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If named transportation secretary, Foxx would oversee regulators of his former employer

If Mayor Anthony Foxx is confirmed as U.S. transportation secretary, he’ll take charge of an agency that regulates his former employer, a Charlotte-based maker of hybrid and electric buses.

For the past four years, while serving as Charlotte’s mayor, Foxx has been deputy general counsel for DesignLine. If Foxx, a Democrat, is confirmed, he’ll leave DesignLine, according to an Obama administration official.

Foxx would lead the U.S. Department of Transportation, which includes two agencies that regulate bus makers: the Federal Transit Administration and the National Highway Traffic Safety Administration. NHTSA focuses on vehicle safety, and FTA oversees the testing of vehicles bought with federal funds.

Since moving its headquarters to Charlotte from New Zealand seven years ago, DesignLine has won contracts with cities across the U.S., including $2.5 million in deals funded by the federal stimulus program, according to U.S. government data.

DesignLine also has seen its share of challenges: The company has been sued over allegations it provided vehicles with cracked bodies and other defects, been accused of missing deadlines to supply buses, and lost out on millions of dollars in deals after they were terminated by local governments with reservations about the company.

Officials with the two DOT agencies last week said their offices have no record of enforcement actions, lawsuits, recalls or investigations involving DesignLine.

Foxx’s spokesman referred questions about the mayor’s status with DesignLine to the White House. An Obama administration official said Foxx has been DesignLine’s point person for legal advice on issues ranging from contract disputes and corporate governance to employment law matters.

The White House official said all Cabinet nominees are required to sign an ethics pledge, agreeing for two years “not to participate in any particular matter involving specific parties that is directly and substantially related to (their) former employer...”

Foxx left the law firm Hunton & Williams in December 2009 to work for DesignLine. Joseph Smith, CEO of DesignLine, would not disclose Foxx’s salary. Foxx does not litigate for DesignLine, Smith said.

“He provides general legal advice,” Smith said, “just whatever legal questions pop up.

“He wasn’t a full-time type of employee. He was in and out.”

Smith described Foxx as being very interested in “green” innovations.

“He’s a fan of technology,” Smith said.

Issues in some cities

DesignLine’s headquarters is on Nevada Avenue, in an industrial area just off Westinghouse Boulevard in southwest Charlotte, about 300 yards from the South Carolina line.

Smith, CEO since last year and the former head of bus operations for New York’s Metropolitan Transit Authority, said nearly 250 full-time DesignLine employees work for the Charlotte operation, where the company makes the buses. In addition to the Nevada Avenue headquarters, DesignLine has another facility nearby, on Granite Street.

Founded in New Zealand in 1985, DesignLine was bought by U.S. investors in 2006 and its headquarters relocated to Charlotte. But shortly after that, DesignLine began encountering problems as it tried to sell its buses to big cities:

• According to a lawsuit, the company was supposed to provide 21 hybrid buses for Baltimore’s Charm City Circulator, a free bus service operated by Lombard, Ill.-based Veolia Transportation. Veolia, which contracted with DesignLine in 2009 for the buses, accused DesignLine in the lawsuit of missing production deadlines, overstating fuel economy and providing defective buses.

In the end, DesignLine supplied only 13 buses for Baltimore, and the case was dismissed last year.

• In 2009, the New York MTA said it was testing DesignLine hybrid buses as part of a search for buses with lower emissions, according to MTA documents. Smith, then the head of the MTA’s bus division, touted the DesignLine buses as “revolutionary.” Smith would later leave to work for DesignLine.

In 2011, the MTA canceled plans to buy DesignLine buses after concluding the buses sometimes didn’t provide sufficient power, according to the documents.

• In a project with the Antelope Valley Transit Authority, based in Lancaster, Calif., DesignLine lost a $6.5 million project funded by the federal stimulus program. DesignLine was to provide 11 buses to the transit authority. The transit authority canceled the contract with DesignLine, claiming the company missed deadlines to deliver the buses, local government documents show.

DesignLine won other stimulus-funded contracts. Charlotte used $1 million to buy five DesignLine buses for Charlotte Douglas International Airport. Arlington Transit in Arlington County, Va., used $1.5 million to buy three DesignLine buses.

The company faced an embarrassment in May 2011, when one of its buses caught fire at Charlotte Douglas International Airport. The airport is using 10 DesignLine buses, airport spokeswoman Lee Davis said.

Most recently, the Charlotte City Council in 2011 approved spending $1.4 million for three DesignLine hybrid buses for the airport, according to documents. The buses were bought without seeking competing bids from other bus companies, under a “sole-source” provision. Foxx has abstained from voting on the purchase of DesignLine buses since going to work for the company.

Smith declined to go into much detail about the company’s past troubles, saying they occurred before his tenure.

“There were issues in the beginning, just because it’s new technology,” he said.

Despite the setbacks, Smith said his business is picking up. For one, New Jersey Transit has ordered 76 buses from DesignLine, he said.

He also pointed to its Charlotte workforce, up from 70 to 245 in the past year. He declined to give revenues for the privately held company.

Little opposition expected

Barring a major controversy, Foxx is expected to face little Senate opposition to his confirmation. He would succeed Ray LaHood, who in January announced that he won’t serve a second term.

With 13 Democrats and 11 Republicans, the committee is expected to approve Foxx’s nomination, which would go to the full Senate, where Democrats hold a slight majority with 53 seats.

Foxx wouldn’t be the first top-ranking White House official to have the ability to influence policy that could affect a former employer. Henry Paulson, former U.S. Treasury secretary, had served as Goldman Sachs Group’s CEO. Observer researcher Marion Paynter and McClatchy Newspapers Reporter David Lightman contributed.

Roberts: 704-358-5248; Twitter: @DeonERoberts
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