[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
          H.R. 1329, RECREATIONAL MARINE EMPLOYMENT ACT OF 2003

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             July 15, 2004

                               __________

                           Serial No. 108-69

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Cass Ballenger, North Carolina       Major R. Owens, New York
Peter Hoekstra, Michigan             Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon,           Robert E. Andrews, New Jersey
    California                       Lynn C. Woolsey, California
Michael N. Castle, Delaware          Ruben Hinojosa, Texas
Sam Johnson, Texas                   Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania     John F. Tierney, Massachusetts
Charlie Norwood, Georgia             Ron Kind, Wisconsin
Fred Upton, Michigan                 Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan           David Wu, Oregon
Jim DeMint, South Carolina           Rush D. Holt, New Jersey
Johnny Isakson, Georgia              Susan A. Davis, California
Judy Biggert, Illinois               Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania    Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio              Ed Case, Hawaii
Ric Keller, Florida                  Raul M. Grijalva, Arizona
Tom Osborne, Nebraska                Denise L. Majette, Georgia
Joe Wilson, South Carolina           Chris Van Hollen, Maryland
Tom Cole, Oklahoma                   Tim Ryan, Ohio
Jon C. Porter, Nevada                Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                   CHARLIE NORWOOD, Georgia, Chairman

Judy Biggert, Illinois, Vice         Major R. Owens, New York
    Chairman                         Dennis J. Kucinich, Ohio
Cass Ballenger, North Carolina       Lynn C. Woolsey, California
Peter Hoekstra, Michigan             Denise L. Majette, Georgia
Johnny Isakson, Georgia              Donald M. Payne, New Jersey
Ric Keller, Florida                  Timothy H. Bishop, New York
John Kline, Minnesota                George Miller, California, ex 
Marsha Blackburn, Tennessee              officio
John A. Boehner, Ohio, ex officio















                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 15, 2004....................................     1

Statement of Members:
    Biggert, Hon. Judy, Vice-Chairman, Subcommittee on Workforce 
      Protections, Committee on Education and the Workforce......     2
        Prepared statement of....................................     2
    Keller, Hon. Ric, a Representative in Congress from the State 
      of Florida.................................................     3
        Prepared statement of....................................     4
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................    33
    Owens, Hon. Major R., Ranking Member, Subcommittee on 
      Workforce Protections, Committee on Education and the 
      Workforce..................................................     6

Statement of Witnesses:
    Greenway, Ian R., LIG Managers, Inc., St. Petersburg, FL,....    21
        Prepared statement of....................................    22
    Hebert, Kristina, Vice President of Operations, Ward's Marine 
      Electric, Inc., Ft. Lauderdale, FL.........................     7
        Prepared statement of....................................    10
    McGarrah, Robert E., Jr., Coordinator for Workers' 
      Compensation, AFL-CIO, Washington, DC......................    16
        Prepared statement of....................................    17
    Nelson, Larry, Vice President, Administration, Westport 
      Shipyard, Inc., Westport, WA...............................    12
        Prepared statement of....................................    13













         H.R. 1329, RECREATIONAL MARINE EMPLOYMENT ACT OF 2003

                              ----------                              


                        Thursday, July 15, 2004

                     U.S. House of Representatives

                  Subcommittee on Workforce Protections

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:10 a.m., in 
room 2175, Rayburn House Office Building, Hon. Judy Biggert 
[Vice-Chairman of the Subcommittee] presiding.
    Present: Representatives Biggert, Keller, Kline, Owens, and 
Payne.
    Ex officio present: Representative Miller.
    Staff Present: Stacey Dion, Professional Staff Member; 
Kevin Frank, Professional Staff Member; Danielle English, 
Professional Staff Member; Ed Gilroy, Director of Workforce 
Policy; Richard Hoar, Staff Assistant; Don McIntosh, Staff 
Assistant; Molly McLaughlin Salmi, Deputy Director of Workforce 
Policy; Deborah L. Samantar, Committee Clerk/Intern 
Coordinator; Kevin Smith, Communications Advisor; Jo-Marie St. 
Martin, General Counsel; Jody Calemine, Minority Counsel 
Employer-Employee Relations; Margo Hennigan, Minority 
Legislative Assistant; John Lawrence, Minority Staff Director; 
Marsha Renwanz, Minority Legislative Associate; Peter Rutledge, 
Minority Senior Legislative Associate/Labor; and Mark 
Zuckerman, Minority General Counsel.
    Vice-Chairman Biggert. Good morning. The Subcommittee on 
Workforce Protections of the Committee on Education and the 
Workforce will come to order.
    We are meeting here today to hear testimony on H.R. 1329, 
the Recreational Marine Employment Act of 2003. Under Committee 
rule 12(b), opening statements are limited to the Chairman and 
Ranking Minority Member of the Subcommittee. Therefore, if 
other Members have statements they may be included in the 
hearing record. I ask for unanimous consent for the hearing to 
remain open for 14-days to allow Members statements and other 
extraneous materials referenced during the hearing to be 
submitted in the official hearing record. Without objection, so 
ordered.

STATEMENT OF HON. JUDY BIGGERT, VICE-CHAIRMAN, SUBCOMMITTEE ON 
WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE

    The focus of today's hearing is H.R. 1329, the Recreational 
Marine Employment Act of 2003, a bill introduced by our 
colleague on the Subcommittee, Representative Keller. The bill 
will amend the Longshore and Harbor Workers' Compensation Act 
to exempt the Recreational Marine Industry from coverage under 
the Act.
    The last time Congress addressed Longshore and Harbor 
Workers' Compensation was 1984. At that time, Congress 
determined that the individuals who build and service vessels 
65 feet and under should not be covered by Longshore coverage, 
but protected under their State workers' compensation plan.
    In the 20 years since Congress last addressed this issue, 
the recreational industry has changed dramatically. Americans 
want everything larger, from their vehicles to fast food and 
boats are no exception. Today, we ask, what was the size 
limitation that was placed in statute over 20 years ago, and 
appropriate to continue to allow the recreational industry to 
grow and compete.
    The practical impact of this limitation has been for 
thousands of jobs to be lost to other countries because of the 
increased costs of doing business here at home.
    Our witnesses today will share their perspectives on the 
economic conditions of the industry today. I would like to 
thank them for taking time out of their busy schedule to 
provide the Subcommittee members with their expertise and 
opinions on the legislation.
    And I will yield the remainder of my time to my colleague 
from Florida, and the sponsor of H.R. 1329, Mr. Keller.
    [The prepared statement of Vice-Chairman Biggert follows:]

    Statement of Hon. Judy Biggert, Vice-Chairman, Subcommittee on 
    Workforce Protections, Committee on Education and the Workforce

    The focus of today's hearing is H.R. 1329, the ``Recreational 
Marine Employment Act of 2003,'' a bill introduced by our colleague on 
the Subcommittee, Representative Keller. The bill would amend the 
Longshore and Harbor Workers' Compensation Act to exempt the 
recreational marine industry from coverage under the Act.
    The last time Congress addressed Longshore and Harbor Workers' 
Compensation was 1984. At that time, Congress determined that the 
individuals that build and service vessels 65 feet and under should not 
be covered by Longshore coverage but protected under their state 
workers' compensation plan. In the 20 years since Congress last 
addressed this issue the recreational industry has changed 
dramatically.
    Americans want everything larger now--from their vehicles to fast 
food, and boats are no exception. Today we ask, was the size limitation 
that was placed in statute over 20 years ago an appropriate to continue 
to allow the recreational industry to grow and compete? The practical 
impact of this limitation has been for thousands of jobs to be lost to 
other countries because of the increased cost of doing business here at 
home.
    Our witnesses here today will share their perspectives on the 
economic condition of the industry today. I would like to thank them 
for taking time out of their busy schedules to provide the Subcommittee 
members with their expertise and opinions on the legislation.
    At this time, I would like to turn over my remaining time to the 
sponsor of the legislation and my good friend from Florida, Mr. Keller.
                                 ______
                                 

STATEMENT OF HON. RIC KELLER, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF FLORIDA

    Mr. Keller. Well, thank you, Madam Chairman. And I want to 
especially thank our witnesses for being here today, two of 
whom, I see, are fellow Floridians. Welcome to all of you.
    Let me begin by telling you the story of how I became 
interested in creating thousands of jobs in the recreational 
marine industry. A group of folks who work in the recreational 
marine industry in Florida came to my Orlando office. One built 
recreational boats. Another repaired recreational boats. And a 
third ran a marina. They all had something in common. All of 
them operated small, family owned businesses. All of them 
wanted to hire more employees, and expand their businesses. And 
all of them had one problem. That is, all of them were forced 
to pay unnecessary and exorbitant insurance premiums under the 
Longshore and Harbor Workers' Compensation Act.
    Specifically, I learned that while workers in the 
recreational marine industry should be covered under the State 
workers' compensation laws, these employers, because of the 
legal technicality, were being forced to pay for Longshore 
insurance, which was three times more expensive than workers' 
compensation insurance in Florida. They showed me a recent 
survey, which indicated that employers in the recreational 
marine industry would save an average of $99,000 per year if 
they were exempt from the Longshore Act, and that 95 percent of 
those employers said they would use the savings to create 
additional jobs. They told me that many jobs were being 
outsourced to the Bahamas, Canada and China, where their 
competitors didn't have to pay the Longshore insurance.
    I told them that this was unacceptable, and I decided to 
file the Recreational Marine Employment Act. To put this 
hearing in perspective, let me briefly walk-through history of 
the Longshore Act. The Longshore Act was created by Congress in 
1927 to cover workers in the commercial ship industry who 
became injured while working upon navigable waters. 
Specifically, it covered Longshoremen, that is people who load 
and unload cargo from commercial ships, and it covered workers 
who build or repaired ships.
    In 1972, the Longshore Act was amended to extend coverage 
beyond those folks working upon navigable waters, to also 
include those individuals working on dry land, such as people 
working on a pier, or a dry dock.
    In 1984, the Longshore Act was once again amended so that 
individuals who built or worked on boats that were under 65 
feet long, would be covered by State workers' compensation 
laws, and not Longshore insurance.
    This amendment was a positive development. It had the 
practical effect of exempting virtually all of the recreational 
marine industry from Longshore insurance. How? Because back in 
1984, recreational boats over 65 feet were almost unheard of. 
Today, however, 20 years later, there are over 250,000 
recreational boats that are 65 feet in length or longer. And my 
bill will provide a common sense update that will create jobs, 
and bring this law into the 21st-century. Now, and in the 
interest of straight talk, let me squarely address questions I 
have heard about this legislation.
    First, will workers exempted from Longshore coverage be 
worse off? No. The truth is that State workers' compensation 
laws provide excellent coverage for workers in the recreational 
marine industry. For example, under the Longshore Act, if you 
are injured you would receive 66 2/3 percent of your salary. 
Under State workers' compensation laws, you receive that much 
or better in 48 out of 50 states. In fact, in many states, the 
benefits are far more generous under State workers' 
compensation. For example, in Iowa, if you were injured, under 
workers' compensation, you would receive 80 percent of your 
salary and a maximum weekly payment of $1,133. In contrast, 
under the Longshore Act, you would receive a mere 66 two-thirds 
percent of your salary and a maximum weekly amount of only 
$1,030.
    The second question I have heard is whether people who work 
on recreational boats should have the same insurance as people 
who work on commercial ships? The answer is ``no,'' because the 
risks are dramatically different.
    For example, commercial ships are built using plate steel 
and welding, and assembly can be extremely dangerous. In 
contrast, most recreational boats are made using fiberglass 
shells and even OSHA recognized that the assembly process is 
just as safe as the one used to built cars or light trucks. 
Indeed, the OSHA statistics I've seen indicate that you were 
three times more likely to be injured while building a 
commercial ship than working on a recreational boat.
    Moreover, with regard to recreational boats, the same OSHA 
statistics showed that it's no more hazardous to build a 
recreational boat of more than 65 feet, then it is to build one 
less than 65 feet.
    For these reasons, and many others, my bill has many 
Democrat co-sponsors, including Martin Frost, Jim Davis, Rob 
Andrews and Norm Dix.
    In summary, the Recreational Marine Employment Act is the 
first update of the Longshore Act in 20 years. It's about jobs. 
It's about common sense. And it's about time.
    Madam Chairman, I yield back the balance of my time.
    [The prepared statement of Mr. Keller follows:]

