PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NEWPORT NEWS SHIPBUILDING AND
DRY DOCK COMPANY,
Petitioner,

v.
                                                               No. 00-1154
FREDERICK M. STALLINGS; DIRECTOR,
OFFICE OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR,
Respondents.

On Petition for Review of an Order
of the Benefits Review Board.
(99-330)

Argued: December 5, 2000

Decided: May 23, 2001

Before WILLIAMS, MICHAEL, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed in part, vacated in part, and remanded by published opinion.
Judge Michael wrote the opinion, in which Judge Williams and Judge
Motz joined.

_________________________________________________________________

COUNSEL

ARGUED: Jonathan Henry Walker, MASON, COWARDIN &
MASON, Newport News, Virginia, for Petitioner. John Harlow Klein,
MONTAGNA, KLEIN & CAMDEN, Norfolk, Virginia, for Respon-
dent Stallings; Laura Jessica Stomski, UNITED STATES DEPART-
MENT OF LABOR, Washington, D.C., for Respondent Director. ON
BRIEF: Amanda R. Kronin, MONTAGNA, KLEIN & CAMDEN,
Norfolk, Virginia, for Respondent Stallings. Henry L. Solano, Solici-
tor of Labor, Carol A. De Deo, Associate Solicitor, Mark Reinhalter,
Senior Attorney, UNITED STATES DEPARTMENT OF LABOR,
Washington, D.C., for Respondent Director.

_________________________________________________________________

OPINION

MICHAEL, Circuit Judge:

Frederick M. Stallings contracted metal fume fever while welding
for his employer, Newport News Shipbuilding & Dry Dock Company
(Newport News). Stallings filed a claim for partial disability benefits
under the Longshore and Harbor Workers' Compensation Act
(LHWCA), and the administrative law judge (ALJ) awarded Stallings
$3.78 per week on a continuing basis for loss of wage-earning capac-
ity and $236.38 in a lump sum for accumulated loss of wages. On
reconsideration the ALJ denied Newport News's request for relief
under § 8(f) of the LHWCA: the ALJ characterized Stallings's award
as "nominal" and held that § 8(f) cannot as a matter of law apply to
nominal awards. (Section 8(f) limits an employer's compensation lia-
bility to two years of benefits when a preexisting disability substan-
tially aggravates a work-related injury.) The Benefits Review Board
(the Board) affirmed the partial disability award. The Board also said
that the award was not nominal, but nevertheless held that Newport
News was not entitled to § 8(f) relief because the award was so small
in fact. Because Stallings has suffered a loss in wage-earning capac-
ity, we affirm the benefits award. We also hold that a small award,
based on an actual loss of earning capacity, does not as a matter of
law preclude an employer from seeking relief under§ 8(f). As a
result, we vacate the order denying § 8(f) relief and remand for the
agency to reconsider whether Newport News meets the requirements
of that section.

                  2
I.

A.

Stallings has worked as a welder for Newport News since 1987.
Until June 1993 he worked mostly in enclosed areas, either aboard
ships or in the shops. On June 24, 1993, while Stallings was on the
job welding, he experienced fatigue, shortness of breath, and dizzi-
ness. He was promptly diagnosed with metal fume fever, a work-
related injury caused by the inhalation of welding fumes. He was
unable to return to work until September 28, 1993, and in the mean-
time he filed a claim for LHWCA benefits. Newport News agreed to
a compensation award that required it to pay temporary total disability
benefits to Stallings for the fourteen-week period of missed work.

When Stallings returned to work in September 1993, his doctor,
Ellis F. Maxey, Jr., M.D. (a pulmonary specialist), advised him to
avoid inside welding. After a while, however, Stallings was assigned
to work inside in close proximity to several other welders. The inside
welding caused Stallings to "feel[ ] somewhat rundown after work,"
and he reported this to Dr. Maxey during an office visit on September
23, 1994. The doctor again warned Stallings to avoid inside welding
and confirmed that Stallings's medical restriction to outside work was
permanent. Newport News accepted this restriction, and Stallings
began welding only on outside jobs. Since Stallings has been
restricted to outside work, he has missed an occasional day of work
due to bad weather. On those days he was "passed out of work" (sent
home early) and paid for four hours. On the bad weather days Stall-
ings could not be reassigned to work inside, unlike welders without
his medical restriction.

