A1330

ASSEMBLY, No. 1330

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblyman DeCROCE

An Act concerning competitive service on certain bus routes, establishing the New Jersey Competitive Bus Service Commission, amending P.L.1979, c.150 and P.L.1954, c.84 and supplementing Title 27 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) Sections 1 through 17 of this act shall be known and may be cited as the "New Jersey Competitive Bus Service Act."

2. (New section) The Legislature finds and declares that:

a. It is in the public interest to increase economy and efficiency in State Government by providing increased competition for the right to operate regular route motorbus services currently operated by the New Jersey Transit Corporation.

b. It is also in the public interest for the Board of the New Jersey Transit Corporation to continue to determine routes and minimum service and maximum fare policies for regular route motorbus services it now operates or contracts for in the State.

c. When offering private carriers the opportunity to operate motorbus service presently provided by the New Jersey Transit Corporation, the corporation shall compete for routes or route segments offered to ensure that service is provided at the least cost to the State.

d. Therefore, to avoid any appearance of conflict among the various roles which the New Jersey Transit Corporation has in the provision of public transit services, it is in the best interest of the State to establish a New Jersey Competitive Bus Service Commission within the Department of Transportation to issue proposals, select carriers, and ensure the proper administration of the operation of routes so awarded.

3. (New section) As used in this act:

"Bus service package" means one or more regular route motorbus routes or route segments to be operated by a single qualified carrier.

"Carrier" or "qualified carrier" means the corporation or a private carrier.

"Commission" means the New Jersey Competitive Bus Service Commission established by section 4 of this amendatory and supplementary act.

"Commissioner" means the Commissioner of Transportation.

"Corporation" means the New Jersey Transit Corporation.

"Department" means the Department of Transportation.

"Private carrier" means a private entity qualified by the commission to operate bus service packages pursuant to section 9 of this amendatory and supplementary act.

4. (New section) a. There is established in the Department of Transportation the New Jersey Competitive Bus Service Commission consisting of five members as follows: the commissioner and the State Treasurer, who shall be members ex officio, and three public members, one of whom shall be appointed by the Governor, with the advice and consent of the Senate, and the two remaining to be appointed by the Governor, one of whom upon recommendation of the President of the Senate and the other upon recommendation of the Speaker of the General Assembly. No more than three members of the commission shall be of the same political party. The public members appointed by the Governor shall serve a four year term, except that the public member appointed by the Governor upon recommendation of the President of the Senate shall serve for a four year term and the public member appointed upon recommendation of the Speaker of the General Assembly shall serve for a two year term. At least one public member shall be a regular bus commuter.

Each public member shall hold office for the term of the member's appointment and until the member's successor shall have been appointed and qualified. A member shall be eligible for reappointment. Any vacancy in the membership occurring other than by expiration of term shall be filled in the same manner as the original appointment but for the unexpired term only.

b. Each public member may be removed from office by the Governor, for cause, after public hearing, and may be suspended by the Governor pending the completion of such hearing. All members before entering upon their duties shall take and subscribe an oath to perform the duties of their office faithfully, impartially and justly to the best of their ability. A record of such oaths shall be filed in the Office of the Secretary of State.

c. The commission shall not be deemed to be constituted and shall not take action or adopt motions or resolutions until at least three members shall have been appointed and qualified in the manner provided in this section. The commissioner shall serve as chairperson of the commission. The members shall annually elect one of their members as vice chairperson. The members shall elect a secretary who need not be a member. The powers of the commission shall be vested in the members thereof in office from time to time and three members of the commission shall constitute a quorum at any meeting thereof. Action may be taken and motions and resolutions adopted by the commission at any meeting thereof by the affirmative vote of at least three members of the commission. No vacancy in the membership of the commission shall impair the right of a quorum of the members to exercise all the powers and perform all the duties of the commission.

d. The members of the commission shall serve without compensation, but the commission may reimburse its public members for actual expenses necessarily incurred in the discharge of their duties. Notwithstanding the provisions of any other law, no member shall be deemed to have forfeited nor shall the member forfeit the member's office or employment or any benefits or emoluments thereof by reason of the member's acceptance of the office of ex officio member of the commission or the member's services therein.

e. Each ex officio member may designate an employee of the member's department or agency to represent the member at meetings of the commission. All designees may lawfully vote and otherwise act on behalf of the member for whom they constitute the designee. The designation shall be in writing delivered to the commission and shall continue in effect until revoked or amended in writing delivered to the commission.

