# Charter Service > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A08-86 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** January 14, 2008 - **Citation:** 73 FR 2326 ## Text DEPARTMENT OF TRANSPORTATION Federal Transit Administration 49 CFR Part 604 [Docket No. FTA-2005-22657] RIN 2132-AA85 Charter Service AGENCY: Federal Transit Administration, DOT. ACTION: Final rule. SUMMARY: This final rule amends regulations which govern the provision of charter service by recipients of Federal funds from the Federal Transit Administration (FTA). Pursuant to the direction contained in the Joint Explanatory Statement of the Committee of Conference, for section 3023(d), “Condition on Charter Bus Transportation Service” of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) of 2005, FTA established a committee to develop, through negotiated rulemaking procedures, recommendations for improving the regulation regarding unauthorized competition from recipients of Federal financial assistance. This final rule clarifies the existing requirements, sets out a new definition of “charter service,” allows for electronic registration of private charter providers, which replaces the old “willing and able” process, includes a new provision allowing private charter operators to request a cease and desist order, and establishes more detailed complaint, hearing, and appeal procedures. DATES: Effective Date: April 30, 2008. ADDRESSES: A copy of this rule and comments and material received from the public, as well as any documents indicated in the preamble as being available in the docket, are part of docket FTA-2005-22657 and are available for inspection or copying at the Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Ave., SE., West Building Ground Floor, Room W12-140, Washington, DC between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may retrieve the rule and comments online through the Federal Document Management System (FDMS) at: http://www.regulations.gov. Enter docket number 22657 in the search field. The FDMS is available 24 hours each day, 365 days each year. Electronic submission and retrieval help and guidelines are available under the help section of the Web site. An electronic copy of this document may also be downloaded from the Government Printing Office's Electronic Bulletin Board Service at (202) 512-1661. Internet users may also reach the Office of the Federal Register's home page at: http://www.nara.gov/fedreg and the Government Printing Office's Web page at: http://www.gpoaccess.gov/fr/index.html. FOR FURTHER INFORMATION CONTACT: Crystal Frederick, Ombudsman for Charter Services, Federal Transit Administration, 1200 New Jersey Ave., SE., Room E54-410, Washington, DC 20590, (202) 366-4063 or ombudsman.charterservice@dot.gov. SUPPLEMENTARY INFORMATION: A. Background 1. Statutory History The Federal Transit Administration was established by the Urban Mass Transportation Act of 1964 (UMT Act, the Act). 1 The Act provided funds for “mass transportation” purposes, defined as: “transportation by bus or rail or other conveyance, either publicly or privately owned, serving the general public (but not including school buses or charter or sightseeing service) and moving over prescribed routes.” 2 This provision illustrates the balance Congress sought to strike between the public and private sectors of the economy. Congress acted to provide Federal funding for the continued existence of urban fixed route providers by enacting a capital program to acquire private transit companies and establish new public transportation agencies. The charter services provided by private companies were still profitable; accordingly, Congress excluded charter service from the definition of “mass transportation.” 1 Pub. L. No. 88-365. 2 UMT Act, Section 2(b). The Federal Aid Highway Act of 1973 placed an additional restriction on the use of federally funded buses for charter service. The 1973 Act prohibited Federal assistance unless the applicant had entered into an agreement with the Secretary of Transportation that it would not engage in charter bus operations in competition with private bus operators outside of the area in which the applicant provided regularly scheduled mass transportation services. In 1974, however, Congress eased the 1973 restriction by allowing an applicant to provide charter services outside the urban area where it provided regularly scheduled mass transportation if it entered into an agreement with the Secretary of Transportation that provided “fair and equitable arrangements” to ensure that federally assisted operators did not compete with private operators of intercity charter bus service where such private operators were willing and able to provide the service. 3 In other words, Federal financial assistance should not enable applicants to foreclose private operators from the intercity charter bus industry where there are private charter operators willing and able to provide the service. 3 Pub. L. 93087, Section 164(a), August 13, 1973. 2. Regulatory History FTA proposed its first regulation regarding charter service on June 13, 1975. 4 This proposal set out policies and procedures governing the provision of charter bus services and the reporting of charter bus revenues and expenses under the UMT Act. The proposed regulations required public operators to take into account both the direct and indirect costs of operating charter service, without regard to the receipt of Federal financial assistance, when developing their charter rates. The proposed regulations also compelled public operators to generate revenues equal to or greater than the cost of providing the charter bus service. 5 FTA finalized this regulation on April 1, 1976. 6 4 “Charter and School Bus Operations,” 40 FR 25304, June 13, 1975. 5 Id. at 25305. 6 “Charter and School Bus Operations,” 41 FR 14123, April 1, 1976. Public transportation agencies complained that this final regulation created an undue administrative burden on them. Private charter companies complained that publicly funded operators, using federally financed equipment, were forcing them out of business. In response, FTA issued an Advance Notice of Proposed Rulemaking (ANPRM) in 1976, which sought to clarify the duties of recipients who engaged in charter bus operations outside their urban area and provide more reliable protection to private operators in the intercity charter bus industry while reducing paperwork burdens on recipients. 7 7 41 FR 56680, December 29, 1976. Another ANPRM was published in 1982, which sought to take a fresh look at the charter regulations. 8 The ANPRM contained four proposals for safeguarding the use of transit equipment and protecting the health of the private intercity charter industry. After reviewing the comments received, FTA determined that none of the four proposals adequately addressed the problem. So, in 1986, FTA issued a NPRM with a brand new proposal. This proposal would prohibit a recipient from performing any charter bus operations to the extent that there was a private charter operator willing and able to provide such charter service in the area in which the recipient desired to provide charter bus operations. This proposal also included exceptions that allowed a public transportation agency to provide charter service in the event there were no willing and able private charter operators, if private charter operators did not have capacity, if private charter operators were unable to provide accessible equipment, or for non-urbanized areas, or if the private charter operator providing the service would create a hardship for the customer. 9 This proposal was finalized in 1987. 10 8 41 FR 5394, January 19, 1981. 9 51 FR 7891, March 6, 1986. 10 52 FR 11916, April 13, 1987. The 1976 regulation and the 1987 regulation are fundamentally different in their approaches and provisions. The 1976 regulation distinguished between charter service that a recipient provided in its service area (intracity service) and charter service a recipient provided outside its service area (intercity service). The 1976 regulation made this distinction because of the new provisions of the UMT Act, which restricted only a recipient's intercity charter service. The rule required recipients to certify all costs that were attributable to the recipient's charter bus operations and maintain records that justified their costs. In contrast, the 1987 rule did not provide different requirements for intercity and intracity service. The 1987 rule eliminated this distinction because the UMT Act definition of “mass transportation” excluded all charter operations, thereby requiring protection for all private charter operators from recipients, not just those providing intercity operations or those that earned in excess of a certain amount. Instead, the 1987 rule focused on prohibiting all charter service by a recipient if there was a willing and able private charter operator who could perform the service. In 1988, Congress directed FTA to amend the charter service regulation to permit non-profit social service agencies with a clear need for affordable and/or accessible equipment to seek bids for charter service from publicly funded operators. On December 30, 1988, FTA amended the charter service regulations to provide for three new exceptions. 11 The first exception allowed recipients to provide direct charter service to non-profit social service agencies. The second exception, limited to recipients in non-urbanized areas, allowed recipients to provide direct charter service to non-profit social service organizations if more than fifty percent of the passengers were elderly. The third exception allowed recipients to provide direct charter services where there was a formal agreement between the recipient and all private operators it had determined to be willing and able through its annual public charter notice. The addition of these exceptions brought the total number of exceptions contained in the rule to eight. 12 The rule has remained essentially unchanged since this amendment in 1988. 11 H. Report 110-498, p. H 122787 as printed in the Congressional Record, December 21, 1987. 12 “Charter Service; Amendment,” 53 FR 53348, December 30, 1988. 3. Demonstration Project and GAO Report Since lingering concerns remained about the charter service regulation and FTA's enforcement of the rule, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) directed FTA to issue regulations implementing a charter service demonstration program in not more than four states. 13 A report evaluating the effectiveness of the demonstration program was to be submitted in three years. The conference report accompanying ISTEA explained that the demonstration program was directed in response to concerns expressed by local transit operators regarding the existing charter service regulation. Many public operators were concerned that certain groups were not being served under the existing regulation, that they were not able to provide service to local government entities that provided support to the local agency, and that they were not permitted to provide service to support local economic development activities. The demonstration program was to be designed to allow public operators in several locations greater flexibility to meet local charter needs without creating undue competition for privately owned charter operators. Congress required FTA to collect data on the impact of the change. 13 Section 3040, “Intermodal Surface Transportation Efficiency Act of 1991,” Pub. L. No. 102-240, December 19, 1991. In September 1997, FTA submitted its report to Congress regarding the demonstration program. 14 The report concluded that there was no need for FTA to substantially revise its charter service regulation. The demonstration did not support public operators' claims of unmet needs for the groups for which the demonstration was primarily intended: government, civic, charitable and other community activities. The charter service provided during the demonstration did not serve a significant number of these groups or significantly increase the level of service to these groups. 14 “Evaluation of the Charter Bus Demonstration,” Federal Transit Administration, Department of Transportation, September 1997. Congress also directed the Government Accounting Office (GAO) to analyze FTA's charter service regulations. GAO conducted a nationwide survey of public transportation operators, private charter operators, and customers. 15 GAO's report showed that local charter regulation differed across localities. GAO found that most public operators stated that the FTA regulation was too strict, but that they had not extensively used the available exceptions to provide charter service. Their reasons for not using the exceptions ranged from being unfamiliar with the exceptions to the exceptions being too cumbersome for the relatively small amount of charter service that they were interested in providing. 16 When asked what they would change about the regulation, suggestions varied depending on whether the public transportation agency was in an urban or rural area. Urban public transportation providers would change the rule to allow them to provide charter service to local government officials and non-profit community organizations. Rural operators would change the rule to allow direct charter services to nonprofit and community organizations, but also requested clarification of the rule. 17 15 “Charter Bus Service: Local Factors Determine the Effectiveness of Federal Regulation, GAO Report to Congressional Committees,” GAO/RCED-93-162, September 7, 1993. 16 Id. at 3. 17 Id. at 4. GAO found that most private charter operators were satisfied with FTA's charter service regulations. Some private charter operators did, however, express concern about the complaint process. Specifically, some private charter operators stated that the burden of proof fell on them when a public operator violated the regulation, the burden of proof fell on them and that the complaint process was lengthy and expensive. Further, some were skeptical that recipients were accurately calculating their fully allocated costs (i.e., all labor, capital, and material costs) of providing charter service. As a result some private charter operators believed that public transportation agencies were charging lower rates than they should. 18 18 Id. at 37. The GAO also interviewed customers of charter service to find out their concerns with FTA's charter service regulation. GAO found two user groups that were dissatisfied with the regulation: those who needed accessible transportation and those who needed a large number of vehicles to serve local conventions and economic development activities. 