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76–485 2012

SINKING THE MARINE INDUSTRY: HOW REGULATIONS ARE AFFECTING TODAY’S MARITIME 

BUSINESSES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT, 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JULY 12, 2012 

Small Business Committee Document Number 112–078 

Available via the GPO Website: www.fdsys.gov 


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Director 


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C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Mike Coffman .................................................................................................. 1 

Hon. Allen West ....................................................................................................... 2 

Hon. Scott Tipton ..................................................................................................... 2 

WITNESSES 

Kristina Hebert, Chief Operating Officer, Ward’s Marine Electric, Inc., Fort 

Lauderdale, FL ..................................................................................................... 3 

Mark Ducharme, Vice President and Chief Financial Officer, Monterey Boats, 

Williston, FL ......................................................................................................... 4 

Captain Steve Engemann, President, Herman Sand and Gravel, Herman, 

MO ......................................................................................................................... 6 

Rashid Sumaila, Ph.D., UBC Fisheries Centre, Aquatic Ecosystems Research 

Laboratory (AERL), The University of British Columbia, Vancouver, BC, 

Canada .................................................................................................................. 8 

APPENDIX 

Prepared Statements: 

Kristina Hebert, Chief Operating Officer, Ward’s Marine Electric, Inc., 

Fort Lauderdale, FL ..................................................................................... 22 

Mark Ducharme, Vice President and Chief Financial Officer, Monterey 

Boats, Williston, FL ...................................................................................... 27 

Captain Steve Engemann, President, Herman Sand and Gravel, Herman, 

MO .................................................................................................................. 32 

Rashid Sumaila, Ph.D., UBC Fisheries Centre, Aquatic Ecosystems Research Laboratory (AERL), The University of British Columbia, Vancouver, BC, Canada ...................................................................................... 35 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Materials for the Record: 

Letter to U.S. Small Business Administration .............................................. 37 

Marine Retailers Association Statement for the Record ............................... 42 

National Council on Compensation Insurance, Inc. Letter for the Record .. 44 

Constituent Testimony from Congressman Allen West ................................ 50 

Florida Yacht Brokers Statement for the Record .......................................... 54 

Worth Avenue Yachts Letter for the Record .................................................. 60 


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SINKING THE MARINE INDUSTRY: HOW REGULATIONS ARE AFFECTING TODAY’S MARITIME BUSINESSES 

THURSDAY, JULY 12, 2012 

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON INVESTIGATIONS, 

OVERSIGHT AND REGULATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10 a.m., in room 

2360, Rayburn House Office Building. Hon. Mike Coffman (chairman of the subcommittee) presiding. 

Present: Representatives Coffman, Tipton, and West. 

Chairman COFFMAN. This hearing is called to order. Good morning. 

This hearing—first of all, I would like to thank you all for joining 

us today as we examine federal policy and regulatory impediments 

for small businesses in the marine industry. I know that each of 

our witnesses have traveled quite a bit to be with us, and we here 

at the Committee appreciate that. 

The coastal and inland water transportation system is often the 

economic lifeblood of the regions where they are located. A healthy 

and vibrant water transportation system is critical to the small 

businesses that directly use the system, as well as those who support those firms. While proven as being one of the most efficient 

and environmentally friendly methods of transporting goods across 

the country, an aging system of locks, dams, and undredged channels threatens the continued viability of these waterways as reliable shipping avenues. 

It is not just the regular wear and tear on these avenues that 

is negatively impacting the small businesses that utilize them. 

State and federal policies, and regulatory impediments also threaten the continued viability of these long-standing industries. We will 

hear numerous examples today from our witnesses on these issues. 

This hearing represents a forum for us to hear firsthand how important the maritime industry is to our nation and the problems 

that are preventing economic growth. Again, I want to thank each 

of our witnesses for taking the time to be with us today. Unfortunately, I have an unavoidable scheduling conflict and must leave 

the hearing. I know that one of my colleagues has been working 

on issues facing the maritime industry since he came to Washington. And I would ask that the gentleman from Florida, Mr. 

West, to now chair the hearing. 


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Mr. WEST. Good morning, ladies and gentlemen. Thank you to 

Chairman Coffman for allowing me the opportunity to host this important meeting and also to my colleague, Mr. Tipton, from Colorado. 

Welcome to our distinguished panelists and thank you for taking 

the time to answer our questions. As some of you may know, the 

marine industry in the state of Florida alone is responsible for the 

creation of more than 200,000 jobs and represents an $18 billion 

industry. These numbers are only a portion of the large impact 

that this industry has on our nation. 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 this nation. 

I have heard from many in the marine industry and South Florida about how the abundance of regulations emanating from Washington, DC., is making it harder to conduct and maintain successful 

businesses. Regulations are creating a toxic business environment 

for so many from builders, manufacturers, and retailers to craftsmen, technicians, and suppliers that are affecting job creators 

across the board. It is our duty in the House Committee on Small 

Business to assess these challenges and provide solutions to help 

businesses grow. It is also my hope that regulators will take note 

of the valuable insight that is given here today. I look forward to 

hearing each of your perspectives as we move forward. 

Before we begin, I want to give a special thank you to Ms. 

Kristina Hebert and also Katie McGowan and the entire South 

Florida marine community for helping to bring this very important 

and critical issue to our Committee’s attention. And at this time I 

would like to ask would any other member—Mr. Tipton would like 

to make an opening statement. 

Mr. TIPTON. Thank you. 

Mr. WEST. Now I would like to talk about the hearing rules. The 

timing lights that you have before you, each of you will have five 

minutes to deliver your testimony. The light in front of you will 

start out as green. When you have one minute remaining, the light 

will turn yellow. Finally, at the end of your five minutes, it will 

turn red. Because of the fact we do not have many members here 

on the panel we can go a little bit over. I ask that you try to adhere 

though to that time limit. 

Our first witness is Kristina Hebert, chief operating officer for 

Ward’s Marine Electric, Inc., in Fort Lauderdale, Florida. Ward’s is 

a 62-year-old third generation family owned and operated business 

dedicated to providing for the electrical needs of the recreational 

marine industry. The company provides mobile dockside service, 

engineering, engraving, and design services, as well as distributes 

a complete line of marine electric equipment, and most of their 

service work is performed in marinas and boatyards where they act 

as subcontractors. Thank you for being with us today, Ms. Hebert, 

and we look forward to hearing your testimony. 


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STATEMENTS OF KRISTINA HEBERT, CHIEF OPERATING OFFICER, WARD’S MARINE ELECTRIC, INC., ON BEHALF OF THE 

MARINE INDUSTRY’S ASSOCIATION OF SOUTH FLORIDA; 

MARK DUCHARME, VICE PRESIDENT AND CHIEF FINANCIAL 

OFFICER, MONTEREY BOATS; STEVE ENGEMANN, PRESIDENT, HERMANN SAND AND GRAVEL; U. RASHID SUMAILA, 

UBC FISHERIES CENTRE, AQUATIC ECOSYSTEMS RESEARCH 

LABORATORY 

STATEMENT OF KRISTINA HEBERT 

Ms. HEBERT. Thank you. And I appreciate the opportunity. 

