[Federal Register: August 17, 2010 (Volume 75, Number 158)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF LABOR
Office of Workers' Compensation Programs
20 CFR Part 701
Regulations Implementing the Longshore and Harbor Workers'
Compensation Act: Recreational Vessels
AGENCY: Office of Workers' Compensation Programs, Labor.
ACTION: Notice of Proposed Rulemaking; request for comments.
SUMMARY: This document contains proposed regulations implementing
amendments to the Longshore and Harbor Workers' Compensation Act
(LHWCA) by the American Recovery and Reinvestment Act of 2009 (ARRA),
relating to the exclusion of certain recreational-vessel workers from
the LHWCA's definition of ``employee.'' These regulations would clarify
both the definition of ``recreational vessel'' and those circumstances
under which workers are excluded from LHWCA coverage when working on
those vessels. The proposed rules also codify the Department's
longstanding view that employees are covered under the LHWCA so long as
some of their work constitutes ``maritime employment'' within the
meaning of the statute.
DATES: The Department invites written comments on the proposed rule
from interested parties. The Department is particularly interested in
receiving comments regarding the proposed definition of ``recreational
vessel.'' Written comments must be received by October 18, 2010.
ADDRESSES: You may submit written comments, identified by RIN number
1240-AA02, by any of the following methods. To facilitate the receipt
and processing of comment letters, OWCP encourages interested parties
to submit their comments electronically.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions on the Web site for submitting comments.
Facsimile: (202) 693-1380 (this is not a toll-free
number). Only comments of ten or fewer pages (including a FAX cover
sheet and attachments, if any) will be accepted by FAX.
Regular Mail: Submit comments on paper, disk, or CD-ROM to
the Division of Longshore and Harbor Workers' Compensation, Office of
Workers' Compensation Programs, U.S. Department of Labor, Room C-4315,
200 Constitution Avenue, NW., Washington, DC 20210. The Department's
receipt of U.S. mail may be significantly delayed due to security
procedures. You must take this into consideration when preparing to
meet the deadline for submitting comments.
Hand Delivery/Courier: Submit comments on paper, disk, or
CD-ROM to the Division of Longshore and Harbor Workers' Compensation,
Office of Workers' Compensation Programs, U.S. Department of Labor,
Room C-4315, 200 Constitution Avenue, NW., Washington, DC 20210.
Instructions: All submissions received must include the agency name
and the Regulatory Information Number (RIN) for this rulemaking. All
comments received will be posted without change to http://
www.regulations.gov, including any personal information provided.
Docket: To read background documents or comments received, go to
FOR FURTHER INFORMATION CONTACT: 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 Avenue, NW., Washington, DC 20210. Telephone: (202) 693-
0038 (this is not a toll-free number). TTY/TDD callers may dial toll
free 1-800-877-8339 for further information.
I. Background of This Rulemaking
Section 2(3) of the LHWCA defines ``employee'' to mean ``any person
engaged in maritime employment, including any longshoreman or other
person engaged in longshoring operations, and any harbor-worker
including a ship repairman, shipbuilder, and ship-breaker * * *.'' 33
U.S.C. 902(3). The remainder of this provision, initially enacted as
part of the 1984 amendments to the LHWCA, lists eight categories of
workers who are excluded from the definition of ``employee'' and
therefore excluded from LHWCA coverage. 33 U.S.C. 902(3)(A)-(H).
Section 2(3)(F) in particular excluded from coverage ``individuals
build, repair, or dismantle any recreational vessel under sixty-five
feet in length,'' provided that such individuals were ``subject to
coverage under a State workers' compensation law.'' 33 U.S.C.
Section 803 of Title IX of the American Recovery and Reinvestment
Act of 2009, Public Law 111-5, 123 Stat. 115, 127 (2009), amended the
section 2(3)(F) exclusion. That provision now excludes ``individuals
employed to build any recreational vessel 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,'' and retains the State-workers'-compensation-
coverage proviso. 33 U.S.C. 902(3)(F), as amended by Public Law 111-5
section 803, 123 Stat 115, 187 (2009) (emphasis supplied).
Thus, under the original version of section 2(3)(F), all
individuals working on recreational vessels shorter than sixty-five
feet were excluded from the definition of ``employee.'' The amended
exclusion retains this same rule for employees building recreational
vessels. For individuals who repair or dismantle recreational vessels,
however, the amended exclusion provides for different treatment. Now,
workers who repair recreational vessels or dismantle them for repair
are excluded from the definition of ``employee'' regardless of the
vessel's length. With the removal of the sixty-five feet length limit,
the number of vessels that will be considered recreational for LHWCA
purposes will increase; and as vessel numbers increase, the number of
workers who repair or dismantle them for repair will naturally increase
as well. On the other hand, amended section 2(3)(F) no longer excludes
workers who dismantle recreational vessels, except when the dismantling
is in connection with a repair. Thus, some workers previously excluded
may now be considered ``employees'' under section 2(3).
The proposed regulations clarify how amended section 2(3)(F) should
be interpreted and applied in several respects.
II. Summary of the Proposed Rule
A. Effective Date of Amendment and Retroactive Impact (Sec. Sec.
The Department proposes to issue a regulation clarifying the
effective date of the section 2(3)(F) amendment, as well as delineating
which claims or injuries are affected by it. The purpose of this
section is to prevent or alleviate confusion among interested parties,
and to make plain whether a particular claim or injury is excluded from
LHWCA coverage as a result of the amendment.
ARRA contains neither a general effective-date provision nor a
specific effective date for the section 2(3)(F) amendment. Where an act
of Congress does not specify its effective date, the law will take
effect on the date it is enacted into law, i.e., the date it is signed
by the President. See Altizer v. Deeds, 191 F.3d 540, 545 (4th Cir.
1999); 3 Norman J. Singer, Sutherland Statutory Construction section
33:6 (6th ed. 2002). Thus, the section 2(3)(F) amendment became
effective on February 17, 2009, the date the President signed the ARRA.
The Department proposes to codify this date in the regulation.
Injuries and Claims Affected
In addition to no effective date, the section 2(3)(F) amendment
does not specify whether it applies to injuries and claims occurring
prior to the effective date. Retroactive application of statutes is
generally disfavored, especially where private rights are affected. See
Landgraf v. USI Film Products, 511 U.S. 244, 264-73 (1994). Thus,
courts will presume that a statute affecting substantive rights does
not apply retroactively absent clear congressional intent to the
contrary. Landgraf, 511 U.S. at 264, 280; Bowen v. Georgetown Univ.
Hospital, 488 U.S. 204, 208 (1988); cf. Bradley v. School Bd. of
Richmond, 416 U.S. 696, 711 (1974) (with respect to procedural and
collateral issues, a court is generally required ``to apply the law in
effect at the time it renders its decision'').
In Landgraf, the Court stated that, in determining whether a
statute applies retroactively, the focus should be on ``whether it
would impair rights a party possessed when he acted, increase a party's
liability for past conduct, or impose new duties with respect to
transactions already completed.'' 511 U.S. at 280. If the statute does
affect a substantive right, then the presumption against retroactive
application applies. Id. In contrast, the presumption does not apply
where the statute addresses prospective relief (changing the remedies
available to the prevailing party), procedural issues or collateral
matters (e.g., attorney fees). 511 U.S. at 276-79.
The Court subsequently fashioned ``a sequence of analysis'' for
courts to use when applying these principles to a statutory provision.
Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37-38 (2006). First, the
court must determine if Congress expressly prescribed the temporal
application of the statute, or if congressional intent can be gleaned
from the application of the canons of statutory construction. 548 U.S.
at 37. If this does not settle the matter, then the court must
determine if the statute affected ``substantive rights, liabilities or
duties [on the basis of] conduct arising before [its] enactment.'' Id.
(quoting Landgraf, 511 U.S. at 278) (brackets in Fernandez-Vargas). If
a substantive right is affected, then the presumption against
retroactivity precludes application of the statute. 548 U.S. at 37-38.
Applying this sequence of analysis to the section 2(3)(F)
amendment, the Department has concluded that the amendment cannot be
applied to injuries occurring before February 17, 2009. First, Congress
did not expressly address whether the section 2(3)(F) amendment applies
retroactively. Likewise, it is not possible to determine congressional
intent through the application of principles of statutory construction.
The legislative history is silent regarding retroactive application of
the provision and there is no clue in the language of the amendment or
the ARRA generally.
Second, the amendment plainly affects a substantive right. It
effectively removes from LHWCA coverage a class of employees (e.g.,
workers repairing recreational vessels sixty-five feet in length or
greater) who previously had been covered. If applied to injuries
occurring prior to February 17, 2009, the amendment would strip those
employees of a right to recover LHWCA benefits which had vested at the
time of their injuries. In addition, the amendment no longer excludes
from coverage a class of employees (e.g., workers who dismantle
obsolete recreational vessels) who previously had been excluded.
