[Federal Register Volume 73, Number 97 (Monday, May 19, 2008)]
[Proposed Rules]
[Pages 28790-28793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-11151]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 605

[Docket No. FTA-2008-0015]


Notice of Proposed Policy Statement on FTA's School Bus 
Operations Regulations

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Proposed policy statement; request for comments.

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SUMMARY: Through this notice, the Federal Transit Administration (FTA) 
proposes to revise its policy with respect to ``tripper service'' and 
``school bus operations'' under 49 CFR Part 605. FTA seeks comment on 
this notice from interested parties. After consideration of the 
comments, FTA will issue a second Federal Register notice responding to 
comments received and noting any changes made to the policy statement 
as a result of comments received.

DATES: FTA must receive all comments by June 18, 2008. FTA will 
consider late filed comments to the extent practicable.

ADDRESSES: To ensure your comments are not entered more than once into 
the Docket, please identify your submissions with the following Docket 
No. FTA-2008-0015. Please make your submissions by only one of the 
following means:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the online instructions for submitting comments.
     Fax: 1-202-493-2251.
     U.S. Post or Express Mail: U.S. Department of 
Transportation, Docket Operations, West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: The West Building of the U.S. Department of 
Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590, 
between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays.
    Instructions: You must include the agency name (Federal Transit 
Administration) and the Docket number (FTA-2008-0015) at the beginning 
of your comment. You should include two copies of your comment if you 
submit it by mail. If you wish to receive confirmation that FTA 
received your comment, you must include a self-addressed stamped 
postcard. Note that FTA will post all comments that it receives, 
including any personal information provided therein, without change to 
http://www.regulations.gov.
    Due to security procedures in effect since October 2001 regarding 
mail deliveries, mail received through the U.S. Postal Service may be 
subject to delays. A party that submits a comment responsive to this 
notice should consider using an express mail firm to ensure the prompt 
filing of any submissions not filed electronically or by hand.

FOR FURTHER INFORMATION CONTACT: Linda Lasley, Assistant Chief Counsel, 
Legislation and Regulations Division, Office of Chief Counsel, Federal 
Transit Administration, U.S. Department of Transportation, 1200 New 
Jersey Avenue, SE., 5th Floor--East Building, Washington, DC 20590. E-
mail: [email protected]. Telephone: (202) 366-1674.

SUPPLEMENTARY INFORMATION:

Background

Introduction

    FTA issues this Notice of Policy Statement and Request for Comments 
to provide guidance in the context of the recent decision of the United 
States District Court for the Western District of New York in 
Rochester-Genesee Regional Transportation Authority v. Hynes-Cherin.\1\ 
The Court's decision in Rochester-Genesee Regional Transportation 
Authority set aside FTA's interpretation of its school bus operations 
regulations under 49 CFR Part 605.\2\ In the proposed policy set forth 
below, FTA clarifies its guidance regarding FTA's interpretation of its 
school bus operations regulations. FTA intends to construe the term 
``tripper service'' to include only existing routes with modified fare 
collection or subsidy systems, frequency of service, and de minimis 
route deviations from existing route paths in the immediate vicinity of 
schools to stops located at or in close proximity to the schools. 
Consistent with that construction, FTA would interpret the definition 
of ``school bus operations'' in 49 CFR 605.3(b) to include service that 
a reasonable person would conclude primarily was designed

[[Page 28791]]

to accommodate students and school personnel and only incidentally to 
serve the nonstudent general public.
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    \1\ No. 07-CV-6378L 1 (W.D.N.Y. Jan. 24, 2008).
    \2\ Id. at 20.
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    FTA expects to issue expeditiously a notice of proposed rulemaking 
to provide clearer definitions of ``tripper service'' and ``school bus 
operations,'' as well as generally to update the existing school bus 
regulation.

