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Editor’s Note: In preparation for the introduction of the Federal Transit Administration’s new charter service regulations on April 30, Passenger Transport spoke with the FTA about clarifications of the new rule. Their conversation follows.
Q. The definition of charter refers to “exclusive use.” What makes use exclusive?
A. 49 CFR 604.3(h) defines “exclusive use” as service that a reasonable person would conclude is intended to exclude members of the public.
Q. What does the FTA mean by “negotiated price”?
A. We don’t have a definition of negotiated price, but if you were to apply standard contract principles, it would be a meeting of the minds regarding the cost of the service. What that also means is that free service would not constitute a negotiated price, but the regular fixed route fare could.
Q. The regulation uses the term “may be characteristic of charter service.” How does that change the definition?
A. It doesn’t change the definition, it simply allows transit agencies to analyze whether the proposed service meets the definition of charter under Paragraph 1 of 49 CFR 604.3(c). Under that definition, you have two conditions that could make service charter. Under Paragraph 1, which is the classic definition of charter service, a third party requests the exclusive use of a bus or van for a negotiated price. Paragraph 2 covers those instances where a recipient initiates service to an event or function that occurs on an irregular basis or for a limited duration and charges a premium fare or receives a third-party subsidy that pays for the service in whole or in part. Under Paragraph 1, we provided “characteristics” of charter as a way to inform public transit agencies as to what we will consider in determining whether the service is charter.
Q. Charter service refers to service paid for by an outside party. For example, if Montgomery County Government in Rockville, MD, pays for Ride On bus service, is that considered an outside party?
A. Essentially what that question is getting at is whether the receipt of general operating funds by a transit agency constitutes a third-party subsidy for purposes of the charter service definition. It doesn’t. General operating assistance received from the federal government, a state, or locality is not a third-party subsidy. Only when one of those entities subsidizes service to an event or function that occurs on an irregular basis or for a limited duration might it be considered charter. For example, service to an apple blossom festival that is paid for by a governmental entity would be considered charter. Regarding the Ride On example, that service is regular and continuous and is public transportation.
Q. If the county’s Parks Department wants to use a Ride On bus, is that an outside party?
A. If the Parks Department requests a Ride On bus to take members of the public to a tree planting ceremony, and pays Ride On for the service, then that would constitute charter service.
Q. How does the regulation define “premium” fare? Please provide examples of premium and non-premium fares.
A. In the definition of charter service, under Paragraph 2 of 49 CFR 604.3(c) a premium fare is greater than the usual or customary fixed route fare. And so an example would be IndyGo’s shuttle system for the Indianapolis 500, where they pick people up at the Indianapolis Museum of Art and take them over to the Speedway for $15. Now, Indianapolis does not have similar express shuttle service that occurs on a regular basis for $15, so $15 is a premium fare.
When a transit agency is analyzing whether a fare is premium, it needs to look at comparable service in its system. For example, the San Francisco Bay Area Rapid Transit District asked us whether its shuttle service to an event for a fare of $7.50 round trip would constitute a premium fare. We asked what other types of fares it charges, and noted that its regular service fare on a trolleybus costs $5 one-way. We determined that the $7.50 fare would not constitute a premium fare.
Q. Does a definition exist for service provided on an irregular or limited basis? Would 81 baseball games or 12 football games during a year qualify?
A. No. Service to 81 baseball games is service to an event or function. If the transit agency provides free service or charges its regular fixed route fare for service to the baseball games, then it would not be charter service.
Q. How would it be handled if the Pope comes back to Washington next year?
A. If WMATA provides express bus service for the Pope’s visit and charges a fare that is higher than its regular express bus fare, then it is charter. The fact that the Pope’s visit may occur only once in our lifetime may mean that this service could be the subject of a petition for an event of regional or national significance or an administrator’s discretion exception.
Q. Regarding programs outside charter service, how does the FTA define program purposes?
A. Program purposes is defined in 49 CFR 604.3(o) as transportation that serves the needs of either human service agencies or targeted populations: elderly, persons with disabilities, or low-income individuals. This does not include exclusive service for other groups formed for purposes unrelated to the special needs of the targeted populations.
Q. What is not a program purpose?
A. Let’s say, for instance, that a Section 5311 recipient uses its 5311 vehicle to pick up a wedding party and take them to the church. That would not be a program purpose because it’s not assisting targeted populations. Taking the Boy Scouts to their annual picnic would also not fit within the definition of program purposes because the Boy Scouts are not a targeted population.
Q. If something is consistent with a program purpose, does it have to receive funding from one of the four specific programs (rural, elderly and disabled, JARC, New Freedom)?
A. This question is somewhat difficult to answer. To take advantage of the exemption from these regulations, under 49 CFR 604.2(e), you must receive funds from our 5310, 5311, 5316, or 5317 programs. Receipt of these funds and providing service to targeted populations means the transit agency is exempt from the regulation (no reporting requirements) and the groups it serves do not have to register on our web site. If a transit agency does not receive funds from those programs, but still wants to assist those targeted groups, then it may take advantage of the exception contained in 49 CFR 604.7—Qualified Human Service Organizations. The exemption is very broad, so a transit agency can take senior citizens out to the mall for an activity or to the Papal visit. That activity would fall within the definition of program purposes.
