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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-161

======================================================================
 
               RECREATIONAL MARINE EMPLOYMENT ACT OF 2005

                                _______
                                

 June 30, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Boehner, from the Committee on Education and the Workforce, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 940]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 940) to amend the Longshore and Harbor 
Workers' Compensation Act to clarify the exemption for 
recreational vessel support employees, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

   This Act may be cited as the ``Recreational Marine Employment Act of 
2005''.

SEC. 2. CLARIFICATION OF RECREATIONAL VESSEL WORKER EXEMPTION.

  The Longshore and Harbor Workers' Compensation Act (33 U.S.C. 901 et 
seq.) is amended as follows:
          (1) Section 2 (33 U.S.C. 902) is amended--
                  (A) in paragraph (3)--
                          (i) so that subparagraph (C) reads as 
                        follows:
                  ``(C) individuals employed by or at, or engaged in 
                the construction or maintenance of, a recreational 
                marine facility or structure;'' and
                          (ii) so that subparagraph (F) reads as 
                        follows:
                  ``(F) individuals employed primarily to build, 
                repair, test, maintain, accommodate, buy, sell, store, 
                restore, transport by land, or dismantle a recreational 
                vessel;''; and
                  (B) by redesignating paragraph (22) as paragraph (24) 
                and inserting after paragraph (21) the following new 
                paragraphs:
          ``(22) The term `recreational marine facility or structure' 
        means a place used primarily to build, repair, test, maintain, 
        accommodate, buy, sell, store, restore, or dismantle 
        recreational vessels.
          ``(23) The term `recreational vessel' means a vessel 
        manufactured primarily for pleasure use.''.

                                Purpose

    H.R. 940, the ``Recreational Marine Employment Act of 
2005,'' clarifies the status of employees in the recreational 
maritime industry under the Longshore and Harbor Workers' 
Compensation Act (``LHWCA,'' the ``Longshore Act,'' or the 
``Act''). As testimony before the Subcommittee on Workforce 
Protections has made clear, current law is outdated and 
arbitrarily imposes inappropriate and illogical requirements on 
the domestic recreational maritime industry. This in turn puts 
the industry at a competitive disadvantage to foreign 
competition. H.R. 940 is intended to address the failings in 
current law by clarifying the recreational marine exemption to 
reflect the current state of the industry, the appropriate 
extension of federal workers' compensation coverage, and the 
realities of the 21st century global economy. Specifically, the 
bill extends the Act's current law recreational marine 
exemption--which is based on a twenty-year old fixed and 
arbitrary standard--by focusing on the practical and functional 
operations of the recreational marine industry.

                            Committee Action


107th Congress

    On May 22, 2002, Representative Ric Keller (R-FL) 
introduced H.R. 4811, the ``Recreational Marine Employment Act 
of 2002.'' The bill was referred to the Committee on Education 
and the Workforce Subcommittee on Workforce Protections. No 
action was taken on the bill prior to the adjournment of the 
107th Congress.

108th Congress

    On March 18, 2003, Representative Keller introduced H.R. 
1329, the ``Recreational Marine Employment Act of 2003.'' The 
bill was again referred to the Committee on Education and the 
Workforce Subcommittee on Workforce Protections.
    The Subcommittee on Workforce Protections held a hearing on 
H.R. 1329 on July 15, 2004.\1\ At this hearing, the 
Subcommittee heard testimony from Kristina Hebert, Vice 
President of Ward's Marine Electrics, a recreational marine 
company in Fort Lauderdale, Florida, who testified on her own 
behalf and on behalf of the Marine Industries Association of 
South Florida; Larry Nelson, Vice President of Westport 
Shipyard, Inc., a boat building company in Westport, 
Washington; Ian Greenway of St. Petersburg, Florida, owner of 
the commercial marine insurance company LIG Marine Managers; 
and Robert E. McGarrah, Jr., Coordinator for Workers' 
Compensation for the AFL-CIO in Washington, DC.
---------------------------------------------------------------------------
    \1\ See Hearing on H.R. 1329, ``The Recreational Marine Employment 
Act of 2003,'' before the Subcommittee on Workforce Protections, 
Committee on Education and the Workforce, U.S. House of 
Representatives, 108th Congress, Second Session, Serial No. 108-69 
(hereinafter ``Hearing on H.R. 1329'').
---------------------------------------------------------------------------

