FTA

1
FTAs Charter Regulations and Provision of
Service Under Contract

• Presented at the
• CalACT Autumn Conference
• Monterey, CA
• October 6, 2005
• Presented by
• Rich Garrity
• Richard Garrity and Associates

2
Presentation Agenda
1. Charter vs. Public Transit Definitions
2. Guidelines Provision of Contract Service
3. Charter Rule Exemptions
4. Special Local Circumstances
5. FTA Charter Rule Determinations
3
Overview of Services Definitions - Charter,
Eligible Mass Transportation, and Contract
Services
4
Applicability

• FTA Recipients Under Sections
• 5307
• 5311
• 5309
• Interstate Transfers

5
Definition

• Transportation Using Buses or Vans, or
  Facilities Funded Under the Acts of a Group of
  Persons Who Pursuant to a Common Purpose, Under a
  Single Contract, at a Fixed Charge (in Accordance
  With the Carrier's Tariff) for the Vehicle or
  Service, Have Acquired the Exclusive Use of the
  Vehicle or Service to Travel Together Under an
  Itinerary Either Specified in Advance or Modified
  After Having Left the Place of Origin

6
Definition

• Applicable to Vehicles and/or Facilities that
  were Financed, in Whole or in Part, with FTA
  Funds
• Transportation is Provided Under the Terms of a
  Contract
• Contracting Party Has Acquired Exclusive Use of
  the Vehicle
• Contracting Party Travels Under an Itinerary
  Specified by the Contracting Entity, Not the
  Transit System

7
Definition

• What About Use of Vehicles Not Funded by FTA?
• If Facilities Were Funded (e.g., Maintenance
  Facility), 49 CFR part 604 Still Applies
• FTA Specifies that the Transit System Generally
  Must Completely Separate Charter Function from
  Public Transit Function

8
Issues

• Contract Service Provided to Social Service
  Agencies Under Contract are Often Similar to
  FTAs Charter Definition
• Legal Interpretation Issued by FTA are Almost
  Exclusive to Fixed Route Environments
• Demand Response Services Present Challenges

9
49 CFR 604 Basic Requirement

• FTA Recipient Must First Determine If There Are
  Any Private Charter Operators Willing and Able to
  Provide the Charter Service Which the Recipient
  Desires to Provide
• If Willing and Able Operators are Found to Exist,
  the Recipient May Not Provide Charter Service
  Unless One or More Special Exemptions Apply

10
Eligible Mass Transportation Services

• To Assist in Understanding When Contract Services
  May be Provided, We Must Understand FTAs
  Definition of Eligible Mass Transportation
• This Term is the Same as Public Transportation

11
Eligible Mass Transportation Services

• 49 U.S.C. 5302(a)(7) States That "Mass
  Transportation" Means
• Transportation by a Conveyance That Provides
  Regular and Continuing General or Special
  Transportation to the Public, but Does Not
  Include School Bus, Charter, or Sightseeing
  Transportation

12
Eligible Mass Transportation Services

• FTA Has Developed an Expanded Definition Used
  Determine if Service is Eligible Mass Transit or
  Charter Service

13
Eligible Mass Transportation Services

• Three Key Factors Determine if a Service is Mass
  Transportation
• Service is Under the Control of the Recipient
• Service is Designed to Benefit the
  Public-at-Large
• Service is Open to the Public and Not Operated
  Closed Door

14
Eligible Mass Transportation Services

• Distinction Between Mass Transit and Charter
  Services Not Always Clear
• In Making a Determination in Formal Charter
  Complaints, FTA Speaks of the Balancing Test
  That Must Be Used in Weighing All Elements of the
  Service

15
Social Service Agency Transportation

• A Second Key Understanding Must Also Be Made
  About Service Provided by Recipients Under
  Contract to a Social Service Agency
• Distinction is Particularly Important to the
  Section 5311 Program