19 19 Id. at 38. The GAO report concluded that its data did not provide compelling evidence that there were serious widespread needs for charter service that could not be met under the current regulation. The data showed that the current exceptions to the regulation, such as contracting with private providers, were not widely used. GAO believed that many public operators, particularly those in rural areas, were unfamiliar with the process for obtaining exceptions. 20 20 Id. at 11. B. SAFETEA-LU Congress next addressed concerns regarding FTA's charter service regulation in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which was enacted on August 10, 2005. The statute amended the statutory provision regarding charter service found at 49 U.S.C. 5323(d). Specifically, with respect to remedies, the SAFETEA-LU amendment provides that, “in addition to any remedy specified in the agreement, the Secretary shall bar a recipient or an operator from receiving Federal transit assistance in an amount the Secretary considers appropriate if the Secretary finds a pattern of violations of the agreement.” Previously, the statute used permissive language, “may,” rather than mandatory language, “shall,” with respect to withholding funds. Further, the previous statutory language did not state that the Secretary could determine an appropriate amount to withhold when the Secretary found a pattern of violations. Rather, if a pattern of violations was found, the Secretary only had the option to bar the recipient from receiving all of its Federal funds. Additionally, the Joint Explanatory Statement of the Committee of Conference, for section 3023(d), “Conditions on Charter Bus Transportation Service” of SAFETEA-LU, stated “the conferees are aware that both public transportation providers and private charter bus providers have expressed strong concerns about the 1987 FTA rule enforcing section 5323(d) regarding charter bus service. The conferees direct the FTA to initiate a negotiated rulemaking seeking public comment on the regulations implementing section 5323(d).” The report also directed FTA to consider the following issues during the negotiated rulemaking: 1. Are there potential limited conditions under which public transit agencies can provide community-based charter services directly to local governments and private non-profit agencies that would not otherwise be served in a cost-effective manner by private operators? 2. How can the administration and enforcement of charter bus provisions be better communicated to the public, including the use of Internet technology? 3. How can enforcement of violations of the charter bus regulations be improved? 4. How can the charter complaint and administrative appeals process be improved? C. Federal Advisory Committee In response to the direction contained in the Conference Committee Report, FTA established a federal advisory committee to develop, through negotiated rulemaking procedures, recommendations for improving the regulation regarding charter bus services. FTA established a Federal Advisory Committee on May 5, 2006. The Charter Bus Negotiated Rulemaking Advisory Committee (CBNRAC) consisted of persons who represented the interests affected by the proposed rule (i.e., charter bus companies, public transportation agencies—recipients of FTA grant funds) and other interested entities. The CBNRAC included the following organizations: American Association of State Highway and Transportation Officials; American Bus Association; American Public Transportation Association; Amalgamated Transit Union; Capital Area Transportation Authority, Lansing, Michigan; Coach America; Coach USA; Community Transportation Association of America; FTA; Kansas City Area Transportation Authority; Lancaster Trailways of the Carolinas; Los Angeles County Municipal Operators Association; Monterey Salinas Transit; National School Transportation Association; New York Metropolitan Transportation Authority; Northwest Motorcoach Association/Starline Luxury Coaches; Oklahoma State University/The Bus Community Transit System; River Cities Transit, Pierre, South Dakota; Southwest Transit Association; Taxicab, Limousine & Paratransit Association; Trailways; and United Motorcoach Association. The CBNRAC met in Washington, DC, on the following dates in 2006: May 8-9 June 19-20 July 17-18 September 12-13 October 25-26 December 6-7 FTA hired Susan Podziba & Associates to facilitate the CBNRAC meetings and prepare meeting summaries. All meeting summaries, including materials distributed during the meetings, are contained in the docket for this rulemaking (#22657). During the first meeting of the CBNRAC, the committee developed ground rules for the negotiations, which are summarized briefly below: ○ 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. ○ 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. ○ All consensus agreements reached during the negotiations are assumed to be tentative agreements contingent upon additional minor revisions to the language until members of the CBNRAC reach final agreement on regulatory language. Once final consensus is achieved, the CBNRAC members may not thereafter withdraw from the consensus. ○ 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. ○ 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. ○ 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. ○ 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. ○ If FTA alters consensus-based language, it will identify such changes in the preamble to the proposed rule, and the CBNRAC members may provide formal written negative or positive comments on those changes and on other parts of the proposed rule that might be connected to that issue. A complete description of the ground rules is contained in the docket for this rulemaking. Finally, the CBNRAC reached consensus on the issues the committee would consider during its negotiations. The committee agreed to consider the four issues included in the Conference Committee report, noted in the previous section of this preamble, and these four additional issues: 1. A new process for determining if there are private charter bus companies willing and able to provide service that would utilize electronic notification and response within 72 hours. 2. A new exception for transportation of government employees, elected officials, and members of the transit industry to examine local transit operations, facilities, and public works. 3. Review and clarify, as necessary, the definitions of regulatory terms. 4. FTA policies relative to the enforcement of charter rules and the boundary between charter and mass transit services in specific circumstances, such as university transportation and transportation to/from special events. 1. Facilitator's Final Report The facilitator, Susan Podziba, submitted her report to FTA on March 6, 2007. The final report summarizes the proceedings of the CBNRAC including the agreement reached on regulatory language for the NPRM and identifies outstanding issues. The facilitator noted in her final report that: As a result of the negotiated rulemaking process initiated by FTA, the revised Charter Service regulations will account for the interests, concerns, and nuances that were raised by all CBNRAC members. Though the negotiations remained difficult, and, at times, antagonistic throughout the seven months of meetings, CBNRAC members remained committed and worked hard to identify consensus solutions for each issue. As a result of the intensive discussions and multiple proposals and counter-proposals offered to resolve the twelve outstanding sub-issues, FTA has a clear understanding of the interest and concerns of both the public transit and private charter stakeholders as well as the range of options available for deciding those issues. (Final Report, page 20.) We would like to underscore the facilitator's conclusion and thank all members of the CBNRAC for their efforts. We also agree with the facilitator that, as a result of the negotiations, we have a clear understanding of the interests involved with the revision of the Charter Service regulations. D. NPRM On February 15, 2007, FTA published a NPRM in the Federal Register (72 FR 7526). The NPRM was a complete revision of 49 CFR part 604. According to the agreement established during the negotiations, FTA included in the NPRM all of the provisions on which the CBNRAC reached consensus. This amounted to a little more than 80 percent of the rulemaking. For the other 20 percent, FTA used its discretion, informed by the discussions during the negotiations, to develop its proposals. 1. Overview of Comments Received on the NPRM We received over 300 comments in response to our NPRM. We heard from 160 public transit agencies, 65 private charter operators, 25 public associations, 16 members of the public, 13 state departments of transportation, 11 private charter associations, 11 cities, 10 universities, four public officials, three air transport groups, and three anonymous comments. We received several comments from participants on the CBNRAC. Some comments were in full support of the proposals contained in the NPRM and other comments rejected the proposals. Even though some of the comments submitted by members of the CBNRAC did not conform to the agreement reached on December 6, 2006, FTA retained much of the consensus language. In addition, we received many helpful comments on ways to improve the regulatory language and we made changes based on those comments. 2. General Comments There were a number of comments on cross-cutting issues that we address before the section-by-section analysis. Specifically, we received comments about the lack of appendices in the NPRM, fully allocated costs, and when a customer specifies the type of equipment. In addition, we received several comments questioning our intentions regarding some of the proposals included in the NPRM. a. Lack of Appendices When we published the NPRM, we made reference to appendices we intended to include in the final rule. Appendix A would be a list of the 64 Federal programs discussed and provided during the CBNRAC negotiations. This list is not unique; rather, other Federal agencies reference this list and the list is available on FTA's public Web site, http://www.fta.dot.gov . In addition, the list of Federal programs was provided to all of the members of the CBNRAC during negotiations and is in the docket for these proceedings. Appendix B would provide guidance on what FTA would consider when removing a registered charter provider or qualified human service organization from the FTA Charter Registration Web site. Appendix C would be a list of questions and answers to provide guidance to recipients regarding the new provisions of the rule. Regarding the lack of appendices in the NPRM, a large public transportation association and several public transit agencies stated “we are troubled by the absence of a draft Appendix A (listing the federal programs that would qualify a social service agency to receive services under an exception). Although we anticipate that all of the more than five dozen federal programs under the United We Ride umbrella will be included, we believe FTA should state as much or provide a draft Appendix A for comment.” Appendices are not regulatory text and do not carry the force and effect of law. In fact, the Office of Federal Register specifically prohibits an appendix from containing regulatory requirements: Rules and proposed rules. Use an appendix to improve the quality or use of a rule but not to impose requirements or restrictions. Use an appendix to present: (a) Supplemental, background, or explanatory information which illustrates or amplifies a rule that is complete in itself; or (b) Forms or charts which illustrate the regulatory text. You may not use the appendix as a substitute for regulatory text. Present regulatory material as an amendment to the CFR, not disguised as an appendix. Material in an appendix may not: (a) Amend or affect existing portions of CFR text; or (b) Introduce new requirements or restrictions into your regulations. 21 21 National Archives and Records Administration, Office of the Federal Register, Federal Register Document Drafting Handbook, page 7.9 (October 1998). Further, as noted above, an appendix is explanatory, and, therefore, according to the Administrative Procedure Act, notice and comment is not required: Except when notice or hearing is required by statute, this subsection does not apply— (A) To interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) When the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 22 22 5 U.S.C. section 553(b). Based on the above, and the fact that proposed information for the appendices was widely available to the public before publication of the NPRM, we made the decision not to include appendices at the NPRM stage. b. Fully Allocated Costs Our proposed rulemaking did not include a requirement for recipients to calculate their fully allocated costs. We decided not to include the provision primarily because a fully allocated cost requirement has the potential to interfere with our efforts to support public transit agencies as mobility managers within their communities. In addition, we are very concerned that a fully allocated cost requirement would hinder our attempts to negotiate with other federal agencies to develop cost allocation principles to share fairly the cost of human service transportation. Private charter operators submitted comment urging us to reconsider our proposal. One comment, which represents a consolidated opinion of several of the private charter operators on the CBNRAC, stated that “the admonition to develop ‘fair charges’ and to recover some percentage of marginal operating costs consistent with the public purpose of the service is useless as either a regulatory tool or guidance to transit agencies. It also provides no protection to private operators. The need for transit agencies to recover fully allocated costs is present even for service provided under one of the many exceptions in this proposed rule.” They contend that, like other social programs, if the Federal Government wishes to subsidize charter service for certain social service organizations, it can make direct subsidy payments to those organizations instead of creating subsidized public bus service that undercuts the price structure in the private market. In addition, one international private charter association suggested that FTA impose a new fully allocated cost requirement: “A system-wide cost per revenue hour dollar figure (approved