of
the ski facilities. The price of the lift tickets should be able to cover their costs
and a reasonable percentage of profit. The price of ski instruction should have
nothing to do with this phase of skiing, and should be related only to the
service of ski instruction itself.
When the independent qualified ski instructor gives a lesson, he purchases
his lift ticket like other members of the skiing public. On the other hand the*
ski school instructors do not. They ride the lifts free. Therefore, the inde-
pendent qualified ski instructor is providing additional income and is paying
his proportionate share towards the operation of the ski slopes. The various
clients of the independent qualified ski instructors also purchase their lift
tickets, and many of these clients, including myself, would not ski at all, or
certainly not much, unless we have the choice of skiing with those independent
ski instructors whom we know are highly qualified, and with whom we have
skiied for years. Therefore, again this is additional income to the slope/lift
operators.
In no way can the independent instructors and their clients inflict any
damage to the slope. Anyone who skis knows full well, that the problems
which often arise on the slope, come from those members of the skiing public
who go "bombing" down the slope, out of control. Certainly, the independent
qualified ski instructors are not about to destroy the basis of their income.
These recreational ski facilities are being operated on government property.
They are therefore for the use of the entire skiing public. They are not private
clubs. Therefore, they cannot discriminate against any member of the public,
including the independent ski instructor. Consequently, the public has the
right to determine with whom they wish to ski when taking instruction. It
cannot be doubted that it is a tremendous economic advantage to have a ski
school right on the slopes. But this advantage should not be permitted to be-
come a monopoly to the detriment of the public. The interest of the public
lies in choosing among the various teaching services available. This spurs all
PAGENO="0335"
331
of those in the field of ski instruction to improve, and the public is the one
to benefit from continually better instruction. Therefore, various ski instruc-
tion services must be permitted to be made available.
The ski slope operators, if they choose to maintain a ski school and obtain
such authorization, should be able to co-exist peacefully with the independent
qualified ski instructors. They may be excellent ski instructors who much
prefer the shelter and security of the schopls and in addition enjoy the
school's programs. But for those qualified ski instructors who wish to assume
the risk of private enterprise, and who must depend on their own professional
reputations to survive as instructors in a highly competitive business, there is
absolutely no reason why they must submit to being members of a corporation,
and then only if the corporation wishes to employ them. If not, there would
be no other alternative for them. They would lose the opportunity to offer
their personal unique skills to the public, and the public in the long run would
be the loser. Whether there are three or four qualified ski instructors, or two
dozen is immateria. What is at stake is the principle of private enterprise, and
the freedom of choice on the part of the public.
Many skiiers prefer to learn at ski schools, and with the ski instructors em-
ployed by these schools. But there are others like myself, who prefer skiing
with the individual instructors of our choice, and if he or she happens to be
an independent instructor, can see no reason why our choice should be arbi-
trarily abridged. Everyone wants to ski with the instructor with whom one
feels safest on the slopes. In addition, there are many advantages to being
able to ski with the independent qualified ski instructor; such advantages in-
clude having skis and poles rented and ready for skiing immediately upon
arrival and being driven to and from the slopes after exhausting lessons.
There is also the matter of price per lesson. It is possible that the school
can satisfy one individual's requirements in this matter. But it is also possible
that the independent qualified ski instructor can satisfy others much better.
Each of us must equate the cost per lesson against the services offered and
the quality of teaching involved, along with the feeling of confidence one has
on the slopes. Only the individual members of the skiing public can possibly
make this determination.
Because these recreational facilities are maintained on public lands, the
public must have free access to these ski areas, and to the ski instruction
available, whether that is by a ski school instructor or by the independent
qualified ski instructor. Furthermore, the independent ski instructor, also as
a member of the skiing public, has to have the same right of access to those
skiing facilities, as well as the right to teach those who wish to employ their
services. This should include the same right of ski school instructors, to cut
the lift 1ine~ These independent instructors should not be discriminated against
in favor of the instructors of the lift operators' ski schools. One cannot define
the word "public" by placing limitations upon it, and the private businesses
which operate these public facilities, cannot be allowed to water down the
public's right to the full enjoyment of these public lands.
The details involved in resolving the many issues such as ski instructor
qualifications, compensation for the use of ski facilities, the cutting of lift
lines by ski instructors, availability of season tickets as against day lift tickets
by the various independent instructors and other members of the public, areas
which should be set aside for beginners, are all technicalities, which should
all be capable of solutions. What is necessary, is a basic belief and attitude
that the use of these recreational facilities on public lands remain open to
the public; that these recreational facilities must be operated in the public's
interest, one of which would be the availability of the best teachers possible,
irrespective of the fact that he or she may be an independent qualified ski
instructor.
I believe that a workable formula can be found whereby the qualified in-
dependent ski instructor can be allowed to teach, and that the American pub-
lic, if it so chooses, has the right to employ their services and talents. It
seems to me that such use would be entirely consistent with the purposes of
the proposed legislation.
Senator HASKELL. The next witness is Mrs. Rex Jennings, presi-
dent, Denver Chamber of Commerce.
PAGENO="0336"
332
STATEMENT OP REX JENNINGS, PRESIDENT, DENVER CHAMBER
OP COMMERCE, DENVER, COLO.
Mr. JENNINGS. Thank you very much, Senator. As you have
stated, my name is Rex Jennings and I work with the Denver
Chamber of Commerce. Very briefly, let me state that my testimony
in connection with Senate bill 2125 is not intended to oppose or
support the legislation per Se. Neither will I offer any alternative
or specific language suggestions. However, in view of the significant
impact on Colorado's economy of the ski and outdoor recreation
industry, I have some observations to make which I hope will be
of some possible interest and of some assistance to your commit-
tee's deliberation.
The chamber believes that it is important that the committee is
fully aware of the economic impact that the ski and the outdoor
recreation industry has on the economy of Colorado and the sig-
nificant contribution it makes in developing employment oppor-
tunities and desirable growth pattern throughout the State. We be-
lieve that economic growth and environmental quality are mutually
compatible if pursued with balance in mind. We think the growth
of the ski industry over the past decade is a good illustration of a
growth industry which is also environmentally clean. We think it
should and can continue to grow under effective and reasonable
methods.
During the years, as the chamber of commerce has directed its
efforts to attract desirable new industry to Colorado, we have been
impressed by the importance company officials directed to the so-
called "quality of life." Our meetings and discussions with these
firms bring out the fact that many companies prefer Colorado over
other States largely because of such amenities as a fine ski industry
and first-class skiing facilities. I emphasize that the companies to
which I am referring have no direct interest in the ski industry,
such as equipment and clothing suppliers, but feel that immediate
access to skiing and outdoor recreation opportunities for their em-
ployees enables them to recruit, retain, and get higher productivity
from their workers. .
In addition, there are, of course, those people who have established
or moved businesses to Colorado who are directly connected with the
ski industry and provide an important number of jobs for Colorado
workers.
In addition, there are, of course, those people who have established
or moved businesses to Colorado who are directly connected with the
ski industry and provide an important number of jobs for Colorado
workers.
Our research department recently identified a number of firms
fi~om Colorado through a review of the "Standard Industrial Classi-
fication Codes," which was published in the "1974-75 Directory of
Colorado Manufacturers," who are directly involved in the manu-
facture of clothing and sporting goods equipment and found there
are 84 companies now in Colorado engaged in this type of manu-
facturing, employing somewhere around 4,000 employees.
PAGENO="0337"
333
In addition, the location of these firms is spread throughout the
State ,and I think this is significant, in numerous counties on both
sides of the Continental Divide. As an example, the 38 firms which
manufacture sporting and athletic goods are located in 11 different
counties from Rio Blanco and Gunnison on the western slope to
Las Animas, Weld, El Paso, Denver, and Boulder on the eastern
slope.
The payrolls of these companies represent very important eco-
nomic support of their respective communities, running into mil-
lions of dollars which are spent throughout the whole range of
services and retail and wholesale activities. The Colorado ski and
outdoor recreation industry is the type of business which attracts
these kinds of clean, environmentally desirable manufacturing
companies.
Also, I believe it is important to emphasize that manufacturing
companies such as the above 84 that I have mentioned are classified
as the basic job, for which a standard rule of thumb in the economic
development profession is that one basim manufacturing job creates
three additional support jobs, so here we are talking about 4,000
basic jobs or a total of 11,000 or 12,000 or 15,000 additional jobs.
In addition to the impact on the economy of the above companies,
there are other important contributions to a healthy business climate
which results from the skiing and outdoor recreation industries.
Statistics developed over the past 8 years illustrate the fact that
the ski industry in Colorado is growing each year. "Colorado Ski
and Winter Recreation Statistics, 1974" published by the University
Of Colorado for the 31 ski areas in Colorado, shows a 205.25 percent
increase in life tickets issued between 1966-67 and 1973-74.
This represents an increase from 1,410,234 tickets back in 1966-67
to 4,304,787 in 1973-74, for a numerical increase of 2,894,553. This
growth is significant and has an important impact on economic
indicators in those counties having ski areas as well as significant
effects on other business in the State, including common carrier
transportation, air, rail, and motor carrier, housing units, restaurants,
lodging, retail sales, banking, miscellaneous services, as well as tax
revenues fOr local, State, and Federal governments.
There are 18 counties in Colorado which have ski areas located
in them, plus four additional counties which then benefit from those
in nearby counties, for a total of 22 counties or about one-third of
the. total counties of the whole State of Colorado.
In conclusion, I appreciate this opportunity to appear before
you today and bring to you our concern in connection with the pro-
posed legislation and our conviction that a healthy and growing
ski and outdoor recreation industry is vital and appropriate for the
State of Colorado.
Senator HASKELL. Thank you, Mr. Jennings, very much, and I
~igree with you. Thank you very much, sir.
Our next witness Gordon Autrey, president of Rocky Mountain
Airways. I guess Mr. Autrey isn't present.
Then it would be Don Collins, president of Federal Employees
PAGENO="0338"
334
Ski Club. Is Mr. Collins present? I guess not.
Then John Higgins of Denver. He is not present.
Hans Patch of Denver, is he present?
STATEMENT OP HANS PATCH, DENVER, COLO.
Mr. PATCH. Thank you, Senator, for the chance you give me to
talk here. My name is Hans Patch. I am the missing link here. I
am a skier. I have skied all my life and I was born in Austria. I
skied in Austria and Switzerland and France and all over the
United States and have lived in the United States for a long time,
and I have seen the growth of this skiing here and I love it. That's
why why I came to live here.
I'm a skier who lines up and I am not a skier who can hire a
ski teacher who gets him through the lift line. I have to wait in
the lift line, and this is some of the problems there are, because if
the ski areas, are held too small, because more and more people ski,
therefore any legislation which comes up should consider growth
of the ski industry, the number of skiers which are added every
year to the skiing, and the growth of this industry of the skiing
area should be geared to this development.
Therefore, too much regulation, too much hemming-in is very
bad, because it will make skiing eventually, if this will keep on, a
sport for the elite which can afford tickets, can afford to go far
away from the cities weekends, travel very, very far to get to the
ski area.
The National Forest, when you realize the registration came upon
them there was no skiing, but skiing now in the national forest has
to be considered by the authorities and by the national forest super-
vision as something to substantially integrate with the enjoyment
people have, with nature. I was last Saturday in Vail, for instance,
and we hiked all of the mountains for hours, for many hours, and
it was as enjoyable as skiing; but it can only be done with the de-
veloping a large ski area, but when we hear now that some ask ski
areas to restrict the same skiing, and this is only something which
benefits the elite, if you can plan ahead, you can go out on the
weekend and go skiing when you elect. But after you buy a ski
ticket in advance, in order to go on the hill you have to wait on
the lift line. I think in the interest of skiers, millions of people,
that should be recommended there should be provisions which will
enable the average people to enjoy skiing without waiting, therefore
open up more areas with all the protection and with all the necessary
controllers of whatever is necessary with controlling for environment
and even the space.
Even how much it costs to play tennis, how much it costs to ski,
this isn't true, because when you play tennis you come to the point
in time to play your tennis, so the cost of tennis courts a.nd golf
courses is nothing compared to the cost of skiing, because you wait
in line an awful long time so you can't say this is recreation. This
is work sometimes.
PAGENO="0339"
335
As to the lift ticket prices, I am not absolutely familiar but I
think it is a wonderful organized area and I think Vail does a
fantastic job in what they are doing, many, many others, operators,
it is what they are doing for the skiing public. But is it necessary
that Vail Associates as a corporation has a real estate corporation
thrown in? Their development depends very much today upon how
well they can sell their real estate. The inference is, for instance,
how their balance sheet shows up. I think that skiing and the liftS
operation, the operation of the mountain, should be absolutely sapa-
rate from any real estate corporation whatsoever, because that
would force a much different picture, and the lift prices are com-
paratively high. Take Europe, I have a brochure about skiing which
gives you all the different ski areas in Europe as to lift tickets, as
to ski schools, and so forth. Most of it is much, much cheaper,
whereas hotels are higher.
Senator HASKELL. This is interesting. Why don't you leave it with
the committee?
Mr. PATCH. It is enlightening, I think. The guidelines in it are
very important because of the nature of what we have. It should be
preserved for all people, not just for anybody who thinks everybody
has to be left alone, that a few can hide from far back, but not all
people can do that, all people have the time. It has to be done in
a reasonable way for the masses to enjoy the sport.
Your suggestion which I heard previously, should there be special
ski areas, that is very, very good. I think from the viewpoint of the
average skiers it is a very good one, because ~the family who skis~
say four or five people, and to go out and pay for each one a lift
ticket for $11, it is very expensive, plus the trip, plus everything
else, and it is a long trip. If it could be done with ski areas even
sujsidized once for intermediate schools in the vicinity of cities big
enough or organized enough thatt he people can enjoy it, it would
be really great. It would be v~ery, very good. There are some ski
areas on the profit sheets that really are far and away less expensive,
not crowded, but generally speaking I think these areas do not appeal
to the skiers because they have been badly planned, because the good
ski areas, the interesting ones, they are all crowded in the season,
absolutely, and the prices of ski schools and ski lessons, welL this
is a question. Sometimes I think it is pretty high and it should be
controlled. It should be that the price structure should be controlled
because areas should not be able to take advantage of, say, the
President is there and therefore it is fashionable, but as much as I
love Vail there are certain things that don't have to be done.
Thank you very much for listening to me.
Senator HASKELL. Thank you for coming up and letting us see
a real-life skier. I think maybe that has been missing.
Mr. PATCH. That's how I felt.
Senator HASKELL. Thank you for coming.
That concludes our witness list and the record will be open for
2 weeks for any submissions. Thank you very much.
[Whereupon, at 3:47 p.m., the hearing was adjourned, subject to
the call of the Chair.]
PAGENO="0340"
PAGENO="0341"
OUTDOOR RECREATION AND SKI PERMITS ON
NATIONAL FOREST LANDS
MONDAY, NOVEMBER 17, 1975
U.S. SENATE,
Sm300MMIrraE ON THE ENVIRONMENT AND LAND REsouacEs;
OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10 a.m. in room 3110,
Dirksen Office Building, Hon. Floyd K. Haskell presiding.
Present: Senators Haskell and Fannin.
Also present: Steven P. Quarles, counsel; and Harrison Loesch,
minority counsel.
OPENING STATEMENT OP HON. FLOYD K. EASKELL, A U.S. SENATOR
PROM THE STATE OP COLORADO
Senator HASKELL. The hearing on S. 2125 will commence. This
is the third hea.ring the subcommittee has held on this bill. On
October 4 and 6, field hearings were held in Aspen and Denver and
there we heard from virtually every segment of the industry, ski
area operators, the financial community, State and local govern-
ments, ski instructors, skiing students, environmental organizations~
and the general public.
As yet, however, we have not heard from the Forest Service which
is charged with permitting the commercial outdoor recreation in-
dustry to use national forest lands. Forest Service policy is not to
present testimony on legislation outside of Washington and, therefore,
the principal purpose of today's hearing is to hear from the Chief of
the Forest Service, Chief McGuire.
A second purpose of today's hearings is to learn from the industry
whether the issues raised in the field hearings are universal or
peculiar to Colorado.
Additionally, we will hear from the industry on certain matters
which have been raised with them. And I hope to get some answers
to those questions.
As sometimes occurs in the drafting of legislation, this bill orig-
inated from a specific incident and several problems involving a
limited number of constituents. We sought to resolve these problems
through informal procedures, but found them to be indications of
a more fundamental issue which could only be addressed by legis-
lation.
Early this year numerous Colorado citizens brought to my atten-
tion a proposal of three Colorado ski areas to simultaneously in-
(337)
PAGENO="0342"
338
crease by 20 percent the daily adult tow ticket rate. Skiing in Col-
orado is already a very expensive form of recreation and I was
concerned that so large an increase would put skiing beyond the
reach of many Coloradoans.
Therefore, I wanted to be sure that the requested increase was
justified. But I found it was virtually impossible to make such a
determination. The Forest Service does not hold public hearings on
requested rate increases nor does it release the financial data upon
which the permittee's request and the agency's decision are based.
I was astonished to learn that the decision on any rate increase
request is the province of the local forest supervisor and that he is
given no objective formula or criteria for making that determination.
It appears absurd, at least to me, that forest supervisors, usually
untrained in economic matters, are asked by the Forest Service to
make such decisions on apparently purely subjective grounds.
In the case of the rate increase request in Colorado, one set of
rates was ultimately denied by the forest supervisor and another
was compromised. Yet even today, several months later, neither the
industry nor the public knows in detail what criteria Forest Service
Personnel used in determining whether the rate increases were justi-
fied or unjustified.
As I began to explore the Forest Service's system of granting
and administering ski permits, I discovered that the lack of uniform
objectives and specific standards pervades the entire system. For
example, ski permits are often saddled with stipulations and con-
ditions which differ both among and within the national forest
regions. This absence of uniform standards can play havoc with the
financial planning of permit applicants and holders and may
jeopardize their existing and planned investment. It clearly frus-
trates any public review of the adequacy of Forest Service decision-
making.
I also learned that the statutory basis for the present permit
system is so full of holes that the Forest Service has adopted a
numbe.r of questionable practices to meet the public demand for
outdoor recreation facilities. Perhaps the most serious of these
practices is that of issuing to a* single ski operator a 30-year permit
for 80 acres-the statutory limit-then supplementing it with a
large number of 1 year special use permits for additional acreage.
Of course, the maximum of only 80 acres is simply too small for
ski operations today.
I am reminded of the history of the Alaskan pipeline. After
much litigation over the adequacy of the environmental impact
statement, the entire pipeline project was brought to its knees by
a minor provision in the Mineral Leasing Act of 1920 which lim-
i~e~l the width of rights-of-ways which could be issued by the In-
terior Department. In that situation the Department had attempted
to use special use permits to sidestep the statutory width require-
ments. The courts found invalid that use of special use permits. I
see no reason why, given that finding, the courts would not also
question the legality of using special use permits to avoid legal
roadblocks to the issuance of permits for ski areas.
In short, after investigating the Forest Service permit system for
ski and other recreation facilities, I am convinced it needs reform-
PAGENO="0343"
339
ing. The system is based on two very antiquated laws: The Organic
Administration Act of 1915 and the Term Permit Act of 1915. The
latest amendment to either of these laws occurred in 1956. The
nature of the industry is far different today than when those. laws
were first enacted and last amended.
Before this hearing begins, however, I want to emphasize two
things.
First: The bill before us is a rough draft only. On introducing
the bill on July of this year, I said that it was a draft bill to be
criticized and reworked during the hearing process. And I am still
of that opinion. I've already expressed my doubts concerning the
appropriateness arid workability of a number of the bill's provisions
and have suggested provisions which might be added in supplement.
Second: I would particularly like to clarify the underlying pur-
pose of the legislation. I have heard described as the purpose of
this bill the regulation of the ski industry as a utility and the
forced reduction of the rates that industry may charge the public.
This is patently wrong. What I hope to achieve by the enactment of
this measure is not necessarily an increase in Forest Service regula-
tory powers, but rather the exercise of existing powers in a uniform,
objective manner. If this is not clear in the provisions of the draft
bill, let's try to rewrite those provisions to meet that purpose.
Our first witness today is the Honorable John B. McGuire, Chief
of the United States Forest Service.
Chief McGuire, it is a pleasure to have you here today.
STATEMENT OP HON. IOHN R. McGUIRE, CHIEF, FOREST SERVICE,
DEPARTMENT OP AGRICULTURE; ACCOMPANIED BY MELVIN
LOVERIDGE, FOREST SERVICE
Chief McGrmu~. Thank you, Mr. Chairman. With your permission
I would like to have Mr. Melvin Loveridge of the Forest Service ac-
company me.
Senator HASKELL. Very pleased to have him.
Chief McGunu~. Mr. Chairman, I can brief my testimony some
what but it contains quite a bit of detail.
Senator HASKELL. It will be included in the record in full.
Chief McGrrmE. Thank you, sir.
We welcome this opportunity to appear before the committee to
discuss Forest Service policy, procedures, and authority for the is-
suance of permits for commercial outdoor recreation facilities and
activities.
As the committee is aware, we cooperate with the private sector to
provide certain needed facilities and services. Use of the national
forest lands is authorized under a permit system.
There are now about 1,900 concessioner permittees on the national
forests. Their investment comes to about $270 million. And the major
part of this investment is in winter sports areas.
.The, national forests are the largest suppliers of skiing in the cop.n-
try with about 200 winter sports areas.
Since we recommend that S. 2125 not be enacted, I will express
our concerns with that bill. And since the bill would primarily effect
ski area permits; therefore, I will concentrate on that aspect.
PAGENO="0344"
340
The act of June 4, 1897, authorizes the Secretary of Agriculture
to regulate occupancy and use of the national forests. In addition,
the act of March 4, 1915, authorizes the Secretary to issue permits for
the use and occupancy of suitable areas of land for recreation facili-
ties.
The combination of these present authorities has in our opinion
proved sufficient; therefore, we have not sought to modify the 80-
acre or 30-year limitations contained in the 1915 act.
In addition to these two acts, we also rely on the act of April 24,
1950 to provide authority for the use of structures owned by the
government.
The provisions of section 3(a) and 3(b) of 5. 2125 which provide
for congressional review and publishing of regulations appear to be
directed at a concern that proposals for major ski developments be
subject to open public review and complete analysis of potential
beneficial and adverse effects prior to issuance of the permit. In our
opinio~ such proposals are now subject to detailed agency analysIs
and to public review, for example, under the National Environmental
Policy Act. In addition, we object to the provisions of section 3(a)
which would allow the committee, by a disapproval resolution, to
prevent the issuance of permits involving more than 1,280 acres, up
to 5,000 acres and the further requirement that permits involving
more than 5,000 acres could not be issued until the committees had
adopted a resolution of approval.
The Department of Justice has consistently advised that similar
requirements are unconstitutional. And just recently that Department
tç~stified on this subject before the Senate Judiciary Subcommittee
on Separation of Powers.
With regard to the fee system, the Forest Service has been im-
plementing since 1972 a new system with respect to winter sports
operations. The new system considers the amount of sales that are
generated in relationship to the commissioner's gross fixed assets.
Minimum rates have been set which are applicable to all permits.
Starting with a minimum, rates progress upward as sales rise in
comparison to gross fixed assets. Rates as established give the con-
cessioner an opportunity to realize approximately 15 percent profit
when his sales are equal to twice his operating costs.
This level of profit is based on national averages and would apply
to a concessioner of average operating efficiency in a normal season.
However, the system neither guarantees nor limits the profit of any
individual concessioner. It does, however, return a reasonable land
rent to the landowner commensurate with the value of the use author-
ized.
We are concerned that sections 3(c) (1) and 4(c) of 5. 2125 would
base the annual fees and allowable charges on equity investment.
This would require major revision of our present system and we are
not aware of any advantages which would result in such a revision.
Senator HASKELL. I might interpret you there, Chief. I think you'll
recall that in that regard I agree with you.
Chief MCGtTTRE. Thank you, Mr. Chairman.
With regard to permittee charges and public information, section
4 of the bill provides that all data supplied by a permittee relating
PAGENO="0345"
341
to a proposed increase or decrease in charges to the public be made
available for public inspection. We believe the broad disclosure of
all financial information required in this section could act possibly
as a deterrent in securing further private investment. The Freedom
of Information Act as amended now applies to the availability to
the public of such information and we strongly prefer that rnforma-
tom on all permits be handled under that existing law.
With regard to the review of permittee charges for services and
use of facilities, the terms of existing permits specify the services to
be provided and provide for our approval of charges and our in-
spection of the quality of service. We view this approach as sufficient
to protect the public interest.
With regard to improvements and extension or renewal of permits,
the structural improvements on Federal lands are the property of the
permittee and may be sold when the permit terminates or may be
removed by the permittee. Many Forest Service permits have ex-
perienced a change in ownership and in nearly all cases, a permit
has been issued to the new owner. In a few cases, improvements have
been abandoned and have become the property of the United States.
Under present authorities, no extension or renewal beyond the
permit term is stated or implied. However, upon the expiration of
the permit, if the use responds to a continuing public need and is
consistent with established land use objectives for the area and if
the permittee has fulfilled his obligations, a new permit is normally
issued to the owner of the improvements.
In those situations where it is necessary to terminate a permit,
uring its term, for another use, the Federal Government obligates
itself to pay compensation. This obligation is expressed in each per-
mit issued under the 1915 act. But we've seldom found it necessary
to terminate a permit during its term, except by mutual consent.
The provisions of the bill with regard to improvements and renew-
al or extension of permits would not substantially change present
procedures. \Ve think it's important to maintain the present secre-
tarial discretion to specify the specific terms and conditions in each
permit.
We do not support the provision which would exclude the Mineral
King Valley from the legislation. It appears that this section is
intended to be the controlling provision and override the sole author-
ity provision in section 7; thus, any permit for ski activities or facili-
ties in Mineral King Valley would have to be issued under the 1897
and 1915 acts. We believe all areas should be subject to the same
basic law.
That concludes my statement, Mr. Chairman.
Senator HASKELL. Thank you, Chief. If my recollection serves me
correctly, you have appeared to have changed your opinion from the
morning you, the majority and minority counsel-Mr. Quarles and
Mr. Loesch-and I sat down and talked about this%
But let me .j~ ask you a few questions addressing public policy.
In your opinion, does an operator who is using public lands have
greater, lesser, or the same obligations as the operator using private
lands?
Chief McGtrniE. I would say he has greater obligations than an
operator using private lands. For one thing, he has been given, the
PAGENO="0346"
342
privilege of using these lands and in return I think the public, which
owns these lands would expect him to perform, probably, to higher
standards than a private land operator.
Senator HA5KELL. As a matter of policy, Chief, do you think the
Forest Service has any obligation to assist in any way to see that
competition exists within the industry vis-a-vis considering the issu-
ance of permits and the administration of permits? Do you feel that
you have any obligation to help insure that true competition exists
between these areas?
* Chief McGimu~. We have a very large responsibility in that re-
gard because we administer a very large portion of the total supply
of suitable areas. So this, we feel, is a very important responsibility
of the Forest Service.
Senator HASKELL. When you bring large numbers of people to an
activity on Federal lands, in my view you necessarily have an im-
pact upon local government whether it be county or municipality. I
suppose I should first ask you whether you agree with my premise ~
Chief MOGUIRE. I fully agree with your premise, Mr. Chairman.
Senator HASKELL. If you agree with my premise, do you feel that
it is any responsibility of the US. Government operating through
the Forest Sevrice to ameliorate the impacts on local government?
Chief McGUIRE. We think it is up to the two levels of government
to consider what might be done to reduce that impact. There are
impacts that are both beneficia.l and disadvantageous to the local
community and the problem with both levels of government is to
achieve-
Senator HASKELL. When you say both levels of government, would
you identify-
Chief MoGuiiu~. The Federal level and the local level. So I would
say that we do have a responsibility here to work with the local
government in ameliorating impacts.
Senator HASKELL. What under current law and policy is being
done in that regard by the Forest Service?
Chief MCGUIRE. In most of the national forests, the Forest Service
is. attempting to coordinate its land use planning, planning for the
use of the national forest lands with the planning that the local gov-
ernment may be doing.
It is also attempting to encourage local governments to staff and
equip themselves to do a more extensive job of planning uses of
the priva.te lands. We try to coordinate, in other words, the two
planning processes.
Senator HASKELL. What portion, if any, of the fee paid to the
United States by the operator in an area is in turn paid by the For-
est Service to a local community?
Chief MGGUIRE. National forest receipts from all kinds of activi-
ties, including winter sports operations, are placed in miscellaneous
receipts of the treasury in the national forest fund. Twenty-five
percent of those receipts from all sources are distributed to the
States to be passed on to the counties in proportion to the acreage
Qf national forest land in the county. This insures some sharing of
school and road costs between the Federal Government and the local
government.
In addition, 10 percent of the receipts are spent in these local
areas for roads and trails.
PAGENO="0347"
343
Senator HASKELL. Ten percent of the receipts by the Forest Service
are turned over for roads?
Chief MOGUIRE. They are not turned over. They are spent by the
Forest Service for construction and maintenance of roads and trails
within the national forests.
Senator HASKELL. I see. And the road construction, is that on
Forest Service land or on local government or fee land?
Chief McGunii~. Generally, it's on Forest Service land. We may
possibly have an occasional road where we need access to national
forest land.
Senator HASKELL. And 25 percent of the receipts for the fee are
turned over to the State for distribution in such manner as they desire
to the local government?
Chief MCGUIRE. Yes, the State is required, Mr. Chairman, to dis-
tribute this 25 percent share in relation to the acreage of national
forest land, and the money must be used for schools and roads by
the local government.
Senator HASKELL. And limited to that?
Chief MoGtrnu~. And limited to that.
Senator HASKELL. Do you happen to know whether this is more,
less or the same percentage as is distributed in the case of timber
sales?
Chief MCGUIRE. This is the same percentage, sir.
Senator HASKELL. How about minerals?
Chief MCGUIRE. With minerals, the situation varies. In the case
of the public domain, leased minerals outside of Alaska, I believe
the share distributed by the Secretary of the Interior from minerals
leased on national forest lands is 371/2 percent.
In the case of acquired lands, primarily in the East, those mineral
leasing receipts are placed in the national forests fund and are dis-
tributed along with other national forest receipts. I believe there's
still another arrangement in Alaska and there are other arrange-
ments for other kinds of receipts. It presents a very complex situa-
tion, as you know.
Senator HASKELL. In view of the fact that private organizations
are operating pursuant to the permit system on public lands, do you
think that the Forest Service has the obligation to see that the public
is adequately served?
Chief MCGUIRE. Yes, we do. A very great obligation.
Senator HASKELL. Could you spell out your understanding of that
obligation?
Chief MCGUIRE. One of our objectives is to make sure that the
private concessioner provides an adequate service to the public. This
means that he must be able to obtain enough returns so that he can
justify his investment and perhaps increase it as public demands
increase.
On the other hand, we do not want to get into a situation where
the private concessioner begins to obtain extreme benefits from the
adequate supplies of the Service.
We want to be sure that we provide for increasing the supply in
pace with the increases in the public's demands for the service.
So, our job is to attempt to balance-on the one hand a viable in-
dustry that can serve the public and has the money to do it-and on
the other hand, to provide enough supplies, enough opportunities so
PAGENO="0348"
344
that there is continuing competition and the public will benefit from
getting the service at the best possible price from the consumer's
point of view.
Senator HASKELL. If I recollect your prepared testimony correctly,
you felt that a public disclosure of operating statements or balance
sheets, I assume, would not be in the best interest of the operator.
Am I correct in that?
Chief MCGUIRE. We think we can go much farther than we have
gone in the past, Mr. Chairman. We think more can be disclosed than
we really thought possible in the past.
But there is a point here at which it becomes somewhat dangerous,
in our view, to go too far in disclosing some details that might tend
to put the operator at a disadvantage with his competitors both on
public and private land.
So I think we can find some middle ground here under the Free-
dom of Information Act that will serve the purpose.
Senator HASKELL. Would it be possible for you to describe the
middle ground?
Chief MCGUIRE. I think the details have been fairly well laid out
in a recent judicial interpretation of the Freedom of Information
Act involving concessions in the national parks.
Senator HASKELL. And this is your opinion? I mean I don't mind
your referring to a~ court as long as you are incorporating it in your
opinion.
Chief MCGTJIRE. This is also our opinion and we have talked to
our counsel about this as a way of defining what might be released
and what should not be released. As a result of this discussion with
our counsel in examination of this judicial interpretation, we feel
that either of two criteria must be used to determine confidentiality
of financial data on a case by case basis.
First: We must answer the question: Will disclosure of this par-
ticular item of financial data impair the Government's ability to
obtain future information from the operator. Second: Will discio-
sure cause substantial harm to the competitive position of the parties
supplying the data?
Senator HASKELL. Taking your first test, I assume the Government
in this particular case would have the right to get any information
it wanted to because it would make that a condition of issuance of
the permit. So that eliminates the first test.
So then we come to your second test and in your second test, would
you read it again, please?
Chief MCGuIRE. Will disclosure cause substantial harm to the
competitive position of the parties supplying the data?
Senator HASKELL. So that is the test that you would impose?
Chief MCGUTRE. That is correct.
Senator HASKELL. I would assume though that you would consider
the public has some right to know here? Or would you not assume?
Or is that an erroneous assumption?
Chief MeGuniE. I think the public has a great right to know.
Senator HASKELL. Thank you. We've established here that the
percentage going to local governments from ski areas are the same
as the percentage going to local governments from timber sales. Arid
yet it's my view-and I would like to know whether you share my
view-that a far greater impact comes to local areas from ski opera-
PAGENO="0349"
345
tions than from timber operations. Now do you share my view or
not?
Chief MCGUIRE. I think that is generally true, Mr. Chairman. Of
course, there are some small ski operations with just a rope tow. But
the typical good size operation has far more impact on the local
community.
Senator HASKELL. Chief, one thing occurred to me during the
hearings both in Aspen, Cob, and Denver, Cob, and that is that by
and large many areas because it may be to their financial best inter-
est to do so have put in very excellent, first-class, and very expensive
facilities. And this may or may not-I've never seen a financial state-
ment so I don't know-but let's assume it does mean that they must
make a charge for a ski tow ticket which is very difficult for the
average family to pay. And probably it does.
Do you consider that the U.S. Forest Service has any obligation
as a matter of policy to see that a ski area which is located near a
large population center-I want to emphasize that-has a balanced
set of facilities for which different charges might be made?
Chief MCGUIRE. We think we do have such an obhgation~ Mr.
Chairman. However, we are confronted with a variety of situations.
Sometimes it's better, or possible at least, to provide a. spectrum of
facilities by increasing the supply of areas accessible to the center
of population.
In other places, it may be possible to get a single operator to pro-
vide a spectrum of facilities. For example, a long time ago we im-
pressed on the ski area operators the need to provide more facilities
for people who do not ski-so-called now bunnies, for example. And
the industry has been quite responsive in providing those kinds of
opportunities.
Senator HASKELL. Assuming, and I don't dispute you in any way,
that there are certain times when one operator cannot for some reason
provide a spectrum-nevertheless, I gather it would be your opinion
that, near a large population center and assuming you had some
very high costs and high-class ski areas, it might be incumbent upon
the Forest Service to look perhaps with more favor to an applicant
who proposes to put in a low-cost facility. Would that be correct?
Chief MCGUIRE. That would be correct.
Senator HASKELL. Can you describe for the record, Chief, the meth-
odology employed by a given forest supervisor in determining wheth-
er a rate increase is or is not justified?
Chief MOGmEE. May I ask Mr. Loveridge to answer that question,
Mr. Chairman?
Senator HASKELL. I would be pleased.
Mr. LOVERIDGE. We don't have any specific formula as such. We do
recognize the opportunity for profit that he has experienced, his
managerial ability, the increased cost of doing business. We have
provided, in general, the guidelines that indicate that a permit would
not be required to charge less than somebody who was in competition
with him. We also provide an opportunity for reasonable profit.
We have described a particular level of reasonable profit as Mr.
McGuire just indicated. The comparability of areas as far as the
services and facilities that are provided, the more sophisticated
areas give a person more for their money and, therefore, warrant a
higher charge to the user than a small rope-tow type area.
PAGENO="0350"
346
They have higher costs involved, too. These are the kinds of con-
siderations that a forest supervisor utilizes when he looks at a re-
4uest for change in rates.
Senator HASKELL. Is the forest supervisor's decision reviewed?
Chief MCG1JIRE. The forest supervisor's decision can be appealed
under the administrative review process.
Senator HASKELL. Is there any automatic review of his decision
provided for within the regulations of the Forest Service?
Chief MCGUIRE. Only in connection with our general administra-
tive review of this whole recreation operation. We do this periodi-
cally when we look at all of his recreation and administration work.
But that's only done in a general way. And only every 4 years or so.
Senator HASKELL. Chief, you might want Mr. Loveridge to an-
swer this question. In applying these very generalized suggestions
that you made, Mr. Loveridge, do you require a financial statement
to be submitted which segregates tow operations from other opera-
tions?
Mr. LOVERIDGE. In preparing information to substantiate the
changes that might be required, we asked for the information that
relates to just that area that we are concerned with.
Senator HASKELL. And what is that area?
Mr. LOVERIDGE. The particular ski area itself and the profitability
of that ski area as it stands upon its own, not land sales or land
speculation.
Senator HASKELL. Have you, in your experience, ever audited a
statement submitted to you by a ski area?
Mr. LOVERIDGE. Yes, sir.
Senator HASKELL. Do you have in your department people-I
gather you must otherwise you wouldn't say it-who are competent
to do that?
Mr. LOVERIDGE. Yes, sir. We have very competent cost accountants
who periodically audit all of our concessioners' books.
Senator HASKELL. Would you submit for the record, Mr. Loveridge,
specific instances in which prior to granting an increase in charges
made to the public, auditors of the Forest Service audited the state-
ments submitted by the operator? Would you submit that for the
record?
Mr. LOVERIDGE. I think we can submit that for the record, sir.
Senator HASKELL. You would be able to, Chief?
Chief MGGUIRE. We will be able to do that, Mr. Chairman.
[Subsequent to the hearing the following was submitted:]
U.S. DEPARTMENT OF AGRICULTURE, FOREST SERVICE,
Washington~, D.C., January 2, 1975.
Hon. FLOYD D. HASKELL,
Chairman, Subcommittee on Environment and Land Re8ources,
U.S. Senate.
DEAR MR. CHAIRMAN: During the hearing on S. 2125, you requested that we
provide for the record specific instances where we conducted audits of ski
area records. We enclose a summary table of recent audits of ski areas in
Colorado, Washington, Oregon, California, and Wyoming. The table indicates
the general purpose of the audit which was usually to establish the level of
gross fixed asets and to verify revenue. We also indicate in the table whether
the audit could have been used to assess requests for an increase in prices.
Generally, the audits could aid in such an asessment; however, they were not
conducted solely for that purpose. The audits were conducted by government
employees in the professional accountant series at the GS-11 to GS-13 levels.
PAGENO="0351"
34.
If you need aditional information on the nature and extent of our audits,
we will be happy to discuss the matter further with you or the Committee
staff.
Sincerely,
HERB CAMPBELL,
(for John R. McGuire, Chaff).
Enclosure.
SUMMARY TABLE OF RECENT SKI AREA PERMIT AUDITS I
Could audit have
been used directly
or indirectly to
assess requests for
Ski area and location Period covered by audit Purpose of audit increased prices?
Aspen Highlands, Aspen Cob. White Nov 1, 1970 to Oct. 31, 1974_ Establish GFA2 and verify Partially.
River National Forest, R-2. revenues.
LTV Recreation Development, Inc., Jan. 1, 1972 to Dec. 31, 1974 do Do.
Steamboat Springs, Cob. Routt -
National Forest, R-2.
Alpental, Inc., Snoqualmie Pass, June 30, 1972 to Apr. 30, do No.
Wash., R-6. 1975.
Ski Lifts, Inc., Snoqualmie Pass, Oct. 1 1973 to Sept. 30, do Partially.
Wash., R-6. 1974.
HyakSkiCorp.,Hyak,Wash.,R-6 June 1, 1974 to May 31, do Do.
Stevens Pass, Inc., Stevens Pass, 1969 to 1972 do Do.
Wash., R-6. July 1, 1973 to June 30,
1974.
Mt. Baker Recreation, Co., Mt. Baker, 1970 to 1974 do Do.
Wash., R-6.
Mt. Ashland Ski Area, Jackson County, July 1, 1974 to June 30, Verify of revenues evaI~ Do.
Oreg., R-6. 1975. uated internal control.
South Oregon Ski, sublessee, R-6 Nov. 1, 1974 to Oct. 30, do Do.
1975.
Ski Shasta, Inc., Mt. Shasta, Calif., Jan. 1, 1972 to June 30, Verify revenues and GFA Could have been
R-5. 1975. update. used to review
fee increase.
Kirkwood Meadows, Inc., Kirkwood May 1, 1974 to Apr.30, 1975 Establish GFA and verify Could help in part
Meadows, Calif., R-5. sales revenues, to review rate
increase request.
Cooper Mountain Inc., Wheeler Junc- Jan. 1, 1973 to Apr. 30, 1974 Verify revenue and update Partially.
tion, Cob., Arapaho National Forest, GFA.
R-2.
Keystone International, Inc., Keystone, June 1,1972 to May 31,1974 do Do.
Cob., Arapaho National Forest, R-2.
Geneva Basin Ski Corp., Grant, Cob., July 1, 1970 to July 31, 1974_ Verify revenue Do.
Pike National Forest, R-2.
Monarch Winter Sports, Inc., Garfield, June 1, 1969to May 31, 1974 do Do.
Cob., San Isabel National Forest,
R-2.
Cooper Hill Ski Area, Leadville, Cob., Jan. 1, 1969 to May 31, 1974 Establish GFA and verify Do.
San Isabel National Forest, R-2. revenues.
Wolf Creek Ski Area, South Fork, Cob., July 1, 1969 to June 30, 1974 New permit Do.
Rio Grande National Forest, R-2.
Ski Happy Jack, Inc., Laramje, Wyo., Aug. 7,1970 to May 16, 1974 Establish GFA-verify and Do.
Medicine Bow National Forest, R-2. establish new 5-year flat
fee.
Lake Eldoro Corp., Nederland, Cob. July 1, 1972 to June 30, 1975 Establish GFA and verify re- Do.
Roosevelt National Forest, R-2. ported revenues.
Durango Ski Corp., Durango, Cob., San Oct. 1, 1971 to Sept.30, 1974 do Do.
Juan National Forest, R-2.
Horn Ski Corp., Grand Junction, Cob., May 1, 1972 to Apr.30, 1974 Update GFA and verify rev- Do.
Grand Mesa National Forest, R-2. enues.
Winter Park Recreation Association, May 1, 1973 to May 4, 1974 do Do.
Winter Park, Cob., Arapaho National
Forest, R-2.
Pikes Peak Ski Corp., Colorado Nov.1,l97OtoOct.31,1974 Establish GFA and verify Do.
Springs, Cob., Pike National Forest, revenues.
R-2.
Berthoud Pass ski area, (operator) Oct. 1, 1973 to Sept. 30, Update GFA and verify re- Do.
Anderson Concessions, Inc., Ber- 1974. ported revenues.
thoud Pass, Cob., Arapaho National
Forest, R-2.
Bosen, Inc., Dillon, Cob., Arapaho Julyl,l973toJune3O,1975 Establish GFA and verify Do.
National Forest, R-2. revenues.
Vail Associates, Vail, Cob., White River May 1, 1973 to Apr. 30, 1974 ~do Do.
National Forest, R-2.
i Audits were conducted by a Government employee in the professional accountant series at the GS-11 to 13 level.
2 Gross fixed assets.
PAGENO="0352"
348
Senator HASKELL. Now, I gather really that, Chief, you are not
concerned about this 80-acre, 30-year permit and one year supplemen-
tary permits despite the judicial decisions concerning that Alaskan
pipline and the Monangahela National Forest in West Virginia. I
realize you are not a lawyer but your counsel doesn't indicate any
concern.
Chief McGuniE. Our counsel does not indicate concern. Of course,
we would prefer, in a bureaucratic way to have complete discretion.
But we have lived with this arrangement for many years. It's worked
fairly well.
Perhaps Congress would want to consider some higher ceiling than
80 acres. That would certainly be satisfactory. But we still probably
need to use the dual system.
In any event, we have now some ski areas that require over 6,000
acres. Others being contemplated might go up to 13,000 or 14,000
acres. If there are new developments in consumer preferences here;
for example, if cross country skiing became even more popular, I can
see where we might require 20,000 or 25,000 acres under some kind
of permit. Also, it would be easier administratively to have all of
the area under one permit.
Senator HASKELL. Thank you. I gather that your counsel is pretty
optimistic about the outcome of the pending litigation. Don't answer
that question. You don't have to.
Chief MCGUniE. It depends on what lawyer you are talking to.
Senator HASKELL. That's right. I have no further questions at the
moment. Senator Fannin.
Senator FANNIN. Thank you, Mr. Chairman. And, Chief McGuire,
I am glad to have you with us here today. We know some of the
problems which seem to be current in Colorado. The distinguished
Senator from Colorado has them to contend with; and I wish we
were blessed with them in Arizona. We need some of these problems
of greater impact to certain areas. We need the business.
But seriously, one of our most serious problems in the State of
Arizona is having some ski areas that are not profitable. If you have
a formula on your percentage basis, it's going to almost make it im-
practical for them to operate.
At least, I'm wondering if you operated on a percentage basis do
you feel they would be entitled to earn more because they've had
some loss years-how do you handle those years after they do get
into the profit side?
Chief MCGUrRE. Well, we try to average them out, Senator. We
recognize this problem. It's peculiar not only to Arizona but to other
parts of the country. Some areas just don't have a good season every
year. And we attempt to recognize that fact.
Senator FANNIN. So you do average it out. There is a basis for
it. I would think it would be very unfair not to do so inasmuch as
they may have one profitable year in three. I know that we have
gotten one out of two and I think sometimes it's one out of three that
we almost expect.
I may feel a little differently because of the particular situation
in Arizona but I do not feel that the Congress has neither the time
nor should they devote their efforts to reviewing all of these different
programs that you initiate and on which you issue permits.
PAGENO="0353"
349
Mr. Chairman, maybe I differ from you because of my different
situation but we are looking for the Forest Service to do more in
the way of encouragement of holding back these permits.
So perhaps, I would not be in the same position as the Senator
from Colorado. I think that we have our work to do and we set out
the guidelines. And then I feel that you should carry through. And,
of course, you bring out the constitutionality of the issue. I'm not
going to argue that. But just from the standpoint of practicality, I
think it would be on your side.
Now I do have some other questions-that are along the same line
when you are talking about what you charge, and the basis of 2 per-
cent of appraised value of nonprofit organizations. And you charge
commercial users the 5 percent. However, the basic 2 percent charge,
sometimes, is rather devastating to some organizations-I'm taking
information from a letter that I wrote to Secretary Butz and I
think a copy to you regarding a particular problem we had and I
would ask the Chairman if he could just permit me to bring this one
matter up because I think it does pertain to the 5 percent and the 2
percent and what is involved. The Forest Service reappraised the
value of two Boy Scout campsites in Arizona.
The amounts jumped from $61 to a new charge of $1,138 on one
campsite. And from $71 to $3,086 on another.
It seems to me there would be a greater consideration of just what
is involved. 1 think this has been brought to your attention by this
letter and also by others. Raising the fees so substantially is certainly
going to be prohibitive to the average Boy Scout. I just wonder if
you have any comments in that regard.
* Chief MCGTJIRE. I'm familiar with that letter, Senator Fannin.
And we have suggested that one* way of reducing the fees is to reduce
the area under permit. The surrounding area could still be used by
the Scouts. We have the general problem here of equity.
Of course, many Boy Scout councils do not benefit from the use
of the national forest. To be fair, if we are going to make special
concessions, we ought to see that all the Scout councils benefit equally
rather than those that happen to have a particular geographic ad-
vantage. We think there are ways of bringing these fees downs but,
as long as land values keep going up, the Scouts are going to have
to face reality that their costs are going to rise.
In the past we have encouraged councils to acquire private land for
base facilities and to use the national forest just like any other citi-
zen. Thereby they may avoid this problem of continuing escalation
of cost. That may be one way.
In this particular instance, I think we can bring the fees down
substantially by reducing the size of the area under permit.
Senator FANNIN. Excuse me. I don't think your analogy that one
council would be opposed to giving a privilege to the Scouts under
another council is correct. There are other advantages that the par-
ticular council would not be involved. And the forest lands might be
involved in some other particular governmental program in which
they have advantages. So I would think that any considerations you
would give to one council would be appreciated by the others.
PAGENO="0354"
350
Chief McGunu~. Well, probably so, Senator. I'm just saying-
Senator FANNIN~ I don't think it's a competitive proposition in
that regard.
Chief McGunu~. We have to find some way of distinguishing be-
tween the different kinds of organizations. Now to those, for exam-
ple, that concentrate their activities on the underprivileged or the
handicapped, we would give a greater discount to than to. those who
did not do that. I think we can find some way of living with this
particular problem.
Senator FANNIN. As I understand it, I certainly would have no rea-
son to be opposed to other groups that take care of youths or take
care of the handicapped being given privileges. But I do think the
Federal Government-we have an obligation to try to encourage
these programs and where we have this chance without any burden
upon the department involved, I think we should go forward.
And I just hope that we can. I just bring that up because I was
rather shocked when I saw the percentage of increase that came
about and realizing that the Scouts and all other youth organizations
and the organizations servicing the handicapped and others certainly
do not have the funds to carry through with their programs. So this
is just one way in which the Government could assist without any
undo burden.
I would hope you would give this every consideration and I'm
pleased to have your explanation that you have considered it. As I
understand it, they would be privileged to utilize the other areas but
they would be brought down to a certain size space for their en-
campments and facilities of that type?
Chief McGunu~. That's the approach which we have recommended~
Senator. We think that probably they do not need exclusive use of
the entire large area they have had in the past.
Senator FANNIN. Thank you very much. Thank you, Mr. Chair-
man.
Senator HASKELL. Just a couple of more questions.
Chief, at the Denver hearings, if my memory serves me
correctly-at least, this is counsel's recollection so I'll adopt his recol-
lection as mine-only somewhat less than 50 percent of ski school
instructions were certified by the appropriate ski instructor's
association.
Now, does this disturb you at all that the public are being taught
by people who don't have the proper-
Chief MCGUIRE. We have been talking to the professional ski in-
structor associations for some time about this particular problem.
I believe we are in fairly good agreement that there are advantages
in having uniform methods of ski instruction in order that the skiers
can move freely from one region to another and continue their in-
struction.
However, we think that the way the association is going, that is~
the professional ski instructors' association, in not requiring their
members to limit their instruction to one technique is satisfactory.
Because a person who wants to try some other technique can always
PAGENO="0355"
351
go to some other area and find that technique there. The ski instruc-
tors have done a pretty good job of recommending to the students
where they might go for ~ different technique.
Senator HASKELL. I'm no expert on this but as I understand it,
the professionals are certifying people as to their ability to be in-
structors. And I must say that it's a little bothersome to me if the
facts are supported that over 50 percent of the people who are actu-
ally teaching members of the public don't have the certification of
their professional organization.
Assuming those facts to be correct, would this concern you at all?
Chief MCGiuRE. As long as the public knows what it's buying, I
don't think I would be too concerned here.
Senator HASKELL. Maybe they should put signs up, "not certi-
fied?"
Chief McGuniE. Well, I think those who are certified would prob-
ably advertise that fact and the consumer, a wise consumer, would
look for that certification.
Senator HASKELL. Caveat emptor, as I recall it.
Chief, in regard to the same area of certification, I addressed a
letter to you on October 29 asking you to consider as a matter of
policy, not as a matter of legality or authority provided the Forest
Service, whether or not you should issue with appropriate restric-
ions permits to allow individuals to teach who are properly certified
but who are independent of area's ski schools.
Have you come to conclusion as to what your answer to my letter
might be?
Chief MCGUIRE. We have not yet come to a conclusion, Mr. Chair-
men. We are taking a look at that both from the policy side and the
legal side.
The additional reason for getting into this subject is that the courts
have remanded to the Secretary a case which is now before the lower
court.
Senator HASKELL. You realize that I'm not asking you to express
an opinion as to whether you can refuse to issue a permit.
My question is, as a matter of policy is it desirable or not desirable
to issue such permit.
Chief MoGimiE. That is the question that we are looking at.
Senator HASKELL. Well, I would appreciate an answer as soon as
you can arrive at it.
Chief McGrrnu~. We hope that perhaps we can have an answer in
~January of next year.
Senator HASKELL. This is going to be a little late to let some of
those folks teach this coming winter, isn't it?
Chief McGtrniE. That's true, sir. But on the other hand this is quite
an important question.
Senator HASKELL. I think when you put that together with the fact
that apparently 50 percent of the people who are teaching don't have
certifications, I would say it's very important.
Well, I thank you, Chief. I think we will keep the hearing record
open for the 2 weeks. I may have some questions, Senator Fannin, or
PAGENO="0356"
352
other members of the committee may have some questions to address
to you. Thank you.
[The October 29, 1975, letters from Senator Haskell to Chief
McGuire and his November 13, 1975 response which was received after
the hearing are set forth below:]
U.S. SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washington, D.C., October 29. 1975.
Hon. JOHN R. MCGUIBE
Chief, Forest Service, Department of Agriculture,
Washington, D.C.
DEAR CHIEF MCGUIRE: As you will recall on March 25, 1975, I co-signed, with
Senator Hart and Representative Schroeder, a letter concerning the case of a
Colorado resident, Don Lemos, and the issue of whether independent ski instruc-
tors s~iould be permitted to teach at ski areas on national forest lands. This issue
arose again during the recent public hearings on S. 2125 in Aspen and Denver,
Colorado. As a result of those hearings, I am writing to urge the Forest Service
to consider implementation, before the coming ski season, of procedures allow-
ing qualified independent ski instructors to teach on areas of the national forest
under permit for ski activities and facilities.
I realize that a case is pending before the District Court in Denver to deter-
mine whether the Forest Service has the legal right to deny access to such ski
areas for independent ski instructors. I understand that this case has been re-
manded by the Circuit Court to the District Court for a rehearing and that the
State has filed a petition to intervene on behalf of the independent ski instruc-
tors. But I consider the overriding issue not to be. one of legal right but rather of
the right policy. I cannot believe it is in the public interest to deny properly
certified independent ski instructors access to national forest lands to practice
their profession, thereby denying the public the freedom to select the ski in-
structors and instruction techniques of their choice and to make that selection in
a situation where price competition prevails.
The testimony at the October 4 and 6 hearings on 5. 2125 has led me to conclude
that the public would be best served by a policy permitting independent ski
instructors to compete freely for students. Such a policy would, of course, require
access to ski facilities located on national forest lands. I might add that those
advocating such access for independent ski instructors have set forth a very rea-
sonable set of conditions concerning, among other things, certification, liability
insurance, limitations on group instruction and advertising. I believe these would
answer most, if not all, objections raised against independent ski instructors.
They would insure highly qualified ski instruction on national forest lands and
would minimize any detrimental economic impacts which independent ski instruc-
tion might have on the holders of ski activities and facilities permits.
Your prompt and favorable attention to this matter would be greatly appreci-
ated. A you know, we have scheduled an additional hearing on 5. 2125 for
November 17. As you or your representative will likely wish to testily at that
hearing, I suggest that a response from you prior to that date would be beneficial
to both of us.
Best wishes,
Sincerely,
FLoYD K. HASKELL,
Chairman, Subcommittee on
Environmental and Land Resources.
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353
U.S. DxPABTMENT OF AGRIcuI~ruRE,
FOREST SERVICE,
Washington, D.C., November 18, 1975.
Hon. FLOYD K. HASKELL,
Chairman,, Subcommittee on Environment aiul Land Resources, Committee on
Interior and Insular Affairs, U.S. Senate.
DEAR SENATOR HASKELL: This is in reply to your October 29 letter suggesting
that the independent ski instructor question is not so much a matter of legal
right, but rather the right policy.
As you noted in your letter, the matter of Sabin vs Butz (Don Lemos) is still
before the court. The appropriateness of the policy is the specific matter before
the court `at this time. Although we do not have a copy of a recently issued court
order on the subject, we expect to receive it soon. We understand, however, that
it requires a reexamination and reconsideration of our single operator policy and
the application from independent ski instructors.
We believe that our current policy was well thought out and has been sustained
over time. We will, however, be looking at the whole matter again and, in SO
doing, will determine whether there are other factors to be considered. We will
be responsive to the court and your request that we consider the issue. Decisions
on this matter will hopefully be made before the next ski season.
We appreciate your expressed concern and the fact that this was brought to
your attention during the recent Colorado hearings. Since the question before
the court Was brought by those interested in independent ski instructors, it should
run its course in that forum.
Sincerely,
JOHN R. MCGTJIRE, Chief.
Chief MCGUIRE. Thank you, Senator.
[The prepared statement of Chief McGuire follows:]
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STATEMENT OF JOHN R. McGUIRE, CHIEF, FOREST sERvrcE,
U.S. DEPARTNENT OF AGRICULTURE, BEFORE THE SUBCOMMITIEE
ON THE ENVIRONMENT AND LAND RESOURCES, COMMITTEE ON
T~TtWIOR AND INSULAR AFFAIRS, SENATE, ON PERMITS FOR
COMMERCIAL OUTDU REc~REATION FX~T[ITIES, S. 2125,
~FF1OVEMBER 17, 1975.
MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
I welcome this opportunity to appear before the Committee to discuss
the Forest Service policy, procedures, and authority for the issuance of
permits for commercial outdoor recreation facilities and activities.
As you are aware, outdoor recreation is a major activity on National
Forest System lands. Much of the recreation use is afforded through the
use of trails, streams, and the natural environment of the forest. To
complement this use the Forest Service administers a wide range of
facilities for camping, picnicking, boating,' swimming, and winter sports.
In many areas, we cooperate with the private sector to provide
needed facilities and services. Use of National Forest lands is authorized
under a permit system. We now administer about i900 concessioner permits
for the construction and/or operation of recreational facilities and
services. This involves about $270 million of privately invested capital.
The major part of this investment is in winter sports areas. The National
Forests are the largest suppliers of skiing in the country with some 216
winter sports areas.
I would like to discuss briefly some of the aspects of our
administration of concessioner permits. Since we recommend that S. 2125
not be enacted, 1 will tie this discussion to our concerns with S. 2125.
The provisions of 5. 2125 would primarily affect ski area permits;
therefore, I ~iil concentrate my discussion on that area of pormit
administration.
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2
Present Authority
The Act of June 4, 1897, authorizes the Secretary of Agriculture to
regulate occupancy and use of the National Forests. We view this
authority as authorizing us to issue a permit for any proper and lawful
use. Such permits are revocable at the Secretary's discretion. In
addition, the Act of March 4, 1915. authorizes the Secretary of Agriculture
to issue permits for the use and occupancy of suitable areas of land for
the purpose of constructing hotels, resorts, or other recreation facilities.
Permits issued under this authority may cover areas of land not exceeding
80 acres and may be issued for periods of not more than 30 years. We
use both the 1897 Act and the 1915 Act as authority for the issuance of
permits. In the case of an extensive winter sports area, a permit issued
under the 1915 Act would cover the major fa~ilities and an additional permit
issued under the 1897 Act would cover the larger area and associated
dispersed facilities. The combination of authorities has proved sufficient;
therefore, we have not sought new authority to modify the 80 acres, or 30-year
limitations contained in the 1915 Act.
In addition to the 1897 and 1915 Acts, we also rely on the Act of
April 24, 1950, to provide authority to allow the use of structures owned
by the government. ~rhis situation exists on less than two percent of the
concessioner permits and on only two ski area permits. The two ski areas
where Federally-owned structures are involved are the Timberline Lodge in
Oregen and Caberfae in Michigan. The permits for these two areas are based
on a combination of the 1915 Act and 1950 Act authorities.
Procedure for Review and Approval of Permits
The provisions of section 3(a) and (b) of S. 2125 which provide for
Congressional review and publishing of regulations appear to be directed
PAGENO="0360"
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3
at a concern that proposals for major ski developments be subject to
open p~iblic review and complete analysis of potential beneficial and
adverse effects prior to issuance of the permit. Such proposals are now
subject to detailed agency analysis and public review. Under guidelines
issued pursuant to the National Environmental Policy Act, proposals with
significant environmental impacts are subject to a complete review and
analysis including the preparation of environmental statements. Through
this process officials of State and local governments, interested agencies
and individuals are kept informed and given an opportunity to review and
comment on proposed actions. We view this review process as providing
the needed input by interested parties in the consideration of proposed
ski developments.
In addition, we object to the provisions of section 3(a) which would
allow the Committee on Interior and Insular Affairs by a disapproval
resolution to prevent the issuance of permits involving 1,280 to 5,000
acres and the further requirement that permits involving more than 5,000
acres could-not be issued until the Committees had adopted a resolution
of approval. The Department of Justice has consistently found that
similar requirements are unconstitutional. The Department of Justice
testified against similar provisions as recently as May 15, 1975, in
appearing before the Senate Subcommittee on Separation of Powers of the
Judiciary Committee.
Fee System
In the past, fees paid to the Federal Government were based on a
percentage of net sales. In some cases, these fees were converted to a
single flat. fee. During the early 1960's we determined that the application
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4
of a single percentage rate against sales developed inequitable fees. After
an exhaustive study of concession operations a new system of determining
fees was instituted in 1968. Major implementation of the new system to
winter sports operations began in 1972. Because of the long-term nature
of these permits, it will be a number of years before all the permits are
converted to the new system. The new system considers the amount of
sales that are generated in relationship to the concessioners gross fixed
assets in structures, fixtures, and equipment needed to generate income.
Minimum rates have been set which are applicable to all permits. Starting
with a minimum, rates progress upward as sales rise in comparison to gross
fixed assets. Rates as established give the concessioner an opportunity
to realize approximately 15 percent profit a,t a level when his sales are
equal to twice the operating costs. This level of profit has been
calculated based on national averages and would apply to a concessioner
of average operating efficiency experiencing a normal season. The system
neither guarantees nor limits the profit of an individual concessioner.
It does, however, return a reasonable land rent to the landowner commensurate
with the value of the use authorized.
We are concerned that sections 3(c)(l) and 4(c) of S. 2125 would base
the annual fees and allowable charges on equity investment.' Development
of a fee system based on equity investment would require a major revision
of our present system. We are not aware of any advantages which would
result from such a revision. We strongly urge that the present fee system
be retained. We believe our present system meets the direction set forth
in the Independent Offices Appropriation Act of 1952 and the Executive
direction issued pursuant to that Act.
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Permittee Charges and Public Information
Section 4 of S. 2125 provides that all data supplied by a permittee
relating to a proposed increase or decrease in charges to the public be
made available for public inspection. We believe the broad disclosure
of all financial.information required in section 4 could act as a
deterrent in securing further private investment in developing needed
public recreation facilities. The Freedom of Information Act as amended
now applies to the availability to the public of such information. We
strongly prefer that information on all permits be handled under the
existing law.
With regard to the review of permittee charges for services and use
of facilities, the terms of existing permits specify services to be
provided and provide for our approval of cha'rges and inspection of the
quality of service. We view this approach as sufficient to protect the
public interest.
Improvements and Extension or Renewal of Permits
Structural improvements on Federal lands are the property of the
permittee and may be sold on permit termination or be removed by the
permittee. Many Forest Service permits have experienced a change in
ownership and in nearly all cases a permit was issued to the new owner.
In a few cases, improvements have been abandoned and have become the
property of the United States.
Under present authorities, no extension or renewal beyond the permit
term is stated or implied. However, upon the expiration of the permit, if
the use responds to a continuing public need and is consistent with established
land use objectives for the area and if the permittee has fulfilled his
PAGENO="0363"
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6
obligations, a new permit is normally issued to the owner of the improvements.
In those situations where it is necessary to terminate a permit during
its term for another use, the Federal Government obligates itself to
pay an equitable amount for the privately-owned improvements. This
obligation is expressed in each permit issued under the 1915 Act. We
have seldom found it necessary to terminate a permit during its term
except by mutual consent.
The provisions of S. 2125 with regard to improvements and renewal
or extension of permits would not substantially change present procedures
under the 1915 Act. We believe it is important to maintain the present
Secretarial discretion to specify the specific terms and conditions in
each permit with regard to improvements and duration of permits.
Mineral King Valley
We do not support the provision in section 9(b) of S. 2125 which
would exclude the Mineral King Valley from the provisions of the proposed
legislation. It appears that section 9(b) is intended to be the controlling
provision and override the sole authority provision in section 7; thus,
any permit for ski activities or facilities in Mineral King Valley would
have to be issued under the 1897 and 1915 Acts. We believe all areas should
be subject to the same basic law. . .
This concludes my formal statement. I will be happy to respond to
questions you may have.
PAGENO="0364"
360
Senator HASKELL. Our next witness is Mr. Gilbert Butler, vice
president, investments division, Morgan Guaranty Trust Company,
New York.
STATEMENT OP GILBERT BUTLER, VICE PRESIDENT, TRUSTS AND
INVESTMENTS DIVISION, MORGAN GUARANTY TRUST COMPANY,
NEW YORK, N.Y.
Mr. BUTLER. Senator Haskell, other members of the committee and
staff members, I am Gilbert Butler, a vice president of the Morgan
Guaranty Trust Company of New York's Trust and Investment Di-
vision. Our division manager over $20 billion of assets, and I head
a subgroup managing pension fund investments in long-term corpor-
ate loans and real estate, all of which totals about $1 billion.
We have been an investor in the U.S. ski industry for about S
years. We have invested in the Greater Park City Co., which operates
a ski area on privately owned land and we own common shares and
convertible debentures of Vail Associates Inc., and common shares
of Aspen Ski Corp.
These investments cost our pension ~fund clients about $10 million.
The current market value of these investments currently is substan-
tially less, and we have a large unrealized loss to date of these invest-
ments.
I am delighted and honored to comment on the draft bill as I think
that it is important to all affected by it to revise the current out-
moded and impractical way of doing business betweenthe U.S. Gov-
ernment and the ski industry. To the extent that I can be helpful
to you in developing a more suitable arrangement for leasing Forest
Service lands to responsible ski operators, I would hope to aid in
accomplishing the following achievements.
One: Substantially increase revenues to the U.S. Government and
State and local governments through increased lease revenues and
income tax collections.
Two: The opportunity for the ski industry to achieve a return on
investment high enough and sustainable enough to attract needed
private capital.
Three: Develop enough new uphill ski life capacity to meet the
demand of the American skiing public and forestall a serious capac-
ity shortage which is rapidly developing. Such a shortage could
drive our skiers abroad at a detriment to our balance of payments
and deprive them of one of their more favorite uses of National
Forest lands.
I wish to be brief and will comment only on those provisions about
which I feel capable of contributing some expertise based on our
years of experience as perhaps the largest long-term institutional in-
vestor in the industry.
Certainly, the most important reform introduced by the draft bill
is putting the lease on a 50-year basis. Without this provision it is
difficult and overly expensive to raise long-term debt. It also makes
equity financing difficult since there is always the risk that the equity
investment will become worthless if a short-term permit is not rolled
over.
PAGENO="0365"
361
In turn the problem of raising a proper equity base increases the
~difficulty and cost of borrowing funds. The bill quite correctly pre-
serves the right of cancellation of a lease by the government if there
is a breach of contract by the operator. The bill's condemnation pro-
vision is a step in the right direction. By condemnation, I mean the
awards of the leases not renewed or canceled.
But the compensation formula should he revised to reflect the
economic value of a going concern. If a pension fund, for example,
paid $10 a share for Vail stock because it was earning say $1.25 and
the Vail leases were canceled, total compensation of say $2 per share
representing the cost of steel and concrete wulod not be regarded
as fair cmpensation.
In fact nonrenewal or lease cancellation would be a financial dis-
aster and the fear of it should be mitigated through an objective set
of automatic renewal criteria. Renewal should be provided for at
least 10 years prior to expiration of the initial term. This would
facilitate financing by the operation in the decade preceding expira-
tion of the initial lease.
Obviously, if a lender sees the lease is going to run out in 5 years,
he's not going to make a 10-year loan.
The testimony of Mr. Wade. Kennedy and Mr. Tom Swanson of
the Denver bank have argued this point well enough so that I do
not need to elaborate.
The draft bill correctly expands the acreage permitted under a
ski area lease to recognize the requirements of a modern economic
ski area. No further comment is needed for me on this important re-
form.
I am pleased to have been told that it is intended to withdraw the
clause requiring the permit fees be computed on the bsis of "a rea-
soriable return on equity investment." Such a clause would confirm
that the government was regulating the industry.
This, in my opinion, would close down the industry to long-term
sources of capital. In such case, either the Government would have
to finance new ski developments or the growing capacity shortage
would become so acute that skiers would have to go abroad or face
horrendous lift lines and overcrowding.
