WASHINGTON – The Federal Transit Administration has rejected a complaint by the United Motorcoach Association alleging that the Charlotte Area Transit System (CATS) violated the federal charter service rule by offering a shuttle service using taxpayer-subsidized buses.
“Based on a review of the entire record, FTA finds that CATS did not violate FTA’s charter service regulations . . . and it hereby dismisses the complaint,” the agency said in its ruling.
UMA, which filed the complaint last year on behalf of Sunway Charters, said it was considering appealing the decision.
Sunway had been approached by the Mecklenburg County Parks and Recreation Department last year about operating a shuttle bus to a county swim area on weekends from June through Labor Day.
Sunway sent a bid in response to the request but never heard anything more until Lee Helms, president of the company, read in a local newspaper that the county had hired CATS to run the shuttles.
“They kept giving us the runaround, then I saw in the newspaper that CATS was running the shuttles,” Helms said when the complaint was filed. “They blatantly disregarded the federal law.”
According to the federal charter service rule, public transit agencies receiving taxpayer money to buy and maintain their buses are not allowed to run those buses in competition with private operators.
The rule, in place for four decades, also requires transit agencies to notify registered charter companies upon receiving a request to provide charter service, thereby allowing other companies to bid on the charter contract.
In the Charlotte case, a county official contacted Sunway Charters on June 10 and asked the company to provide a quote for operating a weekend shuttle service to the county’s new beach at Ramsey Creek Park.
Sunway responded with quotes for both a 55-passenger motorcoach and a 43-passenger transit bus, recommending the transit bus because it has a low floor and double doors for easy access and space for beach bags and coolers. Sunway uses the transit buses for events such as golf tournaments.
The county official then emailed the company, saying, “There has been a lot of pressure from different sides on if/how we are going to proceed. As soon as I find out, I’ll let you know. I suspect that this may go to the board of county commissioners.”
Shortly thereafter, Helms read in the newspaper that the county had partnered with CATS to operate the shuttle at a cost of about $1,700 per weekend, about the same as Sunway’s quote.
UMA, in its complaint to the FTA, said that under federal law, charter service is defined as transportation that is not a part of the transit provider’s regularly scheduled service and that is provided at the request of a third party for the exclusive use of a bus or van for a negotiated price.
It also is defined as transportation provided to the public for events or functions that occur on an irregular basis or for a limited duration.
Under those definitions, CATS was providing charter service for a third party (the county), outside its regularly scheduled service, to transport members of the public for a limited duration (June through Labor Day), UMA said.
UMA also noted that when approached by the county about providing the service, CATS was required to provide notice to private charter operators so they could compete for the service absent competing with the transit authority.
“Complainant finds no evidence the recipient filed notice with registered charter providers,” UMA said in the complaint.
UMA also said Sunway Charters “incurred financial and irreparable harm” by not being allowed to further compete for the “valuable, high-profile contract.”
“Subsequent to ignoring their obligation to provide notice to registered charter providers, (CATS) entered into a contact with Mecklenburg County and began providing service in clear violation of their charter service agreement and federal law,” UMA concluded.
The FTA, however, said in its decision that although Mecklenburg County paid CATS to provide the service, that service was not exclusive but was open to the public.
“Anyone can board or exit the bus wherever they choose” along its route, the FTA said. “Therefore the service does not meet the definition of charter service.”
The agency also noted that although a third party (the county) was paying for the shuttle service, it was considered “seasonal service,” which was not based on an event or an occurrence but was regularly scheduled and ran for the entire summer.
“CATS is not providing service for events or functions that occur on an irregular basis or for a limited duration,” FTA said. “CATS is providing weekend service for the entire summer/beach season. The service is seasonal, and therefore, not charter service.”
Ken Presley, UMA’s vice president of industry relations and COO, said the case could have gone either way, “but the arc always bends in favor of public transit.”
“In a public transit system where nearly 80 percent of their fares are subsidized by taxpayers, I suppose it will now be up to local and state leaders whether they will allow taxpayer-subsidized service to displace small businesses and their employees,” Presley said.
“I suspect this issue will move to round two.”