  Statement of Hon. Ric Keller, a Representative in Congress from the 
                            State of Florida

    Thank you, madam chairman. And I want to especially thank our 
witnesses for being here today, two of whom are fellow Floridians. 
Welcome to all of you.
    Let me begin by telling you the story of how I became interested in 
creating thousands of jobs in the recreational marine industry. A group 
of folks who work in the recreational marine industry in Florida came 
to my Orlando office. One built recreational boats. Another repaired 
recreational boats. And a third ran a marina. They all had something in 
common. All of them operated small, family owned businesses. All of 
them wanted to hire more employees, and expand their businesses. And 
all of them had one problem. That is, all of them were forced to pay 
unnecessary and exorbitant insurance premiums under the Longshore and 
Harbor Workers Compensation Act.
    Specifically, I learned that while workers in the recreational 
marine industry should be covered under the state workers compensation 
laws, these employers, because of a legal technicality, were being 
forced to pay for longshore insurance, which was three times more 
expensive than workers compensation insurance in Florida.
    They showed me a recent survey which indicated that employers in 
the recreational marine industry would save an average of $99,000 per 
year if they were exempt from the Longshore Act, and that 95% of those 
employers said they would use the savings to create additional jobs. 
They told me that many jobs were being outsourced to the Bahamas, 
Canada and China, where their competitors didn't have to pay the 
longshore insurance.
    I told them that this was unacceptable, and I decided to file the 
Recreational Marine Employment Act.
    To put this hearing in perspective, let me briefly walk through a 
history of the Longshore Act. The Longshore Act was created by Congress 
in 1927 to cover workers in the commercial ship industry who became 
injured while working upon navigable waters. Specifically, it covered 
longshoreman, that is people who load and unload cargo from commercial 
ships, and it covered workers who built or repaired ships.
    In 1972, the Longshore Act was amended to extend coverage beyond 
those folks working upon navigable waters, to also include those 
individuals working on dry land, such as people working on a pier, or a 
dry dock.
    In 1984, the Longshore Act was once again amended so that 
individuals who built or worked on boats that were under 65 feet long, 
would be covered by state workers' compensation laws, and not longshore 
insurance.
    This amendment was a positive development. It had the practical 
effect of exempting virtually all of the recreational marine industry 
from longshore insurance. How? Because back in 1984, recreational boats 
over 65 feet were almost unheard of. Today, however, twenty years 
later, there are over 250,000 recreational boats that are 65 feet in 
length or longer. And my bill will provide a commonsense update that 
will create jobs, and bring this law into the 21st century.
    Now, in the interest of straight talk, let me squarely address two 
questions I've heard about this legislation.
    First, will workers exempted from longshore coverage be worse off? 
No. The truth is that state workers compensation laws provide excellent 
coverage for workers in the recreational marine industry. For example, 
under the Longshore Act, if you were injured you would receive 66 and 
two-thirds percent of your salary. Under state workers compensation 
laws, you would receive that much or better in 48 out of 50 states. In 
fact, in many states, the benefits are far more generous under state 
workers' compensation. For example, in Iowa, if you were injured, under 
workers compensation, you would receive 80% of your salary and a 
maximum weekly payment of $1,133. In contrast, under the Longshore Act, 
you would receive a mere 66 and two-thirds percent of your salary and a 
maximum weekly amount of only $1,030.
    The second question I've heard is whether people who work on 
recreational boats should have the same insurance as people who work on 
commercial ships? The answer is ``no'', because the risks are 
dramatically different.
    For example, commercial ships are built using plate steel and 
welding, and the assembly can be extremely dangerous. In contrast, most 
recreational boats are made using fiberglass shells and even OSHA 
recognized that the assembly process is just as safe as the one used to 
build cars or light trucks. Indeed, the OSHA statistics I've seen 
indicate that you were three times more likely to be injured while 
building a commercial ship than working on a recreational boat.
    Moreover, with regard to recreational boats, these same OSHA stats 
show that it's no more hazardous to build a recreational boat of more 
than 65 feet, than it is to build one less than 65 feet.
    For these reasons, my bill has many Democrat co-sponsors, including 
Martin Frost, Jim Davis and Rob Andrews.
    In summary, the Recreational Marine Employment Act is the first 
update of the Longshore Act in 20 years. It's about creating jobs. It's 
about common sense. And it's about time.
    I yield back the balance of my time.
                                 ______
                                 
    Vice-Chairman Biggert. Thank you very much.
    Before I proceed, I would like to extend a warm welcome to 
the Ranking Member of the Full Committee, Congressman George 
Miller, who has joined us today. Mr. Miller has had a long 
interest, long-standing interest, in this program, and direct 
involvement with the last amendments to the program in 1984. So 
we're very pleased to have you with us today. Thank you.
    And with that, I will yield to the distinguished Ranking 
Minority Member from New York, Mr. Owens, for whatever opening 
statement he may wish to make.

STATEMENT OF HON. MAJOR R. OWENS, RANKING MEMBER, SUBCOMMITTEE 
   ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION AND THE 
                           WORKFORCE

    Mr. Owens. Thank you very much.
    Madam Chairman, I would like to note that my staff has 
checked yachttraders.com on the Web, and found that used boats 
of 70 feet and longer are being sold for $900,000 and much 
more. This is not the ``Mom and Pop'' recreational scenario 
which has just been presented by my colleague, Mr. Keller.
    People are willing to pay more for boats, they want bigger 
boats, why do they want cheaper insurance?
    Madam Chairman, I understand that the purpose of today's 
vital hearing is to examine the potential consequences of H.R. 
1329, which has been introduced by Mr. Keller, to amend the 
Longshore and Harbor Workers' Compensation Act.
    Let me make it very clear, at the outset, this hearing 
should also recognize the Longshore Act as a very important 
public law. By providing essential medical benefits, 
rehabilitation services, and compensation for lost wages, the 
Act ensures a vital safety net for maritime workers, when 
injured or killed on-the-job. The Longshore, Harbor, and other 
maritime workers covered by this Act are carrying out difficult 
and often very dangerous jobs. These workers and their families 
have more than earned the right to these hard-won protections.
    A brief legislative history of the Longshore and Harbor 
Workers' Compensation Act is also important to note for the 
record. When first enacted in 1927, this Act covered those 
working on or in navigable waters, beyond the jurisdiction of 
State workers' compensation laws. Amendments in 1972 extend 
coverage to those working shore side to load, unload, repair, 
and build vessels. As a result, marinas and boatyards were 
required to buy Longshore insurance for their workers. 
Subsequently in 1984, a compromise package of amendments was 
ably crafted and enacted to exempt much of the marine 
recreational industry from the Act.
    Let me repeat that for the record. The 1984 amendments 
exempted most of the marine recreational industry from the Act.
    The benefits of those negotiations and the way in which 
that compromise was worked out, is not available to us in a 
brief hearing like this. We will not have a chance to look at 
and examine the nature of that compromise today.
    It is my understanding that the bill introduced by 
Representative Keller seeks to undo the 1984 compromise. I 
would be strongly opposed to any effort to use this hearing as 
a mechanism for putting longshore and workers' compensation 
benefits on the chopping block.
    Madam Chairman, I look forward to hearing from the 
witnesses.
    Vice-Chairman Biggert. The gentleman yields back.
    We don't usually have other Members make opening 
statements, but if the ranking member would care to?
    Mr. Miller. No.
    Vice-Chairman Biggert. Fine. OK. Thank you.
    With that, we will begin our panel of distinguished guests. 
Our first witness today is Ms. Kristina Hebert?
    Ms. Hebert. Hebert.
    Vice-Chairman Biggert. Hebert. Ms. Hebert is Vice President 
of Operations, Ward's Marine Electric Company, a family 
business operating for over 54 years, with 42 employees that 
provide mobile dockside service, engineering, engraving and 
design services, and the distribution of marine electric 
equipment.
    Ms. Hebert is also Vice President of the Marine Industries 
Association of South Florida representing over 800 marine-
related businesses, and over 180,000 jobs.
    Next, is Mr. Larry Nelson. Mr. Nelson has worked for 
Westport Shipyard for 22 years. Under his tenure the company 
has grown from 38 employees who build boats for the salmon 
industry to its current size of over 600 employees, who 
construct large recreational motor yachts. Westport Shipyard is 
recognized as the top builder in the U.S., and one of the top 
15 worldwide.
    Next on our panel is Mr. Robert McGarrah. Mr. McGarrah has 
been Coordinator for Workers' Compensation for AFL-CIO since 
2002, where he works on all national and state programs to 
compensate injured workers, ranging from Homeland Security to 
State Workers' Compensation. He previously worked for AFL-CIO's 
President, John Sweeney, on health-care, contingent labor and 
election reform issues.
    Finally, we will hear from Mr. Ian Greenway. Mr. Greenway 
is President and owner of LIG Marine Managers in St. 
Petersburg, Florida. Prior to his starting his own company, Mr. 
Greenway was a broker with Lloyd's of London for 25 years. He 
is the author of several publications, including Navigating 
Marine Insurance, and the second edition of Navigating Marine 
Workers' Compensation 2000.
    Before our witnesses begin their testimony, I would like to 
remind the Members that we will ask questions after the entire 
panel has testified. In addition, Committee Rule 2 imposes a 5-
minute limit on all questions.
    And then, we will have lights for you, the witnesses, and 
allocate 5 minutes. If you don't get to all of your testimony, 
don't worry about it, I am sure that we will in the questions.
    And so with that, we will begin with Ms. Hebert. You are 
recognized for 5 minutes.