5. (New section) The sole purpose of the commission shall be to facilitate and coordinate the provision of regular route motorbus service within the State through competitive proposals.

6. (New section) The commission shall:

a. Designate bus service packages. In determining what regular route bus routes or route segments shall be included in a bus service package, the commission shall require the corporation to submit proposed bus service packages and shall also consider proposed bus service packages submitted by private carriers. The commission may call upon the corporation to review proposed bus service packages submitted by private carriers.

b. Issue and review requests for proposals for the operation of bus service packages in accordance with section 10 of this amendatory and supplementary act.

c. Designate the carrier to operate a bus service package in accordance with section 10 of this amendatory and supplementary act.

d. Monitor the corporation's day-to-day oversight of the operation of bus service packages contracted for pursuant to this amendatory and supplementary act.

e. Adopt regulations necessary to fulfill the commission's duties under this act in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

7. (New section) The commission and the corporation are directed to cooperate with each other in identifying bus service packages, the issuance of proposals for the operation of bus service packages, and the administration of the operation of bus service packages. When the commission designates a private carrier to operate a bus service package, the corporation shall enter into a contract for the provision of that service with the private carrier within ten days. The department shall provide the commission with the personnel necessary to carry out its duties.

8. (New section) a. The commission shall implement a system whereby the regular route bus service operated by the corporation on the effective date of this amendatory and supplementary act shall be offered in bus service packages to qualified carriers through a competitive process.

b. Any regular route motorbus services operated under competitive proposals pursuant to this amendatory and supplementary act shall be subject to a new competitive proposal at least once every five years.

c. The corporation shall make all equipment purchased with public funds available under nominal leases to private carriers awarded contracts for the operation of bus service packages.

9. (New section) a. Within three months of the effective date of this amendatory and supplementary act, the commission, in consultation with the corporation, shall:

(1) Develop and adopt criteria for designating bus service packages in a manner that will encourage competition between qualified carriers to operate bus service packages. The criteria shall include, but not be limited to: balance of profit potential among bus service packages, homogeneous geographic location of routes, ease of incorporation of the routes into the existing systems of private carriers, and, to the extent possible, combining of routes so that no more than 75 buses are necessary to operate the bus service package.

(2) Adopt reasonable standards with respect to experience, safety records, and financial responsibility and other areas deemed appropriate by the commission by which private carriers can be qualified to provide bus services pursuant to this amendatory and supplementary act. The standards shall be clearly defined in each request for proposals issued by the commission and shall not be designed to restrict the number of eligible participants in the competitive proposal process.

(3) Prepare a standard form of agreement for carriers providing bus services. The contract shall include, but not be limited to:

(a) Reasonable passenger comfort, safety, service and vehicle maintenance standards;

(b) Standards for access to bus services for persons with disabilities, which shall be as specified in the corporation's plan for those services;

(d) Requirements for reasonable insurance protecting the corporation from liability for the acts, negligence, or omission of private carriers, their agents, and their employees;

(e) Reasonable penalties for inadequate performance, including the corporation's right to cancel contracts upon the approval of the commission;

(f) Provisions and standards on the use of the corporation's logo, transfers, transit ways, bus stops, vehicles and other elements as are owned by the corporation and appropriate for use by the private carrier under contract to the corporation.

(g) Require that a private carrier shall not operate interstate service within the geographic boundaries of a bus service package for a period of one year after the expiration of that bus service package contract without the written consent of the corporation. The corporation may impose penalties on a private carrier which fails to comply with this requirement including, but not limited to, prohibiting the carrier from participating in the bus allocation program, the private carrier capital improvement program and the senior citizen and handicapped fare reimbursement program. In addition, the commission may deem a private carrier which fails to comply with this requirement ineligible to operate bus service packages.

