Party bus operators in Nashville sue city over new regulations

Nashville's new entertainment vehicle regulations face a barrage of legal challenges from business operators railing against what they say is an arbitrary permit process with a set of infeasible rules.

Four entertainment vehicle companies have filed lawsuits against Metro and the Metro Transportation Licensing Commission — the body responsible for defining the rules and issuing operating permits — as of Aug. 31.

The commission slashed the entertainment vehicle industry nearly in half during its first-ever permitting process in June, approving 89 total permits of the 159 requested in an effort to reduce the number of vehicles on downtown streets. 

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Mayor John Cooper, Police Chief John Drake, and representatives from several Nashville business and tourism organizations encouraged commissioners to cull unenclosed party vehicles. 

Honky Tonk Party Express, Nashville Party Barge, Nashville Underground and Grey Lion claim in separate lawsuits that the MTLC denied permits without a logical basis. A second Honky Tonk Party Express filing challenges rules requiring vehicle enclosure, restricting hours of operation and setting insurance requirements.

"It seems obvious that the (MTLC) got the mayor's message loud and clear and has done by rulemaking and permit allotment what Mayor Cooper could not do by fiat, which is improper," one Honky Tonk Party Express filing states.

Cooper said Metro's legal department is ready to defend against the lawsuits.

“Bring it on. Common sense regulations for entertainment transportation vehicles will help reduce traffic, control noise, make our streets safer, and improve the quality of life for Nashville residents," Cooper said in an emailed statement Wednesday.

New state and local legislation made it possible to regulate Nashville's entertainment vehicle industry last year. The MTLC, which is composed of nine members appointed by the mayor, has long regulated smaller vehicles, including pedal taverns. 

The MTLC granted 50 permits to sightseeing vehicles, which prohibit alcohol consumption and can be open-air vehicles so long as every passenger remains seated. Another 39 permits went to entertainment transportation vehicles that allow alcohol consumption on board and must be enclosed.

The lawsuits, first reported by the Nashville Post, will test the new rules' staying power.

Metro Law Director Wallace Dietz stated the limitations fall "within Metro's ability to regulate industries for the public good" and Metro is "confident" their implementation will be affirmed in court.

Permit process under fire

Honky Tonk Party Express is the largest company in Nashville's entertainment vehicle sphere. It requested 35 vehicle permits in June and received 12 for entertainment vehicles and five for sightseeing. 

The business currently has 16 entertainment vehicles in operation, with four more being customized for use. Its lawsuit seeks permits for all 20 of its entertainment vehicles.

The company claims the MTLC "double-slashed" its revenue by effectively reducing its fleet by 25% and restricting operating hours, eliminating about 40% of the business' booking slots.

The commission, the lawsuit states, had no traffic impact study on which to base its decision to award or deny permits. 

A "Connect Downtown" study of traffic in Nashville's urban core is underway and expected to be complete by February 2023, according to Nashville Department of Transportation Director Diana Alarcon, who was among those calling for steep reductions in entertainment vehicle traffic.

Alarcon said during the June permitting meeting that she worried businesses who received permits this year could lose them after making further investments if the study shows a need to further cut the number of entertainment vehicles on downtown streets.

Nashville Party Barge is requesting the court overturn the commission's decision to grant only four of the eight permits the company requested.

"MTLC awarded permits to qualified applicants seemingly at random," the suit states.

Lower Broadway venue and bar Nashville Underground last year purchased a tractor and hay wagon, intending to offer a "hayride experience" to patrons. But the venue missed the deadline to apply for an entertainment vehicle permit because, it claims in court documents, the MTLC did not give proper notice of the narrow application period in early April.

The suit claims the publicly posted MTLC meeting agendas were made intentionally vague in an attempt to reduce the number of applicants. Nashville Underground's attempt to appeal failed after MTLC counsel stated proper notice was provided.

Grey Lion LLC filed a suit against the commission in Circuit Court. The MTLC granted two of the nine permits the company requested in what the suit calls a "clearly unwarranted exercise of discretion."

Other regulations challenged

Honky Tonk Party Express pushed back against rules requiring entertainment vehicles be fully enclosed in a separate case.

Enclosure makes sense in cooler weather from November through February, the company stated, but temperatures from March through October make it infeasible to enclose vehicles and air condition them to comfortable and safe levels.

Supply chain issues and engineering questions will also make it difficult, if not impossible, to comply with this requirement by the Oct. 2 deadline, the company's lawsuit states.

Lawsuits also referenced inequity between regulations for pedal taverns, which may allow alcohol in unenclosed vehicles, and larger entertainment vehicles.

Honky Tonk Party Express stated it has been "unable to identify a market" for the liquor liability insurance required by the new regulations, with the exception of one company that might offer the insurance and thus have a monopoly. 

Honky Tonk Party Express asked the court to declare rules regarding enclosure, hours of operation, and liquor liability insurance invalid and enjoin Metro from enforcing the code at the heart of these issues until a ruling is made.

A hearing for Honky Tonk Party Express' permit injunction request is scheduled for 2 p.m. Sept. 6.

Cassandra Stephenson covers Metro government for The Tennessean. Reach her at ckstephenson@tennessean.com. Follow Cassandra on Twitter at @CStephenson731.