Stucky v. City of San Antonio

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 00-50462
_____________________

BRENDA L STUCKY, doing business as Bill’s Wrecker Service;
RICHARD VILLANEVA, doing business as Creswells 24 Hour
Wrecker Service
Plaintiffs - Counter Defendants -
Appellants
v.

CITY OF SAN ANTONIO
Defendant - Counter Plaintiff -
Appellee

TEXAS TOWING CORPORATION
Intervenor Defendant - Counter
Plaintiff - Appellee

________________________________________________________________

Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
July 30, 2001

Before KING, Chief Judge, and REAVLEY and JONES, Circuit Judges.

KING, Chief Judge:

Plaintiffs-Counter Defendants-Appellants Brenda Stucky and

Richard Villaneva, owners of towing companies in San Antonio,

Texas, appeal the district court’s grant of summary judgment in

favor of Defendant-Counter Plaintiff-Appellee the City of San

Antonio and Intervenor Defendant-Counter Plaintiff-Appellee Texas

Towing Corporation. For the following reasons, we REVERSE the
judgment of the district court and REMAND for further proceedings

consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The City of San Antonio’s Towing Laws

This case involves the tow truck operations of Defendant-

Counter Plaintiff-Appellee the City of San Antonio (the “City”).

In 1963, the San Antonio City Council passed Ordinance No. 31977,

which prohibited tow trucks from removing disabled vehicles from

public streets and ways without being directed to do so by the

Chief of Police or his authorized representative. Ordinance

No. 31977 was enacted to combat the acknowledged practice of tow

truck operators monitoring police radios for reports of accidents

and then racing to the scene of those accidents to obtain the

business of towing the wrecked vehicles. All parties apparently

agree that the “lively competition” of the rival tow truck

operators interfered with accident investigations and the

provision of emergency care required at the scene.1

1
This competitive environment, which resulted in
attendant safety concerns, was recognized by a Texas court of
civil appeals:

There is ample testimony to support the conclusion that the
absence of restrictions on wrecker operators created serious
problems. The not unusual situation was for several
wreckers to appear at the scene of an accident, creating
problems for officers who were attempting to restore the
normal flow of traffic and seriously interfering with the
efforts of police officers to investigate the accident and
file the required reports. Wreckers were equipped with

2
 Ordinance No. 31977 was subsequently amended to give the

Manager of the Public Works Department the same authority as the

Police Chief or his authorized representative and is now codified

at § 19-391 in the San Antonio City Code. The current version of

§ 19-391 provides in relevant part:

It shall be unlawful for any person, in the operation of an
automobile wrecker on the public streets and ways of the
city and not having been directed to do so by the chief of
police, the parking manager of the public works department
or authorized representatives, knowingly to move, tow, haul
or otherwise transport in, on or over the public streets and
ways of the city any vehicle which has been abandoned or
which has been involved in a collision and is on a public
street, way or other public property.

SAN ANTONIO, TEX. CODE ch. 19, art. XI, § 19-391(a) (1986).

Since 1977, the City has awarded its towing business to

towing companies through an exclusive contract, whereby one

company is the City’s prime towing contractor for a certain

period of time.2 This contract provides that the designated city

towing services company will “perform all necessary work for the

removal from public streets, ways or other public property in the

radios capable of monitoring the police frequencies. When
the wreckers arrived on the scene of the accident they would
engage in fiercely competitive efforts to induce the car
owners to engage their services. The result was disorder
and confusion at the scene of the accident.

Andrada v. City of San Antonio, 555 S.W.2d 488, 490 (Tex. Civ.
App.—San Antonio 1977, writ dism’d).
2
In 1977, the City awarded an exclusive contract to City
Towing Associates, Inc. In 1991, responding to complaints about
anticompetitive and antitrust concerns, the contract with City
Towing was amended to allow participation by subcontractors, with
City Towing acting as the City’s prime contractor.

3
City of San Antonio, vehicles which have been abandoned, which

have been involved in collisions, parking violations, vehicles to

be checked for evidence, and vehicles belonging to prisoners.”

See San Antonio Wrecker Service Contract ¶ II.

In 1993, after considering the bids of four towing

companies, the City approved a five-year exclusive contract with

Intervenor Defendant-Counter Plaintiff-Appellee Texas Towing

Corporation (“Texas Towing”). On April 1, 1993, Texas Towing was

awarded the “Wrecker Service Contract” (the “Contract”) by way of

City Ordinance No. 77716. In 1995, Texas Towing requested an

amendment to the Contract, which would grant the City the option

to extend the Contract for an additional five years.3 On August

31, 1995, the City passed Ordinance No. 82744, creating the

option to extend the Contract. Pursuant to this option, on May

7, 1998, the Contract was extended for an additional five years

(Ordinance No. 87775), without invitation to the towing industry

to bid for the Contract. The City enforces this exclusive right,

granted to the contractor, against any other towing company that

attempts to contract with the operator of a disabled vehicle at

the scene.

B. The Federal Law

3
Texas Towing requested this option in order to allow it
to secure additional financing and capital investment for new
equipment. In order to obtain this additional financing, Texas
Towing needed assurances from the City that it would keep the
Contract in place for an additional number of years.

4
 In 1994, the United States Congress enacted the Federal

Aviation Administration Authorization Act (the “FAAA Act”) to

deregulate the motor carrier industry. See Pub. L. 103-305, 108

Stat. 1569, 1608 (1994). Section 601 of the FAAA Act amended the

Interstate Commerce Act, preempting state and local regulations

concerning the price, route, or service of intrastate motor

carriers.4 In 1995, Congress passed the Interstate Commerce

Commission Termination Act (the “ICCTA”), which took effect on

January 1, 1996. See Pub. L. 104-88, 109 Stat. 803, 804 (1995)

(codified at 49 U.S.C. § 14501(c)(1)). The ICCTA recodified

former 49 U.S.C. § 11501(h) as 49 U.S.C. § 14501(c), and amended

the statute to include an exemption for state regulation of

nonconsensual tow rates. As will be discussed infra in more

detail, § 14501 provides for federal authority over intrastate

transportation.

C. Plaintiffs’-Counter Defendants’-Appellants’ Lawsuit

In December 1996, Brenda Stucky, doing business as Bill’s

Wrecker Service, and Richard Villaneva, doing business as

Creswell’s 24 Hour Wrecker Service (collectively referred to

hereinafter as “Stucky”), sued the City for declaratory,

injunctive, and monetary relief, alleging that § 19-391(a) and

the City’s exclusive Contract with Texas Towing pursuant to

4
A “motor carrier” is defined as “a person providing
motor vehicle transportation for compensation.” 49 U.S.C.
§ 13102(12).

5
Ordinance No. 87775 (collectively referred to as the

“Ordinances”)5 were preempted by 49 U.S.C. § 14501(c)(1) & (2).

Stucky further alleged that enforcement of the Ordinances

deprived it of a property and liberty interest, thus constituting

a violation of 42 U.S.C. § 1983. Stucky later amended its

complaint to include a Sherman Antitrust Act violation. In 1997,

Texas Towing intervened in the lawsuit.

On July 14, 1997, Stucky filed a motion for partial summary

judgment. The district court originally granted Stucky’s motion

for partial summary judgment, finding that § 14501(c)(1)

preempted the Ordinances. Accordingly, the district court

enjoined the City from further enforcement of the Ordinances. On

a motion for reconsideration, however, the district court vacated

its initial grant of partial summary judgment. After further

motions for summary judgment, the district court issued an Order

on August 25, 1998, granting in part and denying in part the

various motions for summary judgment.6

5
To be clear, the “Ordinances” defined herein
collectively include Ordinance No. 31977, now codified at § 19-
391 in the San Antonio Code, and the Contract with Texas Towing,
only as they relate to “consent” towing. The practice of
nonconsent towing, also covered by the Ordinances, is not before
us on appeal. As used in this opinion, the term “consent tow”
refers to a tow made with the consent of the owner or operator
and the term “non-consent” tow refers to a tow made without the
consent of the owner or operator of the vehicle.
6
As the specific motions and counter-motions are not
dispositive to this case, descriptions of these procedural
filings have been omitted from this recitation.

