**Subpart R - Public Interest Exclusions**

**§ 40.391   What is the scope of a PIE?**

\(a\) The scope of a PIE is the Department\'s determination about the
divisions, organizational elements, types of services, affiliates,
and/or individuals (including direct employees of a service agent and
its contractors) to which a PIE applies.

\(b\) If, as a service agent, the Department issues a PIE concerning
you, the PIE applies to all your divisions, organizational elements, and
types of services that are involved with or affected by the
noncompliance that forms the factual basis for issuing the PIE.

\(c\) In the NOPE (see §40.375(b)(4)), the initiating official sets
forth his or her recommendation for the scope of the PIE. The proposed
scope of the PIE is one of the elements of the proceeding that the
service agent may contest (see §40.381(b)) and about which the Director
makes a decision (see §40.387(b)(3)).

\(d\) In recommending and deciding the scope of the PIE, the initiating
official and Director, respectively, must take into account the
provisions of paragraphs (e) through (j) of this section.

\(e\) The pervasiveness of the noncompliance within a service agent\'s
organization (see §40.389(d)) is an important consideration in
determining the scope of a PIE. The appropriate scope of a PIE grows
broader as the pervasiveness of the noncompliance increases.

\(f\) The application of a PIE is not limited to the specific location
or employer at which the conduct that forms the factual basis for
issuing the PIE was discovered.

\(g\) A PIE applies to your affiliates, if the affiliate is involved
with or affected by the conduct that forms the factual basis for issuing
the PIE.

\(h\) A PIE applies to individuals who are officers, employees,
directors, shareholders, partners, or other individuals associated with
your organization in the following circumstances:

\(1\) Conduct forming any part of the factual basis of the PIE occurred
in connection with the individual\'s performance of duties by or on
behalf of your organization; or

\(2\) The individual knew of, had reason to know of, approved, or
acquiesced in such conduct. The individual\'s acceptance of benefits
derived from such conduct is evidence of such knowledge, acquiescence,
or approval.

\(i\) If a contractor to your organization is solely responsible for the
conduct that forms the factual basis for a PIE, the PIE does not apply
to the service agent itself unless the service agent knew or should have
known about the conduct and did not take action to correct it.

\(j\) PIEs do not apply to drug and alcohol testing that DOT does not
regulate.

\(k\) The following examples illustrate how the Department intends the
provisions of this section to work:

*[Example 1 to §40.391]{.underline}.*   Service Agent P provides a
variety of drug testing services. P\'s SAP services are involved in a
serious violation of this Part 40. However, P\'s other services fully
comply with this part, and P\'s overall management did not plan or
concur in the noncompliance, which in fact was contrary to P\'s
articulated standards. Because the noncompliance was isolated in one
area of the organization\'s activities, and did not pervade the entire
organization, the scope of the PIE could be limited to SAP services.

*[Example 2 to §40.391]{.underline}.*   Service Agent Q provides a
similar variety of services. The conduct forming the factual basis for a
PIE concerns collections for a transit authority. As in Example 1, the
noncompliance is not pervasive throughout Q\'s organization. The PIE
would apply to collections at all locations served by Q, not just the
particular transit authority or not just in the state in which the
transit authority is located.

*[Example 3 to §40.391]{.underline}.*   Service Agent R provides a
similar array of services. One or more of the following problems exists:
R\'s activities in several areas---collections, MROs, SAPs, protecting
the confidentiality of information---are involved in serious
noncompliance; DOT determines that R\'s management knew or should have
known about serious noncompliance in one or more areas, but management
did not take timely corrective action; or, in response to an inquiry
from DOT personnel, R\'s management refuses to provide information about
its operations. In each of these three cases, the scope of the PIE would
include all aspects of R\'s services.

*[Example 4 to §40.391]{.underline}.*   Service Agent W provides only
one kind of service (e.g., laboratory or MRO services). The Department
issues a PIE concerning these services. Because W only provides this one
kind of service, the PIE necessarily applies to all its operations.

*[Example 5 to §40.391]{.underline}.*   Service Agent X, by exercising
reasonably prudent oversight of its collection contractor, should have
known that the contractor was making numerous "fatal flaws" in tests.
Alternatively, X received a correction notice pointing out these
problems in its contractor\'s collections. In neither case did X take
action to correct the problem. X, as well as the contractor, would be
subject to a PIE with respect to collections.

*[Example 6 to §40.391]{.underline}.*   Service Agent Y could not
reasonably have known that one of its MROs was regularly failing to
interview employees before verifying tests positive. When it received a
correction notice, Y immediately dismissed the erring MRO. In this case,
the MRO would be subject to a PIE but Y would not.

*[Example 7 to §40.391]{.underline}.*   The Department issues a PIE with
respect to Service Agent Z. Z provides services for DOT-regulated
transportation employers, a Federal agency under the HHS-regulated
Federal employee testing program, and various private businesses and
public agencies that DOT does not regulate. The PIE applies only to the
DOT-regulated transportation employers with respect to their
DOT-mandated testing, not to the Federal agency or the other public
agencies and private businesses. The PIE does not prevent the non-DOT
regulated entities from continuing to use Z\'s services.