On eight days of bad weather between November 15, 1994, and
February 2, 1996, Stallings was "passed out" because he could not
work outside. This prompted Stallings to file another LHWCA claim
for permanent partial disability benefits (1) for wages already lost
from work missed because of his medical restriction and (2) for an
ongoing loss of wage-earning capacity. Newport News opposed the
claim, but requested § 8(f) relief in the event of an award. The Direc-
tor of the Office of Workers' Compensation Programs of the U.S.
Department of Labor (the Director), on behalf of the Special Fund,

                  3
gave notice that he had no objection to § 8(f) relief if there was
employer liability. The ALJ awarded Stallings permanent partial dis-
ability benefits of $236.38 for past wages lost. In addition, because
Stallings's work-related injury had permanently diminished his wage-
earning capacity, the ALJ awarded him continuing benefits of $3.78
per week.

Newport News moved for reconsideration. The Director likewise
moved for reconsideration and, in addition, withdrew his concession
that Newport News was entitled to § 8(f) relief.1 1 The Director argued
that an employer is not entitled to § 8(f) relief when nominal benefits
are awarded. On reconsideration the ALJ made no changes in the ben-
efits award but agreed with the Director and held that Newport News
was not entitled to § 8(f) relief because the award was nominal or de
minimis. The Board affirmed the ALJ's award of benefits. The Board
also concluded that the award could not be characterized as nominal
because it was based on actual loss of wage-earning capacity. Never-
theless, the Board held that Newport News was still not entitled to
§ 8(f) relief because the award was "so small in fact." Newport News
petitions for review.

B.

Before turning to the issues, we will briefly recite our standard for
reviewing a Board decision. On factual issues we determine whether
the Board "observed its statutorily-mandated standard for reviewing
the ALJ's factual findings." Newport News Shipbuilding & Dry Dock
_________________________________________________________________
1 The ALJ did not abuse his discretion when he allowed the Director
to withdraw his consent to § 8(f) relief. See 20 C.F.R. § 702.338 ("[T]he
procedures at the hearings generally . . . shall be in the discretion of the
administrative law judge and of such nature as to afford the parties a rea-
sonable opportunity for a fair hearing."). First, the Director was not
aware that he had a potential legal argument based on the case of Todd
Shipyards Corp. v. Director (Porras), 792 F.2d 1489 (9th Cir. 1986)
(holding that § 8(f) relief is not available for a nominal award), until the
ALJ set the disability award at the very low sum of $3.78 per week. Sec-
ond, Newport News was not prejudiced by the retraction because the
company had the opportunity to argue the § 8(f) issue to the ALJ on
reconsideration.

                  4
Co. v. Director (Harcum II), 131 F.3d 1079, 1081 (4th Cir. 1997).
According to the LHWCA, the ALJ's factual findings"shall be con-
clusive if supported by substantial evidence in the record considered
as a whole." 33 U.S.C. § 921(b)(3). On legal issues "[t]he Board's
adjudicatory interpretation of the LHWCA is entitled to no special
deference, and is subject to our independent review. However, a rea-
sonable interpretation of the LHWCA by the Director should be
respected." Zapata Haynie Corp. v. Barnard , 933 F.2d 256, 258 (4th
Cir. 1991) (citation omitted).

II.

Newport News first argues that Stallings is not entitled to disability
benefits because he has not sustained any loss of wage-earning capac-
ity. The record compels us to disagree.

An employee covered by the LHWCA is entitled to compensation
for a disability resulting from a work-related injury sustained on the
navigable waters of the United States, which include any adjoining
pier, terminal, or other area used to load, unload, build, or repair
ships. See 33 U.S.C. § 903(a). "Disability," as the Supreme Court has
said, "is a measure of earning capacity lost as a result of work-related
injury." Metro. Stevedore Co. v. Rambo (Rambo II), 521 U.S. 121,
127 (1997). Compensation is authorized not for the physical injury
itself but for the economic harm arising out of the worker's dimin-
ished wage-earning capacity. See id.