109th Congress

    On February 17, 2005, Representative Keller introduced H.R. 
940, the ``Recreational Marine Employment Act of 2005,'' with 
15 cosponsors, including two Democrats. H.R. 940 is 
substantively identical to H.R. 1329 as introduced in the 108th 
Congress. In light of the legislative hearing held on H.R. 1329 
in July 2004, no legislative hearings were held on H.R. 940.
    On March 10, 2005, the Subcommittee on Workforce 
Protections favorably reported H.R. 940, without amendment, to 
the Committee on Education and the Workforce by a roll call 
vote of 6 to 5. On April 13, 2005, the Committee on Education 
and the Workforce favorably reported the bill, as amended by an 
amendment in the nature of a substitute offered by Mr. Keller, 
to the House of Representatives by a roll call vote of 27 to 
18.
    The amendment in the nature of a substitute adopted by the 
Committee retained the core provisions contained in H.R. 940 
while addressing several concerns raised at Subcommittee 
markup. Specifically, the substitute amendment: (a) changed the 
term ``principally'' to ``primarily'' within the definitions of 
recreational vessel and recreational marine facility to more 
closely track statutory language defining recreational vessels; 
(b) changed ``principally'' to ``primarily'' in the delineation 
of an employee's duties to comport with statutory and 
regulatory language regarding the determination of an 
employee's principal duties under other laws; (c) eliminated a 
provision within H.R. 940 that would have allowed an employer 
to qualify for an exemption under the Longshore Act if the 
employer was simply ``in compliance'' with state workers' 
compensation laws; and (d) eliminated a provision unrelated to 
the Longshore Act that addressed the ability of non-maritime 
workers to bring tort law claims of ``unseaworthiness.''

                                Summary

    Congress enacted the Longshore Act to provide workers' 
compensation coverage to non-seamen maritime workers working on 
navigable waters who otherwise had no coverage for injuries 
sustained in the course of their employment. The Act was 
intended to be the sole remedy for workers' compensation claims 
for these workers. In 1984, Congress exempted from the 
Longshore Act certain employees in the recreational boating 
industry, specifically those employees who built, repaired or 
dismantled recreational vehicles under 65 feet in length. In 
doing so, Congress reasoned that: (a) employment in the 
recreational marine industry was not comparable to employment 
in the commercial marine industry, and thus such employees were 
not appropriately included within LHWCA; and (b) injuries 
suffered by employees during the course of employment in the 
recreational marine industry would be covered under state 
workers' compensation laws.
    In the twenty years since the 1984 LHWCA amendments, the 
length of recreational vehicles has increased dramatically. 
H.R. 940 is intended to update the current-law definition of 
recreational vessel to reflect these industry changes; rather 
than setting an arbitrary length limitation, H.R. 940 
appropriately defines a recreational vessel with reference to 
the recreational purpose for which it is manufactured. In 
addition, recognizing the fundamentally different nature of the 
work involved and the risk entailed in the broader recreational 
marine industry (as compared to the commercial shipbuilding 
industry), H.R. 940 extends the Longshore Act exemption to 
include those recreational marine employees who construct or 
maintain recreational marine structures (such as residential 
docks). Importantly, however, H.R. 940 does not change current 
law with respect to state workers' compensation--under the 
bill, as under current law, exemption from the Longshore Act is 
available only where a maritime employer's employees are 
subject to coverage under state workers' compensation law.\2\
---------------------------------------------------------------------------
    \2\ The Committee believes that the Minority's analysis of state 
workers' compensation law versus federal benefits under LHWCA compared 
``maximum allowable'' benefits under both regimes--such maximum 
benefits are provided to employees who are paid much more highly than 
those employed in the recreational marine industry. In support of the 
Minority's view, during Committee consideration of this legislation, 
the Minority cited a report prepared by the Congressional Research 
Service (CRS). To date, the Majority has not been provided a copy of 
this report and therefore cannot speak to its merits. The Committee 
restates its view that under H.R. 940, the vast majority of injured 
employees will fare better--and certainly no worse--than current law.
---------------------------------------------------------------------------

