regulations implementing the longshore and harbor workers

November 12, 2010 Michael Niss Director, Division of Longshore and Harbor Workers’ Compensation Office of Workers’ Compensation Programs U.S. Department of Labor Room C-4315 200 Constitution Ave., NW Washington, DC 20210 Via E-Mail & Regulations.gov Re: Regulations Implementing the Longshore and Harbor Workers’ Compensation Act:

Recreational Vessels - RIN 1240-AA02

Dear Mr. Niss: The National Marine Manufacturers Association (NMMA) appreciates this opportunity to comment on the Department of Labor’s notice of proposed rulemaking and request for comments entitled: Regulations Implementing the Longshore and Harbor Workers’ Compensation Act: Recreational Vessels, 75 Fed. Reg. 50,718 (Aug. 17, 2010). NMMA also appreciates that the Department of Labor provided additional time for comment as NMMA requested. NMMA is the leading national recreational marine trade association, with nearly 1,500 members involved in every aspect of the boating industry. NMMA members manufacture over 80 percent of recreational boats, engines, trailers, accessories, and gear used in the United States. Recreational boating contributes significantly to the U.S. economy, generating $30.8 billion in sales and services during 2009. In 2008, there were 5,284 recreational marine manufacturers, employing more than 135,900 people. There were more than 33,000 retail/service boating businesses, employing 217,718 people in 2008. In addition, there were 12.7 million recreational boat registrations in the U.S. in 2008. Most recreational boats, even among those mechanically propelled, are small enough to be trailered – that is less than 26 feet in length.1 The proposed regulation to implement the congressionally mandated change to the recreational vessel exception to Longshore and Harbor Workers’ Compensation Act (LHWCA)2 will have far

1 NMMA, 2009 Statistical Abstract (Table 6.8, over 95 percent of registered mechanically propelled boats are under 26 feet in length).

2 Section 803 of Title IX of the American Recovery and Reinvestment Act of 2009, PL 111-5, 123 Stat. 115, 127 (2009), amended the recreational vessel exclusion contained in 33 U.S.C. 902(3)(f) so that it now excludes “individuals employed to build any recreational vessel

(Continued …)

Mr. Michael Niss U.S. Department of Labor

November 12, 2010 of 12

reaching implications for both the repair and the manufacturing aspects of the recreational marine industry. Because of the adverse effect of the changes to the recreational marine industry during an extremely difficult economic time, NMMA requests that the Department reconsider its proposal and the adverse impact it will have on marine businesses. Specifically, NMMA requests that the Department --

Acknowledge the lower risk profile for recreational boat manufacturing and repair and provide the full exemption mandated by Congress.

Correct its insufficient Regulatory Flexibility Act analysis and analyze the full effect of its rulemaking on all marine businesses including boat manufacturing, boat repair, and marina and boat dealer firms who conduct repairs.

Retain the new language included in the proposed rule that clarifies the method to measure recreational vessels for the purposes of the 65 foot limitation.

Only require a recreational boat manufacturer to determine that it is building boats to the recreational boat regulations and industry standards.

Go back to the drawing board on the recreational vessel definition to focus on the information available to manufacturers and repairers and not on information only known to the owner / operator.

Classify recreational marine employers as LHWCA exempt if the vast majority (at least 80%) of the work performed on the site is exempt.

Drop the expectation that segmenting its workforce is a viable option for employers to control costs associated with this proposal. Segmenting the workplace is an impossible task for a small boat builder or boat repair facility due to the size of these companies and because the production processes would make that extremely cost prohibitive.

I. THE LOW RISK OF PRODUCTION LINE MANUFACTURING IS AKIN TO

GENERAL INDUSTRY NOT SHIPBUILDING

Recreational boat manufacturing is typically performed in land-based factories utilizing production line processes with little to no connection with the traditional marine employment that is the subject of LHWCA. For example, it is common for recreational boat manufacturing facilities to be located in areas that are not over, adjacent or have any connection to navigable waters. Similarly, many boat dealer facilities also have no connection with navigable waters and are adequately covered by State Workmans’ Compensation regimes.

(Continued …) under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel.”