6
 In its Order, the district court granted in part Stucky’s

motion for summary judgment, declaring that Ordinance No. 82744

(amending the contract to provide an option to extend) and

Ordinance No. 87775 (exercising that option) were preempted by

§ 14501(c)(1), but that the City’s single-vendor towing system

based on the Ordinances was not preempted. Further, the district

court denied the City’s and Texas Towing’s claim that the

Ordinances were exempted from preemption under 49 U.S.C.

§ 14501(c)(2)(A). However, the district court granted in part

the City’s and Texas Towing’s motions for summary judgment, such

that Stucky’s claims for relief under 42 U.S.C. § 1983 and for

monetary damages arising from violations of federal antitrust law

were dismissed with prejudice. Finally, with respect to Stucky’s

claims for injunctive relief arising from antitrust law, the

district court denied the City’s and Texas Towing’s summary

judgment motions. On October 13, 1998, the district court

entered final judgment in accordance with the Order. The parties

appealed.

On appeal, after briefing and oral argument, this court

decided Cardinal Towing & Auto Repair, Inc. v. City of Bedford,

180 F.3d 686 (5th Cir. 1999). On August 14, 1999, another panel

of this court vacated the district court’s judgment and remanded

it to the district court in light of Cardinal Towing. See Stucky

v. City of San Antonio, 204 F.3d 1115 (5th Cir. 1999)

(unpublished table decision). On remand, the district court

7
again considered summary judgment motions addressing whether

federal law preempts the City’s Ordinances as they relate to

consensual towing.

Based on its interpretation of Cardinal Towing, the district

court held on remand that § 14501(c)(1) did not preempt the

Ordinances as they related to the issue of consent towing. The

district court, therefore, granted the City’s and Texas Towing’s

motions for summary judgment on the issue whether the City’s

practice of contracting with a single towing company for

consensual tows was preempted by federal law.7 Finally, the

district court denied Stucky’s motion for partial summary

judgment.

Stucky timely appeals this judgment.

II. STANDARD OF REVIEW

The district court’s preemption ruling is a determination of

law and, therefore, is subject to de novo review. See Kollar v.

United Transp. Union, 83 F.3d 124, 125 (5th Cir. 1996); see also

Branson v. Greyhound Lines, Inc., 126 F.3d 747, 750 (5th Cir.

1997) (“We review de novo the district court’s rulings on

preemption.”). Moreover, this court reviews a grant of summary

7
The district court also denied the City’s and Texas
Towing’s motion for summary judgment on the issue of injunctive
relief for alleged antitrust violations. However, on May 17,
2000, the district court amended its judgment and dismissed the
remaining antitrust claims against the City and Texas Towing.

8
judgment de novo, viewing the evidence in the light most

favorable to the nonmovant. Smith v. Brenoettsy, 158 F.3d 908,

911 (5th Cir. 1998); see also Tolson v. Avondale Indus., Inc.,

141 F.3d 604, 608 (5th Cir. 1998). “Summary judgment is proper

‘if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that

the moving party is entitled to judgment as a matter of law.’”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting FED.

R. CIV. P. 56(c)). The moving party bears the burden of showing

the district court that there is an absence of evidence to

support the nonmoving party’s case. See id. at 325. “If the

moving party fails to meet this initial burden, the motion must

be denied, regardless of the nonmovant’s response. If the movant

does, however, meet this burden, the nonmovant must go beyond the

pleadings and designate specific facts showing that there is a

genuine issue for trial.” Tubacex, Inc. v. M/V Risan, 45 F.3d

951, 954 (5th Cir. 1995). “A dispute over a material fact is

genuine ‘if the evidence is such that a reasonable jury could

return a verdict for the nonmoving party.’” Smith, 158 F.3d at

911 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986)). The substantive law determines which facts are

material. See Anderson, 477 U.S. at 248.

9
 III. PREEMPTION BY 49 U.S.C. § 14501(c)(1)

This is the second time this court has been asked to address

the preemptive reach of 49 U.S.C. § 14501(c)(1). In Cardinal

Towing & Auto Repair Inc. v. City of Bedford, Texas, we held that

the City of Bedford’s (“Bedford”) single-contract towing

ordinance for nonconsensual towing services was not preempted by

§ 14501(c)(1) because Bedford was acting as a “market

participant” and not a “market regulator” in procuring towing

services for individuals who could not consent to a towing

company. See 180 F.3d 686, 697 (5th Cir. 1999). The instant

case presents the question whether our analysis in Cardinal

Towing also holds for a single-contract towing ordinance that

governs consensual towing services. As will be discussed infra

in detail, we conclude that the rationale of Cardinal Towing

cannot be extended to the consent tow situation, and that

§ 14501(c)(1) preempts the City’s Ordinances as they relate to

consensual towing. However, this conclusion does not resolve the

more difficult question that has split our sister circuits —

whether the City’s single-contract towing ordinance falls under

the “safety exemption” provided in § 14501(c)(2)(A). This

question will also be addressed below.

Because of the closeness of the questions before us, we set

forth in some detail our preemption analysis under the reasoning

of Cardinal Towing, guided by the other circuit courts of appeals

10
that have addressed the preemptive effect of § 14501(c)(1). We

begin first with the general preemptive reach of § 14501(c)(1).

A. Preemption Principles

The doctrine of federal preemption is rooted in the

Supremacy Clause of the United States Constitution, which

provides that “the Laws of the United States . . . shall be the

supreme Law of the Land[,] . . . any Thing in the Constitution or

Laws of any State to the Contrary notwithstanding.” U.S. CONST.

art. VI, cl. 2. “As a consequence, state and local laws are

preempted where they conflict with the dictates of federal law,

and must yield to those dictates.” Ace Auto Body & Towing, Ltd.

v. City of New York, 171 F.3d 765, 771 (2d Cir. 1999); R. Mayer

of Atlanta, Inc. v. City of Atlanta, 158 F.3d 538, 542 (11th Cir.

1998) (“[S]tate law that conflicts with federal law is ‘without

effect.’” (quoting Cipollone v. Liggett Group, Inc., 505 U.S.

504, 516 (1992))). Standards governing preemption of state law

also govern preemption of municipal ordinances. See Cardinal

Towing, 180 F.3d at 690.

Federal law preempts state and local laws whenever (1)

Congress has expressly preempted state action; (2) Congress has

devised a comprehensive regulatory scheme in the area, thus

“removing the entire field from the state realm”; or (3) state

action directly conflicts with the “force or purpose” of federal

law. See id. Thus, “[p]reemption may be either express or

implied, and is compelled whether Congress’ command is explicitly

11
stated in the statute’s language or implicitly contained in its

structure and purpose.” Ace Auto, 171 F.3d at 771 (citations and

internal quotations omitted). “However, when preemption is

invoked to prevent a state or municipality from wielding its

traditional police powers, congressional intent to displace that

authority must be ‘clear and manifest.’” Cardinal Towing, 180

F.3d at 690 (quoting California v. ARC Am. Corp., 490 U.S. 93,

101 (1989)). “Congressional intent, therefore, is the ‘ultimate

touchstone’ of preemption analysis.” Tocher v. City of Santa

Ana, 219 F.3d 1040, 1045 (9th Cir. 2000) (quoting Cipollone, 505

U.S. at 516).

B. Express Preemption Under 49 U.S.C. § 14501(c)(1)

In Cardinal Towing, this court recognized that by enacting

the FAAA Act, Congress intended to deregulate the motor carrier

industry, including the towing services industry. See 180 F.3d

at 690 (“In 1994, Congress moved to deregulate the motor carrier

industry. Central to this effort was a section preempting most

state and local regulation.”). In this effort, the FAAA Act

expressly included a general preemption provision, now recodified

in the ICCTA as § 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)(1).

