[Federal Register Volume 73, Number 180 (Tuesday, September 16, 2008)]
[Rules and Regulations]
[Pages 53384-53390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-21601]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 605

[Docket No. FTA-2008-0015]


Final Policy Statement on FTA's School Bus Operations Regulations

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final policy statement.

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SUMMARY: Through this notice, the Federal Transit Administration (FTA) 
clarifies its policy with respect to its interpretation of ``tripper 
service'' and ``school bus operations'' under 49 CFR part 605.

DATE: Effective Date: The effective date of this final policy statement 
is September 16, 2008.

ADDRESSES: Availability of the Final Policy Statement and Comments: One 
may access this final policy statement, the proposed policy statement, 
and public comments on the proposed policy statement at docket number 
FTA-2008-0015. For access to the docket, please visit http://www.regulations.gov or the Docket Operations office located in the West 
Building of the U.S. Department of Transportation, Room W12-140, 1200 
New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Michael L. Culotta, Attorney, 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) 
366-1936.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Introduction

    On May 19, 2008, FTA issued a Notice of Proposed Policy Statement 
on FTA's School Bus Operations Regulations \1\ 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.\2\ As of August 6, 2008, FTA 
received approximately 510 comments on its proposed policy statement.
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    \1\ 73 FR 28,790 (May 19, 2008).
    \2\ 531 F.Supp.2d 494, 507 (W.D.N.Y. 2008) (setting aside FTA's 
interpretation of its school bus operations regulations under 49 CFR 
part 605).
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    In the final policy set forth below, FTA clarifies its guidance 
regarding FTA's interpretation of its school bus operations 
regulations. FTA shall construe the term ``tripper service,'' as it has 
historically, to include modifications to fare collection or subsidy 
systems, modifications to the frequency of service, and de minimus 
route alterations from route paths in the immediate vicinity of schools 
to stops

[[Page 53385]]

located at or in close proximity to the schools. Consistent with that 
construction, FTA shall interpret the definition of ``school bus 
operations'' to include service that a reasonable person would conclude 
was primarily designed to accommodate students and school personnel and 
only incidentally to serve the nonstudent general public.
    FTA stresses that its intent with this final policy is not to 
overhaul its school bus operations regulatory scheme. Rather, in the 
context of Rochester-Genesee Regional Transportation Authority, FTA 
intends to provide its grantees a basis which will allow them to 
continue to provide the service that FTA historically has allowed 
through administrative adjudications, while simultaneously satisfying 
the statutory requirements.
    FTA acknowledges that the 2008-2009 academic year has commenced. 
However, because FTA is not overhauling its regulatory scheme and is 
continuing to allow the type of tripper service that it historically 
has allowed, this final policy will not negatively impact 
transportation for the 2008-2009 academic year if grantees have been 
complying with FTA's historical interpretation of its school bus 
operations regulations.
    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.

B. 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 school 
bus transportation that exclusively transports students and school 
personnel in competition with a private school bus operator.'' \3\ 
Congress' 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. No. 93-87, 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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II. 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\ Rochester-Genesee Reg'l Transp. Auth., 531 F.Supp.2d at 
507.
    \11\ Id. at 507-16.
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    In its decision, the Court narrowly interpreted the word 
``exclusively'' in FTA's definition of ``school bus operations'' and 
found 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 technically would not ``exclusively'' 
transport students.\12\ The Court therefore concluded that RGRTA's 
proposed express bus service did not constitute impermissible school 
bus operations.\13\
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    \12\ Id. at 507-09.
    \13\ Id.
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    Additionally, the Court broadly interpreted FTA's definition of 
``tripper service.'' \14\ The Court cited United States ex rel. Lamers 
v. City of Green Bay for the proposition that a grantee may 
``completely redesign its transit system to accommodate school children 
as long as all routes are accessible to the public and the public is 
kept informed of route changes.'' \15\
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    \14\ Id. at 512.
    \15\ Id. at 512 (citing United States ex rel. Lamers v. City of 
Green Bay, 168 F.3d 1013, 1019 (7th Cir. 1999)).
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    FTA believes that, following the Court's narrow interpretation of 
``school bus operations'' and its 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 grantee keeps the service technically open to the 
public.\16\ FTA believes that such an interpretation would contradict 
FTA's final policy as set forth herein.
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    \16\ Id. at 509-16.
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III. Previous FTA Policy

