A REAL JUNKYARD DOG OF A BILL
By Chuck Muth
May 20, 2011
It’s been labeled “the most lobbied bill” of the 2011 legislative session, and you’ll get no argument from me. I’ve personally never been lobbied on a bill as strongly as I have with this one.
So it must be about something really, really big…right? The budget? Education reform? Health care? Welfare? Child care? Public safety?
Nope. Junkyards.
I…kid…you…not.
SB407 is a bill relating to towing companies, the tariffs (fees) they charge, and the storage of automobiles that have been in an accident or stolen.
The Players:
On one side is a Henderson towing company, SNAP towing, its owner, Bobby Ellis, and their lobbyist, former Assembly Speaker Richard Perkins.
On the other side are a pair of Clark County towing companies - Ewing Bros. and Quality Towing - Paul Enos of the Nevada Motor Transport Association (NMTA), Pete Ernaut and Bill Vissiliades of lobbying giant R&R Partners, and Scott Scherer, a attorney representing Quality Towing
The Disclaimer:
I have not been retained by any of the players; nor have any of the players, to the best of my knowledge, donated or contributed funding to my organization, Citizen Outreach, or to our upcoming Conservative Leadership Conference – though we have solicited such support from R&R Partners and the NMTA.
I’ve known Enos, Ernaut, Scherer and Vissiliades for many years, but have never met or spoken with Ellis on any matter.
As for Perkins, I’ve never held any animosity towards the man, but as a former Democrat Speaker, he and I have certainly had our public policy run-ins over the years. As such, let’s just say I’ve taken a serious “trust but verify” position on dealing with him on this issue.
The Issue:
At the center of the issue is the fact that some people who have been in an accident, or had their car stolen and recovered, were getting hosed by the storage lot where their car was towed. In Clark County, thanks to government contracts, the problems usually occurred at one of two approved towing companies: Ewing Bros. and Quality.
In this corner: One side maintains that Ewing and Quality enjoy, and have enjoyed for decades, near-monopoly control over the accident towing business when law enforcement is involved. The other side maintains that there are now actually 10 approved towing companies which are approved and regulated in Clark County.
As a free-market conservative, whether it’s 2 or 10 companies which have “permission” to provide towing services for automobiles in an accident, or recovered after a theft, is inmaterial. ANY tow truck that is properly licensed in Clark County should be allowed to provide towing services.
That said, the issue here also involves two types of tows: with consent and without consent.
Without consent would be a tow in which a vehicle is recovered after a theft in which the owner is not present to direct where he or she wants the vehicle towed, or in the instance of an accident where the owner or driver isn’t able to direct where he or she wants to have the car towed because, for example, they’ve been injured and taken to a hospital.
For the purpose of SB 407, we’re only talking about “non-consent” tows and storage. Tows conducted under the direction of the owner, driver of his or her agent are not regulated.
In addition, we’re not even talking about the towing of the vehicle itself. What’s at issue here is where the car is towed, not who tows it, as well as who directs where the car is towed to – the owner, driver or his or her agent…or law enforcement.
Ya with me so far?
The Motivation:
Bobby Ellis is a tow truck and storage lot operator who is NOT an approved operator by the Metropolitan Police Department to perform “non-consent” tows. Whether Metro refused to approve him, or he opted not to jump through all the Metro/government hoops and regulations to hook up a wrecked car and tow it is immaterial.
The fact is, Ellis/SNAP is a long-time professional towing and storage operation which has provided towing services for the City of Henderson, though not Clark County, for many years. He is, in other words, no fly-by-night operator.
Indeed, what this *seems* to come down to is that over the years Ellis has developed an excellent working relationship with a number of automobile insurance companies which, if they had their druthers, would druther deal with Ellis than the two major towing operators approved by Metro.
Maybe yes; maybe no.
The thing is, we’ll never know as long as the government controls and regulates who gets to store vehicles in “non-consent tows.” Which was the overall objective of the original version of SB407 – opening up the storage lot business so that insurance companies, rather than government law enforcement agencies, determined where to tow cars that had been in a “non-consent” accident or theft recovery.
Was Ellis, through this bill, attempting to get a piece of the business currently enjoyed by the near-duopoly of Ewing Bros. and Quality? In the immortal words of Sarah Palin: You betcha.
Is that motivation relevant? Nope.
