WASHINGTON New Jersey Transit has appealed the $10,000 fine levied against it by the Federal Transit Administration for violating the governments charter service rule during a golf tournament last summer, questioning the size of the penalty and "whether such an assessment is appropriate."

The transit agencys appeal "does not dispute" that "NJ Transit failed to ensure . . . compliance" with the federal charter service regulation.

Instead, the appeal argues the FTA overstated the number of federally-funded buses used by Academy Bus, New Jersey Transits largest private contractor, to shuttle spectators during the tournament, maintaining the total was 23 buses and not 31 as alleged.

New Jersey Transit also argues it was improperly punished as a repeat offender of the charter service regulation, which prohibits public transit agencies and their contractors from gaining an unfair advantage over private-sector operators by using taxpayer-paid-for buses to provide charters.

The FTA issued the fine after finding a "pattern of violations" by New Jersey Transit because the transit agency also breached the charter service rule earlier in 2013.

In addition to the fine, the FTA ordered New Jersey Transit to submit within 90 days an oversight plan that would ensure that all of its third-party contractors comply with the federal charter service rule. (See July 1 Bus & Motorcoach News).

Basis of case/fine

Last September, the United Motorcoach Association filed a complaint against New Jersey Transit on behalf of Service Bus Co. of Yonkers, N.Y.

The complaint alleged that numerous buses owned by New Jersey Transit and operated by Academy Bus were observed providing continuous shuttle service -- for three days -- from designated parking areas to the Barclays Golf Tournament. The PGA Tour event was played at Liberty National Golf Club in Jersey City.

Academy, based in Hoboken, N.J., operates scores of commuter coaches for New Jersey Transit, the fourth-largest transit bus system in the U.S. Only New York, Los Angeles and Chicago have larger systems. The statewide transit authority operates 2,027 buses, according to its website.

Academy is the nations fourth-largest private motorcoach operator and the largest family-owned coach company.

The New Jersey Transit appeal reveals that Academy was paid $165,512.50 to provide the shuttles at the golf tournament.

The FTA finding and fine against New Jersey Transit was hailed by many motorcoach operators in the Northeast. These operators say Academy has used New Jersey Transit buses for years to provide illegal charter service and undercut competitors.

Some operators, however, criticized the $10,000 fine as being too small in light of their belief that the economic damages suffered by private operators have been much larger.

The UMA complaint asserted that Academy was subject to the charter service regulation as a sub-recipient of FTA funds and was required to notify registered charter companies upon receiving a request to provide charter service at the golf tournament, thereby allowing other companies to bid on the shuttle contract.

UMA contended that under the federal charter regulation, New Jersey Transit was responsible for Academys actions.

Basis of N.J. Transit appeal

New Jersey appealed the fine in a letter to FTA Deputy Administrator Therese McMillan.

"NJ Transit does not appeal the determination that it violated the charter service regulation," its appeal states. "NJ Transit does not dispute that Academy failed to comply with the regulations and that NJ Transit failed to ensure such compliance (when) Academy used FTA-funded buses to provide a private charter for the Barclays Golf Tournament in August 2013."

New Jersey Transit, with a $1.9-billion budget for fiscal 2013, contends the $10,000 fine is too large. Its appeal states: "The economic benefit gained by Academy in using the FTA-funded buses should be recalculated to a lesser amount, thereby reducing the penalty on NJ Transit."

The transit agency gave two reasons for arguing the fine should be bumped lower:

"First, the FTA has over-counted the number of FTA-funded vehicles used by Academy in its charter service. As stated in NJ Transits answer, Academy used two FTA buses on Aug. 23, 13 on Aug. 24 and 16 on Aug. 25. However, the actual number of discrete vehicles used by Academy is only 23 not 31. Several buses were used on more than one occasion . . . if the correct number of vehicles used in the calculation of the fraction of FTA-funded buses in the Academy charter fleet, a percentage of 13.1 percent . . . . would result, not 17.6 percent.

"Second, NJ Transit contends that the overall economic benefit to Academy . . . has not been properly calculated . . . NJ Transit advised that the total value of the contract between Academy and Barclays was $165,512.50 . . . However, it is appropriate that this amount be reduced by the costs incurred by Academy in providing the service such as the costs of its drivers, fuel, and other operating expenses . . .

"Utilizing the lower percentage of 13.1 percent and an amount less than $165,512.50 would produce an economic benefit to Academy of FTA buses of an amount less than $29,130.20. It is likely that this amount would be sufficiently lower enough to allow the administrator to conclude that the level of economic benefit to Academy was only minor, not moderate."

What pattern?

New Jersey Transit also argues that the federal government incorrectly based the fine on a "pattern of violations."

On March 25, 2013, the FTA issued a cease-and-desist order to New Jersey Transit and the Atlantic City Jitney Association in response to a complaint that the association was impermissibly using FTA-funded buses to provide charter service. New Jersey Transit was ordered to develop an oversight plan to ensure that its contractors complied with the charter service regulation.

However, the FTA noted in its Academy ruling that New Jersey Transit had yet to file that oversight plan, saying that its "repeated failure" to enforce the charter service regulation demonstrates "a pattern of violations."

"This statement is not correct," states the New Jersey Transit appeal. It points to an attached e-mail, dated Aug. 1, 2012, that was sent to two FTA consultants as proof of an oversight plan. The transit system says this plan was also attached to a letter sent to FTA on April 10, 2013. "This, in two instances, NJ Transit provided the FTA with the required oversight plan."

In requesting the FTA reconsider the penalty, New Jersey Transit summarizes:

"First, there is no basis to conclude that NJ Transit has committed more than one violation constituting a pattern of violations. Second, even if the administrator were to conclude that the decision was correct, as to this issue, the economic benefit gained by Academy in using the FTA-funded buses should be recalculated to a lesser amount, thereby reducing the penalty on NJ Transit."

The appeal was signed by John J. Hoffman, acting attorney general of New Jersey.

More . . . not less

The New Jersey fine should have been larger, not smaller, said Sal Dipaolo, president of Service Bus Company, which instigated the New Jersey Transit complaint. Last month, he told Bus & Motorcoach News, "It is nowhere near what it should have been."

Dipaolo also noted that the use of federally-funded buses by major private bus operators is not uncommon in the East, and that smaller charter companies "are seriously handicapped by the practice." He said he has tried to file complaints in the past but didnt have the resources to pursue them.

"I appreciate all the efforts of UMA in helping me with this complaint," he said. "It never would have gotten this far without them."