On May 20, 2013, a passenger motor coach run by a Chinatown bus company called Lucky Star departed New York City for Boston’s South Station. Shortly after hitting the road, the driver heard a strange bang come from under the bus. The bus seemed to be functioning normally, so he kept going.

Upon arriving in Boston, the driver was shocked to find a New York City manhole cover lodged in the vehicle’s luggage compartment. Apparently, the bus struck the loose cover in the streets of Manhattan, sending it darting up into the vehicle’s undercarriage. Lucky Star immediately took the bus out of service and sent it to the garage for repairs.

The following month, the Federal Motor Carrier Safety Administration (FMCSA) ordered Lucky Star to cease operating on the grounds that its buses and drivers posed “an imminent hazard to public safety.” One of the primary reasons the FMCSA gave for the shutdown was the manhole cover incident. But the out-of-service order, which is the official document revoking the company’s operating license, incorrectly states that after discovering the damage, Lucky Star’s dispatcher kept the vehicle out of the garage and continued sending it on passenger trips in an act of willful negligence.

The false account of the manhole cover incident is just one of many distortions and inaccuracies that appear in the out-of-service order, according to multiple sources familiar with the investigation. (FMCSA spokesperson Duane DeBruyne declined to comment for this article.) The case of Lucky Star, a well-run company with a nearly spotless accident record, is the latest example of how the government’s stepped-up safety regime is destroying small bus companies to the benefit of large, politically-connected corporate carriers, and in the process making American travelers less safe.

The persecution of Lucky Star is an outgrowth of the federal government’s new and troubling approach to regulating the motor coach industry. Washington, D.C. transportation officials and members of Congress began pushing for a regulatory crackdown following a handful of tragic bus accidents that drew widespread media attention but aren’t indicative of a downward trend in bus safety. The 2012 Federal Transportation Reauthorization Act gave the FMCSA new authority to unilaterally revoke a bus company’s operating license. In April, then-U.S. Transportation Secretary Ray LaHood created “Operation Quick Strike,” a new division of the agency comprised of small SWAT-like teams of bus inspectors with a special mandate to force unsafe operators off the road. The FMCSA, which issues breathless press releases touting Operation Quick Strike’s swift takedowns of companies that are “an imminent hazard to public safety,” calls this approach a “new paradigm” for the agency.

Members of the so-called “Chinatown bus industry,” like Lucky Star, have been particularly vulnerable to abuses under this new paradigm. These companies, many of which were started in New York City by immigrants from the Fujian Province, China in the late 1990s, have revolutionized the passenger bus industry over the past decade. By charging extremely low prices and picking up passengers off the sidewalk instead of at a traditional bus station, they demonstrated that it was possible to lure hordes of new customers to travel by bus. Faced with declining market share, Greyhound, Peter Pan, and Coach USA started subsidiaries that imitate the Chinatown business model, and today “curbside” busing is the fastest growing mode of intercity travel in the U.S. But in contrast to the large corporate-carriers, the owners and staff of the Chinatown companies lack political connections and often speak English as a second language, making them easy targets for abuse by regulators.

It was an Operation Quick Strike team that took down Lucky Star, and what happened to the company demonstrates how the unit’s smoke-out-the-perpetrators mandate creates an incentive to distort facts. In the out-of-service order, Quick Strike inspectors alleged that Lucky Star continued operating a bus after it was found to have a broken emergency exit during a routine October 13, 2012 inspection. In fact, as the written report from that inspection indicates, the emergency exit was snapped into place on the spot to the satisfaction of the attending officer and the issue was closed.

Quick Strike inspectors claimed that Lucky Star also failed to comply with drug and alcohol testing requirements. In fact, according to sources familiar with the investigation, the company conducted regular drug and alcohol tests on its drivers. What it didn’t do is mandate that Steve Desmarias, a mechanic who runs his own a garage and works on contract for Lucky Star, also undergo drug and alcohol testing. The regulations don’t require that mechanics be tested, so why did the inspectors cite Lucky Star for non-compliance? Desmarias occasionally drives empty Lucky Star buses to a garage for repairs. This, according to Quick Strike officers, makes him an official driver.

Desmarias, a well-regarded figure in the Massachusetts’ bus industry, spent 20 years as a supervisor and head mechanic at Tremblay’s Bus Company in New Bedford before opening his own garage. Lucky Star is his primary client. Desmarias says that the two FMCSA officers who conducted field inspections at his shop, David Graham and Terence McSweeney, appeared ignorant of basic inspection guidelines, made threatening remarks to him and his staff, and seemed to be digging for reasons to write up violations.

“I’ve been in this business for over 40 years,” says Desmarias, “and I’ve never seen inspectors behave like these guys.”

Desmarias says that when Graham first walked into his garage, one of his mechanics greeted him by asking, “Can I help you?” “Can I help you?,” replied Graham, and then he flashed his badge. At one point, Desmarias says, Graham threatened to have him “locked up.

Desmarias also says that during a field inspection on May 10th, Graham and McSweeney cited three buses for allegedly having defective safety hatches, which was the sole reason for taking two of the vehicles out of service. According to Desmaris, the hatches of all three buses were fully operational, but because the buses were parked in his garage with their hatches unlatched for ventilation, Graham and McSweeney marked them as broken. (My request to interview Graham and McSweeney was ignored by FMCSA’s press office.)