  STATEMENT OF KRISTINA HEBERT, VICE PRESIDENT OF OPERATIONS, 
        WARD'S MARINE ELECTRIC, INC. FORT LAUDERDALE, FL

    Ms. Hebert. Good morning. Madam Chairperson, and Ranking 
Member Owens, thank you for giving me this opportunity. As 
mentioned, my name is Kristina Hebert. I am Vice President of 
Operations of my family's business, Ward's Marine Electric, 
Inc. We have been in business for 54 years. My grandfather 
started it and still comes to work about three times a week.
    I stand before you today to ask that the recreational 
marine industry be removed from the Longshore and Harbor 
Workers' Compensation Act requirements, by extending the 
current exceptions for boats under 65 feet to encompass the 
entire universe of recreational boats.
    Much of what I will describe for you today, regarding how 
work is performed and the risks that our employees face each 
today, is no different than what is faced by skilled craftsmen 
performing work in similar non-marine highly skilled trades. 
For example, most boats are hauled out of the water when repair 
work is being done at a recreational marine facility. Travel 
lifts are used to simply pick up the boat and move it inside a 
shed, or further inland into a tent or shed. In some cases work 
is performed on a boat behind an owners' house. And finally, 
work is also performed at a marina where minor repairs and 
estimates are given.
    Because our workers are not subject to the kinds of hazards 
found in commercial environments, such as a bustling commercial 
port or shipyard, it is appropriate and necessary that the 
recreational marine industry remain under the jurisdiction of 
State workers' compensation and be excluded entirely from the 
Longshore and Harbor Workers' Compensation Act.
    This low risk environment can be further demonstrated by 
the amount and severity of injuries faced by our workers. At 
Ward's Marine Electric we have a claims/loss ratio for workers' 
compensation injuries that have been averaging less than 2 
percent for the last 5 years. We pride ourselves on providing 
excellent training in a safe working environment for workers, 
which is demonstrated by our low accident rate. We strongly 
believe we can provide quality injury insurance for our 
employees by only purchasing State workers' compensation. We 
understand the necessity of Longshore insurance to protect 
Longshoremen, harbor workers and stevedores, along with others 
in the commercial shipbuilding and shipping repair segment of 
the industry.
    However, it is important to understand that workers in the 
recreational marine industry are not exposed and do not 
encounter the same hazardous environments or the severity of 
injuries as those who work in commercial merchant ships and 
ports and shipyard. State workers' compensation is sufficient 
for industries, and as mentioned by Congressman Keller, in some 
instances, is more financially beneficial to the worker. The 
logic of removing the recreational marine employee from 
mandatory Longshore coverage is demonstrated by the minimal 
number of claims. For the recreational marine industry, 
Longshore coverage is duplicative and unnecessary. Our 
employees' claims can be adequately covered by state insurance 
coverage.
    It is also important to note that the recreational marine 
industry is growing as the sizes of recreational vessels grow. 
The trend in growth of the typical vessel size has continued 
over the past 20 years. In 2003, the most stable segment of the 
industry, with an astonishing 11 percent growth rate, was the 
boats over 150 feet. For us at Ward's, where we choose to 
follow the law and provide coverage--proof of coverage for our 
workers, we must provide coverage for every marine facility in 
the county.
    This is not to say that only boats over 65 feet are our 
community. It is just because boats over 65 feet have visited 
our community and all of our facilities. Once a marina or 
boatyard accommodates a boat over 65 feet, then all workers are 
subject to longshore exposure and must purchase the coverage or 
risk operating illegally. Unless the footage exemption was 
large enough to encompass every recreational boat built in the 
United States, these circumstances would not change.
    Today the playing field is not level. We bill our skilled 
workforce at $75 an hour, subtract an employees hourly pay, and 
of the remainder, $54 is contributed per $100 of payroll, to 
cover the Longshore premium. Given we cannot raise our labor 
rate if we want to remain competitive in the marketplace, we 
make very little profit on our workers who are engaged in 
servicing boats over 65 feet.
    Further, if a company works on these larger boats, it 
cannot obtain State workers' compensation in the marine 
industry without Longshore insurance. For many of then, the 
choices is to purchase both State workers' compensation and 
Longshore, or purchase neither. I am sorry to say that faced 
with that choice, some are providing no coverage for their 
workers. However, if they had the option of providing only 
State workers' compensation, I would believe businesses would 
rush to provide coverage for their workers.
    Due to the high cost of purchasing Longshore insurance 
premiums, businesses like ours have experienced negative 
consequences in competing for business. Boat owners often like 
to make one ``port-of-call`` and use one facility for all of 
their repairs. According to recent study in Broward County, 
Florida, 1400 boats not based in the county visit the area. 
Thirteen hundred of those will have work done in a boatyard 
with an average bill of$140,000. These ``out-of- town'' boaters 
are important to the growth the recreational marine industry, 
and the servicing of such boats is a critical revenue and 
employment base for many states in the country.
    Unfortunately, particularly in coastal states like Florida, 
this business is rapidly going overseas. In the case of 
Florida, and much of the Southeast, many boat owners are 
choosing to have work done in the Bahamas or the Caribbean. 
Service costs in the Caribbean and the Bahamas are lower. One 
of the main reasons is that employers there do not have to pay 
the extremely high cost of Longshore coverage and therefore can 
outbid American businesses. As an international parts 
distributor, Ward's Marine Electric is able to gauge the 
workloads of all of the ports of call because of the parts 
orders we receive.
    While we are able to profit from the sale of equipment, the 
boat in industry and community suffer as a whole. Like most 
firms in the marine service industry, our company is a small 
business. If we want to remain competitive in the recreational 
marine industry, which includes a large percentage of boats 
over 65 feet the law requires us to purchase the insurance. It 
is a challenge of Ward's Marine Electric to compete due to the 
inability to provide competitive labor rates for those who do 
not purchase the coverage.
    Let me conclude by saying that if the recreational marine 
industry was removed from Longshore and Harbor Workers 
Compensation Act requirements, employers like myself, Ward's 
Marine Electric would save $200,000 a year. This money could 
instead be used to expand our services, increase our employees' 
wages, and hire more skilled workers. It would be a win-win for 
employers and employees alike. In order for the industry to 
prosper and grow, we ask for your support in expanding the 
exception of boats under 65 feet to encompass the entire 
universe of recreational boats. The recreational marine 
industry needs relief from this burdensome, costly and 
duplicative coverage.
    Thank you, Members of the Committee, for bringing to this 
public forum an issue that is critical to our industry.
    [The prepared statement of Ms. Hebert follows:]

  Statement of Kristina Hebert, Vice President of Operations, Ward's 
               Marine Electric, Inc., Ft. Lauderdale, FL

Introduction
    Good morning, Chairman Norwood, ranking member Owens and Committee 
Members. Thank you for providing me with the opportunity to represent 
small recreational marine businesses and to testify before your 
Committee. My name is Kristina Hebert and I am Vice President of 
Operations and 3rd generation of my family's business--Ward's Marine 
Electric, Inc. We have been in business for over 54 years and we have 
42 employees, sixteen of whom are American Boat & Yacht Council-
certified marine electricians. Our company provides mobile dockside 
service, engineering, engraving and design services as well as 
distributes a complete line of marine electric equipment. Most of our 
service work is performed in marinas and boatyards where we act as 
subcontractors.
    Aside from my work with Ward's Marine Electric, Inc., I am Vice 
President of the Marine Industries Association of South Florida 
(MIASF). Throughout the state of Florida, MIASF represents over 800 
marine related businesses, such as builders, marinas and boat yards, 
repairers, services, dealers, and yacht brokers. Our industry 
represents over 180,000 jobs and generates over 14 billion dollars in 
economic impact to the economy of Florida. Accordingly, my remarks 
reflect the views of the Marine Industries Association of South Florida 
as well.
    I sit before you today to ask that the recreational marine industry 
be removed from under Longshore and Harbors Workers' Compensation Act 
requirements, by extending the current exception for boats under 65 
feet to encompass the entire universe of recreational boats.
Low Risk Environment
    Much of what I will describe for you today, regarding how work is 
performed and the risks that our employees face each day, is no 
different than what is faced by skilled craftsmen performing work in 
similar non-marine highly skilled trades. For example, most boats are 
hauled out of the water when repair work is being done at a 
recreational marine facility. Travel lifts are used to simply pick up 
the boat and move it further inland under a tent or shed. In some cases 
work is performed on a boat behind an owners' house. Finally, work is 
also performed at a marina where minor repairs and estimates are given. 
Because our workers are not subject to the kinds of hazards found in 
commercial environments, such as a bustling commercial port or 
shipyard, it is appropriate and necessary that the recreational marine 
industry remain under the jurisdiction of state workers' compensation 
and be excluded entirely from the Longshore and Harbor Workers' 
Compensation Act.
Low Injury Rates
    This low risk environment can be further demonstrated by the amount 
and severity of injuries faced by our workers. At Ward's Marine 
Electric we have a claims/loss ratio for workers' compensation injuries 
that has been averaging less than two percent for the last five years. 
We pride ourselves on providing excellent training and a safe working 
environment for our workers, which is demonstrated by our low accident 
rate. We strongly believe we can provide quality injury insurance for 
our employees by only purchasing state workers' compensation. We 
understand the necessity of Longshore insurance to protect 
longshoremen, harbor workers and stevedores, along with others in the 
commercial shipbuilding and ship repair segment of the industry. It is 
important to understand that workers in the recreational marine 
industry do not encounter and are not exposed to the same hazardous 
environments or the severity of injuries as the workers who work on 
commercial merchant ships in ports and shipyards. State workers' 
compensation is sufficient for our industry, and in many instances, is 
more financially beneficial to the worker. The logic of removing the 
recreational marine employee from mandatory Longshore coverage is 
demonstrated by the minimal number of claims. In fact, at Ward's we 
have never had a Longshore claim, yet we continue to pay the exorbitant 
cost just because we work on recreational boats which happen to be over 
65 feet long. For the recreational marine industry, Longshore coverage 
is duplicative and unnecessary. Our employees' claims can be adequately 
covered by state insurance coverage.
Mixed Use Facilities
    It is also important to note that the recreational marine industry 
is growing as the sizes of recreational vessels grow. The trend in 
growth of the typical vessel size has continued over the past 20 years. 
In 2003, the most stable segment of the industry, with an astounding 
11% growth increase, was the over 150 foot market. For us at Ward's, 
where we choose to follow the law, we must provide proof of coverage 
for EVERY marine facility in the county. This is not to say that ONLY 
boats over 65 feet visit our community. It is just because boats over 
65 feet HAVE visited our community and all of our facilities. Once a 
marina or boatyard accommodates a boat over 65 feet, then all workers 
are subject to Longshore exposure and must purchase the coverage or 
risk operating illegally. Unless the footage exemption was large enough 
to encompass every recreational boat built in the United States, the 
circumstances would not change.
High Cost of Longshore Coverage
    Today the playing field is not level. We bill our skilled workforce 
at $75 per hour, of that $54 is contributed to cover the Longshore 
premium. Given that we cannot raise our labor rate if we want to remain 
competitive in the marketplace, we make very little profit on our 
workers who are engaged in servicing boats over 65 feet. Further, if a 
company works on these larger boats, it cannot obtain state workers' 
compensation in the marine industry without Longshore insurance. For 
many then, the choice is to purchase both state workers' compensation 
and Longshore, or purchase neither. I am sorry to say that faced with 
that choice, some provide no coverage for their workers. However, if 
they had the option of providing only state workers' compensation, I 
believe businesses would rush to provide coverage to their workers.
Competitive Disadvantage - International
    Due to the high costs of purchasing Longshore insurance premiums, 
businesses like ours have experienced negative consequences in 
competing for business. Boat owners often like to make one ``port-of-
call'' and use one facility for all of their repairs. According to a 
recent study in Broward County, Florida, an average of 1400 boats not 
based in the county visit the area annually. Of those, 1300 will have 
work done in an area boatyard with an average bill of $140,000. These 
``out of town'' boaters are important to the growth of the recreational 
marine industry, and the servicing of such boats is a critical revenue 
and employment base for many states in the country. Unfortunately, 
particularly for coastal states like Florida, this business is rapidly 
going overseas. In the case of Florida, many boat owners are choosing 
to have work done in the Bahamas and Caribbean. Service costs in 
Caribbean and the Bahamas are lower. One of the main reasons is that 
employers there do not have to pay the extremely high cost of Longshore 
coverage and can therefore outbid American businesses. As an 
international parts distributor, Ward's Marine Electric is able to 
gauge the workloads of other ports of call because of the parts orders 
we receive. While we are able to profit from the sale of equipment, the 
boating industry and community suffer as a whole.
Competitive Disadvantage - Domestic
    Like most firms in the marine service industry, our company is a 
small business. If we want to remain competitive in the recreational 
marine industry, which includes a large percentage of boats over 65 
feet, the law requires us to purchase Longshore insurance. Currently, 
there are employers who choose not to obtain Longshore insurance 
because they simply cannot afford the premiums. However, many 
businesses, including ours, do purchase the coverage. Therefore we are 
placed at a significant disadvantage to our domestic competitors who do 
not comply with the law. This, coupled with the competition of foreign-
based repair centers, puts small businesses like mine in a very 
difficult position. It is a challenge of Ward's Marine Electric to 
compete due to the inability to provide competitive labor rates with 
those who do not purchase Longshore coverage.
Conclusion
    Let me conclude by saying that if the recreational marine industry 
was removed from Longshore and Harbors Worker's Compensation Act 
requirements, employers like Ward's Marine Electric would save 
approximately $200,000 a year by not having to purchase the unnecessary 
and duplicative Longshore insurance. This money could instead be used 
to expand our services, increase our employees' wages, and hire more 
skilled workers. It would be a win-win for employers and employees 
alike. In order for the industry to prosper and grow, we ask for your 
support in expanding the exception of boats under 65 feet to encompass 
the entire universe of recreational boats. The recreational marine 
industry needs relief from this burdensome, costly and duplicative 
coverage.
    Thank you, Mr. Chairman and other Members of the Committee, for 
bringing to this public forum an issue that is critical to our 
industry.
                                 ______
                                 
    Vice-Chairman Biggert. Thank you very much.
    Mr. Nelson, please proceed for 5 minutes.