12
 The purpose of this provision was to eliminate overlapping

state and municipal regulations, which increased costs, decreased

efficiency, and reduced competition and innovation in the towing

services industry. See Tocher, 219 F.3d at 1048 (citing H.R.

CONF. REP. NO. 103-677, at 87 (1994)). “Congress recognized that

dispersing regulatory authority over motor carriers would require

a towing company to adhere to a multitude of different regulatory

schemes in every locality where it conducted business and

virtually destroy any opportunity for companies to maintain

national or even regional standards for conducting business.”

Id. at 1048; see also Ace Auto, 171 F.3d at 772. Towing service

companies have been recognized as motor carriers under § 14501(c)

and are thus covered by the statute’s reach. See Cardinal

Towing, 180 F.3d at 691 (“[T]owing companies performing

nonconsensual tows are “motor carriers.’”).8

8
This recognition derives from the addition of a limited
exemption to § 14501(c)(1) added in the ICCTA that specifically
exempts from preemption a state’s or a political subdivision’s
regulation of the price of nonconsensual tows. See 49 U.S.C.
§ 14501(c)(2)(C). As the Court of Appeals for the Eleventh
Circuit recognized:

If Congress had not intended for § 14501(c)(1) to preempt
state and local regulation of towing services generally,
Congress would not have included an express exemption that
applies solely to prices charged for nonconsensual towing
services. . . . By including an express exemption for the
regulation of prices for nonconsensual towing services,
Congress has evinced its intent that all aspects of
consensual towing services remain subject to the general
rule set forth in the preemption clause.

Mayer, 158 F.3d at 543.

13
 Based on the recognized purpose and a plain reading of the

terms of § 14501(c)(1), every circuit court of appeals to have

addressed the preemption issue has concluded that § 14501(c)(1)

manifests a general congressional intent to preempt state and

municipal ordinances that regulate the prices, routes, or

services provided by towing companies. See Petrey v. City of

Toledo, 246 F.3d 548, 554 (6th Cir. 2001); Tocher, 219 F.3d at

1048; Ace Auto, 171 F.3d at 774; Mayer, 158 F.3d at 545.9 This

determination that municipal regulations of towing services are

generally preempted by § 14501(c)(1) comports with our conclusion

in Cardinal Towing that, unless one of the exemptions to federal

preemption applies, municipal regulations like the challenged

Ordinances in the present case are preempted.

9
This conclusion is further supported by the House Report
accompanying the proposed version of § 14501(c)(2)(C), which
states that the purpose behind the amendment is to:

provide[] a new exemption from the preemption of State
regulation of intrastate transportation relating to the
price of non-consensual tow truck services. This is only
intended to permit States or political subdivisions thereof
to set maximum prices for non-consensual tows, and is not
intended to permit re-regulation of any other aspect of tow
truck operations. The Committee had been asked to go
farther and permit States and political subdivisions thereof
to re-regulate all aspects of non-consensual tow truck
services. The Committee provision struck a balance between
the need to protect consumers from exorbitant towing fees
and the need for a free market in towing services.

H.R. REP. NO. 104-311, at 119-20 (1995), reprinted in 1995
U.S.C.C.A.N. 793, 831-32 (emphasis added).

14
 With this background as guidance, we next address two

possible exemptions to federal preemption under § 14501(c)(1):

(1) the generally recognized “municipal-proprietor” exemption to

preemption and (2) the “safety exemption” provided for in 49

U.S.C. § 14501(c)(2)(A).10 The district court found that the

municipal-proprietor exemption applied to the Ordinances and,

thus, they were not subject to federal preemption under

§ 14501(c)(1). The district court did not address the safety

exemption. We address each in turn.

IV. EXEMPTIONS FROM FEDERAL PREEMPTION

A. The Proprietary Exemption Under Cardinal Towing

1. The Cardinal Towing Decision

In Cardinal Towing, this court applied the “municipal-

proprietor” exemption (also known as the “market-participant”

10
The safety exemption in § 14501(c)(2)(A) provides:

(2) Matters not covered.— Paragraph (1)—
(A) shall not restrict the safety regulatory authority
of a State with respect to motor vehicles, the authority
of a State to impose highway route controls or
limitations based on the size or weight of the motor
vehicle or the hazardous nature of the cargo, 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.

49 U.S.C. § 14501(c)(2)(A).

15
exemption) to the preemptive language of 49 U.S.C. § 14501(c)(1).

See 180 F.3d at 694-95. We need not reiterate the careful

analysis of this doctrine set forth by the Cardinal Towing court,

see id. at 691-95, except insofar as to emphasize the primary

legal conclusions necessary to our decision.

First, the Cardinal Towing court recognized that preemption

policies apply only to state “regulation” and not to actions that

the state takes in its proprietary capacity. See id. at 691

(“The law has traditionally recognized a distinction between

regulation and actions a state takes in a proprietary capacity –

that is to say, actions taken to serve the government’s own needs

rather than those of society as a whole.”); see also Bldg. &

Constr. Trades Council v. Assoc. Builders & Contractors of

Mass./R.I., Inc., 507 U.S. 218, 227 (1993) (recognizing, in

National Labor Relations Act cases, that “[o]ur decisions . . .

support the distinction between government as regulator and

government as proprietor”); cf. Wis. Dep’t of Indus. Labor &

Human Relations v. Gould, Inc., 475 U.S. 282, 289 (1986)

(holding, in the Commerce Clause arena, that attempt to use

spending power in a manner “tantamount to regulation” is subject

to federal preemption); Petrey, 246 F.3d at 558; Tocher, 219 F.3d

at 1049-50.

Second, the Cardinal Towing court determined that this

distinction between a state acting in its regulatory capacity in

contrast to its proprietary capacity is most readily apparent

16
when the government purchases the goods and services that its

operations require in the open market. See Cardinal Towing, 180

F.3d at 691, 692 (“Most government contracting decisions do not

constitute concealed attempts to regulate . . . [because i]n

order to function, government entities must have some dealings

with the market.”). The court cautioned that while the

government can exert substantial leverage through its spending

power and while this power “may create a temptation to take

advantage of these interactions to pursue policy goals,” id. at

692, that at the same time, the fact of government involvement

cannot be “assumed to be motivated by a regulatory impulse.” Id.

Third, the court applied a two-part analysis to aid in

“distinguishing between proprietary action that is immune from

preemption and impermissible attempts to regulate through the

spending power.” Id. at 693. The court suggested asking two

questions to evaluate the government action:

First, does the challenged action essentially reflect the
entity’s own interest in its efficient procurement of needed
goods and services, as measured by comparison with the
typical behavior of private parties in similar
circumstances? Second, does the narrow scope of the
challenged action defeat an inference that its primary goal
was to encourage a general policy rather than address a
specific proprietary problem?

Id. The court explained that “[b]oth questions seek to isolate a

class of government interactions with the market that are so

narrowly focused, and so in keeping with the ordinary behavior of

17
private parties, that a regulatory impulse can be safely ruled

out.” Id.

Finally, the court applied this two-part analysis to the

nonconsent towing ordinance at issue, and held that Bedford’s

action of contracting with a single towing service for nonconsent

tows was a proprietary action and, therefore, not preempted by

federal law. See id. at 697 (“[T]he City’s actions here did not

constitute regulation or have the force and effect of law.

Accordingly, they are not preempted by section 14501(c).”).

As to the first question, whether Bedford acted in its own

interest in obtaining services comparable to a private entity in

similar circumstances, the Cardinal Towing court recognized that

because the ordinance involved only “true nonconsent tows where

the owner of the vehicle was unwilling or unable to specify a

towing company,” id. at 694, Bedford was purchasing services from

the market in place of the consumer. In this situation, “the

owner of the vehicle will by necessity be unable to choose a

towing company” and “the only party that can make the type of

merit selection inherent in market transactions is the party

ordering the tow,” namely the City of Bedford. See id. at 695.

