Directional drilling by state
Directional Drilling Insurance in Arizona
What Arizona law actually does to a fiber bore — an anti-indemnity statute that protects you on private work and steps aside entirely on public work, against a dig law that decides causation before it decides penalties.
Most contractors assume a public owner brings more protection, not less. In Arizona the anti-indemnity statute says the opposite in as many words: it applies to contracts between private parties, and it does not apply to agreements to which the state or a political subdivision is a party. On a city or district fiber build the statute is not narrowed, it is absent, and the indemnity clause stands or falls on ordinary contract principles alone.
The dig law is unusual in a different way. Before it reaches penalties it deals with causation, making certain excavator failures a superseding event that severs the causal link to an operator’s bad locate. A.R.S. §32-1159 decides who carries a strike. The strike itself is on the Directional Drilling Insurance pillar and the pollution liability page.
Boring in Arizona? On a public job §32-1159 does not reach your contract at all. Price it accordingly.
Get a Free QuoteProtection that ends where the public sector begins
A.R.S. §32-1159 begins conventionally enough. Subsection (A) makes void, as against the public policy of the state, a covenant, clause or understanding in, collateral to or affecting a construction contract or architect-engineer professional service contract that purports to indemnify, to hold harmless or to defend the promisee from or against liability for loss or damage resulting from the sole negligence of the promisee or the promisee’s agents, employees or indemnitee.
Two details in that sentence repay attention. The duty to defend is named alongside indemnity, so a defense obligation triggered by a mere allegation is inside the rule rather than outside it — a distinction that matters because defense spending starts long before fault is determined. And the trigger is sole negligence, which in practice is rarely met on a utility strike where a locator, a prime’s schedule and a boring crew all contributed something. Read on its own, subsection (A) is a narrow protection.
Subsection (B) adds a specific carve-out that fiber crews meet more often than most trades: notwithstanding subsection (A), a contractor responsible for performing a construction contract may fully indemnify a person for whose account the contract is not being performed and who, as an accommodation, enters into an agreement permitting the contractor to enter on or adjacent to its property to perform the contract for others. That is the adjacent-landowner access agreement, and on a linear route there can be many of them. A full indemnity in such an agreement is expressly permitted.
Then subsection (C) does the work that defines Arizona. This section applies to all contracts entered into between private parties. It does not apply to agreements to which this state or a political subdivision of this state is a party, including intergovernmental agreements and agreements governed by sections 34-226 and 41-2586, nor to agreements entered into by agricultural improvement districts under title 48, chapter 17.
The practical effect is a clean split by counterparty. On a private ISP or developer subcontract, a clause demanding indemnity for the prime’s sole negligence is void, and the defense obligation with it. On a municipal build, a county project, a state agreement or an intergovernmental arrangement, no part of §32-1159 applies, and a broad indemnity — including a broad duty to defend — is enforceable on its own terms. Since public and grant-administered work is a substantial share of current fiber construction, an Arizona contractor operating on the assumption that the statute is a floor beneath every contract is exposed precisely on the projects most likely to have the largest limits demanded.
It is worth naming the contrast explicitly, because the intuition runs the wrong way. In several states a public owner is subject to additional restraint — barred from demanding indemnity or defense beyond the contractor’s own degree of fault. Arizona withdraws the restraint instead. The same contractor moving between a private subcontract in Phoenix and a municipal one in the next jurisdiction crosses between a regime where the clause is void and one where it is fully enforceable, with nothing in the document announcing the change.
A dig law that settles causation first
The underground facilities provisions sit in A.R.S. §40-360.28 and the sections around it. Notice mechanics resemble other states; what Arizona does with liability and causation does not.
Liability runs in both directions. Subsection (B) provides that if a violation of the article results in damage to an underground facility, the violator is liable to all affected underground facilities operators and excavators for all resulting damages proximately caused by the violation, including economic loss. Subsection (C) extends the same to a person who violates the article by failing to give timely notice, failing to respond in the time and manner provided, or failing to locate and mark a facility in the manner provided. An operator that mismarks is therefore exposed to the excavator, not merely defended against by it, and economic loss is expressly within the recoverable category rather than argued about.
