13 Jul 2012

Marine industry hearing in Washington DC

By Esther Barney

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A hearing in Washington DC yesterday put on formal record for the first time the importance of the leisure marine industry to small businesses in the US, with proposals made for changes to existing regulation in order to promote economic growth. The US House Committee of Small Business met with representatives from the marine industry to discuss issues such as taxation, insurance and resource distribution.

The hearing, entitled “Sinking the Marine Industry: How Regulations are Affecting Today’s Maritime Businesses”, was proposed by Congressman Alan West (R-FL) following the American Boating Congress visit in April, and presented testimony from experts and small business owners. The main areas that the hearing addressed included regulatory actions by the Department of Labor, the planning and permitting processes for the United States Army Corps of Engineers maintenance of navigable waterways, and intra-state taxation of small businesses.

"Representing a sizeable chunk of our working population, I see no better time to zero in on the industry which is paramount to our way of life in South Florida and throughout the nation," said West, whose district extends from Fort Lauderdale to north of Palm Beach. "I have heard from many in the marine industry in South Florida who say regulations are creating a toxic business environment for them. Builders, manufacturers, retailers, craftsmen, technicians and suppliers, they all have the same frustration: the federal government preventing them from hiring and growing their businesses.”



Among topics discussed during the day, the Business Activity Tax Simplification Act (BATSA) has affected a number of small businesses by providing states where goods are imported the ability to tax companies on their entire earnings as opposed to just those relevant to the goods being imported. Although this has not been widespread in the large yacht industry yet, an upward trend would be crippling for small businesses such as suppliers looking to engage in activity nationwide. There was also a request for improving efficiency and speed of the permitting process via the Army Corps of Engineers to prevent slowing down of business development, through reassessing the Corps' resources.

Kristina Hebert, representing the United States Superyacht Association, requested a review of the Department of Labor’s rule imposed at the end of 2011 on the Longshore and Harbor Workers Compensation Act (LHWCA), which significantly changed the impact ofthe amendment passed by Congress on the Act in 2009 to prevent duplication of workers’ compensation cover. The Department of Labor used outmoded definitions of “recreational vessels” from shipping law that changed the application of Congress’s amendment, said Hebert. This altered its subsequent effect to the point where many who carry out maintenance and repair work on vessels over 65 feet were not covered by the amendment. It put those working on superyachts in a position that made their coverage prohibitively expensive, forcing workers to choose between having no compensation coverage or hiking labour rates to internationally uncompetitive levels.

"The new rules have created confusion in both the recreational marine repair industry and the insurance industry," explained Hebert. "The misapplication of the exemption brought thousands of workers under the duplicative coverage or even worse left them without any coverage at all. For these reasons, the rule making seriously missed the mark and will serve only to cost American jobs and drive economic activity offshore."

“A replacement of the definition can be formulated that will keep the cost of workers’ compensation insurance low, allow for more workers to have coverage, and keep jobs and economic activity from going offshore. We recommend that a newly formulated rule contain a definition that applies to recreational vessel repair workers in the same manner that the rule applies to manufactures and public vessels,” she said during her testimony.

Following the hearing, Hebert and other representatives of the superyacht industry met with six high ranking members of the Department of Labor for an extensive discussion on possibly changing the definition of “recreational vessels” in relation to the LHWCA. Over the next month, the marine industry representatives will be preparing suggestions for a new definition to allow for the originally intended impact of the amendment to be put in place. Hebert added that, although there may not be action taken on this issue before the US election later in the year, the progress made yesterday and in the coming weeks will set changes in motion and prevent the need to go over old ground should there be a change in legislators and regulators, as yesterday’s discussions will be on record. To read Hebert’s testimony and full records of the hearing, click here.

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