Because Bedford was purchasing towing services for an

incapacitated or unwilling individual, it was in no different

position than any other private actor. Thus, the court

recognized that the need to purchase towing services in the

nonconsent situation was not motivated by a “regulatory impulse,”

18
but instead was motivated by the need for a service to be

performed:

[N]onconsensual tows do not involve any opportunity for
market interaction on the part of the owner of the vehicle.
The real decision is made by the party who ordered the tow,
who chooses both to remove the vehicle and the party to
perform the service. And whether the ordering party is the
City or a private property owner, it seeks out this service
in the pursuit of its own interests.

Id. at 696.

Regarding the second question, the Cardinal Towing court

recognized that because the scope of the ordinance was narrow,

focused on a single contract covering only a portion of the

towing services market, the primary goal of the ordinance was to

address a specific problem and not to encourage a general policy.

The court distinguished situations involving “licensing” schemes

and ordinances that affect industries as a whole, see id. at 693

n.2. (citing Harris County Wrecker Owners for Equal Opportunity

v. City of Houston, 943 F. Supp. 711, 726 (S.D. Tex. 1996)), and

held that “the limited scope here decisively forecloses an

inference that the City sought to change the tow truck industry

as a whole, let alone influence society at large.” Id. at 694.

2. Application of Cardinal Towing to the Ordinances

Both parties agree that Cardinal Towing controls our

analysis. Stucky argues that the consent/nonconsent distinction

is dispositive because it defines the consumer of the towing

service and thus clarifies whether the City is acting as a

19
consumer or as a regulator. Stucky concedes that in a nonconsent

tow situation, because the driver of the vehicle is, by

definition, not available, the City becomes the consumer and

plays the market-participant role of choosing a towing service.

Stucky contends that, by contrast, in a consent tow situation,

the driver of the disabled vehicle is the market actor, and when

the City by statute chooses a towing service for that individual,

it is regulating, not purchasing services in a proprietary

manner.

Applying Cardinal Towing’s two-part analysis, Stucky argues

that there is no need for the City efficiently to procure

services in the consent tow situation because private parties are

capable of contracting with a towing services themselves.

Further, Stucky asserts that the City’s decision to define all

accident tows as nonconsent tows11 demonstrates the regulatory,

11
Throughout this litigation, the City has contended that
all tows from the scene of accidents on public streets and
roadways are nonconsensual by virtue of § 19-391, which places
all authority to direct towing of vehicles with police or
municipal officials. Recognizing that such a definition was
“problematic,” the district court stated:

In the first place, the State of Texas has defined consent
and non-consent tows by statute. See TEX. TRANS[P]. CODE
§ 643.201(e) (defining “consent tow” as a tow made with the
consent of the owner or operator and “non-consent” tow as a
tow made without the consent of the owner or operator of the
vehicle). In the second place, the City cannot, by sleight
of hand (or language) simply eliminate the concerns
addressed by the inquiry regarding whether a tow is
consensual or nonconsensual. . . . It cannot be the case
that simply redefining what a consent tow is eliminates that
concern. Therefore, the City’s case . . . must rise or fall

20
as opposed to the proprietary, nature of the ordinances. As

Stucky argues, it is only through its police power to regulate

that the City is able to classify all accident tows as

nonconsensual, thus empowering itself with the authority to

direct which towing service will perform the tow.

As to the second part of the Cardinal Towing analysis,

Stucky argues that the regulatory policy affects the competitive

environment for the entire consent towing industry.

Specifically, Stucky contends that the City is preventing all

towing companies (except for Texas Towing) from competing in the

City-authorized consent towing market. Further, the City is

frustrating existing contracts that towing companies may have

with vehicle owners (through dealerships, insurance carriers, or

automobile organizations). Stucky contends that such regulatory

power, which can exclude other competitors from the market, is

not a characteristic shared by private economic parties in

similar circumstances.

on the assumption that its ordinances pertain to both
consent and nonconsent tows, as such tows are defined by
state statute.

Stucky v. City of San Antonio, No. CIV.A.SA96CA128EP, 2000 WL
33348252, at *3 (W.D. Tex. Apr. 4, 2000). We agree that the
City’s argument is unpersuasive. Under § 643.201(e)(2) & (e)(4)
of the Texas Transportation Code, the state has set forth the
definition of consent and nonconsent tows. See TEX. TRANSP. CODE
ANN. § 643.201(e)(2) & (e)(4) (1999); see also Fort Bend County
Wrecker Ass’n v. Wright, 39 S.W.3d 421, 424 n.3 (Tex.
App.—Houston [1st Dist.] Feb. 22, 2001). We abide by those
definitions.

21
 In response, the City12 argues that, as in Cardinal Towing,

it shares a similar propriety interest in contracting with a

single towing service for all (i.e., consent and nonconsent)

City-authorized tows. The City points to issues of efficiency of

service, guaranteed response time, twenty-four hour service,

training, safety records, a clarification of responsibility, and

easier administrative duties as reasons why the City has a

proprietary interest in a single contract system. The City does

not differentiate between consent tows and nonconsent tows,

arguing that the issues of efficiency and safety do not depend on

whether the driver is present to make a decision. The City

contends that it “is a market participant because the City’s

responsibility to control the public streets, and to ease traffic

congestion resulting from car wrecks remain, regardless of

whether the tow is a consent or nonconsent tow.” Further, the

City contends that San Antonio, as the ninth largest city in the

United States, spanning 417 square miles, requires a towing

service that can address its needs. The City contends that its

proprietary interest is heightened because of the large-scale

operation involved in providing towing services to such a large

city.

12
Because the City and Texas Towing provide similar legal
arguments, all references to the City’s arguments should be
interpreted to refer to the Appellees’ collective arguments.

22
 Regarding the second part of the Cardinal Towing analysis,

the City argues that the Ordinances are narrowly drawn to address

a single proprietary problem. For example, the challenged

Ordinances do not restrict towing services involving customers

who request towing from private property or towing services

involving consensual tows from accidents in which the car was

legally parked prior to the accident (provided it was not a

traffic hazard).

While we concede that the City has a compelling practical

argument for its need for efficient and safe towing services, we

cannot ignore the express mandate of Congress to preempt such

regulation of towing services. See 49 U.S.C. § 14501(c)(1). As

has been demonstrated and will be discussed further infra,

§ 14501(c)’s purpose was to encourage competition in the

intrastate towing services market. See Petrey, 246 F.3d at 554;

Tocher, 219 F.3d at 1046; Ace Auto, 171 F.3d at 772; H.R. CONF.

REP. NO. 103-677 (1994), reprinted in 1994 U.S.C.C.A.N. 1715,

1758-59. Accident towing, broadly defined as responding to any

disabled vehicle on any public street, is without question a

significant portion of the towing services market. Thus, a

single contract system, which prevents consumers from consenting

to hiring a towing service other than the one authorized by the

City, does little to foster that market competition.

Further, the logic of Cardinal Towing compels us to find

that a different market situation exists in the consent towing

23
market than in the nonconsent towing market. Had this

distinction not been critical to the court’s holding in Cardinal

Towing, much of the court’s analysis would have been

unnecessary.13 Therefore, applying the two-part analysis, we

must agree with Stucky that the City, in enacting and enforcing

the Ordinances that control consent tows, cannot be said to be

acting as a market participant and, thus, cannot be exempted from

§ 14501(c)(1) under the municipal-proprietor exemption.

First, in the consent tow situation, unlike the nonconsent

tow situation, there are two competing market actors attempting

to purchase services. Each market actor may wish to obtain

towing services “in keeping with the ordinary behavior of private

parties.” Cardinal Towing, 180 F.3d at 693. The challenged

Ordinances, however, frustrate the normal working of private

decisionmaking in a market. Under the Ordinances, if a private

party wishes to employ the services of Towing Company “A” and the

City wishes to employ the services of Towing Company “B”, the

City’s choice controls. This is so, not because the City needs

to purchase the service for its own proprietary interest (i.e.,

“to serve the government’s own [towing] needs”), but for the

related safety interests of “society as a whole” (i.e.,

controlling public streets and easing traffic congestion). See

13
For example, the court simply could have stated that all
City tows purchased by the City on public property were
proprietary and, thus, exempt from § 14501(c)(1) preemption.