                            Committee Views


Background

    In 1917, the U.S. Supreme Court ruled that a state could 
not extend its workers' compensation system to cover 
longshoremen injured over the navigable waters of the United 
States.\3\ Thereafter, Congress enacted the Longshore Act, 
which was intended to resolve the problem of worker coverage 
for employment activity that occurred on inland navigable 
waters and thus fell outside the scope of state workers' 
compensation laws.
---------------------------------------------------------------------------
    \3\ See Southern Pacific Co. v. Jensen, 244 U.S. 205 (1917). 
Subsequent case law has made clear that a state may in fact extend its 
workers' compensation system to include workers injured over navigable 
waters, resulting, at times, in cases where an employer is subject to 
dual coverage requirements (state workers' compensation and the 
Longshore Act).
---------------------------------------------------------------------------
    The Longshore Act applies to workers loading and unloading 
cargo, harbor workers, ship repairmen and ship builders, and 
other longshore occupations. Coverage has also been extended to 
employees of federal contractors on overseas military, air, or 
naval bases; individuals on public works contracts performed 
outside the continental United States; workers employed in non-
appropriated fund instrumentalities, such as post exchanges; 
and employees engaged in operations on the Outer Continental 
Shelf.
    The Longshore Act provides medical benefits, compensation 
for lost wages, and rehabilitation services to those injured 
during the course of employment or to those who contract an 
occupational disease related to their employment. Survivor 
benefits are also provided if a work-related injury causes the 
employee's death. Benefits are paid directly by a self-insured 
employer, an authorized insurance carrier, or in particular 
circumstances, by a Special Fund administered by the Department 
of Labor. The Special Fund is funded by fines and penalties 
levied under the Act; payments by employers for each death case 
where there is no survivor entitled to the benefits; interest 
payments on Fund investments; and by far the largest source, 
payment of annual assessments by self-insured employers and 
insurance carriers.
    The requirement for employers to obtain insurance under the 
Longshore Act varies from situation to situation, and from 
state to state. Generally, if an employer has at least one 
maritime employee working on navigable waters, then that 
employer is required to obtain insurance under the Longshore 
Act. The penalties for failing to insure under the Longshore 
Act include a fine of not more than $10,000, imprisonment, or 
both, and personal liability jointly with the company for any 
compensation or benefits which may accrue under Longshore with 
respect to an injured employee. The program provides over $670 
million in monetary, medical and vocational rehabilitation 
benefits in more than 72,000 cases annually for maritime 
workers and various other special classes of private industry 
employees disabled or killed by employment injuries or 
occupational diseases. The Longshore Act has been amended ten 
times since 1927, with the most significant changes (summarized 
below) occurring in 1972 and 1984.

The 1972 amendments

    In 1972, Congress amended LHWCA to extend federal workers' 
compensation coverage to certain maritime workers who were 
injured on the landward side of the waters' edge (thus not over 
navigable waters). The amendments extended LHWCA coverage to 
certain shore-side maritime workers injured as they went 
between ship and shore. Specifically, the 1972 amendments 
extended the Act to cover injuries occurring to workers on any 
adjoining pier, wharf, dry dock, terminal, marine railway or 
other adjoining area customarily used for loading, unloading, 
repairing or building a vessel.\4\ It also placed limits on 
third-party suits to reduce multiple liability by employers.\5\
---------------------------------------------------------------------------
    \4\ See U.S. House of Representatives Report No. 92-1441, at 10-11 
(1972).
    \5\ Third-party suits are those that an injured worker may file 
against a party other than his or her employer (because of, e.g., an 
unsafe workplace, defective equipment, or other conditions that may 
have caused the injury). Prior to the 1972 amendments, in certain 
instances the third party could then recover its losses by bringing 
suit against the employer.
---------------------------------------------------------------------------

