NEW YORK CITY -- The drama over the New York Metropolitan Transportation Authority takeover of dozens of commuter bus routes being operated by private companies continues to take new twists and turns.

While the private carriers step up their bargaining with New York City and MTA officials, 130 nonunion employees of four of the seven companies are fighting for their jobs.

They've submitted their arguments to binding arbitration in hopes of forcing the transit authority to abide by federal work rules that would require it to give the workers similar jobs with comparable pay and benefits or provide them with job training or cash settlements.

"We're trying to protect them and their families from the economic devastation created by the takeover," said Steven A. Diaz, a Washington D.C. attorney representing the employees of Command Bus Co., Green Bus Lines, Jamaica Buses and Triboro Coach Corp.

The four companies are among seven being taken over by MTA as part of a city scheme to put their routes in the hands of MTA. The regional transit authority is scheduled to take over the four companies April 30. The authority began operating routes formerly run by Liberty Lines Express last month, and is due to take over Queens Surface Corp. routes Feb. 26 and New York Bus Co. routes March 26.

The takeovers, which have been plagued with troubles for months, come as the result of the city dropping franchise agreements it had with the private companies for more than 25 years. The city said it wanted to make the move so service could be improved and it could save the $100 million to $150 million annual subsidy it had been providing the private companies to run 80 daily commuter routes in and out of the city.

The private companies, some of which want to continue to operate the runs, claim the city hindered the service by refusing to replace the 18- to 20-year-old, city-owned buses they have been operating on the routes.

Diaz says the nonunion employees are entitled to job offers or other benefits under the Federal Transit Act, which requires cities and transit agencies to afford "fair and equitable" protections to employees affected by the use of federal transit grants.

He said the 13C provision of the law affects New York and the MTA because a $132 million federal transit grant originally issued to the city some time ago for replacement buses for the seven private companies has been redirected to the MTA and now is being used to buy buses for the same routes the MTA is taking over from the private companies.

Diaz cited a press release issued in November by New York Mayor Michael R. Bloomberg and MTA Chairman Peter S. Kalikow in which they announced that $132 million in federal money had been allocated to buy as many as 300 buses to improve service on routes being operated by the private companies. Since then, says Diaz, they have switched positions and now claim the money actually would be used to purchase train cars and only MTA capital funds would be used to acquire the buses.

Diaz called the conduct of the city and the MTA a game of "bait and switch."

"The city intended all along to use its parked grant to facilitate the subject takeover and has disingenuously protested otherwise in a clear effort to mislead the government and this proceeding," Diaz said. "The manner in which this scheme has come to light through the reprogramming process is proof of the city's deliberate attempts to mischaracterize its intent and the true nature of its actions from the very beginning."

G. Kent Woodman, a Washington D.C. attorney representing the city in the arbitration case, disputes the allegations, insisting the MTA has a long-standing policy of using only local funds for bus purchases.

"None of the federal funds being reprogrammed will be used for the purchase of buses or for the improvement of any bus facilities used by the MTA, including those in the service area of the private companies," he said in a filing with the arbitrator.

MTA spokesman Tom Kelly said the agency routinely does not use federal money for bus purchases because it has a special pre-qualification testing program for new buses that the Federal Transit Administration says is not allowed when federal grants are used.

Motor Coach Industries, which is filling an order for 125 buses for MTA, supported the transit agency's position, noting that the buses it is selling the MTA are being paid with capital funds, not federal money. "They have not used federal money for new buses for years," he said.

Ten of the new buses have been placed in service on the routes operated by Liberty Lines and the remainder will be delivered by the end of the summer.

Still, Diaz contends the city and MTA are not using the grant money properly and the city should be held responsible for the nonunion employees under the transit act. "They appear to be speaking out of both sides of their mouths and somebody is being mislead, which is a very serious matter when you are talking about $132 million," Diaz added.

The arbitrator is expected to rule on a series of preliminary motions at any time and issue a final ruling on the nonunion employee question later.

Meantime, representatives of Command, Green, Jamaica and Triboro continue negotiations with the city.

Jerry Cooper, head of an alliance formed by the four companies, said only one key issue - pensions - has been settled so far. "They've challenged us on our valuation of our real property, on our tangibles and of the nonunion work force, the whole nine yards," he said.

Still, he thinks the issues are likely to be settled, although he is not confident that a final takeover agreement will be completed by the April 30 deadline. "I do think it (the takeover) will happen though," he said. "They can't condemn us because it would take too long, so I believe they will give us what we want."

Cooper continues to maintain that the move will not benefit the city or bus riders. (See Nov. 15 issue of Bus & Motorcoach News). He insists the MTA will reduce service, raise fares and continue to use the same rundown buses that are being used now. "But nobody is letting me voice my opinion and, if they are, they certainly don't agree with me."

He has urged the city to abandon the takeover plan and allow the private companies to continue operating the routes under a new franchise contract.