Charter Rule

For years, ABA and other members of a transportation coalition representing private surface passenger transportation providers have sought to protect private operators from unfair competition and predatory pricing by entities that are either tax exempt or largely bankrolled by the federal government. Two principal examples of unfair competition are: 1) the solicitation of charter bus services at below the fully allocated cost; and 2) the offering of duplicitous services over the fixed routes operated by private transportation providers by subsidized or exempt entities.

Since 1976, the Federal Transit Administration has sought to preserve the role of providing charter bus service for the private motorcoach industry and to limit the charter activities of transit agencies receiving federal capital and operating subsidies. In 1988, the FTA developed and issued its Charter Bus (Service) Rules, but within that initial framework the enforcement of the charter rules was limited in scope and the severity of its penalties.

With the passage of SAFETEA-LU the charter bus rules were mandated for reconsideration. A special committee jointly formed of 22 public and private transportation organizations (including ABA) met over the course of 8 months to revise and reaffirm the limited conditions under which transit agencies could provide services currently offered by the private motorcoach industry. In addition to determining the scope of allowable activities, a new enforcement mechanism and a realistic matrix of financial penalties was established. All complaints can now be lodged electronically and the new regulation mandates a response and adjudication timeline. All charter service notices will be provided directly to registered charter providers electronically by transit agencies. Additional highlights may be found below.

Unfair competition from commuter rail providers, Amtrak, essential air service providers, university transportation services, and other non-profit or tax exempt entities are regulated by differing legislation and federal entities such as Amtrak Reauthorization (legislation), Essential Air Service Reauthorization (legislation), the Federal Aviation Administration (agency), the Federal Transit Administration (agency) and the Internal Revenue Service (agency).

For the full text of the Charter Bus Rules, the IRS ruling on non-profits/tax-exempt entities, the charter bus rules compliance highlights, the complaint forms, and to register for protection as a charter provider check the related resources below.

The FTA has also made additional resources [1] available.