operating budget divided by revenue hours of bus service) is the fairest and simplest way of estimating what it would cost per hour to provide bus service to a third party. This method does not necessarily capture the capital cost consumed, overtime driver hours or preparation time or the infrastructure shared to make this service available to a third party, but on balance a system-wide cost per revenue vehicle hour times total hours of the requested service is the closest to what the actual cost would be to provide the service.” We understand this point of view, but disagree that requiring fully allocated costs is necessary. The rule as written prohibits a public transit agency from providing charter service if a private charter operator expresses interest in providing the service. In addition, the exceptions contained in the rule are areas of charter service that the private charter coalition conceded are areas where public transit agencies can provide community-based charter services that would not otherwise be served in a cost-effective manner by private operators. Not including fully allocated cost provisions in the final rule is appropriate given our efforts to establish coordinated public transit human service transportation and the protections provided for private charter operators in the final rule such as notification procedures and cease and desist orders. c. When a Customer Specifies Equipment In the NPRM, we did not address specifically what would occur if a customer specifies certain equipment in their request for charter service. The only reference we made to specific equipment was in the preamble where we discussed the fact that rubber tire trolley buses are considered buses for purposes of this rulemaking. We received several comments on this topic unrelated to our discussion of including rubber tire trolley buses within the scope of buses generally. Public transit agencies encouraged us to allow a customer to specify the type of equipment they would like use. A member of the public encouraged us to exclude electrically powered trolleys from the scope of the rule. Another member of the public suggested that the notice recipients send to private providers “should also include a description of the specific equipment requested by the customer and not just ‘buses or vans.’ This comment goes on to state “any new rule allows the purchaser of the service to decide what kind of equipment it needs. To that end, the notice to private providers should allow for a reasonable amount of specificity regarding the requirements for a particular service.” Another comment echoed the above sentiment by stating “I should not be forced to obtain services from private charter operators who do not have the proper coach equipment, to spend more money for single door highway coaches, with high floors that take longer to load and unload, that are not geared for city street/shuttle operations, thereby forcing me to obtain more equipment for frequency of service * * *.” The comments regarding types of equipment raise a tricky issue in balancing protections for private charter operators with the need for transit agencies to satisfy community demands. In order to provide attractive “fun” alternatives to encourage downtown employees or tourists to use transit in congested corridors, transit agencies may acquire rubber tire replica trolleys. These trolleys can become a popular enough local attraction that they may be sought for private leisure charters such as weddings. The statute, however, addresses charter without regard to equipment type. The FTA regulation relates to the provision of transportation service, not entertainment, which is why sightseeing is also excluded from the statutory definition of “public transportation.” If there is sufficient demand for such equipment, private charter operators may eventually acquire new equipment to serve this emerging market. In the meantime, however, FTA sees no reason to amend the rule to allow an exception under which a customer may specify the type of vehicle beyond requesting a bus or a van. Likewise, if there were sufficient public demand for low-floor, double door vehicles, or size compatibility with streets to be traveled, and private charter operators do not have that equipment, then private charter operators may eventually acquire new equipment to serve that market as well. But, again we decline to amend the rule to allow for such an exception for public transit agencies. d. Other Concerns We received several comments questioning the intentions of the FTA in proposing the NPRM provisions that we did. One comment from a transit agency stated “The tone of this proposed rule suggests a presumption of ‘guilt’ on the part of all transit providers.” Another transit agency put it this way: “Transit providers should not have to prove, on a daily basis, that they are following the rules.” One public citizen asked: “When was legislation passed that authorized FTA to stop supporting transit.” Or, as a Midwestern transit agency stated “I am opposed to federal requirements that squash our attempt to generate some extra revenue to support the transit system.” FTA went to great lengths to involve all of the affected and interested parties in the CBNRAC negotiations. We prepared background materials, brought in speakers to assist the committee, and hired a highly competent and effective facilitator to assist throughout the process. In addition, all of the materials and notes were posted to the docket so that members of the public could follow the proceedings and each meeting had a public comment period should any member of the public wish to make comments about the proceedings. We were able to reach consensus on 80 percent of the rulemaking. This means the CBNRAC, which included small, medium, and large transit agencies from the West, South, Midwest, North and East, were able to agree on a vast majority of the regulatory text for the NPRM. The provisions were developed with the intention of promoting public transit and protecting the private charter industry. As indicated in the history section of this document, achieving the right balance has been a challenge for many years. We accepted this challenge because a negotiated rulemaking was a novel approach to addressing the issues that have plagued this regulation for years. Given the above, we regret that some commenters perceived the proposed rule to be anti-transit. The tone of this rulemaking is the same as the current regulation and the same as any regulation that prescribes certain behavior. We are in the business of promoting and supporting transit agencies in their mission to provide community-based services. We recognized and promulgated exceptions to the charter service regulation that support transit agencies providing charter services to the elderly, persons with disabilities, and people with low income. In addition, we carefully considered the interests of parties impacted by this rulemaking. The negotiated rulemaking was a powerful tool for collecting that information. We also considered all of the comments received on the proposal and modified some of the regulatory text based on the suggestions included in comments. 2. Section-by-Section Analysis In addressing the comments received, we divided the comments according to the applicable rulemaking section. For each section for which we received substantive comments, we provide a brief summary of the purpose of the regulatory text, we summarize the relevant and representative comments received, and then we describe our decision whether to modify that particular provision. If we modified the provision, then we describe the modification. If we decided not to accept the proposed modification, then we explain why and adopt the language as proposed in the NPRM. For sections of the rule where we did not receive substantive comments, those provisions are hereby adopted as final. Subpart A—General Provisions Section 604.2—Applicability The purpose of this provision was to state early on in the regulation that is required to comply with this rulemaking, who is exempt from the rule's requirements, and to set out certain situations in which this rule does not apply. One public transportation association noted that “the draft rule provides for application to all activities of FTA grantees that are public transit agencies, without regard to the presence or absence of federal funding * * *” We also heard this comment from several public transit agencies. In addition, one transit agency suggested that this rulemaking not apply to those that receive a minimal amount of Federal funds. Agency Response: We note that in order to be an “FTA grantee” a transit agency has accepted Federal funds from FTA. The commenter correctly notes that to conclude otherwise would “exceed FTA's authority and its stated purpose of protecting private entities from federally-assisted competition.” Thus, as stated in the NPRM, this rulemaking applies to those that receive Federal financial assistance from FTA. We do not believe setting a minimum amount of Federal funding to trigger application of this rule is necessary. A transit agency always has the option to segregate locally funded and maintained vehicles and use those vehicles to provide charter service. To be clear, however, it is not just purchasing a vehicle with Federal dollars that triggers the application of these requirements. Housing the vehicle in FTA-funded facilities or using FTA-funded equipment to maintain the vehicle also triggers application of this rule. A complete segregation is necessary to avoid the application of the requirements of this rule. We also received a comment from a state association asking us whether the charter service regulations apply to tribal nations. Under our Notice of Funding Availability for the Tribal Transit Program, published in the Federal Register on August 15, 2006 (71 FR 46959), the charter service regulation applies to tribal nations under that program. The charter service regulations also apply to tribes that receive FTA grants as recipients or subrecipients under other programs. That being said, however, the final rule provides an exemption for section 5311 recipients, which encompasses many tribal programs that use FTA-funded equipment for program purposes (defined as: “transportation that serves the needs of either human service agencies or targeted populations (elderly, individuals with disabilities, and/or low income individuals); this does not include exclusive service for other groups formed for purposes unrelated to the special needs of the targeted populations.”). FTA considered the comments on this subsection, but does not believe the comments warrant a change to the proposed language, and, therefore, the language is adopted as proposed. Section 604.2(c)—Private Charter Exemption This provision exempts from the rule's coverage private charter operators who receive Federal financial assistance either directly or indirectly under 49 U.S.C. sections 5307, 5309, 5310, 5311, 5316, and 5317, or section 3038 of the Transportation Equity Act for the 21st Century (TEA-21). The main comment received regarding this subsection stated: “In removing private charter operators from its scope, it excludes up to 40 percent of the rural transit network from these rules, thus forcing half the network to follow rules and procedures that are waived for the private sector partners.” Another transit agency stated “we do not believe that private charter operators should be treated different from other organizations that receive Federal funds. Allowing some private charter operators to not comply with the charter regulation and receive Federal funds put those private charter operators at a competitive advantage over other private operators that do not receive Federal dollars. Either the receipt of Federal funds is an important factor or it isn't.” Agency Response: We respond to these comments by noting our rationale in the NPRM for including this provision: “The receipt of funds from the Federal government should not interfere with a private charter operator's business. This regulation has its genesis in the protection of the private charter operators from unfair competition by federally subsidized public transit agencies. To subject private charter operators to the charter service regulations undermines the very purpose of these regulations.” We cite three reasons in support of this analysis. First, we think some comments may have confused the many private not-for-profit agencies that provide public transit service in rural areas with the private charter operators protected by this rule. It is not FTA's intent to apply the requirements of the rule differently to public transit agencies depending on whether they are governmental or non-governmental entities. Second, FTA's Over-the-Road Bus Program is specifically designed to provide Federal assistance to private charter operators so that they can retrofit their vehicles to make them accessible and comply with the Americans with Disabilities Act. This is a federally sanctioned activity, and, thus, to apply the charter regulations would run counter to this Federal program. The same argument also holds true for those private charter operators that receive Federal funds under 49 U.S.C. section 5311(f), which provides a limited amount of Federal support for running routes in rural areas. The point here is that there are clear situations under which the Federal government sees a benefit to providing Federal tax dollars to private charter operators. Third, public transit agencies may enter into a contract with private charter operators to purchase transportation services using the private charter operator's vehicles. The fact that a private charter operator contracts with a public transit agency should not have the unintended consequence of preventing the operator from using those vehicles, or other vehicles in its fleet, to provide charter service. If a private charter operator, however, provides fixed route public transportation using federally funded buses or vans under contract to a transit agency or other public entity such as a State Department of Transportation, the private charter operator stands in the shoes of the transit agency and is subject to the charter service regulations in regard to the use of those FTA-funded vehicles. That private charter operator, however, would not be prevented from using other vehicles in its private fleet to provide charter service. Finally, the comment regarding this section's provisions placing one private charter operator in a competitive advantage over another private charter operator