The 1984 amendments

    Subsequent to enactment of the 1972 amendments, questions 
arose as to whether an employee would be covered under state 
workers' compensation or LHWCA if engaged in maritime work on 
the landward side of the waters' edge. Similarly, the 1972 
amendments had not addressed whether employees working on 
``recreational vessels'' were intended to be covered. Courts, 
however, had interpreted the Longshore Act to cover the 
pleasure boat industry, marinas, summer camps, and in some 
cases persons working far from navigable waters.\6\
---------------------------------------------------------------------------
    \6\ See Mississippi Coast Marine, Inc. v. Bosarge, 637 F.2d 994 
(5th Cir. 1981).
---------------------------------------------------------------------------
    In 1984, Congress amended the Act to address these 
uncertainties. The 1984 amendments specifically excluded 
certain categories of workers who were not engaged in maritime 
occupations or who were not exposed to maritime hazards even 
though they may have been employed by maritime employers. 
Specifically, the 1984 amendments excluded from Longshore Act 
coverage: (1) persons performing clerical, data processing, and 
other office work exclusively; (2) individuals employed by a 
club, camp, recreational operation, restaurant, museum or 
retail outlet; (3) those employed by a marina but not engaged 
in construction work on the marina except for routine 
maintenance; (4) employees of suppliers, transporters or 
vendors who are temporarily on the premises of a covered 
employer but not doing the usual work of that employer; (5) 
aquaculture workers; and (6) individuals employed to build, 
repair, or dismantle recreational vessels under sixty-five feet 
in length.

Change in the recreational marine industry

    Since the 1984 amendments, workers employed to build, 
repair or dismantle recreational vessels under 65 feet in 
length have been excluded from coverage under the Longshore 
Act. Workers working on vessels--recreational or otherwise--of 
65 feet or more have been subject to the Act's coverage. In the 
past 20 years, however, there has been a tremendous growth in 
the number of recreational boats built as well as an increase 
in the physical size of recreational boats sold in the United 
States. Indeed, presently, there are nearly 400,000 boats in 
the United States measuring 65 feet in length or longer.
    The marina and boatyard industries maintain that the 
hazards to which employees in the recreational marine industry 
are exposed are more similar to those found in the general 
construction industry than those found in commercial ship 
building and shipyard operations. Data from the Occupational 
Safety and Health Administration (OSHA) support industry's 
position that recreational marine work is far different than 
commercial work. For example, for 2002, OSHA data indicates 
that the serious incident rate for the recreational marine 
industry is 2.35, whereas the serious incident rate for the 
commercial industry is 11.1.7
---------------------------------------------------------------------------
    \7\ ``Serious Incidents,'' as defined by OSHA, are those that 
involve lost time or work restrictions. The OSHA Recordable Incident 
Rates measure injuries per 100 employees as a function of the total 
number of hours worked.
---------------------------------------------------------------------------
    In testimony before the Subcommittee on Workforce 
Protections, Ian Greenway, president of LIG Marine Managers, a 
provider of commercial marine insurance, refuted the notion 
that there was an increased safety risk for boats greater than 
65 feet in length which justifies the exorbitant expense of 
Longshore coverage. Mr. Greenway testified that there is no 
difference in the risks associated with repairing the plumbing, 
air conditioning, or radio on a 75-foot recreational boat as 
compared to a 65-foot recreational boat.8 He further 
testified that current insurance data demonstrate that claims 
for these larger vessels are significantly lower: for example, 
claims for workers on vessels of 65-150 feet are at least 38 
percent lower than those on vessels under 65 feet.9
---------------------------------------------------------------------------
    \8\ Hearing on H.R. 1329, at 22.
    \9\ Id.
---------------------------------------------------------------------------

