As we reported in a prior Alert (“Wood Products Subject to New U.S. Import Rules,” June 2008), Congress recently amended the Lacey Act in order to ban imports of illegally-harvested timber and all products made from such timber, as well as requiring importers of nearly any products containing wood to declare the genus, species and country of origin of the wood used in the products (as well as other information). As we also reported, the Lacey Act’s new declaration requirement could have resulted in the imposition of significant burdens as early as next month on anyone importing wood, wood products, or indeed even other plants and plant products. But the administrative agencies charged with enforcement are mitigating the immediate impact in two ways -- (1) by delaying the implementation of the declaration requirement, and (2) by potentially limiting the scope of the imports requiring a declaration.

Administrative Agencies. The Lacey Act’s declaration requirement will be enforced at the border by U.S. Customs and Border Protection (“CBP”). But the agency primarily responsible for determining the implementation schedule, the regulatory exceptions, and other important details is the Animal and Plant Health Inspection Service (“APHIS”), an office within the United States Department of Agriculture (“USDA”). Other agencies involved include the U.S. Fish and Wildlife Service, the U.S. Department of Commerce, the Office of the U.S. Trade Representative, and the U.S. State Department. These agencies have formed a working group chaired by APHIS.

Phase-In of Declaration Requirement. While the statutory ban on prohibited imports went into effect immediately, the declaration requirement was scheduled to go into effect this December. However, APHIS recently delayed the implementation of the declaration requirement. Specifically, APHIS issued a Federal Register notice in October that set forth a tentative schedule to implement the declaration requirement in stages, based upon how imported products are classified under the Harmonized Tariff Schedule of the United States (“HTSUS”). APHIS and CBP propose to implement the declaration requirement on April 1, 2009, for products classified in HTSUS Chapters 6 and 44, which cover live trees and wood/wood products, respectively. On July 1, 2009 the declaration requirement would broaden to include products covered under HTSUS Chapters 47-48 (wood pulp and paper), 92 (musical instruments), and 94 (furniture). Based on their experience implementing the declaration requirements for these HTSUS chapters, APHIS and CBP plan to set subsequent implementation dates (possibly as early as September 30, 2009) for other chapters, starting with HTSUS Chapters 12-14, 45-46, 66, 82, 93, and 95-97.

According to APHIS, the schedule is designed to start with the products closest to the trees themselves, and then move to products that have undergone more processing. For example, whereas paper in HTSUS Chapter 48 is scheduled for implementation on July 1, 2009, APHIS has not yet identified a schedule for books (in HTSUS Chapter 49). It is unclear, however, how far APHIS and CBP will proceed with implementation of the declaration requirement. In theory, the declaration requirement may apply to any product containing wood (with a limited number of exceptions described below). Nevertheless, APHIS may not implement the declaration requirement for HTSUS Chapters containing products that typically do not contain wood products (e.g., automobiles). Instead, APHIS may avoid the implementation for such HTSUS chapters until it has authority in the spring of 2010 (as provided for by Congress when it passed the amendments) to exempt additional products.

Moreover, this entire schedule is provisional because it depends upon CBP’s development of an electronic system to collect the declarations. APHIS and CBP refuse to rely on paper declarations -- even in the short term -- because they could be swamped by an estimated 30,000 entries per day once the Lacey Act amendments are fully implemented. If an electronic system is not ready by April 1, 2009, the entire schedule may be further delayed.

Scope Exceptions. The scope of products subject to the new declaration requirement is vast. The requirement applies not only to wood and wood products (which are the primary targets), but to “any wild member of the plant kingdom . . . and products thereof, including trees from either natural or planted forest stands,” unless the product falls into a limited number of exceptions. The first two exceptions are for “common cultivars (except trees),” and for “common food crops.” Congress did not define these two exceptions. As a result, APHIS and industry groups are carefully considering how to define these scope exceptions in order to lessen the burden of the legislation while remaining faithful to its core objectives.

The declaration requirement also does not apply to “plants used exclusively as packaging material to support, protect, or carry another item, unless the packaging material itself is the item being imported.” Thus, for example, importers of steel ball bearings shipped in cardboard packaging will not be subject to the import declaration. However, a question remains as to whether APHIS can or will exclude instruction manuals as a type of “packaging material.”

Comment Period. APHIS has opened a public comment window until December 8, 2008. If importers or other stakeholders have comments on the proposed implementation schedule or on the contours of the exceptions discussed above, they may wish to submit comments. Stakeholders may also wish to comment more generally on burdens that can be reduced without undermining the effectiveness of the Lacey Act amendments.

Possible Legislation. Because the Lacey Act amendments are very broad and currently provide APHIS with only limited regulatory discretion, there is significant pressure for further revision of the statutory framework. Congressional action may follow a review of the declaration requirement that APHIS is required to conduct by mid-2010. Importers and others should document and communicate to Congress any unnecessary or excessive burdens imposed on them by the Lacey Act amendments.

For further information, please contact any of the following professionals:

Daniel Wendt, dwendt@milchev.com, 202-626-5898

Richard Abbey*

Welles Orr**

*Former Miller & Chevalier attorney
**Former Miller & Chevalier advisor

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.