MEMORANDUM
FROM:
Sid Hemsley, Senior Law Consultant
DATE:
February 17, 2009
RE:
Wrecker Regulations
Your question is this: Can the city regulate the number of wreckers that can be on the city’s
approved towing list?
The answer to that question is whether such a regulation can be successfully defended as a
“safety” regulation that is “genuinely responsive to safety concerns,” under 49 U.S.C. § 14501(c).
The answer to that question is not necessarily easy to come by, but I think it may be difficult to
show that a particular numerical limit on the approved towing list meets the above standard. As
far as I can determine, there are no cases in the United States that deal with a numerical limitation
on the number of wrecker permits, but there are a number of cases involving wrecker regulations
that are based on the safety consideration of eliminating or reducing “wreck-chasing” by tow
trucks. Such regulations are usually strict enough to effectively limit the number of wrecker
permits. Indeed, that is the reason wrecker owners who are unhappy with those regulations
challenge them.
There are a large number of wrecker regulation cases in the United States, but I will focus
mainly on the ones that are defended on the ground that they reduce “wreck-chasing.” I assume
that would be the ground upon which a numerical limitation on wreckers on an approved list would
be defended.
As we shall see below, wrecker regulations based on reducing “wreck-chasing” that
effectively limit the number of wrecker permits have been upheld where they are shown to be
“genuinely responsive to safety concerns,” rather than to economic and other concerns. In earlier
wrecker regulation cases, the courts were generally satisfied that the regulations were “genuinely
responsive to safety concerns” if the language of the regulations and of the testimony supporting
them were grounded in a purpose of reducing “wreck-chasing.” But in the U.S. Second Circuit
Court of Appeals in recent cases involving such regulations that court has tightened the test. The
Second Circuit now imposes a two prong test. The first one is whether the regulations contain
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language geared toward reducing “wreck-chasing.” The second one determines whether the
regulations actually work to reduce “wreck-chasing.” That seems to be a logical test, given the
question of whether the wrecker regulation is “genuinely responsive to safety concerns.” But I am
not sure that the Sixth Circuit Court of Appeals, in which Tennessee is located, or the Tennessee
state courts, would adopt the Second Circuit’s stricter test for whether a wrecker regulation meets
that test. But I must add here that I am not sure that a numerical limit on the number of wreckers
on the approved wrecker list would meet either test.
As a matter of historical interest, the answer to your question was probably governed for a
short period by the U.S. Sixth Circuit Court of Appeals case of Petrey v. City of Toledo, 246 F.3d
548 (2000). In that case, the Sixth Circuit adopted a “market participation” doctrine. Under that
doctrine, the government enacting wrecker regulations governing nonconsensual tows was acting
as a “market participant“; that is, the purchaser of wrecker services. In that capacity, it had
authority to adopt broad wrecker regulations and those regulations were not governed by 49 U.S.C.
§ 14501(c). Under the market participant theory, presumably, a government could have imposed
a numerical limitation on the number of wreckers on an approved rotation list, at least with respect
to nonconsensual tows. However, the general consensus is that the “market participant doctrine”
was overturned with Petrey by the U.S. Supreme Court case of City of Columbus v. Ours Garage
and Wrecker Service, Inc., 536 U.S. 424 (2002) (which also came to the High Court from the Sixth
Circuit).
Ours Garage & Wrecker Service sets up and answers the question of what wrecker
regulations allow local governments to impose under § 14501(c):
Federal preemption prescriptions relating to motor carriers
contained in 49 U.S.C. § 14501(c) (1994 ed., Supp. V), specifically
to save to States “safety regulatory authority ... with respect to
motor vehicles,” § 14501(c)(2)(A). This case presents the question
of whether state power preserved in § 14501(c)(2)(A) may be
delegated to municipalities, permitting them to exercise safety
regulatory authority over local tow-truck operations.
