June 13 (Bloomberg) — Eight times since October, U.S. bus- safety regulators gave extensions allowing operators to stay on the road after finding problems serious enough to shut them down, according to Transportation Department records.

The May 31 crash of a Sky Express bus outside Richmond, Virginia, that killed four passengers occurred three days into a 10-day reprieve the Charlotte, North Carolina-based company received from a shutdown order. Transportation Secretary Ray LaHood ordered an end to such extensions after the crash.

The Federal Motor Carrier Safety Administration earlier granted extensions to four other motorcoach operators, two that run passenger vans and one school-bus operator, spokeswoman Candice Tolliver said. All eight operators received 10-day extensions beyond the 45-day appeal period required by law.

"They’re cheating the public by having these quiet, behind-the-scenes reviews of their safety and having their 45 days," said Jackie Gillan, vice president of Advocates for Highway and Auto Safety, a Washington-based consumer group. "Who would have gotten on that bus knowing the violations that they had?"

The House Transportation and Infrastructure Committee today will hold a hearing to explore whether the bus-safety agency has enough power to shut down unsafe operators, and whether it has used the powers it does have aggressively enough.

LaHood said on June 1 he was "extremely disappointed" the agency hadn’t shut down Sky Express before the crash. Anne Ferro, the agency’s administrator, said in an interview the next day that the agency used 10-day extensions to make sure its shutdown decisions could stand up to court challenge.

‘Corrective Action’

U.S. regulations allow the agency to grant extensions only if a company files a "corrective action plan" to address safety problems. Sky Express did so, Ferro said in another interview on June 7. Tolliver declined to release the plan, saying it contains confidential information about the company and its drivers.

About 20 percent of the companies subject to being shut down this fiscal year were given 10 additional days to demonstrate they were making safety improvements, Ferro said.

Sky Express exceeded the agency’s "intervention thresholds" for all five categories for which the regulator had safety data, according to information posted on the motor carrier agency’s website. The agency had found "serious" violations within the past 12 months in driver fitness and fatigued drivers, and found at least one unspecified "serious" violation in a April 7 review.

Buses vs. Planes

Another bus company that received a reprieve, Ocean Travel of Williamsville, New York, exceeded FMCSA’s threshold for intervention in five of the seven safety categories tracked. The company’s score for driver fitness was about equal to Sky Express’s, worse than 99.7 percent of other U.S. motor carriers.

The company was still selling tickets for trips from Buffalo, Rochester and Liverpool, New York to New York City as of June 10 on the GotoBus.com website.

Sky Express didn’t return a phone call seeking comment. A woman answering a phone number listed for Ocean Travel said the company was still in business and working out its problems with the government. She declined to give her name.

The Transportation Department handles unsafe bus operators with less urgency than it treats airlines with safety issues, said Peter Pantuso, president and chief executive officer of the American Bus Association, a Washington-based trade group representing about 1,000 motorcoach and tour companies operating in the U.S. and Canada.

The Federal Aviation Administration didn’t wait 45 days to shut down the discount airline ValuJet after a 1996 fatal crash in the Florida Everglades exposed safety concerns, he said.

Sky Express "had a history of violating the rules for a long, long time," Pantuso said. "Why wasn’t the process started 12 months ago or even two years ago?"

‘Continued Slow Progress’

Senators including Frank Lautenberg, a New Jersey Democrat, were pushing safety legislation before the Virginia crash. A bus operated by World Wide Travel of Greater New York crashed into a sign post and split open March 12 while returning to Manhattan’s Chinatown from Mohegan Sun, killing 15, and another Chinatown bus crashed on the New Jersey Turnpike two days later, resulting in two deaths.

The FMCSA has said that about 15 percent of more than 3,000 U.S. commercial buses subjected to surprise inspections in May were taken off the road for safety reasons.

The National Transportation Safety Board, which investigates transportation accidents and recommends safety improvements, first said in 1999 that the motor carrier agency doesn’t place enough emphasis on driver and vehicle qualifications in determining a company’s safety rating.

In a February 2010 update, NTSB said it was concerned by the FMCSA’s "continued slow progress in addressing this issue." Agency changes announced so far don’t go far enough to change that assessment, NTSB spokesman Nicholas Worrell said.

‘Bad Actors’

A bill backed by the American Bus Association would require the Transportation Department "to root out bad actors and unsafe and illegal motor coach operators," according to an April 6 news release from its author, Representative Bill Shuster, a Pennsylvania Republican.

A bill approved by the Senate Commerce, Science and Transportation Committee on May 5 includes provisions to beef up motor-carrier administrative powers. The measure, introduced by Sherrod Brown, an Ohio Democrat, also includes several mandates for vehicle improvements, including seat belts and stronger roofs. The House bill would require testing and research of the safety features and issue rules later.

DOT Criticism

"We can’t wait for yet another deadly bus crash to increase protections for consumers," Senator Kirsten Gillibrand, a New York Democrat, said in an e-mailed statement. "The Department of Transportation needs to use the tools and resources they have to provide proper oversight and accountability to this growing industry."

Brown, Gillibrand and four other senators, in a letter June 6, asked LaHood to spell out what short-term steps can be taken to shorten the timeframe for allowing problem companies to come into compliance.

"It is apparent that the pattern of enforcement by DOT has been uneven, inconsistent and ineffective," the senators wrote. "FMCSA failed to enforce its statutory authority to place the carrier out of service," referring to Sky Express.

Underscoring Ferro’s concerns about bus companies being "reincarnated," the agency on June 3 issued a cease and desist order against Sky Express. The carrier kept selling tickets after being shut down following the crash and was repainting "some or all of its vehicles" in preparation to operate under another name, the agency said in its order.

Four Sky Express buses were pulled over by Maryland State Police outside Washington on Friday, WTOP radio reported. The buses were being driven from North Carolina to New York after being repossessed and carried no passengers, according to the report.

More Authority Needed

FMCSA needs the authority to physically close a company and impound its vehicles, not just to take away its operating authority, Pantuso said.

The bus safety agency will propose a regulation by the end of the year to alter the way it targets companies for shutdown, Ferro said in the June 7 interview. The agency wants to shift from relying on "labor intensive" on-site compliance reviews to monitoring data about vehicle and driver citations, according to a Transportation Department regulatory summary.

The Transportation Department rejects about one-fourth of the 1,200 applications it receives for new bus operations each year, Ferro said in a May interview. Additional powers to shut down rogue companies may result in closing about 300 a year, she said.

To contact the reporter on this story: Jeff Plungis in Washington at jplungisbloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2bloomberg.net