The following link goes to a very brief section of H.R. 4348, the “Highway Bill” that re-authorizes the Sport Fish Restoration and Boating Trust Fund through 2014. As you will read no other changes were made to this important fund, which was the unified position of the Anglers and Boaters Coalition, which the Marine Retailers Association of the Americas is a part of.

I have not been able to find language in the law pertaining to re-opening of the Harbor Maintenance Fund to fund Corps of Engineers dredging projects. As you may recall, the Administration has frozen the fund in essence stopping all dredging projects of deep water ports and channels so the fund balance can be used to net against the rising federal budget deficit.

You’ll see in the following link that there is a very brief two lines that only change the dates in the law authorizing expenditures to the end of 2013.

Read the bill text.

Larry Innis
MRAA Legislative Affairs

The letter, pertaining to the Affordable Care Act and available at the link below, is written by the Secretary of Health and Human Services and was issued to the 50 state governors. It was issued after the Supreme Court’s 5-to-4 ruling that the new law is constitutional. A key thing to remember about this law is that small businesses with fewer than 50 employees are exempt from many provisions of the law.

Read the letter here.

Larry Innis
MRAA Legislative Affairs

The Marine Retailers Association of the Americas has joined the coalition behind SmarterFuelFuture.org to voice concern about the many negative effects of the Renewable Fuel Standard (RFS) and other biofuel policies. Other members of this coalition include BoatUS and the National Marine Manufacturers Association.

The coalition’s educational website is intended to raise awareness about the economic, environmental, hunger and engine performance implications of current U.S. biofuels policy. The group is calling on lawmakers to revisit the failed RFS and enact policies that take its collective concerns into account.

To learn more about MRAA’s stance on biofuels, click here and read our Position Brief on Use of E15 ethanol gasoline blends.

At a July 12 hearing of the House Subcommittee on Investigations, Oversight, and Regulations of the Small Business Committee, Congress looked into problems with the newly written regulation on the Longshore issue and problems with interstate transportation of boats that is addressed by the Business Activity Tax Simplification Act (H.R. 1439).

LONGSHORE — The Department of Labor is responsible for the implementation of the Longshore and Harbor Workers’ Compensation Act (LHWCA), a Federal program that requires employment-injury protection for workers who are injured on the navigable waters or in adjoining areas. Until 2009, the Act excluded from coverage any employee covered by workers’ compensation plans and “employed to build, repair, or dismantle any recreational vessel under 65 feet in length.” Employers with employees subject to the Act are required to purchase insurance or self-insure. For small businesses in the marine industry, self-insurance is usually not an option, and they must purchase expensive coverage. The American Recovery and Reinvestment Act of 2009 (ARRA) amended the LHWCA in two ways: it defined as an employee only those individuals building recreational vessels over 65 feet in length, and it excluded from the definition of employee any individual employed to repair a recreational vessel or dismantle it without regard to length.

On August 17, 2010, the Department of Labor issued a proposed rule executing the changes contained in the ARRA by changing the definition of “recreational vessel” to include a repair yard knowing the purpose of how the vessel is being used. The amendment made by DOL has added confusion concerning where coverage is required for repair of recreational vessels. The question is: does a boat yard need LHWCA or state workers compensation or both? The concern is many associations, including MRAA, submitted comments that the DOL regulation does not conform to Congressional intent of completely exempting businesses that repair and dismantle recreational vessels of any length.

On December 30, 2011, the DOL issued its final rule implementing the changes passed by Congress. Little or no changes were made to the language of the proposed rule to reflect the concerns by the boating industry in regard to the definition of “recreational vessel.”

On July 12, the House Small Business Committee heard testimony from Kristina Hebert of Ward’s Marine Electric and the Marine Industries Association of South Florida, who stated that workers’ compensation insurance represents a significant cost to small business in the recreational boating industry, which is complicated by the duplicative coverage of the LHWCA. She stated the changes to the definition of “recreational boat” made by DOL completely ignored Congressional intent and explicitly limited the exemption for the repair industry. In other words, the DOL did the opposite of what Congress intended by adopting the new definition of “recreational vessel.” The new definition has created confusion in both the recreational marine repair industry and the insurance industry.

She advocated for a narrow fix to the problem with DOL withdrawing the rule as it applies to the repair industry and then revising it. This action has a big economic benefit of keeping the cost of workers’ compensation insurance low, allowing for more workers to have coverage, and keeping jobs from going offshore.

BAT — The U.S. Constitution prohibits a state from imposing any tax on a taxpayer that lacks a substantial nexus within the state. Substantial nexus remains unclear. In a narrow interpretation of the Supreme Court’s 1992 decision in Quill Corp v. North Dakota, a business requires a physical presence in the state to satisfy a substantial nexus applies only to state sales taxes. So, some states have begun to charge use taxes or BATs on cargo shipped through a state. This has led to considerable uncertainty for businesses attempting to estimate and reserve capital for this tax liability. This hodgepodge of state requirements and laws is difficult for marine manufacturers dealing with intra-state commerce. Most do not have the resources to research the requirements of all states through which they do business. As a result, confiscations of boats being transported through a state and imposition of large fines have occurred.