Applying the amendment retroactively to these individuals would alter
the employers' pre-existing duties by making them liable for LHWCA
Thus, for injuries occurring prior to February 17, 2009, the
Department has concluded that the amendment does not apply because
Congress did not explicitly make the amendment retroactive. The
proposed rule provides that the compensability of these injuries
remains governed by section 2(3)(F) as it existed prior to the ARRA
amendment. For injuries occurring on or after February 17, 2009, the
effective date of the amendment, the proposed rules state the obvious:
The compensability of these injuries is governed by the section 2(3)(F)
The Department's proposal is also consistent with Congress'
treatment of previous amendments to the LHWCA's coverage provisions.
The 1972 amendments (expanding coverage to land-based workers who met
the situs and status tests) took effect thirty days after enactment
(i.e., November 26, 1972). Public Law 92-576 Sec. 22, 86 Stat. 1251,
1265 (1972). The courts held that, with respect to coverage, those
amendments did not apply to injuries occurring prior to the effective
date. See, e.g., A/S J. Ludwig Mowinckles Rederi v. Tidewater Constr.
Corp., 559 F.2d 928, 930 n. 1 (4th Cir. 1977). Similarly, Congress
expressly provided that the coverage provisions of the 1984 amendments
(creating certain exclusions from coverage, including section 2(3)(F))
would apply only to injuries occurring after September 28, 1984, the
date of enactment of the amendments. Public Law 98-426 Sec. 28(c), 98
Stat. 1639, 1655 (1984).
Date of Injury
The key date in determining LHWCA coverage generally is the date of
injury. It is the occurrence of an injury arising out of and in the
course of employment that gives rise to a LHWCA claim. Ins. Co. of
North Am. v. U.S. Dep't of Labor, 969 F.2d 1400, 1404 (2d Cir. 1992)
(``An injury causing disability or death triggers the provisions of the
Act.''). As a result, whether an employee is covered under section 2(3)
must be determined as of the date of his injury. See, e.g., Triguero v.
Consolidated Rail Corp., 932 F.2d 95, 99-101 (2d Cir. 1991).
Given the importance of the date of injury, the proposed
regulations contain standards for determining the date of injury for
different types of potentially compensable injuries: Traumatic injury,
occupational illness, hearing loss and death benefits. These
regulations will help clarify when the section 2(3)(F) amendment
Traumatic Injuries. For traumatic injuries, the Department proposes
to codify what is self-evident: The date of injury is the date when the
employee suffers harm. If the injury occurred before February 17, 2009,
a recreational vessel worker may be a covered ``employee'' even if the
worker is in the class that would be excluded by the ARRA amendment
(e.g., a worker who repairs recreational vessels 100 feet in length).
If the injury occurs on or after February 17, 2009, the employee's
eligibility is governed by the section 2(3)(F) amendment.
Occupational Disease. The date of injury is not as obvious in the
occupational disease (or infection) context. Because they may surface
only after a long latency period, courts confronted with this question
in various LHWCA contexts have consistently held that the date of
injury is the date the disease, its work-related nature, and a
resulting disability (i.e., a loss of wage-earning capacity) all become
manifest to the employee. See, e.g., Ins. Co. of North Am., 969 F.2d at
1404-05; SAIF Corp./Oregon Ship v. Johnson, 908 F.2d 1434, 1438-40 (9th
Cir. 1990). These decisions are consistent with the effective-date
provisions Congress adopted for the 1984 LHWCA amendments, which
created the section 2(3)(F) exclusion. Congress provided that where the
date of injury determines the applicability of the amendments, the date
of injury for an occupational disease would be the date of
manifestation. Public Law 98-426 Sec. 28(g), 98 Stat. 1639, 1655
(1984). That provision states:
[I]n the case of an occupational disease which does not
immediately result in a disability or death, an injury shall be
deemed to arise on the date on which the employee or claimant
becomes aware, or in the exercise of reasonable diligence or by
reason of medical advice should have been aware, of the disease[.]
Id. See also 33 U.S.C. 910(i) (linking time of injury to manifestation
in occupational disease cases for purposes of computing compensation);
33 U.S.C. 912 (employee suffering occupational disease must give notice
of injury within one year of manifestation); 33 U.S.C. 913 (employee
suffering occupational disease must file claim for compensation within
two years of manifestation).
The proposed rules codify the position adopted by Congress and the
courts for purposes of the section 2(3)(F) amendment. Under the
proposal, the date of injury for an occupational illness will be the
date that all three of the following facts are manifest to the
employee: (1) The employee suffers a disease; (2) the disease is
related to his employment with the responsible employer; and (3) the
employee is suffering from a disability related to the disease. If the
condition became manifest prior to February 17, 2009, then the employee
remains eligible for coverage under the LHWCA, even if the employee is
in the class affected by the ARRA amendment. If, however, the condition
became manifest on or after February 17, 2009, the employee's
eligibility is governed by the section 2(3)(F) amendment, even if the
last exposure to injurious stimuli was prior to that date.
Hearing Loss. Determining the date of injury in the hearing loss
context poses special challenges that warrant specific regulatory
guidance. Unlike a long-latency disease such as asbestosis--a classic
occupational disease--an employee who is exposed to excessive noise and
suffers a hearing loss has an immediate injury and disability. See
generally Bath Iron Works Corp. v. Director, OWCP, 506 U.S. 153, 162-63
(1993). Yet determining the precise date of injury may still be
difficult. The proposed regulation resolves this issue by using the
date the employee receives an audiogram that documents an employment-
related hearing loss. This regulation echoes the statutory and
regulatory standards for triggering the time for filing a notice of
injury or claim for compensation for hearing loss. 33 U.S.C
908(c)(13)(D); 20 CFR 702.212(a)(3), 702.221(b).
Death-Benefit Claims. The LHWCA provides benefits to survivors of
employees who died as the result of a work-related injury. 33 U.S.C.
909. The courts have long recognized that a death-benefits claim ``is a
distinct right governed by the law in effect when death occurs.'' State
Ins. Fund v. Pesce, 548 F.2d 1112, 1114 (2d Cir. 1977) (citing Hampton
Roads Stevedoring Corp. v. O'Hearne, 184 F.2d 76, 79 (4th Cir. 1950));
see also Ins. Co. of No. America v. U.S. Dep't of Labor, 969 F.2d 1400,
1405-06 (2d Cir. 1992). In effect, these cases establish that the date
of death is the date of injury for determining whether a death-benefit
claim is covered by the LHWCA. The Department proposes to codify this
rule in the regulation. Under the Department's proposal, where an
employee is in the class affected by the amendment to section 2(3)(F),
the employee's survivors remain eligible to receive death benefits if
the employee died prior to February 17, 2009. If the employee died on
or after February 17, however, the survivors cannot obtain benefits.
Finally, the Department has already learned of some confusion among
claimants, employers, and insurers with respect to prior awards to
employees who would be excluded from coverage had their injuries
occurred on or after February 17, 2009. Thus, the proposed rules
clarify that where a compensation order has already been issued with
respect to a pre-February 17, 2009, injury, the amendment to Section
2(3)(F) has no effect on such an order. Employers and insurers must
still comply with all terms of the order, even if the employee would be
excluded from coverage under the LHWCA if the injury occurred on or
after February 17, 2009. This is in keeping with the
Department's view that the amendment has no retroactive effect.
B. What is a recreational vessel? (Sec. 701.501)
The proposed regulation updates and refines the definition of
``recreational vessel.'' The Department's regulations have long defined
``recreational vessel'' as a vessel ``manufactured or operated
primarily for pleasure, or rented, leased or chartered by another for
the latter's pleasure.'' 20 CFR 701.301(a)(12)(iii)(F) (2009). Taken
verbatim from a statute administered by the Coast Guard, see 46 U.S.C.
2101(25), the Department adopted this definition in 1984, at the urging
of many commenters, after the section 2(3)(F) exclusion was first
enacted. 51 FR 4273 (Feb. 3, 1986). As noted above, the original
section 2(3)(F) exclusion limited this general definition by vessel
length, and excluded only those individuals who worked on recreational
vessels under sixty-five feet in length.
The ARRA amendment, however, removed the vessel-length limitation
for workers who either repair recreational vessels or dismantle them
for repair, effectively rendering the current regulatory definition of
``recreational vessel'' as one without any limitation. As a result,
both employers and employees could more frequently encounter
difficulties determining which vessels are recreational. Further, the
Department wishes to ensure that individuals who perform repair work on
vessels that have a significant commercial purpose are not improperly
excluded under amended section 2(3)(F) because the definition of
``recreational vessel'' is overly vague. Thus, the Department believes
that further clarification of the definition is needed, especially with
regard to the potential misclassification of passenger vessels.
To develop a precise definition of ``recreational vessel,'' the
Department believes it is appropriate to look again, as it did in 1984,
to statutes and regulations outside the LHWCA context. This allows for
formulation of a more widely-familiar and workable definition of the
In 1983, Congress passed a comprehensive maritime bill, which
consolidated earlier laws and set forth various categories of vessels
and the types of safety requirements applicable to each category.
