The Multi-Passenger Transportation Deregulation Act Model Legislation Exposed

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The Multi-Passenger Transportation Deregulation Act Model Legislation was adopted by ALEC's Trade and Transportation Task Force at the Annual Meeting on August 21, 1998, approved by the full ALEC Board of Directors in September, 1998. ALEC has attempted to distance itself from this piece of legislation after the launch of ALECexposed.org in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

CMD's Bill Summary

This ALEC-proposed bill mandates that the provision of some public service be opened to bidding by private contractors, and that the contract be awarded on a "lowest cost" basis. While competition can be beneficial, competition without standards is not. "Lowest cost" requirements for procurement contracts tend to lower labor compensation among providers. They are also associated with even worse performance on health and safety, environmental, and reporting requirements than public agencies. An early and, for that reason only, important effort to privatize provision of all public transportation services, through competitive contracting for provision of some service, and "lowest cost" or "least cost" instructions or awards to bidding contractors.

ALEC Bill Text

Model Legislation

{Title, enacting clause, etc.}

An Act to create a more efficient transit system by eliminating the bus service monopoly and allowing multi-passenger van services to compete in the transit market. Be it enacted by the legislature of the state of [insert state]:

SECTION 1. Definitions.

1. Private transit services refers to any motor-vehicle based service providing transportation to customers, clients, or members, including route-based or schedulebased van or bus service, express bus service, multi-passenger van service, dial-a-ride, shared-ride buspools, carpools, or vanpools, or taxis.

SECTION 2. Findings

1. Current regulations imposed by local governments and the public utility commissions grant exclusive privileges to scheduled bus services; these privileges eliminate competition and create monopolies.

2. Operating a bus service in a non-competitive environment leads to lower quality of service, less innovation, less entrepreneurship, higher costs, and in the absence of subsidies, higher fares. These factors combine to steadily diminish the share of trips carried by mass transit.

3. Passengers of private transit services report feeling safer, waiting less, and traveling faster than on traditional municipal bus services. Throughout the country private transit services have proven that they can create new markets and expand existing ones.

4. Current regulations imposed by local governments limit entry into local taxi markets; these limits dramatically reduce competition.

5. Non-competitive or limits on taxi services increases prices, reduces service levels, ENGENDERS "REDLINING," increases waiting time, and denies opportunity to would-be taxi entrepreneurs.

6. The chance to start a private transit service will be a major source of business opportunities for low skill disadvantaged workers.

It will create the small businesses that are the source of economic growth, and will provide a service the public needs.

SECTION 3. Application

(A) [Insert appropriate statute or regulation], which currently prohibits the creation of private transit services to provide public transportation that competes with a publicly franchised or operated bus or transit system is repealed. No county, city or subsection thereof shall prevent a private transit service from entering the transit market as long as it meets the following public safety standards.

1.) Service operators must have a valid vehicle license and driver's license to operate the vehicle.
2.) Service operators must have proper insurance.
3.) The vehicle is subject to regular inspections not to exceed four per year.
4.) Operators must comply with applicable state laws regarding drug and alcohol testing.

(B) Local governments may not deny a license to any applicant that meet conditions 1-3 in Section 3, para. A.

(C) Local government's licensing fees for private transit services may not be excessive or a significant barrier to entry.

(D) Local governments or any transit regulating body may not prevent private services from operating on any route, including those served by public transit.

1.) To deal with the potential problem of private services interloping at bus stops by picking up passengers waiting for publicly franchised or operated bus to arrive, provisions may be made to prevent private transit services from running ahead of public buses, lingering at the bus stop, or engaging in any other form of interloping at the pick-up points.
a) These provisions may arrange for private services to stop at bus stops during certain time windows, or establish for private services separate stopping zones.
b) Stopping zones or staging areas for private transit services established on private property shall be permitted.
2.) Where contracts exist for route-based services with payments based on passenger loads, competition may be deferred until the current contract expires, is renegotiated, or for a maximum of three years.


Adopted by ALEC's Trade & Transportation Task Force at the Annual Meeting August 21, 1998. Approved by full ALEC Board of Directors September, 1998.

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