One of the more absurd passages in the out-of-service order alleges that Lucky Star conspired to hide GPS data from regulators, which could theoretically be used to fact-check company logs. Federal regulations don’t require that bus companies maintain GPS systems on their buses, but the company optionally contracted with an outside firm to install a system on some of its buses. The GPS system never worked properly, generating laughably inaccurate data, so Lucky Star cancelled its contract months prior to the FMCSA’s investigation. Nevertheless, Quick Strike inspectors demanded access to the faulty information and then used it to conclude that Lucky Star drivers were habitual speeders.

As described in the out-of-service order, FMCSA inspectors found it damning that Lucky Star’s buses broke down 80 times over the course of a year. But the report cites no baseline numbers. Lucky Star buses were logging 3.1 million highway miles a year, according to federal data, which works out to one bus breakdown for every 38,750 miles on the road. In other words, Lucky Star’s buses had about one breakdown for every 180 one-way trips between Boston and New York City. Taking into account that a breakdown can be caused by something as unavoidable as a flat tire, the company’s maintenance record was impeccable.

Although the out-of-service order was riddled with inaccuracies, Lucky Star’s owners, Maria Wong and brothers Edward and Albert Leung, were forced to accept the charges out of expedience. Appealing the order could have ensnared the company in an interminable appeals process, keeping its buses off the road for years. (Wong and the Leungs declined to be interviewed for this article out of fear that they would anger FMCSA staff and jeopardize their chances of getting back on the road.)

The FMCSA’s handling of the Lucky Star investigation isn’t an isolated case. Fung Wah is the best-known Chinatown bus company—a cultural icon for those of a certain age and demographic. It was shut down by the FMCSA in March. Like Lucky Star, Fung Wah was a well-run outfit with an impeccable safety record—contrary to the conclusions drawn by many horrendous press reports on the company—and its forced closure was a clear abuse of power. In the case of Fung Wah, state bus inspectors in Massachusetts were also partially to blame for what happened to the company. (Fung Wah’s owner and founder, Pei Lin Liang, declined to be interviewed for this article.)

Fung Wah’s troubles began in February, when Massachusetts Department of Public Utilities bus inspectors Steve Boleyn and Dyann Prouty discovered frame cracks in multiple Fung Wah buses. Most of these cracks had been repaired, but not to the satisfaction of Boleyn and Prouty. “Not trivial stuff,” Ann Berwick, chair of the DPU, told the Boston Globe.

In fact, these cracks were trivial stuff. “Most frame cracks have no safety impact,” says bus engineer Christopher Ferrone. “People that do a very good job of running their buses are getting wrongly impounded for frame cracks,” he says. (Ferrone has no direct knowledge of Fung Wah’s fleet.) Because tour bus bodies have a monocoque construction, meaning they’re fabricated in one piece, frame cracks don’t threaten their structural integrity. Other inspectors had recently cleared the same vehicles that led to Fung Wah’s shutdown.

One month after Fung Wah was forced off the road, the Commercial Vehicle Safety Alliance, which determines official out of service criteria for buses, began rewriting its guidelines for field inspectors with the goal of “alleviating some of the misdiagnosed violations” stemming from frame cracks, according to Lieutenant Donald Bridge, Jr., who is head of the CVSA’s Passenger Carrier Committee. This behind-the-scenes reassessment, however, didn’t lead to a mea culpa on the part of regulators.

The government’s mistreatment of both companies has caused financial and emotional harm to their owners, employees, and their families—but it’s also been detrimental to the riding public. The Boston Globe reports that Lucky Star is planning on raising its prices when it reopens, which will help cover some of its costs stemming from the shutdown. The company will likely get away with its price increase because the new regulatory regime has made it harder than ever for new bus companies to get into the business and undercut existing operators.

Not so long ago, the Chinatown bus industry was subject to fierce price wars. Fung Wah was the first company to introduce a $10 fare between Boston and New York, at a time when Greyhound was charging about five times as much. This lured many travelers out of their cars, which in turn made the riding public significantly safer, because even a poorly maintained bus is orders of magnitude safer than a passenger car. To put the recent hysteria over bus safety into perspective, from 2001 to 2011, there were an average of 34 fatal intercity/cross-country bus accidents each year. During the same period, there were an average of 23,000 fatal passenger car accidents annually. While it is difficult to translate these figures into risk-probability rates, they convey a sense of how much safer it is to take the bus.

Today, Lucky Star is close to reaching a final deal with regulators to reopen. Since the June shutdown, the owners have lost out on hundreds of thousands of dollars in operating revenues. they’ve spent upwards of a million dollars in their efforts to get the company back on the road. Among other things, they’ve purchased expensive new devices for their vehicles in order to please FMCSA regulators that do nothing to enhance passenger safety. Immediately after being shutdown, Lucky Star hired a team of well-compensated Washington, D.C. government relations experts to negotiate a reopening plan with the FMCSA, including Peter Goelz, a former managing director of the National Transportation Safety Board, and Annette Sandberg, a former head of the FMCSA.

Fung Wah is also fighting to gets its operating authority back with no set timetable. To help with its case, the company has hired its own team of government relations experts, including Jeffrey Mullan, the former secretary of transportation in Massachusetts, and Joe Mokrisky, an independent consultant who specializes in instructing bus carriers on how to comply with FMCSA rules.

When Lucky Star and Fung Wah get back on the road—which will hopefully happen very soon—they’ll have a new expertise essential to surviving in today’s passenger bus industry. They’ll know how to better navigate FMCSA’s often arbitrary rules and they’ll know which politically-savvy consultants to call when troubles arise—two things that have nothing to do with providing a safe and pleasant ride to their customers. The golden age of the $10 fare is giving way to a new era, in which the biggest challenge of operating a successful bus company is keeping government bullies at bay.