strikes us as disingenuous. No private charter operator raised this issue, and if it truly was a concern, we have to believe at least one private charter operator would have raised it. Thus, while FTA rejects the proposed modifications to this section, we include language to clarify that the charter service regulations do not apply to private charter operators that receive, directly or indirectly, Federal financial assistance under the programs listed or to the non-FTA funded activities of private charter operators that receive assistance under section 3038 of TEA-21. Subsection 604.2(e)—Exemption for Transit Agencies This provision exempts from the charter service regulation recipients who receive funds under 49 U.S.C. sections 5310, 5316, or 5317 and provide charter service consistent with the Federal program purpose. We heard from numerous public transit agencies encouraging us to expand this provision. The most common request was to expand this provision to include recipients under 49 U.S.C. section 5311. The second most common request was to expand the provision to exclude 49 U.S.C. section 5307 recipients that operate 50 or fewer buses in peak hour service. Agency Response: The CBNRAC considered the request to expand the exemption to section 5311 recipients. The private charter caucus opposed this provision because it believed it would lead to abuse because there is no effective way to limit those activities. The second request regarding 5307 recipients is a new one. We considered both options and the concerns raised with expanding the coverage of this section. We believe that this section can be expanded safely to include recipients of section 5311 funds for two reasons. First, section 604(2)(e) already limits the exception “to program purposes only.” We added a definition of program purposes that states: “transportation that serves the needs of either human service agencies or targeted populations (elderly, individuals with disabilities, and or low income individuals); this does not include exclusive service for other groups formed for purposes unrelated to the special needs of these targeted populations.” Second, we believe this expansion is appropriate given FTA's efforts to support coordinated public transit human service transportation activities. Some of the comments received noted that without the exemption this provision could have a chilling effect on those activities, which is something FTA wants to avoid. Thus, limiting section 5311 recipients” provision of charter service to program purposes, as defined in the regulations, provides a limitation on those services we believe will protect private charter operators. In addition, the revised enforcement provisions will also provide a counterbalance to this expansion if it is abused. We reject the second request—excluding 5307 recipients with 50 or fewer buses—because the change might unduly weaken the protections provided by the rule to private charter operators. In an urbanized area, even one served by a small transit system with 50 or fewer vehicles, there are more likely to be private charter operators available than in rural areas. In other instances, the transit system would be able to provide charter service under other exceptions of the rule, so this new exception would be unnecessary. We have therefore amended 604.2(e) to include 49 U.S.C. section 5311 in the list of programs exempted from the requirements of the charter service regulation when the charter service provided supports program purposes. Section 604.2(f)—Emergency Exemption This proposed provision exempts recipients from the charter service requirements in the event of a national, regional, or local emergency lasting fewer than three business days. We heard from several public transit agencies regarding the three day limitation. Many expressed disappointment that the provision would limit a public transit agency's ability to assist in the event of an emergency. Others expressed concern that local emergencies are not included, but could pose an equal amount of danger to the surrounding community. One example provided was a train derailment where noxious fumes engulfed the community where public transit is the logical choice for evacuating the community quickly and efficiently. Another comment asked why this provision does not include security training exercises. Agency Response: Considering the concerns raised, we have decided to amend this section to allow for transit agencies to respond to declared emergencies. We will add the following language to 604.2(f): “Actions directly responding to an emergency declared by the President, Governor, or Mayor or in an emergency requiring immediate action prior to a formal declaration.” In addition, we felt it necessary to provide a time limitation and so we are changing the three day limit to 45 days. Thus, a transit agency has 45 days to assist with emergency response before having to report its activity to the emergency response docket created under subpart D of 49 CFR part 601. Security training exercises are covered by the emergency preparedness exemption in section 604.2(d). Section 604.3—Exemption This provision sets up a mechanism by which transit agencies may “opt out” of the charter service regulations. We heard from transit agencies that this provision is not necessary, the certification procedures were burdensome, and there appears to be no purpose for the affidavit. Agency Response: While we thought this provision would assist a public transit agency to clearly and unambiguously state it does not intend to provide charter services, we are convinced by the comments that this provision is unnecessary. Therefore, we have removed the exemption section from the final regulation. Section 604.4—Definitions This provision sets out the applicable definitions for this part. Since the section contains several definitions, we will only discuss those definitions where the public submitted comments. All other definitions are adopted as proposed. We also added several new definitions as a result of changes we made to the regulation based on the comments we received. Section 604.3(c)—Definition of “charter service” This is a key provision in the charter service regulation. The definition of charter service identifies what service by public transit agencies is considered charter service. Generally, public transit agencies voiced concern that the proposed definition does not “recognize the realities of local public transportation service by having the flexibility to add and modify service for temporary situations, such as community events and employers opening temporary facilities.” A member of the public submitted a comment that noted the proposed definition “potentially undermines coordinated efforts between local governments and risks decreasing the efficiency and cost-effectiveness of service while jeopardizing ridership incentives for universities and transit systems.” In addition, several transit agencies submitted comments stating “while the proposed rulemaking does address the issues raised in the conference committee report, it also far exceeds what seems to be the intent of Congress by providing a vague and poorly explained definition of charter that could have the impact of redefining the very definition of public transportation.” In fact, most transit agencies submitted concerns about the definition not including the term “exclusive.” One public transportation association noted that “the concept of exclusivity—often referred to as “closed door” service—has been integral to the definition of charter service for more than 20 years and is necessarily the primary means of determining whether transportation is public transportation or a private service.” A public transit agency warned that “the failure to include exclusivity in the charter definition has the potential to change the definition of public transportation.” One airport ground transportation association requested that “the proposed federal definition of charter service not supersede local state, city and airport regulatory definitions currently in place for private motor carriers of passengers to and from airports by maintaining the concept of exclusivity.” Some public transit agencies offered alternatives to the proposed definition of charter service. A Midwestern city provided the American Bus Association's quick reference guide on the definitions of charter, mass transportation, and sightseeing. Three members of the public suggested that the definition should be “a point to point service that is not open to the public, and not of a routine nature.” An air transport company recommended that the definition include “at a fixed charge for a motor vehicle.” An east coast public transit authority set forth the following indicia of charter service: “for the sole use of a distinct group of people; routing and frequency of service solely determined by those people using the service or their sponsor; not open to the general public; identification or affiliation required to board; one-time, nonrecurring event, with no regular pattern; and service not on a pre-published schedule or Web site.” We also heard from public transit agencies that the examples included in the definition of charter service should be removed. Several public transit agencies stated the examples were unclear and inconsistent. One east coast public transit association noted that “there is no simple, rigid template that can simply and routinely be applied to every situation to determine whether or not a service is or is not mass transit. Attempting to impose one at the federal level will inevitably result in a great disservice to the public at large. However, reasonable and fair guidelines would be appropriate and useful to all involved parties.” From the private sector side, we heard from two private charter operator coalitions regarding the definition of charter service. They stated that while the CBNRAC did not reach consensus on the definition, the parties did agree that “charter service has three components: (1) Transportation of a group of persons pursuant to a single contract with a third party; (2) a fixed charge; and (3) according to an itinerary determined by someone other than the public transit agency.” In addition, the coalitions urged FTA to not “impose a black or white approach to defining charter service, but should continue to look at the intent of the service and whom the service is designed to benefit.” They also noted that the lack of a written contract should not be dispositive in determining that service is charter service. One of the coalitions recommended a definition of charter service as “providing transportation service, using buses or vans, principally to benefit a group of riders with mutual purpose and destinations.” This association also questioned the need to indicate who controls the service as it may conflict with interpretations and the intention of the rules: “Who ‘controls’ the itinerary has certainly been an interpretation recipients have long abused, particularly in special events.” This association also recommended that “fixed charge” should be removed because it is often abused. Agency Response: By far, this section received the most comments. Since the CBNRAC could not reach a consensus on the definition of charter service, we also received comments from several of the committee members regarding our proposed definition. Considering all of the comments received regarding the definition of charter service, we decided to shorten and simplify the definition, while maintaining flexibility in determining the intent of the charter service. First, we added back the concept of exclusivity to the definition of charter service. In the past, this word has caused problems because a few public transit agencies have used the term as a loophole to avoid the requirements of this rule. We address this issue by adding a definition of “exclusive”—service that a reasonable person would conclude is intended to exclude members of the public—to the list of definitions. Further while we do not agree that a 20 year history is reason enough to add the term exclusive back in the definition, we do believe that exclusivity is a good indication of intent to perform charter service. Second, we removed all of the examples included in the definition of charter service. Instead, we provide factors that we will consider in determining the intent of the service. We also believe that this revised definition will allow transit agencies the flexibility needed to provide public transportation to address traffic mitigation associated with an event, as well as being able to serve community-based public transportation. Third, we make clear in the definition that it does not apply to demand response services provided to an individual. We also provide a definition of “demand response,” which is discussed in the next section. Finally, we have added a provision to the definition of charter service to address events that are limited in duration and for which the public transit agency charges a premium fare or for which a third party pays for the service in whole or in part. While the new definition does not prevent a public transit agency from establishing, on its own, temporary or irregular routes to respond to community demands, we believe that the nature of such service should be to fulfill a public purpose. Thus, the definition of charter service includes service by a public transit that is irregular or on a limited basis for a premium fare that is greater than the usual or customary fixed route fare or service for which a third party pays all or part of the costs for the service. We believe service that fits in either of those categories represents an opportunity for private sector participation, and, therefore, if the public transit agency wishes to provide such service it must give prior notification to registered charter providers in its geographic service area. Section 604.3(g)—Definition of “demand response” This section is new and is based on comments we receiving asking us to define the term as used in the definition of “charter service.” We have taken the definition of “demand response” from our New Freedom Circular, which states: “any non-fixed route system of transporting individuals that requires advanced scheduling by a customer, including services provided by public entities, nonprofits, and private providers.” Section 604.3(h)—Definition of “interested party” This provision defines who is an interested party for purposes of filing a complaint with FTA. We received only one comment regarding this definition and it stated that the definition was