Source: https://www.federalregister.gov/documents/2011/12/30/2011-32880/regulations-implementing-the-longshore-and-harbor-workers-compensation-act-recreational-vessels
Timestamp: 2019-04-26 00:32:25
Document Index: 575474190

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A Rule by the Workers Compensation Programs Office on 12/30/2011
82117-82129 (13 pages)
https://www.federalregister.gov/d/2011-32880 https://www.federalregister.gov/d/2011-32880
Start Printed Page 82118
A significant number of marinas and a marina trade association submitted comments in response to the NPRM. Most of these commenters expressed concern that the proposed rules would require marinas to purchase LHWCA insurance in addition to state workers' compensation insurance. The Department notes, however, that the LHWCA excludes from the term “employee” those “individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance),” provided the worker is subject to a state compensation law. 33 U.S.C. 902(3)(C). Start Printed Page 82119This exclusion has rarely been tested in litigation, and the LHWCA does not define the term “marina.” Whether any particular facility is a marina and whether its workers are excluded under the terms of section 2(3)(C) is a highly fact-bound question. See generally Keating v. City of Titusville, 31 BRBS 187 (1997). But at least some of these marinas' workers would likely be excluded from LHWCA coverage under section 2(3)(C).
The Department has decided to withdraw proposed § 701.303. This rule codified both the Director's longstanding position and controlling case law that the LHWCA covers a maritime employee if he or she regularly performs at least some duties that come within the ambit of the statute as part of his or her overall employment (i.e., “qualifying” employment). 75 FR 50722 (Aug. 17, 2010). The rule also clarified that LHWCA coverage does not depend on whether the employee is performing qualifying maritime work or non-qualifying work at the time of injury. In discussing the proposal, the Department conducted an exhaustive review of the governing Supreme Court case law and noted the Court's “bedrock principle that `maritime employment' for LHWCA purposes is a unitary concept: Coverage is established whether or not the employee was performing a particular covered activity when injured so long as his overall employment includes ‘some' qualifying maritime employment.” 75 FR 50723, quoting Caputo, 432 U.S. at 265, 273. The Department viewed the rule as important to advising the regulated public of the LHWCA's coverage. 75 FR 50722.
The Department received many comments on the proposed regulation. A great number of these commenters saw proposed § 701.303 as an unwarranted expansion of the LHWCA's coverage and expressed great concern over the additional costs employers would incur if required to carry LHWCA insurance. Most of these comments focused on the nature of the facility (e.g., repair shop, manufacturing plant) where recreational vessel work is performed or the identity of the employer, rather than on the nature of an employee's work at those facilities. The commenters stated that it would be difficult to ascertain when a particular facility or employer conducted sufficient LHWCA-covered operations to trigger LHWCA coverage for the entire facility. Stating that the “some” standard was too vague and would lead to litigation, the commenters urged the Department to adopt a bright-line rule that would be easy to administer and set a high threshold for coverage to comport with the purpose of the recreational-vessel exclusion. Most commenters proposed an 80%-20% split: So long as less than 20% of a facility's or employer's work was on commercial vessels and the remainder on recreational vessels, all work at the facility would be excluded from LHWCA coverage.
The comments misconstrue both the section 2(3)(F) exclusion and the import of proposed § 701.303. Some of the exclusions from the definition of “employee” in LHWCA section 2(3) focus on the nature of the employer. For instance, section 2(3)(B) excludes “individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet.” 33 U.S.C. 902(3)(B) (emphasis added). See Boomtown Belle Casino v. Bazor, 313 F.3d 300, 303-04 (5th Cir. 2002) (holding that plain language of section 2(3)(B) exclusion turns “on the nature of the employing entity, and not on the nature of the duties an employee performs”). But section 2(3)(F) excludes individuals based solely on the type of work they do: It excludes “individuals employed to build * * * repair * * * or to dismantle * * * in connection with the repair” of a recreational vessel. 33 U.S.C. 902(3)(F) (emphasis added). Cf. Boomtown Belle Casino, 313 F.3d at 303-04 (contrasting section 2(3)(B)'s recreational exclusion with section 2(3)(C)'s exclusion for certain marina employees based on their job duties). Thus, for recreational vessel workers, the statute focuses exclusively on the kind of work the employee performs and not on the identity of the employer or the type of facility where the work is performed. Those comments urging the Department to adopt an 80%-20% rule based on the nature of the work performed by a particular employer or at a particular facility as a whole are inconsistent with the statute's plain language.