The federal legislation preempts provisions by “a state [or] political
subdivision of a State ... related to a price, route, or service of any
motor carrier ... with respect to the transportation of property.” §
14501(c)(1). As an exception to this general rule, congress
provided that the preemption directive “shall not restrict the safety
regulatory authority of a State with respect to motor vehicles.” §
14501(c)(2)(A). Section 14501(c)(1)’s statement of the general
rule explicitly includes “State[s]” and their “political
subdivision[s.].” The exception for safety regulations, however,
specifies only “State[s]” and does not mention “political
subdivision[s].” § 14501(c)(2)(A). [At 428]
The question, then, was whether, under 49 U.S.C. § 14501(c), municipalities could even
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adopt rules governing wrecker safety regulations. The court did not answer the question of
whether the City of Columbus’ wrecker regulations passed legal muster.
Here is what 49 U.S.C., §14501(c) expressly says:
- 49 U.S.C. § 14501(c)(1): GENERAL RULE. - Except as provided in paragraphs (2) and
(3), a State, political subdivision of a State, or political authority of 2 or more States may not enact
or enforce a law, regulation, or other provision having the force and effect of law related to a
price, route, or service of any motor carrier ... with respect to the transportation of property
- 49 U.S.C. § 14501(c)(2): MATTERS NOT COVERED.- Paragraph (1)(A) Shall not restrict the safety regulator authority of a State with respect to motor
vehicles ... or the authority of a State to regulate motor carriers with regard to minimum amounts of
financial responsibility relating to insurance requirements and self-insurance authorization;
(B) does not apply to the transportation of household goods; and
(c) does not apply to the authority of a State or a political subdivision of a State to
enact or enforce a law, regulation, or other provision relating to the price of for-hire motor vehicle
transportation by a tow truck, if such transportation is performed without the prior consent or
authorization of the owner or operator of the motor vehicle.
The argument in Ours Garage & Wrecker Service was whether only the state, or the state
and its political subdivisions, had the right to enact safety regulations pertaining to tow trucks. As
that Supreme Court itself acknowledged, the courts of appeal were divided on that question. In
the Sixth Circuit, Petrey v. City of Toledo had held that § 14501(c) preserved the right of only the
state to adopt safety regulations related to tow trucks. But it had also ruled that with respect to
nonconsensual tows, “Toledo, when acting as a market participant, may set certain standards and
ultimate choose those towers which are best able to perform non-consensual police tows for it,
without being subject to § 14501(c)’s preemption provisions.” [At 555] But as I indicated above,
Ours Garage & Wrecker Service seems to have rejected Petrey’s “market participant” doctrine,
along with its ruling that only the state can enact wrecker safety regulations:
We hold that § 14501(c) does not bar a State from delegating to
municipalities and other local units the State’s authority to establish
safety regulations governing motor carriers of property, including
tow trucks. A locality, as § 14501(c) recognizes, is a “political
subdivision” [Emphasis is the Court’s.] of the State. Ordinarily, a
political subdivision may exercise whatever portion of the state
power the State, under its own constitution and laws, chooses to
delegate to the subdivision. Absent a clear statement to the
contrary, Congress’ reference to the “regulatory authority of a
State” should be read to preserve, not preempt, the traditional
prerogative of the States to delegate their authority to their
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constituent parts. [At 429]
The problem with Ours Garage & Wrecker Service, is that the U.S. Supreme Court did not
decide which, if any, of the city wrecker regulations at issue in that case, qualified as exercises of
“safety regulatory authority.” Likewise, it gave no guidance on what safety regulations would pass
constitutional muster, except for one important clue:
We reiterate that § 14501(c)(2)(A) shields from preemption
only “Safety regulatory authority” (and “authority of a State to
regulate ... with regard to minimum amounts of financial
responsibility relating to insurance requirements”). Local
regulation of prices, routes, or services of tow trucks that is not
genuinely responsive to safety concerns garners no exemption from
§ 14501(c)(1) preemption rule. [Emphasis is mine.]
