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Number 52 42248
11-03-87
ACTION: Notice.
SUMMARY: This notice publishes questions and answers regarding the Urban Mass Transportation Administration's revised charter service regulation, 49 CFR Part 604. Since publication of the final rule on April 13, 1987, UMTA has received numerous questions regarding the application of the regulation. The following frequently asked questions regarding the application of the regulation and UMTA's response to them are published today to provide guidance to recipients of UMTA assistance, private charter operators, and other interested parties. This notice does not amend or in any way affect the regulation. The charter service regulation remains in effect, as published on April 13, 1987.
DATE: The charter service regulation, 49 CFR Part 604, went into effect on May 13, 1987 (52 FR 11916, April 13, 1987).
FOR FURTHER INFORMATION CONTACT: Rita Daguillard, Office of the Chief Counsel, Room 9316, UMTA, 400 Seventh Street, SW., Washington, DC 20590, (202) 366-1936.
TEXT:
SUPPLEMENTARY INFORMATION: UMTA's revised charter service regulation, 49 CFR Part 604, went into effect on May 13, 1987. The principle behind the regulation is that federally funded equipment and facilities should not be used to compete unfairly with private charter operators. The regulation implements sections 3(f) and 12(c)(6) of the Urban Mass Transportation Act of 1964, as amended (49 U.S.C. app. 1602(f) and 1608(c)(6)). The regulation prohibits recipients of UMTA assistance from providing any charter service using UMTA funded equipment or facilities if there is at least one private operator willing and able to provide the charter service. The regulation is subject to five limited exceptions, which are set out at 49 CFR 604.9.
Since publication of the final rule on April 13, 1987, UMTA has received numerous questions regarding the application of the regulation. This notice contains frequently asked questions regarding the application of the regulation and its exceptions and UMTA's response to the questions. They are being published in the Federal Register to provide guidance to recipients of UMTA assistance, private charter operators, and other interested parties. This notice does not amend or in any way affect the regulation. The charter service regulation remains in effect, as published at 52 FR 11916, April 13, 1987.
Applicability
1. Question: To what types of charter operations do UMTA's revised regulations apply?
Answer: The preamble to the regulations, at page 11918, states that they apply only to charter service performed by operators using UMTA funded facilities and equipment. If a recipient sets up a separate company that has only locally funded equipment and facilities and operates these with only local funds, or the recipient is able to maintain separate accounts for its charter operators to show that the charter service is truly a separate division that receives no benefits from the mass transportation division, then the charter rule would not apply.
A subsidiary question is that of the applicability of the rule to any entity, public or private, that receives UMTA assistance through an UMTA recipient. In answering this question, it is necessary to look at the language of the rule's enabling legislation, specifically section 3(f) of the UMT Act, which states that its restrictions apply to the recipient "or any operator of mass transportation equipment" for the recipient. It is UMTA's opinion that this language provides little room for discretion and requires that all entities, public or private, that operate for a recipient must be covered by the rule to the extent that the entity provides charter service using UMTA funded facilities or equipment. Consequently, all operators, whether public or private, under contract or receiving assistance through the recipient, are subject to the charter rule but only to the extent that the operator uses UMTA funded equipment or facilities to provide charter service. In short, the rule treats all operators for a recipient as a recipient to the extent that they stand in the recipient's shoes.
Procedures for Determining if There Are Any Private Willing and Able Operators
2. Question: What is the process by which private operators are determined to be "willing and able" under the regulations?
Answer: The procedure for determining if there are "willing and able" private operators is described in 49 CFR 604.11. If a recipient transit agency was not providing charter service on May 13, 1987, the effective date of the new rule, it must publish a notice at least 60 days before it will begin charter service. If a recipient was providing charter service on the effective date of the rule and desires to continue doing so, it must have completed its public notification process not more than 90 days thereafter, or by August 11, 1987.
To start the process, the recipient must publish the notice in a newspaper within its geographic service area. A copy of the notice must be sent to all private charter operators within the service area and to any private operator that requests it, as well as to the American Bus Association (ABA) and the United Bus Owners of America (UBOA). The distribution to UBOA and the ABA ensures that the notice will be delivered to the largest possible number of private operators. The notice must describe the charter service desired to be performed and must give private operators at least 30 days to submit evidence indicating that they are "willing and able" to perform the service. The notice must not require anything beyond: (1) A statement that the private operator has the desire to provide the service described and the physical capability to do so, and (2) submission of documents showing that it possesses the requisite legal authority. The recipient may cease its review of the evidence submitted by private operators once it has been foreclosed from providing the proposed service, i.e., once it has been determined that there is at least one private operator willing and able to provide the service. The transit agency must notify private operators of its "willing and able" determination within 60 days of the deadline for their submission of evidence.
3. Question: Section 604.11(c) specifies that a grantee's notice of the charter service to be provided must be limited to a description of the days, times of day, geographic area, and categories of revenue vehicle for service. This description may not provide a private operator with sufficient information upon which to base a decision whether or not the private operator is truly willing to provide the service. For a variety of reasons, a private operator may be unwilling or unable to service certain types of clientele. May the content of the notice be expanded in such cases to allow the inclusion of information which would be helpful to the private operator in deciding whether to respond?
