Boat Line Faces Decline in Revenues; High-Speed Service Meets Legal Snag

Gazette Senior Writer

The plan to run high-speed ferry service between New Bedford and the Vineyard hit a major snag this week when Steamship Authority managers learned that they may run afoul of the Pacheco Act, the state anti-privatization law.

In a letter written to an attorney who represents a group of boat line employees, the general counsel for state auditor Joseph DeNucci said that if the SSA issues a license for a private ferry service between New Bedford and the Vineyard, it must also continue to operate the conventional passenger ferry Schamonchi - or risk violating the Pacheco Act.

"A decision to discontinue the Schamonchi shortly after licensing a similar service would appear to be subject to the requirements of the privatization law," wrote John W. Parsons, general counsel and deputy auditor.

The Pacheco law is aimed at preventing public agencies from using private contracts unless they can demonstrate cost savings.

Obtained by the Gazette this week, the letter from Mr. Parsons was dated June 25 and addressed to Mark Kaplan, an attorney who represents a group of boat line employees. A copy of the letter was sent to boat line chief executive officer Fred C. Raskin.

At the monthly boat line meeting in Vineyard Haven yesterday morning, Mr. Raskin outlined the problem in the broadest terms, reporting that he had a telephone conversation this week with the general counsel for the state auditor, and reporting that there would be a letter. Mr. Raskin said the SSA had not received the letter yet.

"We have to get the letter first to make sure what it says," he said.

Questioned later in the meeting, Mr. Raskin changed his story slightly, saying that he had seen a draft of the letter.

Boat line managers did not respond yesterday to a request by the Gazette for a copy of the draft letter. The letter from Mr. Parsons obtained by the Gazette was not marked as a draft.

Yesterday a spokesman for the state auditor confirmed that the letter is in fact a draft and had not gone out yet. But press liaison Glen Brier said the final version of the letter is likely to change very little, and he said the substance of the letter represents the position of the state auditor.

"As long as they keep operating [the Schamonchi] service, they will be fine. But if they discontinue that service, then that is when the Pacheco Law kicks in and we may want to revisit the matter," Mr. Brier said.

Because the boat line has not signed a contract for the high-speed ferry service, Mr. Brier said there is no official role for the state auditor to play.

Boat line compliance with the Pacheco Act was written into the new enabling legislation adopted by the state legislature last year. The legislation also expanded the board of governors from three to five by adding voting members from Barnstable and New Bedford.

New Bedford city officials have been on a quest for the last three years to develop expanded ferry service between the Whaling City and the two Islands.

Steamship Authority managers have been working on a plan for months to contract with a private ferry company to run high-speed passenger service between New Bedford and the Vineyard. Negotiations are now nearing the final stages between the SSA and New England Fast Ferry, a newly formed private ferry consortium that wants a license to run the service. The private company plans to run year-round high-speed service between New Bedford and the Vineyard beginning next summer. A final vote by the boat line governors is still required before the license can be issued.

Purchased by the SSA three years ago, the conventional summer passenger ferry Schamonchi is currently running huge annual operating deficits and boat line managers have said they do not know how long they can commit to run the service.

Yesterday Mr. Raskin reiterated his position.

"When it comes to the Schamonchi we cannot make a long-term commitment at this time," he said.

But the opinion from the state auditor's office this week may throw a monkey wrench into any future plan to discontinue service on the Schamonchi.

"Were the authority to license a new service and discontinue the agency-run service, it is likely that the privatization law would apply," Mr. Parsons wrote.

"Contrary to the authority's assertions that the contemplated service is not ‘substantially similar' to the current service offered via the Schamonchi, we find the current and contemplated services to be substantially similar, as defined in the privatization statute," he also wrote.

According to the letter, the state auditor requested information from the boat line in early March in connection with the plan to issue a license for private ferry service out of New Bedford. The inquiry was prompted by a request from Mr. Kaplan for the state auditor to look into the matter.

SSA general counsel Steven Sayers said yesterday that he believes the Pacheco law does not apply to the current plan by the boat line to issue a license for a private ferry service. "But the state auditor has the final decision," Mr. Sayers admitted.

Former New Bedford city solicitor George Leontire, who is now chairman of the boat line port council, said he wants to see the letter.

"If it says you have to run the Schamonchi, then we have problems with that," Mr. Leontire said.