November 11, 2013

If a Tree Falls in a Forest...? If a Declaration Is Never Filed...? Congress Takes Another Unsound Whack at the Lacey Act

Seller Beware: Consumer Protection Insights for Industry

Fresh off the Government shutdown and the fight over the debt ceiling, a few in Congress have turned their attention once again to their curious but dogged effort to amend the Lacey Act, the United States' oldest wildlife conservation law. The anti-Lacey campaign began in earnest with the high profile Gibson Guitar case (involving, among other things, the seizure and forfeiture of illegal wood), and was the subject of two House subcommittee oversight hearings earlier this year, in May and July. In prior posts, we told you about Congressman Rick Crawford's recent bill and Congressman John Fleming's recent bill. We're back to tell you about the latest -- and perhaps the most misguided -- attempt to amend the Lacey Act we've seen so far.

The Lacey Act prohibits the trade in illegally harvested fish, wildlife, and -- thanks to a 2008 amendment -- plants and plant products. The 2008 amendment provides that plants and plant products imported into the United States must be accompanied by an import declaration that contains certain information about the type of plant, its country of origin, the quantity of the plant, and the value of the importation. As is true for any new regulatory requirement, it takes time and effort to adjust. As a result, the agency charged with implementing this requirement, the Department of Agriculture's Animal and Plant Health Inspection Service (APHIS), has been gradually phasing in the declaration requirement and working with industry to help ease the transition.

Most of the complaints about the declaration requirement point to the burdens involved in gathering the information that the declarations require. Those are fair complaints, and APHIS no doubt will have to continue to work with industry to make sure that the declaration system is implemented in a smooth and efficient way. But the most recent proposed amendment, introduced on October 23, 2013, by Congressman Andy Harris, H.R. 3324, appears to do nothing at all to address those concerns, and instead would change the system in a way that would undercut law enforcement and render the declaration requirement all but useless.

Congressman Harris claims his bill is designed to "amend the Lacey Act Amendments of 1981 to reduce burdensome paperwork, and for other purposes." This bill essentially would make the declaration requirement an "on demand" system. In other words, instead of filing declaration forms upon entry, companies still would have to do all the work to pull them together, and then effectively keep them in a drawer and make them available for inspection upon request. Congressman Harris' bill also would make several other changes to the declaration requirement and provide broader authority to the government to limit its applicability through regulation. So, how exactly is this bill supposed to help anybody? Would this bill make it easier for legitimate companies to import plants and plant products? Not really, because they still would have to gather all the information and fill out the declaration; they just wouldn't have to hit "send" and file it with APHIS. On the flipside, would the bill also undermine the important declaration requirement and the purpose of the Lacey Act by making it easier for companies to import illegal goods and by making it harder to identify and stop illegal activity? Absolutely.

The declaration requirement serves several important purposes. At a minimum, it encourages compliance with the Lacey Act because it forces companies to examine their supply chains. Completing the form requires gathering information about the supply chain, which helps highlight potential illegal activity. The further requirement that importers actually file the form is key. Requiring importers to file the form not only gives them an added incentive to make sure the information is correct; it also provides law enforcement officials with an important tool they can use to identify and stop illegal activity. According to an APHIS report, the declarations make it "possible to flag for further review or investigation specific shipments as to which questions arise based on information provided in the declarations filed for those shipments." And once an investigation turns into an enforcement action, declaration forms can provide important evidence that links problematic imports and suppliers. Finally, the declaration requirement helps protect innocent companies that are complying with the Lacey Act because the declarations help companies identify and remedy potential issues. Further, in the event of an enforcement action, the declarations would help prove that those companies are exercising due care and trying to make sure their supply chains are legal.

Changing the declaration filing requirement to an "on demand" system would seriously undercut the benefits of the declaration requirement and would do almost nothing to alleviate the burdens on importers. Going to an on demand system would undermine the incentives importers have to assemble all of the information they need under the law, and therefore would make the requirement less effective at deterring illegal activity. Most crucially, however, an on demand system would undercut law enforcement. Put simply: if a federal agent had to jump through the hoop of politely requesting a declaration form from her target every time she was investigating a dirty company, she would tip off the bad guys, which would effectively invite them to destroy evidence, cover up illegal activity, and/or or flee before they are arrested.

And what about the benefits of the proposed "on demand" system? For legitimate companies there don't seem to be any. As a practical matter, an "on demand" system would still require compliant companies to expend 98% of the effort because they still would have to gather all of the information to complete the form so that it could be produced on demand. Removing the remaining 2% of effort required to press a button and file a document that has already been completed is hardly a huge benefit to businesses. It's hard to see how lifting that tiny burden could justify the significant, adverse impact that an "on demand" system would have on the law enforcement efforts that help provide those legitimate businesses with a level playing field.

In short, the marginal convenience that an "on demand" system might provide to businesses hardly seems worth the system's unintended consequences. The declaration requirement is key to making the 2008 amendments effective in reducing the importation of illegal plants and plant products. Changing it in this manner and unnecessarily opening it up to further regulation could undermine the very purpose of the Lacey Act, to the detriment of legitimate American businesses and consumers.

We'll continue to keep you posted about these issues.  To read more about the Lacey Act, click here and here.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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