Thank you, Congressman West, and thank you Congressman Tipton for this opportunity to have this very important hearing to discuss something very significant to our industry. 

As stated, my name is Kristina Hebert. I am representing as 

president the Marine Industry’s Association of South Florida, and 

I am also a board member of the U.S. Superyacht Association. 

As Congressman West mentioned, I am third generation owner 

and operator of Ward’s Marine Electric. My family business has 

been in Fort Lauderdale for 62 years, and as he also mentioned, 

we do dockside service. And while I have technicians that can travel anywhere across the globe, there is no place better in the entire 

world than the United States that has the greatest concentration 

of skilled labor and tradesmen, and specifically in South Florida. 

Just to give you an idea, I know the congressman mentioned the 

statistics for the state of Florida, but in the Tri-County area, which 

is Broward, Dade, and Palm Beach County, the recreational marine 

industry represents an $8.9 billion economic impact; 107,000 jobs; 

and $3.06 billion in wages and earnings. That is extremely significant. This is about workers. These are families that are able to 

purchase homes, go to school, so on and so forth. 

As I stated, my company can travel all across the world. However, we want to make sure that they are able to stay here. As a 

small business, one of the most—the largest operating expense is 

obviously workers’ compensation. And in my company, customer 

service does not come first; safety comes first. My employees’ safety 

and the boats’ safety. If those two are safe, we will get the customer satisfaction. 

With that being said though, workers’ compensation is one of our 

number one operating expenses and it is cumbersome to do that for 

small businesses. Just to give you an idea, the recreational marine 

industry is 95 percent as far as the Marine Industry’s Association 

of South Florida. Ninety-five percent of our members are small 

businesses. They either work for themselves or they work for a 

small business. And when I say small business, I mean 10 or fewer 

employees. 

The workers’ compensation that is required in the marine industry for these workers falls under two categories. One, you have stat 

compensation; and two, you have longshore and harbor workers’ 

compensation. Congress for many years has sought relief for this, 

for the recreational industry. Clearly, our workers are not commercial. We are not exposed to the same hazards and have sought numerous times to afford relief to the industry. 


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In 1984, there was relief done for boats 65 feet. In 2009, as part 

of the American Recovery and Restoration Act H.R. 1, an amendment was made that would exclude the recreational repair industry 

instead of creating a footage to exclude it, capture it. 

We worked very hard for many years to show the safety record, 

the risks that are not there for the recreational industry, and 

paired with the insurance industry. Congress did a great job. You 

did your job. The amendment was made and it finally afforded an 

opportunity for small businesses to be able to stick with state 

workers’ compensation, have it be affordable, have our labor rates 

be comparable to those international, and keep the jobs in the 

United States to be able to have those 200,000 jobs. 

The Department of Labor is the agency in charge of monitoring 

and enacting that legislation as it relates to the Longshore and 

Harbor Workers’ Compensation Act. They had a rule. I understand 

agencies have to do rule implementations and there was a lot in 

the rule that came out that made a lot of sense. And I realize there 

were some dates and there was some clarification. And as far as 

the recreational industry on the manufacturing side, they did a 

great job. There was a clear line established for workers to be able 

to get covered. What is recreational? What is commercial? Great 

job. 

On the repair side, not so much. There was, number one, a misunderstanding of what the industry represents. Number two, there 

was not a communication with that segment of the industry. And 

number three, a definition was put in that relates to commercial 

maritime shipping and really was not related to the repair industry 

and has never been a part of the legislative history. 

Is there a solution? Why are we here today? Yes. We have language that we would like to be able to substitute, the language 

that was used to for the manufacturing side, and we know that 

that would be the intent given that the agency should keep the intent of the congressional amendment that was made in 2009, and 

it would help small businesses and keep workers covered. Otherwise, they will go without the coverage because it will not be something they can afford. 

I thank you for your time and look forward to the resolution. 

Mr. WEST. Thank you, Ms. Hebert. 

Next up is Mr. Mark Ducharme, vice president and chief financial officer of Monterey Boats in Williston, Florida. Founded in 

1985, Monterey Boats employs about 270 people and designs, engineers, and manufacturers several types of boats, pleasure crafts, 

and cruisers. Mark received his bachelor of science in accounting 

from the University of Florida and his master’s degree in taxation 

from the University of South Florida. Welcome to the Small Business Committee, Mr. Ducharme. 

STATEMENT OF MARK DUCHARME 

Mr. DUCHARME. Good morning, Congressmen. Thank you for the 

opportunity to address you this morning on the business activity 

tax nexus issue. I am here today representing a broad group of organizations and businesses—the Coalition for Interstate Tax Fairness and Job Growth—a group working together for enactment of 

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eral hundred supporters. Among those are small businesses such as 

my own, Monterey Boats. 

Attempts by some states to assess sales, gross receipts or income 

taxes on business that have customers but no physical presence in 

the jurisdiction is simply arbitrary and wrong. 

We understand states face the great temptation of raising tax 

revenues from those who do not vote in its elections or utilize state 

resources. We only engage in interstate commerce by providing 

products or services and do so without any physical presence in the 

state, but efforts to expand traditional definitions of ‘‘tax nexus’’ 

have become completely absurd. 

For example, the State of Michigan secured a copy of Monterey 

Boats’ federal tax return and assessed a 2011 ‘‘gross receipts tax’’ 

in the amount of $376,000, by allocating our entire worldwide sales 

to the state. Monterey Boats, it should be pointed out, has no property in Michigan, no sales offices in Michigan, no agents in Michigan, and no employees in Michigan. Yet, Michigan claimed the authority to tax our sales based merely on the fact that Monterey 

Boats has customers in its jurisdiction, and considers nexus is 

achieved with only one day of contact in the state, including delivery in company-owned rented, leased, or borrowed trucks. 

Another example is New Jersey. We receive a phone call in October 2004, from an agent with the New Jersey Division of Taxation 

notifying our truck was being impounded along with a shipment of 

boats until we remitted $176,000. After retaining an attorney and 

negotiating the release of the truck, the driver, and the load of 

boats, we received a formal jeopardy assessment from the state. We 

remitted funds to the state and began the appeals process. In addition, the state placed a lien on any receivables due to Monterey for 

boats sold anywhere in the country. After seven years, in August 

2011, and after over $100,000 in legal fees and countless manhours accumulating information, we received a final determination 

from the state upholding their position and requiring us to file annual tax returns. 

Although we still have the ability to file a final appeal with the 

New Jersey tax court, it is not economically feasible to do so and 

they are completely aware of that fact. What is worse is that Michigan and New Jersey are not alone. Massachusetts, for example, 

claims that a business has established the necessary nexus for corporate income tax purposes if that business has vehicles that travel 

through Massachusetts more than 12 times in one year, even if it 

has no employees, offices, or inventory in Massachusetts. 

It should be easy for the members of this Committee to see the 

possibilities and the dangers here. States cast covetous eyes on the 

potential tax revenue from out-of-state corporations. The previously 

mentioned tax bills are not part of the budget in planning for Monterey, and it will hinder us as a manufacturer as we attempt to 

survive in a super competitive environment and keep our 250 employees working steadily and producing our fine boats. 