Compliance is an immunity, not just a defense. Subsection (E) provides that where a landlord or an excavator complies with the duties set out in the specified sections, the person is not liable for any death or injury to persons or property, or for any economic loss to any person, to the extent the conduct is regulated by the article. That is drafted as a bar on liability within the article’s scope rather than as a factor to be weighed, and like every provision of this shape it is only as strong as the record proving compliance.
And certain failures sever causation entirely. Subsection (D) provides that notwithstanding any other law, a violation of section 40-360.22, subsection D or subsection L, paragraph 3 is a superseding event that breaks the chain of causation for any damages that could result from an underground facilities operator’s failure to accurately locate or mark a facility. This is a materially different mechanism from comparative fault. Comparative fault reduces a recovery in proportion; a superseding event removes the operator’s error from the causal chain altogether, so there is no proportion left to argue over. For a boring contractor the message is narrow and concrete: the conduct described in those provisions is what preserves an operator’s bad locate as a live cause, and failing it forfeits the argument rather than discounting it.
Penalties themselves are comparatively plain. Under subsection (A), and except as provided in §40-360.22(M), a person who violates any provision of the article is subject to a civil penalty not to exceed $5,000, to be imposed by the court in favor of the state, with penalties received deposited in the state general fund. Note the forum: this is a judicial penalty rather than an administrative one, which means it arrives through litigation rather than through a commission proceeding.
Two programs in one state
The contractors who reach us in Arizona are usually mid-project, holding a certificate a prime has refused and an agent who cannot explain why re-issuing it will not help. The split that explains it is public against private. A contractor who learned the indemnity rule on private subcontracts arrives at a municipal build expecting the same protection and finds a prime demanding far more — correctly, because §32-1159(C) has removed the statute from that contract entirely. The certificate is being asked to stand behind an obligation that, on this job, nothing cuts back. No amount of re-issuing changes an obligation; only reading which counterparty is on the signature page explains it.
So an Arizona program is sized to the public case and enjoys the private case as relief.
Pollution liability is the placement neither regime touches. §32-1159 allocates contractual responsibility and §40-360.28 governs facility damage; a drilling fluid release into desert soil or into a wash is outside both, and the general liability form excludes it. Umbrella liability is sized against the public-contract case, where the indemnity and the duty to defend are both fully enforceable and no statutory ceiling exists. Contractors equipment matters because §40-360.28(B) lets you recover economic loss from a violating operator, which makes your own downtime a documented claim rather than an absorbed cost.
What gets asked on an Arizona file: who the counterparty is on each contract in the schedule, since that decides whether a statute exists; whether the program can absorb a duty to defend that is enforceable on public work and void on private; and how the crew documents the conduct §40-360.28(D) keys the causation rule to. Access agreements with adjacent landowners get read separately, because §32-1159(B) permits a full indemnity in them even where the main contract is protected.
An Arizona note for contract review. Licensing here is real and statewide through the Arizona Registrar of Contractors (ROC), but the license does not affect which side of §32-1159(C) a contract sits on. The counterparty does, and that is a fact about the signature page rather than about the work.
A.R.S. §32-1159 stops at the public-sector boundary and §40-360.28 stops at causation. Neither has anything to say about who may hold the work in Arizona or where it is, and for that there is our Arizona fiber contractor insurance page.
Why Fiber Optic Guard Insurance
On an Arizona file the work is specific: separate the schedule by counterparty before anything is priced, because §32-1159 either governs a contract or is absent from it; treat the duty to defend as a distinct exposure since the statute names it and public contracts do not benefit from that; and set the pollution line against a release neither statute addresses. If a contract is with a public body or an improvement district, send that one first — it is the one with no statutory floor beneath it.
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Arizona
Primary sources cited on this page
Frequently asked questions about Arizona directional drilling insurance
Does Arizona’s anti-indemnity statute apply to a fiber boring contract?