24
id. at 691. Thus, if we are to compare the City’s actions to the

“typical behavior of private parties,” as Cardinal Towing

instructs us to do, the conflict is readily apparent. In the

consent tow situation, by countermanding a private party’s choice

of towing company, the City is acting at cross-purposes with the

private party’s market decision.

Furthermore, the City’s market power cannot be said to be

typical of similar private actors. In utilizing its police power

to control a significant portion of the towing industry, the

City’s actions have the direct economic effect of contracting the

market. This effect does not speak to a private proprietary

purchase, but rather to a public regulatory plan. See Tocher,

219 F.3d at 1049 (“In analyzing the [municipal-proprietor]

exception, it is vital to examine the substance of the

transaction because a city may not use the guise of privity of

contract to conduct otherwise forbidden regulatory activity.”

(citations and internal quotations omitted)).

Second, this court in Cardinal Towing relied on the “narrow

scope” of the ordinance whereby the City “limited itself only to

true nonconsent tows.” Id. at 694.14 Also important, was the

fact that the ordinance involved “a single discreet [sic]

14
Following Cardinal Towing, the Courts of Appeals for the
Sixth and Ninth Circuits have both held that nonconsensual towing
ordinances are exempt from preemption based on a municipal-
proprietor/market-participant analysis. See Petrey, 246 F.3d at
559; Tocher, 219 F.3d at 1049.

25
contract.” See id. at 693; see also Bldg. & Constr. Trades

Council, 507 U.S. at 227 (“[T]he challenged action in this

litigation was specifically tailored to one particular job.”).

In the instant case, the scope of the Ordinances is

obviously broader than the ordinance involved in Cardinal Towing

because the Ordinances encompass all City-authorized (consent and

nonconsent) tows. This scope, however, does not reach the level

of industry licensing schemes and other industry-wide regulations

previously held to be preempted by § 14501(c)(1). See Petrey,

246 F.3d at 564; Tocher, 219 F.3d at 1050. The scope of the

Ordinances, therefore, falls somewhere in between these two

established poles of existing precedent. Because we are unable

to determine, based on an analytically satisfying continuum,15

whether the instant Ordinances are within Cardinal Towing’s

“narrow scope,” we turn to evaluate the purpose of the

regulation. See Cardinal Towing, 180 F.3d at 692 (recognizing

that courts have looked to whether “government entities seek to

advance general societal goals rather than narrow proprietary

interests through the use of their contracting power”).

15
In order to determine the “scope” of the challenged
action, the particulars of each market and the economic effect on
the relevant market actors must be addressed. The difficulty in
the instant case is that the record does not provide relevant
information about the extent of City-authorized (consent and
nonconsent) tows in proportion to the entire towing services
industry in San Antonio. We are told that 50,000 tows were
requested by the City in 1993; however, we do not have the
denominator figure from which to compare that number to the
entire towing industry.

26
 As originally conceived, the Ordinances were a response to

safety concerns affecting the City at large and were intended to

be regulatory, and not proprietary, in nature. The enabling

language of the original Ordinance No. 31977 (now codified as

§ 19-391), provides that the reason for enacting the Ordinances

was to regulate and control the practice of tow truck drivers

from racing to the scenes of accidents.16 Ordinance No. 31977

explicitly stated that the City was acting as “the guardian of

the public rights in the public streets, ways and public

16
Ordinance No. 31977 reads in relevant part:

Whereas, the City of San Antonio is the guardian of the
public rights in the public streets, ways and public
property within said City and holds title for the benefit of
the public, and

Whereas, past experience indicates that automobile wreckers
frequently race to the scene of automobile accidents in the
hope of securing the business of towing in disabled motor
vehicles for repairs, and . . .

Whereas, the efforts of the City police to control the
aforementioned practices of automobile wrecker operators
have not been successful, and

Whereas, the aforementioned practices of automobile wrecker
operators offend against the public peace, safety and
welfare of the City of San Antonio and require regulations
and control, and

Whereas, in order to prevent confusion and traffic
congestion which endanger public health, safety and property
of the City of San Antonio it is deemed expedient, desirable
and necessary to adopt regulations controlling the operation
of automobile wreckers upon the public streets and ways of
the City of San Antonio. . . .

San Antonio, Tex., Ordinance No. 31977 (Dec. 12, 1963).

27
property” and that its purpose was to protect the “public peace,

safety and welfare of the City of San Antonio.” Ordinance No.

31977 then explicitly provided that the City “deemed it

expedient, desirable and necessary to adopt regulations

controlling the operation of automobile wreckers upon the public

streets and ways” of the City (emphasis added).

The original Ordinance No. 31977 has been amended and

codified, but nothing in the record contradicts the conclusion

that safety considerations to benefit “general societal

interests” controlled all subsequent amendments to the

Ordinances. Affidavits from the Chief of Police, the Police

Captain in charge of vehicle storage, and the Deputy Chief of

Police of the Support Services Division, in charge of overseeing

the Vehicle Storage Unit, all support the understanding that the

reason the City chose to regulate towing and selected a single-

vendor system was to improve public safety.17 In both the City’s

17
For example, Ron Bruner, the Police Captain in charge of
vehicle storage at the San Antonio Police Department and
Commander of the Community Services Section that oversees the
Vehicle Storage Unit, stated in his affidavit:

When developing and implementing towing policies for a
municipality such as the City of San Antonio, the most
critical issue is the danger to public safety arising from
the obstruction of City streets and highways after vehicular
accidents. The City of San Antonio has chosen to protect
the public safety by contracting with a single towing
company to provide services at the request of the City.

Jerry Pittman, the Deputy Chief of Police, Support Services
Division, also echoed this understanding by stating: “The number
one concern of the City in relation to towing situations is the

28
and Texas Towing’s briefs and at oral argument, the parties

agreed that safety was the primary consideration behind the

passage and continued enforcement of the Ordinances.18 Thus,

unlike the proprietary-focused ordinance at issue in Cardinal

Towing, the City’s Ordinances have a broader regulatory

purpose.19

Therefore, because the Ordinances restrict market

competition, because the primary goal of the Ordinances is to

regulate and improve the safety of the towing services on City

streets, and because the Ordinances affect a significant portion

of the towing industry in San Antonio, we conclude that the

challenged actions of the City are regulatory in nature and

cannot escape federal preemption under § 14501(c)(1) by way of

safety of the public.”
18
Finally, we note that, under state law, the regulation
of traffic is a regulatory function of a municipality and not a
proprietary function. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.0215(a)(21) (1997) (recognizing the “regulation of traffic”
as one of the functions exercised by the municipality in the
interest of the general public); Murillo v. Vasquez, 949 S.W.2d
13, 17 (Tex. App.—San Antonio 1997, writ denied) (recognizing
that the regulation of traffic is a “classic” example of a
governmental regulatory function).
19
We recognize, of course, that this same “purpose”
underlies the nonconsent tows covered by the Ordinances. That
the City may have initially entered into the single-vendor system
for safety reasons, however, does not affect the analysis under
Cardinal Towing, that nonconsensual tows can escape federal
preemption under the municipal-proprietor/market-participant
exemption. The logic of the first part of the Cardinal Towing
analysis demonstrates the proprietary nature of the City’s need
to procure towing services in the nonconsent towing situation.
The issue has been decided and is not before us on appeal.

29
the municipal-proprietor exemption. Simply stated, the

government interaction with the market is not so narrowly focused

that we can “safely rule out” the “regulatory impulse” of the

City. See Cardinal Towing, 180 F.3d at 693.

Having determined that the municipal-proprietor/market-

participant rationale applied in Cardinal Towing cannot be

applied to the consensual towing situation in the City of San

Antonio, we next turn to whether the Ordinances can be exempted

under the statutory safety exception provided for in

§ 14501(c)(2)(A).