Moreover, as noted, proposed § 701.303 was not intended to expand LHWCA coverage. Rather, the rule codified the Supreme Court's interpretation of the LHWCA. The Department stands by its analysis of the governing case law. Thus, even in the absence of a regulation, a worker who regularly performs at least some duties that come within the ambit of the LHWCA as part of his or her overall employment is covered under the LHWCA, even if the injury occurs while the worker was not performing qualifying maritime duties. Caputo, 432 U.S. at 273. So too is a worker who is injured while performing qualifying maritime duties, regardless of his or her other job duties, so long as that employment is not excluded under section 2(3). See, e.g., Chesapeake and Ohio Ry. Co. v. Schwalb, 493 U.S. 40, 47 (1989) (“It is irrelevant that an employee's contribution to the loading process is not continuous or that repair or maintenance is not always needed. Employees are surely covered when they are injured while performing a task integral to loading a ship.”).
Nevertheless, the Department has elected to withdraw the proposed rule. The Department appreciates the difficulties recreational-vessel employers and facilities face in determining whether their workers are performing LHWCA-covered activities in order to purchase the appropriate insurance. Further investigation into the industry's needs is warranted. Moreover, even though this rule would have an impact on the entire longshoring industry, the Department received only a few comments from individuals or groups with interests extending beyond the recreational-vessel segment of that industry. This result is not surprising because the NPRM chiefly involved implementation of the section 2(3)(F) exclusion for recreational-vessel workers. Given the rule's broad application, however, the Department is reluctant to promulgate the rule without input from the greater longshoring community.Start Printed Page 82120
In response to a number of persuasive comments, the final rule makes several changes and one addition to proposed § 701.504. This rule sets out standards for determining the date of injury, which governs whether the section 2(3)(F) amendment applies. The final rule makes the date of harmful or causative workplace exposure—rather than the date of death or manifestation—the date of injury for determining whether the amendment applies in cases of occupational disease, hearing loss, and death. The rule also adds a new section addressing date of injury for cumulative trauma, which fixes the date of injury as any date on which a workplace trauma worsened the individual's condition.
The Department proposed only technical revisions to this section to accommodate other substantive additions. In particular, the Department moved this section's lengthy definition of “employee” into a new § 701.302. No comments were received, and the rule is promulgated as proposed.
Proposed paragraph (c)(6) updated the paragraph in the definition of “employee” pertaining to the recreational vessel exclusion, which currently appears at § 701.301(a)(12)(i)(F), to incorporate the amended section 2(3)(F) language and cross-reference new §§ 701.501-701.505. No comments were received, and the rule is promulgated as proposed.
(c) One commenter suggests simplifying the rule by describing the vessel categories excluded from the definition of “recreational vessel” rather than cross-referencing the Coast Guard statutes. The Department has not adopted this suggestion. Outside of the manufacturing and building context, a vessel's use at the time the repair or dismantling led to the compensable injury determines its recreational status. Using the general Coast Guard categories will allow the definition of “recreational vessel” to remain current and consistent with the term as used in the recreational boating industry. The Department has made a technical revision to the language in proposed § 701.501(c) to simplify it. No change in meaning is intended by this revision.