The ski industry on the whole is not very profitable and the Gov-
ernment is not qualified to determine rates of return in this industry.
Let the less adept go broke and let the best have an open-ended op-
portunity to make a profit for their shareholders.
The most important reform that is now needed, which is not in-
corporated in the draft bill, is the need to remove all control of lift
ticket pricing from the Government. As a guid proquo the fee sched-
ule across the country should be raised to a scale that imposes a 5-
percent fee on all lift ticket revenues for mature western ski areas.
New areas and less profitable eastern areas could be scaled down
from this level and fees on nonlift ticket income should also be scaled
down.
There would result a large increase in revenues to the Government
not only from increased rents but also from increased income tax col-
lection. Remember the IRS and the States are .50 percent partners
in the pretax income. The destination skiers will benefit by having
67-512 0 - 76 - 24
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362
increased capacity which can only be financed by higher retained
earnings.
Institutions will lend more money to ski areas if the income avail-
able for interest coverage rises to prudent levels. The. number of skier
days in the western States is growing rapidly, perhaps doubling in
the next `1 years. Few, if any, new areas are on the drawing boards
except for Vail's Beaver Creek. Several areas are on the verge of
bankruptcy and cannot finance new lifts.
If, say, the most popular areas lift their daily ticket prices from
$11 to $12 in a free pricing environment, the cost of a 2-week skiing
vacation for a. New Yorker which is now say $1,000 will increase by
$14 or 1.4 percent.
Destination skiers will prefer this to having their large vacation
expense wasted in the future by long lift lines, skied-out mountains,
and an overcrowded environment. The only people who will not
benefit are the locals at the most popular areas that can raise prices.
However, the locals at less popular or more unknown areas, like
Teluride, Cob, will gain business which they desperately need as
the higher cost areas lose customers seeking better values.
In any case, it is improper to subsidize cheap skiing for the locals
in the most successful ski areas at the expense of increased revenues
for the United States and State Governments and the financing of
new capacity.
The local real estate owners and business community have pros-
pered from the large investments of the most successful *ski area
operators and the latter should not be forced to subsidize the former's
labor costs by giving cheap tickets to their employees. The local
market is an important one for the ski areas which should be allowed
.to make their own pricing packages to service this market.
It is not by coincidence that regulated industries have become
synonymous with financially troubled industries. These are anathema
to investors and lenders and a pain in the neck to the Government.
Since the ski industry is not a monopoly situation involving a neces-
sary service, the Government should concentrate its supervision here
on the necessary areas of environmental factors, safety, and a fair
financial return on forest lands leased out to responsible operators.
One other suggestion that I strongly urge for this landmark bill
is that a maximum lease rate be set as a percent of lift ticket revenue.
In other words, that the maximum rate could be 5 percent. That
should not be increased over the term.
The advantages of a long-term lease will be emasculated if the
Government is free to raise rates beyond a set maximum, which I
suggested would be set at 5 percent. A long-term lender could see
his interest coverage seriously reduced if the percentage lease rate
were raised. An equity investor after years of trying to break into the
black or investing a large amount of money in expansion could have
his profit taken away by a rent ra.te increase.
Thank you all for giving me an opportunity to testify on the draft
bill. It represents a lot of hard work and study and forms a basis
for introducing badly needed reforms. If I can be of any further
assistance, please do not hesitate to call on me.
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363
Senator HASKELL. Thank you very much, Mr. Butler. I gather
you would endorse at least a portion of the bill which would increase
the geographical scope of the permit beyond 80 acres.
Mr. Btrru~R. Aboslutely.
Senator ITASKELL. Assuming, and your bank has loaned money to
ski areas as you've testified-
Mr. BUTLER. Right.
Senator HASKELL. Assume that the geographical area of the permit
were broadened beyond the 80 acres; what would be the effect on the
interest rate that your bank would charge ski areas?
Mr. BUTLER. Unfortunately, you can't take any one area out of
context for the whole package. Just like in evaluating any company
and any industry. There's no one thing that would certainly help.
And your recommended lengthening of the lease term is extremely
important also. Both of those would help.
Senator HASKELL. You can't say whether or not it would increase
or decrease interest rates?
Mr. BUTLER. No, not by itself.
Senator HASKELL. Thank you very much. I have no further ques-
tions.
Senator FANNIN. Thank you, Mr. Chairman. I commend you for
your statement, Mr. Butler.
I think I understand your intent on the first page where you have
three recommendations. But it would seem to me that they oppose
each other, especially No. 1. You mention substantially increased
revenues for the U.S. Government and State governments through
increased revenues and income tax collection," and in the next one,
you indicate you did not intend to infer that there would be addi-
tional facilities that would be made available; and that you would
expand the amount of land to be leased.
Is that what you intend?
Mr. BUTLER. Well, by allowing the higher return on investrne~nt,
I tihnk it would encourage more investment.
Senator FANNIN. So you would have a greater number of facilities
available?
Mr. BUTLER. Right.
Senator FANNIN. Well, that ties together. But unless you tie it
together with the increased number of facilities that would be made
available, it would seem it would work in reverse. I understand now
that they do not expect to collect additional income tax from the
present operators nor do you expect-
Mr. BUTLER. Yes sir. They were deregulated and they could raise
prices-
Senator FANNIN. I agree with you on that but you feel that addi-
~iona1 facilities will really bring in the increased revenue from
leasing. You are not advocating-
Mr. BUTLER. Both. I mean if rates go up 10 percent then the
Government share to the leasing arrangements, say 5 percent, will
go up just from the old areas.
Senator FANNIN. If the old areas are deregulated. -
Mr. EUTLER. Right.
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364
Senator FANNIN. And could operate more efficiently and to a
greater advantage, of course. The number of people served and all
that, your figures would work out.
I thank you very much, Mr. Butler.
Senator HASKELL. The next witness is Sherman Adams, Loon Moun-
tain, Lincoln, N.H.
STATEMENT OP SHERMAN ADAMS, REPRESENTING LOON
MOUNTAIN RECREATION CORPORATION, LINCOLN, N.H.
Mr. ADAMS. Mr. Chairman, my name is Sherman Adams. I live
in Lincoln, N.H. I appear here as president of the Loon Mountain
recreation proposition, a middle-sized ski area and general recrea-
tion area in the upper central part of my State.
I ask the chairman permission to revise and extend my remarks
in respect to the subject bill.
Chairman HASKELL. Certainly. And the hearing record will stay
open for 2 weeks for that purpose.
Mr. ADAMS. Mr. Chairman, I have, as you may know-have had
some experience in the business of Government. Prior to that for
25 years I was actively engaged in the harvesting and the sawing
and the pulping of national forest timber. Actually, this experience
began somewhat over 50 years ago. And I've had a fair, close as-
sociation with the Forest Service. And at one time a position with
the Forest Service and particularly with regard to timber sales and
the method by which timber is offered to the public and the condi-
tions of the subject contracts are and were formally very familiar to
me.
I was speaker of the New Hampshire House, a member of the
`T9th Congress. I served two terms as Governor of New Hampshire
and was for 6 year assistant to the President of the United States.
Mr. Chairman, I would like to as indicative of the concern which
is expressed by the Senator as to the profitability of the industry
to say that it is very difficult for a witness from New England-
New Hampshire being of an area that probably could be com-
fortably incorporated in one of your state's counties and with some
territory, perhaps, left over to organize my remarks from the point
of view of a person who lives in a small State that represents a
rather important segment of the economy and of that-I mean
obviously the recreation industry.
I once asked your governor what the most beautiful place in the
world was and he said without hesitation it was Loray, Cob.
I replied obviously that he hadn't seen the White Mountains.
Senator HASKELL. He hadn't been to White Mountain I gather.
Mr. ADAMS. Where the wind has been known to blow at something
like 230 miles per hour or the highest wind velocity that's ever been
recorded in the world.
I think that's our only distinction. While we can say that it's
superlative, that we are the tops.
Mr. Chairman, we have four areas in my State that are all or
partially located on national forest land. And they would be in
the order in reference to the three areas that you have mentioned in
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Colorado; 1 to 10 or 1 to 12 in the size of their income and their
skier day populations. That gives you some idea of New England
and the skiing world in total and the total number of skier days is
rather important to the State in which these areas exist as indeed
is in Vermont where I was born. And along the Atlantic seaboard
from the Appalachians to the White Mountains, there are 350 ski
areas in operation. And there are 30-approximately 30- in my
State.
I repeat, only four of which are located partially on public land.
I would like to put into the record, if I may, that in the case of
my own company in the year 1965; I organized a corporation for
the purpose of building and maintaining and operating a ski area.
And during 9 years, the total lifting and sales have been slightly
over $5 million. And the net or the retained earnings are 6i/2 percent
of that figure. And of the total income, that figure, $6 million,
$516,000 or 5 percent.
As that bears to the total fixed assets, that would be approximately
2 percent of returned earnings of the total fixed assets, about $2
million.
Now, Mr. Chairman, this may not be typical, but in my opinion,
this area has probably done as well as any area in the Northeast
so far as profitability is concerned. After the difficulty that we had
in 1974 in respect to the fuel and energy situation, there were several
bankruptcies in New Hampshire and in the Northeast, in ski areas
that were not able to tough it out during that particular season in
which it was difficult to maintain enough patronage in order to
survive.
The relevency of this testimony is that quite the reverse of the
figures that are in your possession in regard to the profitability of
the areas in Colorado, our difficulty is viability and the ability to-
so to speak-keep our heads out of the water.
Mr. Chairman, this suggestion that you've made in your bill of
complete historical financial disclosure would, in my judgement,
have an adverse effect upon the industry, in the Northeast and along
the eastern seaboard and all areas east of the Mississippi in which
I am quite familiar.
In the first place, a showing of red ink which we've been in-
geniously capable of creating in the industry would not be conducive
to our credit, our ability or procuring the commodities, goods, and
services that we need, and also. would have an uneasy effect upon
the people who work for us who at some total or other, a considerable
number of employees throughout the Northeast.
Unfortunately, in my State, and this holds true in some other
States where a good deal of area is supported by recreation. In
other words, the ability of people to move.
That is their criteria of survival so far as the economy is con-
cerned. And once deprived of mobility, the recreation industry is
not only unprofitable but extremely difficult to maintain.
Senator, you hit upon several things that need straightening out.
If the Forest Service, over my experience with them, with their
people and the secretaries to various chiefs of the Forest Service,
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366
many of whom I've knewn personally and the district chiefs and
the supervisors of the various forests have been able people.
Their directives, in general, have been carried out to the best of
their ability subject to the acts of Congress. But the guidelines have
not been very clear in many respects and you suggest in your bills
means of straightening out some of those guidelines.
I think in respect to public disclosure, it ought to be clear to the
committee and I hope that it is that reading from our term, special
use permit, that the permitee will send to the forest supervisor oii
or before each June 30 of each year a statement of net sales or other
income resulting from the operation under this permit or a profit
and loss statement or other evidence satisfactory to the Forest
Service to the business transacted by the permitee.
Now, the next section says that the Forest Service may require
that any such statement be sworn to and shall have the further
right to examine the permittee's accounting records and supporting
documents.
And next, shall have the right to require the permittee to main~
tam an acceptable accounting system and at its expense to have its
books audited by an accountant and require a copy to the Forest
Service of the report.
Our company has had several audits by capable auditors of the
Forest Service. But the Service over the years-and the early years
in my experience with respect to the Sky area particularly has
not been one of being so much interested in the profitability or
whether you made a loss as it is, as a criteria of what we owe the
Forest Service which was based on a percentage of the total in-
come.
And this is now, as you may know, Senator, being changed by the
Forest Service to include income or revenue or payments that are
made to ski companies on adjacent lands which are not on public
land but the improvements there on there because of their proximity
to the permitted area.
Going back. for a minute to the timber sales agreements. It has
never been the custom-and I have been told that it is not now the
custom to legally inquire into a purchase of national forest timber.
What he used the timber for, what the products were that he man-
ufactured from it, to whom it was sold, what he received for it, or
whether or not he lost or gained.
But a provision was incorporated and it's still incorporated in
the timber sales permit to the effect that the Forest Service does
have the right to inquire into those costs. But have only done so in
many of the years in which I have intimate knowledge for the
purpose of obtaining an appraisal of the value of timber. As a result
of which the upset price of the minimum price of each species of
timber when sold should be offered to the public.
This is not a close analogy. And let me say I'm well aware-I do
bring it up as indicative of the fact that the Forest Service has
never concerned itself with profitability in particular.
Let me say that I think that Central City in Colorado is a very
beautiful place. I think, however, that the abandonment of a ski
area in Colorado-and this from the point of view of the operators
PAGENO="0371"
367
of ski areas in Colorado-is hardly realistic obviously. Because the
abandonment of an area with towers and other equipment and
buildings by reason of their inability to continue would hardly be
an ecological advantage. And this is actually what has happened
on certain areas in the Northeast.
What you, Mr. Chairman, asked a few minutes ago of the Chief
of the Forest Service about whether the Forest Service thought it
had a responsibility in respect to competition-indeed, it does. And
in a rather different way I think than you suggested.
Because, quite manifestly, in the White Mountain National Forest
which has about 800,000 acres, somewhat less than that. But this, I
think, is the third national forest in terms of visitor population. In
other words, it stands third in the whole United States of people
who are desiring the use of that land for one purpose or another.
And, therefore, it now behooves the Forest Service as indeed it
is now coming to the realization at this point that the classification
of land and the allocation of its use and the means of use and the
limitations of use are becoming quite important.
This is the greatest and finest recreation ground that exists that
has any aspects of wildnerness left in the Northeast. I might say that
I was the first head of the trail crew of the Appalacian Mountain
Club in the year 1917. And I have some feel for the ecological aspects*
of the use of forest land and all land generally.
And I am not unsympathetic to the point that many of our
organizations, notably the Society for the Protection of New Hamp-
shire Forestry, which I was the director for some considerable.
length of time. I've been past director of the American Forestry
Association.
And I bring this up from the point of view that the Forest
Service does have the obligation of investigating the projections
of profitability as incident to their offering an applicant to a permit
in the Northeast. In respect to a reasonable return or profitability.
It is rather difficult, Senator, and I've had some experience in
other fields in this regard to apply arbitrary rules or regulations or
criteria or specifications or allocations of public revenue, for ex-
ample. And to express these multilaterally across the United States
would have without devleoping inequalities.
And the result of the applications of some provisions of your bill
ought to be looked at from the point of view-and this I regard
insofar as the Forest Service is concerned is one of their responsi-
bilitise of the impãct upon local economy. There's a very close
relationship, I think, to suggest that between the small villages in
New England-and this is quite different than in Colorado.
I have been and visited many of the areas in your State and,
indeed, farther west where-let me say that your questions not
related to the Chief's opinion of his responsibilities where an area
was close to an urban population or centers of populations is quite
different. And the problems that a State such as ours have in support
of its local political institutions.
Let me digress to say that the 25 percent distribution from the
sales, the total sales, of national forest timber to towns and muni-
cipalities is a pittance. It's unrealistic. The town in which I live is
PAGENO="0372"
368
almost 90 percent owned by the United States. And the villages
that are scattered and are adjacent to or ancillary to public land
have a rather considerable difficulty in respect to raising funds
enough through the taxation of private property in order to support
the local, political institutions.
And this is a matter which should come to the attention of the
committee. And in respect to the derivation of revenue and the
determination as you suggest of what is a fair return on the rn-
vestment in a ski area.
Mr. Chairman, let me repeat. It is rather difficult to look at this
industry which has been the-of longer standing than any other
section of the country in skiing and development of outdoor recrea-
tion and we spend a lot of time, Mr. Chairman, in the setting up of
a national health program and particularly, I'm trying to find the
ways and means for the youth of this country of getting out and
building bodies and become healthy and respected citizens.
And this is one means that I'm sure your committee will feel is a
healthful and supportable enterprise and should be continued under
suitable and proper regulations.
Senator HASKELL. Thank you, Mr. Adams. Very much indeed.
I appreciate your testifying and obviously the problems of New
England are quite different.
I do not have any questions at this time. Senator Fannin.
Senator FANNIN. Thank you, Mr. Chairman. Governor Adams,
it is a pleasure to have you with us this morning. I just would ask
one question. Incidentally, when you talked about beautiful Colorado
and your great State-I was with one of your former Governors in
South America and he was praised on the great Grand Canyon of
Colorado and I had to remind him that the Grand Canyon of the
Colorado River is in Arizona. And so don't leave out Arizona
when we are talking about the great scenic wonders of this great
Nation of ours.
By aside from that, the only comment that I have is that you have
been the chief executive officer of your State. You are in a position
to decide whether or not government regulation would interfere
with certain aspects of operations.
Do you agree with the statement made by Mr. Butler that it's
not by coincidence that regulated industries have become synonymous
with financially troubled industries?
Mr. ADAMS. Would you repeat that please?
Senator FANNIN. It is not by coincidence that regulated industries
have become synonymous with financially troubled industries?
Mr. ADAMS. I think in the question of regulation, Senator Fannin,
that were the ski industry to become regulated by the sort of mech-
anisms that are usually applied to public utilities, that this would
competely change the characteristics.
Senator FANNIN. Well, that's what I was wondering. If that was
your thought. And I appreciate your mentioning that.
Mr. ADAMS. I would think in many respects that would be dis-
astrous.
Senator FANNIN. Thank you.
PAGENO="0373"
369
Senator ETASKELL. Thank you very much, Mr. Adams. I happen
to agree with your last statement also.
[Subsequent to the hearing the following information was re-
ceived:]
LOON MOUNTAIN RECREATION CoRP.
Lincoln, N.H., November 24, 1975.
Hon. FLOYD K. HASKELL,
Dirksen senate Office Bldg.,
Washington, D.C.
Dear SENATOR HASKELL: I thought it might be helpful to send you a sum-
mary of the points that I made at your hearing on the 17th.
I hope you will make this available to your staff for such consideration as
the various points deserve in subsequent drafts of S-2125.
May I express my appreciation of the courtesy which you extended to me
on the day of the hearing.
Sincerely yours,
SHERMAN ADAMS.
Enclosure.
SUMMARY OF TESTIMONY OF SHERMAN ADAMS OF LINCOLN, N.H., REPRESENTING
THE SKI INDUSTRIES OF THE EASTERN SEABOARD AND PARTICULARLY THE NORTH-
EAST REGIONS IN SUPPORT OF S-2125, TOGETHER WITH SUGGESTIONS FOR MODIFI-
CATION OF CERTAIN PxovISIONs OF SAu~ BILL
This statement is submitted pursuant to permission of the Chairman to
revise and extend these remarks and to make further comments upon certain
parts of the testimony on the subject bill.
Senator Haskell has pointed out in the bill (S-2125) certain changes that
are desirable in the statutes giving authority to the Secretary of Agriculture
to lease areas of National Forest land for skiing and related uses. In addition,
language used in Term Special Use Permits is in need of clarification, modi-
fication and the addition of other provisions presently not covered in the
statutes. The following comments are made with the hope that the Senator
may make this statement available to his staff for consideration in making
revisions in his bill:
1. Quite in contrast to the situation in the state of Colorado where three
ski areas in particular have been unusually successful in earning substantial
returns on their investments, the situation in the 350 ski areas east of the
Mississippi and more specifically in the thirty areas in the state of New
Hampshire, is different in that these areas in recent years have found them-
selves in increasing financial difficulty for a variety of reasons. Rather than
realizing a satisfactory level of profitability, these areas are earning a very
modest return, if any, on their investment.
In 1965 this witnes began the construction and operation of an area known
as Loon Mountain which, over a period of nine years, has had a lift ticket
income of $5,040,000 and an income from all sources of $6,500,000. This area
lies partly on USFS land and has both a Term Permit (30 years) and a
supplementary annual Special Use Permit. In these nine years this operation
has retained earnings of $325,000, or 5% of its gross sales. There are few
areas in the East with an equal or beter level of profitability. The four largest
areas in New Hampshire have Term Special Use Permits for the use of
National Forest land. Although these four areas are among the largest in the
Northeast, their total revenues represent in the order of 1 to 12 in comparison
to the three areas in Colorado which have been the subject of complaint as
to their lift ticket rates and profitability.
It is unrealistic to compare the results of the operations of the thirty ski
areas in New Hampshire, and indeed the 350 areas east of the Mississippi,
with the much larger developments in Colorado and elsewhere in the West.
The element of mere size has a formidable effect upon the earning capacity
of many areas in the West as compared to the limited terrain available in
the East.
PAGENO="0374"
370
Increasing constraints imposed upon the permittees in the East by the Forest
Service have raised ominous difficulties that are and will continue to increase
the costs of the operators on public land.
2. The restriction imposed by Congress which limits a term permit to 30
years should be increased to 50 years for reasons that have been well stated
in testimony before this Committee.
In the planning and construction of any ski area, a balance must necessarily
be obtained between the uphill capacity of the lifts, the area of slopes and
trails and their traffic density, the facilities for food and other services, park-
ing areas, utilities and other ancillary conveniences. An imbalance of these
necessities affects profitability and the means of satisfying public use and
necessity. National Forest land now limited to 80 acres in any Term Special
Use Permit needs modification to allow for administrative decision in the
light of the size of the area to be approved for construction. In the case of
unusualy large areas, the Chief of the Forest Service should apprise the
Secretary of his intention to approve or disapprove the application, and the
Secretary should inform the appropriate committee of the Congress of the
intended decision.
3. During the hearing on November 17th, the Chairman questioned the Chief
of the Forest Service concerning the responsibility of the Administrative
Agency to maintain competition among ski areas which would have the effect
of reducing the price of lift tickets. Specifically, the question of competition
was arised in the context of the Forest Service issuing term permits to other
applicants or regulate current prices through arbitrary reductions or dis-
allowing increases in price. As exists in substantially all business enterprise,
competition is endemic in the ski industry.
A close relationship exists between lift ticket income and the cost of pro-
viding up-mountain transportation. No evidence has been adduced that the
skiing public lacks the choice of a whole array of rates that best fits his
pocketbook. The choice of where he skis is his. To attempt to regulate rates,
as in the field of public utilities with public hearings leading to judicial
determination, would delay, inhibit and frustrate private business enterprise.
In the East the ski industry is too often in such financial straits as to be in
no need of regulation to protect the public from excess profitability due to
lack of competition. Applying a "reasonable rate" concept in the bill (S-2125)
will serve to alert the Administrative Agency (USFS) to its responsibility
of maintaining adequate rate control without the need of "utility-type" pro-
cedures for this industry already subject to sharp competition.
More appropriately, the Forest Service needs to use care and foresight in
dealing with new applicants, to prevent overdevelopment of the ski business
which would be caused by the approval of too many permittees over-occupying
certain regions of the public domain already ~idequately served. New appli-
cations need realistic projections of earning capacity. It is important that
these be evaluated. Abandonment of areas due to poor planning and profit-
ability add nothing to the physical asets of national forest land.
4. Reference was made at the Washington hearing to adequate return on
the investment. Until there is a change radically for the better, consistently
increasing cost confronts every service the area now provides from the lift
ticket to the hot dog. There is no indication that any ski area east of the
Mississippi is founding any fortunes for its investors. Inherent in the concept
of rate regulation is the counterbalance of providing a "reasonable return"
on the investment. The nature of ski business is out of focus with this type
of regulation.
5. The ski industry, in its position paper read into the record on the 17th,
made no objection to the disclosure of "historical financial operating data".
The effect of public disclosure of financial operating data would create for
many ski areas damaging, if not chaotic, results. Public knowledge of the
marginal characteristics of a particular ski area migght well have an adverse
effect upon its credit and create an uneasiness among its employees.
The successful bidder in an advertised sale of timber on the National Forest
is not required to disclose the costs of his operation, nor the price he receives
for his product, nor whether he profits or loses in the transaction. In the ski
industry the Government requires a disclosure of gross fixed assets, gross
income realized from various activities conducted on public land, and even
PAGENO="0375"
371
on adjoining land, and the rent paid for the use of the public land he occupies
is based upon these disclosures. Thus the Government and the people ar~
already protected against unreasonable profitability which is the underlying
cause of the agitation for complete financial disclosure.
Only so much of the otherwise confidential details of the financial affairs
of the industry should be disclosed as may be necessary to reassure hte public
that the rate structure of the ski industry is fair and reasonable.
6. Objection has been raised by certain private teachers of skiing to being
excluded from use of National Forest land held by term permittees. All such
permittees pay substantial use fees for the privilege of occupying permitted
areas. Term permits specifically exclude users of permitted land directly com-
peting with the busines of skiing. Private teachers allowed to use such prem-
ises would be competing with the holders of term permits which are equivalent
of specific lease holds. Uses of these remises which do not compete with skiing
busines are allowed provided they do not unnecessarily interfere with the use
by term or special use permits.
Senator HASKELL. Our next witness is Mr. William A. Norton,
president of NSAA, Franconia Notch State Park, Franconia, N.H.
Due to time restraints, I'm going to ask the witness if they would
confine themselves to 10 miuutes each in the future. And I don't
know how long your statement is but maybe you could synopsize
if it's going to go beyond 10 minutes.
STATEMENT OF WILLIAM A. NORTON, PRESIDENT, NATIONAL SKI
AREAS ASSOCIATION, INC. WEST HARTFORD, CONN.
Mr. NORTON. Mr. Chairman and members of the subcommittee:
Thank you very much for the opportunity to appear before you
today in connection with 5. 2125.
To provide for the issuance of permits on public domain national forest lands
for commercial outdoor recreation facilities and activities, and for other purposes.
I am president of the National Ski Areas Association, Inc.
The National Ski Areas Association, Inc., is a nonprofit member-
ship~'corporation, composed of 378 ski area members and approxi-
mately 175 associate members who are manufacturers and suppliers
of ski equipment. Our association represents approximately 90 per-
cent of all ski area business in the United States. One of the objectives
of our association is:
To foster, stimulate and promote safety in skiing, to provide an angency
through which information and ideas may be exchanged by the members to
collect and disseminate trade statistics and information, and to further and
protect the legitmate interests of the ski area operators.
This legislation proposes to establish congressional policies, pro-
vide new authorities to the Secretary of Agriculture, and to en-
courage private enterprise to participate with the U.S. Forest
Service in providing expanded outdoor recreational opportunities
in our national forests.
At the present time, the Forest Service authorizes concessioners
to operate commercial outdoor recreational facilities subject to special
use permit. Moreover, the terms of such permits may not exceed
30 years nor involve more than 80 acres of land. [16 U.S.C. 497.]
In many instances, particularly in the case of major ski areas,
this is insufficient land to develop and operate an adequate resort
facility. The operations of approximately 93 ski area members of
PAGENO="0376"
372
our association involve national forest lands. National forest lands
needed by each operation in excess of 80 acres ca nbe made available
by the Forest Service only on a year-to-year permit. These limita-
tions often frustrate the efforts of private enterprise in developing
adequate recreational facilities involving national forest lands. Testi-
mony developed at the Denver hearings and by Morgan Guaranty
Trust Co. speaks to these concerns in detail.
This legislation, if amended as we recommend, would remove
these unwarranted limitations, permitting the Secretary of Agricul-
ture to determine in each case the amount of land needed to develop
and operate an economically viable ski resort-recreational complex.
Our association has reviewed S. 2125 and adopted the following
resolution.
Be it resolved that the National Ski Areas Asociation endorses the proposal
to remove the 80 acre limitation on permits to ski areas and also endorses
the concept of Congressional overview in connection with the issue of cer-
tain special use permits. We endorse, also, the extension of lease terms from
30 to 50 years to encourage lending institutions to provide long term capital.
Existing law is inadequate or unduly restrictive in these regards and imposes
an unwarranted hardship on a ski area operator as a result.
We support, moreover, assurance of continued tenure through a preferential
right of renewal to those operators who have complied with the terms, pro-
visions, and obligations of a permit in order to protect the substantial capital
investments made on National Forest land.
That prior to the issuance of a special use permit hearings be held to allow
input from all segments of the public, including the proponent, and this
Association endorses the concept of requiring the management agency to
promulgate uniform guidelines for use in determining whether such a special
use permit shall be issued, taking into consideration the environmental impact
not only on the National Forest land but on adjacent lands as well.
That competition exists in the United States ski industry and, therefore,
regulation of rates is neither needed nor necessary. Further, the existing
system inhibits the free play of market place and does not serve the best
interest of either the public, the management agency, or the operator. This
Association believes that our industry will be unable to meet the public de-
mand for additional facilities unless it is in a position to raise the necessary
capital to finance them. With rate regulation as proposed in the bill it is
doubtful that prudent investors would be willing to put dollars in a high
risk business such as ski area operation.
That this Association endoress the concept of public disclosure of historical
financial operating data by all contractors and permittees operating in whole
or in part on public lands.
Section 1 of S. 2125 articulates the congressional policy and pur-
pose for the leasing for commercial outdoor recreation purposes
of the forest reserves created from the public domain and defines
certain terms used in the bill.
We propose no amendments to this section.
Section 2 grants authority to the Secretary of Agriculture to
implement this congressional policy.
We propose no amendments to this section.
Section 3 establishes the Congressional policy relating to acreages
to be leased (subsection (a)); directs the promulgation of regulations
containing guidelines to be employed by the Secretary in determining
whether a permit should be issued (subsection (b)) ; s~pecifies rentals
to be paid for leased Government-owned lands (subsection (c));
establishes terms of leases and provides for their termination (sub-
~ethon (d)).
PAGENO="0377"
373
Subsection 3(e) provides that all such commercial operations on
national forest lands are the responsibility of the concessioner, sub-
ject to regulation and planning guidelines by the Secretary consistent
with the policies `and objectives of the act.
`Subsection 3(f) reserves the right to the Secretary to permit other
uses not inconsistent with the recreation programs permitted on the
leased land.
Subsection 3(g) provides that the Secretary shall not issue more
than one permit for identical outdoor recreational activities wihtin
an area of less than 5,080 acres, unless he complies with the provisions
of section 3(a) (2) (b) or (c).
With respect to section 3 of the bill, we offer the following
amendments:
One: Subsection 3(a) (1), page 3, line 17: insert between the words
"than" and "ski", the words "those developed as a part of a"; in
line 18, strike the words "activities and facilities" and insert in lieu
thereof the words "recreatioii complex".
The purpose of this amendment is to insure that the 80-acre
limitation is not applicable to related recreational activities which
are an integral part of a ski complex, such as tennis courts, riding
stables, golf courses, hotels and other recreational facilities normally
utilized in the summer season, some of which may be located on
national forest lands.
Two: Subsection 3(a) (2) (A), page 3, line 21: insert the word
"resort" between the words "ski" and "activities".
Three: Subsection 3(a) (2) (B), page 4, line 11: insert the word
"resort" between the words "ski" and "activities".
The purpose of amendments 2 and 3 is to recognize that many
ski areas have, in fact, become year-round recreational operations.
It is necessary to recognize this year round use at most of the ski
areas in order to insure a financially viable operation.
Four: Subsection 3(b), page 5, line 12: insert the word "resort"
following the word "ski" at the end of said line.
The purpose of this amendment is to provide, for editorial con-
sistency with the foregoing amendments.
Five: Subsection 3(c) (1), page 6, line 12: strike said line; in
line 13, strike the words "return on equity investment".
The purpose of this amendment is to assure that annual fees are
related to the value of the leased land and are not used for the
purpose of regulating a leasee's net profit. As other witnesses have
testified, particularly Mr. Kennedy at Denver, ski area operations
are not comparable to regulated utilities providing indispensable
public services such as energy, transportation, et cetera.
Rather their revenues are derived from discretionary expendi-
tures and, therefore, there is no guarantee of a profit. Accordingly,
establishing franchise fees that attempt to provide a reasonable, re-
turn on equity is not an appropriate basis for measuring payment of
rental to the government.
Senator HA5KELL. Mr. Norton, that is 10 minutes and due to the
fact that we have six more witnesses, I will have to state the 10
minute rule. Your testimony will be included in full on the record
and be produced as such.
PAGENO="0378"
374
I have really just one question. I do appreciate your coming in
and providing us with specific suggestions for statutory changes.~ I
think that's very helpful rather than giving glittering generalities
and, therefore, this is much appreciated.
Obviously, you do not believe, as you've made very clear that the
industry should be regulated and I would concur with that.
However, what would you think of this? I think you also obvi-
ously would think that the competitive marketplace is the best way
to determine prices. One way of implementing a free competitive
marketplace would be to have the Forest Service not~ issue permits
to any one organization within a certain distance of the trade area.
Which would mean that you would have one next to me and Mr.
Quarles would have the next one rather than my owning all three
of them. What would you think of such a provision?
Mr. NORTON. I think that would be brought out, Senator Haskell,
further along in my testimony.
Senator HASKELL. Could you comment on it. Don't read your tes-
timony. Just comment on it.
Mr. NORTON. The question was that you believe there should be two
or more people on one lease?
Senator HASKELL. No, no. I'm just saying that if this room is a ski
area and I have the permit and I wouldn't be allowed to get th~
permit on the next room but you should or Senator Fannin or some-
body who would compete. What do you think of that as a propo-
sition?
Mr. NORTON. I would think of that, sir-it depends entirely on the
type of facility, perhaps, that would be considered by the Forest
Service from one area to the next. It would seem to me that if there
is a large area that is operating well on a permit in a locality that
the Forest Service would perhaps be well enough to let that alone
without perhaps moving in competition next door to it.
Senator HASKELL. Don't you think competition is healthy?
Mr. NORTON. Yes sir. I believe competition is healthy.
Senator HASKELL. Wouldn't it assist competition if the permit next
door went into other hands?
Mr. NORTON. I'm not sure, Senator.
Senator HASKELL. You don't think that would make for competi-
tion? Well, maybe we disagree on what's competition. Thank you,
sid. Senator Fannin?
Senator FANNIN. Thank you, Mr. Chairman. Mr. Norton is presi-
dent of the National Ski Areas Association. I would just like to ask
you one question. Can you furnish financial data on a comparative
basis of ski area on public and private land?
Mr. NORTON. That data is available, Senator. And I have with me
people today who can present that data to you. I would prefer that
it be done that way rather than my presentation to you.
Senator FANNIN. Is it just a short-
Mr. NORTON [continuing]. Well, Mr. Lewis is a director of our
Association and he has all of that information with him, financial
information. And I would prefer that Mr. Lewis, perhaps, answer
that question.
PAGENO="0379"
375
Senator FANNIN. Well, because of the time element involved could
Mr. Lewis furnish it for the record?
Mr. NORTON. I believe so, sir.
Senator HASKELL. He will present it for the record?
Senator FANNIN. And Mr. Lewis is here?
Mr. NORTON. Yes.
Senator HASKELL. And we will then reproduce Mr. Lewis' submis-
sion in full. And the request was a comparison between the private
land operators and public land operators.
Mr. NORTON. Mr. Lewis has that information.
Senator FANNIN. And if he could give it to us so it would not be
too lengthy but still in enough detail to give us the full information.
Mr. NORTON. I'm sure he can.
Senator FANNIN. Thank you very much, Mr. Norton.
Senator HASKELL. Thank you very much, Mr. Norton.
[The prepared statement of Mr. Norton follows:]
PAGENO="0380"
376
STATEMENT OF MR. WILLIAM A. NORTON, PRESIDENT,
NATIONAL SKI AREAS ASSOCIATION, INC., 61 SOUTH
MAIN, P. 0. BOX 83, WEST HARTFORD, CONNE CTI CUT,
BEFORE THE SUBCOMMITTEE ON ENVIRONMENT AND LAND
RESOURCES OF THE SENATE INTERIOR AND INSULAR
AFFAIRS COMMITTEE, ON NOVEMBER 17, 1975
Mr. Chairman and Members of the Subcommittee:
Thank you very much for the opportunity to appear
before you today in connect~ion with S. 2125, "To provide
for the issuance of permits, on public domain national forest
lands for commercial outdoor recreation facilities and
activities, and for other purposes."
I am President of the National Ski Areas Association,
Inc.
The National Ski Areas Association, Inc., is a non-
profit membership Corporation, composed of 378 ski area members
and approximately 175 associate members who are manufacturers
and suppliers of ski equipment. Our Association represents
approximately 90% of all ski area business in the United States.
One of the objectives of our Association is:
"To foster, stimulate and promote safety in
skiing, to provide an agency through which
information and ideas may be exchanged by the
members, to collect and disseminate trade
statistics and information, and to further
and protect the legitimate interests of the
ski area operators."
PAGENO="0381"
377
This legislation proposes to establish Congressional
policies, provide new authorities to the Secretary of Agriculture
and to encourage private enterprise to participate with the
U.S. Forest Service in providing expanded outdoor recreational
opportunities in our National Forests.
At the present time, the Forest Service authorizes
Concessioners to operate commercial outdoor recreational faci-
lities subject tO special use permit. Moreover, the terms of
such permits may not exceed 30 years nor involve more than 80
acres of land. (16 U.S.C. 497).
In many instances, particularly in the case of
major ski areas, this is insufficient land to develop and
operate an adequate resort facility. The operations of approx-
imateLy 93 ski area members of our Association involve National
Forest lands. National Forest lands needed by each operation in
excess of 80 acres can be made available by the Forest Service
only on a year-to-year permit. These limitations often frustrate
the efforts of private enterprise in developing adequate recre-
ational facilities involving National Forest lands. Testimony
developed at the Denver hearings and by Morgan Guaranty Trust
company speaks to these concerns in detail.
This legislation, if amended as we recommend, would
remove these unwarranted limitations, permitting the Secretary
-2-
67-512 0 . 76 . 25
PAGENO="0382"
378
of Agriculture to determine in each case the amount of Land
needed to develop and operate an economically viable ski
resort-recreational complex.
Our Association has reviewed S. 2125 and adopted
the following Resolution.
RESOLUTION
"BE IT RESOLVED THAT the National Ski Areas Asso-
ciation endorses the proposal to remove the 80 acre limita-
tion on permits to ski areas and also endorses the concept of
Congressional overview in connection with the issuance of
certain special use permits. We endorse, also, the exten-
sion of lease terms from 30 to 50 years to encourage lending
institutions to provide long term capital. Existing law is
inadequate or unduly restrictive in these regards and imposes
an unwarranted hardship on a ski area operator as a result.
We support, moreover, assurance of continued tenure
through a preferential right of renewal to those operators
who have complied with the terms, provisions, and obligations
*of a permit in order to protect the substantial capital
investments made on National Forest land.
"THAT prior to the issuance of a special use permit
hearings be held to allow input from all segments of
the public, including the proponent, and this Association
-3-
PAGENO="0383"
379
endorses the concept of requiring the management agency to
promulgate uniform guidelines for use in determining whether such
a special use permit shall be issued, taking into consideration
the environmental impact not only on the National Forest land
but on adjacent lands as well.
THAT competition exists in the United States ski
industry and, therefore, regulation of rates is neither needed
nor necessary. Further, the existing system inhibits the free
play of the market place and does not serve the best interests
of either the public, the management agency, or the operator.
This Association believes that our industry will be unable to
meet the public demand for additional facilities unless it is
in a position to raise the necessary capital to finance them.
W1th rate regulation as proposed in the bill it is doubtful
that prudent investors would be willing to put dollars in
a high risk business such as ski area operation.
THAT this Association endorses the concept of public
disclosure of historical financial operating data by all contractors
and permittees operating in whole or in part on public lands."
-4-
PAGENO="0384"
380
Section 1 of 5. 2125 articulates the Congressional
policy and purpose, for the leasing for commercial outdoor
recreation purposes of the forest reserves created from the
public domain and defines certain terms used in the bill.
We propose no amendments to thi~ section.
Section 2 grants authority to the Secretary of
Agriculture to implement this Congressional policy.
We propose no amendments to this section.
Section 3 establishes the Congressional policy
relating to acreages to be leased (subsection (a)); directs
the promulgation of regulations containing guidelines to be
employed by the Secretary in determining whether a permit should
be issued (subsection (b)); specifies rentals to be paid for
leased Government-owned lands (subsection (c)); establishes
terms of leases and provides for their termination (subsection
(d)). Subsection 3(e) provides that all such commercial opera-
tions on National Forest lands are the responsibility of the
concessioner, subject to regulation and planning guidelines by
the Secretary consistent with the policies and objectives of
the Act. Subsection 3(f) reserves the right to the Secretary
to permit other uses not inconsistent with the recreation pro-
grams permitted on the leased land. Subsection 3(g) provides
that the Secretary shall not issue more than one permit for
-5-
PAGENO="0385"
381
identical outdoor recreational activities within an area
of less than `five thousand eighty acres", unless he complies
with the provisions of Section 3(a) (2) (B) or (C).
With respect to Section 3 of the bill, we offer
the following amendments:
1. Subsection 3(a)(l), page 3, line 17: insert
between the words "than" and "ski, the words "those developed
as a part of a"; in line 18, strike the words "activities and
facilities" and insert in lieu thereof the words "recreation
complex".
The purpose of this amendment is to insure that the
eighty acre limitation is not applicable to related recreational
activities which are an integral part of a ski complex,
such as tennis courts, riding stables, golf courses, hotels
aid other recreational facilities normally utilized in the
summer season, some of which may be located on National Forest lands.
2. Subsection 3(a) (2) (A), page 3, line 21: insert
the word "resort" between the words "ski" and "activities".
3. Subsection 3(a) (2) (B), page 4, line 11: insert
the word "resort" between the words "ski" and "activities".
The purpose of amendments 2 and 3 is to recognize
that many ski areas have, in fact, become year round recreational
operations. It is necessary to recognize this year round use
-6-
PAGENO="0386"
382
at most of the ski areas in order to insure a financially
viable operation.
4. Subsection 3(b), page 5, line 12: insert the
word "resort" following the word "ski" at the end of said line.
The purpose of this amendment is to provide for
editorial consistency with the foregoing amendments.
5. Subsection 3(c)(l), page 6, line 12: strike said
line; in line 13, strike the words "return on equity investment'.
The purpose of this amendment is to assure lhat annual
fees are related to the value of the leased land and are not used
for the purpose of regulating a leasees net profit. As other
witnesses have testified, particularly Mr. Kennedy at Denver,
ski area operations are not comparable to regulated utilities
providing indispensable public services such as energy,
transportation, etc. Rather their revenues are derived from
discretionary expenditures and, therefore, there is no guarantee
of a profit. Accordingly, establishing franchise fees that
attempt to provide a reasonable return on equity is not an
appropriate basis for measuring payment of rental to the
government.
6. Subsection 3(c) (1), page 6, line 16: at the end *
of said line, add a new sentence reading as follows: "Such fee
-7-
PAGENO="0387"
383
may be based on a percentage of permittee's gross receipts
for each calendar year (or fiscal year or any twelve month
period)
The purpose of this amendment is to simplify not
only the collection of the fee by the United States but also
to reduce the administrative expenses of the concessioner in
maintaining records for the purpose of reporting the basis
of payment of such fees.
7. We recommend that Section 4, beginning at
page 8, line 7 be redesignated Section 5 and that a new
Section 4 reading as follows be inserted:
EXTENSIONS, NEW PERMITS
SEC.4. The Secretary shall encourage
continuity of operation of needed faci-
lities and services by giving preference
in the negotiation of new permits to
permittees who have performed their
ohligations satisfactorily. To this
end, the Secretary, in his discretion,
may grant a new permit to the same
permittee upon its termination or sur-
render of the permit before its
expiration.
The need for this amendment, as has been pointed
out by other witnesses, is to encourage venture capital in the
high risk ski operation business. Such a provision is
necessary to encourage an operator to upgrade, expand or
replace facilities when an existing permit is at or near
the end of its term.
-8-
PAGENO="0388"
384
8. Section 4 of the bill (recommended for
redesignation as Section 5) provides for public disclosure
of permittee's financial information by the Secretary (sub-
section (a)); public hearings in connection with requests
by permittees for rate increases (subsection (b)); and, pro-
mulgation of regulations by the Secretary establishing criteria
for determining whether such rate changes are to be authorized
(subsection (c)).
We recommend that this section be deleted in its
entirety and a new Section 5 be inserted in lieu thereof, reading
as follows:
PUBLIC DISCLOSURE
"SEC. 5. The Secretary shall make
available for public inspection
historical financial operating
data furnished to him or any of f i-
cial of the Department of Agriculture
in connection with any use permit
granted by him pursuant to this act
to the extent that comparable data
furnished by other permittees on
Forest Service land is publicly
available."
The purpose of this amendment is to implement the
suggestion of our Association as stated in our Resolution en-
dorsing disclosure of historical financial operating data. As
-9-
PAGENO="0389"
385
a matter of policy, however, we do not believe that commercial
outdoor recreation permittees should be singled out among the
several classes of users of the resources of the National
Forest System for such public disclosure of their operating
results. Moreover, we suggest that a more appropriate forum
for consideration of public disclosure of data over and above
that already required by the Freedom of Information Act, may
ho throuqh an amendment to that basic legislative charter.
Section 5 of the bill (recommended for rede~;ignation
as Section 6) recognizes title in the concessioner for any
structure, fixture, or improvement placed on leased lands by
the concessioner. Moreover, this section provides that such
title may not be extinguished by the expiration or other termi-
nation of the permit nor may it be taken for public use without
just compensation. This is extremely important protection to
encourage private investment on public lands. In fact, it is
essential if the private entrepreneur is to be in a position
to obtain needed long-terra capital financing. Of course, opera-
tionof the facilities by the concessioner is permissible only
so long as the concessioner has a permit from the Secretary for
the lands on which the facilities are located.
We propose no amendment.
Section 6 of the bill (recommended for redesignation
as Section 7) requires the maintenance of records of accounts,
as prescribed by the Secretary, to determine that all the terms
- 10 -
PAGENO="0390"
386
of the permits have been and are being faithfully performed.
This section also grants access to the Secretary and to the
Comptroller General, as well as their authorized representatives,
to audit these records.
We propose no amendment.
Section 7 of the bill (recommended for redesignation
as Section 8) authorizes the Secretary to cancel special use
permits covering existing concession operations and to issue new
permits to such permit holders pursuant to the provisions of this
legislation without regard to the acreage limitations and review
procedures set forth in Section 3(a) and (b) of the bill. Such
authority is necessary to protect the integrity of the substantial
investment in existing operations.
We propose no amendment.
Section 8 (recommended for redesignation as Section
9) provides authorization to the Secretary to reimburse appli-
cable apprOpriations with payments made by concessioners for
utility services provided to certain concessioners from time-
to-time by the United States Forest Service.
We propose no amendment.
Section 9 (recommended for redesignation as Section
10) extends the provisions of this legislation to all parts of
the National Forest System (subsection (a)); and makes provisions
- 11 -
PAGENO="0391"
387
of the bill inapplicable to any existing or future applica-
tions for commercial outdoor recreation ski activities and
facilities in Mineral King Valley (subsection (b)).
We propose no amendments.
I have with me today several of our Directors
and our Staff. We shall be pleased to answer any questions
you may have.
Thank you very much.
- 12 -
PAGENO="0392"
388
Senator HASKELL. Our next witness is Mr. Thomas A. Corcoran,
president of Waterville Co., Inc. Waterville Valley, N.H.
STATEMENT OP THOMAS A. CORCORAN, PRESIDENT, WATERVILLE
CO., INC., WATERVILLE VALLEY, N.H.
Mr. CORCORAN. Mr. Chairman, my name is Thomas A. Corcoran
and I am president of the Waterville Co., Inc. in Waterville Valley,
N.H., which owns and operates two ski areas both of which involve
special use permits on the lands of the White Mountain National
Forest.
I am also president of the Eastern Ski Areas Association, which
has 200 ski area members in 17 States from Maine to Kentucky. I
am also a fully certified ski instructor and member of the Profes-
sional Ski Instructors Association-PSIA.
Before starting the resort in Waterville Valley, I worked for 2
years as assistant to the president of the Aspen Skiing Corp. in
Aspen, Cob., and I am a former director of Vail Associates in
Vail, Cob.
I am appearing here today on behalf of the National Ski Areas
Association-NSAA-in response to your request for information on
the subject of independent ski instructors. In particular, I shall ad-
dress my comments to two specific subjects: One: How ski instruc-
tion is regulated in European countries; and two, how ski operators
in this country generally view ski instruction.
Our source for information regarding ski instruction in Europe is
Dr. J. Unger of West Germany, secretary of the International Ski
Instructors Association. A copy of the translation of his letter is
attached to my statement, and I would request that it be included
in the record.
Senator JIASKELL. It will so be incorporated in the record.
Mr. CORCORAN. His finding may be summarized as follows:
In France, almost all certified ski instructors work within ski
schools. However, he estimates that 5-10 percent of the instructors
are "independent." They are required to register with the National
Advisory Committee on Ski Instruction for a 1-year special permit,
and with the director of the State Department for Youth and Sports.
In Italy, fully certified instructors can teach private lessons pro-
vided they notify the National Ski Instructors Association and the
nearest ski school of their activities. In addition, they cannot form
interest groups among instructors or even have other instructors assist
them.
In Austria, where each state has its own legislation, the rules are
complicated and diverse. In Tyrol and lower Austria, skiing may be
taught in ski schools only; whereas, in Oorinthia, the law is vague,
and merely indicates the requirement of a State permit.
However, the president of the Austrian Professional Ski Instruc-
tors Association~ Mr. Karl Koller, informs us that despite the per-
missiveness of the several state statutes, professional ski instruction
is limited to ski schools only.
In Switzerland, individual state laws regulate ski schools. How-
ever, they are not uniform. Requirements range from the need to be
certified and insured, to the restriction that there be on "independ-
ent" instructors where ski schools already exist.
PAGENO="0393"
389
In general, skiing has been a major industry in most parts of
Europe for many years. Ski instructors are frequently licensed by
a town, a state, or by a police department; and, they may be licensed
as a ski instruct,or, ski guide, or a mountain guide, each of whoml
has different purposes, training, prerequisites, and regulations. In
most places in Europe, a ski school serves a particular area and no
instruction is allowed to take place unless it is done through that par-
ticular ski school. One of the reasons, I think, for the licensing by
the state in Europe has to do with the geography of the Alps. There
are many instances of interconnected mountains, ski areas, and ski
towns.
In addition, much of the capital that has built ski areas has been
provided by the national and state governments to promote tourism.
Now with respect to the NSAA's position on independent ski in-
structors, I think it is important to view this issue in the overall
context of ski instruction offered at virtually any ski area whether
located on public or private lands.
The ski industry is well aware that fear of injury is one of the
most significant deterrents to participation in the sport. As a result,
ski area operators are very concerned about the adequacy and qual-
ity of ski instruction offered at their individual areas. This concern
is fully justified since several studies have shown that formal instruc-
tion substantially lowers the accident rate for skiers.
In addition, tort liability is a major concern in ski area operations.
The ski area operator is held accountable by the Forest Service and
the courts for the welfare and the safety of the skiing public who
patronize the ski area. Thus, ski instruction within an area assigned
an operator, but independent of the ski area operator's control, could
create a major potential liability for the ski area operator that could
jeopardize the financial viability of the operation as well as the qual-
ity of service provided the public.
There are any number of ways in which an uncontrolled instruc-
tor could misrepresent himself, give poor advice to a skier, show poor
judgment where he takes skiers, or involve them in some other situ-
ation directly causing injury.
Employment decisions* regarding instructors are generally based
on criteria that extend far beyond certification by the Professional
Ski Instructors Association, or other certification bodies. Typical of
these additional criteria are teaching abilty, personal appearance,
adaptability, team work, loyalty, knowledge of mountain character-
istics and related visitor facilities. In short, the ski instructors are an
extension of the sales and customer services of an area.
Independent ski instructors-not a part of the operator's team-
could bring about considerable deterioration in the consistency and
quality of skiing instruction and customer services offered at an indi-
vidual area. In addition, we believe that such a fragmentation of the
instruction process could have a deleterious effect on the total visitor
experience, of which ski instruction is only one part.
In summary, both in Europe and the United States, it is common
practice to require an instructor to be affiliated with a ski school at
the area in question. To permit an individual to give ski instruction
at an area without the consent and supervision of its management
will present serious problems in the field of liability, public relations,
PAGENO="0394"
390
and employee morale, and will in the long run be to the disadvantage
of the pubic.
Senator HASKELL. Thank you, Mr. Corcoran. This is very interest-
ing reading this letter. I would point out that the requirements that
France and Italy have for independent ski instructors including the
carrying of a government permit, insurance for tort liability, are the
kind of requirements advocated by the independent ski instructors
who testified in the Aspen and Denver hearings.
But I appreciate very much your taking the trouble to get this
letter from Europe and will read it with a great deal of pleasured
Thank you, sir.
[The prepared statement of Mr. Corcoran, and subsequent infor-
mation follows:] -
STATEMENT OF THOMAS A. C0Rc0RAN, PRESIDENT, WATEEVILLE COMPANY, INC.,
WATERVILLE VALLEY, N.H.
My name is Thomas A. Corcoran and I am President of the Waterviile
Company, Inc. in Waterville Valley, New Hampshire, which owns and oper-
ates two ski areas both of which involve special use permits on the lands of
the White Mountain National Forest. I am also President of the Eastern Ski
Areas Association, which has 200 ski area members in seventeen states from
Maine to Kentucky. I am also a fully certified ski instructor and member of
the Professional Ski Instructors Association (PSIA). Before starting the re-
sort in Waterville Valley, I worked for two years as Assistant to the President
of the Aspen Skiing Corporation in Aspen, Colorado, and I am a former
Director of Vail Associates in Vail, Colorado.
I am appearing here today on behalf of the National Ski Areas Association
(NSAA) in response to your request for information on the subject of inde-
pendent ski instructors. In particular, I shall address my comments to two
specific subjects:
1. How ski instruction is regulated in European countries; and
2. How ski area opreators in this country generally view ski instruction.
Our source for information regarding ski instruction in Europe is Dr. J,
Unger of West Germany, Secretary of the International Ski Instructors As-
sociation. A copy of the translation of his letter is attached to my statement,
and I would request that it be included in the record. His finding may be
summarized as follows:
In France, almost all certified ski instructors work within ski schools. How-
ever, he estimates that 5-10% of the instructors are "independent." They are
required to register with the National Advisory Committee on Ski Instruction
for a one year special permit, and with the Director of the State Department
for Youth and Sports.
In Italy, fully certified instructors can teach private lessons provided they
notify the national Ski Instructors Association and the nearest ski school of
their activities. In addition, they cannot form interest groups among instruc-
tors or even have other instructors assist them.
In Austria, where each state has its own legislation, the rules are compli-
cated and diverse. In Tyrol and lower Austria, skiing may be taught in sk~
schools only; whereas, in Oorinthia, the law is vague, and merely indicates
the requirement of a State permit. However, the President of the Austrian
Professional Ski Instructors Association, Mr. Karl Koller, informs us that de-
spite the permissiveness of the several state statutes, professional ski instruc-
tion is limited to ski schools only.
In ~Switzerland, individual State laws regulate ski schools. However, they
are not uniform. Requirements range from the need to be certified and insured,
to the restriction that there be no "independent" instructors where ski schools
already exist.
In general, skiing has been a major industry in most parts of Europe for
many years. Ski instructors are frequently licensed by a town, a state, or by
a police department; and they may be licensed as a ski instructor, ski guide,
or a mountain guide, each .of whom has different purposes. training, prerequi-
sites, and regulations. In most places in Europe, a ski school serves a particu-
PAGENO="0395"
391
lar area and no instruction is allowed to take place unless it is done through
that particular ski school. One of the reasons, I think, for the licensing by
the state in Europe has to do with the geography of the Alps. There are
many instances of interconnected mountains, ski areas, and ski towns. In
addition, much of the capital that has built areas has been provided by the
national and state governments to promote tourism.
Now with respect to the NSAA's position on independent ski instructors, I
think it is important to view this issue in the overall context of ski instruction
offered at virtually any ski area whether located on public or private lands.
The ski industry is well aware that fear of injury is one of the most signifi-
cant deterrents to participation in the sport. As a result, ski area operators
are very concerned about the adequacy and quality of ski instruction offered
at their individual areas. This concern is fully justified since several studies
have shown that formal instruction substantially lowers the accident rate for
skiers.
In addition, tort liability is a major concern in ski area operations. The
ski area operator is held accountable by the Forest Service and the courts
for the welfare and the safety of the skining public who patronize a ski area.
Thus ski instruction within an area assigned an operator, but independent of
the ski area operator's control, could create a major potential liability for the
ski area operator that could jeopardize the financial viability of the operation
as well as the quality of service provided the public. There are any number of
ways in which an uncontrolled instructor could misrepresent himself, give
poor advice to a skier, show poor judgment where he takes skiers, or involve
them in some other situation directly causing injury.
Employment decisions regarding instructors are generally based on criteria
that extend far beyond certification by the Professional Ski Instructors Asso-
ciation, or other certification bodies. Typical of these additional criteria are
teaching ability, personal appearance, adaptability, team work, loyalty, knowl-
edge of mountain characteristics and related visitor facilities. In short, the
ski instructors are an extension of the sales and customer services of an area.
Independent ski instructors-not a part of the operator's team-could bring
about considerable deterioration in the consistency and quality of skiing
instruction and customer services offered at an individual area. In addi-
tion, we believe that such a fragmentation of the instruction process could
have a deleterious effect on the total visitor experience, of which ski in-
struction is only one part.
In summary, both in Europe and the United States, it is common practice
to require an instructor to be affiliated with a ski school at the area in ques-
tion. To permit an individual to give ski instruction at an area without the
consent and supervision of its management will present serious problems in
the field of liability, public relations and employee morale, and will in the
long run be to the disadvantage of the public.
TRANSLATION BY PAUL VALAB OF LETTER FROM DR. Jorix UNGER, SECRETARY
ISIA, WEST GERMANY
On October 16th, at the request of Mr. Wm. Norton, president of the NSAA,
I sent a qi~estionnaire to Mr. Karl Gamma, president of the International
Ski Instructors Association, seeking information concerning the right to
- taach skiing by certified ski instructors not affiliated with ski schools. After
a rather inconclusive (due to constant changes in regulations and statutes)
telephone conversation with Mr. Gamma, I now have a letter from Dr.
J. Unger of West Germany, secretary of the ISIA, dated Nov. 4th, 1975.
The translation:
Dear Mr. Valar, Our president, Karl Gamma asked me to answer your
letter of October 16th, 1975.
I am familiar with the ski school legislation (laws) in the Alps and after
a few inquiries I am satisfied to be able to furnish the information requested.
I did not use your questionnaire, since it did not cover all possibilities and
details.
The ski schools laws and regulations I looked into are the latest to the
best of my knowledge. There is always the possibility of local interpretation
(user rights) where the law does not state explicitly that ski instruction is
limited to ski schools, or has to be licensed by the federal government, even
so the right to teach is given to ski schools exclusively.
PAGENO="0396"
392
This letter refers to ski instructors with Grade I certification only (fully
certified) notwithstanding the differences j~ terminology or name.
Germany: Fully certified ski instructors are allowed to teach private lessons,
classes and organized groups without affiliation to a ski school. Under the
law, all certified instructors have the same obligations.
Italy: A fully certified ski instructor can teach private lessons. They have
to inform the National Ski Instructors Association and the nearest ski school
of their activities. They cannot form interest groups among instructors or
even have another instructor assist in a project, even if he is willing to do
this free of charge. (Article 5 of the Italian regulation for ski instructors and
ski schools.)
France: In France, almost all certified ski instructors work within ski
schools, some exceptions are possible, approximately 5-10% are independent.
These instructors require special registration, 8 days after starting the season:
(a) with the national advisory committee on ski instruction, which can
issue a special permit, valid for 1 year and
(b) with the director of the State Department for youth and sports (Art. 12
and 14 of legislation Nr. 51-1137, dated 9/26/51 regarding the organization of
ski instruction.)
Austria: In Austria, every State has it's own ski school legislation. Ac-
cordingly, in the Tyrol and Lower-Austria, skiing may be taught in ski
schools only. The ski school legislation in (arinthia is not specific, it merely
states: Prof. instruction in skiing (organization of a ski school) requires
a State permit. The ski school legislation for Upper-Austria and Salzburg
do not mention private instruction either. It should be noted here that for
the moment, the regulations for Salzburg are suspended. For the State of
Steiemark there also is no defined rule, even so in the bylaws of the in-
structors organization we find that certified instructors may become mem-
bers, even so they are not affiliated with a ski school. This points up the
possibility of such activity within the State. The law for Vorarlberg states
in Art. 1: The establishing of ski schools by private interests and the teach-
ing of skiing by private instructors requires licensing by the State. This
indicates that there are private instructors, as long as they have a State
permit.
This much about the legal aspects: The president of the Austrian Pro-
fessional Ski Instructors Association, Mr. Karl Koller, maintains that pro-
fessional ski instruction in Austria is limited to ski schools. This is of
course possible, either by self-discipline among the ski instructors or at the
insistence of the professional associations. This is not for me to judge.
Switzerland: Switzerland has State Ski School laws. In the State of Bern,
regulations do not mention the certified ski instructor teaching privately.
Every instructor has to be certified and insured. The same applies to the
State of Un, requiring a State license. Art. 6 of the State of Wallis concern-
ing professional ski instruction regulations states that in locations where ski
schools exist, only fully certified instructors may teach. It does not mention
if instructors may work outside of ski schools. Mr. Gamma would be able to
give you more competent answers. Art. 6 concerning ski instructors and
mountain guides in the State of Obwalden (1.22.71) states that fully certified
ski instructors may teach privately, are subject to all State regulations,
cannot charge more than the official tariff and are restricted to 5 persons per
lesson. In the State of Graubuenden the law states under Art. 12 (2.18.70)
that a licensed ski instructor may operate privately or in ski schools and
may take skiers on tours and descents that are marked and regularly serviced
by ski patrols.
In conclusion it could be said that legally, private ski instruction by certi-
fied ski teachers is limited in a few States only, mainly in Austria. In
Germany, France, Italy and some Swiss ski instruction outside ski schools
is possible, even so some questions remain in States where no specific men-
tion is made on the subject.
I hope, Mr. Valar, that I have been able to answer most of your questions.
For further details I would have to ask you to contact the national ski
instructors associations directly.
With kindest regards,
Dr. JOACHIM UNGER,
Secretary, ISIA.
PAGENO="0397"
393
WATERVILLE COMPANY, INC.,
Waterville Valley, N.H., December 4, 1975.
Hon. FLOYD HASKELL,
U.S. Senator,
Senate Office Building,
Washington, D.C.
DEAR SENATOR: I testified before your committee about the independent ski
instructor issue in Washington on November 17, but I think from the ques-
tions that you asked Chief McGuire of the Forest Service that you had ques-
tions about ski instruction in general that have not been adequately answered
or clarified. The purpose of this letter is to expand on my testimony that I
gave in Washington and to try to answer some of the questions that you
may have generally about ski instruction.
I am writing this letter wearing several hats. The first is as President of
the Waterville Valley Ski Area in Waterville Valley, New Hampshire, which
is on National Forest land and has been in existence for about ten years.
Last year we attracted 214,000 skiers which makes us middle to large sized
for the East, but small potatoes compared to some of the Colorado resorts.
I am a former U.S. Olympic skier, vintage 1960, and I took the. pains to
become a fully certified ski instructor in the Rocky Mountain Division during
a period in the early 60's when I worked for several years for the Aspen
Skiing Corporation as Assistant to the President. I have seen skiing from
the large Colorado ski areas point of view and also from the point of view
from the smaller margin ski area operator in parts of the country that are
less endowed by snowfall. The bulk of my comments I think reflects the
typical point of view of the smaller to middle sized area operator.
I would like to cover several topics: 1) The typical operation of a ski
school regardless of whether it is on public or private lands; 2) How in-
structors are picked, trained, and compensated; 3) The role of instructor
certification; and 4) The concerns of the smaller to middle sized area oper-
ator regarding the independent ski instructor issue.
1. THE TYPICAL OPERATION OF A SKI SCHOOL REGARDLESS OF WHETHER IT IS ON
PUBLIC OR PRIVATE LANDS
The operation of a ski school in a small to middle sized ski area is not a
particularly easy or simple business to manage. The complexities of opera-
tion are caused by:
a. Multiplicity of Programs Sought by the PubUc.-GLM (Graduated Length
Method of instruction) instruction for beginners, American technique in-
struction for intermediates and advanced skiers, special kids instruction
using separate teaching methods, freestyle instruction for children and/or
adults, racing instruction for children and/or adults, and occasionally spe-
cial instruction; i.e., deep powder technique, mountain classes, guide service,
etc.
b. Problems of Peak vs. 7~Tonpeak Periods.-The average ski school has a
lot more demand for instruction on weekends and during holiday periods
than it does during typical weeks, and even iionholiday midweek periods
can vary enormously in terms of demand for instruction, depending upon
snow conditions, the ski area's success in attracting vacationers, and the
time during the winter. There are even peaks and troughs in a given day.
On Sunday, for instance, you will have a high demand for lessons in the
morning and little demand, if any, in the afternoon. These seasonal, weekly,
and daily peaks and troughs create enormous problems in terms of adequate
staffing..
c. Teaching Innovations.-In recent years the Graduated Length Method,
GLM, of teaching beginners has become universally accepted as the best
method. As you may know, this system starts a beginners out on very short
skis on the first day, with the equipment provided by the area rental shop.
On the second day, if the instructor so advises, the shortest skis will be
exchanged for slightly longer skis, and so on the next day. In an average
five day vacation period here in the East a beginner will have exchanged
skis on an average of three times, sometimes less and sometimes more often.
Because the equipment is rented it is a system that is only applicable to
67-512 0 - 76 - 26
PAGENO="0398"
394
beginner skiiers who have not already purchased ski equipment. If the
beginner, however, already owns equipment and wants instruction, then the
beginner must be taught using a totally different system of instruction, re-
quiring at least another instructor and the formation of another class.
d. Class vs. Private Lessons.-In our ski school 82% of our ski school
revenue is derived from the sale of class lessons and 18% from the sale of
private lessons. Our retail class lesson costs $6 for 1~/4 hours and a private
lesson is $15 per hour for the first person and $5 for each additional person
(up to 4). Every one of the various instructional programs that we have is
also offered in either a class or private lesson format, which further com-
pounds the staffing requirements. In our case we believe that the class
lesson price is at least partially subsidized by the higher private lesson rate,
the market for which is limited to the very upper income skier.
e. Selection and `Training of Instructors.-I will touch on this more in the
next section of this letter but it is worth noting here that instructors wish
to teach for a wide variety of reasons, have varying degrees of skiing and
teaching proficiency and experience, and are generally divided between
seasonal and part-time employees. The average ski school works extremely
bard to recruit enough ski instructor candidates so that they can have a
reasonable selection after screening candidates for the jobs available. In
most cases the ski school selection is only made after viewing candidates in
actual skiiing and teaching situations, and once selected the ski school
usually conducts intensive weekly clinics to try to standardize the many
details of ski instruction among its instructor staff. In addition to pure
skiing and teaching ability, it is extremely important that the instructor be
good with people, understanding, friendly, and helpful. Because he is dealing
directly with the customers of the ski area it is important that he serve as
a good-will ambassador for the ski area and that he conducts himself, as a
front representative in a proper fashion. Last but not least, the instructor
must have good independent judgment. When the classes disperse once they
are assigned in the ski school meeting place, each instructor is basically on his
own, responsible for the safety and well being of his class. If his judgment
is poor, he can lead his class~ into dangerous situations which can pose serious~
liability problems for the ski area as a whole.
f. The llfio, of Ability in Skiing Families or Groups.-More often than not
when two or more people from the same family come to the ski school they
are of unequal ability and cannot safely or adequately be placed in the same
class, and the last thing they want to hear is, "We have a class for you, sir,
but we don't have a class today for your wife or your son or your daughter."
A ski school is expected to have instruction available for everyone on a
class basis every day regardless. What this leads to very often are individual
skiers receiving the equivalent of a private lesson for the price of a class
lesson. This is especIally common in the smaller ski schools.
I don't mean to belabor the above; they are facts of ski school life, and
we put up with them because it is our business. The ski school creates new
skiers and those new skiers are our life blood. The average ski school of a
small to midde size ski area is not a highly profitable operation. The average
ski school is fortunate if it can hold its labor cost for instructors and super-
visory personnel to 50% of its revenues with other direct costs of ski school
operation typically claiming another 25-30% of revenues and the balance is
not true profit but is before an allocation for corporate overhead, debt serv-
ice, ski area promotion and marketing, and any allocation that the ski area
may make for the use by the ski school of its ski area facilities.
Most ski areas now are no longer on a concession basis in which the ski
school director concessions the ski school from the ski area. In most cases
that I know of throughout the country today, the ski area employs a ski
school director as either a seasonal or year-round employee. He is a depart-
ment head who is held responsible for employing and training his staff and
for providing important services to the customers at the ski area. He is
expected to be a businessman and an administrator. The day of the ski
school director who had no business sense are long gone. The problems a
contemporary ski school today principally require administrative, budgetary,
and public relations expertise.