16
Social Service Agency Transportation

• Legislative History of the Section 5311 Program
  Clearly Indicates that Congress Intended for
  Recipients to Coordinate and Provide Service to
  Social Service Agencies
• Unique Matching Formula Requirements
• Required Condition of Award
• Maximum Feasible Coordination
• FTA Circular 9040.1E
• Social Service Agency Transportation Usually
  Mass Transportation

17
Social Service Agency - Definition

• There is No FTA Definition
• Recommended
• A Government Entity or a Nonprofit Organization
  Exempt From Taxation Under Subsection 501(c)(1),
  501(c)(3), 501(c)(4), or 501(c)(19) of the
  Internal Revenue Code and
• A Recipient of Federal Funds, Either Directly or
  Indirectly, From One or More of the Funding
  Programs Administered by the U.S. Departments of
  Health and Human Services, Labor, and Education
  (See Recent GAO Study/List)

18
Social Service Agency - Definition

• While Vast Majority of Complaints Directed at
  Larger, Fixed Route Transit Systems, Growing Body
  of Complaints Regarding Contract Services

19
Guidelines for Provision of Service Under Contract
20
Defining Eligible Social Service Agency Contracts

• Suggested Guidance to Public Transportation
  Projects Meet the Three Basic Conditions for
  Eligible Mass Transportation in a Demand Response
  Environment

21
Under the Control of the Recipient

• Regular and Continuing Service
• Control of Schedule
• Use of Fully Allocated Costs
• Control Over Vehicle Assignment

22
Under the Control of the Recipient

• Regular and Continuing Service
• Service Provided Throughout The Fiscal Year
• Trip Intervals No Less Frequent Than Monthly

23
Under the Control of the Recipient

• Control Over Scheduling
• Contract Should Not Specify Exclusive Use of a
  Vehicle
• Recipient is Responsible for Setting Pick-Up,
  Drop-Off Times Consistent with Policies for the
  Public re
• Pick Up Window
• Wait/Dwell Time
• No Use of Restricted Group Subscription Service
  in Automated Scheduling

24
Under the Control of the Recipient

• Use of Fully Allocated Cost
• Fully Allocated Cost of Operations, Maintenance,
  Non-Vehicle Maintenance, and Administration

25
Under the Control of the Recipient

• Control Over Vehicle Assignment
• Transit System, Not Social Service Agency,
  Assigns Appropriate Vehicles to Runs
• Does Not Preclude a Social Service Agency from
  Requiring Accessible Vehicles

26
Designed to Benefit the Public-at-Large

• Consistent with Existing Modal Operations
• Service Provided During Normal Span of Operation
• Advertising and Marketing Consistent with All
  Other Services

27
Open to the General Public

• Capacity in the System During the Hours and Days
  of Contract Service Delivery
• No Policy/Contractual Restrictions on the
  Assignment of Passengers to Social Service Agency
  Runs
• No Policy/Contractual Restrictions on Exclusive
  Transport of Clients

28
Fixed Route Service

• Same Three Basic Requirements (Control, Benefit
  to Public, Open to the General Public)
• Keys
• Fares Paid by Customers
• Avoidance of Vehicle Hour Charges
• Incorporation of Multiple Destinations that
  Benefit the General Public
• Marketing Consistent with Other Fixed Route
  Services
• Connectivity with Other Services

29
Fixed Route Example Not Eligible Mass
Transportation
30
Fixed Route Example Eligible Mass Transportation
31
Approach to Contract Service Planning

• Good Sound Judgment
• Apply Basic Transit Planning Principles
• Integration of General Public Needs with Needs of
  Contract Users

32
Options

• Design the Service as Public Transit
• Operate the Service as a Charter Consistent with
  the Provisions of 49 CFR part 604.9
• Cease to Operate the Service

33
Basic Provisions of FTA Charter Regulations
34
Requirements for All Recipients

• Annual Submission (with Each Grant Agreement) of
  an Executed Charter Agreement
• 49 CFR part 604.7
• May be Incorporated by Reference After First
  Submission
• Certification of Compliance