  STATEMENT OF LARRY NELSON, VICE PRESIDENT, ADMINISTRATION, 
             WESTPORT SHIPYARD, INC., WESTPORT, WA

    Mr. Nelson. Thank you, Madam Chairman and Ranking Member 
Owens, it's a pleasure to be here before the Committee today to 
discuss Congressman Keller's legislation, H.R. 1329. I have 
submitted written testimony for the record, but I would like to 
take a few minutes now to summarize that testimony.
    My name is Larry Nelson, I am Chairman and Vice President 
and a principal in Westport Shipyard in Westport, Washington. I 
have worked for Westport most of my 25 year career in 
boatbuilding, and have work in every trade in the business. I 
started in production in 1983, when we were a small company of 
38 employees. We entered the recreational marine boat industry 
just as the West Coast fishing industry was collapsing. Back 
then a 50-foot fiberglass boat was considered a larger boat. A 
boat over 65 feet was almost unheard of at that time.
    We didn't have the technology we have now to build 
fiberglass that big. The few boats that they were, there were 
over 65 feet were actually built like ships, because that was 
the best technology there was back then. Today, the smallest 
boat we build is 98 feet.
    Westport is located in an economically depressed area in 
Grays Harbor County, we have over 600 employees at three 
different locations in Washington state. We employ 700 more 
working indirectly through small business as subcontractors. We 
are also very proud of the fact that we are now--we have 
second-generation employees with our company, and whole 
families that work for Westport. And that is not uncommon in 
this industry as a whole.
    There really were four points in my testimony. The first 
point, H.R. 1329, will continue to meet the intent of the 1984 
amendment to the Longshore Act. No. 2, workers will be 
adequately protected, benefits will not suffer.
    No. 3, boatbuilding, specifically large boatbuilding, is 
much safer than shipbuilding. And No. 4, jobs will be created, 
and those existing jobs will be protected.
    The purpose of H.R. 1329 is to protect workers who are 
creating and sustaining jobs. The same rationale applies today 
as did in 1984, when 65 was ruled a large boat. That was where 
the demarcation was. Really nothing has changed, back then, 
except for the size of the boats and the materials that we use. 
We now apply small boatbuilding to large boats.
    Costs versus the benefits. There has been some question 
whether H.R. 1329 will result in a reduction of benefits. An 
employee would have to earn $80,000 a year to obtain the 
maximum Longshore benefit of $1,031. In Washington, any 
employee earning less than $30 an hour will receive about the 
same under the Longshore Act. That covers virtually every 
employee in our industry. There is no difference in coverage. 
And in some cases, Washington State Workers' Compensation is 
better, actually exceeds Longshore.
    Longshore coverage is two to four times more expensive than 
State workers' compensation, bringing manufacturers, especially 
small businesses, where in many instances use those savings to 
expand their businesses, expand their work forces, update and 
enhance their production processes.
    There is a great difference between shipbuilding and 
boatbuilding. Recreational boatbuilding is more closely related 
to the housing industry and actually to recreational vehicle 
construction. With its indoor construction, under control 
conditions, we employee indoor trades like cabinet makers, 
electricians, and so on, the same as you see in the housing 
industry.
    Work on large boats has been proven to be twice as safe as 
work on smaller boats under 65 feet, and three times as safe as 
shipbuilding in general. This is a safe industry. I build boats 
between 48 feet and 164 feet, and there really is no 
difference. In fact, the larger the boat, the safer it is to 
work on, because the spaces are larger.
    Finally, competition in jobs. Worldwide, the U.S. market 
share is shrinking. In 1999, the U.S. was in first place and 
held 29 percent of the world's market share. Just 3 years 
later, in 2003, we had fallen to 15 percent of market share, 
basically cut in half in a market that is growing.
    Thousands of jobs have already been lost, they have gone 
offshore due to recreational boatbuilders going out of 
business. I'm sure a $10 million boat, maybe a $10 million boat 
here is a $7 million boat in China. So what's the difference? 
If you look an American boat and look in a boat from China, the 
materials are the same, the cost are the same, it's in labor 
costs.
    We have to be able to compete in a worldwide market. To do 
that we had to find other ways to compete. We need to build and 
reinvest back into our businesses, back into technology, back 
into workforce training, so that we can remain competitive.
    In conclusion, Longshore coverage is important to workers 
who work in the Longshore and stevedore industry, but it has no 
place in the recreational boatbuilding industry. Workers in the 
recreational boatbuilding industry do not face the dangers that 
Longshoremen and stevedores face, and the costs of Longshore 
insurance outweighs the benefits.
    The purpose of the 1984 exemption will continue to be 
served under H.R. 1329. There will be no decrease in safety, 
competition will be enhanced, jobs protected, without a loss of 
benefits to employees. H.R. 1329 is good for industry, is good 
for our employees, and is good for this country.
    Thank you, Madam Chairman, and Members of the Committee.
    [The prepared statement of Mr. Nelson follows:]

  Statement of Larry Nelson, Vice President, Administration, Westport 
                      Shipyard, Inc., Westport, WA

    Mr. Chairman and Ranking Member Owens, it is a pleasure to appear 
before the Subcommittee on Workforce Protections to discuss Congressman 
Ric Keller's legislation, H.R. 1329, which, in my opinion, would 
fulfill the intentions of Congress when in 1984 it provided an 
exemption for coverage from Longshore and Harbor Workers' Compensation 
Act Insurance (``Longshore'') for recreational vessels under 65 feet in 
length.
    My name is Larry Nelson, I am Chairman and Vice President and a 
principle in Westport Shipyard in Westport Washington. Throughout my 25 
year career in boat building, as with most of our executive management, 
I have been involved in every aspect of our business including working 
in each of the various trades that we employee. I started at the 
shipyard, in production, in 1983 when we were a small company of 38 
employees building boats for the salmon industry. We entered the 
recreational industry in the early 1980's just as the west coast 
fishing industry was collapsing. Back then a 50'' vessel was considered 
a large yacht and one over 65'' was almost unheard of in the Northwest. 
Over the years the yachts have grown until now the smallest we build is 
98''.
    As the yachts have grown and our employment level has increased, 
our working conditions and our safety record have steadily improved. 
Like many in our industry we are located in an economically depressed 
area where the local economy was once fishing and timber based. We have 
been instrumental in maintaining the integrity of many local economies. 
We currently employee over 600 employees at three different locations 
in Washington state, and 388 of our employees live in Westport. We just 
invested well over 10 million dollars in a brand new facility in Port 
Angeles Washington, another economically depressed area where we 
employee over 100 new employees and hope to grow to 200 by this time 
next year. We are in active partnerships with the community colleges at 
all of our locations to develop training programs for our growing 
industry.
    This is an incredibly competitive business. Fortunately each of the 
US builders has carved out a different product niche so we are not 
competing with each other. Our real competition is off shore and they 
are becoming stronger every year. As a result, I need financial 
resources to reinvest in technology and production efficiencies and new 
products.
    Today, there are more than 250,000 recreational vessels longer than 
65 feet. These are built by the more than two dozen boat builders in 
the United States, many of which are small businesses. If any 
recreational boat builder plans to build a recreational vessel longer 
than 65 feet, that builder would have to purchase Longshore coverage 
for his/her workers. This requirement creates severe hardship for many 
recreational vessel manufacturers, many of which only produce between 
one and six boats each year. Longshore coverage is two, three or even 
four times more expensive than state workers' compensation coverage, 
which we believe is the more appropriate protection for workers in the 
recreational marine industry.
    As you know, H.R. 1329 would remove the recreational marine 
industry from coverage under the Longshore and Harbor Workers' 
Compensation Act and place the industry and its workers under state 
workers' compensation.
    The Longshore and Harbor Workers' Compensation Act was originally 
enacted in 1927. Its purpose was to provide coverage to non-seamen and 
maritime workers (i.e., longshoremen, ship builders, ship repairers and 
stevedores) who work on or near navigable waters facilitates water-
borne commerce. Workers in these industries, then as now, faced 
significant dangers and Congress, exercising its jurisdiction over our 
nation's navigable waters, believed that a special form of national 
protection was needed.
    In the ensuing years, Longshore coverage was by practice mistakenly 
extended to the recreational industry. In 1984, Congress recognized 
this error by providing an exemption to Longshore protection for 
recreational vessels over 65 feet. Today, Congress should finish, or, 
if you will, update, the work that it began in 1984 by enacting H.R. 
1329.
    Few recreational vessels were constructed in 1984 that were longer 
than 65 feet in length, and thus, the 1984 amendments had the practical 
effect of fully implementing the intent of Congress by exempting 
essentially the entire recreational industry from Longshore. But, 
again, with the increase in the size of recreational vessels, H.R. 1329 
is necessary now to fulfill fully the intent of the 1984 amendments.
    There is a great difference between ship builders whose workers 
have traditionally been covered by Longshore, and my segment of the 
marine industry--recreational boat building. The Occupational Safety & 
Health Administration (``OSHA'') defines ``ship building'' as ``the 
construction of large commercial or naval vessels that are fabricated 
in place, most often of steel, typically with the vessel afloat or in 
drydock \1\ On the other hand, recreational boat building, according to 
OSHA, is different:
---------------------------------------------------------------------------
    \1\ OSHA Direction DIR 02-01 (CPL 2), January 23, 2002.
---------------------------------------------------------------------------
        Based on a review of OSHA's compliance experience in boat 
        building facilities and a comparison of these two sets of 
        standards, it is OSHA's opinion that the general industry 
        standards of part 1910 [that is, OSHA's standards for general 
        manufacturing industries in workers are provided with state 
        workers' compensation protection] more closely address the 
        types of operations and hazards of recreational boat building 
        than do the shipyard standards of part 1915 [which establishes 
        OSHA's standards for employment of navigable waters and ship 
        building, ship repairing, ship breaking, and related 
        activities].\2\
---------------------------------------------------------------------------
    \2\ Id.
---------------------------------------------------------------------------
    It is evident to those of us in the recreational marine industry 
that recreational boat building does not present its workers with the 
dangers faced in ship building and in other industries that should be 
protected by Longshore. I understand that there are those who are 
concerned about whether there will be an adverse impact on workers if 
H.R. 1329 were enacted. That could very well have been a question asked 
in 1984 when the Subcommittee endorsed the current 65 feet exception to 
the requirement for Longshore protection. I am unaware, however, of any 
harmful impact to those workers who manufacture recreational vessels 
less than 65 feet and who are not covered as the result of the 1984 
amendments by state workers' compensation. I will contend that the 
reason we have not seen an effort to roll back the 65 feet exception is 
because there has not been any negative impact on workers. We, in the 
industry, have conducted a survey among some of the major recreational 
boat manufacturers to determine whether in fact there were a greater 
number and more significant injuries experienced by workers who 
manufactured vessels in excess of 65 feet. Allow me to provide two 
significant examples.
    Hatteras Yachts, is one of the major boat builders in the world. 
Hatteras manufactures vessels both under and over 65 feet. Hatteras 
reported that in 2001, workers manufacturing vessels under 65 feet 
suffered 10.4 injuries per 100 workers; workers working on vessels 
larger than 65 feet experienced 5.8 injuries per 100 workers. Total 
injuries were 7.7 and total serious injuries were 3.1.
    Another major boat manufacturer that manufactures under and over 65 
feet, Sea Ray, reported the following: for vessels that they 
manufactured under 65 feet in length there were 9.4 injuries per 100 
workers; for workers on vessels larger than 65 feet, 5.2 injuries per 
100 workers were experienced. The total number of injuries was 8.9 per 
100 workers, with the total serious injuries only 1.6 per 100 workers.
    By comparison, the average OSHA Recordable Incident Rates for ship 
building (as opposed to boat building) in the year 2000 was a total of 
22 injuries per 100 workers, with 11.7 of those classified as serious.
    So, as you can see, recreational boat building both under and over 
65 feet is significantly safer than the more dangerous ship building 
industry. particularly in terms of those workers working in the 
recreational marine industry on boats over 65 feet. Therefore, it is 
clear to us that recreational marine workers building recreational 
vessels of all sizes should be covered by state workers' compensation 
rather than Longshore.
    Additionally, the many small businesses that build recreational 
vessels would greatly benefit if H.R. 1329 were enacted and they no 
longer had to provide the vastly more expensive Longshore coverage for 
its workers. By switching to state workers' compensation coverage, 
which is two to four times less expensive as Longshore coverage, these 
small businesses would in many instances use the savings to expand 
their businesses, expand their workforces and update and enhance their 
production processes.
    In conclusion, Longshore coverage is important to workers who toil 
in the longshore and stevedore industry, but it has no place in the 
recreational vessel building industry. Workers in the recreational boat 
building industry do not face the dangers that longshoremen and 
stevedores face. Rather, they face no greater risks than those faced by 
other land-based workers in the manufacturing industry. Further, the 
resources spent on Longshore coverage could be better utilized by the 
small businesses to strengthen their businesses and their livelihood. 
Thus, recreational marine workers should be covered by state workers' 
compensation. We ask you to expeditiously pass H.R. 1329
    Thank you, Mr. Chairman and other members of the Committee for your 
time and attention. I would be happy to answer any questions.
                                 ______
                                 