Statutory and Regulatory Framework

    In 1973, Congress passed the Federal-Aid Highway Act, which 
requires FTA to provide financial assistance to a grantee under 49 
U.S.C. Chapter 53 only if the grantee agrees ``not to provide schoolbus 
transportation that exclusively transports students and school 
personnel in competition with a private schoolbus operator.'' \3\ 
Congress's intent in enacting this provision was to prevent unfair 
competition between federally funded public transportation systems and 
private school bus operators.\4\
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    \3\ Federal Aid Highway Act of 1973, Pub. L. 93-87, section 
164(b), 87 Stat. 250, 281-82 (1973) (codified as amended at 49 
U.S.C. 5323(f) (2006)).
    \4\ Chicago Transit Auth. v. Adams, 607 F.2d 1284, 1292-93 (7th 
Cir. 1979) (citing H.R. Rep. No. 93-410, at 87 (1973) (Conf. Rep.); 
S. Rep. No. 93-355, at 87 (1973) (Conf. Rep.)).
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    In 1976, the Urban Mass Transportation Administration, now FTA, 
codified regulations under 49 CFR Part 605 which implemented the above 
statutory provision.\5\ Under 49 CFR 605.14, FTA may not provide 
financial assistance to a grantee ``unless the applicant and the 
Administrator shall have first entered into a written agreement that 
the applicant will not engage in school bus operations exclusively for 
the transportation of students and school personnel in competition with 
private school bus operators.'' \6\ The regulation defines ``school bus 
operations'' as ``transportation by bus exclusively for school 
students, personnel and equipment * * *.'' \7\
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    \5\ See Codification of Charter Bus Operations Regulations, 41 
FR 14,122 (Apr. 1, 1976).
    \6\ 49 CFR 605.14 (2007).
    \7\ 49 CFR 605.3(b).
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    The regulation exempts ``tripper service'' from the prohibition 
against school bus operations.\8\ ``Tripper service'' is ``regularly 
scheduled mass transportation service which is open to the public, and 
which is designed or modified to accommodate the needs of school 
students and personnel, using various fare collections or subsidy 
systems.'' \9\
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    \8\ 49 CFR 605.13.
    \9\ 49 CFR 605.3(b).
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Rochester-Genesee Regional Transportation Authority v. Hynes-Cherin

    On January 24, 2008, the United States District Court for the 
Western District of New York issued a decision in Rochester-Genesee 
Regional Transportation Authority which set aside FTA's interpretation 
of its school bus operations regulations under 49 CFR part 605.\10\ The 
Court allowed the Rochester-Genesee Regional Transportation Authority 
(RGRTA) to restructure its public transportation operation through the 
addition of 240 new express school bus routes proposed to serve the 
Rochester City School District (RCSD) and its students.\11\
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    \10\ See Rochester-Genesee Reg'l Transp. Auth., No. 07-CV-6378L 
1.
    \11\ Id. at 20-36.
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    In its decision, the Court narrowly interpreted the word 
``exclusively'' in FTA's definition of ``school bus operations'' and 
concluded that, because a member of the general public could, 
hypothetically, board a bus along one of RGRTA's proposed new 240 
express routes, RGRTA's service would not ``exclusively'' transport 
students. The Court therefore concluded that RGRTA's proposed express 
bus service did not constitute impermissible school bus operations.\12\
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    \12\ Id. at 20-24.
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    FTA believes that, following the Court's broad interpretation of 
``tripper service,'' a grantee could conclude that it would be 
permitted to restructure its public transportation operation 
dramatically to accommodate the needs of a local school district and 
its students, thereby displacing private school bus operators and their 
employees, provided the system keeps the service technically open to 
the public.\13\
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    \13\ Id. at 24-36.
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Prior FTA Policy

Tripper Service

    Under its tripper service definition, FTA originally allowed 
grantees to accommodate students only with respect to ``different fare 
collections and subsidy systems.'' However, through administrative 
decisions over the years, FTA broadened its interpretation of its 
tripper service definition to allow grantees to make accommodations 
beyond subsidies and fare collection systems. Specifically, FTA began 
to allow its grantees to make minor modifications to its route paths 
and frequency of service. As FTA stated in one matter concerning the 
Erie Metropolitan Transit Authority:

    Read narrowly, ``modification of regularly scheduled mass 
transportation service to accommodate the needs of school students 
and personnel'' means using different fare collections and subsidy 
systems. In practice, ``modification of mass transportation 
service'' has been broadened to include minor modifications in route 
or frequency of scheduling to accommodate the extra passengers that 
may be expected to use particular routes at particular times of 
day.\14\
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    \14\ See In re Erie Metropolitan Transit Authority 1, 4 (1989).

    For example, in Travelways, Inc. v. Broome County Department of 
Transportation, FTA stated that, ``A familiar type of modification 
would be where the route deviates from its regular path and makes a 
loop to a school returning back to the point of deviation to complete 
the path unaltered.'' \15\ FTA reaffirmed this particular 
interpretation of tripper service in its October 12, 2007, RGRTA 
determination by permitting RGRTA to operate four loop-like route 
extensions, each only several blocks in length, to accommodate the 
needs of school students.\16\
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    \15\ Travelways, Inc. v. Broome County Dep't of Transp. 1, 7 
(1985) (allowing a grantee to run a bus to a point and express to a 
school from that point if the grantee ran a second bus along the 
regular route path from the point at which the first bus expressed 
to the school).
    \16\ Letter from Federal Transit Administration to Rochester-
Genesee Regional Transportation Authority at 6 (Oct. 12, 2007).
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    FTA has not, however, allowed a grantee such as RGRTA to 
restructure its public transportation operation solely to accommodate 
the needs of school students--such a modification would be a major 
modification. Thus, in its October 12, 2007 letter to RGRTA, FTA 
rejected RGRTA's proposed addition of 240 new routes because it would 
have constituted a major overhaul of RGRTA's public transportation 
system solely to accommodate the needs of school students.\17\
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    \17\ Id. at 2-6.
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    In addition to minor modifications to route paths, FTA previously 
has allowed grantees to modify route schedules and the frequency of 
service. For example, in Travelways, FTA stated, ``Other common 
modifications include operating the service only during school months, 
on school days, and during school and opening and closing periods.'' 
\18\
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    \18\ Travelways at 7.
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    Jurisprudence in United States courts has broadened the scope of 
FTA's tripper service definition to include essentially any 
modification. In United States ex rel. Lamers v. City of Green Bay, the 
Seventh Circuit stated (arguably in dicta), ``[T]he City may completely 
redesign its transit system to

