LACEY ACT AMENDMENTS
AFFECT HUGE NUMBER OF IMPORTS

Though little noticed at the time, amendments to the Lacey Act inserted in Section 8024 of H.R. 2419, the Farm Bill that become law on May 22, 2008, are causing major headaches for U.S. importers of an extremely broad range of products.

By Mike Regan

The Lacey Act has been part of U.S. law for over 100 years.  Originally aimed at illegal transportation of animals across state lines, it was expanded beyond wildlife protection in 1981 to provide protection for rare plant species that were being harvested illegally and imported into the U.S.

The 2008 amendments were probably well intentioned, and reflected the concern of members of Congress over the expansion of illegal logging worldwide.  Problems due to illegal logging are serious.  It is apparently not unusual for traffickers to clear-cut forests and essentially steal huge volumes of lumber, indifferent to environmental degradation, applicable laws, and the revenues lost by the countries of origin. 

An article in the October 6, 2008 issue of The New Yorker magazine (“Stolen Forests”) described illegal logging in eastern Russia, just across the Chinese border.  Corrupt businessmen, provincial officials and organized crime figures arrange for logs to be brought into China for use in manufacturing, and Chinese goods containing wood and wood products are exported to markets around the world, including the U.S. The article featured a non-governmental organization based in Washington D.C., the Environmental Investigation Agency, whose executive director worked with Congress on the Lacey Act amendments.

Of course, we can all agree that illegal logging is bad and still recognize that there are better ways and worse ways to address the problem, and it is hard to imagine worse ways than the Lacey Act amendments Congress enacted.

The Lacey Act’s focus prior to the amendments was on plants officially listed as endangered or threatened with extinction.  In the Farm Bill, “plant” was redefined to include all trees, whether from natural forests or tree farms and whether endangered or not, as well as all wood products.  This is an enormous expansion of the Act’s coverage, affecting up to one-third of the Harmonized Tariff Schedule.  It is now illegal to import wood or wood products if the trees were cut in violation of any foreign country’s laws.

To forestall claims by importers that they do not know how or where these products originated, the Act requires importers to include on import declarations the amount of plant products being imported, the scientific name (genus and species) and the value and country of origin.  If the exact information is not known, the importer must identify on import declarations all of the plants (genus and species) and countries from which the product might have come.  These lists are likely to be so long as to preclude electronic filing of import declarations.

There is no small-quantity exception, though there are exceptions for common food crops and scientific specimens.  Products are subject to these new requirements even if only partly wood or wood products, such as tools with wooden handles, cars with wood trim on dashboards, leather watchbands or shoes with cellulose padding inside.  Paper products are also covered, including price tags, hang tags or display cardboard backing, and instructions or owner’s manuals for products that otherwise contain no plant material.

Normally, when laws like this are enacted, an agency is designated to issue implementing regulations, which take effect after a notice and comment rule-making proceeding.  These proceedings often permit government officials to learn about and mitigate practical problems with new laws.  Narrow or selective interpretations, limits on enforcement, and delays in issuing implementing regulations are techniques that have been used in the past.

Unfortunately (and possibly because these techniques have sometimes been seen as ways of thwarting Congressional intent), the Lacey Act amendments are, by their own terms, effective December 15, 2008.  While there is a provision for a report to Congress on experience with the Act, it is not due until after the Act has been in effect for two years.  There are penalties for violations.

Given the many flaws of the Act as amended, it will come as no surprise that a coalition of importers has formed to try to get the next Congress to enact modifications, and to minimize adverse impacts on trade in the meantime.  Importers of a broad range of products, including members of NASSTRAC, National Retail Federation, Retail Industry Leaders Association, the National Association of Manufacturers, U.S. Chamber of Commerce and others, as well as the National Customs Brokers and Forwarders and other similar groups, are concerned about the burdens of compliance.  Exporting countries, including Canada, are also concerned, and fearful that manufacturers may substitute U.S. lumber and wood products for imports in order to avoid red tape and exposure to penalties.

Efforts to address these concerns have borne fruit.  Even governmental authorities recognize that they will not be able to implement the Act by December 15, 2008, due to the need to modify import procedures.  Accordingly, U.S. Customs plans to make paper forms available that importers can use voluntarily.  There will, however, be no penalty for not making the declarations required by the Lacey Act between December 15, 2008 and April 1, 2009 (though there could be penalties for voluntary declarations that are false).

Beginning in April 2009 (or as soon thereafter as the necessary electronic systems are in place), the new requirements would be phased in as follows:

April 1, 2009 – HTS Chapters 44 (wood and articles of wood) and 6 (live trees and cut flowers)

July 1, 2009 – HTS Chapters 47 (wood pulp), 48 (paper and articles of paper), 92 (musical instruments), and 94 (furniture)

September 30, 2009 – other HTS Chapters, based on experience with earlier phase-in steps

The Federal Register for October 8, 2008 contains a Notice and Request for Comments by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), proposing this approach. Extensive public comments were filed by NASSTRAC and others on December 8, 2008.

In the next Congress, there will be an effort to find a legislative solution to the more objectionable provisions of the 2008 Lacey Act amendments.

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