Unless Congress steps in to clarify that the U.S. Constitution requires a physical presence nexus and sets forth a clear bright-line 

test for what constitutes physical presence, then we will continue 

to have impossible-to-plan-for laws, regulations, and enforcement 

action that vary across the 50 states. 


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There is, in fact, legislation that has been reported favorably by 

the House Judiciary Committee that we believe would solve the 

problem. This legislation, the Business Activity Tax Simplification 

Act (BATSA) would require a business to have some type of physical presence in a given state, excluding a de minimus presence of 

fewer than 14 days during a taxable year, before a state would be 

permitted to impose a tax on the business. We believe this is a reasonable and bright-line standard and that businesses could use to 

plan for their tax responsibilities so that they are not hit unexpectedly with large tax liabilities from states in which they have no 

physical presence. 

BATSA would end the confusion that exists as a result of contradictory state court decisions and the refusal of the Supreme 

Court to decide the issue. It would apply to business activity taxes, 

including income and franchise taxes, but it would not apply to 

transaction taxes, such as sales tax. We believe it is fair for a state 

to tax instate businesses as though they regularly conduct business 

there, but we believe it is grossly unfair for any state to reach out 

and assert that simply passing through the state or selling a few 

products in the state allows a tax based on total countrywide income. A business should only pay income and similar taxes where 

it is physically present, and therefore, receives the benefits and 

protections of the state government. 

There is no reason to delay any longer, members of the Subcommittee. The time is right to end unfair business taxation and 

to make it clear that state taxation of out-of-state entities can only 

be done within certain well-defined limits. American businesses are 

not asking for a handout from the Congress, only a fair and level 

playing field, free from the unexpected tax surprises that I have described to you today. Thank you for your time. 

Mr. WEST. Thank you, Mr. Ducharme. 

Our next witness is Captain Steve Engemann, president of Hermann Sand and Gravel in Hermann, Missouri. Missouri or 

Missoura? 

Mr. ENGEMANN. It depends on where you are from. 

Mr. WEST. Okay. Steve completed his river pilot training at the 

River School in Memphis, Tennessee, in 2002, and has been employed at Hermann Sand and Gravel since 2000. He began managing the plant in 2005, and in 2010, he became president of the 

company that employs 10 people. Hermann Sand offers a wide variety of services to his clients, including the sale of sand and gravel; 

commercial towing services on the Missouri River from St. Louis to 

Sioux City, Iowa; transportation of construction equipment; tugboat 

service; and commercial dock repair assistance. Thank you for 

being with us today, Captain Engemann. 

STATEMENT OF STEVE ENGEMANN 

Mr. ENGEMANN. Good morning, Chairman, members of the Committee. I want to thank you for the invitation to come. My name 

is Steve Engemann. I am here representing the marine industry as 

president of Hermann Sand and Gravel, Inc., located in Hermann, 

Missouri, about an hour and a half west of St. Louis. We are a 

small family business that operates on the Missouri River that was 

founded in 1978. It is owned by my mother, Melba, my brother, 


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Tim, and myself. We operate two sand and gravel plants, one in 

Hermann, Missouri, and the other in Jefferson City, Missouri, and 

we employ 10. We have recently grown our business by leasing a 

tow line vessel which employs seven at any time it is operating. We 

pay above average wages, and although the local economy has 

stretched our budget, we continue to offer 100 percent of employerpaid health care coverage. While other businesses in the area have 

closed, we continue to research new ways to retain and maintain 

security for our business and our employees. 

Today I have been asked to speak about the impediments of regulation on small business in the maritime industry. I can assure 

you that these regulations and federal policies have constricted my 

business, and if left unchecked, will be the ultimate demise of my 

business and others that work on the Missouri River. 

Let me begin by communicating which government agencies regulate our business. These agencies include the U.S. Coast Guard, 

U.S. Army Corps of Engineers, the U.S. Department of Labor, Mine 

Safety and Health Administration, the Department of Transportation, the U.S. Fish and Wildlife Service, and the Department of 

Natural Resources. 

I have been trying to get dredging permits renewed since I came to work for the company in 2000. We have spent $185,952 in the 

last five years for an environmental impact statement and litigation pending to restore our permits to their original tonnage. 

There have been numerous meetings, trips, seminars, conferences I have attended so I can press the issue. 

The condition that hurts us the most is a 300,000 tons per five 

mile limit which was imposed on us last year. We are permitted 

to dredge 120,000 tons at that spot of our permit and once we compete with other companies in that area that have much larger permits, we have to go farther up the river, about seven miles, and 

our dredging equipment is not big enough so then we are just out 

the tonnage. 

MSHA is an inspection agency that will come and inspect our 

equipment. They will fine us for anything that is wrong before we 

are given a chance to fix anything. We certainly are for safety. I 

believe that you should be fined if you are negligent if you do not 

fix your equipment, but if you fix it you should not be fined. 

After dredging permits were limited in 2008, we started looking 

for other work that would create new jobs for our employees. We 

had a mine that was close to our facility that was looking for barge 

transportation and we were able to ship 22,000 tons of commercial 

freight out of our sand dock in 2009, and this year we are going 

to be estimating that we ship 60,000 tons. 

The Coast Guard is making vessels go through inspections on a 

regular basis. I agree with the need for a safe vessel, but they seem 

to have lost their desire to mark the channel with navigational 

aids. The Coast Guard can shut my vessel down, but it seems to 

be okay if we do not have a proper channel or a properly marked 

channel. I believe that it should be a joint effort to ensure that 

businesses like ours continue to succeed while understanding the 

need for regulations, and I feel like we should have the opportunity 

to audit the Coast Guard and the Corps just like they audit us, and 

we can work to grow the betterment of the river maritime industry. 


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The rivers, and particularly the Missouri River, could give great 

relief to the highways of Missouri and beyond. The Missouri River 

is a world highway and allows our small company to compete on 

a global market. There are numerous benefits to a successful barge 

traffic. You have 64 semi loads on just one barge. 

There is a lot of freight on the Missouri River and willing and 

hungry terminals that want to ship the product. The obstacle 

standing between small business and successful revenue is the government. 

One thing that is most important to us is something that you can 

help with at Congress. You must pass a budget. Operating without 

a budget, it gives—the government entity cannot provide any assistance to the public if they do not know how much money they 

will be allotted. Our goal is to move enough river commerce to be 

a fully funded river on the Missouri River, which is a billion ton 

miles. 

All the while, I am supposed to be running a business, piloting 

a boat, managing and maintaining my fleet. I spend hours a day 

trying to work with the same governing agencies that seem to put 

me out of business. I am not expecting handouts. I am not looking 

for a grant. I want the government to provide me the service and 

stick with the plan that our forefathers laid out ahead of us. We 

are proud Americans with a strong German heritage in Hermann, 

Missouri, and we are determined that we want to leave this business to our children, just as our father did for us. We want to provide a safe, secure, and honest living for our employees. Thank you. 

Mr. WEST. Our final witness is Dr. U. Rashid Sumaila, professor 

and director of the Fisheries Economics Research Unit at the University of British Columbia’s Fisheries Centre. He specializes in 

bioeconomics, marine ecosystem valuation, and the analysis of global issues, such as fisheries subsidies (illegal reported unregulated) 

fishing, and the economics of high and deep seas fisheries. Dr. 