Public Law 98-89, 97 Stat. 500 (1983). This bill included the
definition of ``recreational vessel'' that appears in the Department's
current regulation. Id. at Sec. 2101, 97 Stat. at 504, codified at 46
U.S.C. 2101(25). In conjunction with the statutory definition, the
Coast Guard has also promulgated regulations and developed additional
guidance materials to make clear what vessels are recreational for
inspection purposes and what vessels fall into other categories. E.g.,
46 CFR 2.01-7; Navigation and Vessel Inspection Circular No. 7-94
(Sept. 30, 1994). These regulations and guidance take into account
other amendments to the 1983 Act, including the Passenger Vessel Safety
Act of 1993, Title V, Coast Guard Authorization Act of 1993, Public Law
103-206 sections 501-513, 107 Stat. 2419, 2439-43 (1993).
To clarify the statutory definition of ``recreational vessel,''
Coast Guard regulations and guidance set forth precise criteria for
defining a ``recreational vessel.'' Essentially, the Coast Guard deems
the following to be recreational: Any unchartered passenger vessel used
for pleasure and carrying no passengers-for-hire (i.e., paying
passengers); and any chartered passenger vessel used for pleasure with
no crew provided and with fewer than twelve passengers, none of whom is
for-hire. All other passenger-carrying vessels fall into one of the
following three categories: Uninspected passenger vessel; small
passenger vessel; and passenger vessel. 46 CFR 2.01-7; Navigation and
Vessel Inspection Circular No. 7-94 (Sept. 30, 1994). The latter two
categories are subject to inspection by the Coast Guard, and all three
of these non-recreational categories face more stringent safety
standards than those imposed on recreational vessels.
The Coast Guard categories have been found to be a workable model
for defining passenger vessels in other contexts. For example, the
Environmental Protection Agency, in a regulation related to engine
emissions standards for recreational vessels, excluded vessels defined
by the Coast Guard as ``small passenger vessels'' and ``passenger
vessels.'' 40 CFR 94.2. And Congress, in drafting the Clean Boating Act
of 2008, which related to engine discharge standards for recreational
vessels, also incorporated the Coast Guard definition: The 2008 Act
excluded from the ``recreational vessel'' definition any vessel subject
to Coast Guard inspection, provided the vessel was commercial or
carried passengers-for-hire. Public Law 110-288 section 3, 122 Stat.
2650, codified at 33 U.S.C. 1362(25)(B).
The consistent use of the Coast Guard vessel categories across
boating safety and environmental laws suggests broad familiarity with
their parameters within the boating community. Moreover, each of the
various Coast Guard categories is based on specific factors, such as
whether there are passengers-for-hire or hired crew. Thus, these
categories provide a clear, objective basis by which employers and
employees can readily ascertain whether a vessel being repaired is a
``recreational vessel'' for LHWCA coverage purposes. Furthermore,
passenger vessels and small passenger vessels must display certificates
of inspection, and uninspected passenger vessels are subject to certain
safety requirements and must have a licensed operator. These indicia of
non-recreational status will make it easier for employers and employees
to recognize passenger vessels that should not be considered
``recreational vessels'' for purposes of the amended section 2(3)(F)
Finally, the regulation clarifies the Department's intent to create
a ``general reference'' to the Coast Guard statutes, so that subsequent
amendments to those laws, as well as their implementing regulations,
apply. In this way, the regulation is dynamic: changes in the industry
that necessitate changes in the referenced statutes and their
implementing regulations will be reflected in the LHWCA context as
C. What types of recreational-vessel work are excluded from coverage?
The proposed rule sets forth what types of recreational-vessel work
may result in an individual being excluded from the definition
``employee'' under section 2(3)(F). For ease of application, the
proposed rule includes separate standards for individuals whose
injuries occurred before February 17, 2009 and those occurring on or
after that date.
As previously noted, section 2(3) of the LHWCA defines ``employee''
as ``any person engaged in maritime employment * * * including a ship
repairman, shipbuilder, and ship-breaker'' unless excluded by sections
2(3)(A)-(H). 33 U.S.C. 902(3). Prior to the ARRA amendment, section
2(3)(F) excluded all three of these occupations from the definition of
``employee'' when the individuals worked on recreational vessels under
sixty-five feet in length. 33 U.S.C. 902(3)(F) (excluding ``individuals
employed to build, repair, or dismantle any recreational vessel under
sixty-five feet in length''). Proposed Sec. 701.502(a)(1) reflects
this statutory standard.
Amended section 2(3)(F), however, takes a different approach and
treats each of these occupations separately. It specifically excludes
``individuals employed to build any recreational vessel 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.'' Thus, individuals who build recreational vessels (i.e.,
shipbuilders) are excluded only when working on vessels under sixty-
five feet in length. Individuals who repair recreational vessels or
dismantle them for repair (i.e., repairmen) are excluded without regard
to the vessel's size. But individuals who dismantle recreational
vessels outside the repair context (i.e., ship-breakers) are no longer
excluded: Amended section 2(3)(F) is simply silent with regard to
workers who dismantle obsolete recreational vessels.
The express inclusion of ship-breakers in the definition of
``employee'' coupled with amended section 2(3)(F)'s silence regarding
workers who dismantle obsolete recreational vessels leads to the
conclusion that these workers are covered under the LHWCA. The plain
language of the statute dictates this result. Proposed Sec.
701.502(a)(2) sets forth this distinction for injuries governed by the
Proposed Sec. 701.502(b)(1) revises the current regulatory
definition of how recreational-vessel length is measured by excluding
from the measurement certain attached structures. Currently, the
regulations state that ``length means a straight line measurement of
the overall length from the foremost part of the vessel to the aftmost
part of the vessel, measured parallel to the center line. The
measurement shall be from end to end over the deck, excluding sheer.''
20 CFR 701.301(a)(12)(iii)(F). This definition has proven
uncontroversial but incomplete. Specifically, the Benefits Review Board
had to determine whether certain attachments to a boat were to be
counted in measuring length. The Board held that ``the length of a
recreational vessel is measured from the foremost part of the vessel to
the aftmost part, including fixtures attached by the builder, for
purposes of determining whether an employee is a maritime employee
covered by the Act.'' Powers v. Sea-Ray Boats, 31 BRBS 206, 212 (1998).
The Department has determined that the regulation should be
clarified by incorporating the Coast Guard's standard for excluding
attachments from the length measurement. See 33 CFR 183.3. As noted
above in the context of defining recreational vessels generally,
adopting the Coast Guard's approach in this context has the advantage
of wide knowledge and acceptance within the boating community. The
proposed rule supplements the existing vessel-length regulation to
create a bright-line standard for determining what structures are
included in measuring length so that boat builders will face no
uncertainty in determining their statutory obligations.
Proposed Sec. 701.502(b)(2) and (3) clarify what constitutes
``repair'' and ``dismantling'' of a recreational vessel. Section
2(3)(F) (both pre- and post-amendment) excludes from the definition of
``employee'' individuals who ``repair'' recreational vessels. In
general parlance, ``repair'' means to restore or mend. See, e.g., The
New Shorter Oxford English Dictionary (1993) (defining ``repair'' as to
``[r]estore (a structure, machine, etc.) to unimpaired condition by
replacing or fixing worn or damaged parts; mend.''). In most instances,
work performed on an existing vessel that maintains the vessel's
character will be considered a ``repair'' of the vessel. But when the
work is done to transform a recreational vessel into another type of
vessel--one that no longer falls within the regulatory definition of
``recreational vessel''--the work goes beyond restoring or mending and
is properly classified as conversion rather than repair. See, e.g., 46
U.S.C. 2101(14a)(B) (defining ``major conversion'' as including a
conversion that ``changes the type of the vessel''). The proposed
regulation clarifies the Department's view that individuals who are
employed to convert a recreational vessel to a different type of vessel
do not fall into the section 2(3)(F) exclusion. For the same reasons,
the proposed regulation similarly provides that the opposite process--
converting a vessel that does not satisfy the regulatory definition of
``recreational vessel'' to one that does--does not constitute
``repair'' of a recreational vessel under section 2(3)(F).
Adoption of a bright-line rule for conversions will simplify the
coverage inquiry. In both circumstances, the work necessarily includes
some qualifying maritime employment (i.e., the work performed at the
beginning or the end of the conversion process when the vessel is not a
recreational vessel). Adopting a bright-line rule avoids the problems
inherent in determining exactly when in the conversion process the
vessel in fact changes character and either becomes or ceases to be
Finally, proposed Sec. 701.502(c) clarifies that a recreational-
vessel worker may still be an ``employee'' if he or she performs other
duties on recreational vessels that do not result in exclusion under
section 2(3)(F) (e.g., building a ninety-foot long recreational vessel)
or performs other qualifying maritime employment in addition to non-
qualifying recreational-vessel work. This provision recognizes what the
Department proposes to make explicit by regulation: That individuals
who walk in and out of qualifying employment in the course of their
work are covered ``employees.'' See discussion of Sec. 701.303.