(4) Adopt reasonable standards for reliability, on-time performance, and other appropriate service quality considerations for each route or route segment for which competitive proposals are sought. The standards shall be clearly defined in each request for proposals issued by the commission.

b. The commission may not establish any requirement relating to the wages, benefits, or union organization of employees of any private carrier providing service under this amendatory and supplementary act. All private carriers providing service under this amendatory and supplementary act shall comply with and give adequate certification of compliance with all applicable federal and State labor laws.

c. No change in contract payment amount to a private carrier shall be made except as specified in the contract. Payment changes in a contract shall be limited to indices, escalators, deflators, changes in service level and other expressly stated or calculable amounts, consistent with the request for proposals and the proposal of the private carrier awarded the contract. Any increase in revenues from increased ridership in a bus service package shall accrue to the operator of the bus service package.

10. (New section) a. Each request for proposals shall specify the route, service frequency, and fares and exact service level in terms of annual revenue service hours and miles to be assumed in the cost proposal as determined by the commission. Each request for proposals shall specify that the standards for carrier qualification and service quality as well as the provisions of the standard form of agreement adopted by the commission pursuant to subsection a. of section 9 of this amendatory and supplementary act shall be incorporated into the contract for service executed by the carrier and the corporation.

b. The commission shall seek the widest reasonable distribution of each request for proposals.

c. The commission shall advertise each request for proposals within ten days of issuance, and in accordance with the department's general procurement policy.

d. Proposals shall be required to be submitted not less than 60 days from the date of the last advertisement for requests for proposals for a bus service package, except in emergency circumstances.

e. Services shall commence under any request for proposals as soon as reasonably practical within the parameters of the service requirements.

f. Any qualified carrier may respond to any request for proposals. The commission shall ensure that disadvantaged business enterprises, as defined in part 23 of title 49 of the Code of Federal Regulations, as amended, have an opportunity to respond.

g. Requests for proposals shall include the requirement that any private carrier operating a bus service package, when filling positions created as a result of operating that bus service package, shall first offer employment to corporation employees who might lose their employment as a result of the termination of service by the corporation which would be required by that contract. The private carrier shall be the sole determinant of the labor requirements necessary to comply with the contract. A private carrier shall not be required to hire any corporation employee who does not meet the private carrier's employment qualifications.

h. With respect to each request for proposals, the commission shall designate the qualified carrier to operate the bus service package whose responsible and responsive proposal offers the maximum return or the lowest cost to the corporation. In determining the maximum return or lowest cost to the corporation, the commission shall consider any specific and quantifiable additional costs to be borne by the corporation as a result of the award of the contract to either a private carrier or the corporation.

i. The commission may reject any or all proposals it deems to be not in the best interest of the State.

11. (New section) The corporation shall submit a proposal, and be awarded a bus service package subject to the following conditions:

a. Any labor conditions assumed in the proposal shall either be specified in currently effective labor contracts or be executed before the proposal deadline in a written and binding agreement between the corporation and the appropriate labor organization.

b. The corporation's proposal price shall be based on the cost for the service. Any deviations from avoidable cost for the service must be based upon contract amendments or other independently verifiable cost reductions. "Avoidable cost" means all direct or indirect costs attributable to a bus service package that would be avoided or eliminated if the bus service package were not operated by the corporation. In calculating avoidable cost the corporation shall include, but not be limited to, costs of: operator wages and benefits; fuels and lubricants; tires, parts and supplies; tolls and fees; insurance; mechanic and other garage personnel wages and benefits; operation and maintenance of garages; regional supervisors; bus and executive management; and administrative and support functions.

c. The corporation shall not make or be bound by any contract, agreement or assurance which creates or extends any form of obligation for continued employment or employee compensation with respect to employees assigned to a bus service package beyond the expiration date for the competitively contracted service.

d. The corporation shall be bound by the same terms, conditions, and performance and other standards as would have applied to a private carrier awarded the contract under the request for proposals. If the corporation's performance is not in compliance with this provision, the corporation shall relinquish the contract and advise the commission to issue a new request for proposals for the service. The corporation, however, shall operate the service until a new contract is entered into.