H.R 1439, the Business Activity Simplification Act, seeks to reduce this uncertainty by conforming the Quill decision to BATs. The act establishes a physical presence requirement in order for states to impose or collect net income taxes or other BATs on multi-state businesses, prohibits states from imposing taxes on net income of interstate sellers of tangible property, and restricts the means by which a state may apportion the income of a business to only that portion conducted in that state.

Mark Ducharme of Monterey Boats represented the boat manufacturers’ testimony by citing an example of how states have charged his company with BATs. Michigan, for example, allocates the entire worldwide sales to the state rather than only that portion of sales and income made in the state. He asked Congress to step in to clarify the Constitution’s requirement of a physical presence in a state to end the confusion that exists today. He said Congress should not delay and end unfair business taxation.

MRAA — MRAA is submitting testimony for the record that supports both positions given by industry representatives on the Longshore issue and the BAT. In addition, MRAA is calling for Congress to review the regulations made of federal government agencies before they become final for complying with Congressional intent of the original law. Misunderstanding of Congressional intent or a desire to follow particular agency interests is causing great confusion.

Twenty years ago, the Marine Retailers Association of the Americas supported a sales tax on catalog sales in an effort to level the playing field for main street small businesses. Now, Internet sales are under a similar type of scrutiny.

Currently, companies without a physical presence in a state where the consumer lives don’t have to charge sales tax on Internet purchases, such as boat parts and accessories.

A number of states have passed laws that would require consumers to pay sales tax on Internet sales. States are struggling to balance budgets and to meet service demands of the public. According to the National Conference of State Legislators, a new Internet sales tax could generate $23 billion in revenues.

The activity in state legislatures is driving support for legislation in Congress that could make collection of sales tax a standard practice on the Internet. The bill, S. 1812, the Marketplace Fairness Act, exempts online businesses making less than $500,000 a year from collecting sales tax. Under this bill, the Internet tax would not include boats. It would only apply to parts and accessories, as a state sales/use tax is currently paid at registration for boats bought on the Internet.

The bill, sponsored by Senators Mike Enzi (R-Wyoming), Richard Durbin (D-Illinois) and 13 others, was introduced in November. It has been referred to the Senate Finance Committee, but the House is also interested with the House Judiciary Committee planning a hearing on July 24.

The Marine Retailers Association of the Americas is launching a survey to explore the impact Internet sales are having on dealers’ businesses and ask dealers whether they support or oppose an Internet sales tax. Click here to take the survey.

In an effort to keep boating and fishing along the southern border of the United States safe, the Marine Retailers Association of the Americas is supporting H.R. 1505, the National Security and Federal Lands Protection Act, which has passed the House and is now being considered in the Senate. Chairman Rob Bishop (R-Utah) offered an amendment to the bill at committee markup that includes revisions to strengthen private property rights, and protect sportsmen and recreational enthusiasts’ access to public lands.

The land along our southern borders are some of the most dangerous areas in our country and are laced with lakes, reservoirs, and rivers where recreational boaters and anglers frequent. However, the Border Patrol has been prohibited from using their motorized vehicles to patrol these areas or place electronic surveillance structures by the U.S. Environmental Protection Agency because of concern over harm to the environment. As a result, our Federal lands have become a highway open to criminals, drug smugglers, human traffickers, and potential terrorists, which has escalated to violence against Americans enjoying the area for boating and fishing.

In early May, the U.S. Army Corps of Engineers ended its four year study of a potential lifejacket wear requirement for adults on all its lakes. The study looked into the feasibility of establishing a mandatory life jacket policy on Corps-managed waters. According to the policy study, wear rates at the test lakes significantly increased and fatalities decreased.

However, the study recommends that no additional regulation be added that would require life jackets be worn while recreating on all Corps-managed waters at this time. Current authority allows the District Commanders to set life jacket requirement policies. The study states many Corps areas are patrolled by other agency personnel and state authorities who would not necessarily be able to enforce Corps policy. Combined with staffing concerns in some Corps regions, this could result in inconsistent enforcement and greater confusion by the public. Ultimately, the study found that while life jacket policy can be an effective tool for increasing survival rates on Corps waters, the policy rapidly loses its value if not regularly and aggressively enforced.

Instead, it suggested that a “selective expansion” of policy should be considered in Districts where boating fatality rates run high, including field water safety education that focuses on the greatest at risk age/gender group.

MRAA strongly and aggressively opposes a mandatory adult life jacket wear policy.