D. Walking In and Out of Qualifying Employment (Sec. 701.303)
This proposed regulation codifies the Director's longstanding
position that the LHWCA covers a maritime employee if he or she
regularly performs at least some duties as part of his or her overall
employment that come within the ambit of the statute (i.e.,
``qualifying'' employment). Although the Supreme Court and the courts
of appeals have generally endorsed this principle, the longshore
community would benefit from the codification of a uniform legal
standard for employees whose duties are not exclusively qualifying
``maritime employment.'' In addition, the proposed rule clarifies that
LHWCA coverage does not depend on whether the employee is performing
qualifying maritime work or non-qualifying work at the time of injury.
While the proposed rule will apply to all LHWCA cases, codifying
these principles at this time may alleviate some of the difficulties
employees and employers will face in applying the amended recreational-
vessel exclusion. Prior to the ARRA amendment, anyone building or
repairing vessels sixty-five feet in length or longer would have been
considered an ``employee'' regardless of the nature of the vessel
(recreational or commercial). Now that the length limitation has been
removed for repairing and dismantling for repair, the walking in and
out of coverage problem will likely be exacerbated. Shipyards and
repair facilities that can handle larger recreational vessels are more
likely to be firms that also have the skills and capacity to handle
commercial vessels. The proposed regulation ensures that employee
status is not affected by the fact that the individual performs work on
recreational vessels provided at least some of his or her work
otherwise qualifies as ``maritime employment.''
Congress enacted the LHWCA in 1927 after the United States Supreme
Court held that the States could not extend their workers' compensation
laws to maritime workers injured on the navigable waters of the United
States. Southern Pacific Co. v. Jensen, 244 U.S. 205, 217-18 (1917).
Between 1927 and 1972, the water's edge defined the respective
jurisdictions of the LHWCA and State law: State law covered any
injury occurring on land, while the LHWCA covered any injury occurring
on water. This division of jurisdiction gave rise to the so-called
``walk in/walk out'' problem. A maritime employee ordinarily moved
between ship and shore in the course of his daily employment. Thus, at
any given time, the employee also moved in and out of LHWCA coverage;
while on land, the employee would be subject to the vagaries of the
particular State's workers' compensation law. To remedy this problem,
Congress amended the LHWCA in 1972 to extend its reach landward to
geographic areas where maritime work was performed. Public Law 92-576,
86 Stat. 1251 (1972). Nevertheless, the walk in/walk out problem
remained unresolved to the extent that an employee's land-based duties
still included tasks outside LHWCA coverage. And, significantly, the
employee could sustain a work-related injury while performing either
qualifying maritime work or non-qualifying tasks as part of his overall
The Supreme Court's seminal decision in Northeast Marine Terminal
Co., Inc. v. Caputo, 432 U.S. 249 (1977), provides a framework for
analyzing the walk in/walk out question. The principal issue presented
for judicial review was whether two employees who were injured while
handling cargo at land-based terminals were covered under the LHWCA.
Blundo worked as a ``checker'' marking cargo that was being unloaded
from a dock-side container. Caputo loaded cargo that had already been
discharged from ships onto consignees' trucks. Both employees could
receive assignments on any given day that would require them to work
either on land or aboard ships. The Court held that both employees were
covered by the LHWCA.
The Court first undertook an extensive historical review of the
LHWCA and the problems arising from the strict limitation on pre-1972
LHWCA coverage, which limited coverage to injuries occurring on
navigable waters. 432 U.S. at 256-66. Of special concern was the lack
of uniformity in coverage and benefits inherent in dividing
jurisdiction between the State workers' compensation schemes and the
Federal statute based solely on the situs of the injury. The Court
concluded that the 1972 amendments ``changed what had been essentially
only a `situs' test of eligibility for compensation to one looking to
both the `situs' of the injury and the `status' of the injured.'' Id.
The Court then discussed whether Blundo and Caputo were ``engaged
in maritime employment'' at the time of their injuries so as to satisfy
the LHWCA's new status requirement. Citing the lack of guidance
provided by Congress concerning the scope of the term, the Court
considered a principal legislative motive in expanding LHWCA coverage
shoreward: Modern methods of cargo-handling had shifted much of the
longshore work from the ship's hold to the adjoining land facilities.
Id. at 269-71. The Court held that Blundo was clearly covered because
his job checking unloaded cargo was an integral part of the overall
unloading process ``as altered by the advent of containerization.'' Id.
As for Caputo, accommodating cargo-handling changes was not
relevant to the status inquiry because he ``was injured in the old-
fashioned process of putting goods already unloaded from a ship or
container into a delivery truck.'' Id. at 271-72. Thus, unlike Blundo,
Caputo was injured after the unloading activities had terminated. The
Court found the answer in ``[a]nother dominant theme underlying the
Congress wanted a ``uniform compensation system to apply to
employees who would otherwise be covered by this Act for part of
their activity.'' It wanted a system that did not depend on the
``fortuitous circumstances of whether the injury (to the
longshoreman) occurred on land or over water.'' It therefore
extended the situs to encompass the waterfront areas where the
overall loading and unloading process occurs.
Id. at 272, quoting S. Rep. No. 92-1125, at 13; H.R. Rep. No. 92-1441,
at 10-11, as reprinted in 1972 U.S. Code Cong. & Admin. News, 4698,
4708. In another passage aimed directly at the walk in/walk out
coverage issue, the Court further observed:
The Act focuses primarily on occupations: longshoreman, harbor
worker, ship repairman, shipbuilder, shipbreaker. Both the text and
the history demonstrate a desire to provide continuous coverage
throughout their employment to these amphibious workers who, without
the 1972 Amendments, would be covered only for part of their
activity. It seems clear, therefore, that when Congress said it
wanted to cover ``longshoremen,'' it had in mind persons whose
employment is such that they spend at least some of their time in
indisputably longshoring operations and who, without the 1972
Amendments, would be covered for only part of their activity.
* * * * *
Thus, had Caputo avoided injury and completed loading the
consignee's truck on the day of the accident, he then could have
been assigned to unload a lighter. Since it is clear that he would
have been covered while unloading such a vessel, to exclude him from
the Act's coverage in the morning but include him in the afternoon
would be to revitalize the shifting and fortuitous coverage that
Congress intended to eliminate.
Id. at 273 (emphasis supplied), 274 (citation and footnote omitted).
Accordingly, the Court held that Caputo, too, was covered by the LHWCA.
The basic premise of Caputo is that the 1972 amendments repudiated
the unpredictability inherent in the pre-1972 walk in/walk out LHWCA
coverage by looking to the overall occupational status of the employee.
In two subsequent cases, the Court addressed the walk in/walk out issue
in the context of the particular activities the employees were
performing when they were injured. Significantly, however, the Court
did not deviate from Caputo's bedrock principle that ``maritime
employment'' for LHWCA purposes is a unitary concept: Coverage is
established whether or not the employee was performing a particular
covered activity when injured so long as his overall employment
includes ``some'' qualifying maritime employment.
In P.C. Pfeiffer Co., Inc. v. Ford, 444 U.S. 69 (1979), two
employees were injured while performing land-based tasks handling
cargo. Id. at 71. Contractual agreements restricted both employees to
land-based work; neither employee could be assigned tasks moving cargo
between vessels and shoreside. But because both employees performed
intermediate tasks in the loading process, the Court held that they
were engaged in maritime employment covered by the LHWCA. Id. at 82-83.
Significantly, the Court suggested that its decision did not represent
a departure from Caputo despite its focus on the employees' particular
activities when they were injured:
Congress was especially concerned that some workers might walk
in and walk out of coverage. Our observation that [the employees]
were engaged in maritime employment at the time of their injuries
does not undermine the holding of Northeast Marine Terminal Co. v.
Caputo, 432 U.S. at 273-274 [remaining reporter citations omitted],
that a worker is covered if he spends some of his time in
indisputably longshoring operations and if, without the 1972 Act, he
would be only partially covered.
Id. at 83 n.18.
The Court reiterated its support for Caputo once again in
Chesapeake & Ohio Railway Co. v. Schwalb, 493 U.S. 40 (1989). The Court
held that repairing and maintaining equipment used in the loading or
unloading process is an essential maritime function and, thus,
employees injured doing that work were
covered under the LHWCA. Id. at 47. In so finding, the Court also
remarked: ``Nor are maintenance employees removed from coverage if they
also have duties not integrally connected with the loading or unloading
functions.'' Id. Three Justices joined in a concurring opinion to
emphasize that the lead decision should not be interpreted as a
departure from Caputo:
I do not understand our decision as in any way repudiating the
``amphibious workers'' doctrine this Court articulated in [Caputo,
432 U.S. at 272-74]. We hold today that [the injured employees] are
covered by the LHWCA since they were injured while performing tasks
essential to the process of loading ships. In light of Northeast
Marine Terminal Co., however, it is not essential to our holding
that the employees were injured while actually engaged in these
tasks. They are covered by the LHWCA even if, at the moment of
injury, they had been performing other work that was not essential
to the loading process.