PAGENO="0399"
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2. HOW INSTRUCTORS ABE PICKED, TRAINED, AND COMPENSATED
In the typical ski area the ski school director will receive throughout the
summer and the fall a substantial number of applications for ski school em-
ployment. Depending on when the ski area intends to open, these applicants
would usually be brought together at one of the first times after the ski
area opehs for an on-snow evaluation by the ski school director and super-
visory staff of each candidate's skiiing and teaching ability. The candidate
will usually be put in a role playing position to test his ability to instruct
and handle a class and to test his knowledge of ski instruction. Some candi-
dates may be seeking part-time positions and some may be seeking season
long employment. The backgrounds of these applicants will vary enormously.
Some may already have taught in prior winters for the ski school so that
their teaching and skiing abilities will already be well known. Some will be
former ski competitors who may be excellent skiers but totally lacking in
instructional experience. Some may be college students who are advanced
skiers and wish to earn extra money teaching part time. Some may have had
teaching experience in other ski schools and are seeking a new ski area
location for one reason or another. Some will be ski instructor certified from
one certification body or another, but many will have no certification. When
some applicants are asked to make their first turn it will be apparent that
they cannot ski at all and should be in ski school themselves rather than
trying out as instructors.
Once the ski school director and the supervisory staff make the preliminary
selections of those instructors that they wish to have as either part time or
full time, then the work begins of training the instructors via clinics on and
off the snow to familiarize them with the various programs and methods of
teaching specially utilized by the ski school. Standardization of teaching
technique is extremely important in a successful ski school operation. If a
ski school student has a lesson from one instructor one day with the instructor
giving him or her certain specific advice, then comes back another day and
is assigned another instructor, the student expects the second instructor to
pick up where the first instructor left off. The student does not expect to
receive contradictory advice from the two instructors, and this will happen
if the instructor staff of a ski school are not well trained and student faults
not diagnosed in a consistent, methodical fashion.
In most ski schools instructor clinicing continues at least once a week vir-
tually all winter long, often early in the morning before the first ski school
class session. Because ski school instructors serve an important public rela-
tions role, they are expected by the skiers they teach and by management to
know far more about the ski area or the resort than just the ski teaching
aspects. They will be asked about virtually every aspect of the company they
work for and the community they live in and they are expected to be expe-
rienced in their answers, and it is important to ski area management that
they be knowledgeable and factual in the information that they prefer.
The safety aspects of their position are particularly important. I have
mentioned above that they must have good judgment in where they take their
classes and how they handle themselves on the mountain. They must be able
to sense when a member of the class is overtaxing his or her strength. They
must know about elementary first aid and frost bite, and if an accident does
occur, they must know how to handle it correctly. In many ski areas if there
is a lift breakdown that requires evacuation, the instructors are expected
and trained to assist in the lift evacuation.
In many ski schools the instructors have an important social function some-
times being expected to organize bands or put on nightly entertainment for
resort guests and many times this is a part of their job. As in any other
employer/employee relationship in which the employee is working directly
with the public it is extremely important to the employer that the employee
conduct himself properly in his deportment with the guests. The ski school
stresses to its instructors that they recognize that these guests are on a
vacation and that they expect it to be a pleasant vacation and that the in-
structor can greatly help-or hurt-in this regard.
Part-time instructors are typically paid by the hour depending on whether
there is work for them. If they teach two classes a day they will typically
make about the same pay as other employees who work an eight-hour day.
PAGENO="0400"
396
If there is no work for them and they show up at ski school meeting times,
which are often about ten in the morning and one or two in the afternoon,
they will be given a ticket so that they may ski as at least partial compensa-
tion. Full time seasonal instructors are typically paid at least in the East,
a base pay of $90-115 a week of six days, if they are uncertified, and $125-145
a six-day week if they are certified. If either a part time or a full-time in-
structor teaches a private lesson the instructor typically receives about 50%
of the revenue from the private lesson. In the case of the full-time instructor
this payment is typically in addition to his base pay; in the case of the
part-time instructor it is typically in lieu of his hourly pay. A full-time certi-
fied instructor can average about $200 per week including his base pay and
split on private lessons that he teaches.
The above pay scales will vary substantially among different parts of the
country and even between different ski areas in the same part of the country,
but I think the numbers and methods of payment are reasonably typical,
although there may be substantially different methods of compensation used
in some areas. The pay scale, however, for ski school employees is governed
by the same economic factors that govern pay scales for other employees in
the ski area or for that matter employees in any business establishment. It
is largely a question of supply and demand with an independent judgment
made by each ski school director on how much he can afford to pay, on how
many ski instructors he wants to have on a full-time basis as a nucleus of
the ski school, on how much his competitors are paying their ski instructors,
on what kinds of qualifications he wants in his ski instructors, etc. For in-
stance, we have lost instructors we would have liked to keep simply because
they were offered more at a competitive ski area-more than we were able
to justify and smtimes the reverse is true.
3. THE BOLE OF INSTRUCTOR CERTIFICATION
There seems to be some confusion as to the role of instructor certification,
what it means, and what it does not mean.
What it means is that an instructor has typically taught a minimum number
of hours in a ski school under the direction of a ski school director. In the
East it is a minimum of 150 hours, which is the equivalent of one season in
full-time employment or two seasons in part-time employment. This minimum
experience level in teaching has to be varified by the ski school director that
the applicant for certification taught for. Typically in the spring an applicant
for certification will take an examination in the region in which he has
taught along with other similarly qualified applicants. The examination will
include the applicant's ability to demonstrate varying skiing forms, to show
his teaching ability in varying mock role playing teaching sessions, and to
show his skiing ability in two timed slalom runs and two freestyle runs. He
will typically have an oral and written exam and must have a standard first
aid card. The scores for the on-snow and off-snow parts of the examination
are tabulated, and if the applicant reaches a certain minimum score, he or
she receives a passing grade and is certified.
The principal advantage in being certified is that it provides the~' in-
structor with a set of credentials which are helpful to him in gaining em-
ployment because it shows that he has at least passed the threshold of
teaching experience and knowledge. He can use this certification as a justifi-
cation for requesting a pay increase or for being paid according to a higher
pay scale. The individual ski school likes to have a relatively high percentage
of its instructors certified because it is a mark of prestige for the ski school
and their professional relationship with other ski schools. It is typically not
an advertising claim that the school uses because if it did make the claim,
for instance, that 60 or 70% of its instructors were certified it would be a
very high percentage which would encourage the ski school customers to
request those instructors who were certified. As a result, there is usually
only a private claim that the ski school makes, but the certification badge of
the fully certified instructor is usually worn on the outside of his ski school
parka, because it signifies a higher professional status than those who are
not certified.
It must be understood that the training and development of ski instructors
is essentially handled on an apprentice basis with the training delegated to
the individual ski schools throughout the country. Some ski schools do not
PAGENO="0401"
397
care at all about certification of their instructors, feeling that certification
is a meaningless anachronism that is not significant nor considered important
by the public. These ski school directors contend that if they have trained
their instructors well these instructors will serve the public well and
there is no need for certification. Any ski school director can enumerate
countless examples of certified instructors that they have encountered whom
they consider for one reason or another poor instructors. A ski school director
typically evaluates his instructors on their individual ability to do the job
they are hired to do and not on their certification status. In shOrt, most ski
schools and ski areas look upon certification status as a door opener for a
prospective employee, similar to a college degree in some regards but not a
guarantee of employment or of the prospective employee's ability to do a good
job as a ski instructor, considering the wide variety of abilities and talents
that are sought by the ski school and the ski area in the individual ski
Instructor.
4. THE CONCERNS OF THE SMALLER TO MIDDLE SIZED AREA OPERATOR REOARDING THE
INDEPENDENT SKI INSTRUCTOR ISSUE
We see the independent ski instructor issue as one that could present far
reaching problems to small to middle sized ski areas, potentially more detri-
mental to areas our size than to larger ski areas.
Some of the potential problems I foresee are as follows:
a. Competitive Product, Better Prices.-The independent ski instructors
claim that they should be entitled to offer a better .competitive product to
the public and that they could do it at a better price. First it should be
recognized that they are only proposing that they offer a competitive product
(private lessons), which are often the most profitable lessons in the ski school
on the part of the skiing public that has the greatest ability to pay; i.e., the
very upper income skier. To the extent that they succeed in this they are
upsetting the economic equation in the ski school operation as a whole to
the extent that it is not unlikely that class lessons would have to be raised
in price to compensate for the loss of revenue.
b. Right to Make a Living.-This is an argument that has been used to my
knowledge by less than five ski instructors working at one ski area, which
happens to be the largest in the country. I have not heard of any such argu-
ments advanced by the thousands of other ski instructors that are employed
elsewhere in the country or for that matter even in the Aspen Ski School. It
is not an issue with us, for instance, and as President of the Eastern Ski
Area Operators Association, I have not heard the subject raised at any of the
other 200+ ski areas in the East which are on both public and private land.
In my mind it is no different from a ski patrolman, or a cafeteria employee,
or a parking lot attendant, or a snowcat driver, or a lift loader who can't
get along with his boss and wants to work in an independent fashion. If
these instructors were in any of these other categories of ski area employees,
their claim to a right to work independently would be patently ludicrous.
The fact is that they want to be independent because they cannot abide by a
normal employee/employer relationship, and if they are allowed to persist in
their claim for independence, it opens the door for any dissatisfied instructors
in any ski area on National Forest land to request an independent instructor
status, returning to the ski area where he was fired, soliciting customers from
among the ski area skiers. It doesn't take much imagination to guess what
he would say about the quality and operation of the ski area ski school and
the seeds of dissention and bitterness that he could sow.
c. The Private Lesson As Compensation.-As mentioned above most ski
schools use a portion of private lesson revenue as an addition or bonus to the
base salary of their full-time seasonal ski instructors. If independent in-
structors were able, by offering cut rates or any other device, to siphon off
a large measure of private lesson business, it would mean that in effect they
are taking this source of income not only away from the ski school but also
away from other instructors in the ski school who are counting on private
lesson income to augment their base salary. The net result would he that
the ski school would have to raise base salaries commensurately and class
lesson prices would undoubtedly rise, as a result affecting far more of the
skiing public at large, particularly the lower income elements of the skiing
public.
d. Choice of Techniques.-This has been offered as a reason by the inde-
pendent instructors, but it is hard for me to see that this is in the best
PAGENO="0402"
398
interests of the public at large. As mentioned earlier, standardization of tech-
nique is an important element in achieving skiing progress on the part of the
student. Ski instruction is not particularly different from other forms of
instruction. You usually learn best when you are in a system that goes from
a-z on a consistent and logical progression basis. To offer alternative ski
techniques is a little like offering a different way to diet. Each diet fad comes
along offering a quick way to lose weight and the overweight skip from one
fad to another and most of them don't lose weight. It is relatively easy for
a ski instructor to corner a customer claiming to teach the French technique
or the Austrian technique as better than the American technique, but the
fact is that the student in all probability will end up confused and confronted
by contradictory advice and will not improve his skiing ability even though
he paid private lesson prices for the misinformation.
e. "The Permittee Independent Ski Instructor."-The independent ski in-
structor would have the Forest Service grant some form of special permit to
the independent ski instructor to perform his trade at a ski area. This raises
some interesting questions. The Forest Service does not now have nor does
it need to have an ability either at the ranger level or supervisors level at
the regional level, or the Washington level to judge who should be granted
independent ski instructor permits and who should not be granted such a
permit. Certification status alone is not adequate. We could fire a certified
instructor tomorrow for having repeatedly used bad judgment in class han-
dling and conceptually he could be back on our slopes the day after with a
permit from the Forest Service. And who would monitor his performance?
The Forest Service? Someone else? Certainly not the ski area operator who
fired him for bad judgment in the first place. But he could be using our lifts
and taking our customers on our slopes into areas of potential danger. As
the permittee we are heavily responsible for everything that happens in our
ski area boundaries. We work closely with the Forest Service to see that
the skiing public is cared for as well as possible. The independent ski in-
structor, by causing an accident, could easily create a situation in which the
ski area, through no fault of its own, could be named as a defendant in a
negligence action along with the independent instructor, and I suspect the
defense attorney would probably look to the ski area for the bulk of any
damages he could get from the jury. The fact is that there is no way that
an independent ski instructor's activities could be monitored by the Forest
Service or anyone else unless an entire new bureaucracy were established
just for this purpose, which hardly seems productive.
f. No Solicitation at the Area.-This is another area that would be impos-
sible to monitor or control. If an independent ski instructor did not have
any clients ~booked one day, where would he go to look for potential business
at the ski area? He would say he was just taking a day off and skiiing for
his own enjoyment, but what would he do in lift lines, and what would he say
riding up a chair with a skier? What would he say with the people he had
lunch with in the base area cafeteria? The fact is that it would be impossible
for him to avoid solicitation or for anyone else to control it. It would result
in more ugly bitter scenes' that are not in anyone's best interests.
g. The Autonomy of the Single Permittee.-If the independent ski instructor
is given a permit to teach at a ski area, it seems to me that the entire
foundation and precedent of looking to one company for responsibility in
operating a ski area on National Forest land has been destroyed, or if not
destroyed badly bent. The present system which is predicated on this premise
works and works well regardless of blemishes and misperfections that can
and should be corrected. The single permittee premise is a cornerstone, and
I think it should be held inviolate. It is the basis for any organization held
accountable for its actions. As soon as you have shared responsibility, par-
ticularly where the shared responsibility has divergent interests and objec-
tives, the premise Of accountability is lost. The concepts and principles at
stake here I think far outweigh in the public interest whatever the claims of
the independent ski instructors. The independent ski instructors have not
shown that the public has been ill served by the ski school system as it exists
now in the United States. They have not shown that there is widespread sup-
port among instructors for their own point of view or that the skiing public
sees a need for independent ski instructors. Is there really more to their
claim than the fact that they cannot get along as employees with past em-
ployers?
PAGENO="0403"
399
I think the converse is true. If they are granted independent permittee
status by the Forest Service, Pandora's Box will be opened with much of the
management framework of the Forest Service open to substantial change and
revision. I truly believe that the ramifications of this kind of decision could
reach far beyond independent ski instructors and that by and large these
ramifications would directly or indirectly be detrimental to the public interest.
I would encourage caution before proceeding with changes in the permittee
status that could have such far reaching effects.
Sincerely,
THOMAS A. CORCORAN,
President.
Senator HASKELL. Our next witness is Mr. James R. Branch, pres-
ident, Association of Ski Area Consultants, Franconia, N.H.
STATEMENT OP IAMES R. BRANCH, PRESIDENT, ASSOCIATION OP
SKI AREA CONSULTANTS, PRANCONIA, N.H.
Mr. BRANCH. Thank you very much, Senator.
I am James Branch and I am president of the Association of Ski
Area Consultants, commonly called ASAC. I am also president of
Sno-engineering, a firm which has specialized in recreation con-
sultancy for 18 years.
The Association of Ski Area Consultants is a professional organi-
zation of qualified mountain resort planners who collectively repre-
sent almost 300 years of experience involving such diverse exper-
tise as engineering, architecture, public accountancy, landscape archi-
tecture, mountain design, economics, marketing, and financial plan-
ning. Our membership spans the country from New Hampshire and
New York to Colorado and Washington State.
We have reviewed 5. 2125 and the testimony at the hearings in
Denver and Aspen, Cob, and I am pleased to present the position
of our association on the bill.
We applaud the intent of this legislation to institute much needed
reforms in the outdoor recreation permit system, to increase the
physical scope of lands leased for recreation use, and to sponsor rea-
sonable prices to the public while maintaining the quality of the
environment.
At the request of the National Ski Areas Association, ASAC draw-
ing on the talents of its membership, has initiated a project to
design a prototypical ski area requiring low initial investment which
would offer skiing opportunity at a comparatvely low cost to the
public. Due to the extreme time constraints related to the date of
this hearing, we have not completed the project. Shortly after the
first of the year our work product should be available to the com~-
mittee.
In order to evaluate the potential for success of a protoype "low
cost" area, we must look at the current state of affairs in the sk~
industry today. For instance, the "1974-75 National Ski Areas As-
sociation Economic Study of North American Ski Areas" evaluates
a sample of 100 ski areas from all regions of the country, 65 percent
of which operate under USFS permit on public land.
The study shows: (a) Average life ticket revenue is $6.14 per day.
(b) Lift ticket revenues varied from a low of $2.29 per day to a
high of $10.50 per day. (c) Lift revenues at 42 percent of these 100
areas averaged under $5 per skier visit.
PAGENO="0404"
400
In order to determine the feasibility of developing an economy ski
area with a low ticket price, several models need to be developed.
One such model would involve direct government financing. In lieu
of such direct government financing another model would be total
private financing with relaxation of some existing standards of the
Forest Service relating to underground utilities, slope grooming,
avalanche control, staffing, et cetera. A third model would involve a
combination of the first two mentioned.
Based on our preliminary analysis of such an economy area it
appears that additional compromises in amenities characteristic of
most fully developed ski areas may need to be made. These compro-
mises related to such things as:
Limitations on base lodge and food service; modest building con-
struction involving, perhaps, prefabricated materials; spartan sani-
tary facilities; minimal support services in terms of ski school, repair
shops, et cetera; surface lifts instead of chair lifts; volunteer pa-
tro1s; reduced snow-grooming equipment; and allowing more skiers
per acre.
Moreover, we must investigate what level of recreational opportu-
nity is now being provided, what the participation levels are, and
what capital and startup costs would be involved.
I would appreciate any further guidance or suggestions of you,
Mr. Chairman, and members of the subcommittee as we pursue our
study.
I shall be pleased to try to answer any questions you may present.
Senator HASKELL. Well, Mr. Branch, I think your project is ex-
tremely worthwhile. Your figures of ski area charges are inter?st-
ing. What I would be particularly interested in is without relaxing
safety requirements, what kind of area could be constructed that
would give maximum opportunity to people.
In other words, what is the lowest cost consistent with safety?
Now, that has to be extrapolated, obviously, in a type of bill of this
kind of thing. I remember when one of my daughters went to college
out in Illinois and she went out skiing and was surprised to find.
that when she got to the top of a ski area, it was a corn field. But
what goes in Illinois may not go elsewhere. Consistent with safety
and with varying factors of say downhill drop, what could be done
to make skiing on Forest Service lands more available to the public?
Mr. Bn~NcH. Sir, that would be an objective of our study. We
will try to develop a prototypical area consistent with the parameters
of good, safe ski development and within the limits of environmental
constraints and controls. The area where the models will represent a
good cross section of the full spectrum of skier demand.
There will be an adequate amount of recreation experience in
terms of vertical transport, feet of skiing a day. And our approach
will be to start with a minimum physical standards of development
that will produce these effects to investigate the economics of that
physical plan. And then the hardest part may be to determine the
marketability for attraètiveness of that particular model.
Senator HASKELL. I look forward greatly and I know other mem-
bers of the subcomittee will to the results of your study. Thank you
very much, Mr. Branch.
Mr. BRANCH. Thank you.
[Subsequent to the hearing the following information was re-
ceived:]
PAGENO="0405"
401
ASSOCIATION OF SKI AREA CONSULTANTS
5975-76 PRESIDENT (603) 823-5539
JIMBRAKCH SEC-TRESS (303) 49?0520
SNO-D4GNEIRINGJNC.
FRANCO~UAN.H ~ December 30, 1975
VI CE PRES I DENT
SECRETARYITREASURER
TEOFARWOL&AOOC.INC. Senator Floyd Haskell, Chairman
BOUW8RCOL0..80303 Sjibconomittee on Environment &
DIRECTORS: Land Resources
WL80RG~N Senate Interior & Insular Affairs
Committee
United States Senate
S~PVOO~HUS Washington, D. C.
Dear Senator Haskell:
I have attached to this letter a statement from the Association
of Ski Area Consultants concerning S-2125. We respectfully
request that this statement be added to the official testimony
taken on Monday, November 17, 1975.
We trust that our perceptions will be of help as you draft final
legislation.
Sincerely,
Ted Farwell
Secretary-Trea surer
Association of Ski Area Committee
TF :ba
Enclosure
PAGENO="0406"
402
As a matter of introduction I would like to explain what the Association
of Ski Area Consultants is. We are a professional organization of qualified mountain
resort planners who collectively represent almost 300 years of experience involving
such diverse expertise as engineering, architecture, public accountancy, landscape
architecture, mountain design, economics, marketing, and financial planning.
Our membership spans the country from New Hampshire and New York to Colorado
and Washington State.
We have reviewed the draft bill, S. 2125 and testimony at hearings in Denver
and Aspen, Colorado. Our comments and position are as follows:
We applaud the intent of this legislation to
institute much needed reforms. in the outdoor re-
creation permit system, to increase the physical
scope of lands leased for recreation use, and to
sponsor reasonable prices to the public while main-
taining the quality of the environment. However,
WE SINCERELY BELIEVE THAT THE PUBLIC WILL
BE OFFERED A WIDER VARIETY OF SKIING OPPOR-
TUNITIES AT LOWER COSTS BY ACTIONS WHICH
ASSURE CONTINUED FREE ENTERPRISE COMPET-
ITION IN THE SKI INDUSTRY THAN BY INCREASING
GOVERNMENT CONTROLS.
The record supports this statement.
PAGENO="0407"
403
There are two elements, in the proposed legislation which appear to inhibit
new competition and/or replace competition with regulation.
I. SECTION 3(a) 2: This section requires that a new ski area
permit must be submitted to and reviewed by a Congressional
Committee. This political process will inhibit new development*
by making ski area permit applications political bargaining tools,
prey to lobbying and subjective decision making. Also, the
specification of 1280 and 5000 acre limitations as set forth in the
bill will motivate areas to automatically tailor their requests to
slightly less than those figures rather than being individually
reflective of good land use planning.
H. SECTION 4: The requirement that the Secretary shall
review and act upon ski area fees to the public will restrain
competition. Private enterprise should test their markets by
optimising price/volume relationships, not by reacting to
committee-established criteria for "reasonablness'. Natural
risks in the sid business are great enough as is. Being
subjected to the uncertainties of rate* control procedures
will raise the cost of capital (the second greatest cost in
ski development behind labor) to levels which the industry
cannot support. Reductions in investor risk, on the other
hand, will encourage increased competition and thereby lower
costs to the public.
-2-
PAGENO="0408"
404
We urge you to eliminate, or revise these two sections in order to motivate
investment and competition..
The preamble to the bill states essentially that ". . .where such facilities
and services are.. .advisable. . .based on ~ ~ planning conducted ~ the
Forest Service. . .shall be encouraged through issuance of permits. ..".
The U.S. Forest Service, if properly staffed and financed, is competent
to review proposals and act responsibly in the public interest. However, the
inadequacy of ~ ~ planning by the Forest Service has in the past suppressed
growth of new ski facilities. Planning and fore~asting, specifically in a new, complex,
and highly specialized industry such as skiing are better achieved through many
separate decisions by private enterprise than by one central public sector agency.
There appears to be a trend towards oligopoly in cei~tain segments of the ski
industry. One reason for this is that some well meaning USFS officials have, with-
held new area "designations" and "permits" because they subjectively felt there was
inadequate need or demand. The USFS role should be limited to that of physical
land management. Market and economic decisions should be made by the investing
private sector.
Further, the USFS should not artificially Protect its permittecs, some of
whom can be proven lacking in physical and/or economic viability. These areas should be
allowed to experience periods of distress, adjustment and reorganization. The
processing of permits for new developments should not hinge on the success of
previous projects, since this imbues the permit with a value far beyond its intended
-3-
PAGENO="0409"
405
function. For instance, nowadays the prospective investor's first question is
"do you have a permit?" It should be "is the project physically and economically
feasible?" Under todays conditions a "permit" or "designation" is mistakenly con-
strued by many to be a guarantee of physical and economic soundness.
Our position advocating the decreasing of controls now excercised by the
USFS in administering ski area permits is supported by the following comments:
1. The USFS has, many times in the past, administered the laws
inequitably, non-uniformly and without adequate expertise. They
have, however, done their best with insufficient budget and man-
power resources, especially in a period of rapid ski industry
growth, new environmental compliance requirements, and increas-
ingly broad economic reverberations, all of which have created
problems which the Forest Service has been historically unequip-
ped to handle.
2. We support and offer our assistance in promulgating section
3(b) which requires the development of revised guidelines for
the issuance of ski area permits, since ski development does
have far ranging environmental and socio/economic affects on adjacent
private ana public lands and communities. We support limitations on'
development scope to that which is compatible with man and his envi-
ronment, but we resist restrictions based on presumed economic and
market forces.
3. We submit that, in general, private sector competition is pro-
-4-
PAGENO="0410"
406
viding skiing to the public at rates lower than, or comparable to,
most other forms of participant outdoor recreation. An assessment
of rates charged to skiers for recreational use of public lands must
not be based on a projection of one or two rather unique circum-
stances to the industry as a whole. One must evaluate reliable
national averages and relate them to specific circumstances such
as capital investment and risk in order to develop a true picture
of the relationship between private enterprise and the general public.
For instance, the 1974-1975 National Ski Areas Association Economic
~ of North American Ski Areas evaluates a sample of 100 ski areas
from all regions of the country, sb:ty five percent (65%) of which operate
under USFS permit on public land. The study shows:
(a) Average lift ticket revenue is $6.04/per day.
(b) Lift ticket revenucs varied from a low of
$2.28/per day to ~ high of $8.82/per day.
Cc) Lift revenues at fo~'ty five percent (45%) of
these 100 areas averaged under $5.00 per
skier visit.
4. The demand for skiin~ continues to grow, even in the face of recession.
However, investment capital is reluctant to enter the field for new develop-
ments or expansion of existing areas cue to increasingly long planning lead
times, (and time is expensive in the 1970's) heavy front end costs, and the
-5-
PAGENO="0411"
407
virtually insurmountable uncertainties associated with obtaining a "designat4ion"
or "permit". These factors all tend to enhance the oligopolistic trend.
Legislation must motivate new investment in order to stimulate competition.
5. Ski areas have historically shown marginal returns on investment. The
Economic Study of the 1974-1975 season (perhaps the best in the ski industry,
economically speaking) shows the following results for the 100 areas analyzed:
(a) An ~ profitability of 11.3% (return on undepreciated
capital investment before interest and income tax).
(b) 73 profitable areas out of the 100 showed an average profit-
ability of ~ 16.3%.
With investors being offered 8% + for tax free municipal and state securities,
and in consideration of the risks inherent in the ski industry, we doubt that even a
25% after tax return is adequate to attract investment capital today.
Thus, from the data presented above it would appear that any committee-
designed "reasonable" rates would tend to be higher than the existing privately
developed rates, especially if the public costs of administration and private sector
COst3 for rate justification are considered.
In conclusion, we suggest that the ski industry as a whole is doing an
acceptable job in providing ski recreation to the public at reasonable rates, and
that the superimposition of more government controls will only serve to compound
existing problems and inevitably result in an escalation in costs to the skier. We
urge recognition of our position and supporting statementS for strengthening private
sector competition in the industry, thereby achieving the objectives of the bill with-
our creating a regulatory bureaucracy.
-6-
PAGENO="0412"
408
ASSOCiATION OF SKi AREA CONSULTANTS
197576 PRESIDENT (603) 823-5539
PRESIDENT December 30 1975 SEC-TREAS(303) 499-0520
JIM BRANCH
IMNINGHREVNG. INC
P.O. ROX 60
FHAPCONIA.N.N. 035R0
VICE PRESIDENT
MN SORGIRSIN
MN BOIGIRSIN& A550C. LTD.
626 5115*6(1 RUSDING
51ATTLCWASH.se1o Senator Floyd Haskell, Chairman
SECRETARY/TREASURER Subc ommittee on Environment &
~&ASSOC.lNC Land Resources
~ Senate Interior & Insular Affairs
DIRECTORS1 C ommittee
United States Senate
Washington, D. C.
BILL SCOTT
SIIP500BIIEIS Dear Senator Haskell:
The Association of Ski Area Consultants is pleased to provide
you with the following analysis of the cost and faa sthility of a
prototype, low cost (Volkswagen) ski area for the 1970's. Our
assignment is based upon the objective of attempting to pro-
vide a quality, low cost skiinc? experience for the consumer who
currently perceives himself as priced out of the skiing market.
Findings & Conclusions:
1) We have designed a spartan, yet safe and sanitary prototype
ski area using the least expensive cable, surface lifts with no
superfluous amenities. This prototype ski area is described
in detail in the accompaning report.
2) This spartan ski area Is budgeted at $833 per skier of capacity.
Our capital budget for an area supporting crowds of 1800 skiers
is $1,500,000.
3) The economic analysis of the feasibility of this prototype
ski area is based upon weather conditions that will allow for
an operating season of 130 days or more.
4) Ski lift ticket prices must be ost $7.00 for Adult, weekend, all
day tickets, and lift ticket revenue must average $5 .35 per skier-
- visit to justify this concept.
PAGENO="0413"
409
Senator Floyd Haskell Page 2
Observations:
A) The average adult ski lift ticket price for 100 respondent ski areas
analyzed In the 1974-75 "Economic Analysis of North American Ski Areas
was $7 .94, only 13.4% higher than the $7 .00 required to justify the prototype
low cost ski area. There are three primary reasons:
1) Inflation, and particularly the double digit rate of 1974, has increased
the capital costs of all materials and labor, and also increased the cost of
capital, and the expectations of investors who are asked to assume the risks.
2) Current ski area management has resisted price increases to the
extent that the average ski lift ticket is a better value today tIa n it was in
1968. That is, the price of skiing, as represented by the ski lift ticket
has increased slower than the cost of labor, materials and services. The
average ski area operator has shared his favorable capital cost and fixed
charges position, with the skier.
3) Current returns to investment capital are insufficient to justify
the risk. Most ski area operators would be far better off financially to
have put their funds into tax exempt municipal securities.
B) If the public truly wanted such a low cost ski area, we believe that the
Industry would have created more. In general, it is our experience that
those ski areas providing the Cadillac facilities attract a larger share of
the skier market, and that while skiers may be vocal about the perceived
high cost of skiing, that given the alternative, low cost, Volkswagen ski
area, that they will pay the difference and ski the Cadillac. In fact, we
doubt that this prototype ski area could attract sufficient skier-visits to
reach break-even.
Table I summarizes the 10 ski areas who responded to the 1974-75
`Economic Analysis of North American Ski Areas, who reported ski lift
ticket prices of $6.00 or less.
TABLE I
Ski Industry Average 10 Ski Area s Tickets $6.00
Gross FixedAssets $2,736 $340
Total Revenue 1,198 122
Less: Expenses 890 129
Operating Rofit (Loss) 308 (7)
Less: Interest 127 9
Rofit (loss) Before Tax 181 (16)
Oper. Profit/G.F.A. 11.3% (21.2%)
Days of Operation 130 80
Utilization 36.5% 35 .1%
67-512 0 - 76 - 27
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410
Senator Floyd Haskell Page 3
C) In cutting corners to conceive a prototype low cost ski area we have
skimped on the skiing and skier comfort items, while of necessity
maintaining those safety and sanitary and environmental safeguards that
are decreed by law. As a result, we foresee a notable reduction in the
quality of the skiing experience and an increase in the skiing accident rate.
D) We believe that looking at the ski industry as it now exists, as usage
Increases and as the midweek periods fill up, that the relative cost of
skiing, as represented by the deflated price of a lift ticket will slowly
decrease in response to competition. We submit that, since the average
ski lift ticket price has grown less than inflation over the past eight sea sons,
that in relation to the critical purchasing power of the average individual,
that todays ski lift ticket is a greater vah~e than the lift ticket in 1968.
Table II compares the price of a ski lift ticket to the change in purchasing
power.
TABLE II
1968 1975. Change
Par Capita, Effective Buying Income - $2,697 $4,602 +70.6%
(Survey of Buying Power-Sales Management)
Weighted Average Ski Lift Ticket Rices
U.S.F.S. Parmit Areas $5.57 $8.81 +58%
AllColoradoSkiAreas $5.59 $8.84 +58%
Aspen SkiAreas $6.50 $10.00 +54%
Breckenridge, Loveland & Winter Park $5 .00 $7.50 +50%
We hope that these findings will assist in your deliberations.
Sincerely,
,1~S;3\W~
Ted Farwell
Secretary-Treasurer
Association of Ski Area Consultants
P.S. Our further research revealed that even the price of a standard low
cost, Volkswagen, model 1131, rose from $l7)9 in 1968 to $3,595 in 1975;
an escalation of 99.8%.
PAGENO="0415"
411
SECTION I - CONCEPIUAL DESIGN AND CAPITAL BUDGET
1) Design considerat1oii~
Our approach to the design of a ski area1conceived to minimize the cost
of skiing)is to cut back upon three attractiveness variables or planning
parameters and in addition, to serve skiers with spartan, yet safe and
sanitary facilities.
A) Hanning parameters (variables in attractiveness)
The quality or attractiveness of a ski area is measured objectively by
several density parameters. Successful ski areas provide just adequate
balances in these variables to attract skiers in sufficient volumns to
provide an appropriate return for the risk involved. Three of these
measures are `design skier density per acre of ski terrain;" design skier
demand for uphill capacity and downhill skiing;' and "design capacity for
food, service and warming."
(1) Design skier density per acre of ski terrain:
It costs between $1,000 and $3,000 to construct an acre of ski slopes
an4kr trails. Therefore, one cost savings is to plan for higher
densities per acre. Acceptable densities run from 100 per acre on
* beginner.slopes In the midwest,to 5 per acre on expert, powder slopes
* in the west. Average acceptable densities, east + west are 15-20
per acre. Current densities at western mountain resort ski areas
are 10 skiers per acre.
Our prototype low cost ski area is based upon increasing densities
to 26 per acre as one capital cost savings measure.
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Page 2
(2) Design skier demand for uphill capacity and downhill skiing:
It costs between l0~ and 65~ to construct one vertical transport
foot per hour of uphill ski capacity. Therefore, a second cost
savings is to plan for providing skiers with less skiing per day
(i .e., a sking them to endure longer ski lift lines). Acceptable
demand parameters run from 500 vertical feet per hour for beginn~-s,
(2,500 vertical feet of skiing per five hour day) to 4,000 vertical
feet per hour for experts (25,000 vertical feet of skiing per six
hour day). Average acceptable demand is currently some 1,500 to
2,000 vertical feet per hour per skier.
Our prototype low cost ski area is based upon decrea sing average
skiing to 1, 110 vertical feet of skiing per hour per skier as a second
capital cost savings measure.
(3) Design capacity for food service and warming: It costs between
$850 and $1,400 per seat to construct the required day use center
to provide skiers with warm shelter, food service, shoe storage,
toilets and `brown-bag lunch room facilities. A third cost savings
is to provide less seats, and less space per seat, and plan for
higher turnover. Current acceptable planning parameters call for
seats for one third of the ski areas design capacity at 30 square feet
per seat (i .e,, for table seating, kitchen, serving line, storage,
toilets and circulation).
PAGENO="0417"
413 ~
Page 3
Our prototype low cost ski area is based upon decreasing the
size of the day use center to accommodate only one quarter of the
ski area design capacity1at only 25 square feet per seat. This is
the third capital cost savings measure.
B) Capital cost parameters (variables in quality). Attractiveness Is also
a function of the equipment and materials used in the construction.
Girrent trends are towards high capacity (1200 hr-l800/hr) double and
triple chair lifts; completely groomed, shaped and seeded ski slopes and
trails; nightly snow grooming and smoothing of slopes with teams of
over-snow, tracked vehicles; plush, expansive, mountain day use
*centers and even underground or multi-level parking structures where
land is at a premium. In each case, where possible without compromising
safety or sanitary standards, our prototype low cost ski area is based upon
the minimum quality standard.
1) Ski lifts planned are standard, mass produced Ftma lifts, the
current least expensive, safe uphill transportation. (A return to
rope tows is rejected as too spartan.)
2) Ski slopes and trails planned Include only clearing and cutting
stumps flush t o the groun ci. Thus, the low cost ski area must be
favored by heavy snow accumulations.
3) Mountain equipment Included consists of two over-snow tracked
vehicles ,thus skiers will find more unbroken snow and larger mougles.
PAGENO="0418"
414
Page 4
4) The planned day use center must be located at the base, with no
mountain fadilities whatsoever. (mid-mountain or summit building
construction adds from 20% to 30% to the basic building costs.) In
addition to the decreased size planned, the materials used must be
standard and probably mass produced such as a metal Butler
building or trailer moved, modular units.
5) Base area equipment includes such required equipment as office
furniture and cash registers; adding machines and typewriters; first-
aid splints and toboggans; utility trucks and trash cans; tools and
lockers; telephones and radios; and signs, etc. Typical capital
budgeting allows from $2 0-30 dollars per skier capacity. In this
spartan prototype we have budgeted $15 per skier.
6) Maintenance is a major requirement at a ski area where ski
lifts and vehicles consist of numerous moving parts. However, we
have budgeted for a minimum, one bay, metal building, meaning
major repairs and overhauls must be contracted out.
7) Access, parking and utilities are fully 35% of this minimum capital
budget, and an area of little savings potential. Early pioneer ski
areas piped in urireated stream water, used outdoor toilets, parked
along state highways, and ran tows with discarded automobile engines.
Safety and sanitary regulations and standards no longer allow for such
frugality. Water must be treated and stored for fire protection; toilets
PAGENO="0419"
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Page 5
are flushed and waste disposed of without excessive pollution; parking
for an average of one auto for three skiers must be provided adjacent
to the slopes and off the highway, and lifts, kitchens and shops
require three pha sed electricity.
These, generally hidden and underground services vary Immensely
from site to site, and are one of the critical fea sthility Items that
differentiate mountains. Access road costs not only vary directly with
length, but can become the critical economic determinate If heavy
cuts and fills, rock removal, drainage and gravel requirements are
encountered. Parking requirements impose similar constraints and
a close, natural level site, is an essential physical element.
Our prototype low cost ski area assumes average site conditions,
a one half mile, gravel access road; some slope and drainage problems
for parking; an on site water source with treatment and storage costs
only; a self contained package sewage treatment plant and Internal
power distrthution requirements only. (Pbwer to the site will be at
no cost to the developer.)
8) Services such as planning; physical,economlc, financial and
environmental studies; engineering, construction supervision and
setting up the organization are almost impossthle to budget. Our
projected costs are rock bottom and anticipate a minimum of time.
PAGENO="0420"
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Page 6
These aspects of ski area costs involve heavy investments of time
by skilled professionals whether ski area staff or independent
consultants. The planning process, as it now exists in Colorado,
requires 33 steps between private developer; federal, state, regional
and local regulatory agencies; and the public through hearings, to
obtain designation and a development permit. Study is currently
underway to reduce this to 16 steps, requiring ideally, some 18 months,
still an expensive planning process. Frequent meetings between two
or more skilled professionals, often after traveling several hours,
to iron out some misunderstanding or poorly communicated detail,
results in abnormally high costs for the planning function.
2) The Prototype Low Cost Ski Area:
The following is a description of our prototype low cost (Volkswagen) ski
area. We have selected a skier capacity of 1,800 so as to spread sons of the
basic costs over a greater earning capacity (i.e., access road, sewer and
water systems, power, etc.). In reality the specific site constraints will have
the major bearing upon skier capacity.
We have used a site with a 1,000 foot vertical diop, rather minimal in the
west, but average in the east and generally non-existant in the mid-west.
The same result could be obtained using one long lift over a 2,000 foot vertical
or four shorter lifts over a 500 foot vertical.
PAGENO="0421"
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Page 7
Table III is a detailed summary of the probable capital cost of this area,
designed in accordance with tI~ parameters discussed and constructed with
non-union labor and with spartan quality facilities.
The total capital budget of $1,500,000 or $833 per skier of capacity is
some 40- 60% of current (1975) capital budgets for proposed ski areas, based
upon our judgements concerning attractiveness and quality.
Section II evaluates the economics of this low cost ski area and sets the
logical minimum ski lift ticket price.
PAGENO="0422"
418
TABLE III
Page 8
PROTOTYI~ "LOW COST' (VOLKSWAGEN) SKI AREA CAPITAL BUDGET
ITEM
SKIER CAF~ICITY
I) I~UMARY SKI FACILITIES:
A) Ski Lifts (Poma Lifts)
1) 3,500' x 1,000$ x 900/hr.
(700 capacity)
2) 3,500' x 1,000' x 900/hr;
(700 capacity)
3)1,900' x 285' x 700/hr.
(400 capacity)
B) Ski Slopes & Trails
1) 70 Acres (Ave.Skier Density
(26/Ac.)
C) Mountain Equipment
1) Two Oversnow Vehicles & Attachments
D) Snowmaking Equipment - 10 acres
TI) Mountain Work Road
II) REQUIRED SUM'ORTING FACILITIES:
A) Day Use Center (450 seats)
B) Ski Patrol, First Aid, Office, etc.
C) Furniture & Fixtures
D) Base Area Equipment
E) Maintenance Facility (1 Bay)
F) Snow Removal Equipment
IV) SERVICES
A) Planning, Surveying, Engineering,
Construction Supervision, etc.
B) Environmental Evaluation (Air, Water,
Wildlife, Scenic & Socio-economic)
C) Organization
D) Working Capital
@$l,000/acre for 50
@$2,000/acre for 20
50'
40
10,000 ft.@$3/foot 30
11,250 sq.ft.@$25/sq.ft.
750 sq,ft,@$20/sq,ft,
15% of Day Use Center
@$l5/skier-capacity
1000 sq,ft,@$20/sq. ft
~EROJECTION CRITERIA CAPITAL
BUDGET
1800 SKIERS (000)
@$26/lineal foot . $ 91
@$26/lineal foot 91
@$20/lineal foot 38
50
40
III) ACCESS & UTILITIES
A) Access Road (1/2 mile-gravel @$34/foot
B) Water System (Treatment & Storage
C) Sewage Treatment Facility (Package
Plant)
D) Power & Communications (Internal
Distrthution)
E) Parking for 600 Autos (400 sq.ft./auto@$0,58/sq.ft
2 80
15
43
27
20
20
90
100
75
50
140
100
50
10
50
TOTAL CAPITAL BUDGET:
$1,500
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Page 9
SECTION II - OF~RATIONAL COSTS AND BREAK-EVEN
There are several acceptable methods of evaluating the economic
feasibility of a specific conceptual plan for a ski area * We offer two analyses
here, both based upon solving for the required ski lift ticket prlce,given the
other economic constraints. Evaluation A is based upon a break-even
analysis, aid the need to achieve reasonable returns for the financial risks
involved. Evaluation B is based upon a quick rule-of-thumb analysis
developed over many years of preparing ski area feasibility studies, and
supported by data from the 1973-74 and 1974-75 National Ski Areas Association-
University of Colorado, Division of Business Rçsearch joint studies "The
Economic Analysis of North American Ski Areas."
1) Evaluation A - Break-even Analysis:
The break-even analysis illustrates the levels of usage required to
reach typical financial goals. Usage is expressed in terms of skier-visits.
A skier-visit is one skier purchasing a day or 1/2 day ticket, a day of
skiing with a season's ticket or a prorating of days on a 2, 3, or 5-day
special. The four levels normally found to be appropriate are:
A) Cash Break-even: (The volume required to meet annual cash operating
expenses. ~1ncipal pay back and interest are not operatip~ expenses.)
B) Operatloil Break-~y~~ (The volume required to meet total operating
expenses including non-cash depreciation expense.)
C) Break-even (Includes Interest expens~~:
D) Earn a reasonable return: (The volumn required to meet total operating
expenses and earn a return on equity (investment) capital commensurate
with the risk involved. Or, that return required to attract private capital.)
PAGENO="0424"
0
Co
z
04
Co
Co
z
Co
Co
0
CO
0
420
Chart A
Break-Even Analysis
Prototype Low Cost Ski Area - 1975
Gross Fixed Assets $1,500,000 Skier Capacity - 1800
I `Skier-visits (000)~
A B C D
PAGENO="0425"
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Page 10
This rate will vary in accordance with the financial structure of the
particular ski area developer. It is our judgement that in the current capital
funds market that it will cost at least 4 points above prime for debt capital,
and that risk capital will require a potential of realizing a 30% after tax
return in order to commit venture capital funds. (30% after tax will require
earnings of 55% before tax.) Thus, ba sed upon maximum prudent leverage
(70:30), the average cost of capital for our low cost ski area in 1975-7 6 is
24.2%!
Proportion Rate
Long Term Senior Debt .70 11% = .077
Invested (Risk) Capital .30 55% =j~
.242
The usage levels are expressed In three ways. Skier-Visits and
Dollars of Revenue define the absolute measure, while Percent of Capacity
describes a relatIve measure. Relating usage to capacity provides a tool
for preparing industry comparisons.
Chart A is the tool used to illustrate the break-even characteristics
of a specific ski area design concept. Our prototype low cost ski area model
has the following economic characteristics:
1) A capital cost of $1,500,000.
2) A skier capacity of 1,800 sk1ers-at-one-tth~e.
3) An average season of 130 days. (The length of the season is one of
the critical variables in assessing the feasibility of a specific site.
The 1974-75 Economic Analysis of North American Ski Areas found the
average of 100 ski areas reporting, at 130 days. In our prototype analysis
if we were to use a longer season we could justify a lower ski lift
ticket price, while a shorter sea son supports an argument for a higher
price. Generally, however, ticket prices remain constant, to the sk1a~,
while the ski area operator assumes the risk of weather and the resulting
PAGENO="0426"
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Page 11
long or short operating season.)
4) Estimated Operating expenses based upon findings cf the N.S .A.A. -
U.C.D.B.R. Economic Studies. The two recent economic studies
(1973-74 & 1974- 75) have developed an Index called the Operating Cost/
Capacity ratio. It is an evaluation r~1 all cash, operating costs per
day of capacity provided, and is calculated by dividing all cash
operating costs (not including depreciation, interest or direct supporting
departmental costs for ski school, food service, rental or sports shops)
by the number of operating days, to factor out the effect of differing
lengths of season. The resulting figure is then divided by the ski
areas capacity to arrive at the average daily cash cost to accommodate
one skier.
The average cash operating/season's capacity ratio for 1974-75 was
$1.68, while in 1973-74 it was $1.65. Analysis shows this figure varies
with utilization as many costs are variable (i.e., Insurance, land use
fees, marketing budgets) and some added labor costs can be traced
* to needs caused by larger crowds (i.e., parking, ski patrol; ticket sales;
* trail grooming). Thus at low utilization, ratios are some $l~20 while
at high levels costs reach to $2.20 per skier capacity perday.
Our prototype break-even analysis is based upon this relationship.
Cash operating costs vary from $281,000 up to 25% utilization to a high
of $515,000 at utilization of 60% and higher. *
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Page 12
5) Depreciation and amortization expense averages 6.4% of the invest-
ment, providing for complete capital recovery in 15 * 6 years.
6) Average revenue per skier-visit earned from contribution profit by
the typical supporting activities, came to $1.06 in 1974- 75 and $0.83
in 1973-74. We have used the more generous return in our model.
Margin From Supporting Services
1974-75 1973-74
Ski School $0.21 $0.18
Food Service 0.22 0.24
Ski Shop 0.12 0.09
Equipment Rental 0.35 0.27
Other 0.16 0.05
TOTAL: $1.06 0.83
We have applied these characteristics to the break-even model
using previously developed standards to establish the break-even goals.
A-Cash Break-even at 20% of capacity.
B-Operational Break-even at 25% of capacity.
CrBreak-even at 40% of capacity.
D-Earn a reasonable return at between 60% and 70% of capacity.
Chart A illustrates the results.
It requires a revenue function or line at $6 * 41 average revenue per
*skier-visit to meet the standard break-even goals. Since $1.06 is received
from supporting facilities, ski lift ticket revenue must be high enough to
supply the balance needed of $5 .35. The 1974-75 study found average
revenue from ski lift ticket sales of all types amounted to 76.1% of the
PAGENO="0428"
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Page 13
published price of the weekend, adult, all day ticket. Thus, our prototype
low cost ski area must charge $7 .00, wIth appropriate discounts for children,
package plans, weekday and season passes, to realize an average of
$5 .35 per skier-visit.
2) Evaluation B - Rule of Thumb Analysis:
One quick method of assessing the economic feasibility of a ski area
concept is the revenue potential to Gross Fixed Assets relationship. This
rule of thumb that we ~1eveloped many years back says that the ceiling
earning power of a ski area concept must at least equal the proposed
Investment in Gross Fixed Assets if the concept is to be feasible. Table IV
illustrates this rule.
PAGENO="0429"
In this exercise we compute the ceiling or maximum revenue potential
by multiplying days of operat ion (4~l) by ski area capacity (4~2) by average
revenue per skier-visit (4~4), (Note: 4~l x 4~2 in our Table IV will not equal
4~3 due to the weighing occa ssioned by large ski areas with long ski seasons.)
The 37 `Top Profit" areas earned a 21.1% operating profit as a percent
of Gross Fixed Assets. Their ratio of ceiling revenue potential (4~5) to
(divided by) Gross Fixed Assets (4~6) is an excellent 1.409. This Is due to a
favorable ccxnbination of a low capital cost/skier capacity ratio ($866) and a
high number of days of operation (142 days). Conversely, the 27 skI areas
showing losses for the 1974-75 ski season have an unfeasibie ceiling revenue
potential to gross fixed assets ratio of less than 1 (i.e., 0.637). ThIs In turn
Is caused by a combination of a high capital cost/skier capacity ratio ($1,295),
67-512 0 - 76 - 28
425
Page 14
TABLE IV
Averages From NSAA Studies
197475 l97475
Total Top Profit
1974-75
Loss
1973- 74
Total
Number of Ski Areas
(100) (37)
(27)
(66)
1) Days of Operation
130 142
103
121
2) Ski Area Capacity
2,899 4,185
1,945
2,892
3) Season Capacity (000)
425 660
225
401
(4~lx4~2)
.
4) Revenue/Skier-visit
$ 7.10 $ 7.74
$ 7.13 $ 6.76
5) Ceiling Revenue Potential
(*3 x44) (000)
3,018 5,108
1,604
2,710
6) Gross Fixed Assets (000)
2,736 3,626
2,518
2,559
7) Ratio (*5 416)
1.103 1.409
0.637
1.059
8) Judgement
9) Average Adult Ski Lift
Ticket Price(Week-end Day)
Acceptable Excellent
$ 7.94 $ 8.83
Not feasible Acceptable
$ 8.13 $ 7.29
10) Capital Cost/Cap. Ratio
$ 944 $ 866
$1,295 $ 885
PAGENO="0430"
426
Page 15
and a poor average number of op~ating days (103 days). These two factors
could be overcome by raising ski lift ticket prices, except that their prices
are not out of line~and such a solution would probably not be accepted by
the skiing public.
Wrien this rule-of--thumb is applied to our prototype low cost ski area
the following calculations result in the necessity for a $7 .00 weekend, adult,
all day ski lift ticket price.
Given: (1) Days of Operation 130 days
(2) Ski Area Capacity 1800 Skiers
(3) Season CapacIty' 234,000 S-V
(6) Gross Fixed Assets $1,500,000
Calculations:
(7) Desired Ratio 1.000
(5) Desired Ceiling Revenue $1,500,000
Pbtential
(4) Necessary Revenue per $6.41
skier-visit (4t5 4~3)
Less: Supporting services ($1.06)
revenue per skier-visit
Equals: Ski Lift ticket revenue $5 .35
per skier-visit
(9) Average Adult Ski lift ticket $7.00
Price (131.4% of $5.35)
(10) Capital Cost/Capacity Ratio $833
(low cost ski area-1975)
PAGENO="0431"
427
Senator HASKELL. Our next witness is Mr. Charles Clusen, Wash-
ington representative, Sierra Club.
STATEMENT OP CHARLES .M. CLUSEN, WASHINGTON REPRESENT-
ATIVE OP THE SIERRA CLUB
Mr. CLUSEN. Thank you, Mr. Chairman. I am Charles Clusen, a
Washington representative of the Sierra Club, on whose behalf I
am appearing here today.
I request that my statment be made part of the record in whole
so that I can attempt to shorten my oral remarks.
Senator HASKELL. It will be reproduced in full.
Mr. CLUSEN. Thank you. We welcome this opportunity to com-
ment on S. 2125. We particularly commend you, Mr. Chairman, for
the changes you have made in the legislation from that drafted by
the ski operators for your receptiveness to improving it further.
For some time now our organization as well as other conservation
and public interest organizations, local and State governments and
individuals, have been concerned by the proliferation of massive
commercial resort complexes on national forest lands, since the en-
vi.ron.mental impacts are often very substantial. The new larger ski
resort complexes are distinctly different from ski areas of a couple
of decades ago.
Large loads of sewage must be treated, air pollution from station-
ary and indirect sources degrade the ambient air quality of areas
formerly having ~pure air, associated private development on nearby
private lands springs up creating uncontrolled urban sprawl and the
scenic national and wild values including wildlife, of the area, and
t.hose surrounding are despoiled.
The commitments of public land resources are huge and largely
irreversible. The stakes are very high. We submit that these are cer-
tainly not decisions that Congress ought to delegate away to the
executive.
Since these ski-related resort complexes are so large, we strongly
recommend that any legislation only address ski areas and not other
commercial outdoor recreation concessions.
I would like to address the acreage limitation at this time.
We support the concept contained in 5. 2125 requiring legislation
for commercial outdoor recreation facilities over a given acreage, yet
we have some question as to the desirability of the veto process of
congressional review.
As I have already discussed in my prepared statement, ski resorts
today in cases are massive complexes committing significant areas of
public lands to the exclusion often of other uses and users.
We feel it essential, therefore, that Congress retain affirmative au-
thority over at least the larger ski resorts. In 1956, Congress amended
title 16 of the United States Code, chapter 497 to allow the Secre-
t.ary of Agriculture to gra.nt term permits for a maximum of 80
acres from the previous 1915 maximum of 5 acres.
An examination of the legislative history regarding the 1956
amendment indicated that Congress was then quite concerned about
limiting the size of ski areas and other commercial outdoor recrea-
tional facilities to help avoid many critical conficts wth other uses
and environmental degradation.
PAGENO="0432"
428
The whole point of the 80 acre was, and is, to force the Executive
to go to the Congress for authorization of larger commercial de-
velopments.
We submit, Mr. Chairman, this concept is every bit if not more
valid today as it was in 1915 and 1956. We recommend that all ski
areas using more than 1,000 acres of national forest land be sent to
Congress for affirmative legislative action.
Regarding the congressional veto process in cases where Congress
fails to act, our question is: Could such inaction be construed as con-
gressional approval-ratification--of the project cutting off the pub-
lic's administrative and judicial remedies?
Is there a danger that the court will say that our concerns were
before the congressional comittee pursuant to the law, and since the
committees approved it by their inaction, it is no business of the
courts?
Congress would have established those committees to oversee the
implementation of the law, and why should not their word be final?
Our attorneys who are engaged in ski area litigation are quite con-
cerned about this question.
In any case, language should be added to the bill allowing ag-
grieved persons to pursue administrative and judicial remedies.
Furthermore, we feel the congressional veto process in most cases
would be no review because it would be for all practical purposes
impossible to get either Interior Committee to vote a negative resolu-
tion with 60 days. The committee schedules alone would practically
make this impossible in the overwhelming majority of cases. Also,
language should be included in the bill preventing any gerrymander-
ing of the permit area, keeping it compact and contiguous. Thus, the
land between cleared runs must be included in the permit area with
the lands which are developed or altered.
We recommend, Senator Haskell, for the inclusion of section 3(b)
in S. 2125 providing certain guidelines to be used in determining
whether a permit for a commercial outdoor recreation ski facility
is to be given to a particular permit applicant or for a particular
area. We feel that more comprehensive and specific standards are
needed to guide the Secretary in the exercise of his discretion in
granting permits for commercial outdoor recreation facilities.
Standards should be included that: (1) Assure there is an eco-
nomic demand for the facility; (2) require all local, State, and Fed-
eral air and water pollution and other environmental laws and regu-
lations to be fully enforced; (3) require space heating and transpor-
tation facilities to he~ energy efficient conserving energy to the maxi-
mum extent possible; (4) assure that the development does not pre-
empt more suitable uses of the area-a question primarily of location
but also design; (5) assure that the development does not seriously
impact nearby national forest lands-including, soil, vegetation, and
wildlife; (6) assure that access to other nearby areas is neither
blooked or facilitated to the extent significantly degrading nearby
national forest lands; (7) prohibit de facto wilderness from being
developed or impacted without first an appropriate wilderness study
and consideration; (8) assure that the public interest would not be
better served .by developing other areas first; and, (9) assure that
local and State governments not only have the authority and capa-
bility to zone and regulate development on nearby private lands, but
PAGENO="0433"
429
also that such zoning and regulation is in existence prior to issuing
the permit-this is to assure that all development s compatible.
Also, we recommend that bonds be posted to assure that the pro-
visions of this legislation and related Forest Service regulations and
permit stipulations are adhered to.
I'd like now to go to permit term.
Section 3(d) would authorize the Secretary to issue permits for
periods of up to 50 years, up from the present 30-year maximum.
Presumably this increase would aid developers in obtaining capital.
The ski industry is not alone in having problems of raising capital.
Virtually all segments of our economy are in a similar bind.
In my prepared statement I've indicated a number of concerns. I
think your provision is excellent and your suggestions go a little
further.
The 50-year term is much too long because there is no way to an-
ticipate that far in advance all potential problems which should be
addressed in the stipulations contained in the permit.
Conditions can and do change and new problems arise. We need
to be able to change the stipulations or possibly even terminate the
permit to acommoda.te the future situation.
Senator HASKELIJ. I've already announced at least my view is
that the change from 30 to 50 years just is too long. I've also an~
nounced the bill as it related to the formula for compensating the
government is wrong.
Mr. CLTJSEN. Thank you, Mr. Chairman. I agree with you strongly.
Going on to wilderness study of roadless areas.
We recommend the inclusion of a provision requiring all roadless
areas of 5,000 acres or more affected by any proposed outdoor com-
mercial recreation developments to be studied for their wilderness
suitability before granting a permit for any portion of such a road-
less area.
Since our wilderness lands are rapidly being whittled away by
logging, road construction, mining activity, and other developments
such as ski facilities, we must reserve our remaining de facto. wilder-
ness for the most careful land planning and disposition.
We further recommend the inclusion of language prohibiting the
location of commercial outdoor recreation facilities in designated
game rOfuges, wilderness study areas, biological and nonselected in-
ventoried areas, unless permitted by Congress.
Now I would like to address the Mineral King. We commend you,
Senator, for the inclusion of section 9(b) exempting Mineral King
from the provisions of this bill. We absolutely cannot accept any
legislation that undermines or erodes our litigation on this nationally
signficant issue.
Mineral King, a national game refuge, is a fragile and unique
alpine valley in the Sierra-Nevada, largely surrounded by Sequoia
National Park.
The purpose for which Congress established a game refuge in this
area-to protect wildlife habitat-~would be entirely precluded by
the construction of the Forest Service/Disr~ey Enterprises Inc. pro-
posed resort. Citizens have sought for decades to add Mineral King
PAGENO="0434"
430
to Sequoia National Park because this very scenic area is an integral
part of the park's wilderness ecosystem. Yet, the Forest Service in-
tends to grant Disney a permit to build and operate the resort.
We believe that massive comercialization of Mineral King is a
monumental mistake. It is the Mineral King type of developments
that must be brought to Congress in a process that requires any af-
firmative decision by Congress in favor of development.
The Mineral King case demonstrates that we cannot rely on the
Secretary to reflect adequately the public interest in commercial rec-
reational development decisions.
Pending before the House Interior Committee is H.R. 6882 and
related bills which would transfer Mineral King from the Forest
Service to the National Park Service making it a part of Sequoia
National Park. We strongly support this legislation and the only
acceptable way to mute the pending Mineral King litigation. In
fact, Mr. Chairman, we recommend to you the idea of prohibiting the
Mineral King development and actually transferring the area to
parks administration in this area.
Thank you, Mr. Chairman.
Senator HASKELL. Thank you, Mr. Clusen.
I would like to get your opinion on one thing, something that
never occurred to me but Chief McGuire talked about the possibility
of, in the future, of cross-country skiing which is a fast developing
sport. And, would some of your-well, for instance, some of your
testimony reviewed the roadless areas to see if they were wilderness
quality, would that apply if the permits sought was one for cross-
country sknng~
Mr. CLtTSEN. Well, I would imagine that unless there is substan-
tial alteration of the natural environment, cross-country skiing would
be consistent with wilderness dedication. Just as backpacking or
horse trips.
Senator HASKELL. Thank you very much, Mr. Clusen. I appreciate
your testimony and it will be reproduced in full.
[The prepared statement of Mr. Clusen follows :1
PAGENO="0435"
431
SIERRA CLUB
324 C Street, S. E.
Washington, D.C. 20003
(202) 547-1144
STATEMENT OF CHARLES M. CLUSEN,
A WASHINGTON REPRESENTATIVE OF THE SIERRA CLUB
BEFORE THE ENVIRONMENT AND LAND RESOURCES SUBCOMMITTEE
OF THE SENATE INTERIOR AND INSULAR AFFAIRS COMMITTEE
ON LEGISLATION REGARDING THE DEVELOPMENT AND REGULATION OF COMMERCIAL
OUTDOOR RECREATION FACILITIES WITHIN THE NATIONAL FOREST SYSTEM, S.2125
November 17, 1975
Mr. Chairman, Members of the Committee, I am Charles M. Clusen, a
Washington Representative of the Sierra Club, on whose behalf I am appearing
here today. The Sierra Club is an international environmental organization
of over 15D,00Q members founded in 1892 which has had a long, historic con-
cern with the protection of our nation's public lands and national forests.
We welcome this opportunity to comment on S.2125,
For some time now our organization as well as other conservation and
public interest organizations, local and state governments and individuals
have been concerned by the proliferation of massive con~ercial resort
complexes on national forest lands, since the environmental impacts areoften very
substantial. The new larger ski resort complexes are distinctly different
from ski areas of a couple decades ago.
PAGENO="0436"
432
-2-
They now not only consist of ski runs, lift facilities and day-use
facilities, but also have large hotels and condominiums (sometimes high
rises) and a myriad of diverse commercial shops and stores. Large loads
of sewage must be treated, air pollution from stationary and indirect
sources degrade the ambient air quality of areas formerly having pure
air, associated private development on nearby private lands springs up
creating uncontrolled urban sprawl and the scenic national and wild
values including wildlife, of the area, and those surrounding are despoiled.
The commitments of public land resources are huge and largely irreversible.
The. stakes are high. We submit that these are certainly not decisions
that Congress ought to delegate away to the executive. Since these ski
related resort complexes are so large, we strongly recommend that any
legislation only address ski areas and not other commercial outdoor
recreation concessions such as camps, clubs, marinas, outfitters or
hotels, resorts, restaurants, stores and service stations not associated
with ski facilities. Present provision of law limiting such facilities
to 80 acres are understood to be quite adequate and the term of permits
cannot be a problem since National Park concessioners are limited as
Forest conces~sions to a period of 30 years. Even though we have heard
a lot from National Park concessioners recently regarding the prohibition
of certain new or expanded facilities and the phasing out of some facilities
in certain parks, there has not been any move to extend the term of the permit.
PAGENO="0437"
433
-`3-
Furthermore, any legislation must not in any way promote the
development of additional.or expanded ski areas. For example, we
object to the words, `shall be encouraged" in Section 1, lines 7 and
8 of page 2 of S.2125. We suggest alternatively that it read, "may
be allowed."
Acreage Limi tation
We support the concept contained in S.2125 requiring legislation for
commercial outdoor recreation facilities over a given acreage, yet we
have some question as to the desirability of the veto process of Congressional
review. AsI have already discussed, ski resorts today in cases are
massive complexes committing significant areas of. public lands to the ex-
clusion often of other uses and users. We feel it essential, therefore,
that Congress retain affirmative authority over at least the larger ski
resorts. In 1956 Congress amended 16 USC 497 to allow the Secretary of
Agriculture to grant term permits for a maximum of 80 acres from the
previous 1915 maximum of 5 acres. An examination of the legislative history
regarding the 1956 amendment indicated that Congress was then quite
concerned about limiting the size of ski areas and other commercial
outdoor. recreational facilities to help avoid many critical conflicts
with other uses and environmental degradation. The whole point of the
80 acrelimit was (and is) to force the executive to go to the Congress
for authorization of larger commercial developments. We submit, Mr.
Chairman, this concept is every bit if not more valid today as it was
in 1915 and 1956. We recommend that all ski areas using more than
1,000 acres of National Forest land be sentto Congres.s for affirmative
legislative action. Furthermore, the impact of ski areas largely on.
PAGENO="0438"
434
-4-
private land adjacent to National Forest land is of great concern-
particularly in the east where land use conflicts are sometimes more
arduous to resolve because the location of incompatible land
uses are closer together.. To help resolve this problem we recommend
that all permits for 320 areas of National Forest land for a development
using a total of 1,500 acres of private an&public land combined be sent to
Congress as legislation.
Regarding the Congressional veto process in caseswhere~
Congress fails to act, our question is could such inaction be construed:
as Congressional approval (ratification) of the project cutting off
the public's administrative and judicial remedies. Is there a danger that
the court will say that our concerns were before the Congressional coninittee
pursuant to the law, and since the committees approved it by their
inaction (section 3(2)(A) it is no business of the courts? Congress would
have established those committees to oversee the implementation of the law,
and why should not their word be final? Our attorneys who are engaged
in ski area litigation are quite concerned about this question.
An example of this sort of thing happened in the Rainbow Bridge
case where ambiguous riders to appropriation bills were interpreted to
have overruled a clear substantial law. In this case at least the full
Congress acted rather than just a Committee. But, thi.s raises a further
potential problem of legal dispute. The Justice Department contends that
action by a Congressional committee alone is unconstitutional and a violation
of the separation of powers doctrine.
PAGENO="0439"
435
-5-
If there is any chance Justice is correct we prefer not to rely- on
this Congressional review approach. In any case, language should be added to
the bill allowing aggrieved persons to pursue administrative and judicial remedies.
Furthermore, we feel the Congressional veto process in most cases
would be no review because it would be for all practical purposes
impossible to get either Interior Committee to vote a negative resolution
within 60 days. The committee schedules alone would practically make
this impossible -in the overwhelming majority of cases. Also, language
should be included in the bill preventing any gerrymandering of the permit
area, keeping it compact and contiguous. Thus, the land between cleared
runs must be included in the-permit area with the lands which are developed -
or altered.
Criteria -and Standards
We commend Senator Haskell for the inclusion of section 3(b) in S. 2125
providing certain guidelines to be used in determining whether a permit
for a cormiiercial outdoor recreation ski facility is tobe ~iven to a particular
permit applic~nt or for a particular area. We feel that more comprehensive and
specific standards are needed to guide the Secretary in the exercise of -
his discretion in granting permits for commercial outdoor recreation
facilities. Standards should be included that : (-I) assure there is
an economic demand for the facility, (2) require all local,.state and
federal air and water pollution and other environmental laws and regulations
to be fully enforced, (3) require space heating and transportation
facilitiest0 beenergy efficient conserving energy to the maximum extent
- that -
possible, (4) assure/the development does not preempt more suitable
uses of the area (a question primarily of location but also design.), -
PAGENO="0440"
436
-6-
that
(5) assure/the development does not seriously impact nearby National
Forest lands (including soil, vegetation and wildlife), (6) assure that
access to other nearby areas is neither blocked nor facilitated to the
extent significantly degrading nearbyNational Forest lands, (7) prohibit
de facto wilderness from being developed or impacted without first
that
an appropriate wilderness study and consideration, (8) assure/the public
interest would not be better served by developing other areas first, and
that
(9) assure/local and state governments not only have the authority and
capability to zone and regulate development on nearby private lands, but
also that such zoning and regulation is in existence prior to issuing the
permit (this is to assure that all development is compatible). Also,
we recommend that bonds be posted to assure that the provisions of this
legislation and related Forest Service regulations and permit stipulations
are adhered to.
Permit Term
Section 3(d) would authorize the Secretary to issue permits for
periods of up to 50 years, up from the present 30-year maximum. Pre-
sumably this increase would aid developers in obtaining capital. The
ski industry is not alone in having problems of raising capital. Vir-
tually all segments of our economy are in a similar bind. The Septem-
ber 22nd, 1975, issue of Business Week magazine dealt with this situation
at length. It would be counter-productive to include in this legislation
any provisions which will help the ski industry to out-compete far more
important segments of the economy such as environmental protection or
energy development in the capital market.
The 50-year term for permits is much too long for other reasons
as well. There is simply no way to anticipate that far in advance
PAGENO="0441"
437
-7-
all potential problems which should be addressed in the stipulations
contained in the permit. Conditions can and do change and new problems
arise. We need to be able to change the stipulations or possibly
even terminate the permit to accommodate the future situation. Many of
the problems associated with major destination ski resorts were simply
unknown 15 years ago. Under the present procedure the one-year re-
vocable permits granted for much of the acreage utilized by ski devel-
opments conceivably1 does givethe Forest Service some leve~age in nego-
tiating for revised stipulations. Developers are understandably un-
comfortable with this uncertainty. However, the broader public interest
strongly argues for the retention of some mechanism for making needed
changes in permit conditions at intervals far shorter than 50 or even
30 years.
