Legislature(2009 - 2010)CAPITOL 17
03/11/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB354 | |
| HB366 | |
| HB267 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 354 | TELECONFERENCED | |
| *+ | HB 366 | TELECONFERENCED | |
| *+ | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 366-MOTOR CARRIER INDEMNIFICATION AGREEMENTS
1:53:53 PM
CHAIR P. WILSON announced that the next order of business would
be HOUSE BILL NO. 366, "An Act relating to indemnification
agreements that relate to motor carrier transportation
contracts."
1:54:12 PM
REPRESENTATIVE JOHNSON as prime sponsor of the bill presented HB
366. He provided a brief history of the genesis of HB 366. The
need for this bill came from within the trucking and shipping
industry. He characterized the indemnification contained in HB
366 as similar to indemnification language the legislature
considered last year that applied to government and university
agencies. He related that some large transportation companies
are forcing small transportation companies to take complete
responsibility and liability for transporting goods. This bill
basically says, "You are responsible for yourself and your own
mistakes and you cannot hold someone else responsible for your
mistakes and enter that into a contract."
REPRESENTATIVE JOHNSON paraphrased from the sponsor statement
which read as follows:
The purpose of this legislation is to promote safety
in the carriage of goods by motor carrier.
A motor carrier must generally comply with the Federal
Motor Carrier Safety Regulations while it is
transporting goods, and is also subject to additional
common law or statutory duties or responsibilities.
Likewise, shippers or other parties frequently have
legal duties and responsibilities to fulfill when they
provide goods for transportation. More and more
frequently, however, shippers are pressuring motor
carriers to provide transportation under contracts in
which the motor carrier contractually agrees to
indemnify and hold harmless the shipper for the
shipper's own failure to meet its legal duties and
responsibilities.
The effect of these indemnification clauses is to
eliminate the incentive for the shipper to meet its
responsibilities and duties in a prudent and
reasonable manner. In essence, such a clause makes the
motor carrier the shipper's insurer. Such a shifting
of liability through contract completely contradicts
sound public policy. One of the primary reasons for
assigning legal liability is to persuade the offending
party to regulate its behavior. However, where the
shipper is at fault but is nevertheless indemnified by
the motor carrier, there is nothing the motor carrier
can do to change its own behavior to make things
safer. That ability lies solely with the shipper.
A similar problem with respect to public construction
contracts has already been addressed by the
legislature in AS 45.45.900.
This legislation voids contractual provisions in motor
carrier transportation contracts that indemnify a
shipper for the shipper's own negligent or intentional
acts or omissions which lead to claims. It maintains
the incentive for a shipper that is a party to a motor
carrier transportation contract to perform its legal
obligations and duties in a prudent and reasonably
safe manner. This legislation now includes an
indemnification clause for the shippers and excludes
the parties to the Uniform Intermodal Interchange and
Facilities Access Agreements.
1:55:09 PM
JEANNE OSTNES, Staff, Representative Craig Johnson, Alaska State
Legislature, on behalf of the prime sponsor, Representative
Craig Johnson, stated the shippers agreed to the bill with an
amendment that was handed out in committee today.
1:55:51 PM
REPRESENTATIVE JOHNSON made a motion to adopt Amendment 1,
labeled 26-LS1434\R.2, Bannister, 3/10/10, which read as
follows:
Page 1, line 5:
Delete "by motor carrier"
Page 1, line 7, following "that":
Insert "(1)"
Page 1, line 10, following "person":
Insert "; or
(2) the shipping person will indemnify,
defend, or hold the motor carrier harmless, or agree
to a provision that has the effect of indemnifying,
defending, or holding a motor carrier harmless, from
claims or liability for the negligence, intentional
acts, or intentional omissions of the motor carrier"
Page 2, line 2, following "carrier":
Insert "if the agent, employee, servant, or
independent contractor provides services in connection
with the particular transportation services contract
to which (a) of this section is being applied"
Page 2, line 8, following "person":
Insert "if the agent, employee, servant, or
independent contractor provides services in connection
with the particular transportation services contract
to which (a) is being applied"
Page 2, line 17, following "person":
Insert "or a motor carrier"
Page 2, line 18:
Delete "has the meaning"
Insert "and "motor carrier" have the meanings"
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.
