[Federal Register Volume 72, Number 31 (Thursday, February 15, 2007)]
[Proposed Rules]
[Pages 7526-7546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2715]



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Part III





Department of Transportation





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Federal Transit Administration



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49 CFR Part 604



Charter Service; Proposed Rule

  Federal Register / Vol. 72, No. 31 / Thursday, February 15, 2007 / 
Proposed Rules  

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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: Notice of proposed rulemaking.

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SUMMARY: 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, the Federal Transit Administration 
(FTA) established a committee to develop, through negotiated rulemaking 
procedures, recommendations for improving the regulation regarding 
unauthorized competition from recipients of Federal financial 
assistance. The proposed revisions contained in this notice of proposed 
rulemaking (NPRM) represent a complete revision to the charter service 
regulations contained in 49 CFR part 604. The NPRM contains the 
consensus work product of the Charter Bus Negotiated Rulemaking 
Advisory Committee (CBNRAC), which was able to reach consensus on a 
majority of the regulatory language. Where the CBNRAC was unable to 
reach consensus, FTA proposes revisions to the charter service 
regulations based on the open, informed exchange of information that 
took place during meetings with the CBNRAC.

DATES: Comments must be received by April 16, 2007. Late filed comments 
will be considered to the extent practicable.

ADDRESSES: You may submit comments by any of the following methods:
    Federal e-Rulemaking Portal: Go to http://www.regulations.gov. 
Follow the online instructions for submitting comments.
    Web site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
    Fax: 202-493-2251.
    Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, PL-401, 
Washington, DC 20590-0001.
    Hand Delivery: Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.
    Instructions: When submitting comments electronically to 
Department's Docket Management System (DMS) Web site located at http://dms.dot.gov, you must use docket number 22657. This will ensure that 
your comment is placed in the correct docket. If you submit comments by 
mail, you should submit two copies and include the above docket number. 
If you wish to receive confirmation that FTA received your comments, 
you must include a self-addressed stamped postcard. Note that all 
comments received will be posted without change to http://dms.dot.gov. 
This means that if your comment includes any personal identifying 
information, such information will be made available to users of DMS. 
You may review the Department's complete Privacy Act Statement in the 
Federal Register published on April 11, 2000 (65 FR 19477) or you may 
visit http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Linda Lasley, Senior Advisor, Office 
of the Administrator, Federal Transit Administration, 400 Seventh 
Street, SW., Room 9328, Washington, DC 20590, (202) 366-4011 or 
[email protected]; Nancy-Ellen Zusman, Attorney-Advisor, Office of 
the Chief Counsel, 200 West Adams Street, Suite 320, Chicago, IL 60606, 
(312) 353-2789 or [email protected]; or Elizabeth Martineau, 
Attorney-Advisor, Office of the Chief Counsel, 400 Seventh Street, SW., 
Room 9316, Washington, DC 20590, (202) 366-1966 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Statutory Authority

    Pursuant to the direction contained in the Joint Explanatory 
Statement of the Committee of Conference, for section 3023(d), 
``Conditions on Charter Bus Transportation Service'' of SAFETEA-LU, FTA 
established a Federal Advisory Committee on May 5, 2005, to develop 
recommendations through negotiated rulemaking procedures for 
improvement of the regulation regarding unauthorized competition from 
recipients of Federal financial assistance.

II. Advisory Committee

    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;
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 State Metropolitan Transportation Authority;
Northwest Motorcoach Association/Starline Luxury Coaches;
Oklahoma State University/The Bus Community Transit System;
River Cities Transit;
Southwest Transit Association;
Taxicab, Limousine & Paratransit Association;
Trailways; and
United Motorcoach Association.

    The CBNRAC met in Washington, DC on the following dates:

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:
    [cir] 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.
    [cir] 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.
    [cir] 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

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reach final agreement on regulatory language. Once final consensus is 
achieved, the CBNRAC members may not thereafter withdraw from the 
consensus.
    [cir] 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 (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.
    [cir] 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.
    [cir] 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.
    [cir] 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.
    [cir] 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:
    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?
    The CBNRAC also agreed to consider 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.

III. Overview

    The negotiated rulemaking process is fundamentally different from 
the usual process for developing a proposed rule. Negotiation allows 
interested and affected parties to discuss possible approaches to 
various issues rather than simply being asked in a regular notice and 
comment rulemaking proceeding to respond to details on a proposal 
already developed and issued by an agency. The negotiation process 
involves the mutual education of the parties on the practical concerns 
about the impact of various regulatory approaches.
    The negotiated rulemaking process for the charter service 
regulation resulted in a complete overhaul of the regulation. This was 
done in response to longstanding concerns that the existing regulation 
is hard to understand because it is unclear about what activities 
constitute ``charter service.'' In addition, members of the CBNRAC 
agreed that the existing exceptions to the prohibition on charter 
service should be clarified. Concerns were also raised about the 
complaint process. Some members felt that complaints were filed in a 
vindictive manner and without a substantive basis. Others felt that 
once a complaint was filed, the standard contained in the existing 
regulation made it nearly impossible to receive the relief requested. 
All members of the CBNRAC felt that the complaint and appeal process 
takes too long.
    What follows is a description of the decisions reached on each of 
the issues that the CBNRAC agreed to consider during negotiations. Each 
issue raised sub-issues that the committee agreed were also worth 
considering, and those sub-issues are also discussed. If consensus was 
reached on an issue (or sub-issue), we explain the consensus. If 
consensus was not reached, we explain the relative positions of the two 
main groups: the public transit caucus and the private charter caucus, 
and then offer a proposal by FTA. We encourage interested parties to 
review the meeting summaries in the docket for a more complete 
description of the positions of the caucuses and the negotiations of 
the CBNRAC.
    Furthermore, two major changes are worth noting at the outset. 
First, the CBNRAC agreed to discard the concept of ``willing and 
able,'' that had persisted for more than 20 years. As a result, private 
charter operators interested in performing requests for charter service 
received by recipients would now be ``registered charter providers.'' 
This term is appropriate because, as explained in further detail later 
in this document, private charter operators would register on an 
Internet site. This website, known as the FTA Charter Registration 
Website, would store the names of private charter operators interested 
in receiving notice from recipients. This new process would replace the 
old ``willing and able'' process.
    Second, the existing regulation contains very limited requirements 
regarding complaints, hearings, and appeals. This proposal contains a 
more robust complaint, hearings, and appeals process. This would ensure 
that FTA has an appropriate mechanism for weeding out frivolous or 
vindictive complaints while ensuring that substantive complaints 
contain the necessary information to inform all parties involved. 
Further, while the existing regulations contain an option for a 
hearing, there are no procedures for a hearing. This NPRM contains 
procedures for a hearing if a complaint merits one.
    To summarize, the proposals contained in this NPRM represent 
consensus language and informed decisions by FTA. The complete rewrite

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of part 604 has been a long time in the making, and is necessary. It is 
the hope of FTA that the clarifications made in this proposal will 
assist public transit agencies in complying with charter service 
regulations and ensure that all parties understand when compliance has 
been achieved.

IV. Conference Committee Report Issues

Issue 1: Limited Exceptions for Providing Community-Based 
Charter Services

    Under the current regulations governing charter service, an FTA 
recipient is generally prohibited from providing charter service unless 
one of the exceptions applies. The existing exceptions are: (1) When 
there is no ``willing and able'' private charter operator; (2) leasing 
equipment; (3) rural hardship; (4) special events; (5) non-profit 
organizations serving individuals with disabilities; (6) non-profit 
social service agencies listed in Appendix A; (7) non-profit 
organizations serving low-income or transit-dependent persons; (8) 
rural non-profit organizations serving the elderly; and (9) formal 
agreement with all willing and able private charter operators.
    The CBNRAC agreed that the revised regulation should also contain 
exceptions. The committee reached consensus on six exceptions: (1) 
Government officials; (2) qualified human service organizations; (3) 
leasing equipment; (4) events of regional or national significance; (5) 
when no registered charter provider responds to notice from a 
recipient; and (6) agreement with registered charter providers. We 
discuss each of these exceptions below. We also discuss one exception 
where the committee could not reach consensus, which was the 
``hardship'' exception. We have added an exception that the committee 
did not consider, but due to past and recent events, we believe should 
be added; an exception for the Administrator. Finally, we discuss three 
sub-issues for all exceptions: Reporting requirements, fully allocated 
costs, and recipients with 1,000 or more buses in peak hour service.
(a) Government Officials
    This is a new exception to the charter regulations and would allow 
recipients to provide charter service to government officials for non-
transit related purposes as long as the recipient provides the service 
in its geographic service area, does not generate revenue (except as 
required by law), and records the trip. The CBNRAC also agreed that 
there should be an hourly annual limit for this exception, but could 
not reach consensus on the number of hours. The public transit caucus 
proposed an annual limit of 125 charter service hours. The private 
charter caucus proposed an annual limit of 80 charter service hours. 
Neither caucus explained why one limit should prevail over the other.
    Since this is a new exception to the charter regulations, FTA 
proposes to accept the private charter caucus' annual limit of 80 hours 
of charter service to government officials for non-transit related 
purposes within the recipient's geographic service area. In accepting 
this proposal, however, FTA believes that extenuating circumstances may 
arise where additional hours may be necessary. As a result, FTA added a 
provision to allow for additional charter service hours under this 
exception, at the Administrator's discretion, in rare or unusual 
circumstances, if the recipient submits a written request: (1) 
Describing the event; (2) explaining why registered charter providers 
in the geographic service area cannot perform the service (e.g., 
equipment, time constraints, or other extenuating circumstances); (3) 
describing the number of charter service hours requested to perform the 
service; and (4) presenting evidence that the recipient has sent the 
request for additional hours to registered charter providers in its 
geographic service area. FTA would review the request and respond to 
the recipient. The recipient would then be responsible for emailing 
FTA's response to the registered charter providers in its geographic 
service area. As with all exceptions under the proposed regulation, the 
recipient would be responsible for recording the service in an 
electronic log.
(b) Qualified Human Service Organizations
    This exception would essentially collapse three exceptions 
contained in the existing regulation pertaining to the elderly, 
individuals with disabilities, and low-income individuals into one 
exception for ``qualified human service organization.'' Consistent with 
the President's Executive Order on Human Service Transportation 
Coordination (February 24, 2004), the CBNRAC reached consensus on 
allowing recipients to provide charter service to ``persons with 
mobility limitations related to advanced age, persons with 
disabilities, and persons struggling for self-sufficiency * * *'' If an 
organization serving the above individuals also receives funds from one 
or more of the 65 Federal programs to be listed in Appendix A to the 
regulation, then the recipient would only need to record the charter 
service in order to provide it. If the organization does not receive 
Federal funds from the programs listed in Appendix A, but serves 
individuals described in this section, then the organization would need 
to register on FTA's Charter Registration Web site and the recipient 
would need to record the charter service. FTA will provide Appendix A 
in the final rule and will update it from time to time as new Federal 
programs are created to assist individuals and organizations covered by 
this exception or when a party sends a petition to the Administrator 
requesting an update to Appendix A.
(c) Leasing FTA-Funded Equipment and Drivers
    The existing exception under the charter regulations allows for a 
recipient to lease equipment to a private charter operator if the 
private charter operator receives a request that exceeds its capacity, 
or the private charter operator does not have equipment accessible to 
the elderly or individuals with disabilities. The CBNRAC reached 
consensus on maintaining this exception with a few minor changes. 
First, the private charter operator would have to be registered on the 
FTA Charter Registration Website. Second, the private charter operator 
would have to own and operate a charter service business. Third, the 
private charter operator would have to exhaust all available vehicles 
from other private charter operators in the recipient's geographic 
service area. Fourth, the recipient would have to record the vehicles 
leased and retain the documentation provided by the private charter 
operator that demonstrates compliance with the first three 
requirements.
(d) Events of National or Regional Significance
    This exception in the current regulation requires a petition to the 
Administrator personally in order to provide charter service for a 
special event. The only limitation is that the service can be provided 
``to the extent that private charter operators are unable to provide 
the service.'' The CBNRAC reached consensus on retaining this 
exception, but with a more formal process for petitioning the 
Administrator. The revised exception would require recipients to first 
consult with private charter operators registered in the recipient's 
geographic service area. After consultation, the recipient may petition 
the Administrator only if the recipient (1) submits the petition at