We commend the Chairman for voicing his doubts about the wisdom
of increasing the permit term to 50 years. We recommend that permit
terms be shortened with a preferential right of renewal for existing
operators. Shorter terms would encourage compliance with and provide
an opportunity to review the conditions of the permit.
Wilderness Study of Roadless Areas
We recommend the inclusion of a provision requiring all roadless
areas of 5,000 or more affected by any proposed outdoor commercial recreation
developments to be studied for their Wilderness suitability before granting~
a permit for any portion of such a roadless area. Since our wilderness
lands are rapidly being whittled away by logging, road construction,
mining activity and other developments, such as ski facilities, we must
reserve our remaining de facto wilderness for the most careful land
planning and disposition. We further recommend the inclusion of language
PAGENO="0442"
438
-8-
prohibiting the location of commercial outdoor recreation facilities
in designated Game Refuges, Wilderness Study Areas, Biological and Nonselected
Inventoried Areas, unless permitted by Congress.
Compensation
Our concern regarding compensation is that we not create so large
a potential financial liability for the U.S. Government that termina-
tion of the permit becomes a virtual impossibility, even if it were
in the public interest. It~ is this sort of a situation that is now
effectively deterring the elimination of outmoded or undesirable con-
cession facilities in our National Parks. We urge the Committee to
seek some mechanism whereby such facilities might be phased out when
appropriate. Perhaps a fund contributed by all permittees could be
established which would be used to compensate the owners of operations
shut down to allow for other uses. Although it is difficult to imagine
closing down something like Vail, the legislation as drafted also covers
many lesser operations.
The provisions of Section 5 requiring the removal of improvements at
the termination of a permit should be clarified to also cover an abandonment
situation.
PAGENO="0443"
439
-9-
Mineral ~
We commend Senator Haskell for the inclusion of Section 9(b) exempting
Mineral King from the provisions of this bill. We absolutely cannot accept
any legislation that undermines or erodes our litigation on this nationally
significant issue.
Mineral King, a Nation Game Refuge, is a fragile and unique alpine
valley in the Sierra-Nevada, largely surrounded by Sequoia National Park.
The purpose for which Congress established a Game Refuge in this area --
to protect wildlife habitat -- would be entirely precluded by the construc-
tion of the Forest Service/Disney Enterprises Inc. proposed resort. Citizens
have sought for decades to add Mineral King to Sequoia National Park because
this very scenic area is an integral part of the Parks wilderness ecosystem.
Yet, the Forest Service intends to grant Disney a permit to build and operate
the resort.
Without a provision such as Section 9(b), the reason the Mineral King
litigation would be impacted by this legislation is because one of the legal
theories of the lawsuit contends that the Secretary of Agriculture would be
exceeding his discretion and willfully trying to circumvent the restriction
of statutes limiting his authority to grant term permits to 80 acres. As
already discussed, Congress in 1956 after great deliberation limited such
permits to 80 acres specifically intending to restrict the Secretary's dis-
cretion. Yet, the Forest Service in the case of Mineral King has chosen to
subvert Congress' retained authority and to give permits for acreage over
the 80-acre limit. Such permits are to be revocable, but practically speak-
ing they are not, since Disney would be building permanent fixed facilities
in the area.
We believe that massive commercialization of Mineral King is a monu-
mental mistake. It is the Mineral King type of developments that must be
PAGENO="0444"
440
-~10-
brought to Congress in a process that requires an affirmative decision by
Congress in favor of development. The Mineral King case demonstrates that we
cannot rely on the Secretary to reflect adequately the public interest in
commercial recreational development decisions.
Pending before the House Interior Committee is H.R. 6882 and related
bills which would transfer Mineral King from the Forest Service to the
National Park Service making it a part of Sequoia National Park. We strongly
support this legislation and the only acceptable way to mute the pending
Mineral King litigation is through the passage of legislation prohibiting
the Mineral King development and transferring the area to Sequoia National
Park. In fact, we recommend that 5. 2125 be amended to prohibit commercial
development of.Mineral King a~d to transfer the area to Sequoia National Park.
Some Additional Concerns
We favor the provisions (Section 4(a) and (b)) of Senator Haskell `s
bill, 5. 2125, providing for public disclosure of pertinent information
justifying any increase of charges to the public for the use of ski facili-
ties on National Forest land and for public participation through hearings.
Currently,membersOf the public are. not granted equal access to public
lands by some ski operators. There seems to be a trend to phase down the.
day skier in favor of the weekly package skier who spends more money on
lodging, meals and tourist and ski shops. This discrimination is effected
by differential pricing and discounting of lift tickets. We recommend that
this.legislation mandate equal treatment. In regard to the fees that per-
mitteés pay the iJnited States,-we.:strongiy feel that such fees be full fair
market value for the permittees use of public lands preventing any govern-
mental subsidy of commercial outdoor recreationoperations.
The words, `related services,' found in line 5 of Section 1 concern us
if they are intended to include the construction and operation of such
PAGENO="0445"
441
.-11-
facilities as condominiums. We recommend there be a Congressional pro-
hibition on condominium development on public lands.
Thank you, Mr. Chairman, for allowing us to state our views.
67-512 0 - 76 - 29
PAGENO="0446"
442
Senator HASItELL. The next witness is John Fry, editor in chief,
Ski magazine, New York.
STATEMENT OP JOHN PRY, EDITOR IN CHIEF, SKI MAGAZINE,
NEW YORK, N.Y.
Mr. FRY. Mr. Chairman, members of the subcommittee, Ski maga-
magazine traces its origin back to 1936 and is the oldest ski magazine
in America. We reach a monthly audience of a million skiers. Ski
has been the voice of American skiers for 40 years.
We are concerned about the cost of the sport to consumers and the
availability of facilities to serve a growing number of Americans
who want to ski, and we regularly publish information to acquaint
skiers with the cost of lift tickets, lessons and accommodations-
nationally and regionally. We publish ski guides for the East and the
West, and an annual guide to cross-country skiing.
I am also editorial director of Ski Business, a monthly publication
for ski shopowners, suppliers and importers of ski equipment.
I am also editorial director of Outdoor Life magazine whose
1,750,000 subscribers also are concerned about the use of National
Forest Service land.
Much of the country's choicest ski terrain is on U.S. Forest Service
land. It includes such areas as Aspen, Vail and most of the Colorado
areas, the Utah areas, Sun Valley, and Heavenly Valley, Squaw
Valley and Mammoth in California, Waterville Valley in New
Hampshire and many, many others. The point is that almost every
American skier, at least once in his life, will ski on national forest
land.
We agree with the Chairman that this land belongs to the people.
It belongs to all Americans. The skier in New York or Los Angeles,
for whom Colorado may be a vacation destination State, is as con-
cerned about the welfare of these ski resorts on Forest Service land
as any skier in Colorado itself, just as the skier in Paris is concerned
about the availability of good ski terrain in the French Alps.
As consumers, we are realistic enough to know that these ski
facilities will not grow to meet our needs unless a proper climate
exists for capital to be attracted for their construction.
Skiing is unique among all sports pursued by Americans in that
the creation of a ski resort requires a construction of whole coin-
munities to house skiers overnight. We are not talking about building
just a tenrns court or a gymnasium or setting aside land for a track
or football field. We are talking about the construction of sewage
facilities, roads, hotels, mechanical lifts and, ultimately, about
housing and schools to take care of the people who supply these
services to Americans who want to ski.
Sking is the most capitally intensive of all recreational pursuits
undertaken by Americans.
Our understanding of bill S. 2125 is that it would tighten Federal
controls over the operation of private ski areas on Federal land,
particularly their setting of lift ticket prices.
We believe that this proposed legislation, in many ways, is good.
It would allow much larger acreages for ski areas to lease over longer
periods of time. I should amend that in view of your comment, Mr.
PAGENO="0447"
443
Chairman, a moment ago on the period of time. And at the same
time scrutinize these leases more carefully.
The bill also would reexamine the way fees are set, that is, the
amount the resort pays to the Government for the use of the land.
Some people believe present fee-sttingf is inequitable.
At the same time, it is my understanding the bill would require
public hearings on any resort's request for an increase in its charges
to the public.
This all sounds very inviting for the ski public. Get the areas to
pay more for land use, hut put a. lid on the lift ticket prices they
charge.
In real life, however, affairs seldom sort themselves out so simply.
We thing the ski public's interest is first served by constructing
facilities that are environmentally sound. Without such controls,
land is wasted, streams are polluted, urban sprawl may ensue. The
long-range result is resorts that no one will enjoy.
Fortunately, protection against irresponsible development on
Federal land is now provided by the requirement of an environ-
mental impact statement for new facilities. That is good even if the
requirement presently is suppressing much new ski area develop-
ment on Forest Service land. When resorts do get built, they are
going to cost more as a result of this situation.
One result, of course, is that investors are becoming frightened of
plowing funds into ski areas. Bill S. 2125, with its stringent controls
over fee-setting and ticket pricing, would make the investment pros-
pect even less attractive.
It's tempting to think that if the supply of skiing on Federal land
is going to be limited in the years ahead, we should have a law that
prevents operators from exploiting the scarcity by charging exorbi-
tant lift ticket prices. Will that happen? We don't know. Right
now, we would feel more confident leaving the free market-individ-
ual choice-to determine ski area economics.
Anyone who's owned a ski area, ski factory or shop can tell you,
the ski business is atutelv competitive. Higher prices at one area
can force skiers to shift their skiing to cheaper areas, or it can lead
them to take up alternatve recreation like cross-country touring or
indoor tennis.
The point is: price competition does exist. In Colorado, the $11 lift
ticket price at major resorts itself better is one of the prime func-
tions of publishers such as Ski magazine.
To superimpose on ski areas Federal regulation of income and
revenue, we believe, is against the interest of ski consumers. As
taxpayers, we do believe that ski areas located on public land should
pay a reasonable price for the use of that land. The extent to which
that cost is passed on to skiers in the form of lift ticket prices and
other resort costs is, we believe, a fair burden that skiers must share.
I have skied for almost 40 years. During the past 10 years when I
have been editor of Ski magazine, I have visited virtually all of
the major ski areas of this country located on u.S. Forest Service
land. I know virtually all of the operators of these resorts.
I recognize that skiing is not an inexpensive sport. But I am not
inclined to believe that public hearings such as those proposed in the
bill would establish significantly the lift ticket prices-Our options
as recreational consumers are so varied, that I believe the market-
place is well equipped to establish fair prices.
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444
Our principal concern as consumers is to have a place to ski. The
extent to which price regulation would curtail the future supply of
those facilities by discouraging investment is counter-production for
the skier.
Thank you, Mr. Charman.
Senator HASKELL. Thank you, Mr. Fry.
As you've mentioned here and I would concur with you that any
kind of detailed regulatory proceeding would be unduly cumber-
some. And I think you appear to set forth in your statement that
competition is probably the best way of regulating rates or prices.
Under those circumstances, I would ask you whether or not the
Forest Service with a view to competition should adopt some kind
of rule, statutory or otherwise, which would prevent you from having
more than one or two ski areas in one area?
In other words, if some place is up for bid and I don't have a~
area there, should I have a preference over you who already has an
area next door? What do you think of that?
Mr. FRY. Well, I think the combination as you describe-I think
the point was brought up earlier, too, that ski areas in a region
ought to be, as I understand it, under separate ownership or, at
least, be competitive in some sense.
I think it's very desirable. On the other hand, we do have to stay
in the development of ski resorts in a ski town very signifioant
environmental problems to face to the extent of which large scale
investment by a single owner can help overcome the environmental
impact of the ski area, that is also desirable.
So I think each situation, it takes what eventually should be done.
Competition, yes, is desirable but so is minimum environmental im-
pact by the whole development on the land around.
Senator HASKELL. I don't really see how environmental impact is
increased by virtue of people having different permits as opposed to
one person possessing a11 the permits.
Can you explain that to me?
Mr. FRY. Well, let me try to understand, sir. Are you talking
about ski areas under a single leaseholder or are you talking about
ski areas in a region that includes a great deal of Foreign Service
land?
Senator HASKELL. I'm talking about a region that has nothing but
Forest Service land and I already have a permit and am operating
a ski area up there. Down the road 10 miles there is an area thati
looks as if it would be good for ski development.
Should I have that permit, thereby giving me a monopoly of the
area? Or should it go to somebody else who has no interest in my
organization?
Mr. FRY. I would say that if there are no environmental factors
to consider, that is, the other area that comes into existence can do
the job properly, yes, that competition is very desirable from the
consumer's point of view.
Senator HASKELL. I would think so, too. And obviously the person
who comes in would have to qualify.
Mr. FRY. But I do think that some of these larger ski areas, even
10 miles apart, you know almost put you "chop a block" with the
others. That is to say there are ski areas now that can be connected
with one another by lift systems. In Europe particularly where the
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445
towns may be 10 miles apart; so that integrated planning is very im-
portant is what I am trying to say.
Senator HASKELL. Well, I would think that integrated planning
could occur by cooperation just as well as if I owned the whole thing
or would you disagree?
Mr. FRY. No, I agree. But I just want to make a point that the
sewage from area A may have an impact on the sewage of area B.
Air or water or whatever else may be involved.
Senator HASKELL. Absolutely. No question about it. Well, thank
you, Mr. Fry. I appreciate very much your coming.
[The prepared statement of. Mr. Fry follows:]
STATEMENT OF JoHN FRY, EDITOR IN CHIEF, SKI MAGAZINE, NEW YORK, N.Y.
I am John Fry, Editorial Director of Ski Magazine. Ski Magazine, which
traces its origins back to 1936, is the oldest ski magazine in America. With a
paid circulation in excess of 400,000, Ski reaches an audience of about one
million skiers monthly. Ski has been the voice of American skiers for 40
years We are concerned about the cost of the sport to consumers and the
availability of facilities to serve a growing number of Americans who want
to ski, and we regularly publish information to acquaint skiers with the cost
of lift tickets, lessons and accommodations-nationally and regionally. We
publish ski guides for the East and the West, and an annual guide to cross-
country skiing.
I am Editorial Director of Ski Business, a monthly publication for ski shop
owners, suppliers and importers of ski equipment.
I am also Editorial Director of Outdoor Life Magazine whose 1.7 million
subscribers also are concerned about the use of national forest land.
Much of the country's choices ski terrain is on U.S. Forest Service land.
It includes such areas as Aspen, Vail and most of the Colorado areas, the
Utah areas, Sun Valley, and Heavenly Valley, Squaw Valley and Mammoth
in California, Waterville Valley in New Hampshire, Sugarloaf in Maine and
many, many others. The point is that almost every American skier, at least
once in his life, will ski on national forest land.
We agree with Senator Haskell that this land belongs to the people. It
belongs to all Americans. The skier in New York or Los Angeles, for whom
Colorado may be a vacation destination state, is as concerned about the wel-
fare of these ski resorts on Forest Service land as any skier in Colorado itself,
just as the skier in Paris is concerned about the availability of good ski ter-
rain in the French Alps.
As consumers, we are realistic enough~ to know that these ski facilities will
not grow to meet our needs unless a proper climate exists for capital to be
attracted for their construction.
Skiing is unique among all sports pursued by Americans in that the creation
of a ski resort requires the construction of whole communities to house skiers
overnight. We are not talking about building just a tennis court or a gym-
nasium or setting aside land for a track or football field. We are talking about
the construction of sewage facilities, roads, hotels, mechanical lifts-and,
ultimately, about housing and schools to take care of the people who supply
these services to Americans who want to ski.
Skiing is the most capitally intensive of all recreational pursuits under-
taken by Americans.
Our understanding of Bill 5. 2125 is that it would tighten federal controls
over the operation of private ski areas on federal land, particularly their
setting of lift ticket prices.
We believe that this proposed legislation, in many ways, is good. It would
allow much~ larger acreages for ski areas to lease over longer periods of time,
at the same time scrutinizing these leases more carefully. Present Forest
Service regulations limit the primary resort use to 80 acres (not enough to
mount a large ski area any more), with unrealistic one-year renewals of
additional acreage.
The bill would re-examine the way fees are set . . . that is, the amount the
resort pays to the Government for use of the land. Some people believe present
fee-setting is inquitable.
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446
At the same time, the bill would require public hearings on any resort's re-
quest for an increase in its charges to the public.
This all sounds very inviting for the ski public. Get the areas to pay more
for land use, put a lid on the lift ticket prices they charge.
In real life, however, affairs seldom sort themselves out so simply.
We think the ski public's interest is first served by constructing facilities
that are environmentally sound. Without such controls, land is wasted,
streams are polluted, urban sprawl may ensue. The long-range result is resorts
that no one will enjoy.
Fortunately, protection against irresponsible development on federal land
is now provided by the requirement of an environmental impact statement for
new facilities. That is good, even if the requirement is suppressing such new
ski area development on Forest Service land. When resorts do get built, they
are going to cost more.
One result, of course, is that investors are becoming frightened of plowing
funds into ski areas. Bill 5. 2125, with its stringent controls over fee-setting
and ticket pricing, would make the investment prospect even less attractive.
It's tempting to think that if the supply of skiing on federal land is going
to be limited in the years ahead, we should have a law that prevents operators
from exploiting the scarcity by charging exorbitant lift ticket prices. Will that
happen? We don't know. Right now, we would feel more confident leaving the
free market-individual choice-to determine ski are economics.
Anyone who's owned a ski area, ski factory or shop can tell you, the ski
business is acutely competitive. Higher prices at one area can force skiers to
shift their skiing to cheaper areas, or it can lead them to take up alterna-
tive recreation like cross-country touring or indoor tennis. The point is: price
competition does exist. In Colorado, the $11 lift ticket price at major resorts
itself is misleading. Attractive ski weeks, airline packages and season passes
effectively bring the actual average price down to 60 to 85 percent of the daily
lift ticket rate. The battle among resorts to get business is intensely price
competitive.
Aspenites and other Coloradans understandably are concerned about the
price they pay for lift tickets. Senator Haskell, however, we believe you would
do well to remind your constituents that they ought to be equally concerned
about the economic health of the ski resort business that brings them, in addi-
tion to jobs, a great deal of out-of-state money.
In addition, thousands of people are employed in the manufacture and dis-
tribution of ski equipment, from importing to retailing, throughout the United
States. The ability of ski resorts to exist and grow affects the welfare of these
people.
The future of skiing in this country is going to be based on its attractive-
ness as an investment for private capital. If there is no investment, we be-
lieve it is most improbable that the government will step in to build facilities
for skiers whose typical family income is about double that of other Americans.
The poor financial returns of most ski area operators do not suggest that
consumers presently are getting ripped off. And skiers do deserve as low a cost
of skiing as they can get. In fact, providing information to help skiers budget
better is one of the prime functions of publishers such as SKI magazine.
To superimpose on ski areas federal regulation of income and revenue, we
believe, is against the interest of ski consumers.
If it were desirable, why should price regulation not apply to paper, wood
products and aU goods and services produced on Forest Service land?
As taxpayers, we do believe that ski areas located on public land should
pay a reasonable price for the use of that land. The extent to which that cost
is passed on to skiers in the form of lift ticket prices and other resort costs
is, we believe, a fair burden that skiers must share.
I have skied for almost 40 years. During the past 10 years when I have
been Editor of Ski Magazine, I have visited virtually all of the major ski
areas of this country located on U.S. Forest Service land. I know virtually
all of the operators of these resorts. I recognize that skiing is not an inex-
pensive sport. But I am inclined to believe that public hearings, while pos-
sibly helpful in improving communications among area operators, federal,
state and local government ,and the ski public, would not be helpful if di-
rected primarily at establishing prices. Our options as recreational consumers
are varied, and I believe the marketplace is well equipped to establish fair
prices. Our principal concern as consumers is to have a place to ski. The
extent to which price regulation would curtail the future supply of those fa-
cilities by discouraging investment is counter-productive for the skier.
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Senator HASKELL. Our last witness is Mr. Donald R. Allen, coun-
sell to the U.S. Ski Association, Washington, D.C.
STATEMENT OP DONALD R. ALLEN, COUNSEL TO THE U.S. SKI
ASSOCIATION
Mr. ALLEN. Good afternoon, Senator. With your permission I will
depart from my prepared remarks.
Senator HASKELL. Your remarks will be reproduced in full.
Mr. ALLEN. I would like to turn to just a couple of points which
have been made by yourself and questions of other witnesses this
morning, Mr. Chairman.
The U.S. Ski Association is, of course, comprised of the consum-
ers. We've heard from a lot of industrial groups this morning and
persons interested in the ski areas. The ski association is the body
comprised of over 100,000 amateur skiers in this country.
I would like to turn-our remarks, I think, are adequately ad-
dressed. The bill which in our view attempts to address problems in
the ski area. And its attempts are laudable indeed.
There are, in our judgment, in the current draft of the bill, several
deficiencies which make it impossible for us to support at the
present time.
We've laid those out in the testimony in terms of technical
deficiency. There are some major steps which the bill would take
in terms of regulation which we are opposed to pretty much under
any circumstances.
However, we are not opposed, per Se, to a limited form of hearing.
As representative of a consumer group, of course, we are interested
in information to the public. We, at the same time, recognize, how-
ever, that ski area* investment is a rather delicate thing.
The United States holds almost a monopoly on the opportunity
for new ski area development. Certainly the great high country ski
areas which will be developed in the future will come primarily
from core service lands.
And at that special responsibility, the Government. is privy to
information, it's privy to power and authority over ski area opera-
tors and it must exercise that power very, very judiciously.
We are convinced that this committee doesn't intend to establish
a ratemaking bureaucracy in the Forest Service.
Let me address one item which has been addressed once this morn-
ing and that is Mineral King.
We understand the committee's intention is to be neutral on the
issue of Mineral King. We submit, however, that the bill is anyl-
thing but neutral on Mineral King. The bill stokes the fires of the
opponents of Mineral King, the development of the ski area in the
Mineral King valley.
As your committee is awasre, I am sure, the Mineral King case
started long, long ago. And it represents one of the great time-
consuming lawsuits in the history of environmental litigation. It's
been up and down to the Supreme Court not on the merits but
simply on the procedural merits and it awaits Judge Weicker's action
in San Francisco.
Its appalling land use applications can't be made in a short period
of time. Nevertheless, the bill would exclude the possibility of ever
issuing a permit under a new authority granted in the bill. It isn't
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448
neutral. It simply relegates Mineral King to a second-class status
if the bill is ever passed and if the game park question is ever
resolved.
Second: It adds to the arguments of the opponents of Mineral
King that, indeed, the Secretary doesn't have adequate authority
to assure a ski area permit at Mineral King. Because why else would
Congress have passed this new bill. It's special interest legislation
which we, as representatives of the consumers, Mr. Chairman, simply
must oppose in the most vigorous way that we know how.
The only way we believe to be neutral to Mineral King is to let
Mineral King be decided before the courts and eventually before
the Chief of the Forest Service, and if certain provisions of this bill
are enacted with the advice and consent or approval of this
committee.
Senator HASKELL. Let me, Mr. Allen, be sure that I understand
you. I'm not quite sure I do.
Would you prefer that Mineral King be decided by legislation?
Mr. ALLEN. No, Mr. Chairman. We would prefer that Mineral
King be decided under existing and whatever new term permit
authority is granted by the Congress. It's currently pending before
the courts. And the issues before the courts involve the game park,
the transmission line across the park into Mineral King, and an-
cillary permits.
The point of the exclusion in section 9 of the bill, though, Mr.
Chairman, is to foreclose forever the possibility that Mineral King
once resolved before the courts will ever be able to benefit from any
new legislation enacted by the Congress.
So, we are in favor-
Senator HASKELL. I don't think I fully understand you because
what we attempted to do here was to put together a bill that didn't
have any effect one way or the other on Mineral King because,
frankly, I'm only just vaguely familiar with the thrust of that
lawsuit.
You would like us to pass a bill to avoid a lawsuit?
Mr. ALLEN. No, not at all. Well, I must say on behalf of the con-
sumers we probably would but we can't seriously suggest that to
you, Senator.
Your bill excludes the possibility of this kind of permit authority
ever being available to Mineral King if the other issues before the
courts affecting Mineral King are resolved.
Senator HASKELL. Now explain that because we try to be neutral.
Mr. ALLEN. All right. And I know you did, Senator, and that's
why I wanted to highlight this before you recess for lunch.
Let's assume that this bill is enacted into law in some reduced
form whereby increased term permit authority is available to the
Secretary of the Agriculture. Unfortunately under section 9, he can
never utilize his enanced permit authority to grant to ski area permit
for Mineral King.
Senator HASKELL. Why not?
Mr. ALLEN. Because this bill says he can't.
Senator HASKEL.L Until it's resolved by litigation. I assume once
it's resolved by litigation-
Mr. ALLEN. Well, that's the problem, Senator. We believe that
when you exclude this bill you stoke the arguments used by the
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opponents of Mineral King that the Congress, indeed, feels that
there is inadequate authority at the present time in the opponents of
Mineral King-excuse me, in the Secretary of Agriculture to grant a
permit.
Senator HASKELL. I as subcommittee chairman want to be com-
pletely neutral on Mineral King. We don't want to give the propon-
ents a boost and we don't want to give them a handicap-
Mr. ALLEN. Let me show you how you are giving them a boost,
Senator. I'm referring to page 12 of the bill which says, "the provi-
sion of this act shall not be applicable to any existing or future appli-
cations for a permit for commercial outdoor recreational ski activities
and facilities in Mineral King."
That means that the Secretary of the. Agriculture can never grant
a permit under this law~-under this bill if it becomes a law if
Mineral King is ever resolved before the Court. He only has his old
1956 Organic Act authority to grant permits.
Now this bill says "the provision of this bill shall not be applicable
to a permit application in Mineral King untIl current law suits are
resolved."
That's something completely different. But this says the bill will
completely neutral as far as Mineral King is concerned.
Senator HASKELL. Suppose you `do this for me, Mr. Allen. Suppose
for the record-and the hearing record is open 2 weeks-suppose you
give me some language which in your opinion would make the bill
completely neutral as far as Mineral King is concerned.
Mr. ALLEN. We would be. delighted, Senator, and appreciate the
opportunity. As I say, the provision itself in rather simple language
says, "the provisions of the act shall not apply to Mineral King". So
the Secretary of the Agriculture once the lawsuit is over, he would
have to read this act and he would say the provisions of this bull
don't apply to Mineral King. I can never consider in any future per-
mit application for a Mineral King permit-
Senator HASKELL. I think you've gotten through to me. And my
intention is to be completely neutral as far as Mineral King is con-
cerned. And so, if you would submit some language that you think
accomplishes that purpose, why, I would be delighted to consider it.
Mr. ALLEN. Thiink you, Senator, and I'll work with Mr. Quarles.
[Subsequent to the hearing the following information was
received:]
DUNCAN, ALLEN AND MITCHELL,
CoUNSELLoRS AT LAW,
Washington, D.C., December 1, 1975.
Hon. FLOYD K. HASKELL,
U.S. Senate,
Dirlesen Senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: During a hearing on S. 2125 on November 18, 1975
before the Subcommittee on Environment and Land Resources `of the Senate
Committee on Interior and Insular Affairs you invited me as a representative
of the United States Ski Association ("USSA") to submit draft language for
your consideration which would insure that 5. 2125 is "neutral" with respect
to litigation surrounding the development of a ski area at Mineral King Valley,
Sequoia National Park, California. I enclose herewith the suggestions of
USSA and request an opportunity to discuss this matter further with you in
person.
A. CURRENT STATUS OF THE MINERAL KING LITIGATION
As you may or may not know, the Mineral King suit is currently pending
before Judge William T. Sweigert of the United States District Court for the
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450
Northern District of California (Sierra Club, et al v. Rogers C. B. Morton,
et al, Civil Action No. 54164 WTS). On February 25, 1975 Judge Sweigert
placed the case on the "Civil Inactive List" pursuant to the Court's Local
Rule No. 119(d). Since then, the Sierra Club filed its "Second Amended Com-
plaint" on February 27, 1975 and took a deposition of Mr. Peter Wyckoff,
Recreation and Land Officer for the U.S. Forest Service's Sequoia National
Forest on September 29, 1975. The case remains, however, on the civil inactive
list.
B. "NEUTRALITY" ON MINERAL KING
The question of neutrality regarding the current controversy over develop-
ment of a ski area at Mineral King is important not only to people who op-
pose the Forest Service's plans for a Mineral King ski area but also to those
who favor it. USSA submits that there are three elements to legislative neu-
trality over Mineral King. To be truly neutral, any proposed legislation must:
(1) Have no impact on the litigation surrounding the development of a Mm-
*eral King ski area; (2) Give rise to no new statutory authority enabling the
development of a Mineral King ski area is pending; and (3) Not bar future
activity at Mineral King consistent with the outcome of the Mineral King liti-
gation once that litigation has run its course.
C. THE PRESENT VERSION OF s. 2125
Mineral King is dealt with in Section 9(b) of S. 2125 which now provides
as follows: "The provisions of this Act shall not be applicable to any existing
or future application for a permit for commercial outdoor recreation ski ac-
tivities and facilities on forest reserve land in Mineral King Valley, Sequoia
National Forest, and shall not affect in any manner any litigation pertaining
thereto." (Emphasis supplied.)
Section 9 contains only two of the three elements of neutrality. First, Section
9 declares that it shall have no impact on existing litigation. Second, Section 9
precludes utilizing the new ski area permit authority in 5. 2125 to authorize
development of a ski area under pending applications at Mineral King.
The present draft of 5. 2125, however, utterly fails to recognize the third
element of neutrality. 5. 2125 does not close its eyes to what the Mineral King
situation might be after the current litigation ends but rather prejudges the
outcome and prematurely freezes the Secretary of Agriculture's ability to deal
with Mineral King in the future. For example, it is at least conceivable that
the courts will determine that the United States, through its various govern-
mental departments, has authority to permit the development of a ski area at
Mineral King Valley and that the United States has complied with all appli-
cable laws including the National Environmental Policy Act. Nevertheless, the
present draft of 5. 2125, if enacted into law, would bar the United States from
ever issuing a ski area permit for Mineral King under S. 2125 because Section
9(b) provides that "[tlhe provisions of this Act shall not be applicable to any
future application for a permit for . . . ski activities - . in Mineral King
Valley . - ."
D. PROPOSED SUBSTITUTE LANGUAGE INSURING NEUTRALITY ON MINERAL KING
We submit that to require the United States to rely only on current author-
ity contained in 16 U.S.C. §551 and 16 U.S.C. §497 for development of a Min-
eral King ski area insures second class treatment of skiing at Mineral King
even if the arguments of those opposed to a Mineral King ski area are found
to be without any merit.
To remedy this defect in neutrality I am attaching herewith proposed lan-
guage to be substituted for the current version of Section 9(b) in S. 2125.
I should say in advance that I found that the addition of language address-
ing the third element of neutrality has caused me to have to reorganize the
existing language to some extent rather than simply tacking language on.
Nevertheless, I have adopted the syntax of the current version of S. 2125.
First, the new language specifically provides that 5. 2125 shall not "affect
in any manner" any litigation pertaining to issuance of a ski area permit in
Mineral King ". . . under laws in effect on the date this Act becomes law." In
other words, S. 2125 can't affect the outcome of challenges to existing statutory
authority for development of a Mineral King ski area.
Second, the proposed substitute language also bars the issuance of any per-
mit under S. 2125 for a Mineral King ski area ". . - [A}s long as litigation now
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451
pending in the United States District Court for the Northern District of Cal-
ifornia pertaining to the issuance of a [Mineral King Ski Area permit . . is
still pending in the courts of the United States." Thus, all existing litigation
and appeals related thereto will toll the terms of 5. 2125 as far as Mineral
King is concerned.
Third, and most important, the proposed substitute language would further
bar the issuance of any Mineral King ski area permit if the courts determine
that the United States lacks authority under existing law to issue a ski area
permit for Mineral King. In other words, the provisions of 5. 2125 could not
be used by supporters of developing a Mineral King ski area to circumvent a
a defeat in the courts. At the same time, however, if supporters of develop-
ment at Mineral King prevail, a Mineral King ski area won't have to depend
only on existing law for a Forest Service permit but could also qualify for
an "improved" permit under 5. 2125. Thus, Mineral King would be protected
against development if those opposing development prevail in the courts but
development of Mineral King would be permitted on the same basis as with
any other ski area if opponents of the Mineral King ski area are unable to
persuade the courts to agree with their position.
I look forward to discussing this matter in further detail with you and
your staff at your earliest convenience.
Sincerely yours,
DONALD R. ALLEN,
Counsel to United States Ski Association.
Enclosure.
UNITED STATES SKI ASSOCIATION PROPOSED SUBSTITUTE LANGUAGE ON
MINERAL KING FOR 5. 2125
Strike Sec. 9(b) of 5. 2125 and substitute therefor the following:
"Sec. 9(b). The provisions of this Act shall not affect in any manner any
litigation pertaining to the issuance of a permit for commercial outdoor rec-
reation ski activities and facilities on forest reserve land in Mineral King
Valley, Sequoia National Forest under laws in effect on the date this Act be-
comes law.
"Sec. 9(c). The provisions of this Act shall not apply to any commercial
outdoor recreation ski activities or facilities on forest reserve land in Mineral
King Valley, Sequoia National Forest;
"(1) As long as litigation now pending in the United States District Court
for the Northern District of California pertaining to the issuance of a permit
for such activities or facilities under laws in effect on that date this Act be-
comes law is still pending in the courts of the United States; or
"(2) If it is determined by the courts of the United States that the United
States lacks authority under laws in effect on the date this Act becomes law
to issue a permit for such activities or facilities or that the United States in
so allowing such activities or facilities would violate such laws."
Mr. ALLEN. Senator, I don't have any other points that I don't
thlnk have not been adequately covered this morning. I would say
that in answer to your questions on the last witness regarding
whether or not competing permits ought to be granted or whether
there ought to be some exclusive right or regional right, for in-
stance, in existing permit holders to ski areas-new ski areas. This
is a complex problem which I don't think admits of one simple
answer.
In fact, you might go further and say should the existing area
operator have exclusivity on complimentary permits in the area.
The problem is investment, the opportunities to return on his invest-
ment, the opportunities to provide the quality services that should
be afforded to the public through a Forest Service permit which is,
by nature, a monopoly.
The Forest Service controls the land and they are dispensing these
permits.
Senator HASKELL. The question is how big of a monopoly; should
you have in an entire trade area a monopoly? As yOu know, as a
lawyer, one of the tests in antitrust is relative market, right?
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452
Mr. ALLEN. Right.
Senator HASKELL. Well, you can decide the area of relative market
by statute if you want to and eliminate it from antitrust.
Mr. ALLEN. And have a lot of litigation on it.
Senator HASKELL. That's right. And that would eliminate a lot
of litigation. And it occurs to me-and I don't like regulation
either-but I don't like monopoly. And I don't like the idea of one
organization getting a stranglehold on a particular market area.
And I often find, I am sorry to say, that business interest come in
and they are all for free competition. But when you suggest some-
thing that's going to enhance competition, they find some reason to
oppose it.
And my thought on having permits in different hands in relevent
market areas was to enhance competition. And that was the purpose
of my suggestion.
Mr. ALLEN. We recognize that suggestion. And as a consumer
group we want more competition and not less competition. How-
ever, there is, albeit, too little known about the problem of ski areas
and new ski areas in proximity to each other in our judgment at
the present time to make a legislative judgment. We don't believe
we know-and perhaps the area operators do know-but I don't
think they know enough now to agree or disagree with you on a
standard for what the relative market might be. It's going to be
different than what we had or that is going to be in Colorado.
Senator HASKELL. I can tell you that if I have to drive a certain
distance and I can go to one of two or three ski areas in roughly the
same distance and one's tow tickets are less than another, it's com-
petition. Now, I may go to the higher cost because I like to ski there
but I can tell you that if I have to drive, let's say, 50 miles to gb
skiing and I've got a choice of three areas and the lift tickets are
different, that'll enter into my decision which one I'll go to. That
I call competition.
Mr. ALLEN. We would call that competition and support that kind
of competition. The question is do you want to have the opportunity
to go to seven or eight ski areas all of which are marginal and barely
making a return on an investment such as they can afford the facility.
Senator HASKELL. Are you assuming that these places can't make a
decent return on investment unless they have all the permits within
a given area?
Mr. ALLEN. We have a lot of examples in Colorado of healthy ski
areas, strong ski areas, but, as skiers, we also know that in other
parts of the ~oumtry we have, for example, six ski areas-
Senator HASKELL. I think, for example, you are talking about
New England parallel. That isn't a parallel to the West because I
think Mr. Adams said there were 350 ski areas in New England. And
our figures here show 12 are on national forest areas. So, New Eng-
land I don't consider a parallel to the West.
Mr. ALTEN. Right, Senator, we are just suggesting here that the
committee go carefully because the question of information is a prob-
lem and exclusivity even as a consumer group, we realize there may
be some justification for a degree of exclusivity which we may other-
wise find unacceptable.
Senator HASKELL. Thank you very much, indeed.
[The prepared statement of Mr. Allen follows:]
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LI~G
5K/TEAM
11111
U ~ UNITED STATES SKI ASSOCIATION
/ 1726 CHAMPA, SUITE 300, DENVER, COLORADO 80202
/ TELEPHONE 303-825-9183
`qpJ
UNITED STATES SKI ASSOCIATION
STATEMENT ON 5. 2125
94'th Cong., 1st Sess.
Before The
Subcommittee On Environment And Land Resources
Committee On Interior And Insular Affairs
United States Senate
November 17, 1975 Donald R. Allen
Duncan, Allen and Mitchell
1775 K Street, Northwest
Washington, D. C. 20006
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454
UNITED STATES SKI ASSOCIATION
STATEMENT ON 5. 2125
94'th Cong., 1st Sess.
My name is Donald R. Allen. I am a member of the law
firm of Duncan, Allen and Mitchell in Washington, D. C. and I am
currently employed as counsel to the United States Ski Association
on whose behalf I appear here today. The United States Ski Asso-
ciation ("USSA") is a nonprofit organization comprised of over
100,000 amateur skiers and is the official sanctioning body in the
United States for amateur snow skiing competition. USSA fields
the United States Ski Team which represents this country in inter-
national winter Olympic competition as the United States Olympic
Ski Team.
USSA is vitally interested in snow skiing both from the
standpoint of amateur competition and recreation. Its members
heavily rely on lands administered by the United States Forest
Service for alpine skiing, nordic skiing and ski touring. Some 84
important commercial ski areas exist on Forest Service lands under
permits granted by the Service. These include some of America's
most well-known ski resorts including Aspen and Vail in the State
of Colorado. Thus, U.S. Forest Service lands and the policies
pursuant to which they are administered are of vital importance
to America's amateur skiers and their official representative, the
United States Ski Association.
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S. .2125, which is currently pending before this Subcommittee,
is an ambitious bill which attempts to deal with many troublesome aspects
of the utilization for Forest Service lands for commercial outdoor recre-
ation facilities and activities including snow skiing. Many of the objec-
tives which are addressed in the bill are laudable ones which need to be
addressed. Unfortunately, there are features of S. 2125 which prevent
the bill from achieving its objectives.
The United States SkiAssociation in hearings held earlier
this year by this Subcommittee in Denver, Colorado set forth in general
terms its views regarding S. 2125. In summary, USSA stated at that
time that it saw a great need for the development of new ski areas and
stated its preference that competition and the free enterprise system
be relied upon to meet this demand. USSA stated that it found certain
provisions of S. 2125 in conflict with continued reliance on the free
enterprise system.
The purpose of my presentation today is not to cover the
same ground which was covered by USSA in its presentation in Denver,
but, rather, to address myself to various technical aspects of S. 2125.
Of course, USSA supports in general the provisions of the bill which
expand the authority of the Secretary of Agriculture to issue permits
for ski areas on National Forest lands. Nevertheless, there are
certain deficiencies which, in spite of the best of intentions of the
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-3--
drafters of.the bill, render S. 2125 an unworkable piece of legislation
which, in its present form, should not be enacted into law. USSA has
reached this conclusion in spite of its favorable attitude to many pro-
visions of the bill.
I. LACK OF COORDINATION
BETWEEN PROVISIONS CALLING FOR A
STUDY AND PROVISIONS REQUIRING
PROMULGATION OF REGULATIONS
S. 2125 places upon the Secretary of Agriculture the
burden to conduct a study regarding winter recreation facilities on
Forest Service lands and issue various regulations dealing with
activities at those facilities. Unfortunately, the bill's study and
regulation promulgation sections are not coordinated. Without some
coordination, the Secretary and the Congress will be deprived of the
benefit of the proposed study when regulations are developed and
promulgated.
Section 3(c)(2) requires the Secretary, within six months
of enactment of the bill into law, to conduct and submit to Congress
a report on user fees charged under permits issued pursuant to the
bill. In spite of the Secretary's responsibility to study this matter
and report to Congress, Section 4(c) requires the Secretary to
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simultaneously promulgate regulations to Congress dealing with the
criteria to be utilized by the Secretary in allowing Forest Service
permittees to charge user fees. At the same time, Section 3(b)
requires the Secretary to submit within six months of enactment
of the bill proposed regulations dealing with guidelines for issuance
of new ski area permits.
Both sets of regulations and the study will involve certain
common, fundamental questions. But from the little that is known at
the present time, it is clear that all ski areas are not the same.
There are marginal operators at one end of the spectrum and there
are truly substantial corporations operating huge ski areas requiring
huge capital investments at the other end.
S. 2125 wisely recognizes the need for study. What S. 2125
overlooks, however, is the need to coordinate the regulations required
to be proposed by the Secretary with the Secretary's study efforts.
Whether or not the problems sought to be cured by the various regula-
tions proposed by the Secretary are truly problems, or whether or not
the Secretary has properly addressed the problems sought to be resolved
depends on information that the Secretary will presumably gather in
his study. Indeed, a formal study of the entire ski area permit program
with adequate opportunity for public involvement would be a welcome
undertaking by the Forest Service. Any judgment by the United States
67-512 0 - 76 -30
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Congress regarding whether or not there are problems to be solved
or how one should go about solving those problems through the issuance
of regulations should follow such a study and not precede it. Thus, we
recommend that the effective date of the provisions contained in S. 2125
requiring the Secretary to propose regulations dealing with permits
and user fees be postponed at the very least to await the outcome of
a broad study effort by the Secretary on problems associated with
ski areas on Forest Service lands and not prejudice the issues prior
to the time when adequate information is available to the Forest
Service.
II. RATEMAKING CONCEPTS CONTAINED
IN TIfE BILL SUFFER FROM LACK OF
PRECISION AND DO NOT CONFORM TO
GENERALLY ACCEPTED RATEMAKING PRINCIPLES
Section 3(c)(1) of the Bill purports to rely on 31 U.S. C.
§483(a) for substantive concepts regarding ratemaking tests for
user fees. Nevertheless, the Section contains substantive language
which itself is lacking in precision. For example, Section 3(c)(l)
would require user fees to be established "... to provide a reasonable
retuin on equity investment. . . The first question which arises is
to whom should the 1reasonable return on equity" accrue? 31 U.S.C.
§483(a) speaks in terms of fairness and equity to the Federal government.
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Does S. 2125 thereby mean that it is the Federal government which
should earn a reasonable return? How would the government's
investment be measured? What opportunity cost could be used to
develop benchmark for a "reasonable" return?
As noted, S. 2125 incorporates the provisions of 31 U.S.C.
§483(a) for purposes of substantive ratemaking standards. Section
483(a) provides for fees to be `fair and equitable taking into con-
sideration direct and indirect costs to the Government, value to
the recipient, public policy interests served, and other pertinent
facts. .." Apart from the fact that this is intended as a measure of
the return to the Federal government, this is an extremely broad
ratemaking standard which is almost without bounds. It appears to
suggest, in the case of a ski area, that a cost benefit analysis be
developed so that public benefits can be measured against government
costs. With no long standing or well developed ratemaking tradition
behind him, the Secretary of Agriculture is left with an unconscionably
broad criteria which will certainly invite controversy and time-consuming
appeals by disgruntled participants in the ratemaking process. Indeed,
some years might .have to be devoted to development of a satisfactory
set of ratemaking principles under S. 2125 through the administrative
and judicial process.
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We doubt that this Subcommittee intended for the Forest
Service to establish its own ratemaking bureaucracy within the
Department of Agriculture. Nevertheless, the vague, general
ratemaking language contained in this bill admits of such an inter-
pretation and may be utilized by some interests to force the Forest
Service into a role which it is ill prepared to play - - that of a
regulatory commission for ski areas.
The Forest Service could easily find itself in the position
of having to establish rates to subsidize inadequate ski area operations
to protect existing investment. It could very well be reluctantly forced
into second guessing the business judgment of its permittees. To
involve the Forest Service to this extent in an operator's activities
on a continuing basis through rate regulation is a revolutionary change
in the traditional role played by the Forest Service. While USSA is not
se opposed to a well-defined, mandatory hearing process to be
followed in conjunction with increases in ski area user fees, such a
responsibility should not be thrust upon the Forest Service without
long and hard study given the examples which are set today by our
various regulatory commissions.
III. THEEFFECTOFS. 2125 ON
MINERAL KING
Section 9(b) of S. 2125 purports to steer the bill clear of a
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long-standing controversy over issuance of a ski area permit proposed
by the Forest Service for Mineral King Valley in the Sequoia National
Forest, California. It is TJSSA s understanding that the drafters of
the bill had intended to take a neutral position on the Mineral King
issue by simply excluding Mineral King from the bill altogether.
USSA applauds this intention. The result actually reached, however,
is anything but neutral.
Section 9(b) provides that no permit under the bill could
ever issue for a ski area at Mineral King. This provision prejudices
Mineral King in two ways. First, to the extent there is a reason to
strengthen existing ski area permit legislation, excluding Mineral
King from ever qualifying for a new permit issued pursuant to the
bill would relegate any eventual ski area developed at Mineral King
to permanent second class status. Second, and more importantly,
the implication which will arise as a result of passage of this bill
will be that existing ski area permit legislation is inadequate. This
will only add fuel to the fires stoked by opponents of Mineral King
who have constantly argued to the courts that the Secretary of Agriculture
lacks authority at the present time to permit the development of the
proposed Mineral King Ski Area.
For nearly eight years opponents of the development of
Mineral King have frustrated attempts of the Secretary of Agriculture
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to reach a land management decision with respect to the future of
Mineral King as a ski area. Congress must permit the Mineral
King issue to be tried, if indeed it must be tried judicially at all,
on its own merits. If new ski area permit authority is enacted,
there is no reason to exclude the possibility of the Secretary of
Agriculture exercising his land management discretion to issue a permit
for development at Mineral King under such new authority.
IV. CONGRESSIONAL INVOLVEMENT IN
LAND MANAGEMENT DECISION-MAKING
Sections 3(a)(2)(A) and (B) provide for an unprecedented
amount of Congressional involvement in the issuance of permits in
excess of 80 acres. Questions involving management of the nation's
natural resources require the expertise of both the legislative and
executive branch. Management policies must be established by
the legislative branch. When issues relating to the management of
lands are involved, this nation has almost without exception chosen to
delegate the actual management decision-making to the executive
branch. Indeed, ever since Congress passed the Organic Adminis-
tration Act of June 4, 1897, 30 Stat. 35, the executive branch has
been invested with the authority and responsibility to manage this
nation's National Forests.
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We doubt that it can seriously be argued today that Congress
wants to take responsibility for land use decisions involving specific
parcels of land except where questions of overriding national policy
are involved. The Congress has neither the field personnel, expertise
nor institutional structure to conduct the kinds of studies and investi-
gations which necessarily precede land management decision-making.
Moreover, that decision-making must take place in the framework of
the continuing management and assessment of all of the land resources
involved. We submit that this Subcommittee 5 involvement in individual
use permits for ski areas as proposed in S. 2125 would be completely
unwarranted and represent a dangerous departure from long- standing
policy regarding the respective responsibilities of the executive and
legislative branches with respect to establishing land management
policies and carrying out those policies.
V. TECHNICAL DEFICIENCIES
There are several technical deficiencies, inconsistencies
and apparently irreconcilable aspects of S. 2125. Following is a
summary of some of the problems.they create.
A. Definition of ~`Forest Reservest -- Section 1 of the
bill (which section number has been inadvertently deleted from the
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text) defines `forest reserves" and "forest reserve lands" as only
that portion of the National Forest system which is created from
the public domain. Since substantial amounts of the National Forest
system have been created not from public domain but from private
lands, the bill inexplicably excludes from its purview substantial
lands in the National Forests. This is true of many of the National
Forests in the eastern United States. We assume that this definition
will be adjusted to make any bill ultimately reported out of the Sub-
committee applicable to all National Forest lands. It is conceivable
that Section 9(a) was intended to cure this defect by making the bill
applicable to all lands administered by the Forest Service. This
curative attempt, if it is indeed one, is redundant and unwieldy and
should be reconsidered.
B. Coordination of Sources of Permit Authority - - Section 2
of the bill appears to contain the fundamental source of authority for
the Secretary to issue improved use permits. Nevertheless, Sections
3(d), (e) and (f) also contain basic authority for issuing permits. From
a strictly organizational standpoint, these various sections should
be coordinated with each other and integrated into one, consistent
section. In light of the degree to which sources of authority for use
permits on Forest Service lands have been litigated, proper organi-
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zation of these basic sections is absolutely necessary.
Additionally, the proviso to Section 3(d) providing for
compensation to be paid by the Secretary if he terminates a permittee's
permit for another use," is confusing. What exactly is another use."
Certainly a clearer articulation of the conditions pursuant to which
compensation is due a permittee is possible. Failing to provide
such a clarification could be costly to the Forest Service and infringe
upon the rights of permittees by allowing too much discretion for
interpretation to rest with the Forest Service.
C. Bar Against Identical Permits - - Section 3(g) bars the
Secretary from issuing more than one permit for `identical outdoor
commercial recreational activities or facilities within an area of less
than 5,080 acres unless each such permit, irrespective of the acreage
involved, is issued in accordance with procedures [involving the consent
of Congress]." It is hard to measure in the abstract what might con-
stitute "identical outdoor commercial recreation activities or facilities."
Of course, there would be no such thing as an "identical" facility.
Each facility is unique in some respect. How close must various
recreation activities be to preclude the issuance of competing permits?
Might not the same problems which this bar to duplicate permits seeks
to prevent arise if complimentary activities or facilities are licensed
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in close proximity to each other? If a permittee is denied exclusivity
with respect to complimentary facilities, he may suffer a similar or
greater harm than that he might suffer if identical competing facilities
were allowed in proximity to his permit area. While the objective
of this section is a worthy one, the language used to implement it
requires substantially more thought and amplification.
D, "Notwithstanding Any Other Provision of Law" - -"Not-
withstanding phrases such as the one used in the beginning of Section
4(a) are extremely dangerous in legislation. This is particularly true
when dealing with matters involving public access to private informa-
tion. Constitutional rights are obviously involved and a "notwithstanding"
clause avoids the question of when public inspection of records might
be appropriate and invites lawsuits over the interpretation of the clause.
We recommend that thought be given to precisely when the disclosure
provisions contained in Section 4(a) should be invokable by the Secretary
of Agriculture rather than avoiding the question by "notwithstanding"
clause approach.
E. Compensation Upon Termination or Expiration of
Permits -- The last "proviso" of Section 5 provides that the Secretary
shall pay compensation to a permittee but only in the event that the
Secretary does not order the removal of the permittee's structures,
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fixtures or improvements and permits the continued use of these
facilities either by the Federal government or some other party.
While presumably founded on the best of intentions, this section
does not guarantee a permit holder that he will be compensated if
his facilities are to be subsequently used by another permit holder.
Under the wording of the section, the United States could deprive a
permittee of compensation by simply terminating his permit. It
could wait for a certain period of time and then permit a new
permittee to utilize the facilities. The Secretary could then claim
that he did not permit the vcontinued use~ of the formal permitte&s
facilities by another permittee (emphasis supplied). By allowing
a sufficient time period to pass, the Secretary could claim he is
only allowing a "new use of the facilities. The language of Section 5
requires tightening to insure that the objective aimed at is achieved.
F. Access to Permittees Records -- Section 6 gives the
Secretary unbridled authority to search private records of a permittee
during the term of any Forest Service permit. Without going into
detail in this regard, we question whether or not Section 6 stays
within the boundaries of legitimate government inquiry or violates
fundamental American principles regarding the right to privacy. As
the Section is written, any "books, documents and papers of the per-
mittee pertinent to the permit" are subject to arbitrary inspection by
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the Secretary. We raise the question as to whether or not this is too
broad.
G. Applicability to Existing Laws - - Section 7 purports to
make the bill only a supplement to and not a substitute for existing
legislation authorizing permits for use of Forest Service lands.
However, the second sentence of the Section specifically subjects
existing permits issued pursuant to such statutes as 16 U.S.C. §551,
and 16 U.S.C. §497 to the provisions of S. 2125. The language is
simply inconsistent and invites confusion and litigation, given the
complicated inter-relationships existing among current sources of
authority for Forest Service use, permits. The Section should be
reworked to insure that existing permits and sources of authority
for permits are not disturbed by any new legislation.
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Senator HASKELL. The hearing will now be adjourned and the rec-
ord will stay open for 2 weeks.
[Whereupon, at 12:45 p.m. the hearing was adjourned.]
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APPENDIX
ADDITIONAL STATEMENTS AND COMMUNICATIONS SUBMITPED FOR
THE RECORD
(471)
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The Wilderness Society
1901 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
STATEMENT OF GEORGE ALDERSON
DIRECTOR OF FEDERAL AFFAIRS, THE WILDERNESS SOCIETY
BEFORE THE SUBCOMMITTEE ON ENVIRONMENT AND LAND RESOURCES,
SENATE INTERIOR COMMITTEE, WASHINGTON, D.C.,
CONCERNING S. 2125, LEGISLATION REGARDING
COMMERCIAL OUTDOOR RECREATION FACILITIES
IN THE NATIONAL FOREST SYSTEM
November 17, 1975
I am George Alderson, Director of Federal Affairs of The Wilderness Society,
1901 Pennsylvania Avenue, N.W., Washington, D.C. 20006.
Since The Wilderness Society presented detailed testimony at the field
hearing in Denver on October 6, this statement will merely summarize our
position on S. 2125.
We favor some of the objectives of S. 2125, but we recommend against its
enactment as introduced. The bill grants unnecessary and unjustified new
privileges to commercial interests for use of public lands, without insuring
commensurate benefits to the public and without adequate safeguards for the
public interest.
We oppose the provision allowing the Secretary of Agriculture to grant
permits for large ski developments with only a Congressional veto option.
We recommend that permits for areas larger than 1,280 acres be grant~d only
(by specific Acts of Congress.
Guidelines should be explicitly included in the bill covering the posting
of bonds, determination of the economic demand for proposed developments,
compliance with energy conservation principles, assurance that other national
(473)
67-512 0 - 76 - 31
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forest values ~re not adversely affected by the development, compliance with air
and water quality laws and regulations, and so forth.
A provision should be added to prohibit development in an inventoried road-
less area unless a formal wilderness study in accordance with the Wilderness Act
of 19614 has been completed.
The Secretary should be required to show that rate adjustments will not
discriminate against the day skier, as opposed to participants in organized
~oups or package deals.
We strongly oppose the 50-year term for permits, and recommend instead
a maximum term of 10 to 15 years, so as not to commit public lands to commercial
use for such a long term.
Thank you for the opportunity to present our views.
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U.S. SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washington, D.C., October 24, 1975.
Hon. JOHN R. MCGUIRE,
Chief,
Forest Service,
Department of Agriculture,
Washington, D.C.
DEAR CHIEF MCGUIRE: I would like to extend to you a belated thank you for
the excellent conversation we had one morning last month on S. 2125, the
outdoor recreation permit bill. I certainly appreciated the interest you ex-
pressed in the measure and the highly constructive attitude you took towards
many of its provisions. I truly believe we can find a common meeting ground
on most of the issues addressed by that legislation.
Subsequent to our meeting, I held field hearings in Aspen, and Denver,
Colorado, on October 4 and 6 respectively. Much of the testimony was to be
expected. Several new issues, however, were raised and I hope to discuss
these with you in the near future.
I would like to ask your assistance on a particular matter which came to my
attention last week. While in Colorado during the Columbus Day recess, I
learned that Mr. D.R.O. Brown may have provided complimentary season passes
to several witnesses who testified at the Aspen hearing. The testimony of the
witnesses who allegedly received these passes did not address the legislation
itself but simply rendered praise to the Aspen Skiing Corporation. This raises
several questions concerning Forest Service policy in relation to such com-
plimentary passes:
First, I would be interested in knowing whether the Forest Service has
specific criteria concerning permissible or impermissible uses of complimentary
or reduced rate passes. Secondly, could you please inform me as to how such
complimentary passes are completed in the formula for determining permit fees
payable to the Federal Government? Could issuance of these passes alter the
fee total in any manner whatsoever? Third, could you please outline for me
how such passes are considered when Forest Service personnel grant or deny
new ski permit applications or permit renewal applications? Fourth, could
you please inform me as to how such passes are considered when Forest
Service personnel grant, modify, or deny request for lift ticket price increases?
You will shortly be receiving the formal announcement of the Subcommittee's
hearing on S. 2125, scheduled for November 11. I look forward to hearing
your testimony on S. 2125 at that time. I hope, however, that your response
to the questions posed in this letter could be returned to me in the very near
future.
Sincerely,
FLOYD K. HASKELL,
Chairman, Subcommittee on the
Environment and Land Resources.
WASHINGTON, D.C., October 31, 1975.
Hon. FLOYD K. HASKELL,
Chairman, Subcommittee on the Environment and Land Resources,
Committee on Interior and Insular Affairs,
U.S. Senate.
DEAR SENATOR HASKELL: Thank you for your letter of October 24. I agree
that there are issues addressed in S. 2125 where we can find common ground.
In your letter, you asked several questions on how we handle complimentary
or reduced rate passes.
About 15 years ago, we concluded that we would have a look seriously at
the matter of give-away or gratutities. On an operator-by-operator basis, the
volume was not large. It was, however, in the aggregate, substantial. As a
result, we developed some definitions and new conditions that were to be made
a part of concession special use permits. The three Aspen Ski Corporation
permits near Aspen contain these conditions.
For our purposes, gratuities include such goods, services, or privilages as
discounts, gifts, dividends, or benefits that are furnished to individuals, stock-
holders, owners, creditors, officers, and employees or their families at rates
or under conditions not available to the general public.
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476
In developing conditions, we recognized that some gratuities were properly
costs of doing business and should not be a part of sales. This included
tickets or passes given those who are present in the interest of public safety,
those whose presence significantly increases sales by publicity for the opera-
tion; competitors, judges, and other officials or organized competitive or exhibi-
tion events; officials responsible for inspection and administration of the
permitted use; and other similar purposes.
Each year, the permittee describes to the Forest Supervisor his expected
volume of business in these categories. Upon approval, based on reasonableness
of the program, he may proceed without considering these items as sales. A
complete record must, however, be kept of all tranactions under the approved
program. All other gratuities are considered sales and are priced at the
permittee's current price to the public and become a part of total sales of the
operation. These total sales are used in fee calculations, and the Treasury.
receives a payment which includes these values.
In direct answer to your question, fees are increased to the extent unap-
proved gratuities are a part of sales. Further, since they are a part of
anticipated total sales that can be generated from an operation, they do not
have a direct bearing when considering to grant or deny new applications or
permit renewal requests. By the same token, total sales are included in our
considerations relating to profit opportunity.
We do not necessarrily limit our decisions to the profit reported by the
permittee. The opportunity for profit is considered when changes in user
charges are being reviewed. In other words, if an operator chooses to give
away part of his potential profit, he may do so, but his doing so has little
bearing on our decision. We still look at the total picture.
Thank you for giving me the opportunity to comment. We are looking for-
ward to the hearings on 5. 2125. I would also be very glad to discuss these
and other issues with you at your convenience.
Sincerely,
JOHN R. MCGUIRE,
Chief.
U.S. SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
Washington, D.C., October 29, 1975.
Hon. JOHN R. MCGuIRE,
Chief,
Forest service,
Department of Agriculture,
Washington, D.C.
DEAR CHIEF MCGUIRE: As you will recall On March 25, 1975, I co-signed,
with Senator Hart and Representative Schroeder, a letter concerning the case
of a Colorado resident, Don Lemos, and the issue of whether independent ski
instructors should be permitted to teach at ski areas on national forest lands.
This issue arose again during the recent public hearings on 5. 2125 in Aspen
and Denver, Colorado. As a1 result of those hearings, I am writing to urge the
Forest Service to consider implementation, before the coming ski season, of
procedures allowing qualified independent ski instructors to teach on areas of
the national forest under permit for ski activities and facilities.
I realize that a case is pending before the District Court in Denver to de-
termine whether the Forest Service has the legal right to deny access to such
ski areas for independent ski instructors. I understand that this case has been
remanded by the Circuit Court to the District Court for a rehearing and that
the State has filed a petition to intervene on behalf of the independent ski
instructors. But .1 consider the overriding issue not to be one of legal right
but rather of the right policy. I cannot believe it is in the public interest to
deny properly certified independent ski instructors access to national forest
lands to practice their profession, thereby denying the public the freedom to
select the ski instructors and instruction techniques of their choice and to make
that selection in a situation where price competition prevails.
The testimony at the October 4 and 6 hearings on S. 2125 has led me to
conculde that the public would be best served by a policy permitting indepen-
dent ski instructors to compete freely for students. Such a policy would, of
course, require access to ski facilities located on national forest lands. I
PAGENO="0481"
477
might add that those advocating such access for independent ski instructors
have set forth a very reasonable set of conditions concerning, among other
things, certification, liability insurance, limitations on group instruction and
advertising. I believe these would answer most, if not all, objections raised
against independent ski instructors. They would insure highly qualified ski
instruction on national forest lands and would minimize any detrimental
economic impacts which independent ski instruction might have on the holders
of ski activities and facilities permits.
Your prompt and favorable attention to this matter would be greatly
appreciated. As you know, we have scheduled an additional hearing on S. 2125
for November 17. As you or your representative will likely wish to testify
at that hearing, I suggest that a response from you proior to that date would
be beneficial to both of us.
Best wishes,
Sincerely,
FLOYD K. HASKELL,
Chairman, Subcommittee on
Environment and Land Resources.
U.S. DEPARTMENT OF AGRICULTURE,
FOREST SERVICE,
Washington, D.C., November 13, 1975.
Hon. FLOYD K. HASKELL,
Chairman, Subcommittee on Environment and Land Resources,
Committee on Interior and Insular Affairs,
U.S. Senate.
DEAR SENATOR HASKELL: This is in reply to your October 29 letter suggest-
ing that the independent ski instructor question is not so much a matter of
legal right, but rather the right policy.
As you noted in your letter, the matter of Sabin vs Butz (Don Lemos) is
still before the court. The appropriateness of the policy is the specific matter
before the court at this time. Although we do not have a copy of a recently
issued court order on the subject, we expect to receive it soon. We understand,
however, that is requires a reexamination and reconsideration of our single
operator policy and the application from independent ski instructors.
We believe that our current policy was well thought out and has been
sustained over time. We will, however, be looking at the whole matter again
and, in so doing, will determine whether there are other factors to be con-
sidered. We will be responsive to the court and your request that we consider
the issue. Decisions on this matter will hopefully be made before the next
ski season.
We appreciate your expressed concern and the fact that this was brought
to your attention during the recent Colorado hearings. Since the question
before the court was brought by those interested in independent ski instructors,
it should run its course in that forum.
Sincerely,
JOHN R. MCGUIRE,
Chief.
CITY OF ASPEN,
Aspen, Colorado, June 18, 1975.
Senator FLOYD HASKELL,
Senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: I had the opportunity to meet with Marty Wolf
at the annual meeting of Colorado Ski Country at the Broadmoor on Tuesday.
After the meeting Marty and I chatted about the forthcoming Forest Service
rate fee hearings. He indicated that you intend to hold public hearings in
Colorado this Fall.
Allow me to formally invite you to hold the Western Slope hearings in
Aspen. We appreciate the effort that you have put in on our behalf and on
behalf of all Colorado communities and citizens regarding the rate fee
structure.
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478
At Marty's request, I am enclosing the administrative appeal as well as the
background information developed by our staff. We discussed briefly the idea
that since the Forest Service imposes such a large impact on local communities
that more equitable revenue sharing should accrue to locally impacted com-
munities. Perhaps this could be an element of discussion during the entire
rate fee hearings.
The Chairman of the County Commissioners and I may have occasion to
be in Washington the latter part of June. If this materializes we should very
much like the opportunity to sit down for a few minutes with you and bring
you up to date on the issue from our point of view. We will contact you
through Marty Wolf when the date is set for our trip.
Sincerely,
STACY STANDLEY III,
Mayor.
Enclosures.
CITY OF ASPEN,
Aspen, Colorado, May 28, 1975.
Mr. ThOMAS EVANS,
Forest Supervisor,
White River National Forest,
P.O. Boos 948,
Glenwood Springs, Cob.
Dmi~ Mu. EVANS: It is my understanding that unless your decision of May 8,
1975, regarding the revised rate structure of the Aspen Skiing Corporation, is
contested within 30 days that the administrative remedies may be forfeited.
The City of Aspen requests that you rescind your approval of the rates
dated April 29, 1975. If your approval is not rescinded, then the City intends to
pursue its administrative remedies by protesting first to the Regional Forest
Office in Denver.
We contend that the rates the ski industry charges are certainly in your
purview, and furthermore, should be under Forest Service Regulation. We
believe so because your agency controls a large amount of land utilized by the
ski industry, and the benefit should accrue to the public rather than the private
sector. However, in assuming this responsibility of allowing a "correct" price,
we sense an arrogance or naivete on your part that something so complex
could be treated by you without reference to anyone who has had experience
in regulatory pricing, nor do we see that you looked to this discipline for
guidance.
Mr. Evans, we regard you in this community as being a good Forest Super-
visor; however, we cannot understand why you were given the task of deciding
such a complex issue as "reasonable pricing." If you would ask anyone who
has spent a lifetime in regulatory industry pricing, they would sympathize
with you on the magnitude of issues involved.
We intend to address some of the following issues, if we need to object to
your ruling:
1. What do you mean by "current invested value"? Is this costless deprecia-
tion or replacement cost? If replacement cost, then we will insist that this
method is not allowed in any other regulated industry and you erred in
allowing it to be used.
2. Are you sure that plant in service (physical capital) is the proper measure
to allow as return on investment, or should financial capital be used? We have
noted that the latter is used by most Public Utility Commissions.
If you considered cost as a legitimate consideration in determining a "rea-
sonable price" then, we would like to know how you treated accelerated de-
preciation and cost that may not be allowed such as entertainment, airplane,
et cetera.
4. Your use of two times normal breakeven is a very gross figure. If you
used a. return on investment concept, we would like to know what rate; and
if you used it times equity and debt capital equally or used different rates.
5. We, of course, want complete disclosure and answers to our questions
which are meaningless unless they can be substantiated.
Once again, we commiserate with you for being placed between a rock and
a hard spot, but we hope you recognize what we feel to be in the public interest.
Sincerely,
PHILIP S. MAHONEY, Ph. D..
City Manager.
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479
WHITE RIVER NATIONAL FOREST,
(Ilenwood Springs, Cob., June 2, 1.975.
Mr. PHILIP S. MAHONEY,
City Manager,
City of Aspen,
P.O. Box V,
Aspen, Cob.
DEAR MR. MAHONEY: I appreciate the concern you expressed in your May 28,
1915 letter as to the magnitude of the decision just made on 1975-1976 ski
area lift rates. A copy of the criteria used in my decision is attached for your
information. It is obvious that the existing system is very subjective.
The five "issues" raised in your letter were not individually used to base
the rate decision. These factors among many others have been proposed by the
Regional Forester as a trial system (copy attached) upon which to base
future price request decisions. It was the Regional Forester's intent when put-
ting forward his proposal, which you refer to in your ietter, to gather expert
opinions such as yours to develop an equitable pricing system. It would be
greatly appreciated if you would completely analyze the proposed system and
make recommendations to the Regional Forester upon which we can develop
a better and stronger evaluation system for future use.
I will not rescind any approvals or disapprovals made to date as you request.
A copy of the new appeal regulations is attached for your use if you intend to
ask for further administrative review.
Sincerely,
THOMAS C. EVANS,
Forest Supervisor.
Enclosure.
CITY OF ASPEN,
Aspen, Cob., June 12, 1975.
Mr. THOMAS EVANS,
Forest Supervisor,
White River National Forest,
P.O. Box 948,
Glenwood Springs, Cob.