overly broad and hard to determine who, in fact, could file a complaint. Agency Response: This particular provision represents consensus language from the CBNRAC. We believe that the parties identified in the list of “interested parties” are clear, and, therefore, the provision is adopted as proposed. Section 604.3(k)—Definition of “pattern of violations” This provision defines what constitutes a pattern of violations for purposes of 49 U.S.C. section 5323, which states in relevant part: “In addition to any remedy specified in the agreement, the Secretary shall bar a recipient or an operator from receiving Federal transit assistance in an amount the Secretary considers appropriate if the Secretary finds a pattern of violations of the agreement.” We received several comments expressing concern about our proposal to define pattern of violations as “more than one finding of non-compliance with this Part by FTA beginning with the most recent finding of non-compliance and looking back over a period of 72 months.” Comments received focused on two aspects of this proposed definition. First, most were concerned that a finding of non-compliance should be for the same provision and not different provisions. Second, several comments stated that it was unfair to examine 72 months and the time period should be two or three years at the most. There was also a misconception that the new rule would retroactively look back over a recipient's compliance record. One comment, which is typical of the comments we received from recipients, stated the issue as follows: “We suggest that the definition be revised to indicate that there must be at least three violations in three years and the application of this new definition should occur when the rule is final. Also, the violations must be related in nature (i.e., not totally disparate issues) in order to show a pattern.” Private charter operators, on the other hand, agreed with the proposed definition, but requested that FTA settle the issue of whether a single complaint against a recipient can establish a pattern of violations. Agency Response: We understand recipients' concerns regarding this definition and the potential finding of a pattern of violations for not complying with paperwork requirements. In addition, we agree with the suggestion that violations should be related and not completely disparate. Thus, we have amended the definition of “pattern of violations” to require that only unauthorized charter service violations can constitute a pattern of violations. We believe that mandatory withholding of Federal funding should only be reserved for those cases involving unauthorized charter service only. This does not mean, however, that there can never be a situation in which FTA will not withhold funds for paperwork (e.g., failure to record charter service or failure to post quarterly reports) violations. Rather, we are simply stating that for mandatory withholding of Federal funds under the new statutory provision contained in SAFETEA-LU, the pattern of violations must be established based on unauthorized charter service. That being said, it is possible to establish a pattern of violations in one complaint. For instance, if one complaint properly documents three distinct charter service trips that are in violation of Part 604, then FTA could consider those three allegations as constituting a pattern of violations. We believe this is a reasonable resolution to the concern of private charter operators that a single complaint could establish a pattern of violations. To be clear, however, each instance of a charter service violation must be related to an event and not a single instance of unauthorized charter service. In other words, the provision of charter service for a flower show that is not in conformance with these regulations would be an event. A single complaint alleging unauthorized charter service, in order to properly assert a pattern of violations, would have to include more than unauthorized service to a flower show. In order to assert a pattern of violations, a single complaint would have to include facts demonstrating unauthorized charter service to a flower show, a golf tournament, and an auto exhibition, for example. In addition, we decline to shorten the examination period to two or three years. While we considered including a three year period to correspond with triennial reviews, not all recipients are subject to triennial reviews and the six year period is consistent with other operating administrations within the Department of Transportation that examine a six year compliance history. Thus, we retain the six year period, which begins on the effective date of this rule. Section 604.4(o)—Definition of “recipient” This provision defines who is a recipient. We received several comments about this definition because some were confused as to whether the term includes “subrecipients.” Agency Response: We have amended the definition to state “including subrecipients” to make clear that the regulation applies to direct recipients of FTA financial assistance as well as subrecipients of FTA financial assistance. Section 604.4(t)—Definition of “violation” This is a new provision to the final rule and it would define what constitutes a violation for purposes of the charter service regulations. Several public transit agencies asked us to define what a “violation” is. Agency Response: We added a new definition to this section to define violation as “a finding by FTA of a failure to comply with one of the requirements of this Part.” Section 604.5—Charter Service Agreement This section discusses the terms of the Charter Service Agreement which is part of the Certifications and Assurances recipients are required to enter into as a condition of receiving Federal funds (49 U.S.C. section 5323(d)). One transportation association noted that there was an inconsistency between our intention not to apply the charter service requirements to third party contractors and the terms of the charter service agreement. Agency Response: In order to address this inconsistency, we have added the clarification that this provision applies only to a third party contractor when they are using vehicles purchased with FTA funds. Subpart B—Exceptions Section 605.6—Government Officials on Official Government Business This provision set out an exception for recipients to provide charter service to government officials on official business. We also proposed not to apply this provision to transit agencies with 1,000 or more buses in peak hour service. We received numerous comments from public transit agencies on this provision to limit the number of bus hours to 80 annually, as proposed by the private charter caucus. Comments we received were along the following lines: “The limit is arbitrary and does not support or respect local cooperation. The transportation of public officials by a public agency should not be considered charter.” One comment on this topic stated: “How about whoever wrote this NPRM comes on down here to tell our government officials who sponsor the taxes that keep our transit systems operating that they have limited number of hours that they can utilize the charter service of the transit system.” The same comment stated that they do not have resources “to conduct boarding surveys that distinguish the government officials from anyone else that may join them on a charter trip.” Some public transit agencies applauded our effort to recognize this service as an exception and felt the provision to allow the Administrator to grant additional hours was sufficient. Those who were not pleased with the NPRM suggested that FTA modify the provision to allow for a greater number of hours for public transit agencies located in state capitols. Others suggested that the limit be based on the size of the recipient's geographic service area. A private charter operator coalition objected to our provision to allow additional hours upon request from a recipient. They urged that such additional hours should only be granted in extenuating circumstances, which should be “invoked very rarely.” They also warned that this exception should not “swallow up the general prohibition” of recipients providing charter service. This commenter also requested at least 72 hours notice of all requests for additional hours under this exception. Finally, regarding our proposal not to apply this provision to recipients with 1,000 or more buses in peak hour public transit service, we heard from three of the largest east coast transit agencies that strongly opposed the provision. Specifically, they noted opposition to “any regulatory change that imposes a different application based on the size of the transit property.” Agency Response: To be very clear, transporting a group of government officials for official government purposes is charter service under the existing definition of charter service. Government officials that happen to board a fixed-route vehicle would not count toward the 80-hour exception. This exception is targeted at government field trips such as visiting a new stadium or wastewater processing facility. It could also mean transporting City Council officials to a site or business officials, accompanied by government officials, touring a city for economic development purposes. This exception is designed to allow recipients to provide charter service to government officials for official government business. Recipients may not provide charter service to governmental officials for non-governmental purposes. We have added language to the regulatory text to clarify this point. We have also added a definition of government official, which states “ `government official' means an individual appointed or elected at the local, state, or Federal level.” Since the transportation of government officials for government purposes is charter service under the current regulations, as noted in the NPRM, we believe that the 80 charter service hours per year is appropriate because it is the baseline number of hours the private charter operators on the CBNRAC agreed to. On the other hand, we recognize that there may be special circumstances that might arise that could call for additional bus hours during the year. If these circumstances arise, we have a provision that allows the FTA Administrator flexibility to allow those additional hours in extenuating circumstances. Private charter operators requested that they have the opportunity to comment on any request for additional hours. To address this concern, we will add a Government Officials docket ( http://www.regulations.gov ; FTA-2007-0020) for the purpose of logging these requests for additional hours. Private charter operators can sign up for notification when FTA places a request in the docket. If the request raises serious concerns, the private charter operator can contact the Ombudsman for Charter Services ( ombudsman.charterservice@dot.gov ) to express those concerns. The decision to grant a particular request is completely within the discretion of the FTA Administrator. Regarding the exception of transit agencies with 1,000 or more buses in peak hour service, this provision was the subject of consensus during the CBNRAC. During the negotiations, a CBNRAC member urged this exception to prevent large public transit agencies from being inundated with requests for charter service from government officials and qualified human service organizations. Private charter operators on the CBNRAC agreed to this provision. The response to this proposal, however, was negative. We heard from three large east coast transit agencies and we are convinced by their argument that large transit agencies should not be treated differently, and, therefore, we removed this provision from the final rule. To conclude, we decline to modify the 80-hour annual limit. Since the transportation of government officials for government purposes was unauthorized charter service when provided by recipients under the old regulation, we believe the 80-hour limit per year is a legitimate threshold number for the new exception. In addition, we have eliminated the language treating transit agencies with more than 1,000 buses in peak hour public transit service differently. Section 604.7—Qualified Human Service Organizations This section provides an exception to the prohibition against recipients providing charter service if they provide charter service to qualified human service organizations (QHSO). We also proposed not to apply this provision to transit agencies with 1,000 or more buses in peak hour service. The CBNRAC reached consensus on this provision because it recognized FTA's efforts to establish coordinated public transit human service transportation planning. In addition, this provision recognizes the President's Executive Order on coordinated transportation (Executive Order on Human Service Transportation Coordination, February 24, 2004). The comments we received on this section primarily centered on the assertion that charter service provided to QHSOs should be completely exempt from the charter service regulations. Specifically, comments stated “although the negotiators agreed that services could appropriately be provided to qualified social service agencies, the draft process is unnecessarily complicated and incomplete.” These comments went on to state “it is unclear how these additional criteria are to be evaluated (i.e., would a qualified social service agency certify such a mission? Would a public transit agency be obligated to investigate the basis for such a claim?) and it is unclear why FTA perceives a need for the additional criteria at all.” These public transit agencies and associations advocated that the additional criteria should be eliminated from the rule. We also heard from several Midwestern transit agencies supporting our provision on QHSOs: “We fully support the exceptions in 604.7 and 604.8 for government officials and qualified human service organizations.” A private charter operator expressed a similar sentiment: “FTA's new disclosure procedures for human service agencies and public operator trips are a positive step forward.” Finally, we received several comments asking us to define the term “struggling for self-sufficiency.” Agency Response: The language in this section represents a consensus from the CBNRAC. The criteria included in the NPRM were the subject of much discussion during the negotiations and the subject of a special presentation from FTA “United We Ride” staff. The criteria are a reflection of the requirement of the President's Executive Order on transportation coordination. In addition, regarding the comment as to