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least 90 days before the event; (2) describes the importance of the 
event, the amount of charter service needed, and how private charter 
operators will be utilized; and (3) files the petition in the special 
events docket. The Administrator would review the petition, request any 
additional information necessary to make a decision, and then post the 
decision in the special events docket. The Administrator's approval of 
a petition under this exception would be limited to the event described 
in the petition.
(e) When No Registered Charter Provider Responds to Notice From a 
Recipient
    The existing regulation allows a recipient to provide any and all 
charter service to the extent that there are no private charter 
operators interested in providing the service. The CBNRAC reached 
consensus on retaining this exception, but with a modification designed 
to make the whole process more responsive. As noted earlier, the 
implementation of an FTA Charter Registration Website would allow 
recipients and registered charter providers to respond in real time 
regarding charter service requests. Under this exception, a registered 
charter provider would have 72 hours to respond to a request for 
charter service to be provided in less than 30 days and 14 days to 
respond to a request for charter service to be provided in more than 30 
days. If a registered charter provider responds to the request, then 
the recipient may not provide the service, even if the registered 
charter provider and the customer are not able to agree upon a price. 
Alternatively, if no registered charter provider responds to a request, 
then the recipient may provide the service so long as it records the 
proper information in an electronic log.
(f) Agreement With Registered Charter Providers
    This exception in the current regulation allows a recipient to 
enter into an agreement with all private charter operators in its 
geographic service area to allow it to provide charter service directly 
to a customer. The CBNRAC reached consensus on retaining this exception 
with certain modifications to account for the use of the Charter 
Registration Website instead of the annual willing and able process. 
Under the revised exception, the recipient would have to ascertain 
registered charter providers in its geographic service area from the 
Charter Registration Website by January 30th of each year. The 
recipient would have to enter into an agreement with those registered 
charter providers by February 15th of each year.
1. Additional Exceptions

(i) ``Hardship''

    The CBNRAC was unable to reach consensus regarding the ``hardship'' 
exception that currently exists in the charter regulation. This 
exception is intended to allow non-urbanized (rural) areas to provide 
charter service if a private charter operator's provision of this 
service would create a hardship on the customer because the private 
charter operator imposes a minimum duration that is longer than the 
trip length or the private charter operator is located ``too far'' from 
the origin of the charter service.
    The CBNRAC could not reach consensus on what constitutes ``too 
far.'' The private charter caucus proposed retaining the exception as 
is. The public transit caucus offered to replace ``too far'' with 
``deadhead time exceeding total trip time from initial pick-up to final 
drop-off.''
    FTA proposes to retain the hardship exception and replace ``too 
far'' with the public transit caucus' proposal. We believe that this 
proposal sufficiently clarifies what is meant by ``too far'' without 
opening up the exception to abuse.

(ii) Administrator's Discretion

    FTA proposes to add a new exception to address unique situations in 
which it may not be practical or feasible to provide notice to 
registered charter providers. Specifically, FTA proposes an 
Administrator's discretion exception that would allow the Administrator 
to personally approve a recipient's use of Federally-funded assets to 
provide charter service for such events as funerals of local, regional, 
or national significance. Such an event is unanticipated and requires 
an immediate response. For example, the deaths of Presidents Ronald 
Reagan and Gerald Ford underscore the need for flexibility when using 
Federally-funded assets to assist in funeral preparation activities and 
on the day of the funeral. Thus, FTA proposes an Administrator's 
discretion exception to the charter regulations. A recipient would have 
to submit a written request, by facsimile or e-mail, that describes the 
event, describes the charter service requested, explains the time 
constraints for providing the charter service, describes the 
anticipated number of charter service hours needed for the event, the 
type of equipment requested, approximate number of vehicles needed, 
duration of the event, and explains how provision of the charter 
service is in the public's interest. Recipients granted an exception 
under this section would need to retain the record of approval from the 
Administrator for three years and include the approval in its 
electronic records for quarterly reporting on the Charter Registration 
Web site.
(2) Reporting Requirements for All Exceptions
    The CBNRAC agreed that for most of the exceptions a recipient must 
record certain information about the charter service provided. 
Specifically, the committee reached consensus on reporting that would 
require recipients to record an organization's name, address, phone 
number, e-mail address, date and time of service, number of passengers, 
destination, trip length (miles and hours), fee collected, and vehicle 
number. This would be required for charter service provided under the 
exceptions for government officials, qualified human service 
organizations, hardship, and when no registered charter provider 
responds to a notice. For the leasing equipment exception, the 
recipient would have to record the registered charter provider's name, 
address, telephone number, number of vehicles leased, types of vehicles 
leased, vehicle identification numbers, and documentation presented to 
the recipient in support of the rule's requirements. A recipient would 
have to retain this information in an electronic format and for at 
least three years. The recipient would also identify in the record the 
exception that the recipient relied upon when providing charter 
service.
    The CBNRAC could not reach consensus on whether or not the above 
electronic records should be posted on the Charter Registration Web 
site. The public transit caucus believes that posting their electronic 
records to a public Web site may implicate privacy concerns. That 
caucus instead favors the provision of records via e-mail upon request. 
The private charter caucus insisted that electronic records should be 
posted to the Web site in order to facilitate transparency. FTA agrees 
with the private charter caucus, but also recognizes that there may be 
some situations where certain information should not be posted on the 
Web site. Thus, FTA proposes to include a provision in the regulation 
that allows recipients to provide only generalized origin and 
destination information when safety or security is an issue.

[[Page 7530]]

(3) Fully Allocated Costs
    The CBNRAC was unable to reach consensus on whether the concept of 
``fully allocated costs'' should apply to public transit agencies that 
provide charter service. The public transit caucus felt as though the 
requirement would be a barrier to providing community-based 
transportation, but the private charter caucus argued that the 
requirement is necessary to protect private charter operators.
    In the past, FTA required public transit agencies to recover fully 
allocated operating and capital costs and ensure that the charter 
service did not interfere with the intended use of the asset. FTA 
allowed this ``incidental use'' because it believed the charter service 
provided supported the mission of FTA.
    We propose to eliminate the concept of ``fully allocated costs.'' 
The exceptions included in the proposed regulation would allow 
recipients to provide charter service that is in the public interest, 
and is consistent with the overall mission of public transit operators 
as mobility managers within their communities. Hence, the charter 
service that would be allowed under the proposed rule would be an 
incidental use of FTA-funded equipment and facilities, and the recovery 
of fully allocated costs would not be required.
    Further, in the case of service provided to ``qualified human 
service organizations,'' the Federal Interagency Coordinating Council 
on Access and Mobility is currently engaged, in cooperation with the 
Office of Management and Budget, in developing cost allocation 
principals to share fairly the costs of human service transportation. 
To require FTA recipients to recover fully allocated costs from those 
qualified human service organizations, including a share of capital 
costs already subsidized by FTA, would impose unfair conditions on 
those interagency deliberations.
    That being said, FTA encourages and expects recipients that provide 
charter services under the provisions of part 604 to develop fair 
charges to recover as much as possible of the marginal operating cost 
of the service, consistent with the public purpose of the charter 
service, and the ability of the requesting entity to pay. As noted 
earlier, under section 604.12, if a registered charter provider 
responds to the request for charter service, the recipient may not 
provide the service, even if the private charter operator's fee for the 
service prevents the requester from purchasing the trip. This provision 
protects the private charter industry from competition with transit 
operators that receive subsidies from FTA.
(4) 1,000 or More Buses in Peak Hour Service
    The CBNRAC reached consensus on limiting the application of two 
exceptions--qualified human service organizations and government 
officials--to recipients with 1,000 or more buses in peak hour service. 
The public transit caucus requested this limitation, but the private 
charter caucus wholly supported it because of the potentially negative 
impact on private charter operators in urban areas where there are 
higher concentrations of qualified human service organizations and 
government officials. Both caucuses viewed the potential number of 
requests as problematic and felt that it was in each caucuses' interest 
to place a limitation on those two exceptions. FTA requests comments 
from qualified human service organizations and governmental officials 
on the practical impact of this limitation in the final regulation.

Issue 2: How Can We Better Communicate Charter Administration 
and Enforcement to the Public?

    The CBNRAC reached consensus on the use of Internet technology to 
improve communications regarding the charter service regulations. 
Members of the committee acknowledged that virtually all private 
charter companies and public transit agencies have access to the 
Internet and to email. The ability to maintain lists of private charter 
companies, informing the public about allowable activities for public 
transit under the charter service regulations, and posting FTA 
decisions and complaints were all cited as valuable ways to use the 
Internet.
    To effectuate the Internet-based approach, FTA would develop a 
Charter Registration Web site that would serve as a single point of 
contact for private charter operators, recipients, and members of the 
public to obtain information regarding charter service in their 
geographic area. In addition, while FTA currently posts decisions 
regarding charter complaints on its Web site, under the revised 
regulation, we propose to make better use of the Department's Docket 
Management System (DMS) by establishing an exemption docket, special 
event docket, advisory opinion docket, complaint docket, and hearing 
docket. These dockets would be available 24 hours a day and seven days 
a week. Further, DMS has listserv capabilities so that the public can 
receive notice each time the government places a document in the 
docket. We believe this level of transparency would go a long way 
toward informing the public as to which transit agencies do not provide 
charter service (exemption docket); private charter operators as to 
when a public transit agency requests a special event exception 
(special event docket); when FTA provides formal advice to private 
charter operators and recipients (advisory opinion docket); when a 
complaint has been filed against a transit agency (complaint docket); 
and when a complaint has been referred for a hearing (hearing docket). 
The CBNRAC reached consensus on this issue.