Stallings's metal fume fever has left him with a permanent partial
disability. His LHWCA compensation is equal to two-thirds of the
decrease in his wage-earning capacity for as long as his disability
continues. See § 908(c)(21). The LHWCA equates a partially disabled
worker's wage-earning capacity with actual earnings post-injury only
if the actual earnings "fairly and reasonably represent" wage-earning
capacity. Id. § 908(h). Otherwise, a reasonable wage-earning capacity
is set, "having due regard to the nature of [the worker's] injury, the
degree of physical impairment, his usual employment, and any other
factors or circumstances in the case which may affect his capacity to
earn wages in his disabled condition, including the effect of disability
as it may naturally extend into the future." Id.

                  5
The ALJ found that a welder without restrictions at Newport News
can be reassigned from outside to inside work on days of bad weather.
Stallings cannot work inside, however, because the medical restriction
resulting from his disability limits him to outside work. This led to the
ALJ's ultimate finding: Stallings has suffered a loss in wage-earning
capacity because on days of bad weather Newport News has no work
for him within his restriction. Newport News denies that Stallings lost
any wage-earning capacity, and it makes several arguments in support
of its position.

First, the company argues that there is no evidence in the record to
support the ALJ's finding that Stallings's disability caused him to lose
wages on days of bad weather. This finding is easily supported by
substantial evidence when the record is considered as a whole. Stall-
ings submitted an affidavit recounting the days when, "because it was
raining, his employer did not offer him work within his restrictions
due to his injury." In his affidavit and in his testimony before the ALJ,
Stallings said that he was "passed out" on these days. In addition, the
manager of human resources for Newport News testified that welders
can be transferred between outside and inside work. Stallings, of
course, could not be reassigned to inside work during foul weather.

Second, Newport News argues that "the possibility of being forced
away from a full day's work applies equally to all welders." Pet'r Br.
at 18. The company did not offer evidence to support this argument,
and Stallings's evidence (recounted above) refutes it. In short, the
record supports the ALJ's finding that Stallings, in contrast to welders
who can work inside, loses wages on days when he is sent home
because of bad weather.

Third, Newport News argues that because Stallings's actual wages
have increased since his injury, he has not lost wage-earning capacity.
This argument is without merit. Wage-earning capacity is determined
by actual wages only "if such actual earnings fairly and reasonably
represent [the worker's] wage-earning capacity." 33 U.S.C. § 908(h).
See also Rambo II, 521 U.S. at 127; Randall v. Comfort Control, Inc.,
725 F.2d 791, 794-95 (D.C. Cir. 1984). Here, Stallings's actual wages
do not represent his wage-earning capacity because his actual wages
have increased for a reason unrelated to wage-earning capacity: he
has worked more overtime hours since his injury. It was therefore

                   6
proper for the ALJ to find that Stallings lost wages on specific days
of bad weather when he could not work, even though his post-injury
earnings are higher overall than before. The point is that if Stallings
was free of his disability, he would be able to earn more than he does
now. See Universal Mar. Serv. Corp. v. Wright , 155 F.3d 311, 329
(4th Cir. 1998).

Finally, Newport News argues that Stallings's disability is tempo-
rary, manifesting itself only in isolated situations. We reject this argu-
ment as well. Stallings's disability is permanent because his injury
has permanently restricted him to working in outdoor areas. The
ALJ's finding on this point is supported by substantial medical evi-
dence, including an opinion from Stallings's doctor. Furthermore,
"[u]nder the [LHWCA] any reduction in wage-earning capacity
greater than zero is compensable." Randall , 725 F.2d at 798. Stallings
has suffered a compensable injury even though his disability only
causes him economic harm on those few days when the weather is too
bad for outside work.

In conclusion, the record establishes that without his disability,
Stallings would have the opportunity to work indoors on days of bad
weather and to earn a full day's pay. As a result, the ALJ's finding
that Stallings sustained a loss of wage-earning capacity is supported
by substantial evidence. The award of benefits is therefore affirmed.