Re: Request for administrative review and supporting statement.
DEAR MR. EVANS: The following constitutes, on behalf of all signatories, a
written request for administrative review of your denial (dated June 2, 1975)
of our earlier request for the reconsideration of the Aspen Skiing Corporation
daily lift ticket increase approval of May 8, 1975. What follows is our state-
ment of reasons as to why the action of May 8, 1975, is believed to be in error.
The* relief requested is a re-examination by the U.S. Forest Service of its
procedures and criteria applied in reviewing lift ticket rate increase requests,
and the establishment by the Forest Service of new procedures and criteria
that better satisfy the notions of substantive and procedural due process.
both recognized as the cornerstones of legitimate government activity.
INITIAL REQUESTS-PROCEDURAL REQUIREMENTS
Let us note initially for the record that we are joined in this request for
Administrative Appeal by the individuals representing purchasers of daily
lift tickets, discount passes and season passes. In anticipation of the review,
we make the following requests pursuant to the appeal provisions of Section
211.2 of Title 36 of the Code of Federal Regulations.
1. We request that you stay your rate approval of May 8, 1975, pending
completion of this appeal.
2. We request a copy of your statement on review and that we be afforded
an opportunity to comment in writing.
3. We request full disclosure of all documents, correspondence, data, sched-
ules, testimony, criteria, policy statements, regulations or other information
used by you in considering the requested rate increase, and do so pursuant
to the requirements of the Freedom of Information Act, 5 U.S.C. § 552.
4. We request that there be made available to us (for inspection and copy-
ing) your statement of all papers comprising the record forwarded by you
to the review officer.
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480
5. We request an opportunity to present our views orally before the re-
viewing officer.
6. Finally, we request that there be prepared a transcript of the admin-
istrative appeal procedures (including the oral conference).
LEGAL ISSUES
The essence of the appeal is our complaint that the actions of the Forest
Service violate substantive and procedural due process, and the objective
of this appeal is to effectuate changes in the Service's administration to
rectify the deficiencies. We contend:
1. That substantive due process is absent because all rate changes have a
real potential for affecting our community in ways not anticipated in the
skeletal criteria outlined by the Service to be followed in its review, and
these externalities must be anticipated and responded to in approving or
disapproving rate changes.
2. That procedural due process is absent because (a) rate change ap
provals are made without prior opportunity for public impact, (b) the cri-
teria applied by the Forest Service are inadequate, (c) no grounds for such
decisions are given nor justification required, and (d) the requirements of
the National Environmental Policy Act (42 U.S.C. 4321, et seq.) have not
been met.
Forest Service regulations recognize that "the economic stability of many
local communities and business enterprises within and adjoining the National
Forests are dependent on recreational activities" F.S.M. 2301.1, and further
dictate that holders of term permits must "render economic and social bene-
fits to the community", F.S.M. 2711.2(4). It is submitted that in approving
the rate increase on May 8th, the Forest Service never examined the impacts
(externalities) of the rate change on the Aspen Community, its economy.
land use, transportation needs, character, competitive position, and in es-
sence, its viability as a ski resort.
In adopting the rate change the Service failed to consider a paramount
objective, i.e., the public good. The criteria applied failed to acknowledge
the dictates of F.S.i~i. 2721 and~ F.S.M. which read: "Service to the public,
public health and safety, and environmental protection must be principle
considerations in preparing all permits and in their administration," and
"Concession permits are issued to provide an essential public service and not
primarily to afford a profit making venture for the permittee."
Finally, the action taken is procedurally defective because the Service
failed to (1) notice and conduct a public hearing prior to adoption of the
rate change, in contradiction to its duty to establish proper procedures for
its decision making, (2) adopt, in advance of application, appropriate stand-
ards and criteria to be applied, Pyramid Lake Paiute Tribe v. Morton, 354
F. Supp. 252 (1973 D.C.D.C.), (3) clearly document its rationale for the rate
approval, Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971),
and (4) comply with N.E.P.A. requirements, F.S.M. 2302, 1942.2-3.
What follows is a discussion expanding on these notions.
NEED FOR REGULATION
We note in Aspen, that the competitive market place, which is relied on
to set the terms of trade in other businesses, such as our restaurants, is
absent in the case of the Aspen Skiing Corporation. We, therefore, support
the Forest Service's contention that "it is deemed in the public interest to
maintain a healthy and viable skiing industry and to induce capital invest-
ment by the private sector to provide needed public alpine skiing oppor-
tunities on public land."'
In his treatise, De Portibus Mans and Dc June Mans, Lord Hale summarized
the law of businesses, "affected with a public interest." He concluded, that
under common law, "When these facilities were the only one chartered or
when there was only one to serve the entire public, they ceased to be entirely
private, because they were affected with a public interest. As a consequence,
`"Lift Ticket Pricing" (tentative 4/8/75), system proposed by Regional Forester, a
copy provided by Thomas Evans, Forest Supervisor, White River National Forest in
letter dated June 2, 1975. (Emphasis added.)
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481
the owners of these facilities could not charge arbitrary or excessive duties or
tolls, but only reasonable and moderate amounts (referring to ferry boat serv-
ice and proper maintenance of the facilities used). For failing in these duties,
the operator was subject to a fine. These ideas, distilled from the common law,
were to become of living consequence in the United States in 1877, when the
Supreme Court relied upon them in its historic decision in Munn v. Illinois,
wherein Lord Hale's conclusions were applied to present day facilities bear-
ing similar characteristics.2
In Munn v. Illinois,3 a solid foundation was laid that clearly permitted regu-
lation when the test of necessity and monopoly were met. The Supreme Court
inquired into the legal principles which support the power to regulate. Lord
Hale was cited as the authority on this issue in Munn v. Illinois, the Court
quoting from Lord Hale in ruling: ". . . We find that when private property
is affected with a. public interest, it ceases to be juris privati only. This as
stated by Lord Chief Justice Hale more than two hundred years ago, in his
treatise Dc Portibus 1tlaris . . . and has been accepted without objection as an
essential element in the law of property ever since. Property does become
clothed with a public interest when used in a manner to make it of public con-
sequence, and affect the community at large. When, therefore, one devotes his
property to a use in which the public has interest, be, in effect grants to the
public an interest in that use, and must submit to being controlled by the
public for the common good, to the extent of the interest he has thus created.
He may withdraw his grant by discontinuing the use; but so long as he main-
tains the use, he must submit to the control."
Having established the "necessity" test, the Court turned to a consideration
of monopoly. The Court noted that nine companies controlled all Chicago grain
elevators, and that prices had been determined by agreement. Observing that
this "may be a `virtual' monopoly", the Court again, quoted from Lord Hale
in saying of IlIunn and Scott: "They stand, to use again the language of their
counsel, in the very gateway of commerce, and take toll from all who pass.
Their business most certainly `tends to a common charge, and is become a
thing of public interest and use.' Every bushel of grain for its passage pays a
toll, which is a common charge, and therefore, according to Lord Hale, every
such warehouseman ought to be under public regulation. Viz: that he . . . take
but a reasonable tQll. Certainly, if any business can be clothed with a public
interest, and cease to be juris privati only, this has been. It may not be made
so by the operation of the Constitution of Illinois or this statute, but it is by
the facts."
Commenting on the Illinois Constitution, which made it the duty of the legis-
lature to protect producers, shippers, and receivers of grain, the Court pointed
out that "This indicates very clearly that during the twenty years in which
this peculiar business had been assuming its present immense proportions,
something had occurred which led the whole body of the people to suppose
that remedies such as are usually employed to prevent abuses by virtual mo-
nopolies might not be inappropriate here. For our purposes, we must assume
that, if a state of facts could exist when the statute now under consideration
was passed." ° Monopoly was thereby joined with necessity as a test of public
utility status.
We agree with the Forest Service that the issue is one of "necessity" and
"monopoly" and, in addition, the Forest Service must regulate the use of
public land. Therefore, they are entirely justified in regulating the Skier
Transport Carriers.
The Aspen Skiing Corporation, as it impacts the Aspen economy, certainly
falls within the purview of the test of necessity and monopoly.
PROCEDURAL DUE PROCESS
We believe that administrative procedure first must accord with certain
"rule of the fair play", formally designated as procedural due process of law.
The essence of this process, we believe, requires (1) that we be given adequate
2Martln G. Glaeser, Outlines of Public Utility Economics (New York: The h~ac-
millan Company, 1927, p. 159).
394 U.S., 113 (1877).
494 U.S. 113, 126.
594 U.S. 113, 130-132.
6 94 U.S. 131, 132.
PAGENO="0486"
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notice that a specified matter will be subject to a public hearing on that par-
ticular matter to present evidence and rebut contrary evidence. We do not be-
lieve you have afforded us this process.
With respect to the Federal Administrative Procedure Act,7 it has been
stated authoritatively that the law was designed to "...afford parties affected
by administrative powers a means of knowing what their rights are and how
they may be protected. By the same token administrators must provide a
simple course to follow in making administrative determinations.8 (Emphasis
added.) We do not believe that you abided by this act and developed a proce-
dure by which this decision or future decisions would provide us ". . . a simple
course to follow. . ."
In a letter from Mr. Tom Evans, dated June 2, 1975, in which he refused to
rescind his approval of the Aspen Skiing Corporation rates dated May 8, 1974,
he included a list of items which he considered in evaluating a proposed rate
increase for the 75-76 ski season for areas in the White River National For-
est. The Forest Service admits in this list of items that the decision was pri-
marily based on a subjective evaluation of approximately 17 items, one of
which was, "Base area, amenities-town, dining, lodging, shops, night life."
Does the Forest Service believe we have been given the proper administra-
tive procedures and a simple course to follow when they have determined a
regulatory policy based on this list? To quote the last sentence, "The above
items of finances, comparability, and quality form the basis of the analysis
leading to approval or disapproval of rates."
The decision, based on such loosely, considered parameters is nothing less
than impractical to measure, imprecise and subject to abuse by arbitrary de-
cision makers. We cannot but object to this aspect of your procedure.
ESSENTIALS OF PROPER RATE REGULATION
As stated in our objections, the Forest Service has used a method of allowing
rates that are too subjective, perhaps whimsical, the criteria defies measure-
ment, and there would be no way to review or object to conclusions obtained
from the process.
We propose that the Forest Service adopt a system similar to that devel-
oped over the years by Utility Regulatory Agencies. A system continually
being reviewed by our Court System and dynamically responding to changing
technical and social conditions. Simply stated, we recommend that the Forest
Service use a Cost of service basis for regulating the ski tow industry.
The basis for rate making is to determine, what is a firm's total cost of
service, or stated another way, this question asks: How much in total revenue
should the firm be authorized to collect through the rates charged for its sales
of service?
The cost of service of a regulated firm is defined as the sum total of: (a)
Proper operation expenses; (b) depreciation expenses; (c) taxes; and (d) a
reasonable return on net valuation of property. Thus, a regulated firm under
efficient and economical management, requires revenues sufficient; (1) to cover
proper operating expenses, depreciation, expenses, and taxes that would be
payable if the authorized rate of return were earned; and (2) to provide rea-
sonable return on the net valuation of the property used and useful in serving
the public.
After the cost of service and revenue requirements have been determined,
the next steps in the rate making process involves pricing the service, or de-
signing schedule of rates that are intended to produce the total revenues that
the firm is authorized to collect from the public.
We have noted in past correspondence with the Forest Service that the
foregoing is not a simple process but one that provides a mechanism 1~or rea-
sonable men to at least understand the process and arrive at similar conclu-
sions based on measurable data. The process requires that there be an under-
standing of what costs are to be allowed-such costs as (a) Sales Promotion
and Advertising, (b) Payment to affiliates `for service, and (c) Charitable
Contribution should be agreed upon as legitimate and necessary to the busi-
~ 60 Stat. 237 (1946).
8Admjnjstratjve Procedure Act, Legislative History, Sen. Doc. No. 248 79th Con-
gress, 2nd Sess. 1946, p. 193.
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ness. Also, the question of proper "Rate Base" is difficult to answer but there
are guidelines and agreements which can be reached that would allow an-
swers to those questions. Finally, an additional problem of the process is to
determine a lair rate of return, but we can look to the Hope Natural Gas Co.
case as a foundation to solving rate of return.
One final comment and recommendation pertains to the Forest Service's
refusal to consider ski passes based on the theory that this would be discrim-
inatory pricing. It is an underlying principle of rate making that (1) rela-
tively homogeneous groups of customers, called customer classes, be estab-
lished, (2) a different schedule of rates is applied to each class, and (3) each
rate schedule ordinarily offers the individual customers within each class a
graduated descending scale of rates for incremental blocks of service taken
Accordingly, public utilities engage in "differential pricing," rather than uni-
form or "supermarket" pricing. It should be made clear that public utility
rates generally are not made for individual customers but for different classes
of customers and services. Thus, we have for example, "student rates" on
airlines and commercial-residential and industrial rates in electric utility
pricing.
To quote from an authority: "Differential pricing is an entirely lawful and
economically desirable form of public discrimination, insofar as regulated
public utilities are concerned. Three conditions are necessary in order for dif-'
ferential pricing to be possible: (1) monopoly or near-monopoly on the sup-
ply side of the market, (2) a total demand, (3) some means of insulating each
market from the others, so that those who buy at the lower prices cannot re-
sell to those who would have to pay higher prices.10
Hopefully, we have demonstrated that we think there is a better method
of pricing, rather than the one which the Forest Service used in its decisLon
of May, 1975.
IMPACTS ON THE ASPEN COMMUNITY (PUBLIC GOOD EXTERNALITIES)
When the use of public lands for skiiing and the pricing thereof have a
detrimental or beneficial impact upon adjacent land use, the surrounding
environment, local governmental costs, et cetera, we enter the realm of
"public good externalities", an area where the need for adequate govern-
mental intervention has historically and theoretically been acknowledged. We
turn now to itemize potential impacts of lift rate changes (rate increases)
on the tourist consumer market and the consequent potential impact on the
Aspen Community, all in support of our contention that the Forest Service
review process to date has been inadequate by reason of its failure to address
these "externalities."
It is well documented that the price of the lift ticket is a small portion
of the average tourist's expenditures on a ski vaati n to Aspen. Specifically,
a 1973 skier survey showed that about One dollar of eight spent on Aspen
skiing vacations went for lift tickets. Under those i mmstau~es, a one dollar
increase in the lift rate would result in only a 1.2% total ski vacation cost
increase. On that basis, then, we would expect only a minimal impact on
tourist visits and possibly none. However, to use numbers in that fashion may
be quite deceptive. For example, in the same survey quoted above, 41.2% were
on their first ski vacation to Aspen. Thus, the relative increase in the lift
ticket price probably means nothing to these skiers before their first trip.
What may be important is the price quoted for Aspen versus other Colorado
areas. If so, then a ticket price in Aspen higher than elsewhere may divert
traffic. If such occurs, using 1973 statistics, the one dollar per day increase
in the lift rate may cause the loss of an additional $45 of spending in the
rest of the Aspen economy. Obviously, a very low rate of attrition due to
this could have a substantial impact on the areas' economy.
As yet, we have been referring only to a short-run impact. Cross elasticity
of demand (responsiveness of consumption of one good due to the change in
price of another) is invariably larger the longer run the time period of
consideration. Although $11/day versus $10/day may not have much immedi-
ate impact, there may be a longer run attrition of tourists if other areas do
°F.P.U. v. Hope Natural 0a8 Co., 320 U.S. 591 (1944).
10 George J. Stigler, The Theory of Price, (New York: The Macmillan Company,
1947, p. 223).
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484
not follow. Additionally, each incremental addition to price may result in
greater attrition than the last due to the declining marginal utility of skiing.
A second aspect of spending patterns is the possibility that tourists wlit
do come may reallocate their spending in such a way that the increase in
ski corporation's revenues may take the form of reduced revenues from other
busin~sses. Fundamentally, one who comes to ski will probably ski and lodge
first but eat and buy gifts, et cetera, secondly. Thus, any such impact is
necessarily discriminatory against what might be called lower spendirr
priorities.
By no means can we assume a priori that a life rate increase will have such
negative impacts. We can only postulate on the basis of downward sloping
damand curves that such might be possible. However, there is evidence that
those marketing skiing in Aspen believe there are such impacts. This evidence
comes from the policy of granting discounts to block purchasers in the form
of package plan organizers. If the package plan organizer passes this on to his
customers, we can only presume that it is throught by those marketing Aspen
that potential skiers do make price decisions. Thus, we would conclude that
there does exist potential elasticity of demand for ski tickets (response of
purchase of ski tickets due to the change in price), and cross elasticity of
demand that are both non-zero. If the tour leader does not pass this discount
on to his customers directly, it must be assumed that it is done indirectly
through a lower package total. By logic we can only assume that those in
the know think tourists make price decisions.
The inescapable conclusion is that there exist sufficient public good external-
ities in the pricing of day lift tickets to justify a study of whether such prices
should be fully, partially, or not at all better regulated.
EFFECT OF MONOPOLY POSITION
As noted above, the existence of a monopoly does, itself, trigger the need
for highly sensitized administrative decision making. We suggest that each
ski area at this time constitutes a monopoly and this condition warrants
added consideration by the Forest Service in its rate approval procedures.
It has been stated by the 13. S. Forest Service (Rocky Mountain Region)
that any one ski area cannot be considered a monopoly as there exist sufficient
substitutes in the form of other areas to create a competitive market. Though
of some merit, this argument is incomplete in the short-run and erroneous in
the long-run. A ski area isolated by more than an hour or two's drive from
others is an effective monopoly to residents even though it is not for tourists.
Thus at a minimum, the Aspen ski slopes are partial monopoly when one cor-
rectly defines the consumer market as composed of residents and tourists. More
technically, this represents a monopoly through location. This occurs when-
ever the cost of making a transaction in terms of time and monetary outlay
is so high that the consumer will not find it feasible to pursue a purchase from
another vendor. The implications of this have long been a concern of location
theorists dating back well over one hundred years in the history of economic
thinking.
Secondly, each ski area has different slopes and snow conditions and each
has a different commuity serving it. It is of no dispute that Vail and Aspen
are different. Thus, the industry is characterized by "product differentiation"
which is synonomous with oligopoly. Oligopoly is further charcterized by
substantial monopoly power-the ability to set prices within limits without
having to concern one's self with the reaction of other firms. In today's world,
antitrust suits are actually aimed at the monopoly powers of firms in oligopol-
ized industries and not at actual monopolies. The logical conclusion is that
even if price regulation because of the assumption of competitive ski areas for
tourists is allowed, price regulation for resident rates is justified on a monopoly
basis. As all rates must be considered in arriving at any, this requires regula-
tion of all rates.
On a long-run basis, each existing ski area has a significant element of
monopoly power. First, entry is limited by the requirement of a permit from
the U. 5. Forest Service. This is a restriction on supply and immediately
creates some need for price regulation as it violates the free entry requirement
for effective competition. Under an inflationary economy, the capital costs of
building a new area restrict entry and give existing areas a Ricardian rent
PAGENO="0489"
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as demand for skiing increases. Such rents provide a vital signal for new
firms under unrestricted entry, but not under restricted entry. Lastly, there
are growing environmental concerns that are reducing the long-run supply
thus adding to the monopoly power of existing areas.
CONCLUSION
It is for all the above reasons that we request administrative review of the
lift rate increase authorized May 8, 1975. Again, our emphasis is on improve-
ment of administrative procedures for lift rate determinations by the U. S.
Forest Service, and it is in this spirit that this appeal is made.
Dated: June 13, 1975.
PHILIP S. MAHONEY, PhD,
City Manager,
City of Aspen, Cob.
Dated: June 13, 1975.
JAMES T. WILSON,
Purchaser of Day Lift Tickets,
Dated: June 13, 1975.
JAMES T. MARTIN,
Purchaser of Employee (Discount) Pass,
Dated: June 13, 1975.
BRUCE J. ANDERSON,
Purchaser of ~Season Pass.
Dated: June 13, 1975.
CERTIFICATE OF MAILING
I hereby certify that I have filed the above Request for Administrative
Review and Supporting Statement by mailing a copy thereof, postage pre-
paid, this 16th day of June, 1975, addressed as follows:
Mr. Thomas Evans
Forest Supervisor
White River National Forest
P.O. Box 948
Glennwood Springs, Co. 81601
PHYLLIS KENNY.
REQUEST FOR ADMINISTRATIVE REVIEW
We believe that administrative prodecure first must accord with certain
"rules of fair play", formally designated as procedural due process of law.
The essence of this process, we believe, comprise 1) that we will be given
adequate notice that a specified matter will be the subject of a public hearing
and 2) we will be given an opportunity at a public hearing on that particular
matter to present evidence and rebut opposition evidence. We do not believe
you have afforded us this process.
With respect to the Federal Administrative Procedure Act1 it has been
stated authoritatively that the law was designed to " . . . afford parties
affected by administrative powers a means of knowing what their rights are
and how they may be protected. By the same token administrators are pro-
vided with a simple course to follow in making administrative determinations.2
(Emphasis added.) We do not believe that you have abided by this act and
developed a procedure by which this decision or future decisions would pro-
vide us. " . . . a simple course to follow . .
In a letter from Mr. Tom Evans, dated June 2, 1975, in which he refused to
recind his approval of the Aspen Skiing Corporation rates, dated May 8. 1975,
he included a list of items which he considered in evaluating a proposed rate
increase for the 75-76 ski season for areas in the White River National
Forest. (A copy is attached in the appendices.) The Forest Service admits in
this list of items.that the decision was primarily based on a subjective evalua-
tion of approximately 17 Items, one of which was, "Base area, ammenities-
town, dining, lodging, shops, night life."
Does the Forest Service believe we have been given the proper administrative
procedures and a simple course to followwhen they have determined a regula-
160 Stat 2'37 (1946)
2Admlnistrative Procedure Act, Legislative History, Sen. Doe. No. 248, 79th Cong.
2nd Sess. 1946. p. 193.
PAGENO="0490"
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tory policy based on this list? To quote the last sentence, "The above items of
finances, comparability, and quality form the basis of the analysis leading to
approval or disapproval of rates."
Your decision, based on such loosely considered parameters is nothing less
than absurd, impractical to measure, imprecise and does not afford us any
administrative procedures. We object.
THE PUBLIC CONCERN
We note in Aspen, that the competitive market place, which is relied on
to set the terms of trade in other businesses, such as our restaurants, is absent
in the case of the Aspen Skiing Corporation. We therefore, support the Forest
Service's contention that "It is deemed in the public interest to maintain a
healthy and viable skiing industry and to induce capital investment by the
private sector to provide needed public alpine skiing opportunities on public
land."3
We think that the end result of such intervention would 1) provide the
Aspen Community reasonable prices, or rates, and reasonable profits, and 2)
adequate service quality, in the ski lift industry.
The basis on which the Forest Service should regulate the Aspen Skiing
Corporation is based on a legal foundation; a product responding to economic,
social, and technological conditions. The common law basis of regulation of
"businesses affected with a public interest" was very clearly stated in a com-
mentary on the common law by Sir Matthew Hale (1609-1670), Lord Chief
Justice of the King's Bench.
In his treatise Dc Portibus Mans and Dc June Mans, Lord Hale sum-
marized the law of businesses, "affected with a public interest." He concluded,
that under common law, "When these facilities were the only one chartered
or when there was only one to serve the entire public, they ceased to be
entirely private, because they were affected with a public interest. As a con-
sequence, the owners of these facilities could not charge arbitrary or exces-
sive duties or tolls, but only reasonable and moderate amounts. Referring to
ferry boat service and proper maintenance of the facilities used. For failing
in these duties, the operator was subject to a fine. These ideas, distilled from
the common law, were to become of living consequence in the United States
in 1877, when the Supreme Court relied upon them in its historic decision in
Munn v. Illinois, wherein, Lord Hale's conclusions were applied to present-
day facilities bearing similar economic characteristics.4
In Munn V. Illinois,5 a solid foundation was laid that clearly permitted
regulation when the test of necessity and monopoly were met. The Supreme
Court inquired into the legal principles which support the power to regulate.
Lord Hale was cited as the authority in this issle in Munn v. Illinois, it quoted
from Lord Hale in ruling, ". . . We find that when'private property is affected
with a public interest, it ceases to be junis privati only. This as stated by
Lord Chief Justice Hale more than two hundred years ago, in his treatise De
Portibus Mans, . . . and has been accepted without objection as an essential
element in the law of property ever since. Property does become clothed with a
public interest when used in a manner to make it of public consequence, and
affect the community at large. When, therefore, one devotes his property to
a use in which the public has interest, he, in effect grants to the public an
interest in that use, and must submit to be controlled by the public for the
comnion good, to the extent of the interest he has thus created. He may with-
draw his grant by discontinuing the use; but so long as he maintains the use,
he msut submit to the control." ~
Having established the "necessity" test, the Court turned to a consideration
of monopoly. The Court noted that nine companies controlled all Chicago
grain elevators, and that prices had been determined by agreement. Observing
that this "may be a `virtual' mOnopoly", the Court again, quoted from Lord
Hale in saying of llIunn and Scott: "They stand, to use again the language
"Lift Ticket Pricing" (tentative 4/8/75), system proposed by Regional Forester a
copy provided by Thomas Evans, Forest Supervisor, White River National Forest in
letter dated June 2, 1976. (EmphasIs added).
Martin G. Glaeser, Outlines of Public Utility Economics (New York: The Mac-
millan Company. 1927, p. 159.
594 U.S., 113 (1877).
694 U.S. 113, 126.
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of their counsel, in the very gateway of commerce, and take toll from all who
pass. Their business most certainly tends to a common charge, and is become
a thing of public interest and use.' Every bushel of grain for its passage pays
a toll, which is a common charge, and therefore, according to Lord Hale, every
such warehouseman ought to he under public regulation. Viz: that he . . . take
but a reasonable toll. Certainly, if any business can be clothed with a public
interest, and cease to be Juris privati only, this has been. It may not be made
so by the operation of the Constitution of Illinois or this statute, but it is by
the facts."
Commenting on the Illinois constitution, which made it the duty of the
lesgislature to protect producers, shippers, and receivers of grain, the Court
pointed out that: "This indicates very clearly that during the twenty years
in which this peculiar business has been assuming its present immense pro-
portions, something had occured which led the whole body of the people to
suppose that remedies such as are usually employed to prevent abuses by
virtual monopolies might not be inappropriate here. For our purposes, we must
asume that, if a state of facts could exist when the statue now under con-
sideration was passed." 8 Monopoly was thereby joined with necessity as a
test of public utility status.
We agree with the Forest Service that the issue is one of "necessity" and
"monopoly" and, in addition, the Forest Service must regulate the use of
public land. Therefore, they are entirely justified in regulating the Skier
Transport Carriers.
The Aspen Skiing Corporation, as it impacts the Aspen economy, certainly
falls within the purview of the test of necessity and monopoly.
THE ESSENTIALS OF RATE REGULATION8
As stated in our objections, the Forest Services has used a method of allow-
ing rates that are too subjective, perhaps whimsical, the criteria defies
measurement, and there would be no way to review or object to conclusions
obtained from the process.
We propose that the Forest Service adopt a system similar to that developed
over the years by Utility Regulatory Agencies. A system continuely being
reviewed by our Court System and dynamically responding to changing
technical and social conditions. Simply stated, we recommend that the
Forest Service use a Cost of Service basis for regulating the ski tow industry.
The basis for rate making is to determine what is a firms total cost of
service, or stated another way, this question ~asks: How much in total revenue
should the firm be authorized to collect through the rates charged for its sales
of service?
The cost of service of a regulated firm is defined as the sum total of: (a)
Proper operation expenses; (b) depreciation expenses; (c) taxes; and (d) a
reasonable return on net valuation of property. Thus, a regulated firm under
efficient and economical management, requires revenues sufficient; (a) to
cover proper operating expenses, depreciation expenses, and the taxes that
would be payable if the authorized rate of return were earned; and (b) to pro-
vide a reasonable return on the net valuation of the property used and useful
in serving the public.
After the cost of service and revenue requirements have been determined,
- the next steps in the rate-making process involves pricing the service, or
designing schedule of rates that are intended to produce the total revenues
that the firm is authorized to collect from the public.
We have noted in past correspondence with the Forest Service that the
forgoing is not a simple process but one that provides a mechanism for
reasonable men to at least understand the process and arrive at similar
conclusions based on measurable data. The process requires that there be an
understanding on what cost are to be allowed-such costs as: (a) Sales
Promotion and Advertising; (b) Payment to affiliates for service; (c) Chari-
table Contribution; should be agreed upon as legitimate and necessary to the
business. Also, the question of the proper "Rate Base" is difficult to answer
~ 94 U.S. 113, 131-132.
894 U.S. 113, 132.
8 CommIttee Note-The copy furnished was sent to the Committee incomplete.
PAGENO="0492"
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but there are guidelines and agreements can be reached that would allow
answers. Finally, an additional problem of the process is to determine a fair
rate of return but we can look to the Hope Natural Gas Go. `° as a
foundation to solving rate of return.
One final comment and recommendation pertains to the Forest Service S
Refusal to consider Ski Passes based on the theory that this would be dis-
criminatory pricing. It is an underlying principle of rate making that (1)
relatively homogeneous groups of customers, called customer classes, be estab-
lished; (2) a different schedule or rates is applied to each class, and (3) each
rate schedule ordinarily offers the individual customers within each class a
graduated descending scale of rates for incremental blocks of service * *
SKI LIFT PRICING - Ax ECoNOMIC OVERVIEW
THEORETICAL ISSUES
There exists universal consensus among economists that there are sets of
conditions under which it is desirable to have governmental units enter the
economic sphere to regulate, influence and/or control economic activity.
Each of these sets of conditions falls under the general heading of "extern-
alities" which is also termed "market failure." Definitionally, any given set
of these conditions exist whenever it can be established that the discounted
present value of the welfare of the entire society is not being maximized.
Herein are presented the ma3or categories of externalities with examples of
each.
Public good externality
Public good externalities consist of several different situations and are the
most pervasive of all externalities. First, there is the situation in which a
commodity cannot be divided so as to award private consumption rights to
any individual. National defense is the most perfect example of this situation.
A slight modification of this is a situation in which private consumption
rights can be awarded but are too expensive to reasonably do so. Private police
protection for the entire society is not thought feasible and is replaced by
public law enforcement.
A public good externality exists in any circumstance in which although there
is the ability to award private consumption rights there exist conditions in
which public welfare would not be served by leaving this function to profit
seeking enterprises. Foremost among this category is the ownership and
administration of land by governmental units. The consumer protection
movement best fits within this category. Public education is considered too
important to leave it to the market to provide. A further example is that of
the recognition by governments that they have a responsibility to assume
liability whenever their decisions impact so-called third parties just as has
long been recognized of the private sector.
Monopoly externality
When the Sherman Anti-Trust Act was passed in 1890, the control of
monopoly became a fully legitimate function of government. Since that time,
there has been expansion of monopoly control to "natural" as well as con-
trived monopolies and governments have become more active in being the
monopoly under certain circumstances.
A natural monopoly is one in which there exists a long-run marginal cost
curve that is declining. Under these circumstances it is inevitable that the
market will reduce to one firm which will then be free to charge prices as
determined by demand independent of the controlling force of competition.
It is socially preferable to restrict the industry to one firm to eliminate waste
as one firm can produce at lower cost than if there were more than one firm
and to regulate the profit level thereof.
Frequently, it necessary for governments to be the monopoly when the
natural monopoly would require such a large capital investment and/or risk
that, the private sector will not enter. Reclamation and to a lesser extent
public transportation fit this category.
`°F.P.C. v. Hope Natural Gas Co., 320 U.S. 591 (1944).
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Ownership Externalities
It is well documented that in a market economy resources that do not
have transferrable private property rights will be utilized in a non-optimal
fashion. Over-fished salmon fisheries, clearcut timber operations on public lands
and air and waterways used as waste depositories are but a few of the many
examples. That non-ownership of resources justifies governmental intervention
in the economy is supported by history going far back into English Common
Law and running throughout the history of government in the United States.
APPLICATION TO LOCAL ISSuES
A ski corporation in a small rural community which uses public lands can-
not automatically be considered as a competitive, free enterprise that will if
left to the pursuance of profit without regulation automatically assist society
in its efforts to maximize its welfare. In its operations such a ski corporation
exhibits elements of public good and monopoly externalities that justify a
study to determine if it is in the public interest to control their prices and
other elements of their operations.
Public good externalities
We begin by noting that in the Aspen area all ski areas are using publicly
owned lands on a fee lease basis. Following precedent requires that the use
of public lands for skiing be regulated so as to attempt to maximize the net
social benefit from the use of that land. As all pricing decisions potentially
affect useage and since usage affects the level of benefits flowing from the
land, no regulation of ski areas can be complete without the regulation of
pricing decisions. One element of the maximization of net social benefits is
the distribution of monetary gains from the private use of public lands. If
the rate of return on equity of area owners is in excess of what could be
earned in another vensure, risk adjusted, then area owners are the recipients
of Richardian rent from the use of public lands. That is, the ski area owner
is receiving profits as a return to land that he does not own! This represents
a subsidy to area owners as a result of governmental actions. Such may be
socially desirable, but to grant such subsidies unknowingly or without
measurement and careful study is not a justifiable action on the part of a
governmental body.
When the use of public lands for skiing and the pricing thereof have a
detrimental or beneficial impact upon land use nearby, the surrounding
environment, local governmental costs, et cetera, we again are in the realm
of public good externalities. A later section details more specifically this
situation to Aspen.
Monopoly externalities
It has been stated by the U. S. Forest Service (Rocky Mountain Region)
that any one ski area cannot be considered a monopoly as there exist sufficient
substitutes in the form of other areas to create a competitive market. Though
of some merit, this argument is incomplete in the short-run and erroneous in
the long-run.
A ski area isolated by more than an hour or two's drive from others is
an effective monopoly to residents even though it is not for tourists. Thus at a
minimum, the Aspen ski slopes are partial monopoly when one correctly de-
fines the consumer market as composed of residents and tourists. Secondly,
each ski area has different slopes and snow conditions and each has a
different community serving it. It is of no dispute that Vail and Aspen are
different. Thus, the industry is characterized by "product differentation"
which is synonomous with oligopoly. Oligopoly is further characterized by
substantial monopoly power-the ability to set prices within limits without
having to concern one's self with the reaction of other firms. In today's world,
antitrust suits are actually aimed at the monopoly powers of firms in oligopo-
lized industries and not at actual monopolies. The logical conclusion is that
even if price regulation because of the assumption of competitive ski areas for
tourists is allowed, price regulation for resident rates is justified on a
monopoly basis. As all rates must be considered in arriving at any, this re-
quires regulation of all rates.
67-512 0 - 76 - 32
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On a long-run basis, each existing ski area has a significant element of
monopoly power. First, entry is limited by the requirement of a permit from
the U. S. Forest Service. This is a restriction on supply and immediately
creates some need for price regulation as it violates the free entry require-
ment for effective competition. Under an inflationary economy, the capital
costs of building a new area restrict entry and give existing areas a Richardian
rent as demand for skiing increases. Such rents provide a vital signal for
new firms under unrestriced entry, but not under restricted entry. Lastly,
there are growing environmental concerns that are reducing the long-run
supply thus adding to the monopoly power of existing areas.
FURTHER DISCUSSIONS OF THE PUBLIC GOOD EXTERNALITIES
Thus far the more general theoretical and historical reasons for governmental
intervention in pricing and more specifically ski lift pricing have been con-
sidered rather than specific public good externalities. In turning to more
specific but potential impacts of life rate charges, only the impacts of rate
increases are considered. In rate regulation, of course, decreases should be a
thoroughly analyzed as increases. However, it is doubtful that in the fore-
seeable future* rate decreases will be a viable possibility. As we have pre-
viously started, there are two separate consumer markets-tourist and resident.
Consequently, the impact of price increase on these two groups will be
addressed separately.
Impact of raising the tourist lift rate
It is well documented that the price of the lift ticket is a small portion
of the average tourist's expenditures on a ski vacation to Aspen. Specifically,
a 1973 skier survey showed that about one dollar of eight spent on Aspen
skiing vacations went for lift tickets. Under those circumstances, a one dollar
increase in the lift rate would result in only a 1.2% total ski vacation cost
increase. On that basis, then, we would expect only a minimal impact on
tourist visits and possible none. However, to use numbers in that fashion may
be quite deceptive. For example, in the same survey quoted above, 41.2% were
on their first ski vacation to Aspen. Thus, the relative increase in the lift ticket
price probably means nothing to these skiers before their first trip. What may
be important is the price quoted for Aspen versus other Colorado areas. If
so, then a ticket price in Aspen higher than elsewhere may divert traffic.
If such occurs, using 1973 statistics, the one dollar per day increase in the
lift rate may cause the lost of an additional $45 of spending in the rest of the
Aspen economy. Obviously, a very low rate of attrition due to this could
have a substantial impact on the area's economy.
As yet, we have been referring only to a short-run impact. Cross elasticity
of demand (responsiveness of consumption of one good due to the change in
price of another) is invariaThy larger the longer run the time period of con-
sideration. Although $11/day versus $10/day may not have much immediate
impact, there may be a longer run attrition of tourists if other areas do not
follow. Additionally, each incremental addition to price may result in
greater attrition than the last due to the declining marginal utility of skiing.
A second aspect of spending patterns is the possibility that tourists who do
come may reallocate their spending in such a way that the increase in ski
corporation revenues may take the form of reduced revenues from other
businesses. Fundamentally, one who comes to ski will propably ski and
lodge first but eat and buy gifts, et cetera, secondly. Thus, any such impact is
necessarily discriminatory against what might be called lower spending
priorities.
By no means can we assume a priori that a lift rate increase will have
such negative impacts. We can only postulate on the basis of downward sloping
demand curves that such might be possible. However, there is evidence that
those marketing skiing in Aspen believe there are such impacts. This evidence
comes from the policy of granting discounts to block purchasers in the form
of package plan organizers. If the package plan organizer passes this on to
his customers, we can only presume that it is thought by those marketing
Aspen that potential skiers do make price decisions. Thus, we would con-
clude that there does exist potential elasticity of demand for ski tickets
PAGENO="0495"
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(response of purchase of ski tickets due to the change in price) and cross
elasticity of demand that are both non-zero. If the tour leader does not pass
this discount on to his customers directly, it must be assumed that it is
done indirectly through a lower package total. By logic we can only assume
that those in the know think tourists make price decisions.
The inescapable conclusion is that there exist sufficient public good exter-
nalities in the pricing of day lift tickets to justify a study of whether such
prices should be fully, partially, or not at all regulated.
Impact of raising the local lift rate
It has been traditional in the ski industry to offer season passes mainly
to local residents who thereby receive .a discount over the daily rate. Al-
though some assume so, it is not immediately obvious that this type of
pricing is a subsidy to season pass holders. Whether it is or not depends upon
whether such a policy reduces or increases the ski corporation's profits.
Whereas the tourist may not change his spending habits when lift rates are
increased, it is highly likely that the local may greatly change his spending
habits. If the ski corporation were to generate less revenue from locals by
charging the full price, then there is definitely `no subsidy through discount
rates. Ultimately this is an empirical question but one that is vital to
pricing decisions. We have had a classic case of two consumers groups with
different demands for the product. Profit maximization can only come via
differential pricing. And, as long as the presence of locals at the lower rate
does not run tourists off the mountain and the incremental revenue of the
local on a discount ticket is greater than the incremental costs of having
him on the mountain, there should be a differential in pricing. And, in fact,
if such exists the ski corporation can achieve the same profit level by charg-
ing tourists less!. That is the elimination of the season pass would reduce
profits unless matched by a hike in the day rate.
Effectively then, it is reiterated that any pricing decision on day rates
must be integrated with season rates. One cannot consider them independent
as both affect profit levels and thereby each other.
Let us now assume that the season pass is eliminated as has been proposed.
One polar possibility is that the average local will receive a reduction of his
real income due to the fact that more of his income must go for skiing if he is
to ski as often as before the change. The other .polar possibility is that no
locals will be harmed but that the tourist will be faced with higher prices
and thus bear the brunt of the elimination of the season pass.
Let us assume that each worker finds himself wth enough additional income
to ski as before. Estimates indicate that this would be about $750,000 for the
entire work force of Pitkin County. If business owners were able to pass this
on in the form of higher prices, it would mean a 1.5 to 2% increase in the
Aspen consumer price index. But now, the worker who lives in Aspen will
be forced to buy at the higher prices those commodities he purhases locally.
As tourists bid for nearly all goods and services sold locally, there is little
that would escape this circle which has no mathematical limit but which
would probably not exceed the previous estimate by more than .1% which
would leave the local worker somewhat worse off but not significantly.
A variety of potential impacts could result if locals were not able to pass
the added labor costs on to the tourists. We are highly uncertain of these
impacts, but know them to be very real possibilities. The following is a
discussion of what we perceive as the possible effects. Note that all of these
fit the category of being external to the ski corporation, but too large to be
ignored in pricing decisions from the viewpoint of society as a whole.
In the' Aspen area, a significant portion of one's real (total) income is
in the form of non-monetary (psychic) income. Psychic income is the amount of
non-tangible rewards that a worker receives or trades for monetary income.
It is generally recognized that many highly educated people accept menial-
type labor in order to be and ski in Aspen. The environment and life style
of Aspen are attractive enough to induce the worker to "trade" a potentially
high salary that would accrue to him in another locale for the opportunity to
live and ski in Aspen. The amount of psychic income a worker receives is a
personal choice and hard to calculate, but is at least estimable. For example,
in 1972, the Bureau of Labor statistics reported that the average (mean)
income of a college graduate was $20,055.00. Now it is reasonable to assume
PAGENO="0496"
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that a college graduate between the ages of 21-30 should earn at least $10,000-
$12,000 per year on the average, In Table No. 1 below, 56-57% of the Aspen!
Snowmass employee population has a college degree or more and yet only 11%
of the Snowmass employees and 20% of the Aspen employees expected to
receive $10,000 or more this year. Combine this information with the fact
that Aspen has one of the highest costs of living in the entire country, which
would offset any c&st of living considerations for income substitution, and
the inescapable conclusion is that some sort of psychic income substitution is
occurring within the labor force. Although it is difficult to allocate so many
dollars to environment, life style, and the opportunity to ski for a season, the
evidence is clear that some workers are foregoing some amount of monetary
income to have the opportunity to ski, and we can reasonably assume that
the remaining 35%-45% of the labor force expects to receive $4,000-$7,000 in
"psychic income" in the 1974-75 season.
If the opportunity to ski is reduced (or otherwise changed) by elimination
of the season pass then three potential impacts may result. First, the worker
may accept the "cut" in real income. His real income, which is made up of
monetary income and a level of psychic income, is reduced by the amount of
psychic income that the worker allocated to skiing. If he spends the same
total amount in a season for skiing as he has in the past then he must accept
less skiing, which is a reduction in psychic income and therefore a reduction
of real income. If he skis as much as he has in the past then he must spend
more of his monetary income to maintain the previous level of skiing, or put
another way, he must spend monetary income to maintain a given level of
psychic income, and therefore, this also represents a reduction of real income.
Historically within the Aspen labor force, savings are low and dissavings are
frequent. This implies an inability to ski as much if monetary income re-
mains the same, because reductions in psychic income can not be adequately
supplanted by reductions in savings, the net result being a real decline in
real income. In any case, this worker is worse off in a welfare sense than
he was prior to the elimination of the pass, and a net decrease in social
welfare may have occurred because of the pricing decision to eliminate or
reduce the worth of the season pass.
The second impact that could result from the decision to eliminate the
season pass is that the worker refuses to accept the "cut" in real income and
demands that the level of psychic income be replaced with monetary income.
This would increase the cost of labor to the employer who would try to
pass it on to the consumer. If he were successful in passing it on, the consumer
would pay a higher price for a ski visit even though the forest service
might not have allowed an increase in lift rates. If he couldn't pass it on
then a decrease in the employer's profit level would occur, and in the case of
a business on a close margin, may cause the failure of the business. This has
a potential impact of reducing the viability of the Aspen economy.
A third alternative is that the worker would quit the job and a replacement
worker would have to be found who is willing to work at a lower level of total
income, since his monetary wage would remain the same and his level of
psychic income would have to be lower. This would also represent a potential
decrease in social welfare.
All three alternatives occur as an indirect result of a decision by a Federal
agency. Inasmuch as it is a governmental responsibility to assist in the maxi-
mization of national social welfare through the administration of public lands,
the impacts of those administrative decisions must be understood, evaluated
and considered.
A correlary impact to these potential changes in real income is a potential
labor market distortion that could result from increased monopsony power
as a result of the pricing decision to eliminate or reduce the worth of the
season pass.
The Aspen Skiing Corporation, by being the area's largest single employer,
cannot avoid impacting employees and other employers by its employment
policies. In particular, the policy of granting its employees season passes, if
combined with the elimination of purchased season passes, would place the
ski corporation in a different position vis-a-vis other employers than it is
presently in.
The granting of the season pass to ski corporation employees would increase
the supply of labor to the ski corporation and thus potentially reduce the
PAGENO="0497"
493
monetary wage paid or charge the characteristics of the ski corporation
employee, or the employee available to the remainder of employers. It is
monetary wage paid or change the characteristics of the ski corporation
tion employees to the detriment of other employers and businesses, due to
the availability of high psychic income in the form of a free season pass.
The ski corporation has monopsony power in the labor market and the
elimination of the purchased season pass would likely increase that monopsony
power. Monopsony power as well as monopoly power is subject to govern-
mental control on the basis of public interest.
Impacts on the labor force may not be limited to impacts on real income
or employment opportunities. The following table has been compiled from
the employee survey that was conducted at the beginning of the 1974-75 winter
season. It is broken into two parts: the first part deals with those character-
istics that the employee brought with him when he arrived in the Aspen!
Snowmass area; the second part deals with those characteristics that are
attributable to the employees' working situation and result because of that
situation. The intent of this separation is to reveal the nature of the employee
as he enters the Aspen/Snowmass economic system and then to compare the
effects that the two elements (Aspen and Snowmass) of that system, have
on him and his level of welfare.
TABLE NO. 1.-CHARACTERISTICS NOT RELATED TO AREA EMPLOYMENT
[Percentj
Snowmass Aspen
group group
(N =451) (N =1310)
Age2Ito3O
Single
Sex (male)
College degree or better
76
69
53
57
70
63
52
56
CHARACTERISTICS RELATED TO AREA OF EMPLOYMENT
Snowmass
group
(N=451)
Aspen group
(N=1310)
Percentages:
More than 1 year in Roaring Fork Valley
Seasonal employees
Live 10 miles or more from work
Live in or around place of work
Drive to work
Type of work (primary):
Bar and restaurant
Lodging
Retail
Professional
36 or more hours per week of work
Average annual income:
Bar and restaurant
Retail
Lodging
Overall
Percentage:
Monthly wages:
$200 to $600
Over $600
Annual expected incomes:
$8000 and less
$8000 to $10,000
$10,000 and more
Average rent (per month)
51
60
38
51
63
31
31
11
5
78
63
26
7
81
54
24
14
16
14
76
$5, 816
5,808
5, 284
5, 953
$5, 881
6,518
5, 203
7, 500
72
24
80
9
11
56
40
68
12
20
$245
$246
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Without delving into a detailed analysis at this point it is obvious on the
face of the chart that there is not much difference in the characteristics of
the employee as he enters the working population of the two areas, but once
he enters that population he is easily differentiated by how much he makes,
where he lives, how far he must commute, if he is seasonal or not, and what
kind of establishment he works at. The point here is that we are dealing
with two ski areas, ten miles apart, administered by the same Forest
Services District, run by the same ski corporation, with access to the same
labor market, subject to the same price schedules by suppliers, and yet the
characteristics of the labor force are significantly different. Why? What
impact does one area have on its labor force than the other doesn't?
More important, what impact do the different labor forces have on the
general viability of the economy in terms of income multipliers, consumer
spending patterns, local, state and Federal governmental spending decisions,
et cetera? Are the characteristics of the Snowmass population a prophecy of
the characteristics of Aspen area labor population to come? How much and
what kind of changes in the labor population characteristics can we expect
as a result of the decision to remove or reduce the season pass? These are
but a few of the basic economic questions that must be answered in any
analysis of price decisions affecting the utilization of public lands.
There are a variety of other impacts outside the economic sphere that
must be considered in pricing decisions. True to the concept of systems,
these impacts are invariably expressed as secondary or teritary components,
elements and/or constraints of the economic sphere, but have significant con-
sequences for other spheres.
Table No. 1 points out the potential for significant impacts on traffic con-
gestion, land use patterns, air quality and social patterns. For example,
38% of the employees at Snowmass travel 10 miles or more to work while
only 7% of the Aspen group must commute that distance. Along this same
line, 51% of the Snowmass group live in or around their area of employe
mostly in an employee housing project or employee quarters while 81% of the
Aspen group live in or around the Aspen area. The important consideration
here is that if the Aspen group were to exhibit the same characteristics as
the Snowmass group the end result would be approximately 500 additional
people commuting more than 10 miles and an out migration of about 400
people from the Aspen area to surrounding residential complexs within 10
miles. This resultant consequences would be approximately 500-600 additional
commuting vehicles added to the peak commuting traffic flows and that would
have to be accommodated and stored in town. Given the present shortage of
existing parking spaces and the already over-capacity traffic loads that the
area street and road system must accommodate, the impact on the Aspen
area would be of a severe magnitude. On cold wintery mornings the added
pollutant would increase the already ominius smog layer that greets the
traveler from the northwest as he approaches the Aspen area. A recent report
by the Air Pollution Control Division of the Colorado Department of Health
indicated that a car operating in high mountain valleys, such as the Roaring
Fork Valley, had a pollution impact eight (8) times that of a car operating
in Denver. In terms of pollution impact, this means that the additional
generation is in the order of 4000-5000 vehicles. The environmental strain
that this type of impact would place on the Roaring Fork Valley is surely
worth some type of environmental impact analysis. A correlary impact to the
additional vehicle generation is that the Federal Highway Administration may
have to allocate funds to up grade or four lane Highway 82. It would be
an interesting situation indeed if the decision of one federal agency in favor
of one firm of the private sector forced another federal agency to expend
public sector funds to rectify an unintended and unconsidered consequence of
the former agency's decision.
Referring to Table No. 1 again, it can be seen that while the Snowmass
employee works approximately the same amount of hours he is paid less on
a weekly basis, and his annual income expectation is significantly less. If
only those areas of high tourist utilization (bar and restaurant, lodging and
retail) are considered the wage differential is about 11% with only the Snow-
PAGENO="0499"
495
mass lodging category surpassing the Aspen wage level. This is not surprising
since lodging is the major component of the Snowmass economy and there-
fore the lodges must bid competitively in order to maintain their accommoda-
tions in rental revenue generating condition. It is interesting to note that
the overall annual income level in Aspen is about 25% greater than that of
Snowmass while the average rent that each group must pay for living
quarters differs by only one dollar per month. This is significant in that
since the Snowmass employee tends to commute more and over longer distances,
he must bear the commuting expenses without the benefit of wage or cost-of-
living differentials significantly in his favor. If the Snowmass labor force
characteristics are indicative of characteristics of future Aspen area labor
forces then there could be significant, economic, environmental, and social
costs that would accrue to these labor forces as a result of a pricing decision
by a federal agency.
The impacts on land use patterns can only be hypothesized at this point,
but it is not unreasonable to assume that as a result of out-migration and
changing commuter patterns that employee related complexes will proliferate
in the downvalley areas leaving current long term housing open to the short
term market which when utilized as lodging increases the peaking of demands
for City services and decreases the support base during off-season. This has
the effect of creating blocks of empty units during the off-season which in a
time of resource shortages is an atrociously poor utilization of resources and
creates the potential for increased crimes against property. The net result is
increased economic, social and environmental costs to the skiing public and
labor fOrce populations, not to mention the permanent residents of the valley.
An alternative hypothesis to this downvalley migration pattern is an out-of-
valley migration pattern. In essence, the ski oriented employee could leave the
valley citing high costs and low real incomes as the motivating factors.
This would create a void in the labor force. Historically, voids in the low
income labor market have been filled with culturally deprived or newly emi-
grated groups. The social impact of integrating a culturally different working
population into a rural mountainous area is certainly a consideration that
should be explored. Even if history were not to repeat itself in the Roaring
Fork Valley, some type of labor force would have to be recruited. The proba-
bility that the new or replacement labor foce has different recreational de
mands and patterns is fairly high. Given that the majority of Pithin
County is federally administated National Forest and recreational areas, it
would appear on the face of it that this potential change would have a large
impact on Forest Service management decisions. If the "down-hill' skiing
work force was replaced by a "cross-country" skiing or snowmobiling work
force then the potential impacts on critical winter ranges and wilderness
areas surely warrants investigation.
We have alluded to many potential impacts that may or may not result.
They may be beneficial or they may be detrimental in the short or long-run.
It has not been our objective to analyse or pass judgment on these impacts;
but only to raise the issue of their potential presence and our concern that it
does not appear that they have been addressed in the recent pricing de-
cision by the Forest Service relating to the Aspen Skiing Corporation's re-
quest for lift rate increases. In a recent letter from the supervisor of the
White River National Forest, the following items were listed as the basis
for analysis leading to approval or disapproval of rate proposals: (1) Fi-
nancial; (2) Comparability of Areas; and (3) Quality of Area.
In essence, our point is that there are many other important factors,
elements, and impacts that must be evaluated, analyzed and considered. The
narrow scope of the pricing decision parameters listed above is not in the
best interests of the public, and must be expanded to maximize the social
benefits derived from the effective administration of public lands.
LARRY SIMMONS,
Urban Economist,
YANK Mojo,
Planning Economist.
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RESPONSIVE STATEMENT To REQUEST FOR ADMINISTRATIVE REVIEW BY CITY OF
ASPEN OF DECISION BY THOMAS C. EVANS, FOREST SUPERVISOR, WHITE RIVER
NATIONAL FOREST, FOREST SERVICE-USDA ON MAY 8, 1975
Approving the Revised Ski Lift Ticket Rate Structure-Ecrcept for the
$250.00 Season Pass For Only Full-Time Employees of Members of the Aspen
Chamber of Commerce and West Village Association-for the Aspen Skiing
Corporation Areas for the `75-'76 Season.
RESPONSIVE STATEMENT
I. Introduction and background
On December 31, 1974, D.R.C. Brown, President of the Aspen Skiing Corpora-
tion submitted the proposed ski lift ticket rate structure for the `75-'76 winter
season for Aspen Mountain, Buttermily Mountain and Snowmass. The Corpora-
tion also requested permission to implement all the rate increases on March 15,
1975, or before the end of the `74-'75 season. Receipt of the referenced letter
and schedule was acknowledged by me on January 14, 1975.
On January 9, 1975, a news release concerning the rate schedule appeared
in "The Aspen Times".
During the latter part of January, 1975 and through February, various
groups and individuals were heard from in the form of letters and petitions.
The Pitkin County Board of Commissioners and the City of Aspen both re-
quested a public hearing, the Roaring Fork Citizen group submitted numerous
signed petitions against the increases, Mayor Stacy Standley of Aspen com-
mented, the State Attorney General's Office became involved from the alleged
price-fixing standpoint, and members of Congress from Colorado requested
information on the rates.
On February 4, 1975, I wrote to Darcy Brown to inform him that I would
need more time to review and audit supplemental financial and use data, and
the comments from other concerned parties.
On February 13, 1975, the Aspen Skiing Corporation submitted some pro-
posed changes as a result of my conversation with Darcy Brown on the morn-
ing of the same day. See "Attachments". The changes were made in an effort
to respond to the suggestions by local groups and still maintain quality skiing
at the areas.
On February 27,1975, I notified the Aspen Skiing Corporation that no price
increases would be approved for the remainder of the `74-'75 season, and that
they would be notified before April 1, 1975 regarding my decision on the pro.
posed rates for the `75-'76 season.
On April 7, 1975, Darcy Brown wrote to me about the delay in my decision
and that the Corporation intended to implement the proposed `75-'76 rates in
view of clauses in the applicable special use permits.
On April 28, 1975, I wrote the Aspen Skiing Corporation, referred to the
above-mentioned letters and disapproved the proposed rate structure based on
the $12.00 adult daily ticket price. However, I approved a $11.00 daily rate
and requested that the Corporation submit a revised rate schedule and attached
a list of items used in my evaluation of the proposed rates. See "Attachments."
On April 29, 1975, Darcy Brown submitted a revised rate schedule based on
his acceptance of the $11.00 daily rate. See "Attachments". Darcy also added
the $250.00 season pass for only those employed by members of the Aspen
Chamber of Commerce and the West Village Association.
On May 8, 1975, I wrote to Darcy and approved the revised rates as sub-
mitted on April 29, 1975, e~vcept for the restricted employee season pass. This
letter brought on the appeal or request for administrative review of June 4,
1975 by Darcy, and by other aggrieved parties including the City of Aspen.
II. Facts and considerations
This section relates to the two issues raised in the subject request and it
also covers the basic concepts used in making the decision to disapprove the
$250.00 season pass for only the full-time employees of members of the Aspen
Chamber of Commerce and the West Village Association, and to approve the
basic $11.00 adult daily lift ticket rate and the rate structure submitted on
April 29, 1975.
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I. The aggrieved party alleges that in making my decision to approve the
increase in the adult daily ticket rate to $11.00, and to change the character
of services offered tto the public, (disapproval of the $250.00 discount season
pass), "substantive due process" was absent since rate changes affect the
community in ways not anticipated in the Forest ~Service criteria.
This is a matter of conjecture and has no basis in fact inasmuch as a pro-
cedure for the decision was used and disclosed. The permittee's position also
has to be considered in view of the terms of the respective contractual agree-
ments (special use permits) that are involved. As previously stated to the
Aspen Skiing Corporation and others, the following criteria were used in the
evaluation of the financial, reasonableness of rates, and public interest con-
siderations:
A. Financial
1. Reasonable rates to the public, recognizing the quality of facilities and
service provided.
2. Reasonable profits for the permittee. These are needed to maintain a
healthy and viable industry in order to induce private capital to provide
alpine skiing opportunities on public land for the general public.
3. Projected changes in skier use.
4. Projected changes in the cost of doing business.
Using items "A3" and "A4" immediately above, plus other financial data
furnished by the Aspen Skiing Corporation, projections of the following were
developed for fiscal years 1975 and 1976: (a) Gross fixed assets, (b) gross sales,
~(c) total expenses, (d) profit before taxes, and (e) profit after taxes.
To determine reasonableness of profit return to the operators the following
ratios were developed based on $10, $11, and $12 adult daily ticket for fiscal
year 1976: (a) Assets/profit before taxes, (b) assest/profit after taxes, (c)
sales/profit before taxes, (d) sales/profit after taxes, (e) stockholders/equity
before taxes, and (f) stockholders/equity after taxes.
From these ratios it appeared that a $12.00 adult daily rate would generate
excessive profits, therefore that rate was not approved for the `75-'76 season.
The ratios also indicated that an $11.00 adult daily rate would provide ade-
quate profits when compared with profits of prior years.
Consequently, all other ticket rates, including season passes, would he ap-
proved for the `75-'76 season providing they did not exceed the $11.00 adult
daily rate and providing, they were made available to everyone and not
limited to the full-time employees of members of the Aspen Chamber of Com-
merce and the West Village Association.
B. Comparability
1. Existing contractual requirements prevent the Forest Service from re-
quiring a permittee to set his rates lower than comparable areas. Compara-
bility is based upon quality of service and upon that segment of the skiing
public served. The major ski areas in Colorado and their rate schedules were
examined in approving the $11.00 adult daily rate.
2. The market place will be allowed in most situations to establish a range
of price levels acceptable to the users and which are reasonable for the
facilities and services provided.
C. Quality
The quality of an area is a subjective evaluation based on the following
items: Number of lifts, total vertical drop, snow conditions, parking facilities,
"status symbol" aspects, scenic aspects-visual feelings, variety of skiing for
all classes of skiers, base area amenities-town, dining, lodging, shops, night
life, ski patrol-service and proficiency, snow safety-avalanche hazard control,
accessibility-nearness to airports and highways, maintenance and operation
of lifts, including public safety aspects, condition of slopes and trails-groom-
ing, packing, snow cultivation, mogul dozing, accident rate relationships,
capacity of lifts, mountain restaurants, types of lifts, transit systems, and
ski school-service.
There has been no violation of laws or regulations. The special use per-
mits-the contracts between the Aspen Skiing Corporation and the Forest
PAGENO="0502"
498
Service-do not require the permittee to sell season passes of any kind. As
pointed out in 5 Usc Section 551 (1974 supplement under "Note 8 - Agency
Powers") an agency has latitude nOt merely to find facts and make judgements
but also t select policies deemed in the public interest as long as there is
consistency with law and legislative mandate.
Based on the procedural method outlined above an administrative decision
had to be made by me that provided for the lowest possible charges to the
public and an eqitable return to the permittee for the improvements and
services he provides. Along with this was the consideration of the basic policy
that National Forest lands should not be the basis for promition of member-
ship in any organization or group. Favoring one over the other is certainly
not in the public interest since I have to consider the users from all over the
United States, not just the residents of Aspen and Pitkin County. The season
pass accommodates a community need but it should not be used in the dis-
criminatory manner proposed by the Corporation. My position is one of approval
if any and all groups are offered the same discount. The fact that National
Forest lands were made available for skiing by the issuance of permits helped
make Aspen what it is today and reversed the city's depressed economy of the
`30's and `40s, and it's obvious that all employees, the community and the
county would benefit if the "exclusive groups" restrictions were to be
eliminated. Furthermore, ski areas are not "public utilities" and are not treated
as such by the Forest Service.
2. The aggrieved party alleges that the decision lacks "procedural due pro-
cess" because (a) rate change approvals are made without opportunity for
public impact ("input" probably intended), (b) Forest Service criteria are
inadequate, (c) no grounds for such decision are given nor justification re-
quired, and (d) the requirements of NEPA have not been met.
(a) Assumming that "public input" was intended, rather than "public
impact", the proposed rate increases were first publicized in the January 9,
1975 issue of "The Aspen Times" (see second entry under "I - Introduction
and Background" on page 1 of my Statement), As a result, during the re-
mainder of January, 1975 and through February-March, various groups held
meetings and individuals expressed their opinion in letters and petitions. The
Roaring Fork Citizens group submitted numerous signed petitions against the
increase, Mayor Stacy Standley of Aspen commented, the State Attorney
Generals Office became involved from the alleged price-fixing standpoint, and
members of Congress from Colorado requested information on the rates.
District Ranger George Morris attended several meetings and met with many
persons as my representative. I personally met with or had telephone con-
versations about the rates with all who requested it including group spokes-
men and key individuals. All of this public input, both pro and con, was con-
sidered by me in setting the criteria and in making the decision. Furthermore,
as a result of this input and my later conversations with Darcy Brown,
changes were made on February 13, 1975 in the rate schedule, in an effort
to respond to the suggestions of local groups and still maintain quality skiing
at the areas. Therefore, the "(a)" statement or reason is not factual.
(b) The criteria used plus other considerations, as outlined above under "II",
are adequate, particularly in view of the contractual requirements or terms
of the various special use permits held by the Aspen Skiing Corporation.
(c) "Grounds and justification" for the decision are set forth above under
"II,'.
(d) In my opinion, the decision does not contitute a major Federal action
that significantly affects the quality of the human environment, as set forth
under section 102 (2) (c) of the NEPA.
Summing up, I think I made a resonable decision as a public servant and
public lands administrator that was fair to all sectors of the public. It was
within my authority as Forest Supervisor and in accordance with the special
use permits issued to the Aspen Skiing Corporation, Buttermilk Mountain and
Snowmass Skiing Corporation.
Date: July 9, 1975.
THOMAS C. EVANS,
Forest Supervisor.
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499
PERTAINING TO "ITEM 3" UNDER "INITIAL REQUESTS-PROCEDURAL REQUIREMENTS"
(FOR COPIES OF MATERIAL) ON PAGE 2 OF THE CITY OF ASPEN'S REQUEST FOR
ADMINISTRATIVE RzvIEw, DATED JUN~ 12, 1975
1. Financial data, audits and analyses or the accounting records of the in-
volved ski areas are not available under existing regulations. This is con-
fidential information that includes sales, volume of business, investments,
and profit and loss statements submitted by the permittee at the request of
the Forest Service. See 36 C.F.R., part 200.6 for records exempt from the
provisions of the Freedom of Information Act (5 U.S.C. 552) as amended by
P.L. 93-502.
2. 3. & 4. The following basic factors were used in the evaluation of the
financial, reasonableness of rates and public interest considerations:
A. FINANCIAL
1. Reasonable rates to the public, recognizing the quality of facilities and
service provided.
2. Reasonable profits for the permittee. These are needed to maintain a
healthy and viable industry in order to induce private capital to provide
alpine skiing opportunities on public land for the general public.
3. Projected changes in skier use.
4. Projected changes in the cost of doing business.
Using items "A3" and "A4" immediately above, plus other financial data
furnished by the Aspen Skiing Corporation and the Aspen Highlands Skiing
Corporation, projections of the following were developed for fiscal years 1975
and 1976: (a) Gross fixed assets, (b) gross sales, (c) total expenses, (d)
profit before taxes, and (e) profit after taxes.
To determine reasonableness of profit return to the operators the following
ratios were developed based on a $10, $11, and $12 adult daily ticket for
fiscal year 1976: (a) Assets/profit before taxes, (b) assets/profit after taxes,
(c) sales/profit before taxes, (d) sales/profit after taxes, (e) stockholders/
equity before taxes, and (f) stockholders/equity after taxes.
From these ratios it appeared that a $12.00 adult daily rate would generate
excessive profits, therefore that rate was not approved for the 75-'76 season.
The ratios also indicated that an $11.00 adult daily rate would provide
adequate profits when compared with profits of prior years and profits of
other comparable areas furnished similar services to the public.
Consequently, all other ticket rates, including season passes, would be
approved for the `75-'76 season providing they did not exceed the $11.00 adult
daily rate and providing they were made available to everyone and not
limited to the full-time employees of members of the Aspen Chamber of Com-
merce and the West Village Association.
B. COMPARABILITY
1. Existing contractual requirements prevent the Forest Service from re-
quiring a permittee to set his rates lower than comparable areas. Com-
parability is based upon quality of service and upon that segment of the
skiing public served.
2. The market place will be allowed in most situations to establish a
range of price levels acceptable to the users and which are reasonable for
the facilities and services provided.
C. QUALITY
The quality of an area is a subjective evaluation based on the following
items: Nunber of lifts, total vertical drop, snow conditions, parking facilities,
"status symbol" aspects, scenic aspects-visual feelings, variety of skiing for
all classes of skiers, base area amenities-town, dining, lodging, shops, night
life, ski patrol-service and proficiency, snow safety-avalanche hazard con-
trol, accessibility-nearness to airports and highways, maintenance and oper-
ation of lifts, including public safety aspects, condition of slopes and trails-
grooming, packing, snow cultivation, mogul dozing, accident rate relationships,
capacity of lifts, mountain restaurants, types of lifts, transit systems, and
ski school-service.
PAGENO="0504"
500
D. SPECIAL USE PERMIT CLAUSES
Special Use Permit clauses relating to rates and services are attached as
follows:
1. Aspen Skiing Corporation for Aspen Mountain, Clause No. 54 on Page 7.
2. Buttermilk Mountain Skiing Corporation for Buttermilk Mountain, Clause
No. 58 on Page 8.
3. Snowmass Skiing Corporation for Snowmass, Clause No. 35a and b.
5. Copies of nine letters between the Aspen Skiing Corporation and Forest
Supervisor Evans beginning on December 31, 1974, through June 4, 1975, are
attached at back as follows:
(1) Letter of December 31, 1974, from D.R.C. Brown, President, Aspen
Skiing Corporation to Evans submitting the proposed lift ticket price schedule
for the `75-'76 season and with an effective date of March 15, 1975, or prior
to the end of the `74-'75 ski season.
(2) Evans' letter of February 4, 1975, to D.R.C. Brown regarding the pro-
posed increases and need for more review time.
(3) D.R.C. Brown's letter of February 13, 1975, to Evans regarding changes
in the price schedule as a result of Evans' telephone conversation with him
on the morning of the same day.
(4) Evans' letter of February 27, 1975, to D.R.C. Brown, wherein he
disapproved any increases for the `74-'75 season, and that he would notify
him before April 1, 1975, regarding the decision on the `75-'76 rates.
(5) Letter of April 7, 1975, from D.R.C .Brown to Evans questioning reg-
latory efforts by the Forest Service and the 30-day time limit on approval
or disapproval of proposed rates.
(6) Evans' letter of April 28, 1975, to D.R.C. Brown, disapproving the $12.00
daily rate, but approving the $11.00 rate and to submit a revised structure
of rates based on the lower figure. A list of items considered in the evaluation
and review of the proposed rate was attached to Evans' letter.