In a nutshell, here is the way municipal wrecker regulation authority stands under 49
U.S.C. § 14501(c):
- Generally, a municipality cannot pass rules and regulations governing price, route or
service, except that a municipality can enact and enforce rules and regulations governing the price
of nonconsensual tows.
- A municipality can enact and enforce wrecker regulations governing price, route or
service if those regulations are “genuinely responsive to safety concerns.”
As I said above, I have been unable to find a case that deals with the sole question of
whether a numerical limitation on the number of wreckers on the approved wrecker list will meet
the safety related standard, but there are several cases that deal with wrecker rotation lists based on
the ground that they prevent “wreck chasing,” and the safety problems that go with it. Such
regulations have been upheld in several cases. In Capitol City Towing and Recovery Inc. v. State,
873 So.2d 706 (La. App. 1 Cir. 2004), Louisiana state wrecker regulations were challenged by the
plaintiff, who alleged that the following rules based on state statutes and regulations were
economically rather than safety related. The first group of challenged regulations, said the court:
institute a ban on solicitation of towing business by tow truck
operators. [Statutory citations omitted by me.] The State submitted
the affidavit of Captain Wayne Ryland of the Louisiana State
Police, who attested that in order to obtain business, tow trucks
barge through intersections, down highways and even through
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accident scenes to be the first tow truck at the scene. Captain
Ryland attested that tow truck operators fought over tows, interfered
with medical care of victims, and solicited to take victims to doctors
and lawyers to gain towing business. This type of regulation aimed
at preventing “wreck chasing” has preciously been upheld by
federal courts in Ace Auto Body and Cole cases as falling within the
state’s safety regulatory authority. Likewise we find the ban on
solicitation to be designed to protect the public from the safety
hazards associated with wreck chasing, and any economic benefits
on intrastate towing are incidental, thus bringing the ban on
solicitation within the safety exemption. Additionally, as the
regulation on the use of CB radios and police communications,
found in Section 1917E and 1933C of Title 55, also further the
State’s goal of eliminating “wreck-chasing” by the towing industry,
they too fall within the safety exception. [At 711-12]
In 1999, the U.S. Second Circuit Court of Appeals upheld a wrecker regulation designed to
prevent “wreck-chasing” in Ace Auto Body and Towing, Ltd. v. City of N.Y., 171 F.3d 765, 777
(2d Cir. 1999), on the ground that the regulation was “reasonably related to safety.” That case was
one to which the court in Capitol Hill Towing, above pointed as support for its wrecker regulation
designed to control wreck-chasing. Another such case was Cole v. City of Dallas, 314 F.3d 730
(5th Cir. 2002), in which the court upheld wrecker regulations that prohibited persons from
receiving wrecker permits who had a criminal history, documented mental illness and unsafe
driving records, on the ground that such regulations wee “designed to curtail confrontation
between truck operators and non-consenting vehicle owners,” [At 735] That was the stated
purpose of the city’s wrecker regulation ordinance, and is similar to the purpose of reducing
“wreck-chasing.”
But the Second Circuit changed its mind between 1999 and 2008. In Automobile Club of
New York v. Dykstra, 520 F.3d 210 (2008). In Automobile Club of New York, the City of New
York cited Ace Auto Body and Capitol Hill in its argument that the city’s wrecker regulations
were “reasonably related to safety.” But the court noted that since Ours Garage & Wrecker Service
was decided by the U.S. Supreme Court, the question of whether a wrecker regulation adopted by
a state or municipality fell within the safety exemption of 49 U.S.C. § 14501(c) turned on the issue
of whether it was “genuinely responsive to safety concerns” rather than whether it was “reasonably
related to safety” The court declared that Ours Garage “limited the ongoing significance of Ace
Auto Body.” It also imposed a higher standard for making that determination.
