Ubiquitous yellow school buses dot the American landscape, delivering millions of children to school every day. Most of these school buses are owned and operated by the local school district. In some areas, however, that local school district contracts with private bus companies whilst in others many students take local city buses to school. The Federal Transit Administration has issued regulations in an attempt to prevent local transit agencies who receive federal funds from unfairly competing with private bus companies in the provision of school service in conjunction with the charter rule. Public transit providers who receive capital or operating assistance from the federal government cannot provide school bus transportation that exclusively transports students and school personnel in competition with a private school bus operator in the pertinent regulations (49 U.S.C. ยง 5323(f)). There has been a "tripper" exception that allows public transit agencies to operate extra service on regular routes to meet the demand caused by school children traditionally; these trippers may even make "de minimis" route deviations in order to directly stop in front of a school building. Some transit agencies have gone farther than merely operating trippers by operating a large number of unique bus routes designed to serve schools and operating only on school days.

The school service rule

 Transit agencies that have routes like this include two providers in the San Francisco Bay area in California: SamTrans of San Mateo County and A.C. Transit of Oakland. The Rochester-Genesee Transportation Authority of New York is an additional one. These networks have operated in a gray area under this regulation; without exception they are open to the public and thereby do not exclusively transport students, although the routes are clearly school routes. In Rochester-Genesee Regional Transportation Authority v. Hynes - Cherin (No. 07-CV-6378L, United States District Court, W.D. New York, January 24, 2008), union members of a private bus company charged that the RGRTA, which had recently entered into an agreement with the local school district to operate more than 240 express routes to area schools, was unfairly competing with local private bus companies for school service. The judge ruled for the RGRTA because these new routes did not "exclusively" serve students; stopped at all regular bus stops, and were included in system timetables although they were designed for students they were open to the general public. Even if few (or even no) members of the public would use a special route under this ruling, if it was possible for them to do so that would be enough to defeat the exclusivity clause. FTA attempted to rewrite its regulations to outlaw this kind of service provision out of a fear that the decision would allow for a wholesale take over of school bus operations by local transit agencies as a result of this decision. The FTA has not revisited this subject, which leaves the court decision as the current final say on the matter as of November 2011.