(7) Letter of April 29, 1975, from D.R.C. Brown to Evans submitting a re-
vised rate structure for `75-'76 that included the $250.00 discount season pass
to members of the Aspen Chamber of Commerce and the West Village Associa-
tion.
(8) Evans' letter of May 8, 1975, to D.R.C. Brown approving the revised
rate schedule except for the season pass proposal because of the employment
restriction.
6. Past schedules starting with the `70-'71 season, except for `72-'73 (no
change in rates from `70-'71) submitted by the Aspen Skiing Corporation are
attached. The reviews and approval system was started region-wide beginning
with the `70-71 season.
A summary of adult daily rates for several different ski areas, beginning
with the `58-'59 season, is also attached for information. The data was obtained
from "Ski Country USA" booklets that also listed other rates such as half-day
etc.
7. See "D" under "2,3&4" above and related attachments. Also Forest Service
Manual sections "2342.42-Rates", and "2342.03-Policies", copies of which are
attached.
8. Forest Service Manual sections "8400" and "8410" relating to environ-
mental statements, copies of which are available in all District Ranger, Forest
Supervisor and Regional Forester offices. However, the subject decision was
not considered to be a major Federal action that significantly affected the
quality of the human environment, as set forth under Section 102(2) (c) of
the National Environmental Policy Act.
9. None. ~ee above under No. 8.
Date: July 3, 1975.
THOMAS C. EVANS,
Forest supervisor.
ATTACHMENTS
Total of six sets (thirty pages) as referenced under the numbered para-
graphs and summarized as follows:
A. Special use permit clause pages.
B. Nine leters re decision on 1975-76 rates.
PAGENO="0505"
501
C. Rate schedules 1970-71 through 1974-75 received from Aspen Skiing
Corporation. The 1975-76 proposals are included in "B" above.
D. Summary of adult daily rates for several ski areas, including Aspen
complex, for 1958-59 season through 1974-75 season.
E. Forest Service Manual (2342 section) pages pertaining to rates.
PAGE 7.2710-ASPEN SKIING CORP-JULY 19, 1946 (REVISE NOVEMBER 8, 1961)
45. A separate special use permit must be obtained by the permittee before the
permittee may hold any competitions, meets, or exhibitions on the permitted
area for which a spectator fee will be charged. Such special events will be
authorized on a case-by-case basis by the forest supervisor.
46. The permittee shall permit free and unrestricted access by the public
to and upon the permitted area at all times for all lawful and proper purposes
not inconsistent with the objects of the permit or with the reasonable exercise
and enjoyment by the permittee of the rights thereof.
47. No charges will be made to the public for the use of ski slopes and trails
on the permitted area.
48. The lifts shall be open to free use of all Forest Service personnel on
official business who are responsible for administration, sanitation, public safety,
and welfare on the Aspen Winter Sports Site.
49. The permittee in its advertising, signs, circulars, pamphlets, letterheads
or like material shall refrain from misrepresenting in any way the accom-
modations provided, the status of this permit, or the area covered thereby.
50. Advance approval from the forest supervisor or his representative shall be
obtained, as set forth in the Southern Rocky Mountain Ski Association rules,
prior to designating or using a slope or trail for races on the permitted area.
51. Speculation on the permitted area or the privileges authorized by this
permit will not be permitted.
52. The permittee may, in connection with shelter-restaurant facilities on
national-forest land, rent and sell ski equipment, food and other sundries and
novelties, but alcoholic beverages shall not be dispensed, stored, sold, or other-
wise disposed of on the land covered by this permit or in the structures thereon.
53. All sanitation methods, food service systems, and water supply facilities
shall comply with the standards of the Colorado Department of Public Health.
54. The resort shall be kept open to the public during the season each year
for which this permit is issued. The character of service and rates charged
on the permitted area, if necessary in the public interest, shall be subject to
regulation by the forest supervisor: Provide, That no reduction in rates below
a point necessary to a reasonable return on the investment shall at any time be
required.
55. Disorderly or otherwise objectionable conduct by the permittee, his
agent, employees or concessionaires, shall upon proof thereof, and upon failure
of the permittee to correct the condition after notice and reasonable opportunity
to do so, because for revocation of this permit.
2720-5NOWMASS SKIING CORPORATION, WINTER SPORTS RESORT, DECEMBER 6, 1973
35. Regulation of services ana rates
a. &~rvices.-The Forest Service shall have the authority to check and reg-
ulate the adequacy and type of services provided the public and to require
that such services conform to satisfactory standards.
b. The character of service rendered and the rates eharged shall be subject
to regulation by the Forest Supervisor, provided, that no reduction in rates
shall be required that would be below a point necessary for a reasonable
return on the investment, or lower than rates charged by comparable private
winter sports enterprises. A complete rate schedule of public services will be
furnished annually in advance of operation to the Forest Supervisor. Any
additions or changes to the rate schedule shall be submitted to the Forest
Supervisor at least 45 days in advance of such change, and unless the
Forest Supervisor notifies the permittee within 30 days thereafter, the changes
in rates will be assumed to have been approved.
c. General-The permittee may, in connection with the facilities authorized
by this permit, rent and/or sell sports equipment, clothing, and repairs,
tobaccos, sundries and novelties and provide restaurant services and lodging.
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502
Other facilities, services, and income-producing enterprises to serve the public
needs and demands may be authorized, in writing, as agreed and planned by
the Forest Service and the permittee.
Nothing in this permit shall be construed to imply permission to use the
area for any purpose or to build or maintain any structure not specifically
identified in this permit or its exhibits or approved by the Forest Service in
the form of a new permit or permit amendment.
d. Beer and Wine Sales.-The sale of beer and wine is allowed under this
permit. However, if conditions develop as a result of this privilege which, in
the judgment of the Forest Service are undesirable, the sale of such beer and
wine shall de discontinued. In the event that this action becomes necessary, the
permittee will be informed in writing by the Forest Service.
e. Gambling.-Gambling or gambling machines or devices will not be per-
mitted on National Forest lands regardless of whether or not they are lawful
under state law or county ordinances.
50. No charges will be made to the public for the use of ski slopes and
trails on the land covered by this permit.
51. The lifts shall be open to free use of all Forest Service personnel on
official business who are responsible for administration, sanitation, public
safety and welfare on the Buttermilk Mountain Winter Sports Area.
52. The permittee in its advertising, signs, circulars, pamphlets, letterheads or
like material shall refrain from misrepresenting in any way the accommoda-
tions provided, the status of this permit, or the area covered thereby.
53. Advance approval from the Forest Supervisor or his representative shall
be obtained, as set forth in the Southern Rocky Mountain Ski Association
rules, prior to designating or using a slope or trail for races.
54. The permittee shall be responsible for policing the grounds, maintaining
order, protecting the premises, and the orderly parking of automobiles and
buses.
55. Speculation on the site or *the privileges authorized by this permit will
not be permitted.
56. The permittee may, in connection with the shelter-restaurant facilities
on National Forest land, rent and hell ski equipment, food, 3.2 beer, wine and
other sundries and novelties, but alcholic beverages shall not be dispensed,
stored, sold, or otherwise disposed of on the land covered by this permit or in
the structures thereon.
57. All sanitation methods, food service systems, and water supply facilities
shall comply with the standards of the Colorado Department of Public Health.
58.The resort shall be kept open to the public during the season each year
for which this permit is issued. The character of service and rates charged, if
necessary in the public interest, shall be subject to requlation by the Forest
Supervisor; provided that no reduction in rates below a point necessary to a
reasonable return on the investment shall at any time be required.
59. Disorderly or otherwise objectionable conduct by the permittee, his agent,
employees or concessionaires, shall upon proof thereof, and upon failure of
the permittee to correct the condition after notice and reasonable opportunity
to do so, be cause for revQcation of this permit.
60. The permittee shall, in developing all natural springs on National Forest
land, allow sufficient water to bypass storage facilities for the watering of
stock grazing under permit.
ASPEN SKIING CORP.,
Aspen, Cob., December 31, 1974.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Glenwood Springs, Cob.
DEAR TOM: The last increase in our basic daily ticket price was in 1973
when we went to a $10 daily ticket. In the past two years, our labor costs have
increased 32% and are projected to increase another 20% this year. Our fuel
costs have increased 55% for gasoline and 101% for diesel fuel. Machinery and
parts have gone up 22%. These items constitute the major part of our operat-
ing costs and arise from causes beyond our control.
For the past several years, we have been absorbing a substantia1 portion
of the increase in our operating costs through increased efficiency. We believe
PAGENO="0507"
503
we are now operating at maximum efficiency. It continues to be our policy to
provide the safest and highest quality skiing in the United States. We cannot
continue to do so without increasing our prices to a degree commensurate with
the increases in our operating costs. It should be noted that at least eight ski
areas in this country which offer far less in the way of facilities than does
the Aspen Skiing Corporation are presently charging more than $10 per day.
In view of the above, we intend to raise our prices according to the attached
sheet effective March 15, 1975.
Sincerely yours,
D. R. C. BROWN,
President.
Enclosure.
LIFT AND SKI SCHOOL PRICES FOR ASPEN MOUNTAIN, BUTTERMILK, AND SNOWMASS
Current Effective
1974-75 Mar. 15, 1976
Daily and weekly:
One day $10 $12
Child (12 and younger) (good only at Buttermilk and Snowmass) 3 3
Young-at-heart (65 and older) (good only at Buttermilk and Snowmass) 3 3
Half day (starts at 1:30 p.m.) 7
One ride (Buttermilk and Snowmass only) 7
Four-day (good 4 out of 5 days) 39 46
Six day (four-area) (Good on 4 mountains-Aspen, Apsen Highlands, Buttermilk,
and Snowmass):
Low-season 54 60
Midseason 57
High season 60 70
5-day lift and ski school special (5 days lifts and 5 days lessons) not good during
high season 80
Season:
Three-area limited use (Aspen Mountain, Buttermilk, Snowmass) 250
Four-area unlimited use (Aspen Mountain, Buttermilk, Snowmass, and Aspen
Highlands) 700
Three-area unlimited use (Aspen Mountair, Buttermilk, and Snowmass)
Discount ticket (entitles purchaser to ski at all 4 areas. Special rate of $5 per day 550
on all four mountains all winter. No limit on number to be sold) 100
Discount ticket (entitles purchaser to ski at all 4 areas. Special rate of $6 per day
on all four mountains all winter. No limit on number to be sold) 100
Ski-school:
One-day ii 12
Three-day 27 33
Five-day special (starts Monday only) 40
Five-day special (starts (7) only) 50
Child one day 9 10
Private lesson-i hour (1 person) 20 20
Private lesson-i hour (2 persons) 25 25
Private lesson-i hour (3 persons) 30 30
Closed class (private groups) 90
Private instructor by the day (6 hours and no restriction on number of people;
however, a class size of 3 or less can cut lift lines) 120 120
ASPEN SKIING CoRP.,
BRECKENRIDGE SKI CORP.,
WHITE RIVER NATIONAL FOREST,
Glenwood springs, Cob., February 4, 1975
Mr. D. R. C. BROWN,
President, Aspen Skiing Corp.,
Aspen, Cob.
DEAR DARCY: Please be advised that we will need more time to review and
audit your supplemental data, as well as comments from others, pertaining to
the proposed lift ticket increases for `75-'76.
We will, however, notify you of our decision as soon as the review and
discussions are completed.
Sincerely,
THOMAS C. EVANS,
Forest Supervisor.
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ASPEN SKIING CORP.,
Aspen, Cob., February 13, 1975.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Glenwood Springs, Cob.
DEAR TOM: Confirming our conversation of this morning, the Aspen Skiing
Corporation wishes to make the following changes in the price schedule which
I sent you on December 31. Under the daily and weekly tickets, eliminate the
one-ride, Buttermilk and Snowmass only, and in its place put a half-day
starting at 1 p.m., Buttermilk and Snowmass only - $8.00. Eliminate the four-
day ticket and in its place put three-clay, good for three out of four days -
$35.00. Eliminate all the tickets listed under season and substitute the follow-
ing: season ticket, Buttermilk and Snowmass only not good for the periods
December 21 to January 4 and February 15 to February 29, sold only in
July-$250.00; discount card, with a $5.00 daily charge, not good on Aspen
Mountain December 21 to January 4 and February 15 to February 29, all
employees of members of the Aspen Chamber of Commerce who purchase this
ticket will be granted a $40.00 refund at the close of the season provided they
have stayed with their employer throughout the season - $100.00.
In a further effort to maintain quality skiing on Aspen Mountain, all
employee's dependents will be requested to refrain from skiing Aspen Mountain
during high use periods. Presently, there are approximately 500 dependents
passes and their usage will be monitered and controlled more closely than in
the past.
We are making these changes in an effort to respond to the suggestions
offered by local citizen's groups and, at the same time, maintain the quality
of the skiing experience here in Aspen which is essential both to the Ski
Corporation's and the community's well-being.
Sincerely yours,
D. R. C. BROWN,
President.
WHITE RIVER NATIONAL FOREST,
Glenwood Springs, Cob., February 27, 1975.
Mr. D. R. C. BROWN,
President, Aspen Skiing Corp.,.
Aspen, Cob.
DEAR DARCY: Reference is made to your price increase request letters (two)
of December 31, 1974 for the Aspen areas and for Breckenridge, and the
supplemental or "changes" letter of February 13, 1975 for the Aspen areas.
Based on my review of the financial data and estimated projections of in-
come and expenses that you furnished, I am not approving any increase in
rates for the 1974-1975 season.
However, you will be notified before April 1, 1975 regarding my decision
on the proposed rates for the `75-'76 season so that you can meet your deadline
dates for publication of new tour package rates with airlines, etc.
My decision is appealable pursuant to Part 211.2 of Title 36 of the Code of
Federal Regulations.
Sincerely,
THOMAS C. EVANS,
Forest Supervisor.
ASPEN SKIING Conp.,
Aspen, Cob., April 7, 1975.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Gbenwood Springs, Cob.
DEAR TOM: As you know, we notified you by letters of December 31, 1974 and
February 13, 1975 of proposed rates at our Aspen ski areas for the 1975-76
season. By letter of February 27, 1975 you indicated that you would notifly US
PAGENO="0509"
505
before April 1, 1975, of your decision on these rates since you recognized our
"deadline dates for publication of new tour package rates with airlines, etc."
To date we have not received such a decision.
Because of our expectation that this decision would be forthcoming by
April 1, we have thus far refrained from any action to implement the proposed
1975-76 rates. However, further delay in effectuating a rate schedule for
next season would seriously disrupt our operations, cause the Aspen Skiing
Corporation unnecessary costs, prevent efficient and businesslike preparation
for the upcoming winter and result in irreparable harm from non-compliance
with our airline and travel bureau scheduling commitments. Consequently,
upon advice of counsel, we intend to implement immediately the proposed
1975-76 rates as described in our previously mentioned letters.
We continue to harbor serious reservations concerning the Forest Service's
authority to regulate, reject, accept, approve or disapprove our skiing rates.
These reservations notwithstanding, since* March 15, 1975, at the latest, the
Aspen Skiing Corporation has clearly been entitled to implement its proposed
rates for 1975-76. The Snowmass permit provides that the Skiing Corporation
notify the Forest Supervisor 45 days in advance of any rate changes, "and
unless the Forest Supervisor notifies the permittee within 30 days thereafter,
the charges will be assumed to have been approved." As you know, the clauses
in the Aspen Mountain and Buttermilk permits concerning rate regulation
are extraordinarily nebulous and provide no express time schedule for dis-
approval by the Forest Supervisor. The Forest Service has theretofore estab-
lished no regulatory procedures or standards regarding lift rates; and absent
these, we have serious doubts as to the validity of any regulatory efforts by
the Forest Service, which would of necessity be ad hoc or arbitrary. How-
ever, the time schedule in the Snowmass permit does represent at least an
effort to provide some sort of very rudimentary procedural guidance regard-
ing disapproval of rate changes for the Aspen areas. Consequently, our counsel
advises us that the 30-day limitation on Forest Service rejections of rate changes
must apply to all three of our Aspen areas.
Since no written disapproval of these rates was forthcoming by March
15, 1975 (which was 30 day following our most recent notification) -nor for
that matter, as of the date of this letter - it is our position that the proposed
1975-76 rates must be considered approved b ythe Forest Service and susceptible
to immediate implementation by the Aspen Skiing Corporation.
Sincerely yours,
D. R. C. BROWN,
President.
WHITE RIvER NATIONAL FOREST,
ASPEN SKIING CORP.,
Glenwood Springs, Cob., April 28, 1975.
Mr. D. R. 0. BROWN,
President, Aspen Skiing Corp.,
Aspen, Cob.
DEAR DARCY: Reference is made to your letters of December 31, 1974, for
the three Aspen areas, and your subsequent letter of February 13, 1975, re-
questing an increase in lift rates.
My letter of February 27 advised you that my decision on the 1975-76 rates
would be delayed.
Based upon our review of your and other financial facility and use data,
I have determined that I cannot approve your proposed structure of rates
based upon a $12 adult daily rate. I can approve up to an $11 daily adult
rate and you may submit a revised structure of lift rates if you wish. I would
be happy to discuss with you the application of your data in arriving at my
decision.
My decision is appealable pursuant to Part 211.2 of Title 36 of the Code of
Federal Regulations (copy attached).
I deeply regret the delay and the problems this delay may have caused
your company. However, your proposal was extremely controversial and I
did want to give the matter sufficient consideration so that I can defend a
rate increase as being in the public interest.
67-512 0 - 76 - 33
PAGENO="0510"
506
A list of items used in the evaluation of the proposed rates is attached for
your information.
Sincerely,
THOMAS C. EVANS,
Forest Supervisor.
Enclosure.
The following items were considered in evaluating proposed rate increases
for the `75-'76 ski lift ticket rates for ski areas under the administration of
the White River National Forest.
A. FINANCIAL
1. Reasonable rates to the public, recognizing the quality of facilities and
service provided.
2. Reasonable profits for the permittee. These are needed to maintain a
healthly and viable industry in order to induce private capital to provide
alpine skiing opportunities on public land for the general public.
3. Projected changes in skier use.
4. Projected changes in the cost of doing business.
- B. COMPARABILITY
1. Existing contractual requirements prevent the Forest Service from re-
quiring a permittee to set his rates lower than comparable areas. Com-
parability is based upon quality of service and upon that segment of the
skiing public served.
2. The market place will be allowed in most situations to establish a range
of price levels acceptable to the users and which are reasonable for the
facilities and service provided.
C. QUALITY
1. The quality of an area is a subjective evaluation based on the following
items: Number of lifts, total vertical drop, snow conditions, parking facilities,
"status symbol" aspects, scenic aspects-visual feelings, variety of skiing for
all classes of skiers, base area amenities-town, dining, lodging, shops, night
life, ski patrol-service and proficiency, snow safety-avalanche hazard con-
trol, accessibility-nearness to airports and highways, maintenance and oper-
ation of lifts, including public safety aspects, conditions of slopes and trails-
grooming, packing, snow cultivation, mogul dozing, accident rate relationships,
capacity of lifts, mountain restaurants, type of lifts, transit systems, and ski
school-service.
The above items of finances, comparability, and quality form the basis of the
analysis leading to approval or disapproval of rates.
ASPEN SKIING Conp.,
Aspen, Cob., April29, 1975.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Glenwood Springs, Cob.
DE&i~ TOM: In response to your letter of April 28th, I submit herewith a revised
rate structure for the 1975/76 season for your approval.
Daily adult $11
Daily child and over 65 3
1/2-Day (Buttermilk and Snowmass only) 7
6-Day high season (December 15-March 27) 64
6-Day low season (November 27-December 15 and March 27-April 11)___ 54
In addition to the above, we propose to offer to full time (30 hours per week
or more) employees of members of the West Village Association or the Aspen
Chamber of Commerce a season pass good only at Buttermilk and Snowmass and
restricted from 12/26/75 to 1/2/76 and from 2/22-27 for $250. If 500 or more of
these tickets are bought at one time prior to August 1, 1975, we will give a
$50 discount.
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507
Upon receipt of your approval of the above rates, we will publicize them
locally.
Sincerely yours,
D. R. 0. BROWN,
President.
APRIL 29, 1975.
Revised rate structure for the 1975-76 season Aspen, Snowmass and Buttermilk
Daily adult $11
Daily child and over 65 3
1,~2-Day (Buttermilk and Snowmass only) 7
6-Day high season (December 15-January 27) 64
6-Day low season (November 27-December 15 and March 27-April 11)____ 54
In addition to the above, we propose to offer to full time (30 hours per week
or more) employees of members of the West Village Association or the Aspen
Chamber of Commerce a season pass good only at Buttermilk and Snowmass, and
restricted from 12/26/75 to 1/2/76 and from 2/22-27 for $250. If 500 or more of
these tickets are bought at one time prior to August 1, 1975, we will give a $50
discount.
WHITE RIVER NATIONAL FOREST,
Glenwood Springs, Cob., May 8, 1975.
Mr. D. R. C. BROWN,
President, Aspen Skiing Corp.,
P.O. Box 1248,
Aspen, Cob.
DEAR DARCY: Your revised rate structure, as attached, for the 1975/76
season dated April 29, 1975 has been received. The rates as submitted are
approved, with the exception of the season pass. Your season pass proposal
would restrict purchase to a specific group based upon employment.
The Forest Service feels that there is a place for special package plans,
discounts during periods of low use, group discounts, season tickets, and
the many other common merchandising procedures providing everyone can,
if he desires, get the same arrangement. Restrictions on sales cannot be
placed because of race, religion, sex, place of residence, or place of employ-
ment. We have and will continue to approve special child and over-62 rates.
I feel there is a place in your pricing structure for low-cost season tickets
restricted to times and areas where capacity is available. Your $250.00 season
ticket with fourteen days of restricted use looks like a good value and would be
approved, if the employment restrictions were removed. The group rebate to
get an early cash flow would also be approved.
The Aspen Corporation has a wide latitude in merchandising procedures that
can be used and that would be approved to balance quality skiing with com-
munity needs and goals. With the strong interest in Aspen concerning your
season ticket use and rates, I am sure that you will do what you can to offer
quality skiing and at the same time meet the needs of the people who provide
the services that have made Aspen famous.
My decision is appealable pursuant to Part 211.2 of Title 36 of the Code of
Federal Regulations (copy attached).
Sincerely,
THOMAS C. EVANS,
Forest Supervisor.
Enclosures.
ASPEN SKIING CORP.,
Aspen, Cob., June 4, 1975.
Mr. THOMAS 0. EVANS,
Forest Supervisor,
White River National Forest,
Gienwood Springs, Cob.
DEAR TOM: This letter represents a formal appeal pursuant to 36 C.F.R. 211.2
of your May 8th decision disapproving our proposed $250 season pass for full-
time employees of the Aspen Chamber of Commerce and the West Village
Association. As grounds for reversing this decision, we submit:
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1. The decision is contrary to the public interest and consequently violates
various applicable statutes and regulations. See e.g. 36 C.F.R. § 251.1, 16 U.S.C.
§ 497 (1964). Consistent with the income requirements of the Aspen Skiing
Corporation, the proposed season pass is designed, in part, to aid local
businesses in attracting and retaining the employees they need to operate
effectively. As your decision acknowledged, Aspen's outstanding national
reputation and appeal depend to a considerable degree on the high quality of
services, entertainments and ware furnished by these local businesses. Elimi-
nation of the proposed season rate would impair the ability of Aspen business-
men to continue maintaining the type of community that attracts and supports
thousands with its unsurpassed recreation and entertainment opportunities.
Your decision states that the Aspen Skiing Corporation enjoys "a wide lati-
tude . . . to balance quality skiing with community needs and goals". Yet the
decision simultaneously denies our attempt to exercise that latitude by accom-
modating a community need with the proposed season pass.
2. The decision is unreasonable, arbitrary and capricious. Your decision
approved special rates for children under 13 and adults over 65. It also en-
dorsed the principle that everyone be availed the same discounts and rate
plans. Yet there is certainly no more reason to permit particular rate arrange-
ments based on age than to permit them based on place of employment. Not
everyone, we recognize, is employed by the Aspen Chamber of Commerce or
the West Village Association, but neither is everyone over 65 or under 13. Race,
religion and ethnic origin have traditionally been prohibited by the law as
grounds for either discrimination or favoritism; while age and sex are also
increasingly being held by the courts as impermissible bases for distinction.
Place of employment has not, to my knowledge, often been proscribed by the
law as a legitimate classification. Thus, the classification which you dis-
approve-place of employment-has found much greater favor in the law than
the classification which you allow-age.
3. The decision burdens Aspen Skiing Corporation with a type of regulation
which does not encumber comparable ski areas operating on both public and
private land.' Consequently, it contravenes the evident intent of the Forest
Service Manual, see Section 2783.12-6(22), that permittees not be saddled with
restrictions which place them at a disadvantage to comparable competing
private enterprises.
4. The decision represents a departure from the Forest Service's traditional
policy concerning special rates for local groups. For many years we gave
special rates to teachers in the local school system and nurses at the Aspen
Valley Hospital without and adverse reaction from the Forest Service. Last
year our special rates to children in the Basalt and Carbondale school system,
though initially disapproved, were finally accepted by the Forest Service. The
consistent application of policy is one of the keystones of both good govern-
ment and law, for without it, the public cannot conduct its affairs in a
rational, effective manner. Your decision appears to violate this principle by
adopting an attitude toward rates for local groups inconsistent with past policy.
5. The decision is invalid for lack of conformity with the requirements of
the Administrative Procedure Act, 5 U.S.C. § 551 et seq. (1964).
I trust that these reasons will provide assistance in the re-examination of
the decision announced in your letter of May 8th. I request that you send
copies of all further correspondence and notices with respect to this appeal to
our legal counsel, Holland & Hart, attention John U. Carlson, 500 Equitable
Building, 730 Seventeenth Street, Denver, Colorado 80202.
Sincerely,
D. R. 0. BROWN,
President.
1 Many other ski areas enjoy substantial flexibility in setting special rates for
certain classes of customers. A few examples should be set forth. For instance, Water-
yule Valley offers special rates for local area residents. Stratton similarly allows
special rates for local residents and also for employees of local ski shops and hotels.
Killington provides more than a dozen special ski programs to Vermont residents.
Crystal Mountain in Washington extends a discount to its stockholders and also to
members of the Armed Forces. The Broadmoor ski area gives half-price lift tickets
to employees of the hotel. Sun Valley avails rates to certain special groups which
are not open to other groups.
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ASPEN SKIING CORP.,
Aspen, Cob., June 4, 1970.
JAMES 0. FOLKESTAD,
Supervisor,
White River National Forest,
Federal Building,
Glenwood Springs, Cob.
DEAR Jns: At our directors' meeting held May 30, our board decided to set a
rate of $8.50 per day for the coming winter season for Aspen Mountain,
Buttermilk and Snowmass. Since the local grapevine spreads the word on
things like this around quite quickly, I am writing this to let you know of our
intentions. Within the next few days I will have supporting documents for our
request and will forward them to your I am just writing this to let you know
that we are not trying to by-pass the Forest Service in this matter.
Sincerely yours,
D. R. C. BROWN,
President.
Aspen Skiing Corp.-Aspen area, 1971-1972 ticket and pass prices
(Approved by board of directors, July 5, 1971, revised as of Nov. 11, 1971)
Adult:
NonSkier (Buttermilk lifts No. 1 and No. 2 only) $6
Half-day (starts at 12:30) 6
One-day 9
One-day (discounted) 6
Three-day (3-area) 25
Six-day (4-area) 50
Two-area season (Buttermilk and Snowmass) 1200
20-use pass (Aspen Mt., Buttermilk and Snowmass) Has to be pur-
chased prior to December 1, renewable thereafter on another 20-use
pass to same person 120
Child:
* One-day
Four-area season-12 and under (free skiing at Buttermilk) 50
Four-area season-Aspen High students (free skiing at Buttermilk)__ 125
Other:
Adult (Buttermilk P-bar and Snowmass lifts No. 1 and No. 6) 2
Child (Buttermilk T-bar and Snowmass lifts No. 1 and No. 6) 1
N0TE5.-No change in ski school rates or types of tickets.
1 $175 if purchased prior to December 1 (local ressidents only).
Fon 1972-1973 SEASON
Nine-dollar rate used for 1971-1972 etcetra, remained the same for the 1972-73
season; hence no schedule of proposed rates submitted.
ASPEN SKIING CoRP.,
Aspen, Cob., March 19, 1973.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Glenwood Springs, Cob.
DEAR TOM: I list below the changes we propose to implement in our ticket
pricing for the next year.
Season Pickets (all areas) - reduced from $250 to $200 with a $3 per use
surcharge when used on Aspen Mountain except in January and April when
there will be no surcharge. The purpose of this is to attempt to encourage more
skiers to go to Snowmass and Buttermilk where our capabilities of handling
large numbers of skiers are greater. We are faced with the situation where
during peak periods we have approximately 15,000 skiers in town and the
capability of handling only 3,000 on Aspen Mountain and still maintain quality
skiing. Since encouraging people to go out of town will make the present
PAGENO="0514"
510
traffic situation even less tolerable unless something is done about it, we
propose to institute a free bus service to Snowmass provided we can get
cooperation from the City and the County with providing express lanes, etc.
This should discourage the use of private cars driving to Snowmass and also
eliminate some of our parking problems. I estimate the cost of this service
to the ski corporation at approximately $150,000 per annum, and admittedly
it is only a stopgap until the City, the County, and ourselves can come up
with a public transportation system.
The other major changes in our ticket pricing will be a $3 ticket at Butter-
milk and Snowmass for children 12 and under and for adults 65 and over. We
also propose to charge a $10 daily ticket from December 15 to January 4 and
February 2 to March 29. The balance of the season, the daily rate will be $9.
I understand that Breckenridge has been transferred to the White River
National Forest, and I shall be looking forward to working with you on our
Breckenridge operation.
Sincerely yours,
D. R. C. BROWN,
President.
ASPEN SKIING Coup.,
Aspen, Cob., March 19, 1973.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Glenwood Springs, Cob.
DEAR TOM: I list below the changes we propose to implement in our ticket
pricing for the next year.
Season Tickets (all areas) - reduced from $250 to $200 with a $3 per use
surcharge when used on Aspen Mountain except in January and April when
there will be no surcharge. The purpose of this is to attempt to encourage
more skiers to go to Snowmass and Buttermilk where our capabilities of
handling large numbers of skiers are greater. We are faced with the situation
where during peak periods we have approximately 15,000 skiers in town and
the capability of handling only 3,000 on Aspen Mountain and still maintain
quality skiing. Since encouraging people to go out of town will make the
present traffic situation even less tolerable unless something is done about it,
we propose to institute a free bus service to Snowmass provided we can get
cooperation from the City and the County with providing express lanes, etc.
This should discourage the use of private cars driving to Snowmass and also
eliminate some of our parking problems. I estimate the cost of this service
to the ski corporation at approximately $150,000 per annum, and admittedly it
is only a stopgap until the City, the County, and ourselves can come up with
a public transportation system.
The other major changes in our ticket pricing will be a $3 ticket at Butter-
milk and Snowmass for children 12 and under and for adults 65 and over. We
also propose to charge a $10 daily ticket from December 15 to January 4 and
February 2 to March 29. The balance of the season, the daily rate will be $9.
I understand that Breckenridge has been transferred to the White River
National Forest, and I shall be looking forward to working with you on our
Breckenridge operation.
Sincerely yours,
D. R. C. BROWN,
President.
ASPEN SKIING Coup.,
Aspen, Cob., May 14, 1974.
Mr. THOMAS C. EVANS,
Forest Supervisor,
White River National Forest,
Gbenwood Springs, Cobo.
DEAR TOM: In spite of the nearly 12% increase in the cost of living index
this past year, the Aspen Skiing Corporation does not contemplate any major
changes in lift prices for the coming season. For your information, I list the
prices we propose to charge: One day - $10; Half day - $7; Child (12 & under)
PAGENO="0515"
511
and Adult (65 & over), Buttermilk and Snowmass only - $3; Four day (good
four out of five days) - $39, this compares with $30 for three days last year;
Six day, Four area (including Highlands) - $54 low season, $57 regular sea-
son, $60 high season; Discount card - $100, this entitles the purchaser to buy
unlimited number of daily tickets for his use at $5 per day at all four areas.
This compares to $60 and $5 per day for a three area card last year. Three
Area Season - limited use - $250, not good during the month of November and
during the periods December 21-January 5 and February 15-28. In addition,
we are offering a new ticket, good for unlimited use at all four Aspen areas
for a price of $700.
As I am sure you know, labor comprises the major part of our operating
costs and our wages are tied into the cost of living index. Unless inflation is
brought under control during this coming year, I feel that this is the last
season we will be able to hold a $10 lift ticket.
Sincerely yours,
D. R. C. BROWN,
President.
FOREST SERVICE MANUAL: TITLE 2300-RECREATION MANAGEMENT
2342.42 `-Rates.-Lift and tow rates will be regulated to ensure the lowest
possible charges to the public and an equitable return to the owner. The rates
must be sufficient to pay for the services of competent personnel to maintain
the machinery in first-rate condition and to make the operation financially
successful.
2342.43-Maintenance-All improvenments and the site will be maintained
to the general standards of safety, condition, and appearance to which they
were constructed or subsequently improved. Timely preseason maintenance is
particularlij important, since working conditions during the winter months
seriously limit the type of work which can be accomplished. Each spring
following the snowmelt, winter-sports areas are littered with an accumulation
of paper, tin cans, broken skis, bottles, and other refuse. District Rangers will
require permittees to collect refuse as soon as the ground is bare of snow. Work
should be started on the lower ground first and progress up slope as the
snow melts.
2342.44-Water supplies and sanitation.-Water supplies will conform with
general standards for public recreation areas (FSM 2331.12c). Testing pro.
cedures are shown in FSM 2331.32a.
General sanitation and sanitary facilities will also be accorded the same
attention prescribed for Forest Service developed sites. There may be some
tendency to underestimate the importance of sanitation on winter-sports sites,
on the theory that cold kills germs. This is contrary to fact.
2342.45-Supervision and inspection-Aside from the general objective of
making National Forest lands available for public recreation purposes, one of
the prime objectives in the winter-sports field is to prevent accidents, in-
cluding those related to ski lifts and tows and avalanche hazards. A further
objective is to prevent occurrences which might lead to claims against the
Government under the Tort Claims Act. District Rangers and Forest Super-
visors will carefully review all plans and critically inspect operations to ensure
that all necessary pubic safety measures are taken.
The degree of supervision will vary with the size and use of the area, scope
of the permittee's authorized activities and his ability to effectively carry out
the safety plan, and the complexity of the hazards involved including
avalanche hazards. A well-organized and functioning ski patrol, whether on
a paid or volunteer basis, will reduce the supervisory time required.
FOREST SERVICE MANUAL: TITLE 2300-RECREATION MANAGEMENT
a. Improvements are being maintained adequately.
b. Improvements are being used as authorized.
c. Public health and safety are protected.
1 October 1967.
PAGENO="0516"
512
2342-Winter sports sites.-A winter-sports site is an area developed for
public enjoyment of skiing, but such activities as snow play, tobogganing, and
skating may be included if justified by public demand. In its entirety, the
site may be extensive. Improvements will usually include ski tows, ski lifts,
downhill runs, ski slopes and ski trains, terrain for cross-country travel,
practice and school slopes, warming shelters, and parking areas. Resorts and
lodges will frequently be an integral part of a winter-sports site, although
inventoried separately. Where there is sufficient demand snow play, toboggan-
ing, snowmobile, and other similar winter-sports sites may be developed
separately.
2342.02-Objective.-The Forest Service objective is to provide adequate
opportunities for winter recreation on the National Forests to meet the public
demand.
2342.03-Policies-The management of lands developed and operated for
winter sports will be in accord with the basic recreation policies (FSM 2303)
and the following supplementary policies:
1. The Forest Service will not ordinarily develop large winter-sports sites,
but will encourage qualified individuals, groups, or cooperating agencies to
develop and operate under commercial or noncommercial permits suitable
winter-sports sites sufficient in number to meet public needs.
2. Winter-sports sites developed primarily for skiing will not be developed
unless esnow and weather records show that dependable safe skiing can
reasonably be expected at the site. It is important that reconnaissance of
winter-sports sites be made during both summer and winter seasons.
3. Permits issued for the development of winter-sports sites will generally
require permittees to provide all of the improvements and services needed by
the public.
4. Permittees will be allowed to charge reasonable prices for use of the im-
provements and services.
5. When a competitive interest exists or when public interest requires, the
Forest Service will issue a prospectus and solicit bids for the proposed develop-
ment (FSM 2712.2) .~
1April 1969.
PAGENO="0517"
DAILY LIFT TICKET RATES-1958-59 THRU 1974-75
(From `Ski Country USA" Booklets, N.H. April 1975)
Area 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75
Aspen Mountain $6.50 $6.50 $6.50 $6.50 $6.50 $6.50 $7.~0 $8.00 $8.00 $6.50 $7.00 $8.00 $8.50 $9.00 $9.00 $10.00 $10.00 ~
Aspen Highlands 4.00 4.50 (1) 5.50 6.50 7.00 7.00 8.00 8.00 6.50 7.00 8.00 .8.50 9.00 9.00 10.00 10.00 ..~
Buttermilk 3.00 3.00 3.50 3.50 5.00 6.50 7.00 8.00 8.00 6.50 7.00 8.00 8.50 9.00 9.00 ~10.00 10.00 ~
Vail 5.00 6.00 (2) 6.50 7.00 (3) 7.50 8.00 9.00 9.00 9.00 10.00 10.00
Snowmass 6.50 7.00 8.00 8.50 9.00 9.00 ~IO.0O 10.00
Copper Mountain 7.00 8.00 8.00
Breckenridge 4.00 4.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 6.00 6.50 7.00 7.50
1 Not listed in book.
2 $6.50 on weekends and $6 weekdays.
3 $7.50 weekends and $7 weekdays (lowered to $7 all days on Jan 1, 1968).
$9 during low season.
PAGENO="0518"
514
Page 1
COLORADO MOUNTAIN CLUB
VIEWPOINT OF STATE WINTER RESOURCES
While the Colorado Mountain Club and its members share many of the
concerns already expressed to this Advisory Board regarding the
environmental, social, and economic impacts of a mountain winter recrea-
tion development, the Colorado Mountain Club (State) Huts and Trails
Committee feels we must address here a specific concern that has only
been touched in passing at meetings of this board. We wish to speak
for the instate consumer, for those Colorado citizens and taxpayers
who, as downhill skiers, or ski tourers, ski mountaineers and snowshoers
have an interest in winter recreation both in its commercial and non-
comnercial aspects, but. who find it becoming increasingly more difficult
to enjoy such activities.
During the past 20 years we have watched the growth~ overcrowding~
and expansion of commercial ski areas. At the same time we have witness-
ed the increasing exclusion of moderate and low-income Coloradans from
these areas. Lift rates have increased, multiple-trip and single-trip
lift tickets have been eliminated and half-day tickets often can now be
bought only for the afternoons. The volunteer ski patrol, in the past
an alternative means for farnillee to ski downhill inexpensively, is being
eliminated in favor of industry-operated patrols. Parking areas are
beginning to charge fees and `tree" private transporation systems
catering to select lodges and condominiums inhibit the development of
viable public transportation. The bunkhouses and inexpensive lodges
found on-site in the early years have disappeared; inexpensive accomo-
dations, if found at all, are increasingly distant and difficult to
PAGENO="0519"
515
Page 2
reach.
In addition, opportunities for alternative uses of winter recre-
ation areas have decreased, although the need has increased. On the
crowded beginner slopes it is no longer easy to find a spot where
younger members of the family can safely "practice" while the older
members use the lifts. As for those members of the population who
wish to snowshoe or to ski-tour, each new season brings additional
difficulties; favorite touring areas have been absorbed by downhill
runs: fees are beginning to be charged for the use of touring trails;
parking has become difficult, if not prohibited, along the heavily
traveled roads. Unplowed public roads have been taken over by ski-mobiles
at the same time that permission to use private lands has become
increasingly difficult to obtain. Ski tourers wishing to reach public
lands up the valleys have literally been forced to use roadside
ditches. Contrary to what is sometimes implied, access to public
lands through private lands was much more common in the past than at
present. (See "Private Property: No Trespassing," Trail and Timberline,
August, 1975, p. 1L~8.
PAGENO="0520"
516
Page 3
We believe that winter recreation developments (i.e. both lift
facilities and `support" facilities) have a responsibility to pro..
vide recreational opportunities for as many, and as diverse a cross-
section of the residents of the State of Colorado as possible. To
achieve this, we feel that areas provideing inexpensive tow tickets
should be encouraged. We suggest that it is necessary to provide:
1: Lift tickets which cost as little as possible and lift tickets
for other than full-day, full-facility use, such as lift
tickets for morning or afternoon, or for specific slopes.
* 2: Convenient and inexpensive food and lodgings.
3: Convenient and inexpensive public transportation both to the
area and within the area meeting the needs of all types of users
including downhill skiers, ski tourers, employees and residents.
4: Adequate public parking convenient to the particular use area,
whether it be downhill or ski touring.
5: Convenient free access to public lands through both the ski
facility itself as well as the support areas. Provision for single
lift ticket for non_downhill skiers, if this provides logical access
to public lands.
/
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PAGENO="0521"
517
colorado ski country USA®
~® PROPOSED PJVIENThIENTS TO S.2125
COLORADO SKI COUNTRY USA
NOVEMBER 25, 1975
SECTION 1
We propose no amendments to this section.
SECTION 2 PERMIT AUThORITI~
We propose no amendments to this section.
SECTION 3 PERMIT TERMS~ FEES, AND CONDITIONS
With respect to Section 3 of the bill, we offer the following amendments:
1) Subsection 3(a)(l), page 3, line 17: insertbetween the words "than"
and "ski", the words "those developed as a part of a"; in line 18, strike the
words "activities and facilities" and insert in lieu thereof the words "recreation
complex".
The purpose of this amendment is to insure that the eighty acre limitation
is not applicable to related recreational activities which are an integral part
of a ski complex, such as tennis courts, riding stables, golf courses, hotels
and other recreational facilities normally utilized in the sumner season, some of
which may be located on National Forest lands.
2) Subsection 3(a)(2)(A), page 3,~line 21: insert the word "resort"
between the words "ski" and "activities'.
3) Subsection 3(a) (2) (B), page 4, line 11: insert the word "resort"
between the words "ski" and "activities".
1461 Larimer Square
Denver, Colorado 80202
303) 572-3131
Incorporating The Rocky
Mountain Ski Area
Operators' Association
PAGENO="0522"
518
-2-
The purpose of amendments 2 and 3 is to recognize that many ski areas
have become year-round recreational resort operations. It is essential to
recognize that such usage at most ski areas is necessary to insure a financially
viable operation. Mre importantly, this year-round use allows for more complete
utilization of the public lands in a desirable manner which benefits a greater
segment of the population.
4) Subsection 3(b)., page 5, line 12: insert the word "resort" following
the word "ski" at the end of said line~
The purpose of this amendment is to provide for editorial consistency with
the foregoing amendments.
5) Subsection 3(b), page 5, line 20, insert the word "on" following the
word "and"; additionally, add the words "of the applicant" following the word
"land" at the end of said line.
The purpose of this amendment is to recognize that the Secretary shall
exercise control over the development boundariesof the applicant/permittee only.
6) Subsection ~(c)(l), page 6, line 12: strike said line; in line 13, strike
the words "return on equity investment".
The purpose of this amendment is to assure that annual fees are related to
the value of the leased land and are not used for the purpose of regulating a
leasee's net profit. As other witnesses have testified, particularly Mr. Kennedy
at Denver, ski area operations are not comparable to regulated utilities providing
indispensable public services such as energy, transportation, etc. Rather their
revenues are derived from discretionary expenditures and, therefore, there is no
guarantee of a profit. Accordingly, establishing franchise fees that attempt to
provide a reasonable return on equity is not an appropriate basis for measuring
payment of rental to the government.
7) Subsection 3(c)(l), page 6, line 16: at the end of said line, add a new
sentence reading as follows: "Such fee may be based on a percentage of permitee's
PAGENO="0523"
519
-3-
gross receipts for each calendar year (or fiscal year or any twelve month period)."
The purpose of this amendment is to simplify not only the collection of the
fee by the United States but also to reduce the administrative expenses of the
concessioner in maintaining records for the purpose of reporting the basis of
payment of such fees.
8) Subsection 3(c) (1), page 6, line 16: at the end of the above amendnent,
add a new sentence which reads: "That 100% of any such fees shall be returned to
the local governing authority for utilization in the development of public services
in the areas impacted by any such special use permit."
The purpose of this amendment is to direct funds back to the county
governments which have an express need to provide additional improvements/services
in the areas under their jurisdiction.
SECTION 4 PERMITEEST CHARGES TO lifE PUBLIC
We recommend that this section beginning at page 8, line 7 be struck in its
entirety and that a new Section 4 be inserted as follows:
NEW SECTION 4 EXTENSIONS, NEW PERMITS
"The Secretary shall encourage continuity of operation of needed facilities
and services by giving preference in the negotiation of new permits to permitees
who have performed their obligations satisfactorily. To this end, the Secretary,
in his discretion, may grant a new permit to the same permitee, provided that,
not less than 5 years prior to the expiration of any permit issued under this Act
for commercial outdoor recreation ski activities and facilities, whether prior to~
or subsequent to this amendment of said Act, the Secretary shall review the
permitee's compliance with the terms, provisions and obligations of the permit.
The Secretary or his designee shall not later than 4 years and 6 months prior to
such expiration advise the permitee of the terms and conditions of the renewal of any
such permit. Notwithstanding any provision of this Act relative to the nunber of
acres to be in any permit to the contrary, the Secretary shall have the authority
PAGENO="0524"
520
-4--
to grant renewals of such existing permits for terms and upon conditions as he
shall deem appropriate."
The need for this amendment, as has been pointed out by other witnesses,
is to encourage venture capital in the high risk ski operation business. Such a
provision is necessary to encourage an operator to upgrade, expand or replace
facilities when an existing permit is at or near the end of its tern.
SECTION 5 TITLE TO IMPROVEMENTS, COMPENSATION
We recommend that this Section beginning on page 9, line 8 be redesignated
Section 6 and that a new Section 5 be inserted in its place, reading as follows:
NEW SECTIONS PUBLIC DISCLOSURE
Sec. 5. "The Secretary shall make available for public inspection
historical financial operating data furnished to him or any official of the
Department of Agriculture in connection with any use permit granted by him
pursuant to this Act to the extent that comparable data furnished by other pennitees
on Forest Service land is publicly available."
The purpose of this amendment is to implement the suggestion of our
Association as stated in our Resolution endorsing disclosure of historical financial
operating data. As a matter of policy, however, we do not believe that commercial
outdoor recreation pennitees should be singled out among the several classes of
users of the resources of the National Forest System for such public disclosure
of their operating results. ?~breover, we suggest that a more appropriate forun
for consideration of public disclosure of data over and above that already required
by the Freedom of Information Act, may be through an amendment to that basic
legislative charter.
Further, we propose no amendments to the original Section 5 (Improvements/
Compensation) which we recommended for redesignation as Section 6.
PAGENO="0525"
521
-5-
SECTION 6 RECORD KEEPING: AUDIT E~ EXAMINATION: ACCESS TO BOOKS ~AND RECORDS
We recommend this to be redesignated as Section 7 and propose no amendments.
SECTION 7 EFFECT ON OTHER LAWS: APPLICABILI1Y TO EXISTING PEITHIT HOLDERS
We recommend this to be redesignated as Section 8 and propose no amendments.
SECTION 8 UTILITY SERVICES FOR CONCESSIONERS: REIMBURSEMENT
We recommend this to be redesignated as Section 9 and propose no amendments.
SECTION 9 APPLICABILITY TO OTHER LANDS IN THE NATIONAL FOREST SYSTEM
We recommend this to be redesignated as Section 10 and propose no amendments.
67-512 0 - 76 - 34
PAGENO="0526"
522
STATEMENT OF H. E, JAMEYSON, MEREDITH, COLO.
Uncle Sam's real estate holdings stretch from sea to
shining sea. Much of this vast empire is administered by the
National Forest Service. Scattered through its many separately
administered forest reserves are privately owned `recreation res-
idences'. These occupy small plots of public land by right of a
"Special Use Permit". Some of these permits date back a half
century or more. An annual occupancy fee is assessed against the
permit holder. Five such recreation residences comprise what is
known as the Norrie Colony. A letter from the White River Forest
Supervisor, dated May 15, 1974, advised the Norrie colonists that
their annual fee ranging from $65 to $80 was being "adjusted" to
$525. Thus the Forest Service made its own contribution to Aner-
ica's soaring inflation.
While the fee hike was a financial jolt to White River
permit holders, it was peripheral to the real issue. What we
are concerned with here is principle, or rather its lack. Are
bureaucrats somehow exempt from the ethical code prevailing in
the private sector of our society? Can a bureaucracY callously
ignore its moral cornmCtments? how much unfettered freedom shou)d
be granted a bureaucracy? This statement is addressed to these
rTuestions. Perhaps its an exercise in futility. Can the voice
of a few exploited citizens be heard over the clamor and din of
highly organized well financed pressure grouos? At my personal
exoense I'm giving it a try.
PAGENO="0527"
523
2
~1anv Americans including this one are hecoming alarned
at our poliferating bureaucracies extending their authority into
every aspect of our life. President Ford has sho'~n an awareness
of this cancerous nhenomenon threatening our democratic precess.
On July 10, 1975, he held an unprecedented meetinci in the White
House. It was attended by the heads of all departments, agencies,
and commissions of government. With his ~ntire bureaucratic team
before him, footballer Ford gave it a locker room harangue, calling
upon the team to get with it and off the back of our citizens.
As he had in March, he once again called upon the bureaucrats to
weigh every decision with a regard for its inflationary consecruence.
As I listened I wondered if the Forest Service was getting the
message. I ha~én to admit that no government can function without
bureaus and bureaucrats, most of whom are ahle and dedicated men.
The problem does not reside in the institution perse, it's the
minicrat hungering for brownie points at the expense of the citizen
who has given bureaucracy a bad name.
For the first half of this century recreation home sites
in the National Forest could be had for the asking. Indeed they
were almost thrust upon any promising prospect. Forest Service
press agents enthusiastically plugged their availability and desir-
ability. For a typical example of such promotion I suggest you
dig up the Peaders Digest for April, 1939. District Ranqers pushed
home sites with the zeal of used car salesmen. One eager ranger
laid out twenty six building sites near our summer home. Me t~ould
have gone for more excent he ran out of ainhabet.
PAGENO="0528"
524
3
We were issued our first nerriit in 1927. It was on
an old log cabin, one of several remaining structures in a ghost
town called Norrje. In 1935, ye were issued a nermit on another
nearby and more desirable site. Here we started construction on
our present suirsser home. We moved to it in 1937. In that same
year, 1937, the Holy Cross Forest Peserve (since incoroorated into
the White River Reserve) issued an official map of its realm.
It was illustrated with en~icing photographs of our alpine Shangri-
la including one of an attractive recreation residence. In lofty
prose and soaring hyperbole the Forest Service public relations men
laid it on thick and at the conclusion of their Madison Avenue
pitch they invited the reader to step right u~ and cut his own
private slice of J\merica the Beautiful. I quote the official
Forest Service invitation: `Summer home lots on desirable sites
have been surveyed and designated for the use of those who wish a
more permanent form of summer residence than a transient tent.
They may be leased for a nominal fee, ranging from $15 to $25
a year for a lot, according to use, location, and desirability.
Maps, descriptions, and full information concerning them may be
obtained at the office of the Forest Supervisor at Glenwood Springs,
Colorado." "Nominal fees" to borrow a word from Ron Ziegler,
are now "inoperative". The Forest Service has welched on a moral
commitment it incurred when it invited us to establish ourselves
in the Forest with substantial investments on the sites it so eagerly
assigned us. Any private enterprise attempting such a rip off
would find itself facing the Federal Trade Commission.
PAGENO="0529"
525
.4
I do not content that the Forest Service is honor bound
to continue our original $25 fee into permatuity. Indeed our foe
over the years, in periodic steps, has increased by over 300%.
While I do not hold that the fee should be frozen, I do charge
the Forest Service with a dishonorable breach of faith when it
abandons the concept of nominality. "Nominal" is a relative term.
By defination (~merican Heritage Dictonary) "nominal pertains
only to that which is so low in relation to values it is a mere
token". A token fee was exactly what the Forest Service had in mind
when it established the Special Use Permit. The shameless fee
hike imposed upon White River permitees suggests that there lurks
somewhere within the Forest Service a minicrat who either doesn't
know or chooses to ignore the obligation the Service undertook when
it used the nominal fee as bait to lure us into its domain. It
would therefore seem appropriate, at this point, to recall a little
Forest Service history.
One of the more interesting, if eccentric, gentlemen of
the 19th century was popularly known as "Barnwell". He was an early
enviornmentalist, anti-pollutionist, New York states first game
warden, a Roosevelt, and the idol of his nephew Teddy. When the
latter made it to the White House a lot of Uncle Barnwell'S philosophy
and crusading zeal came with him. Although the Congress had crentod
the National Forest System in 1897, it remained for President Theo-
dore Roosevelt to put flesh and muscle on the hare bones of ]eqis-
lation. Roosevelt persuaded Gif ford Pinchot to become Chief Forrester.
PAGENO="0530"
526
5
Pinchot was a dedicated conservationist, a man of wisdom and r'rent
energy. ne recruited equally dedicated men for the Service and
established a tradition that survives to this day. The Nationa
Forest Service has a proud record. There have been no scandles
in its history, criticism of it has been minimal and as far as I
can recall its never been investigated by Congress. I entertain a
suspicion that many of the fine forest people I have known. are as
painfully dismayed at what appears to be a new emerging Service.
The empire taken over by Pinchot & Co., while vast was
not completely empty. It was sparsely and to a considerable extent
illegally populated. It was the final frontier of free men, ruqged
individualists who were not about to be pushed around by green-
horns from the East. The fledgling Forest Service entered this
near anarchial arena cautiously. While armed with semi-police
power, the Service substituted the velvet glove for the mailed fist.
Its procedure in the case of the rowdy lumber camp named Norrie
provides a case study of its early methods. The saw mill that
supported the community was owned and operated by a homesteader
arid was on private land. However, dwellings, a blacksmith shop,
a small store, a one room school, occupied preempted public land.
Had any ranger attempted to evict these squatters there would have
been hell to pay. The Forest Service met this ticklish problem with
a Soloman like judgement. It "legalized" the occupancy of its land
with a permit. while the revenue produced was negligable the permit
served an important puroose. When the squatter payed it he wac
PAGENO="0531"
527
6
recognizing the authority arid the soverei~nty of the Forest Sc~rvico.
I wonder how many of the eager young foresters with their college
degrees have ever been told how the Special Use Permit was horn.
With the possible exception of the regulatory commissions
no agency of our government enjoys a larger measure of authority
than the Forest Service. Each of its separate reserves is a benign
dictatorship. The Supervi~or is the law gii~er, the policeman, and
the magistrate. Traditionally he has employed his authority with
restraint and consideration. The White River Supervisor could have
established the 700% hike in permit fees with neither excuse nor
explanation. However, he went to extravagant `lengths to justify
it. His letter states `your permit provides for a periodic review
and adjustment to keep the fee on a basis consistant with land values
and leases of similar nature in the private sector". Of the several
permits issued to me since 1927 that statement appears for the first
time in the one issued in 1970. We have lived in the forest for
nearly a half century, we have seen six Supervisors come and go
and more rangers than I can remember. None before have ever taken
that position. During all our years in the Forest we have lived
within a stones throw of what perhaps is the most valuable piece
of private property on the Fryingpan River and never has our annual
fee been equated `zith the value of the nearby property. Obviously
the effort to relate our fees to neighboring property values is
a recent invention. In a shabby effort to cloth the fee hike with
some trappings of legality the Forest Service has exhumed, dusted
off a 19.51 act of Congress. At this late date it's unc]ear what
PAGENO="0532"
528
7
the Congress had in mind but if it was a rnandat'~ to the Service to
change fee oolicv why did it remain buried for nearly a euartar
of a century? A related question; in 1956, five years after that
alledged "mandatory legislation" the Forest Service issued a manual
of advise to prospective forest site seekers. It contained dotailr~ci
drawings and construction hints and as usual the nominal foe bait.
"A minimum $25 fee is charged, in some cases the fee is slightly
higher". (A 1953 permit issued to a Norrie colonist was indeed
"slightly higher", $35.)
I have been informed,and I assume correctly, that Washington
had ordered the permit fee increase throughout the National Forest
system. In the course of preparing this statement, I learned that
the fee assessed in neighboring Gunnison and Uncomoahgre Forest
Reserves was less than a third of what had been levied upon the
Norrie Colony. I have always thought that governmental agencies
were supposed to treat the citizen with even handed consideration.
Why then was there such a great difference between Gunnison and
White River? When I put this question to the Supervisor he told
me that there was a boom in White Piver country and fees were only
following "escallating land values'. In other words the Forest
Service was joining the promoters and speculators on the gravy
train and the Norrie colonist who lacked the foresight to settle
in Gunnison were caught on the tracks. It apnears that the Nat-
ional Forest Service is shedding its traditional custodial role in
PAGENO="0533"
529
8
exchange for an exnloitive one. It's going all out for the buck.
Painful as the 1975 fee gouge ha~ been, the future holds
an even darker threat. As long as the Forest Service is vested with
the authority to "review and adjust" fees every five years no
permitees investment in the Forest is secure. If fees are to be
related to neighboring land values and arbitrarily boosted every
five years by capricious appraisers the value of the permitees
investment is going to decline in direct proportion as the land
owners value increases. Ultimately this process will be one of
expropriation with the permitee adjusted out of both the Forest
and his investment.
If earlier generations of forest people erred when they
established the permit system, if the nominal fee has become ac-
ronistic and if the Forest Service wants to get out from under both
why doesn't it do so decently? Why does it resort to fabrications
and invented "facts", and why does it trot out phony "appraisals".
If the periodic five year review is continued then it should be
related to some generally accepted economic statistics and not
left to the questionable competency of some "appraisers". On the
other hand if the whole matter of. permitees has provided the Forest
Service with problems and eitharrasment, there's an obvious way
out of this delemma. Simply ask the Congress for authority to
sell the sites to the present permitees. There would be nothing
really unprecidented in such legislation. In fact it would be
quite sinilar to the Homestead Act of the 19th century. And haven't
PAGENO="0534"
530
9
the present permit holders "~roved ufl" on their tiny plot of public
land? I'ui told that there are approximately two million acres of
land in the White fliver Reserve. There are 55 permit holders. If
each was sold 1/2 acre, TThite River would be relinquishing less
than 30 acres of its domain.
If the new emerging service is bent on exploiting its
vast resourses for all that the market will bear, if it seeks a
place in big business, then it must b ma~te~to submit to the same
restraints applied to business. When the Congress established the
Forest Service system it laid down few guide lines. The Service
wrote its own regulations as the needs arose and it made policy
as experience dictated. That was fine during the custodial days,
but now that the Service is becoming a revenue arm of government
there should be some changes made. The permitee is not the only
victim of the Service squeeze, it applys to cattle and sheep men,
campers and all who do business with the Service. As matters stand
the Service today suffers an excess of authority which is bad for
it as well as for the nation. The time, it seems, has come for
Congress to provide guidence and oversite. If Watergate, the CIA
inve~tigations and other rev~álations have taught us anything, i~
is the truth of a statement made by a sage who's name excapes me.
"Power corrupts, absolute power corrupts absolutely." I don't
want to see the Forest Service I've known come to that end.
PAGENO="0535"
531
10
I would he unworthy of the friendship of many men, nest
and present, I have knOwn in the Service if I failed to note the
changed conditions under which they have labored. When we first
came to the Fryingpan there were no more than two or three picnic
tables on the entire length of the river; Today there are five
carnp~rounds . The Ranger ain't so lonely anymore, he's busy finding
a spot where the city family, wanting to rough it, can get a good
TV image on their portable. The Ranger has a degree in forestry,
but don't look for him among the trees, he supervising the dispos-
ition of trash and garbage. On the three summer holidays, Memorial,
July 4 and Labor Day the torrent of visitors overwhlems his sta~f
and spreads along the river where they should'nt be. His ass is
rarely in the saddle, Ets in an office chair or on the seat of a
pickup. He is busy running a high altitude Hilton with running
water, electric lights,showers and flush toilets. The only thing
he is not responsible for is the weather. It's ironic that the
Forest Service should want to increase its cash flow. Aside from
a small percentage of canning fees, all dollars other~wise col-
lected go into the General Fund and the Forest Service struggles
against the rising tide with only what you lawmakers provide.
H. F. Jameyson
S 162
Meredith, Colorado 01642
PAGENO="0536"
532
STATEMENT OF T. DESTRY JARVIS
NATIONAL PARKS AND CONSERVATION ASSOCIATION
FOR THE SUBCOMMITTEE ON ENVIRONMENT AND LAND RESOURCES
SENATE COMMITTEE ON' INTERIOR AND INSULAR AFFAIRS
ON S. 2125
REGARDING PERMITS FOR COMMERCIAL OUTDOOR RECREATIONAL FACILITIES
ON NATIONAL FOREST LANDS
NOVEMBER 17, 1975
Mr. Chairman and other distinguished members of the subcommittee:
I am T. Destry Jarvis, Administrative Assistant for Parks and
Conservation with the National Parks and Conservation Association,
.1701 18th Street, NW, Washington, D.C. 20009. NPCA is a national
conservation organization of nearly 50,000 members which was founded
in 1919 to preserve, protect and promote the national park system.
In addition, our conservation interests extend to wildlife, and
forestry management issues. We appreciate the inviation to present
our, view to the Subcommittee on S. 2125.
In analyzing the provisions of 5. 2125, which calls for a
new permit system for outdoor recreation facilities and activities
on certain national forest lands, we have relied upon our exper-
ience inthe field of ourdoor recreation and public land manage-
ment and have compared this bill with both the Concessions Policy
Act (P.L. 89-249) which governs concession policy in areas of the
National Park System and the Term Permit Act, as amended in 1956,
which is the authorization for the permit system currently used
to regulate commercial outdoor recreation enterprises on the National
Forest lands.
It is unfortunate, however, that while attempting to provide
statutory authority for commercial outdoor recreation facilities
on national forest lands similar to that for concessioners in the
national park system, the different sets of objectives of national
park and national forest administration' have been overlooked or
disregarded. Concession operations on national park lands are to
be administered, `In accordance with fundamental purpose of con-
serving their scenery, wildlife, natural and historic objects,. and
providing for their enjoyment in a manner that will leave them
unimpaired for future generations." National forests on the other
hand are administered for multiple use objectives which include
among others outdoor recreation, rangeland and timber management.
By providing preferential rights, renewal preferences, rights of
PAGENO="0537"
533
-2-
title as well as 50-year terms of lease for commercial outdoor
recreation enterprises on national forest lands, a precedent could
be set which would offer the same rights, preferences and terms
to the livestock and timber interests who also use the resources
of the national forests on a permit or contract basis. The build-
up of private property rights on the public lands is contrary both
to our nation's long-standing tradition of stewardship of public
lands and to the multip).e-use-sustained yield principles governing
management of the national forest system.
The Term Permit Act provides for permits for use and occu-~
pamcy of national forest lands for periods not to succeed 30 years
and for no more than eighty acres. When the 80-acre limit was
placed in the Term Permit Act by amendment in 1956, it was done
so upon recognition of the Congress that commercial developments
larger than 80 acres should have the express approval of Congress
before ôommit~ing significant public resources to single purposes,
often to the exclusion of other uses and users.
There is an even greater need that this concept be retained
today. The pressures of conflicting uses, the overriding multiple-
use mandate, and greater recognition by the general public of the
need for careful planning and close scrutiny of any such permanent
facilities all support the necessity that the Congress retain unto
itself the decision-making authority for granting large-scale,
single-use permits on public national forest lands. Therefore,
we strongly recommend that all proposed permits for commercial
recreational facilities on national forest lands in excess of
1,000 acres be sent to Congress for affirmative legislative action
before approval is granted by the Forest Service.
We do not oppose the prudent development of outdoor recreation
facilities and related services. Such developments,hoWever, should
be carried out on the basis of comprehensive regional planning in
a manner that reflects the capabilities of the land as well as
the cooperative input of both private and public sectors. The
public should not be forced to rely upon the negative action of
Congress as now contemplated in Section 3(a)(2) of 5. 2125 in order
to assure that wise management decisions for our public lands occur.
While the provision provided by Section 3(b) requiring the Secre-
tary to promulgate regulations and guidelines for commercial out-
door recreational ski developments on national forest lands is
essential, the bill should be amended to include more specific
standards which the Secretary must require of developments on these
public lands. Included should be a determination by the Secretary
that any proposed recreational development would have no adverse
impact on other adjacent public lands such as nationa1~arks,
national wildlife refuges or national wilderness areas. In addi-
tion, a determination should be required of the Secretary that any
proposed commercial recreational development does not preempt
some more suitable use for this area, since such commerciai devel-
opment would be converting a previously multiple use area
PAGENO="0538"
534
-.3-
into a largely single purpose area. Since this act would grant
possessory interest to the developer for his facilities on national
forest lands, thus requiring compensation if the permit were to
be terminated, the regulations and guidelines which the Secretary
promulgates should include the types of sanctions which should
be applied to a commercial developer wi.thin the national forest
short of termination and purchase should his operation prove un-
satisfactory -
For all roadless areas of 5,000 or more acres which would be
affected by the proposed outdoor recreation developments, the
Secretary should be required to study their wilderness potential
before granting a permit for any portion of such an area. The
~Act should be further amended to include a prohibition on the
development of commercial outdoor recreation facilities in wilder-
ness study areas, research natural area, game refuges and ranges
under the jurisdiction of the Forest Service and other such lands
unless permitted to do so by Congress. NPCA strongly supports
the provisions of Section 9(b) excluding Mineral King Valley
adjacent to Sequoia National Park from provisions of this Act.
This unique alpine valley, now managed as a game refuge as a part
of Sequoia National Forest, merits inclusion in Sequoia National
Park as proposed legislation would authorize. Nothing in this
bill should be used to preclude future inclusion of this valley
in the park.
Thank you for the opportunity to present our views on this
bill.
PAGENO="0539"
535
STATEMENT OF MR. CHARLES LEWIS, DIRECTOR
NATIONAL SKI AREAS ASSOCIATION, INC., 61
SOUTH MAIN, P.O. BOX 83, WEST HARTFORD,
CONNECTICUT, BEFORE THE SUBCOMMITTEE ON
ENVIRONMENT AND LAND RESOURCES OF THE
SENATE INTERIOR AND INSULAR AFFAIRS
COMMITTEE, ON NOVEMBER 17, 1975
I am Charles Lewis. I am a member of the Board
of Directors of the National Ski Areas Association, a
member of its Public Affairs Committee, past Chairman of
its Economic Study Committee, President of Copper Mountain,
Inc., and I am a CPA.
The purpose of this testimony is to present his-
torical data concerning lift ticket pricing (competition)
and financial operations. In this regard, I shall:
1. Review the historical national pricing
structure.
2. Review the financial highlight of the
industry as derived from a recent survey
of members of the NSAA.
Lift Ticket Prices
In two recent surveys of the U.S. Ski Areas data
was collected regarding the current and historical prices
charged for an adult daily lift ticket.
The areas surveyed were from all geographical ski
regions within the United States both on private and Forest
PAGENO="0540"
536
-2-
Service land. Between and within the geographical areas
surveyed, there is a tremendous amount of competition for
the discretionary skier dollar.
The areas included within the survey represent a
large portion of the available lift capacity within the
U.S. last year.
The survey revealed that the highest adult week-
end daily lift rate reported for the 1974-1975 season was
$15.00 per day and the lowest was $3.50 per day.
Interestingly enough the highest rates charged
last year were by operations not on land controlled by the
Fnrest Service. As a matter of fact, seven (7) of the nine
areas reporting rates of $11 or more per day were on
Pate land. One of the two areas reporting an$1l daily
rate only had 2% of its area under permit from the Forest
Service.
The national weighted average historical lift
price has been plotted graphically and compared to the
established Consumer Price Index, Composite Construction Cost
Index and Average-Hourly Earnings Index. This has been done
for all areas responding irrespective of land ownership
and also for areas located on land under permit from the
Forest Service.
PAGENO="0541"
537
-3-
The historical graph indicates that while lift
prices have exceeded growth in the consumer Price Index,
it is apparently heading toward a reversal.
The investment in lifts, buildings and equipment
constitutes the major expenditures in the capital intense
ski industry. A comparison with the construction ~Lndex is,
therefore, very meaningful. The cost of lift tickets has
lagged substantially behind this index for the last four to
five years.
