Bill puts reins in truckers' liability

Correction: Shannon Newton, president of the Arkansas Trucking Association, was misquoted in this story about proposed anti-indemnification legislation for trucking companies. The quote should have been: “We’d be able to negotiate insurance rates that would cover things that we actually have responsibility for as opposed to insuring the risks of any place that we might enter.”

Arkansas lawmakers introduced a bill Tuesday to protect trucking companies from being held responsible for accidents that result from the negligence of a shipping company.

At the request of the Arkansas Trucking Association, Senate Bill 755 was introduced by Sen. Jon Woods and Rep. Micah Neal, both Springdale Republicans. Shannon Newton, the association's president, described the bill as the group's No. 1 priority during the current legislative session.

"I think, as an association and this industry, when we look around and see the other states that have been able to pass legislation to prevent this practice, we feel it's important that Arkansas move in the direction of doing the same," Newton said.

Indemnification agreements force a carrier to accept responsibility for any problem that occurs even if it was caused by the shipper. The bill would prohibit contracts obligating a motor carrier to agree to an indemnity clause that holds a shipper harmless for its own negligence.

The bill is characterized as an amendment to Arkansas Code Title 23, Chapter 13, Subchapter 1 and is "immediately necessary because these indemnity provisions are causing hardship to the motor carrier industry and threatening the safety of workers associated with or affected by the motor carrier industry." If passed, the provision would not affect current contracts between carriers and shippers.

Arkansas is one of nine states without anti-indemnification legislation that protects trucking companies, according to the association. Legislation has grown increasingly common in the industry around the country the past few years, softening the grip of shippers that were successful in pressing carriers into contracts that make them liable for all damage.

The reversal began after the American Trucking Associations ramped up its interest in anti-indemnification legislation in 2008, drafting model language that could be enacted by state legislatures. Minnesota, South Dakota and Michigan are among the states that have adopted anti-indemnification legislation over the past few years.

"In my opinion, it doesn't look good for Arkansas to be the only state west of the Mississippi River without this type of legislation," Newton said.

David Parker, senior legal counsel for Nebraska-based Great West Casualty Co., has assisted state trucking associations in their efforts to pass anti-indemnification legislation. Parker previously worked in the trucking industry before joining Great West Casualty, which specializes in insuring trucking companies.

"They're basically saying, 'If you want to do business with me, you have to let me have your insurance policy,'" said Parker, who worked with Newton and the Arkansas Trucking Association. "We would explain that to people. That's why 40-something states have said 'That isn't fair.' And it isn't fair."

The Arkansas Trucking Association contends that an anti-indemnification bill is vital even though larger carriers like Lowell-based J.B. Hunt may be able to negotiate or walk away from contracts that hold the carriers responsible for shippers' negligence. Smaller carriers often do not have that luxury.

Scott Richardson, safety manager at Dedicate Logistics in Crossett, said he couldn't specify how many contracts with indemnification clauses Dedicated Logistics currently has with shipping companies. But he said all trucking companies have dealt with clauses in some form.

"The flat honest answer is, if it's one of your main shippers, you don't have a choice," Richardson said. "You either sign it, or they find somebody else."

Newton said a similar bill was introduced two years ago, but it did not pass. She said the association had other priorities on its legislative agenda that year and simply "ran out of time" in its efforts.

After becoming head of the association in July, Newton said an anti-indemnification bill was one of her primary goals and she emphasized it again in a memo emailed to members last week. In the email, she said the association would contact carriers in the coming weeks with information on how they could "help us communicate the importance of this issue with your elected representatives."

Newton said the legislation would place carriers more in control of their own risk.

"We'd be able to negotiate interest rates that would cover things that we actually have responsibility for as opposed to insuring the risks of any place that we might enter," Newton said. "And in addition to that, I think it's important that we demonstrate it's a fair place to do business. That we're not going to allow large shippers to impose this unfair leverage against a small trucking company."

Business on 03/04/2015

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