A. 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 has 
allowed 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.\17\
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    \17\ 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.'' \18\ FTA

[[Page 53386]]

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.\19\
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    \18\ 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).
    \19\ 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 exclusively for the purpose of accommodating the needs of school 
students.\20\
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    \20\ Id. at 2-6.
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    In addition to minor modifications to route paths, FTA 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.'' \21\
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    \21\ 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 accommodate school children as long as 
all routes are accessible to the public and the public is kept informed 
of route changes.'' \22\ 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.\23\
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    \22\ United States ex rel. Lamers v. City of Green Bay, 168 F.3d 
1013, 1019 (7th Cir. 1999).
    \23\ Rochester-Genesee Reg'l Transp. Auth., 531 F.Supp.2d at 
512-13.
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B. ``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.\24\ However, in 1990, FTA withdrew the rulemaking because 
it believed that the regulations were ``functioning adequately.'' \25\
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    \24\ Advance Notice of Proposed Rulemaking, 47 FR 44,795, 
44,803-04 (Oct. 12, 1982).
    \25\ 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.\26\ In resolving that issue, FTA 
examined the Federal-Aid Highway Act of 1973, found the language of the 
Act's school bus provision ambiguous, and looked to the legislative 
history of Act for some guidance.
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    \26\ 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.\27\
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    \27\ 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 
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grantees. 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.\28\
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    \28\ 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.\29\ In efforts to prevent the unfair competition which 
Congress sought to prevent, FTA rejected RGRTA's arguments and 
prohibited RGRTA from providing its school bus service exclusively for 
school students. FTA utilized this same policy and analysis when it 
found non-compliant RGRTA's proposed service in its October 12, 2007 
letter \30\ and again in Laidlaw Transit, Inc. v. Rochester-Genesee 
Regional Transportation Authority.\31\
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    \29\ 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).
    \30\ See Letter from Federal Transit Administration to 
Rochester-Genesee Regional Transportation Authority at 3-4 (Oct. 12, 
2007).
    \31\ 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 hypothetically 
could board a bus along one of RGRTA's proposed 240 routes, RGRTA's 
proposed service was not ``exclusive'' and therefore technically did 
not constitute impermissible ``school bus operations.'' \32\
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    \32\ Rochester-Genesee Reg'l Transp. Auth., 531 F.Supp.2d at 
507-09.
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III. Response to Public Comments

    As of August 6, 2008, approximately 510 parties commented on FTA's 
Notice of Proposed Policy Statement on FTA's School Bus Operations 
Regulations. At the closing date of the docket, June 18, 2008, 
approximately 157 parties commented on FTA's proposed policy statement. 
FTA subsequently considered all additional comments through August 6, 
2008. The

[[Page 53387]]

commenters represent a broad spectrum of stakeholders from geographic 
areas throughout the United States, and they provided comments on a 
wide variety of issues. Many commenters raised issues that are outside 
the scope of FTA's proposed policy statement, and FTA does not address 
those concerns in this final policy statement.
    In this section, FTA responds to public comments by topic in the 
following order: (A) Policy Statement Generally; (B) ``School Bus 
Operations''; (C) ``Tripper Service''; (D) Unfair Competition; (E) 
Economic Issues; (F) Safety Issues; (G) Environmental Issues; (H) 
Congestion; (I) Rising Fuel Prices; (J) Local Issues; and (K) 
Alternative Policy Proposals and Amendments to 49 CFR part 605.

A. Policy Statement Generally

    Some commenters questioned whether FTA has the legal authority to 
issue this Final Policy Statement on FTA's School Bus Operations 
Regulations. These commenters questioned whether FTA should promulgate 
amended regulations rather than issue a policy statement.
    FTA Response: FTA concludes that it is not required to promulgate 
amended regulations to implement this final policy because FTA is not 
changing the language of the regulatory text at 49 CFR part 605. FTA 
merely is clarifying its interpretation of that regulatory language, 
and FTA lawfully may accomplish this clarification through a policy 
statement. Furthermore, FTA is not altering the substance of its 
regulatory requirements under 49 CFR part 605; FTA merely is 
summarizing thirty-two years of its policy in one document, based on 
public comments and FTA's historical interpretation and enforcement of 
its school bus operations regulations. Indeed, many commenters 
applauded FTA's efforts to issue a policy statement to provide guidance 
in the context of Rochester-Genesee Regional Transportation Authority.