Answer: It is UMTA's intention to allow grantees some flexibility in the way that charter services are described. However, a notice must not be worded in a way that would discourage a response from any person who meets the minimum criteria for a willing and able operator. Regardless of how the grantee describes its own service, the grantee must make it clear in the notice that private operators are not required to respond in similar detail. Instead, private operators are required to show only that they have the requisite legal authority and the desire to perform the service plus at least one bus or van. To facilitate a better exchange of information than is possible through the formal notice process, grantees are encouraged to engage private operators in a dialogue through other means as well, such as other written communications, conferences or informal meetings. Grantees may also provide in their notices a telephone number which private operators may call to obtain further information. Through coooperation, it should be possible to ensure that critical consumer needs for charter service will be met.
4. Question: When grantees publish their descriptions of the charter services they wish to provide, can their services be described in terms of trip purposes or certain groups (e.g., Boy Scouts to the ball game)?
Answer: Though the regulations neither specifically permit nor prohibit these descriptions, UMTA encourages their use, since certain trips are of the type that private enterprise traditionally declines to provide. To the extent that such descriptions allow private operators to decide whether they desire to perform a certain trip, they are useful to the "willing and able" determination process.
5. Question: How does a private charter operator demonstrate that it is "willing"?
Answer: In response to the charter notice published by the transit agency, the operator need only express in writing its desire to perform charter service generally in the service area specified by the transit agency. The preamble to the new regulation explains that a private charter operator is considered "willing" even if it refuses to provide charter service to some customers in the affected area.
6. Question: How does a private charter operator demonstrate that it is "able"?
Answer: The charter operator must show two things -- that it has the physical capability of providing the categories of revenue vehicles specified in the notice and that it has the required legal authority to operate charter service in the area where it desires to provide such service.
In order to prove that it is "able" to provide the service, the charter operator does not have to demonstrate that it has any particular capacity level; in other words, a charter operator is as willing and able if it has one bus as it would be if it had one hundred buses. Also, there are only two categories of revenue vehicle that the transit agency can designate in its notice -- buses and vans. Under the UMTA regulations, a bus is a bus whether it is an intercity bus, a transit bus, a school bus, or a trolley bus. A private operator does not have to demonstrate that it has any particular type of bus in order to be considered "able." Finally, the "willing and able" concept is not intended to include any duration limitations; in other words, the fact that a private operator may be required by state regulation to charge for a minimum five hour trip does not mean that it is not "able" to provide for charter of lesser duration.
7. Question: Can brokers be considered "willing and able" private operators?
Answer: No. The preamble to the regulations, at page 11922, specifically states that UMTA has decided not to include brokers in the definition of "willing and able." This is because brokers, who have no equipment of their own, must rely on other parties to provide service. Such an arrangement could result in uncertainty for the customer, since there would never be a guarantee that the broker could provide the necessary equipment. For this reason, UMTA requires that an operator must have at least one bus or van to be determined "willing and able."
8. Question: Can the public authority be held responsible if a "willing and able" private operator is involved in a serious accident and lawsuits are the result?
Answer: When a public authority determines that a private operator is "willing and able," it is merely attesting that the private operator has the requisite type of vehicle and the legal authority necessary for performing charter service. In making its determination, the public authority is not acting as a guarantor of the safety or quality of the private operator's service. Consequently, the transit authority cannot be held responsible for any accident or injury caused by the private operator when performing charters.
9. Question: Can grantees go through the publication process and the determination of whether there is a "willing and able" private operator, more than once a year?
Answer: While the regulations state that the publication process should be an annual one, there are circumstances which would justify more frequent publication. These include cases, such as a suspension of legal authority, in which the private operator is unable to provide service. Grantees who find themselves faced with such situations should repeat the publication process as outlined in § 604.11 of the regulation.
10. Question: What if a private operator retracts its statement that it is willing and able to provide charter service less than a year after the determination is made. Must a recipient repeat the public participation process before resuming charter service?
Answer: If a private operator retracts its willingness to provide charter service less than a year after it was determined willing and able, and no other private operators in the service area have been determined "willing and able," a recipient may resume charter service without re-publishing a notice for the rest of that year only. At the end of this period, if the recipient wishes to continue providing charter service, it must repeat the public participation process to determine if there are any other willing and able operators in the area.
In determining whether there are any other willing and able private operators in their service area, recipients should go back to review all of the responses to their charter notices. If, for instance, a recipient received several responses to its notice but ceased the review process after determining that one operator was willing and able, it should, before resuming charter service, complete the process to ensure that there are no other willing and able operators.
11. Question: May a recipient operate a particular charter trip if all the "willing and able" operators in its service area agree to allow it to do so?
Answer: An UMTA recipient may operate charter trips, even though it has determined that there are "willing and able" private operators in its service area, when there is an agreement to this effect between the recipient and the private operators. The recipient's annual public charter notice must, however, have provided for this type of agreement. If it did not, the grantee must, before undertaking the charter trip in question, amend its charter notice to specifically refer to such agreement. UMTA believes that arrangements of this type are in keeping with the spirit of cooperation between recipients and the private sector that the regulations seek to foster.