Importantly, the Occupational Safety and Health Administration (OSHA) has also recognized the different risk profile of recreational boat manufacturing by concluding in its general compliance policy that 29 CFR Part 1910 (general industry standards) applies to boat building operations that are located inland, i.e, are not on or adjacent to the navigable waters. OSHA has found that the production processes for production line recreational boats is closely akin to the many processes covered by the general industry standards in Part 1910 and differs significantly from the processes involved in shipbuilding (Part 1915). OSHA determined that “it is its view, based on a review of our compliance experience in boat building standards of 20 CFR Part 1910 more closely address the types of processes and hazards of recreational boat building than do the shipyard standards of 29 CFR Par[t] 1915. Further, Part 1910 standards are equally protective of workers, compared with the requirements of Part 1915 that could be enforced in recreational boat building.”3 OSHA also indicated that for recreational boat building facilities located on or adjacent to navigable waters, OSHA will consider violations of Part 1915 by recreational boat builders using production line type processes to be de minimis, if the employer is in compliance with the pertinent general industry standards in Part 1910, which provide equivalent protection.4

II. BACKGROUND ON THE RECREATIONAL MARINE EXEMPTION FROM LHWCA AND COVERAGE UNDER STATE WORKMANS’ COMPENSATION PROGRAMS

For over 25 years, Congress has exempted the vast majority of the recreational marine industry from the coverage of the Longshore and Harbor Workers’ Compensation program when those workers were already covered under a State’s Workmans’ Compensation program. The reason for this exemption was Congressional recognition that the risks associated with recreational boat production line manufacturing were adequately addressed under state workmans’ compensation regimes. Congress recognized this different risk profile and provided an exemption for the build, dismantling and repair of recreational vessels under 65 feet from LHWCA. Most recently, Congress eliminated the 65 foot limitation for the repair and dismantling of vessels for repair. The 65 foot limitation remains in place for boat building. Unfortunately, the Department of Labor has created uncertainty by the way it has proposed to implement the legislative change to the longstanding exemption for the recreational marine industry. As a result, the Department has imposed new costs on the small businesses that make up the boating industry when they can least afford it and encouraged unnecessary and costly litigation. This result is the opposite of the intent of the original exemption over 25 years ago and the recent

3 See Aug. 3, 2001, Letter from R. Davis Layne, Acting Assistant Secretary for Occupational Safety and Health to John McKnight, Director Environmental and Safety Compliance, NMMA (attached).

4 Under Section 9(a) of the Act, violations that are de minimis carry no penalty, do not require abatement, and do not result in the issuance of citations.



amendment to the exemption (suitably included in the American Recovery and Reinvestment Act of 2009). Quite simply, if the DOL proposal goes into effect without change, jobs will be lost.

It bears repeating that the Departments’ proposal will not result in additional protection for recreational marine employees. It is a longstanding requirement under the LHWCA that no exemption can apply where the employee would be left without workers compensation coverage. III. RECREATIONAL MARINE INDUSTRY IS MADE UP OF SMALL BUSINESSES

AND THE DEPARTMENT OF LABOR DID NOT ADEQUATELY CONSIDER THE IMPACT OF THE RULE ON ALL AFFECTED BUSINESSES

NMMA recently surveyed its members to confirm our understanding about the make up of boat manufacturing businesses. Over 90% of boat manufacturing members reported that they employ less than 500 employees. The Small Business Administration classifies boat manufacturers as small businesses if they employ less than 500 employees (NAICS Code 336612).5 Boat dealers, who also typically performing repair work, are small businesses if their annual receipts are less than $30 million (NAICS 441221 & 441222).6 The Small Business Administration recently updated the boat dealer size standard effective on November 1, 2010. Also affected by this rule would be marinas that also conduct repair work on vessels (NAICS 713930 – a small businesses if it has less than $7 million in annual receipts).7 The Department of Labor only identified NAICS 336612 (recreational boat building) and NAICS 811490 (personal good repair and maintenance) in its cost analysis, and failed to include boat dealers or

5 NAICS Code 336612 covers Boat Building and comprises establishments primarily

engaged in building boats. Boats are defined as watercraft not built in shipyards and typically of the type suitable or intended for personal use. Included in this industry are establishments that manufacture heavy-duty inflatable rubber or inflatable plastic boats (RIBs).

