WASHINGTON D.C. The Federal Transit Administration has abandoned plans to write a new rule in response to a federal court decision that it believes could open the door for public transit agencies to take away school transportation work from private bus companies.

In a posting in the Federal Register, the FTA said it was dropping a rulemaking procedure that would have addressed the issue involving Rochester-Genesee Regional Transportation Authority and Laidlaw Education Services, but could have nationwide implications.

The Rochester, N.Y., public transit agency and Laidlaw have had a long-standing feud over which one should be allowed to handle transportation services for high school students from the Rochester City School District.

The decision to drop the rulemaking -- that was proposed last November -- drew negative comment from the motorcoach industry which has worried the federal court ruling last year chipped away at the upgraded FTA charter rule and hampered private carriers from expanding their school transportation work.

"It is very disappointing," said Ken Presley, vice president of the United Motorcoach Association.

Still, he held out hope the decision was made as part of an effort by the FTA to revisit various actions taken by the agency when it was run by the Bush Administration, a common occurrence when there is a change in administrations.

"We hope this move by the FTA is simply part of a review of pending rulemakings that was submitted by the previous administration and not an effort to compromise the (charter) rule in place that protects the private sector from illegal competition from federally subsidized operations," he added.

The FTA, which said it took the action after studying formal comments filed by transit agencies, school districts and motorcoach companies, promised to take another look at the issue in the near future.

Laidlaw initially had the school transportation contract, but lost it to the RGRTA when the school district changed its classroom hours and the private carrier was unable to immediately accommodate the students.

The FTA ruled the RGRTA was in violation of the federal charter rule when it became transporting the students, which led to the transit agency and the school district filing a joint suit against the FTA and others to win the right to transport the students.

A U.S. District Court judge in New York early last year sided with the transit agency and school district in a decision that both the FTA and the motorcoach industry argued was wrong and could damage the charter rule that limits the charter and school transportation work that public transit agencies are allowed to do.

After studying the court action, the FTA announced in November it would conduct a rulemaking procedure to "clarify" the charter regulation in light of the court decision. It said it would adopt a regulation as part of the charter rule that would allow transit agencies to continue to provide the type of school bus service the FTA has historically allowed while simultaneously satisfying the statutory requirements of the charter rule.

Under the current rule, transit agencies can contract to transport school children if they do not alter their regular routes too dramatically and keep the service open to the public.

The FTA said the court decision appeared to create a loophole in the charter rule that allowed transit agencies to completely restructure their routes - setting up 240 express routes in the case of the RGRTA - to serve the schools as long as they permitted the general public to ride.

It maintained that a reasonable person would conclude that the new routes were primarily designed for students and only incidentally to serve non-students.

"Such an interpretation would create a loophole in the statutory and regulatory scheme which would permit FTAs grantees to displace private school bus operators with ease," the agency stressed in its initial announcement of the rulemaking procedure.

The announcement drew more than 230 formal public comments, most of them from transit agencies and school districts critical of the rulemaking effort. Ultimately, their comments led to the FTA abandoning its efforts.

Many of the critics, according to the FTA, appeared to have misunderstood the agencys intentions, thinking instead that it wanted to adopt a new rule that would put broader restrictions on their ability to provide school bus services.

The charge against the rulemaking was led by the American Public Transportation Association, a trade group that represents the public transit industry. Urging the FTA not to make any changes to the rule, the organization contended that the court case in the Rochester situation was just one decision in more than 30 years and since then transit agencies have not rushed to take advantage of the ruling.

"In short, we believe it would be unwise to let a single bad data point in the long history of the rule drive changes likely to have unforeseen consequences," wrote the groups chief counsel, James P. LaRusch.

Even a congressman got involved.

Oregon Rep. Peter A. DeFazio, an influential Democrat, urged the FTA to exempt from the rule school districts that have their own buses but use public transit to augment their service.

"To take away a school districts ability to provide additional service with public transit is unreasonable, particularly when private companies arent being harmed as they dont stand to gain additional contracts," he said.

UMA filed a nine-page letter in favor of the rulemaking and supporting the federal charter rule, which was updated last year. "Having felt the brunt of unfair competition for many years, the revised rule is fairer and now requires accountability from publicly and non-publicly funded carriers," the association wrote.