A vehicle hired for exclusive use that does not operate over a regular route or on a regular schedule. Charter service is closed door service (i.e., no other passengers may be boarded during the provision of service to the chartered group). Compensation on the basis of hours of service is evidence of charter operations. The provision of "free" service is not considered relevant in determining if service is charter or mass transportation.

FTA grantees are prohibited from using federally funded equipment and facilities to provide charter service except on an incidental basis (does not interfere with or detract from the provision of the mass transportation service for which the equipment or facilities were funded and does not shorten the mass transportation life of the equipment or facilities) and when one or more of the following seven applicable exceptions apply:

1. There is no willing and able private charter operator;
2. Grantees may provide FTA funded vehicles to private operators to satisfy a capacity need for accessible vehicles;
3. Grantees in a non-urbanized area (population under 50,000) may provide charter service directly to the customer if the charter service provided by the willing and able charter provider would create hardship on the customer because the private operator imposes minimum durations pursuant to state regulations and the desired trip length is shorter than the mandatory trip length or the private charter operator is located too far from the origin of the charter service;
4. For events of extraordinary, special or singular nature, grantees may petition the FTA Administrator at least 90 days prior to the event for an exception to the charter rule;
5. Charter service may be provided to government entities or non-profit agencies serving persons with disabilities or persons receiving public welfare funds;
6. A grantee in a non-urbanized area may execute a contract with a government entity or a private, non-profit organization by obtaining a tax-exempt certification from the entity when more that 50% of the passengers on the charter trip will be elderly, the requested charter trip is consistent with the function and purposes of the organization, and the charter trip will be organized and operated in compliance with Title VI of the Civil Rights Act of 1964 as amended;
7. A recipient may provide charter service directly to the customer where a formal agreement has been executed between the recipient and all private charter operators it has determined are willing and able, provided the agreement specifically allows the recipient to provide the particular type of charter trip and the recipient has provided for such an agreement in its annual public charter notice.

If the grantee provides charter service under one of the above exemptions, the grantee must have documentation to demonstrate the mileage and/or hours are recorded and subtracted from the useful life of the equipment; fares and schedules are under its control; and the service is designed to benefit the public at large.