III.

Newport News's second argument is that the Board erred in deny-
ing the company § 8(f) relief. The company says that it is entitled to
seek § 8(f) relief because it can show that Stallings's prior medical
conditions substantially contributed to any present disability. If § 8(f)
is applicable, Newport News will be responsible for only the first two
years of Stallings's disability benefits, and the company will avoid
liability for any increase (however substantial) in benefits in the
future. The Director argues that because the disability award is nomi-
nal or very small, Newport News is barred from seeking § 8(f) relief.
The arguments of Newport News and the Director with regard to
§ 8(f) raise several questions. Is Stallings's award of $3.78 per week
for his permanent partial disability a nominal award? If it is, is § 8(f)
relief available in the case of a nominal award? Finally, if Stallings's

                   7
award cannot be characterized as nominal because it reflects an actual
loss of wage-earning capacity, is the company precluded from seeking
§ 8(f) relief because the amount of the award is so small? Before we
answer these questions, we need to know more about§ 8(f) and to
understand what part of its language sparks the argument in this case.

A maritime employer is normally liable for all of the compensation
payable to its employees under the LHWCA. See 33 U.S.C. § 904(a).
Section 8(f) of the Act, however, limits the employer's liability in the
following circumstance. When an injured employee has a permanent
partial disability that is "found not to be due solely to [the work-
related] injury" and the overall disability is"materially and substan-
tially greater than that which would have resulted from the [work-
related] injury alone," the employer is only required to pay compensa-
tion for the first 104 weeks. See id. § 908(f)(1). Thereafter, the bene-
fits are paid out of a special fund administered by the Director and
sustained by employer contributions. See id.§§ 908(f)(2)(A), 944.
The chief purpose of § 8(f) is to encourage employers to hire and
retain disabled workers. See Director v. Newport News Shipbuilding
& Dry Dock Co. (Langley), 676 F.2d 110, 112 (4th Cir. 1982). With-
out § 8(f), employers would have a disincentive to hire disabled work-
ers "for fear of having to pay for the entirety of their injuries if their
pre-existing disabilities were to be aggravated at work." Director v.
Newport News Shipbuilding & Dry Dock Co. (Carmines) , 138 F.3d
134, 138 (4th Cir. 1998). See also Director v. Bath Iron Works Corp.,
129 F.3d 45, 50 (1st Cir. 1997). Section 8(f) thus offers protection to
employers who are willing to hire disabled workers. This protection
comes in the form of a two-year limit on an employer's LHWCA lia-
bility when an employee's preexisting disability seriously compounds
a work-related injury. See Newport News Shipbuilding & Dry Dock
Co. v. Howard, 904 F.2d 206, 211 (4th Cir. 1990).

To obtain § 8(f) relief, the employer must prove three things: "1)
that the [employee's] ultimate disability is not caused solely by the
work-related injury, but is also caused in part by a pre-existing partial
disability; 2) that the pre-existing disability was manifest to the
employer prior to the work-related injury; and 3) that the ultimate per-
manent partial disability materially and substantially exceeded the
disability that would have resulted from the work-related injury alone

                   8
[that is, without] the pre-existing condition." Carmines, 138 F.3d at
138-39 (footnote omitted). See also 33 U.S.C. § 908(f)(1).

Newport News proffered evidence that Stallings suffered from at
least two preexisting medical conditions, chronic obstructive pulmo-
nary disease (COPD) and hypertension. At this stage, Newport News
and the Director are not arguing about whether the company can meet
§ 8(f)'s first and second requirements. Rather, they dispute whether
Newport News can satisfy the third requirement of§ 8(f), namely,
whether Stallings's ultimate disability "materially and substantially"
exceeds the disability that would have resulted from metal fume fever
alone. Specifically, the Director argues that, as a matter of law, a
cumulative disability measured by a monetary award that is either
nominal or very small cannot be "materially and substantially greater
than [the disability] which would have resulted from the [work-
related] injury alone." § 908(f)(1).