Q. Under Q&A 18 of the charter bus rule, an exception exists when no one from the outside uses the service and no premium fare is charged. Does this apply if a transit agency provides free bus service to the county council that pays the local share for the system? If the county council gives the transit agency extra money, is that a payment?
A. If “local share” means general operating assistance, then that is not a third-party subsidy.
If the government gives a transit agency extra money for a bus, is that considered a payment? No. It’s not a payment to an event or function. On the other hand, if the government gives extra money for a bus because the transit agency provided service to an event or function at the request of the government, then that could be considered a third-party subsidy under the new rule. We would need more facts to make a definite determination.
If a transit system wants to provide free service to the county council to take them where they need to go, it can do that, but the county council cannot turn around and cut a check for that service.
We don’t have any requirements in the regulation regarding how much a qualified human service organization can or should pay for the service, but the purpose of the exception was to recognize that those organizations typically don’t have the funds to pay market rate and, therefore, it would seek out a transit agency because it is serving targeted populations.
Our purpose for this approach is to ensure that the new charter regulation does not undermine our coordinated human service transportation program. If a qualified human service organization can pay market rates for service, then we would advise the transit agency to let the private sector know about the opportunity.
Q. Regarding Qualified Human Service Organizations: How does the FTA know that an organization is qualified? Is there an approval process for organizations that register on the web site, or does registering mean the organization automatically qualifies? Who approves or disapproves the qualification? How much can an organization pay a transit agency for service?
A. The registration process is a self-certification process. Organizations that serve a targeted population and do not receive federal funds from the programs listed in Appendix A would have to go to our web site and register. Those organizations must register at least 60 days in advance of the service. Private operators can review the registration and may raise concerns during that 60-day period.
Q. Suppose a homeless shelter needs to take people to an event and offers to pay a transit agency $100 for providing this service. Can the agency accept this money under the Qualified Human Service Organization exemption?
A. Yes. If a transit agency is taking advantage of the QHSO exception, it would need to record certain information about the service—name, address, phone number, the date and time of the service, the number of passengers, and the fee collected. That would go into the transit agency’s quarterly report. If a registered charter provider had concerns about a QHSO’s ability to keep paying for service, the quarterly reporting would reveal that, and the private operator may file a complaint. One hundred dollars sounds like a nominal amount for the service, so the transit agency could accept that money and would need to record that amount in its quarterly report.
Q. In the past, a private provider would contract with, for example, a bride for the use of a trolley-replica bus, then would contract with the transit agency that owns the vehicle to lease the vehicle and hire a driver for a few hours. Now, the public provider cannot lease a vehicle to the private provider without first exhausting all other options. What do the private and public providers have to do to verify the circumstances?
A. The leasing exception was definitely a big concern raised by the private providers during the negotiated rulemaking. The leasing provision in the old rule created a loophole for brokers, who did not own any vehicles, to step in and lease vehicles from transit agencies. As part of the negotiations, we tightened the exception.
Under the new rule (49 CFR 604.8), in order for a private provider to lease vehicles from a transit agency, it has to exhaust all of the private vehicles in the area first. Since we consider a trolley a bus, it unlikely that all of the private vehicles in the area will be engaged in service, but if that is the case, then the registered charter provider may approach the transit agency to lease a trolley.
How does a transit agency verify that all private vehicles have been exhausted? First, the registered charter provider must provide the transit agency with a certification that it has exhausted all of the available vehicles and identify those providers. A transit agency would then check the registration web site to ensure that the number of vehicles identified in the registered charter provider’s certification matches what is on the web site.
Q. Formerly, an agency would advertise for a “willing and able” list of providers to give service. Now, the list is computerized. The easiest option to check is “nationwide service.” How is the FTA dealing with this?
A. The question refers to the issue of private providers registering for the continental United States. In those cases, we are calling private providers and asking them whether they originate service in each state. Most don’t, so they will change their registration.
In addition, we will change the wording on our web page to help private providers register for areas where they can truly provide service. We can’t stop them from registering for the United States, but most of them see the wisdom of just registering for the states where they can really provide the service.
Q. A transit provider can petition the FTA Administrator in case of events of national or regional significance. What has been the effect of this provision on the Kentucky Derby and Indianapolis 500?
A. We’ve received petitions from both of those events, and we will be issuing a decision on both of them on April 30.
Q. In the past, hardship petitions were available if deadhead time for delivering and returning the vehicle took more time than doing the job in rural or small urban areas. Now, the agency must petition the administrator for permission. What is the benefit of doing this and what is the turnaround time?
A. The benefit of having a petition is that the petition goes into a docket that is available 24 hours a day and seven days a week. We believe this provides transparency so that everyone knows who requested an exception and what was our decision regarding the request. Regarding turnaround time, we will make every effort to respond promptly to hardship petitions.
Q. Regarding receiving advisory opinions from the FTA chief counsel, who is an interested party who can ask for an opinion?