The wrecker regulation in Automobile Club of New York required every wrecker in New
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York City to have a wrecker license to operate in, or even to pass through, New York City. The
ostensible purpose of the regulation was to prevent tow truck operators from monitoring police
radios and “chasing each other to reach the scene of an accident first.” [At 212] Obtaining a
wrecker license required the owner to pay $600 per tow truck and $20 per driver, an additional fee
for a fingerprint and criminal record check; proof of liability insurance, a cash bond of $5,000 or a
$200 cash contribution to the Tow Truck Industry Trust Fund, Corp., with New York state
regulation and inspection requirements. The licensing scheme also established the Directed
Accident Response Program, which required that all vehicles disabled within the city be removed
by licensed towers assigned on a rotating basis, and banned the solicitation of disabled vehicles by
unassigned towers.” [At 214] Now a wrecker regulation had to pass a two step test to take it by 49
U.S.C. § 14501(c): (1) “The court must consider any specific expressions of legislative intent in
the statute itself as well as in the legislative history.” (2) Then it must assess those “purported
safety justifications ... in light of the existing record evidence.” [At 215.]
The wrecker regulation in this case failed both tests. It failed the first test because when
the wrecker regulations were ordinally enacted, the mayor’s office declared that their primary
purpose was to eliminate wreck-chasing, but when the city began to enforce those regulations
several years later, “the city council did not discuss safety concerns, noting instead strengthening
enforcement would solve a ‘jurisdictional problem’ posed by the number of towers failing to
renew their licenses in addition to providing consumers with ‘timely, accurate ... information
regarding their rights.’” [At 215] It failed the second test because the city could not explain why
imposing the wrecker licensing and other regulations on all tow trucks, including those passing
through the city and those not soliciting business, would reduce wreck-chasing. Furthermore, the
city, had presented no evidence to support the proposition that the regulations had actually reduced
wrecker-chasing.
Automobile Club of New York relied somewhat on Loyal Tire & Auto Center v. Town of
Woodbury, 445 F.3d 136 (2d Cir. 2006), in which the same court declared that “... whether or not
[Woodbury’s towing law] is reasonably related to safety, it is not genuinely responsive to safety
concerns.” [At 148 n. 6] There wrecker operators were qualified to be on the city’s rotational
list if they were within one mile of the city police department. The city justified the regulation on
two main safety grounds: “(1) vehicle owners who walk first to the police station to retrieve their
cars could then walk in relative safety on sidewalks within the one-mile radius to a tow yard”; and
(2) using two companies located outside of Woodbury would require the town to send police
officers outside the jurisdiction and “dilute the police presence in Woodbury.” [At 141] Citing
Ours Garage & Wrecker Service, the court declared that the city’s regulation was “not genuinely
responsive to safety concerns...” [At 145] The legislative history of the city’s towing ordinance
showed no evidence of safety concerns, “but instead are replete with expressions of dissatisfaction
with services provided by Loyal Tire and a desire to exclude Loyal Tire, as well as other out of
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town businesses form the town’s rotating tow list....” [At 146] Neither did the record support
that city’s argument that the “one mile radius” rule would reduce the number of dangerous tows; in
many cases tows performed by Loyal Tire would be shorter than tows performed by tow
companies within the one mile radius of the police station, and the record showed that only one
person had ever walked to the tow yard from the police station. The city’s rule about keeping the
police within the city was not genuinely safety related, because the record showed that the police
regularly went outside the jurisdiction to provide assistance to other police departments. In short,
the regulations failed the Second Circuit’s two prong test for determining whether they were
“genuinely responsive to safety concerns.”
Similarly, in Tow Operators Working to protect Their Right to Operate on the streets of
Kansas City v. City of Kansas City, Missouri, 338 F.3d 873 (8th Cir. 2003), Kansas City “joined a
number of other cities in moving to stop the practice known as ‘wreck-chasing.’” [At 874] The
city’s ordinance made it:
unlawful for the owner or operator of a tow vehicle to ... [s]top at or
proceed to the scene of an accident unless called to the scene
requested to stop, or flagged down by the owner or operator of a
vehicle involved in an accident or request to perform the service by
a law enforcement officer. [At 874.]