6 NAICS Code 441222 covers Boat Dealers and includes establishments primarily engaged in (1) retailing new and/or used boats or retailing new boats in combination with activities, such as repair services and selling replacement parts and accessories, and/or (2) retailing new and/or used outboard motors, boat trailers, marine supplies, parts, and accessories. NAICS 441221 covers Personal Watercraft Dealers and includes establishments primarily engaged in retailing new and/or used personal watercraft, or retailing these new vehicles in combination with repair services and selling replacement parts and accessories.

7 NAICS Code 713930 covers marinas and includes establishments, commonly known as marinas, engaged in operating docking and/or storage facilities for pleasure craft owners, with or without one or more related activities, such as retailing fuel and marine supplies; and repairing, maintaining, or renting pleasure boats. As a cross reference Boat, pleasure, repair and maintenance services establishments that do not retail new boats are classified in NAICS Code 811490, Other Personal and Household Goods Repair and Maintenance.



marinas that also conduct repair work in its regulatory flexibility analysis. Oddly, the Department of Labor included in its discussion NAICS 336611 which is the code for shipbuilding and is not impacted by this rule at all.8 As a result, the analysis is insufficient since boat dealers and marinas conduct a significant amount of repair work and will be impacted by this regulation. According to the NMMA data, in 2008 there were 5,284 recreational marine manufacturers, employing slightly more than 135,900 people. See, Table 2.11b of the NMMA 2009 Statistical Abstract. In addition, there were more than 33,000 retail/service (repair) boating businesses, employing 217,718 people in 2008. See Table 2.11a of the NMMA 2009 Statistical Abstract.

IV. CLARIFYING THE METHOD OF MEASURING VESSELS WILL HAVE A POSITIVE RESULT

DOL proposes to revise the current regulatory definition of how recreational vessel length is measured by excluding from the measurement certain attached structures. DOL has stated that it is clarifying the regulation so that it incorporates the Coast Guard’s standard for excluding attachments from the length measurements in 33 C.F.R. §183.3. DOL had previously indicated that it intended to rely on the Coast Guard regulations that at the time clearly excluded these attachments from the method used in measuring vessel length. When DOL drafted the current version of §701.502(b)(1) it included the exact language of the Coast Guard regulation with the exception of the last sentence that dealt with the exclusion of attachments. Under the new proposed § 704.502(b)(1), DOL again indicates that it is incorporating the Coast Guard standard, which excluded attachments from the measurement of overall length as seen in 33 C.F.R. §183.3. This proposed bright line rule is a welcome improvement to the regulation that had been the subject of litigation, as DOL indicated, in the case of Powers v. Sea-Ray Boats, 31 BRBS 206, 212 (1998). Unfortunately, while this change is welcome many of the other changes DOL is making to the regulation will not have such a clarifying effect.

V. PROPOSED REGULATION WILL FORCE RECREATIONAL MARINE FIRMS TO ADD COSTLY AND UNNECESSARY LHWCA COVERAGE -- COSTING JOBS

Because the recreational industry is made of small firms it is especially important to have a clear regulation for the recreational marine exemption from LHWCA. These firms do not have the ability to hire attorneys or workers compensation specialists to assist in parsing out confusing regulations and classifying employees. Any ambiguity will force these companies to turn down

8 NAICS Code 336611 is for Ship Building and Repairing and comprises establishments

primarily engaged in operating a shipyard. Shipyards are fixed facilities with drydocks and fabrication equipment capable of building a ship, defined as watercraft typically suitable or intended for other than personal or recreational use. Activities of shipyards include the construction of ships, their repair, conversion and alteration, the production of prefabricated ship and barge sections, and specialized services, such as ship scaling.



