South Dakota bill would void indemnity clauses

By Keith Goble, Land Line state legislative editor | 1/26/2012

Intended to level the playing field for truckers doing business in South Dakota, a bill halfway through the statehouse would protect truck drivers in the state from an unfair clause in motor carrier contracts.

The House voted unanimously on Wednesday, Jan. 25, to advance a bill to the Senate that would do away with certain indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

About 30 states have acted to outlaw the provisions in contracts. In the past year alone Arizona, Oregon, Utah and Wisconsin have adopted the protection for truckers.

Supporters say that indemnification clauses require freight carriers to take on liability for the negligence of shippers. As a result, truckers are responsible for trailer packing, even though shippers actually do the packing.

House Speaker Pro Tem Brian Gosch, R-Rapid City, recently described the effort to lawmakers as “a fairness issue in the trucking industry.”

His bill would outlaw provisions in motor carrier contracts that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

Affected contracts are defined as “a contract or agreement” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload or transport property, including the storage of property.

The protection would not apply to intermodal chassis, containers, or other intermodal equipment.

OOIDA Director of Regulatory Affairs Joe Rajkovacz said this type of rule is good for all truck drivers coping with unreasonable demands from those who contract for transportation.

“This is a real example of how the ‘playing field’ is leveled,” Rajkovacz said.

The bill – HB1073 – is awaiting assignment to committee in the Senate.

To view other legislative activities of interest for South Dakota, click here.

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