35
Requirements for Provision of Charter Services

• If a Recipient Desires to Provide Any Charter
  Service Using FTA Equipment or Facilities the
  Recipient Must First Determine If There Are Any
  Private Charter Operators Willing and Able to
  Provide the Charter Service Which the Recipient
  Desires to Provide

36
Requirements for Provision of Charter Services

• If There is at Least One Such Private Operator,
  the Recipient Is Prohibited From Providing
  Charter Service With FTA Funded Equipment or
  Facilities Unless One or More of the Exceptions
  in Sec. 604.9(b) Applies

37
The Exceptions of 49 CFR part 604.9(b)

• No Willing and Able Operators
• Provision of Equipment or Service
• Service Exceeds Private Operators Capacity
• Lack of Accessible Equipment
• Special Events
• Generally of National Significance (e.g., the
  Olympics)
• Requires the FTA Administrators Approval

38
The Exceptions of 49 CFR part 604.9(b)

• Social Service Agency Exception
• Must Be a Governmental Entity or a Nonprofit
  Agency Exempt from Taxation Under Section
  501(c)(1), 501(c)(3), 501(c)(43), or 501(c)(19)
  of the Internal Revenue Code

39
The Exceptions of 49 CFR part 604.9(b)

• Social Service Agency Exception (Cont.)
• Conditions
• There Will be a Significant Number of Disabled
  Passengers or
• The Agency Receives (or is Eligible to Receive)
  Funding from a List of Federally Sponsored
  Programs or
• There Will be a Significant Number of Transit
  Disadvantage Persons on the Trip
• Trip is Consistent with the Mission of the Social
  Service Agency

40
The Exceptions of 49 CFR part 604.9(b)

• Social Service Agency Exception (Cont.)
• Charter Trip is Operated Consistent with Title
  VI, Section 19 of the Acts, and 49 CFR part 27
• Social Service Agency Executes a Certification

41
The Exceptions of 49 CFR part 604.9(b)

1. Agreement has Been Executed with All Willing and
   Able Operators that Specifically Allows the Trip

42
Special Exceptions of 49 CFR part 604.9(b)

• In Addition to these Five (5) Basic Exceptions,
  Nonurbanized Area Grantees Have Two Unique,
  Additional Exceptions
• Rural Economic Hardship Exception
• Elderly Exception

43
Special Exceptions of 49 CFR part 604.9(b)

• Rural Economic Hardship Exception
• Must Petition State DOT
• Charter with Private Operator Creates Hardship
  Because
• Operators Impose Minimum Duration Requirements
  Pursuant to State Regulation That Exceed the Trip
  Requirements
• Willing Operators are Located Too Far from the
  Charter Service Area

44
Special Exceptions of 49 CFR part 604.9(b)

• Rural Elderly Exception
• Must Be a Governmental Entity or a Nonprofit
  Agency Exempt from Taxation Under Section
  501(c)(1), 501(c)(3), 501(c)(43), or 501(c)(19)
  of the Internal Revenue Code
• Fifty (50) Percent of Passengers Will be Elderly
• Trip is Consistent with Agency Mission
• Agency Executes Certification

45
Allowable Charter

• If One of the Five Basic Exceptions Can Be Met,
  or
• A Nonurbanized Project Meets Either One of the
  Five Basic or Two Special Exceptions
• Charter Service May be Provided
• However.

46
Allowable Charter

• Charter Service Must be Incidental
• Incidental Charter Service Means Charter Service
  Which Does Not
• Interfere With or Detract From the Provision of
  the Mass Transportation Service for Which the
  Equipment or Facilities Were Funded Under the
  Acts or
• Does Not Shorten the Mass Transportation Life of
  the Equipment or Facilities

47
Allowable Charter

• Other Examples of That Would Not be Incidental
• Service Performed During Peak Hours
• Service Which Does Not Meet Its Fully Allocated
  Cost
• Service Being Used to Count Toward Meeting the
  Useful Life of Any Facilities or Equipment
• Service Provided in Equipment That Is in Excess
  of Fleet Spare Ratio

48
Allowable Charter

• Tracking Incidental Charter Service and Vehicle
  Useful Life
• Rule Permits Any Reasonable Computation
• Transit System Does Not Have to Track by Specific
  Vehicles
• System Averages May be Applied to Entire Fleet
• Records of Specific Charter Usage Should be
  Maintained

49
Procedures for Determining Willing and Able
Private Operators
50
Procedures for Determining Will and Able Charter
Operators

• Requirements
• Annual Public Participation Process
• Notice in Newspaper
• Direct Mail to All Known Private Operators in the
  Service Area or Any Operator Who Requests the
  Notice
• Sending Notice to UBOA and ABA

51
Procedures for Determining Will and Able Charter
Operators

• Notice Contents
• Recipient Name
• Description of Proposed Charter Activity
• Process for Response (30 Days)
• Address
• Evidence Required to Be Submitted
• Statement of Action
• Statement Indicating Recipient Will Not Do
  Charter if One Willing and Able Operator is Found
  To Exist (Unless an Exception is Found to Exist)

52
Procedures for Determining Will and Able Charter
Operators

• Description of Proposed Charter Activity
• Description of the Days
• Times of Day
• Geographic Area
• Categories of Revenue Vehicle for Service
• Any Other Information the System Deems Useful

53
Procedures for Determining Will and Able Charter
Operators

• Transit Systems Must Allow a Minimum of Thirty
  (30) Days to Permit Private Companies to Respond

54
Procedures for Determining Will and Able Charter
Operators

• Changes
• An Operator May Go Through The Notice and
  Determination Process More Than Once Per Year
• Suspension of Authority of an Existing Willing
  and Able Carrier
• New Carrier Market Entry in Mid-Year

55
Procedures for Determining Will and Able Charter
Operators

• Carrier Retraction of Willing Status
• If a Private Operator Retracts Its Willingness to
  Provide Charter Service Less Than a Year After It
  Was Determined Willing and Able, and No Other
  Private Operators in the Service Area Have Been
  Determined "Willing and Able," a Recipient May
  Resume Charter Service Without Re-publishing a
  Notice for the Rest of That Year Only

56
Procedures for Determining Will and Able Charter
Operators

• Willing Operator
• An Operator Need Only Express, in Writing, That
  It Desires to Provide Some or All, of the
  Proposed Charter Service

57
Procedures for Determining Will and Able Charter
Operators

• Able Operator
• The Operator Has the Physical Capability of
  Providing the Categories of Revenue Vehicles
  Specified in the Notice
• The Operator Has the Required Legal Authority to
  Operate Charter Service in the Area
• Transit Systems May Not Use Other Criteria to
  Exclude Operators from its Willing and Able List

58
Procedures for Determining Will and Able Charter
Operators

• Special Circumstances
• Tour Brokers
• FTA Had Determined a Transit System May Exclude
  Tour/Charter Brokers from the Definition of
  Willing and Able Private Operators Because They
  Do Not Own Equipment

59
Procedures for Determining Will and Able Charter
Operators

• Transit System Must Provide Written Response of
  Determination Within Sixty (60) Days of
  Submission Deadline

60
Penalties and Sanctions for Non-Compliance with
49 CFR part 604

• Language Changed with SAFETEA-LU (effective
  August 10, 2005)
• FTA/State DOT Investigates
• Violation, If Found, Must Be Corrected
• FTA May Bar a Recipient From Receiving Federal
  Transit Assistance in an Amount Considered
  Appropriate If a Pattern of Violations Occurs

61
Transit System Referrals

• There are No Requirements for a Transit System to
  Systematically Refer Inquiries to Operators
• If the System Opts to Provide Names as a Public
  Service, It is Recommended that All Operators on
  the Willing and Able List Be Provided to Avoid
  the Appearance of Steerage to Specific Operators

62
Special Local Situations
63
Special Situations

• Public Requests Use of Unique Vehicle (e.g.,
  Trolley) Only Available Through the Transit
  System
• FTA Recognizes Only Two Types of Equipment
  Buses and Vans
• Transit System May Not Operate Charter Under this
  Circumstance

64
Special Situations

• Use of Management Companies to Provide Charter
  Services
• Two Issues
• Must be a Separate Business Entity from the
  Management Company
• Charter Regulations Apply to Subrecipients and
  Contractors
• Must Be Able (Hold Requisite Federal/State
  Authority)

65
Special Situations

• Use of Management Companies to Provide Charter
  Services
• Fully Licensed
• The Legal Authority to Operate Motor Vehicles
  For-Hire

66
Special Situations

• Special Events
• Based on FTAs Definition, Special Events are
  Not County Fairs or Other Type Events

67
Special Situations

• Free Service
• FTA Has Determined Cost is Not a Factor in
  Determining Whether a Service is Charter or
  Eligible Mass Transportation
• Even if the Transit System Does Not Charge Users
  or the Contracting Entity, the Service May Still
  be Charter

68
Special Situations

• Provision of Vehicles to Private Charter
  Operators
• The Transit System is Not Obligated to Provide
  Such Equipment

69
Special Situations

• Requests by County Board or City Council to Use
  Public Transit Vehicles
• FTA Has Determined that Use of Vehicles for this
  Purpose is Charter

70
Special Situations

• Court Orders
• FTA Has Determined that Use of Vehicles for this
  Purpose is Charter
• FTA Would Urge a Court Seeking to Impose Upon a
  Recipient an Order to Provide Charter Service, to
  Secure Service From a Private Operator If a
  Private Operator Has Been Determined Willing and
  Able

71
Special Situations

• Public Emergency
• FTA Has Determined That Transit Systems May
  Perform Otherwise Prohibited Charter Service in
  the Case of a Serious Emergency
• Emergencies - Man-Made or Natural Disasters
• Fire
• Chemical Spills
• Floods
• Hurricanes
• The Need to Transport Persons to Meet Social
  Obligations or Protocol Type Demands, Would Not
  Be Considered an Emergency

72
Some Recent Experience in FTA Charter Oversight
73
Recent FTA Involvement

• FTA Involvement
• Special Events Exemptions
• Complaints Filed by Consumers/Private Charter
  Companies
• Triennial Review/State Review Findings
• Other Exemptions and Hardship Waivers

74
Recent FTA Involvement
Source Charter Service Report, Federal Transit
Administration, October 15, 2004.
75
Complaints

• Complaints Constitute the Bulk of the FTA Charter
  Docket
• From 2001 2004, FTA Received 37 Complaints
  Where a Docket Was Established
• Complaints Lodged Against Both Urban and Rural
  Systems Alike

76
Complaints

• Overwhelmingly, FTA Sides with the Plaintiff and
  Either
• Transit System Ceases the Service
• FTA Issues a Cease and Desist Order
• Trolley Service Generates About Twenty (20)
  Percent of These Complaints

77
Special Event Exemptions

• Since 2001, Eighteen (18) Requests Have Been Made
• Fifteen Determinations Documented
• Ten Approved
• Five Denied
• Type of Events
• Super Bowl, Democratic National Convention,
  Presidential Addresses, etc.
• Approvals Based Not Only on Event, But
  Previous/Current System Documentation of Willing
  and Able Operators

78
Triennial/State Reviews

• About Twelve (12) Percent of the Docket Consist
  of Cases that Originate from Findings of a
  Triennial Review of State DOT Review

79
Waivers and Exemptions

• A Number of Grantees Request FTA to Grant
  Exemptions
• Based on Case History, FTA Looks To Render a
  Finding Based on Existing Regulatory Exemptions
• FTA Has Generally Sided with the Transit System,
  as the Request Is Consistent with One of the
  Exemptions in 49 CFR part 604.9(b)
• One (1) Hardship Waiver Granted