The
Mouse that Roared:
The Lacey Act Amended and its Consequences
by Ned Steiner, Director, Trade and Legislative Affairs, for Sandler, Travis
& Rosenberg, P.A.
Global trade in wood products is big business. According to some estimates, it is equal to $150 billion. The same sources estimate that 10 percent of that amount is illegally logged. Indeed, illegal logging seems to be a wide-spread and deep-seated practice for many of the world's leading producers of timber: in Brazil, as much as 80 percent of logging may be illegal, 50 percent in Cameroon and Gabon, 88 percent in Indonesia, 30 percent in Malaysia, 20-30 percent in Russia. There are even indications that a small number of operations in Canada may not be wholly legitimate.*
Illegal logging is clearly a serious problem, with important environmental and economic consequences. It is not surprising, therefore, that the U.S. government would want to address the issue more vigorously. And so it did, by passing a law - included in the 2008 Farm Bill - which redefined the products covered by the law to prevent illegal trade in protected goods (the Lacey Act) and by requiring a new declaration, which obliges importers to identify the genus, species, value, quantity and country of origin of the wood and other plant products that they bring into the United States. At first glance, the provisions seem modest and relatively unobtrusive, particularly when faced with the catastrophe of illegal logging and global deforestation. But the new law, as written and currently understood, is anything but modest.
As importers and accompanying industries - from exporters, to carriers, to retailers - are discovering, the amendments to the Lacey Act have the potential to encompass almost any category of imported good. And, with the new declaration requirement, the new law could require all importers to submit paper declarations, challenging the progress that has been made with the introduction of automation and paperless entry.
In the first place, there is the matter of the definition and redefinition of terms. "Plant(s)" is now understood as "any wild member of the plant kingdom, including roots, seeds, parts or products thereof, including trees and either natural or planted forest stands." Furniture made of illegally harvested wood, for example, is prohibited for importation under this Act. But so are the wooden buttons on a sweater, or the wood handle of a frying pan. Also prohibited is rayon derived from illegally harvested wood pulp, or latex from illegal tapped trees. Importers must also consider that the new law will cover products with hang tags, paper labels or stickers, or description booklets. As these are paper products, they are all covered under the law. Importers should contact their suppliers to make sure that these products do not come from illegally harvested plants or trees.
There are some exceptions to the rule. "Common cultivars, except trees" are not included in this definition, nor are "common food crops". Unfortunately, the U.S. agencies which have been tasked to implement the law have not yet defined these terms. (Is cotton a common cultivar? It should be, but that hasn't been clarified yet).
Consequently, it is now unlawful - and it has been since June 15 - to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant or plant product taken in violation of the laws of a U.S. State, or any foreign law that protects plants. It is also unlawful to make or submit any false record for, or any false identification of, any plant or plant product.
In addition, beginning on December 15, "it shall be unlawful for any person to import any plant unless the person files upon importation a declaration…" This declaration must include the genus, species, value, quantity and country of origin of the plant or plant product, as redefined. There are several challenges arising from the new declaration requirement. First is the sheer volume of items that may be covered. CBP has estimated that 87 of the 95 tariff chapters, or up to 50 percent of all imported goods, may require the new declaration. Second, there is the additional time that this will add to the movement of goods. Importers have little idea how long it will take for them, or their suppliers, to gather this information. Third, there is the question of how the declaration will be presented, and how it will be received. For the time being - at least the next 8 months - CBP will not be able to provide an electronic platform for submissions of the declaration. The declaration, therefore, will have to be submitted in paper, an additional delay. Finally, as stated in the law, the declaration must be presented at the time of importation or the goods risk being deemed inadmissible and held at the border by CBP. The goods would not be released from custody until the declaration is produced. Customs has strongly advised importers to contact their suppliers well beforehand to gather the required information in order to avoid delays at the border.
There is one important exclusion included in the declaration requirement - packaging materials. The law explicitly states that the provision shall not apply to material used to "support, protect, or carry another item, unless the packaging material itself is the item being imported". So, unless you are an importer of cardboard boxes, you do not have to file a declaration stating the genus, species, etc. of the cardboard box that contains your product.
From reading the above,
one might come to dire conclusions, but there is hope that the implementation
of the bill will be less onerous than might be expected. Both the administrative
agencies and Congress have indicated that they would like to base implementation
on a general agreement among the interested parties. Industry representatives
and the original proponents of the legislation have been meeting to identify
some common ground and understanding as to how to put the law into practice.
The proponents are goal-oriented and have made repeated statements that what
they seek is an implementation that is workable for the industry stakeholders
that must operate under the new law.
While details regarding this common ground have yet to be finalized, there seems to be a consensus regarding, most significantly, the application and enforcement of the new law. For example, most of the parties involved envision a phased implementation of the declaration requirement. That would provide importers some breathing room while CBP focuses on a few marquee products or HTS chapters. In addition, it would give customs time to ramp up an electronic form to process the new data. All the stakeholders recognize that a paper declaration would not serve the purpose of gathering searchable, actionable information. The added irony of creating an extra paper document to stop illegal logging is lost on no one. So, while the December 15 deadline still stands, there may some flexibility in terms of who will be expected to submit declarations in the near term, and how those declarations will be submitted.
The case of the Lacey Act and its amendments is a good example of how a seemingly small provision can have an outsized effect, and how it is difficult to anticipate unintended consequences. It also can be an example, it is hoped, of environmentalists and the trade coming together to find solutions that both protect natural resources and support the free flow of goods in legitimate commerce.
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Footnotes:
*Statistics from Environment Investigations Agency
http://www.eia-international.org/cgi/background/background.cgi?t=template&a=23
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