RICHMOND, Va. A northern Virginia transit agency has come under fire from the motorcoach industry for having one of its subsidiaries obtain a state operating permit that will allow it to provide charter service in three different sections of the state.

Coach industry opponents of the move say Virginia Regional Transit of Purcellville is attempting to skirt the new charter service rule that was adopted last year by the Federal Transit Administration.

"We have concluded the issue is very clear, VRT is doing its best to circumvent the revised charter service rule," said Ken Presley, vice president of the United Motorcoach Association. "Is this how the community that supports VRT wants its resources dedicated, harming private taxpaying businesses that employ dozens in their community?"

His comments were echoed by Scott Merriman of Scenic America in Bealeton, Va., who warned the precedent could lead to other transit agencies in the state following VRTs lead and creating their own subsidiaries and beginning to compete for charter work with private carriers. "I think theyve opened a real Pandoras Box here," he said.

Presley and Merriman both said the situation is likely to lead to the filing of a charter service rule violation complaint with the FTA.

The federal rule strictly limits the types of charters that public transit agencies are allowed to do and requires that before they can accept a charter, they first must offer it to private carriers that have asked to be notified.

At issue is a decision last month by the state Department of Motor Vehicles, granting VRT subsidiary Virginia Rides an operating certificate to provide charter service in Loudon and Culpepper counties and in the city of Staunton. Loudon is a northern suburb of the District of Columbia, while Culpepper is about 100 miles from the capital and Staunton is 200 miles away.

Virginia Rides said at a hearing conducted by the state DMV that it plans to offer low-cost and short-duration trips of about one hour to social service groups, private schools, youth organizations and agencies that provide transportation for the homeless and the elderly. Officials from the two counties and the city joined the company at the hearing and testified that there was a need for such service.

The request was opposed by the Virginia Motorcoach Association and 16 of its members who argued that granting of the license would take away business from them and put them at a disadvantage because they fund their own operations and are not subsidized by federal transit grants.

"Virginia Rides indicates they only wish to afford charter transportation to human service organizations. The revised charter service regulation provides ample caveats for this service. The plain-and-simple truth is VRT wants to be in the charter business and this is its version of circumventing the rule," emphasized Presley.

The company asserted at the hearing that although federally subsidized VRT is its parent company, it is a separate entity and does not share in any VRT government grants. Instead, it claimed it was financed by VRT with a $10,000 loan that originated from local and other non-federal revenue sources and that it pays VRT an annual $16,000 management fee. It also maintained that it has its own buses, parking, offices, phones, bank account and financing arrangements.

Hearing Officer Terrence Deanes ruled that because there was no evidence that the private operators were not now providing the service sought by Virginia Rides, there was no basis to conclude that granting the certificate would be unfair or cause them financial harm.

"I was shocked, disappointed and dissatisfied with the ruling, which shows that the hearing officer and the DMV are uneducated and clueless about the federal charter rule," said Merriman. "To allow a nonprofit to do charters makes zero sense to me."

He said VRT had been doing charters for many years but was prevented from continuing to do so when the new charter rule was issued. Instead of giving up and moving on, he said the transit agency created Virginia Rides so it could remain in the charter business.

"Now, when you call VRT with a charter job, they say they cant do it, but that Virginia Rides can and they give them their telephone number," he noted.

Merriman said he receives charter notices from transit agencies throughout the state every week but has never gotten one from VRT.

"There are so many transits playing by the rules, but what if the people change and they look at the VRT model and then start in the charter business," he added. "My problem is that the DMV has opened the opportunity for every publicly funded transit agency in the state to create its own charter service and go head-to-head with me."

He said he will pursue the issue with the FTA and probably will file a formal complaint on his own. At the same time, the state association plans to get together soon to discuss what it might do also.

Added Presley: "Federal and state lawmakers and regulators simply cannot anticipate every possibility but it is difficult to see how this will not eventually culminate in a charter service complaint. UMA is prepared to protect our members' rights."