B. The Safety Exemption Under 49 U.S.C. § 14501(c)(2)(A)

The second relevant exception to the preemption doctrine is

the “safety exemption” contained in § 14501(c)(2)(A), which

provides:

(2) Matters not covered.— Paragraph (1) [§ 14501(c)(1)]—
(A) shall not restrict the safety regulatory authority
of a State with respect to motor vehicles, the
authority of a State to impose highway route controls
or limitations based on the size or weight of the motor
vehicle or the hazardous nature of the cargo, 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.

49 U.S.C. § 14501(c)(2)(A). The City argues that even if it

cannot be considered a market participant in the consent tow

situation, because the Ordinances were enacted to address safety

concerns arising from the towing practices in the City,

§ 14501(c)(2)(A) should be interpreted to exempt the Ordinances

30
from federal preemption. The City asserts that because

§ 14501(c)(2)(A) provides that the safety regulatory authority of

a State shall not be restricted with respect to motor vehicles,

this reserves the authority of the State to delegate its

regulatory power to municipalities like the City.20 The City

contends that because states have traditionally redelegated

regulatory powers to municipalities, and because Congress did not

clearly or manifestly preempt this redelegation authority,

§ 14501(c)(2)(A) covers municipal safety ordinances that are

enacted pursuant to a delegation of state authority.

Stucky, in contrast, argues that § 14501(c)(2)(A) does not

save the City’s towing Ordinances from preemption because

§ 14501(c)(2)(A) is directed only at the authority of the state

and not the political subdivision of the state. Stucky points to

the fact that the general preemption language in § 14501(c)(1)

covers a “state [or] political subdivision of a State,” but that

the text of § 14501(c)(2)(A) omits the phrase “political

subdivision of the State.” Stucky asserts that this omission was

intentional and that it furthers the deregulatory purpose of the

statute. Therefore, Stucky contends that the City cannot

20
The State of Texas has, in fact, delegated this
authority to municipalities. See TEX. TRANSP. CODE ANN.
§ 643.201(a) (1999) (“[A] municipality may regulate the operation
of a tow truck to the extent allowed by federal law.”); Northway
Towing, Inc. v. City of Pasadena, Tex., 94 F. Supp. 2d 801, 802
(S.D. Tex. 2000) (“[T]he State of Texas has specifically
delegated its authority to regulate towing to its political
subdivisions.”).

31
circumvent the express language of the statute by relying on a

redelegation of state authority.

This court was not required to address this provision in

Cardinal Towing; however, other courts have confronted the safety

exemption in § 14501(c)(2)(A) and have disagreed on its

application to municipal ordinances such as the ones at issue.

The Courts of Appeals for the Sixth, Ninth, and Eleventh Circuits

have each held that § 14501(c)(2)(A) does not exempt municipal

ordinances from the general preemptive reach of § 14501(c)(1).

See Petrey, 246 F.3d at 563; Tocher, 219 F.3d at 1051; Mayer, 158

F.3d at 545-47. However, the Second Circuit and several district

courts in this circuit have come to the opposite conclusion,

finding that § 14501(c)(2)(A) explicitly exempts safety-focused

municipal towing ordinances from § 14501(c)(1). See Ace Auto,

171 F.3d at 774-75; Northway Towing, Inc. v. City of Pasadena,

Tex., 94 F. Supp. 2d 801, 802 (S.D. Tex. 2000); Harris County

Wrecker Owners for Equal Opportunity v. City of Houston, 943 F.

Supp. 711, 726 (S.D. Tex. 1996); New Orleans Towing Ass’n v. City

of New Orleans, No. CIV.A.99-3131, 2000 WL 193071, at *8 (E.D.

La. Feb. 12, 2000); AJ’s Wrecker Serv., Inc. v. City of Dallas,

No. CIV.A.3:97-CV-1311D, 1998 WL 185521, at *3 (N.D. Tex. Apr.

15, 1998).

Because of the closeness of the issue and the soundness of

the arguments on either side, we set forth the contrasting

arguments below. As is our practice in questions of statutory

32
interpretation, we look to the text, structure, and legislative

history of the provision in question. See City of Dallas, Tex.

v. Fed. Communications Comm’n, 118 F.3d 393, 396 (5th Cir. 1997).

We also address the determinations made by our sister circuits

and the district courts in this circuit that have confronted this

difficult issue.

1. Statutory Language and Structure

“Interpretation of the statutory language is key to

construing its preemptive force.” Hodges v. Delta Airlines,

Inc., 44 F.3d 334, 335-36 (5th Cir. 1995). Furthermore, in order

to discern Congress’s intent, we must examine the language of

§ 14501(c)(2)(A) in the context of the legislation of which it is

a part. See Bennett v. Spear, 520 U.S. 154, 173 (1997)

(recognizing that statutory provisions must be examined in the

context of the entire statute).

In reviewing the text and structure of § 14501(c)(2)(A), the

express statutory language does not provide for municipalities or

other “political subdivisions of a State” to be exempted from the

preemptive reach of § 14501(c)(1). For this reason, several

circuit courts of appeals have found that Congress did not intend

for municipalities to be exempted from preemption, even for

safety reasons. “The language of § 14501 provides fairly

convincing evidence that the safety regulation exception to

preemption was not meant to apply to a state’s political

subdivisions. . . . [W]ithin § 14501, ‘political subdivision[s]’

33
are mentioned seven times, yet the term is not mentioned at all

in § 14501(c)(2)(A).” Petrey, 246 F.3d at 561. Similarly, as

the Eleventh Circuit recognized in Mayer:

[Section] 14501 contains no fewer than seven express
references to the regulatory authority of the political
subdivisions of the states in its other subsections,
§§ 14501(a), 14501(b), 14501(c)(1), 14501(c)(2)(C),
14501(c)(3)(A), 14501(c)(3)(B), and 14501(c)(3)(C), but
omits any references to political subdivisions in
§ 14501(c)(2)(A). . . . In fact, § 14501(c)(2)(A) is the
only subsection of the statute that mentions the regulatory
authority of a state without also mentioning the regulatory
authority of the state’s political subdivisions.

Mayer, 158 F.3d at 545; see also Tocher, 219 F.3d at 1051

(“[S]ection 14501 contains no less than seven references to the

regulatory authority of political subdivisions, but is

conspicuously silent in section 14501(c)(2)(A).”).

These courts have relied on the general presumption that

when “Congress omits certain language in a particular subsection

of a statute and includes the language in other subsections, the

omission is intentional rather than accidental.” Mayer, 158 F.3d

at 545; see also Tocher, 219 F.3d at 1051 (“‘Where Congress

includes particular language in one section of a statute but

omits it in another section of the same Act, it is generally

presumed that Congress acts intentionally and purposely in the

disparate inclusion or exclusion.’” (quoting in parenthetical

Russello v. United States, 464 U.S. 16, 23 (1983)). These courts

have concluded that the omission of the statutory language was

deliberate and not a drafting error: “We cannot say that

34
Congress simply made a mistake by failing to include political

subdivisions in the exception to preemption in § 14501(c)(2)(A).

Instead, Congress’s silence in failing to include political

subdivisions in § 14501(c)(2)(A) clearly indicates that municipal

safety regulation was not meant to be exempted from preemption.”

Petrey, 246 F.3d at 563; Mayer, 158 F.3d at 545-46 (“We find it

unlikely that this omission reflects a drafting error, because a

similar preemption provision contained in the Airline

Deregulation Act, 49 U.S.C. § 41713(b)(4)(B)(I), contains the

same omission.”).

These courts have also recognized that “[t]he Act itself

defines the term ‘State’ to ‘mean[] the 50 States of the United

States and the District of Columbia,’ and therefore provides no

justification for reading the term ‘State’ to include its

political subdivisions.” Mayer, 158 F.3d at 545; see also

Tocher, 219 F.3d at 1051 (“The term ‘State’ under the FAAA is

defined as ‘the 50 States of the United States and the District

of Columbia’ . . . and a plain reading of this provision

indicates that municipalities are not included within that

definition.”). Further, the statutory language of

§ 14501(c)(2)(A) only addresses State regulation of “motor

vehicles” and not the “motor carriers” at issue under the towing

Ordinances.21 As a result, based on the text and structure of

21
“Motor vehicle” is defined as “a vehicle, machine,
tractor, trailer, or semitrailer propelled or drawn by mechanical

35
§ 14501(c)(2)(A), these courts have declined to apply the safety

exemption to municipal ordinances.

In contrast, the Second Circuit and certain federal district

courts in this circuit have come to an opposite conclusion based

on their interpretation of the statutory language. In Ace Auto,

the Second Circuit concluded that, while the text of

§ 14501(c)(2)(A) does not preserve the regulatory authority of

political subdivisions of the state, “we see no reason to

construe this language to prevent the state from delegating its

regulatory authority to a municipality.” Ace Auto, 171 F.3d at

765. In similar fashion, a district court in the Southern

District of Texas found that congressional delegation of

“regulatory authority to a state may well mean that it is

permitted to redelegate its authority to a political subdivision

either specifically or by leaving undisturbed existing statutes

that would otherwise provide a local government with ample

authority to regulate.” Harris County Wrecker, 943 F. Supp. at

726 (citations, internal quotations, and alterations omitted).

Both courts relied on Wisconsin Public Intervenor v.

Mortier, 501 U.S. 597, 607-08 (1991), for their interpretation of

§ 14501(c)(2)(A). See Ace Auto, 171 F.3d at 765; Harris County

power and used on a highway in transportation, or a combination
determined by the Secretary, but does not include a vehicle,
locomotive, or car operated only on a rail . . . .” 49 U.S.C.
§ 13102(14). The definition of “motor carrier” is set out supra
in note 4.

36
Wrecker, 943 F. Supp. at 726. In Mortier, the Supreme Court held

that under the Federal Insecticide, Fungicide, and Rodenticide

Act (“FIFRA”), states were permitted to redelegate authority to

political subdivisions even without explicit statutory language

so providing. See 501 U.S. at 607-09. The FIFRA statute only

permits a “State” to regulate pesticides, see 7 U.S.C. § 136v(a),

and defines a “State” as “a State, the District of Columbia, the

Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Trust

Territory of the Pacific Islands, and American Samoa.” 7 U.S.C.

§ 136(aa). The Mortier Court held, however, that the statute’s

silence with regard to local governments could not be read “to

establish a clear and manifest purpose to preempt local

authority.” Id. at 607 (internal quotations and citations

omitted). The Court stated further:

The principle is well settled that local governmental units
are created as convenient agencies for exercising such of
the governmental powers of the State as may be entrusted to
them . . . in [its] absolute discretion. The exclusion of
political subdivisions cannot be inferred from the express
authorization to the “State[s]” because political
subdivisions are components of the very entity the statute
empowers. Indeed, the more plausible reading of FIFRA’s
authorization to the States leaves the allocation of
regulatory authority to the “absolute discretion” of the
States themselves, including the option of leaving local
regulation of pesticides in the hands of local authorities.

Id. at 607-08 (citations and some internal quotations omitted)

(alterations in original). Based on the language in Mortier,

these courts found that § 14501(c)(2)(A)’s failure to mention a

37
political subdivision of a state did not control the preemption

analysis.

The Second Circuit also relied on the interpretation given

to § 14501(c)(2)(A) by the United States Department of

Transportation. In a document entitled “Intrastate Trucking

Deregulation: An Analysis and Interpretation of Title VI, Federal

Aviation Administration Authorization Act of 1994,” the

Department stated:

We believe that State or local regulations governing the
towing of damaged or abandoned vehicles that are public
safety hazards would fall within this exemption, assuming
again that such regulations are not a guise for broader
economic restrictions.

See Ace Auto, 171 F.3d at 775 (emphasis added) (quoting U.S.

Dep’t of Transp., Intrastate Trucking Deregulation: An Analysis

and Interpretation of Title VI, Federal Aviation Administration

Authorization Act of 1994, P.L. 103-305 (Mar. 1995)).

Furthermore, consistent with the decisions on this side of

the debate and with the City’s argument, we note that the

statutory language at issue is phrased in the negative — stating

that the federal statute shall not restrict a state from

regulating the safety of motor vehicles. See 49 U.S.C.

§ 14501(c)(2)(A). As the City argues, if we were to find that

the State of Texas cannot redelegate its authority to

38
municipalities such as the City, we would, by necessity, be

restricting that state’s ability to regulate.22

Faced with this difficult task of statutory interpretation,

we ultimately conclude that we must adopt a plain reading of the

language and structure of § 14501(c)(2)(A). We thus join the

majority of circuits in interpreting the omission of the phrase

“political subdivision of a State” as Congress’s “clear and

manifest” intent to preempt municipal safety regulation of the

towing industry. As three of our sister circuits have found,

foundational principles of statutory construction guide us to

presume that Congress intended the language contained within the

statute. See Petrey, 246 F.3d at 561; Tocher, 219 F.3d at 1051;

Mayer, 158 F.3d at 545-46; see also BFP v. Resolution Trust

Corp., 511 U.S. 531, 537 (1994) (“[I]t is generally presumed that

Congress acts intentionally and purposely when it includes

particular language in one section of a statute but omits it in

another.” (alteration in original)). Because Congress did

include the language “political subdivision of a State” in seven

other provisions of the statute and did not include it in

22
This argument follows from the fact that, as mentioned,
Texas has specifically delegated its authority “to the extent
allowed by federal law.” See TEX. TRANSP. CODE ANN. § 643.201(a).
Under Supremacy Clause principles, we interpret this delegation
as being limited by the dictates of Congress’s stated intent in
§ 14501(c)(1) and § 14501(c)(2)(A). See U.S. CONST. art. VI, cl.
2.

39
§ 14501(c)(2)(A), we are unwilling to interpret the statute

against its plain meaning.23

We also find reliance on Mortier misplaced. Those courts

that have relied on Mortier to conclude that § 14501(c)(2)(A)’s

statutory silence as to local governments permits the delegation

of state safety authority to municipalities have failed to

recognize that the statutes at issue are quite different. FIFRA,

in contrast to § 14501(c), does not contain express preemption

language. More specifically, as both the Mayer and Petrey courts

have recognized, “the specific FIFRA provision interpreted in

Mortier made no reference to political subdivisions whatsoever,

and FIFRA as a whole contains only scattered mention of political

subdivisions in its other parts.” Petrey, 246 F.3d at 562

(citing Mayer, 158 F.3d at 547) (internal quotations omitted).

In contrast, § 14501 contains “seven references to political

subdivisions overall, a reference to political subdivisions in

the general preemption provision, and a reference to political

subdivisions in one of the exceptions to the general preemption

provision.” Petrey, 246 F.3d at 562. Thus, Congress’s almost

complete silence throughout FIFRA concerning political

subdivisions simply cannot be equated with the language of

§ 14501 and the particular omission in § 14501(c)(2)(A).

23
Further, we are guided by the definition of “State”
included in 49 U.S.C. § 13102(18), which does not include a
political subdivision of a state.

40
 Finally, we agree with the Eleventh Circuit that “Mortier

. . . falls short of establishing a rule that the word ‘State’

must be interpreted to include political subdivisions in all

circumstances.” Mayer, 158 F.3d at 547. Such an interpretation,

we recognize, would have perverse consequences:

[Such a] reading of the safety exception would lead to the
absurd result that Congress can never preempt local
regulations and simultaneously leave a state’s ability to
regulate intact. If this Court were to hold that a state
can always delegate its responsibility to municipalities,
Congress would always be required to preempt both state and
local laws, or preempt neither. That result would violate
fundamental principles of federalism and lead to a distorted
interpretation of the Supremacy Clause.