A.

This brings us back to two of the questions mentioned. Did Stall-
ings receive a nominal award? And, if he did, would that automati-
cally bar § 8(f) relief? The Director urges us to apply the rule adopted
in Todd Shipyards Corp. v. Director (Porras), 792 F.2d 1489, 1492
(9th Cir. 1986), which held that when a nominal award is granted,
§ 8(f) relief is precluded because that section's third requirement is
not met as a matter of law. Specifically, the Porras court decided that
when a disability resulting from both a preexisting condition and a
work-related injury is measured by a nominal award, the overall dis-
ability "cannot be `materially and substantially greater' than [the dis-
ability] caused by the last injury alone." Id. at 1491. Before we decide
whether to apply the rule in Porras, we must answer the first ques-
tion, that is, whether Stallings received a nominal award.

A nominal disability award is "a mechanism for taking future
effects of disability into account when present wage-earning ability
remains undiminished." Rambo II, 521 U.S. at 136. The concept of a
nominal award is based on the Act's method for determining wage-
earning capacity, which may take into account "the effect of disability
as it may naturally extend into the future." 33 U.S.C. § 908(h). See
also Fleetwood v. Newport News Shipbuilding & Dry Dock Co., 776

                   9
F.2d 1225, 1234 n.9 (4th Cir. 1985). A nominal award does not repre-
sent an actual loss in wage-earning capacity. Instead, it is arbitrarily
set at a very small sum, often at about one percent of present wage-
earning capacity. See, e.g., Porras, 792 F.2d at 1490. The function of
the nominal award is to allow the partially disabled employee to avoid
statute of limitations problems pending a future (and expected)
decline in wage-earning capacity. An injured maritime worker must
generally bring his disability claim within one year of injury. See
§ 913(a). A losing claimant may file a request to modify a decision
rejecting his claim within one year of any rejection. See id. § 922;
Betty B Coal Co. v. Director, OWCP, 194 F.3d 491, 497-500 (4th Cir.
1999). A winning claimant may file for a modification of his benefits
"at any time prior to one year after the date of the last payment of
compensation." 33 U.S.C. § 922. If a partially disabled claimant with
no present loss of earning capacity was denied benefits outright, he
would have to file a modification request every year in order to keep
his case alive until his earning power declined. See Rambo II, 521
U.S. at 134 n.6. The potential pitfalls for this claimant are avoided by
use of the nominal award, which provides the claimant with ongoing
compensation payments. This positions him to take advantage of the
rule allowing for a modification request at any time up to one year
after the last payment of benefits. A nominal award therefore serves
as a placeholder to keep the partially disabled employee's compensa-
tion case alive for purposes of modification if he experiences an
actual loss in earning power at some point in the future. See Rambo
II, 521 U.S. at 128-29; Hole v. Miami Shipyards Corp., 640 F.2d 769,
771 (5th Cir. 1981).

We have outlined the nature and purpose of a nominal award. We
will also look at the particular circumstances of the partially disabled
claimants in Porras and Rambo II for guidance in deciding whether
Stallings actually received a nominal award. In Porras the employee
had no immediate loss in wage-earning capacity due to his permanent
partial disability because he had a five-year contract for light work at
full salary. As a result, the ALJ granted him a nominal award of $3.00
per week so that he could "seek modification of the award when the
economic effects of the injury became apparent." Porras, 792 F.2d at
1490-91. Similarly, in Rambo II the employee's back injury did not
affect his wage-earning capacity once he was promoted to crane oper-
ator, even though his physical condition had not changed. Because the

                  10
employee's "capacity to earn wages [was] no longer depressed" due
to his crane operator wages, the Supreme Court noted that he could
be eligible only for nominal compensation. Rambo II, 521 U.S. at
140. The facts of Porras and Rambo II confirm that a partially dis-
abled worker may be awarded nominal benefits only when he has no
present loss of wage-earning capacity.