(d) Many comments state the proposed definition would unduly burden employers by requiring them to investigate their customers' vessel usage in order to determine whether the boat is recreational. Another comment urges a rule that uses the intent of the owner in buying a vessel instead of its actual use. Others question the feasibility and fairness of holding employers to account Start Printed Page 82121for usage of a boat when off their premises.
The final rule reflects a framework used in maritime and environmental statutes to define public vessels. See 33 U.S.C. 1321(4) (definition of public vessel for environmental protection statute); 46 U.S.C. 2101(24) (definition of public vessel for Coast Guard statute); Blanco v. U.S., 775 F.2d 53, 57-60 (2d Cir. 1985) (discussing “public vessels” as defined in various maritime statutes). This definition requires that the governmental entity own or charter the vessel and use it for a non-commercial and non-military purpose. It encompasses the various kinds of government vessels that the commenters seek to have excluded from LHWCA coverage: Firefighting vessels, police vessels, some Coast Guard vessels, sheriff's office vessels, and state natural-resource-department vessels. But to ensure the definition is not over-expansive, vessels owned or chartered Start Printed Page 82122by a governmental entity that are not of conventional recreational vessel construction or design, or that perform a traditionally commercial service (such as ferrying passengers), or that are military in nature are not considered public vessels.
(a) The Department proposed this rule to clarify what types of recreational-vessel work were covered both before and after the ARRA amendment. 75 FR 50721-22. The rule also made clear that the amendment did not have retroactive effect and that its application was based on the worker's date of injury. The section further defined the terms “length,” “repair” and “dismantle.” Finally, the rule cross-referenced § 701.303 and provided that workers who engaged in both excluded recreational vessel work and qualifying maritime work were covered by the LHWCA.
(d) The Department has made a technical change to the final definition of “dismantle” in paragraph (b)(3). As explained in the NPRM, 75 FR 50721-22, section 2(3)(F) originally excluded workers employed to “dismantle” recreational vessels less than sixty-five feet in length. This unqualified term would have excluded workers who dismantled a vessel at the end of the vessel's life. The amended statute, however, excludes only those workers who dismantle recreational vessels “in connection with the repair of such vessel.” Given this express limitation, the Department concluded that workers governed by the amended statute would not be excluded from LHWCA coverage when employed to dismantle obsolete recreational vessels. Although § 701.502(a)(1) and (2) make this distinction clear, proposed paragraph (b)(3)'s definition of “dismantle” does not. Accordingly, the Department has added the language “if the date of injury is on or after February 17, 2009” to paragraph (b)(3)'s last phrase.
(e) Proposed paragraph (c) essentially reiterated the walking-in-and-out rule that was set forth more fully in proposed § 701.303, i.e., it stated that a worker engaged part of the time in excepted recreational vessel work and part of the time in qualifying work is covered by the LHWCA. 75 FR 50729. Because the Department has withdrawn § 701.303, paragraph (c) has been deleted from the final rule.
The Department agrees with these comments and the final rule makes the Start Printed Page 82123date of injurious exposure the date of injury for occupational diseases. Such an approach is both fairer and more consistent with the position taken by the Department in the past.
As the comments also note, the Department has previously recognized the fundamental fairness of a rule that makes the date of exposure determinative for gauging the effective date of an amendment. Analyzing whether the District of Columbia Workmen's Compensation Act of 1928, D.C. Code 36-501 et seq., which extended LHWCA coverage to private workers in the District from 1928 to 1982, should continue to apply to claims based on employment events prior to that Act's repeal, the Department concluded that, “for the purpose of determining whether a workers' compensation statute applies to such an injury (`coverage'), the relevant legal provisions are those in effect at the time of the employment exposure to the conditions that cause the disease.” 51 FR 4270, 4272 (Feb. 3, 1986). The Department reasoned that “[w]orkers' compensation laws operate upon the employment relationship. The occurrence of an event or events in the course of that relationship is the foundation of any compensation-law liabilities that arise thereafter. The insurance requirement that is a socially and practically critical aspect of compensation legislation attaches to the conduct of covered employment.” Because insurers are responsible for diseases resulting from exposure during the terms of their policies, a manifestation rule would unfairly “relieve[] [insurance carriers] of liabilities they contracted to bear.” Id. at 4272-73.
