2326 Federal Register / Vol. 73, No. 9 / Monday, January 14, 2008 / Rules and Regulations 

1Pub. L. No. 88–365. 

2UMT Act, Section 2(b). 

3Pub. L. 93087, Section 164(a), August 13, 1973. 

4 ‘‘Charter and School Bus Operations,’’ 40 FR 

25304, June 13, 1975. 

5 Id. at 25305. 

6 ‘‘Charter and School Bus Operations,’’ 41 FR 

14123, April 1, 1976. 

7 41 FR 56680, December 29, 1976. 

8 41 FR 5394, January 19, 1981. 

DEPARTMENT OF TRANSPORTATION 

Federal Transit Administration 

49 CFR Part 604 

[Docket No. FTA–2005–22657] 

RIN 2132–AA85 

Charter Service 

AGENCY: Federal Transit Administration, 

DOT. 

ACTION: Final rule. 

SUMMARY: This final rule amends 

regulations which govern the provision 

of charter service by recipients of 

Federal funds from the Federal Transit 

Administration (FTA). Pursuant to the 

direction contained in the Joint 

Explanatory Statement of the Committee 

of Conference, for section 3023(d), 

‘‘Condition on Charter Bus 

Transportation Service’’ of the Safe, 

Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for 

Users (SAFETEA–LU) of 2005, FTA 

established a committee to develop, 

through negotiated rulemaking 

procedures, recommendations for 

improving the regulation regarding 

unauthorized competition from 

recipients of Federal financial 

assistance. This final rule clarifies the 

existing requirements, sets out a new 

definition of ‘‘charter service,’’ allows 

for electronic registration of private 

charter providers, which replaces the 

old ‘‘willing and able’’ process, includes 

a new provision allowing private charter 

operators to request a cease and desist 

order, and establishes more detailed 

complaint, hearing, and appeal 

procedures. 

DATES: Effective Date: April 30, 2008. 

ADDRESSES: A copy of this rule and 

comments and material received from 

the public, as well as any documents 

indicated in the preamble as being 

available in the docket, are part of 

docket FTA–2005–22657 and are 

available for inspection or copying at 

the Docket Management Facility, U.S. 

Department of Transportation, 1200 

New Jersey Ave., SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

You may retrieve the rule and 

comments online through the Federal 

Document Management System (FDMS) 

at: http://www.regulations.gov. Enter 

docket number 22657 in the search 

field. The FDMS is available 24 hours 

each day, 365 days each year. Electronic 

submission and retrieval help and 

guidelines are available under the help 

section of the Web site. 

An electronic copy of this document 

may also be downloaded from the 

Government Printing Office’s Electronic 

Bulletin Board Service at (202) 512– 

1661. Internet users may also reach the 

Office of the Federal Register’s home 

page at: http://www.nara.gov/fedreg and 

the Government Printing Office’s Web 

page at: http://www.gpoaccess.gov/fr/ 

index.html. 

FOR FURTHER INFORMATION CONTACT: 

Crystal Frederick, Ombudsman for 

Charter Services, Federal Transit 

Administration, 1200 New Jersey Ave., 

SE., Room E54–410, Washington, DC 

20590, (202) 366–4063 or 

ombudsman.charterservice@dot.gov. 

SUPPLEMENTARY INFORMATION: 

A. Background 

1. Statutory History 

The Federal Transit Administration 

was established by the Urban Mass 

Transportation Act of 1964 (UMT Act, 

the Act). 1 The Act provided funds for 

‘‘mass transportation’’ purposes, defined 

as: ‘‘transportation by bus or rail or 

other conveyance, either publicly or 

privately owned, serving the general 

public (but not including school buses 

or charter or sightseeing service) and 

moving over prescribed routes.’’ 2 This 

provision illustrates the balance 

Congress sought to strike between the 

public and private sectors of the 

economy. Congress acted to provide 

Federal funding for the continued 

existence of urban fixed route providers 

by enacting a capital program to acquire 

private transit companies and establish 

new public transportation agencies. The 

charter services provided by private 

companies were still profitable; 

accordingly, Congress excluded charter 

service from the definition of ‘‘mass 

transportation.’’ 

The Federal Aid Highway Act of 1973 

placed an additional restriction on the 

use of federally funded buses for charter 

service. The 1973 Act prohibited 

Federal assistance unless the applicant 

had entered into an agreement with the 

Secretary of Transportation that it 

would not engage in charter bus 

operations in competition with private 

bus operators outside of the area in 

which the applicant provided regularly 

scheduled mass transportation services. 

In 1974, however, Congress eased the 

1973 restriction by allowing an 

applicant to provide charter services 

outside the urban area where it 

provided regularly scheduled mass 

transportation if it entered into an 

agreement with the Secretary of 

Transportation that provided ‘‘fair and 

equitable arrangements’’ to ensure that 

federally assisted operators did not 

compete with private operators of 

intercity charter bus service where such 

private operators were willing and able 

to provide the service.3 In other words, 

Federal financial assistance should not 

enable applicants to foreclose private 

operators from the intercity charter bus 

industry where there are private charter 

operators willing and able to provide 

the service. 

2. Regulatory History 

FTA proposed its first regulation 

regarding charter service on June 13, 

1975.4 This proposal set out policies 

and procedures governing the provision 

of charter bus services and the reporting 

of charter bus revenues and expenses 

under the UMT Act. The proposed 

regulations required public operators to 

take into account both the direct and 

indirect costs of operating charter 

service, without regard to the receipt of 

Federal financial assistance, when 

developing their charter rates. The 

proposed regulations also compelled 

public operators to generate revenues 

equal to or greater than the cost of 

providing the charter bus service.5 FTA 

finalized this regulation on April 1, 

1976.6

Public transportation agencies 

complained that this final regulation 

created an undue administrative burden 

on them. Private charter companies 

complained that publicly funded 

operators, using federally financed 

equipment, were forcing them out of 

business. 

In response, FTA issued an Advance 

Notice of Proposed Rulemaking 

(ANPRM) in 1976, which sought to 

clarify the duties of recipients who 

engaged in charter bus operations 

outside their urban area and provide 

more reliable protection to private 

operators in the intercity charter bus 

industry while reducing paperwork 

burdens on recipients.7

Another ANPRM was published in 

1982, which sought to take a fresh look 

at the charter regulations.8 The ANPRM 

contained four proposals for 

safeguarding the use of transit 

equipment and protecting the health of 

the private intercity charter industry. 


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9 51 FR 7891, March 6, 1986. 

10 52 FR 11916, April 13, 1987. 

11H. Report 110–498, p. H 122787 as printed in 

the Congressional Record, December 21, 1987. 

12 ‘‘Charter Service; Amendment,’’ 53 FR 53348, 

December 30, 1988. 

13Section 3040, ‘‘Intermodal Surface 

Transportation Efficiency Act of 1991,’’ Pub. L. No. 

102–240, December 19, 1991. 

14 ‘‘Evaluation of the Charter Bus Demonstration,’’

Federal Transit Administration, Department of 

Transportation, September 1997. 

15 ‘‘Charter Bus Service: Local Factors Determine 

the Effectiveness of Federal Regulation, GAO Report 

to Congressional Committees,’’ GAO/RCED–93–162, 

September 7, 1993. 

16 Id. at 3. 

17 Id. at 4. 

After reviewing the comments received, 

FTA determined that none of the four 

proposals adequately addressed the 

problem. So, in 1986, FTA issued a 

NPRM with a brand new proposal. This 

proposal would prohibit a recipient 

from performing any charter bus 

operations to the extent that there was 

a private charter operator willing and 

able to provide such charter service in 

the area in which the recipient desired 

to provide charter bus operations. This 

proposal also included exceptions that 

allowed a public transportation agency 

to provide charter service in the event 

there were no willing and able private 

charter operators, if private charter 

operators did not have capacity, if 

private charter operators were unable to 

provide accessible equipment, or for 

non-urbanized areas, or if the private 

charter operator providing the service 

would create a hardship for the 

customer.9 This proposal was finalized 

in 1987.10

The 1976 regulation and the 1987 

regulation are fundamentally different 

in their approaches and provisions. The 

1976 regulation distinguished between 

charter service that a recipient provided 

in its service area (intracity service) and 

charter service a recipient provided 

outside its service area (intercity 

service). The 1976 regulation made this 

distinction because of the new 

provisions of the UMT Act, which 

restricted only a recipient’s intercity 

charter service. The rule required 

recipients to certify all costs that were 

attributable to the recipient’s charter bus 

operations and maintain records that 

justified their costs. 

In contrast, the 1987 rule did not 

provide different requirements for 

intercity and intracity service. The 1987 

rule eliminated this distinction because 

the UMT Act definition of ‘‘mass 

transportation’’ excluded all charter 

operations, thereby requiring protection 

for all private charter operators from 

recipients, not just those providing 

intercity operations or those that earned 

in excess of a certain amount. Instead, 

the 1987 rule focused on prohibiting all 

charter service by a recipient if there 

was a willing and able private charter 

operator who could perform the service. 

In 1988, Congress directed FTA to 

amend the charter service regulation to 

permit non-profit social service agencies 

with a clear need for affordable and/or 

accessible equipment to seek bids for 

charter service from publicly funded 

operators. On December 30, 1988, FTA 

amended the charter service regulations 

to provide for three new exceptions.11

The first exception allowed recipients to 

provide direct charter service to nonprofit social service agencies. The 

second exception, limited to recipients 

in non-urbanized areas, allowed 

recipients to provide direct charter 

service to non-profit social service 

organizations if more than fifty percent 

of the passengers were elderly. The 

third exception allowed recipients to 

provide direct charter services where 

there was a formal agreement between 

the recipient and all private operators it 

had determined to be willing and able 

through its annual public charter notice. 

The addition of these exceptions 

brought the total number of exceptions 

contained in the rule to eight.12 The rule 

has remained essentially unchanged 

since this amendment in 1988. 

3. Demonstration Project and GAO 

Report 

Since lingering concerns remained 

about the charter service regulation and 

FTA’s enforcement of the rule, the 

Intermodal Surface Transportation 

Efficiency Act of 1991 (ISTEA) directed 

FTA to issue regulations implementing 

a charter service demonstration program 

in not more than four states.13 A report 

evaluating the effectiveness of the 

demonstration program was to be 

submitted in three years. The 

conference report accompanying ISTEA 

explained that the demonstration 

program was directed in response to 

concerns expressed by local transit 

operators regarding the existing charter 

service regulation. Many public 

operators were concerned that certain 

groups were not being served under the 

existing regulation, that they were not 

able to provide service to local 

government entities that provided 

support to the local agency, and that 

they were not permitted to provide 

service to support local economic 

development activities. The 

demonstration program was to be 

designed to allow public operators in 

several locations greater flexibility to 

meet local charter needs without 

creating undue competition for privately 

owned charter operators. Congress 

required FTA to collect data on the 

impact of the change. 

In September 1997, FTA submitted its 

report to Congress regarding the 

demonstration program.14 The report 

concluded that there was no need for 

FTA to substantially revise its charter 

service regulation. The demonstration 

did not support public operators’ claims 

of unmet needs for the groups for which 

the demonstration was primarily 

intended: government, civic, charitable 

and other community activities. The 

charter service provided during the 

demonstration did not serve a 

significant number of these groups or 

significantly increase the level of service 

to these groups. 

Congress also directed the 

Government Accounting Office (GAO) 

to analyze FTA’s charter service 

regulations. GAO conducted a 

nationwide survey of public 

transportation operators, private charter 

operators, and customers.15 GAO’s 

report showed that local charter 

regulation differed across localities. 

GAO found that most public operators 

stated that the FTA regulation was too 

strict, but that they had not extensively 

used the available exceptions to provide 

charter service. Their reasons for not 

using the exceptions ranged from being 

unfamiliar with the exceptions to the 

exceptions being too cumbersome for 

the relatively small amount of charter 

service that they were interested in 

providing.16 When asked what they 

would change about the regulation, 

suggestions varied depending on 

whether the public transportation 

agency was in an urban or rural area. 

Urban public transportation providers 

would change the rule to allow them to 

provide charter service to local 

government officials and non-profit 

community organizations. Rural 

operators would change the rule to 

allow direct charter services to 

nonprofit and community organizations, 

but also requested clarification of the 

rule.17

GAO found that most private charter 

operators were satisfied with FTA’s 

charter service regulations. Some 

private charter operators did, however, 

express concern about the complaint 

process. Specifically, some private 

charter operators stated that the burden 

of proof fell on them when a public 

operator violated the regulation, the 

burden of proof fell on them and that 

the complaint process was lengthy and 

expensive. Further, some were skeptical 


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18 Id. at 37. 

19 Id. at 38. 

20 Id. at 11. 

that recipients were accurately 

calculating their fully allocated costs 

(i.e., all labor, capital, and material 

costs) of providing charter service. As a 

result some private charter operators 

believed that public transportation 

agencies were charging lower rates than 

they should.18

The GAO also interviewed customers 

of charter service to find out their 

concerns with FTA’s charter service 

regulation. GAO found two user groups 

that were dissatisfied with the 

regulation: those who needed accessible 

transportation and those who needed a 

large number of vehicles to serve local 

conventions and economic development 

activities.19

The GAO report concluded that its 

data did not provide compelling 

evidence that there were serious 

widespread needs for charter service 

that could not be met under the current 

regulation. The data showed that the 

current exceptions to the regulation, 

such as contracting with private 

providers, were not widely used. GAO 

believed that many public operators, 

particularly those in rural areas, were 

unfamiliar with the process for 

obtaining exceptions.20

B. SAFETEA–LU 

Congress next addressed concerns 

regarding FTA’s charter service 

regulation in the Safe, Accountable, 

Flexible, Efficient Transportation Equity 

Act: A Legacy for Users (SAFETEA–LU), 

which was enacted on August 10, 2005. 

The statute amended the statutory 

provision regarding charter service 

found at 49 U.S.C. 5323(d). Specifically, 

with respect to remedies, the 

SAFETEA–LU amendment provides 

that, ‘‘in addition to any remedy 

specified in the agreement, the Secretary 

shall bar a recipient or an operator from 

receiving Federal transit assistance in an 

amount the Secretary considers 

appropriate if the Secretary finds a 

pattern of violations of the agreement.’’

Previously, the statute used permissive 

language, ‘‘may,’’ rather than mandatory 

language, ‘‘shall,’’ with respect to 

withholding funds. Further, the 

previous statutory language did not state 

that the Secretary could determine an 

appropriate amount to withhold when 

the Secretary found a pattern of 

violations. Rather, if a pattern of 

violations was found, the Secretary only 

had the option to bar the recipient from 

receiving all of its Federal funds. 

Additionally, the Joint Explanatory 

Statement of the Committee of 

Conference, for section 3023(d), 

‘‘Conditions on Charter Bus 

Transportation Service’’ of SAFETEA–

LU, stated ‘‘the conferees are aware that 

both public transportation providers 

and private charter bus providers have 

expressed strong concerns about the 

1987 FTA rule enforcing section 5323(d) 

regarding charter bus service. The 

conferees direct the FTA to initiate a 

negotiated rulemaking seeking public 

comment on the regulations 

implementing section 5323(d).’’ The 

report also directed FTA to consider the 

following issues during the negotiated 

rulemaking: 

1. Are there potential limited 

conditions under which public transit 

agencies can provide community-based 

charter services directly to local 

governments and private non-profit 

agencies that would not otherwise be 

served in a cost-effective manner by 

private operators? 

2. How can the administration and 

enforcement of charter bus provisions 

be better communicated to the public, 

including the use of Internet 

technology? 

3. How can enforcement of violations 

of the charter bus regulations be 

improved? 

4. How can the charter complaint and 

administrative appeals process be 

improved? 

C. Federal Advisory Committee 

In response to the direction contained 

in the Conference Committee Report, 

FTA established a federal advisory 

committee to develop, through 

negotiated rulemaking procedures, 

recommendations for improving the 

regulation regarding charter bus 

services. FTA established a Federal 

Advisory Committee on May 5, 2006. 

The Charter Bus Negotiated Rulemaking 

Advisory Committee (CBNRAC) 

consisted of persons who represented 

the interests affected by the proposed 

rule (i.e., charter bus companies, public 

transportation agencies—recipients of 

FTA grant funds) and other interested 

entities. 

The CBNRAC included the following 

organizations: 

American Association of State Highway 

and Transportation Officials; 

American Bus Association; 

American Public Transportation 

Association; 

Amalgamated Transit Union; 

Capital Area Transportation Authority, 

Lansing, Michigan; 

Coach America; 

Coach USA; 

Community Transportation Association 

of America; 

FTA; 

Kansas City Area Transportation 

Authority; 

Lancaster Trailways of the Carolinas; 

Los Angeles County Municipal 

Operators Association; 

Monterey Salinas Transit; 

National School Transportation 

Association; 

New York Metropolitan Transportation 

Authority; 

Northwest Motorcoach Association/ 

Starline Luxury Coaches; 

Oklahoma State University/The Bus 

Community Transit System; 

River Cities Transit, Pierre, South 

Dakota; 

Southwest Transit Association; 

Taxicab, Limousine & Paratransit 

Association; 

Trailways; and 

United Motorcoach Association. 

The CBNRAC met in Washington, DC, 

on the following dates in 2006: 

May 8–9 

June 19–20 

July 17–18 

September 12–13 

October 25–26 

December 6–7 

FTA hired Susan Podziba & 

Associates to facilitate the CBNRAC 

meetings and prepare meeting 

summaries. All meeting summaries, 

including materials distributed during 

the meetings, are contained in the 

docket for this rulemaking (#22657). 

During the first meeting of the CBNRAC, 

the committee developed ground rules 

for the negotiations, which are 

summarized briefly below: 

Æ The CBNRAC operates by 

consensus, meaning that agreements are 

considered reached when there is no 

dissent by any member. Thus, no 

member can be outvoted. 

Æ Work groups can be designated by 

the CBNRAC to address specific issues 

or to develop proposals. Work groups 

are not authorized to make decisions for 

the full CBNRAC. 

Æ All consensus agreements reached 

during the negotiations are assumed to 

be tentative agreements contingent upon 

additional minor revisions to the 

language until members of the CBNRAC 

reach final agreement on regulatory 

language. Once final consensus is 

achieved, the CBNRAC members may 

not thereafter withdraw from the 

consensus. 

Æ Once the CBNRAC reaches 

consensus on specific provisions of a 

proposed rule, FTA, consistent with its 

legal obligations, will incorporate this 

consensus into its proposed rule and 

publish it in the Federal Register. This 

provides the required public notice 

under the Administrative Procedure Act 


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(APA), 5 U.S.C. 551 et seq., and allows 

for a public comment period. Under the 

APA, the public retains the right to 

comment. FTA anticipates, however, 

that the pre-proposal consensus agreed 

upon by this committee will effectively 

address virtually all the major issues 

prior to publication of a proposed 

rulemaking. 

Æ If consensus is reached on all 

issues, FTA will use the consensus text 

as the basis of its NPRM, and the 

CBNRAC members will refrain from 

providing formal negative comments on 

the NPRM. 

Æ If the CBNRAC reaches agreement 

by consensus on some, but not all, 

issues, the CBNRAC may agree to 

consider those agreements as final 

consensus. In such a case, FTA will 

include the consensus-based language 

in its proposed regulation and decide all 

the outstanding issues, taking into 

consideration the CBNRAC discussions 

regarding the unresolved issues and 

reaching a compromise solution. The 

CBNRAC members would refrain from 

providing formal negative comments on 

sections of the rule based on consensus 

regulatory text, but would be free to 

provide negative comments on the 

provisions decided by FTA. 

Æ In the event that CBNRAC fails to 

reach consensus on any of the issues, 

FTA will rely on its judgment and 

expertise to decide all issues of the 

charter regulation, and CBNRAC 

members may comment on all 

components of the NPRM. 

Æ If FTA alters consensus-based 

language, it will identify such changes 

in the preamble to the proposed rule, 

and the CBNRAC members may provide 

formal written negative or positive 

comments on those changes and on 

other parts of the proposed rule that 

might be connected to that issue. 

A complete description of the ground 

rules is contained in the docket for this 

rulemaking. 

Finally, the CBNRAC reached 

consensus on the issues the committee 

would consider during its negotiations. 

The committee agreed to consider the 

four issues included in the Conference 

Committee report, noted in the previous 

section of this preamble, and these four 

additional issues: 

1. A new process for determining if 

there are private charter bus companies 

willing and able to provide service that 

would utilize electronic notification and 

response within 72 hours. 

2. A new exception for transportation 

of government employees, elected 

officials, and members of the transit 

industry to examine local transit 

operations, facilities, and public works. 

3. Review and clarify, as necessary, 

the definitions of regulatory terms. 

4. FTA policies relative to the 

enforcement of charter rules and the 

boundary between charter and mass 

transit services in specific 

circumstances, such as university 

transportation and transportation to/ 

from special events. 

1. Facilitator’s Final Report 

The facilitator, Susan Podziba, 

submitted her report to FTA on March 

6, 2007. The final report summarizes the 

proceedings of the CBNRAC including 

the agreement reached on regulatory 

language for the NPRM and identifies 

outstanding issues. The facilitator noted 

in her final report that: 

As a result of the negotiated rulemaking 

process initiated by FTA, the revised Charter 

Service regulations will account for the 

interests, concerns, and nuances that were 

raised by all CBNRAC members. Though the 

negotiations remained difficult, and, at times, 

antagonistic throughout the seven months of 

meetings, CBNRAC members remained 

committed and worked hard to identify 

consensus solutions for each issue. As a 

result of the intensive discussions and 

multiple proposals and counter-proposals 

offered to resolve the twelve outstanding subissues, FTA has a clear understanding of the 

interest and concerns of both the public 

transit and private charter stakeholders as 

well as the range of options available for 

deciding those issues. (Final Report, page 

20.) 

We would like to underscore the 

facilitator’s conclusion and thank all 

members of the CBNRAC for their 

efforts. We also agree with the facilitator 

that, as a result of the negotiations, we 

have a clear understanding of the 

interests involved with the revision of 

the Charter Service regulations. 

D. NPRM 

On February 15, 2007, FTA published 

a NPRM in the Federal Register (72 FR 

7526). The NPRM was a complete 

revision of 49 CFR part 604. According 

to the agreement established during the 

negotiations, FTA included in the 

NPRM all of the provisions on which 

the CBNRAC reached consensus. This 

amounted to a little more than 80 

percent of the rulemaking. For the other 

20 percent, FTA used its discretion, 

informed by the discussions during the 

negotiations, to develop its proposals. 

1. Overview of Comments Received on 

the NPRM 

We received over 300 comments in 

response to our NPRM. We heard from 

160 public transit agencies, 65 private 

charter operators, 25 public 

associations, 16 members of the public, 

13 state departments of transportation, 

11 private charter associations, 11 cities, 

10 universities, four public officials, 

three air transport groups, and three 

anonymous comments. 

We received several comments from 

participants on the CBNRAC. Some 

comments were in full support of the 

proposals contained in the NPRM and 

other comments rejected the proposals. 

Even though some of the comments 

submitted by members of the CBNRAC 

did not conform to the agreement 

reached on December 6, 2006, FTA 

retained much of the consensus 

language. In addition, we received many 

helpful comments on ways to improve 

the regulatory language and we made 

changes based on those comments. 

2. General Comments 

There were a number of comments on 

cross-cutting issues that we address 

before the section-by-section analysis. 

Specifically, we received comments 

about the lack of appendices in the 

NPRM, fully allocated costs, and when 

a customer specifies the type of 

equipment. In addition, we received 

several comments questioning our 

intentions regarding some of the 

proposals included in the NPRM. 

a. Lack of Appendices 

When we published the NPRM, we 

made reference to appendices we 

intended to include in the final rule. 

Appendix A would be a list of the 64 

Federal programs discussed and 

provided during the CBNRAC 

negotiations. This list is not unique; 

rather, other Federal agencies reference 

this list and the list is available on 

FTA’s public Web site, http:// 

www.fta.dot.gov. In addition, the list of 

Federal programs was provided to all of 

the members of the CBNRAC during 

negotiations and is in the docket for 

these proceedings. Appendix B would 

provide guidance on what FTA would 

consider when removing a registered 

charter provider or qualified human 

service organization from the FTA 

Charter Registration Web site. Appendix 

C would be a list of questions and 

answers to provide guidance to 

recipients regarding the new provisions 

of the rule. 

Regarding the lack of appendices in 

the NPRM, a large public transportation 

association and several public transit 

agencies stated ‘‘we are troubled by the 

absence of a draft Appendix A (listing 

the federal programs that would qualify 

a social service agency to receive 

services under an exception). Although 

we anticipate that all of the more than 

five dozen federal programs under the 

United We Ride umbrella will be 

included, we believe FTA should state 


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21National Archives and Records Administration, 

Office of the Federal Register, Federal Register 

Document Drafting Handbook, page 7.9 (October 

1998). 

22 5 U.S.C. section 553(b). 

as much or provide a draft Appendix A 

for comment.’’

Appendices are not regulatory text 

and do not carry the force and effect of 

law. In fact, the Office of Federal 

Register specifically prohibits an 

appendix from containing regulatory 

requirements: 

Rules and proposed rules. Use an appendix 

to improve the quality or use of a rule but 

not to impose requirements or restrictions. 

Use an appendix to present: (a) 

Supplemental, background, or explanatory 

information which illustrates or amplifies a 

rule that is complete in itself; or (b) Forms 

or charts which illustrate the regulatory text. 

You may not use the appendix as a 

substitute for regulatory text. Present 

regulatory material as an amendment to the 

CFR, not disguised as an appendix. 

Material in an appendix may not: (a) 

Amend or affect existing portions of CFR 

text; or (b) Introduce new requirements or 

restrictions into your regulations.21

Further, as noted above, an appendix 

is explanatory, and, therefore, according 

to the Administrative Procedure Act, 

notice and comment is not required: 

Except when notice or hearing is required 

by statute, this subsection does not apply—

(A) To interpretative rules, general 

statements of policy, or rules of agency 

organization, procedure, or practice; or 

(B) When the agency for good cause finds 

(and incorporates the finding and a brief 

statement of reasons therefor in the rules 

issued) that notice and public procedure 

thereon are impracticable, unnecessary, or 

contrary to the public interest.22

Based on the above, and the fact that 

proposed information for the 

appendices was widely available to the 

public before publication of the NPRM, 

we made the decision not to include 

appendices at the NPRM stage. 

b. Fully Allocated Costs 

Our proposed rulemaking did not 

include a requirement for recipients to 

calculate their fully allocated costs. We 

decided not to include the provision 

primarily because a fully allocated cost 

requirement has the potential to 

interfere with our efforts to support 

public transit agencies as mobility 

managers within their communities. In 

addition, we are very concerned that a 

fully allocated cost requirement would 

hinder our attempts to negotiate with 

other federal agencies to develop cost 

allocation principles to share fairly the 

cost of human service transportation. 

Private charter operators submitted 

comment urging us to reconsider our 

proposal. One comment, which 

represents a consolidated opinion of 

several of the private charter operators 

on the CBNRAC, stated that ‘‘the 

admonition to develop ‘fair charges’ and 

to recover some percentage of marginal 

operating costs consistent with the 

public purpose of the service is useless 

as either a regulatory tool or guidance to 

transit agencies. It also provides no 

protection to private operators. The 

need for transit agencies to recover fully 

allocated costs is present even for 

service provided under one of the many 

exceptions in this proposed rule.’’ They 

contend that, like other social programs, 

if the Federal Government wishes to 

subsidize charter service for certain 

social service organizations, it can make 

direct subsidy payments to those 

organizations instead of creating 

subsidized public bus service that 

undercuts the price structure in the 

private market. 

In addition, one international private 

charter association suggested that FTA 

impose a new fully allocated cost 

requirement: ‘‘A system-wide cost per 

revenue hour dollar figure (approved 

operating budget divided by revenue 

hours of bus service) is the fairest and 

simplest way of estimating what it 

would cost per hour to provide bus 

service to a third party. This method 

does not necessarily capture the capital 

cost consumed, overtime driver hours or 

preparation time or the infrastructure 

shared to make this service available to 

a third party, but on balance a systemwide cost per revenue vehicle hour 

times total hours of the requested 

service is the closest to what the actual 

cost would be to provide the service.’’

We understand this point of view, but 

disagree that requiring fully allocated 

costs is necessary. The rule as written 

prohibits a public transit agency from 

providing charter service if a private 

charter operator expresses interest in 

providing the service. In addition, the 

exceptions contained in the rule are 

areas of charter service that the private 

charter coalition conceded are areas 

where public transit agencies can 

provide community-based charter 

services that would not otherwise be 

served in a cost-effective manner by 

private operators. 

Not including fully allocated cost 

provisions in the final rule is 

appropriate given our efforts to establish 

coordinated public transit human 

service transportation and the 

protections provided for private charter 

operators in the final rule such as 

notification procedures and cease and 

desist orders. 

c. When a Customer Specifies 

Equipment 

In the NPRM, we did not address 

specifically what would occur if a 

customer specifies certain equipment in 

their request for charter service. The 

only reference we made to specific 

equipment was in the preamble where 

we discussed the fact that rubber tire 

trolley buses are considered buses for 

purposes of this rulemaking. 

We received several comments on this 

topic unrelated to our discussion of 

including rubber tire trolley buses 

within the scope of buses generally. 

Public transit agencies encouraged us to 

allow a customer to specify the type of 

equipment they would like use. A 

member of the public encouraged us to 

exclude electrically powered trolleys 

from the scope of the rule. Another 

member of the public suggested that the 

notice recipients send to private 

providers ‘‘should also include a 

description of the specific equipment 

requested by the customer and not just 

‘buses or vans.’ This comment goes on 

to state ‘‘any new rule allows the 

purchaser of the service to decide what 

kind of equipment it needs. To that end, 

the notice to private providers should 

allow for a reasonable amount of 

specificity regarding the requirements 

for a particular service.’’

Another comment echoed the above 

sentiment by stating ‘‘I should not be 

forced to obtain services from private 

charter operators who do not have the 

proper coach equipment, to spend more 

money for single door highway coaches, 

with high floors that take longer to load 

and unload, that are not geared for city 

street/shuttle operations, thereby forcing 

me to obtain more equipment for 

frequency of service * * *.’’

The comments regarding types of 

equipment raise a tricky issue in 

balancing protections for private charter 

operators with the need for transit 

agencies to satisfy community demands. 

In order to provide attractive ‘‘fun’’

alternatives to encourage downtown 

employees or tourists to use transit in 

congested corridors, transit agencies 

may acquire rubber tire replica trolleys. 

These trolleys can become a popular 

enough local attraction that they may be 

sought for private leisure charters such 

as weddings. The statute, however, 

addresses charter without regard to 

equipment type. The FTA regulation 

relates to the provision of transportation 

service, not entertainment, which is 

why sightseeing is also excluded from 

the statutory definition of ‘‘public 

transportation.’’ If there is sufficient 

demand for such equipment, private 

charter operators may eventually 


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acquire new equipment to serve this 

emerging market. In the meantime, 

however, FTA sees no reason to amend 

the rule to allow an exception under 

which a customer may specify the type 

of vehicle beyond requesting a bus or a 

van. 

Likewise, if there were sufficient 

public demand for low-floor, double 

door vehicles, or size compatibility with 

streets to be traveled, and private 

charter operators do not have that 

equipment, then private charter 

operators may eventually acquire new 

equipment to serve that market as well. 

But, again we decline to amend the rule 

to allow for such an exception for public 

transit agencies. 

d. Other Concerns 

We received several comments 

questioning the intentions of the FTA in 

proposing the NPRM provisions that we 

did. One comment from a transit agency 

stated ‘‘The tone of this proposed rule 

suggests a presumption of ‘guilt’ on the 

part of all transit providers.’’ Another 

transit agency put it this way: ‘‘Transit 

providers should not have to prove, on 

a daily basis, that they are following the 

rules.’’ One public citizen asked: ‘‘When 

was legislation passed that authorized 

FTA to stop supporting transit.’’ Or, as 

a Midwestern transit agency stated ‘‘I 

am opposed to federal requirements that 

squash our attempt to generate some 

extra revenue to support the transit 

system.’’

FTA went to great lengths to involve 

all of the affected and interested parties 

in the CBNRAC negotiations. We 

prepared background materials, brought 

in speakers to assist the committee, and 

hired a highly competent and effective 

facilitator to assist throughout the 

process. In addition, all of the materials 

and notes were posted to the docket so 

that members of the public could follow 

the proceedings and each meeting had 

a public comment period should any 

member of the public wish to make 

comments about the proceedings. We 

were able to reach consensus on 80 

percent of the rulemaking. This means 

the CBNRAC, which included small, 

medium, and large transit agencies from 

the West, South, Midwest, North and 

East, were able to agree on a vast 

majority of the regulatory text for the 

NPRM. The provisions were developed 

with the intention of promoting public 

transit and protecting the private charter 

industry. As indicated in the history 

section of this document, achieving the 

right balance has been a challenge for 

many years. We accepted this challenge 

because a negotiated rulemaking was a 

novel approach to addressing the issues 

that have plagued this regulation for 

years. 

Given the above, we regret that some 

commenters perceived the proposed 

rule to be anti-transit. The tone of this 

rulemaking is the same as the current 

regulation and the same as any 

regulation that prescribes certain 

behavior. We are in the business of 

promoting and supporting transit 

agencies in their mission to provide 

community-based services. We 

recognized and promulgated exceptions 

to the charter service regulation that 

support transit agencies providing 

charter services to the elderly, persons 

with disabilities, and people with low 

income. 

In addition, we carefully considered 

the interests of parties impacted by this 

rulemaking. The negotiated rulemaking 

was a powerful tool for collecting that 

information. We also considered all of 

the comments received on the proposal 

and modified some of the regulatory text 

based on the suggestions included in 

comments. 

2. Section-by-Section Analysis 

In addressing the comments received, 

we divided the comments according to 

the applicable rulemaking section. For 

each section for which we received 

substantive comments, we provide a 

brief summary of the purpose of the 

regulatory text, we summarize the 

relevant and representative comments 

received, and then we describe our 

decision whether to modify that 

particular provision. If we modified the 

provision, then we describe the 

modification. If we decided not to 

accept the proposed modification, then 

we explain why and adopt the language 

as proposed in the NPRM. For sections 

of the rule where we did not receive 

substantive comments, those provisions 

are hereby adopted as final. 

Subpart A—General Provisions 

Section 604.2—Applicability 

The purpose of this provision was to 

state early on in the regulation that is 

required to comply with this 

rulemaking, who is exempt from the 

rule’s requirements, and to set out 

certain situations in which this rule 

does not apply. 

One public transportation association 

noted that ‘‘the draft rule provides for 

application to all activities of FTA 

grantees that are public transit agencies, 

without regard to the presence or 

absence of federal funding * * *’’ We 

also heard this comment from several 

public transit agencies. In addition, one 

transit agency suggested that this 

rulemaking not apply to those that 

receive a minimal amount of Federal 

funds. 

Agency Response: We note that in 

order to be an ‘‘FTA grantee’’ a transit 

agency has accepted Federal funds from 

FTA. The commenter correctly notes 

that to conclude otherwise would 

‘‘exceed FTA’s authority and its stated 

purpose of protecting private entities 

from federally-assisted competition.’’

Thus, as stated in the NPRM, this 

rulemaking applies to those that receive 

Federal financial assistance from FTA. 

We do not believe setting a minimum 

amount of Federal funding to trigger 

application of this rule is necessary. A 

transit agency always has the option to 

segregate locally funded and maintained 

vehicles and use those vehicles to 

provide charter service. To be clear, 

however, it is not just purchasing a 

vehicle with Federal dollars that triggers 

the application of these requirements. 

Housing the vehicle in FTA-funded 

facilities or using FTA-funded 

equipment to maintain the vehicle also 

triggers application of this rule. A 

complete segregation is necessary to 

avoid the application of the 

requirements of this rule. 

We also received a comment from a 

state association asking us whether the 

charter service regulations apply to 

tribal nations. Under our Notice of 

Funding Availability for the Tribal 

Transit Program, published in the 

Federal Register on August 15, 2006 (71 

FR 46959), the charter service regulation 

applies to tribal nations under that 

program. The charter service regulations 

also apply to tribes that receive FTA 

grants as recipients or subrecipients 

under other programs. That being said, 

however, the final rule provides an 

exemption for section 5311 recipients, 

which encompasses many tribal 

programs that use FTA-funded 

equipment for program purposes 

(defined as: ‘‘transportation that serves 

the needs of either human service 

agencies or targeted populations 

(elderly, individuals with disabilities, 

and/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.’’). 

FTA considered the comments on this 

subsection, but does not believe the 

comments warrant a change to the 

proposed language, and, therefore, the 

language is adopted as proposed. 

Section 604.2(c)—Private Charter 

Exemption 

This provision exempts from the 

rule’s coverage private charter operators 

who receive Federal financial assistance 

either directly or indirectly under 49 


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U.S.C. sections 5307, 5309, 5310, 5311, 

5316, and 5317, or section 3038 of the 

Transportation Equity Act for the 21st 

Century (TEA–21). 

The main comment received 

regarding this subsection stated: ‘‘In 

removing private charter operators from 

its scope, it excludes up to 40 percent 

of the rural transit network from these 

rules, thus forcing half the network to 

follow rules and procedures that are 

waived for the private sector partners.’’

Another transit agency stated ‘‘we do 

not believe that private charter operators 

should be treated different from other 

organizations that receive Federal funds. 

Allowing some private charter operators 

to not comply with the charter 

regulation and receive Federal funds put 

those private charter operators at a 

competitive advantage over other 

private operators that do not receive 

Federal dollars. Either the receipt of 

Federal funds is an important factor or 

it isn’t.’’

Agency Response: We respond to 

these comments by noting our rationale 

in the NPRM for including this 

provision: ‘‘The receipt of funds from 

the Federal government should not 

interfere with a private charter 

operator’s business. This regulation has 

its genesis in the protection of the 

private charter operators from unfair 

competition by federally subsidized 

public transit agencies. To subject 

private charter operators to the charter 

service regulations undermines the very 

purpose of these regulations.’’ We cite 

three reasons in support of this analysis. 

First, we think some comments may 

have confused the many private not-forprofit agencies that provide public 

transit service in rural areas with the 

private charter operators protected by 

this rule. It is not FTA’s intent to apply 

the requirements of the rule differently 

to public transit agencies depending on 

whether they are governmental or nongovernmental entities. 

Second, FTA’s Over-the-Road Bus 

Program is specifically designed to 

provide Federal assistance to private 

charter operators so that they can 

retrofit their vehicles to make them 

accessible and comply with the 

Americans with Disabilities Act. This is 

a federally sanctioned activity, and, 

thus, to apply the charter regulations 

would run counter to this Federal 

program. The same argument also holds 

true for those private charter operators 

that receive Federal funds under 49 

U.S.C. section 5311(f), which provides a 

limited amount of Federal support for 

running routes in rural areas. The point 

here is that there are clear situations 

under which the Federal government 

sees a benefit to providing Federal tax 

dollars to private charter operators. 

Third, public transit agencies may 

enter into a contract with private charter 

operators to purchase transportation 

services using the private charter 

operator’s vehicles. The fact that a 

private charter operator contracts with a 

public transit agency should not have 

the unintended consequence of 

preventing the operator from using 

those vehicles, or other vehicles in its 

fleet, to provide charter service. If a 

private charter operator, however, 

provides fixed route public 

transportation using federally funded 

buses or vans under contract to a transit 

agency or other public entity such as a 

State Department of Transportation, the 

private charter operator stands in the 

shoes of the transit agency and is subject 

to the charter service regulations in 

regard to the use of those FTA-funded 

vehicles. That private charter operator, 

however, would not be prevented from 

using other vehicles in its private fleet 

to provide charter service. 

Finally, the comment regarding this 

section’s provisions placing one private 

charter operator in a competitive 

advantage over another private charter 

operator strikes us as disingenuous. No 

private charter operator raised this 

issue, and if it truly was a concern, we 

have to believe at least one private 

charter operator would have raised it. 

Thus, while FTA rejects the proposed 

modifications to this section, we 

include language to clarify that the 

charter service regulations do not apply 

to private charter operators that receive, 

directly or indirectly, Federal financial 

assistance under the programs listed or 

to the non-FTA funded activities of 

private charter operators that receive 

assistance under section 3038 of TEA–

21. 

Subsection 604.2(e)—Exemption for 

Transit Agencies 

This provision exempts from the 

charter service regulation recipients 

who receive funds under 49 U.S.C. 

sections 5310, 5316, or 5317 and 

provide charter service consistent with 

the Federal program purpose. 

We heard from numerous public 

transit agencies encouraging us to 

expand this provision. The most 

common request was to expand this 

provision to include recipients under 49 

U.S.C. section 5311. The second most 

common request was to expand the 

provision to exclude 49 U.S.C. section 

5307 recipients that operate 50 or fewer 

buses in peak hour service. 

Agency Response: The CBNRAC 

considered the request to expand the 

exemption to section 5311 recipients. 

The private charter caucus opposed this 

provision because it believed it would 

lead to abuse because there is no 

effective way to limit those activities. 

The second request regarding 5307 

recipients is a new one. We considered 

both options and the concerns raised 

with expanding the coverage of this 

section. 

We believe that this section can be 

expanded safely to include recipients of 

section 5311 funds for two reasons. 

First, section 604(2)(e) already limits the 

exception ‘‘to program purposes only.’’

We added a definition of program 

purposes that states: ‘‘transportation 

that serves the needs of either human 

service agencies or targeted populations 

(elderly, individuals with disabilities, 

and or low income individuals); this 

does not include exclusive service for 

other groups formed for purposes 

unrelated to the special needs of these 

targeted populations.’’

Second, we believe this expansion is 

appropriate given FTA’s efforts to 

support coordinated public transit 

human service transportation activities. 

Some of the comments received noted 

that without the exemption this 

provision could have a chilling effect on 

those activities, which is something 

FTA wants to avoid. Thus, limiting 

section 5311 recipients’’ provision of 

charter service to program purposes, as 

defined in the regulations, provides a 

limitation on those services we believe 

will protect private charter operators. In 

addition, the revised enforcement 

provisions will also provide a 

counterbalance to this expansion if it is 

abused. 

We reject the second request—

excluding 5307 recipients with 50 or 

fewer buses—because the change might 

unduly weaken the protections 

provided by the rule to private charter 

operators. In an urbanized area, even 

one served by a small transit system 

with 50 or fewer vehicles, there are 

more likely to be private charter 

operators available than in rural areas. 

In other instances, the transit system 

would be able to provide charter service 

under other exceptions of the rule, so 

this new exception would be 

unnecessary. 

We have therefore amended 604.2(e) 

to include 49 U.S.C. section 5311 in the 

list of programs exempted from the 

requirements of the charter service 

regulation when the charter service 

provided supports program purposes. 

Section 604.2(f)—Emergency Exemption 

This proposed provision exempts 

recipients from the charter service 

requirements in the event of a national, 


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regional, or local emergency lasting 

fewer than three business days. 

We heard from several public transit 

agencies regarding the three day 

limitation. Many expressed 

disappointment that the provision 

would limit a public transit agency’s 

ability to assist in the event of an 

emergency. Others expressed concern 

that local emergencies are not included, 

but could pose an equal amount of 

danger to the surrounding community. 

One example provided was a train 

derailment where noxious fumes 

engulfed the community where public 

transit is the logical choice for 

evacuating the community quickly and 

efficiently. Another comment asked 

why this provision does not include 

security training exercises. 

Agency Response: Considering the 

concerns raised, we have decided to 

amend this section to allow for transit 

agencies to respond to declared 

emergencies. We will add the following 

language to 604.2(f): ‘‘Actions directly 

responding to an emergency declared by 

the President, Governor, or Mayor or in 

an emergency requiring immediate 

action prior to a formal declaration.’’ In 

addition, we felt it necessary to provide 

a time limitation and so we are changing 

the three day limit to 45 days. Thus, a 

transit agency has 45 days to assist with 

emergency response before having to 

report its activity to the emergency 

response docket created under subpart 

D of 49 CFR part 601. Security training 

exercises are covered by the emergency 

preparedness exemption in section 

604.2(d). 

Section 604.3—Exemption 

This provision sets up a mechanism 

by which transit agencies may ‘‘opt out’’

of the charter service regulations. 

We heard from transit agencies that 

this provision is not necessary, the 

certification procedures were 

burdensome, and there appears to be no 

purpose for the affidavit. 

Agency Response: While we thought 

this provision would assist a public 

transit agency to clearly and 

unambiguously state it does not intend 

to provide charter services, we are 

convinced by the comments that this 

provision is unnecessary. Therefore, we 

have removed the exemption section 

from the final regulation. 

Section 604.4—Definitions 

This provision sets out the applicable 

definitions for this part. Since the 

section contains several definitions, we 

will only discuss those definitions 

where the public submitted comments. 

All other definitions are adopted as 

proposed. We also added several new 

definitions as a result of changes we 

made to the regulation based on the 

comments we received. 

Section 604.3(c)—Definition of ‘‘charter 

service’’

This is a key provision in the charter 

service regulation. The definition of 

charter service identifies what service 

by public transit agencies is considered 

charter service. 

Generally, public transit agencies 

voiced concern that the proposed 

definition does not ‘‘recognize the 

realities of local public transportation 

service by having the flexibility to add 

and modify service for temporary 

situations, such as community events 

and employers opening temporary 

facilities.’’ A member of the public 

submitted a comment that noted the 

proposed definition ‘‘potentially 

undermines coordinated efforts between 

local governments and risks decreasing 

the efficiency and cost-effectiveness of 

service while jeopardizing ridership 

incentives for universities and transit 

systems.’’ In addition, several transit 

agencies submitted comments stating 

‘‘while the proposed rulemaking does 

address the issues raised in the 

conference committee report, it also far 

exceeds what seems to be the intent of 

Congress by providing a vague and 

poorly explained definition of charter 

that could have the impact of redefining 

the very definition of public 

transportation.’’

In fact, most transit agencies 

submitted concerns about the definition 

not including the term ‘‘exclusive.’’ One 

public transportation association noted 

that ‘‘the concept of exclusivity—often 

referred to as ‘‘closed door’’ service—

has been integral to the definition of 

charter service for more than 20 years 

and is necessarily the primary means of 

determining whether transportation is 

public transportation or a private 

service.’’ A public transit agency 

warned that ‘‘the failure to include 

exclusivity in the charter definition has 

the potential to change the definition of 

public transportation.’’ One airport 

ground transportation association 

requested that ‘‘the proposed federal 

definition of charter service not 

supersede local state, city and airport 

regulatory definitions currently in place 

for private motor carriers of passengers 

to and from airports by maintaining the 

concept of exclusivity.’’

Some public transit agencies offered 

alternatives to the proposed definition 

of charter service. A Midwestern city 

provided the American Bus 

Association’s quick reference guide on 

the definitions of charter, mass 

transportation, and sightseeing. Three 

members of the public suggested that 

the definition should be ‘‘a point to 

point service that is not open to the 

public, and not of a routine nature.’’ An 

air transport company recommended 

that the definition include ‘‘at a fixed 

charge for a motor vehicle.’’ An east 

coast public transit authority set forth 

the following indicia of charter service: 

‘‘for the sole use of a distinct group of 

people; routing and frequency of service 

solely determined by those people using 

the service or their sponsor; not open to 

the general public; identification or 

affiliation required to board; one-time, 

nonrecurring event, with no regular 

pattern; and service not on a prepublished schedule or Web site.’’

We also heard from public transit 

agencies that the examples included in 

the definition of charter service should 

be removed. Several public transit 

agencies stated the examples were 

unclear and inconsistent. One east coast 

public transit association noted that 

‘‘there is no simple, rigid template that 

can simply and routinely be applied to 

every situation to determine whether or 

not a service is or is not mass transit. 

Attempting to impose one at the federal 

level will inevitably result in a great 

disservice to the public at large. 

However, reasonable and fair guidelines 

would be appropriate and useful to all 

involved parties.’’

From the private sector side, we heard 

from two private charter operator 

coalitions regarding the definition of 

charter service. They stated that while 

the CBNRAC did not reach consensus 

on the definition, the parties did agree 

that ‘‘charter service has three 

components: (1) Transportation of a 

group of persons pursuant to a single 

contract with a third party; (2) a fixed 

charge; and (3) according to an itinerary 

determined by someone other than the 

public transit agency.’’ In addition, the 

coalitions urged FTA to not ‘‘impose a 

black or white approach to defining 

charter service, but should continue to 

look at the intent of the service and 

whom the service is designed to 

benefit.’’ They also noted that the lack 

of a written contract should not be 

dispositive in determining that service 

is charter service. One of the coalitions 

recommended a definition of charter 

service as ‘‘providing transportation 

service, using buses or vans, principally 

to benefit a group of riders with mutual 

purpose and destinations.’’ This 

association also questioned the need to 

indicate who controls the service as it 

may conflict with interpretations and 

the intention of the rules: ‘‘Who 

‘controls’ the itinerary has certainly 

been an interpretation recipients have 

long abused, particularly in special 


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events.’’ This association also 

recommended that ‘‘fixed charge’’

should be removed because it is often 

abused. 

Agency Response: By far, this section 

received the most comments. Since the 

CBNRAC could not reach a consensus 

on the definition of charter service, we 

also received comments from several of 

the committee members regarding our 

proposed definition. Considering all of 

the comments received regarding the 

definition of charter service, we decided 

to shorten and simplify the definition, 

while maintaining flexibility in 

determining the intent of the charter 

service. 

First, we added back the concept of 

exclusivity to the definition of charter 

service. In the past, this word has 

caused problems because a few public 

transit agencies have used the term as a 

loophole to avoid the requirements of 

this rule. We address this issue by 

adding a definition of ‘‘exclusive’’—

service that a reasonable person would 

conclude is intended to exclude 

members of the public—to the list of 

definitions. Further while we do not 

agree that a 20 year history is reason 

enough to add the term exclusive back 

in the definition, we do believe that 

exclusivity is a good indication of intent 

to perform charter service. 

Second, we removed all of the 

examples included in the definition of 

charter service. Instead, we provide 

factors that we will consider in 

determining the intent of the service. 

We also believe that this revised 

definition will allow transit agencies the 

flexibility needed to provide public 

transportation to address traffic 

mitigation associated with an event, as 

well as being able to serve communitybased public transportation. 

Third, we make clear in the definition 

that it does not apply to demand 

response services provided to an 

individual. We also provide a definition 

of ‘‘demand response,’’ which is 

discussed in the next section. 

Finally, we have added a provision to 

the definition of charter service to 

address events that are limited in 

duration and for which the public 

transit agency charges a premium fare or 

for which a third party pays for the 

service in whole or in part. While the 

new definition does not prevent a 

public transit agency from establishing, 

on its own, temporary or irregular routes 

to respond to community demands, we 

believe that the nature of such service 

should be to fulfill a public purpose. 

Thus, the definition of charter service 

includes service by a public transit that 

is irregular or on a limited basis for a 

premium fare that is greater than the 

usual or customary fixed route fare or 

service for which a third party pays all 

or part of the costs for the service. We 

believe service that fits in either of those 

categories represents an opportunity for 

private sector participation, and, 

therefore, if the public transit agency 

wishes to provide such service it must 

give prior notification to registered 

charter providers in its geographic 

service area. 

Section 604.3(g)—Definition of 

‘‘demand response’’

This section is new and is based on 

comments we receiving asking us to 

define the term as used in the definition 

of ‘‘charter service.’’

We have taken the definition of 

‘‘demand response’’ from our New 

Freedom Circular, which states: ‘‘any 

non-fixed route system of transporting 

individuals that requires advanced 

scheduling by a customer, including 

services provided by public entities, 

nonprofits, and private providers.’’

Section 604.3(h)—Definition of 

‘‘interested party’’

This provision defines who is an 

interested party for purposes of filing a 

complaint with FTA. 

We received only one comment 

regarding this definition and it stated 

that the definition was overly broad and 

hard to determine who, in fact, could 

file a complaint. 

Agency Response: This particular 

provision represents consensus 

language from the CBNRAC. We believe 

that the parties identified in the list of 

‘‘interested parties’’ are clear, and, 

therefore, the provision is adopted as 

proposed. 

Section 604.3(k)—Definition of ‘‘pattern 

of violations’’

This provision defines what 

constitutes a pattern of violations for 

purposes of 49 U.S.C. section 5323, 

which states in relevant part: ‘‘In 

addition to any remedy specified in the 

agreement, the Secretary shall bar a 

recipient or an operator from receiving 

Federal transit assistance in an amount 

the Secretary considers appropriate if 

the Secretary finds a pattern of 

violations of the agreement.’’

We received several comments 

expressing concern about our proposal 

to define pattern of violations as ‘‘more 

than one finding of non-compliance 

with this Part by FTA beginning with 

the most recent finding of noncompliance and looking back over a 

period of 72 months.’’

Comments received focused on two 

aspects of this proposed definition. 

First, most were concerned that a 

finding of non-compliance should be for 

the same provision and not different 

provisions. Second, several comments 

stated that it was unfair to examine 72 

months and the time period should be 

two or three years at the most. There 

was also a misconception that the new 

rule would retroactively look back over 

a recipient’s compliance record. One 

comment, which is typical of the 

comments we received from recipients, 

stated the issue as follows: ‘‘We suggest 

that the definition be revised to indicate 

that there must be at least three 

violations in three years and the 

application of this new definition 

should occur when the rule is final. 

Also, the violations must be related in 

nature (i.e., not totally disparate issues) 

in order to show a pattern.’’

Private charter operators, on the other 

hand, agreed with the proposed 

definition, but requested that FTA settle 

the issue of whether a single complaint 

against a recipient can establish a 

pattern of violations. 

Agency Response: We understand 

recipients’ concerns regarding this 

definition and the potential finding of a 

pattern of violations for not complying 

with paperwork requirements. In 

addition, we agree with the suggestion 

that violations should be related and not 

completely disparate. Thus, we have 

amended the definition of ‘‘pattern of 

violations’’ to require that only 

unauthorized charter service violations 

can constitute a pattern of violations. 

We believe that mandatory withholding 

of Federal funding should only be 

reserved for those cases involving 

unauthorized charter service only. This 

does not mean, however, that there can 

never be a situation in which FTA will 

not withhold funds for paperwork (e.g., 

failure to record charter service or 

failure to post quarterly reports) 

violations. Rather, we are simply stating 

that for mandatory withholding of 

Federal funds under the new statutory 

provision contained in SAFETEA–LU, 

the pattern of violations must be 

established based on unauthorized 

charter service. 

That being said, it is possible to 

establish a pattern of violations in one 

complaint. For instance, if one 

complaint properly documents three 

distinct charter service trips that are in 

violation of Part 604, then FTA could 

consider those three allegations as 

constituting a pattern of violations. We 

believe this is a reasonable resolution to 

the concern of private charter operators 

that a single complaint could establish 

a pattern of violations. 

To be clear, however, each instance of 

a charter service violation must be 

related to an event and not a single 


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instance of unauthorized charter 

service. In other words, the provision of 

charter service for a flower show that is 

not in conformance with these 

regulations would be an event. A single 

complaint alleging unauthorized charter 

service, in order to properly assert a 

pattern of violations, would have to 

include more than unauthorized service 

to a flower show. In order to assert a 

pattern of violations, a single complaint 

would have to include facts 

demonstrating unauthorized charter 

service to a flower show, a golf 

tournament, and an auto exhibition, for 

example. 

In addition, we decline to shorten the 

examination period to two or three 

years. While we considered including a 

three year period to correspond with 

triennial reviews, not all recipients are 

subject to triennial reviews and the six 

year period is consistent with other 

operating administrations within the 

Department of Transportation that 

examine a six year compliance history. 

Thus, we retain the six year period, 

which begins on the effective date of 

this rule. 

Section 604.4(o)—Definition of 

‘‘recipient’’

This provision defines who is a 

recipient. 

We received several comments about 

this definition because some were 

confused as to whether the term 

includes ‘‘subrecipients.’’

Agency Response: We have amended 

the definition to state ‘‘including 

subrecipients’’ to make clear that the 

regulation applies to direct recipients of 

FTA financial assistance as well as 

subrecipients of FTA financial 

assistance. 

Section 604.4(t)—Definition of 

‘‘violation’’

This is a new provision to the final 

rule and it would define what 

constitutes a violation for purposes of 

the charter service regulations. 

Several public transit agencies asked 

us to define what a ‘‘violation’’ is. 

Agency Response: We added a new 

definition to this section to define 

violation as ‘‘a finding by FTA of a 

failure to comply with one of the 

requirements of this Part.’’

Section 604.5—Charter Service 

Agreement 

This section discusses the terms of the 

Charter Service Agreement which is part 

of the Certifications and Assurances 

recipients are required to enter into as 

a condition of receiving Federal funds 

(49 U.S.C. section 5323(d)). 

One transportation association noted 

that there was an inconsistency between 

our intention not to apply the charter 

service requirements to third party 

contractors and the terms of the charter 

service agreement. 

Agency Response: In order to address 

this inconsistency, we have added the 

clarification that this provision applies 

only to a third party contractor when 

they are using vehicles purchased with 

FTA funds. 

Subpart B—Exceptions 

Section 605.6—Government Officials on 

Official Government Business 

This provision set out an exception 

for recipients to provide charter service 

to government officials on official 

business. We also proposed not to apply 

this provision to transit agencies with 

1,000 or more buses in peak hour 

service. 

We received numerous comments 

from public transit agencies on this 

provision to limit the number of bus 

hours to 80 annually, as proposed by the 

private charter caucus. 

Comments we received were along the 

following lines: ‘‘The limit is arbitrary 

and does not support or respect local 

cooperation. The transportation of 

public officials by a public agency 

should not be considered charter.’’ One 

comment on this topic stated: ‘‘How 

about whoever wrote this NPRM comes 

on down here to tell our government 

officials who sponsor the taxes that keep 

our transit systems operating that they 

have limited number of hours that they 

can utilize the charter service of the 

transit system.’’ The same comment 

stated that they do not have resources 

‘‘to conduct boarding surveys that 

distinguish the government officials 

from anyone else that may join them on 

a charter trip.’’ Some public transit 

agencies applauded our effort to 

recognize this service as an exception 

and felt the provision to allow the 

Administrator to grant additional hours 

was sufficient. Those who were not 

pleased with the NPRM suggested that 

FTA modify the provision to allow for 

a greater number of hours for public 

transit agencies located in state capitols. 

Others suggested that the limit be based 

on the size of the recipient’s geographic 

service area. 

A private charter operator coalition 

objected to our provision to allow 

additional hours upon request from a 

recipient. They urged that such 

additional hours should only be granted 

in extenuating circumstances, which 

should be ‘‘invoked very rarely.’’ They 

also warned that this exception should 

not ‘‘swallow up the general 

prohibition’’ of recipients providing 

charter service. This commenter also 

requested at least 72 hours notice of all 

requests for additional hours under this 

exception. 

Finally, regarding our proposal not to 

apply this provision to recipients with 

1,000 or more buses in peak hour public 

transit service, we heard from three of 

the largest east coast transit agencies 

that strongly opposed the provision. 

Specifically, they noted opposition to 

‘‘any regulatory change that imposes a 

different application based on the size 

of the transit property.’’

Agency Response: To be very clear, 

transporting a group of government 

officials for official government 

purposes is charter service under the 

existing definition of charter service. 

Government officials that happen to 

board a fixed-route vehicle would not 

count toward the 80-hour exception. 

This exception is targeted at government 

field trips such as visiting a new 

stadium or wastewater processing 

facility. It could also mean transporting 

City Council officials to a site or 

business officials, accompanied by 

government officials, touring a city for 

economic development purposes. 

This exception is designed to allow 

recipients to provide charter service to 

government officials for official 

government business. Recipients may 

not provide charter service to 

governmental officials for nongovernmental purposes. We have added 

language to the regulatory text to clarify 

this point. We have also added a 

definition of government official, which 

states ‘‘ ‘government official’ means an 

individual appointed or elected at the 

local, state, or Federal level.’’

Since the transportation of 

government officials for government 

purposes is charter service under the 

current regulations, as noted in the 

NPRM, we believe that the 80 charter 

service hours per year is appropriate 

because it is the baseline number of 

hours the private charter operators on 

the CBNRAC agreed to. On the other 

hand, we recognize that there may be 

special circumstances that might arise 

that could call for additional bus hours 

during the year. If these circumstances 

arise, we have a provision that allows 

the FTA Administrator flexibility to 

allow those additional hours in 

extenuating circumstances. Private 

charter operators requested that they 

have the opportunity to comment on 

any request for additional hours. To 

address this concern, we will add a 

Government Officials docket (http:// 

www.regulations.gov; FTA–2007–0020) 

for the purpose of logging these requests 

for additional hours. Private charter 


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operators can sign up for notification 

when FTA places a request in the 

docket. If the request raises serious 

concerns, the private charter operator 

can contact the Ombudsman for Charter 

Services 

(ombudsman.charterservice@dot.gov) to 

express those concerns. The decision to 

grant a particular request is completely 

within the discretion of the FTA 

Administrator. 

Regarding the exception of transit 

agencies with 1,000 or more buses in 

peak hour service, this provision was 

the subject of consensus during the 

CBNRAC. During the negotiations, a 

CBNRAC member urged this exception 

to prevent large public transit agencies 

from being inundated with requests for 

charter service from government 

officials and qualified human service 

organizations. Private charter operators 

on the CBNRAC agreed to this 

provision. The response to this 

proposal, however, was negative. We 

heard from three large east coast transit 

agencies and we are convinced by their 

argument that large transit agencies 

should not be treated differently, and, 

therefore, we removed this provision 

from the final rule. 

To conclude, we decline to modify 

the 80-hour annual limit. Since the 

transportation of government officials 

for government purposes was 

unauthorized charter service when 

provided by recipients under the old 

regulation, we believe the 80-hour limit 

per year is a legitimate threshold 

number for the new exception. In 

addition, we have eliminated the 

language treating transit agencies with 

more than 1,000 buses in peak hour 

public transit service differently. 

Section 604.7—Qualified Human 

Service Organizations 

This section provides an exception to 

the prohibition against recipients 

providing charter service if they provide 

charter service to qualified human 

service organizations (QHSO). We also 

proposed not to apply this provision to 

transit agencies with 1,000 or more 

buses in peak hour service. 

The CBNRAC reached consensus on 

this provision because it recognized 

FTA’s efforts to establish coordinated 

public transit human service 

transportation planning. In addition, 

this provision recognizes the President’s 

Executive Order on coordinated 

transportation (Executive Order on 

Human Service Transportation 

Coordination, February 24, 2004). 

The comments we received on this 

section primarily centered on the 

assertion that charter service provided 

to QHSOs should be completely exempt 

from the charter service regulations. 

Specifically, comments stated ‘‘although 

the negotiators agreed that services 

could appropriately be provided to 

qualified social service agencies, the 

draft process is unnecessarily 

complicated and incomplete.’’ These 

comments went on to state ‘‘it is unclear 

how these additional criteria are to be 

evaluated (i.e., would a qualified social 

service agency certify such a mission? 

Would a public transit agency be 

obligated to investigate the basis for 

such a claim?) and it is unclear why 

FTA perceives a need for the additional 

criteria at all.’’ These public transit 

agencies and associations advocated 

that the additional criteria should be 

eliminated from the rule. We also heard 

from several Midwestern transit 

agencies supporting our provision on 

QHSOs: ‘‘We fully support the 

exceptions in 604.7 and 604.8 for 

government officials and qualified 

human service organizations.’’ A private 

charter operator expressed a similar 

sentiment: ‘‘FTA’s new disclosure 

procedures for human service agencies 

and public operator trips are a positive 

step forward.’’

Finally, we received several 

comments asking us to define the term 

‘‘struggling for self-sufficiency.’’

Agency Response: The language in 

this section represents a consensus from 

the CBNRAC. The criteria included in 

the NPRM were the subject of much 

discussion during the negotiations and 

the subject of a special presentation 

from FTA ‘‘United We Ride’’ staff. The 

criteria are a reflection of the 

requirement of the President’s Executive 

Order on transportation coordination. 

In addition, regarding the comment as 

to whether a transit agency must 

investigate information provided by a 

QHSO, the FTA Charter Registration 

Web site is a tool for tracking registered 

charter providers and QHSOs. There is 

no requirement for public transit 

agencies to independently verify the 

information submitted by a registered 

charter provider or QHSO. Further, 

since registration on the Web site 

constitutes submission of information to 

the government, false submissions 

would be subject to sanctions under 18 

U.S.C. section 1001, which includes 

potential criminal fines and 

imprisonment. 

Regarding the exemption of transit 

agencies with 1,000 or more buses in 

peak hour service, we removed this 

provision from this exception based on 

comments received. (See discussion 

under ‘‘Government Officials’’

exception above.) 

Finally, we changed the phrase 

‘‘struggling for self-sufficiency’’ to ‘‘low 

income,’’ which is a more commonly 

understood term in the transportation 

industry. 

This section is modified to remove the 

exception for recipients with 1,000 or 

more buses in peak hour public transit 

service, and change ‘‘struggling for selfsufficiency’’ to ‘‘low income.’’

Section 604.8—Hardship 

In this provision we proposed to 

allow a transit agency in a nonurbanized area to provide charter 

service to an organization if a registered 

charter provider imposes minimum trip 

duration or the registered charter 

provided would have deadhead time 

that exceeds the total trip length. 

Public transit agencies support this 

exception, but requested that it be 

extended to small urban areas with 

populations under 200,000. One public 

transit agency commented that ‘‘FTA’s 

proposed hardship exception is wellcrafted and provides a reasonable 

objective standard for determining 

whether available private charter 

providers are too far away to be 

expected to provide cost-efficient 

service and scale that definition to the 

size of a particular charter. Expanding 

that provision to, at minimum, small, 

urban areas would allow those areas to 

be better served without impinging on 

the interests of private charter 

operators.’’

Private charter operators opposed this 

exception. They contend that ‘‘hardship 

is largely a myth and any rule 

addressing ‘hardship’ is likely obsolete 

and more likely to be used to harm 

private operators than relieve 

‘hardship.’ ’’ In addition, they assert that 

the rule as written assumes the private 

market may not desire to serve certain 

needs, even if fulfilling the service may 

be at an economic loss and businesses 

routinely discount services, have sales, 

offer loss leaders, and utilize yieldpricing strategies. In theory, a recipient 

creates a ‘‘hardship dependency’’ when 

failing to allow the marketplace to 

respond. 

Agency Response: We believe there is 

merit to retaining the hardship 

exception. Rural providers are in a 

unique position of not having many 

options to rely upon. Private operators 

are usually located in urban areas and 

the high number of deadhead hours is 

a reality for many rural communities. 

On the other hand, we recognize that 

businesses often set minimum trip 

durations and to allow public transit 

agencies to provide charter service 

simply because the minimum trip 

duration exceeds the trip duration of the 

requested charter service could have a 


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negative impact on small, rural private 

providers. 

Therefore, we amended the regulatory 

text to include small urbanized areas 

under 200,000 in population and 

removed the provision that would allow 

a rural public transit agency to provide 

service when the minimum trip 

duration exceeds the length of the 

requested service. In addition we 

collapsed this provision into a new 

section called ‘‘Petitions to the 

Administrator,’’ which is located in 

section 604.11. Because we have 

established a docket for this exception 

(Petitions to the Administrator docket 

http://www.regulations.gov; FTA–2007–

0022), we have removed the reporting 

requirements for the hardship 

exception. Interested persons may 

simply track these requests through the 

docket system. 

Section 604.9—Leasing FTA Funded 

Equipment and Drivers 

This section discusses the ability of a 

public transit agency to lease equipment 

to a private charter operator. 

Private charter operators submitted 

comments requesting that FTA advise 

‘‘recipients it is their responsibility to 

comply with the [leasing exception 

requirements] with emphasis placed on 

the requirement to certify the registered 

charter provider has exhausted all 

available vehicles of all registered 

charter providers in the recipient’s 

geographic service area.’’

Public transit agencies responded to 

this provision with the general concern 

that a recipient does not have the ability 

to determine if the private charter 

operator has capacity: ‘‘The grantee 

should not be responsible for verifying 

the validity of any information provided 

by the leasing charter operator.’’

Another comment stated it slightly 

differently: ‘‘FTA will require public 

agencies to maintain proof offered by 

the lessor that no privately owned 

equipment is available but is unclear on 

whether the public agency must 

investigate independently or may take 

the proffer at face value.’’ Yet another 

comment pointed out that ‘‘while this is 

a well-intentioned and defensible 

condition, the rule should make it clear 

that recipient’s obligation in this area is 

to ask whether this has been done and 

that a recipient may rely on the private 

charter operator’s representation that it 

has, supported by documentation 

provided by the charter operator.’’

Finally, one additional comment 

submitted by a public transit agency 

advocates against this exception because 

of the impact it will have on small 

private charter operators: ‘‘There are 

two problems with this proposed 

exception. First it would be difficult to 

impossible for any private operator to 

guarantee that it has exhausted all of the 

available vehicles of all registered 

charter providers in a large municipal 

area. This would force recipients out of 

the charter leasing business and thereby 

deprive the recipient of much needed 

funds. Second, this provision also 

severely impacts smaller private charter 

operators who would either have to pay 

whatever fee is set by the larger private 

operator or turn away business. Such a 

scenario could eventually force smaller 

private charter operators out of 

business, which would then impact 

FTA’s certification that this regulation 

would not have an impact on small 

businesses.’’

Private charter operators also 

expressed concern with this provision. 

One of the consolidated responses for 

private charter operators who 

participated on the CBNRAC expressed 

concern that the current leasing 

provision allowed for sham transactions 

between a private charter operator with 

no vehicles and a public transit agency. 

The consolidated response noted 

support for the new provision because 

a private charter operator should have 

the first opportunity to provide charter 

bus service in the geographic service 

area. 

Agency Response: We agree with the 

comments submitted regarding the 

concern about a public transit agency’s 

obligation to investigate whether a 

registered charter provider has 

exhausted all of the available private 

charter vehicles in the geographic area. 

We have modified the proposed 

language to include a requirement that 

in order for a recipient to lease vehicles 

to a private charter operator, the 

operator must be registered on FTA’s 

Charter Registration Web site. 

Furthermore, we added a requirement 

that a private charter operator identify 

the number of vehicles it owns when it 

registers. Then, when a registered 

charter provider certifies that it has 

exhausted all of the private vehicles in 

the area, a recipient need only go to the 

Charter Registration Web site, note all of 

the registered charter providers in the 

geographic service area and the number 

of vehicles identified in the registration 

to verify that the registered charter 

provider’s certification is accurate. No 

independent verification beyond this 

process is required by the regulations. 

In addition, if the registered charter 

provider fails to exhaust the vehicles of 

other registered charter providers in the 

geographic service area, then the 

registered charter provider may be 

subject to a complaint for removal from 

the FTA Charter Registration Web site. 

We have retained the requirement to 

exhaust all available privately owned 

vehicles in the geographic service area. 

This is a protection that the private 

charter caucus requested during the 

CBNRAC negotiations and the public 

transit caucus agreed to. We received a 

couple of comments indicating that a 

private charter operator should not have 

to contract with another private charter 

operator known to be ineffective. In 

order to address this concern we do not 

require a registered charter provider to 

lease vehicles from another registered 

charter provider against whom the first 

registered charter provider has filed a 

complaint for removal from FTA’s 

Charter Registration Web site. To 

succeed on this point, however, a 

registered charter provider would have 

to allege facts sufficient to support 

removal as set out in 49 CFR section 

604.21. (See also Appendix C for 

examples.) 

Finally, since we moved the hardship 

exception to the new Petitions to the 

Administrator exception, the leasing 

exception has been renumbered to 

section 604.8. 

Section 604.10—Events of Regional or 

National Significance 

This section allows for the provision 

of charter service by public transit 

agencies for events of regional or 

national significance. 

Private charter operators supported 

this provision, but requested that any 

petitions received by the Administrator 

should be subject to a notice and 

comment provision for registered 

charter providers. They also requested 

that FTA provide a clarification that 

only if all private operator vehicles have 

been exhausted should a recipient be 

allowed to provide charter service. 

Public transit agencies were 

concerned that this provision would 

apply to events that have already been 

planned. In addition, one public transit 

agency stated ‘‘public transit providers 

should be able to provide public 

transportation services for special 

events in their locality that promote 

economic development and show their 

community without the express 

approval of the Administrator or the 

requirement for consultation with 

private charter operators.’’ One east 

coast transit agency stated ‘‘This 

provision does not account for those 

events that are time sensitive in which 

the public transit agency does not have 

time to consult with all of the private 

charter operators in their area, for 

example, a presidential inauguration.’’

Agency Response: This section is now 

included in the ‘‘Petitions to the 

Administrator’’ section located in 


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section 604.11. In response to the 

private charter operators’ comments, we 

note the establishment of a ‘‘Petitions to 

the Administrator’’ docket. Private 

charter operators are able to view 

requests through this Web site (http:// 

www.regulations.gov, FTA–2007–0022). 

We are not offering a public comment 

period, but if a request egregiously 

misstates facts, a registered charter 

operator could contact the Ombudsman 

for Charter Services 

(ombudsman.charterservice@dot.gov) to 

raise specific concerns. 

In addition, in response to the public 

transit agencies comments, for events in 

the planning process, any service 

provided by a public transit agency after 

the effective date of this rule must 

conform to the requirements of the rule, 

including the requirement for the 

recipient to exhaust all available 

vehicles of registered charter providers. 

In other words, if the event will occur 

after the effective date of this rule and 

the public transit agency intends to 

provide service to that event, then the 

service must meet the special events 

requirements contained in section 

604.11. If the event occurs before the 

effective date of this rule, then the 

requirements of the rule do not apply. 

We have also added a requirement 

that the request for this exception 

include the date of the event. We added 

this requirement to make it clear that 

the approval, if granted, would be for a 

one time event only. 

Section 604.11—When No Registered 

Charter Provider Responds to Notice 

From a Recipient 

This section sets out the requirements 

for public transit agencies when no 

registered charter provider responds to 

a notice requesting charter service. 

Public transit agencies submitted a 

variety of comments on this provision. 

Some disagreed with the proposed time 

frames included in the regulation. 

Others complained that providing 

notice was essentially providing free 

advertising/dispatch services to 

registered charter providers. Still others 

requested that FTA consider modifying 

the proposed language to allow a public 

transit agency to provide the service in 

the event that the registered charter 

provider and customer are unable to 

agree upon terms. 

Private charter operators agreed with 

the provisions of this section and noted 

that ‘‘many recipients confuse the 

public by inasmuch as they [sic] 

advertise charter service to the degree 

consumers may not discern between a 

transit agency and a private provider. 

This often has the effect of artificially 

creating ‘demand’ and allowing transit 

agencies to inject their tax subsidized 

pricing in the private market equation, 

thereby indirectly stifling operating 

margins.’’ This comment went on to 

state ‘‘the proposed rule further 

establishes the ‘first option’ to offer 

charter service inasmuch [sic] that 

recipients are not required to notify 

registered charter parties of all inquiries 

regarding charter bus service.’’

Agency Response: We recognize the 

need to clarify that public transit 

agencies are not required to provide 

notice to registered charter providers of 

all requests for charter service. Notice is 

only given for those requests that do not 

fit within one of the exceptions and for 

which the public transit agency is still 

interested in providing that service. 

Only in this instance is a public transit 

agency required to provide notice to the 

list of registered charter providers in its 

geographic service area. Other than that, 

the private charter comments are correct 

that a public transit agency cannot 

provide the requested charter service if 

a registered charter provider responds 

affirmatively to the notice provided. 

This is true even if the customer and the 

registered charter provider are not able 

to agree upon a price. 

We added language to this section 

clarifying that upon receipt of a request 

for charter service that does not fit 

within one of the exceptions outlined in 

subpart B, and the recipient is interested 

in providing the charter service, the 

recipient shall provide notice to 

registered charter providers in the 

recipient’s geographic service area. 

Further, due to the fact that we have 

moved the hardship and special events 

exceptions, this provision is 

renumbered as section 604.9. 

Section 604.12—Agreement With 

Registered Charter Providers 

This section allows a public transit 

agency to provide charter service in its 

geographic service area if it obtains an 

agreement from all of the registered 

charter providers in the geographic 

service area. 

Private charter operators recognized 

that this exception is a continuation of 

an existing exception, but objected to 

the provision because ‘‘the rule as 

proposed places an unfair and 

unintended restriction and subjects 

taxpayer subsidized competition on new 

registered charter parties. It is our 

assertion that on the date new private 

charter operators register, existing 

agreements will no longer permit 

recipients to continue under those 

agreements until an agreement may be 

obtained from all registered charter 

parties.’’ The comment goes on to 

propose that an agreement can be 

fulfilled if a contractual obligation is 

completed no later than thirty days from 

the date a newly registered charter 

provider becomes registered. Further, 

this comment goes on to state that the 

charter service agreement should be a 

fluid document that represents a 

meeting of the minds. 

Public transit agencies submitted 

comments opposing the timeframes of 

January 30th of each year and February 

15th of each year. 

Agency Response: This language 

represents CBNRAC consensus language 

developed by the private charter caucus. 

Since both private charter operators and 

public transit agencies oppose the 

January 30th and February 15th 

timeframes, we modified the regulatory 

text to indicate that a recipient has 90 

days to enter into an agreement with a 

newly registered charter provider after 

an initial agreement with previously 

registered providers. If no agreement is 

reached, the recipient may not provide 

charter service under this exception. 

Further, a registered charter provider 

may cancel the agreement at any time 

after providing the recipient a 90-day 

notice. In addition, because of other 

changes to this subpart, this provision 

has been renumbered to section 604.10. 

Section 604.13—Administrator’s 

Discretion 

This new section is designed to 

provide the Federal Transit 

Administrator with the discretion to 

allow public transit agencies to provide 

charter service in certain extraordinary 

situations. 

We did not receive comments from 

public transit agencies on this new 

exception, but we did hear from private 

charter operators who are opposed to 

the exception. Specifically, they believe 

this exception ‘‘may serve as an 

impediment to the private sector filling 

the needs, while ultimately creating an 

unwarranted entitlement.’’ They base 

this belief on the fact that the examples 

provided of the funerals of Presidents 

Reagan and Ford required advanced 

planning for those events and the 

private sector could have been involved 

if the public transit agency had 

contacted the private sector. 

Furthermore, the private charter 

operator coalition noted that this 

exception is ‘‘a solution in search of a 

problem’’ because there is no reason 

private charter operators couldn’t 

receive notice of the request for service 

and provide buses for these kinds of 

events should they arise unexpectedly. 

Agency Response: This section is now 

called the ‘‘Petitions to the 

Administrator’’ exception and is located 

at section 604.11. The new section 


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contains not only requests for 

discretionary exceptions to the charter 

service regulations, but also the 

hardship and events of regional or 

national significance, which were both 

discussed earlier in this preamble. 

The basis for the discretionary 

exception is to provide the 

Administrator with discretion to 

respond to extraordinary 

circumstances—those events where 

there is no time for prior planning. 

While some preparations may be made 

in anticipation, we believe the actual 

day of the event would not be known in 

advance and the capability of a 

particular city to handle the event 

would likewise not be known in 

advance. We intend to allow this 

exception only under extraordinary 

circumstances. Private charter operators 

may track these requests and FTA’s 

responses through the Petitions to the 

Administrator docket (http:// 

www.regulations.gov; FTA–2007–0022). 

In addition, we added a requirement 

to identify the date of the event because 

we want to make absolutely clear that 

the approval is only for the date 

specified in the request. 

Section 604.12—Reporting 

Requirements for All Exceptions 

This section set out the reporting 

requirements for public transit agencies 

that provide charter service pursuant to 

an exception. We proposed quarterly 

electronic reporting of standard 

information regarding charter service 

trips. 

Private charter operators supported 

this provision as providing the type of 

transparency necessary to ensure that 

public transit agencies are not providing 

unauthorized charter service. While 

some raised concern about the ability to 

omit origination and destination for 

safety and security reasons, if the reason 

is recorded, then most thought this 

exception would be acceptable. In 

addition, we heard from one association 

that encouraged us to increase the time 

period from three years to six years for 

maintaining the records electronically. 

To support this request, they point to 

the fact that our definition of pattern of 

violations examines the past six years 

and to maintain records less than six 

years would be inconsistent with this 

provision. 

Public transit agencies opposed this 

provision because they believe it to be 

too onerous. In addition, one 

commenter suggested that the reporting 

provisions be consolidated so that the 

same information in the same format is 

submitted. Other comments submitted 

requested that the public Web site for 

storing the reports be replaced with a 

local Web site for the agency or with 

records kept at the transit agency’s place 

of business, which would be publicly 

available. One public transit agency 

stated it this way: ‘‘Only basic 

information should be reported under 

the exceptions. If the reporting is made 

too onerous, grantees will have to 

charge the administrative cost to the 

human service or government entity. 

For the other exceptions, that 

information is reported through other 

mechanisms and this additional 

reporting is unnecessary.’’ Others 

recommended maintaining the records 

in a single charter log. A Midwestern 

state department of transportation 

stated: ‘‘We recommend that the charter 

logs required by 604.7(a)(3), 604.8(d), 

604.9(b), 604.10(b) and 604.12(c) be 

consolidated into a single charter log. 

The information that must be 

maintained according to the regulations 

can be categorized and tracked in a 

spreadsheet or database.’’

Agency Response: The purpose of the 

public Web site is to ensure that all 

reports are easily available to members 

of the public, in particular, private 

charter operators. Maintaining these 

records at the transit agency does not 

allow for 24-hour availability. We also 

believe that all of the information can be 

consolidated into one log. With the 

exception of the special events and 

leasing exceptions, the information 

required is the same. Thus, a single 

Word document or Excel spread sheet 

could serve as a recipient’s quarterly 

report. 

In addition, by limiting the 

applicability of this regulation—

excluding recipients of section 5311 

funds when providing charter service 

for program purposes serving the 

elderly, persons with disabilities, or 

persons with low income—we have 

substantially reduced the reporting 

burden on rural and non-urbanized 

areas for most of the service they 

operate. 

Furthermore, we decline to extend the 

reporting period to six years. We believe 

the private charter operators are 

confusing complaints with reports. 

When we examine six years of the 

recipient’s compliance history we are 

looking at complaints filed. Since FTA 

maintains the Charter Registration Web 

site, we will have access to quarterly 

reports for purposes of reviewing a 

recipient’s compliance history. The 

regulatory requirement simply applies 

to a grantee’s retention of its quarterly 

reports, not FTA’s retention of quarterly 

reports. 

Subpart C—Procedures for Registration 

and Notification 

Section 604.13—Registration of Private 

Charter Operators 

This section sets out the required 

information a private charter provider 

must submit in order to be considered 

a registered charter provider. 

We received comments from public 

transit agencies urging us to limit where 

a private charter operator can register. 

Specifically, one representative 

comment stated that it trusts ‘‘FTA will 

be vigilant and act quickly to correct 

abuses by removing private operators 

that act in bad faith * * * but such a 

process will not address the scenario in 

which a registered private operator who 

cannot in actuality provide service 

responds to a recipient’s notice.’’

Agency Response: Private charter 

operators may register with FTA at 

http://www.fta.dot.gov/laws/ 

leg_reg_179.html. We also believe that a 

private charter operator should be able 

to register in any geographic service 

area. This means that a company could 

register with all public transit agencies 

across the United States. We believe that 

since this rule affords protections to 

registered charter providers, the threat 

of losing that registration will be 

deterrent enough for private charter 

operators to act in a commercially 

reasonable manner and in good faith 

when negotiating with a customer sent 

to them by the public transit agency. 

Removal from the Charter Registration 

Web site carries with it a three year 

period of receiving no notice from 

public transit agencies. This is no small 

consequence and, therefore, it will 

protect public transit agencies from 

‘‘vindictive’’ private charter operators. 

Further, as noted in the history section 

of this document, our findings as well 

as GAO’s findings have not found an 

‘‘unmet need’’ with respect to the 

provision of charter services. Thus, we 

believe that this provision is protective 

of those situations in which a private 

charter operator is acting in a vindictive 

manner. 

In addition, the Web site is designed 

to allow quick and efficient removal of 

a private charter operator once a 

decision has been made that satisfies the 

requirements of section 604.26, 

‘‘Removal.’’ We have, therefore, adopted 

as final the proposed language. 

Section 604.14—Recipient’s Notification 

to Registered Charter Providers 

This section requires public transit 

agencies to provide notice to registered 

charter providers when the public 

transit agency is interested in providing 

the requested charter service. 


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We heard from public transit agencies 

and a public transit association 

indicating that a clarification is 

necessary in this section. Specifically, 

according to the association, ‘‘as drafted, 

section 604.14(b) would require prenotification to private charter providers 

upon receiving a request for service 

under any exception. We believe this is 

a drafting error since it is inconsistent 

with the language immediately 

proceeding in section 604.14(a) and our 

understanding of the intent of the 

negotiators.’’ In addition, the association 

raised a concern regarding when an email is returned ‘‘undeliverable.’’ A 

transit agency stated ‘‘the regulations 

require that the transit agency provide 

notice of a request for service by the 

close of business if the request is 

received before 2 p.m. that day, or the 

next business day if received after 2 

p.m. This short time does not allow the 

public transit provider to evaluate the 

request and make sure that all the 

information is complete, before 

notifying the registered private charter 

companies.’’ One Midwestern transit 

agency commented that ‘‘the Web site 

will greatly reduce the private operator’s 

financial risk. They will no longer need 

to market, advertise, or promote their 

business. Every morning they can just 

log on to FTA’s version of ‘Make Me a 

Millionaire’ Web site to see what 

contracts they can bid.’’

Agency Response: We believe the 

language as proposed is clear that only 

requests for charter service that do not 

fit within one of the exceptions require 

notification to registered charter 

providers. In other words, the 

notification procedures apply in the 

event one of the exceptions does not. 

Even so, we decided to add a 

clarification to indicate that upon 

receipt of a request for charter service 

that does not fit within one of the 

exceptions in subpart B, a recipient 

interested in providing the charter 

service shall provide notice to registered 

charter providers registered in its 

geographic service area. 

Further, we are not convinced that the 

time period provided does not give 

public transit agency enough time to 

decide whether it is interested in 

providing the requested charter service. 

The time frames included in this 

particular provision were developed by 

the CBNRAC, which included small, 

medium, and large public transit 

agencies. Therefore, we retain that 

provision and adopt it as final. 

In addition, we agree with the 

transportation association that a 

clarification should be added to the 

regulatory text to take into account 

when an e-mail is returned as 

‘‘undeliverable.’’ In those instances, we 

have required a public transit agency to 

also send notification of the requested 

charter service by facsimile. In that 

instance, the public transit agencies 

must maintain a record of the 

‘‘undeliverable’’ e-mail notification and 

confirmation that a facsimile was sent to 

the number provided by the registered 

charter provider. 

Subpart D—Registration of Qualified 

Human Service Organizations and 

Duties for Recipients Regarding Charter 

Registration Web Site 

Section 604.15—Registration of 

Qualified Human Service Organizations 

This section set forth the registration 

requirements for qualified human 

service organizations (QHSO). Besides 

the basic information of organization 

name, address, and telephone, etc., the 

requirements also include basic 

financial information and a certification 

that funding received from a state or 

local program includes funding for 

transportation. 

We heard from several public transit 

agencies regarding these registration 

requirements. Most opposed the 

requirement to certify that state or local 

funds include funds for transportation. 

One transportation association stated ‘‘it 

is the lack or dearth of transportation 

funding that keeps these social service 

agencies from contracting with private 

charter providers.’’ This association 

requests that the requirement be 

eliminated from the rule because ‘‘the 

rule’s new complaint and appeals 

process is sufficient to ensure that nondeserving organizations do not receive 

service.’’

Regarding the requirement to certify 

funds for transportation, one 

transportation authority noted that 

‘‘many agencies may not know the terms 

of the original federal grant and social 

service agencies that are funded for 

transportation would not necessarily 

need the free or reduced cost services 

this system is intended to facilitate.’’

Another transit agency stated: ‘‘[the 

requirement presents a problem] since 

most federal funds are passed through 

one or more levels of state and local 

government with no indication of the 

original purposes. Social services 

organizations that are funded for 

transportation would not necessarily 

need the free or reduced cost services 

this system is intended to facilitate.’’

From the private charter operator 

side, we received comments from an 

association urging us to ‘‘place the 

burden of qualification on the recipient 

and make clear that a failure to qualify 

an organization will result in a finding 

of violation and enforcement action.’’

Agency Response: We find the 

arguments from the public transit 

agencies regarding QHSO funding to be 

persuasive. Furthermore, the emphasis 

on human service transportation 

coordination planning requires us to be 

mindful of any impediments to 

accomplishing that goal. As such, we 

are modifying the proposed language to 

remove the requirement that a QHSO 

certify that state and local funds include 

funding for transportation. 

We also added a clarification in the 

final rule that a QHSO is required to 

provide certain information and 

demonstrate that it is qualified. Public 

transit agencies should ensure that the 

QHSO has a valid registration in the 

FTA Charter Registration Web site that 

was provided at least sixty days in 

advance of the requested service before 

providing charter services to that 

organization. 

Finally, we added a clarification in 

the final rule that a QHSO, as part of its 

registration, must explain what types of 

future requests for charter service it may 

request from a recipient and how those 

charter service trips are related to the 

QHSO’s mission. 

Section 604.16—Duties for Recipients 

With Respect to Charter Registration 

Web Site 

This section provides minimum 

requirements for recipients of FTA 

funds with respect to the Charter 

Registration Web site. 

We received comments from public 

transit agencies urging us to provide 

training and a training manual for the 

new Web site. 

Agency Response: We agree with 

these comments and, have delayed the 

effective date of the rule in order to give 

us time to provide the necessary 

training and distribute an electronic 

user guide to public transit agencies. We 

will also encourage transit agencies to 

use the site before the effective date of 

the final rule and the Ombudsman for 

Charter Services will assist transit 

agencies with any questions or problems 

they may encounter 

(ombudsman.charterservice@dot.gov). 

We have also modified the language 

of this provision to require a public 

transit agency to ensure that its 

employees and contractors affected by 

this regulation have the competency to 

effectively use the Web site. 

Subpart E—Advisory Opinions 

This subpart allows for public transit 

agencies and private charter operators to 

request an advisory opinion from the 

Office of the Chief Counsel at FTA. 


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We heard from several public transit 

agencies opposing this provision. A 

large public transportation association 

went so far as to challenge whether the 

CBNRAC reached consensus on this 

provision. Other public transit agencies 

said that FTA should ‘‘withdraw the 

provision on advisory opinions because 

this means advice will be given on a 

regional basis which will lead to 

inconsistencies.’’ Another comment 

stated ‘‘while the intent of the advisory 

opinions portion of the rule is laudable 

as a practical matter, our management 

believes it has the potential to create 

more problems than it solves so we urge 

FTA to eliminate it.’’

Private charter operators support the 

advisory opinion provision. 

Specifically, one southern private 

charter operator stated ‘‘I commend the 

committee on the consensus reached in 

the Advisory Opinion issue. This rule 

should be invaluable to both the private 

and the public operator in obtaining a 

clear opinion from FTA on the 

appropriateness of a proposed charter 

movement. If executed timely, this 

avenue will give a transit operator the 

opportunity to refrain from providing an 

illegal charter.’’

On the other hand, we also heard 

from several private charter operates 

expressing concern over FTA’s decision 

to not include cease and desist 

provisions in the rule. One private 

charter operator stated its concern as 

‘‘our main disagreement with the FTA 

proposed rule is the lack of a process by 

which a complainant may apply to FTA 

for a cease and desist order to stop a 

publicly funded transit agency from 

beginning an illegal charter. Allowing 

private operators to apply for a cease 

and desist order prior to the charter 

would prevent the operator from filing 

and the transit agency from responding 

to the full complaint, hearing, and 

appeals process. FTA’s reluctance to 

propose a cease and desist process 

stems solely from the agency’s 

estimation of the workload and human 

capital required to implement it. While 

we are mindful of the agency’s budget 

constraints we feel that a cease and 

desist order process need not be, and 

should not be long and drawn out.’’

Another private charter association 

noted that ‘‘since FTA cannot recoup 

lost revenues when recipients are found 

in violation of the Charter Service rules, 

it is imperative the FTA maintain a 

cease and desist provision and not to 

include such a provision is inconsistent 

with FTA’s duty and fails to protect the 

private charter operator.’’

Agency Response: We decline to 

remove this provision based on the 

comments received from public transit 

agencies. The inclusion of an advisory 

opinion provision allows for a more 

consistent, organized, and transparent 

process than the one that currently 

exists. Further this section was a 

consensus item during the CBNRAC 

negotiations, and, therefore, we are 

reluctant to remove it. 

Further, we are also persuaded by the 

comments from the private charter 

operators requesting a cease and desist 

provision. This provision was 

considered during the CBNRAC 

negotiations, but no consensus was 

reached on this point. We rejected the 

provision in the NPRM because we 

believed it would be too burdensome. 

Since then, we have examined our 

practices, especially with respect to past 

decisions, and confirmed that we have 

provided cease and desist orders in the 

past. Therefore, we have included in the 

Advisory Opinion section a provision to 

allow private charter operators the 

option of requesting a cease and desist 

order. We have created an Advisory 

Opinion/Cease and Desist Order docket 

at http://www.regulations.gov; FTA–

2007–0023 to keep track of all advisory 

opinions and cease and desist orders 

granted or denied. 

We have also included a provision to 

require that registered charter providers 

seeking a cease and desist order serve a 

copy of the request on the affected 

public transit agency by e-mail or 

facsimile. In addition, the registered 

charter provider must certify that it 

telephoned the public transit agency 

and informed an appropriate official of 

the submission of the request for cease 

and desist order in its request for an 

advisory opinion. 

Subpart F—Complaints 

Section 604.27—Complaints, Answers, 

Replies and Other Documents 

This section sets out the content 

requirements for complaints and 

provides timeframes for the filing of 

complaints, answers, replies, and 

rebuttals. This section also allows a 

complainant to withdraw its complaint 

at any time. 

We received a variety of comments on 

this section. Generally, most public 

transit agencies expressed concern over 

the new, detailed complaint procedures. 

One southern public transit agency 

stated ‘‘the complaint process appears to 

be unwieldy, complicated, and 

potentially expensive for small 

operators.’’ A southern association of 

regional councils stated ‘‘the complaint 

process is overly harsh. As written, 

private providers can ‘‘tie up’’ a public 

provider with litigation for almost any 

perceived wrong. Public providers are 

left to stand alone and incur significant 

legal fees to defend every complaint.’’

This comment also advocated for a 

process that addresses honest mistakes, 

is administrative in nature and is free of 

any need for lawyers. One state 

representative submitted a comment on 

behalf of his public transit agency 

constituents stating the ‘‘NPRM is nine 

and one half pages and five of the pages 

address the procedures for filing a 

complaint that cannot be done without 

the services of an attorney. The 

additional administrative requirements 

will result in significant additional 

costs—direct and indirect.’’ In addition, 

we heard from public transit agencies 

that complaints should be filed within 

a certain time frame. One western 

transit district suggested ‘‘FTA’s 

jurisdiction over complaints should be 

limited to complaints that are filed 

within the earlier of: (a) 90 days after 

the event giving rise to the complaint or 

(b) 30 days after the complainant knew 

or should have known about the event 

that is the subject of the complaint.’’

Private charter operators were 

supportive of the proposed complaint 

provisions. A private charter operator 

stated that the ‘‘FTA charter bus 

complaint and appeals process required 

revision in order to achieve consistent 

and timely decisions. The new process 

will require additional information on 

the part of the complainant and should 

result in complaints with enough 

information to determine the violation 

of the charter regulations.’’

Agency Response: We disagree with 

comments that the new complaint 

process is ‘‘unwieldy and unduly 

burdensome.’’ We are also unconvinced 

by comments asserting that the new 

complaint process will be more 

expensive for public transit agencies. In 

fact, the new complaint process places 

a heavier burden on registered charter 

providers than on recipients. Recipients 

have no greater burden under the new 

regulation when it comes to responding 

to a complaint than they did under the 

old regulation. In other words, a public 

transit agency still has the obligation to 

respond timely to a complaint filed 

against it, which is exactly the same 

obligation it had under the old charter 

service rule. This final rule, however, 

plainly states the burden on a transit 

agency when responding to a complaint, 

the timeframe for responding to a 

complaint, and provides clearer appeal 

procedures. All of these improvements 

were agreed upon by all parties during 

the CBNRAC negotiations. 

Further, the new complaint provision 

requires a registered charter provider to 

provide specific factual allegations 

regarding an alleged charter violation. 


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Before the public transit agency has to 

respond to that complaint, FTA looks at 

the complaint to ensure that it has met 

all of the regulatory requirements. In the 

past, the only standard for filing a 

complaint was that it ‘‘is not without 

obvious merit,’’ which allowed an 

incomplete complaint to move forward 

just as easily as a complete complaint, 

which did tie up public transit agencies 

unnecessarily. Now, a complaint must 

be legally sufficient before it moves 

forward to the transit agency for a 

response. 

On the other hand, we agree with 

comments submitted that only ‘‘ripe’’

complaints should be considered. Thus, 

we modified the language in the final 

rule to require that a complaint must be 

filed within 90 days of the date the 

alleged unauthorized charter service. 

Further, we asked for comment 

regarding the role of state departments 

of transportation in the complaint 

process. We proposed to allow a state 

department of transportation to make a 

first attempt to resolve a complaint 

between a private charter operator and 

a sub-recipient. We heard from several 

state transportation departments that 

did not agree with our proposal. We 

heard from one state transportation 

department that did support the idea of 

allowing a state to attempt to resolve the 

matter initially. 

Private charter operators did not 

support state involvement in the 

complaint process. Just like the public 

transit comments, private charter 

operators saw state involvement as 

leading to inconsistent decisions and a 

lengthier process. 

We agree with the majority of 

comments received and will retain the 

proposed language in the final rule. The 

requirement in the final rule would 

notify a state department of 

transportation that a complaint has been 

filed against a sub-recipient. There are 

no requirements for the state in the 

complaint process. 

Finally, we added a clarification that 

complaints for removal of registered 

charter provider or QHSO must be 

submitted within 90 days of discovering 

facts that merit removal. This 90-day 

deadline does not mean, however, that 

QHSOs that register and then are not 

challenged within 90 days after 

registration cannot later be challenged. 

Rather, when a registered charter 

provider or recipient finds evidence 

supporting removal, then the 90-day 

clock begins. 

Subpart H—Decisions by FTA and 

Appointment of a Presiding Official 

(PO) 

Section 604.34—Decisions by the Chief 

Counsel and Appointment of a PO 

This provision allows FTA to appoint 

a presiding official (PO) in the event 

that a hearing is necessary. 

Public transit agencies submitted 

comments expressing concern that the 

qualifications of a PO were not set out 

in the proposed rule. Specifically, 

‘‘without reasonable criteria, vetted 

through public comment, the credibility 

and qualifications of any particular PO 

will necessarily be the first order of 

business in any proceeding. Must a PO 

be neutral and detached? Is FTA 

Regional Counsel available for 

assignment as a PO? Other FTA 

personnel? Is there a means of 

challenging a PO for cause, bias, or 

prejudice?’’

Conversely, private charter operators 

support this provision and ‘‘presume 

that such officials will have no 

predisposed transit affiliation and have 

proper training and experience that will 

instill confidence in the complaint 

process.’’

Agency Response: We believe anyone 

appointed to serve in the PO capacity 

would stand in the shoes of FTA, and 

therefore, it is within FTA’s discretion 

to appoint an appropriate person to 

serve as a PO. This internal decision is 

not subject to notice and comment. Even 

so, we note that a PO will be appointed 

only in those rare cases where a 

complaint warrants a hearing. A PO will 

not review initial complaints. That 

function will be performed by the Office 

of Chief Counsel in headquarters. In the 

event that a PO is appointed to conduct 

a hearing, the PO’s recommended 

decision will have to be adopted by the 

Chief Counsel’s Office. 

To address the comments received, 

we modified the language with respect 

to a PO to indicate that a PO will be 

appointed for hearing purposes only, 

and, regarding qualifications, we have 

added language that the official or 

agency representative appointed to 

preside as a PO shall be a person who 

has had no previous contact with the 

parties concerning the issue in the 

proceeding. 

Section 604.35—Separation of functions 

This section requires that FTA 

personnel involved in proceedings 

under this subpart must not be involved 

with other matters relating to the same 

case. 

Public transit agencies raised a 

concern that ‘‘could one FTA attorney 

prosecute a complaint before another 

FTA attorney? The internal 

inconsistency appears based on the 

iterative nature of the drafting process. 

Both sections of the rule clearly place 

responsibility for prosecution of any 

complaint on the complainant.’’ In 

addition, several transit agencies asked 

the question of who bears the costs of 

litigation before a PO: ‘‘FTA has created 

a substantial quasi-judicial forum and 

process that will almost certainly be 

expensive to comply with. Who will be 

responsible for litigation costs?’’

Agency Response: Addressing the last 

comment first, as with all litigation, and 

as is the case under the old charter 

service regulation, the parties each bear 

its litigation costs. As noted earlier, FTA 

will appoint a PO. In addition, FTA will 

provide a suitable location to hold a 

hearing and hire a court reporter to 

transcribe the proceedings. As in most 

cases, a transcript becomes a matter of 

public record, and, therefore, would be 

available to all parties after the 

proceeding. If a party wishes to expedite 

transcription, then that party would 

bear the additional expense of an 

expedited transcript. 

While these new hearing procedures 

may appear ‘‘substantial’’ in comparison 

to the existing hearing procedures, 

which are nonexistent, the procedures 

set out in the new rule set out a basic 

framework for conducting a hearing. 

The new provisions cover all of the 

basics of a hearing in the rare event that 

one is necessary. 

Section 604.41—Standard of Proof 

This section sets out the standard of 

proof that must be met during a hearing 

and before a PO can rule in favor of a 

party. 

An east coast transit agency 

recommended that the standard of proof 

should not be ‘‘substantial evidence’’

rather it should be ‘‘a preponderance of 

the reliable and probative evidence 

contained in the record and is in 

accordance with the law.’’

Agency Response: After considering 

the comments received on this point, we 

agree that a preponderance of the 

evidence standard is more consistent 

with other administrative proceedings. 

We have amended this section 

accordingly. 

Section 604.42—Burden of Proof 

This section sets out the burden of 

proof in a hearing asserting 

noncompliance with this Part. 

A transportation association 

submitted a comment that this section 

does not give an ‘‘indication of what 

affirmative defense might be available in 

the complaint process. FTA must clarify 

when it feels a complainant no longer 


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Federal Register / Vol. 73, No. 9 / Monday, January 14, 2008 / Rules and Regulations 2343 

carries the burden of proof in its 

administrative proceedings.’’

Agency Response: In response to this 

comment, we have set out the burden of 

proof for a complaint as: ‘‘A 

complainant must show by a 

preponderance of the evidence that a 

recipient provided charter service, as 

defined in this Part, and that such 

service did not fall within one of the 

exemptions or exceptions contained in 

this Part.’’ If the complainant meets this 

burden, then the burden shifts to the 

recipient to demonstrate, by a 

preponderance of the evidence, that the 

service provided was authorized under 

the charter service regulations. 

Providing this burden shifting 

clarification should address the 

commentor’s concern and, therefore, we 

have removed the affirmative defenses 

subparagraph. 

Section 604.47—Remedies 

This section set out the remedies that 

FTA may pursue if a recipient is found 

in noncompliance with this Part. 

We heard from public transit agencies 

on a variety of issues regarding this 

section. First, some recipients asserted 

that FTA has no statutory authority to 

order a recipient to refund funds to the 

U.S. Treasury. Another argument is that 

FTA can only withhold a portion of 

funds if a pattern of violations is found. 

Further, others stated that remedies 

should only be ordered for violations of 

the same provisions and not dissimilar 

provisions. A private charter operator 

pointed out that ‘‘shall mitigate the 

remedy’’ should be ‘‘may mitigate the 

remedy.’’ Another comment submitted 

requested that FTA include a provision 

indicating where the funds will go. 

Others urged FTA to be reasonable in 

assessing remedies because any 

withdrawal of funds from a public 

transit agency will mean a lessening of 

public transit services. Another 

comment submitted requested that FTA 

provide a range of remedies so as to 

provide public transit agencies with an 

idea of how a violation of this Part will 

result in a certain amount of withheld 

funds. 

Agency Response: We agree with the 

comment stating that we could not order 

a recipient to refund funds to the 

Treasury. Therefore, we have removed 

this as a potential remedy. Also in 

response to comments received from 

public transit agencies, we added the 

fact that FTA may pursue as a remedy 

the suspension and/or debarment of a 

recipient, its employees and contractors, 

for a violation of the charter service 

regulation. 

Further, we believe that we do have 

the authority to withhold funds for a 

single violation of this Part. Comments 

on this topic do not take into account 

the statutory provision on remedies. 

Specifically, the statute provides: ‘‘If the 

Secretary decides that a violation has 

occurred, the Secretary shall correct the 

violation under terms of the agreement.’’

49 U.S.C. 5323((d)(2)(B). The agreement 

referenced in the statute is the Master 

Agreement and the terms and 

conditions that all recipients agree to in 

order to receive financial assistance 

from FTA. (See Master Agreement, 

Section 11—Right of Federal 

Government to Terminate: ‘‘Upon 

written notice, the Recipient agrees that 

the Federal Government may suspend or 

terminate all or any part of the Federal 

assistance to be provided if the 

Recipient has violated the terms of the 

Grant Agreement or Cooperative 

Agreement for the Project including this 

Master Agreement * * *.’’) Thus, under 

the terms of the agreement, FTA can 

withhold financial assistance for a 

single violation of the charter service 

regulations. We view the new statutory 

provision as direction from Congress 

that Federal financial assistance must be 

withheld if a pattern of violations is 

found. In contrast, previously under the 

Master Agreement, FTA had the 

discretion to determine whether to 

withhold Federal financial assistance 

for a pattern of violations. Now the 

Master Agreement reflects the new 

statutory provision regarding 

‘‘Additional Remedies,’’ which states 

FTA ‘‘shall bar a recipient or an 

operator from receiving Federal transit 

assistance in an amount the Secretary 

considers appropriate if the Secretary 

finds a pattern of violation of the 

agreement.’’ 49 U.S.C. 5323(d)(2)C). We 

view the ‘‘Additional Remedies’’ section 

of SAFETEA–LU to mean that this 

remedy is in addition to the remedies 

specified in the Master Agreement. We 

therefore adopt these remedies as 

proposed. 

In response to the concern that the 

violations must be similar in nature in 

order to constitute a pattern of 

violations, we believe this concern has 

merit. It is FTA’s intention to view 

paperwork violations differently from 

service violations. Thus, we have 

clarified in the final rule that only 

unauthorized service violations can be 

counted toward a pattern of violations. 

In determining the remedy to be 

applied, however, we will consider 

whether the violation is service, 

paperwork, or reporting. 

We also believe that the examination 

period of six years is appropriate to 

determine a pattern or practice. For 

urbanized area recipients, FTA conducts 

triennial reviews of compliance with 

FTA requirements. The six year period 

allows FTA to look at findings in two 

consecutive compliance reviews. The 

six year period will provide a true 

picture as to whether a public transit 

agency consistently violates the charter 

service regulations. Moreover, we know 

that a vast majority of transit agencies 

diligently comply with the charter 

service regulations. So, we doubt there 

will be many cases in which this 

provision will come into play. 

We also want to respond to the 

private charter companies’ concern that 

a single complaint could establish a 

pattern of violations. We believe that a 

single instance of unauthorized charter 

service cannot establish a pattern of 

violations. If a public transit agency 

provides unauthorized charter service 

for the flower show, then that is one 

instance of unauthorized charter service 

even though the flower show lasts for 

one week. In other words, multiple days 

of unauthorized charter service for a 

single event does not establish a pattern 

or practice of violating the charter 

service regulations. A complaint may, 

however, include several distinct 

instances of potential charter violations. 

In that case, the several distinct 

violations mentioned in the single 

complaint could form a basis for a 

finding of a pattern. 

That being said, with the addition of 

a cease and desist provision to the final 

rule, registered charter providers can 

protect their interests in advance of an 

event. In addition, we will consider the 

issuance of a cease and desist order as 

an aggravating factor—if the recipient 

ignores the order and provides the 

service despite the issuance of a cease 

and desist order—in determining the 

amount of remedy to apply. 

Public transit agencies also wanted to 

know where the withheld funds will go 

if FTA finds a violation of the charter 

service regulations. If FTA finds a 

violation of the charter service 

regulations, FTA will make every effort 

to ensure that the funds may be used by 

other recipients for transit services. For 

example, in instances where there are 

multiple recipients in a large urbanized 

area, FTA could withhold funds from 

the violating transit agency, while still 

allowing the funds to flow to other 

transit providers in the same urbanized 

area to which the funds were 

apportioned. For funds apportioned to 

the State for small urbanized areas, FTA 

could penalize one recipient while still 

allowing the Governor to allocate the 

funds to other urbanized areas in the 

State. Similarly, if a rural transit system 

were penalized for violations of the 

charter rule, the State could allocate the 

funds to other rural transit systems. In 


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an instance where the violator was the 

only eligible recipient, formula funds 

would ultimately lapse and be 

reallocated in a subsequent 

apportionment among all areas. Funds 

de-obligated from a grant, as a penalty, 

after their lapse date, would be similarly 

reapportioned. 

Finally, we agree with the comments 

requesting notice of the range of 

penalties that may be applied for a 

violation. We have created a new 

Appendix D that contains a matrix of a 

range of potential remedies. While each 

case is fact specific and FTA will decide 

what remedy to apply on a case-by-case 

basis, this matrix provides guidance to 

recipients as to what FTA may 

withhold. 

Rulemaking Analyses and Notices 

Executive Order 12866 (Regulatory 

Planning and Review) and DOT 

Regulatory Policies and Procedures 

This rulemaking is not a significant 

regulatory action within the meaning of 

Executive Order 12866, and, therefore, 

this rulemaking was not reviewed by the 

Office of Management and Budget. 

Further, this rule is not significant 

under Department of Transportation 

regulatory policies and procedures. This 

final rule contains revisions that are 

clarifying in nature. Where possible, we 

have adopted provisions to lessen the 

burden on public transit agencies while 

ensuring that those entities do not 

engage in unfair competition with 

private charter operators. 

This rule is not anticipated to 

adversely affect, in a material way, any 

sector of the economy. This rulemaking 

clarifies and sets forth provisions to 

protect private charter operators from 

unfair competition by public transit 

agencies; the changes should increase 

opportunities for private charter 

operators when the requested service is 

not subject to one of the communitybased exceptions. Likewise, we have 

adopted provisions to be the least 

burdensome on small transit agencies—

many of these agencies are now 

exempted from the rule’s reporting 

requirements when they provide charter 

services in accordance with program 

purposes, as defined in the regulation, 

under 49 U.S.C. 5310, 5311, 5316, and 

5317. In addition, this proposed rule 

would not create a serious inconsistency 

with any other agency’s action or 

materially alter the budgetary impact of 

any entitlements, grants, user fees, or 

loan programs. Consequently, a full 

regulatory evaluation is not required. 

FTA estimates the costs associated 

with this rule to be minimal. This rule 

simply clarifies existing procedures and 

sets out more efficient procedures for 

reporting, registration, and notification. 

The only costs we have identified for 

this rulemaking are the training costs to 

familiarize employees with the FTA 

Charter Registration Web site so that 

they can properly find the registered 

charter providers in their geographic 

service areas. Even so, FTA will provide 

training manuals for a recipient’s use, 

which should further minimize a 

recipient’s training costs. 

Regulatory Flexibility Act 

When an agency issues a rulemaking 

proposal, the Regulatory Flexibility Act 

(RFA) requires the agency to ‘‘prepare 

and make available for public comment 

an initial regulatory flexibility 

analysis,’’ which will ‘‘describe the 

impact of the proposed rule on small 

entities.’’ (5 U.S.C. 603(a)). Section 605 

of the RFA allows an agency to certify 

a rule, in lieu of preparing an analysis, 

if the proposed rulemaking is not 

expected to have a significant economic 

impact on a substantial number of small 

entities. 

The nature of this rulemaking is to 

prevent unfair competition by public 

transit agencies with private charter 

operators. We have added provisions 

that are also supportive of small 

governmental entities. Thus, any 

economic impact on small entities will 

be a positive one. FTA hereby certifies 

that the final rule for the charter service 

regulation will not have a significant 

economic impact on a substantial 

number of small entities. 

Unfunded Mandates Reform Act of 1995 

This proposed rule would not impose 

unfunded mandates as defined by the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4, March 22, 1995, 109 

Stat. 48). This final rule will not result 

in the expenditure of non-Federal funds 

by State, local, and Tribal governments, 

in the aggregate, or by the private sector, 

of $120.7 million in any one year (2 

U.S.C. 1532). 

Executive Order 13132 (Federalism) 

This final rule has been analyzed in 

accordance with the principles and 

criteria contained in Executive Order 

13132, and FTA has determined that the 

final rule would not have sufficient 

federalism implications to warrant the 

preparation of a Federalism assessment. 

FTA has also determined that this final 

rule would not preempt any State law 

or regulation or affect the States’ ability 

to discharge traditional State 

governmental functions. 

Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.), 

Federal agencies must obtain approval 

from the Office of Management and 

Budget (OMB) for each collection of 

information they conduct, sponsor, or 

require through regulations. 

FTA has an existing approved 

information collection (OMB Control 

Number 2132–0543) that expires on 

January 31, 2008. FTA has determined 

that the revisions in this final rule will 

require an update to the information 

collection request. However, FTA 

believes there will be a decrease in 

burden hours per submission because of 

the use of electronic technology. 

Executive Order 13175 (Tribal 

Consultation) 

FTA has analyzed this action under 

Executive Order 13175, dated November 

6, 2000, and believes that the final rule 

does not have substantial direct effects 

on one or more Indian Tribes; does not 

impose substantial direct compliance 

costs on Indian Tribal governments; and 

does not preempt Tribal laws. 

Therefore, a Tribal summary impact 

statement is not required. 

Executive Order 13211 (Energy Effects) 

We have analyzed this action under 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ dated May 18, 

2001. We have determined that this 

final rule is not a significant energy 

action under that order and is not likely 

to have a significant adverse effect on 

the supply, distribution, or use of 

energy. Therefore, a Statement of Energy 

Effects is not required. 

Distribution Tables 

For ease of reference, we provide a 

distribution table to indicate changes in 

section numbering and titles. 

SECTION TITLE AND NUMBER

Old section 

(Subpart A) 

New section 

(Subpart A) 

Purpose ...................................................................... § 604.1 .............. Purpose ..................................................................... § 604.1 


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SECTION TITLE AND NUMBER—Continued 

Old section 

(Subpart A) 

New section 

(Subpart A) 

Applicability ................................................................ § 604.3 .............. Applicability ................................................................ § 604.2 

Definitions .................................................................. § 604.5 .............. Definitions .................................................................. § 604.3 

Charter Agreement .................................................... § 604.7 .............. Charter Agreement .................................................... § 604.4 

Charter Service .......................................................... § 604.9 .............. Exceptions ................................................................. (Subpart B) 

§ 604.9(a) ......... .................................................................................... § 604.9 

§ 604.9(b)(1) ..... .................................................................................... removed 

§ 604.9(b)(2) ..... .................................................................................... § 604.8 

§ 604.9(b)(3) ..... .................................................................................... § 604.11 

§ 604.9(b)(4) ..... .................................................................................... § 604.11 

§ 604.9(b)(5) ..... .................................................................................... § 604.7 

§ 604.9(b)(6) ..... .................................................................................... removed 

§ 604.9(b)(7) ..... .................................................................................... § 604.10 

§ 604.9(b)(8) ..... .................................................................................... removed 

Procedures for determining if there are any willing 

and able private charter operators.

§ 604.11 ............ .................................................................................... (Subpart C) 

Registration of private charter operators .................. § 604.16 

Reviewing evidence submitted by private charter 

operators.

§ 604.13 ............ .................................................................................... removed 

Procedures for Registration of Qualified Human 

Services Organizations and Duties for Recipients 

Regarding Charter Registration Web site.

(Subpart D) 

Advisory Opinions and Cease and Desist Orders .... (Subpart E) 

Filing a complaint ....................................................... (Subpart B) ....... Complaints ................................................................. (Subpart F) 

§ 604.15(a) ....... .................................................................................... § 604.27(a) 

§ 604.15(b) ....... .................................................................................... removed 

§ 604.15(c) ........ .................................................................................... § 604.27(b) 

§ 604.15(d) ....... .................................................................................... § 604.27(c) 

§ 604.15(e) ....... .................................................................................... § 604.34 or 46 

§ 604.15(f) ........ .................................................................................... § 604.32 or 33 

Investigations ............................................................. (Subpart G) 

FTA Initial Decisions and Referrals to a Presiding 

Official (PO).

(Subpart H) 

§ 604.15(g) ....... .................................................................................... (Subpart I) 

§ 604.36 

§ 604.15(h) ....... .................................................................................... § 604.37 

§ 604.15(i) ......... .................................................................................... § 604.45 

Remedies ................................................................... § 604.17 ............ Remedies .................................................................. § 604.47 

Appeal to Administrator and final agency orders ...... (Subpart J) 

Appeals ...................................................................... § 604.19(a) ....... .................................................................................... § 604.48(a) 

§ 604.19(b) ....... .................................................................................... § 604.48(b) 

§ 604.19(c) ........ .................................................................................... § 604.48(c) 

§ 604.19(d) ....... .................................................................................... § 604.48(a) 

§ 604.19(e) ....... .................................................................................... § 604.48(b) 

Judicial Review .......................................................... § 604.21 ............ .................................................................................... (Subpart K) 

§ 604.50 

List of Subjects in 49 CFR Part 604 

Administrative practice and 

procedure, Charter service, Mass 

transportation. 

■ In consideration of the foregoing, FTA 

amends chapter VI of title 49 of the 

Code of Federal Regulations as set forth 

below: 

Title 49—Transportation 

■ 1. Revise part 604 to read as follows: 

PART 604—CHARTER SERVICE 

Subpart A—General Provisions 

Sec. 

604.1 Purpose. 

604.2 Applicability. 

604.3 Definitions. 

604.4 Charter service agreement. 

Subpart B—Exceptions 

604.5 Purpose. 

604.6 Government officials on official 

government business. 

604.7 Qualified human service 

organizations. 

604.8 Leasing FTA funded equipment and 

drivers. 

604.9 When no registered charter provider 

responds to notice from a recipient. 

604.10 Agreement with registered charter 

providers. 

604.11 Petitions to the administrator. 

604.12 Reporting requirements for all 

exceptions. 

Subpart C—Procedures for Registration 

and Notification 

604.13 Registration of private charter 

operators. 

604.14 Recipient’s notification to registered 

charter providers. 

Subpart D—Registration of Qualified 

Human Service Organizations and Duties 

for Recipients With Respect to Charter 

Registration Web Site 

604.15 Registration of qualified human 

services organizations. 

604.16 Duties for recipients with respect to 

Charter Registration Web site. 

Subpart E—Advisor Opinions and Cease 

and Desist Orders 

604.17 Purpose. 

604.18 Request for an advisory opinion. 

604.19 Processing of advisory opinions. 

604.20 Effect of an advisory opinion. 

604.21 Special considerations for advisory 

opinions. 

604.22 Request for a cease and desist order. 

604.23 Effect of a cease and desist order. 

604.24 Decisions by the Chief Counsel 

regarding cease and desist orders. 


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Subpart F—Complaints 

604.25 Purpose. 

604.26 Complaints and decisions regarding 

removal of private charter operators or 

qualified human service organizations 

from registration list. 

604.27 Complaints, answers, replies, and 

other documents. 

604.28 Dismissals. 

604.29 Incomplete complaints. 

604.30 Filing complaints. 

604.31 Service. 

Subpart G—Investigations 

604.32 Investigation of complaint. 

604.33 Agency initiation of investigation. 

Subpart H—Decisions by FTA and 

Appointment of a Presiding Official (PO) 

604.34 Chief Counsel decisions and 

appointment of a PO. 

604.35 Separation of functions. 

Subpart I—Hearings 

604.36 Powers of a PO. 

604.37 Appearances, parties, and rights of 

parties. 

604.38 Discovery. 

604.39 Deposition. 

604.40 Public disclosure of evidence. 

604.41 Standard of proof. 

604.42 Burden of proof. 

604.43 Offer of proof. 

604.44 Record. 

604.45 Waiver of procedures. 

604.46 Recommended decision by a PO. 

604.47 Remedies. 

Subpart J—Appeal to Administrator and 

Final Agency Orders 

604.48 Appeal from Chief Counsel decision. 

604.49 Administrator’s discretionary review 

of the Chief Counsel’s decision. 

Subpart K—Judicial Review 

604.50 Judicial review of a final decision 

and order. 

Appendix A to Part 604 —Listing of Human 

Service Federal Financial Assistance 

Programs 

Appendix B to Part 604—Basis for Removal 

From Charter Registration Web site 

Appendix C to Part 604—Charter Service 

Questions and Answers 

Appendix D to Part 604—Matrix of Remedies 

for Violations 

Subpart A—General provisions. 

§ 604.1 Purpose. 

(a) The purpose of this part is to 

implement 49 U.S.C. 5323(d), which 

protects private charter operators from 

unauthorized competition from 

recipients of Federal financial assistance 

under the Federal Transit Laws. 

(b) This subpart specifies which 

entities shall comply with the charter 

service regulations; defines terms used 

in this part; explains procedures for an 

exemption from this part; and sets out 

the contents of a charter service 

agreement. 

§ 604.2 Applicability. 

(a) The requirements of this part shall 

apply to recipients of Federal financial 

assistance under the Federal Transit 

Laws, except as otherwise provided in 

paragraphs (b) through (g) of this 

section. 

(b) The requirements of this part shall 

not apply to a recipient transporting its 

employees, other transit system 

employees, transit management 

officials, transit contractors and bidders, 

government officials and their 

contractors and official guests, to or 

from transit facilities or projects within 

its geographic service area or proposed 

geographic service area for the purpose 

of conducting oversight functions such 

as inspection, evaluation, or review. 

(c) The requirements of this part shall 

not apply to private charter operators 

that receive, directly or indirectly, 

Federal financial assistance under 

section 3038 of the Transportation 

Equity Act for the 21st Century, as 

amended, or to the non-FTA funded 

activities of private charter operators 

that receive, directly or indirectly, FTA 

financial assistance under any of the 

following programs: 49 U.S.C. 5307, 49 

U.S.C. 5309, 49 U.S.C. 5310, 49 U.S.C. 

5311, 49 U.S.C. 5316, or 49 U.S.C. 5317. 

(d) The requirements of this part shall 

not apply to a recipient transporting its 

employees, other transit system 

employees, transit management 

officials, transit contractors and bidders, 

government officials and their 

contractors and official guests, for 

emergency preparedness planning and 

operations. 

(e) The requirements of this part shall 

not apply to a recipient that uses 

Federal financial assistance from FTA, 

for program purposes only, under 49 

U.S.C. 5310, 49 U.S.C. 5311, 49 U.S.C. 

5316, or 49 U.S.C. 5317. 

(f) The requirements of this part shall 

not apply to a recipient, for actions 

directly responding to an emergency 

declared by the President, governor, or 

mayor or in an emergency requiring 

immediate action prior to a formal 

declaration. If the emergency lasts more 

than 45 days, the recipient shall follow 

the procedures set out in subpart D of 

49 CFR 601. 

(g) The requirements of this part shall 

not apply to a recipient in a nonurbanized area transporting its 

employees, other transit system 

employees, transit management 

officials, and transit contractors and 

bidders to or from transit training 

outside its geographic service area. 

§ 604.3 Definitions. 

All terms defined in 49 U.S.C. 5301 et 

seq. are used in their statutory meaning 

in this part. Other terms used in this 

part are defined as follows: 

(a) ‘‘Federal Transit Laws’’ means 49 

U.S.C. 5301 et seq., and includes 23 

U.S.C. 103(e)(4), 142(a), and 142(c), 

when used to provide assistance to 

public transit agencies for purchasing 

buses and vans. 

(b) ‘‘Administrator’’ means the 

Administrator of the Federal Transit 

Administration or his or her designee. 

(c) ‘‘Charter service’’ means, but does 

not include demand response service to 

individuals: 

(1) Transportation provided by a 

recipient at the request of a third party 

for the exclusive use of a bus or van for 

a negotiated price. The following 

features may be characteristic of charter 

service: 

(i) A third party pays the transit 

provider a negotiated price for the 

group; 

(ii) Any fares charged to individual 

members of the group are collected by 

a third party; 

(iii) The service is not part of the 

transit provider’s regularly scheduled 

service, or is offered for a limited period 

of time; or 

(iv) A third party determines the 

origin and destination of the trip as well 

as scheduling; or 

(2) Transportation provided by a 

recipient to the public for events or 

functions that occur on an irregular 

basis or for a limited duration and: 

(i) A premium fare is charged that is 

greater than the usual or customary 

fixed route fare; or 

(ii) The service is paid for in whole or 

in part by a third party. 

(d) ‘‘Charter service hours’’ means 

total hours operated by buses or vans 

while in charter service including: 

(1) Hours operated while carrying 

passengers for hire, plus 

(2) Associated deadhead hours. 

(e) ‘‘Chief Counsel’’ means the Chief 

Counsel of FTA and his or her 

designated employees. 

(f) ‘‘Days’’ means calendar days. The 

last day of a time period is included in 

the computation of time unless the last 

day is a Saturday, Sunday, or legal 

holiday, in which case, the time period 

runs until the end of the next day that 

is not a Saturday, Sunday, or legal 

holiday. 

(g) ‘‘Demand response’’ means any 

non-fixed route system of transporting 

individuals that requires advanced 

scheduling by the customer, including 

services provided by public entities, 

nonprofits, and private providers. 

(h) ‘‘Exclusive’’ means service that a 

reasonable person would conclude is 

intended to exclude members of the 

public. 


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(i) ‘‘FTA’’ means the Federal Transit 

Administration. 

(j) ‘‘Geographic service area’’ means 

the entire area in which a recipient is 

authorized to provide public 

transportation service under appropriate 

local, state, and Federal law. 

(k) ‘‘Government official’’ means an 

individual elected or appointed at the 

local, state, or Federal level. 

(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 the Federal 

Transit Laws. This term includes states, 

counties, cities, and their subdivisions, 

and tribal nations. 

(m) ‘‘Pattern of violations’’ means 

more than one finding of unauthorized 

charter service under this part by FTA 

beginning with the most recent finding 

of unauthorized charter service and 

looking back over a period not to exceed 

72 months. 

(n) ‘‘Presiding Official’’ means an 

official or agency representative who 

conducts a hearing at the request of the 

Chief Counsel and who has had no 

previous contact with the parties 

concerning the issue in the proceeding. 

(o) ‘‘Program purposes’’ means 

transportation that serves the needs of 

either human service agencies or 

targeted populations (elderly, 

individuals with disabilities, and 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 identified herein. 

(p) ‘‘Public transportation’’ has the 

meaning set forth in 49 U.S.C. 

5302(a)(10). 

(q) ‘‘Qualified human service 

organization’’ means an organization 

that serves persons who qualify for 

human service or transportation-related 

programs or services due to disability, 

income, or advanced age. This term is 

used consistent with the President’s 

Executive Order on Human Service 

Transportation Coordination (February 

24, 2004). 

(r) ‘‘Recipient’’ means an agency or 

entity that receives Federal financial 

assistance, either directly or indirectly, 

including subrecipients, under the 

Federal Transit Laws. This term does 

not include third-party contractors who 

use non-FTA funded vehicles. 

(s) ‘‘Registered charter provider’’

means a private charter operator that 

wants to receive notice of charter 

service requests directed to recipients 

and has registered on FTA’s charter 

registration Web site. 

(t) ‘‘Registration list’’ means the 

current list of registered charter 

providers and qualified human service 

organizations maintained on FTA’s 

charter registration Web site. 

(u) ‘‘Special transportation’’ means 

demand response or paratransit service 

that is regular and continuous and is a 

type of ‘‘public transportation.’’

(v) ‘‘Violation’’ means a finding by 

FTA of a failure to comply with one of 

the requirements of this Part. 

§ 604.4 Charter service agreement. 

(a) A recipient seeking Federal 

assistance under the Federal Transit 

Laws to acquire or operate any public 

transportation equipment or facilities 

shall enter into a ‘‘Charter Service 

Agreement’’ as set out in paragraph (b) 

of this section. 

(b) A recipient shall enter into a 

Charter Service Agreement if it receives 

Federal funds for equipment or facilities 

under the Federal Transit Laws. The 

terms of the Charter Service Agreement 

are as follows: ‘‘The recipient agrees 

that it, and each of its subrecipients, and 

third party contractors at any level who 

use FTA-funded vehicles, may provide 

charter service using equipment or 

facilities acquired with Federal 

assistance authorized under the Federal 

Transit Laws only in compliance with 

the regulations set out in 49 CFR 604, 

the terms and conditions of which are 

incorporated herein by reference.’’

(c) The Charter Service Agreement is 

contained in the Certifications and 

Assurances published annually by FTA 

for applicants for Federal financial 

assistance. Once a recipient receives 

Federal funds, the Certifications and 

Assurances become part of its Grant 

Agreement or Cooperative Agreement 

for Federal financial assistance. 

Subpart B—Exceptions 

§ 604.5 Purpose. 

The purpose of this subpart is to 

identify the limited exceptions under 

which recipients may provide 

community-based charter services. 

§ 604.6 Government officials on official 

government business. 

(a) A recipient may provide charter 

service to government officials (Federal, 

State, and local) for official government 

business, which can include non-transit 

related purposes, if the recipient: 

(1) Provides the service in its 

geographic service area; 

(2) Does not generate revenue from 

the charter service, except as required 

by law; and 

(3) After providing such service, 

records the following: 

(i) The government organization’s 

name, address, phone number, and email address; 

(ii) The date and time of service; 

(iii) The number of passengers 

(specifically noting the number of 

government officials on the trip); 

(iv) The origin, destination, and trip 

length (miles and hours); 

(v) The fee collected, if any; and 

(vi) The vehicle number for the 

vehicle used to provide the service. 

(b) A recipient that provides charter 

service under this section shall be 

limited annually to 80 charter service 

hours for providing trips to government 

officials for official government 

business. 

(c) A recipient may petition the 

Administrator for additional charter 

service hours only if the petition 

contains the following information: 

(1) Date and description of the official 

government event and the number of 

charter service hours requested; 

(2) Explanation of why registered 

charter providers in the geographic 

service area cannot perform the service 

(e.g., equipment, time constraints, or 

other extenuating circumstances); and 

(3) Evidence that the recipient has 

sent the request for additional hours to 

registered charter providers in its 

geographic service area. 

(d) FTA shall post the request for 

additional charter service hours under 

this exception in the Government 

Officials Exception docket, docket 

number FTA–2007–0020 at http:// 

www.regulations.gov. Interested parties 

may review the contents of this docket 

and bring questions or concerns to the 

attention of the Ombudsman for Charter 

Services. The written decision of the 

Administrator regarding the request for 

additional charter service hours shall be 

posted in the Government Officials 

Exception docket and sent to the 

recipient. 

§ 604.7 Qualified human service 

organizations. 

(a) A recipient may provide charter 

service to a qualified human service 

organization (QHSO) for the purpose of 

serving persons: 

(1) With mobility limitations related 

to advanced age; 

(2) With disabilities; or 

(3) With low income. 

(b) If an organization serving persons 

described in paragraph (a) of this 

section receives funding, directly or 

indirectly, from the programs listed in 

Appendix A of this part, the QHSO shall 

not be required to register on the FTA 

charter registration Web site. 

(c) If a QHSO serving persons 

described in paragraph (a) of this 


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section does not receive funding from 

any of the programs listed in Appendix 

A of this part, the QHSO shall register 

on the FTA charter registration Web site 

in accordance with § 604.15. 

(d) A recipient providing charter 

service under this exception, whether or 

not the QHSO receives funding from 

Appendix A programs, and after 

providing such charter service, shall 

record: 

(1) The QHSO’s name, address, phone 

number, and e-mail address; 

(2) The date and time of service; 

(3) The number of passengers; 

(4) The origin, destination, and trip 

length (miles and hours); 

(5) The fee collected, if any; and 

(6) The vehicle number for the vehicle 

used to provide the service. 

§ 604.8 Leasing FTA funded equipment 

and drivers. 

(a) A recipient may lease its FTAfunded equipment and drivers to 

registered charter providers for charter 

service only if the following conditions 

exist: 

(1) The private charter operator is 

registered on the FTA charter 

registration Web site; 

(2) The registered charter provider 

owns and operates buses or vans in a 

charter service business; 

(3) The registered charter provider 

received a request for charter service 

that exceeds its available capacity either 

of the number of vehicles operated by 

the registered charter provider or the 

number of accessible vehicles operated 

by the registered charter provider; and 

(4) The registered charter provider has 

exhausted all of the available vehicles of 

all registered charter providers in the 

recipient’s geographic service area. 

(b) A recipient leasing vehicles and 

drivers to a registered charter provider 

under this provision shall record: 

(1) The registered charter provider’s 

name, address, telephone number, and 

e-mail address; 

(2) The number of vehicles leased, 

types of vehicles leased, and vehicle 

identification numbers; and 

(3) The documentation presented by 

the registered charter provider in 

support of paragraphs (a)(1) through (4) 

of this section. 

(c) In accordance with § 604.26, if a 

registered charter provider seeking to 

lease vehicles has filed a complaint 

requesting that another registered 

charter provider be removed from the 

FTA charter registration Web site, then 

the registered charter provider seeking 

to lease vehicles is not required to 

exhaust the vehicles from that registered 

charter provider while the complaint is 

pending before leasing vehicles from a 

recipient. 

§ 604.9 When no registered charter 

provider responds to notice from a 

recipient. 

(a) A recipient may provide charter 

service, on its own initiative or at the 

request of a third party, if no registered 

charter provider responds to the notice 

issued in § 604.14: 

(1) Within 72 hours for charter service 

requested to be provided in less than 30 

days; or 

(2) Within 14 calendar days for 

charter service requested to be provided 

in 30 days or more. 

(b) A recipient shall not provide 

charter service under this section if a 

registered charter provider indicates an 

interest in providing the charter service 

set out in the notice issued pursuant to 

§ 604.14 and the registered charter 

provider has informed the recipient of 

its interest in providing the service. 

(c) After providing the service, a 

recipient shall record: 

(1) The group’s name, address, phone 

number, and e-mail address; 

(2) The date and time of service; 

(3) The number of passengers; 

(4) The origin, destination, and trip 

length (miles and hours); 

(5) The fee collected, if any; and 

(6) The vehicle number for the vehicle 

used to provide the service. 

§ 604.10 Agreement with registered 

charter providers. 

(a) A recipient may provide charter 

service directly to a customer consistent 

with an agreement entered into with all 

registered charter providers in the 

recipient’s geographic service area. 

(b) If a new charter provider registers 

in the geographic service area 

subsequent to the initial agreement, the 

recipient may continue to provide 

charter service under the previous 

agreement with the other charter 

providers up to 90 days without an 

agreement with the newly registered 

charter provider. 

(c) Any of the parties to an agreement 

may cancel the agreement at any time 

after providing the recipient a 90-day 

notice. 

§ 604.11 Petitions to the Administrator. 

(a) A recipient may petition the 

Administrator for an exception to the 

charter service regulations to provide 

charter service directly to a customer 

for: 

(1) Events of regional or national 

significance; 

(2) Hardship (only for non-urbanized 

areas under 50,000 in population or 

small urbanized areas under 200,000 in 

population); or 

(3) Unique and time sensitive events 

(e.g., funerals of local, regional, or 

national significance) that are in the 

public’s interest. 

(b) The petition to the Administrator 

shall include the following information: 

(1) The date and description of the 

event; 

(2) The type of service requested and 

the type of equipment; 

(3) The anticipated number of charter 

service hours needed for the event; 

(4) The anticipated number of 

vehicles and duration of the event; and 

(i) For an event of regional or national 

significance, the petition shall include a 

description of how registered charter 

providers were consulted, how 

registered charter providers will be 

utilized in providing the charter service, 

a certification that the recipient has 

exhausted all of the registered charter 

providers in its geographic service area, 

and submit the petition at least 90 days 

before the first day of the event 

described in paragraph (b)(1) of this 

section; 

(ii) For a hardship request, a petition 

is only available if the registered charter 

provider has deadhead time that 

exceeds total trip time from initial pickup to final drop-off, including wait time. 

The petition shall describe how the 

registered charter provider’s minimum 

duration would create a hardship on the 

group requesting the charter service; or 

(iii) For unique and time sensitive 

events, the petition shall describe why 

the event is unique or time sensitive and 

how providing the charter service 

would be in the public’s interest. 

(c) Upon receipt of a petition that 

meets the requirements set forth in 

paragraph (b) of this section, the 

Administrator shall review the materials 

and issue a written decision denying or 

granting the request in whole or in part. 

In making this decision, the 

Administrator may seek such additional 

information as the Administrator deems 

necessary. The Administrator’s decision 

shall be filed in the Petitions to the 

Administrator docket, number FTA–

2007–0022 at http:// 

www.regulations.gov and sent to the 

recipient. 

(d) Any exception granted by the 

Administrator under this section shall 

be effective only for the event identified 

in paragraph (b)(1) of this section. 

(e) A recipient shall send its petition 

to the Administrator by facsimile to 

(202) 366–3809 or by e-mail to 

ombudsman.charterservice@dot.gov. 

(f) A recipient shall retain a copy of 

the Administrator’s approval for a 

period of at least three years and shall 

include it in the recipient’s quarterly 

report posted on the charter registration 

Web site. 


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§ 604.12 Reporting requirements for all 

exceptions. 

(a) A recipient that provides charter 

service in accordance with one or more 

of the exceptions contained in this 

subpart shall maintain the required 

notice and records in an electronic 

format for a period of at least three years 

from the date of the service or lease. A 

recipient may maintain the required 

records in other formats in addition to 

the electronic format. 

(b) In addition to the requirements 

identified in paragraph (a) of this 

section, the records required under this 

subpart shall include a clear statement 

identifying which exception the 

recipient relied upon when it provided 

the charter service. 

(c) Beginning on July 30, 2008, a 

recipient providing charter service 

under these exceptions shall post the 

records required under this subpart on 

the FTA charter registration Web site 30 

days after the end of each calendar 

quarter (i.e., January 30th, April 30th, 

July 30th, and October 30th). A single 

document or charter log may include all 

charter service trips provided during the 

quarter. 

(d) A recipient may exclude specific 

origin and destination information for 

safety and security reasons. If a 

recipient excludes such information, the 

record of the service shall describe the 

reason why such information was 

excluded and provide generalized 

information instead of providing 

specific origin and destination 

information. 

Subpart C—Procedures for 

Registration and Notification 

§ 604.13 Registration of private charter 

operators. 

(a) Private charter operators shall 

provide the following information at 

http://www.fta.dot.gov/laws/ 

leg_reg_179.html to be considered a 

registered charter provider: 

(1) Company name, address, phone 

number, e-mail address, and facsimile 

number; 

(2) Federal and, if available, state 

motor carrier identifying number; 

(3) The geographic service areas of 

public transit agencies, as identified by 

the transit agency’s zip code, in which 

the private charter operator intends to 

provide charter service; 

(4) The number of buses or vans the 

private charter operator owns; 

(5) A certification that the private 

charter operator has valid insurance; 

and 

(6) Whether willing to provide free or 

reduced rate charter services to 

registered qualified human service 

organizations. 

(b) A private charter operator that 

provides valid information in this 

subpart is a ‘‘registered charter 

provider’’ for purposes of this part and 

shall have standing to file a complaint 

consistent with subpart F. 

(c) A recipient, a registered charter 

provider, or their duly authorized 

representative, may challenge a 

registered charter provider’s registration 

and request removal of the private 

charter operator from FTA’s charter 

registration Web site by filing a 

complaint consistent with subpart F. 

(d) FTA may refuse to post a private 

charter operator’s information if the 

private charter operator fails to provide 

all of the required information as 

indicated on the FTA charter 

registration Web site. 

(e) A registered charter provider shall 

provide current and accurate 

information on FTA’s charter 

registration Web site, and shall update 

that information no less frequently than 

every two years. 

§ 604.14 Recipient’s notification to 

registered charter providers. 

(a) Upon receiving a request for 

charter service, a recipient may: 

(1) Decline to provide the service, 

with or without referring the requestor 

to FTA’s charter registration Web site 

(http://www.fta.dot.gov/laws/ 

leg_reg_179.html); 

(2) Provide the service under an 

exception provided in subpart B of this 

part; or 

(3) Provide notice to registered charter 

providers as provided in this section 

and provide the service pursuant to 

§ 604.9. 

(b) If a recipient is interested in 

providing charter service under the 

exception contained in § 604.9, then 

upon receipt of a request for charter 

service, the recipient shall provide 

e-mail notice to registered charter 

providers in the recipient’s geographic 

service area in the following manner: 

(1) E-mail notice of the request shall 

be sent by the close of business on the 

day the recipient receives the request 

unless the recipient received the request 

after 2 p.m., in which case the recipient 

shall send the notice by the close of 

business the next business day; 

(2) E-mail notice sent to the list of 

registered charter providers shall 

include: 

(i) Customer name, address, phone 

number, and e-mail address (if 

available); 

(ii) Requested date of service; 

(iii) Approximate number of 

passengers; 

(iv) Whether the type of equipment 

requested is (are) bus(es) or van(s); and 

(v) Trip itinerary and approximate 

duration; and 

(3) If the recipient intends to provide 

service that meets the definition of 

charter service under § 604.3(c)(2), the 

e-mail notice must include the fare the 

recipient intends to charge for the 

service. 

(c) A recipient shall retain an 

electronic copy of the e-mail notice and 

the list of registered charter providers 

that were sent e-mail notice of the 

requested charter service for a period of 

at least three years from the date the email notice was sent. 

(d) If a recipient receives an 

‘‘undeliverable’’ notice in response to its 

e-mail notice, the recipient shall send 

the notice via facsimile. The recipient 

shall maintain the record of the 

undeliverable e-mail notice and the 

facsimile sent confirmation for a period 

of three years. 

Subpart D—Registration of Qualified 

Human Service Organizations and 

Duties for Recipients With Respect to 

Charter Registration Web site 

§ 604.15 Registration of qualified human 

service organizations. 

(a) Qualified human service 

organizations (QHSO) that seek free or 

reduced rate services from recipients, 

and do not receive funds from Federal 

programs listed in Appendix A, but 

serve individuals described in § 604.7 

(i.e., individuals with low income, 

advanced age, or with disabilities), shall 

register on FTA’s charter registration 

Web site by submitting the following 

information: 

(1) Name of organization, address, 

phone number, e-mail address, and 

facsimile number; 

(2) The geographic service area of the 

recipient in which the qualified human 

service organization resides; 

(3) Basic financial information 

regarding the qualified human service 

organization and whether the qualified 

human service organization is exempt 

from taxation under sections 501(c) (1), 

(3), (4), or (19) of the Internal Revenue 

Code, and whether it is a unit of 

Federal, State or local government; 

(4) Whether the qualified human 

service organization receives funds 

directly or indirectly from a State or 

local program, and if so, which 

program(s); and 

(5) A narrative statement describing 

the types of charter service trips the 

qualified human service organization 

may request from a recipient and how 

that service is consistent with the 

mission of the qualified human service 

organization. 


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(b) A qualified human service 

organization is eligible to receive charter 

services from a recipient if it: 

(1) Registers on the FTA Web site in 

accordance with paragraph (a) of this 

section at least 60 days before the date 

of the requested charter service; and 

(2) Verifies FTA’s receipt of its 

registration by viewing its information 

on the FTA charter registration Web site 

(http://www.fta.dot.gov/laws/ 

leg_reg_179.html). 

(c) A registered charter provider may 

challenge a QHSO’s status to receive 

charter services from a recipient by 

requesting removal of the QHSO from 

FTA’s charter registration Web site by 

filing a complaint consistent with 

subpart F. 

(d) A QHSO shall provide current and 

accurate information on FTA’s charter 

registration Web site, and shall update 

that information no less frequently than 

every two years. 

§ 604.16 Duties for recipients with respect 

to charter registration Web site. 

Each recipient shall ensure that its 

affected employees and contractors have 

the necessary competency to effectively 

use the FTA charter registration Web 

site. 

Subpart E—Advisory Opinions and 

Cease and Desist Orders 

§ 604.17 Purpose. 

The purpose of this subpart is to set 

out the requirements for requesting an 

advisory opinion from the Chief 

Counsel’s Office. An advisory opinion 

may also request that the Chief Counsel 

issue a cease and desist order, which 

would be an order to refrain from doing 

an act which, if done, would be a 

violation of this part. 

§ 604.18 Request for an advisory opinion. 

(a) An interested party may request an 

advisory opinion from the Chief 

Counsel on a matter regarding specific 

factual events only. 

(b) A request for an advisory opinion 

shall be submitted in the following 

form: 

[Date] 

Chief Counsel, Federal Transit 

Administration, 1200 New Jersey Ave. SE., 

Room E55–302, Washington, DC 20590 

Re: Request for Advisory Opinion 

The undersigned submits this request for an 

advisory opinion from the FTA Chief 

Counsel with respect to [the general nature 

of the matter involved]. 

A. A full statement of all facts and legal 

points relevant to the request 

B. An affirmation that the undersigned 

swears, to the best of his/her knowledge 

and belief, this request includes all data, 

information, and views relevant to the 

matter, whether favorable or unfavorable to 

the position of the undersigned, which is 

the subject of the request. 

C. The following certification: ‘‘I hereby 

certify that I have this day served the 

foregoing [name of document] on the 

following interested party(ies) at the 

following addresses and e-mail or facsimile 

numbers (if also served by e-mail or 

facsimile) by [specify method of service]: 

[list persons, addresses, and e-mail or 

facsimile numbers]’’

Dated this llll day of ll , 20ll. 

[Signature] 

[Printed name] 

[Title of person making request] 

[Mailing address] 

[Telephone number] 

[e-mail address] 

(c) The Chief Counsel may request 

additional information, as necessary, 

from the party submitting the request for 

an advisory opinion. 

(d) A request for an advisory opinion 

may be denied if: 

(1) The request contains incomplete 

information on which to base an 

informed advisory opinion; 

(2) The Chief Counsel concludes that 

an advisory opinion cannot reasonably 

be given on the matter involved; 

(3) The matter is adequately covered 

by a prior advisory opinion or a 

regulation; 

(4) The Chief Counsel otherwise 

concludes that an advisory opinion 

would not be in the public interest. 

§ 604.19 Processing of advisory opinions. 

(a) A request for an advisory opinion 

shall be sent to the Chief Counsel at 

ombudsman.charterservice@dot.gov, 

and filed electronically in the Charter 

Service Advisory Opinion/Cease and 

Desist Order docket number FTA–2007–

0023 at http://www.regulations.gov or 

sent to the dockets office located at 1200 

New Jersey Ave., SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590, for submission 

to that docket. 

(b) The Chief Counsel shall make 

every effort to respond to a request for 

an advisory opinion within ten days of 

receipt of a request that complies with 

§ 604.18(b). The Chief Counsel shall 

send his or her decision to the 

interested party, the docket, and the 

recipient, if appropriate. 

§ 604.20 Effect of an advisory opinion. 

(a) An advisory opinion represents the 

formal position of FTA on a matter, and 

except as provided in § 604.25 of this 

subpart, obligates the agency to follow 

it until it is amended or revoked. 

(b) An advisory opinion may be used 

in administrative or court proceedings 

to illustrate acceptable and 

unacceptable procedures or standards, 

but not as a legal requirement and is 

limited to the factual circumstances 

described in the request for an advisory 

opinion. The Chief Counsel’s advisory 

opinion shall not be binding upon a 

Presiding Official conducting a 

proceeding under subpart I of this part. 

(c) A statement made or advice 

provided by an FTA employee 

constitutes an advisory opinion only if 

it is issued in writing under this section. 

A statement or advice given by an FTA 

employee orally, or given in writing, but 

not under this section, is an informal 

communication that represents the best 

judgment of that employee at the time 

but does not constitute an advisory 

opinion, does not necessarily represent 

the formal position of FTA, and does 

not bind or otherwise obligate or 

commit the agency to the views 

expressed. 

§ 604.21 Special considerations for 

advisory opinions. 

Based on new facts involving 

significant financial considerations, the 

Chief Counsel may take appropriate 

enforcement action contrary to an 

advisory opinion before amending or 

revoking the opinion. This action shall 

be taken only with the approval of the 

Administrator. 

§ 604.22 Request for a cease and desist 

order. 

(a) An interested party may also 

request a cease and desist order as part 

of its request for an advisory opinion. A 

request for a cease and desist order shall 

contain the following information in 

addition to the information required for 

an advisory opinion: 

(1) A description of the need for the 

cease and desist order, a detailed 

description of the lost business 

opportunity the interested party is likely 

to suffer if the recipient performs the 

charter service in question, and how the 

public interest will be served by 

avoiding or ameliorating the lost 

business opportunity. A registered 

charter provider must distinguish its 

loss from that of other registered charter 

providers in the geographic service area. 

(2) A detailed description of the 

efforts made to notify the recipient of 

the potential violation of the charter 

service regulations. Include names, 

titles, phone numbers or e-mail 

addresses of persons contacted, date and 

times contact was made, and the 

response received, if any. 

(b) A request for a cease and desist 

order may be denied if: 

(1) The request contains incomplete 

information on which to base an 

informed a cease and desist order; 

(2) The Chief Counsel concludes that 

a cease and desist order cannot 


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reasonably be given on the matter 

involved; 

(3) The matter is adequately covered 

by a prior a cease and desist order; or 

(4) The Chief Counsel otherwise 

concludes that a cease and desist order 

would not be in the public interest. 

(c) A recipient who is the subject of 

a request for a cease and desist order 

shall have three business days to 

respond to the request. The response 

shall include a point-by-point rebuttal 

to the information included in the 

request for a cease and desist order. 

(d) The time period for a response by 

the recipient begins once a registered 

charter provider files a request in the 

Advisory Opinion/Cease and Desist 

Order docket (FTA–2007–0023 at 

http://www.regulations.gov) or with the 

FTA Chief Counsel’s Office, whichever 

date is sooner. 

§ 604.23 Effect of a cease and desist order. 

(a) Issuance of a cease and desist 

order against a recipient shall be 

considered as an aggravating factor in 

determining the remedy to impose 

against the recipient in future findings 

of noncompliance with this part, if the 

recipient provides the service described 

in the cease and desist order issued by 

the Chief Counsel. 

(b) In determining whether to grant 

the request for a cease and desist order, 

the Chief Counsel shall consider the 

specific facts shown in the signed, 

sworn request for a cease and desist 

order, applicable statutes and 

regulations, and any other information 

that is relevant to the request. 

§ 604.24 Decisions by the Chief Counsel 

regarding cease and desist orders. 

(a) The Chief Counsel may grant a 

request for a cease and desist order if 

the interested party demonstrates, by a 

preponderance of the evidence, that the 

planned provision of charter service by 

a recipient would violate this part. 

(b) In determining whether to grant 

the request for a cease and desist order, 

the Chief Counsel shall consider the 

specific facts shown in the signed, 

sworn request for a cease and desist 

order, applicable statutes, regulations, 

agreements, and any other information 

that is relevant to the request. 

Subpart F—Complaints 

§ 604.25 Purpose. 

This subpart describes the 

requirements for filing a complaint 

challenging the registration of a private 

charter operator or qualified human 

service organization on the FTA charter 

registration Web site and filing a 

complaint regarding the provision of 

charter service by a recipient. Note: To 

save time and expense for all concerned, 

FTA expects all parties to attempt to 

resolve matters informally before 

beginning the official complaint 

process. 

§ 604.26 Complaints and decisions 

regarding removal of private charter 

operators or qualified human service 

organizations from registration list. 

(a) A recipient, a registered charter 

provider, or its duly authorized 

representative, may challenge the listing 

of a registered charter provider or 

qualified human service organization on 

FTA’s charter registration Web site by 

filing a complaint that meets the 

following: 

(1) States the name and address of 

each entity who is the subject of the 

complaint; 

(2) Provides a concise but complete 

statement of the facts relied upon to 

substantiate the reason why the private 

charter operator or qualified human 

service organization should not be listed 

on the FTA charter registration Web 

site; 

(3) Files electronically by submitting 

it to the Charter Service Removal 

Complaint docket number FTA–2007–

0024 at http://www.regulations.gov; 

(4) Serves by e-mail or facsimile if no 

e-mail address is available, or by 

overnight mail service with receipt 

confirmation, and attaches documents 

offered in support of the complaint 

upon all entities named in the 

complaint; 

(5) Files within 90 days of discovering 

facts that merit removal of the registered 

charter provider or qualified human 

service organization from the FTA 

Charter Registration Web site; and 

(6) Contains the following 

certification: 

I hereby certify that I have this day served 

the foregoing [name of document] on the 

following persons at the following 

addresses and e-mail or facsimile numbers 

(if also served by e-mail or facsimile) by 

[specify method of service]: 

[list persons, addresses, and e-mail or 

facsimile numbers] 

Dated this ____ day of ____, 20__. 

[signature], for [party]. 

(b) The registered charter provider or 

qualified human service organization 

shall have 15 days to answer the 

complaint and shall file such answer, 

and all supporting documentation, in 

the Charter Service Removal Complaint 

docket number FTA–2007–0024 at 

http://www.regulations.gov and e-mail 

such answer to 

ombudsman.charterservice@dot.gov. 

(c) A recipient, qualified human 

service organization, or a registered 

charter provider, or its duly authorized 

representative, shall not file a reply to 

the answer. 

(d) FTA shall determine whether to 

remove the registered charter provider 

or qualified human service organization 

from the FTA charter registration Web 

site based on a preponderance of the 

evidence of one or more of the 

following: 

(1) Bad faith; 

(2) Fraud; 

(3) Lapse of insurance; 

(4) Lapse of other documentation; or 

(5) The filing of more than one 

complaint, which on its face, does not 

state a claim that warrants an 

investigation or further action by FTA. 

(e) FTA’s determination whether or 

not to remove a registered charter 

provider or qualified human service 

organization from the registration list 

shall be sent to the parties within 30 

days of the date of the response required 

in paragraph (b) of this section and shall 

state: 

(1) Reasons for allowing the 

continued listing or removal of the 

registered charter provider or qualified 

human service organization from the 

registration list; 

(2) If removal is ordered, the length of 

time (not to exceed three years) the 

private charter operator or qualified 

human service organization shall be 

barred from the registration list; and 

(3) The date by which the private 

charter operator or qualified human 

service organization may re-apply for 

registration on the FTA charter 

registration Web site. 

§ 604.27 Complaints, answers, replies, and 

other documents. 

(a) A registered charter provider, or its 

duly authorized representative 

(‘‘complainant’’), affected by an alleged 

noncompliance of this part may file a 

complaint with the Office of the Chief 

Counsel. 

(b) Complaints filed under this 

subpart shall: 

(1) Be titled ‘‘Notice of Charter 

Service Complaint’’; 

(2) State the name and address of each 

recipient that is the subject of the 

complaint and, with respect to each 

recipient, the specific provisions of this 

part that the complainant believes were 

violated; 

(2) Be served in accordance with 

§ 604.31, along with all documents then 

available in the exercise of reasonable 

diligence, offered in support of the 

complaint, upon all recipients named in 

the complaint as being responsible for 

the alleged action(s) or omission(s) upon 

which the complaint is based; 

(3) Provide a concise but complete 

statement of the facts relied upon to 


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substantiate each allegation 

(complainant must show by a 

preponderance of the evidence that the 

recipient provided charter service and 

that such service did not fall within one 

of the exemptions or exceptions set out 

in this part); 

(4) Describe how the complainant was 

directly and substantially affected by 

the things done or omitted by the 

recipients; 

(5) Identify each registered charter 

provider associated with the complaint; 

and 

(6) Be filed within 90 days after the 

alleged event giving rise to the 

complaint occurred. 

(c) Unless the complaint is dismissed 

pursuant to § 604.28 or § 604.29, FTA 

shall notify the complainant, 

respondent, and state recipient, if 

applicable, within 30 days after the date 

FTA receives the complaint that the 

complaint has been docketed. 

Respondent shall have 30 days from the 

date of service of the FTA notification 

to file an answer. 

(d) The complainant may file a reply 

within 20 days of the date of service of 

the respondent’s answer. 

(e) The respondent may file a rebuttal 

within 10 days of the date of service of 

the reply. 

(f) The answer, reply, and rebuttal 

shall, like the complaint, be 

accompanied by the supporting 

documentation upon which the 

submitter relies. 

(g) The answer shall deny or admit 

the allegations made in the complaint or 

state that the entity filing the document 

is without sufficient knowledge or 

information to admit or deny an 

allegation, and shall assert any 

affirmative defense. 

(h) The answer, reply, and rebuttal 

shall each contain a concise but 

complete statement of the facts relied 

upon to substantiate the answers, 

admissions, denials, or averments made. 

(i) The respondent’s answer may 

include a motion to dismiss the 

complaint, or any portion thereof, with 

a supporting memorandum of points 

and authorities. 

(j) The complainant may withdraw a 

complaint at any time after filing by 

serving a ‘‘Notification of Withdrawal’’

on the Chief Counsel and the 

respondent. 

§ 604.28 Dismissals. 

(a) Within 20 days after the receipt of 

a complaint described in § 604.27, the 

Office of the Chief Counsel shall 

provide reasons for dismissing a 

complaint, or any claim in the 

complaint, with prejudice, under this 

section if: 

(1) It appears on its face to be outside 

the jurisdiction of FTA under the 

Federal Transit Laws; 

(2) On its face it does not state a claim 

that warrants an investigation or further 

action by FTA; or 

(3) The complainant lacks standing to 

file a complaint under subparts B, C, or 

D of this part. 

(b) [Reserved] 

§ 604.29 Incomplete complaints. 

If a complaint is not dismissed under 

§ 604.28, but is deficient as to one or 

more of the requirements set forth in 

§ 604.27, the Office of the Chief Counsel 

may dismiss the complaint within 20 

days after receiving it. Dismissal shall 

be without prejudice and the 

complainant may re-file after 

amendment to correct the deficiency. 

The Chief Counsel’s dismissal shall 

include the reasons for the dismissal 

without prejudice. 

§ 604.30 Filing complaints. 

(a) Filing address. Unless provided 

otherwise, the complainant shall file the 

complaint with the Office of the Chief 

Counsel, 1200 New Jersey Ave., SE., 

Room E55–302, Washington, DC 20590 

and file it electronically in the Charter 

Service Complaint docket number FTA–

2007–0025 at http:// 

www.regulations.gov or mail it to the 

docket by sending the complaint to 1200 

New Jersey Ave., SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590. 

(b) Date and method of filing. Filing 

of any document shall be by personal 

delivery, U.S. mail, or overnight 

delivery with receipt confirmation. 

Unless the date is shown to be 

inaccurate, documents to be filed with 

FTA shall be deemed filed, on the 

earliest of: 

(1) The date of personal delivery; 

(2) The mailing date shown on the 

certificate of service; 

(3) The date shown on the postmark 

if there is no certificate of service; or 

(4) The mailing date shown by other 

evidence if there is no certificate of 

service and no postmark. 

(c) E-mail or fax. A document sent by 

facsimile or e-mail shall not constitute 

service as described in § 604.31. 

(d) Number of copies. Unless 

otherwise specified, an executed 

original shall be filed with FTA. 

(e) Form. Documents filed with FTA 

shall be typewritten or legibly printed. 

In the case of docketed proceedings, the 

document shall include a title and the 

docket number, as established by the 

Chief Counsel or Presiding Official, of 

the proceeding on the front page. 

(f) Signing of documents and other 

papers. The original of every document 

filed shall be signed by the person filing 

it or the person’s duly authorized 

representative. Subject to the 

enforcement provisions contained in 

this subpart, the signature shall serve as 

a certification that the signer has read 

the document and, based on reasonable 

inquiry, to the best of the signer’s 

knowledge, information, and belief, the 

document is: 

(1) Consistent with this part; 

(2) Warranted by existing law or that 

a good faith argument exists for 

extension, modification, or reversal of 

existing law; and 

(3) Not interposed for any improper 

purpose, such as to harass or to cause 

unnecessary delay or needless increase 

in the cost of the administrative process. 

§ 604.31 Service. 

(a) Designation of person to receive 

service. The initial document filed by 

the complainant shall state on the first 

page of the document for all parties to 

be served: 

(1) The title of the document; 

(2) The name, post office address, 

telephone number; and 

(3) The facsimile number, if any, and 

e-mail address(es), if any. 

If any of the above items change 

during the proceeding, the person shall 

promptly file notice of the change with 

FTA and the Presiding Official, if 

appropriate, and shall serve the notice 

on all other parties to the proceeding. 

(b) Docket numbers. Each submission 

identified as a complaint under this part 

by the submitting party shall be filed in 

the Charter Service Complaint docket 

FTA–2007–0025. 

(c) Who must be served. Copies of all 

documents filed with FTA shall be 

served by the entity filing them on all 

parties to the proceeding. A certificate 

of service shall accompany all 

documents when they are tendered for 

filing and shall certify concurrent 

service on FTA and all parties. 

Certificates of service shall be in 

substantially the following form: 

I hereby certify that I have this day served 

the foregoing [name of document] on the 

following persons at the following 

addresses and e-mail or facsimile numbers 

(if also served by e-mail or facsimile) by 

[specify method of service]: 

[list persons, addresses, and e-mail or 

facsimile numbers] 

Dated this llll day of llll, 20ll. 

[signature], for [party] 

(d) Method of service. Except as 

otherwise provided in § 604.26, or 

agreed by the parties and the Presiding 

Official, as appropriate, the method of 

service is personal delivery or U.S. mail. 

(e) Presumption of service. There shall 

be a presumption of lawful service: 


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(1) When acknowledgment of receipt 

is by a person who customarily or in the 

ordinary course of business receives 

mail at the address of the party or of the 

person designated under this section; or 

(2) When a properly addressed 

envelope, sent to the last known address 

has been returned as undeliverable, 

unclaimed, or refused. 

Subpart G—Investigations 

§ 604.32 Investigation of complaint. 

(a) If, based on the pleadings, there 

appears to be a reasonable basis for 

investigation, FTA shall investigate the 

subject matter of the complaint. 

(b) The investigation may include a 

review of written submissions or 

pleadings of the parties, as 

supplemented by any informal 

investigation FTA considers necessary 

and by additional information furnished 

by the parties at FTA request. Each 

party shall file documents that it 

considers sufficient to present all 

relevant facts and argument necessary 

for FTA to determine whether the 

recipient is in compliance. 

(c) The Chief Counsel shall send a 

notice to complainant(s) and 

respondent(s) once an investigation is 

complete, but not later than 90 days 

after receipt of the last pleading 

specified in § 604.27 was due to FTA. 

§ 604.33 Agency initiation of investigation. 

(a) Notwithstanding any other 

provision under these regulations, FTA 

may initiate its own investigation of any 

matter within the applicability of this 

Part without having received a 

complaint. The investigation may 

include, without limitation, any of the 

actions described in § 604.32. 

(b) Following the initiation of an 

investigation under this section, FTA 

sends a notice to the entities subject to 

investigation. The notice will set forth 

the areas of FTA’s concern and the 

reasons; request a response to the notice 

within 30 days of the date of service; 

and inform the respondent that FTA 

will, in its discretion, invite good faith 

efforts to resolve the matter. 

(c) If the matters addressed in the FTA 

notice are not resolved informally, the 

Chief Counsel may refer the matter to a 

Presiding Official. 

Subpart H—Decisions by FTA and 

Appointment of a Presiding Official 

(PO) 

§ 604.34 Chief Counsel decisions and 

appointment of a PO. 

(a) After receiving a complaint 

consistent with § 604.27, and 

conducting an investigation, the Chief 

Counsel may: 

(1) Issue a decision based on the 

pleadings filed to date; 

(2) Appoint a PO to review the matter; 

or 

(3) Dismiss the complaint pursuant to 

§ 604.28. 

(b) If the Chief Counsel appoints a PO 

to review the matter, the Chief Counsel 

shall send out a hearing order that sets 

forth the following: 

(1) The allegations in the complaint, 

or notice of investigation, and the 

chronology and results of the 

investigation preliminary to the hearing; 

(2) The relevant statutory, judicial, 

regulatory, and other authorities; 

(3) The issues to be decided; 

(4) Such rules of procedure as may be 

necessary to supplement the provisions 

of this Part; 

(5) The name and address of the PO, 

and the assignment of authority to the 

PO to conduct the hearing in accordance 

with the procedures set forth in this 

Part; and 

(6) The date by which the PO is 

directed to issue a recommended 

decision. 

§ 604.35 Separation of functions. 

(a) Proceedings under this part shall 

be handled by an FTA attorney, except 

that the Chief Counsel may appoint a 

PO, who may not be an FTA attorney. 

(b) After issuance of an initial 

decision by the Chief Counsel, the FTA 

employee or contractor engaged in the 

performance of investigative or 

prosecutorial functions in a proceeding 

under this part shall not, in that case or 

a factually related case, participate or 

give advice in a final decision by the 

Administrator or his or her designee on 

written appeal, and shall not, except as 

counsel or as witness in the public 

proceedings, engage in any substantive 

communication regarding that case or a 

related case with the Administrator on 

written appeal. 

Subpart I—Hearings. 

§ 604.36 Powers of a PO. 

A PO may: 

(a) Give notice of, and hold, prehearing conferences and hearings; 

(b) Administer oaths and affirmations; 

(c) Issue notices of deposition 

requested by the parties; 

(d) Limit the frequency and extent of 

discovery; 

(e) Rule on offers of proof; 

(f) Receive relevant and material 

evidence; 

(g) Regulate the course of the hearing 

in accordance with the rules of this part 

to avoid unnecessary and duplicative 

proceedings in the interest of prompt 

and fair resolution of the matters at 

issue; 

(h) Hold conferences to settle or to 

simplify the issues by consent of the 

parties; 

(i) Dispose of procedural motions and 

requests; 

(j) Examine witnesses; and 

(k) Make findings of fact and 

conclusions of law and issue a 

recommended decision. 

§ 604.37 Appearances, parties, and rights 

of parties. 

(a) Any party to the hearing may 

appear and be heard in person and any 

party to the hearing may be 

accompanied, represented, or advised 

by an attorney licensed by a State, the 

District of Columbia, or a territory of the 

United States to practice law or appear 

before the courts of that State or 

territory, or by another duly authorized 

representative. An attorney, or other 

duly authorized representative, who 

represents a party shall file according to 

the filing and service procedures 

contained in § 604.30 and § 604.31. 

(b) The parties to the hearing are the 

respondent(s) named in the hearing 

order, the complainant(s), and FTA, as 

represented by the PO. 

(c) The parties to the hearing may 

agree to extend for a reasonable period 

of time the time for filing a document 

under this part. If the parties agree, the 

PO shall grant one extension of time to 

each party. The party seeking the 

extension of time shall submit a draft 

order to the PO to be signed by the PO 

and filed with the hearing docket. The 

PO may grant additional oral requests 

for an extension of time where the 

parties agree to the extension. 

(d) An extension of time granted by 

the PO for any reason extends the due 

date for the PO’s recommended decision 

and for the final agency decision by the 

length of time in the PO’s extension. 

§ 604.38 Discovery. 

(a) Permissible forms of discovery 

shall be within the discretion of the PO. 

(b) The PO shall limit the frequency 

and extent of discovery permitted by 

this section if a party shows that: 

(1) The information requested is 

cumulative or repetitious; 

(2) The information requested may be 

obtained from another less burdensome 

and more convenient source; 

(3) The party requesting the 

information has had ample opportunity 

to obtain the information through other 

discovery methods permitted under this 

section; or 

(4) The method or scope of discovery 

requested by the party is unduly 

burdensome or expensive. 


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§ 604.39 Depositions. 

(a) For good cause shown, the PO may 

order that the testimony of a witness 

may be taken by deposition and that the 

witness produce documentary evidence 

in connection with such testimony. 

Generally, an order to take the 

deposition of a witness is entered only 

if: 

(1) The person whose deposition is to 

be taken would be unavailable at the 

hearing; 

(2) The deposition is deemed 

necessary to perpetuate the testimony of 

the witness; or 

(3) The taking of the deposition is 

necessary to prevent undue and 

excessive expense to a party and will 

not result in undue burden to other 

parties or in undue delay. 

(b) Any party to the hearing desiring 

to take the deposition of a witness 

according to the terms set out in this 

subpart, shall file a motion with the PO, 

with a copy of the motion served on 

each party. The motion shall include: 

(1) The name and residence of the 

witness; 

(2) The time and place for the taking 

of the proposed deposition; 

(3) The reasons why such deposition 

should be taken; and 

(4) A general description of the 

matters concerning which the witness 

will be asked to testify. 

(c) If good cause is shown in the 

motion, the PO in his or her discretion, 

issues an order authorizing the 

deposition and specifying the name of 

the witness to be deposed, the location 

and time of the deposition and the 

general scope and subject matter of the 

testimony to be taken. 

(d) Witnesses whose testimony is 

taken by deposition shall be sworn or 

shall affirm before any questions are put 

to them. Each question propounded 

shall be recorded and the answers of the 

witness transcribed verbatim. The 

written transcript shall be subscribed by 

the witness, unless the parties by 

stipulation waive the signing, or the 

witness is ill, cannot be found, or 

refuses to sign. The reporter shall note 

the reason for failure to sign. 

§ 604.40 Public disclosure of evidence. 

(a) Except as provided in this section, 

the hearing shall be open to the public. 

(b) The PO may order that any 

information contained in the record be 

withheld from public disclosure. Any 

person may object to disclosure of 

information in the record by filing a 

written motion to withhold specific 

information with the PO. The person 

shall state specific grounds for 

nondisclosure in the motion. 

(c) The PO shall grant the motion to 

withhold information from public 

disclosure if the PO determines that 

disclosure would be in violation of the 

Privacy Act, would reveal trade secrets 

or privileged or confidential commercial 

or financial information, or is otherwise 

prohibited by law. 

§ 604.41 Standard of proof. 

The PO shall issue a recommended 

decision or shall rule in a party’s favor 

only if the decision or ruling is 

supported by a preponderance of the 

evidence. 

§ 604.42 Burden of proof. 

(a) The burden of proof of 

noncompliance with this part, 

determination, or agreement issued 

under the authority of the Federal 

Transit Laws is on the registered charter 

provider. 

(b) Except as otherwise provided by 

statute or rule, the proponent of a 

motion, request, or order has the burden 

of proof. 

§ 604.43 Offer of proof. 

A party whose evidence has been 

excluded by a ruling of the PO, during 

a hearing in which the respondent had 

an opportunity to respond to the offer of 

proof, may offer the evidence on the 

record when filing an appeal. 

§ 604.44 Record. 

(a) The transcript of all testimony in 

the hearing, all exhibits received into 

evidence, all motions, applications 

requests and rulings, and all documents 

included in the hearing record shall 

constitute the exclusive record for 

decision in the proceedings and the 

basis for the issuance of any orders. 

(b) Any interested person may 

examine the record by entering the 

docket number at http:// 

www.regulations.gov or after payment of 

reasonable costs for search and 

reproduction of the record. 

§ 604.45 Waiver of procedures. 

(a) The PO shall waive such 

procedural steps as all parties to the 

hearing agree to waive before issuance 

of an initial decision. 

(b) Consent to a waiver of any 

procedural step bars the raising of this 

issue on appeal. 

(c) The parties may not by consent 

waive the obligation of the PO to enter 

a recommended decision on the record. 

§ 604.46 Recommended decision by a PO. 

(a) The PO shall issue a recommended 

decision based on the record developed 

during the proceeding and shall send 

the recommended decision to the Chief 

Counsel for ratification or modification 

not later than 110 days after the referral 

from the Chief Counsel. 

(b) The Chief Counsel shall ratify or 

modify the PO’s recommended decision 

within 30 days of receiving the 

recommended decision. The Chief 

Counsel shall serve his or her decision, 

which is capable of being appealed to 

the Administrator, on all parties to the 

proceeding. 

§ 604.47 Remedies. 

(a) If the Chief Counsel determines 

that a violation of this part occurred, he 

or she may take one or more of the 

following actions: 

(1) Bar the recipient from receiving 

future Federal financial assistance from 

FTA; 

(2) Order the withholding of a 

reasonable percentage of available 

Federal financial assistance; or 

(3) Pursue suspension and debarment 

of the recipient, its employees, or its 

contractors. 

(b) In determining the type and 

amount of remedy, the Chief Counsel 

shall consider the following factors: 

(1) The nature and circumstances of 

the violation; 

(2) The extent and gravity of the 

violation (‘‘extent of deviation from 

regulatory requirements’’); 

(3) The revenue earned (‘‘economic 

benefit’’) by providing the charter 

service; 

(4) The operating budget of the 

recipient; 

(5) Such other matters as justice may 

require; and 

(6) Whether a recipient provided 

service described in a cease and desist 

order after issuance of such order by the 

Chief Counsel. 

(c) The Chief Counsel office may 

mitigate the remedy when the recipient 

can document corrective action of 

alleged violation. The Chief Counsel’s 

decision to mitigate a remedy shall be 

determined on the basis of how much 

corrective action was taken by the 

recipient and when it was taken. 

Systemic action to prevent future 

violations will be given greater 

consideration than action simply to 

remedy violations identified during 

FTA’s inspection or identified in a 

complaint. 

(d) In the event the Chief Counsel 

finds a pattern of violations, the remedy 

ordered shall bar a recipient from 

receiving Federal transit assistance in an 

amount that the Chief Counsel considers 

appropriate. 

(e) The Chief Counsel may make a 

decision to withhold Federal financial 

assistance in a lump sum or over a 

period of time not to exceed five years. 


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Subpart J—Appeal to Administrator 

and Final Agency Orders 

§ 604.48 Appeal from Chief Counsel 

decision. 

(a) Each party adversely affected by 

the Chief Counsel’s office decision may 

file an appeal with the Administrator 

within 21 days of the date of the Chief 

Counsel’s issued his or her decision. 

Each party may file a reply to an appeal 

within 21 days after it is served on the 

party. Filing and service of appeals and 

replies shall be by personal delivery 

consistent with §§ 604.30 and 604.31. 

(b) If an appeal is filed, the 

Administrator reviews the entire record 

and issues a final agency decision based 

on the record that either accepts, rejects, 

or modifies the Chief Counsel’s decision 

within 30 days of the due date of the 

reply. If no appeal is filed, the 

Administrator may take review of the 

case on his or her own motion. If the 

Administrator finds that the respondent 

is not in compliance with this part, the 

final agency order shall include a 

statement of corrective action, if 

appropriate, and identify remedies. 

(c) If no appeal is filed, and the 

Administrator does not take review of 

the decision by the office on the 

Administrator’s own motion, the Chief 

Counsel’s decision shall take effect as 

the final agency decision and order on 

the twenty-first day after the actual date 

the Chief Counsel’s decision was issued. 

(d) The failure to file an appeal is 

deemed a waiver of any rights to seek 

judicial review of the Chief Counsel’s 

decision that becomes a final agency 

decision by operation of paragraph (c) of 

this section. 

§ 604.49 Administrator’s discretionary 

review of the Chief Counsel’s decision. 

(a) If the Administrator takes review 

on the Administrator’s own motion, the 

Administrator shall issue a notice of 

review by the twenty-first day after the 

actual date of the Chief Counsel’s 

decision that contains the following 

information: 

(1) The notice sets forth the specific 

findings of fact and conclusions of law 

in the decision subject to review by the 

Administrator. 

(2) Parties may file one brief on 

review to the Administrator or rely on 

their post-hearing briefs to the Chief 

Counsel’s office. Briefs on review shall 

be filed not later than 10 days after 

service of the notice of review. Filing 

and service of briefs on review shall be 

by personal delivery consistent with 

§ 604.30 and § 604.31. 

(3) The Administrator issues a final 

agency decision and order within 30 

days of the due date of the briefs on 

review. If the Administrator finds that 

the respondent is not in compliance 

with this part, the final agency order 

shall include a statement of corrective 

action, if appropriate, and identify 

remedies. 

(b) If the Administrator takes review 

on the Administrator’s own motion, the 

decision of the Chief Counsel is stayed 

pending a final decision by the 

Administrator. 

Subpart K—Judicial Review 

§ 604.50 Judicial review of a final decision 

and order. 

(a) A person may seek judicial review 

in an appropriate United States District 

Court of a final decision and order of the 

Administrator as provided in 5 U.S.C. 

701–706. A party seeking judicial 

review of a final decision and order 

shall file a petition for review with the 

Court not later than 60 days after a final 

decision and order is effective. 

(b) The following do not constitute 

final decisions and orders subject to 

judicial review: 

(1) FTA’s decision to dismiss a 

complaint as set forth in § 604.29; 

(2) A recommended decision issued 

by a PO at the conclusion of a hearing; 

or 

(3) A Chief Counsel decision that 

becomes the final decision of the 

Administrator because it was not 

appealed within the stated timeframes. 

Appendix A to Part 604—Listing of 

Human Service Federal Financial 

Assistance Programs 

FEDERAL PROGRAMS PROVIDING TRANSPORTATION ASSISTANCE

1 ..... Food Stamp, Employment and Training Program.Food and Nutrition Service ........................... Department of Agriculture. 

2 ..... Voluntary Public School Choice ................... Office of Innovation and Improvement ......... Department of Education. 

3 ..... Assistance for Education of All Children with 

Disabilities—IDEA.

Office of Special Education and Rehabilitative Services.Department of Education. 

4 ..... Centers for Independent Living .................... Office of Special Education and Rehabilitative Services.Department of Education. 

5 ..... Independent Living for Older Individuals 

Who Are Blind.

Office of Special Education and Rehabilitative Services.Department of Education. 

6 ..... Independent Living State Grants .................. Office of Special Education and Rehabilitative Services.Department of Education. 

7 ..... Supported Employment Services for Individuals with Most Significant Disabilities.Office of Special Education and Rehabilitative Services.Department of Education. 

8 ..... Vocational Rehabilitative Grants .................. Office of Special Education and Rehabilitative Services.Department of Education. 

9 ..... Social Service Block Grant ........................... Administration for Children and Families ..... Department of Health and Human Services. 

10 ... Child Care and Development Fund .............. Administration for Children and Families ..... Department of Health and Human Services. 

11 ... Head Start ..................................................... Administration for Children and Families ..... Department of Health and Human Services. 

12 ... Refugee and Entrant Assistance Discretionary Grants.Administration for Children and Families ..... Department of Health and Human Services. 

13 ... Refugee and Entrant Assistance State Administered Programs.Administration for Children and Families ..... Department of Health and Human Services. 

14 ... Refugee and Entrant Targeted Assistance .. Administration for Children and Families ..... Department of Health and Human Services. 

15 ... Refugee and Entrant Assistance Voluntary 

Agency Programs.

Administration for Children and Families ..... Department of Health and Human Services. 

16 ... State Development Disabilities Council and 

Protection & Advocacy.

Administration for Children and Families ..... Department of Health and Human Services. 

17 ... Temporary Assistance to Needy Families .... Administration for Children and Families ..... Department of Health and Human Services. 

18 ... Community Services Block Grant ................. Administration for Children and Families ..... Department of Health and Human Services. 

19 ... Promoting Safe and Stable Families ............ Administration for Children and Families ..... Department of Health and Human Services. 

20 ... Developmental Disabilities Projects of National Significance.Administration for Children and Families ..... Department of Health and Human Services. 


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FEDERAL PROGRAMS PROVIDING TRANSPORTATION ASSISTANCE—Continued 

21 ... Grants for Supportive Services and Senior 

Centers.

Administration on Aging ................................ Department of Health and Human Services. 

22 ... Programs for American Indian, Alaskan Native and Native Hawaii Elders.Administration on Aging ................................ Department of Health and Human Services. 

23 ... Medicaid ........................................................ Centers for Medicaid and Medicare ............. Department of Health and Human Services. 

24 ... State Health Insurance Program .................. Centers for Medicaid and Medicare ............. Department of Health and Human Services. 

25 ... Home and Community Base Waiver ............ Centers for Medicaid and Medicare ............. Department of Health and Human Services. 

26 ... Community Health Centers .......................... Health Resources and Services Administration.Department of Health and Human Services. 

27 ... Healthy Communities .................................... Health Resources and Services Administration.Department of Health and Human Services. 

28 ... HIV Care Formula Program .......................... Health Resources and Services Administration.Department of Health and Human Services. 

29 ... Maternal and Child Health Block Grant ........ Health Resources and Services Administration.Department of Health and Human Services. 

30 ... Rural Health Care Network .......................... Health Resources and Services Administration.Department of Health and Human Services. 

31 ... Rural Health Care Outreach Program .......... Health Resources and Services Administration.Department of Health and Human Services. 

32 ... Health Start Initiative .................................... Health Resources and Services Administration.Department of Health and Human Services. 

33 ... Ryan White Care Act Programs ................... Health Resources and Services Administration.Department of Health and Human Services. 

34 ... Substance Abuse Prevention and Treatment 

Block Grant.

Substance Abuse and Mental Health Services Administration.Department of Health and Human Services. 

35 ... Prevention and Texas Block Grant .............. Substance Abuse and Mental Health Services Administration.Department of Health and Human Services. 

36 ... Community Development Block Grant ......... Community Planning and Development ....... Department of Housing and Urban Development. 

37 ... Housing Opportunities for Persons with 

AIDS.

Community Planning and Development ....... Department of Housing and Urban Development. 

38 ... Supportive Housing Program ....................... Community Planning and Development ....... Department of Housing and Urban Development. 

39 ... Revitalization of Severely Distressed Public 

Housing.

Public and Indian Housing ............................ Department of Housing and Urban Development. 

40 ... Indian Employment Assistance .................... Bureau of Indian Affairs ................................ Department of the Interior. 

41 ... Indian Employment, Training, and Related 

Services.

Bureau of Indian Affairs ................................ Department of the Interior. 

42 ... Black Lung Benefits ...................................... Employment Standards Administration ........ Department of Labor. 

43 ... Senior Community Services Employment 

Program.

Employment Standards Administration ........ Department of Labor. 

44 ... Job Corps ..................................................... Employment and Training Administration ..... Department of Labor. 

45 ... Migrant and Seasonal Farm Worker ............ Employment and Training Administration ..... Department of Labor. 

46 ... Native American Employment and Training Employment and Training Administration ..... Department of Labor. 

47 ... Welfare to Work Grants for Tribes ............... Employment and Training Administration ..... Department of Labor. 

48 ... Welfare to Work for States and Locals ........ Employment and Training Administration ..... Department of Labor. 

49 ... Work Incentive Grants .................................. Employment and Training Administration ..... Department of Labor. 

50 ... Workforce Investment Act Adult Services 

Program.

Employment and Training Administration ..... Department of Labor. 

51 ... Workforce Investment Act Adult Dislocated 

Worker Program.

Employment and Training Administration ..... Department of Labor. 

52 ... Workforce Investment Act Youth Activities 

Program.

Employment and Training Administration ..... Department of Labor. 

53 ... Homeless Veterans Reintegration Program Veterans Employment & Training Service ... Department of Labor. 

54 ... Veterans Employment Program ................... Veterans Employment & Training Service ... Department of Labor. 

55 ... Elderly and Persons with Disability .............. Federal Transit Administration ...................... Department of Transportation. 

56 ... New Freedom Program ................................ Federal Transit Administration ...................... Department of Transportation. 

57 ... Job Access and Reverse Commute Program.Federal Transit Administration ...................... Department of Transportation. 

58 ... Non-Urbanized Area Program ...................... Federal Transit Administration ...................... Department of Transportation. 

59 ... Capital Discretionary Program ...................... Federal Transit Administration ...................... Department of Transportation. 

60 ... Urbanized Area Formula Program ............... Federal Transit Administration ...................... Department of Transportation. 

61 ... Automobiles and Adaptive Equipment ......... Veterans Benefits Administration ................. Department of Veterans Affairs. 

62 ... Homeless Provider Grants ........................... Veterans Health Administration .................... Department of Veterans Affairs. 

63 ... Veterans Medical Care Benefits ................... Veterans Health Administration .................... Department of Veterans Affairs. 

64 ... Ticket to Work Program ................................ Social Security Administration ...................... Department of Veterans Affairs. 


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Appendix B to Part 604—Basis for 

Removal From Charter Registration 

Web Site 

The following is an explanation of terms 

contained in Section 604.27(d) concerning 

reasons for which FTA may remove a private 

charter operator or a qualified human service 

from the FTA charter registration Web site. 

What is bad faith? 

Bad faith is the actual or constructive fraud 

or a design to mislead or deceive another or 

a neglect or refusal to fulfill a duty or 

contractual obligation. It is not an honest 

mistake. Black’s Law Dictionary, Revised 

Fourth Edition, West Publishing Company, 

St. Paul, Minn., 1968. 

For example, it would be bad faith for a 

registered charter provider to respond to a 

recipient’s notification to registered charter 

providers of a charter service opportunity 

stating that it would provide the service with 

no actual intent to perform the charter 

service. It would not be bad faith for a 

registered charter operator to fail to provide 

charter service in response to a recipient’s 

notification when it honestly mistook the 

date, place or time the service was to be 

provided. 

What is fraud? 

Fraud is the suggestion or assertion of a 

fact that is not true, by one who has no 

reasonable ground for believing it to be true; 

the suppression of a fact by one who is 

bound to disclose it; one who gives 

information of other facts which are likely to 

mislead; or a promise made without any 

intention of performing it. Black’s Law 

Dictionary, Revised Fourth Edition, West 

Publishing Company, St. Paul, Minn., 1968. 

Examples of fraud include but are not 

limited to: (1) A registered charter operator 

indicates that it has a current state or Federal 

safety certification when it knows that it does 

not in fact have one; (2) a broker that owns 

no charter vehicles registers as a registered 

charter provider; (3) a registered charter 

provider intentionally misrepresents its legal 

geographic service area. 

What is a lapse of insurance? 

A lapse of insurance occurs when there is 

no policy of insurance is in place. This may 

occur when there has been default in 

payment of premiums on an insurance policy 

and the policy is no longer in force. In 

addition, no other policy of insurance has 

taken its place. 

Black’s Law Dictionary, Revised Fourth 

Edition, West Publishing Company, St. Paul, 

Minn., 1968. 

What is a lapse of other documentation? 

A lapse of other documentation means for 

example, but is not limited to, failure to have 

or loss or revocation of business license, 

operating authority, failure to notify of 

current company name, address, phone 

number, e-mail address and facsimile 

number, failure to have a current state or 

Federal safety certification, or failure to 

provide accurate Federal of state motor 

carrier identifying number. 

Black’s Law Dictionary, Revised Fourth 

Edition, West Publishing Company, St. Paul, 

Minn., 1968. 

What is a complaint that does not state a 

claim that warrants an investigation or 

further action by FTA? 

A complaint is a document describing a 

specific instance that allegedly constitutes a 

violation of the charter service regulations set 

forth in 49 CFR 604.28. More than one 

complaint may be contained in the same 

document. A complaint does not state a 

claim that warrants investigation when the 

allegations made in the complaint, without 

considering any extraneous material or 

matter, do not raise a genuine issue as to any 

material question of fact, and based on the 

undisputed facts stated in the complaint, 

there is no violation of the charter service 

statute or regulation as a matter of law. Based 

on Federal Rules of Civil Procedure, Rule 

56(c). 

Examples of complaints that would not 

warrant an investigation or further action by 

FTA include but are no limited to: (1) A 

complaint against a public transit agency that 

does not receive FTA funding; (2) a 

complaint brought against a public transit 

agency by a private charter operator that is 

neither a registered charter provider nor its 

duly authorized representative; (3) a 

complaint that gives no information as to 

when or where the alleged prohibited charter 

service took place. 

Appendix C to Part 604—Charter 

Service Questions and Answers 

The following questions were taken from 

comments submitted to the Notice of 

Proposed Rulemaking. Some questions have 

been modified slightly from the original text. 

(a) Applicability 

(1) Q: How do I know if these charter 

regulations apply to my transit agency? 

A: If your transit agency accepts FTA 

financial assistance, the charter regulations 

probably apply. Your next step is to look at 

the exemptions contained in section 604.2 

(‘‘Applicability’’). If none of these 

exemptions apply, look at the definition of 

charter service contained in section 604.3 

(‘‘Definitions’’). Determine if the activity your 

agency is about to engage in fits within that 

definition. If not, then the charter regulations 

do not apply. If the activity does fit within 

the definition of charter service, then you 

need to determine whether the activity fits 

within one of the exceptions contained in 

subpart B (‘‘Exceptions’’). Remember that you 

may not provide the service if a registered 

charter provider indicates an interest in 

providing the service. This is true even if the 

registered charter provider does not 

ultimately reach an agreement with the 

customer. 

(2) Q: How are registered private charter 

providers identified? Is there some kind of 

proof requirement that charter operators can 

actually provide service to a particular area? 

Or, do charter operators have to have a 

history of providing service to the area they 

claim to serve? 

A: A registered charter provider is a private 

operator who wishes to receive notification 

of pending charter service requests directed 

to public transit agencies and has registered 

on FTA’s charter registration Web site. When 

registering, charter providers are required to 

provide specific information, including areas 

served. They are not required to provide 

proof of such service. Additionally, the entire 

registration process is a self-certification 

process; FTA does not confirm the 

representations or information that the 

registered charter provider provides. Finally, 

a registered charter provider also does not 

have to demonstrate a history of providing 

service in the areas it claims to serve. 

(3) Q: Is there any geographical limitation 

on where a private charter operator can 

register? 

A: No. There is no geographical limitation 

on which areas a private charter operator 

may register. This means a private charter 

operator may register for several states or 

across the United States. If a registered 

charter provider, however, indicates interest 

in providing charter service to a particular 

customer and fails to negotiate in good faith 

with the customer, and a public transit 

agency was willing to provide the service, 

then the public transit agency can file a 

complaint under 49 CFR section 604.26 

against the registered charter provider. 

(4) Q: Who is considered a ‘‘private charter 

operator?’’ What are the criteria to establish 

that classification? 

A: A ‘‘private charter operator’’ is any 

private, for-profit entity (i.e., individual, 

group or company) that provides chartered 

transportation on a regular basis with its own 

equipment (e.g., bus and/or van). 