whether a transit agency must investigate information provided by a QHSO, the FTA Charter Registration Web site is a tool for tracking registered charter providers and QHSOs. There is no requirement for public transit agencies to independently verify the information submitted by a registered charter provider or QHSO. Further, since registration on the Web site constitutes submission of information to the government, false submissions would be subject to sanctions under 18 U.S.C. section 1001, which includes potential criminal fines and imprisonment. Regarding the exemption of transit agencies with 1,000 or more buses in peak hour service, we removed this provision from this exception based on comments received. (See discussion under “Government Officials” exception above.) Finally, we changed the phrase “struggling for self-sufficiency” to “low income,” which is a more commonly understood term in the transportation industry. This section is modified to remove the exception for recipients with 1,000 or more buses in peak hour public transit service, and change “struggling for self-sufficiency” to “low income.” Section 604.8—Hardship In this provision we proposed to allow a transit agency in a non-urbanized area to provide charter service to an organization if a registered charter provider imposes minimum trip duration or the registered charter provided would have deadhead time that exceeds the total trip length. Public transit agencies support this exception, but requested that it be extended to small urban areas with populations under 200,000. One public transit agency commented that “FTA's proposed hardship exception is well-crafted and provides a reasonable objective standard for determining whether available private charter providers are too far away to be expected to provide cost-efficient service and scale that definition to the size of a particular charter. Expanding that provision to, at minimum, small, urban areas would allow those areas to be better served without impinging on the interests of private charter operators.” Private charter operators opposed this exception. They contend that “hardship is largely a myth and any rule addressing `hardship' is likely obsolete and more likely to be used to harm private operators than relieve `hardship.' ” In addition, they assert that the rule as written assumes the private market may not desire to serve certain needs, even if fulfilling the service may be at an economic loss and businesses routinely discount services, have sales, offer loss leaders, and utilize yield-pricing strategies. In theory, a recipient creates a “hardship dependency” when failing to allow the marketplace to respond. Agency Response: We believe there is merit to retaining the hardship exception. Rural providers are in a unique position of not having many options to rely upon. Private operators are usually located in urban areas and the high number of deadhead hours is a reality for many rural communities. On the other hand, we recognize that businesses often set minimum trip durations and to allow public transit agencies to provide charter service simply because the minimum trip duration exceeds the trip duration of the requested charter service could have a negative impact on small, rural private providers. Therefore, we amended the regulatory text to include small urbanized areas under 200,000 in population and removed the provision that would allow a rural public transit agency to provide service when the minimum trip duration exceeds the length of the requested service. In addition we collapsed this provision into a new section called “Petitions to the Administrator,” which is located in section 604.11. Because we have established a docket for this exception (Petitions to the Administrator docket http://www.regulations.gov; FTA-2007-0022), we have removed the reporting requirements for the hardship exception. Interested persons may simply track these requests through the docket system. Section 604.9—Leasing FTA Funded Equipment and Drivers This section discusses the ability of a public transit agency to lease equipment to a private charter operator. Private charter operators submitted comments requesting that FTA advise “recipients it is their responsibility to comply with the [leasing exception requirements] with emphasis placed on the requirement to certify the registered charter provider has exhausted all available vehicles of all registered charter providers in the recipient's geographic service area.” Public transit agencies responded to this provision with the general concern that a recipient does not have the ability to determine if the private charter operator has capacity: “The grantee should not be responsible for verifying the validity of any information provided by the leasing charter operator.” Another comment stated it slightly differently: “FTA will require public agencies to maintain proof offered by the lessor that no privately owned equipment is available but is unclear on whether the public agency must investigate independently or may take the proffer at face value.” Yet another comment pointed out that “while this is a well-intentioned and defensible condition, the rule should make it clear that recipient's obligation in this area is to ask whether this has been done and that a recipient may rely on the private charter operator's representation that it has, supported by documentation provided by the charter operator.” Finally, one additional comment submitted by a public transit agency advocates against this exception because of the impact it will have on small private charter operators: “There are two problems with this proposed exception. First it would be difficult to impossible for any private operator to guarantee that it has exhausted all of the available vehicles of all registered charter providers in a large municipal area. This would force recipients out of the charter leasing business and thereby deprive the recipient of much needed funds. Second, this provision also severely impacts smaller private charter operators who would either have to pay whatever fee is set by the larger private operator or turn away business. Such a scenario could eventually force smaller private charter operators out of business, which would then impact FTA's certification that this regulation would not have an impact on small businesses.” Private charter operators also expressed concern with this provision. One of the consolidated responses for private charter operators who participated on the CBNRAC expressed concern that the current leasing provision allowed for sham transactions between a private charter operator with no vehicles and a public transit agency. The consolidated response noted support for the new provision because a private charter operator should have the first opportunity to provide charter bus service in the geographic service area. Agency Response: We agree with the comments submitted regarding the concern about a public transit agency's obligation to investigate whether a registered charter provider has exhausted all of the available private charter vehicles in the geographic area. We have modified the proposed language to include a requirement that in order for a recipient to lease vehicles to a private charter operator, the operator must be registered on FTA's Charter Registration Web site. Furthermore, we added a requirement that a private charter operator identify the number of vehicles it owns when it registers. Then, when a registered charter provider certifies that it has exhausted all of the private vehicles in the area, a recipient need only go to the Charter Registration Web site, note all of the registered charter providers in the geographic service area and the number of vehicles identified in the registration to verify that the registered charter provider's certification is accurate. No independent verification beyond this process is required by the regulations. In addition, if the registered charter provider fails to exhaust the vehicles of other registered charter providers in the geographic service area, then the registered charter provider may be subject to a complaint for removal from the FTA Charter Registration Web site. We have retained the requirement to exhaust all available privately owned vehicles in the geographic service area. This is a protection that the private charter caucus requested during the CBNRAC negotiations and the public transit caucus agreed to. We received a couple of comments indicating that a private charter operator should not have to contract with another private charter operator known to be ineffective. In order to address this concern we do not require a registered charter provider to lease vehicles from another registered charter provider against whom the first registered charter provider has filed a complaint for removal from FTA's Charter Registration Web site. To succeed on this point, however, a registered charter provider would have to allege facts sufficient to support removal as set out in 49 CFR section 604.21. (See also Appendix C for examples.) Finally, since we moved the hardship exception to the new Petitions to the Administrator exception, the leasing exception has been renumbered to section 604.8. Section 604.10—Events of Regional or National Significance This section allows for the provision of charter service by public transit agencies for events of regional or national significance. Private charter operators supported this provision, but requested that any petitions received by the Administrator should be subject to a notice and comment provision for registered charter providers. They also requested that FTA provide a clarification that only if all private operator vehicles have been exhausted should a recipient be allowed to provide charter service. Public transit agencies were concerned that this provision would apply to events that have already been planned. In addition, one public transit agency stated “public transit providers should be able to provide public transportation services for special events in their locality that promote economic development and show their community without the express approval of the Administrator or the requirement for consultation with private charter operators.” One east coast transit agency stated “This provision does not account for those events that are time sensitive in which the public transit agency does not have time to consult with all of the private charter operators in their area, for example, a presidential inauguration.” Agency Response: This section is now included in the “Petitions to the Administrator” section located in section 604.11. In response to the private charter operators' comments, we note the establishment of a “Petitions to the Administrator” docket. Private charter operators are able to view requests through this Web site ( http://www.regulations.gov , FTA-2007-0022). We are not offering a public comment period, but if a request egregiously misstates facts, a registered charter operator could contact the Ombudsman for Charter Services ( ombudsman.charterservice@dot.gov ) to raise specific concerns. In addition, in response to the public transit agencies comments, for events in the planning process, any service provided by a public transit agency after the effective date of this rule must conform to the requirements of the rule, including the requirement for the recipient to exhaust all available vehicles of registered charter providers. In other words, if the event will occur after the effective date of this rule and the public transit agency intends to provide service to that event, then the service must meet the special events requirements contained in section 604.11. If the event occurs before the effective date of this rule, then the requirements of the rule do not apply. We have also added a requirement that the request for this exception include the date of the event. We added this requirement to make it clear that the approval, if granted, would be for a one time event only. Section 604.11—When No Registered Charter Provider Responds to Notice From a Recipient This section sets out the requirements for public transit agencies when no registered charter provider responds to a notice requesting charter service. Public transit agencies submitted a variety of comments on this provision. Some disagreed with the proposed time frames included in the regulation. Others complained that providing notice was essentially providing free advertising/dispatch services to registered charter providers. Still others requested that FTA consider modifying the proposed language to allow a public transit agency to provide the service in the event that the registered charter provider and customer are unable to agree upon terms. Private charter operators agreed with the provisions of this section and noted that “many recipients confuse the public by inasmuch as they [sic] advertise charter service to the degree consumers may not discern between a transit agency and a private provider. This often has the effect of artificially creating ‘demand’ and allowing transit agencies to inject their tax subsidized pricing in the private market equation, thereby indirectly stifling operating margins.” This comment went on to state “the proposed rule further establishes the ‘first option’ to offer charter service inasmuch [sic] that recipients are not required to notify registered charter parties of all inquiries regarding charter bus service.” Agency Response: We recognize the need to clarify that public transit agencies are not required to provide notice to registered charter providers of all requests for charter service. Notice is only given for those requests that do not fit within one of the exceptions and for which the public transit agency is still interested in providing that service. Only in this instance is a public transit agency required to provide notice to the list of registered charter providers in its geographic service area. Other than that, the private charter comments are correct that a public transit agency cannot provide the requested charter service if a registered charter provider responds affirmatively to the notice provided. This is true even if the customer and the registered charter provider are not able to agree upon a price. We added language to this section clarifying that upon receipt of a request for charter service that does not fit within one of the exceptions outlined in subpart B, and the recipient is interested in providing the charter service, the recipient shall provide notice to registered charter providers in the recipient's geographic service area. Further, due