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Federal Preemption of the Towing Industry – A Dead Argument

Federal Preemption of the Towing Industry – A Dead Argument

Towing Regulation Preempted? No – The Preemption Argument Against TDLR is Officially Dead.

Summary

For years, some attorneys have argued that the federal law preempted the states’ ability to regulate nonconsent tows.  However, with the signing into law of the FAST Act earlier this month, this argument officially died. See below for more details and a link to the full act is available HERE

Breakdown of Amendment and State Power to Regulate the Towing Industry

The argument that Texas is preempted from regulating the towing industry stemmed from language in in the Federal Aviation Administration and Authorization Act (“FAAAA”) and Federal Interstate Commerce Commission Termination Act (“ICCTA”).  The language of the first act and the subsequent termination of the ICC, it was argued, removed a state’s ability to regulate the towing industry because a tow truck fell within the definition of a “motor carrier.” This argument never got much traction in Texas, but it did create some fireworks from time to time at the Texas Department of Licensing and Regulation (TDLR) and the State Office of Administrative Hearings (SOAH).

However, with the enactment of the “Fixing America’s Surface Transportation Act” or “FAST Act,” Congress has removed language from the code on which some tow companies had been hanging their TDLR preemption hats.  Specifically, the 49 U.S.C. 140501(c)(2)(c) was modified to create a specific exception for state regulation of tow truck operations.  A screen shot of the modified language appears below.

Preemption

The result of this amendment is a specific carve-out that grants state agencies like TDLR the ability to regulate tow truck operation.  Interestingly, this is only a partial resolution of the issues in play under the federal preemption argument.

What About Consumer Claims under the Texas Towing and Booting Act?

So, now we know with 100% certainty that TDLR can  regulate the towing industry in Texas. However, the FAST Act paid no attention whatsoever to the other issues related to federal preemption, such as the consumer actions available under the Texas Towing and Booting Act (such at a tow hearing or a lawsuit under Chapter 2308 of the Occupations Code).  While this author has argued that certain provisions of the TTBA would survive a preemption argument under the Supreme Court’s ruling in Dan’s City, the question remains unresolved at this time.

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