important work or face unnecessary LHWCA costs. In addition, uncertainty in the scope of liability for marine businesses will result in a reduction in the number and variety of insurance firms willing to write policies for these businesses leading to increased costs. Importantly, the additional cost associated with buying additional LHWCA coverage will not result in additional protection for employees, but instead will lead to the loss of jobs. Congress expressly sought to exempt these facilities from the LHWCA in order to remove these unnecessary costs. In fact, the costs associated with LHCWA insurance have been estimated by the Department to be 50-100 percent more expensive than that of State worker’s compensation insurance. NMMA notes that a number of businesses have sent comments to DOL describing the devastating impact these unnecessary increased costs will bring to their businesses. Although, DOL appears to be seeking to implement a rule that would impose fewer costs than the current rule, it has in fact created additional costs for industry because it has caused unnecessary confusion and ambiguity. Specifically, DOL has created a lack of clarity in its new definition of recreational vessel and its new walk in / walk out provision. This lack of clarity will directly result in additional costs for recreational marine employers because firms that should have been exempted will erroneously be brought into the realm of LHCWA. The cost of a lack of clarity was even cited by DOL in its Regulatory Flexibility Act analysis. The DOL claim in its Regulatory Flexibility Analysis that the LHCWA changes “merely codifies exiting law and therefore will have no cost effect on the industry” is simply not true. Rather, the proposed rule is making determinations as to the scope of the exemption expressly provided by Congress that will have real world impacts on recreational marine industries. Importantly, these changes lack the necessary bright line and would instead result in significant uncertainty and litigation.

A. The Definition of Recreational Vessel Does Not Provide Clarity but Rather Adds Confusion and is Focused on Owner/Operator Not Manufacturer or Repairer Information

The DOL was required by the recent amendments to the recreational vessel exclusion to change the definition of recreational vessel as it relates to the repair of vessels because there is no longer a foot limitation on the definition for vessel repair. The DOL proposed regulation unnecessarily goes far beyond simply removing the 65 foot definition applicable only to the repair of vessels. Instead, DOL stated that it sought to look to a host of other Coast Guard demarcations among vessel classes to identify what is and is not a recreational vessel. The result is a general definition of recreational vessel and a long list of other vessel classes that do not qualify as recreational vessels (such as large and small passenger vessels and USCG inspected vessels). Some of these classes are unfamiliar to the recreational boating community as typically they do not have to concern themselves with such classifications or terms. The proposed DOL definition decoded is as follows:



A recreational vessel means a vessel – (1) being manufactured or operated primarily for pleasure; or (2) Leased, rented, or chartered to another for the latter’s pleasure. Recreational vessel does not include a –

• “passenger vessel” as defined by 46 U.S.C. 2101(22)9 [inspected 100 gross tons carrying more than 12 passengers for hire];

• “small passenger vessel” as defined by 46 U.S.C. 2101(35)10 [inspected less than 100 gross tons carrying more than 6 passengers for hire];

• “Uninspected passenger vessel” as defined by 46 U.S.C. 2101(42)11 [uninspected 6 & 12 pack rule];

• Vessel routinely engaged in “commercial service” as defined by 46 U.S.C. 2101(5)12; or

• Vessel that routinely carries passengers for hire” as defined by 46 U.S.C. 2101 (21a)13

9 (22) “passenger vessel” means a vessel of at least 100 gross tons as measured under section 14502 of this title, or an alternate tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title-- (A) carrying more than 12 passengers, including at least one passenger for hire; (B) that is chartered and carrying more than 12 passengers; (C) that is a submersible vessel carrying at least one passenger for hire; or (D) that is a ferry carrying a passenger.

10 (35) “small passenger vessel” means a wing-in-ground craft, regardless of tonnage, carrying at least one passenger for hire, and a vessel of less than 100 gross tons as measured under section 14502 of this title, or an alternate tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title-- (A) carrying more than 6 passengers, including at least one passenger for hire; (B) that is chartered with the crew provided or specified by the owner or the owner's representative and carrying more than 6 passengers; (C) that is chartered with no crew provided or specified by the owner or the owner's representative and carrying more than 12 passengers; (D) that is a submersible vessel carrying at least one passenger for hire; or (E) that is a ferry carrying more than 6 passengers.

11 (42) “uninspected passenger vessel” means an uninspected vessel-- (A) of at least 100 gross tons as measured under section 14502 of this title, or an alternate tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title--

(i) carrying not more than 12 passengers, including at least one passenger for hire; or (ii) that is chartered with the crew provided or specified by the owner or the owner's representative and carrying not more than 12 passengers; and

(B) of less than 100 gross tons as measured under section 14502 of this title, or an alternate tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title--

(i) carrying not more than 6 passengers, including at least one passenger for hire; or (ii) that is chartered with the crew provided or specified by the owner or the owner's representative and carrying not more than 6 passengers. 12 (5) “commercial service” includes any type of trade or business involving the transportation of goods or

individuals, except service performed by a combatant vessel.