B. ``School Bus Operations''

    Some commenters asserted that the word ``exclusively,'' as used in 
49 U.S.C. 5323(f) and in FTA's definition of ``school bus operations'' 
at 49 CFR 605.3, is not ambiguous and, therefore, FTA must implement a 
regulatory scheme that allows FTA's grantees to transport students and 
school personnel so long as the service is technically open to the 
public.
    Additionally, some commenters asserted that FTA's use of a 
``reasonable person'' standard in its interpretation of ``school bus 
operations'' is vague.
    Finally, at least one commenter expressed concern regarding whether 
and to what extent, under FTA's proposed policy, a grantee may create a 
new route to serve a school--particularly in communities experiencing 
population growth and development.
    FTA Response: FTA rejects the notion that 49 U.S.C. 5323(f) is 
unambiguous. FTA believes that one may reasonably interpret the term 
``exclusively'' in 49 U.S.C. 5323(f) and 49 CFR 605.3 to prohibit 
service that essentially is exclusively for students and school 
personnel, even though the service technically may be open to the 
nonstudent public. The relevant language of the regulation prohibits 
service that is ``exclusively for'' students and school personnel. FTA 
consequently concludes that it is reasonable and proper to consider 
whether service is, in fact, ``for'' such riders. FTA also relies 
heavily on the subsequent qualifying language of 49 U.S.C. 5323(f)--
``in competition with a private schoolbus operator''--to justify this 
interpretation. To illustrate, if FTA permitted a grantee to provide 
school bus operations so long as the service is technically open to the 
public, then Congress's purpose of protecting private school bus 
operators would be nullified. Such an interpretation would create a 
loophole in the statutory and regulatory scheme which would permit 
FTA's grantees to displace private school bus operators. Clearly, 
Congress did not intend this result, otherwise, Congress would not have 
passed this statutory provision. Accordingly, in this final policy 
statement, FTA relies on an interpretation of 49 U.S.C. 5323(f) which 
reasonably ensures that FTA's grantees that transport school students 
are not providing school bus operations that are exclusive-in-fact.
    With respect to the ``reasonable person'' standard, FTA points out 
that the standard has nearly a two hundred year history in the common 
law, and therefore, the standard is an acceptable standard in FTA's 
interpretation of its school bus operations regulations.\33\ Courts 
have held that the reasonable person standard is an objective standard, 
and that a ``reasonable person'' is a person: (1) Of ordinary prudence, 
(2) who has knowledge of the law and is aware of its consequences, and 
(3) who exercises caution in similar circumstances.\34\
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    \33\ See Vaughan v. Menlove, (1837) 132 Eng. Rep. 490, and its 
progeny.
    \34\ See William L. Prosser & W. Page Keeton, Prosser and Keeton 
on Torts 173-93 (5th ed. 1984).
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    Finally, FTA does not intend to discourage grantees from creating 
new routes to serve new demand, so long as a reasonable person would 
conclude that the grantees designed the routes to serve some segment of 
the nonstudent general public. Therefore, in the final policy set forth 
below, FTA will interpret its definition of ``school bus operations'' 
to allow a grantee to create a new route to serve school students and 
personnel if a reasonable person would conclude that the grantee 
designed the route to serve some segment of the nonstudent general 
public.