Issue 3: How Can Enforcement of Violations of the Charter Bus 
Regulations Be Improved?

    The CBNRAC reached consensus on improved enforcement of charter 
service regulations by focusing on deterrence of risky behavior. 
Members of the committee noted that the seminal question regarding 
enforcement is: ``What is charter service?'' For the public transit 
caucus, it is important to protect the public transit agency's ability 
to provide public transportation and serve its community. This includes 
the ability to modify routes to address congestion or improve mobility 
for the elderly, disabled or low-income populations. For the private 
charter caucus, charter service by public transit agencies should not 
be ``dressed up'' to look like public transportation. The private 
charter caucus believed that service for special events of an irregular 
nature constitutes charter service and the public transit agencies 
should be prohibited from providing such service unless there is no 
private charter operator interested in performing the service.
    The proposed regulation would implement a new remedial scheme, 
giving the decision-maker discretion to determine the type and amount 
of the remedy based on a number of relevant factors, including, but not 
limited to, the gravity of the violation, the revenue earned by 
providing charter service, and the operating budget of the recipient. 
The remedy could take the form of withholding a ``reasonable 
percentage'' of available Federal financial assistance, a complete bar 
on receiving future Federal funds, or a refund to the U.S. Treasury of 
revenue collected in violation of the rule.
    Besides flexibility in the assessment of a remedy, the CBNRAC 
reached consensus on several other ways to improve the enforcement 
process, specifically (1) issuing advisory opinions and (2) conducting

[[Page 7531]]

investigations. The CBNRAC could not reach consensus on whether the 
following measures should be included in a new and improved charter 
service enforcement regime: (1) Cease and desist orders, (2) using 
neutral decision-makers, and (3) considering a pattern of violations as 
an aggravating factor to any remedy assessed. We discuss each of these 
issues below.
(a) Advisory Opinions
    CBNRAC reached consensus that the new rule should incorporate a 
provision enabling public transit agencies and registered charter 
providers to obtain advisory opinions on a case-by-case basis regarding 
whether or not a particular type of transportation would constitute 
charter service. These advisory opinions would serve as a mechanism for 
expedited review by FTA before the recipient performs the service. 
Through this mechanism, recipients and registered charter providers 
alike would receive formal advice about compliance with charter service 
requirements. An advisory opinion would represent the formal position 
of FTA on a matter and may be used in administrative or court 
proceedings. The advisory opinion would be limited, however, to the 
factual circumstances described in the request and would not be binding 
upon a decision-maker adjudicating a charter complaint.
    Advisory opinions represent a more formalized ``letter of 
determination,'' which is currently issued when private charter 
operators or recipients seek regulatory advice from FTA before 
providing charter service. This more formal process would provide 
transparency and consistency regarding FTA's advice. The CBNRAC reached 
consensus on this issue.
(b) Investigations
    Another way to improve enforcement is to ensure that a complaint 
filed has a substantive basis. Members of the CBNRAC raised concerns 
regarding the filing of incomplete complaints or frivolous complaints. 
Thus, the proposed regulation includes a new provision allowing FTA 
ninety days to conduct an investigation regarding a complaint. This 
provision is consistent with the statutory requirement: ``On receiving 
a complaint about a violation of an agreement, the Secretary of 
Transportation shall investigate and decide whether a violation has 
occurred.'' 49 U.S.C. 5323(d) (2). Thus, the CBNRAC reached consensus 
on revised regulatory language that would allow FTA to conduct an 
investigation after a registered charter provider files a complaint. 
The proposed revision would also allow FTA to investigate on its own 
initiative. After an investigation is complete, FTA may dismiss the 
complaint, issue an initial decision based on the pleadings to date, or 
refer the matter to a neutral decision-maker for a hearing.
(c) Cease and Desist Orders
    The CBNRAC was unable to reach consensus on whether advisory 
opinions should also offer an opportunity to request a cease and desist 
order. The public transit caucus worried that such an order could be 
issued wrongfully, thus preventing public transit agencies from 
providing public transportation. The private charter caucus encouraged 
the inclusion of a cease and desist provision as a way to prevent 
financial harm to private charter operators without going through a 
full-blown complaint and hearing process.
    This NPRM does not include a cease and desist provision. While FTA 
believes that a properly worded cease and desist provision would 
protect against ``wrongfully'' issued cease and desist orders, we are 
reluctant to implement a cease and desist process because FTA does not 
have the human resources to administer a cease and desist provision. 
FTA is concerned that interested parties would inundate the agency with 
cease and desist requests. Furthermore, we believe that revisions to 
the charter service definition, coupled with clear exceptions and 
strong remedies for violations of the regulation provide sufficient 
protection of a private charter operator's financial interest.
(d) Neutral Decision-Maker
    During the CBNRAC negotiations, members of the committee expressed 
the deeply held belief that FTA decisions regarding charter service 
complaints are inconsistent. Both caucuses described experiences of 
receiving inconsistent decisions from FTA regarding whether a 
particular service is prohibited charter service. The private charter 
caucus also stated that FTA was biased in favor of public transit 
agencies by advising agencies on how to tailor the charter service so 
as to look like public transportation. As a consequence, members of the 
committee agreed that decision-making regarding charter service 
complaints should be removed from the regional offices and sent to FTA 
headquarters. The caucuses differed, however, on who should render a 
determination once a complaint is sent to FTA headquarters. The public 
transit caucus favored having FTA headquarters make the initial 
decision regarding the complaint. The private charter caucus contended 
that FTA headquarters is biased in favor of public transit agencies 
regarding charter service complaints. Thus, the private charter caucus 
favors the use of an Administrative Law Judge (ALJ) to make the initial 
decision regarding a complaint.
    After careful consideration of the above positions, and considering 
FTA's limited resources, we propose to include a new provision in the 
proposed regulation that would allow a headquarters office to make an 
initial decision regarding a charter service complaint or to refer the 
matter to a neutral decision-maker (Presiding Official) for a hearing. 
The Presiding Official might be an Arbitrator or other hearing officer 
and the parties to the proceeding would be the public transit agency 
and the complaining party. The Presiding Official would then issue a 
recommended decision to an appropriate headquarters office that would 
reject, ratify, or adopt with modifications the recommended decision. 
Any initial decision may be appealed to the Administrator. This 
proposed process allows FTA to make a determination that a hearing is 
unnecessary and issue an immediate decision based on the pleadings to 
date or to refer the matter for a hearing. We believe that this 
approach is less resource intensive but still provides a neutral 
decision-maker for more serious cases that require a hearing.
(e) Pattern of Violations
    As part of the revised rule's more rigorous enforcement scheme, the 
proposed regulation contains language that would increase any remedy 
ordered if the decision-maker determines that there is a ``pattern of 
violations.'' The CBNRAC could not reach consensus on this issue. The 
private charter caucus believed that more than one violation of the 
charter service regulations should incur a severe penalty. The public 
transit caucus believed that more than one violation of the same 
requirement should be treated more severely. The public transit caucus 
argued that more than one violation of different charter service 
requirements should not constitute a pattern of violations, because the 
public transit agency is unlikely to know what constitutes a violation 
of the charter service regulations until FTA informs the public transit 
agency of the violation.
    As will be discussed later in the definitions section of this NPRM, 
we propose to define a pattern of violations as: ``more than one 
finding of non-

[[Page 7532]]

compliance of this Part by FTA beginning with the most recent finding 
of noncompliance and looking back over a period of 72 months.'' We 
intend to apply this definition in the ``remedies'' section of the 
rule. Under that section, if the decision-maker determines there is a 
pattern of violations, then the decision-maker ``shall bar a recipient 
from receiving Federal transit assistance in an amount * * * considered 
appropriate.'' This means that a public transit agency violating the 
charter service regulation for the first time would be treated 
differently, and less severely, than a public transit agency that has 
violated the charter service regulations more than once over the past 
six years. Further, we determined that looking at a six year period 
would be sufficient to determine whether the public transit agency has 
a history of non-compliance with the charter service regulations. FTA 
believes that the new provision on ``pattern of violations'' would 
deter conduct that leads to complaints, would reduce the number of 
complaints, and would promote consultation with FTA.

Issue 4: How Can the Charter Complaint and Administrative 
Appeals Process Be Improved?