Labor is the single greatest category of operating
expenditure for the ski business. Therefore, comparison
with the labor index is also very meaningful. Again, the
price of lift tickets has generally lagged behind this inde:..
Based upon this information, it appears that:
1. There is wide price variations (competition)
throughout the country, and
2. Price trends have generally followed, rather
than led, the indicated increases in the
costs of doing business (product purchases,
labor and capital goods).
Financial Highlights
For the past five years, the National Ski Areas
Association has annually participated with outside inde-
pendent concerns, first the United Bank of Denver and more
67-512 0 - 76 - 35
PAGENO="0542"
538
-4-
recently the Business Research Division of the University
of Colorado, to generate financial information regarding
the ski industry in North America.
Only in the past few years has any semblance
of profitability come to the industry and then consistently
only in certain geographic areas of the country that are
not as subject as others to fluctuating weather patterns.
Mr. Hubbard's and Mr. Swanson's testimony in Denver
covered several of these elements. However, comparisons
have now been made between all the participants responding
to the 1974-1975 survey and those utilizing land under
permit from the Forest Service. (See attached.) This infor-
mation reveals:
All Areas USF Areas
After Tax Return on
Gross Fixed Assets 3.1% 3.6%
Average Investment in
Gross Fixed Assets $2,736,000 $3,358,000
After Tax Profits as a
Percentage of Revenue 2.9% 3.2%
After Tax Profit on
Stockholders Equity 5.3% 5.3%
By all indicators, the 1974-1975 season was the `best
ever" for the industry, but there is still little consistency
in financial data as shown in the exhibits hereto.
PAGENO="0543"
539
-5-
What this data continues to indicate is that for
a business facing the risk elements the ski industry faces,
the reward has not historically been adequ~te.
in addition, the survey indicates that while the
areas operating under the U.S. Forest Service permits are
investing more in Gross Fixed Assets they are not receiv-
ing any substantial benefits over other operators.
We believe these facts continue to indicate that the
industry is competitive, is not highly profitable and,
therefore, need not be regulated. The areas operating on
Forest land do, at the same time, need the support proposed
in this bill for a longer term lease and adequate acreage
lease as discussed by Messrs. Kennedy and, Swanson in Denver
and Mr. Butler in Washington.
Copies of the data upon which these comments have
been based are attached as exhibits hereto. I would be
pleased to answer any questions you may have regarding this
matter.
PAGENO="0544"
540
NATIONAL SKI AREA SUR\!EY
WEIGHTE1) AVERAGE LIFT TICKET PRICES
180
170 - All Aroas Surveyod
411 Araas not undor USFS Pormit
All Rruas indnr USFS Pernit
150
150 ~
140 - .
180
90 ______________________~-_--~..._-_~ _______
1955 1956 1607 1932 195° 1970 1971 1972 1273 1~.l ii.:
65 67 68 69 70 71 72 73 75 75 3
PAGENO="0545"
541
HISTORICAL COUPARISONS
180 LIFT TICKET PRICES (USFS PER~1ITTEES)
vs. (3)
NATIONAL PRICE/COST I1IOICES
l9AS~1975 .~ (4)1
160 -~ .~ /
2,/'
140 /////~/ (2)
110
100
90
80
1955 196~ 195~ 1968 1959 1970 1971 1972 1973 1974 lOST
66 67 68 69 70 71 72 73 74 75 76
Weiqhted Avuraçe Adult Oaily LiFt Ticket Prices (USFS Permit Areas)
Avcragu Hourly turnin~s Indux
-. Conoosito Construction Cost mdxx
Consumor Price Indox
PAGENO="0546"
542
Notes
Lift Ticket Price Graphs
(1) Weighted average lift ticket prices are averanes of the lift prices at
each area weighted by the nunibe~ of skier-days at that area during the
given year. Weighted averages were used to more accurately and fairly
show the average prices being paid by skiers in the U.S.
Note that the last point on the same line falls in 1974-75, while more
recent data has been obtained for the other indices. It can be readily
seen that all other indices are already well above the 1974-75 level.
(2) Ticket prices have increased (since 1967-68) faster than the Consumer
Price Index. But it can be seen that since 1973 the CPI has been rising
faster (the line is steeper) than ticket prices.
(3) The skiing industry is capital intensive in that extreme investments in
facilities must be made before any revenue may be derived. The costs of
these facilities are mirrored by the Composite Construction Cost Index
(labor, materials, etc.) and can be seen to be rising much faster than
ticket rates. The industry must somehow be able to recover these costs
in addition to the everyday costs of running the areas.
(4) These everyday costs are made up of various costs - but by far the major
component is labor. Thus, skiing is labor intensive with respect to
everyday operating costs. These labor costs are reflected by the Average
Hourly Earnings Index which monitors increases in labor costs for all
non-farm, non-government, non-supervisory workers. This index has been
keeping pace with lift ticket prices (or vice-versa) and already is seen
to be very high in 1975.
PAGENO="0547"
543
NATIONAL SKI AREA SURVEY
FINANCIAL INFORMATION
NOVEMBER, 1975
SURVEY COVERAGE
In Terms of Vertical Transoort Feet (VTF)
Total Survey Coverage
Total Valid Responses
Total USA
Percent Coverage
Percent Valid Responses
(Used herein)
1974-75
543,726,781
451 ,684,O31
978,51 8,000
55. 6%
46.2%
PAGENO="0548"
544
SOURCES OF DATA
All financial data relative to specific ski areas has been extracted
from the annual NSAA ski area survey conducted by the University of Colorado
Business Research Center. The survey is conducted under the direction of Dr.
Charles Goeldner who is in charpe of activities at the research center. Written
authorizations have been obtained from all areas shown for the release of the
survey information.
Lift ticket prices by area as well as skier-days by area for the years
1965-66 through 1974-75 were compiled from the Historical Pricing and Skier-Days
Statistics Survey recently conducted by NSAA. The same statistics from a similar
Colorado survey were added to the National figures (Colorado areas were not counted
twice). Colorado statistics may be found in the Colorado Ski Country USA STATISTICS
publication.
All Consumer Price Index Figures were taken from the 1974 edition of the
U. S. Department of Labor publication entitled 1974 Labor Statistics. Figures
included in the Average Hourly Earnings Index prior to 1967 were computed from
average hourly earnings as shown in 1974 Labor Statistics, using the 1967 figure
as 100%. Index figures from 1967-74 were computed by the government also using
the 1967 figure as 100%. The Composite Construction Cost Index was found in a
periodical entitled Construction Review. Figures prior to 1965 were computed using
1957-59 as the base period and then converted to 1967-68 based percentages. Figures
subsequent to 1965 were computed using 1967-68 as the base year. The most recent
1975 figures have been included where obtainable for all indices.
Before considering the data presented herein, it must be noted that the
survey information has not been audited except in the cases where publicly owned
companies have released audited statements. Consequently the information must be
regarded as unaudited.
PAGENO="0549"
*
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o
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(DO
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0
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PAGENO="0550"
546
Notes
Summary of Operations by Area
(1) MOUNTAIN REVENUES consist of revenues from the operation of (a) ski lifts,
(i3)Tki~chools, (c) cafeterias, (d) ski shops, (e) rental shops, and
(f) other miscellaneous sources. Revenues from real estate related
activities are not included.
(2) MOUNTAIN EXPENSES include all operating costs such as (a) direct labor,
(ET~e~fex~inses, and (c) G&A, advertising, USFS fees, property taxes,
etc.
(3) INTEREST EXPENSE as reported on the survey questionnaire, does not distinguish
between interest expenses incurred on loans at~tributable to ski operations
and those related to real estate activities. However, interest on real
estate developments is qenerally capitalized instead of expensed. Conse-
quently, reported interest expense is assumed to relate to mountain related
obligations.
(4) DEPRECIATION EXPENSE as reported, also fails to distinguish between mountain
facilities and real estate developments. Most real estate investments are
in the form of land and therefore not depreciable. Thus, reported depre-
ciation is assumed to apply to mountain related facilities.
(5) ESTIMATED INCOME TAXES are estimated at 50% of pre-tax net income. Actual
taxes hav~b~ii%~e~'y close to 50% as can be seen on several publicly
distributed financial statements for the 1974 and 1975 fiscal years.
(6) REAL ESTATE NET PROFIT represents the difference between real estate related
revenues and real estate related expenses. Figures shown are net of income
taxes estimated at 50%.
PAGENO="0551"
-4 -4 -4 -,-,-,--`-`--` -~ -~ -,-,-,-,--~-, -~ c:: ~
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C) C) C.) -~ -~ N) CO C) C) CO CO N) C) N) C) -~ CO C) -~ C.) (*3 C) N) N) -~ COD C) C) N) N)-' -N C) -N C) C.) N)N)O0C))*3C)-N-'-'C)C) C) N) -C. N) CCC C) C.) D CC (I
C) ~> ~>
C) -3CC
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IN) I-~ k/C I C)
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IC) CC C ~ /CC
3 C) I C) S C) 01 C) -` ~ - -* N) N) N) C) C~) N) N) C.) N N) C) C.) C)) 1 0 -1 CC C)
II CC C CCC C) C) (0 C.) CO C) C) N) 0) C) I.).-. .-.N) (.1 -` -~ -N 50(3) CD C)-' C.) CO N) N) C) CO C) CD C) C) C) 00-N C)-' N) C) N) CO-'-'N)N)C) CO 3D C) N) N) CD -I -~ ID
CO C C) ~ N)N)-NC)COC)C)C)N)C.C)CON)C.N)NN)COC)C)C)C)C)C)N)C)N)CON)CC)N)C)N)N)C)'N)C)COC)N)-C'CO'- CC) C)
CC.) )N) CC.) C N)-NC.)C.)C)C)C*3-.-- C)N)N)C.)N) C)-NC)C).C.)C)CN)C.C)C)C)CO-'C)COC)COC)C.)COC)N)C)N)-C.N)k/N)C) CCC (C
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PAGENO="0552"
548
Notes
Return on Gross Fixed Assets
(1) GROSS FIXED ASSETS
Gross fixed assets in this case, are all fixed
assets used to carry on the skiing business and related
activities excluding those used for accommodations or held
as real estate. Gross fixed assets is the basis used by
the U.S. Forest Service to apr1.y its Graduated Rate Fee
System (GRFS).
~y~sR~nonGFAUsed?
The adequacy of earnings is generally measured in terms of (1) the
rate earned on sales, (2) the rate earned on the stockholders equity,
and (3) the rate earned on fixed assets.
However, the rate earned on fixed assets (return on GFA), is the most
meaningful measure of the efficiency of operations since it relates the
dollars of profit to the dollars of assets used in the business, thereby
measuring how efficiently the assets are used.
(2) GROSS FIXED ASSETS, AT COST
These figures are shown at historical cost, which in most cases is
significantly less than todays replacement cost.
(3) MOUNTAIN NET PROFIT BEFORE INTEREST
Net profit has been increased by the amount of interest expense (net
of income taxes) in order to remove the effectof leverage.
PAGENO="0553"
-4 -~ -4 ~ -~ -~ -~ ~ -~ ~ Co 0(0
o o C) N) N) -~ N) C) N) N) N) 03 (4~.4 N) N) -~ -~ C) N) C) N) N) N) -~ (7) -~ -4 `303 N) N)-'-' 0303 CD -~ -~ 7) (1(0 0 0
(C) 03 (.3-0.0 0)030) (0(0 `-40) `-4(71 -~ (003 -~ (.3(40) N) N) -`(0 CD (71(0 `-4 N) -~ .7' CD -~ (71(4 N) 030303(403 .0 -~ -`0)0303 `.4 .7' `.3 0)03(4 ~ 01 Ci. ri 0
(C 71(7 71'.) 3(1)00<
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PAGENO="0554"
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Notes
Return on Equity
(1) RETUPJ~ OU EQUITY
Return on equity, like return on gross fixed assets, acts as a
measure of the adequacy of earnings, but only when reviewed along
side the return on sales (revenues) and the return on assets.
This rate of return reflects the use of leverage to generate
net income. Rate of return on equity, however, can be a misleading
concept in situations where capital contributions and retained
earnings are low and leverage is high. This is especially true when
borrowed funds are guaranteed by the stockholders.
(2) NET WORTH OR EQUITY
Net worth or equity has been computed by adding (a) invested
capital, and (b) retained earnings, as reported on the NSAA question-
nai res.
PAGENO="0555"
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NATIONAL FOREST NEWS,
RocKY MOUNTAIN REGION,
Denver, Cob., April 18, 1975.
REGIONAL FORESTER SUGGESTS SKI LIFT PRICING EVALUATION
Regional Forester W. J. Lucas met today with representatives of Colorado's
ski industry and suggested `a three-year evaluation of market performance on
lift~ ticket pricing including a technique for annually establishing an upper
limit guideline for lift ticket prices." According to Lucas, Forest Supervisors
in Colorado who have received requests to authorize lift ticket increases for
next season "will proceed to approve or disapprove these rate requests in a
timely fashion as in past years. In the meantime, I would like to have com-
ments on the proposal."
The proposed evaluation, discussed in detail at the meeting, provides for
annually setting an "adult ticket price upper limit guideline" based on
investment in lift facilities, cost of doing business, and skier use. Rates
which promote skiing by children and those over age 62 will be encouraged.
The calculations would be made on a "group" or average basis using data
from the Forest Service's Graduated Rate Fee System, which is used to set
the annual fee paid to the government by ski area operators for the use of
National Forest lands. Ski area operators could establish their rate schedules
at levels they felt to be appropriate for their market situation, as long as
it did not exceed the guideline in effect for the year.
No date has been set for a decision on whether or not to implement the
proposed system. "I want to know what people think of this approach," Lucas
said. "Is it fair to the public, the ski area operators, and in the public interest?
Do they feel it's workable and responsive to changing conditions? There are
many factors and many points of view to be considered," he added.
A copy of the proposal may be obtained at the. Regional Headquarters,
Rocky Mountain Region, 11177 W. 8th Avenue, P.O. Box 25127, Lakewood,
Colorado 80225. Comments may be submitted to the Regional Forester at that
address.
JOHN.E. BURNS.
LIFT TICKET PRICING
It is deemed in the public interest to maintain a healthy and viable skiing
industry and to induce capital investment by the private sector to provide
needed public alpine skiing opportunities on public land. Also, Colorado is
deemed as the area of comparability provided for in existing special use
permits. The Colorado alpine skiing industry has developed in an atmosphere
of price and non-price competition. It is also regarded as comprising a com-
petitive entity within the national and international scene. Although there
is competition from areas outside Colorado, those firms most directly coinS
parable and competitive with Colorado areas are other Colorado areas.
The Forest Service expects competition to continue because management has
the flexibility to respond to use demands and preferences. A reasonable
balance is also expected to be maintained between supply and demand. If
management does not respond with flexible schedules of rates and a reasonable
balance between supply and demand is not maintained, controls may have to
be established. It is expected that in most situations the market place, will
itself, through competition, establish a range of price levels acceptable to
the users and which are reasonable for the facilities and services provided.
The purpose of reviewing permittee schedules of user rates at winter sports
complexes is to assure that rates are reasonable for the services and facilities
furnished. At the same time, permittees should have an opportunity to derive
a reasonable profit from invested capital.
It is recognized that some operators are better managers than others. Many
have the ability to keep operating costs as low as practical while deriving
a higher level of profit from their operations. In other cases management is
not as efficient and/or investment decisions are not as timely. For these
reasons, the Forest Service believes it is inappropriate to either guarantee or
restrict profit to a predetermined level either on an area-by-area or permittee-
by-permittee basis. Such a policy would encourage inefficiency and limit the
competitive incentive to keep costs as low as practical.
PAGENO="0556"
552
The price of lift tickets at ski areas may or may not respond to the market.
Schedules of rates may be influenced by desires to service fewer people at a
higher price to secure needed profit rather than catering to more people at a
lower price. Schedules of rates may also be influenced by other amenities
being present in the area or by being served by a common transportation
system. Likewise, rates may be influenced by distance from population centers
or travel distribution points. These factors and others must be used in assessing
what rates are in the public interest.
As a guiding principle, the Forest Service feels that the user should pay
for the facilities and services provided, and any "discounts," i.e., lower rates,
must be equally available to all users of the public lands. Public policy
recognizes the need to promote outdoor recreation participation by our youth
and elderly. Encouragement of participation by these age groups is and will
continue to be recognized in schedules of rates.
The Forest Service must also consider clearly recognizable, justified, and
supported increased costs in doing business. It is appropriate that the user pay
for these increased costs. When patronage is clearly expected to remain the
same, an increase in lift ticket rate to cover increased costs would be proper.
If, at areas operating at a profit, it is reasonable to expect that there will be
an increase in patronage, and this increase in itself will cover the increased
costs, no increase in the lift ticket rate would be jusifled. If a combination of
increased use and increreased rates equals additional costs, an appropriate
proportional rate increase should be allowed. Increases will be allowed when
they do not result in an increase in profit beyond that normally experienced
from the past level of patronage or from the expected increase in patronage.
Such consideration should exclude increases in profit realized because of
patronage in excess of projections or recognizable management savings and/or
efficiencies. These factors are to be considered in establishing rates in succeed-
ing years.
The Forest Service believes it can, on the basis of averages, measure to a
reasonable extent the expected levels of or opportunity for, profit. Studies
have shown, for example, that a permittee of average managerial ability
operating on the National Forests experiencing a normal season under
reasonable conditions would have the opportunity to make a 15 percent return
on capital before taxes and interest, invested in Gross Fixed Assets. This
opportunity occurs when gross sales are equal to twice the breakeven point.
(The breakeven point is defined as the point at which a business begins to
show a return on investment: for example, the point where net profit before
interest charges begins to accrue. It is expressed as a ratio of gross sales to
gross fixed assets). Although it could occur, it is not expected that this profit
level will be reached at a lesser ratio of gross sales to gross fixed assets. By
the same token, the profit level is expected to be higher if the gross sales to
gross fixed assets ratio is greater. Data available under the Graduated Rate
Fee System can be used in measuring the profit opportunities.
For ski areas, in particular, industry representatives have advised that a
debt to ownership equity ratio of 1 to 1 is normal. At this level, a gross profit
of 30 percent on ownership equity is reported to be expected and satisfactory.
Thirty percent gross profit on 50 percent ownership is equal to 15 percent on
total equity used in describing gross fixed assets; this opportunity is availalbe
when gross sales are equal to twice the breakeven point. The breakeven point
for ski lift and associated services is 20 percent of gross fixed assets.
Gross Fixed Assets, under the Graduated Rate Fee System, are the invest-
ments made pursuant to approved development plans and relate to dollars
invested in a particular year. It is felt that these investments, maintained in
accord with the permit, can be valued in today's market by adjustment ac-
cording to the Department of Commerce Construction Cost Index; i.e., annually
rising or falling according to measured costs. Such adjustment places the
investment at all areas in Gross Fixed Assets on a common value based upon
which the owners can and should expect a return either by currently receiving
appropriate lift prices or through sale of the asset and reinvestment of the
proceeds. Of course, the current investment value of Gross Fixed Assets must
be carefully established
The determination of gross sales must reflect on-the-house giveaways,
discounts, and seasonal pass tradeoffs. (Gross sales are defined as the gross
receipts or revenue received from the operation plus value of gratuiites, but
PAGENO="0557"
553
less commissions, franchise receipts, excluded gratuities, and certain other
receipts). Each must be considered in the services provided. From the stand-
point of pricing, no consideration should be given to the discount or subsidy
program provided by a permittee as it relates to the community: this is
presumably done in the context of a value given for a value received. Thus,
from the public viewpoint, all tickets issued are to be considered as being
sold for their full value, except as approved by the Forest Supervisor, and
potential profit calculated on that basis assuming that value is received for
value given.
While the Forest Service is reluctant to use pricing controls, it is apparent
that demand (use) is high and that increments of supply are being retarded
for various reasons. It is for this reason desirable to establish a pilot project
extending over a three-year period that a "weighted average adult lift ticket
value" will be computed annually to establish the "top" daily lift price. Once
established, permittees may set their annual rate schedules within this limit
and expect approval by the Forest Supervisor.
During this three-year pilot project, market performance will be evaluated
as to its operation in the public interest within the framework of the price,
cost, supply, and demand situations which prevail.
For review and approval purposes, guidelines are established for computation
of the: (1) adult daily lift ticket "value" and, (2) acceptable lower rates
therefrom.
The adult daily lift ticket "value" will be computed annually for the "top
price" resort group with Colorado as the area of comparability. The "value"
will consider: (1) current investment value, (2) current actual user days
adjusted for children, adults over age 62, and half-day ticket rates and use,
and, (3) gross revenues equal to at least 40 percent of current investment
value (two times breakeven point).
The "value" for Colorado will be computed annually by the Forest Super-
visor, White River National Forest, prior to approvals of rate schedules for
the coming season. The Colorado areas proposing rates equal to the top rate
applicable for the current season will normally be included in the "top price"
group. The Forest Supervisor may elect not to include an area in the group
if, in his judgment, the requested rate is obviously not related to general
market conditions. Forest Supervisors may approve a schedule of rates for
the subsequent season which do not exceed the weighted average adult lift
ticket "value."
The formula to be used to compute the weighted average adult lift ticket
value is:
Current Invested Value (lift related) X.4 (two times normal breakeven)
or Current Annual Gross Lift Revenue, If Greater (÷) Current Annual User
Days (Projected through current winter season) as adjusted for children, over
age 62 and half-day rates and use. = Weighted average adult lift ticket value.
The formula result may be rounded upward or downward to 50~ increments
based on cost and use projections for the following calendar year.
Current Invested Value is Gross Fixed Assets for lifts and related facilities
as updated to current calendar year value by use of the Department of Com-
merce's "Construction Cost Index." The undate is accomplished by adjusting
the orginal cost of improvements to current year value in proportion to the
changes indicated in Construction Cost Index between the year of investment
and the current year. Improvements removed or destroyed will be deducted
from Current Invested Value calculations in the year they occur.
Current annual user days (adjusted) is the anticipated annual user days
through the current winter season, excluding users performing work in duty
status, adjusted for existing children and over age 62 rates and use. The child,
over age 62, and half day adjustment is derived by:
Current Annual User Days multiply 1.00 minus [(current child and over
age 62 use percent multiply percent child and over age 62 ticket rates are
below adult ticket rate) + (half day use percent X percent half day rates are
below adult ticket rate) ~ = Current Annual User Days (adjusted).
Prices below an area's adult daily rate are common business practice and
may be offered subject to annual Forest Supervisor approval of the proposed
rate schedule. Lower rates are usually offered as follows:
1. Single rides-based on one ride of a single lift or combination of lifts.
67-512 0 - 76 - 36
PAGENO="0558"
554
2. Limited lift use-based on less than a full days use, i.e., half day, during
lessons only or limited to a specified lift or lifts.
3. Group Purchases-based on a volume purchase by a specified minimum
numbers of users. A group is any association of users (formal or informal) who
contact the area as a unit to purchase lift tickets for the "group."
4. Age-normally related to children 12 and under, and adults over age 62.
5. Season tickets-based on unlimited skiing for the entire operating season.
6. Limited season tickets-~based on restricted use during a portion of the
operating season, i.e., not valid during specified days of the week, specified
weeks of the season, etc.
7. Student-based on student status at time of purchase.
8. Military service-based on current active duty status as an enlisted mem-
ber of the U.S. Uniformed Services.
9. Multi-day purchase-based on the prepurchase of lift tickets for a specified
number of days.
10. Low use and/or periods-based on encouraging use during low use
periods, i.e., valid during mid-week, early or late season, etc.
Forest Supervisors may approve daily rates equal to or less than the
weighted average adult lift ticket value and which are in accord with usual
practice.
Forest Supervisors may refer rate proposals which do not comply with usual
practice to the Regional Forester for advice.
PAGENO="0559"
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PAGENO="0560"
556
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PAGENO="0561"
557
F. GEORGE ROBINSON
240 Gaylord St.
Denver, Colorado 80206
October 21, 1975
The Honorable Floyd Haskell
The United States Senate
Washington, D. C. 20510
Re: The Hearings On Senate Bill S2l25
Before The Committee On Interior and Insular Affairs
Sub.-Committee of the Environment and Land Resources
Dear Senator Haskell:
I attended the all-day hearings in Aspen on October 4, and have
read all of the statements of the witnesses at the hearings in
Denver on October 6, 1975.
By way of identifying and qualifying myself, I am writing this
letter as an individual, an active skier for over forty years,
one of the incorporators of the Colorado Winter Sports Council,
which raised the money, got the permit and built the first rope
tow on Berthoud Pass in 1937. I also was an early member of the
Colorado Arlberg Club and as such was one of those who helped
raise the original money and cleared the trails to start Winter
Park, even before George Cranmer became involved. I have been
an Aspen home owner since 1946 and a longtime director of the
Aspen Skiing Corporation, although the views expressed in this
letter are personal.
Some of the morning witnesses at the Aspen hearing are part of a
loud and vocal minority, who I have seen polarize on nearly all
local issues. They do not represent views of the majority of the
people of Colorado, or Pitkin County. Much of this group is act-
ing in self-interest to ski for $2.00 per day, on a mountain
already overcrowded, while they pre-empt and crowd out the citizens
from other States and areas, who own an equal share of the National
Forest and pay $11.00 a day to ski there.
I felt that some of the speakers at the Aspen hearings maligned
and abused the Forest Service. I have always felt the Forest
Service had dedicated personnel, acting always with the interest
of the public in mind, who have done a fine job developing
guidelines where there were none. They have sometimes been
hampered by lack of, or obsolete regulations. They have helped,
guided, and fostered the development of areas, and have developed
PAGENO="0562"
558
The Honorable Floyd Haskell
October 21, 1975
Page Two
safe and good practices pertaining to trails, clearing, lift
operation and other phases. They have had to solve problems
on a case by case method, where no rules or precedents existed.
I agree with your efforts in S2l25 to set some standards and
uniformity in the terms and rentals for ski area permits.
Lifting the eighty-acre limitation and extending the life of
ski permits are necessary and desirable. I would suggest that
annual fees for permits should be based on a standard percentage
of income uniform for all operators. I do not favor one based
on a return of equity investment, since this involves so many
other factors, it may be inequitable, penalize efficient operators,
and be extremely difficult and expensive to administer.
I do not believe the Public will be well served by the present
provisions of S2l25 which apply to Rate Regulation and Public
Hearings:
(1) Skiing is not a necessity of life comparable to light, power,
heat, or rail, truck and air transport, who are common
carriers of the necessities of life.
(2) To my own personal knowledge; strong, active and sometimes
fierce competition exists between ski areas, and is the
true determinate of ski-area-rates, and economic viability
of proposed areas.
(3) Rate regulation with Public Hearings on changes will be
cumbersome and expensive. The Forest Service will have to
set up a rate review and regulation agency similar to the
ICC, the FPC, the CAB, etc. etc. Experience shows that this
is expensive and is slow to respond to public needs, sometimes
taking several years.
(4) All of this will greatly increase the cost to ski area operators,
which must be passed on in ticket prices.
(5) Environmental, governmental and public requirements for
new ski area permits, now bring costs to one half to one
million dollars and three or four years time, which must
be spent before investors know whether they have lost their
time and money or will be granted the questionable privilege
of proceding to raise and invest further funds in an industry
where there is a record of losses to investors and meager
returns for the few successful ones.
(6) The foregoing, together with rate regulation, hearings, etc.
would make it almost impossible to raise funds to start new
PAGENO="0563"
559
The Honorable Floyd Haskell
October 21, 1975
Page Three
areas.
(7) Skiing has been growing at a 15% a year compounded rate
in Colorado, and more in some other areas. This represents
a doubling almost every four years. If the American public
is to be well served with good skiing facilities, which
take very little area in its own National Forests, a
favorable governmental and economic climate is a necessity
to attract the investors to provide these facilities.
(8) If S2l25 creates additional obstacles, existing areas will
become so crowded in the next few years, as to make long
waiting lines, require reservations rr~any months in advance
to ski a certain week or day, and result in a very high
load factor in existing areas. This might make existing
ski areas more profitable, but will not serve the American
skiing public well. It will also result in less competition,
higher prices of lift tickets, poorer maintenance and poorer
quality in all ways.
I certainly hope your Committee will give every consideration to
these points, to preserve, enhance and develop the enjoyment of
the fine and wonderful sport of Skiing. For the very miniscule
percentage of National Forests needed for this purpose, I cannot
imagine a better use for the enjoyment of Man.
Respectfully yours,
By
F. George binson
FGR: dmp
PAGENO="0564"
560
STATEMENT
OF THE
UTAH SKI ASSOCIATION
DELIVERED TO
THE SUBCOMMITTEE ON THE
ENVIRONMENT AND LAND RESOURCES,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
U.S. SENATE, ON PERMITS
FOR COMMERCIAL OUTDOOR RECREATION FACILITIES,
5. 2125
Submitted by: Raymond L. Hixson
Chairman, Utah Ski
Association Legislative
Committee
President, Snowbird Corp..
PAGENO="0565"
561
MR. CHAIRMAN AND MEMBERS OF THE CONMITTEE:
On behalf of the fourteen Utah ski areas and other related
businesses we represent, the Utah Ski Association welcomes this
opportunity to submit a statement on Senate Bill 2125.
We applaud Senator Haskell for proposing several signi-
ficant reforms in the area of Permit administration which will
enhance investor confidence and encourage new development.
Continued private investment represents in our minds the
surest means to satisfying the increasing public demand for.
lift-served Alpine skiing, while at the same time keeping lift
ticket and related prices as low as possible.
We agree with Senator Haskell that the public interest
must be served with respect to the granting and administration
of ski area permits on public lands. It is of utmost importance
that commercial ski facilities expand neither too fast
nor too slow in relation to public demand, that environmental
impacts are accorded proper consideration prior to commencing
new developments or expanding existing ones, that the need for
Alpine skiing is balanced against other recreational needs,
and that perrnittees uphold their responsibilities for protecting
the environment, for maintaining high safety standards,
for providing quality facilities and services, for conserving
energy, and for making facilities accessible to a broad cross
section of the public, including local residents and lower income
families. These are among the objectives of Utah Ski Association
members.
PAGENO="0566"
562
Utah Ski Association
Statement on 5. 2125
Page Two
It is with our role as purveyors of a public service
foremost in mind that we address ourselves to the specific
provisions of Senate Bill 2125.
`Section 3, Subsection (d): Provision to Extend the Lease Term
from Thirty to Fifty Years.
The purpose of this provision is laudatory in seeking to
encourage long-term investment, which is vital if private
interests are to continue to meet the growing public demand
for ski facilities. Its purpose should not be to perpetuate
permits which are environmentally detrimental or which lack
sufficient public demand to warrant continued or expanded oper-
ation. What is needed is a mechanism, as the Sierra Club
has suggested, by which the U.S. Forest Service can reevaluate
and revise permits on a regular basis so that they reflect
new conditions and changing public needs. Increasing the lease
term from thirty to fifty years may be important to some
investors, but not as important perhaps as other factors. We
propose that such factors might include the following:
1) establishment of objective criteria for determining
that sufficient public demand exists to justify
further development.
2) standardization of criteria for determining whether
other uses, such as wilderness or non-recreational
ones should be given priority in a particular case.
3) standardization of criteria for reevaluating and
revising permits on a continual basis in accordance
with changing public needs. Along with this, pro-
vision for just compensation in the event of
condemnation through eminent domain. In the interest
of fairness, compensation should be based on valuation
of the investment as a going concern.
PAGENO="0567"
563
Utah Ski Association
Statement on 5. 2125
Page Three
4) provision for renewal of permits, either partial or
total, when improvements involving substantial
capital investments are approved. For example, if
approval to conétruct new lifts were obtained by
a permittee with only five years remainingi on his
thirty year permit, renewal of the basic permit at
that time or else creation of a new permit for the
planned new development would provide considerable
assurance to investors.
Section 3, Subsection (2): Provision to Lift the Eighty Acre
Limitation for Permits for Ski Facilities.
The purpose of this provision is commendable in as much
as the existing limitation does not reflect reality and as a
result is circumvented by the U.S. Forest Service by means of
the device of annual special use permits. However, we wonder,
as did the Sierra Club, if congressional oversight represents
the most appropriate means for regulating issuance of permits.
The Forest Service as a result of its many years of experience
in administering the use of public lands for diverse purposes
is well qualified to evaluate the need, on a national,
regional, and local basis for commercial ski developments vis
a vis other recreational and non-recreational uses. The
National Environmental Protection Act has established guidelines
which the Forest Service must follow in order to assure that
environmental impacts are given adequate consideration. Perhaps,
other legislated guidelines are necessary. In his testimony
before the Senate Interior Committee, Washington D. C. on
November 17, 1975, Charles Clusen, representing the Sierra Club,
pointed out that "more comprehensive and specific standards
are needed to guide the Secretary (Agriculture) in the exercise
PAGENO="0568"
564
Utah Ski Association
Statement on S. 2125
Page Four
of his discretion in granting permits.. ." Mr. Clusen then
mentioned several standards, the purposes of which would be,
among other things to assure that the public interest would
not be better served by developing other areas first and to
assure that local and state governments not only have the
authority and capability to zone and regulate development
on nearby private lands, but also that such zoning and regulation
is in existence prior to issuing the permit.
The Forest Service is experienced in the preparation and
review of Environmental Impact Statements and in working with
local and regional government agencies on long-range land-use
planning. We feel that with proper legislative direction,
their oversight of commercial, recreational development could
be expected to bring about balanced, well-planned, environ-
mentally-sound growth. Congressional review of local development
plans, as called for in S. 2125, would be less satisfactory,
because public hearings would tend to focus on localized situations
at particular times rather than on regional and national
requirements over the long term. Furthermore, adequate pro-
vision for public hearings on significant local issues exists
presently. The Forest Service holds such hearings when needed
as do other government agencies.
* Section 4, Subsection (c): * Provision to Regulate Rates Charged
to the Public for Use of Permittee's Facilities Based on a
Standard of Reasonable Return on Equity Investment.
This provision is unnecessary in as much as strong competition
PAGENO="0569"
565
Utah Ski Association
Statement on S. 2125
Page Five
exists within the skiing industry, competition which has served
as a restraint on price increases. It is also inappropriate
in as much as it would tend to discourage investment, thus
limiting expansion and fostering overcrowded conditions. In
the past a steady stream of new development has served to
restrict crowding and to keep prices to reasonable levels.
In Utah there can be no questiort that the mechanism of the
free market has operated to the benefit of the public. Presently
the average price of an adult, all-area ski pass for the fourteen
Utah areas is $6.77. The highest daily rate found in the State
is $9.00. This rate is charged by Snowbird, which operates
mostly on public land, and by Park City, which operates
exclusively on private land. Both these areas are international-
class destination resorts offering facilities comparable to
Aspen, Colorado and Sun Valley, Idaho. In spite of the fact
that the quality of facilities offered by several Utah ski resorts
would justify higher prices if judged from a national or inter-
national perspective, competition among them is so intense
that a lower rate is dictated by the law of supply and demand.
Local skiers account for 607~ of the total market and their
partronage is eagerly sought. As part of the effort to attract
local customers most Utah areas sell season tickets or offer
discounts on pre-season purchases of daily tickets. The
following are some representative examples:
- Alta sells, in the Summer and Fall, a limited
quantity of adult, unrestricted-use season passes
priced at $160.00.
PAGENO="0570"
566
Utah Ski Association
Statement on S. 2125
Page Six
- Snowbird sells, in the Summer and Fall, daily tickets
priced at $5.00. A minimum purchase of 20 tickets
is required. An even lower-priced ticket is offered
to week-day only skiers.
- Brighton sells, in the Summer and Fall, daily tickets
priced at $4.00. A minimum purchase of 20 tickets is
required.
- Park City sells an adult, unrestricted use season pass
for $225.00. It offers even lower prices to students
and children under 12.
- Sundance sells an adult, unrestricted use season pass
for $150.00. It offers even lower prices to students
and families.
- Snow Basin sells an adult, unrestricted use season pass
for $165.00.
These are among the more expensive areas in Utah. Other
areas offer even cheaper rates. In addition to the above
prives, several areas in Utah subsidize through discounts,
free instruction, etc. programs for elementary, high school,
and university students, and for handicapped and retarded
children.
Charles Lewis, in his testimony at the Washington hearing,
brought forth conclusive evidence in support of the contention
of competitiveness within the skiing industry. In fact, intense
competition is found at the local, regional, and national
levels. If a monopoly situation or discriminatory pricing
exists, it can only be as an isolated phenomenon. It appears
to us that this provision may have been prompted by an isolated
event, a proposed 20% price increase on the part of two Colorado
areas. We question the wisdom of basing an important piece of
PAGENO="0571"
567
Utah Ski Association
Statement on 5. 2125
Page Seven
national legislation, the scope and applicability of which are
nationwide, on a particular experience involving what would
appear to be a rather unique set of circumstances. It seems
clear from an impartial review of the testimony of investment
bankers and financial analysts at the Colorado and Washington
hearings that the ultimate effect of gvernmental regulation
of rates will be the discouragement and reduction of private
investment. With overcrowding already a serious problem despite
a general lack of profitability for the industry, any further
restriction in private investment would not be in the best
interests of the public.
The expansion and progress of the Utah Ski Industry
including the development of new facilities, the replacement
of worn-out machinery, the constant addition and upgrading
of costly services, such as trail grooming, professional ski
patrols, etc., the creation of subsidized public-service programs,
as mentioned above - - - - these improvements have all come into
being as a result of intense competition. It seems that each
year we must provide more and better services in order to continue
to attract customers.
In the long run the only reliable mechanism for assuring
low prices is open competition among ski areas combined with
sufficient allowance for expansion to meet growing public
demand. If and when the limits of expansion are reached,
whether due to environmental, economic, or political factors,
then rates may need to be regulated because investors and operators
PAGENO="0572"
568
Utah Ski Association
Statement on 5. 2125
Page Eight
would enjoy a monopolistic advantage as purveyors of a scarce
resource to a large market. In this case rate regulation would
be appropriate in order to defend the interests of consumers.
But as long as expansion is desirable and feasible any artificial
price restrictions will be counterproductive to the public
interest in the long run, unless the government intends to
subsidize the industry or to replace private investment. This
holds true for public hearings convened for the purpose of
inviting public reaction to proposed rate increases. However
laudable the intention of such hearings, they will not in fact
serve the public interest as long as expansion is possible and
private sources must be depended on to provide venture capital.
`Section 3, Subsection (c) (1): Provision to Regulate Annual
* Fees for the Use of National Forest Lands so as to Provide a
* `Reasonable Ret'urn on Equity Investment.
It is our understanding that Senator Haskell did not mean
to imply by this wording any intention to have the Federal
Government regulate ski developments in the manner of public
utilities. We agree that commercial ski facilities operating
as lessee's on public lands should not be treated as public
utilities anymore than should grazing, timber, or mineral
interests which lease such lands. Compelling arguments opposed
to the public utility concept have already been presented at
the Colorado and Washington hearings. Leaving aside the public
utility issue and focusing directly on the matter of basing
annual permit fees on a standard of reasonable return on equity,
PAGENO="0573"
569
Utah Ski Association -
Statement on S. 2125
Page Nine
investment we still see serious conceptual problems inherent in
this approach. The following is a brief outline of difficulties
which concern us:
1) Only a very small percentage of existing commercial
ski developments provide what an investment banker
or even an economist would regard as a reasonable
return on equity investment, yet the repercussions of
penalizing those few would surely be felt by the
entire industry. Despite the high risks and histor-
ically low returns associated with commercial ski
development, investors are still lured by the hope
of unusual success. To deny them that hope would
reduce the general availability of investment
* capital which is badly needed by the whole industry
for expansion in order to meet growing public demand.
2) It is a logical function of responsible government
to determine the highest and best use of national
lands in accordance with the needs of all its
citizens. This is why we endorse the concept of
* active Forest Service involvement in policing permit-
tee performance and in taking a leading role in regulating
and planning environmentally-sound, well-balanced
development. As mentioned earlier, wilderness
values, other recreational needs, energy and mineral
requirements, as well as other uses such as timber
cutting, mineral extraction and grazing, must all
67-512 0 - 76 - 37
PAGENO="0574"
570
Utah Ski Association
Statement on S. 2125
Page Ten
be considered as important components of the overall
spectrum of needs which must be given consideration
in determining the highest and best use of particular
acreages. No precedent of which we are aware dis-
qualifies the private use of public..landheld under
lease, or penalizes such use, based on the ability of
the permittee to make profitable use of it. On the
contrary, profitability serves as an indication that
a particular type of land-use is in fact fulfilling
an actual need. It also serves to maximize tax and
fee collections since such revenues normally are
structured to increase in relation to increases
in volume of business and appreciation of land values.
We have honestly sought to understand what distinguishes
the skiing industry's use of leased federal land from
that of other lessees. We can see no logical reason
why the skiing industry should be singled out for
controls on profitability when such controls do not
affect other lessees engaged in such pursuits as
grazing, livestock, timber cutting, mineral extraction,
or tourism -- to name a few accepted uses. The only
possible reason that occurs to us is the notion that
land dedicated to commercial ski development is land
removed from the public domain or land denied to the
public. If this is the basis for discrimination it
is erroneously conceived because the public has indicated
PAGENO="0575"
571
Utah Ski Association
Statement on 5. 2125
Page Eleven
through its recreational habits, a very strong interest
in Alpine skiing. The issue of lift ticket prices
has arisen, not because of monopolistic practices,
but because of the inability on the part of ski
area operators to expand rapidly enough:to keep pace
with the explosive increase in skier demand. Regulation
of annual fees on the basis of a standard of reasonable
return on equity investment would serve to exacerbate
rather than alleviate this problem.
3) Since only a small minority of permittees could be
construed under any reasonable standard as realizing
an excessive rate of return on investment, it is only
natural to wonder how fees would be calculated for
the vast majority of areas whose return lies below
the standard. The original Forest Service System, which
based fees on gross receipts alone has recently been
revised in order to provide incentives for areas making
large-scale capital investments. The practical
difficulties surrounding the creation of a more perfect
formula, and especially of one which would regulate,
in a fair, uniform manner, permit fees in relation to
return on investment, appear insurmountable to us. Vast
differences exist among ski areas in terms of their
sources of financing, the revenues they generate, and
the nature and extent of expenses they incur in doing
PAGENO="0576"
572
Utah Ski Association
Statement on S. 2125
Page Twelve
business. No single formula could be expected to take
such a variety of factors into consideration and produce
an equitable standard fee. The present fee system
administered by the Forest Service is more logical
in that it takes individual differences into consider-
ation and allows for negotiation with each area. We
must conclude that either the present system should
be continued or else that annual fees should be
related to the market value of the leased land, as has
been suggested by William Norton of the NSAA.
Section 4, Subsection (b): Provision for Public Disclosure
of All Financial Data Pertinent to the Determination of Per
mittee's Charg~
We endorse the concept of disclosure of past financial
and operating data to responsible government agencies. Such
data, which is presently provided to the U.S. Forest Service
can be used in the public interest for analysis of trends,
for assessing individual performances, and ultimately for sound
planning of future development. It can provide valuable
material for evaluating operating efficiency, effectiveness
in meeting demand, and changes in the service orientation of
the industry. It can be used as the basis for determining
future growth patterns and requirements (energy, financial,
land, etc.) Already such data is being used by the U.S. Forest
Service and the Business Research Division of the University
of Colorado, to help the public to understaad the industry and
PAGENO="0577"
573
Utah Ski Association
Statement on S. 2125
Page Thirteen
the industry to understand itself.
However, details of the current and projected financial
condition of individual firms which affect its ability to
function in the free market cannot be made public. Several
reasons become immediately evident. First, investors have
a right to confidentiality since they are in competition with
others who do not operate on public lands and who are thus not
subject to public disclosure. Second, no standard budgetary
process or format exists which the public can realistically
use for comparative or analytical purposes. Each firm has
its unique structure of debt-equity, revenue sources, and
cost structures. Third, it would be highly inequitable to
base permit fees or rates charged to the public on projected
financial data. When expectations fall short, as they often
do in the ski business, which depends on snowfall, weather,
a bouyant economy, and a fickle market, the operator locked
into rates based on projections of a reasonable return on
investment would find himself in .a very vulnerable position.
Section 3, Subsection (f): Provision for allowing the Secretary
of 4griculturc to Approve Other Uses not Inconsistent with the
Purposes of a Permit.
We firmly oppose this provision if its intention is to open
the door to independent ski instruction. Tom Corcoran, in his
presentation at the Washington hearing, discussed some of :the
probable consequences of allowing independent ski instructors
to function within a permit area: increased injury rates,
PAGENO="0578"
574
Utah Ski Association
Statement on S. 2125
Page Fourteen
greater vulnerability to liability on the part of the permittee,
and deterioration of the quality and consistency of instruction.
We would like to add our concern that independent instruction
would jeopardize the full service orientation of modern ski
areas.
Since the pioneer days of skiing in the United States in
the 1930's and 1940's, considerable progress has been made in
the quantity and quality of associated services which ski
areas regularly provide: trail-grooming, mogul-planning, free
accident-handling by professional ski patrollers, medical
clinics, mountain restaurants and rest rooms, provision of
area hosts and guides - such amenities are becoming more and
more common. Although area operators have taken initiative to
provide such improvements, the public has grown accustomed to
these services to the point where they ~p~ect rather than
appreciate them.
Considerable progress has been made over the years in the
quality, consistency, and availability of ski instruction. Ski
area operators have worked in close association with the national
instructors' organization, the PSIA (Professional. Ski Instructors
of America) in upgrading teaching methods, in training and
certifying ski instructors, and in establishing uniform
standards. The latter (uniformity of teaching methods) is
extremely important in that it enables a skier to improve his
skiing ability consistently while visiting different areas.
The vast majority of ski areas in the United States offer
PAGENO="0579"
575
Utah Ski Association
Statement on S. 2125
Page Fifteen
a wide variety of instructional possibilities: morning and
afternoon classes tailored carefully to different levels of
ability, private and semi-private lessons, special children's
classes - to name a few. An increasing number of areas offer
racing classes, freestyle clinics, day care for children of
ski school customers, and guided tours. Classes are usually
offered seven days per week regardless of weather conditions
or the number of customers who show up. All this is beneficial
to the public and to the industry, but is is costly to the
operator. Many ski schools operate seasonally at a net loss.
We foresee a serious problem if the independent ski
instructor is allowed to superimpose himself on this system.
Let us assume that the independent is to arrange for his own
customers and is to determine his own schedule and fees. What
can he be expected to contribute to the expense of making
instruction available morning and afternoon seven days per week?
What will he do for. children or for individuals who can only
afford a class lesson? What contribution will he make to
the upgrading of teaching methods, the maintenance of uniform
standards, or the training and certifying of future generations
of instructors? The fact is that by skimming off the most
lucrative private lessons and by catering to an elite clientele,
he will be cutting into the profitable areas which any Ski School
must have in order to offset losses incurred in providing
unprofitable services to the public.
The repercussions of allowing other uses within a permit
PAGENO="0580"
576
Utah Ski Association
Statement on S. 2125
Page Sixteen
area may be felt outside of ski instruction as well. Some ski
areas operate mountain restaurants profitably, while others
continue to operate restaurants at a loss year after year as
a customer service. The incursion of other uses into profitable
areas within a permit can only serve in the long run to weaken
the full-service orientation and sense of responsibility
which presently characterizes the skiing industry.
PAGENO="0581"
577
THE NATURE AND SCOPE OF COMPETITION
IN THE COLORADO SKI INDUSTRY
by
C. R. Goeldner, Director
Business Research Division
University of Colorado
I. INTRODUCTION
The purpose of this paper is to briefly examine the nature and scope
of competition in the Colorado ski industry. It is divided into six parts
with the first part providing background information, the second part ana-
lyzing the industry by common competitive measures, the third part looking
at the competition provided by other regions in the U.S., the fourth part
looking at international competition, the fifth part examining competition
for leisure time and dollars, and the sixth part presenting conclusions.
A brief discussion of competition is necessary because there are many
degrees and levels of competition and the concept means different things to
different people. At one extreme are firms who market under conditions ap-
proximating those of pure competition and at the other extreme are firms
operating under conditions of monopoly. Pure competition exists when there
are a large number of small sellers and buyers, the products offered for
sale are identical and sold under similar conditions, rational behavior
takes place, and complete knowledge exists. Monopoly is illustrated by a
firm that has complete control of the entire supply of a certain product--
a one-firm industry. Neither of these situations is commonplace in the U.S.
economy.
PAGENO="0582"
578
2
Characteristic of the U.S. economy is imperfect competition. The typi-
cal U.S. firm operates between the extremes of pure competition and monopoly
under conditions defined as imperfect competition. In most situations such
a firm has adopted some kind of product differentiation, enjoys some loca-
tion advantage, has a unique reputation, and/or a natural product or service ad-
vantage. Such firms have competition from new firms entering the market-
place and from existing firms who constantly expand or innovate and compete
for additional market shard. Thus, one finds new and old firms engaging in
both price and non-price competition, such as competitive advertising, im-
proving the product or service, pioneering with new innovations, etc. The
essential point of price competition is that it takes the demand curve as
a given factor and attempts to increase sales by lowering price. Non-price
competition, in contrast, does not take the demand curve as a given factor,
but usually has as its goal to shift the curve facing the seller to the
right. There has been a tremendous growth of non-price competition in the
U.S. economy largely because of (1) the tendency toward price uniformity,
(2) the effectiveness of non-price competition in holding customers, (3) the
non-price competition of competitors, and (4) the imitation of successful
firms.
The ski areas comprising the Colorado ski industry have characteristics
of firms operating in the area of imperfect competition in an economic sense.
Consequently, the question can be raised: How competitive is the Colorado
ski industry? Some of the more common measures used to determine if an in-
dustry is competitive are: (1) number of firms, (2) ease of entry, (3)
availability of product substitutes, (4) price differentiation, and (5) char-
acteristics of firms such as market share, profitability, etc. Each of
these factors is discussed in detail in the following section.
PAGENO="0583"
579
II. THE COLORADO SKI INDUSTRY
Number of Firms
The Colorado ski industry has grown from a small beginning to a rela-
tively large dynamic industry. The contrast in the last ten years is most
startling. The industry has been characterized by growth both in new firms
entering the industry and major expansion programs of existing firms.
In the 1950-51 ski season there were six areas, four daily and two
weekend. Arapahoe Basin, Loveland Basin, Winter Park, Aspen Mountain were
daily areas and Berthoud Pass and Cooper Hill were weekend areas. Skier
visits totaled 174,030.1 The 1960-61 season found seven daily areas and four
weekend areas in operation with additional areas being planned or under con-
struction. New areas in operation in 1960-61 were Aspen Highlands, Butter-
milk, Monarch, Wolf Creek and Pikes Peak. Ski visits increased substan-
tially, rising to 462,2132 for an increase of 166 percent.
The l96Os experienced a rapid increase in new areas opening, additional
areas being developed, and skier attendance skyrocketing. Ski areas in op-
3
eration in 1962-63 jumped to 17.
This expansion in the number of ski areas operating in Colorado has
continued, reaching 31 areas in1973-74. They were A-Basin, Arapahoe East,
Aspen Highlands, Aspen Mountain, Buttermilk, Snowmass, Breckenridge, Ski
Broadmoor, Copper Mountain, Crested Butte, Geneva Basin, Hidden Valley, Ski
Idlewild, Keystone, Lake Eldora, Loveland, Marble, Monarch, Powderhorn,
1 Colorado Ski and Winter Recreation Statistics, 1972. Business Research
Division, University of Colorado, Boulder, Colorado.
2 Ibid.
Wolf Creek would have made the total 18; however, it did not operate
that season.
PAGENO="0584"
580
4
Purgatory, Stagecoach, Steamboat, Sunlight, Telluride, Vail, Winter Park,
Wolf Creek (all daily) and Berthoud Pass, Ski Cooper, Pikes Peak, Squaw Pass
(weekend areas). Table 1 summarizes this growth in ski areas. In the 1974-
75 season the area growth trend reversed itself as two ski areas did not
open for business (Marble and Stagecoach). Additional areas (Adams Rib,
Beaver Creek, Devils Thumb, etc.) are on the planning boards and may result
in additional new areas in the future.
Table 1
Number of Ski Areas in Coloradoa
1950- 1960- Percent 1970- Percent 1973- Percent 1974- Percent
1951 1961 Increase 1971 Increase 1974 Increase 1975 Increase
6 11 83% 25 127% 31 24% 29 -6%
Members of Colorado Ski Country, U.S.A. It should be noted that in ad-
dition to the areas that are currently members of Colorado Ski Country, U.S.A.
there are additional small areas that have been in and out of business over
the years or were operated by a municipality or club. These areas have of-
fered some competition; however, because their activity has been minimal they
have not been included in the totals. Using only members of Colorado Ski
Country, U.S.A. provides a picture of the more economically viable ski areas.
This dramatic increase in the number of firms and plans for additional
areas indicates there is a degree of competition in the Colorado ski indus-
try. New firms have entered the marketplace seeking profits from a share of
the growing market in ski visits and they compete with existing firms. The
number of firms in Colorado today (1975) is up 383 percent over 1950 levels.
The current 29 areas provide a sufficient base for competition, and past
trends indicate that the number of firms will continue to increase. Conse-
quently, when the Colorado ski industry is evaluated against the criteria
of number of firms i' appears there is a sufficient number to keep the
PAGENO="0585"
581
5
industry competitive. The rapid growth in skier visits in Colorado has re-
sulted in ski area operators concentrating on non-price forms of competition.
Additional firms would provide the potential for more competition; however,
a large number of firms does not necessarily guarantee an industry will be
competitive nor does an extremely small number mean it will not be competi-
1
tive.
Ease of Entry
One of the most telling criteria as to whether an industry is competi-
tive is the ease of entry into it. Industries that have formidable barriers
to entry which will restrict the number of firms to a very low level have
the potential of being non-competitive.
An examination of the Colorado ski industry shows that barriers to
entry do exist. Ski areas require fairly rigid requirements in regard to
snow conditions and mountain characteristics. The number of possible areas
available is finite, reducing the possibilities of expansion. For example,
a major winter resort development normally requires not only a guaranteed
snow season of sufficient length to amortize the investment in lifts and
slope development but also a high elevation with a range of slopes and a
functioning community nearby. Such a community provides a nucleus of serv-
ices, a body of employees and developed access routes to the resort. Ele-
vation requirements for adequate snow in Colorado are high so that the com-
bination of a functioning town, proper slope characteristics and excellent
snow conditions is rather scarce. While good potential sites remain, many
are handicapped by being some distance from population centers and length
1 Competition and the Motor Vehicle Industry, General Motors Corpora-
tion, Detroit, Michigan, 1974.
PAGENO="0586"
582
6
of season problems.. Since most of the desirable sites are on public land ad-
ministered by the Forest Service, it is necessary to not only meet economic
investment criteria but also public interest, land use, etc., considerations
as well. Consequently, as a result of resource limitations there is a limit
on the expansion of the ski industry in Colorado by the entry of new firms.
At this time the Forest Service influences the supply side of ski areas.
Their policies determine the ease of entry and directly effect the competi-
tiveness of the industry. If the Forest Service deems more areas are necessary
to meet demand and public interest criteria are met they can grant more permits
until the supply is exhausted.1 At the present time it appears there will be
an opportunity for new firms to continue to enter the market for some time
in the future because a total of 952 potential sites remain on the Forest
Service inventory for Colorado. In addition to the Forest Service's role, the
state and counties are seeking to clarify their role in this process. In the
future additional levels of government are likely to be involved in land use
determination.
Other factors at play that restrict entry are: (1) the large capital
investment required, (2) low profitability, (3) the risk due to weather con-
ditions and the short operating season, and (4) the position and reputation
of established areas.3
1 Public interest criteria may result in other uses than skiing pre-
dominating limiting the number of sites further.
2 This inventory evaluates the physical potential at each site. It does
not consider site availability. Most of these sites have not been desig-
nated winter sports sites and some of them are unacceptable or marginal for
various reasons.
"Financial Sitzmarks, Skiing Has Proven More Rewarding to Sportsmen
Than to Investors," Barron's, February 7, 1966.
"Investing on the Ski Trails," New England Business Review, Aprii
1960.
Economic Analysis of North American Ski Areas, United Bank of Denver
and the National Ski Areas Association, December 1973.
PAGENO="0587"
583
7
The barriers to entry have existed from the time the' ski industry was
established and continue to exist today. An examination of historical data
show these barriers have not kept new firms out. The dramatic entry of new
firms which has taken place in the last ten years shows they were attracted
by market opportunities and established themselves to compete with existing
firms. Indicative of the competitiveness of the industry is the fact that
existing firms have not stood still, but have attempted to meet the compe-
titive threat of new areas.
To remain competitive, retain market share, keep lift lines short, and
maintain a leadership position, it was necessary for ski area operators to
add additional chairlifts, develop a greater number and variety of trails,
build mid-mountain and top-of-mountain food facilities and warming huts,
experiment with new innovations in equipment such as foot rests and covered
chairs, adopt GLM instruction, etc. In addition to expanding the mountain
product they also have improved the total product at the same time by the
introduction of non-mountain amenities. Nurseries, non-ski activities, and
ground transportation are a few examples of these services.
An examination of Table 2 shows a comparison of the number of' lifts and
the vertical transport feet capacity of the Colorado ski industry for the
1962-63 and 1972-73 seasons. In ten years the number of lifts has increased
from 50 to 173 and vertical transport feet have increased from 30 million to
129 million.
An illustration of how entry of new firms and expansion of old can en-
hance competition is seen from examining the task involved in marketing the
additional capacity. From a marketing standpoint, it is a lot easier to fill
30 million VTF rather than 130 million VTF. The three-fold increase in capa-
city means more competition to keep chair lift seats filled. Indicative
PAGENO="0588"
584
Table 2
Number of Lifts and Vertical Transport Feet
8
1962-1963
1972-1973
Percent
NOLa
b
VTF
(000)
NOL VTF
(000)
Change
NOL VTF
(000)
p_~_~
A-Basin
Arapahoe East
Aspen Highlands
Aspen Mountain
Buttermilk
Snowmass
Breckenridge
Ski Broadmoor
Copper Mountain
Crested Butte
Estes Park
Ski Idlewild
Keystone
Lake Eldora
Loveland
Monarch
Powderhorn
Purgatory
Stagecoach
Steamboat
Sunlight
Te lluride
Vail
Winter Park
Wolf Creek
Weekend
8 3,144
3 394
12 6,927
7 7,602
6 4,858
8 9,831
11 8,100
1 480
5 5,114
8 6,644
5 2,562
2 276
6 7,206
5 3,208
9 4,934
3 1,860
2 1,393
5 3,546
3 2,444
2 932 12 12,341
3 1,901
5 4,799
4 3,455 16 15,897
3 2,535 9 8,551
280 4 712
aNOL -- Number of Lifts
bVTF -- Vertical Transport Feet
4 1,959
2 1,990
5 4,207
2 1,096
4 2,094
1 480
3 1,607
2 1,106
1 220
2 1,268
5 3,300
1 171
100.0
500.0
40.0
200.0
175.0
166.7
150.0
100.0
150.0
80.0
200.0
500.0
300.0
200.0
300.0
0
50.0
100.0
200.0
0
60.5
248. 1
80.7
343.2
286.8
313.4
131.6
25.5
153.0
49.5
987.7
1224.1
360.1
237.3
154.3
0
55.2
6.5
134.1
0
Berthoud Pass
Ski Cooper
Geneva Basin
St. Mary's
Pikes Peak
Squaw Pass
TOTAL
2 565
2 806
2 1,395
1 126
504
50 30,096
565
1,251
1,486
204
295
504
2
3
4
2
3
1
173
129,029 246.0 328.7
Source: Colorado Ski Country USA, Denver, Colorado.
PAGENO="0589"
585
of the efforts to keep these seats utilized at a reasonable level is the
increase in advertising by the Colorado ski areas. This type of non-price
competition is typical of actions taken by ski firms. In a period of rapidly
rising demand non-price competition is the most appropriate marketing stra-
tegy to employ. Price competition is more likely to occur when supply out-
paces demand or the quantity demanded falls.
Availability of Product. Substitutes
Another criteria of competition is whether the consumer has a wide range
of product choice and/or product substitutes. The presence of close substi-
tutes provides the opportunity for a consumer to shift his or her supplier.
While all ski areas are unique in some aspects, they each essentially offer
a similar commodity (skiing experience). With 29 areas in Colorado the con-
sumer has the choice and freedom to substitute one for.another. While the 29
areas are scattered throughout the mountains no ski area is isolated from com-
petition. From virtually any ski area it is possible to get to another within
an hour's driving time. A Denver resident has a choice of ten areas within a
reasonable driving distance for a day's ski outing. In addition, there are
over 1,0001 other ski areas in the United States to choose from as well as in-
ternational ski resorts. In the ski industry there exists direct product sub-
stitutability from the standpoint of skiing facilities and location and indirect
substitutability in *a variety of forms. Skiing is a recreational activity and
as such other recreational activities like ski touring, indoor tennis, an
alternate winter vacation, etc., can also be substituted for skiing. This
type of product substitution presents formidable competition. Due to the
1 Sensitivity of the Leisure-Recreation Industry to the Energy Crisis.
Report prepared by Booz, Allen and Hamilton for the Federal Energy Office.
67512 0 - 76 - 38
PAGENO="0590"
586
10
nature of competition from other ski areas and other recreational aCtivities
these aspects will be explored in greater detail in later sections.
Ran~e of Prices and Services
The Colorado ski industry offers the consumer a fairly wide range of
prices and services. An examination of lift ticket costs for the 1973-74
and the 1974-75 season shown in Table 3 indicate the cost to ski at Colorado
ski areas ranged from $4.00 for an all day lift ticket at a weekend area to
$10.00 at a vacation area (a $6.00 range) during the 1974-75 season. Table
3 shows that the seven vacation ski areas had an average lift ticket price of
$9.14 compared to $7.07 for daily areas in 1974-75. Weekend areas show the
lowest average lift ticket cost at $4.63.
Daily areas offer half-day rates ranging from $3.50 to $6.50. The
average half-day lift ticket price at vacation areas equals $6.50 while the
average half-day price at other daily areas totals $5.20. All daily areas
also offer child's lift tickets at a substantial reduction. The cost of a
child's lift ticket at major vacation areas ranges from $3.00 to $5.00 and
averages $3.86. At other daily areas the range is $3.50 to $5.00 with the
average price totaling $4.07.
In addition to a wide range of prices one also finds a wide range of
services, equipment and facilities. Equipment ranges from rope tows to gon-
dolas, facilities from a lodge at the bottom to mid-mountain restaurants and
warming huts. Night skiing, tokens, busses, snow grooming, snow-making, and
medical services are examples of things individual ski area operators have
emphasized to give themselves a differential advantage. It is the unending
search for differential advantage that keeps competition dynamic.
PAGENO="0591"
587
a Weekend rate.
Table 3
Lift Ticket Costs, 1973-74 and 1974-75 Seasons
11
Weekend ~y_
1973- 1974-
Week
1973-
Day
1974-
Half
1973-
Day
1974-
Child
1973- 1974-
1974
1975
1974
1975
1974
1975
1974
1975
VACATION AREAS
Aspen Highlands
$10.00
$10.00
$10.00
$10.00
$6.00
$7.00
$3.00
$3.00
Aspen Ski Corp.
10.00
10.00
10.00
10.00
`6.00
7.00
3.00
3.00
Breckenridge
7.00
7.50
7.00
7.50
4.50
5.00
3.00
3.00
Crested Butte
8.50
9.50
8.50
9.50
6.50
7.50
3.00
5.00
Steamboat
8.50
9.50
8.50
9.50
6.50
7.00
4.50
4.50
Vail
10.00
10.00,
10.00
10.00
7.00
.7.00
5.00
5.00
Winter Park
6.50
7.50
6.50
7.50
4.50
5.00
3.00
3.50
Average
8.64
9.14
8.64
9.14
5.85
6.50
3.50
3.86
OTHER DAILY AREAS
A-Basin
6.50
7.50
6.50
7.50
4.50
5.50
5.00
5.00
Copper Mountain
8.00
8.00
8.00
8.00
6.00
6.00
4.00
4.00
Geneva Basin
5.50
6.00
5.50
6.00
4.00
4.50
3.00
3.50
Hidden Valley
5.00
5.50
. 5.00
5.50
3.75
4.00
3.75
4.00
Keystone
7.50
8.00
7.50
8.00
5.50
6.00
3.50
4.50
Lake Eldora
6.00
6.50
6.00
6.50
4.00
5.00
4.00
4.00
Loveland Basin
6.75
7.50
6.75
7.50
5.25
5.50
5.25
4.00
Marble
4.50
-
4.50
-
Monarch
7.00
7.00
7.00
7.00
5.00
5.00
4.00
4.50
Powderhorn
7.00
.8.00
7.00
8.00
5.00
6.00
3.50
4.00
Purgatory
Sunlight
Ski Broadmoor
7.50
7.00
5.00
8.00
7.00
6.00
7.50
7.00
4.00
8.00
7.00
5.00
5.50
5.50
3.25
6.00
5.50
3*50a
4.00
4.00
4.00
4.00
Ski Idlewild
5.00
6.00
5.00
6.00
3.50
4.50
3.50
4.00
Stagecoach
6.50
-
6.50
-
4.25
-
3.50
-
Telluride
7.50
8.50
7.50
8.50
5.00
6.50
4.00
4.00
Wolf Creek
5.00
6.50
5.00
6.50
4.25
4.50
3.25
3.50
Average
6.30
7.07
6.30
7.00
4.36
5.20
3.88
4.07
WEEKEND AREAS
.
Berthoud Pass
4.50
4.50
3.50
3.50
Ski Cooper
Pikes Peak
5.00
4.00.
5.00
5.00
3.50
3.50
4.25
3.00
2.50
3.00
2.50
Squaw Pass
3.75
4.00
.
3.00
3.50
2.50
2.75
Average
4.31
4.63
3.33
3.69
2.66
2.75
Source: Colorado Ski Country U.S.A., Denver, Colorado.
PAGENO="0592"
588
12
Consumer preferences are the single most important influence shaping a
competitive industry and its products. No Colorado ski area has control over
the skier market. While repeat visits are highly prized, ski studies mdi-
cate consumer preference must be e~rned and skiers like to try new areas as
well as return to their old favorites) Conâumers do not have to patronize
any one area. Visits can be obtained by offering buyers a product which
yields values which the consumer considers to be superior to any alternative.
These factors explain why Colorado areas offer so many services and must
continue to be innovative.
Characteristics of Colorado Ski Areas
A final point to be addressed is the characteristics of the individual
firms. For example, is there a dominant firm?, a price leader?, does any
one firm or group of firms have the ability to control supply?, demand?,
does any firm control the market? The answer to these questions is no.
While the Aspen Skiing Corporation and Vail Associates are unquestionably
leaders in the industry they have only 30.3 percent (23.5 percent at *Aspen
and 6.8 percent at Breckenridge) and 15.2 percent share of the market re-
spectively based on skiervisits during the 1972-73 season. In the 1973-74
season Aspen had a slight decrease in market share while Vail had a slight
increase. An examination of Table 4 shows that over a period of years there
have been a number of shifts and fluctuations in market share. This indi-
cates a healthy competitive situation with new firms entering the market and
establishing market share. Old firms can expand in an attempt to hold their
share of the market. One finds that each ski area watches the other and
struggles for an enhancement of its total share of the market.
1 The Airlines Skier; The ~ Skier, Volume 1: Lift Surve~; The ~
Skier, Volume 2: Lodging Survey, Business Research Division, University of
Colorado, Boulder, Colorado.
PAGENO="0593"
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13
While the ski areas are similar in some respects, each ski area also
occupies a position which is in some respects unique. Its location, its
slopes, its operating methods, and/or the customers it serves tend to set it
off in some degree from every other ski area. Each area competes by making
the most of its individuality and its special character. It is constantly
seeking to establish some competitive advantage. The majority of ski areas
use the primary appeal of skiing and focus attention on differential advan-
tages. The natural advantages are not enough; ski areas must create new ad-
vantages to remain attractive to their visitors.
Like most industries, the Colorado ski industry began as a few rela-
tively small independent businesses. They were started by men who loved the
mountains and skiing and were eager to make a livelihood doing the things
they loved. Today the majority of ski areas are under corporate ownership
rather than being held by proprietors or partnerships. They have grown and
evolved from small firms to multi-million dollar operations. They have hired
trained functional experts who have instituted new business practices, inno-
vative marketing and advertising programs, accounting and expense controls,
etc. These developments and the maturity that has come to ski area manage-
ment has led to more competition and responsiveness to consumer demands.
The ski area operation is fraught with risk. The risks of adequate
snowfall, good weather, and short season are all uncontrollable. The nature
of these risks makes competition keener. If an operator finds lift ticket
sales off he must launch an immediate marketing effort before it is too late--
before a valuable part of the season is gone. The high risk factor is one
of the major reasons for the vast variation in the profit picture of most
ski areas. This high risk factor also makes it imperative that management
has the flexibility to deal with the risk involved.