1:56:15 PM
MS. OSTNES characterized Amendment 1 as a "win-win situation"
which represents an agreement between shipping and motor
carriers that will indemnify and hold harmless actions that
happen during transportation. In response to Chair P. Wilson,
she related a scenario in which a person transports china that
was appropriately packed by the shipper and was broken during
transport. The question arises who is the responsible party to
pay the damages and whether it would be the shipper/packer who
may not have improperly packed the item or if the truck rolled
over due to the driver. Since the shipper and trucker is held
harmless under the bill, deciding the responsible party depends
on what actually happened.
1:57:41 PM
CHAIR P. WILSON asked whether the matter would be decided by the
courts. She commented that the person in possession would
likely be held responsible.
MS. OSTNES answered no. She stated that the party who created
the problem is responsible for the damage.
MS. OSTNES restated that Amendment 1 is a "win win" situation
since both parties' actions are evaluated to determine the
responsible party.
1:58:56 PM
AVES THOMPSON, Executive Director, Alaska Trucking Association,
related another scenario for members to illustrate responsible
parties. In his scenario, a motor carrier has agreed to
transport fuel. If the fuel truck pulled in to the loading dock
and the shipper's employee turned the wrong valve and spilled
the fuel, the shipper would be held responsible for any damages.
He pointed out the issue the bill addresses is because some
contracts are being written to indemnify the shipper and require
the carrier to pay for the damages. He described an instance in
which a piece of equipment is shipped, but must be offloaded by
forklift. He related that the carrier pulled into the shipper's
yard and the shipper used his/her employee and forklift to
transfer the equipment and the load broke free and was damaged.
Currently, some contracts are written that the carrier is
responsible if the freight breaks free, regardless of fault.
This bill would place the responsibility on the employee who is
negligent, whether the negligent employee is the motor carrier's
employee or the shipper's employee.
2:00:41 PM
REPRESENTATIVE JOHANSEN related a scenario in which the
warehouseman takes the pallet off the truck and the pallet tips
and breaks the pallet contents. The warehouseman may say the
load was not secure, but the trucker may insist the load was a
secure load. He asked who would make the determination of
fault.
MR. THOMPSON offered his belief that the matter would be
adjudicated and the respective insurance companies would review
the situation. He related that HB 366 would not change the
system of assigning responsibility, acknowledging that often a
mishap is not solely due to the negligence of one party.
However, one party cannot contractually demand the other party
must assume liability for issues that arise outside of his/her
responsibility.
2:02:54 PM
REPRESENTATIVE GRUENBERG referred to page 2, line 12 of HB 366.
He suggested that language could be added to include storage
since a third party could also be involved. Third parties
should not be allowed to escape from negligence if the third
party did not properly pack the item, he stated.
REPRESENTATIVE JOHNSON offered his support for Amendment 1. He
offered his belief that the intent of the bill and Amendment 1
is "to do what is fair." He related instances in which trucking
companies are often required to sign contracts in order to
obtain work. These contracts shift the responsibility for
liability solely to the truckers, which could also result in
increased insurance and shipping costs. The purpose of this
bill is to protect both the transporter and the shipper since
neither should be held liable for damage that he/she did not
cause to happen. The result of Amendment 1 is that when goods
are damaged, the person who caused the damage would be held
liable for the damage.
2:07:25 PM
CHAIR P. WILSON related her understanding that Amendment 1 is
the result of an agreement between the trucking industry and the
shipper.
REPRESENTATIVE JOHNSON answered that the language is an attempt
to share the joint and several liability.
2:07:56 PM
REPRESENTATIVE GRUENBERG removed his objection.
There being no further objection, Amendment 1 was adopted.
2:08:17 PM
REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 2, to
add language on page 2, line 12, after, "the" to add "packing
and storage." Thus, subparagraph (C) would read, "providing a
service, including the packing and storage of property,
incidental to (A) or (B) of this paragraph."
CHAIR P. WILSON objected for the purpose of discussion.