It is clear that Stallings did not receive nominal compensation. His
award of $3.78 per week, while a very small sum, represents his
actual (or current) loss in wage-earning capacity. The ALJ arrived at
this figure by using the wage loss that Stallings incurred during a 62
1/2-week period in 1994-1996 as representative of the wage loss he
could expect to suffer over time. The Director argues that this award
is still a nominal one because it "demonstrate[s] a potential for future
[additional] loss of income." Director's Br. at 23. We disagree. An
award is not nominal simply because it has the potential to be
increased. Instead, it is nominal because present wage-earning ability
is undiminished, but there is a significant potential that the disabling
injury will result in a reduced capacity to earn wages sometime in the
future. See Rambo II, 521 U.S. at 138.

The Director also argues that Stallings received a nominal award
because the ALJ characterized it as such on reconsideration. The
ALJ's characterization, however, cannot camouflage the facts. We
agree with the Board that "[d]espite the administrative law judge's
representation of this award as a nominal award pursuant to Rambo
II, his findings of fact belie this characterization." Because Stallings's
disability award represents his actual loss in wage-earning capacity,
we hold that it is not a nominal award. Accordingly, the Porras rule
-- that § 8(f) relief is precluded in the case of a nominal award -- is
not applicable to this case.2 2

B.

Now that we have said that Stallings's compensation award is not
a nominal one, we consider the Director's alternative argument.
According to the Director, the award of $3.78 per week is so "utterly
_________________________________________________________________
2 Because Stallings did not receive a nominal award, we do not reach
the question presented in Porras.

                   11
insubstantial," Director's Br. at 29, that for§ 8(f) purposes it should
be treated the same as the nominal award in Porras. Specifically, the
Director argues that such a paltry sum, even though calculated on an
actual loss, cannot represent a disability that is"materially and sub-
stantially greater" than the disability that would have resulted from
metal fume fever alone. We decline to hold that an employer is not
eligible for § 8(f) relief when the disability award is small in dollar
amount or represents only a small percentage of the employee's total
wages. The Director's interpretation of § 8(f) is contrary to the sec-
tion's language and to the way in which courts have consistently
interpreted the section's requirements.

Section 8(f) provides that an employer must pay only the first 104
weeks of permanent partial disability benefits if the employee's "dis-
ability is materially and substantially greater than that which would
have resulted from the subsequent injury alone." 33 U.S.C.
§ 908(f)(1). This statutory language requires that the employee's
actual disability be materially and substantially greater than the dis-
ability the employee would have faced in the absence of his preexist-
ing medical condition. The statute thus focuses on the degree of
disability attributable to the work-related injury, not on the dollar
amount of the disability award. Under the Director's interpretation of
the statute, however, the decision whether to award§ 8(f) relief would
depend on the level of compensation. While we normally defer to the
Director's reasonable interpretation of the LHWCA, see Zapata Hay-
nie Corp. v. Barnard, 933 F.2d 256, 258 (4th Cir. 1991), we cannot
defer when his interpretation is inconsistent with the language of the
Act. See Public Employees Ret. Sys. v. Betts, 492 U.S. 158, 171
(1989). In this instance, the Director has lost sight of the plain lan-
guage of § 8(f).

Moreover, the case law confirms that the relevant inquiry under the
third element of § 8(f) centers on the disability and a determination
of how much of it was caused by the work-related injury and how
much of it was caused by the preexisting condition. Specifically,

       the employer must show by medical evidence or otherwise
       that the ultimate permanent partial disability materially and
       substantially exceeds the disability as it would have resulted
       from the work-related injury alone. A showing of this kind

                  12
       requires quantification of the level of impairment that would
       ensue from the work-related injury alone. In other words, an
       employer must present evidence of the type and extent of
       disability that the claimant would suffer if not previously
       disabled when injured by the same work-related injury.
       Once the employer establishes the level of disability in the
       absence of a pre-existing permanent partial disability, an
       adjudicative body will have a basis on which to determine
       whether the ultimate permanent partial disability is materi-
       ally and substantially greater.