    Vice-Chairman Biggert. Thank you, very much.
    Mr. McGarrah.

STATEMENT OF ROBERT E. MCGARRAH, JR., COORDINATOR FOR WORKERS' 
             COMPENSATION, AFL-CIO, WASHINGTON, DC

    Mr. McGarrah. Thank you very much, Madam Chairman and 
Members of the Committee. I appreciate the invitation to be 
here today. I want to make three basic points.
    Vice-Chairman Biggert. Would you check you microphone, I 
don't think that it's turned on. Or, pull it closer.
    Mr. McGarrah. All right. I wanted to make three basic 
points, Madam Chair.
    First, this legislation would deprive thousands of working 
families of the protections that Congress guaranteed them when 
it amended the Longshore and Harbor Act in 1972 and 1984. It 
would do this by excluding them from coverage, and forcing them 
to apply for poverty level benefits under State Workers' 
Compensation laws.
    Before 1972, the benefits of the Longshore Act were $70 a 
week, and State benefits were actually higher. Some injured 
workers could file lawsuits against their employers, and that 
was a needed and necessary reform that Congress took in the Act 
in 1972. Including them under the Longshore Act, it created a 
tort reform by putting people in workers' compensation under 
Federal law, and it created a new benefits schedule.
    The point that we have today, Madam Chair, is that we have 
exactly the opposite situation, and marine industry is simply 
seeking to push workers out of the Longshore Act and to poverty 
level benefits under State workers' compensation laws.
    A major study that will be coming out shortly from the 
National Academy of Social Insurance makes it very clear that 
the benefits under State laws are now 30 to 50 percent below 
the benefits payable under the Longshore Act. For example, in 
California, under the Longshore Act, the maximum payment for 
total disability is $1031 compared to $728 in California, $662 
in Ohio, $626 in Florida, and merely $400 a week in New York.
    The State workers' compensation laws, as I said, are at or 
near poverty in their payments. Only the District of Columbia 
which follows the benefits under Longshoremen Act, are benefits 
anywhere near above poverty. And I have a table that is 
attached to my statement today.
    Leading authorities on workers' compensation, like 
Professor John Burton and Dean Emily Spieler of Northeastern 
University Law School, have carefully documented how State 
workers' compensation benefits have been slashed over the last 
15 years. They were done so because large increases in 
insurance forced businesses to look for solutions, and they 
teamed up with insurers to demand cuts in benefits. This is not 
the solution.
    Longshore rates are subjected to the same market forces as 
State workers' compensation rates. When the hard market began 
in 2001, insurers began pricing their product and increasing 
rates. And that is the reason why you're hearing the complaints 
today. In fact, in today's Wall Street Journal, on the front 
page of the Money and Investment section, makes it very clear 
from the risk management survey that's presented, the rates are 
now starting to decline, because we've had enormous rate 
increases since 2001. And workmen's compensation insurance 
rates and longshore rates will be going down as well. In fact, 
in Florida it was recently reported that Longshore rates will 
be cut by 50 percent.
    But we will suggest, Madam Chairman, is that we look 
instead to the recreational marine industry. Yes, it is true 
that they are large numbers of yachts, and I believe the figure 
was quoted as 250,000 are now well over 65 feet and more. And 
it is also true, that China is injuring this luxury yacht 
business, selling yachts at $7 million a year, instead of the 
$10 million that's charged, and much more, by my colleagues 
here on this panel.
    I would suggest, Madam Chairman, that this is an industry 
that has very good profit margins, and has customers that can 
certainly afford to pay workers when they're injured rates that 
are keeping them out of poverty. This is a wage insurance 
program, not a poverty program. Workers' compensation needs to 
be providing people with living wages so that they can get 
healthy and get back to work.
    Amending the Longshore Act by throwing workers and to 
poverty would be a major mistake, and a travesty. Thank you.
    [The prepared statement of Mr. McGarrah follows:]

    Statement of Robert E. McGarrah, Jr., Coordinator for Workers' 
                 Compensation, AFL-CIO, Washington, DC

    Chairman Norwood, Ranking Member Owens and Members of the 
Subcommittee, I am Robert E. McGarrah, Jr., Coordinator for Workers' 
Compensation for the AFL-CIO and I thank you for the invitation to 
appear before the Committee to present the views of working families on 
H.R. 1329, the ``Recreational Marine Employment Act of 2003.''
    This legislation would deprive thousands of working families of the 
protections Congress guaranteed them when it amended the Longshore and 
Harbor Workers Compensation Act in 1972 and 1984. It would do so by 
excluding them from coverage under the Act and forcing them to apply 
for poverty-level benefits under state workers' compensation laws.
    Before Congress amended the Longshore Act in 1972, the benefits 
paid to an injured worker were $70.00 per week. But some injured 
workers could also sue their employers in tort under the doctrine laid 
down by the Supreme Court in Ryan Stevedoring Co. v. Pan-Atlantic 
Steamship Corp., 350 U.S. 124, 100 L. Ed. 133, 76 S. Ct. 232 (1956).
    State workers' compensation benefits for the same injuries, 
however, were much more generous than the $70 weekly Longshore 
benefits. Maximum weekly benefits for permanent total disability, for 
example, were higher in Alaska, Connecticut, Hawaii, Maine, Maryland, 
Massachusetts, Michigan, New York, New Jersey, Rhode Island, and 
Washington---all states with important recreational marine 
industries.\1\
---------------------------------------------------------------------------
    \1\ ``The inevitable result of this disparity was that, in the 
conflict-of-laws picture, the traffic was made up mostly of claimants 
trying to get out of the federal act and into a state act.'' Fn. 72, 9-
145 Larson's Workers' Compensation Law Sec. 145.02.
---------------------------------------------------------------------------
    Employers complained to Congress that they faced both the threat of 
litigation and efforts by injured workers to win higher compensation 
benefits under state workers' compensation laws---exactly the opposite 
of today's complaints from the recreational marine industry.
    Carefully balancing the interests of business and labor, Congress 
amended the Longshore Act in 1972 to provide an exclusive remedy, 
protecting employers from costly and unpredictable litigation. It also 
raised the $70 per week compensation to equal two-thirds of a worker's 
pre-injury wages. Workers in the recreational marine industry were 
covered under the Act if they worked on boats and yachts over sixty-
five feet, or in marina construction.
    Now, the recreational marine industry asks Congress to exempt all 
of its workers from coverage under the Longshore Act, dumping them into 
state workers' compensation systems. This proposal, if enacted, would 
significantly reduce compensation benefits for injured workers. Indeed, 
in many states, this proposal would reduce benefits to below poverty 
levels.
    A review of benefits paid to injured workers for total disability 
shows that in most states, workers' compensation benefits are 30- 50% 
lower than the benefits payable under the Longshore Act. [Figure 5-5]. 
Under the Longshore Act, the maximum weekly payment for total 
disability is $1031, compared to a maximum benefit of $728 in 
California, $662 in Ohio, $626 in Florida, and $400 in New York.
    Today, sadly, state workers' compensation benefits hover at or near 
poverty in most states. According to a soon-to-be published study by 
Dr. Allan Hunt for the National Academy of Social Insurance, \2\ 
[Figure 5-4] the average Temporary Total Disability benefits paid to 
injured workers are below poverty in fifteen states. They are only 
slightly above poverty in another twenty-two states. In fact, only in 
the District of Columbia, which follows the benefit standards of the 
Longshore Act, are benefits for this insurance program above 160% of 
the poverty threshold for a family of four.
---------------------------------------------------------------------------
    \2\ Hunt A. ``Adequacy of Earnings Replacement in Workers'' 
Compensation Programs,'' unpublished study of the National Academy of 
Social Insurance (Washington, DC: 2004).
---------------------------------------------------------------------------
    Leading authorities on workers' compensation, including Professor 
John F. Burton, Jr., the former Chairman of the National Commission on 
State Workers' Compensation Laws, and Northeastern University Law 
School Dean Emily Spieler, have carefully documented the correlation 
between rising workers' compensation insurance rates and the decline of 
benefits paid to injured workers. \3\ Indeed, each time state workers' 
compensation insurance rates rise---as they almost always do when the 
stock and bond markets decline--- insurers tell their customers that 
the only solution is to cut benefits.
---------------------------------------------------------------------------
    \3\ Emily A. Spieler and John F. Burton, Jr, ``Compensation for 
Disabled Workers: Workers' Compensation,'' in New Approaches to 
Disability in the Workplace, Industrial Relation Research Association, 
(Madison, WI, 1998), pp. 205-244.
---------------------------------------------------------------------------
    Longshore rates are affected by the same market forces and 
underwriting cycle as state workers' compensation rates. When the 
recession began in 2001, insurers began pricing their product in what 
they call a ``hard market.'' As a result, the price of workers' 
compensation insurance rose during a recession, when businesses were 
least able to afford a price increase. Now, as the economy is showing 
signs of a recovery, prices are beginning to fall in some markets. 
Longshore rates in Florida recently fell by 50%.
    Insurance rates for workers' compensation are also affected by the 
rates of injury in an industry or occupation. The Bureau of Labor 
Statistics reports that the boat building and repairing industry is one 
of the more hazardous industries in America, with an injury rate of 
11.1 per 100 full-time workers, compared to a national average of 
5.3.\4\ Normally these rates are priced into the premium set by 
insurers for workers' compensation.
---------------------------------------------------------------------------
    \4\ BLS, Number and rate of nonfatal occupational injuries and 
illnesses by selected industry, All United States, private industry, 
2002.
---------------------------------------------------------------------------
    Finally, Mr. Chairman, leading members of the recreational marine 
industry have argued that today's recreational yachts and boats are 
larger than they were in 1984, when the Longshore Act was last amended. 
In 1984, workers on boats and yachts under 65-feet were excluded from 
protection. Today, it is not uncommon to find yachts exceeding 90 feet. 
This Tuesday, the New York Times carried a front-page story about 
China's newest enterprise: luxury yachts.\5\ Commenting on China's 
ability to produce any product at significant savings in labor costs, 
Dean Leigh Smith, executive manager of Australia's Gold Coast City 
Marina, said, ``What would normally be a $10 million boat is $7 
million.''
---------------------------------------------------------------------------
    \5\ New York Times, July 13, 2004, p. A1.
---------------------------------------------------------------------------
    The issue before the Committee today should not be whether Congress 
should enact an amendment that would consign more injured workers to 
poverty-level benefits, but why the marine recreation industry, 
producing and servicing $10 million yachts, isn't willing to provide 
fair compensation to workers injured in this dangerous industry. Why 
isn't it doing more to reduce high injury rates? If insurance prices 
are too high, the first place to turn is the insurance industry itself, 
not injured workers.
    Congress deserves credit for preserving and protecting the 
Longshore Harbor Workers Compensation Act. It is a model for the 
Nation. It provides living wage compensation to injured workers at time 
when poverty is all too common.
    Thank you.
    [Attachments to Mr. McGarrah's statement follow:]


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    Vice-Chairman Biggert. Thank you, very much.
    Mr. Greenway, you're recognized for 5 minutes.