12. Question: What if a recipient determines that there is no "willing and able" operator despite clear evidence to the contrary?
Answer: Under 49 CFR 604.13, a recipient has no discretion in making its "willing and able" determination. If a private operator submits documentary evidence that it has the desire to provide service and the ability to supply vehicles, as well as the necessary legal authority, it must automatically be determined "willing and able." Moreover, a recipient may look behind the evidence submitted by a private charter operator only if the recipient has reasonable cause to believe that some or all of it has been falsified. The remedy when a recipient unjustifiably fails to make the "willing and able" determination is a complaint to the UMTA Chief Counsel, who will direct the parties to attempt to resolve the dispute informally, and failing that, will rule on the complaint in approximately 90 days.
13. Question: Must a recipient publish a notice of intention to provide charter service even when it is aware of at least one willing and able private operator within its geographic area?
Answer: It is UMTA's position that a recipient need not publish a notice of its willingness to provide charter service if the recipient is aware of at least one willing and able private provider within its geographic area. Such a recipient, however, may not provide any charter service if it fails to complete the public participation process, except that the recipient may engage in leasing to a private charter operator as provided in the exception at 49 CFR 604.9(b)(2). A recipient that has not conducted a public participation process is not precluded, solely on those grounds, from qualifying for a special events exception as described at 49 CFR 604.9(b)(4). It should be noted, however, that a recipient seeking a hardship exemption under 49 CFR 604.9(b)(3) must provide written notice to all private charter operators it has determined "willing and able," and allow them 30 days to submit written comments on the exemption request. UMTA will not grant a hardship exception until this process is completed.
14. Question: Does a recipient's failure to complete the public participation process constitute sufficient grounds to warrant scrutiny of the recipient's charter activities to a greater degree than might otherwise be required?
Answer: UMTA does not believe that a recipient's failure to carry out a public participation process necessarily warrants greater scrutiny of the recipient's charter activities than the charter activities of a recipient that has completed the public participation process. This is especially true since the only charter activities that a recipient which has not completed the notification process would be allowed to perform are leasing to a private operator which lacks capacity or accessible equipment, or service under a special events exception. Thus, if a recipient is in conformity with the regulations, its charter activities will necessarily be limited. If, however, private associations or operators have reason to believe that any UMTA recipient, whether or not it has completed the public participation process, is engaging in impermissible charter operations, they may monitor such operations and report on them to UMTA, which will investigate and, if need be, take enforcement action.
15. Question: What is UMTA's position with regard to recipients that refuse to follow the public notification process of the regulations because, "we are certain that the type of charter work we do would be of no interest to any private carrier.
Answer: Until a recipient actually engages in charter service in violation of the regulations, there are no grounds for complaint. However, such recipients may not engage in charter service without completing a public participation process, except for leasing their vehicles to a private provider or providing authorized service for special events after obtaining an UMTA waiver in accordance with § 604.9(b)(4) of the regulations.
16. Question: May a recipient hold a public hearing in connection with its public participation process for determining whether there is a willing and able private provider?
Answer: UMTA has no objection to a recipient's decision to hold a public hearing in connection with determining whether there is a willing and able private provider. The hearing, however, must be in addition to and not a substitute for the public notice requirements of section 604.11. Moreover, in order to demonstrate that the hearing was conducted in a fair and equitable manner, the recipient is advised to make a copy of the hearing transcript available to any party that requests it. UMTA believes that the recipient's willingness to consider a private provider's oral assertion that the private provider is willing and able to perform charter service, offers an additional means for determining whether the latter is willing and able. However, § 604(c)(5) of the regulations requires that in addition to a statement of willingness, the private operator must demonstrate that it has the required physical capability and the legal authority to perform charter service. For this reason, it is important that grantees which conduct such hearings complete their review of written submissions from private operators as provided in the regulations.
17. Questions: What if a transit agency simply fails to conduct, or complete, a "willing and able" determination process and continues to provide charter service?
Answer: 49 CFR 604.17 provides that the UMTA Chief Counsel has the authority to order remedies for such violations, including withholding of subsidies. Where there has been a "continuing pattern of violation," the Chief Counsel may bar the recipient from any further Federal transportation aid.
18. Question: When a private operator has been determined to be "willing and able" to provide service, but is actually unwilling or unable to provide a particular charter trip, may an UMTA grantee fill the void and provide the service?
Answer: The grantee may not provide the service unless an exception applies, e.g., the grantee provides service or vehicles through a contract or lease with a private operator who lacks vehicle capacity or accessibility, the grantee provides service with locally funded facilities which have been entirely separated from UMTA-funded ones, the grantee is given a special events exception, etc.
19. Question: Are grantees required to give a member of the public the name of a "willing and able" provider if the public calls the granteee for charter services?