Id. at 49 (Blackmun, Marshall and O'Connor, JJ., concurring). The
concurring opinion reinforced its view by quoting Ford, 444 U.S. at 83
n.18, (quoted supra), in which the Court had disavowed any intention to
undermine Caputo even though the employees there were performing
longshoring duties when they were injured. 493 U.S. at 49-50. The
concurring opinion concluded:
To suggest that a worker like Schwalb, McGlone, or Goode, who
spends part of his time maintaining or repairing loading equipment,
and part of his time on other tasks (even general clean up, or
repair of equipment not used for loading), is covered only if he is
injured while engaged in the former kind of work, would bring the
``walking in and out of coverage'' problem back with a vengeance.
Id. at 50.
Caputo frames the coverage issue in terms of ``persons whose
employment is such that they spend at least some of their time in
indisputably longshoring operations * * *.'' 432 U.S. at 273 (emphasis
supplied). Ford and Schwalb did not depart from this standard even
though the Court focused on the nature of the employees' activities at
the time of injury. And no court of appeals has concluded that the
later Court cases deviate from Caputo's basic premise. See Atlantic
Container Service, Inc. v. Coleman, 904 F.2d 611, 618 n.4 (11th Cir.
1990) (stating that a coverage test based on either the overall nature
of the employee's work or the specific activity performed at the time
of injury is consistent with Schwalb). In the interest of clarity, the
proposed regulation provides that the work being performed at the time
of injury does not alone determine whether LHWCA coverage is available
to the employee.
The remaining issue concerns the meaning of ``some'' time spent in
maritime employment in order to qualify for LHWCA coverage. None of the
three Supreme Court decisions provide any guidance as to the
quantitative or qualitative meaning of ``some'' time. Since Caputo, the
courts of appeals have addressed the issue in a variety of
circumstances. The cases fall into two general categories. In some
cases, the court relied on a specific percentage of the employee's time
spent in qualifying maritime activities to determine coverage. See,
e.g., Coastal Production Services v. Hudson, 555 F.3d 426, 441 (5th
Cir. 2009) (finding coverage for employee who spent 9.7 percent of
employment in maritime work); Maher Terminals, Inc. v. Director, OWCP
[Riggio], 330 F.3d 162, 169-70 (3d Cir. 2003) (finding coverage for
employee who spent 50 percent of employment in maritime work);
Boudloche v. Howard Trucking Co., 632 F.2d 1346, 1347-48 (5th Cir.
1980) (finding coverage for employee who spent 2.5-5 percent of
employment in maritime work); Vicknair v. Avondale Ind., Inc., 51 Fed.
Appx. 929, 2002 WL 31415174 (5th Cir. 2002) (finding coverage for
employee who spent less than one percent of employment in maritime
work). In other cases, the court considered more generally whether the
employee's qualifying maritime work was ``regular'' or ``episodic.''
See, e.g., Peru v. Sharpshooter Spectrum Venture LLC, 493 F.3d 1058,
1066 (9th Cir. 2007) (stating that coverage should apply if employee's
maritime activities were more than de minimis); Lennon v. Waterfront
Transport, 20 F.3d 658, 660-61 (5th Cir. 1994) (coverage is available
if employee's maritime work is ``sufficiently regular so as not to be
considered episodic events''); Alcala v. Director, OWCP, 141 F.3d 942,
945 (9th Cir. 1998) (finding no coverage because employee's covered
work ``was infrequent or episodic and entirely discretionary in
nature''); Levins v. Benefits Review Board, 724 F.2d 4, 9 (1st Cir.
1984) (coverage is available if employee's maritime work is ``a regular
portion of the overall tasks'' assigned or assignable to employee)
(emphasis in original); Schwabenland v. Sanger Boats, 683 F.2d 309, 312
(9th Cir. 1982) (rejecting requirement that maritime employment must
comprise ``substantial'' portion of employee's overall employment). No
court, however, has provided a bright-line rule based on a quantitative
relationship between the employee's qualifying maritime work and his
overall duties that determines the availability of LHWCA coverage.
The proposed regulation follows Caputo's formulation of LHWCA
coverage in requiring that only ``some'' portion of the employee's
overall work be qualifying maritime employment. The proposed rule then
places an outer limit on what constitutes ``some'': The maritime
employment must be more than infrequent or episodic, and must be
considered a regular part of the employee's job. As such, the proposed
regulation is consistent with the general trend of the court cases in
focusing on whether the employee's qualifying maritime work is regular
or irregular in order to determine whether the employee's overall work
should be covered by the LHWCA. This approach therefore leaves the
determination to the adjudicator in each case to assess the coverage
issue on the facts presented. Finally, the proposed regulation
repudiates any concern (as expressed by the concurring opinion in
Schwalb) that an employee may walk in/walk out of coverage depending on
whether he is injured while performing a qualifying maritime function
or injured while performing other duties.
E. Technical Changes
To accommodate the addition of the proposed rules, the Department
intends to: Re-title Sec. 701.301 and the subheading immediately
preceding it; move the lengthy definition of ``employee'' that
currently appears in Sec. 701.301 into a new Sec. 701.302, and update
the language of the paragraph containing the recreational vessel
exclusion to reflect the amended statute and cross-reference new
Sec. Sec. 701.501-701.505; and add a new Sec. 701.303 for the walking
in and out of qualifying employment regulation.
III. Statutory Authority
Section 39(a) of the LHWCA (33 U.S.C. 939(a)) authorizes the
Secretary of Labor to prescribe rules and regulations necessary for the
administration and enforcement of the Act and its extensions.
IV. Information Collection Requirements (Subject to the Paperwork
Reduction Act) Imposed Under the Proposed Rule
This rulemaking imposes no new collections of information.
V. Executive Order 12866 (Regulatory Planning and Review)
This proposed rule has been drafted and reviewed in accordance with
Executive Order 12866, section 1(b), entitled ``The Principles of
The Department has determined that this proposed rule is not a
``significant regulatory action'' under Executive Order 12866, section
3(f). Accordingly, it does not require an assessment of potential costs
and benefits under section 6(a)(3) of that order.
VI. Small Business Regulatory Enforcement Fairness Act of 1996
As required by Congress under the Small Business Regulatory
Enforcement Fairness Act of 1996, enacted as Title II of Public Law
104-121 sections 201-253, 110 Stat. 847, 857 (1996), the Department
will report promulgation of this proposed rule to both Houses of the
Congress and to the Comptroller General prior to its effective date as
a final rule. The report will state that the Department has concluded
that the rule is not a ``major rule'' as defined under 5 U.S.C. 804(2).
VII. Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531
et seq.) directs agencies to assess the effects of Federal regulatory
actions on State, local, and Tribal governments, and the private
sector, ``other than to the extent that such regulations incorporate
requirements specifically set forth in law.'' For purposes of the
Unfunded Mandates Reform Act, this rule does not include any Federal
mandate that may result in increased expenditures by State, local, and
Tribal governments, or increased expenditures by the private sector of
more than $100,000,000.
VIII. Regulatory Flexibility Act and Executive Order 13272 (Proper
Consideration of Small Entities in Agency Rulemaking)
The Regulatory Flexibility Act of 1980, as amended (5 U.S.C. 601 et
seq.), requires an agency to prepare a regulatory flexibility analysis
when it proposes regulations that will have ``a significant economic
impact on a substantial number of small entities,'' or to certify that
the proposed regulations will have no such impact, and to make the
analysis or certification available for public comment. The Department
believes that the LHWCA itself accounts for most, if not all, of the
costs imposed on the industry and that the proposed rules do not add to
those costs. The primary cost lies in purchasing commercial insurance
or qualifying as a self-insurer to insure workers covered by the LHWCA.
This requirement is imposed by statute. 33 U.S.C. 904, 932. By
expanding the number of recreational vessel workers who will be
excluded from coverage, the section 2(3)(F) amendment will generally
reduce the recreational vessel industry's costs for purchasing workers'
compensation insurance or, in the case of a self-insurer, providing
compensation. Nonetheless, because the recreational-vessel building and
repair industries include many small firms, the Department has
conducted an initial regulatory flexibility analysis. A summary of that
analysis is set forth below. A copy of the complete economic analysis,
which includes references to source materials, is available upon
request directed to the Division of Longshore and Harbor Workers'
Compensation, Office of Workers' Compensation Programs, U.S. Department
of Labor, Room C-4315, 200 Constitution Avenue, NW., Washington, DC
Description of the Reasons That Action by the Agency Is Being
The Department is proposing these rules to implement the ARRA
amendment to section 2(3)(F) of the LHWCA. That amendment, inter alia,
excludes from the definition of ``employee'' workers who repair or
dismantle for repair all recreational vessels, so long as the workers
are subject to coverage under a State's workers' compensation law. This
amendment expanded the existing exclusion, which limited the exclusion
to workers repairing recreational vessels less than sixty-five feet in
Objectives of, and Legal Basis for, the Proposed Rule
The primary goal of the rule is to provide a clear, workable
definition of ``recreational vessel.'' Because the sixty-five-foot
limitation on what constitutes a recreational vessel has been removed,
the amended exclusion presents more opportunities for confusion among
vessel-repair enterprises about whether the boats their workers repair
are ``recreational vessels'' within the meaning of the LHWCA. The
Department has determined that the current regulatory definition of
``recreational vessel'' does not provide adequate guidance to the
industry and its employees, and therefore proposes to adopt a revised
rule that more clearly defines the term.