C. ``Tripper Service''

    With respect to FTA's interpretation of its ``tripper service'' 
definition at 49 CFR 605.3, some commenters requested clarification as 
to what constitutes a ``de minimus'' route deviation. Additionally, 
some commenters recommended that FTA should allow route deviations at 
multiple points along a route path--not just within the immediate 
vicinity of a school.
    FTA Response: FTA intends a ``de minimus'' route deviation, as FTA 
uses the term in this final policy statement, to mean a route 
alteration that is truly minor. For example, historically, FTA has 
allowed its grantees to provide tripper service that deviates from an 
existing route path by several blocks.\35\ FTA intends to identify 
definitively a specific threshold for determining whether an alteration 
is ``de minimus'' in its forthcoming notice of proposed rulemaking.
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    \35\ See, e.g., Travelways, Inc. at 7; Letter from Federal 
Transit Administration to Rochester-Genesee Regional Transportation 
Authority, supra note 20, at 6.
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    With respect to the locations of the route alterations, FTA 
stresses that it does not intend to significantly alter the type of 
service that it historically has allowed. In the past, FTA has allowed 
route alterations only within the immediate vicinities of schools, and 
FTA does not intend to break from that precedent in this final policy 
statement.

D. Unfair Competition

    Many commenters representing the interests of private school bus 
operators expressed support for FTA's proposed policy because the 
policy effectuates Congress's intent that Federally subsidized grantees 
do not displace private school bus operators. However, many commenters 
expressed concern that FTA's proposed policy would interfere with local 
transit agencies that transport students to school out of necessity, 
either because there are no private operators that provide the service 
in the local area or that private

[[Page 53388]]

operators charge an unreasonably high rate in exchange for its service.
    FTA Response: In localities where no private operator exists or 
where a private operator charges an unreasonably high rate in exchange 
for service, FTA highlights an existing exemption for its school bus 
operations prohibition at 49 CFR 605.11(b). Under this provision, FTA 
allows its grantees to provide school bus operations if, in the local 
area, a private school bus operator is ``unable to provide adequate 
transportation, at a reasonable rate, and in conformance with 
applicable safety standards.'' \36\ FTA's final policy does not affect 
this exemption, and FTA suggests that interested parties apply to FTA 
for this exemption, if appropriate.
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    \36\ 49 CFR 605.11(b).
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E. Economic Issues

    Some commenters expressed economic concerns with respect to FTA's 
proposed policy. These commenters questioned the propriety of FTA's 
proposed policy, considering that many school districts have limited 
financial resources and a variety of educational needs. Additionally, 
some commenters proffered that private school bus operators are more 
expensive than Federally subsidized public transportation.
    FTA Response: Congress, by passing the statutory provision now 
codified at 49 U.S.C. 5323(f), already has spoken to this issue and has 
decided that it is concerned with preventing unfair competition between 
Federally subsidized grantees and private school bus operators. Under 
49 U.S.C. 5323(f), FTA may provide financial assistance to a grantee 
only if the grantee agrees ``not to provide schoolbus transportation 
that exclusively transports students and school personnel in 
competition with a private schoolbus operator.'' \37\ In its 
regulations, guidance, and this final policy statement, FTA intends to 
implement this statutory provision to effectuate Congress's intent to 
prevent unfair competition between Federally subsidized grantees and 
private school bus operators.
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    \37\ 49 U.S.C. 5323(f).
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    Moreover, some commenters suggested that taxpayers ultimately spend 
much more in tax dollars on public transit service for students rather 
than on private school bus operators.\38\ For example, they estimate 
that the base cost of a transit bus is between $300,000 and $500,000, 
while they estimate that the base cost of a private school bus is 
between $46,000 and $68,000.\39\ These commenters also claim that the 
maintenance cost per mile for a transit bus is approximately $0.80 to 
$1.00, while they claim that the maintenance cost per mile for a 
private school bus is $0.34.\40\ They therefore argue that, while a 
school district's direct payments to a federally subsidized public 
transit authority may be lower than payments to a private school bus 
operator, the total cost to the taxpayer may be much higher for 
federally subsidized transit service than for private school bus 
service. FTA lacks sufficient information to analyze this argument 
fully, but it will seek additional information and comment in 
connection with FTA's forthcoming notice of proposed rulemaking.
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    \38\ See Comment Number FTA-2008-0015-0184.1 (June 19, 2008).
    \39\ Id. (noting that the useful life of a transit bus is 
approximately 12 to 15 years, while the useful life of a private 
school bus is comparable--approximately 12 years).
    \40\ Id.
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F. Safety Issues