to the fact that we have moved the hardship and special events exceptions, this provision is renumbered as section 604.9. Section 604.12—Agreement With Registered Charter Providers This section allows a public transit agency to provide charter service in its geographic service area if it obtains an agreement from all of the registered charter providers in the geographic service area. Private charter operators recognized that this exception is a continuation of an existing exception, but objected to the provision because “the rule as proposed places an unfair and unintended restriction and subjects taxpayer subsidized competition on new registered charter parties. It is our assertion that on the date new private charter operators register, existing agreements will no longer permit recipients to continue under those agreements until an agreement may be obtained from all registered charter parties.” The comment goes on to propose that an agreement can be fulfilled if a contractual obligation is completed no later than thirty days from the date a newly registered charter provider becomes registered. Further, this comment goes on to state that the charter service agreement should be a fluid document that represents a meeting of the minds. Public transit agencies submitted comments opposing the timeframes of January 30th of each year and February 15th of each year. Agency Response: This language represents CBNRAC consensus language developed by the private charter caucus. Since both private charter operators and public transit agencies oppose the January 30th and February 15th timeframes, we modified the regulatory text to indicate that a recipient has 90 days to enter into an agreement with a newly registered charter provider after an initial agreement with previously registered providers. If no agreement is reached, the recipient may not provide charter service under this exception. Further, a registered charter provider may cancel the agreement at any time after providing the recipient a 90-day notice. In addition, because of other changes to this subpart, this provision has been renumbered to section 604.10. Section 604.13—Administrator's Discretion This new section is designed to provide the Federal Transit Administrator with the discretion to allow public transit agencies to provide charter service in certain extraordinary situations. We did not receive comments from public transit agencies on this new exception, but we did hear from private charter operators who are opposed to the exception. Specifically, they believe this exception “may serve as an impediment to the private sector filling the needs, while ultimately creating an unwarranted entitlement.” They base this belief on the fact that the examples provided of the funerals of Presidents Reagan and Ford required advanced planning for those events and the private sector could have been involved if the public transit agency had contacted the private sector. Furthermore, the private charter operator coalition noted that this exception is “a solution in search of a problem” because there is no reason private charter operators couldn't receive notice of the request for service and provide buses for these kinds of events should they arise unexpectedly. Agency Response: This section is now called the “Petitions to the Administrator” exception and is located at section 604.11. The new section contains not only requests for discretionary exceptions to the charter service regulations, but also the hardship and events of regional or national significance, which were both discussed earlier in this preamble. The basis for the discretionary exception is to provide the Administrator with discretion to respond to extraordinary circumstances—those events where there is no time for prior planning. While some preparations may be made in anticipation, we believe the actual day of the event would not be known in advance and the capability of a particular city to handle the event would likewise not be known in advance. We intend to allow this exception only under extraordinary circumstances. Private charter operators may track these requests and FTA's responses through the Petitions to the Administrator docket ( http://www.regulations.gov ; FTA-2007-0022). In addition, we added a requirement to identify the date of the event because we want to make absolutely clear that the approval is only for the date specified in the request. Section 604.12—Reporting Requirements for All Exceptions This section set out the reporting requirements for public transit agencies that provide charter service pursuant to an exception. We proposed quarterly electronic reporting of standard information regarding charter service trips. Private charter operators supported this provision as providing the type of transparency necessary to ensure that public transit agencies are not providing unauthorized charter service. While some raised concern about the ability to omit origination and destination for safety and security reasons, if the reason is recorded, then most thought this exception would be acceptable. In addition, we heard from one association that encouraged us to increase the time period from three years to six years for maintaining the records electronically. To support this request, they point to the fact that our definition of pattern of violations examines the past six years and to maintain records less than six years would be inconsistent with this provision. Public transit agencies opposed this provision because they believe it to be too onerous. In addition, one commenter suggested that the reporting provisions be consolidated so that the same information in the same format is submitted. Other comments submitted requested that the public Web site for storing the reports be replaced with a local Web site for the agency or with records kept at the transit agency's place of business, which would be publicly available. One public transit agency stated it this way: “Only basic information should be reported under the exceptions. If the reporting is made too onerous, grantees will have to charge the administrative cost to the human service or government entity. For the other exceptions, that information is reported through other mechanisms and this additional reporting is unnecessary.” Others recommended maintaining the records in a single charter log. A Midwestern state department of transportation stated: “We recommend that the charter logs required by 604.7(a)(3), 604.8(d), 604.9(b), 604.10(b) and 604.12(c) be consolidated into a single charter log. The information that must be maintained according to the regulations can be categorized and tracked in a spreadsheet or database.” Agency Response: The purpose of the public Web site is to ensure that all reports are easily available to members of the public, in particular, private charter operators. Maintaining these records at the transit agency does not allow for 24-hour availability. We also believe that all of the information can be consolidated into one log. With the exception of the special events and leasing exceptions, the information required is the same. Thus, a single Word document or Excel spread sheet could serve as a recipient's quarterly report. In addition, by limiting the applicability of this regulation—excluding recipients of section 5311 funds when providing charter service for program purposes serving the elderly, persons with disabilities, or persons with low income—we have substantially reduced the reporting burden on rural and non-urbanized areas for most of the service they operate. Furthermore, we decline to extend the reporting period to six years. We believe the private charter operators are confusing complaints with reports. When we examine six years of the recipient's compliance history we are looking at complaints filed. Since FTA maintains the Charter Registration Web site, we will have access to quarterly reports for purposes of reviewing a recipient's compliance history. The regulatory requirement simply applies to a grantee's retention of its quarterly reports, not FTA's retention of quarterly reports. Subpart C—Procedures for Registration and Notification Section 604.13—Registration of Private Charter Operators This section sets out the required information a private charter provider must submit in order to be considered a registered charter provider. We received comments from public transit agencies urging us to limit where a private charter operator can register. Specifically, one representative comment stated that it trusts “FTA will be vigilant and act quickly to correct abuses by removing private operators that act in bad faith * * * but such a process will not address the scenario in which a registered private operator who cannot in actuality provide service responds to a recipient's notice.” Agency Response: Private charter operators may register with FTA at http://www.fta.dot.gov/laws/leg_reg_179.html . We also believe that a private charter operator should be able to register in any geographic service area. This means that a company could register with all public transit agencies across the United States. We believe that since this rule affords protections to registered charter providers, the threat of losing that registration will be deterrent enough for private charter operators to act in a commercially reasonable manner and in good faith when negotiating with a customer sent to them by the public transit agency. Removal from the Charter Registration Web site carries with it a three year period of receiving no notice from public transit agencies. This is no small consequence and, therefore, it will protect public transit agencies from “vindictive” private charter operators. Further, as noted in the history section of this document, our findings as well as GAO's findings have not found an “unmet need” with respect to the provision of charter services. Thus, we believe that this provision is protective of those situations in which a private charter operator is acting in a vindictive manner. In addition, the Web site is designed to allow quick and efficient removal of a private charter operator once a decision has been made that satisfies the requirements of section 604.26, “Removal.” We have, therefore, adopted as final the proposed language. Section 604.14—Recipient's Notification to Registered Charter Providers This section requires public transit agencies to provide notice to registered charter providers when the public transit agency is interested in providing the requested charter service. We heard from public transit agencies and a public transit association indicating that a clarification is necessary in this section. Specifically, according to the association, “as drafted, section 604.14(b) would require pre-notification to private charter providers upon receiving a request for service under any exception. We believe this is a drafting error since it is inconsistent with the language immediately proceeding in section 604.14(a) and our understanding of the intent of the negotiators.” In addition, the association raised a concern regarding when an e-mail is returned “undeliverable.” A transit agency stated “the regulations require that the transit agency provide notice of a request for service by the close of business if the request is received before 2 p.m. that day, or the next business day if received after 2 p.m. This short time does not allow the public transit provider to evaluate the request and make sure that all the information is complete, before notifying the registered private charter companies.” One Midwestern transit agency commented that “the Web site will greatly reduce the private operator's financial risk. They will no longer need to market, advertise, or promote their business. Every morning they can just log on to FTA's version of `Make Me a Millionaire' Web site to see what contracts they can bid.” Agency Response: We believe the language as proposed is clear that only requests for charter service that do not fit within one of the exceptions require notification to registered charter providers. In other words, the notification procedures apply in the event one of the exceptions does not. Even so, we decided to add a clarification to indicate that upon receipt of a request for charter service that does not fit within one of the exceptions in subpart B, a recipient interested in providing the charter service shall provide notice to registered charter providers registered in its geographic service area. Further, we are not convinced that the time period provided does not give public transit agency enough time to decide whether it is interested in providing the requested charter service. The time frames included in this particular provision were developed by the CBNRAC, which included small, medium, and large public transit agencies. Therefore, we retain that provision and adopt it as final. In addition, we agree with the transportation association that a clarification should be added to the regulatory text to take into account when an e-mail is returned as “undeliverable.” In those instances, we have required a public transit agency to also send notification of the requested charter service by facsimile. In that instance, the public transit agencies must maintain a record of the “undeliverable” e-mail notification and confirmation that a facsimile was sent to the number provided by the registered charter provider. Subpart D—Registration of Qualified Human Service Organizations and Duties for Recipients Regarding Charter Registration Web Site Section 604.15—Registration of Qualified Human Service Organizations This section set forth the registration requirements for qualified human service organizations (QHSO). Besides the basic information of organization name, address, and telephone, etc., the requirements also include basic financial information and a certification that funding received from a state or local program includes funding for transportation. We heard from several public transit agencies regarding these registration requirements. Most opposed the requirement to certify that state or local funds include funds for transportation. One transportation association stated “it is the lack or dearth of transportation funding that keeps these social service agencies from contracting with private charter providers.” This association requests that the requirement be eliminated from the rule because “the rule's new complaint and appeals process is sufficient to ensure that non-deserving organizations do not receive service.” Regarding the requirement to certify funds for transportation, one transportation authority