Sumaila has experience working in fisheries and natural resource 

projects in Norway, Canada, and the North Atlantic Region, Namibia, and the Southern African region, Ghana and West African 

region, and Hong Kong and the South China Sea. You have a lot 

of frequent flyer miles. Thank you for your participation in this 

hearing, Dr. Sumaila. 

STATEMENT OF U. RASHID SUMAILA 

Mr. SUMAILA. Thank you very much, Congressman West. I am 

really grateful for having an opportunity to share some of our research results with you. 

The first point I want to make is that my research area does not 

cover specific statutes and legislative proposals being discussed 

here at this hearing, but my hope is that our global broad-based 

economic research, will enrich the hearing, even though I am not 

into the specifics of the hearing. 

Essentially, what we do at my center and my group, in particular, we study the ocean, fisheries, and try to inform and provide 

research to society in order to find ways that we can maintain the 

flows of benefits from our oceans through time for the benefit of 

both the current generation of people and businesses like you and 

future generations. 


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So we look at marine recreational activities and in there we are 

looking at recreational fishing, whale watching, marine mammal 

watching, diving, kayaking, and all sorts of things that take place 

on the ocean. And our research shows that this is a huge source 

of economic values and benefits to the U.S. and to countries around 

the world. For example, we estimate that over one million people 

get their income and jobs from marine-related activities worldwide, and the U.S. provides a big chunk of this. About $50 billion 

are made out of marine recreational activities and what is more interesting, about 110 million people around the world go to the 

ocean for fun. This is where the jobs come from and where the profits and the dollars come from. So this is a very important source, 

and the way we manage them and ensure that they keep going is 

very important. 

Now, I have told you how important this is economically, but we 

all agree, I think, that the basis of this economic well-being is actually the ecosystem. We need to maintain the ecosystem, make it 

healthy, because upon that comes all these benefits. So that is fundamental. 

So if you go to the economic theory of common property, I mean, 

if you want to keep a healthy ecosystem, which is a common pool, 

then unfortunately you will have to have some regulation and I 

think you agree to that. The key thing is to see how to do this in 

such a way that it does not stop small businesses from surviving, 

but regulation we need because of the common property nature of 

the ocean. And I draw from Adam Smith, one of the main economic 

heroes, and I think for many he was an invisible hand economist 

who is the most famous one, I think. He sees that nature and the 

resources they contain belongs to every generation, and the current 

generation has no right to bind it up for future generations. He 

said this in 1766, in a lecture in the U.K. I was not there but it 

looks like I was there at the time. So we need to manage these resources for all generations, and this is Adam Smith, himself, talking. And that means that some regulation is needed, some management. We need to bring all activities into a management system 

that will ensure that we keep drawing the benefits through time. 

Now, in terms of conclusion, I think, as I have said again and 

again, our research and those of colleagues around the world show 

that marine recreational activities support billions of dollars of 

businesses and that these businesses have impacts on the ecosystem and that is a part of the equation. You know, the more we 

go there, you have 110 million going, there are going to be impacts, 

and therefore, we need to find a way to manage that if we want 

these benefits to continue coming through. And from an economic 

theory of common property, as I said earlier, deregulating completely, deregulating common pool resources can be risky because 

of the general push to grab the resources. If there is money to be 

made, we will all want to make it so we need to have some ways 

to regulate so that we can continue to get the benefits. 

Finally, it is important to not forget the fact that a healthy environment is the basis of any economy, no matter how sophisticated 

the economy is. I made this point at the recent Rio +20 Summit. 

There was a big dialogue there and I was one of the panelists. 

Economies, we realize that an economy is based on taking reVerDate Mar 15 2010 09:46 Nov 16, 2012 Jkt 076485 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A485.XXX A485

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sources from nature. We take the fish. We take the oil, the gas 

from the oceans and so on, and we do all our economic activities. 

And what do we do at the end of it? We pump out the things we 

do not like into nature. Right? The pollutants, the pollution into 

the ocean. So it is important to recognize that you need nature, and 

anything we can do to maintain our ecosystems is really important 

and good for the jobs and the money and the fun we derive from 

nature. And I just wanted to make this clear today to the Committee. Thank you very much. 

Mr. WEST. Thank you, Doctor. And we can start with my colleague, Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. Mr. Chairman, I would 

like to thank you for your leadership on this issue. I know it is 

something that is incredibly passionate for you and obviously, listening, important for our country as well. I come from the high 

water country of the entire nation in Colorado, so our oceans are 

a little limited up there, but this is something that we obviously 

all have, I believe, truly in common in terms of regulations that we 

are feeling as businesses. And Dr. Sumaila, I agree with you and 

I think everybody on the panel would as well. No one is calling for 

absolute deregulation. It is just common sense regulations that we 

would like to be able to see because we are part of the ecosystem 

as well and need to be able to survive. And as we see overreaches 

from government that are hampering our ability to be able to 

dredge a river and to be able to keep those people employed, to 

being able to sell boats in Michigan when you are coming out of 

Florida, to being able to keep those recreational fleets moving out 

as well, I have often found that people get a real appreciation actually for the environment when they are exposed to it, and a real 

appreciation for what is out there. So I do appreciate all of our 

panel here for being here as well today. 

I have a couple of questions here. Ms. Hebert, you were talking about a pretty big industry, $8.9 billion if I wrote that down correctly 107,000 jobs, 95 percent of your businesses are small businesses, people that are trying to be able to provide for their families and actually to be able to contribute back into those communities as well. You had mentioned that there is language to be able 

to restore congressional intent from 2009. Has it been your experience over the course of your participation in this industry that you 

see a regulatory body that at times runs off on its own track and 

exceeds congressional intent or completely distorts congressional 

intent? 

Ms. HEBERT. I would have to say I can only really answer on this 

issue. And I think the difference between, you know, the marine industry, a lot of people think of it as a hobby, and it is something 

that people enjoy, but the fact is that we are an industry. In this 

case, Congress spent a lot of time. The part that is really frustrating, I actually have a letter here that I am going to hold up and 

it is from August 4, 2004, thanking me for testifying on this issue 

by a congressman at the time, vice chairman, Subcommittee of 

Workforce Protections, Judy Biggert. That is eight years almost to 

the day we vetted this. There was research that was done and yes, 

for this regulatory agency to supersede the intent, this was bipartisan. This was numerous administrations, and so on and so forth. 


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I do not think it was done wantfully. I honestly think sometimes 

there is just a misunderstanding of the industry. We are not here 

advocating on behalf of yacht owners. We are here advocating on 

behalf of those 107,000 jobs and families that buy property and 

have their kids in school and that are Americans. So I think it is 

more of a misunderstanding versus anything wantful. 

Mr. TIPTON. I am just kind of curious. There are some of us who 

believe that before a lot of these regulations go final, it might be 

a good idea for the regulatory body, so that we do not have these 

type of misunderstandings or misinterpretations, go on to be able 

to bring those regs back for review to the authoritative committee. 

Would that be a sensible approach in your mind? 