(5) Q: Is there a definition of ‘‘geographic 

service area?’’

A: Yes. Geographic service area is defined 

under 49 CFR section 604.3(j) as, ‘‘the entire 

area in which a recipient is authorized to 

provide public transportation service under 

appropriate local, state and Federal law.’’

(6) Q: Do charter service hours include 

time spent waiting for passengers where the 

vehicle is not available for other services? 

A: Yes. Charter service hours include both 

time spent transporting passengers and time 

spent waiting for passengers. Charter service 

hours also include ‘‘deadhead’’ hours which 

is the time spent getting from the garage to 

the origin of the trip and then the time spent 

from the trip’s ending destination back to the 

garage, since the vehicle is unavailable 

during that time period as well. 

(7) Q: Qualified Human Service 

Organizations (QHSOs) that do not receive 

funds from Federal programs listed in 

Appendix A are required to certify that their 

federal funds include funding for 

transportation. However, most Federal funds 

are passed through one or more levels of state 

and local government, so how can we be 

certain what the original purposes of the 

Federal funds were? 

A: The regulation, 49 CFR 604.15(b), has 

been modified. That provision no longer 

requires QHSOs to certify that their funding 

included funding for transportation. 

(8) Q: What is the status of sub-grantees 

and entities with equipment and operations 

not assisted with federal funds? 

A: The regulations do not apply to 

equipment that is fully funded with local 

funds and is stored in a locally funded 


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facility and is maintained with only local 

funds. 

(9) Q: Must a private charter provider that 

provides public transportation services under 

contract or agreement with a public transit 

agency abide by the limitations in the 

proposed rule? 

A: Yes. Private charter providers that 

provide public transportation service under 

contract with a public transit agency are 

covered by the new regulation when they are 

operating FTA funded equipment or services. 

These private charter operators are standing 

in the shoes of the public transit agency, and 

therefore cannot use federally funded 

equipment to provide charter services. This 

does not mean, however, that a private 

charter operator that contracts with a public 

transit agency and uses one of the private 

charter operator’s own vehicles is subject to 

the charter service regulations (see section 

604.2(c)). 

(10) Q: Does the analysis change under 

different contractual scenarios (e.g., turnkey 

operations, operation and maintenance of 

vehicles provided by the public transit 

agency, or operation of contractor owned 

buses maintained in a federally funded 

facility owned by a public transit agency)? 

A: Yes. The regulations, however, only 

apply when the contract is funded with FTA 

funds or the buses are funded with FTA 

funds or the equipment is maintained in an 

FTA funded facility. 

(11) Q: May a private charter operator that 

qualifies as a sub-grantee of a state, under an 

FTA-administered program, use vehicles 

purchased with federal assistance to provide 

private charter services?’’

A: It depends. A private charter operator 

that receives FTA assistance can use FTAfunded equipment to provide service for 

program purposes (see section 604.2(e)), but 

not for other charter service. Under the 

provisions of section 604.2(c), however, the 

regulations do not apply to non-FTA funded 

activities of private charter operators that 

receive directly or indirectly FTA financial 

assistance under programs such as sections 

5307, 5309, 5310, 5311, 5316, and 5317. 

Further, an intercity bus operator that 

receives assistance under section 5311(f) to 

provide rural intercity bus service may 

provide charter service using a FTA-funded 

vehicle only if one of the exceptions applies. 

A vehicle equipped with a lift using FTA 

assistance under section 3038 of TEA–21 

may be used for charter service. 

(12) Q: Is there an emergency charter 

exception for ‘actual, imminent or 

anticipated possibility of injury, loss of life, 

or loss of property?’ For instance, there could 

be a poison gas plume or threat of one from 

an industrial accident or railcar derailment. 

A transit agency could be called to do a rapid 

evacuation of an apartment, hospital, school, 

elder care facility or some other facility 

requiring group or individual evacuation. 

Must the public transit agencies wait for the 

Administrator to declare this incident an 

event of ‘regional or national significance’ so 

that transit buses can be used? 

A: Yes, there is an exception for 

emergencies. Section 604.2(f) contains an 

exemption that allows for public transit 

agencies to respond to emergencies that last 

fewer than 45 days. If an emergency lasts 

longer than 45 days, the public transit agency 

must follow the procedures set out in subpart 

D of 49 CFR part 601. The Administrator 

does not declare an emergency. Rather, the 

President, Governor, or Mayor declares the 

emergency. 

(13) Q: If an emergency is exactly 45 days 

long, is the emergency services exception 

still applicable? 

A: Yes. If the emergency lasts exactly 45 

days the emergency services exception is still 

applicable. The regulation refers to calendar 

days, not business days. Therefore, if the 

emergency lasts more than 45 calendar days, 

the public transit agency must follow the 

procedures set out in subpart D of 49 CFR 

part 601. 

(14) Q: Do emergency situations include 

matters of security—e.g., when the Secret 

Service requests vehicles with no undervehicle luggage compartments? 

A: No. Situations involving the Secret 

Service would fall under the government 

officials section of the regulation (49 CFR 

section 604.7), which allows up to 80 hours 

annually of charter service to government 

officials on official government business, 

which can include non-transit purposes. 

(15) Q: Are rural transit operators (section 

5311) exempt from the rule? What about 

recipients of 5310 vehicles or JARC or New 

Freedom grants? 

A: Recipients under section 5311, 5310, 

5316, and 5317 are not subject to the charter 

rule when using FTA-funded vehicles to 

provide public transportation or coordinated 

human service transportation or to serve 

groups of individuals with disabilities, the 

elderly, or low income individuals. The 

charter rule does apply, however, if the FTA 

recipient wants to provide other charter 

service using FTA-funded or maintained 

vehicles. A rural transit operator may provide 

other charter service only under the 

exemptions/exceptions contained in the rule. 

(b) Exemptions 

(16) Q: Does the exemption of demand 

response service from the definition of 

charter service exclude rural and small urban 

systems entirely? 

A: No. The exemption of demand response 

service from the definition of charter service 

is intended to exclude service provided to 

individuals, as opposed to a group, who 

request service such as paratransit service. In 

addition, the exception contained in section 

604.7 does not include service provided to 

QHSOs (organizations providing service to 

persons with disabilities, low income 

individuals, and the elderly). 

(17) Q: Is there an expedited process to 

obtain the Administrator’s decision and 

signature for time sensitive events so that 

there could be sufficient time to plan and 

implement service? 

A: Petitions to the Administrator for events 

of regional or national significance will be 

processed as quickly as practicable. 

(c) Definitions 

(18) Q: If a transit agency provides service 

that is irregular or on a limited basis for an 

exclusive group of individuals, but provides 

the service free of charge, is the service 

exempt from the charter regulation? 

A: Yes. So long as the transit agency does 

not charge a premium fare for the service and 

there is no third party paying for the service 

in whole or in part. 

(19) Q: Does ‘‘qualified human service 

agency’’ include any non-profit entity that 

provides services to the disabled, or 

economically disadvantaged without 

reference to age? 

A: Yes, so long as the QHSO either receives 

funding from one of the programs listed in 

Appendix A or registers as a QHSO on the 

FTA charter Web site. Under section 604.7, 

a recipient may provide charter service to 

entities that meet the definition of ‘‘qualified 

human service organization.’’ This includes 

organizations that serve persons who qualify 

for human service or transportation-related 

programs or services due to a disability, 

income or advanced age. All three are not 

required, however, so an organization may 

qualify as a QHSO but serve only persons 

with low income. 

(20) Q: Is it charter service when the local 

transit authority provides event or fair 

service, that is open to the public, with or 

without charge, where the transit authority 

determines the routes and times and it is 

scheduled for the same time every year, but 

the Fair Association subsidizes all or part of 

the costs? 

A: Yes. The fact that the Fair Association 

pays for the service in whole or in part means 

the service is charter under section 

604.3(c)(2). 

(21) Q: What qualifies as indirect financial 

assistance? 

A: The inclusion of ‘‘indirect’’ financial 

assistance as part of the definition of 

‘‘recipient’’ is covers ‘‘subrecipients.’’ We 

modified the definition of recipient in the 

final rule to make this point clear. 

(22) Q: When a transit authority contracts 

out its smaller accessible vehicles for use 

during football games to offer service free of 

charge for persons with disabilities and their 

escorts, is it charter service? 

A: Yes. Under the facts presented, this type 

of service falls under the definition of charter 

service in section 604.3(c)(1). Since 

‘‘contracting out’’ involves a third party, 

exclusive use, and a negotiated price. Thus, 

the transit authority would need to determine 

whether one of the exceptions under subpart 

B applies. 

(23) Q: Is it considered charter service 

when the transit authority funds shuttles to 

and from football games? Regularly 

scheduled service is suspended on these 

days, but this service partially follows the 

existing route and is open to the public at the 

regular fare. 

A: No. If the service provided by the public 

transit agency costs the same as the 

customary fixed route fare and it is open to 

the public then it is not charter. 

(24) Q: Is shuttle service for a one-time 

event considered charter service, if the 

service is open to the public, widely 

advertised, and the itinerary is determined by 

the transit operator? What if the service has 

been provided for decades? 

A: No. So long as the transit authority 

charges its customary fixed route fare for the 

shuttle service, and there is no third party 

involvement, then the service is not charter. 

Widely advertising the service or providing 

the service for decades has no bearing on 

whether the service is charter. 


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(25) Q: Is demand response service 

included in the definition of charter service? 

A: No. Demand response service is 

excluded from the definition of charter 

service under section 604.3(c). 

(26) Q: Is it charter service when a 

university pays a public transit agency a 

fixed charge to allow all faculty, staff, and 

students to ride the transit system for free? 

A: No. So long as the public transit agency 

provides the service on a regular basis, along 

a fixed route, and the service is open to the 

public, the fact that the university may be 

subsidizing student and faculty rides, does 

not convert the service to charter. 

(27) Q: Can a transit agency provide service 

when the customer wants a particular type of 

equipment such as a (rubber tire) trolley bus, 

vintage bus, or CNG bus that the private 

operators do not have? 

A: No. Public transit agencies cannot 

provide charter service solely based on a 

customer’s vehicle preferences. FTA only 

recognizes two categories of vehicles: buses 

and vans. 

(28) Q: What is a ‘‘qualified human service 

organization?’’

A: A qualified human service organization 

is an organization that provides service to 

individuals that qualify for federally 

conducted or assisted transportation related 

programs due to disability, income or 

advanced age. See section 604.3(q). 

(29) Q: If a transit agency has restored or 

preserved historic electric buses for limited, 

special use, are the buses subjected to charter 

bus restrictions? 

A: Yes, if the public transit agency 

purchased the historic electric buses with 

Federal funds or maintains those vehicles in 

federally funded facilities. 

(30) Q: If a grantee operates assets that are 

locally funded are such assets subject to the 

charter regulations? 

A: It depends. If a recipient receives FTA 

funds for operating assistance or stores its 

vehicles in a FTA-funded facility or receives 

indirect FTA assistance, then the charter 

regulations apply. The fact that the vehicle 

was locally funded does not make the 

recipient exempt from the charter 

regulations. If both operating and capital 

funds are locally supplied, then the vehicle 

is not subject to the charter service 

regulations. 

(31) Q: Does ‘‘pattern of violations’’ apply 

from the effective date of the final rule? 

A: Yes. The new definition of pattern of 

violations applies from the effective date of 

the final rule. In other words, in order to 

establish a pattern of violations, the violation 

had to occur after the effective date of the 

final rule. 

(32) Q: What is a violation? Does it require 

an official charter decision or could it also 

include an oversight finding or other means 

of identifying shortcomings? 

A: The new rule defines ‘‘violation’’ as a 

finding by FTA of a failure to comply with 

one of the requirements of this part. A 

finding may be an official charter decision by 

the Chief Counsel or the Administrator. An 

oversight finding would also qualify as an 

FTA finding. 

(33) Q: Are sightseeing trips still not 

charter? 

A: Yes. ‘‘Sightseeing’’ is excluded from the 

definition of ‘‘public transportation’’ under 

49 U.S.C. Section 5302(a)(10). Therefore, it is 

not permissible for public transit agencies to 

provide sightseeing service with FTA-funded 

assets. 

(34) Q: If a transit agency provides vehicles 

to a special event, but the event is open to 

the public, the route is controlled by the 

transit agency, the route is advertised 

similarly to the transit agency’s regular 

routes, the buses are not identified as 

‘‘special service’’ or any other different 

markings, and the vehicles go to and from 

fixed stops in an express bus manner, is this 

charter? 

A: No. So long as the transit authority does 

not charge a premium fare for the service and 

a third party does not pay for the service in 

whole or in part. Advertising or different 

markings on the bus are longer determinative 

of whether the service is charter. 

(35) Q: Does FTA consider wait time as a 

factor, in and of itself, when determining 

whether service is charter service? 

A: No. Wait time is not, in and of itself, 

considered a characteristic of charter service. 

(36) Q: What if there is no ‘‘contract’’ under 

the ‘‘single contract’’ factor and the transit 

agency merely sees a need and provides the 

charter-type service on its own initiative, is 

that charter? 

A: No. If a transit agency sees a need and 

wants to provide service for a limited 

duration at the customary fixed route fare, 

then that service is not charter service. The 

existence of a contract is no longer 

determinative of whether service is charter 

service. 

(d) Exceptions 

(37) Q: If the federal government calls on 

a public transit agency for transit service and 

it will exceed the proposed 80 hour 

limitation, are public operators to refuse this 

service or seek a waiver directly from the 

federal government? 

A: A public transit agency can petition for 

more service hours if it exceeds the 80 hour 

annual allowance. Instructions on how to file 

a petition are more fully described under 49 

CFR Section 604.6(c) of the new regulation. 

Public transit agencies should be mindful 

that the Administrator will grant such 

requests under extraordinary circumstances 

only. 

(38) Q: What kind of events qualify for the 

‘‘Events of Regional and National 

Significance’’ exception? 

A: First, this exception is now located in 

section 604.11 and is called ‘‘Petitions to the 

Administrator.’’ Second, the exception is 

designed to allow public transit agencies to 

participate in providing service to large 

events that will attract a lot of visitors. Some 

examples are: the Kentucky Derby, the 

Indianapolis 500, a bridge opening, or a new 

transit facility opening. If a transit authority 

is unsure whether a particular event fits 

within the exception, the transit authority 

may request an Advisory Opinion from FTA 

according to section 604.17. 

(39) Q: What should a transit agency do 

when it is in the process now of planning for 

an event of regional significance? Will the 

new rules terminate these plans? 

A: The new rule will impact a transit 

authority’s planning process for an event of 

regional significance. Any service provided 

by the transit authority after the effective date 

of the rule—April 30, 2008—is subject to the 

provisions of the new rule. 

(40) Q: What can a public transit agency do 

if there is a time sensitive event in which the 

agency does not have time to consult with all 

the private charter operators in their area? 

For example, the presidential inauguration. 

A: Section 604.11 provides a process to 

petition the FTA Administrator for 

permission to provide service for a unique 

and time sensitive event. A presidential 

inauguration, however, is not a good example 

of a unique and time sensitive event. A 

presidential inauguration is an event with 

substantial advance planning and a transit 

agency should have time to contact private 

operators. 

(41) Q: How should a public transit agency 

handle the situation of a regional or 

nationally significant event when there is a 

requirement to plan significant events (e.g., 

the Super Bowl) many years in advance long 

before the list of registered charter service 

providers is compiled? 

A: If the transit agency plans to provide 

service to an event of regional or national 

significance after the effective date of the 

rule—April 30, 2008—then that service is 

subject to the requirements of the new rule. 

(42) Q: Does the hardship exception apply 

to small urban operators? 

A: Yes. Under section 604.11, the hardship 

exception applies to non-urbanized areas 

under 50,000 in population or a small 

urbanized area under 200,000 in population. 

(e) Notice 

(43) Q: May a transit agency indicate in the 

notice that goes out to registered charter 

providers that the customer requested 

specific equipment? 

A: No. In terms of type of vehicles, the 

notice can include whether the customer 

needs a bus or a van. The registered charter 

provider, when it contacts the customer will 

learn of the specific customer needs. At that 

time, the registered charter provider can 

determine whether to seek out the 

specialized equipment from other private 

charter operators or a public transit agency. 

(44) Q: Must a public transit agency 

provide notice of all potential charter trips to 

registered charter providers? 

A: No. A public transit agency needs to 

provide notice only for charter trips that it is 

interested in providing. If an exemption or 

one of the exceptions applies, then the public 

transit would, after providing the service, 

record the service as required by section 

604.12. 

(45) Q: What does ‘‘notifying private 

operators’’ entail? What actions are to be 

taken when a notification e-mail is 

undeliverable? Is it sufficient to provide 

phone numbers of private operators when 

people call in for charter service? 

A: Only ‘‘registered charter providers’’

need to be contacted. In order to qualify as 

a ‘‘registered charter provider’’ the 

information provided, including contact 

information, must be valid. If the e-mail is 

undeliverable, then the notice should be 

faxed to the registered charter provider. If the 

public transit agency declines to provide the 

service to the customer, then they should 


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refer the customer to the FTA charter 

registration Web site. It is not necessary to 

provide the customer with the registered 

charter provider’s phone number if the 

public transit agency refers the customer to 

the charter registration Web site. 

(46) Q: May a recipient provide service that 

allows customers to park at a distant 

location, like a museum, and then have a 

transit vehicle take them to a sporting event 

for a fare that is higher than the normal fixed 

route fare? May a recipient prevent a private 

charter operator from providing a similar 

service from the same starting point to the 

same destination? 

A: No. In this case, since the recipient 

charges a premium fare for the service, it 

meets the definition of charter. In order to 

provide the service, the recipient must give 

notice to registered charter providers in 

accordance with section 604.14. A recipient 

may not prevent a private charter operator 

from providing a similar service. This is true 

whether or not the private charter operator is 

registered on the FTA Charter Registration 

Web site. 

(f) Complaint & Investigation Process 

(47) Q: May a trade association or other 

operators that are unable to provide 

requested charter service have the right to file 

a complaint under the new rule? 

A: Yes. A registered charter operator or its 

duly authorized representative, who can 

include a trade association, may file a 

complaint under section 604.26(a). Under the 

new rule, a private charter operator that is 

not registered with FTA’s charter registration 

Web site may not file a complaint. 

(48) Q: Is there a time limit for making 

complaints? 

A: Yes. Complaints must be filed within 90 

days of the alleged unauthorized charter 

service. 

(49) Q: Are there examples of the likely 

remedies FTA may impose for a violation of 

the charter service regulations? 

A: Yes. Appendix D contains a matrix of 

likely remedies that FTA may impose for a 

violation of the charter service regulations. 

(50) Q: When a complaint is filed, who is 

responsible for arbitration or litigation costs? 

A: FTA will pay for the presiding official 

and the facility for the hearing, if necessary. 

Each party involved in the litigation is 

responsible for its own litigation costs. 

(51) Q: What affirmative defenses might be 

available in the complaint process? 

A: An affirmative defense to a complaint 

could state the applicability of one of the 

exceptions such as 49 CFR Section 604.6 

which states that the service that was 

provided was within the allowable 80 hours 

of government official service. 

(52) Q: May a state waive participation in 

the complaint proceedings and forward the 

complaint directly to FTA after initial receipt 

and review? 

A: A state is no longer involved in the 

complaint process, and, therefore, no waiver 

is necessary. In order for a complaint to be 

filed, it must be filed directly with the Office 

of the Chief Counsel. 

(53) Q: What can a transit agency do if it 

believes that a private provider is not 

bargaining in good faith with a group and 

responds to a notice with a price or terms 

that are not acceptable to that group? 

A: If a transit agency believes that a 

registered charter provider is not bargaining 

in good faith, the transit agency may file a 

complaint for removal from FTA’s Charter 

Registration Web site. 

(54) Q: What actions can a private charter 

operator take when it becomes aware of a 

transit agency’s plan to engage in charter 

service just before the date of the charter? 

A: As soon as a registered charter provider 

becomes aware of an upcoming charter event 

that it was not contacted about, then it 

should request an advisory opinion and cease 

and desist order. If the service has already 

occurred, then the registered charter provider 

may file a complaint. 

(55) Q: When a registered charter provider 

indicates that there are no privately owned 

vehicles available for lease, must the public 

transit agency investigate independently 

whether the representation by the registered 

charter provider is accurate? 

A: No. The public transit agency is not 

required to investigate independently 

whether the registered charter provider’s 

representation is accurate. Rather, the public 

transit agency need only confirm that the 

number of vehicles owned by all registered 

charter providers in the geographic service 

area is consistent with the registered charter 

provider’s representation. 

(56) Q: Who qualifies as a presiding 

official, what are the duties, and what other 

limitations are imposed? 

A: A presiding official will have training 

and/or experience in conducting hearings. 

More important, the person may not have any 

conflicts of interest or previous contact with 

the parties concerning the issue in the 

proceeding. A presiding official’s duties 

include, but are not limited to, convening a 

hearing, issuing orders, ruling on motions, 

and drafting recommended decisions. 

(57) Q: What recourse does a transit 

operator have when a registered charter 

provider indicates interest in providing the 

charter service set out in the notice and then 

does not do so? 

A: A transit operator can and should file 

a complaint for removal against the registered 

charter provider. This notifies FTA of the 

registered charter provider’s alleged actions. 

FTA will then investigate the allegations and 

potentially remove the registered charter 

provider from the registration list. 

(58) Q: Are there any measures to regulate 

who is considered a registered charter 

provider? And, are there any penalties for 

those that register and actually are not in a 

position to perform the needed services—for 

example an individual who owns a taxicab. 

A: Yes. Through the self-registration 

process, a registered charter provider certifies 

that the information it provides on the 

charter registration Web site is true and 

accurate. The penalty for providing 

inaccurate or untrue information is removal 

from the registration Web site and possibly 

criminal penalties under 18 U.S.C. 1001. 

(59) Q: If a customer hosts a large 

community event and the public transit 

agency cannot provide service because of the 

charter regulations and private operators will 

not provide service because the payment is 

not sufficient, is there any alternative means 

or does the service not get provided at all? 

A: A public transit agency may provide the 

service if, after providing the notice required 

in section 604.14, no registered charter 

providers in the transit agency’s geographic 

service area are interested in providing the 

service. 

(60) Q: What will result if a registered 

charter operator cannot actually provide the 

service, but responds to a recipient’s notice 

anyway? 

A: If a registered charter provider responds 

to a notice, then it is expected to negotiate 

in good faith with the customer to provide 

the service. If a registered charter provider 

vindictively responds to a notice in order to 

prevent a public transit agency from 

providing the service, then that registered 

charter provider may be subject to a 

complaint for removal from the charter 

registration Web site. 

(61) Q: What method will the decision 

maker employ in determining the penalty for 

violating the charter regulations? 

A: Remedies will be based upon the facts 

of the situation, including but not limited to, 

the extent of deviation from the regulations 

and the economic benefit from providing the 

charter service. See section 604.47 and 

Appendix D for more details. 

(62) Q: Can multiple violations in a single 

finding stemming from a single complaint 

constitute a pattern of violations? 

A: Yes. A pattern of violations is defined 

as more than one finding of unauthorized 

charter service under this part by FTA 

beginning with the most recent finding of 

unauthorized charter service and looking 

back over a period not to exceed 72 months. 

While a single complaint may contain several 

violations, the complaint must contain more 

than a single event that included 

unauthorized charter service in order to 

establish a pattern of violations. 

(g) Recordkeeping 

(63) Q: What if the public transit provider 

does not have sufficient time to evaluate a 

request and make sure that all the 

information is complete before notifying the 

registered private charter companies? 

A: A recipient should wait to provide 

notice that is consistent with 49 CFR Section 

604.14. 

(h) Miscellaneous 

(64) Q: Are body-on-van-chassis vehicles 

classified as buses or vans under this 

provision? 

A: Body-on-van-chassis vehicles are treated 

as vans under the regulation. 

(65) Q: Are there adequate provisions to 

ensure that the registry site will be 

maintained in such a way that carriers 

provide evidence of insurance? 

A: Registered charter providers are 

required to certify that they have insurance 

but are not required to provide evidence of 

insurance. If there is information that 

indicates the provider has provided a false 

certification, then it can be subject to 

criminal penalties under 18 U.S.C. 1001 and 

removed from the FTA Charter Registration 

Web site. 

(66) Q: Will the registration Web site be 

fully functional and grantees receive training 

on how to use the Web site before the rule’s 

effective date? 

A: Yes. The Web site will be fully 

functional before the rule’s effective date. A 


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Federal Register / Vol. 73, No. 9 / Monday, January 14, 2008 / Rules and Regulations 2361 

training manual will also be distributed 

before the effective date. FTA intends to also 

do a roll-out of the regulation prior to the 

effective date of the final rule. 

(67) Q: When a new operator registers, may 

recipients continue under existing 

contractual agreements for charter service? 

A: Yes. If the contract was signed before 

the new private operator registered, the 

arrangement can continue for up to 90 days. 

During that 90 day period, however, the 

public transit agency must enter into an 

agreement with the new registrant. If not, the 

transit agency must terminate the existing 

agreement for all registered charter providers. 

(68) Q: Do FTA’s attorneys have the 

necessary training to serve as administrative 

law judges and makes rulings on motions, a 

task that heretofore has not been a part of the 

day-to-day activities of regional counsel? 

A: Yes. FTA attorneys who have the 

delegated responsibility to serve as a 

Presiding Official may rule on motions and 

will possess the necessary qualifications to 

carry out their delegated tasks and 

responsibilities. 

(69) Q: Must a public transit agency 

continue to serve as the lead for events of 

regional or national significance, if after 

consultation with all registered charter 

providers in its geographic service area, 

registered charter providers have enough 

vehicles to provide all of the service to the 

event? 

A. No. If after consultation with registered 

charter providers and there is no need for the 

public transit vehicles, then the public transit 

agency may decline to serve as the lead and 

allow the registered charter providers to work 

directly with event organizers. Alternatively, 

the public transit entity may retain the lead 

and continue to coordinate with event 

organizers and registered charter providers. 

Appendix D to Part 604—Matrix of 

Remedies for Violations 

Remedy Assessment Matrix: 

EXTENT OF DEVIATION FROM REGULATORY REQUIREMENTS

Major Moderate Minor 

Major Economic Benefit ................. $25,000/violation to 20,000 .......... $19,999/violation to 15,000 .......... $14,999/violation to 11,000. 

Moderate ........................................ $10,999/violation to 8,000 ............ $7,999/violation to 5,000 .............. $4,999/violation to 3,000. 

Minor .............................................. $2,999/violation to 1,500 .............. $1,499/violation to 500 ................. $499/violation to 100. 

FTA’s Remedy Policy: 

—This remedy policy applies to decisions by 

the Chief Counsel, Presiding Officials, and 

final determinations by the Administrator. 

—Remedy calculation is based on the 

following elements: 

(1) The nature and circumstances of the 

violation; 

(2) The extent and gravity of the violation 

(‘‘extent of deviation from regulatory 

requirements’’); 

(3) The revenue earned (‘‘economic 

benefit’’) by providing the charter service; 

(4) The operating budget of the recipient; 

(5) Such other matters as justice may 

require; and 

(6) Whether a recipient provided service 

described in a cease and desist order after 

issuance of such order by the Chief Counsel. 

Issued this 7th day of January, 2008. 

James S. Simpson, 

Administrator. 

[FR Doc. 08–86 Filed 1–8–08; 4:36 pm] 

BILLING CODE 4910–57–P 


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