The city also designed a “system in which the Kansas City police will dispatch approved
towing contractors to accident scenes on a rotating basis.” [At 874]
Plaintiffs sued the city on the ground that under the system in which the approved wrecker
would be dispatched would not qualify for the rotation list. But they made what seem to be
breathtaking legal and procedural errors, in light of Ours Garage & Wrecker Service, which
preceded it by at least a year. Their sole argument was that the safety exception in § 49 U.S.C §
14501(c) was “limited only to a State’s safety laws and regulations and does not apply to local
ordinances.” The district court held that the ordinance was safety-oriented and not an economic
regulation because it “undisputedly is intended to eliminate the practice and results of
wreck-chasing as described in other cases.” [At 875]
The plaintiffs appealed the district court’s decision, even though the U.S. Supreme Court
had ruled earlier in Ours Garage and Wrecker Service, that it was within the authority of a state to
delegate its power to its political subdivisions to regulate motor vehicles. The Court of Appeals
upheld the district court, pointing out that reality to the plaintiffs, and declared that the plaintiff’s
had essentially thrown away their case, assuming that the ordinance was safety-oriented, and
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failing to go forward with creating a factual dispute on that issue, “for example, evidence showing
that the Ordinance, either in purpose or effect, [Emphasis is mine.] is the prohibited regulation of
prices, routes or service, rather than genuine safety regulation.” [At 876] The court’s language
about “either in purpose or effect” of the ordinance suggests that it might have applied the two
pronged tests that the Second Circuit eventually applied, had the case came to it had that question
actually been before it.
The unreported case of Houston Professional Towing Association v. City of Houston,
Texas, 2005 WL 2121552 (S.D. Texas), reflects a challenge to the City of Houston’s wrecker
ordinance on a number of grounds, including the ground that safety ground advanced by the city to
support the policy was pretextual. The city’s wrecker ordinance was a complicated one, dividing
the city into 29 zones and gave certain wrecker services the exclusive right to tow vehicles in those
zones. The court appears to have acknowledged that the record supported the city’s arguments
that the wrecker regulations reduced the problem of secondary accidents and “wreck-chasing,” but
still concluded that the economic impact of the regulations were more than incidental to tow truck
operators. Twenty-five percent of tow revenues came from freeway tows, which were governed
by the exclusive towing contracts in the 29 zones. In addition, the towing contracts were let to the
highest bidders. The regulations also effectively defined all freeway tows as nonconsensual tows
even where the driver of the vehicle subject to a tow under the regulations had the ability and
willingness to contract for his own tow. The court declared all of those regulations grounded the
exclusive contracts in economics rather than safety, and invalidated them However, in doing so,
the court suggested that the city could regulate the number of tow trucks that could operate on any
certain segment of the freeway at a given time, and that the city could make other provisions to
intercept “wreck-chasing,” and traffic congestion at accident locations. But this case seems to me
to reflect a test of whether the regulations are “genuinely responsive to safety concerns” more
along the lines of the Second Circuit’s test. The court looked at what the regulations at issue
actually did, rather than merely their purposes reflected in the regulations.
The city reflected in your question probably must ask itself two questions about a
numerical limitation on the number of wreckers on its approved wrecker list:
- What is the genuinely safety related reason for that numerical limitation? If it is to
reduce or prevent “wreck-chasing,” that purpose must show up in its regulations, and be
supported by the record..
- Does the avowed safety related reason for the numerical limitation actually advance the
genuinely safety related reason for the regulation? If the avowed reason is the reduction or
elimination of wreck-chasing,” does the regulation actually accomplish that purpose?
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