Ms. HEBERT. Absolutely. Because we would like the opportunity 

to simply say—and I think what happened, the intent was not to 

cause more of a problem. I think there was just a misunderstanding of what the impact would be and the significance of what 

that impact was. And therefore, if we had had an opportunity to 

really talk about here is this definition, here is why that will not 

work. And the other part I want to make very clear is it is not only 

just about the recreational industry and small businesses having a 

problem. It is also the insurance industry. The insurance industry 

needs a bright line to be able to go, you are under longshore or you 

are not. And remember, you do not get any exclusions from the 

longshore unless you have state compensation. Every worker must 

be covered. So the insurance industry is even more confused, and 

honestly, what has happened is we are much worse because the insurance industry is saying there is no bright line. We do not really 

know what this definition means. So pretty much everybody in the 

repair industry, all of your work is now considered commercial 

under this definition, and I really do not believe that that would 

have been the case. Had we had the opportunity to review it, I 

think there would have been that discovery. 

Mr. TIPTON. You brought up the American Recovery and Reinvestment Act and how it impacted your businesses. Was that a success, failure as it affected your businesses? 

Ms. HEBERT. Well, I will say this. I am not happy with a lot that 

is in there but page 862, where there was the amendment for the 

longshore, that absolutely affected my business. I will tell you, I 

was able to hire three additional people after that went through. 

Just to give you an understanding of what this longshore means, 

and I am not sure. I do not want to take up too much time, but 

the recreational marine industry makes—the difference between, 

let us say you have got longshore and you have got state comp. 

Okay. The difference is when it comes into total disability and you 

have death benefits and lifetime. And, you know what, that is 

something that is absolutely deserving for those people that are 

working in those hazardous environments. The recreational industry makes up .001 percent of total disability workers’ comp claims. 

Meaning 99.99 percent of the time it has nothing to do with our 

industry. Therefore, when you compare apples to apples, state 

comp is adequate with longshore. However, when you are talking 

about money, the money to that, it takes my workers’ comp and 

multiplies it three times. So now I am up to upwards of $50 for 

every $100 of payroll going to workers’ comp. I cannot have labor 


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rates that are competitive. In South Florida, they are going to go 

to the Bahamas and in the Pacific Northwest, they are going to go 

to Canada, in the Pacific Southwest, they are going to go to Mexico. 

These boats are mobile and they have choices. 

So for us that was extremely significant because it was immediately jobs stayed here. Boatyards saved hundreds of thousands of 

dollars, and it is the boatyards that enable workers like myself to 

come in—plumbers, electricians, builders. So honestly, the ARRA 

saved our industry with that. We were able to be in a position that 

we could hold tight when our economy was really not going to go 

well. 

Mr. TIPTON. Thanks for your testimony. 

Mr. Ducharme, I am a small business buy, too, and one of the 

frustrations I think that many of us have is we continue to see 

moving goalposts, not only in terms of the regulatory process that 

Ms. Hebert was just talking about but also in regards to the tax 

code. Can you maybe speak to the importance of being able to have 

some real certainty in terms of what we need to have in terms of 

tax code and regulation in this country? 

Mr. DUCHARME. Absolutely. The issue that arises is twofold. The 

first one being not the most significant but it is significant in the 

sense that from a competitive standpoint, if the tax regs are not 

consistently applied and applied to everyone in the industry that 

you are in, then the price point that you are charging for your boat 

would need to be higher to offset those tax liabilities, and ultimately, you will not be competitive in your industry. So having a 

clear understanding across the entire breadth of your competitors 

allows you to compete on a level playing field. 

Mr. TIPTON. So common sense and some real certainty, you could 

save a lot of money probably in terms of attorney fees that you 

mentioned, $100,000 I think is what I wrote down? 

Mr. DUCHARME. Yes. 

Mr. TIPTON. You probably would have invested that in your business. 

Mr. DUCHARME. Absolutely. 

Mr. TIPTON. Help keep people employed. 

Mr. DUCHARME. Absolutely. 

Mr. TIPTON. Expanded your business and tried to be able to grow 

it. And the government’s policies are inhibiting that development 

of capital to be directed in those directions. 

Mr. DUCHARME. Well, the state’s actions by aggressively pursuing those out-of-state corporations and us needing the federal 

government to keep that flow of interstate commerce going without 

the impediments of states saying we are looking for revenue, outof-state corporations seem to be the easiest to get that revenue 

from, so let us go after them, because they know at the end of the 

day the cost to actually argue and go to court and fight for what 

appears to be obvious is very expensive. 

Mr. TIPTON. Right. I appreciate that. 

Captain, I wanted to be able to ask, and I apologize I am going 

over time, Mr. Chairman, here a little bit. 

Mr. WEST. Continue on. 

Mr. TIPTON. With the dredging permits, how long is it taking you 

to be able to get these permits renewed? 


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Mr. ENGEMANN. We have been on extension since 2000. 

Mr. TIPTON. Since 2000. We are in 2012. 

Mr. ENGEMANN. Right. 

Mr. TIPTON. Twelve years to be able to do that. 

Mr. ENGEMANN. Sometimes they will give you a six-month extension, sometimes it is a year. 

Mr. TIPTON. Does that create some uncertainty for you? 

Mr. ENGEMANN. Yes. Why would I invest in my business? You do 

not know if you are going to be dredging next year. The sales are 

always there and the sand is always there, you know, but if you 

cannot get a permit to operate then why invest? 

Mr. TIPTON. I think that speaks to a very important point that 

we have tried to address through this Committee and through a variety of committees in terms of the regulatory uncertainty that we 

are seeing and the inability apparently of this government to be 

able to give some certainty to people in the private sector when it 

gets down to some of the permitting. It is an unending process that 

we are dealing with it seems like that is truly hurting our ability 

to be able to create jobs. 

I want to go a little bit to your point in regards to MSHA as well 

and the thoughts that they come in the door and it seems to be a 

fine and punish mentality as opposed to improve and correct. Is 

that a fair assessment? 

Mr. ENGEMANN. Right. Whenever they come, anything they find 

wrong is a fine depending on how severe the fine or how dangerous 

the situation is that they may have found. And then it is an allotted fine based on your employees, based on how many times you 

have been fined for that same thing before. It is quite an equation 

to come up with your fine amount. We try to do the best that we 

can, you know, to prevent them, obviously, because we want to 

have a safe work environment for our employees. But we would fix 

anything that they found wrong, and most everything that they do 

find wrong, after the fine we have it fixed before they leave, the 

inspector leaves, or at a minimum of 24 hours by the time they 

come back to close out our inspection. So a fine does not—it is just 

an extra expense that you have to put in your budget every year. 

It does not make our company any safer to me. 

Mr. TIPTON. Well, I appreciate that. Believe it or not, we have 

that in a lot of businesses. I have dealt with OSHA as well with 

the same principle of wanting to be able to come in and fine and 

punish. 

I guess I would like to close, and if you would speak to this, Captain, you indicated that you are held to a high standard. You have 

one problem with that. You want to make sure that you are doing 

it safely, doing it properly, but government is not holding itself to 

that same high standard. If they do not mark the channels correctly, you can actually have a problem with being able to safely 

operate your business because government has failed to do the job 

that they are charged with doing. How many fines has government 

paid? 