    Many commenters expressed concern that FTA, through its proposed 
policy, would create a more hazardous environment for school students 
commuting to school. Specifically, these commenters, with the notion 
that FTA intends to limit allowable service under its ``tripper 
service'' definition, suggest that FTA's proposed policy would result 
in more students walking, biking, and driving across busy roads while 
traveling to school. Some commenters raised a similar safety concern 
and believe that, with limitations on ``tripper service,'' FTA's 
proposed policy will result in less direct routes and increased 
transfers for students traveling to school. Consequently, these 
commenters write, FTA's proposed policy will cause school students to 
congregate at transfer points, which will lead to increased crime 
around these transfer points.
    Many commenters also expressed concerns regarding the safety of 
private school buses. These commenters asserted that public buses are 
safer than private buses. Alternatively, many commenters asserted that 
private buses, which are subject to stringent safety standards imposed 
by the National Highway Traffic Safety Administration (NHTSA), are 
safer than public buses. For example, these commenters noted that NHTSA 
requires school buses to be equipped with warning lights, additional 
mirrors for drivers, ``stop arms,'' and rollover protection. 
Additionally, these commenters assert, that on public buses, school 
students may be exposed to any number of unknown influences, such as 
pedophiles and child molesters.
    FTA Response: Congress, by passing the statutory provision now 
codified at 49 U.S.C. 5323(f), already has spoken to this issue and has 
decided that it is concerned with preventing unfair competition between 
Federally subsidized grantees and private school bus operators. Under 
49 U.S.C. 5323(f), FTA may provide financial assistance to a grantee 
only if the grantee agrees ``not to provide schoolbus transportation 
that exclusively transports students and school personnel in 
competition with a private schoolbus operator.'' \41\ In its 
regulations, guidance, and this final policy statement, FTA intends to 
implement this statutory provision to effectuate Congress's intent to 
prevent unfair competition between Federally subsidized grantees and 
private school bus operators.
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    \41\ 49 U.S.C. 5323(f).
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    Moreover, some commenters misconstrued FTA's intent. FTA did not 
propose to eliminate transit service that historically has qualified as 
tripper service. Therefore, FTA believes that its final policy will not 
result in the above-mentioned increased safety hazards.
    With respect to the safety of public buses versus private buses, 
FTA recognizes that, most notably, private school buses are subject to 
stringent safety standards promulgated by NHTSA.\42\ For example, NHTSA 
imposes on school bus manufacturers restrictions regarding rear view 
mirrors, safety lights, ``stop signal arms,'' rollover protection, body 
joint strength, passenger seating, and crash protection.\43\ 
Accordingly, FTA does not believe that private school buses afford an 
inherently unsafe means of school transportation.
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    \42\ See, e.g., Federal Motor Vehicle Safety Standards, 49 CFR 
Part 571 (2007).
    \43\ 49 CFR Part 571.
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G. Environmental Issues

    Many commenters asserted that FTA's proposal would result in the 
elimination of numerous transit routes. These commenters asserted that, 
with fewer transit routes available to students, more students would 
drive vehicles to school. The affect, these commenters argued, would be 
greater harm to the environment.
    Some commenters also argued that public buses are more fuel-
efficient than private buses. Alternatively, many commenters asserted 
that private buses are more fuel-efficient than public buses. One 
commenter provided evidence that the average fuel miles per gallon for 
transit buses is 4.5, while the

[[Page 53389]]