noted that “many agencies may not know the terms of the original federal grant and social service agencies that are funded for transportation would not necessarily need the free or reduced cost services this system is intended to facilitate.” Another transit agency stated: “[the requirement presents a problem] since most federal funds are passed through one or more levels of state and local government with no indication of the original purposes. Social services organizations that are funded for transportation would not necessarily need the free or reduced cost services this system is intended to facilitate.” From the private charter operator side, we received comments from an association urging us to “place the burden of qualification on the recipient and make clear that a failure to qualify an organization will result in a finding of violation and enforcement action.” Agency Response: We find the arguments from the public transit agencies regarding QHSO funding to be persuasive. Furthermore, the emphasis on human service transportation coordination planning requires us to be mindful of any impediments to accomplishing that goal. As such, we are modifying the proposed language to remove the requirement that a QHSO certify that state and local funds include funding for transportation. We also added a clarification in the final rule that a QHSO is required to provide certain information and demonstrate that it is qualified. Public transit agencies should ensure that the QHSO has a valid registration in the FTA Charter Registration Web site that was provided at least sixty days in advance of the requested service before providing charter services to that organization. Finally, we added a clarification in the final rule that a QHSO, as part of its registration, must explain what types of future requests for charter service it may request from a recipient and how those charter service trips are related to the QHSO's mission. Section 604.16—Duties for Recipients With Respect to Charter Registration Web Site This section provides minimum requirements for recipients of FTA funds with respect to the Charter Registration Web site. We received comments from public transit agencies urging us to provide training and a training manual for the new Web site. Agency Response: We agree with these comments and, have delayed the effective date of the rule in order to give us time to provide the necessary training and distribute an electronic user guide to public transit agencies. We will also encourage transit agencies to use the site before the effective date of the final rule and the Ombudsman for Charter Services will assist transit agencies with any questions or problems they may encounter ( ombudsman.charterservice@dot.gov ). We have also modified the language of this provision to require a public transit agency to ensure that its employees and contractors affected by this regulation have the competency to effectively use the Web site. Subpart E—Advisory Opinions This subpart allows for public transit agencies and private charter operators to request an advisory opinion from the Office of the Chief Counsel at FTA. We heard from several public transit agencies opposing this provision. A large public transportation association went so far as to challenge whether the CBNRAC reached consensus on this provision. Other public transit agencies said that FTA should “withdraw the provision on advisory opinions because this means advice will be given on a regional basis which will lead to inconsistencies.” Another comment stated “while the intent of the advisory opinions portion of the rule is laudable as a practical matter, our management believes it has the potential to create more problems than it solves so we urge FTA to eliminate it.” Private charter operators support the advisory opinion provision. Specifically, one southern private charter operator stated “I commend the committee on the consensus reached in the Advisory Opinion issue. This rule should be invaluable to both the private and the public operator in obtaining a clear opinion from FTA on the appropriateness of a proposed charter movement. If executed timely, this avenue will give a transit operator the opportunity to refrain from providing an illegal charter.” On the other hand, we also heard from several private charter operates expressing concern over FTA's decision to not include cease and desist provisions in the rule. One private charter operator stated its concern as “our main disagreement with the FTA proposed rule is the lack of a process by which a complainant may apply to FTA for a cease and desist order to stop a publicly funded transit agency from beginning an illegal charter. Allowing private operators to apply for a cease and desist order prior to the charter would prevent the operator from filing and the transit agency from responding to the full complaint, hearing, and appeals process. FTA's reluctance to propose a cease and desist process stems solely from the agency's estimation of the workload and human capital required to implement it. While we are mindful of the agency's budget constraints we feel that a cease and desist order process need not be, and should not be long and drawn out.” Another private charter association noted that “since FTA cannot recoup lost revenues when recipients are found in violation of the Charter Service rules, it is imperative the FTA maintain a cease and desist provision and not to include such a provision is inconsistent with FTA's duty and fails to protect the private charter operator.” Agency Response: We decline to remove this provision based on the comments received from public transit agencies. The inclusion of an advisory opinion provision allows for a more consistent, organized, and transparent process than the one that currently exists. Further this section was a consensus item during the CBNRAC negotiations, and, therefore, we are reluctant to remove it. Further, we are also persuaded by the comments from the private charter operators requesting a cease and desist provision. This provision was considered during the CBNRAC negotiations, but no consensus was reached on this point. We rejected the provision in the NPRM because we believed it would be too burdensome. Since then, we have examined our practices, especially with respect to past decisions, and confirmed that we have provided cease and desist orders in the past. Therefore, we have included in the Advisory Opinion section a provision to allow private charter operators the option of requesting a cease and desist order. We have created an Advisory Opinion/Cease and Desist Order docket at http://www.regulations.gov ; FTA-2007-0023 to keep track of all advisory opinions and cease and desist orders granted or denied. We have also included a provision to require that registered charter providers seeking a cease and desist order serve a copy of the request on the affected public transit agency by e-mail or facsimile. In addition, the registered charter provider must certify that it telephoned the public transit agency and informed an appropriate official of the submission of the request for cease and desist order in its request for an advisory opinion. Subpart F—Complaints Section 604.27—Complaints, Answers, Replies and Other Documents This section sets out the content requirements for complaints and provides timeframes for the filing of complaints, answers, replies, and rebuttals. This section also allows a complainant to withdraw its complaint at any time. We received a variety of comments on this section. Generally, most public transit agencies expressed concern over the new, detailed complaint procedures. One southern public transit agency stated “the complaint process appears to be unwieldy, complicated, and potentially expensive for small operators.” A southern association of regional councils stated “the complaint process is overly harsh. As written, private providers can “tie up” a public provider with litigation for almost any perceived wrong. Public providers are left to stand alone and incur significant legal fees to defend every complaint.” This comment also advocated for a process that addresses honest mistakes, is administrative in nature and is free of any need for lawyers. One state representative submitted a comment on behalf of his public transit agency constituents stating the “NPRM is nine and one half pages and five of the pages address the procedures for filing a complaint that cannot be done without the services of an attorney. The additional administrative requirements will result in significant additional costs—direct and indirect.” In addition, we heard from public transit agencies that complaints should be filed within a certain time frame. One western transit district suggested “FTA's jurisdiction over complaints should be limited to complaints that are filed within the earlier of: (a) 90 days after the event giving rise to the complaint or (b) 30 days after the complainant knew or should have known about the event that is the subject of the complaint.” Private charter operators were supportive of the proposed complaint provisions. A private charter operator stated that the “FTA charter bus complaint and appeals process required revision in order to achieve consistent and timely decisions. The new process will require additional information on the part of the complainant and should result in complaints with enough information to determine the violation of the charter regulations.” Agency Response: We disagree with comments that the new complaint process is “unwieldy and unduly burdensome.” We are also unconvinced by comments asserting that the new complaint process will be more expensive for public transit agencies. In fact, the new complaint process places a heavier burden on registered charter providers than on recipients. Recipients have no greater burden under the new regulation when it comes to responding to a complaint than they did under the old regulation. In other words, a public transit agency still has the obligation to respond timely to a complaint filed against it, which is exactly the same obligation it had under the old charter service rule. This final rule, however, plainly states the burden on a transit agency when responding to a complaint, the timeframe for responding to a complaint, and provides clearer appeal procedures. All of these improvements were agreed upon by all parties during the CBNRAC negotiations. Further, the new complaint provision requires a registered charter provider to provide specific factual allegations regarding an alleged charter violation. Before the public transit agency has to respond to that complaint, FTA looks at the complaint to ensure that it has met all of the regulatory requirements. In the past, the only standard for filing a complaint was that it “is not without obvious merit,” which allowed an incomplete complaint to move forward just as easily as a complete complaint, which did tie up public transit agencies unnecessarily. Now, a complaint must be legally sufficient before it moves forward to the transit agency for a response. On the other hand, we agree with comments submitted that only “ripe” complaints should be considered. Thus, we modified the language in the final rule to require that a complaint must be filed within 90 days of the date the alleged unauthorized charter service. Further, we asked for comment regarding the role of state departments of transportation in the complaint process. We proposed to allow a state department of transportation to make a first attempt to resolve a complaint between a private charter operator and a sub-recipient. We heard from several state transportation departments that did not agree with our proposal. We heard from one state transportation department that did support the idea of allowing a state to attempt to resolve the matter initially. Private charter operators did not support state involvement in the complaint process. Just like the public transit comments, private charter operators saw state involvement as leading to inconsistent decisions and a lengthier process. We agree with the majority of comments received and will retain the proposed language in the final rule. The requirement in the final rule would notify a state department of transportation that a complaint has been filed against a sub-recipient. There are no requirements for the state in the complaint process. Finally, we added a clarification that complaints for removal of registered charter provider or QHSO must be submitted within 90 days of discovering facts that merit removal. This 90-day deadline does not mean, however, that QHSOs that register and then are not challenged within 90 days after registration cannot later be challenged. Rather, when a registered charter provider or recipient finds evidence supporting removal, then the 90-day clock begins. Subpart H—Decisions by FTA and Appointment of a Presiding Official (PO) Section 604.34—Decisions by the Chief Counsel and Appointment of a PO This provision allows FTA to appoint a presiding official (PO) in the event that a hearing is necessary. Public transit agencies submitted comments expressing concern that the qualifications of a PO were not set out in the proposed rule. Specifically, “without reasonable criteria, vetted through public comment, the credibility and qualifications of any particular PO will necessarily be the first order of business in any proceeding. Must a PO be neutral and detached? Is FTA Regional Counsel available for assignment as a PO? Other FTA personnel? Is there a means of challenging a PO for cause, bias, or prejudice?” Conversely, private charter operators support this provision and “presume that such officials will have no predisposed transit affiliation and have proper training and experience that will instill confidence in the complaint process.” Agency Response: We believe anyone appointed to serve in the PO capacity would stand in the shoes of FTA, and therefore, it is within FTA's discretion to appoint an appropriate person to serve as a PO. This internal decision is not subject to notice and comment. Even so, we note that a PO will be appointed only in those rare cases where a complaint warrants a hearing. A PO will not review initial complaints. That function will be performed by the Office of Chief Counsel in headquarters. In the event that a PO is appointed to conduct a hearing, the PO's recommended decision will have to be adopted by the Chief Counsel's Office. To address the comments received, we modified the languag [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A08-86. Public record. Not legal advice.