REPRESENTATIVE JOHNSON said he did not think he had a problem
with the intent of Amendment 2, but he asked for clarification
on third parties. He related a scenario in which a person
shipping antlers took the antlers to a packing store, but the
packing store subsequently contracted with yet another company
to pack the antlers.
CHAIR P. WILSON related her understanding that HB 366 relates to
transportation services and not to packaging services.
REPRESENTATIVE GRUENBERG clarified that the process would begin
at the time the goods are loaded until the goods are delivered.
He stated that packing is an integral part of the shipping
process. The purpose of Amendment 2 is to ensure that each
party is only responsible for his/her own negligence, but not
for anyone else's negligence. In this context, "including means
including, but not limited to." He related that if a situation
arose in which an intermediate packer was involved, that the
third party would also be held responsible. He reported that
this responsibility is called comparative negligence and can be
apportioned so each party is held responsible, and may be held
responsible for a portion of the damage. He characterized
Amendment 2 as a "clear and simple amendment" to ensure that
each party is responsible for only his/her own negligence.
2:11:26 PM
MS. OSTNES referred again to page 2, line 12 and to the
placement of the "," after "service." Thus, packing could be
considered part of the service.
REPRESENTATIVE GRUENBERG agreed.
2:12:01 PM
REPRESENTATIVE JOHNSON stated that he did not currently have a
problem with Amendment 2. He asked to work with the maker of
the amendment in the next committee of referral if any
additional issue arises.
REPRESENTATIVE GRUENBERG committed to work with the sponsor if
an issue was discovered.
2:12:37 PM
CHAIR WILSON removed her objection.
There being no further objection, Amendment 2 was adopted.
2:12:57 PM
CHUCK ONSTOTT, General Manager; Midnight Sun Transportation,
President, Alaska Trucking Association, stated that he had not
yet reviewed the amendments being discussed, but the from the
discussions, he thought that is what is needed. He said, "In a
nutshell the legislation is to help protect the small trucking
companies from the larger businesses that are not willing to
take on their responsibilities."
2:14:20 PM
JAMES DOYLE, Owner, Weaver Brothers Trucking, stated that he has
been in business 50 years. He offered his wholehearted support
for the bill. He stated that he personally has been asked to
sign agreements to take on other people's responsibilities. He
must have insurance, but did not believe that he should have to
supply insurance for his company as well as someone else's
company.
2:15:26 PM
MR. DOYLE recalled an instance in which a trucking company
delivered fuel to a gas station. Several days later a customer
came in filled up a small gas can and static electricity caused
a fire, which caused damage to the vehicle and the person. The
trucking company had signed one of the previously mentioned
agreements and was held liable for the damages in the amount of
$1 million. This bill will "make things right" so that each
party takes care of their own liability. He urged the committee
to vote yes.
2:16:48 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 366.
2:17:02 PM
REPRESENTATIVE JOHANSEN recalled the original bill as introduced
and the issues. He asked if the issues had been resolved.
MS. OSTNES stated that HB 366 was initiated at the request of
the motor carriers. She related that within the last several
days the shippers discussed the bill. She surmised that some
large oil companies are interested in the bill and British
Petroleum reviewed the language. In further response to
Representative Johansen, she agreed that the truckers worked
with the shippers and the issues have been resolved in the bill.
2:19:14 PM
REPRESENTATIVE JOHNSON thought the attorneys would not have
problems with the bill since they will always try to protect
their clients.
2:19:51 PM
REPRESENTATIVE T. WILSON moved to report HB 366, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, the CSHB
366(TRA) was reported from the House Transportation Standing
Committee.
2:20:14 PM
The committee took a brief at-ease from 2:20 p.m. to 2:26 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB267 sponsor stmt TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |
| hb 267 backup TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |
| HB366 Backup TRA.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 366 |
| HB366 Sectional TRA.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 366 |
| HB366 Sponsor strmt TRA.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 366 |
| HB354 Sponsor Statement.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 354 |
| HB354 Sponsor Statement TRA.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 354 |
| HB354 Sponsor Statement TRA.pdf |
HTRA 3/11/2010 1:00:00 PM |
HB 354 |