13 (21a) “passenger for hire” means a passenger for whom consideration is contributed as a condition of carriage on the vessel, whether directly or indirectly flowing to the owner, charterer, operator, agent, or any other person having an interest in the vessel.



DOL explains that it took guidance from the recently enacted Clean Boating Act that also defined the scope of vessels that are covered by that Act.14 Importantly, however, the Clean Boating Act included in its definition of recreational vessels the 6 and 12 pack uninspected vessels – which are often recreational vessels allowed by the Coast Guard to also be used, depending on their size, to carry a small amount of passengers for hire. Typically, these are fishing guide vessels where an owner may fund his personal use of the vessel by taking recreational fisherman out for guided fishing cruises. It is important to understand that the Clean Boating Act is directed at owners of vessels and exempts them from needing Clean Water Act permits to operate their boats. The focus in the Clean Boating Act is on the vessel discharges and the expectation that the boats are of a recreational design and operated by primarily recreational skippers. Such an approach is logical given that the regulation is imposed on the actual owner / operator of the vessel. This approach however cannot track where the regulation is imposed on the builder or the repairer of a vessel. A recreational vessel manufacturer is generally without any knowledge of what use the ultimate retail purchaser will make of the vessel. All a manufacturer can do is build to the recreational boat building regulations and standards and market their vessels through traditional recreational retail sales channels. For this reason, the additional “clarification” would require a manufacturer to track the ultimate retailer purchaser’s use of a vessel in order to determine if the LHWCA applies. This is simply not possible. Recreational boats are typically sold through a dealer network and can be sold and resold numerous times during their useful lives. For these reasons, the recreational boat manufacturer should only be required to determine that it is building boats to the recreational boat regulations and industry standards.15 In addition, the LHWCA rules should track the risk associated with this type of vessel construction – not the multiple lines of owner / operator use defined by the Coast Guard. NMMA strongly urges DOL to amend the proposal to establish a separate definition of recreational boat that recognizes the place in the marketing chain that boat manufacturing holds -- the building of a product for a specific market prior to the first retail sale. Such a definition would be similar to the current regulation. NMMA recommends that DOL look to the

14 On July 22, 2008, both houses of Congress passed S. 2766, the Clean Boating Act of 2008. 154 Cong.

Rec. H6749-52, S6981-83 (daily ed. July 22, 2008); Pub. L. No. 110-288; 122 Stat. 2650 (July, 29, 2008). The Clean Boating Act provides that no permit shall be required under the Clean Water Act by EPA or a state for any discharge incidental to the normal operation of a recreational vessel. See Clean Boating Act of 2008, § 2. Under the Clean Boating Act, a “recreational vessel” is any vessel “manufactured or used primarily for pleasure” or that is “leased, rented, or chartered to a person for the pleasure of that person.” Id., § 3. Excluded from the term is any vessel that is a U.S, Coast Guard “inspected vessel” and either “is engaged in commercial use” or “carries paying passengers.” Id.

15 One example of evidence of such standards would include the NMMA Certification of a boat builder’s models. NMMA certifies that a boat meets both the relevant U.S. Coast Guard regulations for recreational vessels and more extensive industry standards.



40 CFR § 63.5779 definition of recreational boat for guidance on how to craft a recreational boat definition for manufacturers --

“… a recreational boat is a vessel which by design and construction is intended by the manufacturer to be operated primarily for pleasure, or to be leased, rented or chartered to another for the latter’s pleasure (rather than for commercial or military purposes); and whose major structural components are fabricated and assembled in an indoor, production-line manufacturing plant or similar land-side operation and not in a dry dock, graving dock, or marine railway on the navigable waters of the United States.”16

This definition was published by the U.S. Environmental Protection Agency in 2001 for the National Emission Standards for Hazardous Pollutants for Boat Manufacturing. The recreational boat manufacturing industry is familiar with this regulation. NMMA urges DOL to include in the final rule the following definition for recreational boats to be applicable to boat manufacturing and boat repairing in a boat manufacturing facility (e.g., performing warranty repairs).

