ning, or packing must take place upon the vessel that is engaged in the physical catching, taking, etc., of the fish. This is made abundantly clear by the legislative history. In Senate Report No. 145, 87th Congress, 1st session, at page 33, it pointed out: For the same reasons, there was included in section 13(a) (5) as amended by the bill an exemption for the "first processing, canning or packing" of marine products "at sea as an incident to, or in conjunction with such fishing operations." The purpose of this additional provision is to make certain that the Act will be uniformly applicable to all employees on the fishing vessel including those employees on the vessel who may be engaged in these activities at sea as an incident to the fishing operations conducted by the vessel. In accordance with this purpose of the section, the The final requirement is that the employee on the fishing vessel must be employed in "the first processing, canning or packing" of the marine products. The meaning and scope of these operations when performed at sea as an incident to the fishing operations of the vessel are set forth in sections 784.134 to 784.136. To be "employed in" such operations the employee must, as previously explained (see sections 784.106 and 784.122), be engaged in work which is clearly part of the named activity. Section 784.134 "First processing". Processing connotes a change from the natural state of the marine product and first processing would constitute the first operation or series of continuous operations that effectuate this change. It appears that the first processing operations ordinarily performed on the fishing vessels at sea consist for the most part of eviscerating, removal of the gills, beheading certain fish that have large heads, and the removal of the scallop from its shell. Icing or freezing operations, which ordinarily immediately follow these operations, would also constitute an integral part of the first processing operations, as would such activities as filleting, cutting, scaling, or salting when performed as part of a continuous series of operations. Employment aboard the fishing vessel in freezing operations thus performed is within the exemption if the first processing of which it is a part otherwise meets the conditions of section 13 (a) (5), notwithstanding the transfer by the 1961 amendments of "freezing", as such, from this exemption to the exemption from overtime only provided by section 13(b)(4). Such preliminary operations as cleaning, washing and grading of the marine products, though not exempt as first processing since they effect no change, would be exempt as part of first processing when done in preparation for the first processing operation described above including freezing. The same would be true with respect to the removal of the waste products resulting from the above described operations on board the fishing vessel. Section 784.135 "Canning". The term "canning" was defined in the legislative history of the 1949 amendments (House (Conference) Report No. 1453, 81st Cong., 1st sess.; 95 Cong. Rec. 14878, 14932-33). These amendments made the "canning" of marine products or byproducts exempt from overtime only under a separate exemption (section 13 (b) (4)), and subject to the minimum wage requirements of the Act (see section 784.137 et seq.). The same meaning will be accorded to "canning" in section 13(a) (5) as in section 13(b) (4) (see section 784.143 et seq.) subject, of course, to the limitations necessarily imposed by the context in which it is found. In other words, although certain operations as described in section 784.143 et seq. qualify as canning, they are, nevertheless, not exempt under section 13(a) (5) unless they are performed on marine products by employees of the fishing vessel at sea as an incident to, or in conjunction with, the fishing operations of the vessel. Section 784.136 "Packing". The packing of the various named marine products at sea as an incident to, or in conjunction with, the fishing operations of the vessel is an exempt operation. The term "packing" refers to the placing of the named product in containers, such as boxes, crates, bags and barrels. Activities such as washing, grading, sizing and placing layers of crushed ice in the containers are deemed a part of packing when performed as an integral part of the packing operation. The packing operation may be a simple or complete and complex operation depending upon the nature of the marine product, the length of time out and the facilities aboard the vessel. Where the fishing trip is of short duration, the packing operation may amount to no more than the simple operations of packing the product in chipped or crushed ice in wooden boxes, as in the case of shrimp, or placing the product in wooden boxes and covering with seaweed as in the case of lobsters. Where the trips are of long duration, as for several weeks or more, the packing operations on fishing vessels with the proper equipment sometimes are integrated with first processing operations so that together these operations amount to readying the product in a marketable form. For example, in the case of shrimp, the combined operations may consist of the following series of operations-washing, grading, sizing, placing in 5-pound boxes already labeled for direct marketing, placing in trys with other boxes, loading into a quick freezer locker, removing after freezing, emptying the box, glazing the contents with a spray of fresh water, replacing in box, putting them in 50-pound master cartons and finally stowing in refrigerated