    All CBNRAC members agreed that the complaint process should be 
designed so as to produce consistent decisions on charter bus 
complaints. The perceived inconsistency in past charter decisions by 
FTA was attributed in part to region-based adjudication under the 
current rule. The committee expressed concern over the diverse 
approaches for addressing charter violations taken by different 
regions. To this end, the committee recommended that regional offices 
should no longer handle charter complaints. Instead, complaining 
parties would bypass the regional offices and file their complaints 
directly with the FTA Office of the Chief Counsel. FTA headquarters 
would receive complaints, post complaints in a complaint docket, and 
investigate alleged violations.
    Furthermore, the committee reached consensus on a more detailed 
complaint process. The existing rule only requires the filing of a 
complaint that ``is not without obvious merit and that * * * states 
grounds on which relief may be granted.'' This generalized pleading 
process has led to frivolous filings or complaints that do not contain 
enough information to determine the violation of the charter service 
regulations. The revised regulations would require a complainant to 
identify the specific provisions of the charter service regulation 
allegedly violated, provide a complete and concise statement of the 
facts relied upon in filing the complaint, and submit all documents 
offered in support of the complaint.
    Additionally, the CBNRAC reached consensus on new filing and 
service provisions. In the past, there were instances where the 
complainant failed to notify the public transit agency. Instead, the 
FTA regional office sent the complaint. The revised regulation would 
require a complainant to file the complaint with the public transit 
agency and send proof of service to FTA headquarters. Furthermore, the 
committee agreed that associations may file a complaint as a duly 
authorized representative of a registered charter provider. The private 
charter caucus advocated for this position so that registered charter 
providers who work with public transit agencies would not have to file 
a complaint directly. Even so, the association would have to identify 
on whose behalf the complaint is filed.
    Moreover, we would appreciate comments on how to address State 
involvement in the complaint process. For instance, in the case of a 
complaint against a rural transit operator funded as a subrecipient of 
a State under section 5311, we propose that the private charter 
provider should submit a complaint with the State Department of 
Transportation (FTA's direct recipient) first. If the State Department 
of Transportation cannot resolve the complaint, then the private 
charter operator would proceed under subpart F. This option was not 
presented to the CBNRAC and we have not revised regulatory text to 
reflect this proposal. We would, however, appreciate comment on the 
topic.
    In addition to a more detailed complaint process, the CBNRAC agreed 
that the appeals process should have more flexibility, the conciliation 
period should be eliminated, parties should be able to complain about a 
private charter operator or qualifed human service organization's 
registration on the FTA Charter Registration Web site, and it should be 
easier for FTA to dismiss incomplete or non-substantive complaints. 
Each of these points is discussed below.
(a) Appeals
    The CBNRAC reached consensus on an improved appeals process that 
gives the Administrator discretion to take an appeal or modify an 
initial decision. Previously, the Administrator could only consider an 
appeal if ``the appellant presents evidence that there are new matters 
of fact or points of law that were not available or not known during 
the investigation of the complaint.'' 49 CFR 604.20(b). Members of the 
committee viewed that provision as too limiting, and advocated for 
broader discretion. Thus, the new provision would allow an appeal so 
long as the appellant meets the relevant deadlines. Further, even if 
the appellant has not filed an appeal, the Administrator, on his or her 
own motion, may review an initial decision. As noted earlier, the 
initial decision would be made either by a headquarters office or by an 
Arbitrator after a hearing and ratification by a headquarters office. 
Additionally, the new regulation would set out specific timeframes for 
FTA to make decisions regarding the complaint and appeal. Specifically, 
the initial decision would have to be issued 110 days after the 
investigation is complete. A decision on an appeal would have to be 
made within 30 days.
(b) Conciliation Period
    The committee also determined that the mandatory conciliation 
period in the existing rule was almost never used and had no effect 
other than delaying the adjudicatory process. The committee recommended 
that FTA remove this requirement from the new rule and instead include 
a statement that encourages the parties to resolve their dispute 
informally before filing a complaint. Thus, we proposed not to include 
a conciliation period in the revised regulation.
(c) Removal From Charter Registration Web Site
    The CBNRAC reached consensus on providing a new provision that 
allows registered charter providers or recipients to file a complaint 
challenging the registration of a private charter operator or qualified 
human service organization on the Charter Registration Web site. 
Members of the committee approved of this provision because it would 
allow the removal of private charter operators that act vindictively 
when responding to requests for charter service. In other words, a 
private charter operator that responds affirmatively to a notice from a 
recipient requesting charter service but then does not contact the 
customer or negotiates in bad faith with the customer could be removed 
from the Web site and not receive future requests for charter services. 
The proposed regulation sets out specific reasons why FTA could remove 
a registered charter provider from the registration list. In addition, 
we plan to develop an Appendix B that would set out examples of each 
basis for removal.

[[Page 7533]]

    On the other hand, a registered charter provider could file a 
complaint to remove a qualified human service organization from the 
registration list. FTA may remove a qualified human service 
organization for the same reasons a registered charter provider may be 
removed from the registration list (e.g., bad faith and lack of 
documentation).
    Thus, under this new process, a complaint would be filed 
electronically in the complaint docket and a response would be required 
in seven days. FTA would then consider the complaint and response and 
issue a decision in ten business days. FTA's decision would be posted 
in the complaint docket and would identify the reasons for removing or 
allowing the private charter operator or qualified human service 
organization on FTA's Charter Registration Web site. If removal is 
ordered, the decision would identify the length of time for removal and 
when the party may reapply for registration.
(d) Dismissals
    Furthermore, to ensure the integrity of the complaints filed, the 
CBNRAC reached consensus on new provisions that would allow FTA to 
dismiss a complaint, without prejudice, if it is incomplete. FTA may 
also dismiss a complaint, with prejudice, if the complaint, on its 
face, is outside the jurisdiction of FTA, fails to state a claim that 
warrants further investigation, or if the complainant lacks standing to 
file the complaint.

V. Additional Issues Considered by the CBNRAC

Issue 5: 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

    The CBNRAC discussed this issue because the private charter caucus 
and public transit caucus were close to an agreement on this issue 
during previous negotiations before the formation of the CBNRAC. 
Essentially, the committee viewed the current ``willing and able'' 
process as protection for private charter operators from unsuccessful 
negotiations with customers who might expect lower prices from public 
transit agencies. The current process also allows public transit 
agencies to provide charter service when there is no private charter 
operator interested in performing the service. Even so, the committee 
recognized that the existing willing and able process is outdated and 
agreed to eliminate it in favor of a web-based registration process.
    The Charter Registration Web site would serve as a database of 
private charter operators who are interested in receiving notice from 
recipients regarding requests for charter service. In order to 
register, private charter operators would have to answer several 
questions about their business and the geographic areas they serve. 
Recipients, upon receiving a request for charter service that a 
recipient is interested in providing, would be required to send an 
email to registered charter providers listed on FTA's Charter 
Registration Web site in the recipient's geographic service area. The 
notification would have to be sent by 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 would have to send 
the notice by the close of business the next business day. The 
recipient may then provide charter service if no registered charter 
provider responds to the notice within 72 hours for charter service 
requested to be provided in less than 30 days; or within 14 calendar 
days for charter service requested to be provided in 30 days or more. 
The recipient would have to retain an electronic copy of the notice and 
the list of registered charter providers notified of the requested 
charter service for a period of at least three years from the date the 
notice was sent. The recipient would also record certain information 
about the charter service for purposes of quarterly reporting. Members 
of the CBNRAC expressed approval of this real-time process over the 
existing annual notification process.
    The CBNRAC could not reach consensus on whether a private charter 
operator should be required to answer whether it would provide free or 
reduced rate services to qualified human service organizations. The 
public transit caucus argued in favor of such a requirement while the 
private charter caucus argued against a requirement and advocated 
instead that it be optional.
    The proposed regulation includes language that would make it 
optional for a private charter operator to indicate whether they would 
provide free or reduced rate charter services to qualified human 
service organizations. We believe that private charter operators wish 
to support their communities in the same way that many recipients 
support their communities and that they would likely take advantage of 
this option because qualified human service organizations can conduct a 
search on the Charter Registration Web site to look only for those 
private charter operators with free or reduced rates. We do not 
believe, however, that private charter operators should be required to 
provide such information.
(a) Registration of Qualified Human Service Organizations
    In addition to registering private charter operators, the Charter 
Registration Web site would also serve as a database for qualified 
human service organizations that do not receive funding from the 
Federal programs listed in Appendix A to the regulation. In order to 
register, qualified human service organizations would have to answer 
several questions about their organization, its funding, and its 
mission.
    After registering, these qualified human service organizations 
would be eligible to receive free or reduced rate charter services from 
either recipients or registered charter providers. The committee 
reached consensus on this issue.
    FTA requests comment from qualified human service organizations, 
not receiving funding from the Federal programs listed in Appendix A, 
on the practical impact of these registration requirements.

Issue 6: 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

    The CBNRAC reached consensus on a new applicability provision for 
the charter service regulations. Under the new provision, the charter 
service regulations should not apply to a recipient transporting its 
own employees, other transit system employees, management officials, 
contractors and bidders, government officials and their contractors and 
official guests to or from transit facilities or projects within their 
geographic service area for the purpose of conducting oversight 
functions such as inspection, evaluation, or review.
    During the discussions on this issue, members of the CBNRAC noted 
that movement of transit employees or officials for transit purposes is 
simply not charter service. Further, as discussed in greater detail in 
the next section, under the new definition of charter, movement of 
transit employees from one work station to another is also not charter 
service. The CBNRAC also reached consensus on the following 
applicability provisions:
    (a) The charter service regulations would not apply to a recipient 
that transports its employees, or other transit system employees or 
officials for

[[Page 7534]]

emergency preparedness planning and operations.
    (b) The charter service regulations would not apply to recipients 
of 49 U.S.C. 5310, 5316, or 5317 funds, when used for program purposes.
    (c) The charter service regulations would not apply in the case of 
local, regional, or national emergencies lasting fewer than three days. 
Otherwise, the recipient would have to follow the provisions of 49 CFR 
part 601 subpart D.
    (d) The charter service regulations would not apply to a non-
urbanized area transporting its employees outside of its geographic 
service area for training purposes.
    The CBNRAC could not reach consensus on whether the charter service 
regulations apply to private charter operators receiving funds, 
directly or indirectly, from programs under 49 U.S.C. 5307, 5309, 5310, 
5311, 5316, 5317 or section 3038 of the Transportation Equity Act for 
the 21st Century. The private charter caucus requested this provision 
because it believes that the receipt of Federal funds should not hinder 
the private charter operator's ability to conduct its business. The 
public transit caucus asserted that private charter operators receiving 
Federal funds should be subject to the same limitations as public 
transit agencies.
    We propose to include this provision because 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 public 
transit agencies. To subject private charter operators to the charter 
service regulations undermines the very purpose of these regulations.