What is a recreational vessel? A recreational vessel for a boat manufacturing facility building new vessels or conducting boat repair work (e.g. performing warranty repairs) means a vessel which by design and construction is intended by the manufacturer to be operated primarily for pleasure, or to be leased, rented or chartered to another for the latter’s pleasure (rather than for commercial or military purposes).

The use of this definition addresses the intent of a manufacturer to build a boat for the recreational market and avoids the unintended consequence of requiring a boat manufacturer to reach into the marketing chain to ascertain the use of a vessel by the ultimate retail purchaser. Similarly, NMMA also urges that the above definition also be applied to boat dealers and repair shops that are performing repair and or warranty work on these same boats, many of which are in land-based facilities.

B. Recreational Marine Employers Should be Classified as LHWCA Exempt if the Vast Majority of the Work Performed at the Site is Exempt

The Congressional intent behind the recreational marine exemption from LHWCA was to exempt classes of employers from the Act’s coverage when the affected employees would

16 40 CFR § 63.5779 (definition of “Aluminum Recreational Boat” that included a sub-definition of

“Recreational Boat”). Part 63—National Emission Standards for Hazardous Air Pollutants for Source Categories.



otherwise be covered by state workmans’ compensation programs. The DOL proposal creates uncertainty by stripping the exemption in the case where an employee’s non-exempt work is more than “infrequent, episodic, or too minimal to be a regular part of his or her overall employment.” Importantly, the DOL proposed regulation would allow a worker to fall into the LHWCA even if they were hurt while working on an exempt recreational vessel if they had otherwise during the course of their employment worked on non-exempt vessels. DOL recognized that its proposal would require a trier of fact to determine what coverage would apply. As a result, employers are left without a clear understanding of when LHWCA coverage is necessary. This would also appear to impose LHWCA coverage on an employee that would be imposed for the full term of an employee’s employment at that firm. DOL has not established a bright line rule, but rather one that invites litigation and confusion. NMMA supports clarifying language that allows employees and employers to know, without litigation, when LHWCA coverage is triggered. To put this in real world terms, consider a small aluminum boat manufacturer. Its boats are small trailerable boats built in a land locked factory using production line-based processes. During the recent Gulf Oil Spill, recreational boat sales were essentially frozen as large areas were closed to boating and fishing. However, there was a great need for wildlife and law enforcement response vessels. Some recreational boat manufacturers, such as this small aluminum boat manufacturer, were requested to make boats to be provided to state agencies and contractors to use to install oil containment booms and to recover wildlife. The work to fulfill this order would have been its employees’ regular work during the time it took to fill it. The order kept its employees from being laid off. The boats built are the same the recreational vessels this plant usually builds. In addition, overall for the year this order would not make up more than 80 percent of their total annual production volume. In this instance, the small boat manufacturer knows the source of this order. But in other cases, there would be no way to know that a boat it produced for the recreational boat market was then sold by a boat dealer to a government agency. In both of these situations, the work performed by the employee would not change, the risk would not change, and the coverage under state workman’s compensation would also be intact. However, under the DOL proposal this small aluminum boat manufacturer would have to add expensive LHWCA coverage in order to take this order. To be clear, typically a recreational boat manufacturer is not seeking out commercial work. Rather, state agencies and law enforcement will seek out recreational vessels for their use. In some cases, it is because there is a desire to be a camouflaged vessel – that is for a police boat to appear to be a standard recreational vessel for law enforcement purposes. It clearly was not the intent of Congress to provide a disincentive to manufacturers to be willing to provide such vessels to law enforcement. If the DOL proposal goes into place, it would put the boat manufacturer in an position of attempting to ascertain the ultimate use of vessels at the point of a retail purchase -- an impossible task -- and needing to decide whether to turn down requests for government vessels. For these reasons, NMMA strongly urges DOL to replace the standard proposed in Section 701.303 with one that ensures the LHWCA exemption would apply to all employees at a