average fuel miles per gallon for private school buses is 6.5.\44\ 
Scores of commenters asserted that private school bus service is 
approximately 40% more fuel-efficient than public bus service.\45\
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    \44\ See Comment Number FTA-2008-0015-0184.1 (June 19, 2008).
    \45\ See, e.g., Comment Number FTA-2008-0015-0242.1 (July 25, 
2008).
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    FTA Response: Congress, by passing the statutory provision now 
codified at 49 U.S.C. 5323(f), already has spoken to this issue and has 
decided that it is concerned with preventing unfair competition between 
Federally subsidized grantees and private school bus operators. Under 
49 U.S.C. 5323(f), FTA may provide financial assistance to a grantee 
only if the grantee agrees ``not to provide schoolbus transportation 
that exclusively transports students and school personnel in 
competition with a private schoolbus operator.'' \46\ In its 
regulations, guidance, and this final policy statement, FTA intends to 
implement this statutory provision to effectuate Congress's intent to 
prevent unfair competition between Federally subsidized grantees and 
private school bus operators. Moreover, these concerns are based on the 
misperception that FTA's proposed policy would prohibit tripper service 
that FTA historically has permitted.
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    \46\ 49 U.S.C. 5323(f).
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    In response to specific concerns regarding environmental harm and 
fuel-efficiency concerns, FTA concludes that there is no reliable 
method to determine the effect of its school bus operations policy on 
the environment. There are numerous factors that will vary from 
locality to locality, such as, (1) the number of additional vehicles 
utilized as a direct result of FTA's school bus operations policy, (2) 
the fuel emissions of those vehicles, and (3) the manufacturing date of 
those vehicles. FTA notes that no commenter provided evidence that 
FTA's proposed policy would result in greater harm to the environment.
    FTA does not anticipate that its school bus operations policy will 
have a significant environmental impact, and, thus, FTA does not 
believe that this final policy requires additional approvals under the 
National Environmental Policy Act.\47\
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    \47\ See 23 CFR 771.117(c)(20) (2008).
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H. Congestion

    Many commenters asserted that FTA proposes to eliminate numerous 
transit routes. These commenters alleged that, with less transit routes 
available to students, more students would drive vehicles to school. 
The affect, these commenters argued, would be increased congestion.
    FTA Response: Congress, by passing the statutory provision now 
codified at 49 U.S.C. 5323(f), already has spoken to this issue and has 
decided that it is concerned with preventing unfair competition between 
Federally subsidized grantees and private school bus operators. Under 
49 U.S.C. 5323(f), FTA may provide financial assistance to a grantee 
only if the grantee agrees ``not to provide schoolbus transportation 
that exclusively transports students and school personnel in 
competition with a private schoolbus operator.'' \48\ In its 
regulations, guidance, and this final policy statement, FTA intends to 
implement this statutory provision to effectuate Congress's intent to 
prevent unfair competition between Federally subsidized grantees and 
private school bus operators.
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    \48\ 49 U.S.C. 5323(f).
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    Moreover, these concerns are based on the misunderstanding that 
FTA's proposed policy would prohibit tripper service that FTA 
historically has permitted. In this final policy statement, FTA does 
not propose to alter its historical interpretation of ``tripper 
service'' fundamentally, and therefore, FTA does not believe that its 
final policy will affect congestion.

I. Rising Fuel Prices

    Some commenters expressed concern about rising fuel prices and the 
effect these prices will have on school transportation.
    FTA Response: Congress, by passing the statutory provision now 
codified at 49 U.S.C. 5323(f), already has spoken to this issue and has 
decided that it is concerned with preventing unfair competition between 
Federally subsidized grantees and private school bus operators. Under 
49 U.S.C. 5323(f), FTA may provide financial assistance to a grantee 
only if the grantee agrees ``not to provide schoolbus transportation 
that exclusively transports students and school personnel in 
competition with a private schoolbus operator.'' \49\ In its 
regulations, guidance, and this final policy statement, FTA intends to 
implement this statutory provision to effectuate Congress's intent to 
prevent unfair competition between Federally subsidized grantees and 
private school bus operators.
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    \49\ 49 U.S.C. 5323(f).
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    Moreover, these commenters did not specify how rising fuel prices 
should affect FTA's final policy. Notably, rising fuel prices affect 
both public transit authorities and private school bus operators in any 
given locality, therefore, FTA estimates that rising fuel prices should 
affect school districts in a similar manner, regardless of the type of 
service that they use to transport students. Without a more 
particularized concern from these commentators, it is difficult for FTA 
to speculate how rising fuel prices should impact and factor into FTA's 
final policy.

J. Local Issues

    Approximately 141 of the 510 commenters represent the Oakland, 
California area, and these commenters expressed concerns that FTA 
proposed to eliminate transit service in that region. Approximately 27 
commenters from Washington State expressed similar concerns.
    FTA Response: These comments are unfounded: FTA did not propose to 
eliminate any particular transit service through its proposed policy 
statement, and FTA does not propose to eliminate any particular transit 
service through this final policy statement. Moreover, FTA's final 
policy does not prohibit transportation that historically has qualified 
as tripper service. Therefore, so long as public transit authorities in 
these areas are complying with FTA's historical interpretation of its 
school bus operations regulations, FTA's final policy should not 
interfere with the transportation that these public transit authorities 
provide.

