Regulations Implementing the Longshore and Harbor Workers' Compensation Act: Recreational Vessels, 50718-50730 [2010-20080]

Agencies

• DEPARTMENT OF LABOR
• Office of Workers' Compensation Programs

[Federal Register Volume 75, Number 158 (Tuesday, August 17, 2010)]
[Proposed Rules]
[Pages 50718-50730]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20080]


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DEPARTMENT OF LABOR

Office of Workers' Compensation Programs

20 CFR Part 701

RIN 1240-AA02


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.

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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: https://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 https://www.regulations.gov, including any personal information provided.
    Docket: To read background documents or comments received, go to 
https://www.regulations.gov.

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.

SUPPLEMENTARY 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 
employed to

[[Page 50719]]

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. 
902(3)(F).
    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.  
701.503-701.505)

    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.
Effective Date
    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 
benefits.
    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) 
amendment.

[[Page 50720]]

    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 
applies.
    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.
Prior Awards
    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

[[Page 50721]]

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 
term.
    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) 
exclusion.
    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 
well.

C. What types of recreational-vessel work are excluded from coverage? 
(Sec.  701.502)

    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

[[Page 50722]]

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 
amended exclusion.
    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 
recreational.
    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

[[Page 50723]]

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 
employment.
    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. 
at 264-65.
    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. 
at 271.
    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 
1972 Amendments:''

    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

[[Page 50724]]

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 
Regulation.''

[[Page 50725]]

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 
20210.

Description of the Reasons That Action by the Agency Is Being 
Considered

    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 
length.

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 
industry.
    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 
delegated authority.

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 
insurance.
    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,

[[Page 50726]]

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 
coastal waters.
    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 
(SIC) system.
    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 
boats.
    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