When a businessman, or any other citizen, believes they’re getting screwed by the government, it is their right to petition their government for redress. SB407 is Mr. Ellis’ petition for redress.
Version #1: Over-Reach:
From what I gather, Ellis retained Perkins to help him change the law to allow him to compete for the non-consent storage lot business. I believe the actual language of the original bill was drafted by the Legislative Counsel Bureau (LCB) staff under the direction of Mr. Perkins, but I could be wrong on that.
In any event, the original bill draft language not only would have opened up the storage lot business to operators other than those awarded a special contract by the government, but was written in such a way that Ellis would have been pretty much the only storage lot operator that would have met the criteria to qualify as an approved storage facility - though even he would have had to make some changes to his own operation to come into compliance.
The original bill required that the storage lot had to be at least 10 acres in size with a six-foot concrete wall surrounding it, be completely separated from other business operations, etc.
Conveniently, Ellis’ existing facility met almost all of the criteria, but no other existing storage lots in Clark County did. So in essence, as critics rightfully pointed out, the change would have simply shifted one government-regulated monopoly to a non-government-regulated monopoly.
That said, if the storage lot business was, in fact, deregulated, there’s no reason in the world not to believe that other operators would enter the market and similarly compete with Ellis’ operation. If the demand for storage lots was opened, the supply would naturally increase.
Amendment:
Nevertheless, the problem of automobile owners getting hosed on occasion by government-approved and regulated storage lots is a legitimate issue and deserved to be addressed. So the Senate Transportation Committee amended SB407. But from a free-market standpoint, the amended version was even worse than the original version.
As amended and passed, SB407 only required the government regulatory board, the Nevada Transportation Authority, “to conduct a review of all tariffs and schedules (fees) filed for certain activities by operators of tow cars,” submit a report of their review to the Legislature and “adopt regulations” establishing a government-mandated schedule of fees for storage lots.
The bill as amended seemed innocuous enough. It only called for a review and report on recommendations for further government regulation and price-controls in an effort to keep citizens from getting hosed by government-regulated towing operations. Who could argue with that, right?
Well, free-marketers, that’s who.
While Ellis may have over-reached in his original language, the amended version of the bill did nothing more than expand the government’s control over storage lot decisions rather than expand that control to the private insurance companies who would be forced to pay the government-mandated and controlled fees.
Nevertheless, the Senate approved the amended bill 21-0 on April 26, 2011.
SB407 should be opposed by any free-market conservative in the Assembly if it comes to them as approved in the Senate.
At best, it *might* provide a little relief for citizens who have been - to borrow a phrase from former Sen. John Ensign - “jacked up” on storage lot fees. But what it really does is simply increase government regulation and price control rather than increase free-market competition.
Version #2: Better:
With the original bill gutted and filleted in the Senate, Perkins shifted his attention to salvaging it in the Assembly. It was around this time that SB407 hit my radar screen. As such, I reached out to Perkins to make an inquiry.
He, in turn, sent me an amended version of his original bill which removed the more offending aspects of the original which would have given Ellis a distinct advantage, if not an assured monopoly, along with his testimony on the bill that he presented to the Senate.
Upon reviewing his testimony, the original bill, the bill as passed by the Senate, and the new version which was being prepared for introduction to the Assembly, I wrote a column on the bill on May 16, 2011.
And that’s when the heavy-duty lobbying began.
The Opposition:
I first received a “Fact Sheet on SB 407” from Mr. Scherer which was provided to the Senate Transportation Committee along with Mr. Perkins’ testimony. After reviewing the Fact Sheet, I have to say it was not compelling.
Without getting too far into the weeds, it was primarily an anti-Ellis screed calling into question his motivations and potential benefits rather than an objective look at the public policy questions being raised.
But more importantly, a number of the significant objections raised in the Fact Sheet had been addressed and resolved in the amended version being prepared for the Assembly. So while helpful in understanding some of the initial objections to the bill, some of the “facts” where, frankly, dated and no longer facts.
That was followed up by a series of phone calls and emails from Mr. Enos. In those communications, it was clear that his organization’s primary objections to the new version of the bill centered on two items, Sections 4.a and 4.b.