Global competition

    Any company, marina, boatyard, or subcontractor that 
services recreational boats 65 feet in length or longer must 
obtain insurance under the Longshore Act. The Committee is 
concerned that this has forced many small marinas to obtain 
both Longshore and state workers' compensation coverage because 
of the uncertainty of who is covered and who is not.
    The marina and boatyard industry estimates that one in five 
boat projects has migrated from the U.S. to Canada as a direct 
result of the increased cost of doing business in the U.S. 
Likewise, the industry in South Florida has seen a large but 
undocumented number of jobs move to the Bahamas. The evidence 
suggests that Longshore Act requirements put U.S. businesses at 
a competitive disadvantage to Canadian foreign competition 
resulting in domestic job loss.
    In testimony before the Subcommittee on Workforce 
Protections, small business owner Kristina Hebert noted that 
because of the high costs of purchasing Longshore insurance, 
U.S. businesses have experienced negative consequences in 
competing with companies in the Bahamas and Caribbean. As Ms. 
Hebert testified, one of the main reasons costs are lower is 
that ``employers there do not have to pay the extremely high 
cost of Longshore coverage and can therefore outbid American 
businesses.'' 10
---------------------------------------------------------------------------
    \10\ Id. at 11.
---------------------------------------------------------------------------
    It has been estimated that it is nearly three times more 
expensive to insure for the same risk under the Longshore Act 
than under applicable state workers' compensation systems. 
Domestic boat builders maintain that the duplicative and added 
cost of the Longshore Act premiums hinders their ability to 
expand their workforces. At the July 2004 hearing, Ms. Hebert 
testified that employers such as Ward's Marine Electric would 
save approximately $200,000 a year by not having to purchase 
the unnecessary and duplicative Longshore insurance and agreed 
with other witnesses that this money could ``instead be used to 
expand our services, increase our employees' wages, and hire 
more skilled workers.'' 11 Finally, as Larry Nelson, 
vice president of administration for Westport Shipyard in 
Westport, Washington explained to the Subcommittee, ``[B]y 
switching to state workers' compensation coverage, which is two 
to four times less expensive as Longshore coverage, [ ] small 
businesses would in many instances use the savings to expand 
their businesses, expand their workforces and update and 
enhance their production processes.'' 12
---------------------------------------------------------------------------
    \11\ Id. at 9.
    \12\ Id. at 15.
---------------------------------------------------------------------------

Conclusion

    H.R. 940 clarifies and extends exemption from the Longshore 
Act across the broad range of the recreational marine industry. 
The Committee is concerned that since enactment of the 1984 
amendments, the recreational marine industry has seen rapid 
growth in the number of vessels 65 feet or longer, growth which 
threatens the vitality and integrity of the 1984 recreational 
vessel exclusion. The bill reflects the Committee's view that 
the recreational marine industry is fundamentally different 
than the commercial shipbuilding industry, irrespective of any 
arbitrary ``footage'' limitation applied to any single vessel. 
Finally, H.R. 940 responds to the intense competitive nature of 
the recreational marine industry: the bill would help restore 
U.S. jobs in the recreational boating industry that have been 
lost to foreign competition overseas, while maintaining all 
existing state remedies and workers' compensation protections.

                      Section-by-Section Analysis


Section 1. Short title.

    This act may be cited as the ``Recreational Marine 
Employment Act of 2005.''

Section 2. Clarification of recreational vessel worker exemption.

    Section 2 amends section 2(3) of the Longshore and Harbor 
Workers' Compensation Act to exempt from Longshore Act 
coverage: (a) individuals who are employed by or at, or who are 
engaged in the construction or maintenance of, a recreational 
marine facility or structure; and (b) individuals who are 
employed primarily to build, repair, test, maintain, 
accommodate, buy, sell, store, restore, transport by land, or 
dismantle a recreational vessel. Section 2 defines a 
``recreational marine facility or structure'' as ``a place used 
primarily to build, repair, test, maintain, accommodate, buy, 
sell, store, restore, or dismantle recreational vessels'' and 
defines a ``recreational vessel'' as a vessel, irrespective of 
size, that is ``manufactured primarily for pleasure use.''