locker. GENERAL CHARACTER AND SCOPE OF THE SECTION 13(b)(4) EXEMPTION Section 784.137 "Shore" activities exempted under section 13(b)(4). Section 13(b) (4) provides an exemption from the overtime but not from the minimum wage provisions of the Act for "any employee employed in the canning, processing, marketing, freezing, curing, storing, packing for shipment, or distributing" aquatic forms of animal and vegetable life or any byproducts thereof. Originally, all these operations were contained in the exemption provided by section 13(a) (5) but, as a result of amendments, first "canning", in 1949, and then the other operations in 1961, were transferred to section 13(b) (4). (See the discussion in sections 784.102 to 784.105.) These activities are "shore" activities and in general have to do with the movement of the perishable aquatic products to a nonperishable state or to points of consumption (S. Rep. 145, 87th Cong., 1st sess., p. 33). Section 784.138 Relationship of exemption to exemption for "offshore" activities. The reasons advanced for exemption of employment in "shore" operations, now listed in section 13(b) (4), at the time of the adoption of the original exemption in 1938, had to do with the difficulty of regulating hours of work of those whose operations, like those of fishermen, were stated to be governed by the time, size, availability and perishability of the catch, all of which were considered to be affected by natural factors that the employer could not control (see 83 Cong. Rec. 7408, 7422, 7443). The intended limited scope of the exemption in this respect was not changed by transfer of the "shore" activities from section 13 (a) (5) to section 13(b) (4). The exemption of employment in these "shore" operations may be considered, therefore, as intended to implement and supplement the exemption for employment in "offshore" operations provided by section 13 (a) (5), by exempting from the hours provisions of the Act employees employed in those "shore" activities which are necessarily somewhat affected by the same natural factors. These "shore" activities are affected primarily, however, by fluctuations in the supply of the product or by the necessity for consumption or preservation of such products before spoilage occurs (see Fleming v. Hawkeye Pearl Button Co., 113 F. 2d 52; cf. McComb v. Consolidated Fisheries, 174 F.2d 74). Section 784.139 Perishable state of the aquatic product as affecting exemption. (a) Activities performed after the conversion of an aquatic product to a nonperishable state cannot form the basis for application of the section 13(b)(4) exemption unless the subsequent operation is so integrated with the performance of exempt operations on the aquatic forms of animal and vegetable life mentioned in the section that functionally and as a practical matter it must be considered a part of the operations for which exemption was intended. The exemption is, consequently, not available for the handling or shipping of nonperishable products by an em ployer except where done as a part of named operations commenced on the product when it was in a perishable state. Thus, employees of dealers in or distributors of such nonperishable products as fish oil and fish meal, or canned seafood, are not within the exemption. Similarly, there is no basis for application of the exemption to employees employed in further processing of or manufacturing operations on products previously rendered nonperishable, such as refining fish oil or handling fish meal in connection with the manufacture of feeds. Further specific examples of application of the foregoing principle are given in the subsequent discussion of particular operations named in section 13 (b) (4). (b) In applying the principle stated in paragraph (a) of this section, the Department has not asserted that the exemption is inapplicable to the performance of the operations described in section 13(b) (4) on frozen, smoked, salted, or cured fish. The Department will continue to follow this policy until further clarification from the courts. Section 784.140 Scope of exempt operations in general. Exemption under section 13 (b) (4), like exemption under section 13(a) (5), depends upon the employment in the actual activities named in the section, and an employee performing a function which is not necessary to the actual conduct of a named activity, as explained in section 784.106, is not within the exemption. It is also essential to exemption that the operations named in section 13(b) (4) be performed on the forms of aquatic life specified in the section and not on other commodities or on mixed commodities a substantial part of which consists of materials or products other than the named aquatic products. Application of these principles has been considered generally in the earlier discussion, and further applications will be noted in the following sections and in the subsequent discussion of particular operations mentioned in the section 13(b) (4) exemption. Section 784.141 Fabrication and handling of supplies for use in named operations. (a) As noted in section 784.109, the exemption for employees employed "in" the named operations does not extend to an employee by reason of the fact that he engages in fabricating supplies for the named operations. Employment in connection with the furnishing of supplies for the processing or canning operations named in section 13(b) (4) is not exempt as employment "in" such named operations unless the functional relationship of the work to the actual conduct of the named operations is such that, as a practical