Customs Law Advisory - New US Law Will Impose Substantial Reporting Burdens on Importers of Any Wood or Tree Products, And Will Cover A LOT More Products Than You Think

October 3, 2008

US importers of products that derive in any part from a tree soon must comply with a new law that requires declaration of (1) the genus and species of the tree input, (2) the country where the original tree was harvested, and (3) the quantity and value of the tree content. Violators may face stiff fines, possible seizure of the goods and, potentially, criminal prosecution. The US Department of Agriculture (“USDA”) and US Customs and Border Protection (“CBP”) are working on regulations for the declaration requirement, which is to become effective December 15, but may be delayed until next year. All companies involved in imports containing any amount of wood or tree content (including highly processed products far removed from the original tree) should review supply chains to determine how to meet this new law. Now also is the time for importers to express opinions to the agencies and Congress regarding how the law should be implemented.

The New Amendments to the Old Lacey Act

The June 2008 Farm Bill includes amendments to the Lacey Act. For 100 years, the Lacey Act has prohibited illegal trade in wildlife. The 2008 amendments expand the Act to prohibit trade in plants and plant products harvested in violation of any US or foreign law.

The amendment also requires importers to declare the scientific name (genus and species) of any plant product included in any import good, the country where the original plant was harvested, and the quantity and value of the plant content. For many importers, declaring a plant species will be entirely new. Moreover, the country required here is the original country of harvesting for the plant input, not the usual country of origin for the finished import goods. Finally, while importers have always had to declare the quantity and value, the new declaration will require the quantity and value of the plant content, rather than the entire, finished item.

Until regulations are issued by USDA and/or CBP, but only until then, the new law allows importers to list all the species or countries that may have been involved.

Vast Product Coverage

The new Lacey Act potentially covers a staggering array of products. The declaration requirement applies to all plants and plant products. “Common cultivars,” are excluded. While that term is not yet defined, it seems likely to mean any commonly farmed plants or food crops. However, all trees (whether “natural or planted forest stands”) are specifically required to be subject to the new law. “Packing materials” are also excepted, but that term is not yet defined. It is critical to note that the new law contains no minimum level of plant content for the new requirements to apply. This means that the declaration must be filed for any imported product that includes any amount of wood or paper content, trim, tree fiber or tree-derived chemicals. Below are only a few potential examples. This is by no means a complete list and the actual coverage will depend on the definitions in the regulations:

Any item accompanied by a paper manual or instruction booklet;
Furniture, toys and guns;
Any rayon fabric (made from wood pulp);
Chewing gum (may contain gum arabic);
Picture frames and mirrors;
Books and magazines;
Any garment with wooden buttons or paper hangtags;
Any machine or electronic device with a rubber hose or gasket;
Tools or appliances with wooden handles or trim;
Chemicals or pharmaceuticals using any tree cellulose, fiber or extract;
Lipstick or other cosmetics using any wood rosin, gum or tar;
Maple syrup.

Criminal and Civil Liabilities

Under the new Lacey Act, anyone trading in illegally sourced plant products may be subject to imprisonment for up to five years and civil or criminal fines up to $500,000. A false import declaration risks similar criminal penalties or much lower civil penalties. Lower penalty limits may apply if the conduct was not knowingly done or if some due care was exercised. In all cases, violation of the law risks forfeiture of the imported goods.

Regulations, Timing and Next Steps

The Lacey Act prohibition against trade in illegally-harvested plants and plant products is effective immediately. The new declaration requirement is to become effective on December 15, 2008. However, USDA and CBP have informally indicated that they may implement a phased enforcement schedule. Under this possible approach, enforcement would begin in April 2009, when it appears that the agencies may have established a method for electronic declaration, rather than using paper forms. Moreover, April 2009 enforcement might only apply to obvious tree products such as lumber, plywood and flooring, with other products covered in later phases. Such schedules are only speculative at this time and there has been no official guidance yet from the agencies.

Further guidance may not come for some time, since USDA and CBP have apparently asked Congressional officials to advise on whether a minimum content regulation would be permitted, whether the terms were meant to be applied as broadly as they appear in the law, and other questions. Accordingly, now is the time for importers to express to Congress and the agencies any concerns regarding how this new law will be implemented.

If you have any questions on US Customs or import procedures, please contact Greg McCue at 202.429.6421 or Winston Zheng at 202.429.3058.