RECREATIONAL VESSEL REGULATIONS – PART THREE

RECREATIONAL VESSEL REGULATIONS – WHAT IS A RECREATIONAL VESSEL?

The American Recovery and Reinvestment Act of 2009, (ARRA), removed the sixty-five foot limit from the exclusions in §2(3)(F).  This affected only individuals repairing or dismantling recreational vessels.

The old regulation read: -

(F) Individuals engaged in the building, repairing or dismantling of recreational vessels under 65 feet in length. For purposes of this subparagraph recreational vessel means a vessel manufactured or operated primarily for pleasure, or rented, leased or chartered by another for the latter's pleasure, and length means a straight line measurement of the overall length from the foremost part of the vessel to the aftmost part of the vessel, measured parallel to the center line. The measurement shall be from end to end over the deck, excluding sheer.

The definition was of a recreational vessel was three fold: -

1.              It was manufactured primarily for pleasure; or

2.              It was operated primarily for pleasure; or

3.              It was rented, leased or chartered by another for the latter’s pleasure.

The definition came from the Coast Guard.  There appears to be no litigation on the subject of what constitutes a recreational vessel, and certainly none was mentioned in either the Notice of Proposed Rule Making, the comments submitted by industry in response, nor in the Notice of the Final Rule.  (There was a case, which addressed the length of a vessel; of that, more later). 

The new regulation reads: -

§ 701.501 what is a recreational vessel?

(a) Recreational vessel means a vessel—

(1) Being manufactured or operated primarily for pleasure; or

(2) Leased, rented, or chartered to another for the latter’s pleasure.

(b) In applying the definition in paragraph (a) of this section, the

following rules apply:

(1) A vessel being manufactured or built, or being repaired under warranty by its manufacturer or builder, is a recreational vessel if the vessel appears intended, based on its design and construction, to be for ultimate recreational uses. The manufacturer or

builder bears the burden of establishing that a vessel is recreational under this standard.

(2) A vessel being repaired, dismantled for repair, or dismantled at the end of its life is not a recreational vessel if the vessel had been operating, around the time of its repair or dismantling, in one or more of the following categories on more than an infrequent basis—

(A) ‘‘Passenger vessel’’ as defined by 46 U.S.C. 2101(22);

(B) ‘‘Small passenger vessel’’ as defined by 46 U.S.C. 2101(35);

(C) ‘‘Uninspected passenger vessel’’ as defined by 46 U.S.C. 2101(42);

(D) Vessel routinely engaged in ‘‘commercial service’’ as defined by 46 U.S.C. 2101(5); or

(E) Vessel that routinely carries ‘‘passengers for hire’’ as defined by 46 U.S.C. 2101(21a).

(3) Notwithstanding paragraph (b)(2) of this section, a vessel will be deemed recreational if it is a public vessel, i.e., a vessel owned or bareboat-chartered and operated by the United States, or by a State or political subdivision thereof, at the time of repair, dismantling for repair, or dismantling, provided that such vessel shares elements of design and construction with traditional recreational vessels and is not normally engaged in a military, commercial or traditionally commercial undertaking.

(c) All subsequent amendments to the statutes referenced in paragraph (b)(2) of this section and the regulations implementing those provisions in Title 46 of the Code of Federal Regulations will apply when determining whether a vessel is recreational.

Section (a) has not changed. 

So what do sections (b) and (c) do to help?   We can sympathize with the Department in their effort to clarify the definitions.  In Morgan v. Jones, decided in 1773, Sir William Murray, First Earl of Mansfield, Chief Justice of England and widely regarded as the father of commercial law, remarked: “Many of the disputes in the world arise from words”.  The words “Recreational vessels” threaten to confirm his prescience.

First, lets look at (b)(3).  This “deems” a public vessel to be a “recreational vessel” for these purposes.   There is a delightful lack of precision or further definition in the subsection.  The vessel must “share[] elements of design and construction” with “traditional recreational vessels”.  Well, quite a number of vessels are designed and constructed with bows and sterns.  They also have steering and navigational equipment.  They also have motors.  How many elements have to be shared?  What is “design and construction”?  Coast Guard vessels share elements of design with recreational vessels.  Even anchors.   