             Explanation of Amendments Adopted in Committee

    The Committee adopted an amendment in the nature of a 
substitute offered by Representative Keller described herein.
    The amendment in the nature of a substitute adopted by the 
Committee retained the core provisions contained in H.R. 940. 
The substitute changed the term ``principally'' to 
``primarily'' within the definition of recreational vessel and 
recreational marine facility to more closely track statutory 
language defining recreational vessels.13 It 
similarly changed ``principally'' to ``primarily'' in the 
delineation of an employee's duties to comport with common 
statutory and regulatory language regarding the determination 
of an employee's principal duties.14
---------------------------------------------------------------------------
    \13\ The general provisions of the U.S. Code applicable to vessels 
and seamen define ``recreational vessel'' at 46 U.S.C. Sec. 2101(25). 
The Department of Labor has also used this terminology in regulations 
implementing the Longshore and Harbors Workers' Compensation Act. See 
20 C.F.R. Sec. 701.301(a)(12)(iii)(F) (1985) (defining recreational 
vessel as one operated primarily for pleasure).
    \14\ See, e.g., 29 C.F.R. Sec. 541.700 (defining ``primary duty'' 
under Fair Labor Standards Act).
---------------------------------------------------------------------------
    The substitute eliminated a provision within H.R. 940 that 
would have allowed an employer to qualify for an exemption 
under the Longshore Act if that employer was ``in compliance 
with'' state workers' compensation coverage. Under current law, 
an employer may qualify for an exemption from the Longshore Act 
only if its employees are subject to state workers' 
compensation coverage. If no state workers' compensation 
coverage is in place then the employer is required to provide 
Longshore coverage. Concern was raised at Subcommittee markup 
that the ``in compliance with'' language contained in H.R. 940 
as introduced may have resulted in some workers falling through 
a ``gap'' in state workers' compensation and Longshore Act 
coverage. The amendment removes the workers' compensation 
language that may have inadvertently created such a gap and 
thus retains current law in this regard.
    Finally, the substitute eliminated a provision of the bill 
unrelated to the Longshore Act that addressed the ability of 
non-maritime workers to bring tort law claims of 
``unseaworthiness.'' This provision raised substantive concern 
at Subcommittee markup; as it was not fundamentally related to 
the necessary Longshore Act reforms that H.R. 940 is intended 
to make, this provision was dropped in the substitute.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act (CAA), requires a description of the 
application of this bill to the legislative branch. H.R. 940 
clarifies the status of employees in the recreational maritime 
industry under the Longshore and Harbor Workers' Compensation 
Act (``LHWCA,'' the ``Longshore Act,'' or the ``Act''). The 
bill does not restrict legislative branch employees from the 
benefits of this legislation.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget & Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The Committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office and as such the Committee 
agrees that the bill does not contain any unfunded mandates. 
See infra.


  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of clause 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 940 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 29, 2005.
Hon. John A. Boehner,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 940, the 
Recreational Marine Employment Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Christina 
Hawley Sadoti.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 940--Recreational Marine Employment Act of 2005

    H.R. 940 would amend the Longshore and Harbor Workers' 
Compensation Act to clarify the exemption for certain workers 
in the shipbuilding industry. Current law requires special 
workers' compensation coverage for that industry, with an 
exemption for employees of companies that build boats less than 
65 feet in length. This bill would expand the exemption to all 
workers in the recreational marine industry, regardless of the 
length of the vessel.
    Most of the insurance premium payments and workers' 
compensation benefits are paid to and from private insurance 
companies. However, the Department of Labor (DOL) oversees an 
account that assesses fines and penalties, makes annual 
assessments of authorized private insurance carriers, and pays 
benefits to workers in special circumstances. DOL estimates 
that payments related to the recreational marine industry into 
and out of this special fund amount to less than $1 million 
annually. Therefore, CBO estimates the effects of this 
legislation on mandatory spending and receipts would be 
insignificant.
    H.R. 940 contains no new private-sector or 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act and would impose no significant costs on state, 
local, or tribal governments. Under current law, employers in 
the recreational marine industry must purchase insurance 
required by the Longshore and Harbor Workers' Compensation Act. 
This bill would shift that coverage to policies meeting the 
requirements of state laws governing workers' compensation.
    This estimate was prepared by Christina Hawley Sadoti (for 
federal costs), Nabeel Alsalam (for the private-sector impact), 
and Leo Lex (for the state and local impact). This estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c) of House Rule XIII, the goal 
of H.R. 940 is to clarify the status of employees in the 
recreational maritime industry under the Longshore and Harbor 
Workers' Compensation Act (``LHWCA,'' the ``Longshore Act,'' or 
the ``Act''). The Committee expects the Department of Labor to 
implement the changes to the law in accordance with these 
stated goals.