matter, the employment is directly and necessarily a part of the operations for which exemption is intended. Employees who meet the daily needs of the canning or processing operations by delivering from stock, handling, and working on supplies such as salt, condiments, cleaning supplies, containers, etc., which must be provided as needed if the named operations are to continue, are within the exemption because such work is, in practical effect, a part of the operations for which exemption is intended. On the other hand, the receiving, unloading, and storing of such supplies during seasons when the named operations are not being carried on, for subsequent use in the operations expected to be performed during the active season, are ordinarily too remote from the actual conduct of the named operations to come within the exemption (see section 784.113), and are not affected by the natural factors (section 784.138) which were considered by the Congress to constitute a fundamental reason for providing the exemption. Whether the receiving, unloading, and storing of supplies during periods when the named operations are being carried on are functionally so related to the actual conduct of the operations as to be, in practical effect, a part of the named operations and within the exemption, will depend on all the facts and circumstances of the particular situation and the manner in which the named operations are carried on. Normally, where such activities are directed to building up stock for use at a relatively remote time and there is no direct integration with the actual conduct of the named operations, the exemption will not apply. (b) It may be that employees are engaged in the same workweek in performing exempt and nonexempt work. For example, a shop machinist engaged in making a new part to be used in the repair of a machine currently used in canning operations would be doing exempt work. If he also in the same workweek makes parts to be used in a manufacturing plant operated by his employer, this work, since it does not directly or necessarily con tribute to the conduct of the canning operations, would be nonexempt work causing the loss of the exemption if such work occupied a substantial amount (for enforcement purposes, more than 20 percent) of the employee's worktime in that workweek (see section 784.116 for a more detailed discussion). Section 784.142 Examples of nonexempt employees. An employer who engages in operations specified in section 13(b) (4) which he performs on the marine products and byproducts described in that section may operate a business which engages also in operations of a different character or one in which some of the activities carried on are not functionally necessary to the conduct of operations named in section 13(b) (4). In such a business there will ordinarily be, in addition to the employees employed in such named operations, other employees who are nonexempt because their work is concerned entirely or in substantial part with carrying on activities which constitute neither the actual engagement in the named operations nor the performance of functions which are, as a practical matter, directly and necessarily a part of their employer's conduct of such named operations. Ordinarily, as indicated in section 784.160, such nonexempt employees will not be employed in an establishment which is exclusively devoted by the employer to the named operations during the period of their employment. It is usually when the named operations are not being carried on, or in places wholly or partly devoted to other operations, that employees of such an employer will be performing functions which are not so necessarily related to the conduct of the operations named in section 13 (b) (4) as to come within the exemption. Typical illustrations of the occupations in which such nonexempt workers may be found (although employment in such an occupation does not necessarily mean that the worker is nonexempt) are the following: General office work (such as maintaining employment, social security, payroll and other records, handling general correspondence, etc., as distinguished from "marketing" or "distributing" work like that described in section 784.159), custodial, maintenance, watching, and guarding occupations; furnishing food, lodging, transportation, or nursing services to workers; and laboratory occupations such as those concerned with development of new products. Such workers are, of course, not physically engaged in operations named in section 13(b) (4) in the ordinary case, and they are not exempt unless they can be shown to be "employed in" such operations on other grounds. But any of them may come within the exemption in a situation where the employer can show that the functions which they perform, in view of all the facts and circumstances under which the named operations are carried on, are actually so integrated with or essential to the conduct of the named operations as to be, in practical effect, directly and necessarily a part of the operations for which exemption was intended. Thus, for example, if canning operations described in section 13 (b) (4) are carried on in a location. where the canning employees cannot obtain necessary food unless the canner provides it, his employment of culinary employees to provide such food is functionally so necessary to the conduct of the canning operations that their work is, as a practical matter, a part of such operations, and the exemption will apply to them. On like principle, the exemption may apply to a watchman whose services are required during