 STATEMENT OF IAN R. GREENWAY, LIG MARINE MANAGERS, INC., ST. 
                         PETERSBURG, FL

    Mr. Greenway. Thank you.
    Thank you for the opportunity to be here today. I think 
everyone would agree that this is a vital part of insurance. It 
will fully provide benefits to every stevedore, every shipyard, 
and has been doing so for 80 years. But 80 years ago, it 
started off in a very different fashion working with stevedores 
and the harbor workers that were around at the time, and not in 
the recreational marine industry.
    It has been suggested that the move of recreational boat 
builders, repairers and contractors to State workers' 
compensation will put them on some form of poverty level. And 
this simply isn't true. The numbers quoted have talked heavily 
about the maximum level benefits.
    Well, unfortunately, very few people in the recreational 
marine field will ever hit those maximums. They're not the 
people buying these boats. They cannot afford to buy the boats, 
whether they be the employer or the employee.
    They're working at levels where they will get two thirds of 
their weekly wage, not hit the maximums, not hit any sort of 
caps that are in the State benefits. Now the critical issues 
with Longshore insurance, which I'm involved in every day, is 
where a claim dollar goes. And in reality in the recreational 
marine industry that claim dollar goes much more to the medical 
community and to the legal community than it does to the 
injured employee.
    Sorry, it's distracting to hear the buzzer all the time. I 
have also compared changes in Longshore rates in Florida. The 
change in Longshore rates in Florida that occurred on July 1 
was a reduction of 42 percent or 44 percent in the effective 
rate only for a very narrow band of people. It had no effect on 
boat builders and most boat repairers. It only hit a very 
narrow band. It still leaves Florida among some 15 states with 
Longshore costs that are more than double the cost of the State 
act workers' compensation. And that's where this money is 
going. It's going to the attorneys, and it is going to the 
medical profession. It's not going to claimants, they're not 
going to suffer from this.
    We also have an inequity here. Why should the person who is 
building the recreational boat of 60 feet be in a different 
shape to a person who is building a 70 foot boat?
    In 1984, the put the exemption for 65 foot, when there were 
only a few 65 foot vessels in existence. The growth of that 
means the growth of this footage needs to be addressed now.
    But I think there's one other point that we have to address 
here, and that is the huge number of employees who are out 
there today without any coverage. It is estimated that some 
one-third of marine businesses today, recreational marine 
businesses, today have no benefits at all, because they are not 
prepared to pay the exorbitant price for Longshore.
    I think it is in everybody's interest to make sure that 
every employee has benefits available. The states have a 
workers' compensation system that works under 65 foot, why 
shouldn't it work over 65 foot? They enforce it. They broadened 
the coverage, so that everybody has that coverage. The 
Longshore Act does not provide those teeth to ensure that 
everybody has coverage until after the claim.
    There are thousands of employers throughout this country 
who provide no benefits to their employees today. They can't 
afford them. That means there are tens, possibly hundreds of 
thousands of uninsured employees out there today. I urge this 
Committee to move the recreational marine industry back into 
the State act workers' compensation, so that those people can 
get coverage so that every employee can be covered.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Greenway follows:]

     Statement of Ian R. Greenway, LIG Marine Managers, Inc., St. 
                             Petersburg, FL

    Good morning, Chairman Norwood and Ranking Member Owens. My name is 
Ian Greenway and I am pleased to be here this morning to address the 
need for a broader legislative exception for the recreational boating 
industry from the Longshore and Harbors Workers' Compensation Act 
(``Longshore Act'').
    There is a great need to continue the efforts of this committee 
when it last amended the Longshore Act in 1984. Enactment of a broader 
legislative exception for the recreational boating industry will 
greatly reduce an ill-placed economic burden on the many small 
businesses of the recreational marine industry, with virtually no 
significant impact on the highly skilled workforce in this sector of 
the maritime industry. In fact, enactment of a broader exception will 
result in a considerable expansion of available benefits and protection 
to recreational marine workers across the nation.
    I am president and owner of LIG Marine Managers (``LIG'') located 
in St. Petersburg, Florida. LIG is a leading provider of commercial 
marine insurance to independent insurance agencies throughout the 
United States since 1989. I have the privilege of interacting regularly 
with the marine industry and am a member of various trade associations. 
I have not only underwritten Longshore policies for many years, but 
have delivered hundreds of seminars in every corner of this country, to 
both the insurance community and the marine industries, as well as 
authoring a book dedicated to this topic. As such, I understand the 
industry and its employers and workers, as well as the risks these 
workers face in all aspects of the marine industry. Of particular 
relevance to today's hearing, I deal extensively with the recreational 
marine industry. With your permission I would like to address the 
impact that the enactment of a broader legislative exception would 
have, not only on the recreational marine industry, but also for the 
vital protection of its employees.
    As you know, the Longshore Act was initially passed in 1927 to 
provide coverage to dockside workers, such as stevedores, shipyards and 
harbor workers. Over the years, however, the universe of maritime 
workers who were required to be covered by Longshore insurance grew to 
include virtually all waterfront employees. In 1984 Congress provided 
new exceptions for the coverage of Longshore insurance. Of those 
exceptions, exclusion F exempted ``individuals employed to build, 
repair or dismantle any recreational vessel under 65 feet in length.'' 
There is no difference in the risks associated with repairing the 
plumbing, air conditioning or radio on a 75-foot recreational boat as 
compared to a 65-foot recreational boat. In 1984, when this exemption 
was enacted, recreational vessels over 65 feet were a rarity. However, 
today a quarter of a million of the boats registered in the United 
States are over 65 feet in length.
    In fact, current insurance data demonstrates that claims for these 
larger vessels are significantly lower. Claims for workers on vessels 
of 65-150 feet are at least 38% lower than those on vessels under 65 
feet. The reality is that the larger the boat, the more money is 
involved and as such, more care is given to its manufacture, 
maintenance and repair. Consider these vessels to be like hand crafted 
luxury cars, which literally have white-glove treatment. We see not 
only fewer injuries but also fewer serious injuries in larger 
recreational boats than we do in their smaller counterparts.
    There are significant consequences for the marine industry--for 
both the employer and employee--by requiring Longshore insurance for 
recreational marine industries. The most significant is the vastly 
increased cost for employers of plumbers, electricians and other 
specialty contractors when they are compelled to purchase Longshore 
insurance rather than the alternative, state workers' compensation 
protection. I have submitted for the record a chart that highlights the 
difference in cost between Longshore insurance and state workers' 
compensation insurance for these types of businesses in a number of 
states with significant recreational marine workers. For example, in 
states such as Florida, Alabama, Louisiana and Tennessee, as well as 11 
other states, the cost of Longshore insurance is more than double the 
cost of acquiring state workers compensation for workers. In another 19 
states the cost is between 50% and 100% higher.
    Not only does this result in a huge economic burden for the 
employer, but it means that an estimated one-third or more of such 
employers simply do not purchase any coverage, despite the legal 
requirement to so do, leaving injured employees without any available 
medical coverage, or lost wages and disability income. Transferring 
these businesses to the state workers' compensation system will not 
only make these policies more affordable, and provide a wider insurance 
marketplace to the employer, but also the states will have jurisdiction 
to enforce their own rules and ensure all businesses are carrying the 
coverage required by law to protect their employees.
    There seems to be some concern over how Longshore premiums are 
allocated. Each sector of the marine industry has its own 
classifications, for example ship repair is 6872F, and Stevedoring has 
four classifications dependent on equipment used: 7317F, 7309F, 7327F 
and 7350F. The premiums, payrolls and claims for each of these 
classifications are segregated, and the rates for a particular 
classification are calculated purely from that classification's 
experience. Thus, there would be no effect on the rates and premiums of 
traditional marine industries by any change implemented here.
    I am convinced that transferring these businesses to the state 
workers' compensation system and enforcing the State Workers' 
Compensation Acts, as only the states have the power to do, will mean 
that tens of thousands, and possibly hundreds of thousands of workers, 
will acquire coverage where there is none today. In addition, it will 
provide an economic boost to employers, allowing them to expand their 
operations and hire new employees-all while leaving the traditional 
Longshore employees unaffected.
    In conclusion, I strongly encourage this committee to amend the 
Longshore Act to further expand the 1984 amendments by removing the 
recreational marine industry in its entirety from under LHWCA. If 
enacted into law, this will rationalize the state workers' compensation 
coverage in the recreational marine industry that Congress began in 
1984.
    Workers will not be harmed. Instead they will be benefited by more 
universal coverage.
    Thank you.
    [An attachment to Mr. Greenway's statement follows:]