12. (New section) Whenever a private carrier operates a bus service package, during the term of the contract, that carrier may increase or expand regular route motorbus service within the geographic boundaries of the bus service package. Any increase in revenues in the bus service package resulting from the increased or

expanded service shall accrue to the operator of the bus service package.

13. (New section) The operation of a bus service package by a private carrier, under a contract awarded pursuant to this amendatory and supplementary act, shall not be sufficient cause for the termination of employment of any corporation employee working on a full-time basis to provide corporation operation of the bus service package on the date of issuance of the request for proposals for that bus service package. Any reduction in the number of corporation employees that becomes necessary as a result of the operation of a bus service package by a private carrier shall be achieved through employee attrition on a corporation-wide basis.

14. (New section) The State Auditor shall perform, or shall contract with an independent certified public accounting firm, other than the corporation's regular auditor, to perform, a neutral and unbiased performance audit to be completed and reported to the Legislature not later than eighteen months after the effective date of this amendatory and supplementary act. The performance audit shall analyze in a fair and equitable fashion the implementation of this amendatory and supplementary act including, but not limited to, compliance with the competitive proposal process, compliance with avoidable cost requirements, the level of contract compliance by private carriers, the cost of that compliance and whether those costs will be recurring or may be reduced, application of savings to consumer benefit and taxes paid by private carriers. All costs of the audit shall be borne by the corporation.

15. (New section) Each year for a period of five years from the effective date of this amendatory and supplementary act, the commission shall make every effort to issue on an annual basis requests for proposals on ten percent, and, at minimum, shall issue requests for proposals on five percent, of the regular route motorbus service operated by the corporation. The annual competitive proposal requirement shall be met only by the requests for proposals for service not operated under competitive proposals and not previously offered as a bus service package. In any year in which the commission does not issue requests for proposals on ten percent of the regular route motorbus service, the commission shall submit a report to the Governor, the Senate President, and the Assembly Speaker detailing the reasons why this requirement was not met.

16. (New section) The Office of Public Carrier Affairs in the corporation is transferred to the department and shall hereafter be known as the Office of Competitive Bus Service. All employees of the office are transferred to the department. All records, property and financial resources of the office are transferred to the department and all responsibilities of the office shall be assumed and performed by the department.

17. (New section) All transfers directed by this act shall be made in accordance with the "State Agency Transfer Act," P.L.1971, c.375 (C.52:14D-1 et seq.). Nothing in this act shall be construed to deprive employees of their right, privileges, obligations or status with respect to any retirement system.

18. Section 6 of P.L.1979, c.150 (C.27:25-6) is amended to read as follows:

6. a. The corporation may enter into contracts with any public or private entity to operate rail passenger service or portions or functions thereof. Where appropriate, payments by the corporation for services contracted for under this section shall be determined in accordance with the Federal Regional Rail Reorganization Act of 1973 (45 U.S.C.701 et seq.), the Federal Rail Passenger Service Act of 1970 (45 U.S.C.501 et seq.), any other applicable Federal law, and any and all rules, regulations and standards, promulgated thereunder and decisions issued pursuant thereto. In all other cases, payments shall be by agreement upon such terms and conditions as the corporation shall deem necessary.

b. The corporation may enter into contracts with any public or private entity to operate motorbus regular route, paratransit or motorbus charter services or portions or functions thereof. Payments shall be by agreement upon such terms and conditions as the corporation shall deem necessary. Contracts for the provision of regular route bus service offered and awarded after the effective date of this amendatory and supplementary act shall conform to the provisions of P.L. , c. (C. )(now before the Legislature as this bill).