facility so long at least 80% of the work performed at that facility in a calendar year is done on qualifying recreational vessels. Importantly, such an objective test would be based on the actual work performed in a year and not on a complicated fact based inquiry on the possibility of the repurposing of a vessel after retail sale. An 80% test would allow recreational marine employers to decide whether to accept government contracts, and if so, to make arrangements to ensure that those employees would be appropriately covered. Such an objective assessment would also make it possible for both employees and employers to quickly determine the proper forum to receive compensation for any injury. Understanding the importance of ensuring that the marine workforce is adequately protected, the Department of Labor should establish this 80% test in accordance with the circumstance already laid out by EPA in 40 CFR §63.5779 -- that is only for a boat manufacturing facility building new vessels or conducting boat repair work (e.g. performing warranty repairs) “whose major structural components are fabricated and assembled in an indoor, production-line manufacturing plant or similar land-side operation and not in a dry dock, graving dock, or marine railway on the navigable waters of the United States.” This 80% test should also apply to a recreational boat repair facility such as a recreational boat dealership. Such a threshold would allow for boat manufacturers and boat dealers to sell recreational boats to state and local departments of natural resources and police forces. This would ensure that these vessels would continue to be available for these important uses. This approach also recognizes the lower risk profile for such production line process built boats. In addition, it properly balances the Congressional intent of protecting maritime workers against the heightened risks of a maritime employment and the lack of state workman’s compensation on navigable waters, while also exempting recreational boat manufacturing and repair work in recognition of its different risk profile.

C. Common Work Force Cannot Be Segmented as Suggested by DOL

The Department proffered that businesses that perform work on both exempt recreational (as defined in the proposed rule) and non-exempt vessels can reduce their insurance-cost burden by segmenting their workplace into exempt and non-exempt vessel operations, further minimizing any cost implications of the proposed rule. See 75 Fed. Reg. 50,728. However, segmenting the workplace is an impossible task for a small boat builder or boat repair facility. It is impossible first due to the size of these companies and because the production processes would make that extremely cost prohibitive. For example, an employee could make a component that would then be stockpiled so that it could be used over the course of a manufacturing period. There would be no way to know at the time that a particular component was manufactured what boat it would be installed on. In addition, the vast majority of the affected firms are comprised of small businesses and this makes it especially difficult to segment the workforce. A small dealership conducting repairs would also not have enough work available to segment its workforce. Thus, the approach suggested by the Department of Labor is clearly unworkable and would only serve to add additional costs.



The uncertainly created by the DOL proposed rule means that the rule will impact much more than firms who build or repair vessels that are 65 feet or larger (currently there are 3,176 registered vessels over 65 feet). To a certain extent, the Department recognized this dilemma and noted that it was not able to determine which marine industry establishments performed repair work on recreational vessels and that it is likely that some of the building and repair businesses engaged in both “commercial and recreational work.” The Department noted that “to the extent the employer uses a common work force for both tasks, the statute would require the employer to obtain LHWCA insurance by virtue of the commercial work.” DOL expressly sought comment on this issue. See 75 Fed. Reg. at 50,727. NMMA has provided significant comment on how to address this issue above. NMMA also notes that this question turns on how DOL defines recreational boat. NMMA urges the DOL to consider the lower risk inherent in recreational boat building and repair, the intent of Congress to provide an LHWCA exemption to this industry, the size of most of the businesses involved, the need to establish a clear bright line rule of when LHWCA coverage applies, and the benefit to the public to provide law enforcement with appropriate vessels. This can be done first by adopting the definition proposed in these comments and by classifying recreational marine employers as LHWCA exempt if the vast majority of the work performed on the site is exempt (at least 80%).

***

NMMA appreciates the Department of Labor’s consideration of these comments and stands ready to assist the Department should it have any questions. Please contact me at 202-737-9766 or [email protected] for any additional information. Sincerely,

Cindy L. Squires, Esq. Chief Counsel for Public Affairs and Director of Regulatory Affairs

Enclosure: Aug. 3, 2001, Letter from R. Davis Layne, Acting Assistant Secretary for

Occupational Safety and Health to John McKnight, Director Environmental and Safety Compliance, NMMA

CC: Winslow Sargeant, Ph.D.

Chief Counsel, Small Business Administration Office of Advocacy 409 Third Street, S.W., 7th Floor Washington, D.C. 20416

regulations implementing the longshore and harbor workers

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