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    Vice-Chairman Biggert. Thank you, very much.I21We will now 
move to the question-and-answer period, and I yield myself 5 
minutes.
    Mr. Greenway, you noted that there is no difference in the 
risks associated with preparing the plumbing, air- 
conditioning, or radio on a 75 foot recreational vessel as 
compared to a 65 foot vessel. Can you compare the number and 
degree of seriousness for injuries that you see occurring in 
vessels over 65 feet with those that are less than 65 feet?
    Mr. Greenway. The rating organization that monitors all 
these statistics, keeps statistics for vessels under 65 feet, 
and vessels between 65 foot and 150 feet. The claims on those 
are shown to be at least 38 percent lower than vessels over 65 
foot, 65 foot to 150 foot range.
    As Mr. Nelson has already said, it is just easier to work 
on a larger vessel. There's more space, there's more time, 
there's more money involved, quite frankly, from the owner to 
be that safe, and to take the more, higher degree of care 
that's necessary.
    Vice-Chairman Biggert. Thank you. Looking at the law, it 
appears that the Longshoremen's insurance was put in to make 
sure that there was no gap in coverage, that everyone that 
would be working on some type of vessel would be provided with 
insurance.
    This won't happen, of course, but let's say we repealed the 
Longshoremen's Act, and so that there was no insurance, looking 
then at the vessels that are 65 feet and over, would there be 
any gap in coverage? Ms. Hebert?
    Ms. Hebert. Well, I mean, I can't speak for the insurance 
industry. As far as my workers, maybe the question is, how I do 
with it? Some days, I'm just wondering if there is anyone who 
would not receive this State workers' compensation. You know, I 
don't have the--maybe I can yield that to Ian, as far as, you 
know, the State compensation.
    As far as in Florida, the goal would be to have everyone 
covered under State compensation. I think that we are equal to 
our land-based partners. The work that we provide, for example, 
I am sure Mr. McGarrah formerly with NCCI, which is the 
National Council on Compensation Insurance, for a company like 
mine, Marine Electric, there is no classification for Marine 
Electric. We are electricians, and so we are classified the 
exact same. For my company, no, they would all would be 
covered, and in fact, the classification wouldn't change, they 
would just fall right to the same classification, my insurance 
numbers would not even change, other than this multiplier that 
he mentioned, has dropped. All of our workers would be the same 
and NCCI consider us in our risks equal to our land-based 
partners.
    Vice-Chairman Biggert. OK.
    Mr. Nelson. May I also address the question?
    Vice-Chairman Biggert. Sure.
    Mr. Nelson. Yes, but we did our research, and looked into 
this, one of the things that we discovered is that there are a 
few states that don't necessarily require workers' 
compensation.
    And I think that one of the things that we would favor, is 
that the bill were structured in a way, and maybe it could be 
done during markup, is that an employer would have to provide 
Longshore insurance if there was no State compensation 
available, to keep people from falling through the cracks.
    Vice-Chairman Biggert. I mean that was the intent of the 
law.
    Mr. Nelson. That was the intent of the law.
    Vice-Chairman Biggert. Right.
    Mr. Nelson. And that's our intent too.
    Vice-Chairman Biggert. Mr. McGarrah.
    Mr. McGarrah. Yes, Madam Chair.
    The State of New Jersey specifically excludes workers in 
the marine industry, so they would have no coverage, unless the 
State amended state law. Historically, the United States has 
always provided for Federal coverage for workers operating 
airports and harbors. That goes way back to the early days of 
the republic. And for Congress to throw workers back into the 
State system, especially when the states are not providing any 
coverage whatsoever, would be an historic reversal of Federal 
maritime policy and would, frankly, as I had indicated, 
contrary to what Mr. Greenway stated, would throw workers into 
poverty.
    The average temporary total disability payments, I'm 
talking about average payments, this was a study by the 
National Academy of Social Insurance, would put many workers 
below poverty, in State workers' compensation systems and only 
marginally above poverty. That's the major concern here.
    And that's one of the major reasons in this very wealthy 
industry, with multimillion dollar yachts being found in ports 
everywhere, and we're all for multimillion dollar yachts, if we 
can afford them--workers simply can't live in poverty, and get 
better and get back to work. Thank you.
    Vice-Chairman Biggert. Mr. Greenway.
    Mr. Greenway. I think that, when we look at the original or 
the Longshore Act as it stands today, it provides a beautiful 
caveat to draw people back into Longshore if there is no State 
compensation. Section 9023 says, if individuals described in 
clauses (a) through (f), that's the exclusionary language, are 
subject to coverage under--are subject to coverage under State 
workers' compensation law.
    It simply says there, that those exclusions disappear if 
there is no State act coverage in force.
    Vice-Chairman Biggert. Thank you.
    Mr. Greenway.--coverage in force.
    Vice-Chairman Biggert. Thank you.
    My time is expired, and that would yield 5 minutes to the 
gentleman from California, Mr. Miller.
    Mr. Miller. OK.
    Vice-Chairman Biggert. You're not used to sitting in that 
position.
    Mr. Miller. Thank you, very much, and thank you for your 
testimony.
    I must say, and this will come as a surprise to you, but 
I'm not persuaded yet, that the answer is simply to do away 
with the Longshore coverage.
    You describe an industry you suggest is among the safest, 
and that would suggest to me, as very often is the case we have 
a rating problem here, where we have a cost problem, and the 
insurance industry very often is not about insurance coverage, 
it is about insurance investments, and the cycles that they go 
through.
    It appears that after the pounding that they took in the 
beginning of this decade, in 2000, and rates escalated across 
the country for many lines of insurance and are now starting 
once again to come down. And I don't quite get that the answer 
is that we would uncover these workers for what I think is, in 
fact, in many instances and in many states, an inferior line of 
coverage in terms of the benefits to those workers.
    And I spent a lot of time in boat yards and in shipyards, 
and I guess, you're saying that the statistics show that 
somehow this is much safer. If it is so safe, I am not quite 
sure why the rates are so high. Mr. Greenway has a theory on 
that. And yet at the same time, when I walk around many of 
these large yachts, and we certainly don't do the largest in my 
area, the very, very large yachts, very expensive yachts, I 
don't know, the distance to the ground is a lot further off the 
bow of these yachts when they put up on the waves, than it is 
from, you know, a small recreational boat or what we used to 
think was even a larger recreational boat. It's a different 
experience in terms of that.
    And I just don't quite get that the answer here is to 
retract this coverage from those individuals. And I appreciate 
this Committee struggles all the time with both work and 
manufacturing and jobs that are going overseas. But it is hard 
for me to believe that differential is in the Longshore wage 
here.
    I realize that you have to add up all of your total costs. 
But if the differential is $5 million a yacht, I don't think 
that's about Longshore, and the suggestion is a cost of labor. 
Well, if you look at the cost of labor, if you offer those 
prices, you wouldn't get anybody to work in your yards, forget 
whether they are covered are not. I mean, they are not going to 
work for $160 month. They are not going to work for $400 a 
month, you know, to get to the skill that you, I assume, you 
need to keep your customers, and to add new ones.
    I'm just struck that this is the focal point for a series 
of problems, whether it is insurance rating, or whether it is 
competition, that suggest that somehow this is the answer. I 
would be happy to have you respond.
    Mr. Nelson. I would love to. Thank you. I think that you 
hit it right on the head. We can't get a worker to work for a 
$160 a month. And we can't get our customers to spend----
    Mr. Miller. I understand that. Most people in the United 
States aren't going to live like people live in China working 
in those industries.
    Mr. Nelson. And we wouldn't want to.
    Mr. Miller. That's my point.
    Mr. Nelson. We're trying to maintain and grow our business, 
pay family wage jobs, the overseas competition isn't doing 
that. Our customers are not going to pay an additional $3 
million to $4 million for a boat, so that they can buy from us.
    Mr. Miller. Well, for now, there was a story on Tuesday 
where they said nah, that's an interesting boat, but the 
quality is not that much different to look at.
    Mr. Nelson. And look where----
    Mr. Miller. I understand, and I believe that is only a 
matter of time, before the quality----
    Mr. Nelson. Our market share has been cut in half. That 
work is going elsewhere. And for a number of reasons. And 
Longshore is not the only reason. The reason is that we pay 
some of the highest wages and industry , in the world. And we 
want to continue to do that.
    Mr. Miller. And when those people are injured, they ought 
to be compensated at a level that has something to do with 
their standard of living they had while they were working 
before they were injured.
    Mr. Wilson. Absolutely. And workers----
    Mr. Miller. And that's not what workers' compensation does, 
in many, many, many, states. It just doesn't do that.
    Ms. Hebert. If I could comment on that. As I mentioned, one 
of my other capacities is that I am Vice President, actually 
Chairman Biggert mentioned that, I am Vice President of the 
Marine Industries Association of South Florida. I have been 
Chair of the Longshore Taskforce. We didn't even call it a 
committee for years.
    And one thing that we did, and we went out, as you know 
South Florida is the yachting capital the world. You know, 
obviously that's what people imagine, people imagine lots of 
wealthy people sitting around. But the reality is that our 
industry generates more dollars in the state than the citrus, 
and that we create more jobs, and generate more money.
    This is about the small working families. We did a work-
study in South Florida, clearly one of the biggest places you 
would want to go in the country to have work done on your boat. 
We did a work survey--let's go to all the yards, let's go to 
all the marinas, my company was included, what are the wages, 
what are the wages and salaries of people.
    We went from the deck hand to the boat washer, to the 
service manager, on, on, and on. And what we found, and we have 
this, what we found is that all positions fell well within the 
salary caps of the state compensation system. We do not have 
people making the salaries of the Longshore and stevedores. And 
our employees are not working at the ports. We are working 
inland. My company doesn't even work on the water, I mean, we 
drive in vans, you know, to wherever it is. You know, our 
facilities are not located at the port, they're down the river. 
And the experiences and environments that are there are not the 
hazardous, things you are imagining at the port.
    So I would beg to differ. In Fort Lauderdale, which is not 
one of the cheapest places to live in this country. If our 
salaries can fall well within state compensation, which I'm 
sure the industry--insurance industry would love to comment on 
the Florida State workers' compensation policies, are not 
exactly the most generous, they do fall well within, and 
they're not going to be a poverty level.
    Mr. McGarrah. Well, Mr. Miller, if I could just add two 
points. One is, the injury rates in this industry are double 
the average injury rates, according to the Bureau of Labor 
Statistics. The average national injury is about 5.3 per 100 
full-time workers. This boat building industry is 11.1 per 100 
full-time workers. This is a booming industry, and a Nexis 
search of just the companies represented here on this panel, 
with my colleagues here, shows they're all going very well, 
thank you and have expansion plans and doing well selling 
yachts, and as I say are, upwards $10 million--some of them 
even more into the $30 million range. That's why we find it 
quite preposterous that there would be a suggestion that 
Federal Longshore rates, which are paying living wage while 
people are recovering from injuries, ought to be eliminated, 
and put workers into rates in a states that a well below 
poverty.
    But what we think here, frankly, is in overreaching on the 
part of this very competent industry. And perhaps, some 
misinformation from the insurance companies that are servicing 
them. Because the insurance industry, as we all know, and as 
the Wall Street Journal documents in a front-page story today 
in the Money and Investing section, the industry made many 
major pricing decisions that came home to haunt it when the 
market collapsed. And that is why rates had to go up across the 
board for property, casualty insurance. Workers' compensation 
is no exception.
    A closer examination of rates, as they do in the 
Commonwealth of Virginia, which show that the industry 
frequently, as frankly many other financial services industries 
have, have priced their products in ways that are less than 
truthful, and less than candid. And the Commonwealth of 
Virginia catches errors all the time in the pricing practices. 
I would urge my colleagues to join with us, in labor, and 
properly examining and calling for transparency among insurers 
in the property-casualty insurance industry. It's a critically 
important part of our economy. It's necessary for all of us to 
do business. But we have got to have truth in the pricing of 
the insurance product. We don't have that now.
    Vice-Chairman Biggert. The gentleman's time has aspired. 
The gentleman from Florida, Mr. Keller, is recognized for 5 
minutes.
    Mr. Keller. Thank you, Madam Chairman.
    I want to briefly address a couple of things. The Ranking 
Member, Honorable George Miller, said that he is not yet 
persuaded. Well, perhaps it is because of my youth and 
experience, but I am not giving up on him on this issue. I am 
respectful of the fact that he was actually here in 1984 when 