(cf: P.L.1979, c.150, s.6)

19. Section 73 of P.L.1954, c.84 (C.43:15A-73) is amended to read as follows:

73. a. The Public Employees' Retirement System is hereby authorized and directed to enroll eligible employees of the New Jersey Turnpike Authority, the New Jersey Highway Authority, Palisades Interstate Park Commission, Interstate Sanitation Commission, the Delaware River Basin Commission and the Delaware River Joint Toll Bridge Commission.

In the case of the Delaware River Joint Toll Bridge Commission, the eligible employees shall be only those who are employed on the free bridges across the Delaware river, under the control of said commission, or who are members of the retirement system at the time they begin employment with the commission.

The said employees shall be subject to the same membership, contribution and benefit provisions of the retirement system as State employees.

b. The State University of New Jersey, as an instrumentality of the State, shall, for all purposes of this act, be deemed an employer and its eligible employees, both veterans and nonveterans, shall be subject to the same membership, contribution and benefit provisions of the retirement system and to the provisions of chapter 3 of Title 43 of the Revised Statutes as are applicable to State employees and for all purposes of this act employment by the State University of New Jersey after April 16, 1945, and for the purposes of chapter 3 of Title 43 of the Revised Statutes any new employment after January 1, 1955, shall be deemed to be and shall be construed as service to and employment by the State of New Jersey.

c. The Compensation Rating and Inspection Bureau, created and established pursuant to the provisions of R.S.34:15-89, shall, for all purposes of this act, be deemed an employer and its eligible employees, both veterans and nonveterans, shall be subject to the same membership, contribution and benefit provisions of the retirement system and to the provisions of chapter 3 of Title 43 of the Revised Statutes as both are applicable to State employees.

The retirement system shall certify to the Commissioner of Insurance and the Commissioner of Insurance shall direct the Compensation Rating and Inspection Bureau to provide the necessary payments to the retirement system in accordance with procedures established by the retirement system. Such payments shall include (1) the contributions and charges, similar to those paid by other public agency employers, to be paid by the Compensation Rating and Inspection Bureau to the retirement system on behalf of its employee members, and (2) the contributions to be paid by the Compensation Rating and Inspection Bureau to provide the past service credits up to June 30, 1965 for these members, both veterans and nonveterans, who enroll before July 1, 1966.

d. The New Jersey Sports and Exposition Authority, created and established pursuant to the "New Jersey Sports and Exposition Authority Law," P.L.1971, c.137 (C.5:10-1 et seq.) shall for all purposes of this act, be deemed an employer and its eligible employees both veterans and nonveterans, shall be subject to the same membership, contribution and benefit provisions of the retirement system and to the provisions of chapter 3 of Title 43 of the Revised Statutes as are applicable to State employees.

(1) Eligible employees as used herein shall not include persons who are not classified as salaried, or who are compensated on an hourly or per diem basis, or whose employment is normally covered by other retirement systems to which the authority makes contributions.

(2) Eligible employees previously permitted to enroll in the retirement system shall redeposit the contributions previously made by them and all service credit shall then be restored and future contributions made at the date of contribution as originally assigned. The authority shall redeposit the employer payments it had made, with interest to the date of redeposit.

e. (1) The New Jersey Transit Corporation created and stablished pursuant to the "New Jersey Public Transportation Act of 1979," P.L.1979, c.150 (C.27:25-1 et seq.) shall for all purposes of this act, be deemed an employer and its eligible employees both veterans and nonveterans, shall be subject to the same membership, contribution and benefit provisions of the retirement system and to the provisions of chapter 3 of Title 43 of the Revised Statutes as are applicable to State employees. Eligible employees as used herein means only those individuals who are members of the Public Employees' Retirement System or any other State-administered retirement system immediately prior to their initial employment by the corporation.

