San Fran Towing Regs Not Pre-Empted by Feds

SAN FRANCISCO (CN) - Federal and state law do not pre-empt San Francisco's permit system for the towing industry, the Ninth Circuit ruled.

The ruling, announced Thursday, upheld a district court ruling in a case filed against the city and county of San Francisco by the California Tow Truck Association.

In a complaint filed on July 21, 2010, the association claimed the municipalities' "scheme" of charging towing companies from $217 to $546 for business permits, and $34 for drivers, is pre-empted by the Federal Aviation Administration Authorization Act.

The act has authority over intrastate transportation, including towing, and trumps state and municipal law for price, route or service of tow trucks, the complaint said.

Both parties filed motions for summary judgment, and U.S. District Judge Charles Breyer initially sided with the industry, ruling the federal law trumps San Francisco's permit system.

A Ninth Circuit, however reversed the ruling and remanded the case, directing the lower court to "analyze each challenged provision individually."

After having a second look at the case, Breyer preserved the permit system, holding that all but one of its challenged provisions fall under the Act's safety, insurance and price exceptions.

The district court also determined that several challenged provisions, such as the permit display requirement and the business plan requirement, were not subject to the preemption clause at all.

The association once again appealed to the Ninth Circuit, but a three-judge panel affirmed the district court's ruling on all provisions, except the business plan requirement.

The panel rejected the association's argument that the safety exception only applies to the "safe physical operation of the tow trucks themselves."

"Regulations that are 'genuinely responsive' to the safety of other vehicles and individuals involved in the towing process may also be exempted from preemption," U.S. Circuit Judge Marsha Berzon wrote in a 39-page opinion.

The panel applied that "safety concept" in affirming Breyer's ruling.

"That the permit requirements have a significant and logical relationship to safety is evident," Berzon wrote. "As the district court stated, 'the presence of a permit requirement implies the threat of permit revocation,' which makes the requirement 'a tool for policing misconduct in the towing industry.' Furthermore, the permit requirement enables the city proactively to 'weed out' and monitor tow car drivers and firms on an ongoing basis."

The panel said the other provisions "including the criminal history disclosure requirements, fall within the scope of [the act's exception] and are therefore not preempted."

As for the business plan provision, the panel said "the city's evidence suggests that the business plan requirement is intended to further consumer protection, not safety."

"We hold that the business plan requirement is preempted by the FAAAA, but that the requirement is severable from the valid complaint requirement contained in section 3052(4), and from the permit scheme more generally," Berzon wrote.

The court remanded the business plan decision "for further proceedings" and ruled that the association will have to pay for its costs to appeal.

Wayne Snodgrass , the city's deputy attorney, was not immediately available for comment.

Patrick Whalen, the attorney for the association, said he could not yet divulge what the next move would be or what legal options remain.

"I can't share that because I presented that to my client and haven't heard back from them yet," he said.

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