these amendments were adopted. Therefore, I haven't pretended 
to tell him what his intent was. I have been respectful of the 
that fact that you, and you alone, know what you intended.
    I21But I looked it up, and you were the Subcommittee Chair, 
and it passed by a voice vote. And because you put that 65 foot 
rule in, you made a very positive difference for the 
recreational marine industry that would not have happened.
    I wanted to get the support of folks like you, Martin Frost 
and Rob Andrews and Jim Davis, and so there is, specifically, 
there is no union bashing in this bill. There's nothing to do 
with collective bargaining, there is no tort reform stuff. I 
wanted to have a common sense bill that would be 
noncontroversial.
    So in the interests of optimism, let me directly address 
something that I hope would persuade you and some others. In 
California, if you were injured and you were a Longshoreman, 
and by the way let me point out, this bill does nothing to 
impact the coverage for Longshoreman. They have the Longshore 
insurance before, and they have the Longshore insurance after.
    But if you, let's say are a recreational person, and you 
are working on a boat and you were injured, under Longshore 
insurance you get 66 and two-thirds percent. Under California 
State workers' compensation, you get 66 and two- thirds 
percent.
    I would suspect the AFL-CIO witness would point out then do 
you, yes, but under the total maximum amount, under Longshore, 
you get $1030, and under California $728. And so, let me just 
address that directly, show you why it doesn't really have the 
hurt that you think it does.
    If you look at a particularly high paid worker on a 
recreational boat, a diesel mechanic who makes $20.38 an hour, 
and that comes out to $815.20 a week. And in a 40 hour week, 
the employer will be required in California, to pay 66 and two 
thirds percent, just like in Florida. And that equals $543, 
well within Florida's maximum cap, well within California's 
maximum cap, the same amount.
    So it's really no attempt to push workers out of coverage 
or to give them inferior coverage, not at all. Now, one of the 
things that came out from Mr. McGarrah's testimony was sort of 
like this is just something to help rich folks, you know, and 
they could help themselves.
    So let me just, rather than leave that unanswered, let's 
just address directly. Ms. Kristina Hebert, are you a 
billionaire?
    Ms. Hebert. No.
    Mr. Keller. Do you spend your free time hanging out with 
Donald Trump?
    Ms. Hebert. No.
    Mr. Keller. Do you own a 250 foot yacht?
    Ms. Hebert. No.
    Mr. Keller. OK, do you have a small family business?
    Ms. Hebert. Yes.
    Mr. Keller. OK, tell me how many people your company 
employees?
    Ms. Hebert. Forty-two.
    Mr. Keller. Forty-two, and you say this company will save 
about $200,000 a year, if we pass this legislation?
    Ms. Hebert. Yes.
    Mr. Keller. OK, just to address for cynics, are you going 
to take this $250,000 a year and just upgrade, and buy a place 
in Palm Beach. Or are you going to use this to hire more 
employees?
    Ms. Hebert. No, we would actually use it hire more 
employees.
    Mr. Keller. Now, we haven't sworn you in, but if you were 
sworn in under oath, you would say the same thing, that you 
were going to use this to hire more employees and create more 
jobs?
    Ms. Hebert. Yes.
    Mr. Keller. One of the things that you said intrigued me, 
you were talking about how expensive it was, essentially for a 
skilled worker, workforce hour of $75 an hour, and most of the 
money would actually go to pay for the Longshore insurance. And 
you said something to the effect, that because of the high cost 
of Longshore insurance, some of employers are just going bare. 
Are you suggesting that if we didn't have the Longshore 
requirement, for the recreational folks, that actually there 
would be more workers with insurance coverage?
    Ms. Hebert. That's exactly what I am suggesting in a way, 
you know, I'm not an insurance professional. But we, as I 
mentioned, are a parts distributor. And so, in addition to 
providing service work, we provide parts for other contractors 
that are out there doing work, that I know, that are 
underbidding us.
    And they are doing this because they cannot afford 
Longshore coverage. When you're looking at a one or two man 
show, that makes $30,000 a year, and you're asking them for 
$25,000 up-front in insurance, they're going to say, sorry, I 
can't do it, and they're going to work illegally.
    But I would guarantee that they all would want to provide 
coverage for their workers. That's what they want to do with 
it.
    Mr. Keller. OK, one final one. I want to question, Mr. 
Greenway real quick.
    Mr. McGarrah keeps talking about the injury rates for 
workers, but I think he's blurred the recreational workers with 
the ship workers. For example, he highlights the testimony of 
the Bureau of Labor Statistics that the boat building and 
repair industry has one of the most hazardous site injury rates 
of 11.1 per 100 full-time workers. He doesn't state that these 
rates are priced into the premiums set by issuers for workers' 
compensation.
    Are you familiar with this statistic, and is this statistic 
for the entire boating industry, or does there need to be a 
distinction between the commercial ships and the recreational 
boating?
    Mr. Greenway. I have not seen that number before, but there 
clearly is a big difference between the shipbuilding industry 
and the boatbuilding industry. And even within the boatbuilding 
industry, between the under 65 and the over 65.
    Shipbuilding and stevedores, are considered to be twice to 
three times the numbers of claims the boat builder has. And 
even within the boatbuilding category, you have a 38 percent 
statistic from NCCI, which shows that it is 38 percent lower 
for over 65 foot because of the space available.
    I would also like to add though that the coverage issue, I 
think, is very important. Most states, Florida, California, 
right now, are doing huge clampdowns on businesses in the 
states that are not providing workers' compensation insurance 
because the way Longshore is written, the states have no power 
to go in and enforce Longshore insurance.
    So these employers that are going around without anything, 
they are claiming that I can take a choice, I can only take the 
risk of going bankrupt when the claims happen, or I can take 
the risk for a certainty for going bankrupt now. That means 
that nobody has a job. Nobody's got benefits. They get left out 
there in the cold.
    Mr. Keller. Thank you, Madam Chairman. My time has expired.
    Vice-Chairman Biggert. Thank you, Mr. Keller. The gentleman 
from New Jersey, Mr. Payne, is recognized.
    Mr. Payne. Yes. Thank you, very much.
    This is certainly a very important issue. I think some of 
the issues go beyond your industry, and I don't know how we in 
the U.S. are going to contend with the fact that China produces 
things more cheaply. I guess, the answer is either reduce 
wages, which of course is happening anyway, actually, which is 
a bad trend, or, that we, I guess, move out of that industry, 
which is not good for the American worker. However, we've seen 
a number of industries totally decimated by the fact that 
corporations seem not to--you're not a corporation, but 
multinational corporations seem not to have any borders, that's 
for sure. And the capital just flows with the push of a 
computer button.
    And so I think some of the problems that you're finding 
here, really is going to be a dilemma, that we as a nation will 
have to come to grips with it--I'm not running for President, 
so I don't have to come up with the answer. But you're talking 
about, of course, $10 million for a ship here and $7 million 
for one built in China. I think we have to just take a look at 
how we come up with technology to reduce our costs.
    We have been able to--if we took that philosophy, we would 
make more automobiles in the United States, because automobiles 
are made in Brazil, they're made in China, they are made in 
Namibia, as a matter of fact. And so if our philosophy is 
simply going to be that we have to ratchet down hourly wages, 
or our insurance coverage, or--then we are in trouble, because 
you're not going to be able, you know, it first started with T-
shirts and underwear, you know, that was all right, and that 
was sort of sweatshop stuff here anyway. And so we don't make 
it any more, Fruit of the Loom's here.
    But then it comes into other industries, and so I really 
don't, you know, have an answer for this problem, this dilemma. 
I think that what we're going to have to do is to make a better 
product, somehow use the creativity of the American worker, who 
I believe is the best worker in the world. And somehow, 
perhaps, have corporations have some, some loyalty to the U.S.
    I know that it might sound high-falutin', but you see there 
was not too much concern about the loss of manufacturing jobs, 
like it was--the apparel business, the clothing lines, that 
sort of thing.
    Of course, then it started to move to automobiles, and we 
kind of fought back. As a matter of fact, there was a 
lackadaisical attitude on the part of the workers in the 
corporations in the U.S. until the foreign cars went longer and 
lasted longer, got better efficiency, and so the companies 
decided, well, we got to compete. And so, the American car now 
is almost, nearly as efficient and fuel as Japanese cars. It's 
just that the corporations were lazy. We just had it made. We 
didn't have to come up, the profits were great, so let's just 
sit down and make the profits.
    Now, we've got to put money into research and development. 
I think that we can do that in all industries. The fact now, 
though, that others are getting concerned, we didn't bother 
higher income people because like we said they didn't work in 
making T-shirts and those kinds of apparel and dungarees.
    But now I do hear my colleagues and friends who are the 
architects, who are little concerned now because what they're 
doing and some major cities is that they're sending to India or 
China perhaps even, or other places some kind of a description 
of a building that they would like to be built, and you know, 
these architects in India are sending back the building design. 
And so now it's actually starting to impact on the upper 
income, the professionals. Now we're starting to hear the 
concern.
    We hear that physicians are plugged into medical devices in 
India somewhere, or in the Bahamas, and as that person goes 
through the CT scan, someone over there that is making half the 
price, is coming up with the, who has the same kind of 
education, and knows what the CT-scan says, is coming back with 
the diagnosis for the illness.
    So this is going to be something that is not about 
sweatshirts anymore, it's about all kinds of industries. The 
old philosophy was that as the Third World kind of starts to 
manufacture low-priced things that we'll be able to sell them 
more high-tech. Well, the problem is now that the high-tech 
stuff is being over there too.
    So we've got some very substantial problems. I don't have 
any questions. But I would hope that we're not trying to 
ratchet ourselves down to compete on that level, but make a 
better mousetrap as they say, and people will make a beaten 
path to your doorway.
    Vice-Chairman Biggert. And with that, the gentleman's time 
has expired. The gentleman from Minnesota, Mr. Kline.
    Mr. Kline. Thank you, Madam Chair.
    Thank you all, witnesses, for being here today, your 
excellent testimony, your patience in answering our questions, 
just a couple of comments.
    I certainly want to thank my colleague to my immediate 
right here for authoring this bill. I think it's the right 
thing to do. It seems to me, incredibly arbitrary that we have 
picked a foot length of 65 feet. It could have been 60, or 20, 
or 80, or 90. What we have here is the difference between 
making recreational boats and building ships. And that seems to 
be perfectly clear to me.
    I'm very much in support of the bill, and I think it's the 
right thing to do. I especially want to thank Ms. Hebert and 
Mr. Nelson. You're doing exactly what we love to see in this 
country. You're creating jobs, good jobs, high- paying jobs. 
You're expanding opportunities for Americans, and they're 
taking advantage of it. I am pleased with you, and I'm pleased 
with the industry. This is an American industry that is doing 
very well, and we don't want to penalize that industry, and see 
those jobs move elsewhere. We want good jobs for Americans with 
good pay, and you're just doing one heck of a job.
    So thank you very much. Thank all of you for being here to 
testify today. And with that, I yield back, Madam Chair.
    Vice-Chairman Biggert. The gentleman yields back. I wish to 
thank the witnesses for their valuable time and excellent 
testimony and the Members for their participation.
    If there is no further business, the Subcommittee stands 
adjourned. Thank you.
    [Whereupon, at 11:18 a.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

Statement of Hon. Dennis J. Kucinich, a Representative in Congress from 
                           the State of Ohio

    The Recreational Marine Employment Act of 2003 will have a negative 
impact on many workers in the state of Ohio. Removing recreational 
workers from the protection provided by the Longshoremen and Harbor 
Workers' Compensation Act (LHWCA) would leave them at a disadvantage. A 
worker in Ohio, for example, would receive $315.00 less for a temporary 
disability under the maximum weekly payment allowed in the state 
compensation program. Similar disparities between LHWCA and state 
compensation benefits exist for both permanent disabilities and death 
benefits as well.
    Ohio is not alone in this inequality. Many other states also have 
state compensation laws that would provide fewer benefits for workers 
than the LHWCA would. In fact, the temporary disability benefits in 
fifteen states are below the poverty threshold. It is completely 
unacceptable for a family to be forced into poverty due to a temporary 
injury.
    Proponents of this legislation argue that it will be a catalyst for 
developing more jobs and helping small businesses. We cannot develop 
businesses interest on the backs of workers. It is our duty to protect 
workers and ensure that if an on the job injury occurs, they will 
receive the necessary compensation. The Recreational Marine Employment 
Act of 2003 places an unnecessary burden on workers.

                                 
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