BEFORE THE FEDERAL TRANSIT ADMINISTRATION

Charter Complaint #2003-01

49 U.S.C. Sections 5303, 5304, 5306, 5307, and 5323

California Bus Association,

On behalf of Amador Bus Lines,

Complainant

v\.

Sacramento Regional Transit District,

Respondent.

DECISION

INTRODUCTION

On March 6, 2003, the California Bus Association (CBA) filed this
complaint with the Federal Transit Administration (FTA) alleging that
the Sacramento Regional Transit District (RT) has violated the
conditions placed on the receipt of Federal assistance by the Federal
transit laws (49 U.S.C. Chapter 53) by instituting the Downtown
Circulator service, which among other things, replaced a service
operated by a private operator, Amador Bus Lines, under contract to the
State of California Department of General Services (DGS). After
reviewing the allegations and the filings of the parties, FTA concludes
as follows:

> • that RT\'s Downtown Circulator is not impermissible charter service
> under FTA\'s charter service regulation at 49 CFR Part 604; that RT\'s
> Downtown Circulator is \"mass transportation\" within the meaning of
> the Federal transit laws; and, accordingly, that the requirements of
> 49 U.S.C. 5323(d)(1) regarding a public authority\'s provision of
> charter service in competition with a private operator of charter bus
> service do not apply to RT\'s service; and
>
> • that since Amador\'s shuttle service contract with DGS was for
> charter service, not mass transportation service, the requirements of
> 49 U.S.C. 5323(a)(1) regarding, a public authority\'s provision of
> mass transportation service in competition with a private operator of
> mass transportation service do not apply; that with regard to
> participation by the private sector, RT has met the minimum statutory
> requirements for public notice and comment in section 5307; and that
> while it appears that RT could have done more to explore the use of
> private sector providers in this situation, RT has met the minimum
> requirements of section 5306.

CBA\'s complaint

Under its contract with DGS, Amador provided shuttle service for the
exclusive benefit of state employees parking in state lots. Sometime in
2002, the State contacted RT to determine whether RT could add new
routes to its downtown service area that would meet the needs of its
employees who travel between State parking lots and State office
buildings. As a result of these discussions, RT developed the Downtown
Circulator service (also referred to as the Capital Shuttle), which now
consists of three fixed routes numbered 141,142, and 143 within the
Central City of Sacramento. As a part of this plan, RT also changed the
frequency of its previously existing Route 140.

This expansion of RT\'s service is provided by FTA funded CNG-powered
buses. DGS and RT entered into an agreement whereby DGS compensates RT
for the additional costs of increasing downtown service in consideration
of RT\'s acceptance of the State employee ID card as proof of fare
payment along these new routes. Passengers who do not possess a State ID
card pay the applicable fare: DGS purchases Central, City Passes for its
employees at a discounted rate.

On January 28, 2003, DGS notified Amador that its contract would not be
renewed when it expired on April 7, 2003. In its March complaint, CBA
requested that FTA investigate, alleging that RT violated private sector
participation requirements under 49 U.S.C, 5303 (f)(4), 5304(d), 5306(a)
and 5307(c)(2) and (6) by failing to inform or involve the private
sector in its plan to use Federal assistance to purchase expansion buses
for the purpose of displacing the private operator.

CBA also cites 49 U.S.C. 5323(a)(1)(A) and (B) in arguing that RT\'s
federally assisted expansion buses are being used, unlawfully, to
prevent an existing private transportation operator from fairly
competing to provide this service.

CBA also asserts RT\'s Downtown Circulator service violates FTA\'s
Charter regulations, arguing that the Downtown Circulator is riot mass
transportation service as defined by 49 U.S.C. 5302(a)(7) and 49 CFR
Part 604. CBA cites the agreement with DGS for RT to provide shuttle
service for DGS employees and the RT planning documents describing DGS\'
approaching RT to operate the service needed to replace the shuttle
service performed by Amador.

RT\'s response

On March 20, 2003, RT responded to the complaint. RT related the history
of its development of the Downtown Circulator service, including its
public hearing in June 1999 for the program of projects that included
expansion of its CNG fleet. At that time, RT did not have a specific
plan for deploying these new buses, other than to meet growing demand
for service in the region. In addition, RT anticipated that it might
need more buses to accommodate the service changes that would be
required with the opening of the South Sacramento and the Amtrak-Folsom
Light Rail Corridor Light Rail Extension projects. Last year, RT
developed the service plan to determine where to

deploy these new buses, which are only now being delivered to RT. RT
argued it met the private enterprise consultation obligations regarding
procurement of these buses with its published notices.