Director v. Newport News Shipbuilding & Dry Dock Co. (Harcum I),
8 F.3d 175, 185-86 (4th Cir. 1993). See also Director v. Bath Iron
Works Corp., 129 F.3d 45, 51 (1st Cir. 1997) ("[A]n employer is
required to show the degree of disability attributable to the work-
related injury, so that this amount may be compared to the total per-
centage of the partial disability for which coverage under the
LHWCA is sought.").

In this case Newport News's eligibility for § 8(f) relief therefore
depends on comparing the degree of disability that would have
resulted solely from Stallings's work-related injury (metal fume
fever) with the degree of disability that Stallings currently suffers as
a result of the combination of the metal fume fever and his preexisting
medical conditions of COPD and hypertension. The ALJ has not
made such a comparison in this case. After the Director withdrew his
concession on § 8(f) relief, the ALJ denied the relief as a matter of
law. Thereafter, the Board accepted the Director's argument that even
if Stallings's award is not a nominal one, it is too"small in fact" to
allow § 8(f) relief. Specifically, the Board held that because the award
is so small, the "employer would be legally unable to establish that
claimant's disability is not due solely to the work injury, and is, in
fact, `materially and substantially greater' than that caused by the last
injury alone." We disagree with the Director and the Board. We rec-
ognize, of course, that an award of $3.78 per week is insubstantial and
that Stallings's disability does not greatly affect his wage-earning
capacity. Nevertheless, the small size of the award does not answer
the statutory question of whether Stallings's current disability --
manifested by his inability to work indoors -- is"materially and sub-
stantially" greater than the kind of disability he would be facing if he

                  13
had only metal fume fever and did not suffer from COPD and hyper-
tension. And, it is legally (and factually) possible to answer this ques-
tion in Stallings's case because, as we have said,§ 8(f) focuses not
on the dollar amount of the award but on how much each condition
contributes to the ultimate physical disability.

The Director also invokes the policy argument used to support the
denial of § 8(f) relief in the case of a nominal award. The argument
is that if § 8(f) applied to a nominal award, the employer would
escape liability for any significant compensation; it would pay the
nominal benefits for two years and avoid liability for any substantial
decline in wage-earning capacity that might occur later. See Porras,
792 F.2d at 1491-92. Notwithstanding the merits of the policy argu-
ment in the case of a nominal award, we decline to apply it in a case
like this one. Here, the employer has been ordered to pay compensa-
tion, calculated on the basis of an actual loss in wage-earning capac-
ity, to an employee with a permanent partial disability. In such a case
the employer is entitled to § 8(f) relief if it can show that a preexisting
condition is a material and substantial contributor to the overall dis-
ability resulting after the work-related injury.

The policy argument is inapplicable for another reason. When the
disability award represents an actual loss in wage-earning capacity,
there is not necessarily an expectation that wage-earning capacity will
decline in the future. A nominal award, on the other hand, must be
based on the "significant potential" that the worker's injury will
diminish his wage-earning capacity at some future point. Rambo II,
521 U.S. at 138. In Stallings's case there is no finding that he faces
a significant potential for a further decline in wage-earning capacity.
Thus, there is no indication that Newport News will be avoiding sig-
nificant compensation payments if it is awarded§ 8(f) relief.

We hold that a small disability award that reflects an actual loss in
wage-earning capacity does not preclude an employer from seeking
relief under § 8(f) of the LHWCA. We therefore vacate the Board's
decision insofar as it denies § 8(f) relief to Newport News. We
remand the case to the Board with instructions to remand to the ALJ
for reconsideration of the § 8(f) issue. In particular, the ALJ should
determine whether Stallings's ultimate disability (taking into account
his pre-injury COPD and hypertension) is materially and substantially

                   14
greater than the disability that would have resulted from metal fume
fever alone.

IV.

To summarize, we affirm the award of disability benefits to Stall-
ings. We also hold that an employer may seek § 8(f) relief on a dis-
ability award that is small but not nominal. We therefore vacate the
Board's decision denying Newport News § 8(f) relief and remand to
the Board with instructions to remand to the ALJ, who will reconsider
the company's request for § 8(f) relief in light of this opinion.

AFFIRMED IN PART, VACATED
IN PART, AND REMANDED

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