Mr. ENGEMANN. I do not know. My tugboat has been stuck for 

two days in a spot that we cannot get through. 

Mr. TIPTON. How much is that costing you? 


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Mr. ENGEMANN. It is probably $4,500 a day. We have a crew of 

seven. We are pushing fertilizer to Nebraska City. 

Mr. TIPTON. And whose responsibility, just to be clear, was it to 

be able to mark that channel? Was it yours? 

Mr. ENGEMANN. No. 

Mr. TIPTON. Whose? 

Mr. ENGEMANN. The Coast Guard and the Corps of Engineers. 

Mr. TIPTON. Okay. And the Corps of Engineers. 

Mr. ENGEMANN. The Corps of Engineers would make the channel 

navigable, but we are having issues on the Missouri River with the 

Endangered Species Act where they make habitats and we have 

more water going through the habitat channels than we have in 

the river, navigable river. There is a 40-foot deep channel where 

the pallid sturgeon are supposed to be swimming and I have got 

seven feet where my barge is supposed to be. 

Mr. TIPTON. I appreciate that and again, I appreciate our panel 

taking the time to be able to be here. I know it is an expense when 

you could actually be out doing your job as opposed to sitting in 

Washington, but I think this is important just to be able to shine 

the light of day that government can have some real impact. Sometimes there are a few positives that are out there, but we have got 

to be able to bring some common sense to this regulatory policy, 

to the taxation policy, and to be able to make sure that we have 

that common sense balance to be able to meet the needs, not only 

of our environment but that other portion of the environment, the 

American people as well. So thank you, and I yield back, Mr. 

Chairman. 

Mr. WEST. Thank you, Mr. Tipton. 

My first question overall to the panel, do you think that there 

is a negative stigma that is associated with the marine industry 

here in the United States of America? 

Ms. HEBERT. Yes. 

Mr. WEST. Can you elaborate? 

Ms. HEBERT. Absolutely. I, again, think it is a misunderstanding 

that this is all about gluttonous, having fun, that rich yacht owners 

are, you know, taking advantage of the government and you do not 

want to be regulated. There is nothing that could be further from 

the truth. In fact, I think that the government should mandate 

that anybody that makes over a certain amount of money be forced 

to buy a boat of a certain size because the quickest way to put 

money into the economy is buy a boat. You are either going to constantly be fueling, provisionally, repairing, all of those things. And 

all of those things, each and every step of the way, create jobs and 

money. So there is a huge misunderstanding. 

Mr. WEST. Anyone else? On average, per year, with one, you 

know, give an example, what is the provisioning for one boat or one 

yacht or recreational vessel that you see? 

Ms. HEBERT. Well, I can give you one example of a boat that is 

a 150-foot boat, U.S. built. Their annual budget is $4.5 million. And 

that is just maintenance. That is I am going to get some repair. I 

am going to provision. That does not include fuel, which every 

state, anywhere they go to get fuel, those taxes go, and especially 

in the state of Florida, they go to the general revenue. But that is, 

basically, you have crew to maintain it. You are going to Whole 


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Foods or Publix or your Stop and Shop or your Kroger’s or whatever your grocery store is. That is a general maintenance, $4.5 million. 

Mr. WEST. Dr. Sumaila, you talked about balancing ecosystems, 

and I thoroughly agree with you. I am a master scuba diver myself, 

and of course, you cannot get out to dive unless you have a boat. 

One of the things that we have down in South Florida, we are finding is that an invasionary species was introduced there. The lion 

fish has no natural predators, and one of the things that is promoted locally are lion fish rodeos where you get, you know, dive 

boats to go out and, you know, whack these little rascals and they 

are good eating as well. 

So I think that we do have those systems in place. It does not 

always have to be by the government coming down with regulation, 

but you have people that understand that the ecosystem is necessary for them to be able to go out and enjoy, you know, the boating. So I think that you have a system of policing oneself. My question to you is that when you sit and look at the recreational industry, boating industry here in the United States of America as far 

as them taking care of their ecosystem, how does that compare to 

some of the other places that you have been in your travels? 

Mr. SUMAILA. You are right, Congressman, that regulation is not 

just about the government. It is about the people themselves and 

it goes all through the system. We talk about co-management a lot 

in places where you have business people meeting with government 

officials to find a way to do it in the co-management fashion. And 

you also have situations where the businesses and the communities 

take care of their things. So there is a wide range of ways of making sure that we make and keep the ecosystem healthy. 

Mr. WEST. But when you do a comparative analysis between 

what you see here in America, as you say, you have done studies 

here and research with other countries where you travel, how does 

the United States of America rate as far as our recreational marine 

industry and how we are caring for our ecosystem? 

Mr. SUMAILA. This is a question I have not specifically looked at, 

so I would not be able to give you the scientific kind of answer. But 

if you go to South Africa, in Namibia, they do have recreational 

fisheries. And when I compared them and the U.S., it is reasonably 

similar actually because they do a good job, too, relatively, to the 

U.S. So yeah, South Africa and Namibia look similar to the U.S. 

in terms of managing. 

Mr. WEST. Ms. Hebert, one of the things—you talked about how 

this statute, this amendment was part of the American Reinvestment Recovery Act. That is law. And so how do you think it is possible that a government agency can come back and all of a sudden 

supersede something that was law? 

Ms. HEBERT. I am not sure. I think that as Congressman Tipton 

suggested, I do not know that that was their intention. I think that 

there was a statute with a definition and they thought, well, let us 

make the definition better to understand that intent. Had they sat 

down with the repair segment of the industry and had that conversation and gone through the review and done the legislative review of that, they would have seen that that was inaccurate. I 

think it is communication. I do not know why that was the case. 


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Mr. WEST. So they did not do any type of checking with the industry whatsoever? 

Ms. HEBERT. There was a comment period put out. We did provide comments. I know that there was some discussion with the 

manufacturing portion of the industry and there was a very positive relationship. I just think on the repair side it was deemed insignificant. It was never reviewed by the Office of Budget and Management because, again, it was deemed insignificant. 

Mr. WEST. Is it deemed insignificant to you? 

Ms. HEBERT. Absolutely not. 

Mr. WEST. Okay. So again, we have an instance where regulatory 

fiat trumped the legislative process in your estimation? 

Ms. HEBERT. And long term. And I do want to say that this was 

a long, many Congresses different presidents. Whether it was a republican or democrat administration, this spanned over four congresses. The work was done. 

Mr. WEST. Mr. Ducharme, question. You ship your boats worldwide. Can you give us a comparison between the problems that you 

have that you brought up with Michigan and New Jersey or some 

others as opposed to when you are shipping your product worldwide? I mean, do you find yourself being at a greater disadvantage 

doing operations right here within the United States of American 

than doing it globally? 

Mr. DUCHARME. Well, it is the most difficult to understand and 

the most cumbersome, absolutely. But from an international standpoint we ship to 20 different countries around the world and our 

responsibility stops once we deliver our product to the boat. So my 

understanding and information that I have about the European 

Union or Russia or China is pretty limited. But domestically, it is 

cumbersome. It is impossible to capture and understand what state 

or what municipality may be going after our industry and what 

tactics they may use to determine if they are going to send you a 

questionnaire, call you on the phone, tell you that they have your 

boats, you have got to pay some money in order to get them. So 

it is not easy to plan for. 

