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FTA’s Charter Regulations and Provision of Service Under
Contract
Presented at the
CalACT Autumn ConferenceMonterey, CA
October 6, 2005
Presented by:
Rich GarrityRichard Garrity and
Associates
Page 2 of 79
Presentation Agenda
1. Charter vs. Public Transit: Definitions 1. Charter vs. Public Transit: Definitions
2. Guidelines: Provision of Contract Service 2. Guidelines: Provision of Contract Service
3. Charter Rule Exemptions 3. Charter Rule Exemptions
4. Special Local Circumstances 4. Special Local Circumstances
5. FTA Charter Rule Determinations5. FTA Charter Rule Determinations
Page 3 of 79
Overview of Services: Definitions - Charter,
Eligible Mass Transportation, and
Contract Services
Page 4 of 79
Applicability
FTA Recipients Under Sections: § 5307 § 5311 § 5309 Interstate Transfers
Page 5 of 79
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”
Page 6 of 79
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
Page 7 of 79
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
Page 8 of 79
Issues
Contract Service Provided to Social Service Agencies Under Contract are Often Similar to FTA’s Charter Definition
Legal Interpretation Issued by FTA are Almost Exclusive to Fixed Route Environments
Demand Response Services Present Challenges
Page 9 of 79
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
Page 10 of 79
Eligible Mass Transportation Services
To Assist in Understanding When Contract Services May be Provided, We Must Understand FTA’s Definition of “Eligible Mass Transportation” This Term is the Same as
“Public Transportation”
Page 11 of 79
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”
Page 12 of 79
Eligible Mass Transportation Services
FTA Has Developed an Expanded Definition Used Determine if Service is Eligible Mass Transit or Charter Service
Page 13 of 79
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”
Page 14 of 79
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
Page 15 of 79
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
Page 16 of 79
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
Page 17 of 79
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)
Page 18 of 79
Social Service Agency - Definition
While Vast Majority of Complaints Directed at Larger, Fixed Route Transit Systems, Growing Body of Complaints Regarding Contract Services
Page 19 of 79
Guidelines for Provision of Service Under
Contract
Page 20 of 79
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
Page 21 of 79
Under the Control of the Recipient
Regular and Continuing Service
Control of ScheduleUse of Fully Allocated CostsControl Over Vehicle
Assignment
Page 22 of 79
Under the Control of the Recipient
Regular and Continuing Service Service Provided Throughout
The Fiscal Year Trip Intervals No Less
Frequent Than Monthly
Page 23 of 79
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
Page 24 of 79
Under the Control of the Recipient
Use of Fully Allocated Cost Fully Allocated Cost of
Operations, Maintenance, Non-Vehicle Maintenance, and Administration
Page 25 of 79
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
Page 26 of 79
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
Page 27 of 79
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
Page 28 of 79
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
Page 29 of 79
Fixed Route Example – Not Eligible Mass Transportation
RemoteParking Lot
Hospital
0 0.5 1
Page 30 of 79
Fixed Route Example – Eligible Mass
Transportation
RemoteParking Lot
Hospital
0 0.5 1
TransferCenter
CountyBldg.
SocialSecurity
Bus Stop
Page 31 of 79
Approach to Contract Service Planning
Good Sound JudgmentApply Basic Transit
Planning Principles Integration of General
Public Needs with Needs of Contract Users
Page 32 of 79
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
Page 33 of 79
Basic Provisions of FTA Charter Regulations
Page 34 of 79
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
Page 35 of 79
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
Page 36 of 79
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
Page 37 of 79
The Exceptions of 49 CFR part 604.9(b)
1) No Willing and Able Operators2) Provision of Equipment or Service
Service Exceeds Private Operator’s Capacity
Lack of Accessible Equipment
3) “Special Events” Generally of National Significance
(e.g., the Olympics) Requires the FTA Administrator’s
Approval
Page 38 of 79
The Exceptions of 49 CFR part 604.9(b)
4) 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
Page 39 of 79
The Exceptions of 49 CFR part 604.9(b)
4) Social Service Agency Exception (Con’t.)
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
Page 40 of 79
The Exceptions of 49 CFR part 604.9(b)
4) Social Service Agency Exception (Con’t.)
Charter Trip is Operated Consistent with Title VI, Section 19 of the Acts, and 49 CFR part 27
Social Service Agency Executes a Certification
Page 41 of 79
The Exceptions of 49 CFR part 604.9(b)
5) Agreement has Been Executed with All Willing and Able Operators that Specifically Allows the Trip
Page 42 of 79
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
Page 43 of 79
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
Page 44 of 79
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
Page 45 of 79
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….
Page 46 of 79
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
Page 47 of 79
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
Page 48 of 79
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
Page 49 of 79
Procedures for Determining Willing and Able Private Operators
Page 50 of 79
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
Page 51 of 79
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)
Page 52 of 79
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
Page 53 of 79
Procedures for Determining Will and Able Charter
Operators Transit Systems Must Allow a
Minimum of Thirty (30) Days to Permit Private Companies to Respond
Page 54 of 79
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
Page 55 of 79
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
Page 56 of 79
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
Page 57 of 79
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
Page 58 of 79
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
Page 59 of 79
Procedures for Determining Will and Able Charter
Operators Transit System Must Provide
Written Response of Determination Within Sixty (60) Days of Submission Deadline
Page 60 of 79
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
Page 61 of 79
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
Page 62 of 79
Special Local Situations
Page 63 of 79
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
Page 64 of 79
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)
Page 65 of 79
Special Situations
Use of Management Companies to Provide Charter Services Fully Licensed:
– The Legal Authority to Operate Motor Vehicles For-Hire
Page 66 of 79
Special Situations
Special Events Based on FTA’s Definition,
“Special Events” are Not County Fairs or Other Type Events
Page 67 of 79
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
Page 68 of 79
Special Situations
Provision of Vehicles to Private Charter Operators The Transit System is Not
Obligated to Provide Such Equipment
Page 69 of 79
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
Page 70 of 79
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”
Page 71 of 79
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
Page 72 of 79
Some Recent Experience in FTA Charter
Oversight
Page 73 of 79
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
Page 74 of 79
Recent FTA Involvement
12.2%
24.3%
50.0%
6.8%6.8%
Triennial/State Reviews Special Event Exemptions
Complaints Willing & Able Issues
Waivers & Exemptions
Source: Charter Service Report, Federal Transit Administration, October 15, 2004.
Page 75 of 79
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
Page 76 of 79
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
Page 77 of 79
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
Page 78 of 79
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
Page 79 of 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