Section 4.a stipulated that “A vehicle storage lot must be physically separated and not commingled with other business activities.” Section 4.b stiplulated that “A vehicle storage lot must comply with the requirements imposed pursuant to NRS 706.4485 on an operator of a tow car…”
Understandably, the in-artfully crafted language of 4.a could be construed to mean that towing operators, such as Quality and Ewing Bros., had to physically separate their towing operation from their storage yard operation. This was a legitimate concern and objection.
As for 4.b, I still don’t know exactly what the MTA’s objection to it was, but as it turns out, it doesn’t matter.
Three Time’s the Charm:
On Thursday, May 19, 2011, Perkins submitted Version #3 of SB 407 which completely removed – not edited, REMOVED – both Section 4.a and Section 4.b.
So at least as far as the NMTA is concerned, problem solved.
Unless their stated concerns weren’t their real concerns and all they really want to do is screw Bobby Ellis (or Richard Perkins) so that some of their members can continue to enjoy the present near-monopoly on accident and stolen vehicle tows.
So what we have left, in essence and at its core, is a bill that amends Chapter 706 the existing Nevada Revised Statute (NRS) as follows:
“An insurance company may designate a vehicle storage lot to which all inoperable vehicles or stolen vehicles that have been recovered which are insured by the company must be towed by a tow car which responds to the scene of an accident or theft recovery pursuant to a summons by a law enforcement agency. Such a designation must be provided in writing by the insurance company or the operator of the vehicle storage lot to all:
(a) Law enforcement agencies; and
(b) Tow companies that have obtained certificates of public convenience and necessity, located in the county in which the vehicle storage lot is situated.
In other words, the private insurance company that insures the vehicle and may be on the hook (so to speak) for paying the storage fees, gets to determine, in advance, to which storage lot the vehicle is towed rather than the government.
However, the amendment also specifically states that the vehicle owner or an agent of the private insurance company, may direct the tow to an alternate location.
Further, the amendment does not (a) create anything close to what could be considered a deregulated monopoly on storage yards for SNAP, nor does it (b) prohibit Quality or Ewing Bros. from competing to get contracts with the private insurance companies.
So what we have left are, frankly, trivial, nit-picking arguments against the bill that can be boiled down to arguing what “is” is.
Indeed, the closest to a legitimate argument that I’ve had made to me since the new language was submitted is that the bill would continue to regulate the storage yards of Quality and Ewing Bros. but not SNAP.
To back up that argument, an attorney for the regulated towing companies referred me to NAC 706.406, which sets fees for the “Storage of a vehicle that was towed without the prior consent of the owner of the vehicle, his agent or the driver of the vehicle, or at the request of a law enforcement agency.”
The problem with this argument is that if the new version of SB407 is approved, storage of a vehicle at Quality or Ewing Bros. would NOT be regulated pursuant to this administrative code if the agent of the owner, meaning the insurance company, designated that the insured vehicle be towed to the storage lot of Quality or Ewing Bros.
Under that circumstance, the storage fees would not be subjected to government price controls, but would be established under a private contract between the private insurance company and the private storage lot.
Open competition. Free market. Deregulation.
Closing Arguments:
So the bottom line is that state legislators in the Assembly now have a choice between expanding government regulation and price-controls of storage yards by approving the version of SB407 that was passed by the Senate….
Or it can approve the new version of the bill as is being introduced in the Assembly which has removed pretty much all of the legitimate objections and concerns and opens the storage lot business to free market competition where the private insurance companies, not the government, get to decide which storage yard they want to do business with.
That Metro, which has had a protected relationship with Quality and Ewing Bros. for decades, would prefer the devil they know than the devil they may get should not factor into this debate.
This bill has NOTHING to do with Metro getting wrecked cars quickly and efficiently off the street. This bill is NOT about who tows the vehicle, but where the vehicle is towed to. And that decision should be made, whenever possible, by the folks who will have to pay the storage fees – meaning the vehicle owner and/or the owner’s insurance company.
Where the car stays should be determined by the one who pays.
Unless opponents of SB407 can come up with a more compelling argument against Version #3 of the bill – which has stripped out all of the legitimate, stated objections to the original proposal – other than we don’t like Bobby Ellis and are afraid to compete with him in the open market….
I strongly urge members of the Assembly to approve SB407 with the Version #3 amendment proposed by Mr. Perkins and send it back over to the Senate for reconsideration.
Chuck Muth
President
Citizen Outreach
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