Issue 7: Review and Clarify, as Necessary the Definitions of 
Regulatory Terms

    One of the main points of contention for the CBNRAC was the 
definition of ``charter service'' and ``pattern of violations.'' For 
all other definitions, the CBNRAC was able to reach consensus. 
Additionally, since the conclusion of the negotiations, we decided that 
definitions of ``qualified human service organization'' and ``charter 
service hours'' are necessary. Thus, what follows is a discussion of 
the negotiations regarding the definitions of charter service and 
pattern of violations. We also offer our proposed definitions of 
qualified human service organization, charter service hours, and 
special transportation.
(a) Definition of Charter Service
    CBNRAC was unable to come to an agreement on the definition of the 
term ``charter service.'' The controversy centered on a particular 
category of transportation service provided on an irregular basis for 
occasional local events such as golf tournaments, festivals, state 
fairs, July 4th celebrations, flower shows, home shows, and sporting 
events. The public transit caucus considers open-door bus service to 
these types of events to be public transportation that serves the 
community at large (by providing traffic mitigation and other public 
benefits) even though the transit agency may need to create new or 
modified routes on a temporary basis for the duration of the event in 
order to provide the service. The private charter caucus believes that 
such services constitute ``charter service'' because a third party 
event sponsor is usually involved through some type of contractual 
arrangement; a new, temporary route has to be created to transport 
people to and from the event (as opposed to published, regular transit 
routes); and because the service is not continuous, and lasts only for 
the duration of the event. Despite lengthy discussions and an exchange 
of various proposals between the two sides, these differences could not 
be resolved by the committee. We recommend that interested parties 
review the docket for the exact proposals offered by each caucus.
    In response to the discussions held by the CBNRAC, we propose a 
definition of charter service that recognizes concerns raised by each 
caucus and provides examples of what would be considered charter 
service. In providing this definition of charter service, we note that 
the term ``buses'' includes rubber-tire replica trolleys.
    First, the caucuses were able to agree, although they did not reach 
consensus, on the proposition that charter service has three 
components: The transportation of a group of persons pursuant to a 
single contract with a third party; a fixed charge; and an itinerary 
determined by someone other than the public transit agency. The CBNRAC 
agreed that these three elements would have to be present in order for 
a particular service to be considered charter service.
    Second, members of the CBNRAC felt it was important to provide 
examples of what is and is not charter service. Thus, we propose a 
definition that includes three examples of charter service: (1) Use of 
buses or vans to transport school students, school personnel or school 
equipment; (2) shuttle service to events that occur on an irregular 
basis or for limited duration; or (3) shuttle services limited to a 
group of individuals pursuant to a contract with an institution, 
university, corporation or government.
    We also include in the definition examples of what is not charter 
service. Specifically, we propose that the following do not constitute 
charter service: (1) Adding equipment or days to an existing route; (2) 
extending service hours on an existing route; (3) demand-responsive 
service that is part of coordinated public transit human service 
transportation; and (4) new or modified service that is open to the 
public, where the recipient establishes and controls the route and the 
service continues from year to year.
    In an effort to provide further clarification of what service would 
be considered charter service or public transportation, FTA will 
publish an Appendix C with the final rule that contains more examples 
and frequently asked questions. We would appreciate comments with 
questions that should be included in Appendix C.
(b) Definition of Pattern of Violations
    The CBNRAC did not reach agreement on the definition of ``pattern 
of violations.'' Some participants advocated that the term should mean 
``more than one instance of noncompliance with charter service 
regulations.'' Under this interpretation, FTA could find in a single 
decision that a transit agency engaged in a pattern of charter service 
violations. A pattern could be established, for instance, if the public 
transit agency's one-time provision of charter service violated several 
requirements of the charter service rule.
    Others sought a more limited definition, whereby a recipient 
commits a pattern of violations of the charter service regulations only 
if FTA makes a series of findings of successive charter service 
violations over a period of time. Still others advocated a definition 
that recognizes a pattern only if the same regulation is violated more 
than once over a period of time.
    We propose to adopt a definition of pattern of violations that 
looks at violations over a period of time. The violation need not be a 
violation of the same regulation, although it could be, in order for 
FTA to find a pattern of violations. Further, we propose to look at the 
recipient's six-year history to determine whether or not it has engaged 
in a pattern of violations. Thus, a violation in the year 2006 means 
that FTA could look back to the year 2000 to determine whether other 
violations

[[Page 7535]]

exist, which would constitute a pattern of violations. Violations found 
by FTA in 1999 could not be used to find a pattern of violations. This 
definition strikes a balance between the need to penalize recipients 
that routinely violate the charter service requirements and the need to 
place a time limit on how far back FTA may look for other violations. 
This definition, as with all provisions of this rulemaking, does not 
take effect until FTA issues a final rule.
(c) Definition of Qualified Human Service Organization
    After the conclusion of negotiations, and as we began to make 
decisions about the outstanding issues, it became clear that we needed 
to include a definition of ``qualified human service organization'' in 
the proposed regulation. We believe this definition is necessary to 
elaborate on the exception for qualified human service organizations 
contained in the regulation with the Executive Order on Human Service 
Transportation Coordination signed by the President on February 24, 
2004. Thus, we propose to define ``qualified human service 
organization'' as an organization that serves persons who qualify for 
human service or transportation-related programs or services due to 
disability, income, or advanced age.
(d) Definition of Charter Service Hours
    We also did not present a definition of ``charter service hours'' 
to the CBNRAC. While the committee reached consensus that charter 
service hours is the appropriate measurement for the annual limit 
contained in the ``government officials'' exception, FTA did not 
provide a definition of charter service hours for review by the 
committee. Thus, we now propose to define charter service hours as the 
total hours operated by buses or vans while in charter service, 
including the hours operated while carrying passengers for hire and 
associated deadhead hours.
(e) Definition of Special Transportation
    The CBNRAC did not discuss the definition of special transportation 
during its deliberations, but we believe the term should be defined to 
avoid confusion in the future. The statutory definition of ``public 
transportation'' includes a reference to ``special transportation.'' 
There is no definition of ``special transportation'' in statute or in 
the charter service regulations. Legislative history, however, 
indicates that the term includes service exclusively for the elderly 
and persons with disabilities, and service for workers who live in the 
innercity but commute to a factory in the suburbs. See, H.R. Rep. No. 
1785, 90th Cong., 2d Sess., reprinted in 1968 U.S. Code Cong. Ad. & 
News 2941. In order to provide clarity, we believe it would be helpful 
to include a definition of ``special transportation'' in the proposed 
charter service regulation. Thus, we propose to define ``special 
transportation'' as demand response or paratransit service that is 
regular and continuous and is a type of ``public transportation.''

Issue 8: FTA Policies Relative to the Enforcement of Charter 
Rules and the Boundary Between Charter and Public Transit Services in 
Specific Circumstances, Such as University Transportation and 
Transportation to/from Special Events

    The committee reached consensus to include an appendix to the final 
rule that would provide specific examples of situations that do or do 
not qualify as charter service. In close cases, the parties affected by 
the rule could refer to these illustrative situations for guidance in 
making decisions about whether or not requested service would 
constitute charter or public transportation under the charter service 
regulation.
    CBNRAC members reached consensus to include in the proposed rule a 
limited exception to allow transit operators to provide transportation 
to events of regional or national significance on a case-by-case basis. 
In order to take advantage of this exception, a recipient would 
petition the Administrator after first consulting with registered 
charter providers in the recipient's geographic area to determine 
whether registered charter providers are capable of performing the 
service. To be eligible for the exception, the recipient would also 
have to satisfy a number of conditions set out in the rule. The 
Administrator would have full discretion to grant or deny the request.

VI. Other Revisions to the Charter Service Regulations

    The CBNRAC also reached consensus on the revision to the general 
purpose statement and the charter service agreement. The committee was 
unable to reach consensus on whether the regulation should contain an 
exemption provision.
    The general purpose statement for the charter service regulation 
simply states that the purpose of the regulation is to protect private 
charter operators from unauthorized competition with recipients of 
Federal financial assistance. There was no major discussion or 
disagreement on this provision, and, therefore, we propose the language 
developed by the CBNRAC.
    The charter service agreement has not been updated for over twenty 
years. This regulation updates the charter service agreement, which is 
included in the Grant Agreement or Cooperative Agreement entered into 
by the recipient of Federal funds. The CBNRAC reached consensus that 
the charter service agreement should incorporate by reference the terms 
of the charter service regulations, and, therefore, we propose to 
include those provisions.
    Finally, the CBNRAC was unable to agree to the terms of an 
exemption provision. An exemption provision would allow a recipient to 
make an affirmative declaration that it would not provide charter 
service, under any conditions, in or out of its geographic service 
area. This provision was developed to address concerns by the committee 
that recipients that do not wish to provide charter service should be 
readily identifiable by the public, other recipients, and private 
charter operators. The private charter caucus supported such a 
provision because such an exemption would assist private charter 
operators in determining when a recipient is in violation of the 
charter service regulations. The public transit caucus did not object 
to the specific terms of the provision, but believed that no public 
transit agency would utilize an exemption provision.
    We propose to include an exemption provision. The process would be 
for the recipient to provide its declaration by the third week of 
September each year. The recipient would file this declaration in an 
exemption docket. Thus, a member of the public could easily determine 
which recipients have declared that they would not provide charter 
service. If after three years there are no recipients that use the 
exemption provision, FTA proposes to rescind that portion of the rule.

Distribution Tables

    For ease of reference, we provide a distribution table to indicate 
proposed changes in section numbering and titles.
    Section Title and Number:

[[Page 7536]]



----------------------------------------------------------------------------------------------------------------
             Old section                                              New section
----------------------------------------------------------------------------------------------------------------
             (Subpart A)                                              (Subpart A)
Purpose..............................  Sec.   604.1...........  Purpose................  Sec.   604.1.
Applicability........................  Sec.   604.3...........  Applicability..........  Sec.   604.2.
Definitions..........................  Sec.   604.5...........  Definitions............  Sec.   604.3.
Charter Agreement....................  Sec.   604.7...........  Charter Agreement......  Sec.   604.5.
Charter Service......................  Sec.   604.9...........  Exceptions.............  (Subpart B).
                                       Sec.   604.9(a)........  .......................  Sec.   604.12(b).
                                       Sec.   604.9(b)(1).....  .......................  removed.
                                       Sec.   604.9(b)(2).....  .......................  Sec.   604.10.
                                       Sec.   604.9(b)(3).....  .......................  Sec.   604.9.
                                       Sec.   604.9(b)(4).....  .......................  Sec.   604.11.
                                       Sec.   604.9(b)(5).....  .......................  Sec.   604.8.
                                       Sec.   604.9(b)(6).....  .......................  Sec.   604.8.
                                       Sec.   604.9(b)(7).....  .......................  Sec.   604.8.
                                       Sec.   604.9(b)(8).....  .......................  Sec.   604.13.
Procedures for determining if there    Sec.   604.11..........  .......................  (Subpart C).
 are any willing and able private
 charter operators.
                                                                Registration of private  Sec.   604.16.
                                                                 charter operators.
Reviewing evidence submitted by        Sec.   604.13..........  .......................  removed.
 private charter operators.
Filing a complaint...................  (Subpart B)............  Complaints.............  (Subpart F).
                                       Sec.   604.15(a).......  .......................  Sec.   604.27(a).
                                       Sec.   604.15(b).......  .......................  removed.
                                       Sec.   604.15(c).......  .......................  Sec.   604.27(b).
                                       Sec.   604.15(d).......  .......................  Sec.   604.27(c).
                                       Sec.   604.15(e).......  .......................  Sec.   604.34 or 46.
                                       Sec.   604.15(f).......  .......................  Sec.   604.32 or 33.
                                       Sec.   604.15(g).......  .......................  (Subpart I).
                                                                                         Sec.   604.36.
                                       Sec.   604.15(h).......  .......................  Sec.   604.37.
                                       Sec.   604.15(i).......  .......................  Sec.   604.45.
Remedies.............................  Sec.   604.17..........  Remedies...............  Sec.   604.47.
                                                                Appeal to Administrator
                                                                 and final agency
                                                                 orders.
                                                                                         (Subpart J).
Appeals..............................  Sec.   604.19(a).......  .......................  Sec.   604.48(a).
                                       Sec.   604.19(b).......  .......................  Sec.   604.48(b).
                                       Sec.   604.19(c).......  .......................  Sec.   604.48(c).
                                       Sec.   604.19(d).......  .......................  Sec.   604.48(a).
                                       Sec.   604.19(e).......  .......................  Sec.   604.48(b).
Judicial Review......................  Sec.   604.21..........  .......................  (Subpart K).
                                                                                         Sec.   604.50.
----------------------------------------------------------------------------------------------------------------

Rulemaking Analyses and Notices

    All comments received on or before the close of business on the 
comment closing date indicated above will be considered and will be 
available for examination in the docket at the above address. Comments 
received after the comment closing date will be filed in the docket and 
will be considered to the extent practicable. In addition to late 
comments, we will continue to file relevant information in the docket 
as it becomes available after the comment period closing date, and 
interested persons should continue to examine the docket for new 
material. A final rule may be published at any time after close of the 
comment period.