On private work, yes. A.R.S. §32-1159(D)(2) defines a construction contract as a written or oral agreement relating to the construction, alteration, repair, maintenance, moving, demolition or excavation or other development or improvement to land. Excavation is named in its own right and the definition closes with an open reference to development or improvement to land, so a bore is inside without any argument about whether conduit is an appurtenance to a building. The harder question in Arizona is not what work the statute covers but which contracts it covers, and that is answered in subsection (C).
What does §32-1159 void?
Under subsection (A), a covenant, clause or understanding in, collateral to or affecting a construction contract or architect-engineer professional service contract that purports to indemnify, to hold harmless or to defend the promisee from or against liability for loss or damage resulting from the sole negligence of the promisee or the promisee’s agents, employees or indemnitee is against the public policy of this state and is void. Two things are worth noting. The duty to defend is expressly inside the void, which matters because defense costs often arrive long before any liability is established. And the trigger is sole negligence, which is a demanding standard — a strike in which a locator, a prime and a bore crew all contributed is not a sole-negligence case, so the clause survives as to it.
Does the statute protect me on a municipal or state fiber project?
No, and this is the provision that most changes how an Arizona program is built. A.R.S. §32-1159(C) states that the section applies to all contracts entered into between private parties, and that it does not apply to agreements to which this state or a political subdivision of this state is a party, including intergovernmental agreements and agreements governed by sections 34-226 and 41-2586, nor to agreements entered into by agricultural improvement districts under title 48, chapter 17. So on a city, county, state or district project the anti-indemnity protection is simply absent, and the indemnity clause in that contract is governed by ordinary contract principles rather than cut back by statute. Because a large share of fiber build is public or grant-administered, this is not a rare edge case in this trade.
How does that compare with other states?
It runs in the opposite direction from the pattern a contractor may have learned elsewhere. Some states add protection on public work — Michigan, for example, bars a public entity from requiring a contractor to defend or assume liability beyond its own degree of fault, which is a cap that exists only on public contracts. Arizona does the reverse: the protection exists only on private contracts and is withdrawn where a public body is a party. A crew that works both sides of that line in the same state should not assume the public job is the safer one from a contractual standpoint. If anything the public job is where the clause needs reading most closely.
If an Arizona operator mismarks a line and I hit it, who pays?
A.R.S. §40-360.28 answers this in a way most states do not, by addressing causation rather than only allocating cost. Subsection (B) provides that if a violation of the article results in damage to an underground facility, the violator is liable to all affected underground facilities operators and excavators for all resulting damages proximately caused by the violation, including economic loss — note that the duty runs to excavators as well as to operators, so an operator’s violation can leave it owing you. Subsection (C) applies the same rule to a person who fails to give timely notice, fails to respond in time and manner, or fails to locate and mark a facility as the article requires. And subsection (E) provides that an excavator complying with the stated duties is not liable for death, injury, property damage or economic loss to the extent the conduct is regulated by the article.
What is the superseding-cause provision in the Arizona dig law?
A.R.S. §40-360.28(D) provides that notwithstanding any other law, a violation of section 40-360.22, subsection D or subsection L, paragraph 3 is a superseding event that breaks the chain of causation for any damages that could result from an underground facilities operator’s failure to accurately locate or mark an underground facility. In plain terms: certain excavator failures do not merely reduce a recovery against the operator, they sever the causal link to the operator’s bad locate altogether. That is a stronger consequence than comparative fault, because it removes the operator’s error from the analysis rather than weighing it. It also means the excavator conduct described in those provisions is worth understanding precisely, since compliance with them is what keeps an operator’s mismark available as a cause at all. Separately, under subsection (A) a person who violates any provision of the article is subject to a civil penalty not to exceed $5,000, imposed by the court in favor of the state, with penalties deposited in the state general fund.
Insure your Arizona bores for the contract with no statute behind it
Send the contract and the bore profile, and say who the owner is. On public work in Arizona the clause is enforceable as written.
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