RT argued that it complies with the FTA public participation requirement
by publishing a notice annually that solicits private enterprise
participation in RT\'s development of its program of projects to be
funded under FTA grants. RT also publishes a notice of its program of
projects inviting comments before the program is adopted, combining this
notice with its budget public hearing notice. It provided a copy of the
notices for the last three years. The notice in June of 1999 included
expansion of RT\'s bus fleet. In addition, RT published a public hearing
notice in August 2002 for the new Downtown Circulator service. RT states
that its public notice process was reviewed as part of FTA\'s 1997 and
2000 triennial reviews and that no deficiencies in the public
participation process were noted.

RT states that although the new routes are designed to serve State
employees, the Downtown Circulator service is part of RT\'s fixed route
system of mass transportation and is not charter service as defined by
the three factors cited by FTA: (1) open to the public and not closed
door, (2) designed, to benefit the public at large, and (3) under the
control of the recipient.

In response to CBA\'s argument that section 5323 applies to this
situation, RT argues that FTA funds are not used to operate the
competing service and that the shuttle service operated by Amador was
charter service, not \"mass transportation service\" protected by the
statute.

Finally, RT argues that CBA\'s protest is untimely because Amador knew
on, January 27, 2003 that RT would be operating this service because it
testified at RT\'s public hearing on that day but waited until March 8
to submit its protest

RT believes the MPO for the Sacramento metropolitan urban area has
properly provided the notice required by sections 5303(f)(4), 5304(d),
and 5307(c)(2) and (6).

CBA\'s response to RT

On April 7, 2003, CBA responded to RT\'s March 20 and 25 responses,
stating as follows:

> 1\. RT is not in compliance with private sector participation
> requirements because it did not disclose that its 1999 program of
> projects bus expansion plan would include the Downtown Circulator
> service. Further, CBA states that RT\'s August 26, 2002 public
> hearings did not include the private sector in consultation regarding
> this new service.
>
> 2\. RT is not excused from FTA private sector participation
> requirements because it does not receive FTA operating assistance.
>
> 3\. Amador has standing to be protected under section 5323 because of
> its likelihood to be financially injured.
>
> 4\. RT\'s Downtown Circulator is not mass transportation, but charter
> under contract to DGS. RT\'s 1992 Sacramento Downtown Shuttle
> Feasibility Study Draft Final Report does not support the new service
> in question. CBA maintains there is no demonstrable demand for the
> Downtown Shuttle other than to serve State employees. Further, all of
> RT\'s public notices in 2002 identify this service as \"New Downtown
> State Shuttles.\" CBA argues that while the service agreement with DGS
> was converted into a purchase of Central City passes, the subsidy from
> DGS remains substantially the same.
>
> 5\. CBA\'s complaint is not untimely because while RT approved the
> Downtown Shuttle Service on September 30, 2002, it was toot until a
> February 14, 2003 meeting with DGS that CBA was told that DGS(was not
> interested in pursuing discussions with CBA.

RT\'s second response

On June 3, 2003, RT provided additional information regarding its
compliance with 49 U.S.C. sections 5306 and 5307 regarding private
enterprise participation. RT responded that the requirement in section
5306(a) applies to plans and programs developed by the metropolitan
planning organization, in this case the Sacramento Area Council of
Governments. RT states it complied with section 5307(c) requirements for
participation of interested parties, including private transportation
providers.

DISCUSSION

1\. Charter Service.

The threshold issue is whether the service provided by RT is
impermissible charter service or permissible mass transportation. The
definition of charter service found in FTA\'s regulations at 49 CFR
604.5(e) is as follows:

> \[T\]ransportation using buses or vans, or facilities funded under the
> Acts of a group of persons who pursuant to a common purpose, under a
> single contract, at a fixed charge for the vehicle or service, have
> acquired the exclusive use of the vehicle or service to travel
> together under an itinerary either specified in advance or modified
> after having left the place of origin.

