February 2010

Could a Voice From the Hill Change the Charter Rule?

by Nicole Schlosser, Associate Editor

Recent upset to the Charter Rule occurring in Washington State has left motorcoach industry experts wondering what the future holds for the law. On Dec. 16, Congress approved and the Obama Administration signed the Omnibus Appropriations Bill, which included a provision from Sen. Patty Murray (D-Wash.) to exempt King County Metro Transit from the Charter Rule, allowing the agency to take precedence over private transportation companies to provide shuttle service for the Seattle Seahawks, Seattle Mariners and University of Washington Huskies sporting events.

While the provision is strictly meant to apply to charter service for these sports teams, it could be extended to other area events, meaning that potentially the Federal Transit Administration (FTA) would be unable to enforce the Charter Rule against King County Metro on any charter work, taking business away from an increasing number of private operators.

While the bill is not a permanent provision of the law, and so far is only in effect for the current fiscal year, chances are that if the bill is renewed, the provision will stay put.

Clarifying communication

In 2008, clarifications were made to the Charter Rule, to enhance communication between public and private transportation and to make clearer which entity could take certain jobs. The Rule was also revised to add clarification on the appeal process, who to report to and penalties. The cornerstone of the original Charter Rule was a "willing and able" provision, meaning that if there was a private, willing operator who could provide the requested service and was able because they had the necessary equipment and met the requirements of the customer, then that operator had precedence over the public entity. It ensured that if there wasn't a private operator able or available, that the service would be done by a public agency, so the customer got service.

That intent did not change in the negotiated rulemaking. The revisions further clarified the "willing and able" provision and specified that the public entity could seize opportunities to showcase itself. "As a transit agency, if the mayor said '[there are] dignitaries coming to town, we want to be able to showcase our own service that we're paying for,' you weren't obligated to follow the willing and able rule and hire a private company when you had the service in your own backyard," explains Peter Pantuso, president, American Bus Association (ABA).

"[The clarifications] made the rule easier for everybody to understand: clearer definitions, clearer lines of who was responsible for what. Now those clear lines have been blurred, because you have a successful sports franchise that doesn't want to pay for service, and people buying tickets to go to a Seattle Seahawks football game, who are spending $100 or more a ticket, don't want to pay an extra couple of dollars for transportation," he adds.

Fostering teamwork

While they worked on the clarifications, the Rule brought the public and the private sectors of the transportation industry together to put a meaningful rule in place that clarified how to share information. Pantuso says that the provision could have a ripple effect on the industry. "It would be very easy for other senators and members of Congress to all of a sudden follow the same model [as Washington State] for an agency that they represent. It could very quickly end up turning the Charter Rule around to the point where it was worse than when the negotiated agreement took place," he adds.

Pantuso points to examples of public and private operators working together more effectively over the last year, likely as a result of the clarifications. "The private sector stepped up to the plate, and provided excellent service for golf tournaments, the Kentucky Derby and the Hollywood Bowl Concert Series - all of those were done in an environment where they wouldn't been done before by the private sector." Many operators worked to develop relationships with the local transit agency. "It's been more of a partnership in the last year-and-a-half than it ever had been in the past, and it's unfortunate to see it moving in a different direction now," Pantuso says.

Victor Parra, president, United Motorcoach Association (UMA), says that the exemption undermines the entire Charter Rule, creating a potentially dangerous precedent. "The whole Rule was [intended] to keep publicly funded transit out of work that has been the purview of the private sector. Given that the transits are subsidized by taxpayer dollars, there's no way we can compete. They offer the same service at a lesser price." He notes that while Sen. Murray said that she doesn't want any other jurisdictions or states to jump on board, that potentially could happen down the road.

Parra says that the Rule is valuable because it has promoted the need for the public and the private sector to work together at a time when deficits are climbing. He sees this teamwork as a way of reducing taxpayer expenditures and utilizing private sector resources to support the transportation needs of the community. "Government dollars, state and federal, are being squeezed," he adds. "This is a smart time to utilize private sector resources. Hopefully we'll see a lot more of that going forward. Instead of continuing to put out more money for publicly funded equipment, let's use private sector assets. They're there, they're paid for."


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