Anti-indemnification efforts heat up for trucking companies
Dec 1, 2011 12:00 PM, By Rick Weber
NEIL Voorhees, director of safety services and security for Trimac Transportation, applauded the American Trucking Associations' anti-indemnity efforts and said carriers need to “push back.”
Voorhees said it's not fair that shippers increasingly are presenting carriers with contracts that make the carrier liable to indemnify the shipper for any damages, even if the damage was caused by the shipper's own acts. Voorhees discussed the indemnification issue during the 2011 Intermodal Bulk Liquid Symposium that was organized by the Intermodal Tank Container Association and was held October 20 in Kemah, Texas.
“I think it's very important that we all push back on this one,” he said. “We're still going to take responsibility for all we did (as a carrier), but we shouldn't be responsible — and our insurance companies will not allow us to say we're responsible — for what shippers and consignees do.
“It's been a very difficult process. I'm very proud of everything the ATA has done. There are a lot of carriers in this room that have been heavily involved in financing these actions. It's very, very expensive to get to the point where we are now, but we still have a ways to go. We're close, but we're not there yet.”
The ATA drafted model language that could be enacted by state legislatures. It would make liability-shifting provisions in motor carrier transportation contracts void and unenforceable as against state public policy. As of April 22, 30 states had adopted these laws, most of them closely following the ATA model language.
“The specific goal of our task force is to eliminate these unfair practices,” he said. “Because of these contractual provisions, there are potential adverse effects on transportation safety as well as a growing frequency with which such provisions are being forced on motor carriers by shippers and others. The task force has three parts: The first describes what kind of contractual language the statute is dealing with and provides the remedy that such language is to be unenforceable; the second defines the limiting term to which the provisions apply; and the third defines how the prohibited language would benefit our organization.
“The provisions as a whole mean that the state could not enforce a provision or contract that would require one party of a transportation contract, whether that party is a motor carrier or another entity, to assume liability for the acts of another party to the contract. The model language includes no exceptions to the rules. The wording is set up to effectively prohibit contract clauses that serve to shift liability away from the motor carrier that is a party to a transportation contract as well as those that would shift liability to a motor carrier. Many of the existing state provisions are very similar to the model language, but some lack one or more of these elements. Many of the state provisions do not follow the order of the provisions in the model language, but such changes in the order of the clauses should make no difference in the effectiveness of the law.”
He said 27 of the 30 states' existing anti-indemnification provisions are similar to the task force model, along with statutes in Kansas and Louisiana that include some “significant” additional features.
“Most of the states have one or more exceptions to the general prohibition against indemnity,” he said. “Four state statutes — California, Oklahoma, Pennsylvania, and Texas — are different enough to warrant separate analysis. Twenty-five of the 26 state provisions that correspond closely to the task force model include language to describe the motor carriers' transportation contract to which the indemnification prohibition applies. Iowa specifically adds the phrase, ‘whether expressed or implied’ in defining the contract, and Wisconsin has ‘written, oral, expressed, or implied.’ This may serve to expand the definition in some circumstances.
“Oregon, on the other hand, limits its contract to written contracts only. Washington specifically adds contracts that involve moving equipment or trailers and contracts for monitoring loading or unloading of freight. Oregon and Utah specify that a covered incidental service must be for hire. The other laws make no such specifications.”
Voorhees commented on two other issues:
- Possible changes to Hours of Service.
“The biggest thing is the 34-hour restart. You can use it, but you must include two periods between midnight and 6 am. That would be very difficult, to take 34 hours off between midnight and 6 am. It could be done, but it's going to be tough.
“Here's how this is going to affect trucking: capacity, parking, safe havens, capacity, change to EOBRs, and last but not least, capacity. This isn't just going to impact the trucking industry. It's going to impact shippers, consignees, and every US citizen. The cost of everything we buy is going to go up if they make this change. Plus, we are not going to have the drivers to haul it, or the safe havens to park equipment.
“Is anyone getting involved? Go onto the FMCSA site and write your congressman.”
- CSA 2010.
“I think they really have the right tool here. My concern is that we're not consistent in the enforcement of roadside inspection violations. Any enforcement agency can look at a tractor-trailer and see different problems. Now, any roadside inspection violation you get has a huge impact under CSA. They're using this for more enforcement, for more interaction, to identify the drivers and trucking companies that are getting more of these violations, so they can actually help us. The government's here to help us improve our safety performance. I think this time, they really mean it. My only concern is the consistency of enforcement and how they're comparing trucking companies to trucking companies. They have to work some kinks out before they use this and our shippers and consignees make their decision on whom they're going to use.”
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