And what is a “traditional recreational vessel”?  There are now many purpose built private submarines.  Are they “traditional”?  

And the public vessel must not “normally” be used for “military, commercial or traditional commercial undertaking”. 

If the local police boat is always used on Memorial Day to let off fireworks, for which the Town makes an admission charge, is that a commercial undertaking?  And what is the difference between “commercial” and “traditional commercial” undertakings?  Is once a year use “normal”; and if not how many days use would be “normal”?  

Regardless of these questions, what possible authority does the Secretary have to exclude workers from the Act with no congressional mandate, and not even Notice of Rule Making?  There is nothing in the LHWCA or the ARRA to authorize this drastic exclusion.  The Department of Labor used to be the protector of workers’ rights.  Now, they not only write to exclude workers under a congressional mandate, but add in another exclusion on their own initiative.  This exclusion should be challenged immediately.

Turning to (b)(2), the Department gives clear guidelines.  The vessel is not a recreational vessel if it had been operating  “around the time of its repair or dismantling, in one or more of the following categories on more than an infrequent basis….” This definition hinges on the use, rather than the “nature”(design and construction) of the vessel.  It does so at some points of time (“around”) before the repairs, specifying that the use must have been “on more than an infrequent basis”.

Consider a whale watching boat.  It is used regularly during a season from Memorial Day to Labor Day to carry up to 20 paying passengers.  At the end of the season the owner arranges for it to be repaired prior to winter lay up.  In September and October he uses the vessel for his own pleasure, mostly fishing.  He runs two special trips for paying passengers in September, and one in early October.  He turns down a special trip in late October, because he wants the vessel to be a recreational vessel around the time of the repairs.  Has he succeeded?  If not, what must he do to succeed?

Turning to (b)(1), it is the builder who must prove that the vessel is recreational, by design and construction, for ultimate recreational uses.  Much fun is to be in a Boston Whaler; but many employers also use them for commercial purposes.  If there is a factory making these boats, (on a covered situs of course), are they recreational?  The design and construction is “ambiguous” since any individual boat could be sold either to a recreational or to a commercial buyer.  And if the manufacturer sells exclusively to commercial buyers for commercial use, would this fact trump the “design and construction” requirement?

We now return to the provisions of 20 CFR 701.401. 

An injured worker is excluded from LHWCA under 20 CFR 701.301 if he is covered by a state workers compensation statute. 

In order to recover under Longshore and Harbor Workers' Compensation Act, he must first be refused by the state.  But if the state is a “concurrent” state, one of those which do not exclude workers covered by the LHWCA, they will never refuse him.  Whether the vessel is recreational or not, is irrelevant in state proceedings.  He can’t get a declaration from the state that he is covered by LHWCA.  So he cannot contest the decision of his employer that he is not covered by LHWCA.   The regulations were designed to prevent people being excluded in error.

However, if he files an LS 203, and asserts that the vessel is not a recreational vessel, the presumption of cover under LHWCA should ensure he gets heard.  If the OALJ decides that the vessel is a recreational vessel, then the worker is returned to state cover.  In the meantime, the employer, if he does not have LHWCA cover, is forced to defend himself as an “uninsured employer” at his own expense.  To suggest he should have purchased insurance “in case” means he has to pay the premium.  The purpose of the amendment was to prevent duplicate premiums.

If the state is an exclusive state, the worker will go to the state, who will say “we only cover you if LHWCA does not.”  The worker then goes to OWCP who says “Can’t you read?  You need a final decision on the merits on jurisdictional grounds before we can talk to you”.  If the state workers’ compensation commission is hears the case, it will they who determine whether or not the vessel is recreational.  If they decide it is, and grant cover under the state act, a worker has been excluded in error.

One thing seems certain.  The ARRA was written to increase jobs – in theory the jobs of ship repairers.  However it would appear also to help lawyers, paralegals, claims adjusters, and, with any luck, expert witnesses and workshop and conference organizers.  It’s an ill wind, as they say.