WASHINGTON - A California congressman has accused the U.S. Department of Transportation of routinely ignoring laws that require public transit agencies to maximize private-sector involvement in developing transit services and failing to enforce rules that restrict transit systems from competing with private operators.

"It is clear from yesterday's testimony that there are glaring gaps in the methods DOT uses in determining private- versus public-sector participation," said Rep. Doug Ose, chairman of the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs.

"The law clearly dictates maximum private-sector participation in the transportation process and DOT's actions are contradictory to the letter and spirit of the law," the congressman asserted.

Ose also said his probing of DOT and the Federal Transit Administration had turned up a number of cases where the FTA had "allowed local transit authorities to complete unfairly with existing private mass transit service providers."

Ose's comments came at the start and conclusion of a hearing he called to explore the USDOT's record in encouraging private-sector participation in ground transportation, as well as its oversight and enforcement record.

Clearly, Ose was underwhelmed by the record amassed by the DOT and FTA under the Bush Administration.

Several witnesses described how the FTA had allowed public transit authorities to compete unfairly with existing private bus operators, while others expressed strong disappointment with the DOT's private-sector participation policies and performance.

Ose recounted his experience investigating the case of Regional Transit, the public agency in his home city of Sacramento, and its take over of a 25-year competitively awarded contract for a shuttle bus service.

FTA rules, said Ose, prohibit a public transportation service from using federal grant dollars to purchase buses to offer equivalent service at a reduced rate to that charged by the private sector.

Yet, despite the regulations, the FTA awarded $2.4 million to Regional Transit for the purchase of buses and later allowed the agency to use the buses to takeover an existing privately operated transit service. "This takeover resulted in an estimated additional $277,000 annually in public operational expense," Ose said.

"There is a clear problem here. When a grantee (Regional Transit) does not use federal grant monies consistent with federal law, Congress needs to weigh in," he said. "I am severely disappointed by the attitude and actions to date to enforce the statutory and regulatory requirements that apply to capital assets purchased in whole or in part with federal funds, especially when those assets are used to push existing private transit operators out of business."

The victim of the Regional Transit takeover, William Allen, president of Amador Stage Lines of Sacramento, was one of those who testified before Ose's committee.

"FTA's record of failure in this case is profound," Allen said. "FTA abdicated its responsibility to enforce congressionally-mandated statutory standards, federal regulations and the FTA's own signed grant agreement with Regional Transit as a condition of receipt of $2.4 million to purchase new shuttle buses," he continued.

"Instead of assuming a quasi-judicial role in this complaint as required by Congress, FTA became, in effect, an unapologetic advocate for (Regional Transit)," said Allen, who went on to provide a laundry list of examples of the FTA neglecting its statutory and regulatory responsibilities.

Some of the most erudite testimony offered at the hearing came from Terry Thomas, president of Community Bus Services in Youngstown, Ohio.

Thomas told of how the FTA aided and abetted a local public transit agency's efforts to thwart the award of a contract to his company to operate public transit service in Trumbull County, Ohio. Rather than submit a proposal to provide the service itself, Western Reserve Transit Authority of Youngstown threw up bureaucratic roadblocks for nearly a year.

Thomas went on to sight chapter and verse on how the FTA has moved away from congressional mandates requiring maximum private-sector participation in public transit planning, and how FTA has failed to meet a standard of enforcement as intended by Congress.

"Existing federal transit statues must be enforced to encourage both public transit agencies to consider contracting with private transportation companies to the maximum extent feasible and provide less costly and much needed services while maximizing all available transportation resources," Thomas told the committee.

Like others appearing before the committee, Thomas called for new rulemaking by the FTA to address unfair competition from federally subsidized transit agencies.

A third strong voice providing evidence of the FTA allowing a public transit provider to stifle private-sector competition - regardless of the intent of federal laws and regulations, came from Katsumi Tanaka, chairman and CEO of E Noa Corp., operator of the Waikiki Trolley and E Noa Tours in Honolulu.

Tanaka said the city and county of Honolulu and their transit service, The Bus, had monopolized service to a popular visitor destination, Hauauma Bay; deliberately excluded the private sector from plans to develop a bus rapid transit system, and harmed private operators by aggressively recruiting tourists to use its highly subsidized service.

Two others appearing before Ose's committee were from public policy think tanks and both said the USDOT had failed miserably to maximize private-sector participation in public transportation.

"By not capitalizing on all opportunities to involve the private sector we are increasing the costs of transportation services, limiting their flexibility, stifling innovation and creating a static system to the detriment of taxpayers and travelers," said Dr. Adrian Moore, vice president of the Reason Foundation in Los Angeles.

"It might be expected that in the United States, with the world's strongest market economy, competitive contracting would have spread rapidly. However, the greatest progress toward incorporating competition in transit has occurred overseas," said Ronald Utt, research fellow at the Heritage Foundation in Washington.