Towing rate increase not recommended to Louisiana Public Service Commission

By Mark Schremmer, Land Line staff writer | 3/21/2016

The Louisiana Public Service Commission staff’s recommendations regarding nonconsensual towing didn’t include a lot of changes.

Mike Matousek, OOIDA director of state legislative affairs, said the lack of changes is a good thing.

“Really, what they’ve done is clean things up a little bit,” Matousek said. “They’ve added a few definitions to improve clarity. What’s most important is what they didn’t include. Members of the towing industry asked for across-the-board rate increases and itemized billing. They wanted itemized billing on things like shovels and other reusable items. That didn’t get approved. In a lot of states, they get away with that.”

The staff recommendations, which includes a schedule of prescribed rates and requirements for nonconsensual towing and recovery services, were issued Friday, March 18. The recommendations will be placed on the agenda for the Louisiana Public Service Commission’s May 18 meeting.

A technical conference on the matter was held Jan. 19 in Baton Rouge, La. Comments regarding the proposed rule were to be submitted by Feb. 5.

Many of the comments from towing companies asked for increased rates.

According to one of the comments, “all of the rates are too low for the following reasons.”

  • The trucks being towed have changed and require changes to the tow trucks, therefore creating greater expenses for tow companies. 
  • The revenue generated from nonconsensual tows is not enough to cover the expenses for bad debt from nonconsensual tows. 
  • The rates for specialized equipment are not enough to recover the expenses for the equipment. 
  • Towing is the “Fourth Service” like EMS, police and fire. 

The staff’s response to the comment dismissed many of those claims.

“Staff is unable to recommend a rate increase without financial documentation supporting the tow companies’ claims that revenue does not cover expenses,” the staff wrote. “Tow companies are not a Fourth Service provided by tax revenue. They are private companies operating for a profit. Tow companies voluntarily request to be added to a rotation list to provide nonconsensual tows and voluntarily enter in to this regulated business. If tow companies are not generating enough revenue to cover their expenses, they can voluntarily remove themselves from the rotation list.”

Another comment said storage rates for nonconsensual tows in Louisiana weren’t consistent with airport rates or commercial lot parking in downtown New Orleans.

“The storage rates are not intended to be competitive since the customer is not choosing when or where to park the vehicle,” the staff wrote.

Matousek, who testified on the matter in Baton Rouge, said the staff’s responses indicate the Louisiana Public Service Commission understands the issue.

OOIDA has been working to get states to review their policies regarding nonconsensual towing. The approval of the FAST Act gave states absolute authority to regulate every aspect of nonconsensual tows.

“In Louisiana, and in many other states across the country, small-business truckers are increasingly subjected to unreasonable charges from towing companies engaged in nonconsensual towing and recovery operations,” Matousek wrote to the Louisiana Public Service Commission. “By definition, a nonconsensual tow provides little (if any) opportunity for truck drivers involved in a roadside accident to shop for a towing company or negotiate rates. Unfortunately, if not properly regulated, this can result in towing invoices that are inflated by tens of thousands of dollars.”

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