Answer: UMTA does not require granteees to give members of the public who request it the name of a "willing and able" private provider. The intention of the regulation is not to create a list of private operators, but rather to determine if there is a at least one willing and able to provide charter service. UMTA recognizes, however, that this information may be beneficial to the public, and encourages grantees to provide it. Grantees who have a roster of several private providers may use their discretion in determining which names to give to a member of the public who calls. They may give out all, some, or only one of the names on their list of "willing and able" operators. However, UMTA will view any attempt on the part of the recipient to establish an exclusive subcontracting or brokering relationship with or steer customers toward one particular operator, as a contravention of the regulations, and will in such cases take appropriate action.
Exceptions to the Regulations
20. Question: Are there any exceptions under the regulations which permit a recipient to provide charter service with UMTA funded equipment and facilities?
Answer: Yes, 49 CFR 604.9 sets out five limited exceptions to the basic prohibition in the rule. These exceptions, and their limits, are described below.
Exception #1: A recipient may provide charter service to the extent that there are no "willing and able" private operators. This can occur only after the process described above has been completed.
Exception #2: A recipient may enter into a contract to provide charter equipment to a private operator when the operator needs equipment in excess of its capacity.
Service provided by the recipient under this exception must be under contract to a private charter operator, who is responsible for the direction and control of the recipient's equipment while the service is being provided. Also, while the regulation does not prevent the recipient from turning over the charter service that is previously provided directly to one or more private operators, the systematic steering of customers toward one particular operator is against the spirit and intent of the regulation. UMTA would encourage recipients to channel their previous charter business to private operators in a fair and equitable manner.
Another situation discouraged by UMTA is that in which a private operator subrecipient contracts out its charter business to an affiliate that is not entirely separate or independent. This is because the regulations apply to subrecipients of UMTA funds which use UMTA-funded equipment or facilities, just as it does to recipients. The rule does not apply, however, to subrecipients not using UMTA-funded equipment or facilities, or to independent companies operated by subrecipients. In order to ensure that its charter operations are not affected by the prohibition of the rule, a subrecipient should set up an entirely distinct company to handle its charter operations, or at the very least keep separate accounts for its charter business.
Exception #3: This exception allows recipients to contract with private operators to provide "equipment accessible to elderly and handicapped persons" when the private operator does not have such equipment. Again, the contract would never be between the recipient and the customer, but always between the recipient and the private operator. Exception #3 is similar to Exception #2, and the same limitations apply to both.
Exception #4: A recipient in a non-urbanized area (i.e., an area with a population of less than 50,000) may petition UMTA to provide charter service directly when charter service provided by willing and able charter operators would create a hardship on the customer because the private operators "are located too far from the origin of the charter service" or where the private operators must, by State regulation, impose minimum durations longer than the desired trip length. Before any such exception is granted, the recipient must petition the UMTA Chief Counsel to grant such an exception, and give notice of its request for an exception to any private operator it has determined "willing and able." The private operators then have 30 days to submit written comments to the recipient on the request. The question of what is "too far" from the charter point of origin will be decided by the Chief Counsel on a case-by-case basis.
With regard to the minimum duration exception, the important point is that this only applies when minimum duration charges are required by State regulation; however, the exception does not apply if the minimum durations "are the result of an industry practice." Thus, there should be few cases where this exception would apply. Moreover, the exception only applies for charters up to the minimum duration required by State law or regulation.
Exception #5: Recipients may petition the UMTA Administrator for an exception to provide charter service directly for "special events" when the private operators do not have the capacity to provide all necessary service. UMTA has not defined "special events," but intends that it cover only events of an extraordinary and singular nature, such as the Pope's visit or the Pan American Games. Regularly scheduled yearly or periodic events, such as an Independence Day fireworkers display or ham operators' convention, would not qualify for the exception. Any exception granted by the Administrator under this exemption is only good for the particular special event specified.
21. Question: Special events are sometimes planned with less than ninety days advance notice. Will UMTA consider requests for special events exceptions on less than a ninety-day schedule?
Answer: The regulations reflect the congressional directive that certain events of a singular nature be given special consideration. They do not provide for a waiver of the requirement that a petition for a special events exception be submitted at least 90 days prior to the event. However, those events mentioned in the Report of the Senate Committee on Appropriations, i.e., the Pan American Games or visits by foreign dignitaries, were so obvious in nature and occurred so close to the effective date of the Rule that they would not require a ninety-day advance notice. (See, Senate Report 99-423, to accompany H.R. 5205, the Department of Transportation and Related Agencies Appropriations Bill, 1987, 99th Cong. 2d Sess., Aug. 19, 1986, p. 66). UMTA will continue to work with grantees to ensure that adequate charter service is provided for truly special events.
22. Question: If a grantee intends to petition UMTA for an exemption to provide service in a non-urbanized area (section 604.9(b)(3) of the regulation), must the grantee also have complied with the general public notice requirements (section 604.11)?
Answer: Yes, compliance with § 604.11 is a first step for any grantee wanting to provide charter service under the hardship exception of § 604.9(b)(3). The provisions of § 604.11 are designed to enable a grantee to determine whether any private operator is willing and able to provide the desired charter service. If no willing and able operator exists, then the UMTA grantee may provide the service as long as it does not interfere with mass transportation, and the grantee does not need to request a hardship exception. Therefore, the initial inquiry into the availability of willing and able operators is required.
23. Question: Must a grantee comply with the public notice requirements of § 604.11 before seeking a special events exemption under § 604.9(b)(4)?
Answer: No, compliance with § 604.11 is not a prerequisite to obtaining a special events exemption under § 604.9(b)(4). However, UMTA would expect a recipient applying for a special events exception to have at least contacted private operators in their service area to determine to what extent these operators are unable to provide the service in question.
Charter Service
24. Question: When a recipient falls within one of the exceptions described above, may it provide any charter service it chooses as long as it is covered by the exception?
Answer: No, charter services provided under one of the exceptions must be "incidental" charter service. "Incidental" is described as charter service which does not "interfere with or detract from" providing mass transportation service or does not "shorten the mass transportation life of the equipment or facilities" being used.
UMTA has given the following examples of what charter service would not be considered "incidential": 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; and service provided in equipment that is in excess of an UMTA-approved spare ratio. It is important to note that these are examples only, and UMTA will decide what is "incidental" on a case-by-case basis.
25. Question: If the customer insists on a particular type of equipment that the willing and able to private operator does not have, for example, a trolley lookalike, articulated or double-decker bus, may the grantee provide the service?
Answer: The regulation recognizes only two categories of vehicles, i.e., buses or vans. Trolleys, artics, double-deckers and other types of specifically modified equipment are placed in one of these categories and are subject to the same rules as all other equipment. Therefore, the grantee would be able to provide the service only if one of the regulatory exceptions applies.
26. Question: When a grantee is providing charter service with locally funded buses or vans, may the equipment be stored and maintained in UMTA-funded facilities?
Answer: In a recent opinion involving charter operations by the Manchester (NH) Transit Authority, the Chief Counsel stated that under the new charter regulations, if there is a willing and able private provider, a transit authority may not allow its separate charter entity to use, on an incidental basis, the UMTA-funded garage in connection with its charter operations, even if the separate charter service were to pay the transit authority rent and fees for such incidental use. This prohibition is based on the language in 49 CFR 604.9(a), which explicitly states: "To the extent that there is one * * * private operator, the recipient is prohibited from providing charter service with UMTA-funded equipment or facilities * * *" (Emphasis supplied). It should be noted that the term "facilities" in the context of the charter regulations applies to offices and other administrative locales. This rule, however, applies only to the use of facilities by public transit authorities and their charter entities. Thus, if a grantee has excess space in its UMTA-funded garage, it may lease that space to a private operator on an incidental basis.
Moreover, any maintenance expenses incurred by a grantee's separate charter entity must be paid for exclusively out of local funds. Thus, any expense for items such as depreciation, utilities, labor, etc., incurred by the entity in providing charter service must be accounted for separately and not charged to any UMTA grant. To avoid accounting difficulties and possible violations of UMTA regulations, grantees should consider contracting for the maintenance of the locally funded vehicles rather than doing the work in-house.
27. Question: Do the following types of service fall within the definition of "charter service" for the purposes of the regulation:
a. Service that is provided for free but otherwise meets the criteria in the definition of charter?
Answer: Cost is irrelevant in determining whether service is mass transportation or charter service. Thus, service which meets the criteria set by UMTA, i.e., service controlled by the user, not designed to benefit the public at large, and which is provided under a single contract, will be charter regardless of the fact that it is provided for free.
As a general rule, free charter service would be "non-incidential" since it does not recover its fully allocated cost, and could not be performed by an UMTA recipient, even under one of the exceptions to the charter regulations. However, UMTA will consider certain types of free charter service to be "incidental." An example of this would be free service to an economically disadvantaged group when there is no private operator willing and able to perform the service. Since UMTA is concerned about the diversion of mass transit revenues and the reduction in mass transportation life resulting from service provided below cost, it will, when presented with a complaint, consider such service "incidental" charter only in a very limited number of cases.
b. Service that is exclusively for the elderly and handicapped but otherwise meets the definition of charter?
Answer: Exclusive service for the elderly and handicapped, even when provided on a demand responsive basis, is "mass transportation" under the definitions in the UMT Act and is not considered to be charter. It should be noted that to qualify as "exclusive," the service in question must be open to all elderly or handicapped in a particular geographic service area and not restricted to a particular group of elderly or handicapped persons.
c. Service to regularly scheduled but relatively infrequent events (sporting events, annual festivals) that is open door, with the routes and schedules set by the grantee and with fares collected from individuals, whether or not the individual fares are subsidized by a donor?
Answer: No. Such service does not meet the charter criteria of being under a single contract, for a fixed charge, exclusive use, or with an itinerary controlled by a party other than the grantee. However, such services would appear to be excellent candidates for privatization since they may very well be self-supporting without the need for public subsidies. In accordance with UMTA's private enterprise policy, grantees should examine the interest and capability of the private sector in providing the service.
d. Service within a university complex according to routes and schedules requested by the university?Answer: If the service is for the exclusive use of students and the university sets fares and schedules, the service would be charter. However, such service operated by a recipient which sets fares and schedules and is open door, though it serves mainly university students, would be mass transportation.
e. An UMTA recipient proposes to provide the following "group demand" service using federally funded buses. Certain groups, e.g., the handicapped or employees of a common workplace, would contract with the transit authority for the service. Each individual would pay his or her own fare at the recipient's basic rate. The buses would pick up the riders at designated stops and remain in service on whatever routes require them. None of the trips would be devoted to members of a particular group, and anyone else would be free to board the buses. Can this be regarded as "charter service" under the new regulations?
Answer: The service described above would probably be "mass transportation" as defined on page 11920 of the preamble. First, the service is under the control of the recipient, who is responsible for setting the route, rate, schedule, and deciding the equipment to be used. Second, it is open to the public and is not closed door. Anyone wishing to ride the service is free to do so. Moreover, to the extent that the trip is for the benefit of clients of a human service agency and is open door, it would, in accordance with the example provided on page 11920 of the preamble to the regulations, be "mass transportation."
28. Question: How should grantees calculate "mass transit useful life" less "charter life" of vehicles?
Answer: Any reasonable method of calculation is sufficient (e.g., average hours per week, month, or year subtracted from total hours; average miles per week, etc., subtracted from total miles). The calculation does not necessarily have to be done for each particular bus, and averages can be applied to an entire fleet. For instance, a grantee that provides 3 days of charter service per year per bus, would subtract 36 days from the 12-year useful life of each individual bus. Where, however, a transit authority reserves a particular bus or fleet of buses for charter service, it should keep manifests which record the charter life of the vehicles in question. This calculation applies to all buses a grantee is currently using, whether purchased before or after the effective date of the new charter regulations.
29. Question: How should grantees calculate "mass transit useful life" less "charter life" of facilities?
Answer: The "useful life" concept applies only to buses and not to facilities. However, in cases where grantees lease facility space to private bus companies, such leases must be "incidental" to mass transit use. In the case of facility space, this means that in no instance should charter buses have priority over mass transportation buses.
30. Question: Does the charter regulation prohibit peak hour charter?
Answer: Peak hour charter is cited on page 11926 of the preamble as one instance of non-incidental use. It is, however, cited as an example only, and the language of the preamble cannot be interpreted as a prohibition. In a complaint citing peak hour use by an UMTA recipient or subrecipient, UMTA would review the facts and make a case-by-case determination.
31. Question: Are monthly, quarterly, or yearly trips organized by social service groups for their clients, to be considered "charters" or "mass transportation"?
Answer: Such trips would generally be considered charters. However, in the preamble to the new regulations, at page 11920, UMTA has indicated that periodic trips organized by a social service agency can be considered "mass transportation" if they are "open door" and the recipient can put on any rider in addition to the agency's clients. There are many cases which fall in between these two categories, and, in a complaint on the subject, UMTA will examine each case individually. It should be noted, however, that UMTA would consider the insitutition or substantial modification of such service of this sort as an opportunity for the public authority to solicit the participation of the private sector.
32. Question: When a private operator requests buses from a grantee to run a given charter service, what is a grantee's responsibility to assure the circumstances fit the limited exceptions set forth in § 604.9(b)(2)?
Answer: The above-cited regulation allows grantees to contract with private operators only when and to the extent that the private operator lacks equipment that is accessible to the elderly and handicapped or lacks capacity. UMTA will allow its grantees to use their reasonable, good faith judgment as to whether the requirements of the regulations have been met, and, in the absence of apparent fraud or falsified statement, will not require them to look behind a request for the use of their buses by a private operator.
33. Question: Many small transit systems are departments of city or local government rather than separate authorities or commissions. As such, they are occasionally requested by another city department to make a bus available for some use, typically to take members of the city council and staff on a tour of that department's facilities or projects, or some other trip in connection with the department's operations. Would these movements be considered "charters" within the definition of the rule?
Answer: Yes. The trips described above share most of the characteristics of "charter service" provided on page 11919 of the preamble. Specifically, the service is: (1) By bus; (2) to a defined group of people; (3) there are no single contracts between the recipient and individual riders; (4) the patrons have the exclusive use of the bus; (5) the riders have the sole authority to set the destination. Since the regulations do not include an exception for a particular category of customers, such as state entities, a transit authority that wishes to provide service of this type would be obliged to comply with the requirements of the charter regulations.
34. Question: May a recipient provide charter service if it is under court order to do so? Suppose, for instance, that a court issues an order requiring a recipient to provide charter service to transport a jury to view a scene in connection with a court case.
Answer: UMTA's charter regulations prohibit a recipient from providing such service using UMTA-funded facilities or equipment if there is at least one willing and able private operator in its geographic area. If there is one such willing and able private provider, the recipient may perform charter service only if it qualifies for an exception to the regulation and operates the service on an incidental basis. In this case, the recipient might be able to supplement the capacity of a private operator, under the exception set out in 49 CFR 604.9(b)(2).
If the recipient is in a non-urbanized area, there is a possibility that there might be no willing and able private operator, in which case the recipient would be authorized to provide incidental charter service directly to the customer. In addition, a recipient in a non-urbanized area might be eligible for a hardship exception under the terms of 49 CFR 604.9(b)(3). Unless the recipient meets one of the exceptions, it cannot provide charter service without jeopardizing its Federal transit assistance. UMTA presumes that a court would not intentionally issue an order whose implementation might necessarily cause an entity to violate Federal regulations. For this reason, UMTA would urge a court seeking to impose upon a recipient an order to provide charter service, to secure service from a private operator if a private operator has been determined willing and able.
Charter Agreement
35. Question: Are Metropolitan Planning Organizations (MPO's) that pass funds through to transit authorities and other city entities which operate transit services, required to submit a charter agreement to UMTA?
Answer: 49 CFR 604.3 provides that the charter regulations apply only to certain specified applicants and recipients of Federal transportation assistance. MPO's which perform no transit services and simply serve as a conduit for Federal funds, would not be required to submit the charter agreement described in section 604.7 of the regulations. However, MPO's which contract directly with a private operator to run mass transit service, would be subject to the requirement.
36. Question: Do transit authorities need to file a charter agreement if they do not intend to provide charter service and only intend to lease buses to private operators when private operators lack capacity or accessible vehicles?
Answer: Under § 604.7 of the charter regulations, all applicants for UMTA assistance, with the exception of section 16(b)(2) grantees, must file a charter agreement, whether or not they intend to provide charter service.
Definitions
37. Question: What is the meaning of the term "geographic charter service area" which appears in § 604.11(b)(1) of the regulations?
Answer: The term "geographic charter service area" used in § 604.11(b)(1), which deals with the publication of charter notices, refers to the geographic area in which the recipient desires to provide charter service. The preamble, at page 11927, explains that if the geographic area is large enough, the notice may have to be published in more than one newspaper in order to cover the entire area.
38. Question: What is the meaning of the term "too far" which appears in § 604.9(b)(3)(ii)?
Answer: Section 604.9(b)(3) describes the exception that recipients in non-urbanized area may apply for when State imposed minimum durations or the private operators' distance from the origin of charter service would result in a hardship to the customer. In the latter case, the recipient may apply for an exception when it believes that the private operator is located at too great a distance from the origin of service to provide reliable and affordable service to the customer. UMTA has no fixed guidelines for determining what is "too far," but will examine the information or materials provided by a recipient before deciding to grant or deny the exception.
39. Question: How does UMTA define "sightseeing"?
Answer: The preamble to the charter regulation states that UMTA applies to "sightseeing service" the Interstate Commerce Commission's definition of "special service." In keeping with this definition, "sightseeing service" is held to be service offered and arranged by the recipient, and contracted individually with each patron, and not with patrons as a group. This is in contrast to "charter service," which is considered the one-time provision of service, of which the rider, and not the recipient, has control. In order to distinguish between the two types of service, the preamble offers the following example: If a customer comes to the recipient and contracts for the exclusive use of the vehicle, the service would probably be charter service. On the other hand, if the recipient offers individual contracts to anyone to ride to a destination that the recipient has selected, the service would probably be sightseeing service. 52 FR 11920 and 11921, April 13, 1987. Sightseeing service is not subject to the restrictions placed on charter service by the new regulations, and may be provided by a recipient if it is incidental to the provision of mass transportation.
However, recipients should not attempt to convert charter service into sightseeing as a way of circumventing the regulations. UMTA would be suspicious or concerned about incidents in which recipients operate service which, though it conforms to the above criteria, is without pre-arranged schedules and is specifically designed to accommodate the desires of a particular group. Likewise, UMTA would not consider the fact that an operator charges individual fares or a group rate based on the number of passengers as sufficient to make the service sightseeing when none of the other characteristics of sightseeing are present. In such cases, UMTA would consider the service to be charter and not sightseeing.
Subcontracting With Private Operators
40. Question: Section 604.9(b) of the regulations allows a recipient to subcontract with a private operator which lacks capacity or accessible vehicles. Must a recipient subcontract every time a private operator requests that it do so?
Answer: No. UMTA has allowed recipients complete discretion in deciding if and with whom they wish to subcontract. The preamble states that ". . . the regulation does not require that the recipient contract with the private operator. The recipient may refuse to provide any equipment or services to the private charter operators," 52 FR 11924, April 13, 1987.
41. Question: Does a transit agency have to follow the notification requirements of § 604.11 every time a private operator wants it to subcontract equipment to be used for charter service?
Answer: No. The notice requirements of § 604.11 only affect recipients that wish to provide charter service. If a recipient has no desire to provide direct charter service, but only subcontracts equipment at the request of a private operator, it is not required to file a charter notice.
42. Question: How would UMTA's subcontracting requirements apply to the following case: A private operator contracts to take a charter group from State A to State B and tour in that State, a considerable distance away. A substantial number of the passengers wish to fly instead of making the entire trip by charter bus. When the operator gets to State B, may he go directly to the transit authority in State B to lease the buses he needs to accommodate the passengers who flew?
