The Ninth Circuit Court of Appeals recently held in Tocher v. City of Santa Ana, ___ F.3d ___, 2000 U.S. App. LEXIS 16128 (9th Cir. 2000), that certain municipal and state regulations regarding the towing business are preempted by the Federal Aviation Administration Authorization Act of 1995 (FAAA), 49 U.S.C. section 14501.
The City of Santa Ana’s Municipal Code included ordinances regulating automobile towing operations and tow trucks. The ordinances required towing businesses and tow truck operators to obtain “towing operation” permits from the City, and regulated towing facilities and hours of operation. The ordinances also authorized the chief of police to establish and maintain a rotational tow list for impounding vehicles, made up of tow operators with valid City-issued permits. The City ordinances were enacted pursuant to the California Vehicle Code, which grants cities the authority to regulate towing businesses. State law also requires towing companies to accept certain kinds of payment and regulates the manner of removal of vehicles from private property.
Tocher operated a towing business in Santa Ana. After the City demanded that Tocher and his employees obtain City permits, Tocher filed this lawsuit to prevent the City from enforcing its towing ordinances. Tocher alleged that the City ordinances were preempted by the FAAA. The district court held that the City and the State regulations were preempted by the FAAA. The City appealed the district court’s ruling.
In certain areas of the law where the United States Congress has enacted legislation, the federal law preempts state and municipal laws on the same subject. In this case, FAAA provides, in part, that a state or a political subdivision of a state “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 . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. section 14501(c)(1) (emphasis added).
The court of appeals reviewed the City ordinances to determine if they regulated the price, route, or services of the towing industry. The court determined that the regulations regarding permits and the operation of the towing business clearly affected services and competition in the towing industry. For example, the permit scheme prevented truck drivers from entering the towing industry unless they complied with the permit scheme. Furthermore, the court found that restrictions on rates, advertising, and business hours affected the price, route, or services of a motor carrier.
As for the City ordinances allowing the police department to set up a rotational tow list, the court applied the “market participant” exception to the general rule of preemption. The City, in seeking out the best and most cost-effective service, was acting as any other private consumer in a competitive market. Therefore, the ordinance regarding rotational tow lists was not preempted by the FAAA, except to the extent that it required members of the tow list to comply with the preempted operational regulations.
Cities with towing ordinances should review and amend them consistent with the FAAA, while recognizing that use of a rotational list of towing companies for impounding vehicles is not affected.
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