March 21, 2007

SB 346 by Senator Duncan
Passed Senate Committee

On Monday the Senate State Affairs Committee took public testimony on SB 346 by Senator Duncan. This is the bill that proposes to prohibit broad and intermediate form indemnities, prohibit additional insured endorsements inconsistent with that, and prohibit waivers of subrogation on workers comp. policies.

The committee, which is chaired by Senator Duncan, heard Joe Nixon express the position of AGCTBB that this bill solves only part of the problem. In order to truly address the use of indemnity provisions in construction contracts the industry needs the legislature to define “employee” and “employer” in a manner that protects all parties in the direct chain of contract from lawsuits by an injured party who is covered by workers’ compensation insurance. The committee also heard Paul Workman, AGCTBB Vice President, express his personal dissatisfaction with the bill which would leave him to pay attorney fees to defend what should be a workers compensation claim, even if those fees are ultimately recovered from the subcontractor. Our thanks to both Joe and Paul for representing our industry before this committee.

AGCTBB was the only trade organization to voice concern before the Senate State Affairs Committee. A number of industry groups, including the Civil Justice League, Texas Association of Business, and groups representing the railroads and petrochemical industry, have expressed opposition and plan to oppose the bill in the full Senate or House, but were unwilling to take on Senator Duncan.  In spite of our efforts, SB 346 was voted out of the Senate State Affairs Committee on Monday evening. We expect SB 346 to pass out of the Senate and arrive in the House in a week or two.

Earlier, on March 7, the House Civil Practices Committee held a hearing on HB 1152 by Representative Eiland, the House companion to SB 346. At that hearing numerous groups were present to express their opposition to the bill and it is still being held in that committee. Steve Nelson, AGCTBB legislative co-chair, is working with the House committee, Representative Eiland and other interested groups in discussions about how to make this legislation into something that will benefit the entire industry.

Please note. A considerable portion of this bill is entirely consistent with anti-broad and intermediate indemnity legislation that AGC supported and passed two sessions ago. And, a considerable amount of the concern we have had to this type of legislation in the past is of less concern after recent tort reform amendments. It is still overly broad and needs work, but some aspect of this legislation is likely to pass and will provide needed benefits to general contractors who are asked to furnish broad indemnities.

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