                   Constitutional Authority Statement

    H.R. 940 amends the Longshore Harbor Workers' Compensation 
Act, and thus falls within the scope of Congressional powers 
under Article I, section 8, clause 3 and Article III, section 
2, clause 1 of the Constitution of the United States to the 
same extent as does the Longshore Act.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 940. However, clause 3(d)(3)(B) of that rule provides that 
this requirement does not apply when the Committee has included 
in its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SECTION 2 OF THE LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT

           *       *       *       *       *       *       *


                              definitions

    Sec. 2. When used in this Act--
    (1) * * *

           *       *       *       *       *       *       *

    (3) The term ``employee'' means 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, but 
such term does not include--
          (A) * * *

           *       *       *       *       *       *       *

          [(C) individuals employed by a marina and who are not 
        engaged in construction, replacement, or expansion of 
        such marina (except for routine maintenance);]
          (C) individuals employed by or at, or engaged in the 
        construction or maintenance of, a recreational marine 
        facility or structure;

           *       *       *       *       *       *       *

          [(F) individuals employed to build, repair, or 
        dismantle any recreational vessel under sixty-five feet 
        in length;]
          (F) individuals employed primarily to build, repair, 
        test, maintain, accommodate, buy, sell, store, restore, 
        transport by land, or dismantle a recreational vessel;

           *       *       *       *       *       *       *

    (22) The term ``recreational marine facility or structure'' 
means a place used primarily to build, repair, test, maintain, 
accommodate, buy, sell, store, restore, or dismantle 
recreational vessels.
    (23) The term ``recreational vessel'' means a vessel 
manufactured primarily for pleasure use.
    [(22)] (24) The singular includes the plural and the 
masculine includes the feminine and neuter.

                             MINORITY VIEWS

    We oppose H.R. 940, the ``Recreational Marine Employment 
Act of 2005.'' The effect of this legislation is to 
substantially diminish the income and living standards of 
injured workers, too often to poverty levels; and to create 
much greater uncertainty and consequent litigation regarding 
the parameters of the Longshore and Harbor Workers' 
Compensation Act.