This definition, in turn, serves several purposes. It gives
entities that build or repair vessels guidance regarding the
classification of vessels their employees are working on so that they
may insure themselves under the appropriate workers' compensation
scheme (i.e., the LHWCA or a State). Similarly, the definition provides
guidance to workers who might otherwise be unsure of their rights under
the LHWCA. Finally, a clear definition reduces the possibility of
litigation over when the section 2(3)(F) exclusion applies.
In addition, the Department anticipates that in the absence of a
size limitation, more questions will be raised regarding coverage for
workers who perform a combination of qualifying work (e.g., building a
seventy-foot recreational vessel) and non-qualifying work (e.g.,
repairing a seventy-foot recreational vessel). The Department thus
wishes to clarify how the LHWCA applies to workers engaged in
qualifying maritime employment whose job duties also include tasks that
do not come within the ambit of the LHWCA. The proposed rule merely
codifies existing law and therefore will have no cost effect on the
The LHWCA empowers the Secretary of Labor ``to make such rules and
regulations * * * as may be necessary'' to administer the statute. 33
U.S.C. 939. In addition, the Department, like any other administrative
agency, possesses the inherent authority to promulgate regulations in
order to fill gaps in the legislation that it is responsible for
administering. Chevron v. Natural Resources Defense Council, 467 U.S.
837, 843-44 (1984). The Secretary has delegated her authority to the
Director, Office of Workers' Compensation Programs. Secretary's Order
10-2009 (Nov. 6, 2009). This proposed rule falls within the Director's
Small Entities to Which the Proposed Rule Will Apply
To estimate the number of small businesses to which the proposed
rule would apply, the Department considered both the numbers and size
of recreational vessels and the nature of those business entities that
build or repair vessels.
In 1988, there were 3,176 registered recreational vessels sixty-
five feet or longer, accounting for less than 0.1 percent of 9.5
million recreational vessels in the United States. At that time,
recreational vessels twenty-six feet and under represented more than 96
percent of all registered boats, with 5.2 million boats under sixteen
feet and 4.0 million boats sixteen to less than twenty-six feet in
length. Therefore, the effect of the 1984 Amendments to the Longshore
Act, which first adopted the section 2(3)(F) exclusion, was to exempt
practically all of the recreational marine industry from Longshore
In the subsequent twenty years, the number of recreational vessels
sixty-five feet or longer increased almost three fold, to 11,514 boats
by 2008. However,
these boats still represent 0.1 percent of all registered recreational
vessels. The industry is still dominated by boats that are less than
twenty-six feet in length. The prevailing trend has been toward boats
sixteen to less than twenty-six feet in length; during the 1988-2008
period, the number of these boats grew 55.8 percent to 6.3 million
vessels, whereas boats under sixteen feet declined 21.7 percent to 4.0
million. Together, these two categories account for 94.6 percent of the
10.9 million total registered recreational vessels.
In line with national statistics, there were 817 recreational
vessels registered in Florida that were sixty-five feet or longer in
2008, which accounted for less than 0.1 percent of the almost 1 million
statewide recreational vessels.
The small share of recreational vessels greater than sixty-five
feet in length suggests that the boat repair industry's work is
predominantly focused on smaller boats. However, the registered vessel
records from the U.S. Coast Guard do not include foreign flagged
vessels, which may be serviced by domestic boat repair establishments
while sailing within U.S. waters. Therefore, the number and frequency
of domestic and foreign owned recreational vessels greater than sixty-
five feet in length that receive service by domestic boat repair
establishments is probably relatively small but difficult to measure
with any precision.
Within the larger vessel category, there were close to 5,000
``super-yachts'' (vessels over eighty feet in length) globally in 2008,
with 43 percent of those vessels between eighty and 100 feet and 36
percent between 100 and 165 feet. There were also 420 worldwide yachts
over 165 feet in length and eighty-eight vessels over 235 feet. While
many of these large boats are registered outside the United States,
their size and ocean-going capability means that they could potentially
enter U.S. waters for service or repair. Slightly less than half of the
catalogue of vessels greater than eighty feet in length were built
before 2000, while 22 percent were built before 1990. From 1990 through
2000, about 130 super-yachts were produced each year. However, since
2000, production has accelerated as the demand for these vessels
continues to grow. From 2000 through 2008, an average of 310 super-
yachts were produced each year, with 510 such yachts being built in
2008 alone. Within this large vessel category, 32 percent were built in
Italy and 21 percent were produced in the United States.
Although recreational vessels greater than sixty-five feet in
length compose a very small minority of total registered boats, the
frequency and nature of their repair is dramatically different than
smaller vessels. Anecdotal information provided by industry sources
indicate that larger boats require more frequent servicing and that
work is of a more specialized nature relative to smaller vessels.
Larger vessels, which are more intricate, require substantially more
maintenance and are more likely to require professional maintenance.
Therefore, the proportion of boat repair establishments servicing
recreational vessels sixty-five feet or larger is assumed to be
substantially greater than the relative number of those vessels. For
instance, the servicing of recreational vessels sixty-five feet or
larger is estimated to comprise between 25 and 35 percent of the total
business of recreational boat repair establishments that are located on
The North American Industry Classification System (NAICS) is the
standard used by Federal statistical agencies in classifying business
establishments for the purpose of collecting, analyzing, and publishing
statistical data related to the U.S. business economy. It is also the
standard used to classify small businesses for the Regulatory
Flexibility Act. See 5 U.S.C. 601(3), 15 U.S.C. 632(a). NAICS was
developed under the auspices of the Office of Management and Budget,
and adopted in 1997 to replace the Standard Industrial Classification
An explicit analysis of the recreational vessel building and repair
industry is problematic because there are no designated NAICS codes
assigned specifically to this industry. Instead, the boat building and
repair industry is currently segmented into two NAICS industries:
(1) NAICS industry 336612 (Boat Building) comprises establishments
primarily engaged in building boats that are suitable or intended for
personal use, but exclude the repair and servicing of those boats. The
key word in this industry definition is ``primarily.'' Firms classified
in this industry earn at least half of their revenue from boat
building. Some of these firms may conduct significant repair service
work (especially major renovations of yachts), but they are classified
as boat builders based on the majority revenue source.
(2) NAICS industry 811490 (Other Personal and Household Goods
Repair and Maintenance) comprise establishments primarily engaged in
repairing and servicing personal or household-type goods. This broad
industry includes, but does not separate, the repair of items such as
garments, watches, jewelry, musical instruments, bicycles and
motorcycles, motorboats, canoes, sailboats, and other recreational
Industry data such as the number of establishments, annual revenue,
and employment that are specific to the recreational vessel industry
are, therefore, not directly available because the boat repair segment
of this industry is combined with other personal and household repair
and maintenance industries. However, prior to the current industry
classification system, the SIC combined the two segments into one
industry: SIC 3732 (Boat Building and Repairing). Therefore, the most
recently available detailed SIC-based data are used to provide
disaggregated estimates based on current NAICS-based data.\1\
\1\ Although separate NAICS data is available for marinas, the
Department did not rely on this data because marina workers are
separately excluded from the ambit of the LHWCA if subject to a
State workers' compensation law. 33 U.S.C. 902(3)(C).
In 1997, there were 2,782 establishments primarily engaged in
building and repairing recreational boats. These establishments
employed 50,876 workers and generated $6.4 billion in shipment
value.\2\ The boat repair segment accounted for 1,739 or 62.5 percent
of the broader industry's establishments, but only 9,454 or 18.6
percent of the employees and $821 million or 12.7 percent of shipments.
\2\ Manufacturers' shipments measure the dollar value of
products sold by manufacturing establishments and are based on net
selling values, f.o.b. (free on board) plant, after discounts and
allowances are excluded.
In 2007, there were 1,102 establishments in NAICS industry 336612
(Recreational Boat Building). These establishments employed 53,466
workers, generated $11.1 billion in shipments, and had a payroll of
$1.9 billion. This implies a 5.3 percent increase in recreational boat
building establishments and a 29.1 percent increase in workers in the
boat building segment since 1997.
As part of the SIC to NAICS conversion, the boat building portion
of SIC 3732 was allocated to the standalone NAICS industry 336612 (Boat
Building), while the boat repair segment of SIC 3732 was allocated
within NAICS industry 81149 (Other Personal and Household Goods Repair
and Maintenance). Within this broad NAICS industry, the boat repair
industry accounted for 18.4 percent of the revenue in 1997, 11.9
percent of the establishments, 14.5 percent of the paid employees, and
17.9 percent of the total annual payroll.
In 2007, there were 9,631 establishments classified under NAICS
industry 81149 (Other Personal and
Household Goods Repair and Maintenance). These establishments employed
33,136 workers, generated $2.8 billion in revenue, and had $882.5
million in annual payroll.\3\ Applying the 1997 SIC-to-NAICS
distribution ratios, an estimated 1,150 of those establishments were
primarily engaged in recreational boat repair in 2007 and employed
4,800 workers. However, this method assumes that the distribution of
establishments within NAICS 81149 was fixed from 1997 through 2007.