Tocher, 219 F.3d at 1051. Thus, we cannot agree with those

courts that have, based on Mortier, allowed municipalities to

avoid preemption through a redelegation theory.

It is this final point that also aids us in resolving the

most difficult argument presented by the City — namely, how to

square the negatively phrased “shall not restrict the safety

regulatory authority of a State with respect to motor vehicles”

language, with the determination that states may not redelegate

their safety authority over motor carriers to municipalities. As

an analysis of the legislative purpose and history of

§ 14501(c)(2)(A) demonstrates, Congress’s decision to permit

regulation of certain facets of the transportation industry at

the state level, but not at the local level, was a deliberate

action intended to further competitive markets. We now turn to

that analysis.

41
 2. Legislative History and Purpose

As with the textual analysis, courts have differed regarding

how best to interpret the legislative history of the safety

exemption in § 14501(c)(2)(A). Again, the Sixth, Ninth, and

Eleventh Circuits have held that the legislative history supports

the argument that municipalities were not intended to benefit

from the safety exemption. “The legislative purpose and history

of § 14501 . . . support the notion that Congress’s failure to

include political subdivisions in § 14501(c)(2)(A) was

deliberate.” See Petrey, 246 F.3d at 563; see also Tocher, 219

F.3d at 1051; Mayer, 158 F.3d at 546.

First, these courts point to the ICCTA’s conference report,

which expressed Congress’s intent to promote greater competition:

[T]he conferees believe preemption legislation is in the
public interest as well as necessary to facilitate
interstate commerce. State economic regulation of motor
carrier operations causes significant inefficiencies,
increased costs, reduction of competition, inhibition of
innovation and technology and curtails the expansion of
markets. . . . The sheer diversity of these regulatory
schemes is a huge problem for national and regional carriers
attempting to conduct a standard way of doing business.

H.R. CONF. REP. NO. 103-677, at 87 (1994), reprinted in 1994

U.S.C.C.A.N. 1715, 1759; see also Petrey 246 F.3d at 563; Mayer,

158 F.3d at 546.24 These courts recognize that a “strict

24
The debates in the House of Representatives support the
conclusion that the inclusion of § 14501(c)(2)(C) was meant to
exempt nonconsensual towing prices from preemption but leave
consensual towing preempted by § 14501(c):

The pending legislation would restore the local authority to

42
reading” of § 14501(c)(2)(A) “furthers the policy of deregulation

underlying the enactment of section 14501. Allowing both states

and municipalities to escape preemption under the guise of

regulating safety could lead to widespread, diverse regulation of

motor carriers, precisely what Congress sought to avoid in

promulgating a broad preemption statute.” Tocher, 219 F.3d at

1051; see also Mayer, 158 F.3d at 546.

The legislative purpose, therefore, was to increase

competition by eliminating overlapping and potentially

inconsistent local regulations, without undermining the states’

ability to regulate motor vehicle safety, highway route controls,

hazardous cargo, or motor carrier insurance requirements. See 49

U.S.C. § 14501(c)(2)(A). “Stated differently, it is reasonable

to assume that Congress decided that safety and insurance

ordinances must be enacted on a statewide level, in order to

minimize the disturbance to the motor transportation industry

engage in regulating the prices charged by tow trucks in
nonconsensual towing situations. Regulation of routes and
services, as well as regulation of consensual towing, would
still be preempted.

Nonconsensual towing situations are those where the owner of
the vehicle is unable to consent to it being towed, such as
in cases of a severe accident, where the vehicle is towed
from a commercial establishment for being illegally parked,
or towed from city streets as a result of police order.

141 CONG. REC. H15,602 (daily ed. Dec. 22, 1995) (statement of
Rep. Rahall) (emphasis added).

43
that a patchwork of local ordinances inevitably would create.”

Mayer, 158 F.3d at 546.

The Second Circuit, however, has interpreted the legislative

history in broader terms, allowing for the delegation of state

safety authority to municipalities. In evaluating the same ICCTA

conference report on which Stucky and the other circuits have

relied, the court stated: “[W]e see no reason to construe this

language to prevent the state from delegating its regulatory

authority to a municipality. To the contrary, the legislative

history indicates that state safety regulatory authority

(including, presumably, the authority to delegate) was to be

‘unaffected’ by the preemption statute.” Ace Auto, 171 F.3d at

775 (quoting H.R. CONF. REP. NO. 103-677, at 84, 85, reprinted in

1994 U.S.C.C.A.N. at 1756, 1757). The Second Circuit further

stated:

[A]lthough the legislative history clearly illustrates
Congress’ deregulatory purpose, the history is ambiguous as
to the scope of that purpose. More particularly, the
reports issued in connection with § 14501 suggest that its
primary purpose was to eliminate local economic regulation,
not local safety regulation. To the extent that the scope
of Congress’ purpose is unclear, we hesitate to construe the
text of § 14501 so as to frustrate unnecessarily the ability
of municipalities to respond to the local safety concerns
created by local towing industries.

Ace Auto, 171 F.3d at 775 (citing H.R. CONF. REP. NO. 103-677, at

86-87 (1994), reprinted in 1994 U.S.C.C.A.N. at 1758-59)

(internal citation omitted); Harris County Wrecker, 943 F. Supp.

at 727 (“[T]here is no evidence or congressional findings that

44
municipal safety regulations would interfere with Congress’s

concern for competitiveness in tow trucking.”).

After our own review of the legislative history, we are

compelled to agree with the conclusions of the Sixth, Ninth, and

Eleventh Circuits. While acknowledging the closeness of the

question, we hold that any ambiguity in the legislative history

must be resolved consistent with our plain reading of the

statute.

Primarily, our reasoning rests on three interrelated

factors. First, all courts addressing this issue have recognized

that § 14501(c) was enacted with a deregulatory purpose. By

interpreting the legislative history consistent with the plain

language of the exemptions in § 14501(c)(2)(A), we further that

purpose.

Second, we find it reasonable that in mentioning only

“States” in § 14501(c)(2)(A), Congress intended to permit

regulation of certain components of the transportation industry

at the state level and preclude those same regulations at the

local level. See Mayer, 158 F.3d at 546 n.6 (“By requiring that

safety and insurance ordinances must be enacted on a statewide

basis, the costs associated with complying with the ordinances

are reduced dramatically, which is an outcome that is consistent

with the policy objectives of the ICCTA.”). This “partial”

preemption preserves state control over state interests and yet

fosters deregulation by preventing a patchwork of municipal and

45
county safety and insurance regulations from impeding the

competitive development of the towing services industry.

Finally, we are unconvinced by the distinction relied on by

the Second Circuit, that Congress intended to eliminate “local

economic regulation,” but not “local safety regulation.” Ace

Auto, 171 F.3d at 775-76. While the statement of intent may be

accurate, the instant case proves the fragility of the

distinction, as the single-vendor system, if exempted as a

“safety regulation,” would result in an economically

noncompetitive market for all City-authorized consent and

nonconsent tows. Thus, under the guise of safety regulation, the

economics of the intrastate towing market would be shifted away

from the competitive market envisioned by Congress. As was

recognized in oral argument, under the City’s argument there is

no stopping point for the potential reach of the safety

exemption. Pursuant to § 14501(c)(2)(A), municipalities

potentially could designate all tows in the City as implicating

safety concerns and thus regulate the entire towing industry

under the safety exemption. We do not believe Congress created

§ 14501(c)(2)(A) to be a loophole through which local governments

could avoid the general preemptive reach of § 14501(c)(1).

Therefore, we hold that the City’s Ordinances involving

consent towing cannot escape federal preemption under the safety

exemption of § 14501(c)(2)(A). The plain reading of the statute,

supported by its legislative history, demonstrates Congress’s

46
clear and manifest intent not to include political subdivisions

of the state within that exemption.

V. CONCLUSION

For the foregoing reasons, we REVERSE the judgment of the

district court and REMAND for proceedings consistent with this

opinion.

47