A vehicle storage facility is the one place in Texas where a towed car reliably sits and someone is watching. Every car that goes in has paperwork, and every car that comes out leaves in somebody’s truck. That makes the storage lot gate the natural chokepoint for a problem the towing industry has been raising for years: trucks operating without the license the state requires, driven by people the state has never checked, taking custody of other people’s cars.
The Towing and Storage Advisory Board spent the last third of its Wednesday meeting — its first in nearly eight months — on exactly that question. The board asked the Texas Department of Licensing and Regulation to enforce licensure at the gate. The department’s position, given at the meeting by its assistant general counsel, was that three separate legal obstacles stand in the way.
Checked against the Occupations Code, the Administrative Code and federal law, two of those obstacles are not where the department placed them — and the central one is a rule TDLR wrote years ago and still has.
Ken Ulmer, who holds the vehicle storage facility seat for counties over one million and runs a VSF in Houston, opened with something that had happened the day before. “I see just yesterday I had three tow trucks in here that weren’t licensed and that’s in one VSSF in Houston.” His complaint was not that they came. It was that he had been instructed to let them leave with the cars. “But the problem is we’ve been told don’t ask them for any information.”
The department’s answer, given by assistant general counsel Michael Bostic was that the instruction follows from a limit on what a regulator may ask a licensee to do. “The reason you’ve been told that is because we can’t delegate enforcement authority our enforcement authority to you. If we did that through a rule it would likely get invalidated by court.”
Ulmer restated the issue as consumer protection. A car leaves his lot in a truck whose driver the state has never checked. “He hasn’t been background checked. He doesn’t have a TDLR license. We don’t know who we’re putting that consumer in the truck with.” And he remembered the rule being the other way. “I don’t understand what changed.”
The department’s second reason was federal preemption. “General Council’s opinion on this issue specifically is that if we were to discriminate against out-of-state tow trucks by requiring a TDLR license to enter the tow truck facility, it would be invalid. It would be preempted by federal law.” He continued: “So, one state can’t discriminate against another state’s licences. We I I can’t force a a legal tow truck that’s that’s legal under federal law to comply with TDR’s licensing scheme.”
Ulmer’s reply went to the premise rather than the conclusion — the trucks he is describing are not interstate operators at all. “Not one single tow truck that comes into my facility is from out of state.” He went on: “These tow trucks are not from out of town. These are the same people that come to our facilities day after day after day. They got Texas plates on their trucks. The drivers have Texas driver’s license.” He knew the last part, he said, because one of them had hit a car in his lot and the police had to be called.
Asked by Mark Mitchell, who sits in the property and casualty insurer seat, whether reciprocity with border states might resolve it, the department named the statute its position rests on. “So the issue isn’t specifically out of state licenses coming in. It ispeople who are operating under the Federal Unified Carrier Registration Act. So you understand the federal law is supreme over state law, right? And so if they’re operating under this act, we can’t stop them from doing that.”
Gary Hoffman, who holds the VSF seat for counties under one million, supplied the origin story for the exemption and the industry’s grievance about what happens to its complaints. “We send you complaints. We send you everything and just get letters back saying it’s not enforceable.” On where the loophole came from: “It was put in place basically by Copart and IAA because hurricane times they want to send trucks from everywhere to come in here and do emergency relief. But that’s created this loophole for everybody else to operate illegally.” The trucks he is describing are not interstate haulers. “They’re a pickup in a flatbed trailer with a winch on it.”
The exemption Hoffman is describing is real, though it is a state exemption rather than a federal one — Occupations Code § 2308.002(11)(H) excludes certain car haulers from the definition of “tow truck,” which is how they escape the permit and license requirements entirely. Copart was the sole testifying proponent of SB 860 (2021), which added the insurance-to-salvage-pool clause, and the committee analyses do invoke hurricanes; the Texas Towing and Storage Association testified against it. But the broad “prearranged shipping transaction” language he is objecting to came in six years earlier, in SB 1820 (2015) — a bill TTSA supported. And IAA appears nowhere in either bill’s record.
Charles Rash, who holds the towing company seat for counties over one million, reduced the whole dispute to two sentences. “there’s two reasons people are unlicensed. Criminal history or no insurance. And both of those reasons are consumer protection issues big time.”
The presiding officer, Tasha Mora, then made the one proposal on the table that TDLR could act on tomorrow without a rule, a bill or a court. The department’s own enforcement report shows tow complaints rising while the share producing discipline sits below seven percent. “So maybe point those resources to unlicensed activity because the department’s data is showing that those complaints are going very few of them are requiring disciplinary action.” She was careful about what the board was and was not asking for: “I don’t think we want that authority.” The board is not asking to become the police. It is asking the department to spend its investigators where the violations are.
Bostic asked the board directly where a sting would do the most good — “where do you all think the best use of our resources would be would be conducting a sting operation” — and got a list: park outside a Houston VSF and watch; answer the Facebook Marketplace ads and ask the driver for a license; search the ads in Spanish as well as English. Shae Adamick added a category nobody had raised. “You have roadside groups that are subcontracted from different insurance companies.” Hoffman said the national motor clubs are no better, and that drivers have arrived at his lot without so much as a driver’s license.
Nothing was voted on. The discussion was folded into a renamed compliance work group, along with electric vehicles and electronic parking permits, with a target of meeting in September or October.