            PROBLEMS WITH H.R. 940 AS REPORTED BY COMMITTEE

H.R. 940 Imposes Substantial Cuts in Benefits for Injured Workers
    While State benefits typically compensate workers at a rate 
of two-thirds of their weekly income, States typically have 
much lower benefits ceilings. As consequence, well paid injured 
workers, such as the highly skilled workers who may be expected 
to be employed building multi-million dollar yachts, suffer a 
much greater loss of income under State workers' compensation 
laws than they do under the Longshore Act.
    According to information provided by CRS, a worker who 
earns $1200 a week ($60,000 a year assuming the person takes 
two weeks off) who is totally disabled would receive a benefit 
of $800 a week under the Longshore Act. By contrast, the same 
worker under Florida's workers' compensation law would only 
receive $626 a week, almost half of their former income. In 
North Carolina, the same worker would only receive $688 a week 
under state law. In Tennessee, the worker would only receive 
$618 a week under state law. In Mississippi that worker would 
have only received $341 a week, and in Georgia would only 
receive a benefit of $425 a week.
    The Longshore Act also pays more for ``scheduled injuries'' 
which are injuries to specific body parts included in a 
``schedule'' in the workers' compensation statute. For the loss 
of an arm at the shoulder, for example, a marina worker would 
receive $321,603 under the Longshore Act. For an identical 
injury, however, a worker would only receive $121,100.60 in 
South Carolina and $90,704.39 in the state of Washington.
    According to the National Academy of Social Insurance, in 
1998 the average temporary total disability benefit payment in 
sixteen states (Alabama, Iowa, Kentucky, South Carolina, 
Nebraska, Oklahoma, Maine, North Dakota, Idaho, New Mexico, 
Georgia, Louisiana, Kansas, South Dakota, Montana and 
Mississippi) is below the poverty threshold for a family of 
four. In addition, Utah and Indiana benefits were right at the 
poverty line for average temporary total disability weekly 
compensation.\1\
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    \1\ See page 75, ``Adequacy of Earnings Replacement in Workers' 
Compensation Programs, A Report of the Study Panel on Benefit Adequacy 
of the Workers' Compensation Steering Committee,'' National Academy of 
Social Insurance, H. Allan Hunt, Editor, W.E. Upjohn Institute for 
Employment Research, 2004.
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    Finally, unlike the Longshore program, not a single state 
workers' compensation program annually indexes benefits for 
inflation. Hence, the disparity between what an injured worker 
and family would be awarded under current law, in contrast to 
H.R. 940, increases over time to the further detriment of 
injured workers and their families.
H.R. 940 Exempts Those Working on Commercial Vessels from Longshore 
        Coverage
    Although the sponsors of H.R. 940 claim the bill only 
effects recreational vessels, it is much broader. The bill 
exempts individuals employed by or at or engaged in 
construction or maintenance of a recreational marine facility. 
A recreational marine facility is defined as ``a place used 
primarily to build, repair, test, maintain, accommodate, buy, 
sell, store, restore or dismantle a recreational vessel.'' If a 
shipyard is deemed to primarily build or repair recreational 
vessels, regardless of the size of those vessels, then that 
yard is exempt from the Longshore Act regardless of the fact 
that it may also do substantial work on commercial vessels.
    The bill exempts ``individuals employed primarily to build, 
repair, test, maintain, accommodate, buy, sell, store, restore, 
transport by land or dismantle a recreational vessel.'' A 
worker who works primarily on recreational vessels is exempt 
from Longshore coverage even if the employee is injured while 
working on a commercial vessel.
    Anyone employed at a recreational marine facility is exempt 
even if they are working on a commercial vessel; and any 
employee who works primarily on recreation vessels is exempt 
even if they are working at a commercial shipyard on a 
commercial vessel.
H.R. 940 Exempts Workers who Have Always Been Covered by the Longshore 
        Act Since Its Inception
    Those who construct marinas, pile drivers and carpenters, 
have been covered by the Longshore Act since it was enacted in 
1927. When recreational marinas were exempted in 1984, such 
employees were explicitly excluded from the scope of that 
exemption. No evidence has ever been offered to the Committee 
that this work has gotten safer or otherwise should be exempted 
from the Longshore Act. Nevertheless, H.R. 940 exempts workers 
engaged in construction of a recreational marine facility.
H.R. 940 Is Unduly Ambiguous Regarding the Size and Definition of a 
        Recreational Vessel
    Recreation vessel is defined as a vessel ``manufactured 
primarily for pleasure use'' without regard to the size of the 
vessel. Ships that can only be constructed or repaired in dry 
docks on navigable waters can nevertheless be deemed 
recreational vessels. A ship that is also used for commercial 
purposes is nevertheless a recreational vessel if it is used 
primarily for pleasure use. A ship that is used exclusively for 
commercial use may nevertheless be deemed a recreational vessel 
if the ship was manufactured primarily for pleasure use. What 
is meant by ``pleasure use'' is also uncertain. Is a cruise 
liner operated by Carnival Lines a vessel that is operated 
primarily for pleasure use? What about a yacht owned by a 
corporation that is used partly to woo customers and partly for 
the relaxation of executives? How does one determine whether a 
large yacht will be used as a charter boat, and if so, is it a 
vessel primarily for pleasure use?
The Burdens Imposed on Injured Workers by H.R. 940 Significantly 
        Outweigh the Bill's Purported Benefits
    The justification offered by the Republicans for enacting 
H.R. 940 is that the reduction in premiums will better enable 
recreational marinas and recreational yacht builders to compete 
with foreign competition. However, according to the author of 
the bill, Mr. Keller, the ``employers in the recreational 
marine industry would save an average of $99,000 per year if 
they were exempt from the Longshore Act.'' \2\ The estimate for 
these savings is based on a survey that has never been entered 
into the record. Even assuming the estimate is accurate, it 
hardly begins to close the gap between American labor costs and 
those of Carribean and Chinese workers with whom American yacht 
builders and marinas compete. In addition, when one considers 
that a single yacht that is sixty-five feet or more may sell 
for millions of dollars, the hardships imposed by the bill upon 
workers are not justifiable.
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    \2\ See ``Statement of Hon. Ric Keller, a Representative in 
Congress from the State of Florida,'' in H.R. 1329, Recreational Marine 
Employment Act of 2003, Hearing Before the Subcommittee on Workforce 
Protections of the Committee on Education and the Workforce, U.S. House 
of Representatives, 108th Congress, 2nd Session, July 15, 2004, Serial 
No. 108-69, at page 4.

                                   George Miller.
                                   Major Owens.
                                   Ruben Hinojosa.
                                   Dale E. Kildee.
                                   Danny K. Davis.
                                   Robert C. ``Bobby'' Scott.
                                   Robert Andrews.
                                   Rush Holt.
                                   Timothy Bishop.
                                   Dennis Kucinich.
                                   Raul M. Grijalva.
                                   John Tierney.