[[Page 28792]]

accommodate school children as long as all routes are accessible to the 
public and the public is kept informed of route changes.'' \19\ Citing 
Lamers, the Court in Rochester-Genesee Regional Transportation 
Authority allowed RGRTA to restructure its public transportation system 
by adding 240 new routes to accommodate the needs of RCSD and its 
students.\20\
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    \19\ United States ex rel. Lamers v. City of Green Bay, 168 F.3d 
1013, 1019 (7th Cir. 1999).
    \20\ Rochester-Genesee Reg'l Transp. Auth., No. 07-CV-6378L at 
30.
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``Exclusive'' School Bus Operations

    FTA has had little prior formal policy regarding ``exclusive'' 
school bus operations under 49 CFR Part 605. In 1982, FTA attempted to 
clarify the meaning of ``exclusive'' school bus service through a 
rulemaking.\21\ However, in 1990, FTA withdrew the rulemaking because 
it believed that the regulations were ``functioning adequately.'' \22\
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    \21\ Advance Notice of Proposed Rulemaking, 47 FR 44,795, 
44,803-04 (Oct. 12, 1982).
    \22\ Notice of Proposed Rulemaking: Withdrawal, 55 FR 334 (Jan. 
4, 1990).
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    In school bus adjudications, parties did not directly address the 
issue of ``exclusive'' school bus operations until United Food and 
Commercial Workers District Union Local One v. Rochester-Genesee 
Regional Transportation Authority.\23\ In resolving that issue, FTA 
examined the Federal-Aid Highway Act of 1973, and finding that the 
language of the Act's school bus provision was ambiguous, FTA looked to 
the legislative history of Act for some guidance.
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    \23\ FTA School Bus Docket Number 2006-02 1 (2007).
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    In an early version of the Federal-Aid Highway Act, Congress did 
not use the word ``exclusively'' in the school bus provision, but 
rather, focused the language of the Act on preventing unfair 
competition between federally funded grantees and private school bus 
operators. That language is as follows:

    [N]o financial assistance is to be provided to an applicant 
which engages, directly or indirectly in transporting school 
children and personnel to and from school and school authorized 
functions or which proposes to expand present routes, schedules, or 
facilities for that purpose in competition with or supplementary to 
service criteria provided by a private transportation company or 
other person so engaged in so transporting such children and 
personnel.\24\
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    \24\ S. Rep. No. 93-355, at 86 (1973) (emphasis added).

    After the bill passed the House and the Senate, the conference 
modified the above provision in an effort to further protect private 
school bus operators from unfair competition with federally funded 
grantees, but the conferees still did not use the word ``exclusively.'' 
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The conferees used the following language:

    [N]o federal financial assistance is to be provided under those 
provisions of law for the purchase of buses to any applicant who has 
not first entered into an agreement with the Secretary of 
Transportation that the applicant will not engage in school bus 
operations in competition with private school bus operators.\25\
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    \25\ S. Rep. No. 93-355, at 87 (emphasis added).