K. Alternative Policy Proposals and Amendments to 49 CFR Part 605

    Some commenters offered alternative policy proposals, including 
amendments to 49 CFR part 605, for FTA's consideration. Specifically, 
some commenters proposed that FTA require an annual period of open 
bidding on school transportation, with bid submissions from interested 
parties received in April and FTA selections, based on quality and 
cost, in May.
    Some commenters also proposed additional exemptions under 49 CFR 
part 605, such as exemptions for: (1) Areas with populations of less 
than 200,000 persons; (2) transit agencies that operate in communities 
without school district transportation subsidies; (3) grantees that 
provide service to school districts that operate some service with 
their own private fleets; and (4) routes serving secondary schools.
    Lastly, some commenters suggested that FTA utilize a negotiated 
rulemaking proceeding to formulate its forthcoming proposed rule.
    FTA Response: With respect to the open bidding proposal, FTA 
believes that such a proposal amounts to a new regulatory scheme, which 
FTA cannot appropriately adopt through a policy

[[Page 53390]]

statement. The proposal would require an amendment to FTA's school bus 
operations regulations, not its interpretation of those regulations, 
and FTA would have to adopt such a scheme through a rulemaking.
    With respect to the proposed exemptions, FTA believes that, if 
adopted, these proposals would constitute substantive changes to the 
text of FTA's school bus operations regulations. FTA already lists a 
series of allowable exemptions at 49 CFR 605.11. Thus, FTA believes 
that it cannot appropriately consider these exemptions within the 
rubric of this final policy statement.
    Finally, FTA believes that the comments suggesting a negotiated 
rulemaking fall outside the scope of this policy statement. FTA will 
appropriately address any comments regarding a notice of proposed 
rulemaking in that forum.

IV. Final FTA Policy

A. Purpose of Final FTA Policy

    In the final 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's school bus prohibition and Congress's express 
intent regarding that prohibition. Therefore, FTA issues this final 
policy statement 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.
    Additionally, 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.

B. Tripper Service

    With respect to a grantee's regularly scheduled public 
transportation service, FTA shall interpret the definition of ``tripper 
service'' under 49 CFR 605.3(b), as it historically has interpreted 
that definition, to allow a grantee to (1) utilize ``various fare 
collections or subsidy systems,'' (2) modify the frequency of service, 
and (3) make de minimis route alterations from route paths in the 
immediate vicinity of schools to stops located at or in close proximity 
to the schools. For example, a grantee may provide more frequent 
service on an existing route to accommodate increased student ridership 
before and after school. Furthermore, a grantee may alter route paths 
to accommodate the needs of school students by making de minimis route 
alterations from route paths to drop off and pick up students at stops 
located on school grounds or in close proximity to the schools.
    FTA believes that this 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). This policy permits only 
the type of design or modification accommodations that FTA historically 
has allowed and does not represent a departure from FTA's prior 
guidance on this matter.

C. ``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 shall 
interpret the term ``exclusively'' in the definition of ``school bus 
operations'' under 49 CFR 605.3(b) to encompass any service that a 
reasonable person would conclude was primarily designed to accommodate 
students and school personnel, and only incidentally to serve the 
nonstudent general public. Additionally, grantees may create new routes 
to serve school students and personnel if a reasonable person would 
conclude that the grantees designed the routes to serve some segment of 
the nonstudent general public.
    FTA believes that maintaining this interpretation of 
``exclusively'' is consistent with the legislative history on the issue 
and would allow FTA effectively to implement the express intent of 
Congress, which is to prevent unfair competition between Federally 
funded grantees and private school bus operators. This policy does not 
represent a departure from FTA's prior guidance on this matter, and is 
merely intended to provide FTA with additional flexibility when 
interpreting 49 U.S.C. 5323(f) and 49 CFR 605.3(b) and effectuating the 
intent of Congress.

    Issued in Washington, DC on this 11th day of September 2008.
James S. Simpson,
Administrator.
 [FR Doc. E8-21601 Filed 9-15-08; 8:45 am]
BILLING CODE 4910-57-P