Editor’s Note: This commentary for Bus & Motorcoach News was written by Kumar Shah, president and CEO of Pronto Corp., which filed the complaint discussed in this article. Public records, regulatory filings and other supporting documents referenced in the commentary are linked throughout so readers may review the underlying materials and draw their own conclusions. The views expressed are those of the author and do not necessarily reflect the views of Bus & Motorcoach News or United Motorcoach Association
The upcoming Oregon Country Fair shuttle service should have demonstrated how the Charter Rule protects qualified private operators. Instead, I believe it illustrates how the rule is being interpreted in ways that leave those operators with fewer protections than Congress intended.
The dispute between Pronto Corp. and the Lane Transit District (LTD) is about far more than one shuttle contract. It raises important questions about how the Federal Transit Administration (FTA) applies and enforces the Charter Rule, and whether private operators still receive the protections the regulation was designed to provide.
If the FTA’s interpretation in this case stands, I believe other public transit agencies may follow a similar path when competing for special-event transportation. That is why this issue deserves the attention of every private carrier.
Pronto’s proposal
Pronto Corp., formerly El Camino Charters and doing business as Accelar Inc., has operated charter services and developed transportation technology for more than 20 years. The company is an FMCSA-authorized motor carrier (DOT No. 2952688), registered with the California Public Utilities Commission (26666A), and an FTA-registered charter provider (Charter ID 6643). Through a network of 6,775 affiliates, including more than 1,800 bus and motorcoach operators, Pronto can provide charter and shuttle services nationwide.
When LTD issued a Charter Notice for the Oregon Country Fair shuttle service scheduled for July 10-12, under 49 CFR Part 604, Pronto responded that it wanted the job. We contacted affiliates in the Eugene area and identified two operators with more than 30 motorcoaches available for the event.
Using three years of ridership data, we proposed a demand-responsive shuttle operation managed through ProntoJourneys.com. Based on our analysis, the proposal would have reduced the fair’s transportation costs by more than 10% while providing greater operational flexibility and improving the passenger experience.
In our view, Pronto demonstrated it was qualified, ready, willing, and able to provide the service.
One operational challenge involved tree branches along portions of the route that obstructed standard-height motorcoaches. Pronto proposed several alternatives. We obtained a quote from a local contractor and offered to cover the cost of trimming the branches. When the event organizer determined tree trimming was not feasible, we proposed leasing LTD’s lower-profile transit buses at the agency’s published, fully allocated rates under 49 CFR Section 604.8.
LTD had previously operated the shuttle with 20 transit buses each day, with each bus making fewer than three round-trip trips. Based on our demand analysis, we proposed using four to 12 buses making multiple trips throughout the day. According to our analysis, that approach would have reduced transportation costs by more than 10%.
During the procurement process, we obtained emails through an Oregon public records request. Based on those communications, we concluded LTD expected private operators to withdraw so the agency could resume operating the service. That interpretation became one reason we filed a complaint with the FTA.
On April 7, LTD asked the FTA for an advisory opinion, arguing that private operators could not perform the service and requesting permission to operate the shuttle itself. Subpart B of 49 CFR Part 604 outlines the limited circumstances under which a public transit agency may resume operating charter service when no qualified private provider is available.
On April 12, we filed our response to the request for advisory opinion and a formal complaint against LTD with the FTA, arguing that Section 604.9 did not apply because Pronto is a qualified, FTA-registered charter provider that was ready, willing, and able to perform the service.
Our complaint also alleges that LTD engaged in anti-competitive conduct that interfered with the Charter Rule process and reiterates that Pronto and its affiliates remained prepared to perform the work.
On April 28, the FTA issued a determination allowing LTD to operate the shuttle under Section 604.9. In our view, the agency accepted LTD’s position without addressing Pronto’s response to the advisory opinion request or ruling on the complaint we had filed. We contacted the FTA several times in May and June, and the agency told us it considered our submissions addressed and that no further action was necessary.
On June 29, we filed a revised complaint and administrative motion asking the FTA to vacate its April 28 determination, arguing that the agency:
- Overstepped the authority granted to it by Congress;
- Overlooked material evidence;
- Incorrectly concluded that qualified private operators were unable to perform the service;
- Failed to adjudicate Pronto’s complaint against LTD;
- Relied on statements from LTD that Pronto contends were inaccurate.
Is Charter Rule working?
That sequence of events is why I believe this case extends well beyond one festival in Oregon. It raises broader questions about how the Charter Rule is interpreted and enforced, and whether private operators can continue to rely on the protections Congress intended.
The Charter Rule was established to prevent publicly funded transit agencies from competing directly with private companies when qualified private operators are available to provide charter service. Throughout this process, Pronto demonstrated that it was ready, willing and able to perform the work while proposing multiple solutions to address operational challenges.
Despite those efforts, the FTA determined that private operators could not provide the service and allowed LTD to operate the shuttle under Section 604.9. I disagree with that determination and have challenged it through Pronto’s complaint against LTD and our June 29 motion asking the FTA to vacate its decision.
This case raises important legal and policy questions about how the FTA determines whether a private operator is capable of providing charter service. If operational challenges that can be addressed through reasonable alternatives are enough to remove a qualified private operator from consideration, I believe the protections provided by the Charter Rule become increasingly difficult to rely upon.
In this case, Pronto requested to lease LTD’s low-profile buses under provisions of the Charter Rule that we believe permit such arrangements. After LTD declined that request, the agency argued private operators could not perform the service and asked the FTA for permission to operate it instead. I believe that sequence raises important questions about how the Charter Rule is being interpreted and applied.
