Equitable Competition

Equitable Competition

Private intercity bus operators are encountering increased illegal competition from federally subsidized local transit agencies. Congressional mandated Federal Transit Administration (FTA) regulations prevent transit agencies from accepting federal subsidy and providing charter or scheduled intercity bus service. Despite the prohibition some local transit agencies offer these services in direct violation of federal law.


The Federal Transit Act of 1964 excludes "charter and sightseeing transportation" services from the definition of "mass transportation" for which FTA funding is available. In addition, the Act prohibits a public agency recipient of FTA funds from providing intercity charter bus operations if it will foreclose a private bus operator from providing the same service.

In SAFETEA-LU, Congress mandated that the Secretary of Transportation investigate charter rule violations and provided the authority to fine publicly funded transit agencies that violate the charter rule. In addition, Congress mandated that FTA conduct a negotiated rulemaking proceeding ("Neg. Reg.") in which transit agencies, labor unions, non-profit transportation providers and private bus operators negotiated an updated regulatory structure. The final rule, published on January, 14 2008, provides clear guidelines on the delineations for when the private sector has the right to provide service and when publicly funded transit agencies may provide service. The updated rules established a rational decision and appeals process along with safeguards to ensure that non-profit social service agencies are provided transportation service. Importantly the updated rule was negotiated between all parties and finalized by the FTA.

ABA Position

We seek full enforcement of the FTA's charter bus rule. We reject any congressional action to diminish or restrict charter rule enforcement in any jurisdiction. Charter services are explicitly a function of the private motorcoach industry. Unlike publicly funded transit, private sector operators must cover their fully allocated (operating and capital) costs when pricing charter contracts and intercity service. Therefore, the charter rule prevents transit operators from using their access to public funds to underbid free market pricing. The motorcoach travel and tour industry provide $145 billion in economic impact and supports as many as 1.4 million American jobs1. Attacks on the charter rule threaten one of the largest and least subsidized public transportation systems in the United States. As federal and state budgets tighten transit authorities should incorporate private sector transportation providers into their planning to help maximize the use of public dollars. Charter operators like their scheduled service counterparts provide a valuable public transportation benefit that can be integrated into statewide transportation planning. ABA believes that public dollars should be used in the most efficient way possible and not as a tool to disenfranchise, undercut and potentially shutter private businesses.

1 [1] The ABA Foundation, The Economic Impact of the Motorcoach Travel and Tourism Industry; 2012.