Private operators challenge states to share CARES Act transit funds

With Congress deadlocked over a new COVID-19 relief package that could include $10 billion in loans and grants to the private motorcoach industry, some operators are holding out hope that states will share some of the federal money they have already received but have yet to fully allocate.

So far, though, they have had little luck convincing states to provide a portion of their Coronavirus Aid, Relief and Economic Security (CARES) Act funds to the private motorcoach industry. About $25 billion of the $2.2 trillion federal aid package was assigned to transit agencies when the measure passed in March. 

Only three states — Michigan, Wisconsin and New Hampshire — have shared their CARES Act transit monies with the battered industry. In all three states, the money is funding private operators that provide commuter and line services, not charter or tour operators.

“It’s really disappointing,” said Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University in Chicago. “Motorcoach operators fell between the cracks. They were not given support like public transit agencies.”

More than 70% decline

Schwieterman produces annual reports on the motorcoach industry, with the last one published before the pandemic stopped the motorcoach industry in its tracks in March. Since then, the industry has seen business decline by more than 70%, he said.

DeCamp Bus Lines shut down service Aug. 7.

In August, the transportation departments in Michigan and Wisconsin provided $2.4 million in CARES Act funding to Michigan-based Indian Trails Inc. so it could restart daily scheduled bus service, which includes routes throughout Michigan and into Chicago, Milwaukee and Duluth, Minnesota, along with reduced connections to the Greyhound and Amtrak national networks.

The funding, the same type as provided to local transit authorities, will help cover Indian Trails’ losses on all contracted and subsidized routes for the rest of 2020 and into 2021 as ridership rebuilds.

New Hampshire is allocating $7.5 million in CARES Act aid to three private bus companies so they can resume line service, mainly between New Hampshire and Boston. The state’s transportation department allocated $3.5 million to C&J Bus Lines in Portsmouth, $2 million to Concord Coach Lines and $2 million to Dartmouth Coach in Lebanon.

The three companies traditionally carry 1.5 million passengers annually between New Hampshire and Boston for work, medical services and recreational travel, and are considered a critical component of the transportation system in New Hampshire. 

Operations suspended

Another private operator that also could be considered essential was unable to receive CARES Act funding from New Jersey and was forced to suspend commuter operations last month.

DeCamp Bus Lines, which has been operating in New Jersey since 1870, shut down service on Aug. 7 after the financial strain of the pandemic crushed its operating budget. All but two of the company’s 66 buses were parked.

“We had 6,500 to 7,000 passengers a day before the pandemic,” said Jonathan DeCamp, vice president and chief operating officer, and the sixth-generation of his family to work at the 150-year-old company. “When we shut down on Aug. 7, we had 400 on a good day.”

DeCamp said industry officials have been trying to convince the state to share some of the CARES Act money that went to New Jersey Transit, arguing that the public agency received more than it asked for. That’s because funding was determined by the passenger mileage reported to the state by both public transit and private commuter lines, he said, adding that it is only fair that the private lines share the money.

“But New Jersey has been unwilling or unable to share those funds with us,” DeCamp said.

‘Grossly unfair’

Carol Katz, a principal at Katz Government Affairs LLC, a lobbying firm that represents the Bus Association of New Jersey, wrote in a recent op-ed in the Star-Ledger that New Jersey Transit received $1.4 billion in CARES Act funding, $200 million more than the state had requested. She said that one-third of scheduled bus service in the state is provided by private bus operators, yet New Jersey Transit has refused to share any of the federal monies with those operators.

“That’s tough for DeCamp. But it’s also grossly unfair to DeCamp’s passengers and to other New Jerseyans whose routes to work, or the doctor, or the grocery store happen to be operated by a private bus carrier instead of NJ Transit,” Katz wrote.

She questioned New Jersey Transit’s argument that Federal Transit Administration regulations prohibit public transit agencies from sharing CARES Act funds with private operators.

“Tell that to Michigan or New Hampshire, each of which recently spent FTA funding to bring their private bus companies back to life,” Katz wrote.

No mention of prohibition

The FTA’s website states that a transit agency may use funding from the CARES Act apportioned through the Formula Grants for Rural Areas program for any purpose normally allowed through that program, including private intercity bus services. That program provides funding to support public transportation in rural areas with populations less than 50,000.

Pattie Cowley
Pattie Cowley

An FTA spokesperson said that the distribution of CARES Act funds to private operators in urban areas depends on the contract between the agency receiving the money and the private carrier.

“A private sector company providing public transportation may receive CARES Act funds for the FTA Urbanized Area Formula Program from an eligible recipient of those funds, such as a state DOT or transit agency, depending on the terms of its contract with the recipient,” the spokesperson said.

Some private bus companies in New Jersey have their own schedules and also are contracted to run some of New Jersey Transit’s routes. Nancy Snyder, a spokeswoman for the transit agency, told that the agreement between the private operators and New Jersey Transit is that the agency will provide vehicles and capital improvements in exchange for the revenue miles used in the formula to calculate federal aid.

“Each year, private carriers have been compensated beyond the value of revenue miles through equipment, maintenance and other subsidies provided by NJ Transit,” Snyder said.

‘Hanging in the balance’

New Jersey state legislators, as well as the New Jersey Business & Industry Association and the Greater New Jersey Motorcoach Association, have called on Gov. Phil Murphy to release more of the state’s $2.4 billion in CARES Act funds. Published reports have estimated that the state has spent only about 10% of those funds.

“Murphy is sitting on it, and people are up in arms about it,” said Patricia Cowley, executive director of the Greater New Jersey Motorcoach Association. “That money is supposed to be for helping businesses. We want it to be used for getting the smallest businesses back on their feet. Lives and businesses are hanging in the balance.”

Critics have claimed that Murphy is hoarding the money in hopes that Congress will eventually let states use their CARES Act allocations to shore up their general funds. But the governor has denied such claims, saying that he still needed guidance on how the state can legally spend the money.

“All federal money comes with very strict regulations, and there’s approval processes,” Murphy said during a briefing on the pandemic, according to NJ Spotlight News.

But Cowley said the whole issue appears to boil down to one thing: “I hate to say it, but it’s all politics.”

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