Therefore, a 33.9 percent decrease in the number of other personal and
household goods repair and maintenance establishments and a 49.2
percent decrease in employment imply commensurate declines in the boat
repair industry. This seems highly improbable given the increase of
establishments and employment within the boat building industry; the
steady number of overall recreational vessel registrations; the demand
shift toward larger recreational boats; and the changing nature of the
other establishments within NAICS 81149. Therefore, applying the same
industry growth rates experienced by boat building establishments, an
estimated 1,837 establishments were primarily engaged in recreational
boat repair in 2007. These establishments employed 12,203 workers,
generated $1.6 billion in revenue, and had $436 million in annual
payroll.\4\ This seems to be the more credible estimate of the size of
the boat repair industry in 2007.
\3\ See U.S. Census Bureau, 2007 Economic Census.
\4\ This methodology also holds constant the 1997 allocations of
boat building and repair. Furthermore, this method implies that the
boat repair establishment proportion of NIACS 81149 increased from
11.9 percent in 1997 to 19.1 percent in 2007 and that the number of
all other establishments within NAICS 81149 declined by 39 percent,
as the overall sector contracted by 34 percent.
The combined boat building and estimated boat repair industry,
therefore, had approximately 2,900 establishments in 2007 that employed
65,700 workers, generated about $12.8 billion in combined shipments and
revenue, and had a $2.3 billion payroll. The boat building segment
comprised 81 percent of the overall employment and payroll and
generated 87 percent of the output value. However, for every one boat
building firm there were three, more labor-intensive, boat repair
Small establishments dominate both industries, although they are
more heavily weighted within the boat repair industry. In 2007, the
average establishment in the boat building industry employed 48.5
workers, whereas the average boat repair establishment employed 6.6
workers. Confirming this employment dynamic, estimates using data from
the U.S. Census Bureau's County Business Patterns reveal that of the
1,102 establishments engaged in boat building, 651 (59 percent) had 9
employees or fewer and 928 (84 percent) had 49 employees or fewer.
Another 186 establishments (17 percent) employed between 50 and 249
workers, while an additional 19 establishments employed 500 or more
workers. Conversely, approximately 86 percent of boat repair
establishments had 9 employees or fewer and 95 percent employed 19 or
The Small Business Administration (SBA) defines establishment size
standards to determine whether a business entity, including all of its
affiliates, is small and, thus, eligible for Government programs and
preferences reserved for ``small business'' concerns. A size standard
is usually stated in number of employees for manufacturing industries
and average annual receipts for most nonmanufacturing industries.
The SBA size standard for the ship building and repair industry
(NAICS 336611) is 1,000 employees; boat building (NAICS 336612) is 500
employees; and other personal and household goods repair and
maintenance (NAICS 811490) is $7.0 million in annual receipts. In 2007,
the average establishment in the boat building industry generated $10.1
million in shipments, whereas the average boat repair establishment
generated approximately $886,000 in revenues. Therefore, for the
purpose of the proposed regulations, the typical establishment within
the boat repair industry falls within the small business designation.
The Department is not able to determine, however, which of these
small businesses will be affected by the proposed rule due to a lack of
data. The available data does not segregate establishments by work
performed on the specific types of vessels identified as recreational
by the Coast Guard and as adopted in the proposed rules. Moreover, it
is likely that some of these building and repair businesses engage in
both commercial and recreational-vessel work. 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. Accordingly, the Department invites comments on this
Projected Reporting, Recordkeeping and Other Compliance Requirements of
the Proposed Rule, Including an Estimate of the Classes of Small
Entities That Will Be Subject to the Requirement and the Type of
Professional Skills Necessary for Preparation of the Report or Record
The proposed rules do not directly impose any reporting or
recordkeeping requirements on any entities, regardless of size. Nor do
the rules impose other significant costs beyond those imposed by the
LHWCA itself. The statute requires employers whose employees are
covered by the LHWCA to secure the payment of compensation by either
purchasing commercial insurance or qualifying as a Department-approved
self-insurer. 33 U.S.C. 904, 932. The ARRA amendment to section 2(3)(F)
significantly expanded the exclusion for recreational vessel workers,
thereby reducing the number of workers considered employees for LHWCA
coverage purposes. Thus, both small and large businesses that repair
recreational vessels sixty-five feet or greater in length who had
previously been required to purchase LHWCA insurance may be relieved of
that obligation. Instead, these employers generally will only be
required to purchase lower-cost State insurance.
Given that small establishments dominate the recreational-vessel
industry, very few (if any) would attempt to qualify as a self-insurer.
Thus, the Department has focused the cost inquiry on those entities
purchasing commercial insurance. The Department has surveyed the cost
of purchasing LHWCA insurance and compared it to the cost of various
States' workers' compensation insurance. On average, LHWCA insurance is
50-100 percent more expensive than State workers' compensation
insurance. Because the premium for both LHWCA and State workers'
compensation coverage is calculated as a percentage of the employer's
payroll, regardless of payroll size, the cost for both small
establishments and larger employers is the same in relative terms.
To the extent the proposed rule defines certain boats as
``recreational vessels,'' the rule will have an impact on whether a
particular employer must purchase LHWCA insurance. The Department does
not anticipate that the proposed rule will cause many businesses that
would otherwise be exempt from the LHWCA to fall under the statute: the
rule is designed to clarify the definition so that there is no
ambiguity regarding what vessels are recreational, and not to reduce
the number of vessels categorized as
recreational. Moreover, businesses that perform work on both
recreational and non-recreational vessels as defined in the proposed
rule can reduce their insurance-cost burden by segmenting their
workplace into recreational vessel and non-recreational vessel
operations, further minimizing any cost implications of the proposed
Identification of Relevant Federal Rules That May Duplicate, Overlap or
Conflict With the Proposed Rule
The proposed rules adopt the Coast Guard's standards for
delineating recreational as opposed to non-recreational vessels. As set
forth above, the Department has chosen these standards because their
use will eliminate duplicative or overlapping standards, rather than
create them. The Department is unaware of any other rules that may
duplicate, overlap or conflict with the proposed rule.
Description of Any Significant Alternatives to the Proposed Rule That
Accomplish the Stated Objectives of Applicable Statutes and That
Minimize Any Significant Economic Impact of the Proposed Rule on Small
Entities, Including Alternatives Considered, Such as: (1) Establishment
of Differing Compliance or Reporting Requirements or Timetables That
Take Into Account the Resources Available to Small Entities; (2)
Clarification, Consolidation, or Simplification of Compliance and
Reporting Requirements Under the Rule for Such Small Entities; (3) Use
of Performance Rather Than Design Standards; (4) Any Exemption From
Coverage of the Rule, or Any Part Thereof, for Such Small Entities
The Department considered not revising the current broad regulatory
definition of recreational vessel, see 20 CFR 701.301(a)(12)(iii)(F),
but rejected that course. Prior to the ARRA amendment, the sixty-five
foot length limit provided an outer boundary for the definition; any
vessel sixty-five feet or longer was not a recreational vessel for
purposes of the section 2(3)(F) exclusion. Without this boundary, the
Department believes that both small and large businesses will benefit
from a clearer definition of recreational vessel. Boat builders and
repairers will be able to structure their operations with greater
certainty. A refined definition also diminishes the chances of
litigation, resulting in reduced legal costs.
Because the exact number of businesses performing work on each type
of vessel described in the proposed rule is unknown, it is
correspondingly difficult to determine whether adopting some other
definition would impose fewer direct costs on small businesses. The
Department considered using a size measure other than length, such as
tonnage alone. But the ARRA amendment indicates Congress' preference
for defining recreational vessels by the nature of the vessel and its
use rather than by its size. Adopting the Coast Guard classifications
is consistent with this approach.
The exemption for recreational-vessel workers is a creature of
statute. All businesses, small or otherwise, must make determinations
regarding their need to procure LHWCA or State workers' compensation
insurance. The proposed rule attempts to simplify these determinations
by adopting an existing classification scheme well-known to the
Finally, the LHWCA does not allow for imposing differential
requirements on small businesses to lower their costs. The cost of
compensation payments drive the cost of LHWCA insurance, which is
priced by private insurance carriers. Logically, then, lower
compensation payments would lead to lower insurance costs. But the
statute establishes the amount of compensation an injured worker must
be paid, and that amount remains the same for employers of all sizes.
Questions for Comment To Assist Regulatory Flexibility Analysis
The Department invites all interested parties to submit comments
regarding the costs and benefits of the proposed rule with particular
attention to the effect of the rule on small entities described in the
analysis above. The Department is particularly interested in
information regarding: (a) The number of businesses performing work on
the respective vessel categories under the proposed rule and the
proportion of their work devoted to those vessels; (b) the
administrative burden, if any, of determining vessel status under the
proposed rule; and (c) the existence of other categorization schemes
for recreational vessels and whether those alternate schemes are widely
IX. Executive Order 13132 (Federalism)
The Department has reviewed this proposed rule in accordance with
Executive Order 13132 regarding federalism, and has determined that it
does not have ``federalism implications.'' The proposed rule will not
``have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,''
if promulgated as a final rule.
