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Capitol Lookout: Yacht stigma clouds marine industry interests

Question: What’s a five-letter word that’s apparently not used in polite company on Capitol Hill? Some seem to think it’s the word “yacht.”

In a congressional hearing last week, called ostensibly to explore the reasons that new federal regulations long sought by the marine repair industry actually ended up hurting rather than helping, the main concern on the minds of lawmakers is that the word “yacht” conjures up a very negative stereotype on Capitol Hill.

The first thing Rep. Allen West (R-Fla.), presiding chairman of the House Small Business Subcommittee on Oversight and Investigations, wanted to know was, “Do you think there’s a negative stigma associated with the marine industry?”

This could get interesting, I thought, as West adventurously raised an issue that has long bedeviled lobbyists for the recreational boating industry, who have had to deal with the perception that everyone who owns a boat is a rich fat-cat yacht owner. Industry veterans may well recall the damage done by the ill-conceived federal luxury and “user fee” taxes that so harmed the industry during the 1980s.

Not much has changed since then. Just last week the political pundits were atwitter over the propriety of Mitt Romney caught red-handed on film at the helm of his 29-foot Sea Ray while on a Independence Day vacation at his 6,700-square-foot, six-bedroom summer home on Lake Winnipesaukee in New Hampshire. According to the Associated Press, the Romneys also keep a small Boston Whaler and a Malibu ski boat in their “three-boat garage.”

Is this the image that the Republican candidate should be projecting during a national presidential campaign in which “jobs” were supposed to be the main topic of discussion, the chattering class wanted to know?

For those who might begrudge Romney his boats, let the record show that the Romney family and recreational boating have a long history. According to a 1994 article in the Boston Globe and featured on the website BuzzFeed Politics, Romney was arrested in 1981 on disorderly conduct charges while taking his family out on their boat on Lake Cochituate in Massachusetts.

Seems that a park ranger warned Romney that he faced a $50 fine because his “license,” according to this report, “appeared to be painted over.” Apparently deciding that the better part of valor was to pay the fine rather than face the wrath of five kids waiting to go boating, Romney put the boat in the water. He was subsequently arrested by the park ranger, handcuffed and taken to the local police station, where he was booked.

According to BuzzFeed Politics, “Romney appeared in Natick District Court several days later and threatened to sue the arresting officer for false arrest. The charges were dropped and sealed at Romney’s request.” So much for New England hospitality.

But I digress.

At the witness table sat Ward’s Marine Electric COO Kristina Hebert, representing the Marine Industry Association of South Florida and the United States Superyacht Association, as well as Mark Ducharme, vice president and CFO of Monterey Boats of Williston, Fla., and two others. About 30 onlookers, including representatives from the NMMA, USSA and MRAA, looked on as five wall-mounted television cameras (four facing the two members of Congress in attendance and one facing the four witnesses) captured the hearing for live broadcast.

Responding to West’s question, Hebert agreed that the marine industry had an image problem, saying, perhaps partly tongue in cheek, “I think there’s a misunderstanding … that this is all about just having fun. … Rich yacht owners are just taking advantage of the government, and we don’t want to be regulated. Nothing could be further from the truth. In fact, I think the government should mandate that anyone who makes over a certain amount of money be forced to buy a boat of a certain size because the quickest way to put money into the economy is to buy a boat. Either you’re going to be constantly fueling, provisioning, repairing — all of those things, each and every step, creates jobs and money, so there’s huge misunderstanding.”

The point she was trying to make, of course, is that the marine industry, including the superyacht segment, is a major employer and that thousands of jobs and livelihoods are at stake when government makes decisions affecting the industry.

In fact, this congressional hearing was convened to spotlight new Department of Labor regulations that, on the face of it, run counter to a change in the law that Congress made in 2009 when it passed the American Recovery and Reinvestment Act. The new law was supposed to expand the exemption for the recreational marine repair industry from the requirement to purchase expensive workers’ compensation insurance under the federal Longshore Harbor Workers Compensation Act and allow the industry to substitute much less expensive state workers’ compensation insurance.

Instead, according to Hebert, the Labor Department “ignored stated congressional intent and explicitly limited, not expanded, the exemption for the repair industry … and issued a rule that did just the opposite of what Congress intended by adopting a new definition for a recreational vessel being repaired or dismantled.”

Hebert got nothing but support from West, who came across as a sober and thoughtful advocate for the South Florida marine industry, as opposed to his public persona as a Fort Lauderdale firebrand and Tea Party darling who made a name for himself for, among other things, alleging last April, in true Joe McCarthy style, that 78 to 81 members of the Democratic Party are members of the Communist Party.

“Regulatory fiat has trumped the legislative process,” West said, noting that he was a “master scuba diver” and that he would work to get the problem facing the industry corrected. The only other member of the nine-member subcommittee to attend the full hearing was Rep. Scott Tipton (R-Colo.).

Other issues before the subcommittee include legislation supported by the NMMA to resolve the business activity tax nexus issue under which some states are assessing a gross receipts tax on out-of-state businesses. Ducharme, the Monterey Boats executive, pointed out that the state of Michigan hit his company with a $376,000 tax even though it has no property, no sales offices, no agents and no employees in the state.

Meanwhile, the Florida Yacht Brokers Association wants to change federal law to allow foreign-built vessels over 80 feet that have not been imported to the United States to be allowed to be offered for sale for more than six months. Such vessels are currently on the market for an astonishing 766 days.

Before gaveling the 59-minute hearing to a close, West wanted to hear “any suggestions to help us ensure that we keep the marine industry vibrant and safe for future generations.”

Hebert replied, “The onus is on the industry to work together and get past the word yacht. Big boats are good things, and big boats equal big jobs.”

That said, Hebert plans to pursue an administrative solution by asking the Labor Department to reconsider its rulemaking or ask the Vice President’s office to do so under Executive Order 12866. To pursue these options, MIASF has retained the extremely well-connected Washington, D.C., law firm Blank Rome and one of its top lobbyists, Duncan Smith, a former chief counsel to the House Merchant Marine and Fisheries Committee, who has had a hand in most every issue affecting recreational boating over the past 30 years.

The House of Representatives began regularly filming committee hearings earlier this year. Click here to view this hearing online.

Click here for easy access to the video for all House hearings.

Michael Sciulla testified more than 30 times on Capitol Hill during a 28-year career at BoatUS, where he managed the organization’s government relations and public affairs operations while serving as editor of its 650,000-circulation flagship publication.



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