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    FTA has determined preliminarily that this rulemaking is not a 
significant regulatory action within the meaning of Executive Order 
12866, and is not significant under Department of Transportation 
regulatory policies and procedures. This NPRM 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.
    FTA has not conducted a cost analysis for this rulemaking because 
the changes proposed do not impose any cost on the industry. Since this 
rulemaking is designed 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 community-based exceptions.
    FTA welcomes comments on whether there are economic impacts from 
this proposed regulation. Comments regarding specific burdens, impacts, 
and costs would be most welcome and would aid us in more fully 
appreciating whether there are cost impacts for this proposed rule.

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.

[[Page 7537]]

    The nature of this rulemaking is to prevent unfair competition by 
public transit agencies with private charter operators. Thus, any 
economic impact on small entities will be a positive one. FTA hereby 
certifies that the proposals for the charter service regulation 
contained in this NPRM, if adopted, would not have a significant 
economic impact on a substantial number of small entities. FTA invites 
comment from members of the public who believe there will be a 
significant impact on 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 proposed 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 proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, and FTA has 
determined that this proposed action would not have sufficient 
federalism implications to warrant the preparation of a Federalism 
assessment. FTA has also determined that this proposed action would not 
preempt any State law or regulation or affect the States' ability to 
discharge traditional State governmental functions. Comment is 
solicited specifically on the Federalism implications of this proposal.

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 December 31, 2007. FTA has determined 
that revisions in this proposal will require an update to the 
information collection request. However, FTA believes that any increase 
in burden hours per submission is more than offset by decreases in the 
frequency of collection for these information requirements and the use 
of electronic technology.

Executive Order 13175 (Tribal Consultation)

    FTA has analyzed this action under Executive Order 13175, dated 
November 6, 2000, and believe that the proposed action would not have 
substantial direct effects on one or more Indian Tribes; would not 
impose substantial direct compliance costs on Indian Tribal 
governments; and would 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 it 
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.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross-reference this action with the 
Unified Agenda.

List of Subjects in 49 CFR Part 604

    Charter Service.

    In consideration of the foregoing, FTA proposes to revise title 49, 
Code of Federal Regulations, part 604 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 Exemption.
604.4 Definitions.
604.5 Charter service agreement.
Subpart B--Exceptions
604.6 Purpose.
604.7 Government officials.
604.8 Qualified human service organizations.
604.9 Hardship.
604.10 Leasing FTA funded equipment and drivers.
604.11 Events of regional or national significance.
604.12 When no registered charter provider responds to notice from a 
recipient.
604.13 Agreement with registered charter providers.
604.14 Administrator's discretion.
604.15 Reporting requirements for all exceptions.
Subpart C--Procedures for Registration and Notification
604.16 Registration of private charter operators.
604.17 Notification to registered charter providers.
Subpart D--Procedures for Registration of Qualified Human Services 
Organizations and Duties for Recipients Regarding Charter Registration 
Web Site
604.18 Registration of qualified human service organizations.
604.19 Duties for recipients with respect to charter registration 
Web Site.
Subpart E--Advisory Opinions
604.20 Purpose.
604.21 Request for an advisory opinion.
604.22 Processing of advisory opinions.
604.23 Effect of an advisory opinion.
604.24 Special considerations.
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.
604.31 Service.
Subpart G--Investigations
604.32 Investigation of complaint.
604.33 Agency initiation of investigation.
Subpart H--Initial Decisions by FTA and Referrals to a Presiding 
Official (PO)
604.34 Initial decisions and referrals to 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 Depositions.
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 a headquarters office initial decision.
604.49 Administrator's discretionary review of a headquarters 
offices initial decision.
Subpart K--Judicial Review
604.50 Judicial review.


[[Page 7538]]


    Authority: 49 U.S.C. 5323(d); 49 CFR 1.51

Subpart A--General Provisions


Sec.  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.


Sec.  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 their 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 their geographic service area or proposed 
geographic service area for the purpose 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 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, 
49 U.S.C. 5317 or section 3038 of the Transportation Equity Act for the 
21st Century, as amended.
    (d) The requirements of this Part shall not apply to a recipient 
transporting their 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. 5316, or 49 U.S.C. 5317.
    (f) The requirements of this Part shall not apply to a recipient in 
the event of a national, regional, or local emergency lasting fewer 
than three business days. If an emergency exists that the recipient 
expects to last longer than three business days, the recipient shall 
follow the procedures set out in subpart D of 49 CFR part 601.
    (g) The requirements of this Part shall not apply to a recipient in 
a non-urbanized area transporting their employees, other transit system 
employees, transit management officials, transit contractors and 
bidders to or from transit training outside its geographic service 
area.


Sec.  604.3  Exemption.

    (a) Recipients, who do not engage or intend to engage in charter 
services using equipment or facilities funded under the Federal Transit 
Laws, may file an affidavit certifying that they will not provide 
charter services covered by this Part.
    (b) If a recipient files an affidavit described in this section, 
the recipient shall not provide charter service under any of the 
exceptions contained in subpart B and shall be exempt from the 
notification requirements of subpart C.
    (c) The affidavit described in this section shall state:
    I, (insert name and title), hereby swear or affirm that (insert 
name of applicant or recipient) and all contractors or recipients 
through (insert name of applicant or recipient) will not provide 
charter service that uses equipment or facilities funded under the 
Federal Transit Laws.

    I, (insert name and title), also understand that by swearing out 
this affidavit, (insert name of applicant or recipient) and all 
contractors or recipients through (insert name of applicant or 
recipient) could be subject to the penalties contained in 18 U.S.C. 
1001 for submitting false information to the government and may 
subject (insert name of applicant or recipient) and all contractors 
or recipients through (name of applicant or recipient) to a 
withholding of Federal financial assistance as described in 49 CFR 
part 604 subpart I.

    (d) The affidavit described in paragraph (c) of this section shall 
be notarized and an original copy sent to: Office of the Chief Counsel, 
TCC-20, Room 9316, Washington, DC 20590. In addition, the above 
affidavit shall be submitted electronically to http://dms.dot.gov and 
placed in the Charter Service Exemption Docket number xxxxx.
    (e) An affidavit described in this section shall be sent to FTA by 
the third week of September each year.
    (f) A recipient may revoke an affidavit filed under this part by 
sending a notice to the address and docket identified in paragraph (d) 
of this section indicating they revoke the affidavit and agree to 
comply with charter service requirements of this Part.


Sec.  604.4  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) The term ``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) The term ``Administrator'' means the Administrator of the 
Federal Transit Administration or their designee.
    (c) The term ``charter service'' means providing transportation 
service using buses or vans to a group of riders pursuant to a single 
contract with a third party, for a fixed charge, and according to an 
itinerary determined by someone other than the recipient.
    (1) The term charter service includes, but is not limited to, the 
following when the conditions in paragraph (c) of this section are met:
    (i) The use of buses or vans for the exclusive transportation of 
school students (e.g., elementary, secondary, university, or trade), 
school personnel, or school equipment;
    (ii) Shuttle service to events such as festivals, sporting events, 
conventions, and similar functions that occur on an irregular basis or 
for a limited duration; or
    (iii) Shuttle services limited to a specific group of individuals, 
provided under an agreement with an institution, such as a university, 
corporation, or government.
    (2) The term charter service does not include the following:
    (i) Addition of equipment or days to an existing route;
    (ii) Extending service hours for an existing route;
    (iii) Demand responsive service that is part of coordinated public 
transit human service transportation;
    (iv) New or modified service that is open to the public, where the 
recipient establishes and controls the route, and the service continues 
from year to year; or
    (v) The transportation of transit employees from one work location 
to another work location.
    (d) The term ``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) The term ``Chief Counsel'' means the Office of the Chief 
Counsel within the Federal Transit Administration.
    (f) The term ``days'' means calendar days. The last day of a time 
period is included in the computation of time

[[Page 7539]]

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) The term ``FTA'' means the Federal Transit Administration.
    (h) The term ``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.
    (i) The term ``registration list'' means the current list of 
registered charter providers and qualified human service organizations 
maintained on FTA's charter registration website.
    (j) The term ``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) The term ``pattern of violations'' means more than one finding 
of non-compliance with this Part by FTA beginning with the most recent 
finding of non-compliance and looking back over a period of 72 months.
    (l) The term ``public transportation'' has the meaning set forth in 
49 U.S.C. 5302(a)(10).
    (m) The term ``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).
    (n) The term ``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 website.
    (o) The term ``recipient'' means an agency or entity that receives 
Federal financial assistance, either directly or indirectly, under the 
Federal Transit Laws. This term does not include third-party 
contractors.
    (p) The term ``special transportation'' means demand response or 
paratransit service that is regular and continuous and is a type of 
``public transportation.''


Sec.  604.5  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 tier, 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 part 604 et seq., 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 their Grant 
Agreement or Cooperative Agreement for Federal financial assistance.

Subpart B--Exceptions


Sec.  604.6  Purpose.

    The purpose of this subpart is to identify the limited exceptions 
under which recipients may provide community-based charter services.


Sec.  604.7  Government officials.

    (a) Except for a recipient with 1,000 or more buses in peak hour 
service, a recipient may provide charter service to government 
officials (Federal, State, and local) for 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) Records the charter service in a separate log that identifies 
the purpose of the trip, date, time, destination, number of government 
officials on the trip and vehicle number.
    (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 non-transit related purposes.
    (c) A recipient may petition the Administrator for additional 
charter service hours only if the petition contains the following 
information:
    (1) Description of the 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.