The documents associated with this case, including Pronto’s complaint, the public records obtained from LTD, and the FTA’s response, are available for readers to review. I encourage operators to examine those materials and reach their own conclusions.
During the past nine months, we contacted FTA regional administrators in Regions 9 and 10 more than 30 times by email, phone and voicemail but did not receive a response. In my view, greater communication with private operators would strengthen confidence in the Charter Rule process and help resolve disputes before they escalate.
The bigger picture
My concern extends beyond Oregon. If the FTA’s April 28 determination stands and LTD operates the Oregon Country Fair shuttle, I believe other public transit agencies may cite that decision when arguing that operational challenges justify public agencies providing services that private operators can perform.
That possibility should concern every private carrier that depends on the Charter Rule to provide a fair opportunity to compete.
My concerns about the Charter Rule did not begin with the Oregon Country Fair dispute.
In 2010, Pronto developed and launched a special-event shuttle platform under a four-year contract supporting transportation for San Francisco 49ers games. Around that time, we challenged a special-event shuttle operated by the San Francisco Municipal Transportation Agency because we believed it met the federal definition of charter service.
The FTA initially agreed that the premium-fare operation qualified as charter service. However, after SFMTA modified the service and proposed charging regular transit fares, the FTA allowed the operation to continue.
I viewed that decision as a turning point, signaling that publicly funded transit agencies could continue operating certain special-event transportation services even when private operators were available.
At the time, Pronto chose not to pursue another lengthy legal challenge on its own. We also sought support from industry associations but were unable to build broader industry participation. Since then, I have watched more public transit agencies provide special-event transportation under what I believe is the framework established by the FTA’s 2012 interpretation.
The LTD dispute reinforced my concern that the Charter Rule is being interpreted differently than many private operators expected. In my view, the 2012 interpretation expanded opportunities for public transit agencies to operate special-event transportation. If the April 28 LTD determination remains in place, it could further reduce the protections private operators have historically relied upon, even when they contend they are ready, willing and able to provide the service.
I also believe these two FTA interpretations have significantly changed how the Charter Rule is applied in practice. Whether those interpretations should have been adopted through a formal rulemaking process or reviewed by Congress or the courts is one of the legal questions raised in Pronto’s filings.
This issue deserves closer examination by the industry, regulators and policymakers. Pronto has filed a request for expedited review asking the FTA to address the legal questions raised in our June 29 motion.
This discussion is not about one contract or one transit agency. It is about whether the Charter Rule continues to provide qualified private operators a fair opportunity to compete for charter work.
Based on Pronto’s experience managing transportation for large-scale events and our internal nationwide analysis, we estimate this represents an annual market opportunity of more than $800 million using a demand-responsive operating model. In our experience, many public transit agencies manage special-event transportation much like fixed-route transit service. Because demand can fluctuate significantly, we believe agencies often deploy more buses than necessary. Based on our analysis, transit agencies collectively spend more than $2 billion annually on these services, while private operators using a demand-responsive approach could provide comparable service for substantially less.
That represents an opportunity to improve efficiency and reduce costs for taxpayers while creating more opportunities for qualified private operators. Since the FTA’s 2012 interpretation, I believe, many transit agencies have incorporated special-event transportation into their operating budgets rather than treating it as separate charter work. The FTA reviews those budgets as part of its Triennial Review process.
During LTD’s most recent Triennial Review, the FTA cited the agency for Charter Rule violations involving its Butte-to-Butte shuttle service. LTD subsequently submitted a remedial training plan and, according to FTA records, is implementing that plan. At the same time, the FTA’s April 28 determination allows LTD to operate the Oregon Country Fair shuttle under Section 604.9. Those circumstances warrant closer examination of how the Charter Rule is being interpreted and enforced.
Case’s consequences
Pronto’s complaint regarding the Oregon Country Fair shuttle remains pending before the FTA. I believe the issues raised in that complaint deserve a formal response.
I recognize that others may view this case differently. That is why I encourage operators to review the documents for themselves, including Pronto’s complaint, our motion asking FTA to vacate its April 28 determination, the public records obtained from LTD, the FTA’s response and the relevant provisions of 49 CFR Part 604.
My purpose in writing this is not to revisit a single procurement dispute. It is to encourage a broader discussion about how the Charter Rule is interpreted and enforced, and whether it continues to provide the protections Congress intended for qualified private operators.
If you believe this issue affects the future of the private motorcoach industry, I encourage you to join that discussion. Submit comments when opportunities arise. Share your experiences with industry associations. Speak with your elected representatives about the importance of maintaining a fair and competitive environment for private carriers.
Reasonable people may disagree about the outcome of the Oregon Country Fair case. What should not be in dispute, however, is the importance of a transparent process and the consistent application of the Charter Rule.
The questions raised by this case extend beyond one event in Oregon. In my view, they deserve the attention of every private operator that relies on the Charter Rule to compete fairly in the marketplace.
Kumar Shah is president, CEO and chairman of Pronto Corp., a charter transportation and technology company based in San Jose, California. He has more than 20 years of experience in the motorcoach industry and prior to that, as CEO / CMO of several venture capital-funded high-tech companies and several years with a Silicon Valley-based venture capital firm. He has advocated on regulatory issues affecting private transportation providers. Readers with questions or comments may contact him at kumar@prontojourneys.com or pr@ProntoCorporation.com or visit ProntoJourneys.com.