A. We define interested parties in 49 CFR 604.3(l). Interested party means an individual, partnership, corporation, association, or other organization that has a financial interest that is affected by the actions of a recipient providing charter service under federal transit laws. This term includes states, counties, cities and their subdivisions, and tribal nations.
Q. The FTA can withhold some federal funding if an agency violates a charter rule. Under SAFETEA-LU, the secretary can withhold an “appropriate” amount for a pattern of abuse—two violations in 72 months, covering everything except record keeping. However, a violation may turn up in a triennial review. How can a provider approach this within the charter system?
A. There are two ways that the FTA would become aware of a violation: 1) through the complaint process, and 2) through triennial reviews, for those that are subject to triennial reviews. Although we are going to rely on triennial review results, we would like to point out that mandatory withholding for a pattern of abuse only applies to unauthorized charter service, not paperwork violations.
Q. The FTA is providing outreach to public providers. How is the FTA educating private providers to avoid problems and complaints?
A. One of our first outreach opportunities was at the American Bus Association Annual Meeting in Virginia Beach, VA, earlier this year. Our goal is to have two sessions every time we conduct outreach—one for the public sector and one for the private sector.
For example, at the APTA Bus & Paratransit Conference we will give a presentation during the conference and then meet with the private providers off-site in Austin, TX. For another example, we will attend the Northwest Motorcoach Association quarterly meeting, and so we added a session with Portland-area public transit agencies.
We are answering a lot of questions. The ombudsman has been very busy, funneling all of these questions through, and so hopefully people will agree that we have been very accessible and that we are providing timely answers to their questions.
Q. If a public provider petitions for an event of national significance at the same time a private provider wants a cease and desist, would the FTA make two separate decisions?
A. The FTA will make a decision for each request, but the decisions will be complementary. If we say no to the petition, then we would in all likelihood say yes to the cease and desist order, and vice versa. So almost every event could potentially have two filings.
Q. NASCAR, for instance, cannot pay a transit system to provide extra service. The offer must go to the private sector. However, some private-sector providers don’t have any or enough accessible vehicles. What happens to customers with disabilities?
A. What we’re looking for here is that the private charter company provides an equivalent level of service, and that doesn’t necessarily mean that every vehicle has to be accessible. The ADA requires an equivalent level of service for persons with disabilities. This does not mean that every vehicle has to be accessible. It means that the provider must ensure that an accessible vehicle is available for a person who might need service. Also, coaching a customer to request all accessible vehicles does not mean that the transit agency can step in if the customer and the private provider can’t reach an agreement.
Q. Much regular public transportation is supplemented by the private sector, specifically major employers. Is that considered charter service?
A. If developers want to pay a transit agency to extend its bus service out to a new business park, that wouldn’t be considered charter service because it would be regular and continuous.
Q. If the number of trips per day increases (such as employees traveling to a toy factory prior to Christmas), is that charter?
A. No. Adding additional equipment, hours, or days to an existing fixed route is not charter. The private providers acknowledged that during the negotiated rulemaking.
Q. How would seasonal service be handled at resort areas, such as Hilton Head in February?
A. Again, if it’s regular service that occurs during certain months because there is an influx of tourists, then it is still regular service—as long as the transit agency’s bus is not picking people up at the hotel and taking them to an event. Regular service doesn’t always mean year-round service. It can be service that occurs for a few months a year, but people still have to go out to a bus stop, wait, pay their fares, and go the normal fixed route. Since it’s on a regular basis, not serving an event or function on an irregular or for a limited duration, the service doesn’t meet the definition of charter.
Q. Given the uncertainty out there, is the FTA considering another rulemaking or another way to clarify the rule?
A. We always offer our ombudsman, ombudsman.charterservice@dot.gov, and we have answered 200 to 300 questions through that process since the rule came out. We’ve received petitions for exceptions and we’ve received a few requests for advisory opinions. We’ve even gotten a few of those out! We are committed to getting the word out as best we can, so there’s no reason for someone to say they didn’t know.
Q. Is there anything we haven’t asked that you think is important for our members to know?
A. There’s so much. Seasonal service is an important issue for those areas that run regular fixed route service from May to October. That doesn’t amount to charter service. We will come out with some additional Q&As on that topic.
Negotiated price does not include free service. If a transit agency wants to provide free service to an event or function that occurs on an irregular basis or for a limited duration, it can. There have been some questions about creative financing. We caution transit agencies that if someone sponsors a bus—i.e., if someone is holding a check and handing it over because a transit agency provided service to an event or function that occurs on an irregular basis or for a limited duration—then the transit agency must inform the private sector first. If that doesn’t happen, then a transit agency could be subject to a complaint.
Another important issue that transit agencies should know about is that, if it receives funds from our 5310, 5311, 5316, or 5317 programs, then it is exempt from the charter regulations when it provides service to the elderly, persons with disabilities, or low-income individuals. As long as the service is targeted toward those groups, the transit agency does not have to record the service and the group receiving the service does not have register on our website. If a recipient does not receive funds from those programs, then it must proceed under the QHSO exception (49 CFR 604.7) if it wants to provide services to the elderly, persons with disabilities, or low-income individuals.
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