Sec.  604.8  Qualified human service organizations.

    (a) Except for a recipient with 1,000 or more buses in peak hour 
service, a recipient may provide charter service to a qualified human 
service organization serving persons:
    (1) With mobility limitations related to advanced age;
    (2) with disabilities; or
    (3) struggling for self-sufficiency.
    (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 organization shall not 
be required to register on the FTA charter registration Web site.
    (c) If an organization serving persons described in paragraph (a) 
of this section does not receive funding from any of the programs 
listed in Appendix A of this Part, the organization shall register on 
the FTA charter registration Web site in accordance with Sec.  604.18.
    (d) A recipient providing charter service under this exception 
shall record the qualified human service organization's name, address, 
phone number, e-mail address, date and time of service, number of 
passengers, origin, destination, trip length (miles and hours), fee 
collected, if any, and vehicle number.


Sec.  604.9  Hardship.

    (a) A recipient in a non-urbanized area may provide charter service 
to an organization if the charter service provided by a registered 
charter provider would create a hardship on the organization because:
    (1) The registered charter provider imposes a minimum trip duration 
and the requested charter service is less than the minimum trip 
duration; or
    (2) The registered charter provider has deadhead time exceeding 
total trip time from initial pick-up to final drop-off.
    (b) A recipient providing charter service under this section shall 
record the organization's name, address, phone number, e-mail address, 
date and time of service, number of passengers, destination, trip 
length (miles and hours), fee collected, if any, and vehicle number.


Sec.  604.10  Leasing FTA funded equipment and drivers.

    (a) A recipient may lease FTA-funded equipment and drivers for 
charter service only if the following conditions exist:

[[Page 7540]]

    (1) The private charter operator is registered on the FTA charter 
registration Web site;
    (2) The registered charter provider owns and operates 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 the registered 
charter provider's name, address, telephone number, number of vehicles 
leased, types of vehicles leased, vehicle identification numbers, and 
documentation presented by the registered charter provider in support 
of paragraph (a)(1) through (3) of this section.


Sec.  604.11  Events of regional or national significance.

    (a) A recipient may petition the Administrator for an exception to 
the charter service regulations in order to provide charter service 
directly to a customer for a special event of regional or national 
significance. In order to petition the Administrator under this 
exception, a recipient shall first consult with registered charter 
providers in the geographic service area to determine whether or not 
registered charter providers are capable of providing the service.
    (b) After completing the consultation required in paragraph (a) of 
this section, a recipient may petition for an exception under the 
following conditions:
    (1) The recipient shall submit its petition for an exception to the 
Administrator at least 90 days before the first day of the special 
event;
    (2) The recipient's petition shall describe the event, explain how 
it is special and of regional or national significance, explain the 
amount of charter service that registered charter providers are not 
capable of providing, explain how registered charter providers will be 
utilized for the event; and
    (3) File the petition in the Special Events Docket number XXXX at 
http://dms.dot.gov.
    (c) Upon receipt of a petition that meets the conditions set forth 
in paragraphs (a), (b)(1), (b)(2), and (b)(3) of this section, the 
Administrator shall review the materials and issue a written decision 
denying or granting in whole or in part the request. In making this 
decision, the Administrator may seek such additional information as the 
Administrator deems necessary.
    (d) Any exception granted by the Administrator under this procedure 
shall be effective only for the special event identified in paragraph 
(b)(2) of this section.


Sec.  604.12  When no registered charter provider responds to notice 
from a recipient.

    (a) A recipient may provide charter service to a customer if no 
registered charter provider responds to the notice issued in Sec.  
604.17:
    (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 interest in 
providing the charter service set out in the notice issued pursuant to 
Sec.  604.17.
    (c) A recipient shall record the charter service in a separate log 
that identifies the customer name, address, phone number, email 
address, date and time of trip, origin and destination, number of 
passengers, trip length (miles and hours), fee collected, if any, and 
vehicle number.


Sec.  604.13  Agreement with registered charter providers.

    (a) A recipient may provide charter service directly to a customer 
after entering into an agreement with all registered charter providers 
in the recipient's geographic service area.
    (b) For purposes of entering into an agreement with all registered 
charter providers as described in paragraph (a) of this section, a 
recipient shall determine the registered charter providers in its 
geographic service area each year before January 30th.
    (c) A recipient shall enter into an agreement with all registered 
charter providers in its geographic service area under this section 
before February 15th of each year.


Sec.  604.14  Administrator's discretion.

    (a) A recipient may petition the Administrator personally for an 
exception to the charter service regulations in order to provide 
charter service directly to a customer for a unique and time sensitive 
event, usually funerals of local, regional, or national significance. 
In order to petition the Administrator under this exception, a 
recipient shall submit a request with the following information:
    (1) A description of the event and why it is unique and time 
sensitive;
    (2) The type of charter 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
    (5) A description of how provision of the requested charter service 
is in the public's interest.
    (b) Upon receipt of a petition that meets the requirements set 
forth in paragraph (a) of this section, the Administrator shall review 
the materials and issue a written decision under his or her own 
signature denying or granting in whole or in part the request. In 
making this decision, the Administrator may seek such additional 
information as the Administrator deems necessary.
    (c) Any exception granted by the Administrator under this procedure 
shall be effective only for the unique event identified in paragraph 
(a) of this section.
    (d) A recipient shall send the request to the Administrator by 
facsimile or email.
    (e) 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.


Sec.  604.15  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 notice and records required electronically and for a period of at 
least three years from the date of the charter service or lease.
    (b) 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) Starting the first quarter after the effective date of this 
rule, 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).
    (d) In unusual circumstances described in the record for the 
service, a recipient may record generalized origin and destination 
information for safety or security reasons.

[[Page 7541]]

Subpart C--Procedures for Registration and Notification


Sec.  604.16  Registration of private charter operators.

    (a) Private charter operators shall provide the following 
information to be considered a registered charter provider:
    (1) Company name, address, phone number, email address, and 
facsimile number;
    (2) Federal or State motor carrier identifying number;
    (3) The geographic service areas of public transit agencies that 
the private charter operator is able to provide charter service in;
    (4) A certification that the private charter operator has valid 
insurance; and
    (5) A private charter operator may also indicate whether they are 
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 shall 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) Registered charter providers 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.


Sec.  604.17  Notification to registered charter providers.

    (a) Upon receiving a request for charter service, a recipient may:
    (1) Decline to provide the service and refer the requestor to FTA's 
charter registration Web site;
    (2) Provide the service pursuant to an exception set out in subpart 
B of this Part; or
    (3) Provide notice to registered charter providers as set out in 
this section and provide the service pursuant to the exception 
contained in Sec.  604.12.
    (b) Upon receipt of a request for charter service, a recipient 
interested in providing the charter service shall provide notice to 
registered charter providers in the recipient's geographic service area 
in the following manner:
    (1) 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) Notice sent to the list of registered charter providers shall 
include:
    (i) Customer name, address, phone number, and email 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.
    (c) A recipient shall retain an electronic copy of the notice and 
the list of registered charter providers that were sent notice of the 
requested charter service for a period of at least three years from the 
date the notice was sent.

Subpart D--Registration of Qualified Human Service Organizations 
and Duties for Recipients Regarding Charter Registration Web site


Sec.  604.18  Registration of qualified human service organizations.

    (a) Qualified human service organizations that do not receive funds 
from Federal programs listed in Appendix A but serve individuals 
described in Sec.  604.8, shall register on FTA's charter registration 
Web site by submitting the following information:
    (1) Name of organization, address, phone number, email 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, or 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 how the requested service is 
consistent with the mission of the qualified human service 
organization.
    (b) A qualified human service organization is eligible to receive 
charter services from a recipient if the qualified human service 
organization:
    (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;
    (2) Verifies FTA's receipt of its registration by viewing its 
information on the FTA charter registration Web site; and
    (3) Certifies that the funding received from a state or local 
program includes funding for transportation.
    (c) A registered charter provider may challenge a qualified human 
service organization's status to receive charter services from a 
recipient by requesting removal of the qualified human service 
organization from FTA's charter registration Web site by filing a 
complaint consistent with subpart F.
    (d) A qualified human service organization shall provide current 
and accurate information on FTA's charter registration, and shall 
update that information no less frequently than every two years.


Sec.  604.19  Duties for recipients with respect to charter 
registration Web site.

    A recipient that provides charter service allowed under this Part 
shall train its affected employees and contractors on how to use the 
FTA charter registration Web site.

Subpart E--Advisory Opinions


Sec.  604.20  Purpose.

    The purpose of this subpart is to set out the requirements for 
requesting an advisory opinion from FTA regarding specific, factual 
events. Advisory opinions are intended to give formal advice to a 
recipient, registered charter providers, or their duly authorized 
representative, regarding the requirements of this Part. This subpart 
also describes the conditions under which an advisory opinion may be 
used in subsequent proceedings.


Sec.  604.21  Request for an advisory opinion.

    (a) A recipient, a registered charter provider, or their duly 
authorized representative, 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, 400 Seventh Street, SW., 
Room 9316,
Washington, DC 20590
Re: Request for Advisory Opinion

The undersigned submits this request for an advisory opinion of the FTA 
Chief Counsel with respect to [the general nature of the matter 
involved].


[[Page 7542]]


A. Issues involved.

[A concise statement of the issues and questions on which an opinion is 
requested.]

B. Statement of facts and law.

[A full statement of all facts and legal points relevant to the 
request.]

The undersigned certifies that, 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.

[Signature]

[Printed name]

[Title of person making request]

[Mailing address]

[Telephone number]

[email address]

    (c) 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.


Sec.  604.22  Processing of advisory opinions.

    (a) A request for an advisory opinion shall be sent to the address 
indicated in Sec.  604.21(b) of this subpart; filed electronically at 
http://dms.dot.gov or sent to the dockets office located at 400 Seventh 
Street SW., PL-401, Washington, DC 20590, in the Charter Service 
Advisory Opinion Docket number xxxx; and sent to the recipient, if 
appropriate.
    (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 Sec.  604.21(b). The Chief Counsel will send the 
response to the requestor, the docket, and the recipient, if 
appropriate.
    (c) The Chief Counsel may respond to any request to FTA for 
regulatory guidance as a request for an advisory opinion, in which case 
the request will be filed in the Charter Service Advisory Opinion 
Docket, and a copy sent to the recipient, if appropriate.


Sec.  604.23  Effect of an advisory opinion.

    (a) An advisory opinion represents the formal position of FTA on a 
matter, and except as provided in Sec.  604.24 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.


Sec.  604.24  Special considerations.