(2) Any employee of the New Jersey Transit Corporation transferred to the Department of Transportation pursuant to P.L. , c. (C. )(now before the Legislature as this bill) may purchase credit for all service with the corporation rendered prior to the effective date of P.L. , c. (C. )(now before the Legislature as this bill) if that service would otherwise be eligible for credit in the retirement system. This purchase shall be made in the same manner and shall be subject to the same conditions provided for the purchase of previous membership service by section 8 of P.L.1954, c.84 (C.43:15A-8).

f. (1) The Casino Reinvestment Development Authority, created and established pursuant to P.L.1984, c.218 (C.5:12-153 et seq.), the New Jersey Urban Development Corporation, created and established pursuant to P.L.1985, c.227 (C.55:19-1 et seq.), the South Jersey Food Distribution Authority, created and established pursuant to P.L.1985, c.383 (C.4:26-1 et seq.), the New Jersey Development Authority for Small Businesses, Minorities and Women's Enterprises, created and established pursuant to P.L.1985, c.386 (C.34:1B-47 et seq.), and the Catastrophic Illness in Children Relief Fund Commission, created and established pursuant to P.L.1987, c.370 (C.26:2-148 et seq.) shall each, for all purposes of this act, be deemed an employer and eligible authority, corporation, or commission. Employees, both veterans and nonveterans, shall be subject to the same membership, contribution and benefit provisions of the retirement system and to the provisions of chapter 3 of Title 43 of the Revised Statutes as are applicable to State employees.

(2) The current or former employees of the authorities, the corporation, and the commission may purchase credit for all service with the authority, corporation, or commission rendered prior to the effective date of this amendatory and supplementary act, P.L.1990, c.25 (C.43:15A-73.2 et al.), if that service would otherwise be eligible for credit in the retirement system. This purchase shall be made in the same manner and shall be subject to the same terms and conditions provided for the purchase of previous membership service by section 8 of P.L.1954, c.84 (C.43:15A-8). The authority, corporation, or commission shall pay the 2nfunded liability as determined by the actuary for prior service purchased by its employees in accordance with a schedule approved by the actuary. This obligation of the authority, corporation, or commission shall be known as the accrued liability for prior service credit.

(3) For any employee of the authorities or of the corporation or commission who is in service with the authority, corporation, or commission on the effective date of this amendatory and supplementary act, P.L.1990, c.25 (C.43:15A-73.2 et al.), the age of enrollment for the purposes of the member contribution rate under section 25 of P.L.1954, c.84 (C.43:15A-25) shall be the age of the employee on the date the continuous service with the authority began. Any employee who was a member of the retirement system on the date continuous service with the authority, corporation, or commission began but whose membership expired before the effective date of participation by the authority, corporation, or commission in the retirement system, and who has not withdrawn the employee contributions from the system, shall participate in the retirement system under the former membership and shall contribute to the system at the rate applicable to the former membership.

(cf: P.L.1990, c.25, s.1)

20. This act shall take effect immediately.

STATEMENT

This bill would provide for the contracting out of motorbus regular route service currently operated by the New Jersey Transit Corporation (NJT) through a competitive process. The bill establishes the New Jersey Competitive Bus Service Commission in the Department of Transportation which is charged with implementing the competitive process. The commission would comprise five members: the Commissioner of Transportation, the State Treasurer, and three public members appointed by the Governor. Of the three public members, the Governor would appoint two, one on the recommendation of the President of the Senate and one by the Speaker of the General Assembly. One public member would be a regular bus commuter. The Commissioner of Transportation would serve as chairperson of the commission.

The commission would designate bus service packages, issue and review requests for proposals submitted for the operation of the bus service packages, and designate the carrier whose proposal offers the maximum return or lowest cost to the NJT. The NJT would be required to submit proposals and would determine its proposal cost on an avoidable cost basis. When the commission designates a private carrier to operate a bus service route, the NJT would be required to enter into a contract for the operation of that service with the private carrier within ten days.

The Office of Public Carrier Affairs would be transferred from NJT to the Department of Transportation to support commission activities. In addition, a performance audit is required to be done by the State Auditor or through contract by an independent accounting firm.

Requires certain NJT bus routes to be contracted out on a competitive basis; establishes the New Jersey Competitive Bus Service Commission.