PAGENO="0594"
Table 4
Share of Market Based on Ski Visits
,
Percent
Market
Percent
Market
Percent
Market
Percent
Market
1966-67
Share
1969-70
Share 1972-73
Share 1973-74 Share
Arapahoe Basin
108,473
7.7
136,671
5.0
89,417
2.3
96,625
2.3
Arapahoe East
-
-
-
-
20,636
0.5
22,161
0.5
Aspen Highlands
72,453
5.1
143,580
5.2
239,800
6.0
258,149
6.0
Aspen Skiing Corp.
284,942
20.2
730,472
26.7
933,657
23.5
1,002,140
23.3
Berthoud Pass
15,978
1.1
12,200
0.5
7,900
0.2
6,990
0.2
Breckenridge
105,572
7.5
165,476
6.0
271,213
6.8
282,776
6.6
Ski Broadmoor
15,424
1.1
13,000
0.5
23,786
0.6
22,133
0.5
Ski Cooper
13,722
1.0
23,885
0.9
25,067
0.6
16,961
0.4
Copper Mountain
-
-
-
-
120,463
3.0
181,883
4.2
Crested Butte
44,922
3.2
75,355
2.8
190,822
4.8
220,451
5.1
Geneva Basin
17,000
1.2
42,064
1.5
21,988
0.6
24,015
0.6
Hidden Valley
19,102
1.4
56,840
2.1
57,500
1.5
47,293
1.1
Ski Idlewild
19,000
1.4
16,000
0.6
22,200
0.6
18,602
0.4
Keystone
-
-
S
145,967
3.7
173,351
4.0
Lake Eldora
22,236
1.6
108,840
4.0
95,410
2.4
108,665
2.5
Loveland
113,000
8.0
183,000
6.7
159,406
4.0
138,542
3.2
Marble
-
-
-
-
-
-
1,100
0.03
Monarch
20,982
1.5
45,723
1.7 77,131
1.9
58,059
1.4
Pikes Peak
-
-
3,130
0.1
7,111
0.2
4,016
0.1
Powderhorn
20,889
1.5
40,712
1.5
41,481
1.0
36,280
0.8
Purgatory
34,901
2.4
49,001
1.8
113,858
2.9
96,564
2.2
St. Mary's
-
-
-
-
-
-
-
-
Ski Trail Mt.
Squaw Pass
1,476
-
0.1
-
-
-
-
-
-
6,400
-
0.2
-
8,000
-
0.2
Stagecoach
Steamboat
-
37,131
-
2.6
-
121,013
-
4.4
8,972
236,870
0.2
6.0
-
345,163
-
8.0
Sunlight
15,000
1.1
27,300
1.0
37,464
0.9
35,296
0.8
Telluride
-
-
-
-
32,785
0.8
45,530
1.1
Vail
238,000
16.9
421,334
15.4
604,194
15.2
673,178
l5..6
Winter Park
179,168
12.7
310,956
11.4
355,456
8.9
356,117
8.3
Wolf Creek
11,673
0.8
14,341
0.5
27,296
0.7
24,747
0.6
TOTAL
1,410,234
2,740,873
3,974,250
4,304,787
Sour: Colorado Ski
Country U.S.A., Denver, Colorado.
PAGENO="0595"
591
15
As well as competing on the consumer front for market share where the
competition is likely to be the most intense, there is also the problem of
persuading investors to put money into a prospective ski area or expansion.
It is an operation similar to persuading customers to buy a product. There
is no way of compelling the investor or the consumer to part with his money
if he does not have confidence in what is offered. In appealing to inves-
tors, a developer must provide the kind of evidence which is acceptable to
them regarding the reality of the advantage on which he expects to found the
business. If the advantage is real and the amount of funds required is not
insurmountable, the money will be available. However, there is competition
for capital funds. Copper Mountain serves as an excellent example in that
its start was delayed because capital was not obtained when originally
planned. The high risk and low profitability of the industry makes compe-
tition for capital more intense.
A brief review of ski area profitability is in order because it helps
to provide information on the behavior of ski areas and their ability to
compete. The profitability of ski areas is difficult to assess because
studies indicate a very mixed picture--profitability varies considerably
among ski areas.
One of the major problems in examining ski area profitability is the
limited data that is available. Historically the first study conducted by
Ted Farwell reported data for the 1965-1966 season and revealed a rather
bleak financial picture. This was followed by Case and Company study com-
missioned by the National Ski Areas Association (NSAA) which covered the
1967-68 season. It indicated the industry was having profitability problems.
These studies were followed by three United Bank of Denver studies. These
were entitled Economic Analysis of the Skiing Industry published in November
PAGENO="0596"
592
16
1971, An Economic Analysis of North American Ski Areas published in December
1972, and Economic Analysis of North American Ski Areas published in December
1973. Shortcomings of these studies were: (1) a low response rate and (2)
a lack of comparability among firms. The range of activities among ski
areas varies greatly. For example, one firm may only be involved in pro-
viding uphill transportation while another may be involved iii lodging,
restaurants, real estate, construction, ground transportation, nurseries,
entertainment, etc.
The 1973 study indicates that in the third year of United Bank's pre-
paring the NSAA annual economic study the financial performance was disap-
pointing with 48.7 percent of responding areas showing a loss. Examination
of the local region shows only 61.3 percent of the Rocky Mountain ski areas
responding made a profit. Since there are a number of new areas in the
Rockies and it is typically several years before they show a profit this
factor is a partial explanation of the disappointing profit picture. A re-
view of past economic studies leads to the conclusion that ski areas have in-
consistent profitability records.
If ski area profits do not improve the result may be less competition
in the industry. A healthy, profitable industry has the ability to compete
while a sick industry simply strives for survival. Profits attract competi-
tion. If the inconsistent profits and delicate economics due to the short
season, snow conditions, risk, and competition for capital result in an in-
dustry plagued by thinly capitalized operations with inordinate debt service
requirements, and heavy interest expenses the effect may well be a high in-
cidence of bankruptcy and turnover in ownership. If this happens, the industry
will have even more difficulty in attracting funds required to keep up with
consumer demand and the industry will lose its ability to compete.
PAGENO="0597"
593
17
The profit picture of Colorado ski areas is similar to that of the in-
dustry. Unpublished data extracted from the Economic Analysis of North
American Ski Areas study conducted by the Business Research Division, Uni-
versity of Colorado shows 11 Colorado areas reported profit information. Of
the 11 reporting 6, or slightly over half, lost money during the 1973-74
season. Over the years a number of Colorado areas have had refinancing prob-
lems; however, in the past 10 years only two Forest Service permit areas
have gone through bankruptcy. These areas were Crested Butte and Indian Head
(now Geneva Basin) and both appear to be viable ski area operations today.
III. OTHER U.S. REGIONS
In comparing the Colorado ski industry with other geographical areas,
excellent skiing conditions in the state are a major reason that the Colo-
rado ski industry has continued to become stronger year after year. The
topography provides ideal conditions for good, light powder snow. Colorado
ski slopes are, for the most part, located below timberline, at 7,000 to
11,000 feet in altitude. Due to the altitude, the slopes are protected and
less subject to the sudden thaws and freezes that plague resorts at lower
elevations. These natural factors give the industry in Colorado a definite
competitive advantage over many ski areas in other parts of the country.
In spite of these advantages Colorado finds it must compete with over
1,000 other ski areas dispersed around the country. New England, the Mid-
west, California, and the Pacific Northwest have long been noted for skiing.
Utah is a relative newcomer and in the near-term will provide the most
notable competition to the Colorado ski industry.
Colorado ski areas have been successfully competing with other geo-
graphic areas. The Colorado industry has been blessed with a rapidly growing
PAGENO="0598"
594
18
demand which has kept up with capacity improvements. In today's society
where competition for the consumer dollar is keen, demand must be created.
The Colorado ski areas have been helping to create this demand and competing
effectively for consumer dollars. The Colorado ski industry has been grow-
ing at about a 15-20 percent annual rate. How long this can last is open to
conjecture (for example, 20 years of such growth would move skier days from
4 million to 153 million). If lift capacity and new areas continue to be
developed at the present pace, there will be a day perhaps when ski areas
are overbuilt. However, this will be in the future as present demand ap-
pears to be maintaining a good relationship to capacity in Colorado.
It is necessary in today's market place for firms and ski areas to keep
up with changes in consumer demand. The original ski market was composed of
a small group of outdoorsmen willing to put up with a lot of effort to get
to the top of the hill for the pleasure of skiing down. The market was pre-
dominantly male.
Today the market is mixed, skiing is a family sport, and it is more
social and recreational than pioneer. It is also necessary to give the vaca-
tion skier much more today than in the past. Not only is good skiing re-
quired, but also good food, good accommodations, good entertainment, good
shopping, and good apres ski activities are essential. Colorado ski areas
provide most of what today's vacation skiers want and have gained a competi-
tive advantage by doing so.
Colorado ski areas have effectively competed for the many markets that
exist--the vacation skier, weekend skier, daily skier, national market, re-
gional market, local market, etc.
PAGENO="0599"
595
19
IV. INTER1'~ATIONAL COMPETITION
Colorado ski areas are not only competing among themselves and the over
1,000 other ski areas around the country, but also with ski areas around the
world. During the 1973-74 season the Business Research Division conducted
ski research with both the airlines serving Stapleton International Airport
and the Aspen Chamber of Commerce. The results of this research show that
substantial numbers of foreign visitors ski in Colorado.
Canada and Europe are currently the prime competitors for U.S. skiers.
The devaluation of the dollar has helped Colorado areas during and since
the 1973-74 ski season at the expense of European ski resorts. It has made
a Colorado ski vacation have a more favorable competitive price advantage
with the result that a substantial shift in the market took place. Trade
sources indicate that European areas are developing marketing strategies to
regain the competitive advantage they have held for so long with east coast
skiers. Foreign governments are also planning to spend promotion dollars to
attract winter visitors.
In addition to new promotional competition on the horizon are new ski
resorts being constructed around the world. Illustrative are areas in
Morocco's Atlas Mountains, Spain's Granada, SoUth America's high Peruvian
and Chilean Andes, Romania's Carpathian Mountains, Bulgaria, Poland, Albania,
* Lebanon, Crete, Soviet Union, Australia, and New Zealand. While these areas
will serve primarily local skiers, it still appears there will be a new di-
mension to international ski tourism competition in the future.
V. COMPETITION FOR LEISURE TIME AND DOLLARS
In addition to direct competition, there is pressure from outside the
industry. Colorado ski area operators must persuade customers to spend
PAGENO="0600"
596
20
discretionary dollars on the ski slopes. They are competing with indoor
tennis, Arizona sun trips, Hawaii winter vacation trips, new clothes, new
furniture, etc., for the consumers' discretionary income.
It is necessary to recognize that the ski industry is a leisure-time
recreation industry. Consequently, it must compete for leisure time and
leisure dollars with all other recreation industries. There is no question
but what leisure has been one of the fastest growing industries in the
country and the competition has been very keen for both time and dollars.
Illustrative is the heavy promotion of golf and tennis packages to Arizona
and California during the height of the ski season.
While skiing has enjoyed great popularity in recent years, so have other
forms of leisure recreation activities. The ski industry must compete with
other forms of leisure recreation activity which have also shown impressive
growth records. When one considers the equipment required, the travel,
lodging and eating expenses involved with a ski trip, one can see that the
ski industry has a more difficult task facing it than many of the other rec-
reation-oriented industries.
VI. CONCLUSIONS
Few, if any, industries in the U.S. and world economies fit the classi-
cal economists' criteria of perfect competition--a homogeneous product, a
large number of buyers and sellers, perfect information and mobility, and.
stiff price competition. Within markets characterized by the absence of
competition, monopoly power is the practical economists' gauge. None of the
firms operating in Colorado's ski area market have gained or are in a posi-
tion to gain monopoly power from either the supply or demand side of the
PAGENO="0601"
597
21
market. There is also no evidence of the industry being dominated by one
firm.
Competitive advantage is often achieved through product differentiation
and market segmentation. These appear to be the key strategies of firms op-
erating Colorado's ski areas. In this case, market segmentation itself may
become characteristic of the product from one area to anoçher. The "ski ex-
perience" is not a uniform product. From price-quality and price-quantity
perspectives, the price mechanism appears operational in this market.
Furthermore, the dynamics of competition are highly visible within this
market. The historical and continuing ease of entry, relatively minor re-
gional market location advantage, on-going strategies to improve the product
mix and technology, and necessity of innovation and extensive advertising to
maintain and expand one's share of the market all point to a competitive
market environment and behavior. The competition, as indicated, has largely
taken the non-price form--advertising, improved facilities, additional serv-
ices, etc. if these competitive tools fail it is likely that price competi-
tion would be employed.
Inter-regional comparative advantage is the basis for the efficient al-
location of resources among regions with different resource bases. The fact
that Colorado enjoys a comparative advantage over other U.S. and world ski
regions suggests that competition would lead to its gaining an increasing
share of the domestic and world markets. The flow of consumer preference
away from traditional ski regions to the newly developed or expanded Colo-
rado areas testifies to strong inter-regional and international competition.
However, Colorado's position is not invulnerable. Colorado ski areas must
continue to offer a better product if they are to remain competitive and
attract the national and international skier.
PAGENO="0602"
598
22
Beyond ski industry competition there is also competition for leisure
time and dollars. The choice of a winter tennis trip to Arizona, a winter
vacation to the Caribbean, a golf trip to California, etc., during the height
of the ski season cannot be ignored.
The design, construction, operation, and marketing of ski areas has been
a high risk, low return, turbulent kind of business~ The brief history of
the industry sketched in this paper is a record of dynamic, constructive
change and responsiveness to consumer tastes and preferences. More impor-
tantly, it is a record of the vitality and adaptiveness of competitive en-
terprise. These qualities in large measure reflect the competitive striving
for profit through serving customers efficiently. No one experienced in the
ways of the ski industry would question that the customer is "king' and that
those who disappoint him court failure. The present structure of the in-
dustry has been the direct result of this process of competitive selection.
As long as management continues to have the flexibility to meet the demands
and preferences of skiers and a reasonable balance between supply and demand
is maintained it is expected the industry will retain its competitive charac-
teristics.
PAGENO="0603"
599
STATEMENT OF T. J. SARDY, SECRETARY, ASPEN COMMUNITY SERVICE
TICKET COMMITTEE, ASPEN. COLO.
My name is T. J. Sardy. I have volunteered to be a witness at the hearings
on Senate Bill 2125 in defense of ski areas requesting ticket price increases.
Since I am unable to attend in person, I ask that this letter be made part of
the record.
I am presently serving as secretary of the Aspen Community Service Ticket
Committee. I am a former County Commissioner of Pitkin County, having
served for 24 years, and was in business in Aspen from 1939 to 1974.
I lived in Aspen seven years before the Aspen Skiing Corporation through
the leadership of Walter Paepcke was organized. At this time, Aspen was
not much more than a dream as a* winter recreation area. Aspen Mountain
had one run and a short boat tow. Private capital and sheer determination
made it possible to develop an unsurpassed winter recreational area.
As the Aspen Skiing Corporation grew, it recognized the needs of the
community of Aspen, and with generosity contributed financial support to
every real community need-the hospital, the airport, the Chamber of Com-
merce, reservation service, direct bus service, and to various school activities.
The Community Service Ticket Committee consists of a group of citizens
invited by the Aspen Skiing Corporation and Aspen Highlands, to review
applications for a ski pass to the four areas in the community. These passes
are available to anyone who serves the community without remuneration,
such as the volunteer fire department, the historical society, the thrift shop,
the library and hospital boards, outdoor education, etc. All are recognized
and given passes. Through the years, resident employees, senior citizens and
school children have had the privilege of reduced rates.
Stockholders in the Aspen Skiing Corporation have received only one dividend
in thirty years. The Corporation preferred to reinvest in improvement of
facilities, skiing conditions, and safety. Thus, you can see it has not been a
very good investment for the stockholders as far as cash returns is concerned.
Now we have, as in many other areas of business, government interference
in dictating to a successful corporation how to run its business. There are
always some who wish something for nothing.
The skiing corporations in the state wish' to increase the price of the ski
ticket in order to maintain ski areas superb in the quality and safety of skiing.
A minority group is objecting to the increase in rates but are not objecting to
the 7% tax on recreation tickets proposed by a few Colorado legislators.
T. J. SARDY.
ASPEN SKIING CORP.,
Aspen, Cob., November 28, 1975.
Mr. JOHN R. McGUIRE,
Chief,
U.S. Forest Service,
Washington Office,
Washington, D. C.
DEAR MR. MCGUIRE: I have recently been in .contact with Tom Corcoran who,
as you know, is representing the position of the NSAOA in regard to the issue
of independent ski instructors. He has informed me that there appears to be
an almost total lack of information and understanding on the part of most
of the parties concerned regarding the theory, the practice and the significance
of Ski Instructor Certification programs throughout the country. I would
like to present some of the background of certification together with some of
my thoughts in the hope that it may serve some useful purpose.
Ski instructor certification programs were started in this country during
the 1930's. At that time there were very few established ski schools and there
~was a growing number of self-styled, independent ski instructors offering
their services to the skiing public. Certification was designed to assure the
public of some degree of competence on the part of ski instructors. Certification
programs were originally administered by Divisions of the National Ski
Association (now 11S.S.A.). As separate ski instructor associations were
formed within the Divisions, these associations took over the responsibility of
certifying ski instructors. During the past 30 years the foremat has actually
changed very little.
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Although certification has changed very little during this period, all other
facets of the skiing sport and industry have undergone significant change.
This is especially true in the area of ski instruction and ski schools. Today
virtually all ski areas in the country are served by very competent and re-
liable ski school operations. The public no longer needs the protection that
certification was originally intended to give. In effect the ski schools now
certify to the public that their instructor is competent. It actually does not
occur to the public that this would not be the case. During the past 10 years
at least one million students have been served by our Aspen Ski School.
During this period of time not more than a dozen students have shown an
interest in the certification status of their instructor. It would be like walking
into a nationally known restaurant and asking if the chef knows how to cook.
Current problems, questions and confusion concerning ski instructor certi-
fication is a result of the fact that our ski instructor organizations have been
slow to adjust to the changing situation. The only really useful function of
instructor certification today is to serve the profession rather than to protect
the public. Certification does serve a useful purpose in the process of develop-
ing, training and educating ski instructors. In our Rocky Mountain Ski
Instructors'. Association there is an encouraging trend to move in this direction.
It is interesting to note that it is the Ski School Directors Committee of our
association that appears to be the moving force behind this trend.
Independent ski instructor advocates seem to feel that since they are
certified that this should guarantee them the right of employment or their
right to practice their profession independently using the facilities developed
by a private company, and in competition with the ski school operated by that
company. Perhaps I have missed something along the line, but that is not
the way I understand either the free enterprise system or the American way
of life.
Sincerely,
CURT CHASE,
Director, Aspen ~ki &hool.
* CITY OF ASPEN,
Aspen, Cob., August 5, 1975.
SENATOR FLOYD HASKELL,
New ~Senate Office Building,
Washington, DXI.
DEAR SENATOR HASKEL: This is the latest event in our lift ticket increase
appeal.
Very truly yours,
STACr STANDLEY III,
Mayor.
Enclosure.
JULY 31, 1975.
CHIEF, U.S. FOREST SERVICE,
Department 01 Agriculture,
Washington, D.C.
Re: Appeal from refusal to disclose-statement of reasons
DEAR SIR: This appeal is made from the refusal of Thomas E. Evans, Forest
Supervisor, White River National Forest, dated July 19, 1975, to disclose
financial data submitted by the Aspen Skiing Corporation in support of its
request for a lift price increase. Such information had been requested by the
City of Aspen on June 12, 1975, in conjunction with its Request for Adminis-
trative Review of an earlier denial of a Request for Reconsideration, and
pursuant to the Freedom of Information Act, 5 U.S.C. Section 552, et seq.
Appeal from such denial is hereby made, and in support of these appeals, we
state and argue as follows:
1. The reasons given for such refusal was that the Washington Office Direc-
tive 6231, permised on Section 552(b) (4) of the Act, has determined that
"sales, volume of business, investments, and profit and loss statements sub-
mitted by a permittee upon request of the Forest Service" is exempt from
disclosure.
2. The 1974 case of National Parks and Conserv Association v. Morton, 498
F2d 765 (C.A.D.C.) held that before a federal agency may withhold such
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601
requested information, it must be first determined that disclosure (1) will
"impair the government's ability to obtain necessary information in the
future", or (2) will "cause substantial harm to the competitive position of
the person from whom the information was obtained."
3. The record reflects that no such determinations have been made.
4. It is further noted that neither possibility exists a's a matter of fact.
a. With reference to the first, "since the concessioners are required to pro-
vide this financial information to the government there is presumably no
danger that public disclosure will impair the ability of the government to
obtain this information in the future", National Parks, supra..
b. With reference to the second, it is worthy of note that (1) Aspen Skiing
Corporation has a virtual monopoly over the ski areas within the adjacent
National Forest lands, (2) its monopoly position can only be defeated as a
result of permit issuance by the Forest Service, and (3) any harm that may
result by introduction of a competitor has not been shown to be "substantial."
5. Finally, it is submitted that any real contest to the advisability of the rate
increase is totally emasculated by the inability of the appellants to examine,
refute, bebut and otherwise challenge those documents substantially relied
on by the Forest Service in calculating the financial situation and needs of the
Aspen Skiing Corporation.
It is for these reasons that request is made that the determination to refuse
disclosure be overturned and that you direct immediate release of this financial
information to that the appellant, City of Aspen, can actively and intelligently
prosecute its administrative appeal as contemplated by the applicable federa1
administrative review regulations.
Respectfully submitted
SANDRA M. STTJLLER,
City Attorney.
Certificate of Mailing
I hereby certify that the foregoing has been served upon the Chief of the
United States Forest Service, `by placing the same, this 31st day of July, 1975,
in the United States Mails, postage prepaid, certified mail with return receipt
requested, addressed as follows:
Chief, United States Forest Service
Department of Agriculture
Washington, D.C., 20250
PHYLLIS KINNY.
ASPEN SKIING CORP.,
Aspen, Cob., October 31, 1975.
Hon. FLOYD HASKELL,
U. ~. $enator,
~Senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: During the public hearing on your proposed Senate
Bill 2125 held at Aspen, Colorado on October 4th, your committee received
input from a small group of self-styled independent ski instructors relative
to Forest Service policies and procedures concerning special use permits and
ski teaching services. Your committee also received input from a major ski
area operator in regard to the same point. The positions of these two interested
parties appear clear and obvious.
I would like to seak up on behalf of two other interested parties who
constitute an overwhelming, if so far silent, majority in the proceedings. I
am talking about the thousands of dedicated professional, ski instructors who
are working happily and efficiently within the established system, and the
hundreds of thousands of skiers who are now being exceedingly well served
by that system.
The question may be raised why this silent majority does not speak for
itself. I can only surmise that this is simply not the way of the silent majority.
I would be among the list to claim that our current system of ski schools and
ski teacher is perfect. On the other hand it has served both the public, and
the vast majority of the ski teaching profession very well. The Aspen Ski
School annually employs around 200 ski instructors. Seventy of these in-
structors have been with the school for five years, about thirty-five for eight
67-512 O-76----39
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602
years and almost twenty of them for ten years or more. E~ven though these
instructors may not be beating a path to your door, this must be considered
clear testimony that professional ski instructors as a group are not unhappy
with the way things are in the ski teaching business.
Every year the Aspen Ski School serves somewhere in the vicinity of 100,000
students. To serve this kind of volume an organized ski teaching effort is an
absolute necessity. Just as in an organized society, an individual who functions
productively in an organization must submit voluntarily and cheerfully to
some form of personal discipline and restraint. In a society, or in an organiza-
tion there will always be a few who, for reasons known only to themselves,
refuse to play the game. It should be obvious that those who speak so loudly
for the cause of independent ski instruction come from among these few. I hope
that your committee will well consider how the needs of all the skiers, and
all the ski instructors will be served if the door is opened to independent ski
instruction.
People who participate in ski instruction programs can be divided into two
groups. There is the vast majority who choose class instruction, and the
relatively few who opt for private instruction. These two groups, might be
considered "The bread and butter business", and the "frosting on the cake".
It has perhaps not escaped your attention that the voice for independent
instructors say: "Let the ski schools have the bread and butter, we want the
frosting on the cake".
As one who knows the ski school business well, I can say that losing the
"frosting" would not be the death blow to a ski school in itself, but it would,
without question, have subtle and far reaching effects. In the first place the
private lesson business in any ski school is the direct source of supplemental
or overtime pay for the individual ski instructor. Without this income many
ski instructors could not survive. As they left the ski schools, either to give up
the profession, or to go "independent' themselves, ski~ school services to the
public would inevitably decline. With only "bread and butter" income, ski
schools would be forced to offer only "bread and butter" services. Most ski
schools currently subsidize numerous programs which benefit a. lot of people.
In Aspen there is a free skiing program for 300 local youngsters very year.
There are free instructional programs for the blind, for amputees and other-
wise disadvantaged skiers, and so on. If ski schools are forced to tighten their
financial belts, these services will soon disappear, again decreasing the earning
potential for the ski school instructor. The cycle of declining ski school
service continues.
In closing I would say that I have been somewhat surprised at the interest,
and apparent sympathy that has been generated for the cause that is
clearly not in the best interest of either the skiing public or the ski teaching
profession. It is my hope that you will soon begin to hear from the silent
majority and that your committee will consider well what may be best for
all concerned.
Sincerely,
Cun~ CHASE,
Director, Aspen School School.
ASPEN SKIING CORP.,
Aspen, Cob., November 1~, 1975.
HON. FLOYD HASKELL,
U.S. Senator,
Senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: A number of different things have come to my
mind since the hearings were held in Aspen in regard to your Senate Bill
2125. Specifically I am concerned with independent ski instruction and the
issuance of special use permits for individuals.
I have been in this business for thirty-five years and have observed the~
evolution of ski schools to their present form from what they were almost
fifty years ago. At this time a smattering of good skiers freelanced what they
knew to others on an informal basis; and as the sport grew so did the
organizing of instructors as is seen in any normal business in this country.
To revert to' the concept of independent ski instructors would create
numerous unnecessary problems for the public, the existing schools; the
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603
organized instructors student body, the ski area operators, and the government
agencies involved.
The independent ski instructor claims that he should be available to serve
the public if the public requests his services. He states that he should be
certified, pay the ski area operator a percentage of his revenue or a set fee
and have liability insurance. He contends that under the present single
permittee system that the ski area operator or owner has created a monopoly.
In this country there are a great many ski areas and ski schools. In Aspen,
for example, there are two ski schools. In simple words this does not constitute
a monopoly. Even the state of Colorado has many ski schools of varying sizes.
The independent instructor teaches practically a hundred per cent private
lessons. In organized schools, the public usually has a choice of instructors for
private lessons, and with advanced notice he can have the instructor of his
choice.
At the present moment all areas of the country require that for an instructor
to take a certification exam that he be a member of an organized school and
that he must have taught a certain length of time before taking the exam.
This is really the only way that a person receives the necessary training so
that he can pass the exam, and the ski schools pay for this training.
As far as liability insurance is concerned, invariably the big corporation
that runs the area will end up as the defendant in any liability case involv-
ing a law suit. In all fairness to the ski corporation in case this should
happen, the corporation should have the initial and present control of the
instructor; and not be responsible for every individual giving a lesson on
the hill as he sees fit to do.
The control of a percentage or fee to the ski area for the use of its facilities
would be very difficult. For example, now when one of the independent in-
structors is approached by a security officer on the bill and asked if he is
teaching, the answer is: "No, I'm just skiing with friends".
In court this same person will swear that the big ski company has a
monopoly and is restraining him from earning a living. How can the
Internal Revenue Service cope with this situation?
If this permitee system is changed to take care of all instructors who
want to become independent, how will it affect all of the other forest
service permits that are issued to other companies not involved in skiing?
Think of the additional number of forest rangers alone who would have to
be employed just to keep track of their end of the situation.
Some ski area land is owned by private individuals who receive payment.
for its use by the ski company. How would it he determined how each
individual would compensate for this even if they had permission to use
these parcels of land?
The ski area supplies lifts, ski patrols, restaurants, slope grooming and
other facilities. Costs of operation are partially included in ski lesson tickets.
I don't believe that the independent instructor would be willing to pay his
fair share of this overhead even if he comprehended what the fair value
would be. The independent instructor could not function unless he had all
of these facilities to use that were financed and provided by someone else.
In this area alone there could conceivably be hundreds of independent ski
instructors. Parallel this to a public school system with no administrators,
no set courses, and teachers preferring to tutor a couple of bright high
school students rather than teach a class of first or second graders. Where
are all of the youngsters going to start to learn if the teachers only want
to teach the gifted or wealthy individual?
There has to be an organization to schedule these beginners and children and
take care of them. This is the great majority of our business.
Scheduling, pricing and quality control are a large aspect of the ski teaching
profession. An organized school can take care of the beginners, intermediates,
and children who must go in a class for economic reasons. These people
cannot be eliminated from the skiing picture. The independent ski instructor
would disregard this whole phase of ski school operation.
- The Aspen Ski School, as well as many other schools, gives a large amount
of free instruction time to handicapped people and children. How would it
be determined which independent instructor would give free time while his
buddy is getting paid without an organization to absorb the cost and pay the
teachers?
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604
This is a brief summary of a few thoughts that go through my mind while
in the process of helping to get the Aspen Ski School ready for operation for
the coming winter season.
Sincerely,
DICK MCCRUDDEN,
Assistant Director,
Aspen Ski School.
ASPEN SKIING Coup.,
Aspen, Cob., November 18, 1975.
Senator FLOYD D. HASKELL,
U.S. Senate,
WasMngton, D.C.
DEAR FLOYD: Yesterday I attended the hearing in Washington on Senate
Bill 2125. I noted that you asked two witnesses whether or not they would
recommend that the Forest Service give preferential treatment to an applicant
not connected with any nearby ski operation in order to foster competion. Both
witnesses agreed that competition was healthy, but seemed to duck the issue
of whether or not it would be proper to afford preferential treatment. Since
the Aspen complex with three of its four ski areas under the control of the
Aspen Skiing Corporation, is, to the best of my knowledge, the only place in
the country where two or more ski facilities are under the control of a
single corporation, I assume that your questions were made with our operation
in mind.
What neither respondent pointed out was that a substantial part of these
three ski areas and all base facilities are located on private ground and that
the only choice the Forest Service had in this instance was to grant a permit
to the party owning the private land or to grant no permit at all.
I know of only one ski area in Colorado located 100% on the National Forest
and, furthermore, nearly all the ski areas inventoried by the Forest Service and
classified as having a good potential involve some. private land. Consequently,
the granting of preferential treatment to a third party even if it were legal
would in itself do nothing to foster competition since the owners of the
private land are the only ones in a position to develop the ski area.
With less than 10% of our skier visitors coming from within the state of
Colorado, I feel that the Aspen Skiing CorpOration is in competition with all
the first class ski areas both in the United States and in Europe and is not
the monopoly that some people have attempted to make it out to be~ As you
may know, there has been another ski area proposed for the Aspen complex
and I have gone on record as saying that the Aspen Skiing Corporation will
welcome the competition.
I do not know whether it is appropriate to request that this letter be made
a part of the *hearing record, but I did -want to try to explain tn you the
problem inherent in suggesting that the Forest Service be selective in its
choice of proponents for a skiing development.
Sincerely your,
D.R.C. BROwN,
President.
HERBERT H. LEHMAN COLLEGE,
OF THE CITY UNIVERSITY OF NEW YORK,
Bron~v, N.Y., December 13, 1975.
Senator HASKELL,
U.S. Senate,
Washington, D.C.
DEAR SENATOR HASKELL: I am writing to express my oposition to certain
provisions in S. 2125, currently being considered by your Subcommittee.~ I
think that the relaxation of the current 80-acre limitation on commercial
ski resorts is a grave mistake: the development of ski runs constitutes a
far from negligible threat to environmental quality, especially when it in-
volves denuding slopes from vegetation, and I am strongly in favor of limit-
ing these resorts to the indispensable minimum. I likewise object to increasing
in the term of permits from 30 to 50 years.
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605
The most important consideration, in my mind, is that strict environmental
standards be incorporated into the bill: in particular, ski resorts should be
kept out, completely, from game refuges and wilderness study areas, since
they are totally incompatible with the goals of such areas in the first place.
It goes without saying that I would favor strongly a specific prohibition on
the proposed Disney development of Mineral King: the area should rather be
transferred to the Sequoia National Park.
Sincerely,
ERICA C. GARCIA,
Associate Professor.
HIBBARD & KING,
ATTORNEYS AT L~w,
Steamboat Springs, Cob., October 9, 1975.
Senator FLo~rr K. HASKELL,
Committee on Interior and Insular Affairs,
Subcommittee on the Environment and Land Resources,
U.S. Senate.
Re: Written testimony for the record on hearings on 5. 2125.
DEAR SENATOR HASKELL: On October 4, 1975 I testified on behalf of the
Sierra Club at the Hearing held in Aspen on your Senate Bill 2125. I request
that the following comments be included in the Hearing Record. Although I
am representing both the Sierra Club as an international conservation
organization and the Rocky Mountain Chapter of the Club (including the
state of Colorado), my comments should not be viewed as the final position
of the Club. Upon further study of the issues presented in S. 2125 and
when more input has been received from Club members, our position may be
amended.
WILDERNESS INFRINGEMENT
For several years the Sierra Club has been involved in litigation over the
proposed ski areas of Beaver Creek and Mineral King. One of the major issues
causing such lawsuits is whether the Forest Service can designate for "winter
sports" an area which has been inventoried for possible Wilderness Ares
designation prior to the completion of a wilderness study. We believe it would
be an uncomplicated amendment to your Bill to settle this issue, and the
Club will submit for your consideration statutory language in the near future.
GUIDELINES
5. 2125 currently lists a number of specific guidelines for the Secretary of
Agriculture to consider in determining whetther a particular area or operator
should be issued a permit. These guidelines are excellent as far as they go,
however, we feel additional guidelines should be mandated. Although NEPA
would require many environmental considerations for initial permits, guidelines
should be required specifically in the Bill for permit renewals as well and
should be expanded to include such considerations as impacts on existing
and potential wilderness areas, wildlife, watershed, social and economic impacts
(short and long term), compliance with all applicable state and federal water
and air quality standards, scenic values, energy conservation, soil erosion and
summer recreational use.
ACREAGE PROVISIONS
5. 2125 § 3(a) does not define what is included in the categories of acres to
be utilized. This is a major shortcoming of the current system of 80 acre
permits, which are defined by the operators as lttle more than the acres
covered by buildings and lift towers. Your Bill should clearly define acres to
be utilized as including uncleared lands between runs as well as cleared and
improved lands, that is, all land within the boundary of the total ski area.
I'm sure this is what you intended, but past experience has shown that such
a definition is needed.
CONGRESSIONAL REVIEW
Present provisions in the Bill for congression approval to be presumed by
inaction for 60 days for areas of1,280 arces or less are unacceptable. It is un-
realistic to assume that a congressional committee will ever pass a resolution
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606
of disapproval. By combining 1,278 acres of public lands with large tracts
of private lands, ski areas with major environmental and social impacts
could be developed without any congressional action. Perhaps the most objec-
tionable aspect of the current provisions of S. 2125 is that a court may con-
clude that congress has reserved final decisions on permits to itself, even if
decision by inaction. Thus, under the separation of powers doctrine, judicial
review may be cut off. I trust this was not your intention, but this should be
clarified.
As an alternative, we recommend that affirmative congressional approval be
required for any ski area over 2,500 acres, this figure to include both public
and private lands whenever any public lands are to be included. A provision
should be included stating that nothing in the Act shall be construed to pre-
clude judicial review of any action or decision of the Secretary of Agriculture
or Forest Service.
PERMIT TERM
Rather than extend current terms of permits from 30 to 50 years, we
recommend reducing them to 5 years, the term used for FCC permits. We are
aware of the potential problem of financing for operators with short permit
terms, and to deal with this we recommend a preference be given to existing
operators in permit renewals. Shorter terms would encourage operators to
comply strictly with permit conditions and provide for frequent review under
the guidelines of § 3(b).
We feel the Bill should be amended to provide that no compensation would
be given to an operator whose permit is revoked or not renewed for failure to
comply with permit conditions in so far as compensation might be sought for
loss of the permit as opposed to loss of facilities.
REASONABLE RATE OF RETURN
We object to the "reasonable rate of return" language in the Bill. The only
time the government should engage in coming this close to guaranteeing an
entrepreneur a profit is when the government closely regulates his business
as a public utility. Thus, your Bill must be expar~ded to create public utility
regulation of the ski industry or the "reasonable rate of return" language must
be dropped.
DIFFERENTIAL PRICING, DISCOUNTING AND DISCRIMINATION
Currently, members of the public are not granted equal access to public lands
by ski area operators. The trend is to phase out, the day skier and local area
skier in favor of the weekly package skier who, of course, spends more money
in lodging, food and ski shops. This discrimination is effected by differential
pricing and discounting of lift tickets. We feel that, as in the case of profits,
the government cannot take a middle approach. Either your Bill should man-
date equal treatment for all citizens in their access to public lands for skiing
through ticket prices or regulate differential pricing in a public utility system.
The Sierra Club again wishes to commend you for your initiative in this
area through S. 2125. We appreciate the opportunity to express our views and
suggest improvements to your Bill. We encourage you follow through on this
project' through additional hearings in the far west and New England areas
which will also be affected by this type of legislation and to amend 5. 2125
as a result of this public input.
Sincerely,
PETER B. KING.
NATIONAL FOREST RECREATION ASSOCIATION,
Cupertino, Calif., November 13, 1975.
Hon. FLOYD D. HASKELL,
U.S. Senate,
Washington, D.C.
DEAR SENATOR HA5KELL: The National Forest Recreation Association, repre-
senting winter sports areas, resorts, marinas, packer-outfitters operating as
permittees on ~federal lands, passed the following resolution at its 27th
Annual Meeting in San Diego on November 13, 1975:
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"Be it resolved that the National Forest Recreation Association go on record
as supporting the National Ski Areas Association Policy Statement concern-
ing Senate Bill 2125."
May we ask you to make this a part of the record for the hearing on Senate
Bill 2125.
Sincerely,
FRANcIs A. WALLACE,
Eceecutive Vice-President.
LAW OrncEs,
* RAGAN & MASON,
* Washington, D.C., December 2, 1975.
Hon. FLOYD K. HASKELL,
Committee on~ Interior and Insular Affairs,
Old senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: As was agreed at the hearing on 5. 2125, on
November 15, I am herewith submitting the enclosed copies of a letter of
November 20 from Mr. Paul Valar to supplement and clarify the testimony
presented at the hearing on the manner in which independent ski instructors
operate in Europe.
There are enclosed, also, copies of a statement by Mr. Warren Hellman of
Lehman Brothers, Incorporated, New York, New York.
We request that these documents be inserted in the hearing record.
With warmest personal regards and very good wish, I am,
Sincerely yours,
GEORGE B. HARTZOG, JR.
Enclosure.
NATIONAL SKI AREAS ASSOCIATION,
West Hartford, Conn., November 18, 1975.
Mr. PAUL VALAR
Franconia, N.H.
DEAR PAUL: First of all I want to thank you for helping us obtain informa-
tion from Europe on the subject of "Independent Ski Instructors". The transla-
tion of the letter from Dr. Unger was submitted as part of our testimony at
the Senate hearings in Washington on November 17, 1975. For your information
enclosed is a copy of that testimony.
This subject has become a very important issue with Senator Haskell who
at this point in these proceedings on Senate Bill 2125, tends to support the
position that Independent Ski Instructors should be allowed to instruct at
the resorts in this country that operate under permit on U.S. Forest Service
Lands. We believe that all instruction at our areas should be under the con-
trol of area management, and the ski school, and to allow Independent Ski
Instructors on these mountains would raise havoc.
We have been asked by Senator Haskell to submit further information on
this subject of Independent Ski Instructors. Through your contacts in Europe,
we need to obtain the following additional information on what *the policies
are in the various ski countries:
1. What happens to the pupil who becomes injured when taking a lesson
from an independent instructor?
a. Is it the responsibility of the ski instructor himself to get the injured
pupil off the mountain for medical attention?
b. Does the Independent Ski Instructor call on the resorts ski patrol to
take care of the injured skier? If so, who pays for this service?
2. If a Certified Ski Instructor is fired from the ski school can that
instructor turn around and teach at the resort as an Independent Instructor?
3. Who is legally liable for the injured pupil of the Independent Ski
Instructor? That is, would it be the independent instructor, the area where
he is teaching, or the ski school?
4. Are the Independent Ski Instructors required to carry public liability
insurance? If so, to what limits?
* 5. Is the Independent Ski Instructor required to notify the ski school director,
or manager, when he is teaching at their area?
a. Does the Independent Instructor obtain privileges such as the free use of
ski lifts or line cutting?
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b. Does the Independent Instructor keep all of the fee collected from the
pupil or does he have to turn a portion of this fee over to the area ski school?
These are all very important questions, which we must get the answers to
as soon as possible. Can you help us out?
Please call me collect at any time if you have any questions. Again, many
thanks for all you have done for us.
Sincerely,
CAL CoNNIFF,
Ea'ecutive Director.
PAUL VALAB SKI ScHooLs, INC.,
Franconia, N.H., November 20, 1975.
Mr. CAL C0NNIFF,
Executive Director, NSAA,
61 South Main Street,
P.O. Box 83,
West Hartford, Uonn.
DEAR CAL, Thank you for your letter of November 18th. Since I am a
Swiss certified ski instructor (1944), a Swiss certified mountain guide (1945)
as well as accredited as a Swiss ski school director (1946) I can answer your
letter without additional correspondence with Europe. Granted, there are
local differences as to possible privileges afforded independent instructors.
But as far back as I can remember and may I add that my father was a
certied ski instructor .and mountain guide also, we adhered to a code amongst
professionals locally, nationally as well as internationally.
For the past 26 years I accompanied American skiers, mostly a private party,
to all parts of the Alps, South America and our Western ski resorts. I always
contact the local ski school and was always received cordially. The answers
to your question are therefore based on experience, as well as knowledge of
the laws and statutes that regulate ski instruction in the Alps.
1. The independent instructor calls the local ski patrol for assistance.
(a) Even so the European ski instructor is trained to handle emergencies
mci. making a tobaggan out of skis, he does not carry the necesary equipment.
At many resorts he must carry a belt pouch with first aid items prescribed by
regulations, but he does not evacuate the injured himself.
(b) In the Alps, the skier requiring assistance, pay for the ski patrol, regard-
less of the circumstances.
2. Normally, the firing of a ski school instructor would indicate transgression
against statutes and regulations in general and most always would result in
the loss of the ski teaching license.
3. The independent ski instructors liability is no more and no less than any
other ski instructors at the area. On the other hand, the area can not be held
responsible for negligence on his part.
4. Liability insurance is mandatory, even so claims are rare, except in
accidental deaths. I cannot state limits here, since the sums awarded, if any,
are less than in the. U.S. and vary greatly from country to country. These
limits certainly would be part of the statutes.
5. The independent resident instructor informs the local management and
ski school at the beginning of the season. If he takes a private party to another
ski area, he must notify that ski school for every visit.
(a) Normally, the ski area issues a season pass for the ski instructOr, regard-
less of ski school affiliation. This is entirely left up to the ski area manage-
ment, since practically all ski schools are independent business organizations.
Very few resorts allow line cutting by independents.
(b) The independent ski instructor has no financial obligation to the local
ski school. But he has to be available to the ski area management for rescue
operations and emergencies that require qualified personnel, such as lift
evacuations etc. and he has to be available for such training as ski school
instructors are required to attend. Furthermore, he cannot charge more than
the local tarriff. Unfortunately, this can be circumvented by such things as
teaching 3 so-called half-days, normally shortchanging the customer timewise
and other tricks. This does not happen in a ski school situation, since the
instructor would not profit by doing so. .
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If I can be of any further assistance, please don't hesitate to let me knows
Sincerely,
PAUL VALAR.
NEW YORK, N.Y., December 1, 1975.
To THE COMMITTEE ON INTERIoR AND INSULAB AFFAIRS-ATTENTION MR. HASKELL
The purpose of this memorandum is to discuss certain aspects of Bill No. S.
2125 and how they relate to the financial strength of the ski industry. It
seems to me that these points are worth discussing because it is only with
adequate financing that we can have a healthy, viable and safe ski industry
which will provide employment directly and indirectly as well as a great
deal of pleasure for numbers of our citizens.
The area of the bill which I would like to discuss are the following:
1. The right of a ski area to establish tariffs without hearings or other
bureaucratic proceedings. [Section 4(b).]
2. The limit in acreage which can be leased on a long term basis to ski
areas. [Section 3(a) (2) (A) and (B).]
3. The terms of leases and rights to cancellation. [Section 3(d) and others.]
4. The requirements for full disclosure of data by ski areas. [Section 6.]
Before getting to specific recommendations let me first set forth certain back-
ground information which I believe will be helpful in analyzing the various
problems in drafting legislation covering the ski industry.
The problems of financing ski areas have, I am sure, been discussed before
the subcommittee at length, but I would like to present those problems from
my particular vantage point as an officer of an Investment Banking Firm,
Lehman Brothers Inc., an investor in three ski areas, Stratton Corporation,
Mad River Glen Corporation, and the Sugar Bowl Corporation, and a Director
of the Stratton Corporation.
Ski areas have generally found it difficult and costly to obtain capital for
several reasons:
1. The business is extremely cyclical. It is obviously tied closely to the
vagaries of weather as well as general economic conditions. The experience
of the Eastern areas, many of which actually went bankrupt, during the
dry winters accompanied by the fuel crisis in 1972-1973 and 1973-1974 demon-
strates this point.
2. It is highly competitive industry. Since the vast majority of skiers live
some distance from the area where they will ski, they can decide between a
number of alternatives before choosing where to go. Price is only one con-
sideration; others are type of terrain, atmosphere, access to major airport.
3. An equity investment in a ski area is limited in terms of its ability to
grow or is relatively "closed" rather than "open" ended in nature. This
probably bears some definition so let me talk by example. If I choose to pro-
vide a portion of the equity for a ski area the ultimate return is limited by the
potential earnings from the number of skiers or persons enjoying other
recreational activities who will use that area. It is essentially a "local"
investment rather than nationwide or international in scope. Conversely, if
one invests in a company manufacturing scientific instruments, the possible
return is almost unlimited as the product can be sold wherever markets may
develop. This is an important distinction as successful venturers in products
such as scientific instruments have made several hundred times their invest-
ments while investors in ski areas have been fortunate to make two or three
times their original investment.
4. The cost of entry into the business of operating a ski area is relatively
high. Typically, to develop a major facility today will cost in excess of $5
million.
5. In many cases, areas do not own their primary asset which is the terrain
used for skiing.
6. In recent years, activist groups have halted the development of areas
at the outset or, what is worse, in mid-stream. Certain areas have put
millions of dollars into inrastructure only to find that they are stymied in
attempting to put in sufficient accomodations to permit the area to be profitable.
For the above-mentioned reasons, financing of areas has generally been
limited to the following sources:
1. Individuals who for sentimental or other non-economic reasons wish to
see an area developed.
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2. Lenders such as commercial banks who provide what is normally described
as "interim" or "short-term" capital, often with personal guarantees of the
original investors. It is sort of a financing truism that long-lived assets should
be matched by permanent or semi-permanent capital. This has generally not
been true for ski areas.
3. Potential users of an area have sometimes been willing to provide capital
in return for privileges such as lift tickets or season passes.
It is impotant to note that most traditional sources of capital that have
been available to finance industry in this country have not been and are not
now available to the ski industry.
Long term debt money provided by institutions such as insurance companies
and pension funds has not been available for the following reasons:
1. The ski corporations are small in size, local in flavor, and risky in nature.
2. Many of the entities do not own the land on. which they operate and have
leases which are of a dubious quality.
Public equity markets have been available only for a very few areas and
only for a very short time for these areas. The securities have not fared well
in the public markets for the reasons stated above; namely, cyclicality, lack
of open-endedness, and lack of valuable underlying assets such as land.
The conclusions one can draw from the foregoing are as follows:
1. The industry to prosper and to be in a position to obtain badly needed
capital must operate in a free market atmosphere to the extent possible. The
pricing of services for a ski area is an enormously intricate and complicated
process. If it should become necessary to submit pricing decisions to a
bureaucratic process such as public hearings, I believe it would be a major
impediment to obtaining capital. My strong suggestion is that pricing he left to
the market place. I might add that I do not know how two areas can operate
nearby each other, one on private land and one on public land, if one is able
to set prices quickly based on market conditions and the other must wait
for the results of public hearings. Additionally, attempting to establish
equitable rates or return on equity in a cyclical business is nearly impossible
task as the CAB has found in the case of the airlines. One is limited at one
end by the market place (you could not have charged $30 to $40 per day ticket
in the East in the 1974-1975 season to make up for. 1972-1973 and 1973-1974)
and at the other. by rates set at hearings or through public debate.
2. Extend the amount of land subject to long-term lease from the Forest
Service. The present practice of leasing only eighty acres on a long-term basis
and the balance of the area on a year-to-year basis is. very unhealthy.
3. Extend the term of the lease sufficiently to give the appearance of owner-
ship. A fifty year term should be sufficient to accomplish this but, in reality,
the conditions of renewal and the practice of renewal are more important
than the term of the lease.
4. Make the basis for lease renewal straight-forward and uncomplicated and
permit the process to begin sufficiently in advance of expiration that adequate
plans can be made. Criteria for renewal could include such aspects as safety
record, environmental record, capital invested, number of skiers served, and
the area's financial record.
5. Require adequate disclosure. There is no reason why the public should
not have access to the financial records of areas operated on public lands. If
they are to have access to public markets for securities these disclosures must
be made anyway.
In conclusion, I believe legislation of the type suggested can be beneficial
to the ski industry and to the public which it serves. It can help to overcome
some of the handicaps that have hampered the areas operated on Forest
Service lands in the past.
F. WARREN HELLMAN.
LAW OFFICES,
RAGAN & MASON,
Washington, D.C., January 8, 1976.
Hon. FLOYD K. HA5KELL,
U.S. Senate,
Washington, D.C.
DEAR SENATOR HASKELL: There has recently come to my attention an ex-
change of correspondence between Mr. Malcolm McLane of Wildcat Mountain
and Mr. Thomas A. Corcoran of Waterville Valley concerning the position of
the National Ski Areas Association in connection with 5. 2125.
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All of Mr. McLane's comments will be of interest to you and the Sub-
committee. Of special interest, I am sure, are his comments with respect to
New Hampshire statutes governing banking and other financial institutions.
These statutes, as he advises, require that there be at least 20 years remaining
in the life of a Term Special Use Permit in order for such financial institutions
to take a mortgage of such a permit as security for a loan. This advice has
special significance in connection with our proposal to extend the term of such
permits from 30 years to 50 years as presently proposed in S. 2125.
With warmest personal regards and every good wish, I am
Sincerely yours,
GEORGE B. HARTZOG, JR.
WATERVILLE Co., INC.,
Waterville Valley, N.H., November 14, 1975.
Mr. D. R. C. BROWN,
President,
Aspen Skiing Corp.,
Box 1248,
Aspen, Cob.
DEAR DARCY: I also asked Malcolm McLane, the founder and President of
Wildcat Ski Area in New Hampshire which is totally on National Forest
lands, for his opinions on the draft statements.
Regards,
THOMAS A. CORCORAN,
President.
ORR AND RENO,
Professional Association,
Concord, N.H., November 6, 1975.
Mr. THOMAS A. CORCORAN,
Waterville Company, Inc.,
Watervible Valley, N.H.
DEAR TOM: I am happy to comment on the draft policy statement of the
NSAA. I do so out of my experience as general counsel for Wildcat Mountain
Corporation for the past 20 years and as its President during the last 6 years.
(1) I am particularly concerned about the position taken by the NSAA
with respect to extension of the 30-year limit on Term Special Use Permits.
remaining in the life of a Term Special Use Permit in order for such financial
institutions subject to state jurisdiction require that there be at least 20 years
remaining in the life of a Ter mSpecial Use Permit in order for such financial
institutions to take a mortgage of such a permit as security for a loan. This
means in effect that it is impossible to raise money by borrowing unless at
least 20 years remains on the permit. Original financing may be feasible, but
any form of refinancing or new financing after 10 years has run on a permit is
out of the question unless the permit can be renegotiated. It is obviously most
important to us in New Hampshire (and there are 6 ski areas operating in
New Hampshire nuder Term Special Use Permits) to have the 30-year limit
extended to 50 years. Although it is certainly desirable to have a right to re-
new at the end of a Term Permit, I am sure that existence of such a right,
subject to certain conditions and approval by the Forest Service, would not
meet the requirements of security demanded by financial institutions.
(2) We would certainly urge raising of the 80-acre limit under 30-year
Term Special Use Permits. It was ludicrous to squeeze operating facilities
within the 5-acre limit which formerly applied and it is still unrealistic under
the 80-acre limit. A ski area encompasses more than just operating facilities,
and the entire permit area should be under the Term Special Use Permit.
(3) With respect to the regulation of rates, it would seem to me that the ski
industry is totally different in its structure and operation than that of the
traditionally regulated industries such as transportation and utilities where
the government awards a monopoly in a given area and must, therefore,
protect the public interest through rate setting. Here in the East, any skier
has a vast choice of places to ski within a few hours of his residence offer-
ing a wide variety of choices at varying prices. The marketplace exercises
a controlling influence on price setting. Furthermore, to the best of my
knowledge hardly any ski area makes a reasonable profit and certainly not
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over an extended period of years. The number of bankruptcies recently attest
to the unstable financial condition of the industry here in the East. I see no
justification for the Forest Service to regulate prices in ski areas under
permit which must compete both in the market for skiers as well as for
equity funding and loans with unregulated ski areas on private lands. I
think more studies should be made with respect to the profitability of ski
areas. Figures could certainly be published without identification of the
individual company. There is no reason for full public disclosure of financial
records of private companies except to the extent that this follows full
governmental regulation.
Sincerely.
MALCOLM MCLANE.
DENVER, CoLo., October 5, 1975.
Senator FLOYD HA5KELL,
senate Office Building.
Washington, D.C.
DEAR SENATOR HASKELL: I'd like to add my voice to the people talking at
your hearings on the ski areas, but being a working person can't. Hearings,
somehow, are always held on days that most people work. So, I'll add my
"pen."
I agree with those who think the ski area operators are ripping off the
public. I think that it is too hod that the public lands are being used solely for
private profit.
I think that it is too bad that the Forest Service, an agency noted for its
love for private interests and private profit and equally noted for its distaste
for ecology and the public interest, is allowed to pander to the operators. The
Forest Service allows lift ticket prices to go up almost without limit, to the
point that ordinary people can't afford to. ski. Do we really want to have
Aspen and Vail (and Copper Mt., and everywhere else since most of the areas
are on public land) just for millionaires from California and New York? I
hope not.
I think that there should be hearings on raises in rates. I think the details
of the economics of the operations should be public. Are the lift tickets paying
for the land sales? Are they paying for unsold condominiums, etc. etc.? And,
since the operators are operating on public resources, their profits should
be limited and their monopolies (e.g., ski schools) not allowed.
I like to ski but I'm not made of money.
Sincerely,
E. DONALD KAYE.
COLORADO SPRINGs, CoLo., November 23, 1975.
Hon. FLOYD HASKELL,
Russell Senate Office Building,
Washington, D.C.
DEAR SENATOR HASKELL: It has come to my attention that you are drafting
a bill that would set standards for the permit granting process for ski areas
on public lands. I am adamantly opposed to your proposals on the grounds
that they are completely unnecessary.
The present system. has worked adequately enough in that no one group of
operators threatens to create a monopoly in the ski business. On the contrary,
there are presently thirty one ski areas operating in Colorado alone. The
Forest Service's permit granting process does not need any strict guidelines to
operate under since the Forest Service must negotiate with many different types
of ski area developers and operators. The many unique factors that ziiust he
considered by the regional forester for each ski development should rest with
that forester and not some great bureaucratic machine in Washington.
Rencently, the Colorado attorney general's office has proposed legislation
denying ski area operators the right to develop other ski areas in their general
area. This is the most ludicrous example of government interference in private
enterprise that I have read about in several years. The level of competition
among ski areas is sufficient to keep all ski developers in bounds. There is no
danger that Aspen or Vail is going to monopolize all of Colorado's mountains.
Presently, absolutely nothing prevents ski operators such as the Steamboat
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developers, for example, from building a ski area right next to Vail or one of
Aspen's mountains. But no developer has shown a desire to do so. If our
government officials cannot understand why a local developer such as Aspen or
Vail is not the most suited and best prepared for local expansion then they
should go back to school and take a course in basic logic and elementary
reasoning. Vail Associates is a prime example. Vail has already taken ten
years and invested $7 million on the proposed Beaver Creek Resort and not one
building has been constructed or one tree cut. Upon completion this resort will
be the best planned and best managed ski area in the world, yet it is only
8 miles west of Vail. No other developer besides Vail Associates would take
the tremendous risks to build this ski area. Just because it is within 50 miles
of Vail's other ski development does not mean that Beaver Creek is bad. On
the contrary, it is because of Vail's expertise in the ski business that this area
will be such a good one. The proposed legislation will preclude the development
of Beaver Creek and other proposed ski areas in Colorado. This is not in
the best interests of the majority of the public, including local residents and
the millions of skiers in this country.
I urge you to drop your proposals on ski areas and the permit granting
process and undertake some action that will benefit the people of the state
of Colorado and the United States.
Sincerely,
RANDALL M. CLARK.
EL PASO, TEx., December 8, 1975.
Hon. FLOYD K. HASKELL,
U.s. senate,
Washington, D.C.
DEAR SENATOR HASKELL: I understand the Ski Area Relief Act (S. 2125) would
relax the present 80-acre limitation on commercial ski .resorts and increase the
term of permits from 30 to 50. years. I am firmly opposed to both of these
actions. I would like to see firmer environmental standards in the bill and the
prohibition of ski resorts in the game refuges or wilderness study areas.
Thank you,
Sincerely,
P. NEWELL.
TAOS, NEW MEX., December 9, 1975.
DEAR SENATOR HASKELL: I am writing about S. 212, the Ski Area Relief Act.
I support the Sierra Club's p~roposed changes in the bill: retention of 80
acre limit to ski areas, prohibition of resorts from game refuges and wilderness
study areas, and denial of the Disney development in Mineral King.
I live in a popular ski area, and I am an avid skier. However, because of a
lack of strong national environmental standards, the water quality in the Rio
Hando has suffered so that downstream users cannot even use the water for
livestock. Ski areas are intensive use areas, and I am sure problems similar to
ours exist elsewhere. Stronger standards should be written into the bill.
Yours truly,
DAVID BATES.
RICHMOND, CALIF., December 11, 1975.
Senator HASKELL,
Chairman, senate Interior Environment and Land Resources subcommittee,
senate Office Building,
Washington, D.C.
DEAR SIR: I strongly urge you to change the Ski. Area Relief Act, S.2125. I
am especially opposed to the elimination of the 80-acre limitation on com-
mercial ski resorts and to the extension of the term of permits from 30 to 50
years. Furthermore, there is a necessity for a more rigorous posture on environ-
mental standards than~ is contained in S.2125. In addition, the proposed Disney
development of Mineral King should not be allowed to occur. More precisely,
I am in favor of including the Mineral King area in the Sequoia National Park.
Respectfully, .
BIX E. SWAIN.
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ANCHORAGE, ALASKA, December 13, 1975.
DEAR SENATOR HASKELL: I am writing regarding S. 2125, the Ski Area
Relief Act, which I understand is presently being considered by your Sub-
cammittee. I urge pour support for retention of the 80-acre area limitation,
and for a permit length of no more than thirty years. I also urge your support
for the Sierra Club's proposals for firmer environmental standards and pro-
hibition of ski areas in game refuges and wilderness study areas, and for
specific prohibition of the proposed Disney development of Mineral King and
the transfer of this area to the Sequoia National Park.
In addition, I want to urge your support for the Conservationists' Bill for
"National Interest" lands in Alaska, for the "Four Systems" to be created
from federal public lands in my State. Senators Stevens and Gravel will no
doubt resist this proposal, and attempt to hold down any creation of Parks,
Wildlife Refuges, and Wild and Scenic Rivers in Alaska (though they are not
so opposed to new National Forests, which can be exploited in ways the other
systems can't-something euphemistically called "multiple use", though it
should usually be called "excusive use for the benefit of a few exploiters and
exporters"). I hope that you will realize that Congress has the opportunity to
"round out" the National Park and Refuge and Wild and Scenic Refuge
Systems, in the next few years; if it fails to act soon, it will be too late, and
the lands will be lost to the national public.
I am, Sincerely,
GERALD R. BROOKMAN.
DAVIS, CALIF., December 14, 1975.
Senator FLOYD HASKELL,
Senate Office Building,
Washington, D.C.
DEAR SENATOR IIASKELL: Your hearings on U.S. Forest Service involvement
in ski area operations on public lands are of great interest to me. Our family
of 5 has some 127 years of skiing behind it, and the 3 boys are continuing to
ski while away at college.
I'm especially interested in the Forest Service's showing enough interest
in their permittees operations to require a rate structure that will not eliminate
ski touring by users of the lifts. All of us enjoy an occasional day on the
lifts using a day pass. We can't afford more. But that can become a hideous
bore. Then it pays to take off from the top of the lift into untracked terrain.
This is possible only if the ski lift operator sells single rides. Until this year
Alta, Utah had such single rides as do, or did, the other older Utah resorts-
Brighton, Snow Basin, Beaver. Only the new resorts, of which Snowbird, Park
City, and the Jackson, Wyoming Ski Corp. are horrible examples, have never
sold single rides. As you probably know, not only do European areas sell single
rides, but one-way rides-at least on the Patscherkofel and the Axamer Lizum
at Innsbruck, at St. Anton, Davos, Zermatt, St. Moritz, etc. 10-ride tickets
come at a discount.
I can think of no other public form of transportation that forces its patrons
to ride it all day, or not at all.
If the Forest Service will not regulate the structure of its permittees' lift
tickets, then I see no reason for further development of ski areas on public
lands.
Some areas do have a single ticket, but the cost is 1/3 to 1/2 the price of
a day pass, which is ridiculous. If a skier may expect 20,000 to 30,000 downhill
feet a day on an all-day pass, then a lift giving 2000 ft drop (most give 1000-
1500 ft) should charge 1/10 to 1/15 of the day-pass price for a single ride-
especially when part of a 10-ride ticket. The shorter lifts should charge 1/20 to
1/30 of the day price ticket.
Even with day-passes at an exorbitant $10, this would make single rides less
than $1 on our biggest lifts, $2-1.30 on the 4000 ft Jackson tram. Actually the
Jackson ski patrol has bad up to 12 rides a day on the tram, so my figures of
20,000 to 30,000 downhill ft a day are not exaggerated.
When you look at ski lift prices and operations, I hope you will* take a
very good look at the Alta lifts. Mr. Chick Morton, he manager, runs the best
outfit I know of in Utah, Colorado, Wyoming, Idaho, or California. The lifts are
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well-maintained and dependable, the crew is skilled, the operation serves the
publ~ic very well. Alta evidently makes money. For many years almost every
year they have improved their operation-building housing for employees,
cafeterias at midway, ticket office, packing machines (hardly an improvement
but now considered necessary), new lifts, now rebuilt and re-located lifts. The
price of a day pass is still $6.50. Half days are available, now up to $5 but
they were $4.
Why Snowbird, built with Bass' oil-shelter and tax evasion dollars, or
Jackson, built (the tram) with a Federal loan and with numerous house lots
made out of poor ranch land to sell, should charge more than Alta I cannot
imagine. But I don't think Alta needs to raise its prices! Maybe Aspen is
really so inefficient they need to charge $12 a day-they are unique in inducing
their on-the-hill employees to form a union-but Aspen seems to have made
enough money to buy Pfeiffer's Buttermilk, Snowmass, Breckenridge, and now
* threaten to move into both Washington and* Canada.
Touring, downhill touring, is a part of skiing. Since we have ski areas
developed on public land, I think ski tourers should be able to use them.
They can't if single-ride tickets are not available. And a scalped tourer is an
uncomfortable tourer.
Sincerely,
JACK MAJOR.
ASPEN, CoLo., November 10, 1975.
INTERIOR COMMITTEE,
Dirksen B'uilding,
U.S. Senate,
Washington, D.C.
DEAR Sins: I am writing in regard to the question of allowing independent ski
insrtuctors to teach at ski areas located on national forest administered land.
I feel it would be a valuable service to the public to allow this right to fully
certified, qualified instructors. Having taught in the Aspen Ski School for three
years, I have seen many instances when a person taking a ski lesson has not
received his full benefit due to the instructor's tight scheduling requirements, a
mismatch with an instructor with whom he cannot properly communicate, or
simply receiving a tired rehash of old technique.
From an independent insrtuctor's viewpoint, a better lesson could be given
because the insrtuctor is able to schedule a convenient time for the lesson with
the student, accept pupils whom he feels he would be best qualified to teach, and
provide insrtuction methods not limited by a rigid ski eschool progression tech-
nique-a technique incidentally, which varies from area to area. A person skiing
on public land should have the right to choose by whom he would like to receive
a lesson, without regard to whether or not that insrtuctor happens to belong
to the staff of the particular school at the area.
I would appreciate having this letter recorded into your committee records.
Sincerely,
WALTER SNELLMAN.
BaAR VALLEY, CALIF., December 1, 1975.
DEAR SENATOR MCCLURE, As a fully certified (Professional Ski Instructors
of America, Far West Ski Instructor's Assn.) instructor and instructor
examiner with nine years of teaching experience, I ask you to support Senate
Bill 2125 submitted by Senator Floyd Haskell of Colorado.
The bill deals with ski area management and practices on public (U.S.
* Forest Service) land. As an instructor, I am primarily concerned with how
ski instruction will benefit from this bill.
Here are the current problems:
1. Ski schools hold an exclusive monopoly over lessons given on public land
at any given ski resort.
2. The public has no choice of type of lesson or technique. It must take
what the ski school offers.
3. Individual instructors must conform to rigid ski school methodologies or
not teach at all. This denies the public alternative ways of learning.
4. Because ski schools skim such large percentages from each lesson, in
addition to the instructor's wage, they are forced to price lessons quite beyond
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the reach of many people. For example, a person pays twelve dollars for a one
hour private lesson. Approximately 50% goes to the ski school. An independent
instructor could charge $6/hr, make the same amount of money, and save the
public a considerable amount.
5. After nine years of teaching skiing, I make $600/mo. (no benefits, no
retirement, no health insurance, etc.) Ski school monopolies make it impossible
for the individual ski instructor to earn a decent wage. As independents, fully
certified ski instructors could become the highly qualified professionals which
the public deserves, and earn a wage equal to the dignity of their profession.
6. There exist organizations (PSIA, FWSIA) to oversee instructor certifica-
tion and provide a vehicle by which apprentice instructors could become
certified and able to insure quality instruétion.
My concern is that at persent, both the public and many individual in-
structors of outstanding ability are not being given a fair and equitable chance
to secure and deliver the finest instruction available. Passage of SB 2125 will
benefit the entire skiing public. Thank you for your time.
Sincerely,
DUANE D. CORNELL.
SUN VALLEY, IDAHO, December 9, 1975.
Mr. JOHN McGUIRE,
Chief of the
U.S. Forest Service,
Washington, D.C.
Re: Application for Independent Ski Instructor Permit
DEAR MR. MCGUIRE, I am applying for a permit to teach as an independent
ski instructor on U.S. Forest Service Land, in particular at the Sun Valley
Ski Area, Sawtooth National Forest, Idaho.
* I am a fully certified instructor and examiner at the newly formed Northern
Intermountain Professional Ski Instructors Association Inc. (approx. 150
members) and a former member of the Rocky Mountain Ski Instructors (fully
* certified in 1960).
I have been teaching for 19 years: 2 years at Winter Park, Cob.; 2 years
at Arapahoe Basin, 0010.; and 15 years at Sun Valley, Idaho.
As of this year I will not be hired back to the Sun Valley Ski School for
personal reasons.
It is my firm belief that any fully certified instructor, covered by liability
insurance, should have the privilege to teach on U.S. Forest Service Land,
because it will enhance competition and will break monopolistic practices by
present Ski Schools.
It is a fact that a number of instructors that work for present system
Ski Schools would never survive had they to work for themselves.
There are instructors at present system Ski Schools that have no certifica-
tion and teach on U.S. Forest Service Land. I can name several at the Sun
Valley Ski School.
Thank you for considering my urgent matter.
Respectfully,
HANS Hun.
0