X. Executive Order 12988 (Civil Justice Reform)
This proposed rule meets the applicable standards in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.
XI. Congressional Review Act
This proposed rule is not a ``major rule'' as defined in the
Congressional Review Act (5 U.S.C. 801 et seq.). If promulgated as a
final rule, this rule will not result in an annual effect on the
economy of $100,000,000 or more; a major increase in costs or prices
for consumers, individual industries, Federal, State, or local
government agencies, or geographic regions; or significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and export markets.
List of Subjects in 20 CFR Part 701
Longshore and harbor workers, Organization and functions
(government agencies), Workers' compensation.
For the reasons set forth in the preamble, the Department of Labor
proposes to amend 20 CFR Part 701 as follows:
PART 701--GENERAL; ADMINISTERING AGENCY; DEFINITIONS AND USE OF
1. The authority citation for Part 701 is revised to read as
Authority: 5 U.S.C. 301 and 8171 et seq.; 33 U.S.C. 939; 36 DC
Code 501 et seq.; 42 U.S.C. 1651 et seq.; 43 U.S.C. 1331;
Reorganization Plan No. 6 of 1950, 15 FR 3174, 3 CFR, 1949-1953
Comp., p. 1004, 64 Stat. 1263; Secretary's Order 10-2009; Pub. L.
111-5 Sec. 803, 123 Stat. 115, 187 (2009).
2. Amend Sec. 701.301 as follows:
a. Redesignate paragraph (a)(12) as Sec. 701.302, with its sub-
paragraphs redesignated according to the following table:
New designation in Sec.
Former designation in Sec. 701.301 701.302
(a)(12)(i) introductory text.............. (a) introductory text.
(a)(12)(ii) introductory text............. (b) introductory text.
(a)(12)(iii) introductory text............ (c) introductory text.
b. Redesignate paragraphs (a)(13) through (a)(16) as (a)(12)
through (a)(15); and
c. Revise the undesignated center heading following Sec. 701.203
and immediately preceding Sec. 701.301, and revise the section heading
of Sec. 701.301 to read as follows:
Definitions and Use of Terms
Sec. 701.301 What do certain terms in this subchapter mean?
* * * * *
3. Amend newly designated Sec. 701.302 by adding a section
heading, and by revising paragraph (c)(6) to read as follows:
Sec. 701.302 Who is an employee?
* * * * *
(c) * * *
(6) Individuals employed to build any recreational vessel 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. For purposes of this
paragraph, the special rules set forth at Sec. Sec. 701.501 through
4. Add Sec. 701.303 to read as follows:
Sec. 701.303 Is a worker who engages in both qualifying ``maritime
employment'' and non-qualifying duties in the course of employment an
``employee'' covered by the LHWCA?
(a) An individual is a covered ``employee'' if he or she performs
at least some work in the course of employment that qualifies as
``maritime employment'' and that work is not--
(1) Infrequent, episodic, or too minimal to be a regular part of
his or her overall employment; or
(2) Otherwise excluded from coverage under Sec. 701.302.
(b) The individual's status as a covered ``employee'' does not
depend on whether he or she was engaged in qualifying maritime
employment or non-qualifying work when injured.
5. Add a new undesignated center heading following Sec. 701.401
and add Sec. 701.501 to read as follows:
Special Rules for the Recreational Vessel Exclusion from the Definition
Sec. 701.501 What is a Recreational Vessel?
(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
(b) Recreational vessel does not include a--
(1) ``Passenger vessel'' as defined by 46 U.S.C. 2101(22);
(2) ``Small passenger vessel'' as defined by 46 U.S.C. 2101(35);
(3) ``Uninspected passenger vessel'' as defined by 46 U.S.C.
(4) Vessel routinely engaged in ``commercial service'' as defined
by 46 U.S.C. 2101(5); or
(5) Vessel that routinely carries ``passengers for hire'' as
defined by 46 U.S.C. 2101(21a).
(c) All subsequent amendments to the statutes referenced in
paragraph (b) of this section are incorporated. The statutes referenced
in paragraph (b) and all subsequent amendments thereto apply as
interpreted by regulations in Title 46 of the Code of Federal
6. Add Sec. 701.502 to read as follows:
Sec. 701.502 What types of work may exclude a recreational-vessel
worker from the definition of ``employee''?
(a) An individual who works on recreational vessels may be excluded
from the definition of ``employee'' when:
(1) The individual's date of injury is before February 17, 2009,
the injury is covered under a State workers' compensation law, and the
individual is employed to:
(i) Build any recreational vessel under sixty-five feet in length;
(ii) Repair any recreational vessel under sixty-five feet in
(iii) Dismantle any recreational vessel under sixty-five feet in
(2) The individual's date of injury is on or after February 17,
2009, the injury is covered under a State workers' compensation law,
and the individual is employed to:
(i) Build any recreational vessel under sixty-five feet in length;
(ii) Repair any recreational vessel; or
(iii) Dismantle any recreational vessel to repair it.
(b) In applying paragraph (a) of this section, the following rules
(1) ``Length'' means a straight line measurement of the overall
length from the foremost part of the vessel to the aftmost part of the
vessel, measured parallel to the center line. The measurement must be
from end to end over the deck, excluding sheer. Bow sprits, bumpkins,
rudders, outboard motor brackets, handles, and other similar fittings,
attachments, and extensions are not included in the measurement.
(2) ``Repair'' means any repair of a vessel including
installations, painting and maintenance work. Repair does not include
alterations or conversions that render the vessel a non-recreational
vessel under Sec. 701.501. For example, a worker who installs
equipment on a private yacht to convert it to a passenger-carrying
whale-watching vessel is not employed to ``repair'' a recreational
vessel. Repair also does not include alterations or conversions that
render a non-recreational vessel recreational under Sec. 701.501.
(3) ``Dismantle'' means dismantling any part of a vessel to
complete a repair but does not include dismantling any part of a vessel
to complete alterations or conversions that render the vessel a non-
recreational vessel under Sec. 701.501, or render the vessel
recreational under Sec. 701.501, or to scrap or dispose of the vessel
at the end of the vessel's life.
(c) An individual who performs recreational-vessel work not
excluded under paragraph (a) of this section or who engages in other
qualifying maritime employment in addition to recreational-vessel work
excluded under paragraph (a) of this section will not be excluded from
the definition of ``employee.'' (See Sec. 701.303).
7. Add Sec. 701.503 to read as follows:
Sec. 701.503 Did the American Recovery and Reinvestment Act of 2009
Amend the Recreational Vessel Exclusion?
Yes. The amended exclusion was effective February 17, 2009, the
effective date of the American Recovery and Reinvestment Act of 2009.
8. Add Sec. 701.504 to read as follows:
Sec. 701.504 When does the 2009 amended version of the recreational
vessel exclusion apply?
(a) Date of injury. Whether the amended version applies depends on
the date of the injury for which compensation is claimed. The following
rules apply to determining the date of injury:
(1) Traumatic injury. If the individual claims compensation for a
traumatic injury, the date of injury is the date the employee suffered
harm. For example, if the individual injures an arm or leg in the
course of his or her employment, the date of injury is the date on
which the individual was hurt.
(2) Occupational disease or infection. Occupational illnesses and
are generally caused by exposure to a harmful substance or condition.
If the individual claims compensation for an occupational illness or
infection, the date of injury is the date the illness becomes
``manifest'' to the individual. The injury is ``manifest'' when the
individual learns, or reasonably should have learned, that he or she is
suffering from the illness, that the illness is related to his or her
work with the responsible employer, and that he or she is disabled as a
result of the illness.
(3) Hearing loss. If the individual claims compensation for hearing
loss, the date of injury is the date the individual receives an
audiogram with an accompanying report which indicates the individual
has suffered a loss of hearing that is related to employment.
(4) Death-benefit claims. If the individual claims compensation for
an employee's death, the date of injury is the date of the employee's
death, even if his or her death was the result of an event or incident
that happened on an earlier date.
(b) If the date of injury is before February 17, 2009, the
individual's entitlement is governed by section 2(3)(F) as it existed
prior to the 2009 amendment.
(c) If the date of injury is on or after February 17, 2009, the
employee's eligibility is governed by the 2009 amendment to section
9. Add Sec. 701.505 to read as follows:
Sec. 701.505 May an employer stop paying benefits awarded prior to
the effective date of the recreational vessel exclusion amendment if
the employee would now fall within the exclusion?
No. If an individual was awarded compensation for an injury
occurring before February 17, 2009, the employer must still pay all
benefits awarded, including disability compensation and medical
benefits, even if the employee would be excluded from coverage under
the amended exclusion.
Signed at Washington, DC, this 9th day of August 2010.
Director, Office of Workers' Compensation Programs.
[FR Doc. 2010-20080 Filed 8-16-10; 8:45 am]
BILLING CODE 4510-CF-P