(d) Hearing loss. For hearing loss cases, proposed paragraph (a)(3) adopted the audiogram date—i.e., the date that the individual received a diagnosis quantifying hearing loss via Start Printed Page 82124an audiogram—to define the date of injury. The Department offered similar reasons to those offered in support of a manifestation rule in occupational disease cases, and additionally pointed out the difficulty of pinpointing a date of exposure in hearing loss cases.
In the proposal, the Department relied on Insurance Company of North America v. Dep't of Labor, 969 F.2d 1400, 1406 (2d Cir. 1992), and similar cases for the proposition that death should be the date of injury. However, although the court held that the time of one's death was the date of injury for determining the applicability of the 1972 amendments, it observed that the goal of the 1972 amendments was “an expansion * * * of the class of persons entitled to benefits under the Act.” Id. Here, the core purpose of the ARRA amendment is sparing businesses from the expense of duplicative state workers' compensation and LHWCA insurance coverage. One simply cannot infer that Congress sought to deny LHWCA benefits where workers were injured while covered by the LHWCA, but died post-amendment, given that employers would have already paid for LHWCA insurance coverage for a death resulting from an injury while a worker was performing LHWCA-covered employment.
This rule has been drafted and reviewed in accordance with Executive Order 12866, section 1(b), entitled “The Principles of Regulation.” The Department has determined that the rule is not a “significant regulatory action” under Executive Order 12866, section 3(f). Accordingly, it does not require an assessment of potential costs and benefits under section 6(a)(3) of that order. Moreover, because it is not a Start Printed Page 82125significant rule within the meaning of the Executive Order, the Office of Management and Budget has not reviewed it.
As required by Congress under the Small Business Regulatory Enforcement Fairness Act of 1996, enacted as Title II of Public Law 104-121 §§ 201-253, 110 Stat. 847, 857 (1996), the Department will report promulgation of this final rule to both Houses of the Congress and to the Comptroller General prior to its effective date. The report will state that the Department has concluded that the rule is not a “major rule” as defined under 5 U.S.C. 804(2).
This definition, in turn, serves several purposes. It gives entities that build or repair vessels guidance regarding the classification of vessels their employees are working on so that they may insure themselves under the appropriate workers' compensation scheme (i.e., the LHWCA or a state law). Similarly, the definition provides guidance to workers who might otherwise be unsure of their rights under the LHWCA. Finally, a clear definition reduces the possibility of litigation over the applicability of the section 2(3)(F) exclusion.[1]
(b) Some commenters, including the SBA, assert that using the Coast Guard standards for classifying recreational vessels will expand the number of small businesses covered by the LHWCA, thereby increasing their costs. Because the term “recreational vessel” has been only generally defined in the past, it is impossible to ascertain the extent to which the revised definition will alter the exclusion's scope and thereby affect small entities. Moreover, the final rule retools the definition so that it involves significantly less verification effort, and to make the definition's scope clear so that businesses can avoid purchasing LHWCA insurance on a precautionary basis.Start Printed Page 82126
(c) Addressing proposed § 701.501, the NMMA comments that the definition of recreational vessel and its use of the Coast Guard standards is ambiguous and will impose additional costs on small businesses that may not be able to determine whether a vessel meets the definition and, as a result, may turn away important work rather than incur the costs associated with LHWCA insurance. The NMMA also posits that insurance firms will be less apt to write LHWCA policies on these businesses, again increasing costs. The NMMA further encourages the Department to adopt a different recreational-vessel definition for boat manufacturers that focuses on the manufacturer's intent in building the vessel rather than on its end use. The SBA similarly states that the Department should consider this regulatory alternative. In addition, a few small repair businesses note that under the proposed definition, they would have to turn away public-vessel work if performing such work made purchasing LHWCA insurance necessary.