    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, who 
may not delegate this function.

Subpart F--Complaints


Sec.  604.25  Purpose.

    This subpart describes the requirements necessary for filing a 
complaint with FTA regarding the provision of charter service by 
recipients or filing a complaint challenging the listing of a private 
charter operator or qualified human service organization on the FTA 
charter registration Web site. Note: FTA expects all parties to attempt 
to resolve matters informally before beginning the official complaint 
process, which can be time-consuming and expensive to all parties 
involved.


Sec.  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 their 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 website;
    (3) Files the complaint electronically by submitting it to the 
Charter Service Complaint Docket number xxxx; and
    (4) Serves the complaint by email (or facsimile number if no email 
address is available) and attaches documents offered in support of the 
complaint upon all entities named in the complaint.
    (b) The private charter operator or qualified human service 
organization shall have 7 days to answer the complaint and shall file 
such answer and all supporting documentation in the Charter Service 
Complaint Docket number xxxxx.
    (c) A recipient, qualified human service organization, or a 
registered charter provider, or their duly authorized representative, 
shall not file a reply to the answer.
    (d) FTA shall determine whether to remove the private charter 
operator or qualified human service organization from the FTA charter 
registration website based on probative 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) A determination whether or not to remove a private charter 
operator 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. FTA's decision, 
after consultation with the Chief Counsel, shall state:
    (1) Reasons for allowing the continued listing or removing the 
private charter operator or 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 website.

[[Page 7543]]

    (f) FTA's determination in this section shall not be subject to 
review under subparts J or K of this Part.


Sec.  604.27  Complaints, answers, replies, and other documents.

    (a) A registered charter provider, or their duly authorized 
representative (``complainant''), affected by an alleged noncompliance 
of this Part may file a complaint with the Office of the Chief Counsel.
    (b) Except as provided otherwise in Sec.  604.26, complaints filed 
under this subpart shall--
    (1) Title the document ``Notice of Charter Service Complaint;''
    (2) State the name and address of each recipient who is the subject 
of the complaint and, with respect to each recipient, the specific 
provisions of the Federal Transit Laws that the complainant believes 
were violated;
    (3) Serve the complaint in accordance with Sec.  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;
    (4) Provide a concise but complete statement of the facts relied 
upon to substantiate each allegation;
    (5) Describe how the complainant was directly and substantially 
affected by the things done or omitted by the recipients; and
    (6) Identify each registered charter provider associated with the 
complaint.
    (c) Unless the complaint is dismissed pursuant to Sec.  604.28 or 
Sec.  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. Respondents shall 
have 30 days from the date of service of the FTA notification to file 
an answer.
    (d) The complainant shall 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 supporting documentation upon which the parties rely.
    (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.


Sec.  604.28  Dismissals.

    (a) Within 20 days after the receipt of a complaint described in 
Sec.  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.


Sec.  604.29  Incomplete complaints.

    If a complaint is not dismissed pursuant to Sec.  604.28, but is 
deficient as to one or more of the requirements set forth in Sec.  
604.27, the Office of the Chief Counsel will 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.


Sec.  604.30  Filing.

    (a) Filing address. Unless provided otherwise, the complainant 
shall file the complaint with the Office of the Chief Counsel, 400 
Seventh Street, SW., Room 9316, Washington, DC 20590 and file it 
electronically at http://dms.dot.gov or mail it to the docket at 400 
Seventh Street, SW., PL-401, Washington, DC 20590. Filings sent to the 
docket shall include the Charter Service Complaint docket number xxxx.
    (b) Date and method of filing. Filing of any document shall be by 
personal delivery or U.S. mail. Unless the date is shown to be 
inaccurate, documents to be filed with FTA shall be deemed filed:
    (1) On the date of personal delivery;
    (2) On the mailing date shown on the certificate of service;
    (3) On the date shown on the postmark if there is no certificate of 
service; or
    (4) On the mailing date shown by other evidence if there is no 
certificate of service and no postmark.
    (c) E-mail. A party may also send the document by facsimile or 
email, but delivery by either facsimile or email shall not constitute 
service as described in Sec.  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 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.


Sec.  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 email 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 number xxxx.
    (h) 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

[[Page 7544]]

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 
email or facsimile numbers (if also served by email or facsimile) by 
[specify method of service]:

[list persons, addresses, and email or facsimile numbers]
Dated this -- day of --, 20--.
[signature], for [party]

    (i) Method of service. Except as otherwise provided in Sec.  
604.26, or agreed by the parties and the Presiding Official, as 
appropriate, the method of service is personal delivery or U.S. mail.
    (j) Presumption of service. There shall be a presumption of lawful 
service--
    (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 most current 
address submitted under this section has been returned as 
undeliverable, unclaimed, or refused.

Subpart G--Investigations


Sec.  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 Sec.  604.27 was 
due to FTA.


Sec.  604.33  Agency initiation of investigation.

    (a) Notwithstanding any other provision of law, 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 Sec.  
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--Initial Decisions by FTA and Referrals to a Presiding 
Official (PO)


Sec.  604.34  Initial decisions and referrals to a PO.

    (a) After receiving a complaint consistent with Sec.  604.27, and 
conducting an investigation, the Chief Counsel may:
    (1) Issue an initial decision, signed by a headquarters office, 
based on the pleadings filed to date;
    (2) Refer the matter to a PO; or
    (3) Dismiss the complaint pursuant to Sec.  604.28.
    (b) If the Chief Counsel refers the matter to a PO, 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 an initial 
decision.


Sec.  604.35  Separation of functions.

    (a) Proceedings under this Part shall be handled by an FTA 
attorney.
    (b) After issuance of an initial decision by a headquarters office, 
the FTA employee or contractor engaged in the performance of 
investigative or prosecutorial functions in a proceeding under this 
Part will not, in that case or a factually related case, participate or 
give advice in a final decision by the Administrator or designee on 
written appeal, and will 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, 
or FTA employees advising those officials in that capacity.

Subpart I--Hearings


Sec.  604.36  Powers of a PO.

    A PO may:
    (a) Give notice of, and hold, pre-hearing conferences and hearings;
    (b) Administer oaths and affirmations;
    (c) Issue administrative subpoenas and 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 an 
initial decision.


Sec.  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 a notice of appearance in accordance 
with Sec.  604.30 and Sec.  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 initial decision and for the final agency 
decision by the length of time in the PO's decision.

[[Page 7545]]

Sec.  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.


Sec.  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.


Sec.  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.


Sec.  604.41  Standard of proof.

    The PO shall issue an initial decision or shall rule in a party's 
favor only if the decision or ruling is supported by, and in accordance 
with, reliable, probative, and substantial evidence contained in the 
record and is in accordance with law.


Sec.  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 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.
    (c) A party who has asserted an affirmative defense has the burden 
of proving the affirmative defense.


Sec.  604.43  Offer of proof.

    A party whose evidence has been excluded by a ruling of the PO may 
offer the evidence on the record when filing an appeal.


Sec.  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://dms.dot.gov or after payment of reasonable 
costs for search and reproduction of the record.


Sec.  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 an initial decision on the record.


Sec.  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 a headquarters office for ratification or modification not later 
than 110 days after the referral from the Chief Counsel.
    (b) The headquarters office shall ratify or modify the PO's 
recommended decision within 30 days of receiving the recommended 
decision. The headquarters office shall serve its initial decision, 
which is capable of being appealed to the Administrator, on all parties 
to the proceeding.


Sec.  604.47  Remedies.

    (a) If the headquarters office determines that a violation of this 
Part occurred, the headquarters office shall take any of the following 
actions:
    (1) Bar the recipient from receiving future Federal financial 
assistance from FTA;
    (2) Order the refund of revenue collected in violation of this Part 
to the U.S. Treasury; or
    (3) Order the withholding of a reasonable percentage of available 
Federal financial assistance.
    (b) In determining the type and amount of remedy, the headquarters 
office shall consider the following factors:
    (1) The nature and circumstances of the violation;
    (2) The extent and gravity of the violation;
    (3) The revenue earned by providing the charter service;
    (4) The operating budget of the recipient; and
    (5) Such other matters as justice may require.
    (c) The headquarters office shall mitigate the remedy when the 
recipient can document corrective action of alleged violation. The 
headquarters office'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

[[Page 7546]]

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 headquarters office finds a pattern of 
violations, the remedy ordered shall bar a recipient from receiving 
Federal transit assistance in an amount that the headquarters office 
considers appropriate.
    (e) The headquarters office may propose to withhold Federal 
financial assistance in a lump sum or over a period of time not to 
exceed five years.

Subpart J--Appeal to Administrator and Final Agency Orders


Sec.  604.48  Appeal from a headquarters office initial decision.

    (a) Each party adversely affected by the headquarters office's 
initial decision may file an appeal with the Administrator within 21 
days of the date of the headquarters office issued their initial 
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 Sec. Sec.  604.30 and 
604.31.
    (b) If an appeal is filed, the Administrator reviews the entire 
record and issues a final agency decision and order based on the record 
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 
the Federal Transit Laws or any regulation, or agreement the final 
agency order includes a statement of corrective action, if appropriate, 
and identifies remedies.
    (c) If no appeal is filed, and the Administrator does not take 
review of the initial decision by the headquarters office on the 
Administrator's own motion, the headquarters office's initial decision 
shall take effect as the final agency decision and order on the twenty-
first day after the actual date the headquarters office's initial 
decision is issued.
    (d) The failure to file an appeal is deemed a waiver of any rights 
to seek judicial review of a headquarters office initial decision that 
becomes a final agency decision by operation of paragraph (c) of this 
section.


Sec.  604.49  Administrator's discretionary review of a headquarters 
office's initial 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 the headquarters office's initial 
decision that contains the following information:
    (1) The notice sets forth the specific findings of fact and 
conclusions of law in the initial 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 headquarters 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 Sec.  604.30 and Sec.  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 the 
Federal Transit Laws, regulations or agreement, the final agency order 
includes a statement of corrective action, if appropriate, and 
identifies remedies.

Subpart K--Judicial Review


Sec.  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) An FTA decision to dismiss a complaint as set forth in 
Sec. Sec.  604.28 and 604.29;
    (2) FTA's determination to remove or allow a listing on FTA's 
charter registration website in accordance with Sec.  604.26;
    (3) A recommended decision issued by a PO at the conclusion of a 
hearing;
    (4) A headquarters office decision that becomes the final decision 
of the Administrator because it was not appealed within the stated 
timeframes.

    Issued this 12th day of February, 2007.
James S. Simpson,
Administrator.
 [FR Doc. E7-2715 Filed 2-14-07; 8:45 am]
BILLING CODE 4910-57-P