FTA’s Charter Regulations and Provision of Service Under Contract

1. FTA’s Charter Regulations and Provision of Service Under Contract Presented at the CalACT Autumn Conference Monterey, CA October 6, 2005 Presented by: Rich Garrity Richard Garrity and Associates

2. Presentation Agenda 1. Charter vs. Public Transit: Definitions 2. Guidelines: Provision of Contract Service 3. Charter Rule Exemptions 4. Special Local Circumstances 5. FTA Charter Rule Determinations

3. Overview of Services: Definitions - Charter, Eligible Mass Transportation, and Contract Services

4. Applicability • FTA Recipients Under Sections: • § 5307 • § 5311 • § 5309 • Interstate Transfers

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

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

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

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

9. 49 CFR 604 – Basic Requirement • FTA Recipient Must First Determine If There Are Any Private Charter Operators Willing and Able to Provide the Charter Service Which the Recipient Desires to Provide • If Willing and Able Operators are Found to Exist, the Recipient May Not Provide Charter Service Unless One or More Special Exemptions Apply

10. Eligible Mass Transportation Services • To Assist in Understanding When Contract Services May be Provided, We Must Understand FTA’s Definition of “Eligible Mass Transportation” • This Term is the Same as “Public Transportation”

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

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

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

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

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

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

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

18. Social Service Agency - Definition • While Vast Majority of Complaints Directed at Larger, Fixed Route Transit Systems, Growing Body of Complaints Regarding Contract Services

19. Guidelines for Provision of Service Under Contract

20. Defining Eligible Social Service Agency Contracts • Suggested Guidance to Public Transportation Projects Meet the Three Basic Conditions for Eligible Mass Transportation in a Demand Response Environment

21. Under the Control of the Recipient • Regular and Continuing Service • Control of Schedule • Use of Fully Allocated Costs • Control Over Vehicle Assignment

22. Under the Control of the Recipient • Regular and Continuing Service • Service Provided Throughout The Fiscal Year • Trip Intervals No Less Frequent Than Monthly

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

24. Under the Control of the Recipient • Use of Fully Allocated Cost • Fully Allocated Cost of Operations, Maintenance, Non-Vehicle Maintenance, and Administration

25. Under the Control of the Recipient • Control Over Vehicle Assignment • Transit System, Not Social Service Agency, Assigns Appropriate Vehicles to Runs • Does Not Preclude a Social Service Agency from Requiring Accessible Vehicles

26. Designed to Benefit the Public-at-Large • Consistent with Existing Modal Operations • Service Provided During Normal Span of Operation • Advertising and Marketing Consistent with All Other Services

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

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

29. Fixed Route Example – Not Eligible Mass Transportation

30. Fixed Route Example – Eligible Mass Transportation

31. Approach to Contract Service Planning • Good Sound Judgment • Apply Basic Transit Planning Principles • Integration of General Public Needs with Needs of Contract Users

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

33. Basic Provisions of FTA Charter Regulations

34. Requirements for All Recipients • Annual Submission (with Each Grant Agreement) of an Executed “Charter Agreement” • 49 CFR part 604.7 • May be Incorporated by Reference After First Submission • Certification of Compliance

35. Requirements for Provision of Charter Services • If a Recipient Desires to Provide Any Charter Service Using FTA Equipment or Facilities the Recipient Must First Determine If There Are Any Private Charter Operators Willing and Able to Provide the Charter Service Which the Recipient Desires to Provide

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

37. The Exceptions of 49 CFR part 604.9(b) • No Willing and Able Operators • Provision of Equipment or Service • Service Exceeds Private Operator’s Capacity • Lack of Accessible Equipment • “Special Events” • Generally of National Significance (e.g., the Olympics) • Requires the FTA Administrator’s Approval

38. The Exceptions of 49 CFR part 604.9(b) • Social Service Agency Exception • Must Be a Governmental Entity or a Nonprofit Agency Exempt from Taxation Under Section 501(c)(1), 501(c)(3), 501(c)(43), or 501(c)(19) of the Internal Revenue Code

39. The Exceptions of 49 CFR part 604.9(b) • Social Service Agency Exception (Con’t.) • Conditions: • There Will be a Significant Number of Disabled Passengers; or • The Agency Receives (or is Eligible to Receive) Funding from a List of Federally Sponsored Programs; or • There Will be a Significant Number of Transit Disadvantage Persons on the Trip • Trip is Consistent with the Mission of the Social Service Agency

40. The Exceptions of 49 CFR part 604.9(b) • Social Service Agency Exception (Con’t.) • Charter Trip is Operated Consistent with Title VI, Section 19 of the Acts, and 49 CFR part 27 • Social Service Agency Executes a Certification

41. The Exceptions of 49 CFR part 604.9(b) • Agreement has Been Executed with All Willing and Able Operators that Specifically Allows the Trip

42. Special Exceptions of 49 CFR part 604.9(b) • In Addition to these Five (5) Basic Exceptions, Nonurbanized Area Grantees Have Two Unique, Additional Exceptions: • Rural Economic Hardship Exception • Elderly Exception

43. Special Exceptions of 49 CFR part 604.9(b) • Rural Economic Hardship Exception • Must Petition State DOT • Charter with Private Operator Creates Hardship Because: • Operators Impose Minimum Duration Requirements Pursuant to State Regulation That Exceed the Trip Requirements • Willing Operators are Located Too Far from the Charter Service Area

44. Special Exceptions of 49 CFR part 604.9(b) • Rural Elderly Exception • Must Be a Governmental Entity or a Nonprofit Agency Exempt from Taxation Under Section 501(c)(1), 501(c)(3), 501(c)(43), or 501(c)(19) of the Internal Revenue Code • Fifty (50%) Percent of Passengers Will be Elderly • Trip is Consistent with Agency Mission • Agency Executes Certification

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

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

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

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

49. Procedures for Determining Willing and Able Private Operators

50. Procedures for Determining Will and Able Charter Operators • Requirements • Annual Public Participation Process • Notice in Newspaper • Direct Mail to All Known Private Operators in the Service Area or Any Operator Who Requests the Notice • Sending Notice to UBOA and ABA