Mr. WEST. With the growth and the advent of the Internet, do 

you think that that will provide you the right type of presence in 

other states? Do you think that would meet that qualification? 

Mr. DUCHARME. As far as the Internet and selling our product? 

Mr. WEST. Well, being able to have a presence in some of these 

other states because that is what you were talking about, this ability to say that you have a presence so that you do not receive this 

type of taxation. 

Mr. DUCHARME. Physical presence, correct. 

Mr. WEST. Yes. 

Mr. DUCHARME. So if there is a bright-line standard that says if 

you have these particular employees, property, payroll, and you 

have contact with our state that exceed a certain number of times 

per year because you are aggressive soliciting sales in our state, 

then you are going to fall under our taxing jurisdiction. Otherwise, 

we are not trying to avoid tax but you need to—you will still pay 

tax within the state that you are domiciled. 

Mr. WEST. Do you have any other state taxes that you get hit 

on? 


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Mr. DUCHARME. Yes, we pay in the state of Washington, Michigan I mentioned, New Jersey, and Louisiana, and Texas, and New 

Hampshire. 

Mr. WEST. Captain Engemann, you bring up a great point that 

affects, I think, this industry as a whole with our inland waterways, our ports and what have you. Why do you think it is taking 

so long for the Corps of Engineers to get through dredging permits? 

Mr. ENGEMANN. There is a vast region that we are permitted. We 

are all permitted together on the Missouri River as one permit. We 

have individual permits to our company but we have Kansas City 

to the mouth at St. Louis, and there is a wide range of problems 

that the local graders may or may not have, like, in Kansas City, 

they have a bad degradation issue that is not the same where I operate. In Hermann, Missouri, we do not have that issue but I am 

still delayed with my permits. 

Mr. WEST. You mentioned earlier in your testimony all the different agencies that you have to go through, all the wickets. Do 

they ever have monthly or quarterly coordination meetings where 

you can sit down and do the one-stop shopping instead of having 

to stovepipe with each one of these agencies? And do you find there 

is no crosstalk and coordination between these agencies that you 

have to contend with? 

Mr. ENGEMANN. There is no crosstalk, excuse me. A similar issue 

with, like you say, my dredge operator got an injury a few weeks 

ago. I reported an accident report to MSHA and the Coast Guard 

because he is a marine employee, but it means we are regulated 

by MSHA. We have to report it as my incident as well. So just one 

example. We are crossing all the time. 

Mr. WEST. You talked about the navigation devices. How often 

have you told the Coast Guard about this issue with the navigation 

devices and what type of response have you gotten back? 

Mr. ENGEMANN. After a few months go by of negligence, then you 

will get some response and then they will come out and try to do 

better. There are big opportunities on the Missouri River to be successful if we can get the Coast Guard and the Corps of Engineers 

to work with us. We have increased our business tremendously this 

year and it has got a lot of potential. 

Mr. WEST. When you talk about the penalties and fines that you 

get, are you aware of these checklists that they have? Are there 

spot inspections? Are they scheduled inspections? If you are, as you 

said, able to rectify the situation on the spot while the inspector 

is there, do you still find yourself getting penalized and fined? 

Mr. ENGEMANN. Still get fined. Yes, sir. 

Mr. WEST. Even if you correct it right there on the spot? 

Mr. ENGEMANN. Even if we correct it right there. 

Mr. WEST. Annually, last year, how much of an economic impact 

did that have on you? 

Mr. ENGEMANN. I would say $4,000 or $5,000 probably. We try 

to do our best. Like I say, we appeal something if it is a large fee 

or something. 

Mr. WEST. But even in appealing, does that cost you money in 

the appealing process? 

Mr. ENGEMANN. It takes my time personally. You have a book of 

regulations from every agency that you try to follow, and in a large 


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company they probably could have a full-time person be a safety 

inspector. 

Mr. WEST. Compliance person. 

Mr. ENGEMANN. But in a small business you cannot afford it. 

Mr. WEST. Because you only have 10 employees. 

Mr. ENGEMANN. I only have 10 employees. 

Mr. WEST. And most of them are out there on the river? 

Mr. ENGEMANN. Exactly. 

Mr. WEST. To include yourself. 

Mr. ENGEMANN. Including myself. 

Mr. WEST. Do you sometimes feel that these folks are coming 

down and they are working counter to you? 

Mr. ENGEMANN. Yes, sir. We will hire a consultant sometimes, 

like a safety consultant, if I feel like we are not keeping up as good 

as we should or a new regulation that I do not understand, then 

I hire a professional consultant. 

Mr. WEST. Once again that cuts into your profit margin. 

Mr. ENGEMANN. Minimum of $1,500 for basically a day or two. 

They will come out and might do a safety audit on your company 

or check for noise or dust or something. There is no way we could 

ever be out of those limits. It is not possible. 

Just for an example, dust. We have to check that annually. 

MSHA checks it annually. We are dredging sand that is wet. I 

mean, it is never going to have dust. But we still have to check it. 

Mr. WEST. Excuse me for laughing. 

Mr. ENGEMANN. And it gets to be very frustrating. We intend to 

be there a long time and we have got long-term employees. We 

have been here 20 years and growing, and everything we invest in 

our community, in our business, and this is very frustrating. 

Mr. WEST. You know, you and Ms. Hebert are generational businesses. How do you look at the death tax and how that is going 

to affect you? If we are talking about taking this from 35 percent 

bracket to 55 percent bracket, dropping the minimum exemption 

level from $5 million down to $1 million, I mean, are we going to 

be able to continue to pass on to subsequent generations the businesses that your fathers and forefathers created for you? 

Ms. HEBERT. In my opinion, no. I think it is going to create such 

a disincentive or hurdles that instead of being focused on investing 

in our businesses and figuring out how, I mean, I plan on being 

there for our 100th anniversary, and I want to make sure that that 

happens. But when you have these hurdles such as this, I mean, 

how do you overcome that? And I think what is going to happen 

is there will be a way and eventually it will right itself. How many 

travesties and how many businesses are not going to be there or 

are not going to make it through? 

And at the same time, while our government, as Captain 

Engemann said, we are not looking for subsidies. We are not looking for any support. Congressman, where is the world’s largest boat 

show? 

Mr. WEST. Fort Lauderdale. 

Ms. HEBERT. Fort Lauderdale. The city, the state, and the county 

have contributed in the 53 years of this show zero dollars, and that 

is okay, because it is still the world’s largest boat show. But when 

you have governments—I just came back from Taiwan last week. 


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In Taiwan, the United States is between number two and number 

five on the global order book. Taiwan is number seven. This government, in addition to creating a regulatory environment that 

does not have hurdles for generations—which by the way that is 

very generational—they are touting themselves, marching towards 

status as the world’s luxury yacht manufacturing capital of the 

world. And with incentives and regulations that are for—I mean, 

they are building an entire waterfront. And you talk about the 

Army Corps of Engineers. I saw a boatyard change its facilities in 

one year and they now are able to put their boats in the water. 

Dredging was done in six months. There was not an Army Corps. 

Now, is that going to happen overnight? But when these countries 

figure it out, that we are going to overregulate ourselves, the business will go elsewhere, just like other industries it has. And I think 

that the death tax is very symbolic of that. Again, I do not think 

it will be forever gone but there will be many businesses. It will 

recreate our industry. We will not have the heritage. 

Mr. DUCHARME. As a small family business, we take pride and 

our goal is we raise our kids in the family business. They are a 

part of our everyday life. And if you have to pay 50 percent tax for 

the next generation just to get it, that is not going to happen. You 

would end up selling the business. 

Mr. WEST. Would you say that our marine industry is a 

generational industry? 

Mr. DUCHARME. Yes, sir. We are second generation, going to be 

going on third, hopefully. 

Mr. WEST Anything else, Mr. Tipton? 

Mr. Tipton. I just had maybe one more, Mr. Chairman. Showing 

the picture of the yacht, I have a friend and he said the only thing 

better than owning your own boat is having a friend who owns a 

boat—when you were talking about the ongoing expenses. But it 

obviously does create employment. 

You know, I do serve on the Small Business Subcommittee and 

chair, oversee Energy, Ag, and Trade, and one thing that we are 

always looking for is ways to be able to help American businesses 

really to be able to export. You are talking about the Taiwanese 

wanting to become the world’s largest yacht builders, to be able to 

export those boats over here. But I am a little surprised because 

I think it is positive and we would like to be able to see that grow. 

U.S. exports, being about—we export about 21 percent of the 

powerboats manufactured here. Given that many of you are involved in, to some degree, exporting or facilitating some of the exporting that is going on, are there any additional steps that you see 

that Congress should be considering and should be undertaking to 

streamline or improve that part of the process? 

Ms. HEBERT. I will answer quickly on that. Because I am not in 

the manufacturing and as far as the export, what I would say is 

remember that these are boats and they can come back. That if we 

export them, they do not have to go away because they can come 

right back. And let us make it easy for them to come back as foreign goods, and let us make sure that we still give them every incentive to come back and spend money in our U.S. waters. 

Mr. TIPTON. Great. Thank you, Mr. Chairman. 


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Mr. WEST. My final question comes back to the first question. We 

talked about the negative stigma on the marine industry. I would 

like to ask each and every one of you, what do you think that we 

can do to put a true American face on this industry to make sure 

that we do not have regulatory agencies that are coming up with 

their own little rules and changing rules to go against law? That 

we can make sure that agencies are out there supporting our business growth and ensure that we can have production manufacturing and also the transfer of goods along our inland waterways? 

So what would be your suggestions to help us to ensure that we 

keep the marine industry vibrant and safe to go on for future generations? 

Mr. DUCHARME. Well, I think the point that you make that putting a human face on the industry is the most critical. We work 

with and are a member of the National Marine Manufacturers Association and each one of the manufactures that are a member of 

the group contribute based on the number of engines that they buy 

from the likes of Mercury and/or Volvo. And advertising and putting the human face on the family aspect and the jobs that all 

manufacturers create within the United States, it is a luxury good 

but it is for enjoyment, and responsible boaters are passionate 

boaters and they take care of waterways and they take responsibility for the environmental impact. And you find now that as Ms. 

Hebert mentioned, it is an expensive hobby. And you do not go into 

it unless you have a lot of passion for boating. And that is the face 

and the relationship that we have to make with manufacturing and 

pleasure boating within the U.S. 

Mr. ENGEMANN. The one thing is that the agencies that regulate 

us need to have personal interaction with our companies, whether 

it be the Corps, Coast Guard, or MSHA, especially the people that 

make the rules. I want them to come talk to me. I want them to 

get on my equipment. I want them to get in my mind and see how 

we work. See how their rules are going to affect us. And there has 

got to be a common sense approach. You look at how this company’s exports go for basically money. I mean, we have got a terrific debt. And the goods that we are shipping in the Missouri 

River is cash. You know, we are taking soybeans out of the Midwest that are very valuable globally. And that has got to be very 

important to hold that transportation asset open so we can safely 

transit. You know, the more goods we get down that river, the 

more cash comes in. To me that is very simple. I would consider 

the Missouri River to be the eighth wonder of the world. It was a 

feat. Whenever they built and designed this thing for 2,500 miles 

between the dams and the property that was created to grow crops 

and then they had the most efficient transportation mode highway 

built along the same—to try to get—I do not know how many 

states it is, all thinking the same, that is a feat. And now we are 

blowing holes in it. They lost the common sense approach to keeping our marine system active, viable, and efficient. Thank you. 

Mr. SUMAILA. The key point is for the U.S. to do all the country 

can do to maintain a healthy ecosystem. Taiwan, Thailand, if they 

keep allowing things to be taken down and the U.S. maintains its 

own, the businesses will come back here. So that is crucial. And 

how to do that is the common sense regulation, and you have to 


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think of the businesses. Make sure you are not putting too much 

betting on them whilst we do all we can to maintain the ecosystem. 

And another thing that maybe the U.S. can do because the U.S. 

is an influential and powerful nation, is actually looking at these 

other countries and using whatever instruments and mechanisms 

to make sure that they do not disadvantage U.S. companies. I 

think that always you can do that. So Taiwan, if you want to do 

business with the U.S., there are some things you have got to do 

or we do not do business with you because that will help us avoid 

getting into what economies say race them to the bottom. Because 

if we all just keep saying, okay, if you regulate us and they do not 

do it with a disadvantage which is true, they are going to keep 

going down that way, lose the ecosystems that we all need and depend on for these businesses to go on. So maybe that could be another channel to use. 

Ms. HEBERT. I think I am probably going to reiterate what all 

of my colleagues have said, is that a lot of it is communication. I 

have to say in fairness, I have never sat down with a legislator, regardless of where they are from, and by the end of the conversation 

not have them understand that the marine industry—many times 

there is an aha moment depending on where they are from. Not everybody is blessed to be a South Florida representative, but there 

is always an understanding once it is explained. So some of that 

onus is on our behalf, and I think it is all working together. I think 

having a level playing field with trade agreements, being able to 

do some things back and forth so there is not that incentive one 

way or the other that is heavy, and just really getting past the 

word ‘‘yacht’’, and knowing that is okay. Big boats are good things 

and big boats equal big jobs. 

Mr. WEST. Well, thank you all again for being with us today. And 

as Chairman Coffman noted in his opening statement, the coastal 

and inland water transportation system is often the economic lifeblood of the regions where they are located. Small businesses 

across the country utilize our ports, our rivers, our lakes for a wide 

variety of applications for commerce and recreational alike. The 

maritime industry is a significant contributor to our national economy, and the federal government needs to do a better job of balancing priorities so that these waterways are maintained so that 

they remain valuable resources that they are. 

I look forward to working with all of you on these issues presented today, and again, I appreciate you being with us today and 

thank you for your testimony. 

I ask for unanimous consent that members have five legislative 

days to submit statements and supporting materials for the record. 

And without objection, so ordered. This hearing is now adjourned. 

[Whereupon, at 11:12 a.m., the Subcommittee was adjourned.] 


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