performance of the named operations in order to guard against spontaneous combustion of the products of such operations and other occurrences which may jeopardize the conduct of the operations. "CANNING" Section 781.143 Meaning and scope of "canning" as used in section 13(b)(4). Section 13(b) (4) exempts any employee employed in the canning of aquatic forms of animal or vegetable life or byproducts thereof from the overtime requirements of the Act. As previously stated, it was made a limited exemption by the Fair Labor Standards Amendments of 1949. The legislative history of this section in specifically explaining what types of activities are included in the term "canning" and the antecedents from which this section evolved make it clear that the exemption applies to those employees employed in the activities that Congress construed as being em braced in the term and not to all those engaged in the fish canning industry (Mitchell v. Stinson, 217 F.2d 214). Congress defined the term "canning" (House (Conference) Report No. 1453, 81st Cong., 1st sess. 95 Cong. Rec. 14878, 14932-33) as follows: Under the conference agreement "canning" means hermetically sealing and sterilizing or pasteurizing and has reference to a process involving the performance of such operations. It also means other operations performed in connection therewith such as necessary preparatory operations performed on the products before they are placed in bottles, cans, or other containers to be hermetically sealed, as well as the actual placing of the commodities in such containers. Also included are subsequent operations such as the labeling of the cans or other containers and the placing of the sealed containers in cases or boxes whether such subsequent operations are performed as part of an uninterrupted or interrupted process. It does not include the placing of such products or byproducts thereof in cans or other containers that are not hermetically sealed as such as operation is "processing" as distinguished from "canning" and comes within the complete exemption contained in section 13 (a) (5). Of course, the processing other than canning, referred to in the last sentence quoted above, is now, like canning, in section 13 (b) (4) rather than section 13(a) (5). Section 784.144 "Necessary preparatory operations". All necessary preparatory work performed on the named aquatic products as an integral part of a single uninterrupted canning process is subject to section 13(b)(4) (see Tobin v. Blue Channel Corp., 198 F.2d 245, approved in Mitchell v. Myrtle Grove Packing Co., 350 U.S. 891). Such activities conducted as essential and integrated steps in the continuous and uninterrupted process of canning are clearly within the definition of "canning" as contemplated by Congress and cannot be viewed in isolation from the canning process as a whole. Exempt preparatory operations include the necessary weighing, cleaning, picking, peeling, shucking, cutting, heating, cooling, steaming, mixing, cooking, carrying, conveying, and transferring to the containers the exempt aquatic products (see Mitchell v. Stinson, 217 F. 2d 214). But the preparatory operations do not include operations specified in section 13 (a) (5) pertaining to the acquisition of the exempt products from nature. Therefore, if a canner employs fishermen or others to catch, take, harvest, cultivate or farm aquatic animal and vegetable life, section 13 (a) (5) and not section 13 (b) (4) would apply to these particular operations. Section 784.145 Preliminary processing by the canner. The mere fact that operations preparatory to canning are physically separated from the main canning operations of hermetically sealing and sterilizing or pasteurizing would not be sufficient to remove them from the scope of section 13(b) (4). Where preparatory operations such as the steaming or shucking of oysters are performed in an establishment owned, operated, or controlled by a canner of seafood as part of a process consisting of a continuous series of operations in which such products are hermetically sealed in containers and sterilized or pasteurized, all employees who perform any part of such series of operations on any portion of such aquatic products for canning purposes are within the scope of the term "canning." Section 784.146 Preliminary processing by an other employer as part of "canning". If the operations of separate processors are integrated in producing canned seafood products, all employees of such processors who perform any part of the described continuous series of operations to accomplish this result would be "employed in the canning of" such products. Moreover, preliminary operations performed in a separately owned processing establishment which are directed toward the particular requirements of a cannery pursuant to some definite arrangement between the operators of the two establishments would generally appear to be integrated with the cannery operations within the meaning of the above principles, so that the employees engaged in the premilinary operations in the separate establishment would be employed in "canning" within the meaning of section 13(b)(4) of the Act. Whether or not integration exists in a specific case of this general nature will depend, of course, upon all the relevant facts and circumstances in such case. Section 784.147 Preservation of aquatic products for later canning. The cooling, icing, or refrigeration of the aquatic products in the course of canning does not constitute such a break or discontinuance of the process as to bring the preparatory operations |