Charter service is usually a one-time provision of service over which
the passenger, not the service provider, exercises control. 52 *Fed.
Reg*. 11916, 11919 (April 13, 1987). In contrast, the Federal transit
laws define \"mass transportation\" as transportation that provides
regular and continuing general or special transportation to the public.
49 U.S.C. § 5302(a)(7). In the preamble to its charter service
regulation, FTA has articulated other features that flow logically from
this definition:

> First, mass transportation is under the control of the recipient.
> Generally, the recipient is responsible for setting the route, rate,
> and schedule, and deciding what equipment is used. Second, the service
> is designed to benefit the public at large and not some special
> organization such as a private club. Third, mass transportation is
> often to the public and is not closed door. Thus, anyone who wishes to
> ride on the service must be permitted to do so.

52 *Fed. Reg*. 11920.

Given the many varying scenarios existing in the transportation
industry, FTA has determined that a balancing test must be used to
determine the nature of the service involved in any complaint filed with
FTA. As the preamble to the charter regulation points out, there is no
fixed definition of charter service, and the characteristics cited by
FTA are illustrative, not exhaustive. 52 *Fed. Reg*. 11919-11920.

*Under the control of the recipient*

The charter service criteria include bus transportation under a single
contract at a fixed rate for the vehicle or service. FTA has previously
determined that control of fares and schedules is the critical element
in the balancing test FTA uses to distinguish charter service from mass
transportation. *Seymour*, at 10. Compensation on the basis of hours of
service is evidence of charter operations, whereas individual fares paid
by each rider indicates the service is mass transportation. *Seymour*,
at 9-10.

The RT and DGS arrangement, the Central City Pass Agreement, provides
that RT retains control of routes and service. Such pass agreements are
not features of charter service, instead constituting \"group demand\"
service as contemplated by Q&A Number 27(e), \"Charter Questions and
Answers,\" 52 *Fed. Reg*. 42248, 42252 (November 3,1987), which provides
that group demand service is not charter service where groups such as
employees of a common workplace contract with a transit authority for
service and each individual pays his or her own fare, so long as the
authority controls routes and service and the service is open door.

*Designed to benefit the public at large*

Service is designed to benefit the public at large when it serves the
needs of the general public, instead of those of \"some special
organization such as a private club.\" 52 *Fed. Reg*. 11920 (April 13,
1987). *Annett Bus Lines v. City of Tallahassee*, FL-TALTRAN/90-02-01
(April 28, 1992). in this regard, CBA has provided evidence that the
Downtown Circulator service was structured to meet the needs of State
employees to travel from parking lots to State office buildings, that it
is a service designed to substitute for the State\'s contract service
with

Amador, and that the service since instituted carries almost exclusively
State employees. The record supports these assertions; however, none of
these facts, taken into consideration with the information provided by
RT, results in the conclusion that the Downtown Circulator service is
anything but mass transportation.

While the service is designed to accommodate the State employees
primarily, it is not restricted to their exclusive use, but is available
to anyone wishing to board; moreover, this service has been integrated
into RT\'s larger route structure, providing greater transportation
connectivity in the downtown area for riders of the fixed route system.
FTA finds that the service benefits the public at large.

(CBA argues that RT\'s 1992 study supports a different downtown service
configuration, not the Downtown Circulator service. FTA is not willing
to substitute its judgment for the grantee\'s in this regard.)

*Open to the public and not closed door*

In determining whether service is truly "open door,\" FTA looks both at
the level of ridership by the general public, as opposed to a particular
group, and at the intent of the recipient in offering the service. The
intent to make service open door can be descried in the attempts to make
the service known and available to the public. FTA thus takes into
account the efforts a recipient has made to market the service.
Generally, this effort is best evidenced by publication of the service
in the recipient\'s preprinted schedules. *Washington Motor Coach
Association v. Municipality of Metropolitan Seattle,* WA-09/87-01 (March
21, 1988). FTA has also interpreted \"open door\" to mean a substantial
public ridership and/or an attempt by the transit authority to widely
market the service. *Blue Grass Tours and Owner v. Lexington Transit
Authority*, URO-III-1987. The posting of bus stop signs and connections
to other transportation routes are also considered indicators of
\"opportunity for public ridership.\" *Seymour Charter Bus Lines v.
Knoxville Transit Authority*,TN-09788-Ol (November 29,1989).

RT advises that the Downtown Circulator routes and schedules are set out
in the pocket timetables that will be supplied in each bus assigned to
these routes. In addition, the new routes are included in the June 2003
edition of SRT\'s Bus and Lightrail Timetable Book. FTA finds that SRT
has demonstrated that the service is, in fact, open door.

Accordingly, FTA concludes that RT\'s Downtown Circulator is permissible
mass transportation, not charter service, within the meaning of the
Federal transit laws. We now turn to the question of RT\'s compliance
with the private sector participation requirements in the Federal
transit laws.

2\. Private Sector Involvement

*Compliance with private sector participation requirements*

The relevant provisions of 49 U.S.C. 5306 focus mainly on including the
private sector in participating in local transit programs, ensuring that
adequate compensation is provided a private provider when its transit
facilities and equipment are acquired by a state or local government
authority, and protecting private providers of transit from competition
with federally assisted transit providers.

Federal transit law (49 U.S.C. 5303(f)(4)) and the joint FTA/Federal
Highway Administration planning regulations direct special attention to
the concerns of private transit providers in planning and project
development, specifically requiring that private transit providers, as
well as other interested parties, be afforded an adequate opportunity to
be involved in the early stages of the plan development and update
process (23 CFR 450.322).

FTA does not impose prescriptive requirements for determining whether a
grant applicant has made adequate efforts to integrate private
enterprise in its transit program, as explained in the FTA Notice
\"Private Enterprise Participation,\" dated April 26, 1994 (59 *Fed.
Reg*. 2l890 *et seq*. (1994)); FTA Circular 9030.1C, Page V-39, Para.
24. *Private Enterprise Concerns* (October 1, 1998).

FTA grantees must comply with rigorous planning and private enterprise
requirements (49 U.S.C. 5303-5307) and the joint FTA/FHWA planning
regulations. To determine the adequacy of a grant applicant\'s efforts
to incorporate private enterprise in its transit program, FTA monitors
compliance with statutory and regulatory private enterprise requirements
as part of the triennial reviews. Indeed, FTA\'s Fiscal Year 2000
Triennial Review Report noted a deficiency in RT\'s public participation
process. On July 3, 2001, RT took corrective action through adoption of
a Standard Operating Procedure establishing a new coordination and
consultation process in developing the annual federal program of
projects. Upon review, FTA accepted this procedure and closed the
finding.

*Competition with the private sector*

Federal law recognizes the special concerns of private transportation
providers and affords them certain safeguards from competition with
public agencies. Specifically, FTA is prohibited from providing Federal
assistance to a governmental body that provides service in competition
with, or supplementary to, mass transportation service provided by a
private transportation company, unless FTA finds that the local
transportation program developed in the planning process provides for
participation of private mass transportation companies to the maximum
extent feasible (49 U.S.C. 5323(a)(1)(B)).

RT argues that this restriction in section 5323(a)(1) applies only if
FTA funds are used to operate the competing service and the company is
providing \"mass

transportation\" service and that neither condition is met here. RT
states the Downtown Circulator service does not fall under this
restriction. CBA has provided information to support its assertion that
the Downtown Shuttle service was instituted to meet, at least in part,
the needs of the State, as employer, to replace the service it had
previously contracted for with Amador.

The term \"mass transportation\" is defined in section 5302(a)(7) as
\"transportation by a conveyance that provides regular and continuing
general or special transportation to the public, *but does not include*
school bus, *charter* or sightseeing transportation.\" Emphasis added.
The term \"charter\" is defined in the FT A regulations at 49 CFR
604.5(e) as follows:

> \"Charter Service\" means transportation using buses or vans, or
> facilities funded under the Act of a group of persons who pursuant to
> a common purpose, under a single contract, at a fixed charge (in
> accordance with the carrier\'s tariff) for the vehicle or service,
> have acquired the exclusive use of the vehicle or service to travel
> together under an itinerary either specified in advance or modified
> after having left the place of origin\....\"

Under this standard, it is clear that the service Amador provided under
contract with DGS was charter service; moreover, Amador is not a
\"private mass transportation company\" to which the protections of
section 5323 apply.

CONCLUSION

While it appears that RT could have done more to explore the use of
private sector providers in this situation, RT has met the minimum
requirements under the law. The service RT is providing, known as the
Downtown Circulator, is not charter service, but permissible mass
transportation service.

In accordance with 49 CFR 604.l9, the losing party may appeal this
decision within ten days of receipt of the decision. The appeal should
be sent to Jennifer Dorn, Administrator, FTA, 400 Seventh Street, S.W.,
Room 9328, Washington D.C.20590.

Renee Marler

Regional Counsel

August 5, 2003

Leslie Rogers

Regional Counsel

August 5, 2003