    As evinced by the above language, Congress intended to prevent 
unfair competition between federally funded grantees and private school 
bus operators. Therefore, in District Union Local One, FTA concluded 
that it would defeat the purpose of the Federal-Aid Highway Act and 
eviscerate 49 U.S.C. 5323(f) if it accepted a grantee's argument that 
its service was technically nonexclusive and open to the public, but 
where: (1) The grantee had designed the service specifically for 
students, without regard to demand from the nonstudent public; (2) the 
vast majority of passengers were students; and (3) as a result, the 
routes would displace the private school bus industry and its 
workers.\26\ In efforts to prevent the unfair competition which 
Congress sought to prevent, FTA rejected RGRTA's arguments and 
prohibited RGRTA from providing its ``exclusive'' school bus service. 
FTA utilized this same policy and analysis when it struck down RGRTA's 
proposed service in its October 12, 2007 letter \27\ and again in 
Laidlaw Transit, Inc. v. Rochester-Genesee Regional Transportation 
Authority.\28\
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    \26\ District Union Local One, FTA School Bus Docket Number 
2006-02 at 10-11 (holding the Rochester-Genesee Regional 
Transportation Authority's (RGRTA) school bus service was designed 
and modified ``exclusively'' for the Rochester City School District 
and its students because students constituted a significant 
proportion of passengers on the school bus routes and RGRTA designed 
the routes without regard to demand from the nonstudent public).
    \27\ See Letter from Federal Transit Administration to 
Rochester-Genesee Regional Transportation Authority at 3-4 (Oct. 12, 
2007).
    \28\ See Laidlaw Transit, Inc. v. Rochester-Genesee Reg'l 
Transp. Auth., FTA School Bus Docket Number 2007-01 1, 4 (2007).
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    The Court in Rochester-Genesee Regional Transportation Authority, 
however, applied a narrower, more restrictive analysis when it 
interpreted the word ``exclusively'' in the context of ``school bus 
operations.'' Notwithstanding the fact that RGRTA designed its 240 
express school bus routes exclusively for the benefit of RCSD and its 
students, without regard for demand from the nonstudent public, the 
Court held that, because a member of the general public could board a 
bus along one of RGRTA's proposed 240 routes, RGRTA's proposed service 
was not ``exclusive'' and therefore did not constitute impermissible 
``school bus operations.'' \29\
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    \29\ Rochester-Genesee Reg'l Transp. Auth., No. 07-CV-6378L at 
20-24.
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Proposed FTA Policy

Purpose of Proposed FTA Policy

    In the proposed policy set forth below, FTA clarifies its guidance 
regarding FTA's interpretation of its school bus operations regulations 
under 49 CFR Part 605 in light of the Court's decision in Rochester-
Genesee Regional Transportation Authority. FTA respects the Court's 
decision in the Western District of New York. However, FTA finds that 
the Court's decision is problematic because, if applied elsewhere in 
the United States, it could obstruct FTA's ability to execute and 
implement Congress' school bus prohibition and Congress' express intent 
regarding that prohibition. Therefore, FTA issues this Notice of Policy 
Statement and Request for Comment to clarify the status of FTA's 
guidance regarding its interpretation of its school bus operations 
regulations under 49 CFR part 605, and to resolve, for jurisdictions 
outside of the Western District of New York, conflicting issues between 
FTA's school bus operations policy and the Court's decision in 
Rochester-Genesee Regional Transportation Authority.
    In addition, FTA intends to issue expeditiously a notice of 
proposed rulemaking to provide clearer definitions of ``tripper 
service'' and ``school bus operations'' as well as generally to update 
the existing school bus regulation.

Tripper Service

    With respect to a grantee's regularly scheduled public 
transportation service, FTA narrowly would interpret the definition of 
``tripper service'' under 49 CFR 605.3(b) to allow a grantee to (1) 
utilize ``various fare collections or subsidy systems,'' (2) modify the 
frequency of service, and (3) make de minimus route deviations from 
existing route paths in the immediate vicinity of schools to stops 
located at or in close proximity to the schools. For example, a grantee 
would be permitted to provide more frequent service on an existing 
route to accommodate increased student ridership before and after 
school. FTA would allow a grantee to alter existing route paths to 
accommodate the needs of school students by making truly de minimus 
route deviations from existing

[[Page 28793]]

route paths to drop off and pickup students at stops located on school 
grounds or in close proximity to the schools. FTA believes that its 
proposed policy regarding its interpretation of the definition of 
``tripper service'' is consistent with both the statutory language and 
the language of 49 CFR 605.3(b). The policy permits only the type of 
design or modification accommodations that FTA historically has 
allowed.

``Exclusive'' School Bus Operations

    To effectuate the intent of Congress when it enacted its school bus 
operations prohibition now codified at 49 U.S.C. 5323(f), FTA narrowly 
would interpret the definition of ``school bus operations'' under 49 
CFR 605.3(b) to encompass any service that a reasonable person would 
conclude primarily was designed to accommodate students and school 
personnel, and only incidentally to serve the nonstudent general 
public. FTA believes that returning to this interpretation of the 
definition of ``school bus operations'' is consistent with the 
legislative history on the issue and would allow FTA to effectively 
implement the express intent of Congress, which is, to prevent unfair 
competition between federally funded grantees and private school bus 
operators.

    Issued in Washington, DC, on this 14th day of May 2008.
James S. Simpson,
Administrator.
 [FR Doc. E8-11151 Filed 5-16-08; 8:45 am]
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