Answer: If, when the operator gets to State B, all his buses remaining in State A are in use, he has a capacity problem and may subcontract with the transit authority under the exception in § 604.9(b)(2)(i). If his buses in State A are not in use, he may subcontract with the transit authority only after making a reasonable and diligent effort to lease extra buses from private providers in State B. UMTA has established no guidelines as to what constitutes a reasonable and diligent effort, but will rely on the private providers good faith. However, it would be desirable, if he has planned his trip with sufficient lead time, that the private provider contact the ABA or UBOA for the names of private providers from whom he could lease the extra buses needed once he has reached his destination.
Special Categories of Vehicles and Users
43. Question: The charter regulation at 49 CFR 604.5(d) differentiates buses from vans. Is there any difference in the way the regulation applies to each category of vehicle?
Answer: While the regulation recognizes buses and vans as separate categories of vehicles, it applies equally to each mode. As is explained in the preamble at page 11920, the service which section 12(c)(6) of the UMT Act distinguishes from mass transportation is merely charter service, not charter bus service. Since the regulation seeks to ensure that UMTA-funded equipment and facilities are used for mass transportation, either vehicle mode, to the extent that it provides mass transportation, may be included within its purview.
Nonetheless, when UMTA published its revised charter service regulation on April 13, 1987, it issued a request for comments on the appropriateness of including vans. See the preamble to the regulation at 52 FR 11920, April 13, 1987. The 45-day period which UMTA had provided for comments ended on May 28, 1987. UMTA is now evaluating the comments that have been received to determine whether it should continue to include vans in the scope of the regulation. However, unless and until UMTA decides that the regulation will affect only buses and not vans, it will apply in the same manner to each category of vehicle.
44. Question: Is there a special exception in the charter regulation for charitable or non-profit groups?
Answer: UMTA's charter service regulation does not contain a special exception for charitable or non-profit groups. The drafters of the regulation, however, were aware of the concerns of such groups. As stated in the preamble to the regulation at 52 FR 11924, April 13, 1987, it is UMTA's opinion that private charter operators will be able to adapt their service to the needs of various categories of customers, if necessary by tailoring prices to meet the buyer's limitations. For this reason, UMTA believes that there is little reason to include any exceptions for the non-profit customer.
However, given the concerns expressed about the charter regulation by certain non-profit groups and the congressional guidance set forth in the House Report language accompanying the FY 1988 Department of Transportation and Related Agencies Appropriations Bill (H.R. 2890), UMTA is in the process of re-evaluating its position. UMTA is in fact preparing to issue a notice of proposed rulemaking which will address this issue and, if it concludes that an exception for charitable or non-profit groups is necessary, will propose a change in the regulations by the end of the present calendar year.
45. Question: Is there a special exception in the charter regulations for emergency situations?
Answer: UMTA will allow recipients to perform otherwise prohibited charter service in the case of a serious emergency, in which time is of the essence in transporting victims or rescue workers. The types of emergency situations contemplated under this exception are man-made or natural disasters, such as fire, chemical spills, floods or hurricanes. The need to transport persons to meet social obligations or protocol type demands, would not be considered an emergency.
46. Question: UMTA funds have, in many instances, purchased trolley vehicles for use by public transit authorities. In some cases, these are the only trolley vehicles for use in a particular geographic service area. What should be the position of a private operator, who is pleased with the present UMTA charter regulations, but which is faced with inquiries for charter use of trolley vehicles that can be obtained only from the public authority?
Answer: While UMTA has no authority to direct the activities of private operators, UMTA suggests that if a private operator does receive many requests for the use of trolley vehicles, then the operator might consider acquiring an appropriate number of vehicles, either by lease or purchase. However, UMTA does not consider it essential to the public interest to take measures to assure the availability of UMTA-funded buses to meet public demand for a particular type of vehicle.
47. Question: Is there a way in which private operators may approach agencies that have trolleys to arrange to lease or purchase those trolley vehicles?
Answer: UMTA's charter service regulations provide an exception at 49 CFR 604.9(b)(2) that would permit a recipient to lease its vehicles on an incidental basis to a private operator. If the trolley buses or other vehicles in question are accessible to elderly and handicapped passengers, a recipient may honor a private operator's request for the use of its accessible vehicles provided the recipient is capable of meeting its primary mass transportation obligations. 49 CFR 604.9 (b)(2)(ii). However, if the trolley buses in question or other vehicles are not accessible, then the recipient may not honor the private operator's request to use non-accessible vehicles unless the private operator has exhausted its own capacity to provide service in its own vehicles. 49 CFR 604.9(b)(2)(i). Within these restrictions, a private operator is free to pursue the possibility of leasing an UMTA recipient's trolley buses.
In addition, UMTA requires its recipients to dispose of UMTA-funded equipment and facilities when such equipment and facilities are no longer needed for mass transportation. Therefore, it would be entirely appropriate for a private operator to express an interest to an UMTA recipient in acquiring the recipient's trolley buses if the recipient finds it no longer needs trolley buses to fulfill its mass transportation obligations.
Alfred A. DelliBovi,
Deputy Administrator
Enclosure C-01-16
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