The Department has set forth its full response to these and other comments pertaining to the recreational-vessel definition in the section-by-section analysis for § 701.501 above. The Department has made two important changes to the final recreational-vessel definition in response to these comments. These changes will help small businesses identify recreational vessels within the meaning of the section 2(3)(F) exclusion and make informed decisions regarding their need to obtain LHWCA insurance. First, the Department has promulgated an alternative definition for manufacturers and builders, which allows them to assess a vessel's recreational nature based on design and construction data reasonably available to them. Second, the final rule carves out an exception for public-purpose vessels so that businesses that repair these vessels in addition to other recreational vessels will not have to purchase LHWCA insurance.
(d) Addressing proposed § 701.303, many comments expressed the view that the Department should have considered alternative measures for determining coverage for workers who perform both qualifying maritime duties and non-qualifying work (walking-in-and-out of qualifying coverage). The commenters believed the rule would force businesses to secure expensive LHWCA insurance for their workers, instead of less expensive state workers' compensation insurance. In this regard, several commenters rejected the Department's suggestion that businesses could minimize the cost implications of the proposed rule by segmenting their workplaces into recreational and non-recreational vessel operations. 75 FR 50728. These commenters (mostly small businesses) noted that their staffs were too small to segregate in this fashion. Most commenters proposed an 80%-20% split as an alternative: So long as less than 20% of a facility's or employer's work was on commercial vessels and the remainder on recreational vessels, all work at the facility would be excluded from LHWCA coverage. The SBA also suggested that the Department adopt this alternative.
The Department has set forth its full response to these comments in subsection D of the General Response to Significant Comments and Explanation of Major Changes section above. For the reasons explained there, the Department is withdrawing proposed § 701.303 and has not promulgated it in this final rule.
(c) The Department fully acknowledges the data put forward by comments, including the industry surveys and the additional NAICS categories. However, it is impossible to state, in this informational vacuum, the accuracy of this data relative to the Department's conclusions in the IRFA. In any event, assuming the larger number of affected small businesses suggested by the commenters is correct, this final rule maximizes, to the extent consistent with sound administration of the LHWCA, the benefit of the recreational vessel exemption for small businesses by adopting several alternative proposals raised by, or on behalf of, small businesses. Because the final rule addresses these substantive concerns and ensures that small business can take maximum advantage of the section 2(3)(F) recreational vessel exclusion, while nevertheless protecting those employees whose duties are Start Printed Page 82127covered by the LHWCA, the Department believes that reaching a precise conclusion concerning the number of affected small businesses is not critical.
2. In § 701.301, revise the preceding undesignated center heading and the section heading, remove paragraph (a)(12), and redesignate paragraphs (a)(13) through (16) as paragraphs (a)(12) through (15).
3. Add § 701.302 to read as follows:
(1) Individuals employed exclusively to perform office clerical, secretarial, security, or data processing work (but not longshore cargo checkers and cargo clerks);Start Printed Page 82128
4. Add a new undesignated center heading following § 701.401 and add § 701.501 to read as follows:
5. Add § 701.502 to read as follows:
(3) “Dismantle” means dismantling any part of a vessel to complete a repair but does not include dismantling any part of a vessel to complete alterations or conversions that render the vessel a non-recreational vessel under § 701.501, or render the vessel recreational under § 701.501, or, if the date of injury is on or after February 17, 2009, to scrap or dispose of the vessel at the end of the vessel's life.
6. Add § 701.503 to read as follows:
7. Add § 701.504 to read as follows:
(1) Traumatic injury. If the individual claims compensation for a traumatic injury, the date of injury is the date the employee suffered harm. For example, if the individual injures an arm or leg in the course of his or her employment, the Start Printed Page 82129date of injury is the date on which the individual was hurt.
8. Add § 701.505 to read as follows: