[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT HEARING ON
THE 2008 LACEY ACT
AMENDMENTS PART 1 AND 2
=======================================================================
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON FISHERIES, WILDLIFE,
OCEANS AND INSULAR AFFAIRS
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
Thursday, May 16, 2013 (Part 1)
Wednesday, July 17, 2013 (Part 2)
__________
Serial No. 113-16
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
or
Committee address: http://naturalresources.house.gov
----------
U.S. GOVERNMENT PRINTING OFFICE
80-980 PDF WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (800) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-214 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democratic Member
Don Young, AK Peter A. DeFazio, OR
Louie Gohmert, TX Eni F. H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Tom McClintock, CA Jim Costa, CA
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Cynthia M. Lummis, WY CNMI
Dan Benishek, MI Niki Tsongas, MA
Jeff Duncan, SC Pedro R. Pierluisi, PR
Scott R. Tipton, CO Colleen W. Hanabusa, HI
Paul A. Gosar, AZ Tony Cardenas, CA
Raul R. Labrador, ID Steven A. Horsford, NV
Steve Southerland, II, FL Jared Huffman, CA
Bill Flores, TX Raul Ruiz, CA
Jon Runyan, NJ Carol Shea-Porter, NH
Mark E. Amodei, NV Alan S. Lowenthal, CA
Markwayne Mullin, OK Joe Garcia, FL
Chris Stewart, UT Matt Cartwright, PA
Steve Daines, MT
Kevin Cramer, ND
Doug LaMalfa, CA
Vacancy
Todd Young, Chief of Staff
Lisa Pittman, Chief Legislative Counsel
Jeffrey Duncan, Democratic Staff Director
David Watkins, Democratic Chief Counsel
------
SUBCOMMITTEE ON FISHERIES, WILDLIFE, OCEANS
AND INSULAR AFFAIRS
JOHN FLEMING, LA, Chairman
GREGORIO KILILI CAMACHO SABLAN, CNMI, Ranking Democratic Member
Don Young, AK Eni F. H. Faleomavaega, AS
Robert J. Wittman, VA Frank Pallone, Jr., NJ
Glenn Thompson, PA Madeleine Z. Bordallo, GU
Jeff Duncan, SC Pedro R. Pierluisi, PR
Steve Southerland, II, FL Carol Shea-Porter, NH
Bill Flores, TX Alan S. Lowenthal, CA
Jon Runyan, NJ Joe Garcia, FL
Vacancy Edward J. Markey, MA, ex officio
Doc Hastings, WA, ex officio
---------
CONTENTS
----------
Page
Hearing held on Thursday, May 16, 2013........................... 1
Statement of Members:
Fleming, Hon. John, a Representative in Congress from the
State of Louisiana......................................... 1
Prepared statement of.................................... 2
Sablan, Hon. Gregorio Kilili Camacho, Delegate in Congress
from the Territory of the Northern Mariana Islands......... 3
Prepared statement of.................................... 4
Statement of Witnesses:
Asner, Marcus A., Partner, Arnold and Porter LLP............. 56
Prepared statement of.................................... 57
Autor, Erik O., Esq., President and CEO, Total Spectrum LLC
and
Autor Global Strategies LLC................................ 66
Prepared statement of.................................... 67
Bech, Rebecca, Deputy Administrator, Animal and Plant Health
Inspection Service, U.S. Department of Agriculture......... 5
Prepared statement of.................................... 7
French, Jameson S. ``Jamey'', President and CEO,
Northland Forest Products.................................. 52
Prepared statement of.................................... 54
Guertin, Stephen D., Deputy Director, U.S. Fish and Wildlife
Service, Department of the Interior........................ 10
Prepared statement of.................................... 12
Matthiesen, Birgit, Special Advisor to the President and CEO,
Canadian Manufactures and Exporters (CME).................. 47
Prepared statement of.................................... 49
McCreary, Steve, General Manager, Collings Guitars,
Incorporated, National Association of Music Merchants...... 40
Prepared statement of.................................... 42
Snapp, Travis Reed, Managing Director, Benchmark
International, Chief Operating Officer, Benchmark Holdings,
International Wood Products Association.................... 43
Prepared statement of.................................... 45
Additional materials supplied:
American Forest and Paper Association, Statement submitted
for the record by Dr. Fleming.............................. 78
Environmental groups supporting the Lacey Act, Letter
submitted for the record by Mr. Lowenthal.................. 22
List of documents retained in the Committee's official files. 89
National Wildlife Federation, Statement submitted for the
record..................................................... 86
Truth Takes a Back Seat in Lacey Act Hearing, Huffington
Post, by Rep. Earl Blumenauer, Article submitted for the
record by Ms. Shea-Porter.................................. 77
U.S. Forest Products Industry, Letter submitted for the
record by Mr. Lowenthal.................................... 21
With Gibson Settlement, `Due Care' is Slightly More Clear,
Hardwood Floors Magazine, October/November 2012, by Marcus
Asner, Samuel Witten and Katherine Ghilain, Article
submitted for the record................................... 87
World Wildlife Fund, Statement submitted for the record by
Dr. Fleming................................................ 81
CONTENTS
----------
Page
Hearing held on Wednesday, July 17, 2013......................... 91
Statement of Members:
Fleming, Hon. John, a Representative in Congress from the
State of Louisiana......................................... 91
Prepared statement of.................................... 92
Sablan, Hon. Gregorio Kilili Camacho, a Delegate in Congress
from the Territory of the Northern Mariana Islands......... 93
Prepared statement of.................................... 95
Statement of Witnesses:
Alexander, Kristina, Legislative Attorney, American Law
Division, Congressional Research Service, Library of
Congress................................................... 96
Prepared statement of.................................... 98
Asner, Marcus A., Arnold and Porter, LLP..................... 110
Prepared statement of.................................... 112
Kamenar, Paul D., Esq., Attorney at Law...................... 138
Prepared statement of.................................... 140
Larkin, Paul J., Jr.......................................... 128
Prepared statement of.................................... 130
Rubinstein, Reed D., Esq., Partner, Dinsmore & Shohl, LLP,
for the U.S. Chamber of Commerce Institute for Legal Reform 120
Prepared statement of.................................... 122
von Bismarck, Alexander, Executive Director, Environmental
Investigation Agency....................................... 100
Prepared statement of.................................... 102
Additional materials supplied:
List of documents retained in the Committee's official files. 166
OVERSIGHT HEARING ON ``THE 2008 LACEY ACT AMENDMENTS.'' PART 1
----------
Thursday, May 16, 2013
U.S. House of Representatives
Subcommittee on Fisheries, Wildlife, Oceans, and Insular Affairs
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to notice, at 10:03 a.m., in
Room 1324, Longworth House Office Building, Hon. John Fleming
[Chairman of the Subcommittee] presiding.
Present: Representatives Fleming, Wittman, Thompson,
Duncan, Sablan, Shea-Porter, Lowenthal, and Garcia.
Also Present: Representative Harris.
Dr. Fleming. The Subcommittee will come to order. The
Chairman notes the presence of a quorum.
STATEMENT OF THE HON. JOHN FLEMING, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Dr. Fleming. Good morning. Today I am holding what I hope
will be the first in a series of hearings on various provisions
of the Lacey Act. It is appropriate to start this oversight by
closely examining the most significant--and some would say
contentious--changes to this Act in almost 40 years.
The expansion of the Lacey Act, to include all plant and
plant products, was signed into law on May 22, 2008. The full
House was never given the opportunity to debate or amend the
2008 Lacey Act amendments. The language was added in the Senate
as a fore-amendment to the 700-page 2008 farm bill. These
provisions are costing millions of dollars in compliance costs
and subjecting Americans to literally thousands of foreign
laws, regulations, and decrees.
It is now 5 years later, and it is time to examine whether
this law has had its intended effect of reducing, if not
stopping, the importation of illegally harvested timber and
products made from such wood. It is also time to ask what is
the benefit of having U.S. importers and small businesses fill
out tens of thousands of plant and plant product declaration
forms at a cost of hundreds of millions of dollars, when these
forms are not shared, have not been used to initiate a single
investigation, and not even being reviewed? There must be a
better way to collect this information in a more effective
manner.
On panel one we have representatives from the Animal and
Plant Health Inspection Service and the Fish and Wildlife
Service. I am interested in finding out the status of the
Section 8204 report on the cost of legal plant imports and the
extent of illegal logging and trafficking, which was to be
submitted to the Congress no later than November 22, 2010;
whether the agencies plan to issue regulations affecting
products manufactured prior to May 22, 2008, or containing a de
minimis amount of Lacey Act products; and whether there are any
ongoing efforts to establish and maintain a data base of
foreign laws.
On panel two I am looking forward for specific evidence--
not anecdotal examples, hearsay comments, or rumors--but proof
that these amendments have stopped or at least reduced the
amount of illegal wood entering the international market. In
addition, I would like to find out about alternative
information collection methods besides the declaration form
which may be more cost-effective; whether the Federal
Government should be required to establish and maintain a
comprehensive list of foreign laws; what problems are created
by an innocent owner defense; and what changes this Congress
should consider to the 2008 amendments.
At this time I am happy to welcome back to the Subcommittee
the Ranking Minority Member from the Commonwealth of Northern
Mariana Islands, Congressman Sablan, for any opening remarks or
statements that he would like to make.
[The prepared statement of Dr. Fleming follows:]
Statement of The Honorable John Fleming, Chairman, Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs
Good morning, Today, I am holding what I hope will be the first in
a series of hearings on various provisions of the Lacey Act. It is
appropriate to start this oversight by closely examining the most
significant and some would say contentious changes to this Act in
almost forty years.
The expansion of the Lacey Act to include all plant and plant
products was signed into law on May 22, 2008. The full House was never
given the opportunity to debate or amend the 2008 Lacey Act Amendments.
The language was added in the Senate as a floor amendment to the 700-
page 2008 Farm Bill. These provisions are costing millions of dollars
in compliance costs and subjecting Americans to literally thousands of
foreign laws, regulations and decrees.
It is now five years later and it is time to examine whether this
law has had its intended effect of reducing, if not stopping, the
importation of illegally harvested timber and products made from such
wood.
It is also time to ask what is the benefit of having U. S.
importers and small businesses fill-out tens of thousands of Plant and
Plant Product Declaration Forms at a cost of hundreds of millions of
dollars, when these forms are not shared, have not been used to
initiate a single investigation and not even being reviewed. There must
a better way to collect this information in a more effective manner.
On Panel 1, we have representatives from the Animal and Plant
Health Inspection Service and the Fish and Wildlife Service. I am
interested in finding out the status of the Section 8204 Report on the
cost of legal plant imports and the extent of illegal logging and
trafficking, which was to be submitted to the Congress no later than
November 22, 2010; whether the agencies plan to issue regulations
affecting products; manufactured prior to May 22, 2008 or containing a
``de minimis'' amount of Lacey Act products and whether there are any
ongoing efforts to establish and maintain a database of foreign laws.
On Panel 2, I am looking for specific evidence--not anecdotal
examples, hearsay comments or rumors--but proof that these amendments
have stopped or at least reduced the amount of illegal wood entering
the international market. In addition, I would like to find out about
alternative information collection methods besides the declaration form
which may be more cost effective; whether the federal government should
be required to establish and maintain a comprehensive list of foreign
laws; what problems are created by an innocent owner defense; and what
changes this Congress consider to the 2008 Amendments.
At this time, I am happy to welcome back to the Subcommittee, the
Ranking Minority Member from the Commonwealth of the Northern Marina
Island, Congressman Sablan for any opening statement he would like to
make.
______
STATEMENT OF THE HON. GREGORIO KILILI CAMACHO SABLAN, A
DELEGATE IN CONGRESS FROM THE TERRITORY OF THE NORTHERN MARIANA
ISLANDS
Mr. Sablan. Well, thank you very much, Mr. Chairman. And I
would like to welcome all of our witnesses and our guests this
morning. Today we will discuss the Lacey Act, our most
comprehensive Federal law to combat natural resources crime.
The 112-year-old law is one of the most powerful
protections we have for natural resources in the United States,
and the most effective tool that we have for conserving
important wildlife and habitat abroad. Majestic species like
tigers, rhinos, elephants, and apes captivate the human
imagination. Yet they face multiple threats around the world.
Although these animals are not native to the United States,
Americans have consistently supported measures protecting these
iconic animals in their natural habitat.
For example, grants from the multi-national Species
Conservation Funds supplements the efforts of developing
countries to control illegal poaching, reduce human-wildlife
conflict, and protect essential habitat. While these grants
play an integral part in species protection, the global trade
in illegal wildlife is still estimated to be worth between $20
and $25 billion, annually.
Last Congress the Natural Resource Committee Majority
pushed ill-conceived legislation that would have lowered Lacey
Act penalties and taken firearms out of the hands of
conservation police officers, clearing a path for organized
crime syndicates to increase wildlife poaching and trafficking
on the black market. The Committee's Majority also promoted a
bill last Congress to roll back the important 2008 Lacey Act
amendments that deal with plants and plant products.
Fortunately, that legislation failed.
I hope that today's hearing does not mark the beginning of
another such effort to weaken this important law. Rather, this
Subcommittee should be taking an honest look at the successes
of the law and areas that need to be improved, including
whether or not the Federal agencies with responsibility for the
Lacey Act are getting the resources they need.
It is clear that vulnerable wildlife species will not
recover as long as their habitats continue to be destroyed. The
2008 amendments to the Lacey Act address this deficiency by
cracking down on the importation of illegally logged wood,
where many of these species live.
These provisions also protect people and their livelihoods.
The loss of foreign resources have been found to directly
affect the livelihood of 90 percent of the 1.2 billion people
living in extreme poverty, worldwide.
It is estimated that between 50 to 90 percent of all
logging in key-producing tropical countries is illegal.
Importantly, the Lacey Act helped reduce illegal logging by at
least 22 percent globally, with reductions as high as 50 to 70
percent in some key countries.
Illegal logging also affects domestic jobs. Prior to
passage of the 2008 amendments, timber industries in the United
States were forced to compete with countries that illegally log
in national parks, avoided duties and taxes, and paid little or
nothing for raw materials. These unfair practices caused a
domestic timber industry $1 billion a year, which directly
translates to a decrease in American jobs. For that reason, a
broad coalition of U.S. timber harvesters, manufacturers,
retailers, musicians, and conservation groups combined their
efforts to defend the Lacey Act last year.
It is telling that the Lacey Act has been examined and
unanimously agreed-upon by Congress on a bipartisan basis
multiple times over the last 112 years. The Lacey Act is
working to invigorate U.S. businesses and protect human rights
and the environment around the world. The 2008 amendments level
the playing field for U.S. timber, protect the private property
rights of crime victims, and respect the laws of countries that
have an interest in ensuring responsible and beneficial use of
their natural resources, and they should remain part of the
Lacey Act.
Thank you very much, and I look forward to hearing from our
witnesses.
[The prepared statement of Mr. Sablan follows:]
Statement of The Honorable Gregorio Kilili Camacho Sablan, Ranking
Member, Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs
Thank you, Mr. Chairman and welcome to all our guests.
Today we will discuss the Lacey Act, our most comprehensive federal
law to combat natural resources crime. This 112-year-old law is one of
the most powerful protections we have for natural resources in the
United States, and the most effective tool we have for conserving
important wildlife and habitat abroad.
Majestic species like tigers, rhinos, elephants and apes captivate
the human imagination, yet they face multiple threats around the world.
Although these animals are not native to the United States, Americans
have consistently supported measures to invest in protecting these
iconic animals in their natural habitat. For example, grants from the
Multinational Species Conservation Funds supplements the efforts of
developing countries to control illegal poaching, reduce human-wildlife
conflict, and protect essential habitat. While these grants play an
integral part in species protection, the global trade in illegal
wildlife is still estimated to be worth between $5 and $20 billion
annually.
Last Congress, the Natural Resources Committee Majority pushed ill-
conceived legislation that would have lowered Lacey Act penalties and
taken firearms out of the hands of conservation police officers,
clearing a path for organized crime syndicates to increase wildlife
poaching and trafficking on the black market. This Committee's Majority
also promoted a bill last Congress to roll back the important 2008
Lacey Act amendments that deal with plants and plant products.
Fortunately that legislation failed. I hope that today's hearing does
not mark the beginning of another such effort to weaken this important
law. Rather, this subcommittee should be taking an honest look at the
successes of the law and areas that need to be improved, including
whether or not the federal agencies with responsibility for the Lacey
Act are getting the resources they need.
It is clear that vulnerable wildlife species will not recover as
long as their habitats continue to be destroyed. The 2008 amendments to
the Lacey Act addressed this deficiency by cracking down on the
importation of illegally logged wood, thus protecting the forest
ecosystems where many of these species live. These provisions also
protect people and their livelihoods. The loss of forest resources has
been found to directly affect the livelihood of 90 percent of the 1.2
billion people living in extreme poverty worldwide. It is estimated
that between 50 and 90 percent of all logging in key producing tropical
countries is illegal. Importantly, the Lacey Act has helped reduce
illegal logging by at least 22 percent globally, with reductions as
high as 50 to 70 percent in some key countries.
Illegal logging also affects domestic jobs. Prior to passage of the
2008 amendments, timber interests in the United States were forced to
compete with countries that illegally logged in national parks, avoided
duties and taxes, and paid little or nothing for raw materials. These
unfair practices cost the domestic timber industry a billion dollars a
year, which directly translates into a decrease in American jobs. For
that reason, a broad coalition of U.S. timber harvesters,
manufacturers, retailers, musicians, and conservation groups combined
their efforts to defend the Lacey Act last year.
It is telling that the Lacey Act has been examined and unanimously
agreed upon by Congress on a bipartisan basis multiple times over the
last 112 years. The Lacey Act is working to invigorate U.S. businesses
and protect human rights and the environment around the world. The 2008
amendments level the playing field for U.S. timber, protect the private
property rights of crime victims, and respect the laws of countries
that have an interest in ensuring responsible and beneficial use of
their natural resources, and they should remain part of the Lacey Act.
Thank you and I look forward to hearing from our witnesses.
______
Dr. Fleming. The gentleman yields his time. Thank you.
Before we go to the panel, the Chairman asks unanimous consent
that the gentleman from Maryland, Dr. Harris, be allowed to sit
with the Subcommittee and participate in the hearing.
[No response.]
Dr. Fleming. Hearing no objection, so ordered.
We will now hear from our first panel of witnesses, which
includes Ms. Rebecca Bech, Deputy Administrator, Plant
Protection Quarantine, Animal and Plant Health Inspection
Service; and Mr. Stephen Guertin, Deputy Director of the U.S.
Fish and Wildlife Service.
Your testimony will appear in full in the hearing record,
so I ask that you keep your oral statements to 5 minutes, as
outlined in our invitation letter to you, and under Committee
Rule 4(a).
Our microphones are not automatic, so please press the
button when you are ready to begin, and make sure that the tip
is close to you so we can hear.
Timing lights are very simple. You have 5 minutes. You are
on the green light for 4 minutes. You will be under yellow
light, caution light, for the last minute. And when it turns
red, we ask that you please conclude your remarks.
Ms. Bech, you are now recognized for 5 minutes to present
your testimony of the Animal and Plant Health Inspection
Service.
STATEMENT OF REBECCA BECH, DEPUTY ADMINISTRATOR, PLANT
PROTECTION AND QUARANTINE, ANIMAL AND PLANT HEALTH INSPECTION
SERVICE, U.S. DEPARTMENT OF AGRICULTURE
Ms. Bech. Yes, thank you. Dear Mr. Chairman and members of
the Subcommittee, thank you for the opportunity to testify at
today's hearing on implementation of the 2008 farm bill
amendments of the Lacey Act. I am Rebecca Bech, Deputy
Administrator of Plant Protection and Quarantine, a program
within USDA's Animal and Plant Health Inspection Services.
APHIS has a broad mission that includes protecting U.S.
animal and plant health, administering the Animal Welfare Act,
and carrying out wildlife damage management activities. APHIS's
responsibilities were further broadened with the passage of the
2008 farm bill, which amended the Lacey Act by expanding its
protections to a broader range of plant and plant products.
Over the past 5 years, our agency has focused on
implementing our piece of the Lacey Act amendments, the
Declaration Requirement, while continuously working with our
stakeholders to carry out Congress's direction in a common-
sense way.
Since we last testified before this Subcommittee 1 year
ago, we have made progress on several regulatory and
administrative fronts to further refine the requirements of the
Act and ease the burden on industry, while enhancing our
ability to collect and analyze declaration data. Our goal
remains to implement the declaration requirement in a way which
is consistent with the statutory requirements protective of the
environment and natural resources, and manageable for the
regulated community.
Now, since 2009, APHIS has received approximately 1.8
million import declarations, or about 40,000 per month.
Estimates indicate the full enforcement of the Act would result
in over 1 million import declarations per month. Given the
scope, the inter-agency group has decided to phase in the
enforcement of the declaration requirements, gradually adding
categories of products to give affected industries and agencies
time to comply and help ensure the legal trade would not be
unintentionally or unnecessarily disrupted.
To date we have implemented four phases for plant
declarations, and will provide a minimum of 6 months' notice to
the public before any other phases are implemented. APHIS has
implemented the Lacey Act amendments and we have been faced
with a number of challenges, particularly in regard to the
scope of the provisions. We found that we can use existing
regulatory and administrative flexibilities to deal with a
number of these challenges.
For example, APHIS has drafted a final rule defining common
food crop and common cultivar, and intends to publish it in the
near future. This will clarify the existing statutory exclusion
and eliminate approximately 500,000 imports per month.
Additionally, APHIS has initiated a rulemaking process to
develop de minimis exclusions which would provide industry cost
and time savings by eliminating the need for declarations of
products comprised of minimal plant material. We published an
advance notice of proposed rulemaking in June 2011, and we are
using this feedback received through this process to move
forward with rulemaking.
To address the concerns raised regarding goods manufactured
to the effective date of 2008, APHIS published guidance on
declaring pre-amendment wood. And under this guidance, if
importers of items manufactured entirely before the effective
date are unable, through the exercise of due care, to determine
the genus of the species of the plant materials contained in
the item, the importer can then use a special designation pre-
amendment. We have also implemented other special use
designations, and will continue to provide a way for the public
to propose other special use designations.
A new development I would like to mention is a web-based
solution we call our LAWGS. It is the Lacey Act Web Government
System. We are developing LAWGS to help eliminate the need for
the paper-based declaration, and provide an electronic
alternative for collecting and maintaining declarations. Having
this IT structure will help the Agency analyze and monitor the
declarations for compliance. To fund our Agency's
implementation of the Act, we received $775,000 in 2012, the
first time the Agency received appropriated funds. And in 2013,
$716,000. We are requesting $1.445 million for 2014.
Mr. Chairman, thank you for the opportunity to testify
today. I assure you that APHIS will continue to implement the
2008 amendments, balancing the legitimate needs of industry
with the requirements of the Act. For this to be a successful
effort, APHIS will continue its commitment to listening to the
public, business, and industry, seeking their input, and
implementing the Act in a way that addresses their concern in
the best possible way, while still following the direction of
Congress.
I would be happy to answer any questions. Thank you.
[The prepared statement of Ms. Bech follows:]
Statement of Rebecca Bech, Deputy Administrator, Animal and Plant
Health Inspection Service, U.S. Department of Agriculture
Dear Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to testify at today's hearing on
implementation of the 2008 Farm Bill amendments to the Lacey Act. I am
Rebecca Bech, Deputy Administrator of the Plant Protection and
Quarantine Program within USDA's Animal and Plant Health Inspection
Service (APHIS).
APHIS has a broad mission that includes protecting U.S. animal and
plant health, administering the Animal Welfare Act, and carrying out
wildlife damage management activities. These efforts support the
overall mission of USDA: to protect and promote food, agriculture, and
natural resources. The Food, Conservation, and Energy Act of 2008, more
commonly known as the 2008 Farm Bill, amended the Lacey Act (16 U.S.C.
3371 et seq.) by expanding its protections to a broader range of plants
and plant products (Section 8204, Prevention of Illegal Logging
Practices) and requiring APHIS to implement the import declaration
requirement for those products.
The Administration is fully supportive of the 2008 amendments. Over
the past five years, our Agency has focused on implementing our piece
of the Lacey Act amendments--the declaration requirement--while
continuously working with our stakeholders to carry out Congress'
direction in a common sense way. Since we last testified before this
Subcommittee one year ago, we have made progress on several regulatory
and administrative fronts to further refine the requirements of the Act
and to ease the potential burden on industry, while enhancing our
ability to collect and analyze declaration data, all of which I will
discuss in more detail. While our focus is on the declaration
requirement, we are part of the broader Lacey Act interagency group
tasked with implementing the provisions of the Act, which includes
representatives from the U.S. Forest Service, U.S. Department of
Homeland Security's Customs and Border Protection (CBP), U.S. Trade
Representative, U.S. Department of Justice (DOJ), U.S. Department of
State, U.S. Fish and Wildlife Service (FWS), the Council on
Environmental Quality, and the U.S. Department of Commerce.
APHIS' Implementation of the Declaration Requirement--A Phased-In
Approach
In implementing the amendments, it was important that we take into
account the large and diverse quantity and value of imported products
that require a declaration under the Lacey Act; goods containing plant
material are included in at least 59 of the 99 chapters of the
Harmonized Tariff Schedule of the United States (HTS), encompassing an
estimated 5,000 types of goods. Additionally, estimates indicate that
full enforcement of the Act would result in over 1 million import
declarations per month. Given this scope, the interagency group decided
to phase in enforcement of the declaration requirement, gradually
adding categories of products that require a declaration, to give
affected industries and agencies time to comply and to help ensure that
legal trade would not be unintentionally or unnecessarily disrupted.
To date, APHIS has implemented four phases for plant declarations,
encompassing 447 HTS codes. The interagency group identified categories
of goods to be included in each of these phases that were relatively
less complex goods for which the required declaration information
should be more readily available.
APHIS introduced the latest phase of the implementation schedule in
April 2010. Since that time, the Agency has focused on soliciting input
from the public on ways to improve the administration of the 2008
amendments, development of the common food crop and common cultivar
rule, the analysis and working towards the completion of the required
report to Congress, as well as discussions on how to deal with the
administrative challenges of implementing the Act. While APHIS has not
yet announced additional phases as part of the implementation process,
the Agency has had interdepartmental discussions about what types of
additional products and corresponding HTS codes could be included in
the next phase of enforcement that meet the goals of the Act while
presenting the least potential burden on legitimate trade and the
Agency. Consistent with a Notice APHIS published on February 3, 2009 in
the Federal Register, the Agency still commits to provide a minimum of
six months' notice before further phases are implemented.
Using Regulatory and Administrative Flexibilities to Refine the
Requirements
As APHIS has implemented the Lacey Act amendments, we have been
faced with a number of challenges, particularly in regard to the scope
of the provisions. While the Act directs us to provide legislative
recommendations to Congress to assist in the identification of plants
imported in violation of the amendments, we have found that we can use
existing regulatory and administrative flexibilities to deal with a
number of the challenges we have encountered.
On the regulatory front, APHIS is moving forward with two
regulations to further refine the requirements of the Lacey Act
amendments. First, the Agency plans to complete the rule defining
``common food crop'' and ``common cultivar,'' which will greatly
benefit industry, by clarifying the existing statutory exclusions and
excluding large numbers of products from the declaration requirement.
Common food crops would include plant material, such as fruits,
vegetables, and grains. Common cultivars would include plant material,
such as cotton. Any plant material imported into the United States that
falls under either definition would not be considered a ``plant'' under
the Lacey Act, and would not be subject to the requirements of the Act.
On August 4, 2010, APHIS published a proposed rule in the Federal
Register to establish definitions for these terms, and later extended
the comment period at the request of stakeholders. Under the proposed
rule, these exclusions would cover approximately 500,000 imports per
month. APHIS has drafted a final rule and intends to publish it in the
near future to provide greater clarity to regulated entities.
Second, APHIS has initiated the rulemaking process to develop de
minimis exclusions, which would provide industry cost and time savings
by eliminating the need for declarations of products comprising of
minimal plant material. In June 2011, the Agency published an Advance
Notice of Proposed Rulemaking soliciting input on such an exception,
particularly in regard to developing a de minimis standard for the
amount of plant material that must be present in a product for the
declaration requirement to apply. We are using the feedback received
through this process as we move forward with rulemaking.
Administratively, APHIS has been able to streamline data
requirements for the declaration form and address concerns about the
resulting costs to industry to provide that information. The Agency has
implemented Special Use Designations (SUD) to help importers expedite
their reporting of various wood products. For example, APHIS has made a
SUD available for one type of common trade grouping, Spruce Pine Fir
(SPF), an acceptable industry short-hand that signifies a larger group
of species that may otherwise be difficult to differentiate from one
another. Additionally, we have developed SUDs for importers of other
plant products, such as products containing composite, recycled, or
reused plant materials. Given the positive feedback we have received on
this initiative, APHIS has now implemented a formal process for
stakeholders to propose special use designations for other species
groupings, and is currently reviewing recommended suggestions for
possible inclusion.
Another area of interest has been goods manufactured prior to the
effective date of the 2008 amendments. APHIS has published guidance on
these goods, consistent with comments received through the June 30,
2011, Advance Notice of Proposed Rulemaking that included a section on
declaring pre-Amendment wood. Under this guidance, if importers of
items manufactured entirely prior to May 22, 2008, are unable through
the exercise of due care to determine the genus or species of the plant
materials contained in that item, the importer can use the SUD
``PreAmendment.'' In addition, we are working with other interagency
group members to explore other possible policies to address such plant
products manufactured prior to 2008.
Improving Data Collection and Use
Since 2009, APHIS has received approximately 1.8 million import
declarations. Of this total, approximately 40,000 declarations are
filed per month, and approximately 15 percent of these declarations are
submitted on paper forms that require significant resources to analyze
and store securely. Prior to fiscal year 2012, APHIS had not received
funding specific to the implementation of the Lacey Act; however, we
are now able to dedicate resources to address the administrative
challenge of paper declarations. The Agency is developing a web-based
solution to help eliminate the need for paper-based declarations and
provide an easier electronic alternative for collecting and maintaining
declarations. The system, Lacey Act Web Governance System, or LAWGS,
will provide another alternative to importers for filing declarations
(as importers currently go through a licensed customs broker or fill
out a paper declaration) and allow APHIS to be more responsive to
importers' needs. In addition, an information technology infrastructure
will help the agency to analyze and monitor these declarations for
compliance with the Act. We have completed Phase 1 development of LAWGS
and conducted our first webinar for industry on its use in March 2013.
We anticipate piloting the system this summer before full
implementation this fall.
Additionally, APHIS continues to work with U.S. Customs and Border
Protection (CBP) on improvements to data transmission by importers into
CBP systems. APHIS and CBP are collaborating to strengthen the guidance
and streamline the process importers need to file Lacey Act declaration
information in CBP's electronic system for Participating Government
Agencies (PGA's). The PGA Message Set is a single, harmonized set of
importer information collected by CBP as part of Customs and Trade
Automated Interface Requirements.
APHIS has also acquired new software to improve the Agency's
ability to monitor and analyze Lacey Act data from the import
declarations. When the system is fully operational, the Agency will be
able to create sets of reports to aid in accountability and to perform
regular compliance checks of the data. It will allow the Agency to
easily target problem shipments and repeat offenders, helping to ensure
compliance with the 2008 amendments. It is important to clarify that
APHIS' enforcement role only pertains to the declaration requirement.
When we notice errors or discrepancies on the declaration forms, we
work with importers to educate them about how to comply with the Act.
However, APHIS makes declaration forms available to the enforcement
agencies should they be needed for investigations. DOJ requested and
APHIS provided full electronic declaration data available during 2009-
2011. More recently, DOJ, FWS, and CBP enforcement officials requested
and APHIS coordinated the delivery of information related to almost
3,000 electronic Lacey Act declarations in support of their
investigations.
Outreach and Collaboration
Since the enactment of the 2008 amendments, the U.S. Government has
undertaken substantial public outreach efforts, both domestically and
internationally, to inform and educate importers, producers, suppliers,
and foreign governments on the requirements of the Lacey Act. APHIS
leads Lacey Act outreach efforts in the United States. Serving as the
public's primary point of contact on the Lacey Act, APHIS:
Maintains a dedicated Web site (http://
www.aphis.usda.gov/plant_health/lacey_act/), which contains extensive
Lacey Act materials and updated guidance on how to comply.
Answers dozens of telephone and email inquiries monthly
from members of the public seeking guidance on the Lacey Act.
Along with its federal partners, meets with and educates
industry trade groups, professional forestry organizations, non-
governmental organizations, legal professionals, companies, other U.S.
Government agencies, and foreign government officials and industry
officials.
Developed a Lacey Act primer to educate importers on
APHIS' role in implementation of the Act, and provided it to industry
and on our Web site.
We also recognize the critical role that the public and industry
have in informing the process as we continue implementation of the
Lacey Act amendments. Throughout implementation, APHIS has actively
solicited comments from the public on how best to administer the
program to balance the needs of businesses and industry with the need
to meet the goals of the Act and implement the statutory requirements.
For example, several times, APHIS adjusted the phased enforcement
schedule to address concerns raised by businesses and industry
associations. Beyond that, APHIS, in its Federal Register notices, has
solicited comments on other issues related to Lacey Act implementation.
For example, the special use designations discussed above resulted in
part from a recommendation that APHIS develop a list of shorthand
designations that would satisfy the genus and species requirement. Many
stakeholders also raised the need for a de minimis exemption to the
declaration requirement, which, as was previously mentioned, we are
addressing. APHIS has also heard regularly from luthiers who
manufacture artisan stringed instruments using stores of tropical
hardwoods that were imported before the 2008 amendments, and we have
provided guidance to clarify requirements and address their concerns.
APHIS again sought public comment through a notice in the Federal
Register on February 28, 2011, consistent with the requirement in the
2008 amendments that the Secretary provide public notice and an
opportunity for comment before conducting a review of implementation of
the amendments. The comments received in response to that notice, as
well as comments received in response to earlier Federal Register
notices relating to the implementation of the 2008 amendments, have
been taken into account in the preparation of the Act's required report
to Congress. I apologize for the delays in completing this report and
providing it to your Committee. As we have developed the report, we
felt it was important that it reflect input received from stakeholders
and the other Federal agencies interested in the 2008 amendments, and
that process has taken some time.
Cost of Implementation
As part of the rulemaking process for the common food crop and
common cultivar rule, the Agency developed an economic analysis that
included the estimated cost of compliance of the declaration
requirement. Our economic analysis estimates that these exemptions
could save industry and the government between $900,000 and $2.8
million per year just for the five percent of products that is
excluded.
To fund our Agency's implementation of the Lacey Act, APHIS
received $775,000 in FY 2012--the first time the Agency received
appropriated money for the program. In FY 2013, the Agency received
$716,000 and we are requesting $1.445 million for FY 2014. This funding
has been and will be used for full-time staff, recordkeeping and secure
storage for paper declarations, education and outreach, and continued
development of the LAWGS database and other tools.
Mr. Chairman, thank you for the opportunity to testify today. I
assure you that APHIS will continue to implement the 2008 amendments
balancing the legitimate needs of industry with the requirements of the
Act. For this to be a successful effort, APHIS will continue its
commitment to listening to the public, business and industry, seeking
their input and implementing the Act in a way that addresses their
concerns in the best possible way, while still following the direction
of Congress.
______
Dr. Fleming. Thank you, Ms. Bech.
And now, Mr. Guertin, you have 5 minutes.
STATEMENT OF STEPHEN D. GUERTIN, DEPUTY DIRECTOR, U.S. FISH AND
WILDLIFE SERVICE
Mr. Guertin. Good morning, Chairman Fleming, Ranking Member
Sablan, and members of the Subcommittee. I am Steve Guertin,
Deputy Director of the U.S. Fish and Wildlife Service. Thank
you for the opportunity to testify before the Subcommittee
today.
The Lacey Act prohibits trafficking in illegally taken
fish, wildlife, and plants. Its premise is simple, but
effective. People who take wildlife in violation of a State,
Federal, tribal, or foreign law, and then engage in interstate
commerce with the wildlife, are violating Federal law.
The Lacey Act provides a deterrent to wildlife trafficking
through criminal penalties. It gives law enforcement officers
the tools to conduct investigations, make arrests, and protect
themselves from criminals. The service is one of the lead
Federal agencies for enforcing the Lacey Act. Our law
enforcement agents' efforts to stop wildlife smuggling put them
against organized criminal networks conducting high-profile,
black-market----
Dr. Fleming. Mr. Guertin, would you suspend for a moment?
Would you pull that microphone closer? We have some bagpipes in
the background, which I really enjoy, but unfortunately, I
can't fully hear what you are saying.
Thank you. Go ahead.
Mr. Guertin. Thank you, Chairman. I never testified with
theme music before, either.
However, the Service's 216 special agents work on over
13,000 investigations each year involving complex crimes that
target highly endangered species such as elephants, rhinos,
tigers, and sea turtles, as well as domestic species managed by
States, such as bears, turtles, and paddlefish. We also have
136 wildlife inspectors who are our front-line defenders in
combating illegal trade in wildlife and wildlife products.
Congress has amended the Lacey Act many times since 1900.
In 2008, stronger protections were added for plants, notably
timber. Simply put, the plant amendments will bring plants
under the same standards as all wildlife species that have been
protected by the Lacey Act for over the last 100 years. The
2008 plant amendments were supported by a broad coalition of
trade associations, environmental organizations, and unions.
The Service is working with our Federal partners to implement
the 2008 plant amendments. These amendments provide relatively
new statutory authority, and agencies are working on their
implementation.
The declaration requirement is being implemented in phases,
in order to minimize any undue effects on trade in illegal wood
products. The Service is currently working with APHIS to
finalize a rule to define the terms ``common cultivar'' and
``common food crop,'' which are exempt from Lacey Act plant
requirements.
Providing clear definitions for these terms will facilitate
continued legal trade in these plant species. The
Administration is exploring other possible policies to address
plant products manufactured prior to 2008. APHIS has provided
almost 3,000 declarations to the Service, Customs, and Border
Protection, and the Department of Justice, in support of
enforcement Agency investigations.
Service special agencies are currently pursuing three
investigations of potential violations of the 2008 plant
amendments. A recent case involving a domestic guitar
manufacturer ended last August with a criminal enforcement
agreement in which the firm accepted responsibility for illegal
actions.
Congress can improve the 2008 plant amendments by making
sure that the agencies tasked to enforce them have the
resources to do so. The Service cannot fully allocate the
resources needed to pursue the international organized crime we
know to exist in this arena without pulling resources from
other enforcement responsibilities. The number of Service law
enforcement officers has remained essentially the same since
1978. Due to sequestration, we are not able to hire a new class
of 24 law enforcement officers in Fiscal Year 2013.
In contrast, illegal trade has grown in sophistication. The
global economy for wildlife products has expanded. And new law
enforcement mandates have been enacted. Congress can also
strengthen the Service's position to address trans-national
wildlife and timber trafficking by supporting our plans to
station senior special agent international attaches in key
regions overseas, including Asia, Africa, and South America.
Wildlife trafficking is increasing, becoming a
transnational crime involving illicit activities in two or more
countries and often two or more global regions. Cooperation
between nations is essential to combat this crime. The 2008
Lacey Act amendments were a significant environmental
accomplishment.
We appreciate your Subcommittee holding this hearing to
learn about the progress being made to implement the plant
amendments and to evaluate their effectiveness. We look forward
to continuing to work with the Subcommittee on this issue, and
we would be pleased to answer any further questions you or the
Members may have. Thank you.
[The prepared statement of Mr. Guertin follows:]
Statement of Stephen D. Guertin, Deputy Director, U.S. Fish and
Wildlife Service, Department of the Interior
Good morning Chairman Fleming, Ranking Member Sablan, and Members
of the Subcommittee. I am Stephen Guertin, Deputy Director for the U.S.
Fish and Wildlife Service (Service), in the Department of the Interior
(Department). I appreciate the opportunity to testify before you today
to provide an update on implementation of the 2008 plant amendments to
the Lacey Act. Simply put, the plant amendments bring plants under the
same standards as all wildlife species that have been protected by the
Lacey Act for the last hundred years.
The Service is one of the lead federal agencies for enforcing the
Lacey Act (16 U.S.C. Sec. Sec. 3371-3378), a long-standing law that
prohibits trafficking in illegally taken fish, wildlife, and plants.
The Service also enforces many other U.S. laws that protect wildlife,
including the Endangered Species Act, the Marine Mammal Protection Act,
and the Migratory Bird Treaty Act. The Lacey Act complements and
strengthens our ability to enforce these and other statutes. The Lacey
Act also strengthens our ability to enforce the provisions of the
Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES), an international treaty signed by 178 countries,
including the United States, to prevent species from becoming
endangered or extinct because of unregulated international trade.
The Service's 216 special agents work on some 13,000 investigations
each year involving complex, high-impact wildlife crimes. These
wildlife crimes include highly endangered species such as elephants,
rhinos, tigers, and sea turtles; rainforests in the tropics; wildlife
habitat in the United States; and native species like bears, ginseng,
turtles, and paddlefish that are poached in violation of state laws.
Our agents' efforts to stop wildlife smuggling pit them against
transnational organized networks and criminals conducting high-profit,
black market trade valued in the billions of dollars. Our agents are
responsible for covering the nearly four million square miles of land
that make up this country. They are an extraordinary group of public
servants focused on combating illegal taking and trafficking of
wildlife, plants and wildlife and plant products in the United States.
We have 136 wildlife inspectors stationed at 38 of the more than
400 U.S. Customs ports of entry throughout the country. Last year they
processed approximately 187,000 declared shipments of wildlife and
wildlife products worth more than $4.4 billion, supporting jobs and
economic development for businesses large and small. Wildlife
inspectors are also our front line defenders in combating illegal trade
in wildlife and wildlife products. They utilize the Lacey Act to help
stop the import of injurious species that could devastate our native
ecosystems and industries if illegally imported or smuggled into the
country.
The Service also employs 393 Federal Wildlife Officers who serve as
the uniformed police force and conservation officers for the 561
National Wildlife Refuges and 38 Wetland Management Districts in the
United States and territories, comprising approximately 150 million
acres of the National Wildlife Refuge System (NWRS). They also
regularly conduct enforcement operations off of NWRS lands enforcing
the provisions of the Migratory Bird Treaty Act. These officers perform
the full range of law enforcement duties, including patrols,
surveillance, investigations, apprehensions, participation in raids,
detentions, seizures and arrests, and interaction with the judicial
system. In addition to the Service, each of the land managing agencies
within the Department including the National Park Service, Bureau of
Land Management, Bureau of Reclamation and the Bureau of Indian Affairs
enforce the Lacey Act across hundreds of millions of acres of public
and tribal lands.
These agents and officers depend on the Lacey Act to do their work.
The Lacey Act is the single most effective law to protect wildlife and
plants available in the United States. Its prohibitions protect animal
and plant resources from rapacious exploitation here and around the
world. Its penalties make prison sentences and significant fines a real
possibility for hard-core profiteers; reduce financial incentives for
wildlife and plant trafficking; and provide real deterrents for
wildlife crime. Notably, the Lacey Act also supports those businesses
that engage in legitimate wildlife and plant trade here and abroad by
ensuring a level playing field and helping to secure the continued
commercial availability of natural resources needed by U.S. businesses
by supporting domestic and foreign conservation laws. The Lacey Act
shows that our Nation's commitment to wildlife and plant conservation
goes beyond words to encompass action. This law equips law enforcement
officers with the tools they need to conduct investigations and bring
criminals to justice, while leveling the playing field for businesses
that follow the rules.
Historical Background
The Lacey Act was the Nation's first federal wildlife protection
law. Its passage in 1900 was prompted by growing concern about
interstate profiteering in illegally taken game species and the impact
of that trafficking on states and their wildlife resources.
The original law made it illegal to transport from one state or
territory to another wild animals or birds killed in violation of state
or territorial law. According to the House Committee Report from the
56th Congress, its ``most important purpose'' was ``to supplement the
state laws for the protection of game and birds.'' It also banned the
importation of injurious wildlife that threatened crop production and
horticulture in this country. In its original version, the Lacey Act
focused on helping states protect their resident wildlife.
Congress expanded the Lacey Act through amendments several times
during the law's first century. One of the most significant of these
amendments occurred in 1935, when Congress extended the Lacey Act's
prohibitions on interstate commerce to include wildlife and birds taken
in violation of federal or foreign law.
Amendments enacted in 1981 expanded the scope of the statute to:
include certain unlawfully harvested fish; increase penalties for
trafficking; strengthen tools for enforcement; apply prohibitions on
interstate and international trafficking to any type of wild animal;
and extend protection to certain wild plants. The 1981 amendments also
added tribal laws and U.S. treaties to the list of underlying laws
upheld; incorporated strict liability forfeiture provisions consistent
with other resource laws; and established criminal felony liability for
those buying or selling protected specimens of fish or wildlife that
they knew had been taken and transported in violation of an underlying
law.
2008 Plant Amendments
The most recent amendments to the Lacey Act were passed by Congress
and signed into law on June 18, 2008, as part of the Food,
Conservation, and Energy Act of 2008 (Pub. L. 110-246). They expanded
the definition of plants covered by the Act, and similarly expanded and
clarified the predicate violations that could trigger the Lacey Act.
Under the 2008 amendments, it is unlawful to import, export, sell,
receive, acquire or purchase in interstate or foreign commerce any
plant that was taken in violation of a federal, state, tribal or
foreign conservation law. The statute specifies that the underlying
laws that trigger a plant trafficking violation include laws and
regulations that:
Protect the plant;
Regulate the (i) theft of plants, (ii) taking of plants
from a park, forest reserve, or other officially protected area, (iii)
taking of plants from an officially designated area, or (iv) the taking
of plants without, or contrary to, required authorization;
Require the payment of royalties, taxes or stumpage fees
for the taking, possession, transportation or sale of any plant; and
Govern the export or transshipment of plants.
The amendments were supported by the Bush Administration as part of
its Presidential Initiative against Illegal Logging. The initiative
responded to widespread concerns about the environmental and economic
impacts of illegal logging. Both Republicans and Democrats supported
the amendments as a way to protect jobs from unfair and illegal logging
practices.
The Lacey Act plant amendments were supported by more than 50 trade
associations, non-profits, and unions, representing the entire range of
stakeholders, as well as members of both parties in Congress. This
broad support was driven by concerns that illegal logging has a
negative impact on biodiversity, indigenous peoples, the global
climate, and on U.S. businesses that operate by the rules.
In particular, the law received strong support from the U.S. forest
products industry. The 2008 amendments help ensure that all businesses,
including foreign companies that send their goods into this country,
are operating on a level playing field.
The amendments equipped the United States with tools for addressing
timber trafficking and discouraging illegal logging. They provided a
new definition of the term ``plant'' making it clear that (with some
limited exceptions) the prohibitions apply to plant products as well as
whole plants. Specifically, the term ``plant'' was defined as ``any
wild member of a plant kingdom, including roots, seeds, parts, or
products thereof, and including trees from either natural or planted
forest stands.'' The inclusion of ``products'' parallels wildlife
provisions in the Lacey Act, which cover not only live fish and
wildlife, but also products made from them.
The amendments also added a declaration requirement for plant
products. This mandate is similar to the requirement for the
declaration of wildlife imports and exports established by the
Endangered Species Act, which also applies to all wildlife and wildlife
products, whether protected under a specific conservation law or not.
The U.S. Department of Agriculture's Animal and Plant Health
Inspection Service (APHIS), operating within available funding, has
implemented and enforced the amendments with respect to the declaration
process. As in the past, the Fish and Wildlife Service remains
responsible for conducting criminal investigations of Lacey Act
violations, including those authorized by the plant amendments. While
APHIS has long had a role in implementing CITES requirements for plant
trade, the agency was assigned new responsibilities with respect to
developing and implementing a declaration system and collecting and
maintaining the resulting plant import data.
Importance of the Lacey Act
Today the Lacey Act makes it unlawful to traffic in fish, wildlife,
or plants taken, possessed, transported, or sold in violation of
federal, state, foreign, or tribal conservation law, treaty, or
regulation. It allows the United States to help states, Tribes, and
countries worldwide protect their natural resources by discouraging a
U.S. market and U.S. demand for illegally obtained plants and wildlife.
The law is a critical cornerstone for resource protection and
conservation law enforcement.
Under the Lacey Act, Service law enforcement agents expose illegal
guiding operations (i.e., guided hunting trips) profiteering in state,
tribal, and federally protected species and pursue cases involving the
illegal large-scale commercial exploitation of wildlife and plant
resources in violation of state, tribal, or federal law. The Lacey Act
provides a unique mechanism for states and Tribes to address crimes
within their borders by out-of-state or non-tribal guides and hunters
as well as the interstate sale or international export of unlawfully
acquired U.S. wildlife or plants. Such sales fuel the market for
certain species, putting domestic wildlife and plant populations
increasingly at risk. Illegal commercialization of wildlife is a real
and present threat to conservation.
On the international front, the Lacey Act provides an essential
tool for combating large-scale exploitation of natural resources in
developing nations and the subsequent smuggling and interstate commerce
in foreign and shared species protected and regulated under federal
laws, international treaties such as CITES, and the conservation laws
of other countries. Its provisions give the Justice Department access
to powerful enforcement tools which enable the Department to bring
charges against international organized crime rings and criminals who
knowingly and deliberately traffic in the world's most imperiled
species and in its most important natural resources, such as fisheries
and timber. Trafficking in illegally harvested wood, for example, is
estimated to generate proceeds of approximately $10 billion to $15
billion annually worldwide, according to a 2012 report by the World
Bank.
The existence and enforcement of the Lacey Act's foreign law
provisions have made the United States a leader and role model for
countries around the world--particularly those that, like the United
States, have long been major markets for wildlife and plant resources
illegally taken in developing countries that struggle to feed their
people, let alone protect their wildlife, plants, and forests. Through
these provisions, our Nation holds itself accountable for stopping
illegal trade in natural resources involving interests in our country,
and recognizes and supports the efforts of other countries to level the
playing field for legitimate businesses who manage their natural
resources responsibly.
Implementation of the 2008 Plant Amendments
In terms of implementing the 2008 plant amendments, the declaration
requirement is being enforced in phases so as to minimize any potential
undue effects on trade in legal wood products. The Service is currently
working with APHIS to finalize a rule to define the terms ``common
cultivar'' and ``common food crop'', which are excluded from Lacey Act
plant requirements. Providing clear definitions of these terms will
facilitate continued legal trade in these plant species. The Service is
also working with other interagency group members to explore other
possible policies to address plant products manufactured prior to 2008.
APHIS makes Lacey Act plant import declarations available to the
Service, Customs and Border Protection, and the Department of Justice,
upon written request, should they be needed for investigations. APHIS
has provided almost 3,000 declarations pursuant to the 2008 plant
amendments to the Service, Customs and Border Protection, and the
Department of Justice in support of the enforcement agencies'
investigations.
Service special agents are currently pursuing three investigations
of potential violations of the 2008 plant amendments. A recent case
involving the Gibson Guitar Company ended last July with a criminal
enforcement agreement. In the agreement, the firm accepted
responsibility for continuing to purchase rare wood from Madgascar
after Madagascar had banned the sale and export of such wood. Gibson
agreed to over $600,000 in penalties including the forfeiture of wood
imported after implementation of the ban.
The Service has not conducted a comprehensive review of the effect
of the 2008 plant amendments; however, we strongly support this law,
which, in 2011, has been cited by United Nations Agencies and the World
Future Council as one of the world's top three forest conservation laws
in 2011. Congress can improve the 2008 plant amendments by making sure
that the agencies tasked to enforce them have the resources to do so.
The Service cannot fully allocate the resources needed to pursue the
transnational organized crime we know to exist in this arena without
pulling resources from other enforcement responsibilities. The number
of Service law enforcement officers has remained essentially the same
since 1978. Due to sequestration, the Service was not able to hire a
new class of 24 law enforcement officers in fiscal year 2013. In
contrast, illegal trade has grown in sophistication, the global economy
for wildlife products has expanded, and new law enforcement mandates
have been enacted.
Congress can also strengthen the Service's position to address
transnational wildlife and timber trafficking by supporting our plans,
as identified in the President's fiscal year 2014 Budget, to station
senior special agent international attaches in key regions overseas
(including Africa, Asia, and South America) and by working with the
Service to make needed adjustments in laws so that it can be fully
utilized in the investigation and prosecution of international criminal
syndicates. The Service budget request for fiscal year 2014 provides
$68.3 million for the law enforcement program to investigate wildlife
crimes and enforce the laws that govern the Nation's wildlife trade.
Wildlife trafficking is increasingly a transnational crime involving
illicit activities in two or more countries and often two or more
global regions. Cooperation between nations is essential to combat this
crime. Investigations of transnational crime are inherently difficult,
and they become even more so without organizational structures to
facilitate this cooperation. This request of $6.1 million above the
2012 appropriation also includes funding to foster these needed
partnerships to address technical challenges in the science of wildlife
forensics.
The 2008 Lacey Act plant amendments were a significant
environmental accomplishment. We urge Congress to support continued
implementation of this law and to ensure that the United States remains
a leader in the global effort to save forests and protect the planet
and its people.
Conclusion
I would like to thank the Subcommittee for your continued support
for the conservation and protection of fish, wildlife, and plants
throughout the world. Thank you for the opportunity to present
testimony on the 2008 plant amendments to the Lacey Act. I would be
pleased to answer any questions that you may have.
______
Dr. Fleming. OK. Thank you, Mr. Guertin. At this point we
will begin Member questioning of the witnesses. To allow all
Members to participate, and to ensure we can hear from all our
witnesses today, Members are limited to 5 minutes for their
questions. However, if Members have additional questions, we
can have more than one round of questioning. I now recognize
myself for 5 minutes.
My first question--and this is for both panel members--is
what is your definition of legal logging? Yes, go ahead, Mr.
Guertin.
Mr. Guertin. Mr. Chairman, your question is what is my
definition of legal and----
Dr. Fleming. Yes.
Mr. Guertin. And I assume you relate this to legal and
lawful take of wildlife, plant, or animal species, as we are
talking about here today?
Dr. Fleming. Yes.
Mr. Guertin. Yes. It would be in accordance with the rules
and regulations and the laws enforced here in the U.S., and
also those of the international community.
Dr. Fleming. OK. Ms. Bech?
Ms. Bech. I would defer to the definition that he just
gave. We concur with that.
Dr. Fleming. OK. Again, for the panel, can a wood product
be sustainable and illegal?
Mr. Guertin. Mr. Chairman, your question was can a wood
product be sustainable and legal?
Dr. Fleming. Yes.
Mr. Guertin. Yes, sir. It can.
Dr. Fleming. OK. You agree with that, Ms. Bech?
Ms. Bech. Yes, sir.
Dr. Fleming. OK. All right. It is now 2\1/2\ years since
the Animal and Plant Health Inspection Service was required to
submit a report to the Congress characterizing the cost of
legal plant imports and the extent of illegal logging practices
and trafficking. Can you tell me what is the status of this?
Ms. Bech. Yes, sir. I apologize for the delay in completing
this report and providing it to your Committee. We felt like,
in developing the report, it was important to reflect input
received from the stakeholders and the other Federal agencies,
and this has taken some time. We were hoping to have the report
ready today, but I am happy to say that we will be providing
the report to you within the next week.
Dr. Fleming. OK, thank you. Since APHIS has finished its
analysis, what can you share with us in terms of illegal
logging practices and trafficking?
Ms. Bech. Well, our piece of the responsibility in
implementing the Lacey Act is focused on just the declarations.
And we have done some monitoring of the declarations and looked
at the errors in that. The report, however, focuses on the work
that we have done to complete the declarations. And I would
defer, then, to my colleague to see if he has any comment on
the illegal practice of logging.
Dr. Fleming. When you review the declarations, are you just
reviewing them to ensure accuracy, or to see if it complies
with the law?
Ms. Bech. Yes, sir. We are looking at them for any errors,
and to ensure that they are complying with the declaration. We
have referred some declarations that we found to be problematic
to DOJ and the Fish and Wildlife Service. To date, though, we
have done very minimal monitoring. We have had limited
resources. And so we focused initially on helping to educate
and provide outreach, so that people can comply with the
declaration, and that has been our focus.
Dr. Fleming. OK. So the focus--and I am not saying this is
inappropriate--is on accuracy. If you come across issues that
may suggest problems, you refer that.
Ms. Bech. Yes, sir. That is correct.
Dr. Fleming. OK. What is the status of regulations
exempting plant products manufactured prior to May 22, 2008,
and those products containing a de minimis amount of Lacey Act
material?
Ms. Bech. We have implemented what we call a special use
designation pre-amendment. So, for importers who, through due
diligence, have tried to determine the genus and the species,
but they are unable to do that for products that pre-date 2008,
then we allow them to use the special use designation on the
declaration, and then they are in compliance with the
declaration.
As far as de minimis, we are moving forward. We published
an advance notice of proposed rulemaking in 2011 to determine
what the standard would be for de minimis, and we are moving
forward on rulemaking for that now.
Dr. Fleming. Wouldn't it be simpler just to exempt, prior
to May 22nd, things that--it seems problematic to try to make
that difference and deal with that. It is such a gray area. Why
not just exempt those prior to May 22nd?
Ms. Bech. Well, currently, the way the Lacey Act states the
requirement is that there must be a declaration. And so, for us
to exempt something or to say that you don't have to require
the declaration, we don't have the authority, currently, to do
that.
Dr. Fleming. So you would require action from this
Committee, perhaps--Congress itself, then--to fix that problem?
Ms. Bech. Yes, sir. We don't have the authority, currently.
Dr. Fleming. OK, thank you. All right. My time is up. I
yield to Mr. Sablan for 5 minutes for questions.
Mr. Sablan. Well, thank you very much, Mr. Chairman. Let me
start.
Ms. Bech, I share Chairman Fleming's concern on the long-
overdue report the 2008 Lacey Act amendments require. So we
look forward to next week's submission. And we are going to
sort of hold you to your word.
But many wood product importers have applauded your
agency's phasing implementations of goods to be declared. And
your agency took smart steps toward facilitating the
declaration process by phasing in products based on their
degree of processing and complexity of their composition. What
other actions have you taken to facilitate compliance with the
2008 amendments?
Ms. Bech. Well, I mentioned these in my testimony. We,
again, have some special use designations. So this is where
people can look at things that are common, such as fir and
hemlock and Western Cedar, and they can group those together
underneath the special use designation. It is also used for the
pre-amendment, those things that they can't tell genus and
species of products that were done before 2008.
We have done a lot of outreach and education. As we have
reviewed the declaration and we have looked at the errors, we
have gone back to the importers, working with them to correct
these errors. And we are also developing our LAWGS data base,
which is a web-based system. We are hoping that will really
streamline, in particular, the paper declaration process.
Looking at the errors that we have seen, we are developing
drop-down menus to make it easier for people to classify the
plant units and the common names and scientific names.
So, we are providing a lot of these kind of efforts and,
again, a lot of outreach and education.
Mr. Sablan. Thank you. Mr. Guertin from Fish and Wildlife.
From where I am from, it has been sometimes reported that the
United States authority has been, a lot of the time, charging
people with poaching of the Marianas fruit bat. And there is
some truth to that also, because we were concerned that all she
was doing was bringing fruit bat cases to the court. But I must
compliment Fish and Wildlife for doing that, because it is an
endangered species in the Northern Marianas. But we are talking
about logging here now.
So, let me say that the World Bank estimates that illegal
logging accounts for 50 to 90 percent of the volume of forestry
activities in key producer tropical countries, and 10 to 30
percent of all wood traded globally. This tragedy is occurring
even in formerly protected forests.
So, how are the 2008 Lacey Act amendments essential in
reducing global trade in illegal timber? And have they set an
example for other countries? I flew into the island of
Hispanola, and I see that half of the island is large with
forest and the other half is barren because of logging, over-
logging.
Mr. Guertin. Thank you, Congressman. We think that the
amendments are very important, because they tell the world that
the United States will not allow importation of illegally
harvested timber. U.S. businesses dealing in commercial timber
scale imports are responsible for knowing where their timber
comes from, as are other businesses operating in other
environments. The United Nations has cited this law as one of
its foremost forest conservation laws enacted in recent years,
and both the EU and Australia have recently enacted laws that
are very similar to the 2008 amendments to the Lacey Act.
Mr. Sablan. All right. And again, after pushing for
legislation in Congress last year to change the Lacey Act,
while still under investigation by the U.S. Department of
Justice, the Gibson Guitar Corporation signed a criminal
enforcement agreement to avoid further prosecution.
In addition to admitting to knowingly and intentionally
importing wood taken illegally from Madagascar, and agreeing to
fines and forfeitures in excess of $600,000, Gibson was
required to develop a Lacey Act compliance program. Can this
program serve as a model for other wood imports?
Mr. Guertin. Congressman, we think this is a great case
that illustrates why education and outreach to both the timber
and music industries is critical for the Service and all the
Federal partners. Certainly the case and the precedent set by
the Gibson case sent everyone a strong message that the U.S. is
serious about enforcing this law. But we want to focus our
efforts rather on outreach, education, and a proactive
engagement with industry to, rather, tell the good story and
get allies to enlist to work on a common cause toward achieving
the larger policy objective.
Mr. Sablan. Yes, because we need to work together.
Otherwise, from where I come from, we don't have bagpipes that
we just heard earlier, but we have guitars and ukeleles
strumming.
So, Mr. Chairman, my time is up, I yield back.
Dr. Fleming. Thank you. The Chair now recognizes Mr.
Wittman for 5 minutes.
Dr. Wittman. Thank you, Mr. Chairman. Ms. Bech, Mr.
Guertin, thank you so much for joining us today. I want to
begin by getting both of your perspectives on the Lacey Act.
Specifically, can you give me what you believe are the pros and
cons of having the Lacey Act focus on just laws involving
conservation?
Mr. Guertin. Congressman, we are a conservation
organization, so my testimony will be largely focused on that.
But the Lacey Act, in many ways, is where it all began. This
goes back to the 1850s and the whole development of the common
law doctrine that wildlife, fisheries resources, and plants are
there for all American citizens and future citizens to enjoy.
And over the last 150 years, our country has formulated the
North American model of conservation, which puts that premise
at the forefront, that these natural resources are for all
citizens to enjoy now and in the future for future generations,
as well.
And so, these plant amendments have now brought up the take
of plants and timber products and other things like that under
that purview, as well. But it is our guiding principle, as a
conservation organization, to manage for now and future
generations for all citizens to benefit from these natural
resources.
Dr. Wittman. OK. Ms. Bech?
Ms. Bech. USDA supports the aim of the Lacey Act in
protecting natural resources from illegal logging and
harvesting, as well as the role in eliminating unfair
competition. And so we support the amendments and our role in
that in implementing the declaration. Thank you.
Dr. Wittman. OK. Let me ask this. I know that there has
been a number of stories and real-life instances where people
are dealing with the 2008 amendments to the Lacey Act, and
really has a lot of people scratching their heads to say, ``How
in the world are those folks in the regulated community going
to deal with this?''
Can you tell me? What are both of your agencies doing to
help the regulated community deal with these changes to the
Lacey Act in 2008? As you know, for many of them, they have
scratched their heads, they have monumental amounts of
paperwork that they have to go through. And, even then, they
are frustrated to say, ``I have no idea what I need to do to
comply.''
Can you give me your perspective on what you are doing, or
what you need to do, to assist the regulated community?
Ms. Bech. Well, I think first we tried to take an approach
of a phased-in approach, so that we dealt with things that were
very clear that could fall underneath the declaration
requirements, and those that were more complex and more
difficult have come in further phases. And so we are still
continuing with that process.
And we have looked at a lot of the issues initially, and
maybe some of the head-scratching that was going on with how to
comply. That is how we geared our outreach and education. We
have done several things, again, to help with that, and address
these problems. And we have actually found that initially it
took, we estimated, about an hour-and-a-half to fill out the
declaration because it was so new and difficult. And what we
are finding today is we are estimating it is down to about 30
minutes to file the declaration, due to the outreach efforts
that we have done.
And also, I think that the creation of our new data base,
the LAWGS, that is going to be very, very helpful for those
that are still struggling with paper declarations. And so it is
numerous steps like this included in my testimony.
Dr. Wittman. Thank you. Mr. Guertin?
Mr. Guertin. Thank you, Congressman. We are trying to focus
our efforts largely on education and outreach and partnering
with the commercial sector, sending our personnel to trade
organizations and conferences and meetings, outreach seminars,
talking about what the requirements are and how we are trying
to streamline compliance. We are focusing less of our effort on
going after prosecution of individual violations, but rather,
focusing our limited law enforcement, if we need to, on
criminal-level commercial exploitation of these wood products
overseas.
Dr. Wittman. Let me ask you all a couple of questions I
want to try to get in before my time is up. Just simple yes-or-
no answers.
Do you believe that the 2008 amendments to the Lacey Act
are reasonable? Ms. Bech?
Ms. Bech. Yes.
Dr. Wittman. Mr. Guertin?
Mr. Guertin. Yes, Congressman, from our perspective.
Dr. Wittman. Do you believe that there are any changes that
are needed to those amendments in any future reauthorizations?
Ms. Bech?
Ms. Bech. Well, we believe we have the regulatory authority
and flexibility now, with our current administrative processes,
to deal with the challenges.
Dr. Wittman. OK. Mr. Guertin?
Mr. Guertin. We would concur, Congressman. The legislation
could stand, and we could work with the Federal family to
streamline some of the procedural requirements.
Dr. Wittman. So you believe, then, the statutory authority
could be refined in order to make sure that the process is
streamlined?
Mr. Guertin. I don't think we would need to amend the
legislation, Congressman. We could work within the existing
legislation to streamline the processes.
Dr. Wittman. Do you believe that you have achieved that
now, currently, Ms. Bech?
Ms. Bech. I believe that we still have some work to do, and
that as we continue to develop the data base and continue
focusing on some of the issues and challenges we face, we have
other means and flexibility in working with our inter-agency
partners to address those in administrative ways.
Dr. Wittman. Mr. Guertin, quickly, yes or no?
Mr. Guertin. Yes.
Dr. Wittman. OK. Thank you. Mr. Chairman, I yield back.
Dr. Fleming. The gentleman yields back. The Chair now
recognizes Mr. Lowenthal for 5 minutes.
Dr. Lowenthal. Thank you, Mr. Chairman, for holding this
hearing. And thank you to the witnesses for attending today. I
admit, as a new Member, and like many Americans, I was not
familiar with the Lacey Act before coming to Congress. But
after learning about this landmark wildlife protection law, it
quickly became apparent that the Act has broad public support,
from industry to environmental NGO's, because of the effective
job that it has done in protecting American jobs threatened by
the illegal wildlife trade, and in reducing the harvesting of
threatened fauna and flora throughout the world.
For example, I have a letter here that was signed by 55
U.S. forest products companies supporting the Lacey Act. In the
letter from the forest companies it says, ``Our organizations
stand in strong support of the Lacey Act and all that it has
accomplished in addressing the issue of illegal logging
worldwide since its passage in 2008.'' I am talking about the
recent amendments. ``Illegal logging and the threat posed to
the United States in terms of jobs and forest resources by
illegally sourced products throughout the world is being
addressed by the Lacey Act, allowing our industry to compete
fairly in the international market.''
I ask, then, for unanimous consent to place this letter
into the record, Mr. Chair.
Also, the U.S. forest products industry supports the Act
because it helps to create a level playing field for U.S.
forest product companies, preventing them from being undermined
by illegal loggers. This has contributed to a 70 percent
increase in U.S. forest products over the past few years, while
most other global exporters have remained flat, or have
declined, according to the Hardwood Federation. This translates
into more jobs and a stronger U.S. economy.
So, therefore, the Lacey Act has also had a significant
role in reducing illegal global deforestation, which has
contributed to a 22 percent decline in illegal logging,
according to the non-partisan think tank, The Chatham House.
This reduction in illegal logging has helped to combat climate
change by eliminating an estimated one billion tons of
greenhouses gases, an amount nearly equivalent to the annual
emissions from Japan.
I also then ask for unanimous consent to place into the
record a letter supporting the Lacey Act from over 30
environmental groups to the record. These numerous and
substantial benefits explained why the law has such broad-based
support from environmental groups, unions, and industry.
[The letters submitted for the record by Mr. Lowenthal
follows:]
Letter Submitted by the U.S. Forest Products Industry
June 4, 2012
Dear U.S. House of Representatives:
Our organizations stand in strong support of the Lacey Act and all
that it has accomplished in addressing the issue of illegal logging
worldwide since its passage in 2008. We strongly oppose legislation
such as H.R. 3210, The Retailers and Entertainers Lacey Implementation
and Enforcement Fairness Act, H.R. 4171, the Freedom from Over-
Criminalization and Unjust Seizures Act (FOCUS) Act of 2012 which
weaken this important law, and/or the amendments being offered by
Subcommittee Chairman Fleming.
The U.S. forest products industry produces about $175 billion in
products annually and employs nearly 900,000 men and women in good
paying jobs. The industry meets a payroll of approximately $50 billion
annually and is among the top 10 manufacturing sector employers in 47
states. An industry study prior to passage of the 2008 Lacey Act
amendments estimated that illegal logging cost the U.S. forest products
industry some $1 billion annually in lost export opportunities and
depressed U.S. wood prices.
Because of the seriousness of this issue, our industry has worked
within a unique coalition that also includes environmental groups,
labor organizations, retailers and others to amend the Lacey Act, and
to encourage full and timely implementation. The coalition has
continued consensus talks in the U.S. Senate.
The U.S. forest products industry has a proud tradition of
providing sustainable and legal resources to our customers both
domestically and around the world. Illegal logging and the threat posed
to U.S. jobs and forest resources by illegally sourced products
throughout the world is being addressed by the Lacey Act, allowing our
industry to compete fairly in the international market. Please oppose
H.R. 3210 (The RELIEF Act), H.R. 4171 (The FOCUS Act), the Fleming
amendment to H.R. 3210, and other amendments that weaken and undermine
the Lacey Act. We stand ready to work with you and your colleagues on
finding alternative approaches.
Sincerely,
Please See Attached for Full List of Signatures
Action Floor Systems Alabama Missouri Forest Products Assoc.
Forestry Assoc. American Forest & National Alliance of Forest Owners
Paper Assoc.
American Forest Resource Council National Hardwood Lumber Assoc.
American Forest Foundation National Wood Flooring Association
American Hardwood Export Council NewPage Corp.
Anderson Hardwood Floors Northeastern Loggers Assoc.
Appalachian Hardwood Manufacturers Northern Hardwoods
Inc.
Associated Oregon Loggers, Inc. Northland Forest Products
Atlanta Hardwood Corp. Oregon Forest Industries Council
California Redwood Assoc. Oregon Women in Timber
Columbia Forest Products Pennsylvania Lumbermens Mutual
Insurance Co.
Domtar Penn-York Lumbermen's Club
Empire State Forest Products Assoc. Plum Creek Timber Co.
Emporium Hardwoods Resolute Forest Products
Graphic Packaging International Rock-Tenn Co.
Hardwood Federation The Rossi Group
Hardwood Manufacturers Assoc. Scotland Hardwoods
Hardwood Plywood & Veneer Assoc. The Shannon Lumber Group
Highland Hardwood Sales Shannon Plank Flooring
International Paper Co. Shaw Industries Group
Kentucky Forest Industries Assoc. Tennessee Forestry Assoc.
Lake States Lumber Assoc. Texas Forestry Assoc.
Mallery Lumber Co. Timber Products Co.
Maple Flooring Manufacturers Assoc. Treated Wood Council
Maxwell Hardwood Flooring Virginia Forestry Assoc.
Minnesota Forest Industries Western Hardwood Assoc.
Minnesota Timber Products Assoc. Wood Component Manufacturers
Assoc.
______
Letter Submitted for the Record by: 350.org; Blue Green Alliance;
Center for Biological Diversity; Center for International Environmental
Law; Clean Air Task Force; Dogwood Alliance; Earth Day Network;
Environmental Investigation Agency; Forest Stewardship Council-United
States; Forest Trends; Friends of the Earth; Global Witness;
Greenpeace; International Fund for Animal Welfare; League of
Conservation Voters; National Wildlife Federation; Natural Resources
Defense Council; Olympic Forest Coalition; Rainforest Action Network;
Rainforest Alliance Reverb; Saint Louis Zoo; Sierra Club; Sound & Fair;
Sustainable Furnishings Council; The Field Museum; The Lands Council;
The Madagascar Fauna Group; The Nature Conservancy; Union of Concerned
Scientists; United States Green Building Council; United Steel, Paper
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union (USW); Wildlife Conservation
Society; World Wildlife Fund
June 6, 2012
Dear Representative:
On behalf of our millions of members and supporters, we urge you to
oppose H.R. 4171: The Freedom from Over-Criminalization and Unjust
Seizures Act of 2012 (FOCUS Act), and H.R. 3210: The Retailers and
Entertainers Lacey Implementation and Enforcement Fairness Act (RELIEF
Act), as well as any other amendments under consideration that would
undermine the Lacey Act. The RELIEF and FOCUS Acts will hurt American
businesses and severely undermine longstanding U.S. leadership in
global conservation and curbing illegal logging. The Fleming Amendment
to H.R. 3210 would be equally damaging and would do nothing to address
the concerns outlined below.
Responding to the economic and environmental costs of illegally
traded timber, the Lacey Act was amended in 2008 with overwhelming
bipartisan support from Congress, industry, labor and environmental
organizations to make it unlawful to trade timber and wood products or
other plants taken in violation of the laws of either a U.S. state or a
foreign country.
With illegal logging costs to the U.S. timber and wood products
industry estimated at approximately $1 billion per year, the
consequences of undercutting this law are significant. In an October
11, 2011 letter to Congress more than 15 U.S. trade associations
underscored that ``Illegal logging threatens U.S. jobs by allowing
unfair competition in wood commodities throughout the world and
destroys the world's forests.'' When the U.S. government combats
illegal logging, this promotes the use of sustainably and legally
sourced U.S. forest products. This ensures that the U.S. forest
products industry can compete on a level playing field, thereby
boosting its strength and supporting U.S. jobs.\1\
---------------------------------------------------------------------------
\1\ The U.S. forest products industry produces about $175 billion
in products annually and employs nearly 900,000 men and women in good
paying jobs. The industry meets a payroll of approximately $50 billion
annually and is among the top 10 manufacturing sector employers in 47
states.
---------------------------------------------------------------------------
After four years, the 2008 amendments are already showing
impressive results. Illegal logging is on the decline, as much as 25%
worldwide, with reductions as high as 50-70% in some key countries.
Companies around the globe are changing the way they make sourcing
decisions and monitor their supply chains. Consistent enforcement over
time is essential to solidify these new behaviors so they become common
practice. Signatories to the October 11th letter urged, ``that no
legislative action be taken to diminish the contributions of the Lacey
Act to these important objectives.''
H.R. 3210, the Retailers and Entertainers Lacey Implementation and
Enforcement Fairness Act (RELIEF) Act, would destroy the
effectiveness of three key provisions of the Lacey Act
responsible for driving positive change:
Import Declaration. H.R. 3210 would remove the
requirement for manufacturers and retailers of all non-solid wood
products to know what kind of wood they are trading. Knowing the type
and source of wood is essential to ensuring legality, one of the
centerpieces of the Lacey Act. Among the multitude of products this
would exempt, this measure would explicitly exclude pulp and paper from
any future requirement to document its wood source. Pulp, paper,
paperboard, and the products made from them are by far the largest
segment of imports covered by the Lacey Act amendments. Excluding pulp
and paper alone risks killing good paying manufacturing jobs in an
industry that employs almost 400,000 people in forty-two states with a
combined $30 billion in annual compensation.\2\
---------------------------------------------------------------------------
\2\ United States Department of Labor, Occupational Safety and
Health Administration: http://www.osha.gov/SLTC/pulppaper/index.html &
American Forests and Paper Association: http://www.afandpa.org/
PulpAndPaper.aspx.
The agencies of jurisdiction have already decided to implement
the declaration requirement in a phased manner to allow industry time
to prepare. In addition, leading retailers, importers, producers, labor
and environmental groups have developed a careful consensus on
recommendations to improve implementation of the declaration. This
measure would ignore that consensus.\3\
---------------------------------------------------------------------------
\3\ The more than 50 organizations supporting the consensus process
are also now discussing the proper treatment of composites in detail.
For reference, the 2009, 2010 & 2011 consensus statements are available
at http://www.eia-global.org/LaceyActConsensusStatements.
---------------------------------------------------------------------------
Significant penalties to deter illegal-sourcing. The law
has been effective in part through the deterrent effect it has on bad
operators, who perceive their risk of being prosecuted or having goods
seized as a reason to change behavior. H.R. 3210 would remove this
impetus for change by limiting penalties for all ``first infractions''
to a minor fine of $250, regardless of size of the company, volume or
value of the illegal product. This provision would likely impact a case
currently under investigation involving significant quantities of
precious wood allegedly logged illegally in the biodiversity-rich
forests of Madagascar.
Forfeiture of illegally-obtained product. Under the Lacey
Act, ill-gotten gains are subject to confiscation, as is U.S. standard
practice for dealing with illegal goods. H.R. 3210 would instead allow
for all major manufacturers to keep wood that has been proven to be
stolen, regardless of the severity of evidence of illegal logging.
Without the threat of losing merchandise that has been acquired in
contravention of the law, what is the incentive to ensure legal
sourcing?
Contrary to arguments that this bill will benefit musicians, a
number of prominent musicians have signed a pledge stating that they
support the Lacey Act and oppose current efforts underway to weaken the
law, such as the RELIEF Act.\4\ This pledge also urges lawmakers to
help ensure that the music industry has a positive impact on the
environment rather than contributing to forest destruction and human
rights abuses.
---------------------------------------------------------------------------
\4\ This pledge has been signed by: Mick Jagger, Sting, Bonnie
Raitt, Willie Nelson, David Crosby, Dave Matthews Band, Bryan Adams,
Bob Weir, Sarah McLachlan, Lenny Kravitz, Jack Johnson, Jason Mraz,
Maroon 5, Lily Allen, Lana Del Rey, Simon Le Bon (Duran Duran), Debbie
Harry, Jools Holland, Barenaked Ladies, Brad Corrigan (Dispatch), Pat
Simmons (Doobie Brothers), Brett Dennen, My Morning Jacket, Guster, The
Cab, Ryan Dobrowski and Israel Nebeker (Blind Pilot), Ray Benson
(Asleep at the Wheel), Of A Revolution (O.A.R.), Jack Antonoff, Razia
Said, Richard Bona, and over 40,000 other musicians and individuals
from around the world. Full text of the pledge can be viewed: http://
www.reverb.org/project/lacey/index.htm.
---------------------------------------------------------------------------
H.R. 4171, the Freedom from Over-Criminalization and Unjust Seizures
Act (FOCUS) Act, removes all criminal penalties as well as the
need to comply with foreign laws from the entire Lacey Act.
Foreign Laws. The scope of foreign laws covered is
explicitly identified and described for the purposes of capturing those
laws most relevant to stopping illegal trade in wildlife and plant
products. The FOCUS Act proposes to remove these protections, leaving
legitimate business operators once again vulnerable to being undercut
by illegal competitors. It also seriously hampers enforcement of the
Endangered Species and Marine Mammal Protection Acts as well as the
Convention on the International Trade of Endangered Species (CITES)
because violations of these measures are often enforced under the Lacey
Act.
Criminal Penalties. Criminal penalties are an essential
part of the Lacey Act, as civil penalties alone will not be strong
enough to deter the organized crime and criminal mafias that are often
at the heart of illegal logging and wildlife trafficking operations. As
a World Bank report from March 2012 makes clear, an effective fight
against this scourge has to look beyond the poor loggers in the forest
or the petty criminals, and focus on those who are truly enriched by
this illicit activity.
Further, if the Lacey Act is decriminalized, violators will not be
subject to federal search warrants and may very well be in a ``safe
harbor'' simply by crossing state lines. Illegal commercialization of
fish, wildlife and plants is often sophisticated, well financed and
often engaged in other illegal activities. When these ventures cross
state lines, as they almost always do, the resources of the U.S. Fish
and Wildlife Service and the enforcement powers allowed under the
current Lacey Act are essential to a successful prosecution. The
proposed changes will likely take the U.S. Fish and Wildlife Service
out of the picture and make effective enforcement of interstate
violations virtually impossible.
We are committed to working with Members of Congress, companies,
NGOs, Agencies, and other interested stakeholders in developing rules
that ensure effective implementation of the Lacey Act and maintain its
environmental integrity. Now is the time for sensible dialogue to
ensure the Lacey Act amendments of 2008 remain strong while addressing
reasonable concerns. Dismantling the principal tenets of the law is
misguided and would be a travesty for American businesses and global
conservation efforts.
We urge you to oppose H.R. 3210, H.R. 4171 and any related
amendments, including the Fleming Amendment, which would bring sweeping
changes to undermine implementation and enforcement of this incredibly
effective century-old law.
______
Dr. Lowenthal. So, this is my question in the time. To help
me understand, from the Administration's point of view, how the
Administration views the Act as being effective, do they
believe that it has been as effective as I have stated by these
groups? And what have been the major complaints about the Act
that you are hearing? I would ask both witnesses.
Mr. Guertin. Thank you, Congressman. Yes, we think it has
been a very effective addition to the Act to help in the larger
conservation goals our agency pursues with all of the other
Federal agencies. We are trying to work through some of the
very legitimate concerns our partners in private industry have
expressed to us about some of the procedural requirements
that----
Dr. Lowenthal. So it is the procedural requirements.
Mr. Guertin. Yes, Congressman. Much as many of these
environmental statutes and requirements--what our partners and
industry are seeking is certainty and decisions from the
Federal Government whether they can move forward or not. And
what we are working on with APHIS and the other Federal
partners is to give industry that certainty and that ability to
move forward with legitimate business purposes.
Dr. Lowenthal. Thank you.
Ms. Bech. APHIS's piece of implementing the Act is on the
declaration process. And so, the things that we have heard the
importers say that are difficult with that initially have been
researching the product and the sources for the products, and
then the more administrative piece of just complying with
filing the declarations.
We have, of course, as I have stated earlier, done many
things to help with outreach and education, looking at the
common errors, going back and providing information to the
importers, so that it makes it easier for them to comply.
Dr. Lowenthal. So you think that the complaints that you
have heard can be corrected internally, without any other
legislative changes?
Ms. Bech. Yes, sir. We believe that we have enough
flexibility within our regulatory framework and our
administrative processes right now to address the concerns that
have been raised to date.
Dr. Lowenthal. Thank you. I yield back my time.
Dr. Fleming. The gentleman yields back. Next Mr. Thompson
is recognized for 5 minutes.
Mr. Thompson. Thank you, Chairman.
Dr. Fleming. You can defer your time to someone else, if
you like.
Mr. Thompson. No, I am ready to go.
Dr. Fleming. Oh, OK.
Mr. Thompson. Yes, yes, I am good to go on the Lacey Act.
Thank you, Mr. Chairman. Thanks for having this hearing. And to
both deputy administrators--thanks, Deputy Administrator,
Deputy Director, thanks for being here. As Chair of the
Subcommittee on Agriculture that has jurisdiction over
forestry, obviously the Lacey Act, I think, it is an important
piece of legislation, and the purpose behind it is to deter and
hopefully prevent illegal logging.
I think the frustrations that come with is come with every
regulation, it comes at the implementation phase. And that is
not easy. You don't have easy jobs. But we are all charged with
trying to do our best for the citizens to make sure what
regulations are necessary, that there is a pathway to
compliance. And so, that is why I appreciate this hearing. It
allows us to really talk about some of those issues.
Deputy Administrator Bech, you mentioned in your testimony
that the amendment directs you to provide legislative
recommendations to Congress to assist with the identification
of plants in violation. I am actually more curious to see what
you have found that can help you deal with this
administratively? And can you give examples of what you have
already done in this regard?
Ms. Bech. Yes, sir. Well, several things. One of the ones
we have mentioned is the de minimis, and looking at that. That
further will clarify products that would fall outside of the
requirements.
Certainly we have talked about the definition of the common
food crop and common cultivar. Again, that takes out a major
part of those kinds of products, over 500,000, that would be
exempt, then, from the declaration. So these are just a few of
the things, administratively. And we are very excited about the
Web site, the web data base that we are providing, which will
make----
Mr. Thompson. What is the progress of that? What is your
timeline, in terms of implementation? That obviously makes a
lot of sense, in terms of assisting folks to navigate this.
Ms. Bech. Well, we provided our first webinar to industry
groups on this, and we are beginning to pilot that this summer.
We hope for full implementation in the late fall.
Mr. Thompson. OK. Thank you. Deputy Director Guertin,
currently the Lacey Act requires people to exercise due care to
learn whether it is against the law anywhere in the world to
transport, possess, or sell a specific fish, wildlife, or plant
product. And yet the Federal Government has taken the position
that it is not their job to identify what international law
might trigger a Lacey Act violation.
It seems like the law is set up in a way that folks will
violate it no matter what they do. It is difficult enough for
probably large, multi-national companies to keep track of all
the international laws covered by the Lacey Act, but how do we
expect an individual musician, a mom-and-pop business to
exercise due care, especially when there is no data base of
international laws to consult? That lack of a data base is
something I saw as striking, actually.
Mr. Guertin. Yes, Congressman. And we recognize that is a
great frustration, both for industry and private citizens. Like
APHIS, we are focusing a lot of effort on education, outreach,
interpretive materials for folks coming in across the borders
through various mechanisms to relieve some of the uncertainty,
particularly for those who are musicians in the population.
The U.S. just sponsored, at the Congress of Parties
conference in Thailand, CITES, this past spring a new musical
passport that will be implemented mid-next month that would
allow American citizens to have one document, instead of having
to require them to obtain a document for every country they
travel to. So we are really trying to pursue some creative
solutions to give both private citizens and industry a little
more certainty. Because we recognize the overwhelming majority
of commerce is very legitimate--law-abiding citizen, as well as
industry.
Mr. Thompson. Thank you for sharing what you are doing, in
terms of specific musicians. That is obviously the kind of
background that really got this teed up most recently. But it
obviously expands beyond a guitar or a musical instrument. The
folks are traveling overseas, and they pick up some type of
trinket, some type of souvenir, like we have all done. How do
we assure that the citizens who, quite frankly, find themselves
in a situation where they are being arrested, prosecuted, made
an example of, when, quite frankly, these are folks who were
just acting the way most innocent tourists do?
Mr. Guertin. Sure, Congressman. The Fish and Wildlife
Service or any Federal agency will not try to make a case
against anyone who has unknowingly violated any type of
wildlife law. We, again, try to focus on education, outreach, a
lot of just information for people. We focus all of our law
enforcement at the commercial scale, where we think we can
really make a significant difference with those bad actors out
there who are doing the wholesale take of plant, fish,
wildlife, and other species like that.
If a citizen is caught, unfortunately, it is just, for us,
more of a unfortunate situation. We may or may not confiscate
the item, let them off with a warning. But it is more about
education and outreach for the individual citizen.
Mr. Thompson. Very good. Thank you. Thank you, Mr.
Chairman.
Dr. Fleming. The gentleman yields back. Next, Ms. Shea-
Porter.
Ms. Shea-Porter. Thank you, Mr. Chairman. And I am always
impressed when I look back in history and see how much our
forefathers and mothers had the insight and the foresight to
see some of the challenges ahead and to put laws into place to
protect our very precious environment.
And about a week ago I read in the New Hampshire newspaper
that we were having problems--illegal harvesting of eel elvers.
And for those who don't know, those are baby eels. And I have
to admit I didn't know that word, either. But the issue
existed, and continues to exist, and so we are grateful for
organizations and government agencies such as yours to monitor
and to help protect these resources for this generation and the
next generation, as well.
I, too, am concerned, and I hope we will see that report
next week. There are certain responsibilities that come with
that and, you know, that is given, and I appreciate the fact
that you have addressed that.
So I have questions for both of you. First, how has the
difficult budget climate hindered APHIS's ability to implement
the 2008 Lacey Act amendments? And can you also tell me,
please, what impact you expect the sequester to have on your
agency, going forward?
Ms. Bech. Yes. Thank you. Well, certainly it wasn't until
just a few years ago that we actually received any appropriated
funds for helping us implement. We have had very, very limited
resources to provide work for this effort.
We are requesting the $1.445 million for next year, and we
are hopeful that will be supported. Certainly these resources
are much needed. We would continue to add some staff to this
effort. We would look at other innovative ways--enhancing the
data base that we have to help us analyze the information, and
looking at other efforts in providing outreach and education.
So, with the support of the budget, we believe, then, that
we will be able to continue the efforts that we have already
begun. Thank you.
Ms. Shea-Porter. So your workload has increased without the
extra funding to enable you to accomplish all that you hope to
accomplish, and that we have asked you to.
Ms. Bech. The workload has increased. And, of course, there
is certainly more that we would like to do, as well. And so,
again, we are hopeful that the budget request will be
supported. Thank you.
Ms. Shea-Porter. Thank you.
Mr. Guertin. Thank you, Congresswoman. Specifically with
the impacts of the sequestration on our law enforcement
program, because of the way this was applied at the sub-
activity level, it precluded us from being able to move forward
to hire a new class of law enforcement agents to add additional
capacity. Our solution, like all the Federal agencies, is we
are focusing our efforts with the folks we do have on board,
where we can make the most significant impacts. But not
bringing in that next cadre of folks will have a long-term
effect on our ability to implement the program.
As to moving forward, the President's budget request for
2014, which the U.S. Congress is currently evaluating for your
consideration through the appropriations process, there are
some incremental funding increases in their for our law
enforcement program, which would allow the Service, if Congress
appropriates this funding, to hire an additional five positions
overseas in range countries--specifically in Asia and Africa,
for example--as attaches to work with the international
business community, international countries, education,
enforcement, as well as proactive solutions to keep a better
eye and put solutions on the ground for the trade in wildlife,
plants, and fish species as well.
Ms. Shea-Porter. OK, thank you. And you can keep your mic
on, because I had one more question for you. After China, the
United States imports more wood products than any other country
in the world. Do the 2008 Lacey Act amendments make it more
difficult to bring illegal wood into the U.S.? And what do you
base your statement?
Mr. Guertin. We don't think it makes it any more difficult
for legitimate businesses to import any type of product in with
the new requirements of the 2008 Lacey Act. What this Act has
given the Federal agencies the ability to do is get a better
handle on the illegal importation of some of these products,
and for us then to focus our efforts on those bad actors who
are out there.
Ms. Shea-Porter. Have you been able to reduce any of the
illegal wood coming in by using that?
Mr. Guertin. It is only anecdotal information coming in so
far, Congresswoman, but we believe the trend is starting to
show up that there has been an impact on making a difference in
some of this illegal commercial utilization overseas.
Ms. Shea-Porter. Which would be good for domestic
producers.
Mr. Guertin. It would be very good for domestic producers,
yes.
Ms. Shea-Porter. Thank you, and I yield back.
Dr. Fleming. The gentlelady yields back. Mr. Harris?
Dr. Harris. Thank you very much. And thank you, Mr.
Chairman and the Committee, for allowing me to sit in in my old
Subcommittee.
Let me just ask a question, just so I get it straight. Now,
Ms. Bech, you are charged with kind of collecting these forms,
but you don't investigate them or all. How do they get from you
over to Fish and Wildlife?
Ms. Bech. Yes, sir. That is correct, we don't do the
enforcement piece. So we are collecting the declarations. We
send these over once a month, and also at request. Like
recently, the Department of Justice has asked for all the paper
declarations, and they will be scanning those and then using
those in their enforcement actions.
Dr. Harris. OK. So you are just a passive conduit. I mean
you don't do anything with those forms. You don't look at them
in any way, you are a conduit. You collect them and pass them
on.
Ms. Bech. Well, we do monitor them.
Dr. Harris. But what is monitor? If you are not doing
investigations, what does monitor mean? I mean this sounds just
like the background check for guns. The FBI gets the NICS call,
but it doesn't do anything. It just hands everything over to
ATF. So is this the same situation? I mean you are not
responsible for enforcement at all?
Ms. Bech. No, sir. We are not----
Dr. Harris. OK. And you collect--was your testimony that if
you had--all these reports were made, you are getting about
40,000 a month--did you say it would be a whole lot more if
everybody had to report everything? It would be, like, a
million a month? Is that what you said?
Ms. Bech. Yes, sir. That is correct.
Dr. Harris. A million a month. And you would just be
passing them--OK. Well, let me get to Mr. Guertin.
So, what peaks your interest in these reports? Because my
question to you is I have information here, I want to know if
it is true, there are only three ongoing investigations, none
of them triggered by a declaration form. Is that right?
Mr. Guertin. There are actually six cases that we have
worked on in the last fiscal year, Congressman. Three have been
satisfied, three are ongoing. In some part, our information was
derived from these declaration forms. I can't get into the
details of those cases, but they do include commercial
exploitation overseas.
Dr. Harris. Commercial what?
Mr. Guertin. Exploitation of paper product or timber
overseas.
Dr. Harris. OK. All six of those?
Mr. Guertin. All six of these cases we have looked into
have been wood-related.
Dr. Harris. OK. And how many of them were triggered by the
fact that somebody at Fish and Wildlife saw something on one of
these 1.9 million forms?
Mr. Guertin. The three cases that are currently under
investigation right now were partly informed by the information
derived----
Dr. Harris. I don't understand what ``partly informed''
means, because it means--somebody's ears have to go up on
something. Partly informed could mean that it is just part of
the investigation. I mean how many originated because one of
these forms triggered--because I am going to an on-demand
system, where, obviously, you wouldn't see a form. So----
Mr. Guertin. I can't share any further information because
this is an ongoing investigation. We would be glad to sit with
you offline and go through some of the specifics of this.
Dr. Harris. Why? I am just curious; I am relatively new to
Congress. Why would offline and online be any different? Are we
hiding something from the American people?
Mr. Guertin. Not at all.
Dr. Harris. Then go ahead and answer my question.
Mr. Guertin. These are cases that are under active
investigation right now with us and the Department of Justice.
Dr. Harris. Are these national security issues? Look, this
is a congressional inquiry. You are collecting 1.9 million
pieces of paperwork causing tens of millions of dollars to
American businesses. I want to know if any of those pieces of
paperwork was the origination of investigation.
Mr. Guertin. In part it was, Congressman. But, Congressman,
I will also be honest with you----
Dr. Harris. Let me tell you how other systems work, like
NICS. You know, ATF doesn't investigate someone trying to
illegally obtain a firearm unless the FBI says, ``Someone tried
to illegally obtain a firearm, here is the information, go
ahead and investigate.''
I want to know if that is how those investigations started.
It is a simple question. It is not a complicated question. I
mean did somebody sitting in an office, wasn't going to do
anything, got a piece of paper or an electronic form from Ms.
Bech's 1.9 million submissions and said, ``Oh, my gosh, I think
there is a crime here,'' or did somebody have a suspicion, got
a piece of paper, and continued to investigate, which would
lead to the belief that an on-demand system would work just
fine?
This is not a complicated question. There are only six of
these. If you have to go back and take some time to review back
at home at the office, all six, just tell me you need time to
review.
Mr. Guertin. Congressman, you won't be satisfied with my
oral statement here, so yes, we will provide for the record a
more detailed----
Dr. Harris. And when will you have that answer available to
me?
Mr. Guertin. Within the next week, if that would be
satisfactory.
Dr. Harris. A week would be fine. Now, let's get to an on-
demand system. Can you do it under the current confines of the
statute, or would you need a statutory change?
Ms. Bech. APHIS does not have the authority under the
current statute to implement an on-demand system at this time,
since the Lacey Act does require importers to file a
declaration upon importation.
Dr. Harris. So you would need a statutory change. And----
Ms. Bech. Yes, we----
Dr. Harris. And was your testimony exactly the same before?
What were you talking about before when you said, yes, you may
have some ability to change some of the declaration process?
Was that just with electronic declaration, or----
Ms. Bech. No, sir. What we believe is through electronic
submissions and our web-based system, that we can do some
further streamlining of the declaration process to address some
of the concerns that people have identified that they feel like
an on-demand system would correct. And so, we feel like some of
those issues that have been brought forward can be addressed
through another mechanism.
Dr. Harris. OK. Thank you very much. Thank you, Mr.
Chairman.
Dr. Fleming. The gentleman yields back. Mr. Duncan is
recognized.
Mr. Duncan. Thank you, Mr. Chairman. And just the nature of
Congress, things pull you away sometimes. This is a very
interesting topic, something that we have been following for a
number of years.
And I really don't have any questions for the panelists,
but this may have been brought up earlier, but when this Lacey
Act issue, especially with Gibson Guitars and maybe a couple of
others came out, we raised concerns about whether certain
groups were being targeted by the U.S. Fish and Wildlife
Service over the Lacey Act because they were contributors to
certain campaigns or had certain leanings. And in light of what
we see going on right now with the IRS targeting certain groups
that just have words like ``patriot'' or ``freedom'' in their
names, or that study the Constitution, in light of that scandal
that is going on right now, I think it is important that we
keep in mind and be cognizant of what happened with Gibson
Guitar, and the concerns we raised about the Lacey Act being
used to target certain groups. I think it is time to revisit
that.
I don't know if there is any substance to it, but it is
something that I am cognizant about, as we have this hearing,
in light of what is going on in Washington. And after that
comment, I will just yield back. Thank you so much.
Dr. Fleming. The gentleman yields back. I believe that is
all for the first round. I think there is perhaps some follow-
up questions----
Ms. Shea-Porter. Mr. Chairman? Could I make one more
statement, please?
Dr. Fleming. Yes.
Ms. Shea-Porter. Thank you. I am concerned that when we
have these hearings, we are not germane and we are just not
staying on topic a lot of times. And I have some concerns. I
realize that there are issues that divide us. But honestly, I
mean, to keep politicizing this, we are not having an IRS
hearing right now. And I just don't think it is helpful to the
tone. We are sitting here trying to bridge this gap. It is not
just the feet between us, but it is also some viewpoints. And I
just think that I hope the next panel----
Dr. Fleming. Does the gentlelady want to bring up a point
of order?
Ms. Shea-Porter. Yes, I----
Dr. Fleming. Because I will be happy to give you time in
just a moment----
Ms. Shea-Porter. Thank you.
Dr. Fleming [continuing]. If you have----
Ms. Shea-Porter. Thank you. I just wanted to say--actually,
I will just leave it as it is, and say our next panel----
Dr. Fleming. The Chairman duly notes that.
Ms. Shea-Porter [continuing]. I hope we can concentrate on
the issue at hand. Thank you.
Dr. Fleming. So we will begin another round here of
questioning. And I will recognize myself for 5 minutes.
I just want to be sure, Mr. Guertin. You said something and
I am not sure--we may have miscommunicated in question-and-
answer. Just to be sure--because I asked if--that it is both
sustainable and legal. In other words, if it is illegal, can it
also be sustainable. And your answer, I wasn't sure whether you
agreed with that or not.
Mr. Guertin. Congressman, I think the bagpipes were playing
then. I thought you said can it be both sustainable and legal.
But you are clarifying now ``illegal''? No----
Dr. Fleming. My question is ``illegal.''
Mr. Guertin. And I apologize, because I----
Dr. Fleming. Yes.
Mr. Guertin [continuing]. Misunderstood what your question
was.
Dr. Fleming. Yes.
Mr. Guertin. But it cannot be both sustainable and illegal.
And thank you for that opportunity to clarify that.
Dr. Fleming. OK, thank you. Now, Ms. Bech, it is
interesting. You said, as I understand your testimony and your
response to questions, you do not feel any further amendments
are necessary for the Lacey Act, that everything can be done
without any further amendments?
Ms. Bech. That is correct.
Dr. Fleming. And do you agree with that, Mr. Guertin?
Mr. Guertin. Yes, Chairman.
Dr. Fleming. But yet, when I said, ``Well, it seems like to
me we could solve a lot of problems here by exempting prior May
22nd,'' you said that would require further acts. So it seems
like, to me, that you are already suggesting that--and there
have been other questions raised, as well--that there are
problems already that we can't fix without further legislation.
Ms. Bech. Well, we believe that by providing the special
use designation, where a importer can come in and through due
care has tried to determine genus and species, is unable to do
so, then they can evoke the special use designation and say
pre-amendment 2008, and therefore they meet the requirement of
the declaration.
Dr. Fleming. Yes, but that is very problematic. So why not
just exempt? Prior to May 22nd that is old history. Why in the
world are we still struggling with this problem? You say that
under current law you don't have the ability to create
regulations to solve that problem.
Ms. Bech. That is correct.
Dr. Fleming. That is correct?
Ms. Bech. Yes.
Dr. Fleming. OK. All right. Now, here is the other question
I have. Do I also understand, Ms. Bech, that you said that
industry widely accepts this, that the current Lacey laws in
effect, and the amendments of 2008 are widely accepted by
industry? Is that part of your testimony? I thought I heard you
say that. I just wanted to confirm. Did you say that or not? We
can always go back to the transcript. So you seem to be a
little hesitant to agree with yourself on this. I just want to
get clarification.
Ms. Bech. Well, I don't recall specifically stating it is
widely accepted. I said that we have been working with
importers on the use of it, and we have streamlined efforts to
help them. And so they are able to comply with the declaration.
Dr. Fleming. But my question is, is industry widely
accepting this? What, in your view, is industry acceptance on
this? I mean we are hearing about 1,000-page applications that
have to be completed, very expensive, lots of impact. You heard
Mr. Duncan refer to what we are seeing in government today,
where industry is being intimidated by the Federal Government
in many different areas, not just the IRS. We are hearing
reports about the Endangered Species Act and other areas.
So, my question is, do you have a sense that industry
widely accepts the current Lacey Act and the 2008 amendments?
Ms. Bech. Well, I think that we have heard from many
industries that feel like there are a lot of challenges in
complying with it. And we have also heard from industries that
feel very strongly in support of it. So we have tried to
address the concerns and the challenges that some of the
industries have brought----
Dr. Fleming. What about you, Mr. Guertin? What is your
perception of industry? Is it widely accepted by the industry?
Mr. Guertin. I think we have some acceptance from certain
segments and certain individual companies and individuals in
industry. We have heard concerns from other members of
industry, as well. We are trying to, within that framework,
move forward to be proactive and put solutions on the ground
for implementation, so that we can make this law----
Dr. Fleming. I am not hearing that you are confident at all
that industry is comfortable with what is going forward, and it
isn't fully implemented.
Well, let me ask one other question. Do you have the
authority to establish a data base of foreign laws? Either one
of you.
Mr. Guertin. I would have to check with our authorization
lawyers on that, Mr. Chairman----
Dr. Fleming. Ms. Bech?
Mr. Guertin [continuing]. Personally aware----
Dr. Fleming. Do you know?
Ms. Bech. Yes. We currently have no plans to establish that
data base. And again, I----
Dr. Fleming. I am sorry. I didn't ask you if you had plans.
Do you have the authority? Because, again, you said, ``We don't
need any more laws, we don't need any more amendments.'' Do you
have the authority to do that?
Ms. Bech. I would have to check with my office of general
counsel.
Dr. Fleming. I would ask that you both find out and report
in writing on that.
Thank you. I would now recognize Mr. Sablan for 5 minutes.
Mr. Sablan. Thank you very much, Mr. Chairman. And let me
say, Mr. Guertin, can you please explain why the declarations
required under the 2008 Lacey Act amendments are an important
tool for law enforcement? Doesn't having these records increase
your chances of finding patterns of illegal activities? And
would an on-demand system limit your ability to identify
patterns of illegal activity in real-time?
Mr. Guertin. Thank you, Congressman. As is the case with
many wildlife cases that we are involved with, most of the
declarations filed are never used, because they are filed by
businesses that are following the law. That said, we use these
declarations as part of all of the tools at our disposal for
law enforcement to prioritize which cases we want to pursue.
And this type of on-demand system that you and the other
Members and the Chairman have been talking about may be a way
forward to help further strengthen this program, overall.
Mr. Sablan. All right. That is why I am thinking, because I
heard over a million declarations were filed. And out of that,
maybe six, maybe less than six have led to investigations.
Because Dr. Harris raised questions earlier about filing
all the declarations. And I am sure in the medical professions,
checklists serve as an important tool to avoid medical
mistakes. I am not a doctor, but I am assuming that, because I
have seen my doctor do that.
So, in your view--I am thinking, but I am asking you--in
your view, is the declaration a kind of checklist to help those
in the timber industry ensure that they are not contributing to
illegal logging? Maybe those one million declarations have led
to maybe six or less investigations--maybe those checklists
helped. I am asking both of you. We will start with Mr.
Guertin, please.
Mr. Guertin. Thank you, Congressman. The forms that are
filed, we don't view them necessarily as a checklist, as just a
report of what the product is that is being shipped into the
U.S. We use this and a whole lot of other information to
prioritize our caseload for our law enforcement program. Our
agents work each year on about 13,000 high-priority cases,
where we evaluate and then prioritize which cases warrant
further workload and investigation, if there has been a
significant violation.
Of those, it is probably in the hundreds that we actually
turn into a formal case to investigate and then try to
prosecute. And of those, over the last two cycles, six have
been plant-related. So it is part of an information process
that we use to focus up----
Mr. Sablan. Ms. Bech, I have several questions. Can you
give me a short one on my question?
Ms. Bech. Yes, sir. Again, we are primarily responsible for
collecting the declaration. We do refer those. And I am aware,
from Fish and Wildlife Services and DOJ, that there are some
open investigations.
Mr. Sablan. All right. And so now, Ms. Bech, let me ask.
How has public feedback affected how you have implemented the
2008 Lacey Act amendments? Have you been open to industry's
suggestions for making compliance easier?
Ms. Bech. Yes, sir. We have worked very hard with the
industry groups to hear what their concerns are. And we have
tried to address those in many different ways. We have
provided, again, a lot of guidance to them in how to fill out
the declaration forms. Primarily we heard that their ability to
research the sourcing of the product has been a real challenge.
Mr. Sablan. So if a company makes an honest mistake, for
example, what happens? Wouldn't the United States Department of
Agriculture, your, what, Animal and Plant Health inspection
service be most interested in helping those companies comply
with the law?
Ms. Bech. Yes, sir. When we find that there has been an
error or a problem with filling out the declaration, we go
directly back to the importer and try to work with them to help
them in completing the declaration accurately. And so we
provide a lot of direct comments back to them and work with----
Mr. Sablan. And maybe that is why we have maybe six of
them, maybe--charges filed. I think it is working. I am not
sure--something that works--but anyway, Mr. Chairman, I yield
back my time.
Dr. Fleming. The gentleman yields back. The Chair now
recognizes Mr. Thompson for 5 minutes.
Mr. Thompson. Thank you, Chairman. I wanted to try to get
to some numbers, actually, in terms of violations, Deputy
Director Guertin, can you provide an accounting for how many
Lacey Act violations have been investigated And prosecuted
since the 2008 amendments, a description of the violation, and
the international law and the country of origin at issue, and
how the matter was resolved? Is there a data base like that
available that--I don't expect, obviously, all that information
today. But whether it is--is that something you could provide
within 2 weeks, or----
Mr. Guertin. Yes, Congressman. We will provide the
information that we have available in the Fish and Wildlife
Service as a follow-up for the questions and records--and an
insert for the record for the hearing, if that would be
acceptable.
Mr. Thompson. I think that would be very helpful, in terms
of good transparency, gives us some idea of a kind of a way to
check the pulse of what we are seeing, where the violations
are.
Do we--and I am in the camp that--I think we should be, as
we get information in terms of international laws that impact
this, in terms of avoiding the bureaucracy that sometimes gets
folks into trouble when they are not aware of--I really do
believe we should be creating that type of a Web site for folks
to peruse. Do we put that information out, that you are going
to be able to provide me, in a public way so that is at least a
tool that people can look to and say, ``Hey, well, you know
what? Obviously, this has been recognized as a violation, so it
is not a place I want to go. It is not a plant product that I
want to go after''?
Mr. Guertin. Yes, Congressman. We do annual reports from
our law enforcement program that--some of it is included in the
budget justification, some of it we have on pamphlets and web
pages. And we would be glad to include those reference
materials as part of the hearing record, as well.
Mr. Thompson. That would be great. Is that a part of the--
what you talked about, the education, more collaborative
approach that you--where possible, that you are able to take on
this issue?
Mr. Guertin. Yes, Congressman, we would be glad to provide
those details as part of the hearing record.
Mr. Thompson. OK. I wanted to kind of really focus and see
if--how many misdemeanor convictions have you had during the
past 5 years in regards to plant and plant products? Is it----
Mr. Guertin. We have had none, Congressman.
Mr. Thompson. No convictions.
Mr. Guertin. No. With your permission, Congressman, I
clarify no convictions for a misdemeanor.
Mr. Thompson. OK. Any idea of how many violations,
investigations of violations?
Mr. Guertin. Just the six we have talked about,
Congressman.
Mr. Thompson. OK. Very good. Mr. Chairman, I yield back.
Thank you.
Dr. Fleming. The gentleman yields back. Ms. Shea-Porter?
Ms. Shea-Porter. Thank you, Mr. Chairman. Of course, a part
of the job here is to provide those guidelines so people don't
make those mistakes. And so it isn't simply an enforcement
tool, it is also a tool to educate and to make sure--so I think
the fact that we have everybody register their cars and get
licenses, we don't assume--and actually, it is a very small
number that actually do something terrible in their cars, but
there is still a process where they learn, have a permit, they
study the rules.
And so, is it so that this actually helps people to
protect? It is not simply a punitive tool that you are seeking,
but also to help protect our environment and our resources and
help protect our businesses? Do you see that as your role,
also?
Mr. Guertin. Yes, Congresswoman. This is part of a larger
portfolio of conservation statutes that the Fish and Wildlife
Service and the other agencies work on in partnership with the
States, the Tribes, and the international community to
safeguard under the rubric of the North American Model of
Conservation that goes back 150-some years here in our country
that guides this larger founding principle that these wildlife,
plant, and fish species belong to all of us and for future
generations to come.
Ms. Shea-Porter. Right. And I think that we would rather
protect than prosecute. So I think it speaks well that there
are few prosecutions.
Now, I heard the Chairman say that this--all of this seems
to somehow or another intimidate businesses. But I am holding a
letter to the House of Representatives from businesses. And I
would like to read into the record. It says, ``The U.S. forest
products industry has a proud tradition of providing
sustainable and legal resources to our customers, both
domestically and around the world. Illegal logging and the
threat posed to U.S. jobs and forest resources by illegally
sourced products throughout the world is being addressed by the
Lacey Act, allowing our industry to compete fairly in the
international market.'' So they oppose these amendments, and
they go on to list their names here.
And this is industry speaking now, and I will just name a
few of them, because they are big ones. American Forest and
Paper Association, they do not seem to be intimidated. Anderson
Hardwood Floors, Associated Oregon Loggers, Appalachian
Hardwood Manufacturers, Columbia Forest Products. I am trying
to pick from around the country. Hardwood Federation,
International Paper, Kentucky Forest Industries Association,
Minnesota Timber Products Association, Virginia Forestry
Association, Treated Wood Council, Timber Products, Texas
Forestry Association, Wood Components Manufacturers
Association. I would argue, Mr. Chairman, that rather than be
intimidated, they seem to be supporting and appreciating our
role here, and the Lacey Act, in trying to protect them from
illegal actions.
Dr. Fleming. Would the gentlelady yield----
Ms. Shea-Porter. Yes, I will.
Dr. Fleming [continuing]. Just for a moment? None of those
are importers of wood products.
Ms. Shea-Porter. Say that again.
Dr. Fleming. None of those that you listed are importers of
wood products.
Ms. Shea-Porter. The point that we are making here, again,
is that what we are trying to do is, first of all, make sure
that we don't have that. So they support this. The other part
is--we are talking about American industry. And American
industries, that is what we are about. That is our goal here.
Let me read a little bit more, reclaiming my time----
Dr. Fleming. Well, could I just----
Ms. Shea-Porter. Reclaiming my time, thank you. ``Because
of the seriousness of this issue, our industry has worked
within a unique coalition that also includes environmental
groups, labor organizations, retailers, and others, to amend
the Lacey Act and to encourage full and timely
implementation.'' And they go on to talk about the importance
of the industry meeting a payroll of approximately $50 billion
annually.
This is important to our industry. It is important to our
country. And it is also important to not only the people who
occupy this land now, but those who will be here in times to
come. And so, while we certainly always want to make sure that
these agencies do the work properly, that they don't go after
any certain sector, and we want to make sure that it is fair,
there is also reason that we do this. These laws don't just
come about because certain people have decided to harass other
people here. This is critical work they are doing.
And again, the law dates back to, what, 1900? So all of the
issues and the sub-issues that we are arguing here, 1900 they
recognized that there was a problem and they wanted to address
it to conserve and protect. And I think that while we talk
about this, we need to make sure that we are careful about how
we talk about this, as well. Thank you, and I yield back.
Dr. Fleming. The gentlelady yields back. Again, before I
recognize a point of personal privilege, what we are discussing
today is filling out these voluminous, very expensive forms.
And again, I can understand that a domestic wood company would
not have a problem with that because, again, they don't deal
with that.
So, with that, I will yield to the gentleman, Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman. And thanks for making
those comments. And I believe in the Lacey Act. I believe it
serves a very valid purpose, from its original intent. And so I
don't want any comments to be construed that I don't appreciate
the efforts of Fish and Wildlife Service and other agencies
that actually have to enforce this.
But I am concerned, and I appreciate the comments that a
consumer wouldn't really have any criminal liability if they
did due diligence to investigate where the particular material
that made whatever consumer product they were purchasing, and I
will use a guitar here, since Gibson is on my mind. But when a
customer goes in a store and they purchase a guitar or any
other item from the shelf, they play it, they like it, like the
sound of it, like the look of it, how much more due diligence
do they really have to do about where that wood came from, or
where other products that were used in that item came from?
And so, I appreciate there is no criminal liability, but I
still question them out of due diligence.
And then the second thing I just--and I don't expect an
answer on that. The second thing I am concerned about is a
story that I read last year when we were having these Lacey Act
hearings about--I believe it was lobster tail that was packaged
by a company in the United States that were to be shipped, I
believe, to Honduras. And they were seized by our government,
not because that company had violated U.S. law at all, other
than a provision in the Lacey Act of 2008 that says you can't
violate a law in another country. So that company has to know
the laws of another country, and hope that they are not
violating that, when their own government swoops in with SWAT-
like tactics, often times, to seize products and face
tremendous fines that actually puts that company out of
business. That seems a little un-American to me, that we would
require and enforce the laws of another country. I think that
is a caveat within the 2008 amendment when we start enforcing
laws of other nations. We should enforce the laws of the United
States.
So, I think that is just something the courts are probably
going to end up having to decide, or we in Congress are going
to have to change within the 2008 law, to take that ambiguity
out, because I think we have an ultimate goal and role to
support U.S. industry, U.S. small businesses. And so that is
just a concern I have. Maybe you all have touched on that.
But the last question I would like to ask is the accounting
of how the Lacey Act violations have been investigated and
prosecuted since the 2008 amendments. And so I am asking can
you provide to this Committee, preferably within 7 days, a
description of the violations, international laws, and country
of origin at issue, and how the matter was resolved, where
there has been Lacey Act violations? If you can just provide us
an accounting. Maybe you have that today. If you do, that is
great. If not, I look forward to that being submitted.
Mr. Guertin. Thank you for that question, Congressman. To
put everything in context, we work on almost 13,000 law
enforcement cases each year for all of the wildlife laws that
we enforce. And of that total, almost 2,500 are for violations
of the Lacey Act, interstate----
Mr. Duncan. 2,500.
Mr. Guertin. But when you throw in all of the other
statutes, Endangered Species, African Elephant Conservation
Act, the Rhino and Tiger Act, smuggling laws, and things like
that, the Lacey Act is a small subset of that. And of those
2,500, we have pursued about 6 for plant-related things. But we
are largely focusing our efforts on some of these larger
smuggling rings for rhinos and tigers and some of these
charismatic megafauna.
The caseload is building slowly for some of these plant
species and timber species as well, but as we told your
colleague, Congressman Thompson, we would be glad to provide a
detailed rack-up of these statistics, as well, for the record.
Mr. Duncan. Yes. Well, Mr. Chairman, I don't have any
further questions. I just hope the panelists and government
agencies that are overseeing the Lacey Act understand the
frustration of Members of Congress as we hear from companies
that have been affected in other ways about what is the role of
Federal Government, what should we be enforcing and what are we
enforcing and why, and how we can just pull back a little bit
to make sure that businesses understand the law.
Businesses don't want to violate the law. There are
violators out there. There are people that are going to break
the laws anyway. I am not talking about that. I am talking
about the companies that are just trying to provide for their
workers and their family, provide products for this country,
and they are trying to do it within this myriad of regulations
and rules that they have to operate in. They need to be able to
have some certainty that the game isn't going to change
tomorrow. They need to have some certainty that they can
legibly read and understand the laws that are on the books, so
that they can comply.
Whether that is State or local or Federal laws, I think we
owe it to those businesses to provide that ability for them to
understand how they need to operate, what does that spectrum
look like, so that they can provide those services and provide
for their family, ultimately, and be successful chasing the
American dream. And so that is why I think this is so
important, Mr. Chairman. And I appreciate you guys
understanding our frustration as we hear from the others, and
as we work together to make sure that we support those
businesses. And I will yield back.
Dr. Fleming. The gentleman yields back. And we thank you
today for your testimony and answering questions. We need to
move along to our next panel, so we will excuse you and ask the
next panel, the second panel, to step forward.
Your written testimony will appear in full in the hearing
record. So I ask that--oh, I am sorry, I jumped ahead here.
Yes, right here, here we are.
OK, all right. We are now ready for our second panel of
witnesses, which includes Mr. Steve McCreary, General Manager,
Collings Guitars; Mr. Travis R. Snapp, Chief Operating Officer
of Benchmark Holdings; Ms. Birgit Matthiesen, Special Advisor
to the President and CEO, Canadian Manufacturers and Exporters;
Mr. Jameson S. French, President and CEO, Northland Forest
Products; Mr. Marcus A. Asner, Partner, Arnold and Porter; and
Mr. Erik O. Autor, the President and CEO of Autor Global
Strategies and Total Spectrum.
Your written testimony will appear in full in the record
today, so I ask that you keep your oral statements to 5
minutes, as outlined in our invitation letter to you, and under
Committee Rule 4(a). Our microphones are not automatic, so be
sure and push the button to turn it on, and keep the mouthpiece
close.
The timing lights are very simple. You have 5 minutes in
your testimony.
You will be under green light for the first four, yellow
light for the last minute, and when it turns red we ask that
you quickly conclude your comments.
I now recognize Mr. McCreary for 5 minutes on your
testimony on behalf of the National Association of Music
Merchants.
STATEMENT OF STEVE MCCREARY, GENERAL MANAGER, COLLINGS GUITARS,
INCORPORATED
Mr. McCreary. Mr. Chairman, Congressman Sablan, and members
of the Subcommittee, my name is Steve McCreary. I am the
general manager of Collings Guitars, which is a medium-sized
manufacturing company located in Austin, Texas. I am here today
on behalf of NAMM, the National Association of Music Merchants.
They are headquartered in Carlsbad, California. They have more
than 9,000 member companies who make and sell a variety of
musical instruments and accessories. I appreciate the
opportunity to be here today and share our industry's views on
the 2008 amendments, one of our country's most important
conservation laws, of course, the Lacey Act.
We operate in a 27,000 square-foot facility in Austin with
90 employees. Last year we produced more than 2,700 high-end
acoustic and electric guitars, mandolins, and ukeleles. We sell
through retailers in 34 States and 19 countries, and our
exports have grown to be approximately 20 percent of our
business. To maintain our quality and reputation, hand-crafting
still plays a major part of our instruments process, and we
must pay close attention to the species and sourcing of wood
and other materials used in our instruments.
With regard to the 2008 amendments, our company, NAMM, and
the music products industry are supportive of the goals of this
law. While we know of no direct evidence which would indicate
that passage of the amendments have resulted in a reduction of
illegal logging, we are keenly aware that it is important to
promote the legal and sustainable production and harvesting of
the wood species which lend so much to the beauty and tonal
quality of our instruments.
Collings has always made an effort to exercise caution in
our procurement practices, but I believe we are currently
better stewards due to the 2008 amendments. Lacey led us to
review our vendor compliance program, thereby eliminating some
suppliers while continuing to deal with those we believe share
our integrity and commitment to legal and responsible
practices.
Nevertheless, we do have some concerns about how the 2008
amendments have impacted our business, and our customers, both
retailers and musicians. In short, the way it is applied has
been increasing our cost.
First is the import declaration process. About 40 percent
of our woods come from outside the States. And for every
shipment, inbound shipment, a document must be filed with the
Animal, Plant and Health Inspection Service. Regardless of who
the importer of record is, a customs broker must assist with
the details involved with the imports, and it costs us money
each time an import declaration is filed. As with filing our
export declarations for instruments that leave our borders that
have inlays made of seashell, these filing costs add up. The
whole process seems a bit like making taxpayers file a return
with every paycheck, instead of annually.
We understand that APHIS is currently receiving almost
40,000 declarations each month, and processing these imposes a
substantial cost and burden on the Agency. Even the reported
effort toward the electronic filing I don't think will
substantially reduce the costs to us or those of the
government. There must be a more efficient way to accomplish
this, and we believe that the importer of covered products
should be required to maintain records pertaining to what
materials they import and where they come from, and that such
information should be available to enforcement agencies on
request. But the document should not have to be filed with
every shipment. We think this would be cost effective, and
would allow the government to focus on finding the needle of
high-risk imports, without having to look through the entire
haystack of all imports.
As indicated, we have a due-care process that should assure
us of receiving only raw materials which comply with Lacey's
requirements. However, because of the broad reach of Lacey to
cover a myriad and still undefined array of foreign laws, it
could still be possible for our company or others to come into
possession of material with questionable providence. We are
experts at making guitars, not foreign laws. We and our
industry colleagues have a great concern that we could do
everything right, have no actual or inferred knowledge of
illegality, exercise required due care, and yet end up with
materials or finished goods confiscated.
For many in our industry, that could be a death blow,
especially true for the smaller companies, the way we started
out, as well as our wholesale and retail customers and working
musicians. We are certainly not arguing for a get-out-of-jail-
free card for our industry; we simply think that the Lacey Act
should provide for a process by which a manufacturer can seek
the return of raw materials or finished products in front of an
independent party, such as an administrative or court judge,
before customs can impound them.
Finally, the 2008 amendments should be modified to exempt
from all enforcement raw materials or instruments which were
imported or manufactured prior to the effective date of the
law. I know that most of our early instruments are still in
use, and the same holds true for instruments made by other
companies in our industry who have been in business far longer.
There are plenty of 100-plus year-old instruments being played
and performed with every day. We understand that the
government's position that if pre-2008 products are resold
after 2008, they are also subject to enforcement actions.
Saying that such actions are not a enforcement priority
does little to ease the concern of the music products industry
or our customers. We would urge that the law be amended to
exempt material harvested and products finished prior to May
22, 2008 from all aspects of the Lacey Act.
In conclusion, Mr. Chairman, we are supportive of the goals
and objectives of the 2008 amendments of the Lacey Act. As with
any law, we think there have been unintended consequences. And
we hope that with what we regard as common-sense proposals, the
law could be modified favorably by the Congress. We thank you
very much.
[The prepared statement of Mr. McCreary follows:]
Statement of Steve McCreary, National Association of Music Merchants
Mr. Chairman, members of the Subcommittee, I am Steve McCreary,
General Manager of Collings Guitars, a medium-sized company located in
Austin, TX. I am here today on behalf of NAMM, the National Association
of Music Merchants. Headquartered in Carlsbad, CA, NAMM has more than
9,000 member companies around the world who make and sell a variety of
musical instruments and accessories.
I appreciate the opportunity to be here today to share our
industry's views on the 2008 amendments to the Lacey Act, one of our
country's most important conservation laws.
Before I do, however, let me tell you a little bit about Collings
Guitars, which started in the mid-1970's when Bill Collings began
building guitars on his kitchen table with just a few hand tools.
Descended from a family of engineers, Bill dropped out of college to
pursue building guitars. A decade later, Bill was in Austin, building
flattop and archtop guitars in his own small shop. As his reputation
for outstanding quality and meticulous attention to detail quickly
spread, Bill rented a 1,000-square foot space in 1989 and hired two
helpers.
Today, Collings Guitars operates from a 27,000 square foot facility
featuring technology that makes parts production more consistent,
accurate and safe. Our approximately 90 employees produced more than
2,700 acoustic and electric guitars, mandolins and ukuleles last year.
We sell through retailers in over 30 states and about 20% of our
business is done outside of the U.S. We are proud that artists such as
Lyle Lovett and Pete Townshend own many and perform with our
instruments as do musicians in many other well-known bands
Despite our growth, handcrafting still plays a major part in our
instrument production and we pay close attention to the type and
sourcing of wood and other material used in our instruments. The spruce
and maple used on the tops of many of our instruments come primarily
from U.S. forests while other woods, used elsewhere in the instruments,
come from many countries around the world.
With regard to the 2008 amendments to the Lacey Act, our company,
NAMM and the music products industry are supportive of the goals of
this law. While we know of no direct evidence which would indicate that
passage of the amendments has resulted in a reduction in illegal
logging, we are keenly aware that it is important to promote the legal
and sustainable production and harvesting of the wood species which
lend so much to the beauty and tonal quality of our instruments.
At Collings Guitars, we think we are in a better corporate position
because of the 2008 amendments. We always thought we exercised due care
in our procurement, but Lacey has led us to review our vendor
compliance program, drop some suppliers and continue to deal with those
who we believe share our integrity and commitment to legal and
responsible procurement.
Nevertheless, we do have some concerns about how the 2008
amendments impact our business and our customers, both retailers and
musicians.
First is the import declaration process. About forty percent of our
woods come from outside the United States and for every shipment a
document must be filed with the Animal and Plant Health Inspection
Service (APHIS) of the U.S. Department of Agriculture. We are importer
of record for slightly less than half of our foreign wood and procure
the rest from sources we believe are reputable suppliers.
Regardless of who brings in the shipment, however, customs brokers
assist with the details involved in importing and while these brokers
perform a valuable role in the supply chain, it does cost us money each
time a Lacey import declaration is filed. As with filing export
declarations for shell inlays, which are non-endangered species, these
costs are generally passed on to our customers. We understand that
APHIS is currently receiving some 40,000 declarations each month and
processing these imposes a substantial cost and burden on the agency as
well. Even a reported effort toward electronic filing will not
substantially reduce our costs or those of the government.
There must be a more efficient way to accomplish this. We think
that importers of covered products should be required to maintain
records pertaining to what materials they import and where they get
them from, and that such information should be available to enforcement
agencies on request, but that documents should not have to be filed
with every shipment. We think that is more cost-effective and would
allow the government to focus on finding the ``needle'' of high-risk
imports, without having to look at the entire ``haystack'' of all
imports.
As I indicated, we think we have implemented and follow a due care
process that will assure us of receiving only raw materials which
comply with the Lacey Act's requirements. However, because of the broad
reach of Lacey to cover a myriad--and still undefined--array of foreign
laws, it could still be possible for our company to come into
possession of material with questionable provenance.
We and our industry colleagues have great concern that we could do
everything right, have no actual or inferred knowledge of illegality,
exercise required due care and yet end up having materials confiscated.
For many in the industry, that could be a death blow. That's especially
true for artisan luthiers--the way Bill Collings started out--as well
as our wholesale and retail customers and working musicians.
We are certainly not arguing for a ``get out of jail free card.''
We simply think that the Lacey Act should provide for a process by
which an alleged law violator can seek return of his raw materials or
finished products in front of an independent party like an
administrative or court judge.
Finally, the 2008 amendments should be modified to exempt, from all
enforcement, raw materials or instruments which were imported or
manufactured prior to the effective date of the law. I know that many
of our company's early instruments are still in use, and the same holds
true for instruments made by other companies in our industry who have
been in business far longer. Even instruments which are more than 100
years old are still being played today.
We understand that it is the government's position that if these
pre-2008 products are resold after 2008 they are subject to enforcement
actions. Saying that such actions are not an enforcement priority does
little to ease the concern of the music products industry and our
customers. We would urge that the law be amended to exempt material
harvested and products finished prior to May 22, 2008 from all aspects
of the Lacey Act.
In conclusion, Mr. Chairman, we are supportive of the goals and
objectives of the 2008 amendments to the Lacey Act. As with any law, we
think there have been unintended consequences and we hope that what we
regard as common sense proposals to modify the law will be favorably
considered by the Congress.
______
Dr. Fleming. Thank you, Mr. McCreary.
Next up is Mr. Snapp--you are Travis R. Snapp--for 5
minutes on behalf of the International Wood Products
Association.
STATEMENT OF TRAVIS R. SNAPP, MANAGING DIRECTOR, BENCHMARK
INTERNATIONAL, CHIEF OPERATING OFFICER, BENCHMARK HOLDINGS,
INTERNATIONAL WOOD PRODUCTS ASSOCIATION
Mr. Snapp. Good morning, Mr. Chairman, and members of the
Committee. My name is Travis Snapp, And I am the Chief
Operating Officer at Benchmark Holdings. I am pleased to be
testifying on the Lacey Act before the House Subcommittee on
Fisheries, Wildlife, Oceans, and Insular Affairs today. I am
here as a member of the International Wood Products
Association. IWPA is the leading international trade
association for the North American imported wood products
industry, representing 200 companies and trade organizations.
IWPA has also been active in the Lacey Act Coalition, a broad
group of domestic manufacturers, retailers, and distributors,
from small family businesses to multi-national corporations,
that are greatly impacted by this law.
My company, Benchmark International, has certainly been
impacted by the Lacey Act. Originally founded over 60 years ago
as Pittsburgh Testing Labs, Benchmark International is one of
the oldest wood product certification and testing agencies in
operation today. We provide independent, third-party
certification of wood products, materials testing, research and
development, international regulatory compliance program
management, and engineering services.
I would like to speak to you about my professional
experiences with the Lacey Act as a product and process
certifier. I first became involved with the Lacey Act in 2008,
when Congress amended the statute to include plant and plant
products. Benchmark International immediately began working on
a proprietary Lacey compliance verification program. This LCV
program is designed to provide independent, third-party audits
to assist manufacturers and importers in demonstrating due
care, which the Lacey Act defines as the degree of care that a
reasonably prudent person would exercise under the same or
similar circumstances.
Under this program, Benchmark International offers the
necessary training, detailed recordkeeping, onsite
investigation, and verification to ensure that a company has
exercised due care when sourcing raw materials for products or
importing finished goods from abroad. Our program gives
downstream customers a high degree of confidence in the
products they purchase. Since Benchmark began offering the LCV
program in 2009, we have had 33 manufacturing facilities from
around the world request to enroll in our program.
However, due to the complexity of supply chain, and the
broad scope of the Lacey Act, I have been forced to turn 29 of
these 33 facilities away from our program. To be very clear on
this point, this is not to imply that there is illegal material
running rampant in supply chains. Rather, it demonstrates that
supply chains are complex, making it difficult to identify
every chip of wood used to produce a finished good, to the
extent the Lacey Act requires.
Several manufacturing facilities, if enrolled in our
program, would have required two to three full-time staff
working 40 hours per week, just to keep track of the raw
material stream. This complexity is not confined to the
manufacturing facilities that have approached me. Companies in
the United States and around the world utilize raw materials
from a variety of sources, both domestic and foreign.
It isn't just the raw materials that make it difficult to
certify to Lacey. The vast number of foreign laws included
under Lacey are unmanageable in scope. Benchmark International
contracts six legal firms overseas who track only the laws
related to wood exporting, processing, concessions, and cutting
in a mere six countries. That limited scope alone accounts for
over 1,000-plus laws that U.S. companies have to comply with
when importing wood to the United States. It has cost my
clients upwards of $300,000 since 2009, when we began our
program.
These 1,000 laws and regulations do not scratch the surface
of what the Lacey Act's true scope includes. When a speeding
ticket for a truck transporting logs, an overweight vehicle, or
a customs issue between two governments are all considered
Lacey Act violations, from my perspective as a certifier, that
is unreasonable and unachievable.
My recommendation to this Subcommittee is to clarify the
scope of the Lacey Act as it relates to plant and plant
products. This can be done by amending the 2008 Amendment to
narrow its scope by compiling a list of all foreign laws that
fall into the Lacey Act, or by a combination of both. It is
imperative that the scope of laws be narrowed to those that
actually deal with plant and plant products, that the concept
of contraband be clarified so that businesses may have their
day in court, and that pre-2008 material be exempted from the
Lacey Act declaration requirement.
Thank you, Mr. Chairman and Committee members for the
opportunity to appear before you today. I stand ready to answer
any questions you may have.
[The prepared statement of Mr. Snapp follows:]
Statement of Travis Reed Snapp, Chief Operating Officer,
Benchmark International
Good Morning Mr. Chairman and members of the Committee. My name is
Travis Snapp, and I am the Chief Operating Officer of Benchmark
International.
I am pleased to be testifying on the Lacey Act before the House
Subcommittee on Fisheries, Wildlife, Oceans, and Insular Affairs today.
I am here as a member of the International Wood Products
Association. Established in 1956, IWPA is the leading international
trade association for the North American imported wood products
industry, representing 200 companies and trade organizations engaged in
the import of hardwoods and softwoods from sustainably managed forests
in more than 30 nations across the globe. Association members consist
of three key groups involved in the import process: U.S. importers and
consuming industries, offshore and domestic manufacturers and the
service providers that facilitate trade. IWPA advances international
trade in wood products through education and leadership in business,
environmental and public affairs.
IWPA has also been active in the Lacey Act Coalition, a broad group
of domestic manufacturers, retailers, and distributors. This Coalition
has been reaching out to Congress since 2011 with four specific Lacey
Act issues they would like addressed. They represent a wide cross
section of industries, from small family businesses to multi-national
corporations that are greatly impacted by this law.
My company, Benchmark International, has certainly been impacted by
the Lacey Act. Originally founded over 60 years ago as Pittsburgh
Testing Labs, Benchmark International is one of the oldest wood
products certification and testing agencies in operation today. We are
a global leader in providing independent third party certification of
wood products, materials testing, research and development assistance,
international regulatory compliance program management and engineering
services.
I would like to speak to you about my professional experiences with
the Lacey Act as a product and process certifier.
Practical Issues with Lacey Act Implementation: The Complexity of
Supply Chains and the Scope of Foreign Laws
I first became involved with the Lacey Act in 2008 when Congress
passed an amendment that added plant and plant products to the pre-
existing Lacey Act framework. It was immediately clear that this would
affect the wood manufacturing sector within the United States and
abroad.
As soon as the 2008 Amendments were passed, Benchmark International
began working on a proprietary Lacey Compliance Verification Program
(LCV). This LCV program is designed to provide independent, third-party
audits to assist manufacturers and importers in demonstrating ``due
care'', which the Lacey Act defines as the ``degree of care that a
reasonably prudent person would exercise under the same or similar
circumstances.''\1\
---------------------------------------------------------------------------
\1\ Animal Plant Health Inspection Service, United States
Department of Agriculture. Lacey Act Primer. http://www.aphis.usda.gov/
plant_health/lacey_act/downloads/LaceyActPrimer.pdf. Page 17.
---------------------------------------------------------------------------
Under this program, Benchmark International offers the necessary
training, detailed record keeping, on-site investigation and
verification to ensure that a company has exercised due care when
sourcing raw materials for products or importing finished goods from
abroad. Our program gives downstream customers a higher degree of
confidence in the products they purchase.
Since Benchmark began offering the LCV program in 2009 we have had
33 manufacturing facilities from around the world request to enroll in
our program.
However, due to the complexity of the supply chain and the broad
scope of the Lacey Act, I have been forced to turn 29 of them away.
To be clear, this is not to imply that there is illegal material
running rampant in supply chains. Rather it demonstrates that supply
chains are complex and ranging across continents for individual
manufacturers, making it difficult to identify every chip of wood used
to produce a finished good from plant or plant products to the extent
the Lacey Act in its current form requires.
Several manufacturing facilities, if enrolled in our program, would
have required 2 to 3 full time staff working 40 hours per week just to
keep track of the raw material stream used to produce finished
products. This complexity is not confined to the manufacturing
facilities that have approached me; companies around the world and in
the United States utilize raw materials from a variety of sources, both
domestic and foreign.
It isn't just the raw materials that make it difficult to certify
to Lacey. The vast scope of foreign laws included under Lacey are
unmanageable in scope--Benchmark International contracts 6 legal firms
who track only the laws related to wood export, processing,
concessions, and cutting in a mere 6 countries. That limited scope
alone accounts for over 1000+ laws (and growing), and has cost my
clients upwards of 300,000 USD since 2009 when we began our program.
These 1000+ laws and regulation laws do not scratch the surface of
what the Lacey Act's true scope includes. When a speeding ticket for a
truck transporting logs, an overweight vehicle, or a customs issue
between two governments are all considered Lacey Act violations (a
felony that is punishable by potential jail time and hundreds of
thousands of dollars in fines) from my perspective as a certifier, that
is unreasonable and unachievable. It causes uncertainty for American
businesses that attempt to operate legally and in compliance with the
Lacey Act's intent.
Scope of Foreign Laws: A Workable Solution to Aid in Compliance
My recommendation to this subcommittee is to clarify the scope of
the Lacey Act as it relates to plant and plant products so as to
provide assurances for businesses making every effort at due care. This
can be done by amending the 2008 Amendment to narrow its scope, by
compiling a list of all foreign laws that fall under the Lacey Act, or
by a combination of both.
Businesses have been told not to worry, that the government would
never prosecute over an infraction as minor as an overweight
transport--but a customs misclassification was in fact the subject of a
raid and seizure of goods. American businesses, the jobs they support,
and the consumers they supply deserve clarity on the scope of foreign
laws that fall under the Lacey Act. I would ask Congress to legislate
these changes, so that the businesses I certify can have a chance at
compliance with the Lacey Act's mandates.
Contraband Should Be Clarified
Further clarity should be provided for items seized in an alleged
Lacey Act violation. Under the Department of Justice's current
interpretation of the Lacey Act, material seized is considered
``contraband''--as illegal as cocaine. While cocaine is instantly
recognizable as illegal per se, wood--or finished products produced of
or incorporating wood--are not.
This fundamental difference is integral. Because of this
designation, items seized under the Lacey Act are deemed contraband.
And much as an individual would be unable to petition a court for the
return of cocaine, a company is not granted standing in court to
petition for the return of their seized goods (assuming they can
demonstrate due care).
It is imperative that the companies I certify can know they have
some protection under the law should a Lacey Act case be brought
against them, or someone in their supply chain.
Clarifying Contraband: A Reasonable Solution
Not one association or reputable company would ask for those who
engage in illegal activity to be given a legal pass--if a Lacey Act
violation does occur, if a company or individual has clearly and
knowingly traded in illegal material, then I and IWPA would support the
appropriated penalties under the law. Illegality need not be rewarded.
Just as I sit before you today giving testimony on the implications of
the Act as currently written, I would testify against any entity
domestic or foreign who knowingly violated the Act.
Ethical companies that have demonstrated their attempt to comply as
best they can with the Lacey Act should be accorded a day in court to
contest the seizure, demonstrate the due care they took, and have an
avenue of recompense. Designating wood as contraband effectively severs
this route, and does not allow the right to a fair trial.
This is a wrong that needs to be righted. Wood should not be
classified as contraband; a legislative fix is required to ensure that
American businesses have the right to a day in court to demonstrate the
measures of due care they performed.
Pre-2008 Material: How to Perform Due Care?
Improved clarity should be extended to other areas of the Lacey Act
as well. There is still uncertainty with products harvested, imported,
and/or manufactured prior to the 2008 passage of the Lacey Act
Amendments. To expect any point in the supply chain--importer,
distributor, or consumer--to comply with a law in regards to a product
produced prior to the law's enactment is unreasonable. Determining the
country of origin and/or species in a product pre-2008 can often be
difficult, if not impossible. Legislation is necessary to clarify this
point, and ensure that antiques and other pre-2008 material can be
bought and sold.
Congressional Action Needed
Congress should take up Lacey Act reform. I understand firsthand
the practical difficulties businesses face that rely upon imported and
domestically sourced wood and wood products under the Lacey Act. An
unknowable and unmanageable scope of laws, retroactive liability, and
the denial of a trial if allegations are made--this law, while well
intentioned, has some practical flaws that desperately need legislative
attention.
I want to emphasize that I support the goals of the Lacey Act--I
don't want illegal logging; I am by nature and profession a
conservationist. But in order for this law to function as Congress
intended it to--protecting the forests, weeding out the bad actors, and
allowing legal trade to continue--fixes are urgently needed. We need a
common sense approach to this issue.
It is imperative that the scope of laws be narrowed to those that
actually deal with plant and plant products, that the concept of
contraband be clarified so that business may have their day in court,
and that pre-2008 material be exempted from Lacey Act declaration
requirements. Businesses, the jobs they support, and they consumers
they serve deserve that.
Thank you, Mr. Chairman and committee members, for the opportunity
to appear before you today. I stand ready to answer any questions you
might have.
______
Dr. Fleming. Thank you, Mr. Snapp.
I now recognize Ms. Birgit Matthiesen for 5 minutes to
present testimony on behalf of the Canadian Manufacturers and
Exporters.
STATEMENT OF BIRGIT MATTHIESEN, SPECIAL ADVISOR TO THE
PRESIDENT AND CEO, CANADIAN MANUFACTURERS AND EXPORTERS
Ms. Matthiesen. Mr. Chairman, Committee, thank you very
much. My name is Birgit Matthiesen And I appear here today on
behalf----
Dr. Fleming. Yes. Let me interrupt you for a second. Be
sure and pull that microphone close. You all are going to have
to really just share that. Slide it back and forth, and
hopefully we can hear you a little better. Thank you.
Ms. Matthiesen. Is it better now?
Dr. Fleming. Yes, much.
Ms. Matthiesen. OK. My name is Birgit Matthiesen. I appear
today before you on behalf of Jayson Myers, the President and
CEO of Canadian Manufacturers and Exporters. As the foreigner
in the room, I am doubly honored to be invited to appear before
you today, and I thank you very much, sir.
I would also like to think that I am the voice of the
hundreds, if not thousands, of American companies engaged in
our vibrant cross-border business relationship. These are the
companies across America that are our customers, our suppliers,
and our best business partners.
In just three words, I can describe the Canada-U.S.
economic relationship: nature, volume, and immediacy. By
nature, I mean almost 40 percent of our two-way trade is either
intra-industry or intra-company. By volume, a truck crosses our
border every 2 seconds. By immediacy, long gone are the days,
sir, that these trucks are filled with finished goods destined
directly to retail shelves. Today they are more apt to be
component parts destined to just-in-time assembly line
production facilities all across America.
Let me focus my remarks on the import declaration, since we
are, by vast majority, the significant filers of import
declarations, either because we are importers of record in
Canada, or our business partners are the importers.
Canada, as you know, has one-third of the global boreal
forest. More such forest that is federally protected than any
other country in the world. Over 90 percent is under public
stewardship. Our members, like my colleagues at the table
today, strongly support the goals of the Lacey Act. What are
our companies doing? Not only do they comply with both U.S. and
Canadian regulations, they enforce their own supply chains with
very stringent, good-stewardship programs. They do so as good,
corporate citizens. But also they do so because their brand
names demand them to. As one lumber company in Canada once put
it--this CEO once put it, ``Sustainability is in our fiber.''
In addition, and across all industry sectors, Canadian
companies and their carriers partner with U.S. Customs and
Border Protection, voluntarily spending millions of dollars to
secure their supply chain against illicit or illegal intrusion.
What are our two governments doing? Canadian environmental
and border agencies join with their American counterparts in
strong enforcement of the CITES provisions. Just next month, on
June 20th, Canadian regulators will once again be in Washington
to meet with their American counterparts and American business
associations to further the work of important bilateral
initiatives such as the Beyond the Border Action Plan and the
Regulatory Cooperation Council.
The idea is to focus government resources and to join the
resources on the high and unknown elements of our cross-border
trade against third-country risks. In both cases, we need to
recognize the need to join our forces. The import declaration
flies in the face of these efforts. The cost of compliance,
including additional IT and reporting and staffing costs before
the import declaration is even sent, is a tax on North American
manufacturing. The data elements required are near impossible
to obtain, and will only be exacerbated when the product
coverage expands up the manufacturing supply chain as is
currently envisioned in legislation.
There must be a better way, and there is. Currently, and
for years now, our NAFTA certificates of origin already attest
to the Canadian origin of our shipments. Customs transactions
today are electronically sent to CBP and other border agencies
well ahead of the arrival of the actual shipment at the
physical border. CBP and their APHIS staff have the opportunity
to look at what is coming down the road before the shipment is
allowed into the United States. Highly sophisticated risk
analysis tools are applied at this point to this data, again,
in an effort to seek out any anomalies in global trade patterns
to focus more attention.
Gentlemen, Madam, a transactional approach and import
declaration for each transaction--and you heard the numbers
today--is neither risk-based or good regulatory practice. CME
is working closely in both Ottawa and Washington to find new
ways to manage our cross-border relationship. Canadian agencies
and our business partners are part of the solution, we are not
part of the problem. We have to be. The competition from third-
country imports in our own backyard here in North America is
now stiffer than ever before. Canadian and American companies
can and we will compete in the global marketplace. But the
import declaration is simply yesterday's thinking and
yesterday's enforcement tool.
I was pleased to hear about the North American cooperation
that was cited by the panel beforehand. That is exactly the
approach we need to take for tomorrow. And I thank you very
much, again.
[The prepared statement of Ms. Matthiesen follows:]
Statement of Birgit Matthiesen, Special Advisor to the President and
CEO, Canadian Manufactures and Exporters (CME)
Mr. Chairman, Members of the Subcommittee, thank you for inviting
me to testify at today's hearing on the Lacey Act. I appear today on
behalf of Jayson Myers, President and CEO, Canadian Manufacturers &
Exporters.
Introduction
CME is the largest business association in Canada representing
thousands of Canadian companies across many sectors. More importantly,
a significant portion of our members are either Canadian operations of
U.S. multinationals, suppliers of component products to U.S. assembly
operations, or buyers of U.S. manufactured goods. Our offices are in
every provincial capital in Canada as well as our nation's capitol,
Ottawa.
I would like to ask that the Committee accept my formal written
testimony as part of today's record.
The business community we have built--together.
I appear before this panel today as the voice of the Canada-U.S.
business partnership--one that is unique in the world. Long gone are
the days when a truck travelling across our shared border is filled
with finished products destined to retail shelves. Today, almost half
of cross-border shipments are either intra-company supplies or
component part destined for intra-industry manufacturing plants.
The volume, the immediacy and the nature of our cross-border
business partnership has been a key contributor to our shared economic
health and will continue to play a vital role as our communities on
both sides of the border return to economic health.
So while I am representing CME at this hearing, I like to think
that I am also representing our U.S. business partners and the
thousands of workers in the United States who depend on our vibrant
business relationship.
Canada is not part of the problem, rather we are part of the solution.
An American or Canadian truck crosses our land border approximately
every two seconds. Hundreds of these trucking companies and their
customers have voluntarily partnered with U.S. and Canadian border
agencies to bolster and secure their cargo supply chains. Programs such
as Customs-Trade Partnership Against Terrorism (C-TPAT), and Partners
in Protection (PIP) in Canada.
In addition, their truck drivers and rail crews have been fully
vetted by CBP and other agencies under the bilateral Free and Secure
Trade (FAST) program. In both directions, our trucking and rail
shipments arrive at ports of entry where Canadian and U.S. customs
officials work in partnership every day to mitigate commercial or
security risk to our communities. There is no other trading partnership
that comes close to what U.S. and Canadian companies together have
pledged with our border agencies.
Our forests
Canada has one-third of the global boreal forest in a band that
stretches from coast to coast. Canada also has more boreal forest that
is federally protected than any other country in the world. This is in
addition to the fact that 93% of Canada's forests are under public
stewardship. The area of certified forest in Canada is greater than the
combined area of all other country certifications; representing almost
40% of the world's certified forests. This certification system
complements Canada's comprehensive and rigorous forest management laws
and regulations.
What our companies are doing
Our member companies have implemented stringent due diligence
standards on their entire supply chain. They must, because they know
that any misstep would damage their corporate standing and their
commercial access to U.S. and Canadian markets. Further, Canadian
companies involved in cross-border shipments of wood and plant products
are well known to U.S. agencies. They send thousands of the same and
repetitive shipments to the same U.S. customer and supply chain each
and every day. These are hardly fly-by-night or unknown entities, but
brand name prominent companies in both countries.
To them, their sustainability efforts are their competitive
advantage. Or as one CEO put it, ``sustainability is in our fiber''.
This responsibility extends to our members' supply chain by their
conducting reviews and verification of purchased inputs and requiring a
compliance standard throughout their supply chain to guard against
illegally logged or improperly harvested forests.
If any compliance concern is detected, companies immediately cease
their purchasing from suppliers, period.
In short, Canadian companies and our US business partners know the
value of good stewardship.
For our businesses to survive we must keep unnecessary clogs out of
our cross-border supply chains and to recognize by regulation and
policy the safeguards either or both countries together have put in
place to protect our communities from illegally harvested wood, plants,
or related products from third countries.
What our two countries are doing--together
Next month Canadian regulators will be in Washington to meet with
their American counterparts and American business leaders on the next
steps towards regulatory equivalence between our two countries.
Launched in 2011, the U.S. and Canada Regulatory Cooperation
Council aims to eliminate redundant or obsolete regulations that burden
our integrated cross-border supply to partner our resources at the
North American perimeter.
The statement at its launch tells that story--``The President and
the Prime Minister have taken this initiative because they believe that
their citizens deserve smarter, more effective approaches to regulation
that enhance the economic competitiveness and well-being of the United
States and Canada, while maintaining high standards of public health
and safety and environmental protection.''\1\ Cooperation on regulatory
inspections not only raises the comfort level for U.S. and Canadian
enforcement agencies, it raises the comfort level for our consumers and
our families.
---------------------------------------------------------------------------
\1\ http://www.whitehouse.gov/sites/default/files/us-
canada_rcc_joint_action_plan3.pdf.
---------------------------------------------------------------------------
Also in 2011, our two countries launched the ambitious ``Beyond the
Border'' Action Plan that also aims to partner border enforcement
resources against external risks, harmonize cargo data requirements and
reduce transactional compliance costs on our intra-North American
supply chain.
One of the key initiatives under the Border Action Plan is an
import management approach that contemplates stepping away from the now
obsolete transaction-by-transaction import process to an account-based
system that reports import shipments on a periodic even annual basis.
Participating companies will share more information on their global
supply chains with Customs authorities in exchange for periodic import
reporting. To be clear, this does not mean a reduction of scrutiny, or
a risk to security--it means better security. Customs authorities can
better allocate precious resources to target the high-risk elements of
international trade, while simultaneously reducing costs for our best
corporate citizens.
On the multilateral front, Canada and the United States are joined
in their commitments made in 2011 at the Asia-Pacific Economic
Cooperation (APEC) work to implement appropriate measures to prohibit
trade in illegally harvested forest products.
In Canada, our Wild Animal and Plant Protection and Regulation of
International and Interprovincial Trade Act (WAPPRIITA) is the
legislation through which Canada enforces and administers its
responsibilities under the Convention on the International Trade in
Endangered Species of Wild Flora and Fauna (CITES), an international
agreement to protect endangered species. Canada is one of more than 150
countries which have signed the Convention. The Canadian law stipulates
the federal permit requirements for the international trade of
wildlife, their parts, and products made from them.
How does this work? CITES operates through an import/export permit
system which require that our companies
Obtain CITES Permits before an import or export occurs.
Verify that Customs or the federal department of
authority validated the CITES permits at the time of export and/or
import. Without validation, permits will not be accepted. Also, a copy
of the permit will be retained by Canada Customs and will be forwarded
to Environment Canada for compliance purposes.
Ensure all valid cities documents accompany the shipment.
Note: CITES-listed wildlife may be subject to regulations by other Acts
of Parliament or provincial and territorial legislation. Other
government agencies should be contacted, particularly the Canadian Food
Inspection Agency (CFIA) when importing or exporting live animals or
plants.
Advise Environment Canada of wildlife imports in advance,
to speed the inspection process.
Comply with the International Air Transport Association
(IATA) Regulations and the CITES Guidelines for Transport and
Preparation for Shipment of Live Wild Animals and Plants when shipping
live specimens.
The Lacey Import Declaration
A transactional Lacey Import Declaration is unnecessary and a tax
on North American competiveness. A better approach might be Blanket
Plant declaration similar to the existing U.S. regulations covering
importing chemical substance.\2\
---------------------------------------------------------------------------
\2\ 19 CFR 12.12.
---------------------------------------------------------------------------
In our public comments submitted to the U.S. Department of
Agriculture, CME expressed unwavering support for the goals of the
Lacey Act--that of combating illegal harvesting and trafficking of wood
and plant products. But given that the vast majority of Lacey regulated
shipments originate in Canada, the border compliance requirement,
specifically the transactional import declaration, must be revisited.
In our view, not only because of the commercial costs but because
we believe that only through combined government efforts based on sound
and proven risk management principles can we protect our industries and
our communities from the scourge of illegally harvested plant products.
In a time when governments on both sides of our border are reducing
their operational budgets, it is important that agencies be able to
target high-risk shipments and to act quickly. If those same agencies
are buried in paper import declarations--mostly from Canada--they have
fewer resources to go after the much higher or unknown risk elements.
Beyond the horizon
The current implementation of the Lacey Act declaration is limited
to a few tariff chapters but the underlying statute clearly indicates
the intent of Congress at the time was that all products containing
plant materials would be subject to the a declaration requirement.
When the import declaration requirement is pushed farther upstream
in the manufacturing chain, it will become impossible to comply with.
As an example, a manufacturer of plastic auto parts which contain
inputs from a myriad other components, such as resin, will not be able
to determine the origin of the plant that the resin was made from, let
alone the cultivar and species, or weight and value.
In addition, the nanotechnology industry today--in both our
countries--is developing exciting new products from plant fibers. These
industries, among others, are the job-creators of tomorrow. It is this
innovation that will spur North American manufacturing competitiveness
in the years ahead. Applying the Lacey import declaration to these
products of the future will be impossibility.
In terms of costs, under the current product coverage for the Lacey
Import Declaration, the broker cost borne by US importers is raised by
5-7 times--imagine what any future application of the declaration might
mean for the U.S. business community. This cost is without a doubt a
tax on our NA manufacturing sector at a time when our communities can
least afford additional burdens.
A better way
CBP and USDA at the border already have at their disposal highly
sophisticated risk targeting tools, armed with data carriers and
shippers must provide hours if not days before the truck or rail
shipment even physically arrives at the land border. It is the success
of these tools and the risk management approach to cross-border trade
that allows these agencies to know what will be arriving, from where,
and at which ports of entry. It allows them to target the unknown or
less-known elements of what is coming into the United States--be it a
carrier, a shipper, a commodity, or even an anomaly of shipping
patterns. CBP officers at ports of entry are highly trained in the use
of the information and determine which shipments should be given more
scrutiny at ports of entry.
CME member companies enjoy an exceptionally high import compliance
performance rate. They fully support efforts to stem illegal logging of
endangered forests around the globe. They have and will continue to
work with U.S. and Canadian agencies--in short, these companies are not
part of the problem but welcome the opportunity to be part of the
solution.
Our business community is not asking for any country carve- out o
the Lacey Act regulations but only reasonable changes to the import
declaration.
1. First and foremost, we ask that a transactional import
declaration be reconsidered and that a blanket declaration tied to the
Customs transaction be adopted.
2. Second, that the data required to meet Lacey import
requirements reflect an understanding of business practices and
business confidentiality concerns. We ask that data regulations be
reasonable and implemented in such a way that the regulated community
can be able to comply.
3. Third, that the certification that the Lacey-regulated
shipment does not contravene any logging regulations in third country
be shelved. It is an impossible task for the industry, now and
certainly when the regulated HTS coverage is expanded.
On the Canada-U.S. front at least, the cumbersome Lacey import
declaration is not the solution.
It is yesterday's thinking and yesterday's enforcement tool.
Thank you and I look forward to any questions you may have.
______
Dr. Fleming. Thank you, Ms. Matthiesen. I got it right this
time. Thank you.
The Chair now recognizes Mr. Jameson S. French for 5
minutes to provide testimony on the 2008 Lacey Act amendments.
STATEMENT OF JAMESON S. FRENCH, PRESIDENT AND CEO, NORTHLAND
FOREST PRODUCTS
Mr. French. Great. Thank you very much, Mr. Chairman. My
name is Jameson French. I am from New Hampshire. My family has
been in the hardwood industry since the 1880s, so we are on the
fourth generation. The fifth is coming along. Just for the
record, I have operations in Virginia, as well as in New
Hampshire. Back in the good days of 2007, we had 75 employees.
We dropped down to 55 during the devastating recession, And I
am happy to tell you that we have gotten back up to 63 now.
I am representing both my company, but also as a member of
the Hardwood Federation that is the largest hardwood trade
association in the U.S. We represent about 10,000 businesses in
every State in the country. A lot of those businesses, most of
those businesses, are small, family owned businesses in rural
areas that provide very important jobs and economic development
opportunities in those districts.
Before I get into the--some of the other key points I
wanted to make, I just wanted to make a clarification,
Congresswoman Carol Shea-Porter mentioned all those companies,
and you talked about them not being importers. Many of those
companies on that list and many of those trade associations
include importing companies, and I could go into that later on.
It is very important to note that a healthy, sustainable
forest means a healthy, sustainable forest industry. It is not
just about the forest products, it is also about the
environment, recreation, and wildlife. We are a very long-term
industry. As my dad says, he is growing trees for his great-
grandchildren. The U.S. is a fabulous wood basket for the
world, and will continue to be so.
I take great pride, as an exporter of wood products, that
the U.S. leapt ahead of the rest of the world back in 2008 and
took a very big step by amending the Lacey Act to address
illegal logging. It sent a message out to the world that we--
where we were less effective in some other areas of
environmental protection, but we were a leader. And since then,
the European Commission, that estimates about 20 percent of the
wood coming into Europe has been illegally secured, has passed
very strict regulations that came into effect this year.
Australia has also passed similar regulations.
I would just like to remind everybody that this was a very
bipartisan amendment when it came through. I am very proud to
say that both my Senators, Senator Gregg and Senator Sununu at
the time, Republicans from New Hampshire, were cosponsors,
along with Senator Alexander, Senator Collins, and several
other Republicans. It was a bipartisan effort, and we had
substantial hearings. There was a hearing before this
Committee, I believe. There were consensus with multiple
industry groups. It was a very deliberate and very thorough
process.
As you probably know, the economic down turn hit the
industry very hard. We have been very, very dependent on the
recovery of the industry because of exports. And just a few
very important statistics that are in my testimony, but I
should just say that the exports were at the highest level in
2012 at $1.6 billion. And in 2008 the U.S. share of the global
hardwood trade was 13 percent. Since that time, coinciding with
the enactment of Lacey, the share has grown and it reached 20
percent for the first time. And over the last 4 years, the U.S.
hardwood exports have risen by more than 70 percent. During
that same period, exports from all other leading hardwood-
producing countries, with the sole exception of Thailand, have
been flat or declining.
In 2012, China's trade statistics recorded a 5 percent
increase in the imports of U.S. hardwood, while the imports of
hardwood from all other sources declined by 6 percent. I really
believe that China, because of our Lacey Act, is starting to
deal with the problems that they have with illegally traded
wood.
In 2012, the U.S. hardwood export value was more than
double that of Malaysia, the world's second-largest hardwood
producer. So the U.S. industry has been helped. I have some
very specific quotes in my testimony from Tom Talbot in
Wisconsin and from Orn Gudmundsson in Kentucky. I won't read
them again, but Orn is a wood importer himself, and he believes
that the Act does not impose undue burden on himself, and it
helps the import--the leveling the playing field, and it makes
his customers overseas more interested in buying legal American
wood products, low-risk products.
So, we strongly urge--the Hardwood Federation and most of
the members of my industry strongly urge that the Lacey Act be
fully implemented, and that we do what we can to fully fund
APHIS and Fish and Wildlife to make sure it is enforced. And I
think it would be a really bad mistake to reopen the statute.
Thank you very much for your attention. I look forward to
your questions.
[The prepared statement of Mr. French follows:]
Statement of Jameson S. ``Jamey'' French, President and CEO of
Northland Forest Products
Mr. Chairman, Members of the Subcommittee, I am Jameson French,
President and CEO of Northland Forest Products, a hardwood lumber
processor, exporter and distributor based in New Hampshire with
operations in Virginia. My family has been in the hardwood lumber
business since the late 1800s. I am here before you today to represent
the views of both my company and as a member of the Hardwood
Federation, the largest hardwood industry trade association,
representing thousands of hardwood businesses in every state in the
country. Companies in the hardwood industry are predominantly small
family-owned businesses dependent upon a sustainable supply of healthy
timber resources, both imported and domestically sourced. They serve
not only the domestic market, but a strong and growing export market.
The Federation and its members believe it is critical to keep American
companies operating and our citizens employed by protecting forest
resources and increasing consumer demand for hardwood products, and
assuring fair competition worldwide.
The Hardwood industry includes many multi-generational families
that care deeply about long term healthy and sustainable forests,
whether in North America or around the world. Without forests there
will be no forest industry, let alone forests that pull and sequester
carbon from the atmosphere, provide recreational activities and give
shelter and habitat to wildlife.
A strong forest products industry supports healthy and valuable
forests. In 2012, the U.S. Department of Agriculture Forest Service
released a study showing the correlation between an active forest
products industry and expanding forests in areas of the world with the
most active forest products industries, including North America,
Northern Europe and Scandinavia. The Lacey Act is a valuable tool for
the Hardwood industry in terms of both creating healthy and sustainable
forests and supporting the U.S. forest products industry.
I think it is also important to note that the U.S. is held in high
esteem around the world for taking the first step in addressing this
global problem. Now, there is a growing movement around the world as
others follow our work to reduce illegal logging: The European
Commission estimates that 19% of lumber imports to the European Union
are illegally sourced. The European Union, as well as other countries,
are viewing this as a serious problem and also enacting Lacey-type laws
to address sourcing. Some key examples include:
The European Union passed their Timber Regulation in 2010
and fully implemented it in March of 2013;
The Australia passed the Illegal Logging Prohibition Act
and the government has committed $1 million to work with regional
governments and industry on a number of measures to combat illegal
logging;
The Philippines is also ramping up their enforcement
against illegal logging.
The Hardwood Federation was the first industry group to recognize
illegal logging as a serious threat. We were one of the first
associations along with 49 other trade associations, non-profits and
unions that supported passage of the Lacey Act Amendments as part of
the 2008 Farm Bill. We did so for reasons that were both environmental
and economic. Purveyors of illegally harvested timber have the
potential to inundate our markets with products priced at levels that
are simply out of reach for U.S. producers. In fact, illegal logging
costs our industry billions of dollars each year by suppressing global
prices by as much as 16 percent. By putting law-abiding U.S. producers
at a competitive disadvantage, illegal logging costs us real jobs here
in America.
Simply stated, the case for bolstering the century-old Lacey Act to
address illegal logging was so compelling that the 2008 amendments were
enacted under the Bush administration with strong bipartisan
congressional support. The U.S. Forest products industry is a
considerable economic force. The amendments were passed after public
hearings and extensive negotiations among affected parties. The U.S.
importing companies we represent are willingly bearing the costs of
complying with the Lacey Act and applaud the U.S. government agencies
such as the USDA Animal and Plant Health Inspection Service for
implementing an effective program of compliance given minimal
resources.
The industry produces approximately $200 billion in products
annually and employs nearly 900,000 men and women in good paying jobs.
The industry meets a payroll of approximately $50 billion annually and
is among the top 10 manufacturing sector employers in 47 states. Our
industry, like others, has been challenged over the last few years by
economic and regulatory uncertainties. However, there are key benefits
we are realizing since the passage of Lacey.
First, it is important to note that the U.S. has the largest supply
of sustainable, legally sourced hardwoods in the world. With a growing
emphasis on worldwide enforcement against illegal practices worldwide,
American hardwoods have benefited as the preferred choice.
Market forecasts show that the legality movement, which was
prompted by enactment of Lacey, will reduce wood supplies from
countries where there is a significant risk of illegal logging. Recent
statistics show that this heightened awareness around the world is
providing a real opportunity for legal operators in the United States.
U.S. hardwood lumber exports in 2012 were at their
highest ever level last year, at $1.6 billion;
In 2008, the U.S. share of global hardwood lumber trade
was 13 percent. Since that time--coinciding with enactment of Lacey--
that share has steadily grown and in 2012, reached 20% for the first
time;
Over the last four years, U.S. hardwood lumber exports
have risen by more than 70%;
During the same period exports from all other leading
hardwood lumber producing countries, with the sole exception of
Thailand, have been flat or declining;
In 2012, China's trade statistics record a 5% increase in
imports of U.S. hardwood lumber while imports of hardwood lumber from
all other sources declined by 6%;
In 2012, U.S. hardwood lumber export value was more than
double that of Malaysia ($790 million), the world's second largest
exporter of hardwood lumber.
In addition to these macroeconomic figures, I would like to share a
few examples of how the Lacey Act has helped some small businesses in
my industry:
Tom Talbot, the CEO of Glen Oak Lumber and Milling in
Montello, Wisconsin notes that in the last 2\1/2\ years, his business
in American basswood window products has soared. The increase is
directly attributable to national distributors' demand for legally
sourced wood and accurate documentation.
Orn Gudmundsson, President of Northland Corporation
hardwoods based in Kentucky states ``As a wood importer myself, I do
not believe the Act imposes undue burdens on us, nor does it seek to
stop the use of imported wood or wood products. Furthermore the
inclusion of wood in the Lacey Act has had an enormously positive
impact on U.S. hardwood lumber exports. Manufacturers overseas are
increasingly relying on U.S. hardwood lumber, due in part to our
reputation for legally sourced and sustainable timber. Many Southeast
Asian manufacturers who wish to avoid wood from questionable sources
have increasingly turned to U.S. hardwoods. About 50% of my company's
exports to Southeast Asia are probably returned to the U.S. as finished
or semi-finished product. If we abolished the Lacey Act these
manufacturing jobs would not magically reappear in the U.S. rather the
U.S. lumber they are made from would be likely replaced by illegal
local wood.''
As a member of the Hardwood Federation and a representative of the
ten thousand (10,000) businesses we represent, I urge Congress to allow
the Lacey Act to be fully implemented. We currently await the
interagency report to Congress on aspects of Lacey Act implementation,
enforcement and its effectiveness. In the meantime, we recommend that
Congress provide full funding for Lacey Act implementation so that
computer systems and other critical infrastructure needed to make this
law fully effective are in place. We strongly oppose Congressional
actions aimed at re-opening the statute and diminishing enforcement.
It is important to note that delivering on Lacey Act objectives is
not a process without growing pains as the private sector and the
government learns from each other about implementation realities. That
is why 57 industry trade associations and environmental groups,
including the Hardwood Federation, the International Wood Products
Association, the American Forest and Paper Association, the National
Association of Manufacturers and the National Retail Federation signed
onto a consensus statement recommending areas to streamline and enhance
implementation that can be made administratively to the Lacey Act. We
look forward to continuing to work with our co-signers and the
Administration on these technical fixes.
The increased awareness of the need for transparency, risk
management and legal sourcing is precisely the intent of the Lacey Act.
This law is important for protection of the environment and the
competitiveness of the U.S. forest products industry. This Act promotes
our ability to maintain a growing consumer demand for a U.S.
sustainable supply of healthy timber resources which in turn supports
local economies situated in predominantly in rural areas across this
great nation.
Thank you for your consideration of our industry's perspective on
this issue. The Lacey Act is critical to U.S. hardwood jobs and we urge
the Committee to assure that the statute is allowed to continue to be
fully implemented as originally envisioned.
______
Dr. Fleming. Thank you, Mr. French.
The Chair now recognizes Mr. Marcus Asner for 5 minutes to
provide his perspective on the 2008 Lacey Act amendments.
STATEMENT OF MARCUS A. ASNER, PARTNER, ARNOLD AND PORTER, LLP
Mr. Asner. Thank you, Mr. Chairman. I have been involved
with the Lacey Act for over a decade, both as a Federal
prosecutor, when I handled one of the largest Lacey Act cases
in history, and now, in private practice, when companies come
to me for advice on how to comply with the Lacey Act.
I think that everybody in this room agrees that illegal
logging and illegal trade is bad for America and it is bad for
the world. It hurts legitimate U.S. companies and it hurts
consumers. It harms the environment and let's don't forget it
hurts victims. Illegal logging and trade impinges on the rights
of property owners, the very people and States whose trees were
stolen.
The Lacey Act is a key weapon in the fight against illegal
logging and illegal trade. It protects victims of crime. It
helps fight corruption, it promotes the rule of law, and it
enhances our national security. And it helps level the playing
field for American companies. And that ends up protecting
American jobs.
Now, some of the witnesses, in their testimony today and in
their written testimony, talked about due care. The Lacey Act
due care standard is crucial. Companies are in the best
position to police their own supply chains, and they need the
freedom to do that. As Mr. McCreary points out, Lacey has led
companies like Collings Guitar to review their compliance
programs. They drop risky suppliers, and they deal with
legitimate vendors. But let's be clear, there is nothing new
about due care, even in the wood industry. And as a consumer, I
frankly expect that legitimate companies will sell me legal
wood and legal paper. I don't, frankly, think that is too much
to ask. In fact, in my view, Lacey helps legitimate companies--
like yours, sir--because it makes sure that corrupt or
indifferent companies play by the same rules.
Now, some of the witnesses have suggested that an innocent
owner defense to forfeiture should be enacted, and I have a
problem with that. I think it is inconsistent with widely used
Federal forfeiture procedures. I think it also has a tendency
to undercut the current effect of the Act and, more
importantly, it undercuts the fundamental property rights of
the victims of illegal logging.
One of the witnesses suggested that wood can get forfeited
without any due process, apparently using Gibson as an example.
But that is just flat wrong. It is not the law, and that is not
what happened in Gibson. That is something that we explained at
length in a BNA article that I had submitted for the record.
But let me be blunt about this. Everybody gets their day in
court. And suggestions to the contrary, relying on Gibson, are
just flat wrong.
Now, don't get me wrong. I am very sensitive to the fact
that forfeiture laws, at least in theory, can lead to harsh
results. But I think that the Lacey Act deals with that
already. There is an explicit procedure in the Act called the
remission procedure, that is specifically designed to handle
those cases.
Now, I also disagree with some of the statements made about
foreign law. We all deal with foreign law all the time. And
Lacey is clear. It talks about six specific types of plant-
related offenses. So any statement that a speeding violation
somehow qualifies as a Lacey Act offense is just flat wrong.
That is not the law.
Now, there was a mention earlier about the Honduras lobster
case. And there is a suggestion that it was somehow improper.
But any suggestion that people like David McNab, who was at the
center of that, went to jail for some technicality is, again,
flat wrong. McNab was a criminal. He was guilty of violating
Lacey, he was guilty of smuggling, he was guilty of money
laundering. He engaged in a massive scheme to smuggle over 1.6
million pounds of illegal lobster into the United States. And
that has a devastating effect, including a devastating effect
on the population in Florida.
Legitimate companies in every industry, not just wood,
already make sure they buy and sell legal goods. And companies
have been navigating foreign laws forever. Businesses are in
the best position to ask the relevant questions and to make
sure that goods are legal, and they are also in the best
position to protect themselves by demanding their suppliers
warranty and guarantee the wood they are supplying.
A final point. Some say the declaration requirement is
burdensome. But I think it actually forces importers to examine
the supply chains and to ask the right questions. And I was
very cheered by some of the comments that people from--the
woman from APHIS said today, that they are working through some
of the hiccups. But as a former law enforcement person, I think
it also helps law enforcement fight illegal logging.
So, let me be clear. The Lacey Act is clear to me. It helps
fight crime, it helps protect American companies and jobs. It
protects victims. And it promotes the rule of law and helps
protect national security.
Thank you for your time, and I would be happy to address
any questions you have.
[The prepared statement of Mr. Asner follows:]
Statement of Marcus A. Asner, Arnold and Porter LLP
Introduction
Mr. Chairman, Ranking Member, and members of the Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs, thank you for inviting
me to appear before the Subcommittee today to address the topic of the
2008 Amendments to the Lacey Act.
I am a partner in the New York office of Arnold & Porter LLP where
I routinely advise companies on Lacey Act and other environmental and
criminal matters. Although I am advising several clients on legal
matters relating to the Lacey Act, I am appearing today in my personal
capacity and not on behalf of Arnold & Porter or any client.
For nine years (2000-2009), I served as an Assistant United States
Attorney (AUSA) in the Southern District of New York where I was Chief
of the Major Crimes Unit from 2007 to 2009. When I was an AUSA, I led
the investigation and prosecution of United States v. Bengis, one of
the largest Lacey Act cases in history, involving the smuggling of
massive quantities of illegally harvested rock lobster from South
Africa. Since I joined Arnold & Porter in 2009, I have counseled
clients on a wide variety of Lacey Act issues, including assisting
clients in complying with the 2008 Amendments. I have written
extensively on the Lacey Act, and I have been invited to speak at
numerous domestic and international meetings concerning environmental
crime. In the past year or so, for example, I have spoken on Lacey Act
issues at the World Fisheries Conference, the Forest Legality Alliance,
INTERPOL, and the Boston Seafood Show.
Today, I will explain my thoughts on how the 2008 Lacey Act
Amendments have contributed to reducing the international trade in
illegal plants and plant products, and in the process have served
American businesses and consumers and helped the environment. I also
will address some of the concerns raised by critics of the 2008
Amendments.
Discussion
The 2008 Lacey Act Amendments prevent illegal plants and plant
products from flooding the U.S. market, disrupt criminal organizations,
and reduce corruption in foreign countries, which in turn levels the
playing field for legitimate businesses and improves our national
security. The Lacey Act supports U.S. consumers who have an interest in
a sustainable supply of natural resources and in worldwide ecological
health, which plays a key role in U.S. and worldwide economic and
social stability. It also protects the victims of environmental crimes.
I want to emphasize upfront that I am well aware of the challenges
companies face as they determine how to meet the requirements of the
Lacey Act, and understand both sides of the debate over how best to
shape Lacey Act requirements. I regularly advise clients in various
industries, so I know firsthand that compliance can be challenging,
especially at first, and especially for small businesses with limited
resources seeking to navigate foreign legal systems. Companies that
never before had to concern themselves with issues of provenance in
their supply chains now are having to develop compliance programs to
make a good faith effort to ensure that the goods they bring to the
United States are legal.
Despite the challenges faced by lawful importers, I believe that
the Lacey Act is a vital enforcement tool that protects U.S. interests
in the aggregate. From my perspective as someone who has been involved
in Lacey Act enforcement and compliance for over a decade, the 2008
Amendments are serving U.S. and global interests by helping to reduce
the trade in illegal wood and wood products.
Moreover, in my experience from the last few years, companies are
overcoming the challenges, setting up compliance programs, and learning
to become more adept at complying with the 2008 Amendments to the Lacey
Act. That companies are becoming better at compliance does not surprise
me. In other areas, United States companies long have faced laws that
regulate overseas behavior. Seafood importers have had to comply with
the Lacey Act for decades, and many U.S. companies have to deal with
Committee on Foreign Investment in the United States (CFIUS)
regulations and the Foreign Corrupt Practices Act. Experience in these
other areas teaches that complying with new laws and regulations can be
burdensome at first, but that, over time, companies learn and become
better at working within the new regulatory framework.
Benefits of the 2008 Lacey Act Amendments
Passed in 1900, the Lacey Act is the United States' oldest wildlife
protection law. Its original goals were to address issues including the
interstate shipment of unlawfully killed game, the introduction of
harmful invasive species, and the killing of birds for the feather
trade. The Act has been amended several times and broadened to combat
trafficking in illegal wildlife, fish, and--as of 2008--plants and
plant products. During its long tenure, the Lacey Act has been
successful in the areas of wildlife and fish. In light of the enormous
problems of illegal logging and unsustainable harvesting, along with
the related human toll (such as the toll of corruption and forced
labor) and environmental impacts (such as deforestation, destruction of
biodiversity, wildlife displacement, erosion, climate change, and loss
of local livelihood), the 2008 addition of protections for plants and
plant products was a natural and welcome extension of the Act.
The Lacey Act is an important tool for law enforcement in the
ongoing effort to combat sophisticated criminal organizations and to
protect legitimate businesses and U.S. consumers. Lacey Act
prosecutions have been used to disrupt large-scale criminal
organizations with illegal behavior extending beyond fish, wildlife,
and plant violations. When I was a prosecutor, I experienced firsthand
how the Lacey Act can be used as a tool to (1) dismantle criminal
operations and deter illegal activities that are having economic and
environmental impacts; (2) protect U.S. interests; and (3) protect the
victims of environmental crimes. I will discuss each of these benefits
in turn.
Dismantle Criminal Operations and Deter Illegal Activities
I first became involved with the Lacey Act around 2002 when I
started working on the investigation of the Bengis international
criminal organization. The Bengis organization engaged in a massive
scheme to smuggle into the United States and sell to U.S. consumers (at
a significant profit) rock lobster that had been illegally harvested in
South Africa. The scheme, which spanned over a decade, had a
devastating impact on the South African rock lobster population. The
Bengis scheme involved (among other things) numerous violations of
South African fishing and customs laws, bribery of South African
fisheries inspectors, submission of false shipping documentation,
smuggling of contraband into the United States, sale of illegal seafood
to U.S. consumers, circumvention of U.S. immigration laws, spoliation
of evidence, and the use of United States banks to transfer criminal
proceeds. The United States and South Africa worked together closely on
the investigation and prosecutions, which ultimately led to the
dismantling of the Bengis organization. In the United States, five
members of the organization were arrested; all ultimately pleaded
guilty and the main players were sentenced to prison. The defendants
also forfeited $7.4 million to the U.S. In 2011, the Court of Appeals
for the Second Circuit ruled that South Africa is a victim entitled to
restitution for the defendants' crimes, and in 2012, a magistrate judge
in the Southern District of New York recommended that South Africa be
awarded $54.9 million in restitution from the defendants.
The Bengis case provides just one example of how the Lacey Act can
serve as a powerful enforcement tool in the fight against criminal
activity in cases where actors import into the United States illegal
goods covered by the Act. It is important to remember, however, that
the Lacey Act also protects innocent actors. A person who innocently
imports illegally harvested wood is innocent under the Lacey Act.\1\
She only would be guilty of a felony if she actually knew the wood was
illegal.
---------------------------------------------------------------------------
\1\ Of course, the fact that the person is innocent in this example
does not change the fact that the wood in fact was stolen. Under well-
established U.S. property law, stolen property ordinarily will be
returned to the rightful owner, even if the person possessing the wood
is innocent.
---------------------------------------------------------------------------
In cases where a person, in the exercise of due care, should have
known that wood she imported had been stolen, the Lacey Act establishes
a middle ground--a misdemeanor. In my experience, misdemeanor
prosecutions under the Lacey Act are rare. Prosecutors typically focus
their limited resources on more serious felony investigations and
prosecutions. In this, as in any other lawful industry, legitimate
businesses and law-abiding citizens understandably take pains to ensure
that they are buying legal goods, whether those goods are wood,
seafood, wildlife, or some other commodity such as food, diamonds, or
electronics. It is in this respect that the due care standard in the
Lacey Act serves an important role in reinforcing lawful behavior, and
in leveling the playing field between legitimate companies that invest
resources to try hard to do the right thing, and companies that are
utterly indifferent to whether the goods they are importing and
supplying to the American consumer are legal or illegal.
I am sensitive to the fact that some companies find the due care
standard to be confusing and would prefer that ``due care'' be defined
using a checklist or a set of bright line rules that would apply across
all fact patterns and industries. While I understand why these comments
are being made, I believe that much of the anxiety about the due care
standard is misplaced. Legitimate companies in a wide variety of
industries routinely exercise due care in policing their supply chains,
because they take seriously the goal of providing consumers with legal
goods. In my view, the flexible ``due care'' standard is actually
better for companies because it enables them to mitigate risk in ways
that are appropriate for their particular operations and supply chains.
Moreover, there is nothing particularly new about the due care
standard. Like the similar ``reasonable person'' standard relied upon
elsewhere in U.S. law, the due care standard is a necessary and common
element in the American legal system, arising in a wide variety of
situations, ranging from the concepts of negligence in tort law, to
negligence-based Clean Water Act violations. The Lacey Act's due care-
based standard has functioned effectively for many years. In fact,
seafood importers have been working with the due care standard under
the Lacey Act ever since 1969.
Requiring that companies exercise ``due care'' in selecting and
managing their imports plays a significant role in deterring illegal
activity. The standard places the responsibility on law-abiding
companies to take a critical look at and understand their own supply
chains, and it also prevents unscrupulous companies from devising ways
to circumvent, perhaps through technicalities, any due care
``checklist'' or bright line rules that otherwise might be devised. In
my own practice, I often counsel clients on ways to create their own
compliance programs, so they can make a good faith effort to ensure
that their supply chains are legal and can demonstrate due care in
those efforts. The Compliance Program outlined in the Gibson Guitar
Criminal Enforcement Agreement has provided a useful model, and various
industries are creating their own models from which individual
companies can draw. In circumstances where they deem additional
protections are needed, clients are further protecting themselves by
demanding and obtaining warranties and indemnification from their
suppliers. These are good developments. As a result of the 2008 Lacey
Amendments, I find that companies increasingly are focused on actively
monitoring their own supply chains and creating compliance programs
that enable them to ensure that the paper, lumber, and other plant
products they supply to the American consumer come from legal sources.
This is transforming a market in which honest, legitimate companies
(who worked hard to ensure the legitimacy of their supply chains)
previously were at a competitive disadvantage to companies who were
allowed to get away with a ``no questions asked'' approach to the
legality of their supply.
Nor is the focus on supply chains limited to the Lacey Act. Supply
chain due diligence increasingly has become a priority for companies in
all sectors. In addition to the health and safety and counterfeiting
issues with which we are all familiar, and the conservation and law
enforcement goals of the Lacey Act and similar enactments, Congress has
acted repeatedly since the 2008 Lacey Act amendments to require more
transparency in supply chain issues. For example, there have been new
statutory and regulatory requirements to prevent U.S. Government
contractors from using human trafficking victims when performing
government contracts.
Protect U.S. Interests and Reduce Corruption
According to a 2012 UNEP and INTERPOL report, ``illegal logging
accounts for 50-90 per cent of the volume of all forestry in key
producer tropical countries and 15-30 per cent globally. Meanwhile, the
economic value of global illegal logging, including processing, is
estimated to be worth between U.S. $30 and U.S. $100 billion, or 10-30
per cent of global wood trade.'' \2\ Not only is the U.S. one of the
world's leading producers of products like wood flooring and hardwood
plywood, but it is also one of the largest consumers.\3\
---------------------------------------------------------------------------
\2\ UNEP and INTERPOL, Green Carbon, Black Trade: Illegal Logging,
Tax Fraud and Laundering in the World's Tropical Forests (2012),
available at http://www.unep.org/pdf/RRAlogging_english_scr.pdf.
\3\ USITC, Wood Flooring and Hardwood Plywood: Competitive
Conditions Affecting the U.S. Industries at 1-1 (Aug. 2008), available
at http://www.usitc.gov/publications/332/pub4032.pdf.
---------------------------------------------------------------------------
The mere presence of illegally procured wood in the international
marketplace affects the competitiveness of legitimate U.S. producers.
The United States' GDP of timber-related manufacturing was valued at
$77 billion in 2009.\4\ According to a 2004 report, illegal logging
depresses U.S. prices by about 2-4% which translates to about $1
billion in annual losses to the U.S. market from lower prices and
reduced market share.\5\ Evidence presented in the Bengis case revealed
that illegal operations are able to sell larger quantities of goods at
lower prices than their legitimate competitors.\6\ This illegal
advantage in turn adversely affects competitors' business and customer
relations. Meanwhile, overharvesting activities seriously affect the
worldwide and U.S. market's supply. As a result, any reduction in
market price in the short-term due to the influx of illegal goods is
short-lived, and prices will increase in the long-term as supply is
depleted due to unsustainable practices. By reducing the amount of
illegally harvested wood and other plant products in the international
marketplace, the Lacey Act benefits U.S. companies and consumers. By
reducing the demand for illegal and unsustainably harvested goods, the
Act also helps to protect the global supply of natural resources upon
which American consumers depend.
---------------------------------------------------------------------------
\4\ U.S. Census Bureau, Statistical Abstract of the United States
at 563 (2012) (Table 883), available at http://www.census.gov/
compendia/statab/2012edition.html.
\5\ Seneca Creek Associates, LLC and Wood Resources International,
LLC, ``Illegal'' Logging and Global Wood Markets: The Competitive
Impacts on the U.S. Wood Products Industry at ES-2, 26 (Nov. 2004),
available at http://www.illegal-logging.info/uploads/afandpa.pdf;
Pervaze A. Sheikh, Cong. Research Serv., R42119, The Lacey Act:
Compliance Issues Related to Importing Plants and Plant Products 12
(2012), available at http://www.fas.org/sgp/crs/misc/R42119.pdf.
\6\ Government's Memorandum of Law in Opposition to Defendants'
Joint Motion for a Departure from the Applicable Sentencing Guidelines
Range at 15-17, United States v. Bengis, No. 1:03-cr-00308-LAK
(S.D.N.Y. May 26, 2004).
---------------------------------------------------------------------------
The Lacey Act also helps reduce corruption and promote the rule of
law in foreign countries, which in turn helps to level the playing
field for U.S. companies and enhances our national security. There is a
close link between corruption and natural resources crime. In his
Statement for the Record on the 2012 Worldwide Threat Assessment of the
U.S. Intelligence Community, the Director of National Intelligence
included ``environmental crime'' in the list of ways in which
transnational organized crime threatens U.S. national interests:
Illicit trade in wildlife, timber, and marine resources
constitutes a multi-billion dollar industry annually, endangers
the environment, and threatens to disrupt the rule of law in
important countries around the world. These criminal activities
are often part of larger illicit trade networks linking
disparate actors--from government and military personnel to
members of insurgent groups and transnational organized crime
organizations.\7\
---------------------------------------------------------------------------
\7\ Statement for the Record on the Worldwide Threat Assessment of
the US Intelligence Community, Before the S. Select Comm. On
Intelligence, 113th Cong. 5-6 (2013) (statement of James R. Clapper,
Director of National Intelligence, available at http://
www.intelligence.senate.gov/130312/clapper.pdf. The Statement also
noted that ``[t]ransnational organized crime (TOC) networks erode good
governance, cripple the rule of law through corruption, hinder economic
competitiveness, steal vast amounts of money, and traffic millions of
people around the globe.'' Id. at 5.
The U.N. Office on Drugs and Crime's report, Illegal Logging in
---------------------------------------------------------------------------
Indonesia: The Link Between Forest Crime and Corruption, notes:
Illegal logging [in Indonesia] relies on corruption to stay in
business. It depends on the complicity of officials throughout
the entire production chain from forest to port, including
forest rangers, local government, transport authorities, police
and customs. Organized criminal groups are involved in
transporting illegal timber, as well as endangered species, out
of the country and across multiple borders . . .
Environmental crime, such as this illegal logging in Indonesia,
is becoming increasingly organized and transnational in nature
and can be seen, just as drug and firearm trafficking, as one
of the most significant areas of transborder criminal activity,
threatening to disrupt societies and hinder sustainable
development.\8\
---------------------------------------------------------------------------
\8\ U.N. Office on Drugs and Crime, Illegal Logging in Indonesia:
The Link Between Forest Crime and Corruption (2010), available at
http://www.unodc.org/unodc/en/frontpage/2010/June/illegallogging-in-
indonesia-the-link-between-forest-crime-and-corruption.html.
Corruption related to environmental crimes presents a threat to the
United States' interests generally, and to U.S. companies specifically.
By providing an enforcement tool for federal prosecutors on the one
hand and encouraging the creation of compliance programs that help
identify issues in the supply chain on the other, the Lacey Act helps
to reduce the specter of corruption, and ultimately fosters an
environment favorable to legitimate American businesses.
Protect Victims of Environmental Crimes
Penalties under the Lacey Act protect victims by deterring the
theft of fish, wildlife, and plants and plant products. Moreover, just
as property laws protect owners' rights by requiring the return of
stolen art or an autographed baseball stolen from your home, the Lacey
Act protects the rights of victims of illegal harvesting and trade,
whether such victims are in the U.S. or abroad.
The Lacey Act helps ensure that victims of Lacey Act crimes receive
compensation. If someone snuck onto my land in Irving, Texas, cut down
my trees, and then sold them to an unwitting buyer in Oklahoma, I would
want my trees back, even if the gentleman in Oklahoma had purchased the
timber innocently. The Lacey Act provides a mechanism by which I could
get my trees back and the trespassing thieves could be prosecuted. When
coupled with a charge of conspiracy under Title 18, the Lacey Act
supports compensation to victims in the form of restitution under 18
U.S.C. Sec. Sec. 3663 & 3663A. The Bengis case illustrates this point.
The Court of Appeals ruled in that case that South Africa should be
awarded restitution as compensation for the lobster stolen as part of
the scheme. By protecting the property rights of victims of
environmental crimes, the Lacey Act provides justice to victims and
deters future criminal activity. I will discuss this aspect of the
Lacey Act further below in connection with the discussion of the
``innocent owner'' defense.
Responses to Concerns
I am aware of a number of concerns that have been voiced about the
Lacey Act, many of which appeared in the various changes that were
proposed last year in the Retailers and Entertainers Lacey
Implementation and Enforcement Fairness Act. The RELIEF Act, among
other things, would have altered the Lacey Act's forfeiture provision
to include an ``innocent owner'' defense, removed or limited some of
the Act's provisions for plants and plant products imported before
2008, narrowed the categories of foreign laws that trigger violations
and modified the declaration requirements. I am sympathetic to the
challenges that legitimate businesses, particularly small companies,
face in complying with the Lacey Act, especially when they are
operating in foreign countries with unfamiliar legal systems. I expect
that some of the same concerns may be raised in this hearing, so I
would like to focus on some of these proposals in my testimony today.
Forfeiture and the Proposed ``Innocent Owner'' Defense
According to press reports, following the well-publicized seizures
of wood at Gibson Guitar's facilities, a common complaint was that
Gibson's wood was seized and held even though Gibson purportedly had
not ``had its day in court to defend itself,''\9\ and that Gibson was
the victim of an abuse of governmental power. However, as my co-authors
and I explained in an article published in Bloomberg BNA's Daily
Environment Report, if you look at the law and what happened in the
Gibson proceedings, it becomes clear that Gibson in fact did have its
day in court, exactly as contemplated in the law.\10\ In addition,
based on the facts that emerged, Gibson had illegally imported highly
protected wood, ignoring the results of their own due diligence, and
the actions taken by the government in response were reasonable.\11\
Gibson is therefore a prime example of the proper functioning of the
Lacey Act. The Gibson case aside, however, a more fundamental point is
that adding an innocent owner defense to the Lacey Act would be
inconsistent with widely-used federal forfeiture procedures, would
undermine the deterrent effect of the provisions, and potentially would
defeat the fundamental property rights of the victims of environmental
crimes. If such an amendment were to be enacted, those in possession of
stolen wood would have unique rights to keep that wood despite the
illegality of its procurement, which is fundamentally at odds with the
law that applies across the board in other stolen property contexts.
---------------------------------------------------------------------------
\9\ Tina Korbe, Video: The Great Gibson Guitar Raid. . .Months
later, still no charges, Hot Air (Feb. 23, 2012, 3:40 PM), http://
hotair.com/archives/2012/02/23/video-the-great-gibson-guitar-raid-
months-later-still-no-charges/; see also John Roberts, Gibson Guitar
Case Drags On With No Sign of Criminal Charges, FoxNews.com (Apr. 12,
2012), http://www.foxnews.com/us/2012/04/12/gibson-guitar-case-drags-
on-with-no-sign-criminal-charges/.
\10\ Marcus A. Asner, Maxwell C. Preston and Katherine E. Ghilain,
Gibson Guitar, Forfeiture, and the Lacey Act Strike a Dissonant Chord,
Bloomberg BNA's Daily Environment Report (also published in the Daily
Report for Executives, White Collar Crime Report, and the International
Environment Reporter) (Sept. 4, 2012), available at http://
www.arnoldporter.com/resources/documents/
Arnold&PorterLLP.BloombergBNA%27sDailyEnvironmentReport_090412.pdf.
\11\ Criminal Enforcement Agreement Between U.S. Dep't of Justice
and Gibson Guitar Corp. (July 27, 2012), available at http://
www.fws.gov/home/feature/2012/USvGibsonGuitarAgreement.pdf.
---------------------------------------------------------------------------
Seizure and Forfeiture Under the Lacey Act
It is well settled that the federal government may seize property
upon a showing of probable cause that the property is illegal. The
process is straightforward. Someone who believes that her property has
been wrongfully seized may file a motion in federal court asking the
court to review the evidence and determine whether the property is
contraband or should be returned.\12\ Even if that person does not
pursue the return of the seized property in this manner, the government
generally must follow a formal forfeiture process in order to keep it.
Goods seized pursuant to the Lacey Act may fall into one of two
categories of contraband. Those involving violations of procedural
requirements, such as failing to obtain proper permits, are considered
``derivative contraband.'' On the other hand, those for which
possession or exportation is banned are considered ``contraband per
se.''\13\ For example, a country like Madagascar bans the harvest of
ebony and the export of any ebony products in unfinished form except
when the supplier has special authorization from the government. In
that situation, unfinished Malagasy ebony seized from someone in the
United States who imported that ebony from a supplier who did not have
that special authorization is contraband per se.
---------------------------------------------------------------------------
\12\ Specifically, the person seeking the return of their property
may file a motion in federal court pursuant to Rule 41(g) of the
Federal Rules of Criminal Procedure. See United States v. 144,744
Pounds of Blue King Crab, 410 F.3d 1131 (9th Cir. 2005) (holding that
goods seized under the Lacey Act are contraband).
\13\ See Helton v. Hunt, 330 F.3d 242, 247 (4th Cir. 2003) (citing
One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 699-700 (1965),
and quoting Cooper v. City of Greenwood, 904 F.2d 302, 305 (5th Cir.
1990); see also Conservation Force v. Salazar, 677 F. Supp. 2d 1203,
1210-11(N.D. Cal. 2009).
---------------------------------------------------------------------------
The forfeiture procedures that apply to goods seized under the
Lacey Act are the same Civil Asset Forfeiture Reform Act (CAFRA)
procedures that govern forfeiture actions under a wide variety of
laws.\14\ The government must provide notice and an opportunity for a
hearing at which the forfeiture may be contested. If the party fails to
timely respond, the property is deemed administratively forfeited. If
the party elects to file a claim within the 60-day period, the
government must commence judicial forfeiture proceedings, during which
the party may present evidence and argue that the property should be
returned.\15\ The government must demonstrate by a preponderance of the
evidence that the property is subject to forfeiture,\16\ and that the
government had probable cause to believe that the property was subject
to forfeiture in the first place.\17\ These procedures were followed in
Gibson, and normal forfeiture proceedings in federal court were ongoing
when the Criminal Enforcement Agreement was reached.
---------------------------------------------------------------------------
\14\ 18 U.S.C.A. Sec. 983.
\15\ See 18 U.S.C.A. Sec. 938(a)(3), (a)(4)(A) (contemplating
claims pursuant to Supplemental Rules); Fed. R. Civ. P. Supplemental
Rule G(5).
\16\ See 18 U.S.C.A. Sec. 983(c)(1).
\17\ See 19 U.S.C.A. Sec. 1615.
---------------------------------------------------------------------------
In addition to this judicial avenue of challenge, the law provides
an administrative appeal process whereby a party can appeal directly to
the agency that seized the goods, seeking remission or mitigation of
forfeiture.\18\ Under the Fish and Wildlife Service's regulations, for
example, a party may file a petition seeking remission or mitigation of
administrative forfeiture with Solicitor of the Department of
Interior.\19\ If the Solicitor finds that there are sufficient
``mitigating circumstances,'' the Solicitor may remit or mitigate the
forfeiture upon reasonable terms and conditions.\20\ As a result, not
every contested seizure will require the involvement of federal courts.
---------------------------------------------------------------------------
\18\ See 16 U.S.C.A. Sec. 3374(b).
\19\ 50 C.F.R. Sec. 12.24.
\20\ 50 C.F.R. Sec. 12.24(f).
---------------------------------------------------------------------------
Innocent Owner Defense
Some have suggested including an ``innocent owner'' defense to
forfeiture. Proponents have argued that companies that unknowingly
possess illegally harvested wood should be able to obtain the return of
that illegal wood (regardless of its legality) because they were
unaware, despite exercising due care, that the wood was illegal. While
I am sympathetic to the truly innocent owner in such a situation and
recognize that some importers could face forfeiture under difficult
circumstances, I am also sympathetic to crime victims. I am concerned
that such a defense would not only undermine the effectiveness of the
Lacey Act, but it also would be inconsistent with basic U.S. property
principles.
My concern is that providing an innocent owner defense for the
purchaser or importer of illegal goods and allowing the ``innocent
owner'' to keep what is not lawfully hers not only decreases companies'
incentives to ensure that their goods are legal, but it also deprives
lawful owners of their right to have their property returned. If a
thief steals my autographed baseball and sells it to an innocent
collector who has no idea that it was stolen, that does not change the
fact that it is still my baseball and I have a right to get it back.
The illegal intervening activity does not extinguish my property right
in the baseball. We naturally feel sorry for the collector, of course,
who was duped into buying the baseball from the thief, but that does
not mean he should get to keep my baseball; instead, his recourse is to
seek compensation from the thief and make sure that he has a valid
supplier next time. The same concept applies to goods imported in ways
that violate the Lacey Act. The individuals, states, or countries whose
resources have been illegally obtained have a right to the return of
their property or to monetary compensation for property that was lost.
The intervening illegal activity does not extinguish those property
rights, regardless of who knew what along the way. It is the importer's
responsibility to know its suppliers and put measures in place to
ensure that its goods are legal. Just as a legitimate art gallery
requires evidence of provenance before purchasing paintings or
artifacts, or a seller of name-brand shoes needs comfort that it is not
buying counterfeits, companies that are dealing in goods covered by the
Lacey Act are responsible for knowing their supply chains and, if
appropriate, demanding contractual warranties to protect themselves.
The strong incentive in the Lacey Act to use due care is causing
this positive shift in the marketplace. Introduction of an innocent
owner provision would have the opposite effect of encouraging companies
to know as little as possible about their supply chains. In addition,
basic property rights are fundamental to the law of our country. Any
proposed changes to the Lacey Act must be consistent with these
longstanding legal principles. An innocent owner defense that deprives
the rightful owner of his or her property clearly is not.
Indeed, if the committee were inclined to consider any changes to
the Lacey Act, I think it would make most sense to strengthen the Act's
protections of victims and property rights, by making it easier for
victims to recover for Lacey Act violations. One simple idea would be
to expand the list of crimes covered by the federal restitution
statutes, 18 U.S.C. Sec. Sec. 3663 & 3663A, so that it explicitly would
cover the Lacey Act. That fix would help facilitate the return of
stolen articles to their rightful owner in cases where the evidence
establishes a substantive Lacey Act violation, but fails to support a
charge under Title 18 (for example, where the defendant acted alone and
therefore did not violate the federal conspiracy statute, 18 U.S.C.
Sec. 371). Congress also could support the rights of crime victims
further by creating a rebuttable presumption that, once articles have
been shown to violate the Lacey Act and are forfeitable, such articles
will be deemed to be the property of the state or country of origin,
absent a showing of superior title. The state or country where the
fish, wildlife, plant or plant product was illegally taken would be
deemed a ``victim'' entitled to restitution.
Plants and Plant Products Imported Before 2008
Some have expressed concern that the Lacey Act might cover plants
and plant products that were harvested before the Lacey Act was amended
in 2008, noting that innocent owners of antique musical instruments or
furniture technically face exposure under the Lacey Act. I am
sympathetic to such concerns. Of course, as I explained above, truly
innocent owners of pre-2008 plants or plant products cannot be
prosecuted under the Lacey Act. Helpfully, the U.S. Fish and Wildlife
Service further has clarified that ``individual consumers and musicians
are not the focus of any U.S. Fish and Wildlife Service law enforcement
investigations pertaining to the Lacey Act, and have no need for
concern about confiscation of their instruments by the U.S. Fish and
Wildlife Service.''\21\ More fundamentally, however, as with the
``innocent owner'' proposal discussed above, I am concerned about how
any change addressed to pre-2008 articles would square with our general
obligation under the U.S. legal system to protect the rights of
property owners. I am equally concerned that any such change would have
the unintended effect of excusing illegal activity and perpetuating the
presence of illegal goods in the market, all to the detriment of
American interests. For example, it would be hard to be sympathetic to
someone who knowingly imported wood that was illegally harvested from a
World Heritage Site in 2007 who now wants to profit from its sale.
Moreover, because of difficulties in dating wood, constructing a ``pre-
2008'' exception could inadvertently help criminals launder wood that
in fact was harvested and imported after 2008, because defendants could
demand that the United States affirmatively prove in a criminal case
that the wood is harvested or imported after 2008. Accordingly, while I
understand why these issues have been raised, I again urge the
committee to be cautious in proposing any such change to the Lacey Act.
---------------------------------------------------------------------------
\21\ U.S. Fish & Wildlife Service, Where We Stand: The Lacey Act
and our Law Enforcement Work (Sept. 22, 2011) (available at http://
www.fws.gov/news/blog/index.cfm/2011/9/22/Where-We-Stand-The-Lacey-Act-
and-our-Law-Enforcement-Work).
---------------------------------------------------------------------------
Scope of Foreign Laws
Some have expressed concern over the scope of foreign laws that
could trigger a Lacey Act violation. Again, I believe that much of the
anxiety about the scope of foreign laws is misplaced. The categories of
foreign laws at issue in the Lacey Act are set out clearly in the Act.
Legitimate companies in a wide variety of industries routinely must
navigate local and foreign laws. Seafood companies complying with the
Lacey Act have been navigating foreign laws for decades. Moreover, the
fact that a particular foreign law may be ambiguous, unclear or
difficult to discern, bears on the due care analysis and may suggest
that a company did not knowingly import illegal goods (which is what
happened with some of the wood at issue in Gibson). More fundamentally,
however, in my experience, legitimate businesses take seriously their
obligations to comply with local and foreign laws. They ask adequate
questions and, to gain comfort with their compliance with U.S. law,
they track their due diligence in such a way that they can demonstrate
their good faith if questions arise later. In this respect, businesses
that work with foreign suppliers are in the best position to ask the
relevant questions and require that their suppliers make sure the goods
are legal.
Declaration Requirement
Finally, some concerns have been raised that the declaration
requirement is burdensome and creates a collection of paper that serves
no purpose. The declaration requirement is one of the key elements of
the 2008 Amendments because it forces importers to examine their supply
chains, ask questions, and obtain information to ensure that everything
is legal. While it has been reported that there currently is a backlog
in processing some of the declarations filed by paper means,
approximately 80% of the declarations are filed and processed
successfully by electronic means. More fundamentally, the declarations
provide information that protects innocent companies and helps in the
investigation and prosecution of criminal organizations. Indeed, the
defendants' paper trail in Bengis provided crucial evidence leading to
the dismantling of the criminal scheme.
The declaration requirement is requiring companies to ask new
questions and gather new information about the plants and plant
products they have been using for years. This can be a difficult and
slow process, which is why APHIS has been working with industries to
phase in enforcement and providing resources to help companies
understand and comply with the declaration requirement.\22\ In addition
to setting up a website dedicated to Lacey Act compliance and
resources, APHIS has issued guidance to address potential difficulties
in identifying the genus and species of certain categories of plants
and plant products. For example, the guidance includes a provision
stating that items manufactured prior to the 2008 Amendments for which,
despite the exercise of due care, it is impossible to identify certain
information, the importer may identify the genus as ``Special'' and the
species as ``PreAmendment.''\23\ APHIS has also stated that it does not
require a declaration for most personal shipments or for musical
instruments transported for performances.\24\
---------------------------------------------------------------------------
\22\ See Elinor Colbourn and Thomas W. Swegle, The Lacey Act
Amendments of 2008: Curbing International Trafficking in Illegal
Timber, STO36 ALI-ABA 365, 373-77 (Apr. 26, 2012).
\23\ APHIS, Lacey Act Plant and Plant Product Declaration Special
Use Designations (Sept. 19, 2012), available at http://
www.aphis.usda.gov/plant_health/lacey_act/downloads/lacey-act-SUD.pdf.
\24\ APHIS, Lacey Act Amendment: Complete List of Questions and
Answers (Feb. 16, 2012), available at http://www.aphis.usda.gov/
plant_health/lacey_act/downloads/faq.pdf.
---------------------------------------------------------------------------
To further ease compliance with the declaration requirement and
improve enforcement capabilities, APHIS requires funding that will
allow it to streamline the process so that submitting the declarations
and accessing the information in real time is more efficient for
industry and the agencies alike. Already with the limited funding APHIS
received for the first time last year, it soon will be piloting a web-
based interface designed to offer a viable alternative to submission of
the 20% of declarations that are still being filed by paper means.
Fully funding APHIS, the Fish and Wildlife Service, and other key
agencies so they can effectively implement and enforce the Lacey Act
will ensure that it is less burdensome to companies and that it
achieves the goals of curbing illegal trade as envisioned in the law.
Conclusion
The Lacey Act provides an important tool that helps enforcement
officials fight crime, corruption, and the theft of plants and plant
products for the benefit of American interests. I have advised
companies in various industries on Lacey Act compliance, including
clients in the paper industry, book publishing, and the cosmetic
industry, and I am cognizant of the challenges faced by serious law
abiding American companies that are trying to do the right thing.
Still, the fact that compliance is challenging does not mean that we
should ignore our supply chains. We owe it to our country, our
legitimate businesses, and American consumers to get this right. We
especially owe it to our children and grandchildren who will be facing
worldwide shortages in natural resources and greater environmental
degradation if we fail to invest the time and energy to make sure we
protect our forests, fish and wildlife from the threat of illegal
harvesting.
Thank you again for inviting me to appear today. I would be happy
to answer any questions.
______
Dr. Fleming. Thank you, Mr. Asner.
Finally, we have Mr. Erik Autor for 5 minutes to provide
his perspective on the 2008 Lacey Act.
STATEMENT OF ERIK O. AUTOR, ESQ., PRESIDENT AND CEO, AUTOR
GLOBAL STRATEGIES LLC/TOTAL SPECTRUM LLC
Mr. Autor. Mr. Chairman, members of the Subcommittee, thank
you for inviting me to testify at today's hearing on the Lacey
Act. While I am a former representative of the retail industry,
I appear today on behalf of myself, and speak only as someone
who has been actively involved in the policy discussions on the
Lacey Act amendments since their passage in 2008.
The purpose of the 2008 Lacey Act amendments is to prevent
illegal logging and harvesting of plants in both the United
States and abroad which pose serious threats to the environment
and legitimate commerce and products derived from wood in
plants. These aims are laudable, and supported by American
business.
However, the law, as written and enforced, has had several
unintended consequences that unnecessarily burden compliance
and enforcement, needlessly engender unpredictability, threaten
American businesses and jobs, and deviate from the law's core
objectives. To address those unintended consequences, Congress
should make four modest common-sense reforms to the law that
will improve and facilitate enforcement and compliance, and
reduce unnecessary burdens on legitimate commerce, while
preserving the law's integrity and objectives.
Other witnesses have already discussed in detail three of
these reforms: addressing pre-2008 harvesting and production;
providing a legal procedure in seizure and forfeiture actions
for owners who can demonstrate due diligence; and refining the
scope of foreign laws and regulations subject to the Lacey Act.
Therefore, given our limited time, I will focus the
remainder of my statement on the fourth issue with the Lacey
Act amendments, relating to the requirement that imports
containing wood or plant material must be accompanied by a
declaration filed upon importation with USDA's Animal and Plant
Health Inspection Service. This requirement has created three
significant problems for both government and business.
The first is that the term ``upon importation'' is a
layman's expression with no legal meaning in the technical
parlance of customs law. Rather, the process of making entry is
the key action with respect to an imported product, which is
the point at which it legally, rather than just physically,
enters U.S. customs territory. The most common types of entry
for commercial goods are consumption entries and warehouse
entries.
The second problem with the import declaration is that it
has failed to facilitate compliance for businesses by imposing
unnecessary costs and higher regulatory burdens compared to
other laws regulating imports. In particular, technical
limitations with the electronic system for filing import
declarations have not been able to accommodate large amounts of
data that must be submitted on each shipment for even fairly
simple products. As a result, importers have had to resort to
breaking up single shipments into multiple entries or file
paper declarations. Both these options significantly complicate
and delay import transactions, and force importers to incur
much higher customs brokerage fees, merchandise processing
fees, and other administrative costs.
The third problem is that the import declaration
requirement has compromised, rather than enhanced enforcement
efforts by the Federal Government. Even though the law is not
yet fully implemented, APHIS calculates that it already
receives approximately 9,200 declarations per week, or about
40,000 a month. The Agency faces this crush of paper with few
resources and little ability to examine declarations, undertake
any risk-based analysis, and has been unable to add new tariff
lines under the new U.S. harmonized tariff schedule to the
declaration requirement, as mandated by the statute.
Congress should correct these problems which unnecessarily
cost industry and government $56 million annually by replacing
the requirement for filing a declaration upon importation for
each shipment of imported merchandise with a declaration on
demand. The on-demand system is currently used in other laws
regulating imports, including safety certifications for
imported products under the Consumer Product Safety Improvement
Act, and is more consistent with the paperless system Customs
and Border Protection uses in its enforcement activities. It
requires importers to collect and maintain the same information
currently required on the import declaration, but to produce
that information at the request of Federal enforcement
agencies.
This system will allow the enforcement agencies to identify
and focus on higher-risk shipments by more efficiently
separating the wheat from the chaff. It will also relieve
businesses of the cost and burdens incurred by constantly
having to file declarations, even for low-risk shipments that
are merely being sent, unread, to warehouse for storage. An on-
demand declaration system would in no way undermine the Lacey
Act, but will actually support better enforcement and
compliance.
Finally, I must caution that, to the extent opposition to
any changes to the Lacey Act amendments may be motivated by
exploiting the problems with this law to burden or disrupt
legitimate imports, it is inappropriate and consistent with
U.S. legal obligations under the rules of the World Trade
Organization and contrary to the intent of Congress that this
law operate or be used as a non-tariff trade barrier against
legally harvested plants.
In conclusion, I don't question the need for a law like the
Lacey Act amendments, nor would I suggest changes that I
thought would undermine the law. I just believe this law needs
to be improved to make it more effective by correcting the
problems I have discussed. Congress specifically contemplated
possible changes to the law, once it had a chance to see how it
would operate. After 5 years, Congress has ample evidence that
these modest and targeted reforms are warranted and should be
adopted. Thank you.
[The prepared statement of Mr. Autor follows:]
Statement of Erik O. Autor, Esq., Total Spectrum LLC and
Autor Global Strategies LLC
Mr. Chairman, Members of the Subcommittee, thank you for inviting
me to testify at today's hearing on the Lacey Act. While I am a former
representative of the retail industry, I appear today on behalf of
myself and speak only as someone who has been actively involved in the
policy discussions on the Lacey Act Amendments since their passage in
2008 as part of the Food, Conservation, and Energy Act.
The purpose of the 2008 Lacey Act Amendments is to prevent illegal
logging and harvesting of plants in both the United States and abroad,
which pose serious threats to the environment and legitimate commerce
in products derived from wood and plants.
While these aims are laudable and supported by American business,
the amendments were added to the 2008 farm bill largely without the
benefit of the normal legislative process of full public comment, and
debate and consideration in Congress. The unfortunate consequence is
that this law, as written and enforced, has had several unintended
consequences that unnecessarily burden compliance and enforcement,
needlessly engender unpredictability, threaten American businesses and
jobs, and deviate from the law's core objectives.
To address those unintended consequences, Congress should make four
modest, common-sense reforms to the law that will improve and
facilitate enforcement and compliance and reduce unnecessary burdens on
legitimate commerce, while preserving the law's integrity and
objectives.
First, Congress should correct an omission in the 2008 amendments
to prevent retroactive application of the law to plants or plant
products imported, processed, or manufactured prior to the law's
effective date of May 22, 2008. As a general principle, penal statutes
should not be applied retroactively, especially when it could subject
individuals and companies to potentially severe legal consequences with
no prior notice or ability to comply with the law. This reform is
particularly important to ensure that enforcement actions will not be
taken against antiques and used products, or musical instruments
containing wood or plant products harvested, in some cases, years
before 2008, the provenance of which is impossible to determine.
Second, the Lacey Act Amendments were written in a way that could
trigger enforcement and penalties from violations of an almost
unlimited and largely unknowable set of criminal and civil foreign
laws, regulations, and ordinances at the national, sub-national, and
local level. Consequently, the public has little guidance or
notification as to the legal responsibilities under this law, which
raises a serious legal question whether the law, as currently written,
is unconstitutionally vague.
Congress should mitigate this problem by clarifying that the 2008
Amendments apply only those foreign laws that are directed at the
protection, conservation, or management of plants or the ecosystems of
which they are a part. For example, it is simply inappropriate to
initiate a Lacey Act enforcement action based on a violation of a
foreign law restricting the export of certain products that is intended
not to protect the environment, but rather to protect manufacturing in
that country from foreign competition.
Congress can also direct the Administration to construct a
publicly-available database of applicable foreign laws. These changes
will also ensure that enforcement of the law is properly focused on and
consistent with its environmental goals, will provide companies greater
predictability, and facilitate due diligence in their supply chain
management.
A third problem that Congress should address is that the Lacey Act
Amendments, as currently constructed and enforced, can subject a good-
faith owner, purchaser, retailer, or other party in the chain of
custody of a plant or plant product, to penalties through no fault of
their own and despite best efforts to comply.
The Departments of Interior and Justice have stated that ``people
who unknowingly possess a musical instrument or other object containing
wood that was illegally taken, possessed, transported or sold in
violation of law and who, in the exercise of due care would not have
known that it was illegal, do not have criminal exposure.'' However,
Justice has also stated that the Lacey Act Amendments impose a strict
liability standard with respect to possession of such products, which
it deems to be contraband. Thus, a company can have its products seized
and forfeited regardless of the degree of due diligence that it
exercises to comply with the law. Typically, products seized and
forfeited are not destroyed, but are auctioned off by the federal
government and returned into the stream of commerce.
Generally speaking, wood and plant products are not inherently
illegal to possess. Also, it is impossible to know just by looking at a
wood product whether it was made from legally or illegally harvested
wood. Given these considerations, it is inappropriate to treat wood and
plant products as contraband like illicit drugs, unless they involve a
tree or plant specifically included under a trade ban, such as the
Convention on the International Trade in Endangered Species (CITES).
Congress should address this problem by clarifying that the strict
liability provision for seizure of contraband under the civil asset
forfeiture statute does not apply to plants under the Lacey Act. As a
matter of due process, Congress should also provide those who can
demonstrate they have exercised proper due care in compliance with the
law, a day in court and a right to petition a federal judge for the
return of any goods seized and subject to forfeiture through no fault
of their own. This change would not undermine the Lacey Act because it
would actually provide an incentive to encourage the highest degree of
due diligence, and would offer no loophole for knowing violators,
scofflaws, or even innocent owners who cannot show that they exercised
a sufficient degree of due care.
The fourth issue with the Lacey Act Amendments relates to the
requirement that imports containing wood or plant material must be
accompanied by a declaration filed ``upon importation'' with USDA's
Animal and Plant Health Inspection Service (APHIS). This requirement
has created three significant problems for both government and
business. The first is that the term ``upon importation'' is a layman's
expression with no legal meaning in the technical parlance of customs
law. Rather, the process of ``making entry'' is the key action with
respect to an imported product, which is the point at which it legally,
rather than just physically, enters U.S. customs territory. The most
common types of entry for commercial goods are ``consumption entries''
and ``warehouse entries.''
The second problem with the import declaration is that it has
failed to facilitate compliance for businesses by imposing unnecessary
costs and higher regulatory burdens compared to other laws regulating
imports. In particular, technical limitations with the electronic
system for filing import documents cannot accommodate large amounts of
data that must be submitted on each shipment for even fairly simple
products. As a result, importers have to resort to breaking up single
shipments into multiple entries or file paper declarations. Both these
options significantly complicate and delay import transactions, and
force importers to incur much higher brokerage fees, Merchandise
Processing Fees (MPF), and other administrative costs.
The third problem is that the import declaration requirement has
compromised, rather than enhanced enforcement efforts by the federal
government. Even though the law is not yet fully implemented, APHIS
calculates that it already receives approximately 9,200 declarations
per week. The agency faces this crush of paperwork with few resources
and little ability to examine declarations, undertake any risk-based
analysis, and has been unable to add new tariff lines under the U.S.
Harmonized Tariff Schedule (HTS) to the declaration requirement as
mandated by statute.
Congress should correct these problems, which unnecessarily cost
industry and government $56 million annually, by replacing the
requirement for filing a declaration upon ``importation'' for each
shipment of imported merchandise with a ``declaration on demand.'' The
on-demand system is currently used with other laws regulating imports,
including safety certifications for imported products under the
Consumer Product Safety Improvement Act (CPSIA), and is more consistent
with the paperless system Customs and Border Protection (CBP) uses in
its enforcement activities. It requires importers to collect and
maintain the same information currently required on the import
declaration but to produce that information at the request of federal
enforcement agencies. This system will allow APHIS to identify and
focus on higher-risk shipments by more efficiently separating the wheat
from the chaff. It will also relieve businesses of the costs and
burdens incurred by constantly having to file declarations, even for
low-risk shipments, that are merely being sent unread to a warehouse
for storage. An on-demand declaration system would in no way undermine
the Lacey Act, but will actually support better enforcement and
compliance.
As part of this change, Congress should also provide explicit
authority to the Secretary of Agriculture to promulgate regulations
regarding plant declarations, and permit the Secretary to distinguish
among different plants and limit the applicability of the declaration
requirement for a particular class of type of plant if the Secretary
determines that applying the requirement to such plant class or type
would not be feasible, practicable, or effective.
Finally, I must caution that to the extent opposition to any
changes to the Lacey Act Amendments may be motivated by exploiting the
problems with this law to burden or disrupt legitimate imports, it is
inappropriate, inconsistent with U.S. legal obligations under the rules
of the World Trade Organization, and contrary to the intent of
Congress, that this law operate, or be used as a non-tariff trade
barrier against legally-harvested plants.
In conclusion, I do not question the need for a law like the Lacey
Act Amendments, nor would I suggest changes that I thought would
undermine the law. I just believe that this law needs to be improved to
make it more effective by correcting the problems I have discussed.
Congress specifically contemplated possible changes to the law once it
had a chance to see how it would operate. After five years, Congress
has ample evidence that these modest and targeted reforms are warranted
and should be adopted.
______
Dr. Fleming. OK. Well, thank you, panel. At this point we
will begin Member questioning of the witnesses. To allow all
Members to participate, and to ensure we can hear from all the
witnesses today, Members are limited to 5 minutes for their
questions. However, if Members have additional questions, we
can certainly have a round or two. We really only have two
Members at this moment. So that round may go fairly fast.
I now recognize myself for 5 minutes. First of all, panel,
it is interesting. I think some very quick conclusions can be
drawn from what I have heard with both panels. And number one
is there is a consensus that everybody believes that, in
general, the Lacey Act is a good thing, that it provides
certain protections, and that it is well-intended. I hear some
say that nothing needs to be changed about the law. Others say,
yes, there is some massive problems. But it seems to be that
the more a company relies on imports, the more problematic this
law can be.
Also, like many things in government today, we seem to
punish good guys and often times the bad guys get away. So, I
think we need to be mindful of these things, going forward.
So, with that, I would like to ask Mr. Snapp some
questions. Mr. Snapp, could you more fully explain how you had
to turn away that 29 companies that you talked about from the
Lacey Act compliance verification program?
Mr. Snapp. Thank you, Chairman. I would be happy to answer
your questions. The complexity of supply chains stretched to
the product itself. So, if you are looking at an engineered
panel, an engineered map-form panel, you have multiple forms of
raw material feeding that production facility. So you can have
residuals from a saw mill, you can have actual timber
harvested. All of those products can come from a very large
area. So tracking back downstream to where those materials
originated from becomes problematic, at best.
If you have a specified concession, which is what our
current program enrollees have, it is much easier. But if you
don't have a specified concession, and you are purchasing raw
materials from secondary suppliers who may have purchased that
material from a third-tier supplier, the ability to backtrack
where that material came from is nearly impossible, without a
very large workforce.
Dr. Fleming. OK. Well, that then leads to the second
question. What is your annual cost to have six legal firms on
retainer to keep track of foreign laws?
Mr. Snapp. The program that we developed using the legal
firms overseas in the country of origin where the material is
initially harvested is at a front-loaded cost, because we have
to use the attorneys to isolate, identify all of the relevant
laws before the program begins. So, the initial two years, the
average cost per facility was ranging between $25,000 and
$40,000. On an ongoing maintenance basis, now that we have
identified those laws, the legal firms actually provide
oversight and advice on any changes. That cost averages the
mills $10,000 to $15,000 per year.
Dr. Fleming. And who ultimately pays that cost?
Mr. Snapp. The clients pay that cost, sir. And that cost is
technically carried down to the end customer. But we have seen
significant difficulty for end customers to justify a higher
price on a commodity product, based on that investment on legal
and our services.
Dr. Fleming. So if the end user, the customer, the retail
customer, simply can't afford or is not willing to pay for that
product, then what impact does that have on jobs?
Mr. Snapp. On the jobs specific to the United States, sir?
Dr. Fleming. Yes.
Mr. Snapp. You see a higher cost going into what we call
reman facilities, who utilize cut lumber, they utilize
engineered panels. If their base cost increases, their finished
product cost increases. So if their finished product cost
increases, then the consumer price is going to increase. You
have alternative products that come from overseas in finished
product form that don't have those costs associated with them,
which can further undercut those U.S.-produced products,
therefore putting more pressure on U.S. jobs.
Dr. Fleming. So the net result is a transfer of American
jobs to foreign countries.
Mr. Snapp. Correct, sir.
Dr. Fleming. OK. OK. Ms. Matthiesen, what is it costing
your members to comply with the declaration requirement?
Ms. Matthiesen. The cost to our members, if they are the
importer of record for U.S. import purposes, is currently
around $5 per import declaration. But that $5, sir, is the cost
associated with the actual brokerage transmission of the
declaration. And I think, as Mr. Snapp and others have made the
case this morning, the backroom costs are even more, the IT and
the staffing and this sourcing inquiries through the supply
chain. So that cost could run approximately $6 to $7 per
important declaration.
The other thing I would note, just because I have the
opportunity now, is that we are still relatively low on the
manufacturing supply chain in product coverage of the Lacey
Act. Think of the auto and the auto industry who needs to make
a plastic dashboard made of resin, made of plants, and it will
be almost impossible.
Dr. Fleming. Yes. OK, thank you. My time is up. I now
recognize Ms. Shea-Porter for 5 minutes.
Ms. Shea-Porter. Thank you very much. It is always
difficult to think about the economic cost whenever we
implement any kinds of new regulations. But thinking also in
terms of why and what this is about, and how it does help
American businesses, in addition to the environmental health
and support that it provides, it is always tough to weigh
those. It is tough to weigh those.
So, having said that, I would like to first ask Mr. Asner,
I was looking at some of the testimony there, and there is
something that we didn't talk about here, but I think it does
have an impact. Can you tell us about the environmental crimes
such as illicit trade in timber? Who are the players? And does
this come back to us in any way?
Mr. Asner. Look, a lot of these cases are ones that you
read about in the paper. And the cases that DOJ focuses on,
similar to the case that I focused on when I handled the Bengis
matter, these are international conspiracies, they are often
very sophisticated conspiracies, and cases like that often deal
with cross-border problems. People exploit the fact that it is
difficult for law enforcement to communicate across borders.
There are devastating impacts locally.
There are also impacts in the United States. There are
immigration violations. There is forced labor. And I have read
reports also that, for example, the Director of National
Intelligence has issued a report talking about how there are
connections with corruption, which, of course, undercuts the
rule of law, which undercuts our national security.
So, yes, I think that the crime, the underlying crime, is a
very serious one. And for the bad guys, they think, whether it
is wood or fish or blood diamonds, they think of it as money,
and they are willing to violate the rules in order to line
their own pockets, and then support whatever ill things they
want to take care of.
Ms. Shea-Porter. OK, and there is, obviously, associated
costs with trying to fight these guys. They are not just the
guys who made a little mistake, but there is actually a huge
market in there that is creating a huge problem around the
world, not just in our country, but other countries.
Mr. Asner. Yes, absolutely. And just to be clear, people
who make a mistake, who make an innocent mistake under the
Lacey Act, are not guilty, period.
Ms. Shea-Porter. Right. I think we have to keep repeating
that.
And then I have another question for you. In your testimony
you state that a person who innocently imports wood is innocent
under the Lacey Act. Can you explain--first of all, they can
have their day in court. Right?
Mr. Asner. Absolutely.
Ms. Shea-Porter. Can you explain what the genesis of this
misunderstanding is? I----
Mr. Asner. Yes. I think it is a lot of looseness, a lot of
people who are playing with law, and don't actually understand
what the Lacey Act entails.
There are two provisions that have a mental state
requirement, and one is a misdemeanor--that is the one that is
tied to the due care standard--and then one is a felony, and
that is tied to a knowledge standard. Then there is not a
penalty, but a consequence of forfeiture. If you possess
illegal things under the laws of the United States, you are not
allowed to keep them.
Now, I understand--and, by the way, there are very good
reasons for that. And one of the reasons is that, hopefully,
those illegal things will be taken away and given back to the
rightful owner, and that is an important principle, because we
believe in property rights here. So there are sympathetic
cases. So where, for example, you have something and you can't
really trace it back to an owner, in those situations--and the
person is truly innocent--in those situations you can invoke
the remission statute and ask for an exception to the
forfeiture. And that is well documented.
Ms. Shea-Porter. OK. Thank you. Thank you for that answer.
Mr. French, I am obviously thrilled to see you here. What
is the impact to your business, when illegally sourced material
enters the U.S. marketplace?
Mr. French. This is a big issue about American jobs, and it
is one of the reasons that those Lacey Act amendments were
referred to by some very conservative members of my association
as a jobs act for many States, particularly in the South.
But in my business, if illegal wood comes in, and my
domestic customer, who is trying to make a product out of wood,
it undercuts their ability to compete in the world marketplace
for that manufactured product. So if a toilet seat or a toilet
roll holder from China comes in made out of illegal wood and it
can be sold at one-tenth the price of the product that could be
made out of American wood in America, using American employees,
that is a devastating impact on those customers.
And the wood products industry in this country was
devastated by this last recession. And the influx of illegal
woods was added to that terrible impact.
Ms. Shea-Porter. And I had another question for you. Now,
we are obviously always concerned about costs for businesses.
And clearly, as somebody who has run a business for many years,
you look at that bottom line also. But is the cost for
compliance smaller than the cost of allowing illegal wood and
not finding it?
Mr. French. Yes. I mean I am not a big importer, myself. We
do import some, and we have. But talking to people that have, I
think, most imported wood businesses want to have legitimate
supply chains. And they work very, very hard. And I think the
Lacey Act--the APHIS documents have actually helped these
businesses walk themselves through their supply chains and
eliminate high-risk areas for purchase. And they are focusing
on lower-risk sustainable and legal material.
So, I think that the companies that want to make it work,
particularly the importing companies, are going to have less
cost than perhaps some people are talking about.
Ms. Shea-Porter. Thank you. I will yield back.
Dr. Fleming. Thank you. Well, let's have another round,
shall we? We are having fun.
Mr. Autor, now, you heard Mr. Asner make assertions, first
of all, that this is a matter of national security, which is
news to me. But also he said that innocent people who may
perhaps accidentally break some laws have nothing to fear.
Perhaps there is no danger to forfeiture, and that sort of
thing. Do you agree?
Mr. Autor. No, I don't agree.
Dr. Fleming. Could you pull it a little closer.
Mr. Autor. Sorry. We have to distinguish between two--well,
first of all, it has been clear that if you have exercised due
diligence and have been found to exercise due diligence, that
you will not be subject to criminal prosecution. So, in that
sense, you are not guilty.
However, under the Civil Asset Forfeiture Act, the mere
possession of material that has been found to violate Lacey is
deemed to be contraband, like illegal drugs, and is subject to
seizure and forfeiture, regardless of your intent.
So, if you are a perfectly innocent owner, you have
exercised proper due diligence, and you can demonstrate that
you have, you can still be subject to having the material
seized and forfeited which, in some cases--and I can point to
Gibson Guitar--can amount to millions of dollars. And for a
smaller company, that can put them out of business, even though
they have been found to do nothing wrong, and they are not
subject to any criminal sanctions, whatsoever.
And there is not an adequate procedure under the law to be
able to go to a Federal judge and demonstrate that you have
exercised proper due care as expected and required under Lacey,
and to petition a court to return the merchandise. And this is
not the same as illegal drugs or a stolen painting. There is
nothing inherently illegal about wood. You can have two
identical tables made of hickory or cherry, and it is
impossible to determine whether one was from illegally
harvested wood or the other was not.
So, I think there is some distinctions to be drawn here.
The remission procedure that Mr. Asner mentioned is very
limited in petitioners being able to use that procedure. I
think that there needs to be a better legal process through the
Federal courts for petitioners to be able to show that they
have exercised due care.
Dr. Fleming. So if I am an American company owner, small
businessman, as many, I am sure, are, so if I have a $3 million
shipment coming in, and it is confiscated, even though I may
not be directly fined, my $3 million goes out the window and
then my business could go bankrupt. So, by default, my business
is being punished. Is that really what you are saying?
Mr. Autor. I think that is an accurate characterization,
yes. You have done nothing wrong, you can demonstrate that you
have done everything you can to comply with this law, and yet
you can still have the product that you have seized.
And if this is truly to be treated like contraband, like
illegal drugs, technically anyone in the chain of possession,
including a consumer, could be subject to forfeiture and
seizure.
Dr. Fleming. Well, again, that is very worrisome. Today we
are talking about the IRS picking and choosing people to
retaliate against, potentially being used as political pawns,
putting the heavy boot of the Federal Government on the necks
of law-abiding citizens who were innocent, who perhaps made a
mistake, maybe didn't check the right box on a form. That is,
indeed, very worrisome.
Ms. Matthiesen, we have been talking about, of course,
American law. But we will return to Canada here for a moment.
Has there ever been an allegation that illegal logging has or
is occurring within Canada?
Ms. Matthiesen. From my knowledge--and I have asked the
question to my sister associations in Canada--no.
Dr. Fleming. OK. Therefore, do you believe it is fair that
your wood products are being treated exactly the same as those
countries who have a history of illegal logging?
Ms. Matthiesen. Well, it flies in the face of risk
management, and it flies in the face of what our two countries
and the NAFTA partnership has been doing in the last several
years that has created thousands of jobs in the last two
decades since we signed NAFTA.
So, queen for the day, the answer would be we would like to
have a distinctive and separate approach for Canada, simply
because the risk is that much reduced.
Dr. Fleming. Yes. OK, thank you. I see my time is up. The
Chair now recognizes Ms. Shea-Porter.
Ms. Shea-Porter. Thank you, and I am still looking around
thinking I am at Natural Resources, not any oversight on the
IRS. But whatever, having said that.
So I have a couple of questions. I listened very closely to
what Mr. Autor said--and I am sorry if I mispronounced your
name. And I would like Mr. Asner to tell me. Do you agree with
that characterization? Yes or no. And please explain.
Mr. Asner. No, not at all. Unfortunately, I think Mr. Autor
wasn't in the Federal Government for a long time and didn't
handle criminal cases.
When goods are forfeited, the government has a right to
seize goods before forfeiture, and then you can file a motion
under Rule 41(g) of the Federal Rules of Criminal Procedure,
and you can get a court hearing to get those back. And that is
just black-letter law. And defendants do that all the time.
If the government proceeds to forfeit, what they have to do
is give a notice, and then somebody can come in and make a
claim to it under CAFRA, which he did mention. It is dripping
with due process.
After that, there is then a hearing, and somebody can make
a claim, and there can be a claim that it is contraband, the
government bears the burden of proving it is contraband or that
it is illegally possessed. The other side gets to contest that.
And so there is a process that goes through this.
So the mention, for example, of Gibson, there were two
categories of wood in Gibson. One, the government actually
allowed them to file a petition for remission on. That was the
Indian wood. The other ones they had admitted they didn't
exercise due care, and that ended up getting forfeited. So I
don't know what he is talking about when we are talking about
Gibson there. That case is pretty clear.
And then, with respect to the $3 million example, I mean
that is the law, not just in Lacey, that is the law in customs.
That is the customs law, and it has been that law for decades,
if not 100 years already, that if something comes into the
country and you are not allowed to have it, it is illegal, then
it gets forfeited. And I understand that it can be a problem
for people who are innocent bringing it in. And commercial
clients--for example, my clients--we handle that through
warranties and guarantees. We force the upstream supplier to
guarantee the legality of the goods.
And keep in mind the example of the $3 million worth of
wood, on the other side of that, more often than not, there is
a victim whose wood that belonged to. And just as if you steal
a piece of art and you sell it to a third party, and that third
party then sells it to me unwittingly, I can't complain when
the person who is the victim comes to me and says, ``I want my
art back.'' I have to give it back. My recourse is with the
criminal.
Ms. Shea-Porter. OK. Thank you, and I yield back.
Dr. Fleming. The gentlelady yields back. The Chair would
like to ask some follow-up questions.
Mr. Asner, do you represent companies that perhaps could
fall under this law?
Mr. Asner. I do, from time to time, advise companies. It
hasn't been a huge business, actually, frankly.
Dr. Fleming. OK. But you would charge and perhaps make
money by representing them having to deal with the issues here
discussed today.
Mr. Asner. I would hope to; that is what we do.
Dr. Fleming. OK. So as a result of that, you do have a
financial interest in some of the issues that go on today that
may subject companies to the problems here.
Mr. Asner. I think, actually, probably my financial
interests would be with companies that are opposed to what I am
saying today. My interest here is I have been interested in the
Lacey Act for about 10 years, if not more, because I was a
Federal prosecutor. I am here on my own dime. I just think it
is interesting. I think it is important for the country----
Dr. Fleming. But you would agree, sir----
Mr. Asner. I think it is important for my children.
Dr. Fleming. You would certainly agree that the more laws
and regulations and the more trouble that companies have with
this law, the more they are going to have to hire guys like
you.
Mr. Asner. You know, I think, actually, generally, it is
true that the more regulations, the more----
Dr. Fleming. The more lawyers we have to hire, right?
Mr. Asner. The more difficult it gets. But on the other
hand, it also protects, and it protects the rights of property
owners.
Dr. Fleming. Right.
Mr. Asner. And we are here to protect property owners.
Dr. Fleming. OK. Then, Mr. Autor, there was certain
assertions here, such as that this law is--how did that go,
dripping with--what was the word?
Mr. Asner. Due process.
Dr. Fleming. Due process. Dripping with due process. I
would like to hear your response.
Mr. Autor. Well, I think we need to look at how it is
actually being utilized and enforced. And I think that there
are serious due process concerns. And ultimately, with respect
to the Indian wood in the Gibson Guitar case, the Federal
Government acknowledged that it was mistaken. And although
Gibson had tried to use the remission process in the case of
that wood, it was not successful in doing so. So I think that
instance really highlights some of the concerns here.
It is true, as I said, if you are an innocent owner, you
are not going to be subject to criminal prosecution, but it is
by no means clear--and I don't agree that it is dripping with
due process--that you are not going to still be subject to
seizure and forfeiture without an adequate recourse to be able
to say that ``I have done what I can to comply with this law.''
And, quite frankly, I think we need better due process to
encourage better compliance. We can't just have sticks with
this law, we need a carrot, as well. And this is not a loophole
for people who are scofflaws or can't demonstrate that they
have done proper due process. This is going to be a very narrow
remedy.
Dr. Fleming. Have you ever worked for the Federal
Government?
Mr. Autor. I have.
Dr. Fleming. OK. So I thought I heard Mr. Asner say you
have not worked for the Federal Government. But you have. A
number of years, perhaps?
Mr. Autor. I worked for the Federal Government for a total
of 8 years.
Dr. Fleming. OK. That is longer than I have worked for the
Federal Government, so I think that is plenty of time.
Anyway, I think that--I mean would you not agree, Mr.
Autor, that a law like this gives pause to someone who is
legitimately trying to run a business? This is the sort of
thing that could keep a business person, a man or a woman, or
even a small corporation up at night.
Mr. Autor. I think so. I mean the costs--we have identified
ways to fix this law. We are not talking about undermining,
undercutting, gutting this law at all. But there are definitely
ways that we have identified that can lower the costs of
compliance and actually encourage compliance, help the agencies
enforce this law better, achieve its objectives better, and
provide businesses more predictability in how this law is going
to be enforced.
Dr. Fleming. So what we are really talking about is simply
some improvements to a very old law that, unfortunately, some
things were not contemplated exactly, and innocent people are
being caught up in it. I think that is reasonable.
Would you agree, Mr. Snapp?
Mr. Snapp. Absolutely, Chairman.
Dr. Fleming. OK. Well, with that I yield back. And if Ms.
Shea-Porter would like to ask questions, I will recognize her.
Ms. Shea-Porter. Thank you. And I am glad to see you
identify yourself as working for the Federal Government,
because we are part of that. It is not the government. It is us
and others who work there and we try to work together here and
get this right.
But Mr. Chairman, I ask unanimous consent to include in the
record an article written last year by Representative
Blumenauer clarifying the facts in the Honduran lobster
smuggling case. He concludes with this important statement that
gets to the heart of the importance of the Lacey Act's
interaction with foreign laws. He wrote, ``I suspect that if
foreign fishermen smuggled 400,000 pounds of Maine lobsters or
illegally harvested wood from Oregon worth millions of dollars
from our country, that I would want them brought to justice,
even if--especially if--they fled our jurisdiction.'' So I ask
that be entered in the record.
Dr. Fleming. Without objection, so ordered.
[The article submitted for the record by Ms. Shea-Porter
follows:]
[From the Huffington Post, May, 8 2012]
Truth Takes a Back Seat in Lacey Act Hearing
(By Rep. Earl Blumenauer)
Today, I had the opportunity to testify before the Committee on
Natural Resources Subcommittee on Fisheries, Wildlife, Oceans and
Insular Affairs on two bills that would repeal significant portions of
the Lacey Act. The Lacey Act is common sense legislation that protects
American workers and industries from illegally harvested or exported
materials.
I was severely disappointed, however, that one of the witnesses
invited by the majority, Senator Rand Paul of Kentucky, chose to attack
the Lacey Act using misleading statistics and half-truths if not all-
out lies. At the center of Senator Paul's testimony was an oft-
repeated, yet apocryphal, story about two American fishermen who were
unjustly prosecuted under the Lacey Act for transporting their catch in
cardboard containers instead of plastic. Senator Paul was outraged that
these two fishermen would be subject to monetary penalty, and even jail
time, because of this simple mistake.
I would be outraged, too . . . if the story were even remotely
true.
The two fishermen were doing far more than carrying lobsters in the
wrong containers--they were found guilty by a jury of conspiracy,
smuggling, and money laundering. Their convictions were upheld by a
U.S. federal district court and also by the 11th Circuit Court of
Appeals. This was a textbook case of criminals trying to circumvent the
law for 400,000 pounds of lobster worth $4.6 million.
Therefore it is especially offensive to see a U.S. Senator
parroting this ``fisherman's tale''--who can ever believe those--
without even getting into the facts. Even worse, Senator Paul then used
this doctored story for his personal political goal of gutting the
protections that exist for the benefit of American jobs and the
environment.
Senator Paul's testimony was a perfect example of what's wrong with
the political system today. He is more than willing to mislead and
confuse public opinion to justify his world view. This is not something
unique to Republicans, but happens whenever public figures put their
own political goals ahead of the truth and the greater good. Instead of
this constant game of spin and counter-spin where the facts take a back
seat, we need work together to find compromise solutions that deal with
the underlying problems we face, whether those are jobs, civil
liberties, national security, infrastructure investment, or protecting
the environment.
That's what I have been working on in regards to the Lacey Act. We
have a broad coalition who supports American workers and strong
environmental protections with groups such as the League of
Conservation Voters, the Hardwood Federation, the American Forest and
Paper Association, the Sierra Club, and the United Steelworkers. This
varied group is able to work together on this issue because they are
willing to put their short-term goals on the back burner and focus on
long-term issues in a way that promotes justice, fairness, and an
inclusive table with room for all, while dealing head-on with facts.
That is the type of political coalition and system I am proud to be
part of.
______
Ms. Shea-Porter. Thank you, and I yield back.
Dr. Fleming. OK. The gentlelady yields back. I would like
to thank you, panel, for your valuable testimony and
contributions today. Members of the Subcommittee may have
additional questions for the witnesses. And we ask you to
respond to these in writing. The hearing record will be open
for 10 days to receive these responses.
Before closing, I ask unanimous consent to submit for the
record a Congressional Research Service report on the Lacey
Act, ``Compliance Issues Related to Improving Plants and Plant
Products''; a statement by the American Forest and Paper
Association; and a statement from the World Wildlife Fund.
[The statements submitted for the record by Dr. Fleming
follows, the report has been retained in the Committee's
official files:]
Statement of the American Forest and Paper Association
The American Forest and Paper Association (AF&PA) appreciates this
opportunity to provide the following testimony on the 2008 Lacey Act
Amendments.
AF&PA serves to advance a sustainable U.S. pulp, paper, packaging,
and wood products manufacturing industry through fact-based public
policy and marketplace advocacy. AF&PA member companies make products
essential for everyday life from renewable and recyclable resources and
are committed to continuous improvement through the industry's
sustainability initiative--Better Practices, Better Planet 2020. The
forest products industry accounts for approximately 4.5 percent of the
total U.S. manufacturing GDP, manufactures approximately $200 billion
in products annually, and employs nearly 900,000 men and women. The
industry meets a payroll of approximately $50 billion annually and is
among the top 10 manufacturing sector employers in 47 states.
Why AF&PA Supports the 2008 Lacey Act Amendments
The U.S. forest products industry is a strong proponent of
sustainable forest management practices in the U.S. and around the
world and is committed to using forest management and manufacturing
practices that meet environmental, social, and economic objectives. Our
customers rely on us as the foundation of their supply chain to ensure
that the products we sell are produced in a legal and sustainable
manner.
Building on its legacy of sustainability, the U.S. forest products
industry two years ago set sustainability goals called ``Better
Practices, Better Planet 2020.'' The initiative recognizes the
importance of procurement of our primary wood fiber from sustainable
sources. It includes a specific commitment to increase the amount of
fiber procured from certified forest lands or through certified fiber
sourcing programs in the U.S., and to work with governments, industry,
and other stakeholders to promote policies around the globe to reduce
illegal logging.
While very little illegal logging occurs in North America, this is
not the case around the globe. Conversion of forest land to agriculture
is the primary cause of deforestation in developing countries but
illegal logging also contributes to overexploitation and unsustainable
forest management. Illegal logging is not just an environmental issue--
it is also an economic issue. When illegally sourced forest-based raw
materials enter the stream of commerce, a global economic problem is
created for U.S. producers of products from legally sourced raw
materials.
The scope of global illegal logging and its economic cost was under
heated debate a decade ago with many exaggerated claims on the extent
of the problem. To better inform the industry's policy on this issue,
AF&PA commissioned its own study in 2004 to assess the economic impact
of illegal logging on timber production and trade. The report concluded
that up to 10 percent of global wood products production and a roughly
similar share of global wood products trade are of suspicious origin.
The report also estimated that eliminating global illegal logging would
increase U.S. wood exports by over $460 million per year and increase
the value of U.S. domestic shipments by $500-700 million annually.
For these reasons, AF&PA was an active participant in a unique
stakeholder coalition comprising the forest products industry, labor,
environmental organizations, and importer groups, who worked together
for the Congressional passage of the 2008 amendments to the Lacey Act.
The 2008 amendments expanded the coverage of the Lacey Act by making it
unlawful to import, export, transport, sell, receive, acquire, or
purchase in interstate or foreign commerce any plants or products--
including wood and paper--made of plants that are taken or traded in
violation of the laws of a federal, state, or foreign law. The plants
or products are considered illegally sourced when they are stolen,
taken from officially protected or designated areas, taken without or
contrary to required authorizations or on which appropriate royalties,
taxes, or stumpage fees have not been paid, or are subject to export
bans.
The amendments also require importers to file a declaration
identifying the country of harvest, the genus and species of plants
contained in the products, and the unit of measure. The declaration
requirement, administered by the Animal and Plant Health Inspection
Service (APHIS) of the U.S. Department of Agriculture, already applies
to imports of solid wood products but has not yet been phased-in to
composite wood products or to pulp and paper, among others.
Impact of the 2008 Lacey Act Amendments
The 2008 Lacey Act Amendments brought heightened international
awareness to the illegal logging issue and introduced a strong
incentive throughout the global supply chain to ensure the legality of
forest products. Chatham House, a UK-based nonprofit on international
and current affairs, has documented welcome reductions in illegal
logging or trade over the past few years and identified the Lacey Act
Amendments as part of the reason. Also, the 2008 amendments lead the
way for similar illegal logging regulations in other major import
markets, including the European Union Timber Regulation and the
Australian Illegal Logging Prohibition Act.
Looking at one important segment of the forest products industry,
the 2008 Lacy Act Amendments appear to have been an important factor
behind the increase in U.S. exports of hardwood lumber and the U.S.
exports' share of global exports, particularly sales to China. Market
developments for U.S. hardwood lumber is particularly germane in
assessing the effectiveness of the 2008 amendments because it competes
with tropical hardwood lumber originating from countries where illegal
logging has been an issue.
U.S. hardwood lumber exports have increased by more than 70% over
the past four years. During the same period, exports from almost all
other leading hardwood lumber producing countries have been flat or
declining.
Developments in the China market are particularly important
indicator since that country is a major destination for U.S. hardwood
lumber as well as tropical hardwood lumber and where the lumber is
processed and re-exported to the U.S. and other major markets as
furniture and other consumer products. According to China's trade
statistics, hardwood lumber imports from the U.S. have been rising over
the past several years. In 2012, hardwood lumber imports from the U.S.
increased 5%, while imports from other sources declined 6%. There is
anecdotal information indicating that the pickup in demand for U.S.
hardwoods is coming from both domestic customers and from buyers in the
Far East who reportedly are looking for hardwoods from reliable and
legal sources. Many U.S. hardwood timber mills are small, family-owned
businesses so the Lacey Act provides significant economic boost to
American rural businesses and jobs.
Implementation of the 2008 Lacey Act Amendments
Implementation has not been problem free. Our industry has worked
within a wide coalition including importers, industry, environmental
groups, labor organizations, retailers, and others to develop consensus
recommendations to the federal agencies on implementation of the Lacey
Act Amendments. The consensus group provided the federal agencies with
two sets of detailed documents (in 2009 and 2010) encouraging the
agencies to use their rulemaking authority to clarify and streamline
the requirements for industry to comply with the Lacey Act. As recently
as August 2011, the consensus group submitted a joint statement to
APHIS proposing a process for addressing outstanding technical issues.
The following are AF&PA's recommendations:
First and foremost, the administration was mandated by
Congress to produce a report on implementation issues within two years
of passage of the 2008 amendments. This report has still not been
completed. Without the report, it is difficult for Congress and private
sector stakeholders to assess whether the understanding of the
outstanding implementation issues are best resolved administratively or
by legislative changes. We urge members of this committee to formally
request that the implementing agencies provide a date certain for the
release of the report so that Congress and the public may have access
to the information needed to determine the best course of action for
solving the identified problems with implementation.
We believe that the declaration requirement is an
important tool in ensuring that businesses all along the supply chain--
harvesting operations, manufacturers, brokers, importers, and
retailers--become a part of the solution through joint action. The idea
behind the 2008 amendments was not a heavy-handed government system of
regulation, but a requirement that put the burden on the supply chain
to exercise due care in knowing the source of the raw material.
The implementation of the declaration requirement is a work in
progress. Several paper companies that have implemented
internal fiber tracking systems have told AF&PA that it will be
very difficult to identify the genus and species of the wood
fiber they use at their paper mills on a shipment-by-shipment
basis. Typically, their wood fiber comes from low-risk North
American sources.
AF&PA would support constructive proposals that allow greater
flexibility for importers of composite wood and pulp and paper.
One option is provide a de minimis exemption to cover the odd
wood and pulp source where the mill cannot guarantee complete
knowledge of the country of harvest or the species. This would
provide importers more flexibility and reduce the liability of
having to verify and declare 100 percent knowledge of the
species and harvest location of imports.
AF&PA believes that the Lacey Act Amendments should not
apply to plants and plant products manufactured or imported prior to
the enactment of the amendments. We agree that it is unreasonable to
expect importers to obtain complete supply chain information pre-May
2008. Specific language could be developed by stakeholders that would
preclude unintended gaps.
In the wake of the raid on the facilities by officers of
the U.S. Fish and Wildlife Service on facilities of Gibson Guitars in
2011, a great deal of concern was expressed by some in the musical
instruments industry and by individual musicians about possible
confiscation of musical instruments when entering or leaving the
country. To assuage these concerns, Federal agencies should issue clear
guidance that enforcement action will not be taken against individual
consumers. There is no precedent in the Lacey Act's long enforcement
history of the government targeting end users of individual products.
The 2008 amendments reinforce and support the laws of
other countries concerning the management and trade of plants and plant
products. As stated above, a Lacey Act violation is triggered by laws
concerning the way plants and plant products are taken, possessed,
transported, imported, or exported. Bans and restrictions on exports of
raw materials such as logs and sawwood are common laws in tropical
countries and are directly linked to forest management and protection
efforts. In countries where corruption is common or where there is weak
governance, these laws are an important tool in controlling large
exports of illegally logged timber.
Finally, we believe that adequate funding for federal
agencies responsible for carrying out the Lacey Act mandate is critical
to ensure the full implementation of the Act. This should include
funding for international programs that educate foreign governments and
businesses on how to comply with the Lacey Act.
Conclusion
Given that the U.S. is the largest importer of forest products,
with proper implementation and enforcement, the Lacey Act can be an
important tool for protecting forests around the world and controlling
international trade in illegally logged and traded plants and plant
products. By fighting illegal logging, the Lacey Act also is leveling
the competition in the international wood market. We understand that
many Asian manufacturers of wood products are returning to U.S.
hardwood to avoid sourcing from questionable suppliers. This helps in
preserving and growing jobs in U.S. communities.
As with any other law, there is room for improvement in the manner
the act is being implemented and enforced. We believe the first thing
the federal agencies need to do is issue their report on the
implementation and operation of the Lacey Act Amendments. If it is
determined that the Act doesn't provide sufficient administrative
authority and legislative changes are still needed, we would be glad to
work with Congress to implement technical changes that would improve
the effectiveness of the Lacey Act without diminishing its objectives.
______
Statement submitted on behalf of the World Wildlife Fund
World Wildlife Fund (WWF) appreciates this opportunity to provide
written testimony to the House Natural Resources Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs for its May 16, 2013
hearing on illegal logging and the 2008 Amendments to the Lacey Act.
Forests have been at the heart of WWF's work for half a century.
Invaluable to wildlife and people, forests house over two-thirds of
known terrestrial species and act as an important source of livelihood
for over 1.6 billion people. Nonetheless, every year the world loses an
area larger than the state of New York to deforestation. An important
contributor to this annual forest loss and degradation is illegal
logging and the associate trade in illegally sourced wood products. A
July 2010 study released by the London-based think tank Chatham House
estimated that at the beginning of this century in five of the top ten
most forested countries, at least half of the trees cut were felled
illegally.\1\
---------------------------------------------------------------------------
\1\ Chatham House. ``Illegal Logging and Related Trade: A global
Response'', prepared by S. Lawson and L. McFaul, 2010.
---------------------------------------------------------------------------
The impacts of illegal logging are devastating. Perpetrators often
deliberately target remaining high-conservation-value forests,
including protected areas, which contain the highly valuable species
that have been over-exploited elsewhere. Economically speaking, illegal
timber products depress world timber prices, disadvantaging U.S.
companies that produce and sell legally sourced forest products.
Studies have estimated that the U.S. wood products industry loses as
much as $1 billion annually from illegal logging.\2\
---------------------------------------------------------------------------
\2\ Seneca Creek Associates, LLC, and Wood Resources International,
LLC. 2004. ``Illegal'' Logging and Global Wood Markets: The Competitive
Impacts on the U.S. Wood Products Industry'', prepared for American
Forest & Paper Association.
---------------------------------------------------------------------------
In 2010 there was rising optimism, with reports noting that illegal
logging declined as much as 25% worldwide in the millennium's first
decade.\3\ However, more recent studies have shown that illegal loggers
are becoming more organized and sophisticated in their tactics.\4\ It
is clear that, while the 2008 Lacey Act Amendments contributed to the
decline seen in the last decade, cartels involved in illegal logging
are learning the loopholes and fighting back. Recent estimates suggest
that between 50 and 90% of all logging in key producing tropical
countries is illegal, with the economic value of global illegal logging
between $30 and $100 billion, or 10-30% of global wood trade.\5\
---------------------------------------------------------------------------
\3\ Chatham House. ``Illegal Logging and Related Trade: A global
Response'', prepared by S. Lawson and L. McFaul, 2010.
\4\ Nellemann, C., INTERPOL Environmental Crime Programme (eds).
2012. Green Carbon, Black Trade: Illegal Logging, Tax Fraud and
Laundering in the Worlds Tropical Forests. A Rapid Response Assessment.
\5\ INTERPOL/World Bank. 2009. CHAINSAW PROJECT An INTERPOL
perspective on law enforcement in illegal logging. INTERPOL General
Secretariat, Lyon.
---------------------------------------------------------------------------
But sobering statistics like these do not mean we throw up our
hands, declare the 2008 amendments as ineffectual, and cede the world's
forests to illegal loggers. Rather, this is the time to buckle down and
provide U.S. government agencies the resources they need to fully
implement the Lacey Act. This will not only benefit the wildlife and
communities that depend on forests for their immediate survival, but
will level the playing field for those U.S. businesses acting honestly.
Based on financial data in the Global Trade Atlas, over the last four
years, U.S. hardwood lumber exports have risen by more than 70%. In
2012, the U.S. share of global hardwood lumber trade exceeded 20% for
the first time--rising from 13% in 2008. Although this cannot be wholly
attributed to the 2008 Lacey Act Amendments, there are definite
correlations. In addition, recognizing the environmental and economic
benefits of the 2008 Lacey Act Amendments, the European Union and
Australia have passed similar legislation. WWF urges the Committee to
assist stakeholders, including industry, labor, and environmental
groups, in strengthening the Lacey Act Amendments and fully implement
them across relevant U.S. government agencies.
Illegal Logging's Impacts:
The Russian Far East
The forests of the Russian Far East (popularly called ``the Ussuri
Taiga'') support extraordinary biological diversity, including nearly
all of the world's remaining Amur tigers (around 450) and Far Eastern
leopards (35). These rich temperate forests also support the
traditional income generation activities of tens of thousands taiga
villagers, such as pine nut collecting, hunting, sable trapping, and
forest beekeeping. But the Ussuri Taiga is being pushed to the edge of
destruction due to illegal logging by a violent ``forest mafia'' which
conducts industrial-scale timber theft largely to supply Chinese
furniture and flooring manufacturers, many whom in turn export to the
U.S. and EU. To demonstrate the scale of this criminal activity, WWF
Russia conducted an analysis that showed that the volume of Mongolian
oak logged for export exceeded the volume authorized for logging by
200%--meaning that at least half of the oak being exported across the
border to China was stolen. Further analysis of export data showed that
2010 was a mild year--in 2007 and 2008 the oak harvest was four times
as large.
This widespread illegality has four primary negative effects:
Ecological. Illegal logging severs vital taiga food
chains by removing the most productive wildlife food sources--Korean
pine and Mongolian oak. Pine nuts and acorns are the main food source
for wild boars and red deer, which in turn are the primary prey of the
Amur tiger. The overharvesting of these tree species became so extreme
that Prime Minister Putin completely banned the logging of Korean pine
in 2010. But the plunder of oak resources continues unabated and total
collapse of this wildlife food resource is imminent. Furthermore, as
timber supplies dwindle illegal loggers are moving more and more into
ecologically-sensitive forests like riparian buffers and wildlife
reserves.
Social. The vast majority of forest villagers receive no
economic benefit from illegal logging. Instead, their traditional
livelihoods of hunting, nut gathering and beekeeping are under threat.
For instance, a sharp conflict has erupted between logging brigades and
beekeepers in the Dalnerechensk region over the illegal logging of
linden, a key honey species.
Rule of law. Money from foreign purchasers, including the
U.S., washes through China to the Ussuri Taiga, where it finances
massive corruption in the Russian Forest Service and police. Bribed
forest rangers and policemen essentially leave huge swathes of rural
Russia at the mercy of a forest mafia that uses intimidation and
violence to maintain control.
Economic. In 15 years illegal logging has nearly tapped
out the timber supply that should have supported legal forest industry
for decades. Legal actors cannot compete in a market awash with illegal
timber. Hope for economic development in depressed Taiga regions is
disappearing as the resource is stolen for export.
WWF Russia works with dedicated forest rangers and village
activists to combat illegal logging in the Ussuri Taiga. Their stories
demonstrate what's at risk both for the forest and local communities.
Men like Anatoliy Kabanets, who has been hounding illegal loggers for
15 years as a forest ranger, policeman, private forest guard and WWF
specialist. Anatoliy's work has led to the numerous prosecutions and
has successfully driven illegal loggers from key wildlife reserves. But
it also cost him his oldest son, who died in a traffic accident
believed to be rigged by illegal loggers. Faced day after day by
glaring corruption and lawlessness, many others in his place have given
in to apathy and cynicism. But Anatoliy is too dedicated to the Ussuri
Taiga and the people who need it to walk away.
Or Konstantin Dobrashevsky, a local legislator who organized his
neighbors to monitor and report illegal logging of Korean pine, the
source of a vital economic resource for the village--pine nuts. In
response illegal loggers organized a campaign of intimidation against
Konstantin and his neighbors, shooting out the windows of their homes
and leaving bullets on their doorstep to be found by their children.
Undaunted, Konstantin has continued to use his legislative post to
organize illegal logging investigations, audit the actions of the
deeply corrupt State Logging Company, and defend the rights of village
beekeepers and hunters against illegal loggers. He told WWF Russian
``[i]t gets better when they know you aren't afraid of them.''
Peru
The mahogany trees of the Amazon are some of the most coveted and
expensive woods on earth, with a single tree capable of fetching tens
of thousands of dollars by the time it reaches the United States and
Europe. For years, Brazil was a leading exporter of mahogany but a 2001
moratorium on logging big-leaf mahogany forced importers to shift their
attention to new sources. Peru quickly rose to become the world's
largest supplier. Over a decade later, populations of mahogany and
another highly sought species, Spanish cedar, have precipitously
declined, leaving many of Peru's most precious watersheds without its
most valuable trees.
To make matters worse, much of the mahogany harvested was done so
illegally. In 2005 alone, 20 of the 24 (83%) exporters of mahogany
exported unlawful mahogany trees and products to the U.S. and
Europe.\6\ This has continued into the present day, with estimates
putting illegal activity as accountable for three-fourths of the annual
Peruvian timber harvest.\7\ Now, the last stands of mahogany and
Spanish cedar are nearly all in national parks, territorial reserves,
or native Indian lands. This has led to a two-fold problem: loggers
have begun to target new tree species with far less protections, and
others still have ventured into restricted lands to target the last of
Peru's mahogany and Spanish cedar.
---------------------------------------------------------------------------
\6\ AIDESEP (2007) Illegal logging and international trade in
mahogany from the Peruvian Amazon, AIDESEP, Rainforest Foundation
Norway. http://www.illegal-logging.info/uploads/Mahogany_reportEng.pdf.
\7\ Wallace, S. (2013) Mahogany's Last Stand, National
Geographic.com April, 2013. http://ngm.nationalgeographic.com/2013/04/
mahogany/wallace-text.
---------------------------------------------------------------------------
Rampant illegal logging prompted U.S. action in 2007 when Congress
required a series of reforms by Peru as a prerequisite for a free-trade
agreement. This included implementation of a plan on mahogany that
would comply with the Convention on International Trade in Endangered
Species of Wild Fauna and Flora (CITES). But changes have been slow to
take effect, with minimal results for many of the remote communities
that have watched their forest be decimated by organized illegal
logging cartels.
Despite these challenging circumstances, there are positive stories
coming out of Peru, including the Consorcio Forestal Amazonico (CFA),
holders of Peru's largest individual concession at 180,000 hectares.
CFA is complying with Forest Stewardship Standards (FSC) and planning
for a sustainable future.\8\ Scott Wallace, in an article for National
Geographic titled ``Mahogany's Last Stand,'' notes that CFA is ``trying
to do things right.'' \9\ The company's concession may lack a high
density of valuable mahogany, but as the article reveals, they are
targeting over ``20 different species with commercial potential'' in a
cyclical approach that they hope will allow them to harvest
indefinitely. It is the 2008 Lacey Amendments, as well as the newly
enacted European Union Timber Regulations (EUTR) and the Australian
Illegal Logging Prohibition Bill, that create the market for CFA to
sell its legal, sustainable wood thereby encouraging new ways of doing
business within Peru's forest industry.
---------------------------------------------------------------------------
\8\ Global Wood, Consorcio Forestal Amazonico SAC; http://
www.globalwood.org/company/mgodetail.asp?id=22778.
\9\ Wallace, S. (2013) Mahogany's Last Stand, National
Geographic.com April, 2013. http://ngm.nationalgeographic.com/2013/04/
mahogany/wallace-text.
---------------------------------------------------------------------------
Economically Speaking: WWF's Work With The Global Timber Industry:
Every business is in the forest business. Whether a company uses
wood in its production or consumes wood fiber in paper or paper
products, every company depends on the forest industry in some form or
another. WWF believes that if companies practice sound forest
management and responsible wood sourcing, it is possible to supply the
world's needs for timber while also conserving the biodiversity of the
world's last, great forest areas in places such as the Amazon, Borneo,
the Congo Basin and the Russian Far East.
WWF's Global Forest & Trade Network (GFTN) works with companies
from all across the global forest products supply chain that are
willing to lead the industry in responsible forest management and
trade. First established in 1991, GFTN assists almost 300 companies
world-wide in understanding the forest origin of their wood products,
and implementing responsible sourcing action plans.
Through its fieldwork and its collaboration with GFTN participants,
WWF has witnessed first-hand how the 2008 Lacey Act Amendments have
positively changed the practices of U.S. companies and their suppliers,
strengthening their sourcing practices and leveling the playing field
for U.S. companies that produce and sell legally sourced forest
products. Attached to our testimony you will find a factsheet on Lacey
that describes the law, its effects on industry, and includes quotes
from different American companies that publicly articulate the positive
impacts of the Lacey Act.
Conclusion
By motivating companies to ensure that the timber used in their
products is legally and responsibly harvested, the 2008 Lacey Act
Amendments are a key driver in the global fight to stop illegal
logging. But as crime cartels become more organized and sophisticated,
so too must the legislation that prevents the systematic destruction of
our most precious natural resources. The 2008 Lacey Act Amendments were
a step in the right direction, and progress like this should be further
supported by the U.S. Congress. Creating protected lands is not enough;
without active enforcement measures to prevent illegal logging, many of
the world's most biodiverse habitats will be lost. WWF urges the
Committee to assist stakeholders, including industry, labor, and
environmental groups, that have created a consensus document listing
next steps for strengthening the Lacey Act Amendments to fully
implement these suggestions with the relevant U.S. government agencies.
About World Wildlife Fund
WWF is the world's largest conservation organization, working in
100 countries for nearly half a century to build a future in which
people live in harmony with nature. With the support of almost 5
million members worldwide, WWF is dedicated to conserving nature and
reducing the most pressing threats to the diversity of life on Earth.
Attachment
The Lacey Act: Good for Forests, Good for Responsible U.S. Businesses
WHY ARE THE 2008 LACEY ACT AMENDMENTS SO IMPORTANT?
As one of the world's largest producers and consumers of forest
products, the United States plays a key role in deterring illegal
logging and associated trade. A 2010 Chatham House study estimated that
illegal wood and paper imports into the U.S. could represent almost 4%
of all U.S. wood and paper imports, valued at $4 billion.\1\
Deforestation and forest degradation caused by illegal logging often
results in devastating impacts to local communities, wildlife, and
ecosystem services such as clean air and water. Illegal logging also
disadvantages U.S. companies that produce and sell legally sourced
forest products. Traders of illegal timber can flood the market with
cheap products, creating an unlevel playing field. The Lacey Act is
important in maintaining a fair market in which responsible U.S.
companies can compete.
---------------------------------------------------------------------------
\1\ Chatham House. 2010. Illegal Logging and Related Trade:
Indicators of Global Response. Prepared by S. Lawson and L. MacFaul.
---------------------------------------------------------------------------
WHAT DOES THE LAW SAY?
The 2008 Amendments to the Lacey Act of 1900 represent the first
piece of U.S. legislation to combat the trade of illegal plants and
plant products including timber, wood, and paper products. The law
addresses illegal logging in three ways:
It prohibits all trade of plant and plant products that
are illegally sourced from any U.S. state or foreign country;
Requires a declaration of the country of origin of
harvest, value, volume, and species name of all plants contained in
imported products; and
Establishes penalties for violations of this law
including forfeiture of goods and vessels, fines, and jail time.
HOW DOES ILLEGAL LOGGING AFFECT INDUSTRY?
Studies have estimated that the U.S. wood products industry loses
as much as $1 billion annually from illegal logging.\2\ The World Bank
estimates annual global economic loss from the illegal trade to be
approximately $10 billion, and losses due to tax evasion and royalties
on legally sanctioned logging are valued at approximately $5
billion.\3\ Illegal logging depresses global prices for timber and
timber products by up to 16%.\4\ These lower values in price weaken the
U.S. forest industry's ability to compete in the global marketplace and
threaten the industry's job security.
---------------------------------------------------------------------------
\2\ Seneca Creek Associates, LLC, and Wood Resources International,
LLC. 2004. ``Illegal'' Logging and Global Wood Markets: The Competitive
Impacts on the U.S. Wood Products Industry. Prepared for American
Forest & Paper Association.
\3\ The World Bank. 2006. Strengthening Forest Law Enforcement and
Governance: Addressing a Systemic Constraint to Sustainable
Development.
\4\ Chatham House. 2010. Illegal Logging and Related Trade:
Indicators of Global Response. Prepared by S. Lawson and L. MacFaul.
---------------------------------------------------------------------------
INDUSTRY SUPPORT FOR RESPONSIBLE FORESTRY AND TRADE
In addition to strong support from the NGO community, the Lacey Act
Amendments have garnered widespread support from U.S. businesses that
believe in the importance of legal timber trade. Many U.S. companies
continue to publicly articulate the positive impacts of the Lacey Act
in reducing illegal logging, raising awareness and attention on the
part of companies about the forest origin of their wood products, and
supporting the U.S. economy, jobs, and their businesses.
The following quotes are from companies that participate in WWF's
Global Forest & Trade Network (GFTN), expressing their support for this
important tool that reinforces their commitments to responsible
forestry and trade.
Hewlett Packard Company (NYSE: HPQ)
``Having the Lacey Act compliance requirements in place supports
HP's efforts towards achieving our responsible sourcing goals.''--
Engelina Jaspers, Vice President, Environmental Sustainability
Domtar Corporation (NYSE: UFS)
``Domtar strongly believes that illegal logging is a serious global
problem with detrimental environmental and economic consequences and we
support the efforts of governments to continue working on this very
important issue. A successful implementation of the Lacey Act should
help level the playing field for all companies, recognizing the
importance of using only legally and responsibly harvested wood.''--
Lewis Fix, Vice President, Sustainable Business and Brand Management
Williams-Sonoma, Inc. (NYSE: WSM)
``The Lacey Act legislation has been pivotal in helping us deliver
on our commitment to eliminate unwanted and unknown wood from WSI's
supply chain, by motivating our suppliers to ensure that the timber
used in their products is legally and responsibly harvested.'' --David
Williams, Sustainable Development Analyst
Tetra Pak Inc.
``The Lacey Act is an important tool that supports global companies
like Tetra Pak that have long been committed to doing what's right for
the environment. The Lacey Act complements our efforts to reduce
illegal logging and warrants a code of conduct which is implemented
wide across all players in the wood and timber market.'' --Elisabeth
Comere, Director, Environment and Government Affairs
IKEA
``Wood is one of IKEA's most important raw materials, which is why
we have been working on sustainable wood sourcing for more than a
decade. Harmonized international legislation against the unlawful
trading and handling of harvested wood is an important tool to curb
illegal logging and a stepping stone towards sustainable forestry.
Additionally, when fully and efficiently implemented, it will provide a
common approach for all businesses to adhere to.''--Anders Hildeman,
Global Forestry Manager, IKEA
ABOUT WORLD WILDLIFE FUND
WWF is the world's leading conservation organization, working in
100 countries for nearly half a century to build a future in which
people live in harmony with nature. With the support of almost 5
million members worldwide, WWF is dedicated to conserving nature and
reducing the most pressing threats to the diversity of life on Earth.
Visit www.worldwildlife.org to learn more.
ABOUT GFTN
The Global Forest & Trade Network is WWF's initiative to eliminate
illegal logging and drive improved forestry in the world's most
valuable and threatened forests, by engaging with companies across the
forest products supply chain that are committed to legal and
responsibly sourced forest products. First established in 1991, GFTN
assists almost 300 companies world-wide in understanding the forest
origin of their wood products, and implementing responsible sourcing
action plans. GFTN seeks to strengthen market conditions that help
conserve forests, while providing economic and social benefits for the
businesses and people that depend on them. With combined annual sales
of $70 billion, trading by GFTN participants represents 20% of all
forest products bought or sold internationally every year. For more
information on WWF's Global Forest & Trade Network visit
gftn.panda.org.
______
Dr. Fleming. As I indicated at the beginning of this
hearing, this is just the first in a series of hearings on the
Lacey Act. And it is likely that a second oversight hearing
will be held within the next 2 months.
I want to thank Members and staff for their contributions
to this hearing. And thereby being no further business, the
Subcommittee is hereby adjourned.
[Whereupon, at 12:31 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Statement of the National Wildlife Federation
The National Wildlife Federation appreciates the opportunity to
submit the following statement for the record of the oversight hearing
on the 2008 Lacey Act Amendments:
The National Wildlife Federation (NWF) is America's voice of
conservation, protecting wildlife for our children's future. With 47
state affiliates and over four million members and supporters across
the country, including hunters, anglers, gardeners, and other outdoor
enthusiasts, NWF has been in the forefront of national and
international efforts to conserve wildlife and natural habitats
including forests, for the last 77 years. Illegal logging has long been
one of the major threats to the world's remaining forests, particularly
in developing countries. Damage includes thefts from national parks and
other protected areas, loss of habitat for many endangered species, and
conflicts with local communities who are dependent on forests for their
livelihoods. NWF believes that a range of tools are needed to help save
the world's remaining tropical rainforests and other natural habitats,
and we continue to support the Lacey Act Amendments of 2008 because
they provide an important such tool. Significantly, the Lacey
Amendments resulted from a major bi-partisan effort to promote both
forest conservation and fair treatment for companies who work to
eliminate illegal wood products from their supply chains.
NWF has worked for years to promote sustainable forest management,
and to provide incentives for best practices in the industry. Members
of our staff have held leadership positions on the board of a key
organization in this space, the Forest Stewardship Council (FSC), which
established voluntary ``sustainability standards'' for forest products
around the globe through consensus between industry and civil society.
FSC offers not only clear environmental and social standards, but also
a chain of custody system, that can be relied upon by businesses to
demonstrate their sustainability credentials. But honest firms, and
market mechanisms like the FSC, have a hard time competing when
significantly cheaper, illegal wood enters the supply chain in global
commerce. The Lacey Act Amendments help to level this playing field--
they make it illegal to trade in and to import to the U.S. forest
products that were harvested or traded illegally in the country or
state where they came from. This provides an excellent complement to
the FSC's private sector certification standards.
NWF's analysis of recent market data reveals that the Lacey
amendments have begun to demonstrate the benefits that they promised,
even though they are not yet fully implemented: they are bolstering
forest conservation efforts by countries beset by criminal logging
enterprises; and they are leveling the playing field, and, in some
cases, providing an advantage to industry actors who obey the law. One
reason for this success is that the leadership shown by the United
States in amending our century old Lacey Act has encouraged other
countries to step up with their own measures. Soon after passage of the
Lacey Act Amendments, the European Union established its own Timber
Regulation and the Australian Parliament passed the Illegal Logging
Prohibition Act. Other nations are considering similar steps and/or
improving enforcement of laws against illegal logging. These laws in
the U.S. and other major wood consuming countries are helping to back
up the efforts of developing countries and emerging economies who are
struggling against ``forest mafias''. It would be a shame for the U.S.
to undercut these valiant measures to fight corruption, violence and
theft, just as they are ramping up and showing results.
We are pleased that many U.S. based forest products producers and
manufacturers joined NWF in support of the 2008 Lacey Act Amendments,
and the reasons are not hard to understand: they have a hard time
competing with the illegal loggers who undercut them by stealing the
trees, or evading the payment of fees to land owners or the costs of
good land management. Recent trade figures suggest that the timber
industries of countries like the U.S., who have laws such as Lacey in
place, are gaining market share: for example, the imports of hardwood
lumber from the U.S. to China rose in 2012 by 5%, while imports to
China from other areas declined by 6%. Since these imports are mostly
for processing and re-export to consuming nations, this is one
indication of the power of legality requirements, such as Lacey, to
influence the trade. Market mechanisms have the potential to discourage
illegal logging and to push for further transformation of the wood
products industries toward legal and sustainable production for the
long term. Having taken the lead on this market improvement, the United
States should not abandon the hardworking companies, many of them small
businesses, who are obeying the law.
Some firms have complained about the costs of compliance with the
Lacey Act, and we have worked with a coalition to help smooth out some
of the wrinkles of early implementation. There may be additional
improvements which can be made in the documentation system, and we will
continue to collaborate on those.
We believe that FSC certification is a useful tool to help
determine legal provenance of wood sourcing. But in general, we think
that industries can be expected to understand their own supply chains,
and to assure that they are not trafficking in illegal goods--this is a
normal cost of doing business, and timber products should not be
treated any differently. The Lacey Act is part of the American
tradition of rewarding honest businesses which follow the rules, since
it promotes increased transparency about where products come from.
While not yet fully implemented, the Lacey amendments are on the right
track--they should be fully put in place, with full funding for the
modest electronic data management systems and equipment that will make
them more effective and efficient.
______
[From Hardwood Floors Magazine, October/November 2012]
With Gibson Settlement, `Due Care' is Slightly More Clear
(By Marcus Asner, Samuel Witten & Katherine Ghilain)
The Criminal Enforcement Agreement that Gibson Guitar signed with
the Department of Justice (DOJ) brings some clarity to the Lacey Act's
mandate that companies . . .
While not a binding legal precedent for other cases, the compliance
program included in the Criminal Enforcement Agreement that Gibson
Guitar recently signed with the Department of Justice (DOJ) brings
welcome clarity to the Lacey Act's mandate that companies exercise
``due care'' when identifying the source of a wood product.
The Criminal Enforcement Agreement resolved a nearly three-year
investigation and set of legal proceedings concerning wood that was
allegedly illegally harvested and/or exported from Madagascar and
India. Gibson promised to pay a $300,000 penalty and a $50,000
``community service payment,'' cooperate in Lacey Act investigations
and prosecutions, and drop forfeiture challenges with respect to some
of the wood previously seized by DOJ.
Perhaps most significant for the many industries directly affected
by the Lacey Act--including wood flooring importers, manufacturers,
distributors and installers--was the rigorous Lacey Act Compliance
Program that Gibson was required to implement as part of the agreement.
The compliance program provides some welcome clarity on the contours of
the Act's much-discussed ``due care'' requirement.
The Lacey Act requires that companies exercise ``due care'' in
identifying the source of their goods, but does not spell out what has
to be done to meet this standard. According to DOJ, ``due care means
that degree of care which a reasonably prudent person would exercise
under the same or similar circumstances,'' and it ``is applied
differently to different categories of persons with varying degrees of
knowledge and responsibility.'' The standard is generally high in a
commercial context. With few precedents for guidance, both regulators
and affected industries naturally will look to the Gibson outcome for
guidance and to supplement industry customs and standards.
Gibson's Program
As explained in section 2.3 of the Gibson Compliance Program, the
Lacey Act due care requirement is designed to ``minimize the risk of
purchasing plant products that were harvested or traded illegally.'' To
comply with this expectation, the program requires Gibson to follow
these steps before buying any wood or wood product:
1. Work with suppliers to ensure they can implement Gibson's
policies, which include procuring wood from either recycled sources or
forests where legal harvest and chain of custody can be verified, and
obtaining copies of all relevant import and export documentation and
business or export licenses;
2. Ask questions to gather information about suppliers and the
source of the wood and wood products to determine whether the products
meet Gibson's requirements for known/legal wood products;
3. ``. . . Conduct independent research and exercise care before
making a purchase,'' which may include everything from Internet
research to consulting with U.S. or foreign experts or authorities and
making site visits;
4. Request sample documentation from suppliers to evaluate Lacey
Act compliance and document validity;
5. Make a determination prior to making a purchase based on all of
the information collected;
6. Maintain records of these efforts; and
7. Decline to pursue the purchase if there is any uncertainty of
legality.
Section 3 of the Compliance Program sets forth Gibson's policies
with respect to wood procurement, verification of foreign law and
certifications/licenses, risk determinations, supply chain audits,
employee training, record retention, and internal disciplinary actions
for non-compliance.
Industry Implications
Gibson's Lacey Act Compliance Program is binding only on Gibson and
it is not meant as an official DOJ pronouncement of what ``due care''
is supposed to mean in other cases. That said, in the absence of other
notable precedents, Gibson's program, as a practical matter, helps
articulate the industry standard for due care.
Companies engaged in the trade of wood should see the compliance
program as a useful guide that may well help protect them from
liability. There is no ``silver bullet'' solution to meeting the due
care standard. But companies nevertheless would be well served to
implement compliance programs reflecting procedures set out in Gibson's
program, tailored to their own circumstances and supply chains.
Adopting an appropriately adapted Gibson-style program will give a
company a decent argument that it exercised ``due care'' and therefore
complied with the requirements of the law, if it ever unwittingly ends
up with some illegal wood and the feds come knocking. DOJ tries to take
a consistent approach to enforcement, so the Gibson agreement, and
particularly the compliance program, has practical precedential value,
even if it is not binding as law on other companies and industries.
International attention on illegal harvesting and environmental
commerce is likely to increase. That, in turn, will heighten companies'
exposure to civil and criminal enforcement actions under the Lacey Act.
Wood products companies would be wise to review their policies and
procedures and ensure that they have in place comprehensive programs
like Gibson's. This will help insulate them from Lacey Act liability
and help further the sustainability of the natural resources that are
critical to their operations.
______
The documents listed below have been retained in the
Committee's official files.
Bloomberg BNA, Daily Environmental Report
TM, Gibson Guitar, Forfeiture, and the Lacey Act
Strike a Dissonant Chord
Congressional Research Report for Congress, The
Lacey Act: Compliance Issues Related to Importing Plants and
Plant Products
# # #
OVERSIGHT HEARING ON ``THE 2008 LACEY ACT AMENDMENTS.'' PART 2
----------
Wednesday, July 17, 2013
U.S. House of Representatives
Subcommittee on Fisheries, Wildlife, Oceans, and Insular Affairs
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to notice, at 2 p.m., in
room 1324, Longworth House Office Building, Hon. John Fleming
[Chairman of the Subcommittee] presiding.
Present: Representatives Fleming, Runyan, Sablan, Shea-
Porter, and Lowenthal.
Dr. Fleming. The Subcommittee will come to order. The
Chairman notes the presence of a quorum.
STATEMENT OF THE HON. JOHN FLEMING, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Dr. Fleming. Good afternoon. Today the Subcommittee will
continue its oversight examination of the Lacey Act, by
focusing on the provision of that law that requires American
citizens to comply with the laws of foreign Nations.
Article I of our Constitution stipulates that ``all
legislative powers herein granted shall be vested in a Congress
of the United States.'' While I am not a constitutional expert,
I find nothing in that landmark document that allows the
Congress to delegate law making authority to foreign countries.
However, that is essentially what the Congress did in 1935,
when the Lacey Act was amended to prohibit the importation of
all wildlife taken contrary to a foreign law. If I had been a
Member of the 74th Congress--by the way, I wasn't even born
then--I would have voted against the provision, because it is
simply wrong to force American citizens to comply with laws of
other Nations.
Regrettably, the 2008 amendments have significantly
compounded this problem. Instead of having to comply with a
limited number of foreign laws by expanding coverage to include
plant and plant products, this has triggered literally tens of
thousands of foreign laws.
In addition, because of the Federal court decisions, the
term ``foreign law'' has now been greatly expanded to include
foreign regulations, foreign resolutions, and foreign decrees
and, thanks to the 2003 U.S. v. McNab case, ``other such
legally binding provisions that foreign governments may
promulgate.''
Based on testimony we received, there is no data base of
those foreign laws and, frankly, the Federal enforcement
agencies have no idea how many were triggered by the 2008
Amendments. Yet, we are allowing our Federal courts to send our
constituents to overcrowded Federal prisons for violating laws
enacted not only by the British Parliament but also the
National People's Congress of the People's Republic of China,
the National Assembly of Venezuela, and the National Congress
of Honduras.
This is truly madness, and I agree with the Heritage
Foundation that this ``violates one of the fundamental tenets
of Anglo-American common law: that men of common intelligence
must be able to understand what a law means. No one should be
forced to run the risk of conviction and imprisonment for
making a mistake under foreign law.''
It is one thing for an American living abroad to comply
with the laws where they are living. It is quite another to
convict one of our citizens living here for violating the laws
of one of the 192 countries recognized by the United Nations.
The Lacey Act demands that you know every law, civil and
administrative, as well as criminal, of every foreign land.
This is simply wrong.
During the course of today's testimony, I am interested in
finding out from our distinguished panel of witnesses the
legislative history explaining the rationale for requiring
compliance with foreign laws, why the Congress has never
provided a definition for the term ``foreign law,'' and why
this provision is even necessary in the Lacey Act, that we are
willing to sacrifice the freedom and liberty of our citizens.
[The prepared statement of Dr. Fleming follows:]
Statement of The Honorable John Fleming, Chairman, Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs
Good afternoon, Today, the Subcommittee will continue its oversight
examination of the Lacey Act by focusing on the provision of that law
that requires American citizens to comply with the laws of foreign
nations.
Article 1 of our Constitution stipulates that ``All legislative
powers herein granted shall be vested in a Congress of the United
States.''
While I am not a constitutional expert, I find nothing in that
landmark document that allows the Congress to delegate law making
authority to foreign countries. However, that is essentially what the
Congress did in 1935 when the Lacey Act was amended to prohibit the
importation of all wildlife taken contrary to a foreign law.
If I had been a member of the 74th Congress, I would have voted
against that provision because it is simply wrong to force American
citizens to comply with the laws of other nations.
Regrettably, the 2008 Amendments have significantly compounded this
problem. Instead of having to comply with a limited number of foreign
laws, by expanding coverage to include plant and plant products this
has triggered literally tens of thousands of foreign laws.
In addition because of federal court decisions, the term ``foreign
law'' has now been greatly expanded to include foreign regulations,
foreign resolutions, and foreign decrees and thanks to the 2003 U.S. v.
McNab case ``other such legally binding provisions that foreign
governments may promulgate.''
Based on testimony we received, there is no database of those
foreign laws and frankly the federal enforcement agencies have no idea
how many were triggered by the 2008 Amendments. Yet, we are allowing
our federal courts to send our constituents to overcrowded federal
prisons for violating laws enacted not only by the British Parliament
but also the National People's Congress of the People's Republic of
China, the National Assembly of Venezuela and the National Congress of
Honduras.
This is truly madness and I agree with the Heritage Foundation that
this ``violates one of the fundamental tenets of Anglo-American common
law: that ``men of common intelligence'' must be able to understand
what a law means. No one should be forced to run the risk of conviction
and imprisonment for making a mistake under foreign law.''
It is one thing for an American living abroad to comply with the
laws where they are living. It is quite another to convict one of our
citizens living here for violating the laws of one of the 192 countries
recognized by the United Nations. The Lacey Act demands that you know
every law--civil and administrative as well as criminal--of every
foreign land. This is simply wrong.
During the course of today's testimony, I am interested in finding
out from our distinguished panel of witnesses the legislative history
explaining the rationale for requiring compliance with foreign laws,
why the Congress has never provided a definition for the term ``foreign
law'' and why this provision is even necessary in the Lacey Act that we
are willing to sacrifice the freedom and liberty of our citizens.
______
Dr. Fleming. At this time I am pleased to recognize the
distinguished Ranking Member, the gentleman from the
Commonwealth of the Northern Marianas, Congressman Sablan, for
any opening statement he would like to make.
STATEMENT OF THE HON. GREGORIO KILILI CAMACHO SABLAN, A
DELEGATE IN CONGRESS FROM THE TERRITORY OF THE NORTHERN MARIANA
ISLANDS
Mr. Sablan. Thank you very much, Mr. Chairman. And good
afternoon, everyone.
The title of today's hearing poses a question that is
simple enough to answer. We expect people from other countries
who are visiting or operating a business in the United States
to follow our laws. And so, of course, those countries should
expect the same from Americans traveling or working within
their sovereign territory. With that, we should all be able to
call it a day and move on to more pressing business.
The question posed by the Majority misses the point of the
Lacey Act's foreign law provisions, which is to protect
Americans from unwittingly buying seafood stolen from the
waters of another country, or guitars made from illegal wood.
It also ignores the interests Americans have in protecting
wildlife abroad, and the fact that the Lacey Act is one of the
most effective tools we have for doing that.
Finally, the Lacey Act does not require U.S. citizens to
comply with foreign laws. But, instead, bans trade in illegally
harvested wildlife and plants.
So, as we speak, the illegal timber trade is funding al-
Qaeda-linked terrorists. Ivory is helping Joseph Kony and the
Lord's Resistance Army to continue to commit atrocities and
destabilize Central Africa. And sophisticated criminal networks
with helicopter, night vision goggles, and automatic weapons
are profiting from killing the last rhinos on the planet.
We should not muddy the waters by distorting the intent and
effect of one of our strongest conservation laws. Rather, we
should hold a hearing to ask what we can do to help this global
criminal assault on the wildlife and habitats that Americans
cherish, and that developing countries need to feed their
people.
Unfortunately, this Committee's Majority has ignored our
requests for such a hearing. And that is a shame, because we
should all benefit from hearing different perspectives on the
kind of serious crime the Lacey Act works to deter and punish.
But the Majority did not invite the Department of the Interior
to discuss how additional resources for conservation,
education, and natural resources law enforcement could turn the
tide against criminal deforestation in South America. They did
not invite the Department of State to learn about diplomatic
efforts to curb demand for elephant ivory, rhino horn, and
shark fin in East Asia. And they did not invite the Department
of Defense to learn whether bringing a stop to poaching in
Africa could make the United States a safer place. They did,
however, choose to ignore all of this, all some very real
challenges we face.
We will not ignore these challenges. We have a
responsibility on this Committee to address, head on, the
threats to natural resources that Americans value. And we will
not shirk that responsibility.
The Lacey Act is a good and legitimate law, one of which we
should be proud. That includes the foreign law provisions which
have been on the books for more than 80 years. Every
constitutional challenge to the Lacey Act has failed. But if
the Majority wants to bring another one, then they should
pursue that in the courts, not in our Committee. If Majority
Members want to introduce legislation that would damage the
Lacey Act, they are welcome to do so. But I would expect it
would meet a similar fate as that of last year's anti-Lacey Act
bills. In the meantime, we will do our best to highlight the
depth and breadth of transnational wildlife and timber crime,
and hope that they will join us together--join us so that we
can take on those problems together.
I welcome all of our witnesses, and I look forward to your
testimony.
And, Mr. Chairman, I ask for unanimous consent to enter
into the record four items.
The first is a United Nations Secretary General's report
from May 2003 that references the link between poaching and
other transnational organized criminal activities, including
terrorism.
The second is a statement from the U.S. Director of
National Intelligence, James R. Clapper, during the worldwide
threat assessment hearing in the Senate Select Committee on
Intelligence on March 12, 2003. His testimony states that
elicit trade in wildlife, timber, and marine resources
constitute a multi-billion-dollar industry annually, and that
these criminal activities are linked to insurgent groups and
transnational organized crime organizations.
The third is President Obama's Executive Order from July 1,
2013, which states that combating wildlife trafficking is in
the national interests of the United States, because poaching
operations have expanded beyond small-scale opportunistic
actions to coordinated slaughter commissioned by armed and
organized criminal syndicates.
And finally, the fourth is a recently released report on
the global security implications of the illegal wildlife trade
from the International Fund for Animal Welfare, which
demonstrates that we urgently need to increase our attention
and resources to fully understand the pathways of the illegal
wildlife trade and connections to all the illicit activities,
such as arms trafficking, corruption of--militancy and
terrorism, all of which threaten our global security. Mr.
Chairman, I thank you very much.
Dr. Fleming. Without objection, so ordered.
[The information submitted for the record by Mr. Sablan has
been retained in the Committee's official files:]
Dr. Fleming. The gentleman yields his time.
[The prepared statement of Mr. Sablan follows:]
Statement of The Honorable Gregorio Kilili Camacho Sablan, Ranking
Member, Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs
Thank you, Mr. Chairman.
The title of today's hearing poses a question that is simple enough
to answer. We expect people from other countries who are visiting or
operating a business in the United States to follow our laws, so of
course those countries should expect the same from Americans traveling
or working within their sovereign territory. With that, we should all
be able to call it a day and move on to more pressing business.
The question posed by the majority misses the point of the Lacey
Act's foreign law provisions, which is to protect Americans from
unwittingly buying seafood stolen from the waters of another country,
or guitars made from illegal wood. It is also ignores the interest
Americans have in protecting wildlife abroad, and the fact that the
Lacey Act is one of the most effective tools we have for doing that.
Finally, the Lacey Act does not require U.S. citizens to comply with
foreign laws, but instead bans trade in illegally harvested wildlife
and plants.
As we speak, the illegal timber trade is funding Al Qaeda-linked
terrorists. Blood ivory is helping Joseph Kony and the Lord's
Resistance Army to continue to commit atrocities and destabilize
central Africa. And sophisticated criminal networks with helicopters,
night vision goggles, and automatic weapons are profiting from killing
the last rhinos on the planet. We should not muddy the waters by
distorting the intent and effect of one of our strongest conservation
laws. Rather, we should hold a hearing to ask what we can do to help
stop this global criminal assault on the wildlife and habitats that
Americans cherish and that developing countries need to feed their
people. Unfortunately, this committee's majority has ignored our
request for such a hearing.
That is a shame, because we could all benefit from hearing
different perspectives on the kinds of serious crime the Lacey Act
works to deter and punish. But the majority did not invite the
Department of the Interior to discuss how additional resources for
conservation, education, and natural resources law enforcement could
turn the tide against criminal deforestation in South America. They did
not invite the Department of State, to learn about diplomatic efforts
to curb demand for elephant ivory, rhino horn, and shark fin in East
Asia. And they did not invite the Department of Defense, to learn
whether bringing a stop to poaching in Africa could make the United
States a safer place. They did, however, choose to ignore all of the
very serious and very real challenges we face.
We will not ignore these challenges. We have a responsibility on
this committee to address head on the threats to natural resources that
Americans value, and we will not shirk that responsibility. The Lacey
Act is a good and legitimate law--one of which we should be proud. That
includes the foreign law provisions, which have been on the books for
more than 80 years. Every constitutional challenge to the Lacey Act has
failed, but if the majority wants to bring another one then they should
pursue that in the courts, not in our committee. If majority members
want to introduce legislation that would damage the Lacey Act they are
welcome to do so, but I expect it would meet a similar fate as that of
last year's anti-Lacey Act bills. In the meantime, we will do our best
to highlight the depth and breadth of transnational wildlife and timber
crime, and hope that they will join us soon so that we can take on
these problems together. I welcome all of our witnesses, and I look
forward to your testimony.
______
Dr. Fleming. A notice to our panel. First of all, thank you
for being here today. We are going to be called for votes in
the next few minutes. What we are going to try to do is get
through as much testimony as we can. And then we will recess
for votes and come right back. So we want to be sure we are
sitting on the edge of our seats to hear your testimony today.
We will now hear from our panel of witnesses, which
includes Ms. Kristina Alexander, Legislative Attorney, American
Law Division, Congressional Research Service; Mr. Alexander von
Bismarck, Executive Director, Environmental Investigation
Agency; Mr. Marcus A. Asner, Arnold and Porter; Mr. Reed D.
Rubinstein, Partner, Dinsmore and Shohl, representing the U.S.
Chamber of Commerce; Mr. Paul J. Larkin, Jr., who is a Senior
Legal Research Fellow at the Heritage Foundation; and Mr. Paul
D. Kamenar, a former Senior Executive Counsel, Washington Legal
Foundation.
Your written testimony will appear in full in the hearing
record, so I will ask that you keep your oral statements to 5
minutes, as outlined in our invitation letter to you, under the
Committee Rule 4(a).
Our microphones are not automatic. And also, be sure the
tip is close enough. You have to, I guess, share a little bit
of microphone today. So be aggressive about shifting it so it
can get there close to you and we can hear you.
We will move forward, then. Ms. Alexander, you are now
recognized for 5 minutes.
Ms. Alexander. Good afternoon, Mr.----
Dr. Fleming. Oh, let me interrupt you just for a second.
One thing I left out, our lighting system. You are on the green
light for 4 minutes, and then yellow for a minute. And when it
turns red, if you haven't completed, be sure and go ahead and
wrap up. Your full testimony in writing will be submitted for
the record, so we will have it all.
Thank you. I now open it up to you, Ms. Alexander.
STATEMENT OF KRISTINA ALEXANDER, LEGISLATIVE ATTORNEY, AMERICAN
LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF
CONGRESS
Ms. Alexander. Good afternoon, Mr. Chairman, members of the
Subcommittee. My name is Kristina Alexander. I am a legislative
attorney with the Congressional Research Service. I am here to
introduce the Lacey Act and explain its legislative history
regarding the ban on trade of plants and animals taken in
violation of foreign law.
The Lacey Act has a 113-year history that I will now review
in 5 minutes.
It was enacted in 1900 and has been amended many times
since. Speaking generally, it is against Federal law to buy or
sell plants or animals that were taken or traded in violation
of State, Federal, tribal, or foreign law. When enacted, the
Lacey Act was designed to prevent killing wildlife in violation
of one State's laws and escaping prosecution by selling game in
another State. In 1900, it applied to game that was killed in
violation of the laws of a State, territory, or district. Thus,
the Lacey Act has always been a two-part law: a violation of
the Federal law is predicated on the violation of another law.
In 1900, Congressman John Lacey acknowledged that his
legislation would require those who sold game to understand the
laws of the jurisdiction from which the game originated. At the
start, the Lacey Act regulated just wild animals and birds.
Fish were separate. A companion law, the Black Bass Act of
1926, addressed the illegal trade of fish. It shared the same
structure as the Lacey Act: a violation of Federal law could be
found if underlying law were violated. At the time, the
predicate acts included violations of State, territorial, and
district law.
In 1930, Congress enacted the Tariff Act, which prohibited
importing wildlife if taken in violation of the laws of a
foreign country, unless a certificate were issued. Congress's
discussion of the Tariff Act gives perhaps the fullest
congressional treatment of banning wildlife imports taken or
exported contrary to the laws of a foreign nation: ``By law and
treaty, the United States has recognized the desirability of
the protection and conservation of wildlife. Certain practices
of a commercial nature involving violations of laws of other
countries, though not of laws of the United States, are
entirely contrary to the intent and purpose of this policy of
conservation.''
There was some initial dissent to this law, however. In
September 1929, the Senate opposed legislation that required
compliance with foreign law. Senator Smoot of Utah expressed
concern not regarding any imposition on U.S. citizens, but
about interfering with the sovereignty of other countries. An
amendment removed the wildlife trade language, but 6 months
later the wildlife ban was included in the Act.
In 1935 the Lacey Act was amended to make violations of
foreign law a predicate act, as well. The legislative record
surrounding the 1935 amendment is not rich with explanation. In
fact, the total remarks are as follows: ``It is proposed also
to extend the operation of the Lacey Act to foreign commerce
and game and other wildlife.''
In 1969, a comprehensive wildlife law was enacted which
amended the Lacey Act to include more types of animals, and
amended the Black Bass Act to make foreign law violations a
predicate act for fish. The law also prohibited importing
species in violation of foreign law that were at risk of
becoming extinct.
The legislative history for adding foreign laws to fish
trade is more substantial than in 1935, perhaps because the
1969 change was part of a larger bill. A House report describes
the purpose of the Black Bass amendment as assisting in
reducing commercial traffic in fish illegally taken in a
foreign country. The Senate Committee describes the
international purpose as both reducing demand for poached
wildlife, as well as promoting reciprocity among other
countries that might prohibit the sale of wildlife taken
illegally in the United States.
Testimony before Congress in the 1960s addressed the
foreign law provision of the Lacey Act. Witnesses indicated
that it would be difficult to know of and comply with laws of
foreign countries when importing species. However, there is no
discussion by a Member of Congress in the debate on the 1969
amendments on any difficulties in making it a violation of U.S.
law to violate a foreign law.
A trade protocol similar to that required by the Lacey Act
is in place for the Convention on International Trade of
Endangered Species of Wild Fauna and Flora, known as CITES,
which entered force in 1975. While CITES does not explicitly
require compliance with foreign law, it does require that for
certain listed species, U.S. importers must have a valid export
certificate. That export certificate would demonstrate
compliance with foreign law. CITES, in contrast to the Lacey
Act, provides a list of species for which an export permit is
required.
The Black Bass Act and the Lacey Act were combined in 1981.
At that time some plants were added, and in 2008 the plant
provisions were amended. In terms of the plant provisions,
therefore, the predicate violation of foreign law has always
existed.
Mr. Chairman, that concludes my prepared statement. I am
happy to answer any questions you or others may have.
[The prepared statement of Ms. Alexander follows:]
Statement of Kristina Alexander, Legislative Attorney, American Law
Division, Congressional Research Service, Library of Congress
Mr. Chairman and Members of the Subcommittee:
My name is Kristina Alexander. I am a Legislative Attorney with the
Congressional Research Service. I am here to introduce the Lacey Act
and explain its legislative history regarding the restriction on trade
in plants and animals taken in violation of foreign laws.
The Lacey Act was enacted in 1900 addressing imports of injurious
species and wildlife trafficking between states. My testimony is
limited to the wildlife trafficking provisions of the Lacey Act, which,
generally speaking, make it a violation of federal law to buy or sell
plants or animals that were taken or traded in violation of state,
federal, tribal, or foreign law. More specifically, with regard to
foreign law, the Lacey Act makes it unlawful to import, export,
transport, sell, receive, acquire, or purchase in interstate or foreign
commerce any fish, wildlife, or plant taken, possessed, transported or
sold in violation of any foreign law.\1\ In the case of plants, the
underlying foreign law must protect or regulate plants.
---------------------------------------------------------------------------
\1\ 16 U.S.C. Sec. 3372(a)(2). Other prohibited acts are described
in 16 U.S.C. Sec. Sec. 3372(a)(1)-(4). For a fuller analysis of the
Lacey Act, see CRS Report R42067, The Lacey Act: Protecting the
Environment by Restricting Trade, by Kristina Alexander.
---------------------------------------------------------------------------
The Lacey Act of 1900 was intended to prevent hunters from killing
wildlife in violation of one state's laws and escaping prosecution by
selling the game in another state. It was unlawful to transport the
dead bodies of wild animals or birds from one state to another if the
animals or birds were killed in violation of the laws of the ``State,
Territory, or District in which the same were killed.''\2\ Thus, a
Lacey Act violation has always been predicated on a violation of
another law. In 1900 those predicate acts were limited to the laws of a
state, territory, or district. The sponsor of the act, Congressman John
F. Lacey, acknowledged that the law would require those who sold game
to understand the laws of the jurisdiction from which the game
originated in order to avoid violating the Lacey Act.\3\
---------------------------------------------------------------------------
\2\ Lacey Act, ch. 553, 31 Stat. 187, 188 (1900).
\3\ 56 Cong. Rec. 4,873-74 (1900). Mr. Lacey: ``It will simply do
this: Suppose the closed season in Virginia commences on the 1st of
December, and the closed season in Georgia is the 1st of October. Now,
it will be lawful to ship animals and birds from Virginia into the
District of Columbia and Baltimore longer than it would be from
Georgia, because the closed season is different; and the man that
receives and handles them must know that he is dealing in something
that has not been killed in violation of the State law from which the
game comes.''
---------------------------------------------------------------------------
Initially, the Lacey Act regulated trade of ``wild animals and
birds,'' while the Black Bass Act of 1926 addressed illegal trade in
fish.\4\ The Black Bass Act shared the same structure as the Lacey Act,
making it a federal offense to violate the laws of a State, Territory,
or the District of Columbia with respect to fish.
---------------------------------------------------------------------------
\4\ Black Bass Act, ch. 346, 44 Stat. 576 (1926).
---------------------------------------------------------------------------
In 1930, Congress passed the Tariff Act of 1930, which prohibited
importing wildlife that was taken in violation of foreign law.\5\ The
Tariff Act of 1930 specifies that unless a certificate is issued, a
``mammal or bird, or part or product thereof'' may not be imported into
the United States if the laws of the country of origin ``restrict the
taking, killing, possession, or exportation to the United States.''\6\
During debate on the Tariff Act in September 1929, the Senate opposed
legislation to require compliance with a foreign law. Senator Smoot of
Utah questioned whether the provision amounted to undue interference
with the enforcement rights of other countries:
---------------------------------------------------------------------------
\5\ Tariff Act of 1930, ch. 497, 46 Stat. 590, 741 (codified as
amended at 19 U.S.C. Sec. 1527).
\6\ 46 Stat. 741; 19 U.S.C. Sec. 1527.
The House bill contained a new provision prohibiting the
importation of wild mammals or birds unless accompanied by the
certification of an American counsel that such articles have
not been acquired or exported in violation of the laws of the
country from which they come. . . . The provision partakes of
the nature of an attempt to enforce the laws of foreign
countries in respect to matters of their internal policy. While
it may not be proper to encourage violation of foreign laws, it
would seem to be beyond the proper purpose of a tariff bill to
adopt the amendment proposed by the House bill.\7\
---------------------------------------------------------------------------
\7\ 71 Cong. Rec. 3,628 (Sept. 14, 1929).
A 1929 House Report provides additional insight regarding the ban,
centering not around trade obligations, but around the stated purpose
---------------------------------------------------------------------------
of wildlife conservation:
By law and treaty the United States has recognized the
desirability of the protection and conservation of wild life.
Certain practices of a commercial nature involving violations
of laws of other countries, though not of laws of the United
States, are entirely contrary to the intent and purpose of this
policy of conservation. Many foreign countries have passed and
are passing laws for the protection of wild birds and mammals
either directly or through prohibition of exportation of such
articles. In view of the policy of our Government in these
matters, it is believed that we should not countenance
disregard of the laws of these countries by permitting the
importation of birds or mammals taken or exported in violation
of such laws . . ..\8\
---------------------------------------------------------------------------
\8\ H. Rep. 71-7 at 181 (May 9, 1929).
While a Senate amendment removing the foreign law provision from
the House bill was approved, six months later, a foreign law provision
substantially similar to that in the House bill was included in the
bill that became the Tariff Act of 1930.\9\
---------------------------------------------------------------------------
\9\ 72 Cong. Rec. 5521 (March 18, 1930).
---------------------------------------------------------------------------
In 1935, the Lacey Act was amended to add violations of foreign
laws as predicate acts. At that time, it became a federal crime to
capture, kill, take, ship, transport, carry, purchase, sell, or possess
wild animals or birds ``contrary to the law of any State, Territory, or
the District of Columbia, or foreign country or State, Province, or
other subdivision thereof'' in which the game was captured, killed,
taken, delivered, or knowingly received for shipment, transportation,
or carriage, or from which it was shipped, transported, or carried.\10\
The legislative record surrounding the 1935 amendment provides little
explanation regarding the foreign laws amendment. The only germane
published remarks were in a House Report: ``It is proposed also to
extend the operation of the Lacey Act to foreign commerce in game and
other wildlife.''\11\
---------------------------------------------------------------------------
\10\ Act of June 15, 1935, P.L. 74-148, Sec. 201, 49 Stat. 378,
380.
\11\ H. Rep. No. 74-886 (May 13, 1935).
---------------------------------------------------------------------------
Subsequent amendments to the Lacey Act expanded the law's reach. In
1948, federal law was added to the list of predicate acts.\12\
Amendments of 1969 extended the act's coverage to wild mammals, wild
birds, amphibians, reptiles, mollusks, or crustaceans ``or the dead
body or parts thereof.''\13\
---------------------------------------------------------------------------
\12\ Act of June 25, 1948, P.L. 80-772, Sec. 42, 62 Stat. 683, 687.
\13\ Act of Dec. 5, 1969, P.L. 91-135, Sec. 7, 83 Stat. 275, 281.
---------------------------------------------------------------------------
Also in 1969, the Black Bass Act was amended to include foreign law
violations among its predicate acts.\14\ The legislative history for
this amendment is more substantial than for the 1935 change to the
Lacey Act, possibly because the 1969 change was part of a larger bill
to ban importing species at risk of becoming endangered. A House Report
by the Committee of Merchant Marine and Fisheries describes the Black
Bass Act amendment as enabling the United States to ``assist in
reducing commercial traffic in black bass or other fish illegally taken
in a foreign country.''\15\ The Senate Committee on Commerce described
the international purpose:
---------------------------------------------------------------------------
\14\ Act of Dec. 5, 1969, P.L. 91-135, Sec. 7, 83 Stat. 275, 281.
\15\ H. Rep. 90-1102, at 10 (Feb. 21, 1966).
By prohibiting the sale in the United States of wildlife
protected by a foreign government, the demand for poached
wildlife from that country will be sharply reduced. In
addition, however, such a law is also designed to promote
reciprocity. If we assist a foreign country in enforcing its
conservation laws by closing our market to wildlife taken
illegally in that country, they may in turn help to enforce
conservation laws of the United States by prohibiting the sale
within their borders of wildlife taken illegally within the
United States.\16\
---------------------------------------------------------------------------
\16\ S. Rep. 91-526, at 12 (Nov. 6, 1969).
Congressional hearings for the 1969 amendments addressed the
foreign law issue regarding endangered species import bans, as well as
the extension of the Lacey Act to other species. Witnesses indicated
that it was difficult to know of or comply with laws of foreign
countries when importing species. For example, the Director of the
---------------------------------------------------------------------------
National Zoological Park stated:
Often we don't know which countries animals came from or what
borders they have crossed. Let us say that before buying an
animal I want to be sure that it was captured and exported
legally from its country of origin. There is no way I can do
this.
First, it would require a large staff of lawyers and
translators to assemble and analyze the enormous mass of
national, State, provincial and local and tribal wildlife
protection laws for more than a hundred nations.
Next, one would have to collect the regulations, then somehow
discover what procedures are followed . . .''\17\
---------------------------------------------------------------------------
\17\ House Committee on Merchant Marine and Fisheries, Subcommittee
on Fisheries and Wildlife Conservation, Fish and Wildlife Legislation,
Part 1, hearing on H.R. 6138, H.R. 8693, H.R. 11618, H.R. 3327, and
H.R. 10923, 90th Cong., 1st sess., Oct. 4, 1967, Testimony of Dr.
Theodore H. Reed, Director, National Zoological Park.
Almost a year later, the Assistant Director of the Zoo testified
that ``experience has shown that enforcement of this provision of the
Lacey Act is next to impossible.''\18\ Similarly, a report by the
Senate Commerce Committee includes a letter from the Deputy Assistant
Secretary of the Interior stating that the proposed endangered species
provision, which would require the Department of the Interior to
assemble a list of at risk species, would ``make enforcement easier,
because it is now very difficult to tell whether a particular mammal or
bird or part thereof was taken illegally in a foreign country.''\19\
---------------------------------------------------------------------------
\18\ Senate Committee on Commerce, Subcommittee on Merchant Marine
and Fisheries, Endangered Species, hearing on S. 2984 and H.R. 11618,
90th Cong., 2nd Sess., July 24, 1968, Testimony of Mr. John Perry,
Assistant Director, National Zoological Park.
\19\ S. Rep. 90-1668, at 15 (Oct. 10, 1968). Letter of Clarence F.
Pautzke, Deputy Assistant Secretary of the Interior.
---------------------------------------------------------------------------
However, there is no discussion in the legislative history of the
1969 amendments by a Member of Congress on any compliance difficulties
in making it a violation of U.S. law to violate a foreign law.
A trade protocol similar to the Lacey Act requirements went into
effect in 1975, when the Convention on International Trade of
Endangered Species of Wild Fauna and Flora, known as CITES, entered
into force.\20\ While CITES, through its enabling act, the Endangered
Species Act, does not explicitly require compliance with foreign law,
it does require U.S. importers to have a valid export certificate for
certain listed species to demonstrate compliance with foreign law.
CITES, in contrast to the Lacey Act, identifies the species for which
an export permit is required.
---------------------------------------------------------------------------
\20\ 16 U.S.C. Sec. 1538(c). The United States ratified the treaty
in 1974.
---------------------------------------------------------------------------
In 1981, the Lacey Act and the Black Bass Act were combined,
keeping the name the Lacey Act. Also in 1981, the Lacey Act was amended
to add tribal laws as predicate acts,\21\ and to cover some plants.\22\
In 2008, the plant provisions were expanded to the current
language.\23\ Accordingly, in terms of plant provisions of the Lacey
Act, foreign law violations have always been included as predicate
acts.
---------------------------------------------------------------------------
\21\ Lacey Act Amendments of 1981, P.L. 97-79, Sec. 3, 95 Stat.
1073, 1074.
\22\ Lacey Act Amendments of 1981, P.L. 97-79, Sec. 3, 95 Stat.
1073.
\23\ Food, Conservation, and Energy Act of 2008, P.L. 110-246,
Sec. 8204(b), 122 Stat. 1651, 2053-55. See, 16 U.S.C. Sec. 3371(f)
(definition of plant); 16 U.S.C. Sec. 3372 (prohibited activities
related to plants); 16 U.S.C. Sec. 3372(f) (plant declarations).
---------------------------------------------------------------------------
Mister Chairman, that concludes my prepared statement. I would be
happy to answer any questions that you or other Members of the
Subcommittee might have, and I look forward to working with all Members
and staff of the Subcommittee on this issue in the future.
______
Dr. Fleming. Thank you.
Next, Mr. von Bismarck for 5 minutes.
STATEMENT OF ALEXANDER VON BISMARCK, EXECUTIVE DIRECTOR,
ENVIRONMENTAL INVESTIGATION AGENCY
Mr. von Bismarck. Thank you, Mr. Chairman, Ranking Member,
and members of the Subcommittee, for inviting me to appear
today. As Executive Director and an investigator for the
Environmental Investigation Agency, I have conducted field
investigations on every continent into the criminal networks
making their living off of stealing the world's natural
resources. In this work I am grateful for the training and
experiences I received as a U.S. Marine.
EIA has worked for nearly 30 years to expose environmental
crimes and advocate for effective solutions. For example, EIA's
investigations led to the international ivory ban in the late
1980s.
I would like to provide an update from the field, if you
will, to help illustrate why the respect for foreign laws
within Lacey is so critical. A 1-minute video will show the
most recent investigations we are conducting. The first
undercover clip illustrates the tiger parts trade, where the
role of organized criminal networks is becoming clearer.
Militant groups affiliated with al-Qaeda, such as the Harakat
ul-Jihad-Islami-Bangladesh and Jamaat-ul Mujahedin Bangladesh,
designated as foreign terrorist organizations by the State
Department, are suspected of poaching tigers in India's
Kaziranga National Park to support terrorist activities.
The second clip shows undercover meetings with ivory
smugglers who said that 90 percent of the trade is illegal,
30,000 elephants are killed each year by organized crime
syndicates, threatening not just animals, but people. The
Lord's Resistance Army is slaughtering elephants in the
Democratic Republic of Congo's Garamba National Park for ivory
to fund its atrocities, which include rape, large-scale
massacres, sexual slavery, and abduction. Similar, Somalia's
militant group, al-Shabaab, is poaching elephants in Kenya,
while the Sudanese Janjaweed militias are reportedly
responsible for the recent mass elephant slaughters in Chad and
Cameroon.
The final clip was from Madagascar, from EIA's
investigation which contributed to the Gibson case. A Chinese
trader in a Mercedes was explaining to me how he was friends
with the new President of Madagascar, and helped finance his
coup with profits from the rosewood and ebony trade. I am aware
that the Gibson case has been politicized. Luckily, the facts
can ultimately come forward. Gibson purposefully sought out
Malagasy wood when others wouldn't, when they knew that cutting
had been illegal since 2006. This was unfair to Madagascar, and
unfair to other American companies working hard to play by the
rules.
If anybody spent a single day in the logging town, you
would be convinced of this fact. I posed as a new buyer, and 3
days later I was taken by the Gibson suppliers into the
national park to show where they illegally cut the ebony. And
Gibson had much better tools to find that out. And, in fact,
they did find that out. They did a fact-finding mission. They
wrote about it in emails. And they decided that, despite that,
to keep buying the wood.
Luckily, the efforts by this company to try to change a law
here in Washington while it was being investigated under that
law ultimately didn't work. We have seen this kind of thing
happen in Indonesia, but I am glad it didn't work in the United
States. Because of this Lacey case, Madagascar national parks
made it through a turbulent coup bruised, but still intact.
Because of this Lacey case, manufacturers in China stopped
buying Malagasy wood. Because of this Lacey case, Madagascar's
forests still have a chance. And because of this Lacey case,
the U.S. has a chance to cement new rules of the road in
international commerce, particularly in China.
If we want to imagine the consequences of removing concern
for foreign laws from the Lacey Act, we can look to China. The
Chinese Government has answered the question posed by this
hearing clearly. They say, ``No, we generally do not need to
follow the rules of other countries.'' As a result, many of
their companies steal natural resources around the globe. I
cannot imagine that it is the intent of this Committee or this
hearing to follow China down a path of rewarding commerce in
stolen goods.
The irony is we are at the cusp of encouraging new rules of
the road in other countries, as a result of American
leadership. China spoke to the U.S. Trade Delegation on Monday
about instituting measures to stop the import of illegal wood
into its borders. A retreat on this principle of respecting
foreign laws will destroy this progress and condemn U.S.
companies to having to compete on the basis of who can buy more
illegal wood.
Timber smuggling, like the wildlife trade, is about
national security. For countries around the world, such as in
Madagascar's case, and for U.S. direct interest, USAID's Harry
Bader, who received the State Department's USAID award for
heroism, says the Lacey Act is a critical counter-terrorism
tool, because of its coverage of foreign laws. His counter-
insurgency cell in Eastern Afghanistan found that the
international sale of cedars was funding attacks on U.S.
troops. This trade has fallen entirely now into the hands of
insurgents like the Haqqani Network, and the forests are
currently being liquidated to prepare for the summer fighting
season. That is happening now to replace ``ordnance seized or
destroyed'' by successful coalition operations. Illegal logging
similarly supports insurgencies that threaten ongoing U.S.-
supported counter-insurgency efforts in the Southern
Philippines and Colombia.
Mr. Chairman, I urge you not to follow China, but to lead
and support our present chance to set up norms of international
trade that dry up the markets for goods that were stolen, that
fund drug cartels, human rights abuses, and terrorism. Thank
you, Mr. Chairman.
[The prepared statement of Mr. von Bismarck follows:]
Statement of Alexander von Bismarck, Executive Director,
Environmental Investigation Agency
Introduction
Mr. Chairman, Ranking Member, and members of the Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs, thank you for inviting
me to appear before the Subcommittee today for the oversight hearing,
``Why Should U.S. Citizens Have to Comply with Foreign Laws''.
I have investigated and studied global crime in natural resources
for over 15 years. As an investigator and the Executive Director of the
Environmental Investigation Agency, I have conducted international
field investigations on every continent into criminal networks dealing
in illegal wood, endangered species and harmful chemicals. Before
joining EIA I researched linkages between economics, ecology and human
health with the Harvard School of Public Health and the New England
Aquarium. I have a masters of science from the London School of
Economics in Environment and Development and a BSc from Harvard
University in Environmental Science and Public Policy. I am also proud
to have served as a U.S. Marine.
The Environmental Investigation Agency, Inc. (EIA), a non-profit
501(c)(3) organization, has worked for nearly 30 years to investigate
and expose environmental crimes, and advocate for creative and
effective solutions. EIA's analyses of the trade in illegal timber,
wildlife, and ozone-depleting substances have been globally recognized.
As an example, our investigative work in the late 1980s provided
evidence that led to the international ban on ivory trade.
Since 1999, EIA has also used its undercover methodologies in
partnership with local organizations to document the environmental and
social impacts of illegal logging, as well as its context of corruption
and criminal activity, in countries including China, Peru, Indonesia,
Malaysia, Honduras and Russia. Our experience has shown us
unequivocally that the illegal logging which causes the most serious
environmental and social harm is inextricably linked to international
trade, and that any solution will therefore require action and
cooperation from both producer and consumer nations.
We were honored to represent a broad coalition of industry, labor
and environmental stakeholders when we testified before this
subcommittee in 2007 about the need for amendments to the Lacey Act to
include coverage of plants and timber taken or traded in violation of
foreign law.\1\ Since the passage of the 2008 amendments, we have
continued to work closely with a coalition of organizations, which
represent a majority of affected stakeholders, to identify potential
challenges with the implementation of the Act and to propose solutions
that protect the environment and promote good governance while
minimizing unnecessary regulatory burdens or regulatory uncertainty for
legitimate businesses engaged in legal trade.
---------------------------------------------------------------------------
\1\ We refer you to our 2007 testimony, which goes into greater
detail than we do here about the devastating impacts of illegal logging
around the globe and the need for a robust Lacey Act: http://eia-
global.org/PDF/testimony-EIA-forests-oct07.pdf.
---------------------------------------------------------------------------
In my testimony I will highlight the facts on the ground that the
Lacey Act is designed to combat, and document how effective
implementation of this law is having a positive impact in the United
States and around the globe. I will stress that more effective
implementation is needed, rather than less. In a world where illegal
logging and other poaching of natural resources funds terrorism,
destabilizes rule of law and development around the world, and
undercuts all law abiding U.S. companies, we should all be supporters
of a U.S. law that protects U.S. citizens from unwittingly supporting
these crimes.
Constitutionality of the Lacey Act
First, I would like to state the obvious that the Lacey Act is a
U.S. law. The U.S. legislature has on many occasions chosen to pass
laws which, in plain English, state that the United States does not
support commerce in stolen goods. The Lacey Act is one of these laws;
so are laws that prohibit counterfeiting and smuggling, trafficking in
stolen property, as well as many customs laws. The Lacey Act
essentially prohibits the trade in illegally taken wildlife and plants.
When an elephant is poached in Africa, the U.S. government has made it
clear that it does not want to provide safe harbor for the buyer that
financed that poaching. This has been the case since 1935 and there is
no serious question that the laws prohibiting interstate or foreign
trade in ivory or other poached goods are constitutional. Without
prohibitions against trafficking in illegal wildlife and timber, the
U.S. market would become a world leader in rewarding the organized
crime that drives this trade.
Environmental Crimes: A Threat to National Security
Wildlife and forest crime is the 4th largest transnational crime in
the world, worth an estimated U.S. $17 billion annually.\2\ In March
2013, the U.S. Worldwide Threat Assessment, produced by the U.S.
intelligence community, also highlighted the threat of environmental
crimes to our national security:
---------------------------------------------------------------------------
\2\ Haken, J. 2011. Transnational Crime In The Developing World.
Global Financial Integrity, Washington, DC, USA.
``Illicit trade in wildlife, timber, and marine resources
constitutes a multi-billion dollar industry annually, endangers
the environment, and threatens to disrupt the rule of law in
important countries around the world. These criminal activities
are often part of larger illicit trade networks linking
disparate actors--from government and military personnel to
members of insurgent groups and transnational organized crime
organizations.''\3\
---------------------------------------------------------------------------
\3\ Clapper, James. U.S. Intelligence Community Worldwide Threat
Assessment Statement for the Record. March 12, 2013. Accessed July 16,
2013. http://www.intelligence.senate.gov/130312/clapper.pdf.
Recognizing the importance of this issue and the challenge it
poses, on July 1st, President Obama issued an Executive Order to
address ``the significant threats of wildlife trafficking on the
national interests of the United States.''\4\
---------------------------------------------------------------------------
\4\ White House Press Release. July 1, 2013. http://
www.whitehouse.gov/the-press-office/2013/07/01/executive-order-
combating-wildlife-trafficking.
---------------------------------------------------------------------------
In 2010, the United Nations Office of Drugs and Crime (UNODC)
produced a major report on the Globalization of Crime: A Transnational
Organized Crime Threat Assessment,\5\ which included environmental
resources crime as one of the top eight offenders. In the report UNODC
noted that:
---------------------------------------------------------------------------
\5\ United Nations Office of Drugs and Crime, ``Globalization of
Crime: A Transnational Organized Crime Threat Assessment,'' 2010:
http://www.unodc.org/documents/data-and-analysis/tocta/
TOCTA_Report_2010_low_res.pdf.
``Crime has diversified, gone global and reached macro-economic
proportions: illicit goods are sourced from one continent,
trafficked across another, and marketed in a third. Mafias are
today truly a transnational problem: a threat to security,
especially in poor and conflict-ridden countries. Crime is
fuelling corruption, infiltrating business and politics, and
hindering development. And it is undermining governance by
---------------------------------------------------------------------------
empowering those who operate outside the law.''
The top three recommendations from the UNODC report follow:
Because most trafficking flows are driven more by the
market than by the groups involved in them, efforts that target
these groups--the traditional law enforcement response--are
unlikely to be successful on their own.
Because transnational organized crime markets are
global in scale, global strategies are required to address
them, and anything else is likely to produce unwanted side
effects, often in the most vulnerable countries.
Because globalized commerce has made it difficult to
distinguish the licit from the illicit, enhanced regulation and
accountability in licit commerce could undermine demand for
illicit goods and services.
All three of these recommendations are supported by full and
effective implementation of the Lacey Act, which has at its heart the
intent to ferret out and dismantle international criminal networks
profiting from poaching of wildlife and illegal harvest of plants. The
United States was also a proponent of a resolution urging member states
to formally view the illicit trade in plants and wildlife as a
``serious crime,''\6\ that was finally adopted by the UN Commission on
Crime Prevention and Criminal Justice (CCPCJ) in April 2013.\7\ Turning
away from that mandate means green-lighting activities of transnational
organized crime with our eyes wide open to the threats and
consequences.
---------------------------------------------------------------------------
\6\ Biron, Carey L. ``Africa: UN Recognizes Wildlife Trafficking As
`Serious Crime' '' All Africa, April 29, 2013. Accessed July 15, 2013.
http://allafrica.com/stories/201304300508.html?viewall=1.
\7\ UN Commission on Crime Prevention and Criminal Justice. 22nd
Session, UNODC. April 2013. Accessed July 15, 2013. http://
www.unodc.org/unodc/en/commissions/CCPCJ/session/22.html.
---------------------------------------------------------------------------
I will now share with you some illustrative examples of what this
transnational crime looks like in practice on the ground, and, where
possible, I provide examples of Lacey Act enforcement actions aimed to
deter further criminal activity.
Illegal Logging in Afghanistan: Funding Insurgents
There are many examples around the world where forests offer an
important mechanism to both finance and provide a base of operations
for insurgents and other elements eager to avoid the rule of law.
Current examples include Muslim separatists in Southern Philippines,
cocaine cartels in Central America, and insurgents in Afghanistan.
A recent article reporting on the work of the U.S. Natural
Resources Counterinsurgency Cell (NRCC) in eastern Afghanistan,
established under Task Force Mountain Warrior (TFMW), shows that the
illegal timber trade was funding insurgent groups in Afghanistan.\8\
Profits from this trade likely funded the killing of U.S. troops on the
ground in Afghanistan.
---------------------------------------------------------------------------
\8\ Harry R. Bader, Clint Hanna, Clint Douglas & John D. Fox
(2013): Illegal Timber Exploitation and Counterinsurgency Operations in
Kunar Province of Afghanistan: A Case Study Describing the Nexus Among
Insurgents, Criminal Cartels, and Communities Within the Forest Sector,
Journal of Sustainable Forestry, 32:4, 329-353: http://dx.doi.org/
10.1080/10549811.2013.767913.
---------------------------------------------------------------------------
Members of the U.S. counterinsurgency cell found that, ``The
success of the timber smuggling networks created a sort of forced
collaboration, transcending friction points and enabling tribal and
politically antagonistic entities to cooperate. Thus, insurgent
organizations freely coordinated with corrupt Afghan government
officials, local warlords, village elders, and Pakistan government
intelligence services in order to gain revenue from harvesting
timber.'' This led to the conclusion that, ``whoever keeps the timber
industry working, have the people's hearts . . . and their guns.''\9\
---------------------------------------------------------------------------
\9\ Ibid, pg. 340.
---------------------------------------------------------------------------
The report further explains that ``it is believed that the
insurgent effort to dominate the timber trade in Kunar began as a
deliberate operation to liquidate valuable forests in order to obtain
revenue to procure ordnance, men, and other supplies in anticipation of
the 2011 and 2012 fighting seasons . . . a need by insurgent elements
to replenish ordnance seized or destroyed by successful coalition
operations.''\10\
---------------------------------------------------------------------------
\10\ Ibid, pg. 343.
---------------------------------------------------------------------------
Much of this timber was smuggled through Pakistan, where it
received fraudulent paperwork intended to make it appear legal and was
traded onward to global markets. International buyers not practicing
due care will have purchased this timber and thus, knowingly or not,
financed the continuation of insurgent and terrorist activities.
The Lacey Act is designed to help the United States fight these
insurgent and terrorist operations, and protect U.S. interests, by
helping ensure that companies in the business of selling goods in the
United States take reasonable measures to know their suppliers. Anybody
interested in ensuring that we, as American citizens and consumers, are
not unwittingly funding insurgent groups that are killing U.S.
servicemen and women overseas, should be working to strengthen the
implementation of the Lacey Act, not weaken or dismantle it.
By fully funding the implementation of the Lacey Act, including its
declaration requirement and enforcement, leading by example, and
encouraging other countries to pass similar measures, the U.S.
government can dry up the international profit centers for wood trade
that supports terrorism.
Illegal Logging in Peru: Destabilizing a U.S. trading partner
EIA's April 2012 report on the illegal logging situation in Peru--
``The Laundering Machine'',\11\ analyzed official documents which
demonstrate that at least 112 illegal shipments of cedar or mahogany
wood--laundered with fabricated papers and signed off on by Peruvian
government officials--arrived in the U.S. between 2008 and 2010. These
shipments account for over 35% of all trade in these protected species
between the U.S. and Peru. Our field investigators found that this
pervasive laundering and corruption have been an open secret in Peru's
wood trade for years, and that any exporter or importer still relying
only on paper permits to claim legality should know better by now.
---------------------------------------------------------------------------
\11\ Environmental Investigation Agency. ``The Laundering Machine:
How Fraud and Corruption in Peru's Concession System are Destroying the
Future of its Forests.''
---------------------------------------------------------------------------
Illegal timber in the Peruvian Amazon is cut by crews of loggers,
often under abysmal and abusive conditions, and stolen from protected
areas including national parks, indigenous territories, and other
government lands. Migrant workers find themselves trapped in camps
located deep in the jungle, and indigenous communities are left with
massive debts after intermediaries swindle them out of their valuable
trees. These practices are financed by powerful timber barons, some
connected to organized crime, who turn a blind eye to the human rights
abuses and crimes committed. This timber is then laundered with
documents based on false information.
In 2006, the World Bank estimated that the illegal logging sector
in Peru generated between $44.5 and $72 million dollars annually,\12\
while recorded legal profits from timber sales in the same year reached
only 31.7 million.\13\ By 2011, the government and industry of Loreto,
Peru's largest region, estimated that illegal logging was causing the
country annual losses greater than $250 million dollars--1.5 times the
value of total timber exports.\14\
---------------------------------------------------------------------------
\12\ Pautrat, L. and I. Lucich. Analisis Preliminar Sobre
Gobernabilidad y Cumplimiento de la Legislacion del Sector Forestal en
el Peru. 2006.
\13\ Fordaq. Peru: Timber exports fall 11% in first quarter. June
6, 2011. Accessed July 14, 2013. http://www.fordaq.com/fordaq/news/
logs_softwood_plywood_26553.html.
\14\ OSINFOR Comunicado: ``Gobierno Regional de Loreto,
Concesionarios y OSINFOR unidos para promover el desarollo forestal
sostenible con inclusion social.'' October 2011.
---------------------------------------------------------------------------
Cocobolo, Inc.: The U.S. Department of Interior v. Three Pallets of
Tropical Hardwood
In June 2009, agents of the U.S. Fish & Wildlife Service seized
three pallets of tropical hardwood as they entered the Port of Tampa,
Florida from Iquitos, Peru. Originating deep in the Amazon, the pallets
contained numerous species of decorative woods, including tigrillo
(Swartzia arborescens), palisangre (Brosimum rubescens), and tigre
caspi (Zygia cataractae). Agents confiscated the wood on grounds that
the shipment violated the Lacey Act's declaration requirements.\15\ The
seizure was supported by substantial evidence that the exporter was
using stolen and forged documents. The FWS Agents were acting on
information from a Peruvian business owner, who learned that his
business had been used as a front to fraudulently ship the wood in
question.
---------------------------------------------------------------------------
\15\ 16 U.S.C. Sec. 3372(f).
---------------------------------------------------------------------------
The U.S. importer filed a petition for remission of the wood, but
the Solicitor's office found that Mr. Crouch, owner of Cocobolo, Inc.,
failed to take reasonable steps to comply with the regulations and
ensure that the shipment was authorized by an export permit that
properly documented the required information and was declared
appropriately under the Lacey Act upon arrival into the United States.
Evidence that the tropical hardwood was stolen to begin with, using
forged documents led the Solicitor's Office to conclude that the
exporter did not have legal title to the shipment.\16\
---------------------------------------------------------------------------
\16\ U.S. Department of the Interior v. Three Pallets of Tropical
Hardwood (Crouch), INV No. 2009403072 (Office of the DOI Solicitor June
22, 2010).), (Decision in Response to Petition for Remission).
---------------------------------------------------------------------------
This case demonstrates how strict liability forfeiture is
implemented by government agencies and that the Lacey Act does provide
both legal and administrative remedies to ensure a company gets to
`have its day in court'.
Illegal Logging in Russia: Threatening the Last Siberian Tigers and
American Business
In the Russian Far East (RFE) region lie the hardwood forests of
the Sikhote-Alin mountain range, home to numerous threatened species,
including the world's largest cat, the endangered Siberian (Amur) tiger
(Panthera tigris ssp. altaica). The forests of the RFE are being cut at
an alarming rate; last year, nearly 20 million cubic meters of timber
flowed across the border into neighboring China.\17\ According to the
local WWF office in Vladivostok, in 2010, an equivalent harvested
volume of approximately 900,000 cubic meters of oak was exported, most
of it to China. Data from Russian provincial forest agencies authorized
only 452,213 cubic meters of oak to be cut in 2010, indicating that at
least 50% of the oak exported into China from Russia was illegally
harvested.\18\
---------------------------------------------------------------------------
\17\ Russian Customs data as reporting in United Nations COMTRADE.
\18\ Smirnov, D.Y. (ed.) Kabanets, A.G., Milakovsky, B.J.,
Lepeshkin, E.A., Sychikov, D.V. 2013. Illegal logging in the Russian
Far East: global demand and taiga destruction. WWF, Moscow.
---------------------------------------------------------------------------
Oak, ash, linden, elm and other precious hardwoods are manufactured
in China into flooring and furniture, much of which is then re-exported
onwards to the U.S., EU, and Japan. All of these products have numerous
substitutes from around the world; the U.S. and Europe both export
significant quantities of temperate hardwoods to China. However, the
high quality and low cost of illegally harvested old-growth Russian
hardwoods has historically served to undercut U.S. and European
products.
Oak, ash, and other hardwood species from across the northern
hemisphere differ little in their utility as raw materials for
furniture and flooring. The key factor that has changed since 2008 is
that, with passage of the Lacey Act amendments, suppliers in China now
have a motivation to use timber from low-risk countries to avoid
complications with their U.S. buyers. The Lacey declaration
requirement, the PPQ 505 form, is the key element for tracking and
promoting shifts such as these. On the PPQ 505 form, U.S. importers
must list the species name and country of harvest of the wood in their
imports. This is one of the few ways for U.S. importers to distinguish
whether the oak in their Chinese-manufactured flooring comes from a
high-risk country or a low-risk one, and is thus the key factor
motivating a shift in raw-materials sourcing.
Illegal Logging in Madagascar: Undermining a Fragile State
Over the past ten years, the impoverished island nation of
Madagascar has experienced a crisis of rampant illegal logging, which
has decimated the world-renowned biodiversity of its national parks,
impoverished local communities, and fueled corruption and a coup in
2009. Hundreds of thousands of tons of extremely high value rosewood
and ebony have been illegally cut and smuggled out of the country to
serve consumer markets, with the vast majority going to China for the
high-end domestic furniture market.\19\
---------------------------------------------------------------------------
\19\ EIA and Global Witness, Investigation Into the Global Trade in
Malagasy Precious Woods: Rosewood, Ebony and Pallisander, October 2010.
---------------------------------------------------------------------------
In 2009, the U.S. government investigated Gibson Guitar Inc. for
importing illegally harvested ebony from Madagascar. In 2012, Gibson
acknowledged that it imported ebony from Madagascar despite knowing
that harvest of ebony had been illegal for many years. Gibson agreed to
pay over $600,000 in fines and forfeited ebony, and also committed to
follow a detailed compliance process for future imports. This action
has had a significant impact on sourcing practices within the music
industry worldwide and validates the effort of all American companies
that invest in sourcing legal wood.
The spotlight the case placed on the illegal Malagasy rosewood and
ebony trade also led to crackdowns in China on Chinese importers of
these precious woods. As a result of increased international scrutiny
of the illegal timber trade, evidenced by laws such as the Lacey Act
amendments and the European Union Timber Regulation, China for the
first time has publicly acknowledged the problem of illegal timber
imports. These actions to curb demand led to a decrease in illegal
logging in Madagascar. On Monday, a high level delegation from China
met with U.S. counterparts to discuss concrete steps it could take to
stop its own role in illegal logging, particularly in Madagascar. U.S.
leverage to encourage China to address illegal logging in these
discussions stems from the Lacey Act, since it allows us to challenge
imports of wood products that are misrepresented or shown to be made
from illegal timber.
As in many Lacey cases, the enforcement action involving Gibson
Guitar Inc. had positive impacts in fighting the illicit trade that
went beyond the case itself; it had the effect of curbing the illegal
logging of national parks in Madagascar, having the Chinese patrol more
thoroughly the role their businesses play in the illegal destruction of
Malagasy forests, and encouraged the global musical instruments
industry to more thoroughly examine its sourcing practices. All of
these are important elements for challenging international criminal
networks, establishing sustainable business practices for the future of
the trade, protecting forest resources, and rewarding American guitar
companies that are playing by the rules.
Chinese Response to Lacey Act Plant Amendments
In 2009, following the new Lacey Act amendments, the People's
Democratic Republic of China also introduced the ``Guide on Sustainable
Overseas Forest Management and Utilization by Chinese Enterprises'',
emphasizing the responsibility of Chinese forestry companies operating
overseas to abide by host-country laws and to practice sustainable
forest management. In 2011, the government proposed a draft legality
verification system. Over the past five years, in a significant shift,
Chinese officials have taken a more active role in international
forestry discussions, reflecting increased international pressure and
focus on issues relating to timber legality.
In addition, recent years have demonstrated dramatic changes in
Chinese timber product sourcing practices. Chinese official import data
illustrates these trends: while Russia still accounts for 37% of total
log and lumber imports by China, the share made up by Canada, New
Zealand, and the United States has more than tripled from 10% in 2007
to 33% in 2010 (Please see attached graphic). At a recent conference,
Chinese government officials noted that China is importing less wood
from high-risk countries due to legality concerns on the part of U.S.
and European buyers. This data indicates that laws like the amended
Lacey Act are already starting to positively impact supply chains
around the world.
The Current Wildlife Poaching Crisis
The illegal wildlife trade is believed to be equivalent--in both
revenue produced for criminals and level of threat to national
security--to arms and narcotics trafficking. The links between wildlife
poaching, the associated illegal trade, and transnational organized
crime are increasingly complex and require more U.S. resources and
attention than currently exist, certainly not less. Far greater
investment is required to institutionalize intelligence-led, multi-
agency enforcement in key source, transit and destination countries in
order to identify and apprehend key criminals in the trade chain and
disrupt these criminal networks.
Elephants
Elephants are being slaughtered in large numbers, an estimated
30,000 per year, by organized crime syndicates for their ivory to feed
Asian, and particularly Chinese, demand. Though China claims to have a
controlled domestic legal ivory market, EIA investigations have shown
that up to 90% of the ivory in China is illegal and supplied by poached
elephants in Africa.\20\ Evidence indicates a growing involvement of
organized crime networks, and these syndicates rely on corruption,
collusion and protection from different government institutions and
private sector operators to thrive.
---------------------------------------------------------------------------
\20\ Environmental Investigation Agency. ``Blood Ivory: Exposing
the myth of a regulated market.'' 2010.
---------------------------------------------------------------------------
There is a growing body of evidence that the slaughter of majestic
and iconic elephants is supporting crimes against humanity, showing
that the illegal wildlife trade threatens not only animals but also
people. A recent report, ``Kony's Ivory: How Elephant Poaching in Congo
Helps Support the Lord's Resistance Army,'' provides field evidence
confirming that the Lord's Resistance Army (LRA) is slaughtering
elephants in the Democratic Republic of Congo's Garamba National Park
for ivory to fund its atrocities.\21\ The LRA is known for vast human
rights violations, including murder and large-scale massacres, rape and
sexual slavery as well as abduction. Joseph Kony, the criminal leader
of this rebel group, has ordered his followers to bring him elephant
ivory to obtain food, arms and other supplies to fuel more rebel unrest
and violence. Thus, the illicit ivory trade is serving to help sustain
violence and terrorism that the United States has vowed to combat.
---------------------------------------------------------------------------
\21\ Kasper Agger and Jonathan Hutson. ``Kony's Ivory: How Elephant
Poaching in Congo Helps Support the Lord's Resistance Army.'' June
2013. A co-production of the Enough Project, The Resolve, Invisible
Children, and the Satellite Sentinel Project (with DigitalGlobe).
---------------------------------------------------------------------------
Sadly, the LRA is not the only armed group targeting elephants to
fund criminal activity. Somalia's militant group al-Shabaab has been
implicated in poaching elephants in Kenya while the Sudanese Janjaweed
militias are reportedly responsible for the recent mass elephant
slaughters in Chad and Cameroon.\22\
---------------------------------------------------------------------------
\22\ International Fund for Animal Welfare (IFAW). ``Criminal
Nature: The Global Security Implications of the Illegal Wildlife
Trade.'' June 2013.
---------------------------------------------------------------------------
As one of the world's largest consumers of illegal wildlife, the
U.S. plays a significant role in the international ivory trade.\23\ The
U.S. is now leading the international community's growing focus on the
poaching crisis by recognizing that wildlife crime is serious organized
crime--it's now time to act on this recognition by fully implementing
its commitment to ending wildlife trafficking.
Rhinos
Thus far in 2013, more than two rhinos per day have been poached
for their horns to feed Asian demand. The Convention on International
Trade in Endangered Species (CITES) Secretariat believes the rhino horn
trade to be ``one of the most structured criminal activities currently
faced by CITES.''\24\ If the current rate continues, more than 900
rhinos will be killed in South Africa this year, easily surpassing last
year's record high of 668 poached rhinos. The well-funded and
sophisticated criminal poaching networks have thus far overwhelmed the
capacity of local enforcement officials to adequately stop the
slaughter in range states.
---------------------------------------------------------------------------
\24\ CITES Secretariat, Species Trade and Conservation--
Rhinoceroses: Report of the Secretariat, SC62 Doc. 47.2.
---------------------------------------------------------------------------
The Lacey Act has made it possible to charge and prosecute those
involved in the killing and trafficking of globally threatened rhinos
and their parts. As an example, in September 2012, members of an
international smuggling ring pled guilty to federal charges for
illegally trafficking rhino horn.\25\ In addition to charges of money
laundering and tax fraud, Vinh Chuong ``Jimmy'' Kha and Felix Kha and
the Win Lee Corporation pled guilty to conspiracy, smuggling and
wildlife trafficking in violation of the Lacey Act. The case surfaced
as part of the U.S. Fish and Wildlife Service's (USFWS) ``Operation
Crash,'' an ongoing nationwide crackdown targeting those involved
specifically in illegal killing of rhinos and unlawful trafficking of
rhino horn. At sentencing, the defendants were ordered to pay a total
of $800,000 in restitution to the Multinational Species Conservation
Fund, managed by the USFWS, to support international rhino conservation
efforts.
---------------------------------------------------------------------------
\25\ FWS News Release. ``Members of International Smuggling Ring
Plead Guilty to Federal; and also Charges of Illegally Trafficking
Endangered Rhinoceros Horns.'' September 14, 2012. Accessed July 17,
2013 http://www.fws.gov/le/pdf/rhino-horns-news-release-09172012.pdf.
---------------------------------------------------------------------------
USFWS Director Dan Ashe commented on the sentencing in this case as
follows: ``Criminals in this country who are cashing in on this illegal
trade should know that the United States will hold them accountable for
their crimes and do everything possible to protect wild populations of
rhinos.''\26\
---------------------------------------------------------------------------
\26\ 7th Space Interactive. ``USDOJ: Smuggling Ring Sentenced in
Los Angeles for Criminal Trafficking of Endangered Rhinoceros Horn''
Found at: http://7thspace.com/headlines/437930/
usdoj_smuggling_ring_sentenced_in_los_angeles_for_criminal_trafficking_o
f_endangered_
rhinoceros_horn.html.
---------------------------------------------------------------------------
Tigers
The role of organized criminal networks in the international
illegal trade in skins, bones and other body parts of tigers and other
Asian big cats between India, Nepal and China became apparent in 1999
and continues to be documented.\27\ Further, militant groups affiliated
with al-Qaeda (such as the Harakat ul-Jihad-Islami-Bangladesh (HUJI-B)
and Jamaat-ul Mujahedin Bangladesh (JMB), two entities designated as
foreign terrorist organizations by the U.S. Department of State and
European governments) and based in Bangladesh are suspected of
sponsoring the poaching of tigers and other protected species at
India's Kaziranga National Park to support terrorist activities.\28\
The poaching crisis has been exacerbated by a surge in demand for the
use of skins for luxury home decor and for use as bribes and
prestigious gifts in China, which has put not just tigers at risk, but
leopards and snow leopards as well.
---------------------------------------------------------------------------
\27\ See, e.g., EIA (Feb 2013), Hidden in Plain Sight: China's
Clandestine Tiger Trade; EIA (Oct. 2012), Briefing on Snow Leopards in
Illegal Trade--Asia's Forgotten Cats; EIA (Nov. 2011), Key features of
the Asian big cat skin and bone trade in China in 2005-2011.
\28\ (ref supra to IFAW 2013 Criminal Nature report) at p.12.
---------------------------------------------------------------------------
With as few as 3,200 wild tigers remaining, it is critical that all
countries introduce domestic measures to end all trade, in all tiger
parts and products from all sources; captive-bred as well as wild.
During this year alone, based on poaching incidents and seizures,
approximately 24 tigers have been killed in India.\29\ Major seizures
of parts and products of tigers and other Asian big cats confirm that
the illegal trade is ongoing and that more resources and political will
are required to end all big cat trade.\30\
---------------------------------------------------------------------------
\29\ Wildlife Protection Society of India (WPSI), Tiger Deaths in
2013, http://www.wpsi-india.org/wpsi/index.php.
\30\ See, e.g., Chetan Chauhan (Feb. 18, 2013), Rich haul of tiger
body parts in Nepal shows increased threat to Indian tigers (Hindustan
Times, New Delhi), http://www.hindustantimes.com/India-news/NewDelhi/
Rich-haul-of-tiger-body-parts-in-Nepal-shows-
increased-threat-to-Indian-tigers/Article1-1013268.aspx; Phoenix Fund
(Feb 2013), Sad statistics from the Amur!, http://
www.rewildingfoundation.org/2013/02/26/sad-statistics-from-the-amur/.
---------------------------------------------------------------------------
Facts of the McNab Case
Opponents of the Lacey Act repeatedly cite the case of McNab v.
United States of America and Blandford, Schoenwetter, and Huang v.
United States of America as an example of over-regulation to validate
the push for change to the law. However, they fail to share fundamental
elements of the case that illustrate why the violations were so
egregious. In this case, the persistent and willful failure to comply
with foreign laws led to disastrous ecologic, human and economic
consequences. We would like to make some clarifications for the record.
The fishing of lobsters off the Caribbean coast of Honduras and
Nicaragua is having increasingly devastating human as well as
environmental consequences. It is largely done by indigenous Miskito
men who free-dive to deeper and deeper waters to grab lobsters that
have become increasingly scarce due to over-exploitation. The average
life span of these men is now under 40 as so many die of decompression
sickness (also known as ``the bends'') because they do not have proper
equipment to dive at those depths. These are the lobsters that are then
loaded onto boats such as the one McNab operated.
During the period covered by the indictment, the Republic of
Honduras had imposed conservation regulations to protect its lobster
fishery from over-exploitation and health regulations to ensure safe
processing of fishery products. McNab owned and operated a fleet of
lobster fishing boats that harvested Caribbean spiny lobster in
Honduran fishing waters. The McNab case involved a very large amount of
lobster: 400,000 lbs with a value of $4.6 million.\31\
---------------------------------------------------------------------------
\31\ David Henson McNab vs. United States of America: http://
www.justice.gov/osg/briefs/2003/0responses/2003-0622.resp.html.
---------------------------------------------------------------------------
A number of Honduran laws and regulations were broken by McNab's
fleet throughout its operations, including regulations intended to
prevent harvesting of juveniles, illegal transport, failure to report
harvest to the appropriate Honduran fishing authorities, and failing to
ensure that the lobsters were inspected and processed in Honduras.
While one of the underlying laws that McNab's Lacey violation was
eventually based upon involved the packaging material, the extent of
McNab's illegal activity was much more extensive. Even the packaging
violation is more meaningful than it might appear, as the incorrect
packaging allowed the company to better hide the under-sized lobsters
from authorities.
The National Marine Fisheries Service agents (NOAA) repeatedly
consulted with Honduran officials and determined through their
investigation that Honduran law had been violated by McNab's company,
and by those that bought the lobster in the United States. The Honduran
law was changed subsequently due to corruption and bribery in Honduras,
and the courts saw it for what it was. This is a case in which the
Lacey Act did exactly what it was supposed to do: prevent destruction
of a natural resource in violation of the conservation laws of a
trading partner.
Conclusion
U.S. industry and consumers do not want to fund human rights
violations in Peru, Kony and the Lord's Resistance Army in the DRC,
insurgents in Afghanistan, the junta in Burma, the extinction of the
Amur Tiger in Russia, or the decimation of elephants and rhinos
throughout the continent of Africa. This is a limited list of how
profit from illicit trade in wildlife, fish and plants has become one
of the leading sources of finance for criminal networks. Why is this?
It is precisely because there is not enough enforcement and respect for
the rule of law that governs the take and trade of natural resources.
The Lacey Act is one of the laws working effectively to change this
reality.
Europe, Australia and perhaps soon Japan are following the United
States' lead in this area in order to make sure that their domestic
laws also deter the international trade in illegal plant species. Here
the U.S. has led by its example of respect for the rule of law.
By the title of this hearing, the subcommittee seems to propose an
alternative view that the United States should allow its citizens and
businesses to abdicate all responsibility for lawful conduct as soon as
their activities move beyond U.S. borders. We don't have to imagine
what the consequences of such an approach are: China has no measures
similar to the U.S. Lacey Act and consequently is largely responsible
for the giant sucking sound of natural resources illegally taken from
around the globe. Chinese companies exhibit blatant disregard for the
rule of law overseas, bribing officials and smuggling vast quantities
of precious wildlife, timber and other natural resources to their
factories. The only forces now frustrating these practices are the
Lacey amendments and similar laws which close markets to such lawless
and destructive practices.
Times have changed in the more than 100 years since the Lacey Act
first became law, and Congress has kept apace, through thoughtful
amendments over that time, to meet the challenges that globalization
and increasingly sophisticated international criminal networks pose to
legal trade.
Mr. Chairman, I cannot imagine it is your intention that the United
States should cease to lead in the fight against transnational
organized crime and the protection of our natural heritage.
Removing coverage of foreign laws from the Lacey Act would fatally
undermine this effective tool and reveals a disinterest in conducting
responsible trade. In this age of globalized trade--the Lacey Act
supports and, in fact, rewards those traders that want to play by the
rules. Removing these protections for legitimate business operators
would leave them once again vulnerable to be undercut by illegal
competitors. American businesses operating overseas and trying to
follow the rules would be without a future.
As we are faced with a wildlife poaching crisis raging out of
control, ever more sophisticated illegal timber networks, and over 80%
of global fishery stocks at risk as they struggle with illegal,
unreported and unregulated fishing, there is not a better proven tool
than a well-funded and effectively enforced U.S. Lacey Act.
Thank you for your time, and I would be happy to answer any
questions.
______
Dr. Fleming. Yes, thank you for your testimony.
Well, votes have been called. I am going to go ahead and
recess. We will probably be approximately an hour. So don't run
far. And we will be back. We are waiting at the edge of our
seats for the rest of the testimony and the questions today.
Thank you.
[Recess.]
Dr. Fleming. The Committee is now brought back to order. I
think we left off with Mr. Asner next. So, Mr. Asner, you are
now recognized for 5 minutes.
STATEMENT OF MARCUS A. ASNER, ARNOLD AND PORTER, LLP
Mr. Asner. Thank you, Mr. Chairman. This hearing is focused
on the Lacey Act, and it asks a simple question: Why should
U.S. citizens have to comply with foreign laws? The answer is
simple. The Lacey Act has no such requirement. Lacey does not,
in fact, require U.S. citizens to comply with foreign law. In
fact, the Act requires only that people in the U.S. comply with
the U.S. law, the Lacey Act, which, in turn, prohibits trade in
the United States of illegal fish, wildlife, plants, and plant
products.
American consumers have a right to buy legal goods, and
people who traffic in illegal goods should be punished. If
someone steals a truckload of cattle in Ontario and smuggles it
into Michigan, no one in this room would quarrel that the
person has committed a crime. In fact, the smuggler would have
violated a whole slew of Federal laws, including laws that bar
interstate transportation of stolen property, and laws that
prohibit the theft of livestock. And if someone steals tons of
lobster from South Africa, as the defendants did in the Bengis
case that I handled as a prosecutor, and dumps the stolen
lobster on unknowing American consumers, all for a huge profit,
that person has committed a crime. She has violated the Lacey
Act.
In both cases, whether cattle or lobster is stolen,
deciding whether the defendant has committed a U.S. crime
necessarily will turn, at least in part, on foreign law. To
find out whether the cattle was stolen, we have to look to the
laws of Canada, and to find out whether the lobster was stolen,
we have to look to the laws of South Africa. U.S. courts are
well equipped to do this, and have been doing so for as long as
anybody can remember.
The invitation also asks about whether the foreign law
provision of the Lacey Act is constitutional. Every single
circuit court to consider the issue has upheld the Lacey Act as
constitutional. Courts addressing the issue have described the
contrary argument--and I am quoting--as ``patently frivolous,
without merit, and neither original nor meritorious.'' As the
third circuit said, ``The Act does not delegate legislative
power to foreign governments, but simply limits the exclusion
from the stream of foreign commerce to wildlife unlawfully
taken abroad.''
The Lacey Act is good for America and protects the rights
of victims. Allowing importers to ignore the legality of the
goods they sell to Americans will encourage trade in illegal
goods, which, in turn, will put legitimate U.S. businesses at a
disadvantage, threaten the sustainable supply of resources we
need, undermine the rule of law in other countries, and
threaten our national security.
The Lacey Act also protects victims, including individuals
in countries who had their resources stolen or illegally taken,
as the court made clear in Bengis, when it ordered the
defendants to pay compensation to South Africa for the lobster
that they stole.
Now, some of my colleagues argue in their written testimony
that the Lacey Act is unfair and even unconstitutional. I
disagree. One argument is that the Lacey Act makes it a crime
to violate foreign law, and that it requires Americans to be
familiar with tens of thousands of foreign law. That is not
accurate. Lacey punishes trafficking in the United States in
certain illegal goods, but only if the defendant knew, or
should have known, that the goods were illegal.
Another argument is that the Lacey Act holds someone
criminally liable for the violation of even the most technical
foreign law, rule, or local ordinance, without any evidence of
intent. Again, that is not true. If you unwittingly and
reasonably find yourself in possession of illegal goods, you
are not guilty under the Lacey Act.
Another argument is that no one reasonably can be expected
to know the laws of other countries. In fact, the categories of
laws triggering the Lacey Act are clear. They are laws
governing wildlife, fish, and plants. The seafood industry has
been living with Lacey for decades. And, despite the rhetoric,
no one is charged with knowing tens of thousands of foreign
laws. But if somebody imports rosewood from Madagascar as part
of their business, we frankly expect that they would try to
find out whether the wood is legal.
Finally, some of my colleagues argue that the Lacey Act can
lead to some unfair results, claiming that in McNab, innocent,
hardworking, small businessmen trying to make a living were
unjustly imprisoned for unknowingly violating Honduran law. I
have been involved with the criminal justice system for many
years now, both in the prosecution side, and now as a defense
lawyer. And I have seen many sad and sympathetic cases. McNab
is not one of those cases.
It involved a large, sophisticated, and destructive
international scheme that included more than 40 shipments of
illegal lobster tails, with a retail value of over $17 million.
Defendants in McNab illegally harvested quantities of under-
sized and egg-bearing lobster, purposely misreported their
catch to Honduran authorities, packaged the illegal goods in
ways that helped them avoid detection, and smuggled their
illegal contraband into the United States, where it was sold to
unwitting consumers for significant profit.
Innocent, hardworking Americans just trying to make a
living don't do things like that. Thank you, your Honor.
[The prepared statement of Mr. Asner follows:]
Statement of Marcus A. Asner, Arnold and Porter, LLP
Introduction
Mr. Chairman, Ranking Member, and members of the Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs, thank you for inviting
me to appear before the Subcommittee today to address the topic of
``Why Should Americans Have to Comply with the Laws of Foreign
Nations?''
I am a partner in the New York office of Arnold & Porter LLP where
I routinely advise companies on Lacey Act and other environmental and
criminal matters. Although I am advising several clients on legal
matters relating to the Lacey Act, I am appearing today in my personal
capacity and not on behalf of Arnold & Porter or any client.
For nine years (2000-2009), I served as an Assistant United States
Attorney (AUSA) in the Southern District of New York where I was Chief
of the Major Crimes unit from 2007 to 2009. When I was an AUSA, I led
the investigation and prosecution of United States v. Bengis, one of
the largest Lacey Act cases in history, involving the smuggling of
massive quantities of illegally harvested rock lobster from South
Africa. Since I joined Arnold & Porter in 2009, I have counseled
clients on a wide variety of Lacey Act issues, including assisting
clients in complying with the 2008 Amendments. I have written
extensively on the Lacey Act, and I have been invited to speak at
numerous domestic and international meetings concerning environmental
crime. In the past year or so, for example, I have spoken on Lacey Act
issues at the World Fisheries Conference, the Forest Legality Alliance,
INTERPOL, and the Boston Seafood Show. In May, I testified before this
Subcommittee regarding ``The 2008 Lacey Act Amendments.''
Today, I will explain my thoughts on how the Lacey Act's
requirement that individuals and companies ensure that the wildlife,
fish, and plants in which they are trading are legal under both U.S.
and foreign law is a constitutional and effective way of furthering the
goals of the Lacey Act and protecting U.S. interests. I also will
address some concerns that have been raised about the foreign laws
provision of the Lacey Act.
Discussion
The Lacey Act is designed to further U.S. interests by keeping
illegal fish, wildlife, plants and plant products from flooding the
U.S. market, and by protecting our supplies of sustainable natural
resources. The Act helps disrupt criminal organizations and fight
corruption in foreign countries, which in turn helps level the playing
field for legitimate businesses and improves our national security. By
making it illegal to ``import, export, transport, sell, receive,
acquire, or purchase any fish or wildlife or plant taken, possessed,
transported, or sold in violation of any law, treaty, or regulation''
of the United States or foreign countries, the Lacey Act furthers these
goals and protects the victims of environmental crime, both in the U.S.
and abroad.
The United States is very much the leader in this area. Other
countries, including Australia and Canada, are now using the Lacey Act
as a model for their own laws. That other countries are adopting their
own versions of the Lacey Act is good for America; if someone pillages
our resources and then flees beyond the reach of American law
enforcement, we certainly would insist that they be held responsible
for their crimes.
This oversight hearing asks: ``Why should Americans have to comply
with the laws of foreign nations?'' To be clear, the Lacey Act does not
in fact require U.S. citizens to comply with foreign law, nor does it
require the U.S. to enforce other countries' laws. The Act requires
only that people in the U.S. comply with a U.S. law (the Lacey Act),
which in turn prohibits trade in the United States in illegal fish,
wildlife, plants, and plant products. American consumers have a right
to buy legal goods, and the Lacey Act provides a proper (and
constitutional) means to help enforce that right.
Frequently, determining whether particular goods are legal
necessarily will turn on the law of a state or a foreign country. The
Lacey Act's ``assimilation of [foreign] laws is designed to reduce
demand in the United States for species poached in foreign countries
and to encourage international cooperation and mutual reciprocal
enforcement efforts.''\1\ U.S. courts routinely address issues of
foreign law, and are well-equipped to do so.\2\ In cases where a
foreign law is ambiguous or difficult to understand, the Lacey Act's
state of mind (mens rea or scienter) requirement--that importers act
``knowingly'' for a felony conviction or with ``due care'' for a
misdemeanor--protects people who unwittingly find themselves dealing in
illegal goods.\3\ In the context of forfeiture, the remission
procedures provided by the agencies charged with enforcing the Lacey
Act help protect innocent importers who exercise due care, by giving
them an opportunity to argue for the return of seized goods. The case
of Gibson Guitar is a prime example; while the wood from Madagascar was
clearly illegal and had to be forfeited (as Gibson ultimately
conceded), there was some ambiguity in the Indian law, so Gibson was
permitted to submit an unopposed petition for remission \4\ and obtain
the return of the Indian wood.\5\
---------------------------------------------------------------------------
\1\ Legal Timber Protection Act: Hearing before the House of
Representatives Committee on Natural Resources, Subcommittee on
Fisheries, Wildlife and Oceans on H.R. 1497, 110th Cong. 7 (2007)
(statement of Eileen Sobeck, Deputy Assistant Att'y Gen., Env't &
Natural Res. Div., U.S. Dep't of Justice).
\2\ See, e.g., United States v. Bengis, 631 F.3d 33, 39-41 (2d Cir.
2011) (looking to South African law to determine property rights); see
also Fed. R. Civ. P. 44.1 and Fed. R. Crim. P. 26.1 (rules on how
courts interpret foreign law).
\3\ See United States v. Lee, 937 F.2d 1388, 1394-95 (9th Cir.
1991) (citing Village of Hoffman Estates v. Flipside, Hoffman Estates,
Inc., 455 U.S. 489, 499 (1982)).
\4\ Criminal Enforcement Agreement Between U.S. Dep't of Justice
and Gibson Guitar Corp. at 3 (July 27, 2012) [hereinafter Gibson CEA],
available at http://www.fws.gov/home/feature/2012/
USvGibsonGuitarAgreement.pdf.
\5\ See Gibson USA--Electric Guitars, http://www.gibson.com/press/
usa/(last visited July. 15, 2013) (advertising the sale of ``Government
Series'' guitars made from wood reclaimed from FWS in the remissions
process); Musician's Friend, Gibson Les Paul Government Series Electric
Guitar, http://www.musiciansfriend.com/guitars/gibson-les-paul-
government-series-electric-guitar (last visited Jun. 20, 2013)
(describing the commemorative Les Paul guitars and noting that
``[i]nterspersed among the general production run of the Government
Series, the confiscated and returned components will be `golden
tickets' of a sort, rendering these particular guitars instantly
collectible'').
---------------------------------------------------------------------------
The Lacey Act's approach to protecting the legality of U.S.
commerce is constitutional. In fact, the approach of referencing state
or foreign law is employed in a wide variety of circumstances. Allowing
importers to ignore the provenance of products would thwart the
laudable goals of the Act and encourage trade in illegal goods, which
in turn would put legitimate U.S. businesses at a disadvantage,
threaten the sustainable supply of resources upon which American
consumers rely, undermine the rule of law in other countries, and
threaten our national security.
History of the Lacey Act
Passed in 1900, the Lacey Act is the United States' oldest wildlife
protection law. Its original goals were to address issues including the
interstate shipment of unlawfully killed game, the introduction of
harmful invasive species, and the killing of birds for the feather
trade. It has been amended several times since 1900. The 1935 amendment
expanded the scope of predicate laws to include federal and foreign
laws. This amendment was necessary to address the evolution of
international commerce stemming from the invention of the automobile
and the airplane.\6\ While not the subject of much discussion in the
1935 record, the purpose of the foreign laws provision was elaborated
upon in the Senate Report issued in connection with the 1969
Amendments:
---------------------------------------------------------------------------
\6\ H.R. Rep. No. 74-886, at 2 (1935). ``The Lacey Act of 1900 (31
Stat. 188) was in large part designed to aid the States by prohibiting
shipment in interstate commerce of game and other wildlife killed or
shipped in violation of their laws. The customary and ordinary means of
transportation of game at the time the act was passed were common
carriers by rail and water, and the act was limited to shipment by such
carriers. Advent of the automobile, and now the airplane, has
introduced means of conveyance of game from State to State that have
almost completely supplanted the railroads and water carriers. It is
proposed to amend the Lacey Act so that it will apply to the present-
day vehicles and methods of transportation.'' Id.
On the international level . . . [b]y prohibiting the sale in
the United States of wildlife protected by a foreign
government, the demand [in the U.S.] for poached wildlife from
that country will be sharply reduced. In addition, however,
such a law is also designed to promote reciprocity. If we
assist a foreign country in enforcing its conservation laws by
closing our market to wildlife taken illegally in that country,
they may in turn help to enforce conservation laws of the
United States by prohibiting the sale within their borders of
wildlife taken illegally within the United States.\7\
---------------------------------------------------------------------------
\7\ S. Rep. No. 91-526, at 12 (1969).
The Lacey Act was overhauled in 1969, when Congress extended it to
cover additional species, increased the maximum penalty, imposed a
``knowingly and willfully'' standard for criminal violations, and
beefed up civil penalties to apply to negligent violations (for
violating the ``due care'' standard). In the 1981 amendments, Congress
sought to strengthen the Lacey Act in light of the discovery that the
``massive illegal trade in fish and wildlife . . . handled by well
organized large volume operations run by professional criminals'' was
causing ``grim environmental consequences'' and ``severe'' economic
consequences.\8\ The 1981 amendments were designed to bolster
enforcement under the Act. Those amendments combined the Lacey Act with
the Black Bass Act to create a ``single comprehensive law addressing
illegal trade in fish, wildlife and rare plants,''\9\ making the
culpability standard less stringent (``knowingly'' instead of ``knowing
and willfully''), increasing the civil penalties, adding a felony
punishment scheme to encourage the DOJ to prioritize Lacey Act cases,
and adding the strict liability forfeiture provision.\10\ The 2008
amendments adding plants and plant products grew out of the same
concerns leading to the strengthening of the Lacey Act in 1981--the
``global problem of illegal logging and timber trafficking and the need
for stronger enforcement tools to address it.''\11\
---------------------------------------------------------------------------
\8\ S. Rep. No. 97-123, at 1 (1981): ``The illegal wildlife trade
has grim environmental consequences. It threatens the survival of many
species of wildlife particularly those which we value because of their
aesthetic or commercial values. The economic consequences of this trade
are also severe. It directly threatens America's agriculture and pet
industries and indirectly burdens individual taxpayers. Imported
wildlife carry diseases that can affect poultry, livestock, fish and
pets.''
\9\ H.R. Rep. 97-276, at 30 (1981).
\10\ S. Rep. No. 97-123, at 2-3. ``Providing for a felony penalty
scheme for unlawful importations of wildlife is consistent with
existing customs law . . . By specifying in this Act that such
importations are felonies, notice is given to all wildlife importers
who are unaware of the fact that the customs felony law applies to
their activities [and] that their illegal activities may subject them
to a felony punishment scheme.'' Id. at 11; H.R. Rep. 97-276 at 20.
\11\ Sobeck Statement, supra note 1.
---------------------------------------------------------------------------
Judicial Review of the ``Foreign Laws'' Provision of the Lacey Act
The Chairman has asked whether the Supreme Court has ever addressed
section 3 of the Lacey Act--the section prohibiting the trade in fish,
wildlife, plants or plant products that are illegal according to U.S.
or foreign laws or regulations.\12\ The Supreme Court has not directly
addressed whether the Lacey Act's use of foreign laws violates Article
I of the Constitution. However, every circuit court to consider the
issue has upheld the Lacey Act against constitutional challenge.\13\
The argument that the Lacey Act's reliance on foreign laws is
unconstitutional has been described as ``patently frivolous,''\14\
``without merit,''\15\ and ``neither original nor meritorious.''\16\ As
the United States Court of Appeals for the Third Circuit explained:
---------------------------------------------------------------------------
\12\ 16 U.S.C. Sec. 3372(a).
\13\ See, e.g., United States v. Rioseco, 845 F.2d 299, 302 (11th
Cir. 1988) (Lacey Act is not an unconstitutional delegation of
legislative power); United States v. Bryant, 716 F.2d 1091, 1094-95
(6th Cir. 1983) (same); United States v. Molt, 599 F.2d 1217, 1219 n.1
(3d Cir. 1979) (same); Rupert v. United States, 181 F. 87, 90 (8th Cir.
1910) (Lacey Act is a proper exercise of Congress' power under the
Commerce Clause); cf. United States v. Senchenko, 133 F.3d 1153, 1158
(9th Cir. 1998) (federal regulation, which was the basis for a Lacey
Act conviction, did not unconstitutionally delegate legislative power
by basing a federal offense on violations of state law).
\14\ Bryant, 716 F.2d at 1094; Molt, 599 F.2d at 1219 n.1.
\15\ Senchenko, 133 F.3d at 1158.
\16\ Rioseco, 845 F.2d at 302.
The Act does not delegate legislative power to foreign
governments, but simply limits the exclusion from the stream of
foreign commerce to wildlife unlawfully taken abroad. The
illegal taking is simply a fact entering into the description
of the contraband article, just as if importations of wine or
automobiles were restricted to bottles bearing an official
foreign designation of Appellation controllee or cars bearing
indicia of a foreign safety inspection. Congress could
obviously exercise its plenary power over foreign commerce in
such a manner if it so chose.\17\
---------------------------------------------------------------------------
\17\ Molt, 599 F.2d at 1219 n.1 (citing United States v. Sharpnack,
355 U.S. 286, 294 (1958); Kentucky Whip & Collar Co. v. Illinois Cent.
R. Co., 299 U.S. 334, 347-49 (1937); Gibbons v. Ogden, 22 U.S. 1, 207
(1824)); accord Lee, 937 F.2d at 1393 (``Although the Act does depend
upon violations of foreign law, . . . `the [United States] government
is not applying the foreign law per se, but rather it is looking to the
foreign law to determine if the Act's provisions are triggered; if so,
then it will apply the Act, and not the foreign law.' Read in this
manner, the Act delegates no power to foreign governments, and
therefore does not violate article I.'').
Prohibiting the flow of illegally obtained goods in interstate
commerce is well within the scope of Congress' power under the Commerce
---------------------------------------------------------------------------
Clause. As the Supreme Court explained long ago:
Congress can certainly regulate interstate commerce to the
extent of forbidding and punishing the use of such commerce as
an agency to promote immorality, dishonesty or the spread of
any evil or harm to the people of other states from the state
of origin. In doing this it is merely exercising the police
power, for the benefit of the public, within the field of
interstate commerce.\18\
---------------------------------------------------------------------------
\18\ Kentucky Whip, 299 U.S. at 346-47 (quoting Brooks v. United
States, 267 U.S. 432, 436-37 (1925)).
Accordingly, the Lacey Act's restrictions on the flow of illegal
goods in interstate commerce are well within the scope of Congress'
commerce power.\19\
---------------------------------------------------------------------------
\19\ See, e.g., Rupert, 181 F. at 90; United States v. Romano, 929
F. Supp. 502, 507-09 (D. Mass. 1996).
---------------------------------------------------------------------------
Courts similarly have rejected arguments that the ``foreign law''
provision of the Lacey Act is unconstitutionally vague.\20\ Any concern
about the vagueness of a local or foreign law is handled by the Act's
scienter or mental state requirements.\21\ Put simply, people who
unwittingly and reasonably find themselves in possession of illegal
goods are not guilty under the Lacey Act. The argument that the foreign
law provision of the Lacey Act is unconstitutionally vague--like the
commerce power argument--is meritless.
---------------------------------------------------------------------------
\20\ Lee, 937 F.2d at 1394-95; see also Bryant, 716 F.2d at 1095.
\21\ See Lee, 937 F.2d at 1394-95 (citing Village of Hoffman
Estate, 455 U.S. at 499).
---------------------------------------------------------------------------
A Wide Range of United States Laws Involve Foreign Law Predicates
The Chairman also asked about other U.S. laws that reference
foreign laws. The concept that American law in some circumstances must
look to the laws of other countries is neither new nor unique to the
Lacey Act. The fish and seafood industries, as well as the pet trade,
have been subject to this requirement under the Lacey Act for decades.
In United States v. Bengis, for example, the Court of Appeals for the
Second Circuit looked to South African law to determine South Africa's
property rights in lobster poached from its waters, ultimately
concluding that South Africa had a property right in poached lobster,
and was entitled to restitution for defendants' illegal poaching and
trafficking scheme.\22\ Importers of all sorts of goods long have had
to make sure that the goods they were importing were not considered
stolen property under the laws of foreign countries, at the risk of
violating the National Stolen Property Act \23\ and similar
statutes.\24\ Indeed, the fact that foreign law at times may be
relevant in the United States is so well established that the Federal
Rules of Civil Procedure and the Federal Rules of Criminal Procedure
contain explicit rules on how U.S. courts are to determine issues of
foreign law.\25\
---------------------------------------------------------------------------
\22\ Bengis, 631 F.3d at 39-41.
\23\ 18 U.S.C. Sec. Sec. 2314-15; see United States v. Portrait of
Wally, 663 F. Supp.2d 232 (S.D.N.Y. 2009) (local law determines
property rights)
\24\ See, e.g., 18 U.S.C. Sec. 667 (theft of livestock), Sec. 670
(theft of medical products).
\25\ See Fed. R. Civ. P. 44.1; Fed. R. Crim. P. 26.1.
---------------------------------------------------------------------------
Many U.S. statutes look to foreign laws to determine legality.\26\
The Tariff Act of 1930, for example, prohibits the importation of any
wild mammal or bird, or any part thereof, if ``the laws or regulations
of [the exporting] country . . . restrict the taking, killing,
possession, or exportation to the United States[] of any wild mammal or
bird, alive or dead, or restrict the exportation to the United States
of any part or product of a wild mammal or bird.''\27\ Similarly, it is
illegal to export ``a listed chemical in violation of the laws of the
country to which the chemical is exported,''\28\ as well as to export
or serve as a broker or trader in an international transaction
involving a listed chemical while knowing or having reasonable cause to
believe ``that the chemical will be used to manufacture a controlled
substance in violation of the laws of the country to which the chemical
is exported.''\29\ Another statute prohibits interstate commerce in
certain hazardous substances, with an exception for shipments that are
being exported to a foreign country and comply with the laws of the
importing country.\30\
---------------------------------------------------------------------------
\26\ See, e.g., 19 U.S.C. Sec. 1527 (criminalizing importation of
wild mammals and birds in violation of foreign law); 18 U.S.C. Sec. 546
(prohibiting smuggling of goods into foreign countries in violation of
that country's law); 21 U.S.C. Sec. 960(d)(2) (prohibiting exportation
of listed chemicals in violation of foreign laws); 15 U.S.C.
Sec. Sec. 1263-64 (exemptions from restrictions on commerce and trade
in hazardous substances where the substances are being exported to a
foreign country and meet that country's legal requirements); 21 U.S.C.
Sec. 606(a) (exemption from food safety requirements food products for
exportation where the product is legal under the foreign country's
laws); 46 U.S.C. Sec. 30306 (creating liability in the U.S. for deaths
at sea where, under the law of a foreign country, a cause of action
exists for death by wrongful act, neglect, or default). U.S. laws also
look to foreign laws for other purposes. See, e.g., 20 CFR Sec. 404.356
(regulation providing that Social Security Administration will look to
adoption laws of foreign country where adoption took place to determine
whether the person is the insured's legally adopted child); 18 U.S.C.
Sec. 1956(b)(2) (service of process on a foreign person is effective if
it accords with the law of the country in which the person is found).
\27\ 19 U.S.C. Sec. 1527(a).
\28\ 21 U.S.C. Sec. 960(d)(2). Liability extends to anyone who
``serves as a broker or trader for an international transaction
involving a listed chemical, if the transaction is in violation of the
laws of the country to which the chemical is exported.'' Id.
\29\ 21 U.S.C. Sec. 960(d)(4).
\30\ 15 U.S.C. Sec. 1264(b)(3).
---------------------------------------------------------------------------
Businesses Should Comply with the Lacey Act
The Lacey Act helps deter companies from using suppliers that
procure goods in an illegal or unsustainable manner. This in turn
protects U.S. interests by ensuring a level playing field for
legitimate businesses, helping in the fight against foreign corruption
that threatens our national security, and protecting our supply of
sustainable natural resources. It also helps protect victims, by
ensuring that, when possible, the rightful owners obtain either the
return of their stolen goods or appropriate compensation.
Compliance Protects U.S. Interests and Reduces Corruption
The evils targeted by the Lacey Act affect the United States'
economic, social, environmental, and national security interests. As
noted in the President's July 1, 2013 Executive Order:
The poaching of protected species and the illegal trade in
wildlife and their derivative parts and products (together
known as ``wildlife trafficking'') represent an international
crisis that continues to escalate. Poaching operations have
expanded beyond small-scale, opportunistic actions to
coordinated slaughter commissioned by armed and organized
criminal syndicates. The survival of protected wildlife species
such as elephants, rhinos, great apes, tigers, sharks, tuna,
and turtles has beneficial economic, social, and environmental
impacts that are important to all nations. Wildlife trafficking
reduces those benefits while generating billions of dollars in
illicit revenues each year, contributing to the illegal
economy, fueling instability, and undermining security. Also,
the prevention of trafficking of live animals helps us control
the spread of emerging infectious diseases. For these reasons,
it is in the national interest of the United States to combat
wildlife trafficking.\31\
---------------------------------------------------------------------------
\31\ Exec. Order No. 13,648 (2013), 78 Fed. Reg. 40,621-23 (July 5,
2013).
The Lacey Act helps reduce corruption and promote the rule of law
in foreign countries, which in turn helps to level the playing field
for U.S. companies and enhances our national security. There is a close
link between corruption and natural resources crime. In his Statement
for the Record on the 2012 Worldwide Threat Assessment of the U.S.
Intelligence Community, the Director of National Intelligence included
``environmental crime'' in the list of ways in which transnational
organized crime threatens U.S. national interests:
Illicit trade in wildlife, timber, and marine resources constitutes
a multi-billion dollar industry annually, endangers the environment,
and threatens to disrupt the rule of law in important countries around
the world. These criminal activities are often part of larger illicit
trade networks linking disparate actors--from government and military
personnel to members of insurgent groups and transnational organized
crime organizations.\32\
---------------------------------------------------------------------------
\32\ Statement for the Record on the Worldwide Threat Assessment of
the U.S. Intelligence Community, Before the S. Select Comm. On
Intelligence, 113th Cong. 5-6 (2013) (statement of James R. Clapper,
Director of National Intelligence, available at http://
www.intelligence.senate.gov/130312/clapper.pdf. The Statement also
noted that ``[t]ransnational organized crime (TOC) networks erode good
governance, cripple the rule of law through corruption, hinder economic
competitiveness, steal vast amounts of money, and traffic millions of
people around the globe.'' Id. at 5.
Corruption related to environmental crimes presents a threat to
the United States' interests generally, and to U.S. companies
specifically. Companies that turn a blind eye to their supply
chains enjoy a competitive advantage that in turn adversely
affects legitimate companies' business and customer relations.
Meanwhile, overharvesting seriously affects the worldwide and
U.S. market's supply. As a result, any reduction in market
price in the short-term due to the influx of illegal goods is
short-lived, and prices will increase in the long-term as
supply is depleted due to illegal and often unsustainable
practices. By reducing the supply of illegal goods in the
marketplace, the Lacey Act benefits U.S. companies and
consumers. The Act reduces the demand for illegal and
unsustainably harvested goods, which also helps to protect the
global supply of natural resources upon which American
consumers depend. By providing a powerful enforcement tool on
the one hand and encouraging the creation of compliance
programs that help identify supply chain issues on the other,
the Lacey Act helps to reduce the specter of corruption, and
ultimately fosters an environment favorable to legitimate
American businesses.
Compliance Protects the Victims of Crime
Penalties under the Lacey Act protect victims by deterring the
theft of fish, wildlife, and plants and plant products. Moreover, just
as property laws protect owners' rights by requiring the return of
stolen livestock or furniture stolen from your home, the Lacey Act
protects the rights of victims of illegal harvesting and trade, whether
such victims are in the U.S. or abroad.
Victims of environmental crime might be individuals, states, or
countries. Individuals from whom fish, wildlife, or plants or plant
products are taken are victims who have a right to the return of their
goods or compensation in the form of restitution. The intervening
illegal activity does not extinguish those property rights. In
addition, the states or countries in which the illegal takings occur
have a right to enforce their laws, which includes the right to seize
illegal property. This right was recognized in Bengis, where the Second
Circuit Court of Appeals ruled that South Africa should be awarded
compensation for the lobster stolen as part of the scheme.\33\ As Preet
Bharara, the U.S. Attorney for the Southern District of New York,
explained recently:
---------------------------------------------------------------------------
\33\ See, e.g., Memorandum Opinion, United States v. Bengis, No.
1:03-cr-00308-LAK (S.D.N.Y. Jun. 14, 2013), ECF No. 249 (awarding
restitution to South Africa for illegally harvested lobster imported
into the United States or intended for shipment to the United States).
[T]hose who violate the environmental laws of another country
by illegally taking fish, wildlife, or plants and then import
these items into the U.S. will be required to pay back the
victims of their offenses. This Office remains committed to
ensuring, no matter how long it takes, that those who would
damage another country's environment and seek to profit in the
U.S. market will have to remedy their violations of law and
repay those foreign governments.\34\
---------------------------------------------------------------------------
\34\ Press Release, United States Attorney's Office, Southern
District of New York, Officers of Fishing and Seafood Corporations
Ordered to Pay Nearly $22.5 Million to South Africa for Illegally
Harvesting Rock Lobster and Smuggling It into the United States (June
14, 2013), available at http://www.justice.gov/usao/nys/pressreleases/
June13/BengisArnoldetalRestitutionPR.php?print=1.
By protecting the property rights of victims, the Lacey Act
provides justice to victims and deters future criminal activity. It is
the importer's responsibility to know its suppliers and put measures in
place to ensure that its goods are legal. Just as a legitimate art
gallery requires evidence of provenance before purchasing paintings or
artifacts, or a seller of name-brand shoes needs comfort that it is not
buying counterfeits, companies that are dealing in goods covered by the
Lacey Act are responsible for understanding and controlling their
supply chains and, if appropriate, demanding contractual warranties to
protect themselves.
Responses to Concerns
Scope of Foreign Laws
Some have argued that the scope of foreign laws triggering a
violation of the Lacey Act is too broad. In fact, the categories of
foreign laws implicated by the Lacey Act are clear and well-defined.
Legitimate seafood companies have been complying with the Lacey Act for
decades.
Critics of the Lacey Act frequently point to the case of United
States v. McNab as an example, claiming that the defendants in that
case somehow were convicted unjustly of Lacey Act violations and sent
to jail for technical violations. That argument disingenuously
misconstrues the McNab case. A closer look reveals that law
enforcement, relying in part on the Lacey Act, in fact put an end to a
large, sophisticated, and destructive international criminal
organization engaged in a massive scheme that involved more than 40
shipments of illegal spiny lobster tails from Honduras, adding up to
more than 1.6 million pounds of illegal spiny lobster with a retail
value of over $17 million.\35\
---------------------------------------------------------------------------
\35\ Press Release, NOAA, McNab to Continue Serving Federal Prison
Sentence for Lobster Smuggling (Mar. 22, 2004), available at http://
www.publicaffairs.noaa.gov/releases2004/mar04/noaa04-r119.html.
---------------------------------------------------------------------------
As a part of the scheme, Honduran national David McNab and his co-
conspirators (among other things) illegally harvested massive
quantities of undersized and egg-bearing lobster, misreported their
catch to Honduran authorities, packaged the illegal goods in ways that
helped them avoid detection, and smuggled their illegal contraband into
the United States, where it was were sold to unwitting American
consumers for significant profit. The co-conspirators intentionally
falsified import documents by using a secret code to disguise the true
size of illegal, undersized lobster. With at least one shipment, a co-
conspirator falsely relabeled cases of Honduran lobster as a product of
the United States. After law enforcement intercepted one illegal
shipment on its way to Alabama, the co-conspirators tried to evade law
enforcement and continue their scheme by shipping illegal lobster tails
from Honduras to Los Angeles via airplane. After one of those shipments
was caught and seized in Los Angeles, the co-conspirators continued
with their illegal smuggling by trying to ship the illegal lobster
through Canada.
A jury in Alabama found each of the four defendants in McNab guilty
of knowingly violating the law by committing one or more of the
following crimes: conspiracy, smuggling, money laundering, Lacey Act
violations, and false labeling.\36\ The defendants' criminal scheme had
a devastating impact on lobster populations in Honduras.\37\ The scheme
impacted the United States' supplies as well; the offspring of lobster
populations in areas like Honduras and Nicaragua are, given the current
flows in the Gulf, the primary parental source for replenishing lobster
stocks in the southeastern United States.\38\ Florida's lobster
harvests dramatically declined in part because of the illegal harvest
of small lobsters and female egg-bearing lobsters in the source
fisheries off Central America.\39\ The McNab defendants were guilty,
they were found guilty by a jury, and their convictions were upheld on
appeal. The United States Supreme Court denied McNab's petition for a
writ of certiorari.
---------------------------------------------------------------------------
\36\ United States v. McNab, 331 F.3d 1228, 1234 n.10 (11th Cir.
2003).
\37\ Press Release, NOAA, supra note 35.
\38\ Id.
\39\ Id.
---------------------------------------------------------------------------
Critics frequently claim that the McNab defendants went to jail for
violating a Honduran ``cardboard box'' regulation. That is simply
false, as explained above. Moreover, critics' protestations
notwithstanding, the Honduran inspection and processing requirements
played an important role in Honduras' efforts to combat the illegal
lobster trade. By packaging lobster in seventy-pound frozen, unsorted
clumps, McNab made it virtually impossible for authorities to inspect
for illegal undersized or egg-bearing lobster, which in turn helped the
co-conspirators better hide the illegal lobsters from authorities and
continue their criminal scheme, all to the detriment of the species,
the legitimate fishermen relying on the harvest for their livelihood,
and the consumers (including American consumers) of the lobsters. In
that regard, the Honduran processing regulations--while seemingly
technical--are quite similar to the technical labeling and packaging
requirements the United States commonly uses in areas such as food
safety, drug safety, and environmental protection. Such requirements
provide a common and useful tool in the battle against illegal poaching
and logging. Indeed, a wide range of legal regimes employ similar
technical processing, declaration, or permitting requirements because
such requirements often provide the best way to prevent the abuse and
degradation of the environment. The Clean Water Act, which requires
that dischargers apply for a permit to release pollutants into the
waters of the United States,\40\ provides one example; the permitting
requirements help regulators ensure that the water bodies are
adequately protected from excessive pollution. The Lacey Act's foreign
laws provision acknowledges the importance of the laws and regulations
designed to promote resource conservation through these vitally
important, indirect measures.
---------------------------------------------------------------------------
\40\ 33 U.S.C. Sec. 1342.
---------------------------------------------------------------------------
Database of Foreign Laws
Some have suggested that the government should create a list or
database of the foreign statutes that could trigger Lacey Act
violations, and that only laws on that list could support a prosecution
under the Lacey Act. However, creating such a database would be both
inefficient and unproductive. Companies selling goods in the United
States should know where the goods come from, and are in the best
position to make sure that their suppliers are following the law. It
would not be in their best interest to have someone in the government
create a list of laws that could trigger the Lacey Act; such a list
inevitably would be over- or under-inclusive, and it would not provide
any meaningful protection for the company in court, for consumers
seeking comfort that they are purchasing legal goods, or for the
victims who had their resources stolen. In an enforcement action,
companies should have the right to argue their understanding of the
predicate law at issue, and it is up to the judge or jury to determine
whether a particular good or activity is illegal under a particular
law.
Alleged Ambiguity of Foreign Laws
Some have raised concerns that an ambiguous foreign law could
result in a criminal conviction and/or the forfeiture of goods. That
argument misunderstands the Lacey Act.
Mens rea/scienter. For an importer to be found guilty of a felony
under the Lacey Act, the government must show that she imported fish,
wildlife, plants, or plant products that she knew were illegal. In
cases where a person, in the exercise of due care, should have known
that wood she imported had been stolen, she is guilty of a
misdemeanor.\41\ Where a foreign law is ambiguous or indecipherable,
the government will be hard pressed to prove either knowledge or the
absence of due care, and most likely would never bring such a case. As
the Ninth Circuit Court of Appeals explained in Lee:
---------------------------------------------------------------------------
\41\ The ``due care'' standard serves an important role in
reinforcing lawful behavior and in leveling the playing field between
legitimate companies that strive to ensure the legality of their
operations and those companies that are indifferent as to the legality
of the goods they are importing and supplying to the American consumer.
The ``due care'' standard's fact-specific and flexible nature helps
protect companies that are taking measures to ensure their goods are
legal. Not only does the due care standard allow companies to tailor
their compliance programs to their own supply chains, but it also takes
into account the foreign laws under which the companies are operating
so that ambiguous laws do not subject innocent, diligent companies to
unfair liability.
[The Lacey Act] scienter element prevents the Act from
criminally punishing those who violate the Act's provisions but
are reasonably unaware that they are doing so. The protections
inserted by Congress prevent the Act from ``trap[ping] the
innocent by not providing fair warning,'' and therefore
mitigate any potential vagueness of the Act.\42\
---------------------------------------------------------------------------
\42\ Lee, 937 F.2d at 1395 (internal citations omitted).
CAFRA and Remission. The Civil Asset Forfeiture Reform Act
(``CAFRA''), incorporated by reference in the Lacey Act, explicitly
contemplates a process under which a person may file a claim for the
return of seized property. After the seizure, the government must
provide notice to the person from whom the property was seized. That
person may either: (1) file a claim in court contesting forfeiture; or
(2) submit a petition straight to the agency that seized the
property.\43\ The second option commonly is referred to as
``remission.'' The federal departments charged with enforcing the Lacey
Act, including the Departments of Justice, Interior, and Agriculture,
and the National Oceanic and Atmospheric Administration, all have
regulations permitting people to petition for remission and seek the
return of goods that otherwise would be illegal to possess under the
Lacey Act.\44\ The petitioner sets forth the reasons why the goods
should be returned and the agency determines whether, in light of the
particular circumstances, mitigation is warranted or the goods should
be returned.\45\ In fact, that is what happened in Gibson. Gibson
conceded that the Madagascar wood was illegal and that wood was
forfeited. However, as noted above, because the Indian law was
ambiguous with respect to whether the Indian wood Gibson had imported
was legally exported ``finished'' wood or illegally exported
``unfinished'' wood, the government allowed Gibson to file an unopposed
petition for remission to seek the return of that wood.\46\ Gibson
filed the remission petition and that Indian wood was in fact
returned.\47\
---------------------------------------------------------------------------
\43\ See 18 U.S.C. Sec. 983(a).
\44\ See 50 CFR Sec. 12.24 (FWS, Department of Interior); 7 CFR
Sec. 356.7 (Department of Agriculture); 15 CFR Sec. 904.506 (NOAA); 28
CFR Sec. 9.4 (DOJ).
\45\ See, e.g., 50 CFR Sec. 12.24(e).
\46\ Gibson CEA, supra note 4 at 3.
\47\ See note 5, supra.
---------------------------------------------------------------------------
Conclusion
The Lacey Act provides an important tool that helps enforcement
officials fight crime, corruption, and the theft of fish, wildlife, and
plants and plant products. The foreign law provision of the Lacey Act
is neither unique nor unconstitutional. It is a perfectly legitimate
means of furthering the goals of the Act and ensuring that only legal
goods are imported into the United States. Companies operating in or
procuring materials from other countries have a responsibility to
ensure that the materials they bring into the United States are legal.
As a consumer, I expect companies to do so and it is hard to imagine
that any responsible, law-abiding American would want to buy goods that
were stolen in another country or otherwise obtained in violation of
another country's laws. Without the foreign law provision of the Lacey
Act, the problems of wildlife poaching, fish overharvesting, and
illegal logging would proliferate, to the detriment of American
businesses and consumers of present and future generations.
Thank you again for inviting me to appear today. I would be happy
to answer any questions.
______
Dr. Fleming. Yes. Thank you, Mr. Asner.
We now move along to Mr. Rubinstein. You are recognized for
5 minutes, sir.
STATEMENT OF REED D. RUBINSTEIN, ESQ., PARTNER, DINSMORE AND
SHOHL
Mr. Rubinstein. Thank you, Mr. Chairman, Ranking Member
Sablan, members and staff of the Committee. My name is Reed
Rubinstein, I am a partner with the firm of Dinsmore and Shohl
in Washington, D.C. I am testifying here today on behalf of the
U.S. Chamber Institute for Legal Reform.
First of all, it is a real pleasure, again, to be before
you talking about this critically important issue. To begin
with, I want to make it clear--and clarity is important--that
ILR strongly supports the Lacey Act's important fish, wildlife,
and plant conservation goals. Those in our country who import
or use medicines containing rhino horns, tiger bone, or bear
bile, who eat sea turtle eggs and bush meat, seek out religious
articles made from ivory obtained through the murderous
poaching of elephants or rhinos, or purchase wood products
known to have been illegally imported ought to be prosecuted.
But ILR believes that the Lacey Act reform is needed,
desperately so.
As written, it requires American citizens to comply with
foreign law, very broadly defined, and as interpreted by U.S.
bureaucrats, to avoid criminal and civil jeopardy under U.S.
law. The government refuses to translate and specify the
applicable foreign laws that are to provide basic rules of the
road so that stakeholders may distinguish permitted from
proscribed conduct.
The dynamic incorporation of foreign law into the U.S. code
is a prima facie threat to democratic principles, contrary to
all prudential principles of government transparency and
accountability, and it should not be tolerated in a well-
ordered constitutional republic.
Furthermore, the government's refusal to maintain a data
base of applicable foreign wildlife and plant laws, and to
articulate intelligible principles of due care, so that
stakeholders have reasonable notice of proscribed conduct is
profoundly unfair to the regulated community, and has,
paradoxically, hampered Lacey Act compliance.
The Congressional Research Service reports that, lacking
clear standards, government officials ``might use information
gained from foreign governments, non-governmental
organizations, private citizens, anonymous tips, declarations,
industry and border agents, among others,'' to enforce Lacey.
The disorganized, ad hoc enforcement approach means agencies
and prosecutors are afforded unbounded discretion to prosecute
Americans in U.S. courts for violations of foreign laws that
are enacted, interpreted, and ``enforced'' by corrupt
authoritarian regimes based on information obtained from highly
questionable and biased sources.
Also, there is more than ample evidence that the
implementation of the 2008 Lacey Act amendments has proven to
be expensive and unwieldy and ineffective. There is no evidence
that those amendments have actually reduced the illegal logging
rate. Although 5 years have passed since enactment, the USDA
still cannot provide specific cost figures for the new
requirements on legal plant imports, nor has it been able to
determine whether the Act has led to a reduction in the level
of illegal logging and trafficking.
Nevertheless, reform opponents will tell you that Congress
must choose between aligning Lacey with core American legal
norms and values, or protecting wildlife, fish, and plants.
This is a false choice.
First, the Lacey Act's unique dynamic incorporation of
foreign law is contrary to our most basic legal norms, and
simply bad public policy, because it gives the government such
broad enforcement discretion. On August 24, 2011, the Gibson
Guitar factories in Nashville and Memphis were raided by armed
agents from the U.S. Government. The company was not accused of
importing banned wood. Rather, guns were drawn against the
company and its workers because someone somewhere in the
Federal bureaucracies thought that Gibson ran afoul of a
technical Indian regulation governing the export of finished
wood products designed to protect Indian woodworkers from
foreign competition. To make matters worse, the Indian
Government certified that the goods were properly and legally
exported.
In July of 2012, Gibson and the government settled.
Interestingly, the settlement, which was praised by the Justice
Department in a press release, speaks very little to the Indian
wood, other than to say that, notwithstanding the armed raid,
certain questions and inconsistencies exist regarding the
tariff classification of the wood. And, accordingly, until the
Indian Government informs the U.S. Government that such imports
are expressly prohibited by laws related to Indian foreign
trade policy, there will be no enforcement against Gibson.
Frankly, it is difficult to imagine anyone who cares about
Anglo-American principles of due process and the rule of law
justifying the armed raid of Gibson.
My time is up. I would be happy to answer questions. Thank
you.
[The prepared statement of Mr. Rubinstein follows:]
Statement of Reed D. Rubinstein, Esq., Partner, Dinsmore & Shohl, LLP,
for the U.S. Chamber of Commerce Institute for Legal Reform
My name is Reed D. Rubinstein and I am a partner in the Washington,
D.C. office of Dinsmore & Shohl, LLP. For over twenty-five years, I
have practiced environmental and administrative law, defending
individuals and companies in federal civil and criminal enforcement
matters. I also have served as the U.S. Chamber of Commerce's Senior
Counsel for Environment, Technology and Regulatory Affairs, and as an
adjunct professor of environmental law at the Western New England
School of Law.
I am testifying today on behalf of the U.S. Chamber's Institute for
Legal Reform (``ILR'') in support of Lacey Act reform. ILR promotes
civil justice reform through legislative, political, judicial and
educational activities at the national, state and local levels. The
U.S. Chamber is the world's largest business federation, representing
the interests of more than three million businesses and organizations
of every size, sector, and region.
I. SUMMARY
ILR strongly supports the Lacey Act's important fish, wildlife and
plant conservation goals.\1\ Those who import, use, consume, collect or
benefit from ``medicines'' containing rhino horns, tiger bone or bear
bile; shark fins, sea turtle eggs and ``bush meat''; ``religious
articles'' made from ivory obtained through the murderous poaching of
elephants; or rare wood illegally cut from protected forests ought to
be prosecuted. However, the Lacey Act needlessly subjects American
citizens to criminal and civil jeopardy for ``violations'' of an
impossibly broad range of foreign laws, regulations and enactments.\2\
The statute's broad and non-specific incorporation of foreign law is a
prima facie threat to democratic principles;\3\ functionally
inconsistent with core republican values and basic due process; and
contrary to all prudential principles of government transparency and
accountability.\4\
---------------------------------------------------------------------------
\1\ 18 U.S.C. Sec. Sec. 42-43; 16 U.S.C. Sec. 3371 et seq.
\2\ Indonesia, for example, has over nine hundred laws,
regulations, and decrees that govern timber exploitation,
transportation, and trade. Saltzman, Establishing a ``Due Care''
Standard Under the Lacey Act Amendments of 2008, 109 Mich. L. Rev.
First Impressions 1, 6 (2010). That foreign ``laws'' lack a direct
nexus to fish, wildlife or plant conservation, or provide only for
civil fines, or even are ruled invalid and retroactively repealed by
the government that enacted them in the first instance, is of no
moment. See generally United States v. McNab, 324 F.3d 1266, 1268 (11th
Cir.) cert. denied 540 U.S. 1177 (2004); United States v. Lee, 937 F.2d
1388, 1393 (9th Cir.) cert. denied 502 U.S. 1076 (1992).
\3\ Dorf, Dynamic Incorporation of Foreign Law, 157 Penn. L. Rev.
103, 115 (2008); Grossman, TESTIMONY BEFORE THE SUBCOMMITTEE ON THE
CONSTITUTION, COMMITTEE OF THE JUDICIARY, UNITED STATES HOUSE OF
REPRESENTATIVES (December 14, 2011) available at http://
www.heritage.org/research/testimony/2011/12/judicial-reliance-on-
foreign-law#_ftn5 (accessed July 8, 2013). As Grossman put it:
Important American interests may go unrepresented (to say the least)
when, for example, we incorporate Indian trade-protection law into our
criminal code . . . Why should we adopt laws that are not only
difficult to ascertain and apply, but are also inconsistent with, or
even contrary to, our preferences, values, and interests?
\4\ See generally City of Chicago v. Morales, 527 U.S. 41 (1999);
Grayned v. City of Rockford, 408 U.S. 104, 108 (1972); Posner,
Foreword: A Political Court, 119 Harv. L. Rev. 31, 88-89 (2005).
---------------------------------------------------------------------------
The government's failure to both maintain a database of applicable
foreign wildlife and plant laws and to articulate intelligible
principles of ``due care'' to guide stakeholders has hampered Lacey Act
compliance. Currently, the government charges American musicians,
fishermen and florists with knowledge of all potentially applicable
foreign ``laws'' and then requires them to guess, at the risk of their
liberty and property, how much ``due diligence'' is needed in any given
case.\5\ Such a legal regime tramples ordinary notions of fair play,
offends well-settled rules of law and should not be tolerated in a
well-ordered, constitutional republic.\6\
---------------------------------------------------------------------------
\5\ See PowerPoint: Wayne D. Hettenbach, Senior Trial Attorney
Environmental Crimes Section, U.S. Department of Justice, The Lacey
Act: Implications for Supply Chains, available at
http://www.google.com/
url?sa=t&rct=j&q=the%20lacey%20act%3A%20implications%20for%20supply%20ch
ains&source
=web&cd=1&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.americanbar.org%2Fcontent%2
Fdam
%2Faba%2Fadministrative%2Flitigation%2Fmaterials%2F2013_jointcle%2Fthe_l
acy_act_
implications_supply_chains.authcheckdam.pdf&ei=MTPbUcWjC4_BywGY8oGgBA&us
g=
AFQjCNFsj6zvWlQ7_3KVBDnIrQH1IFq17w (accessed July 8, 2013); Testimony
of Craig Foster, Legal Timber Protection Act: Hearing on H.R. 1497
Before the Subcomm. on Fisheries, Wildlife and Oceans of the H. Comm.
on Natural Resources, 110th Cong. at 55 (2007)(discussing compliance
barriers and explaining that ``it is necessary to understand that long
supply chain and the fact that there are many people along that supply
chain . . . I cannot audit the entire supply chain . . . Criminal
behavior is criminal behavior. All I can do is work with the best of my
knowledge''); United States v. 144,774 Pounds of Blue King Crab, 410
F.3d 1131 (9th Cir. 2005).
\6\ See Morales, 527 U.S. at 56 (citation omitted). As the Supreme
Court held long ago: That the terms of a penal statute . . . must be
sufficiently explicit to inform those who are subject to it what
conduct on their part will render them liable to its penalties, is a
well-recognized requirement, consonant alike with ordinary notions of
fair play and the settled rules of law. And a statute which either
forbids or requires the doing of an act in terms so vague that men of
common intelligence must necessarily guess at its meaning and differ as
to its application, violates the first essential of due process of law.
Connally v. General Constr. Co., 269 U.S. 385, 391 (1925).
---------------------------------------------------------------------------
As the Congressional Research Service points out, this troubling
failure to distinguish between permissible and proscribed conduct also
renders enforcement ``challenging.''\7\ Lacking clear standards,
government officials ``might use information gained from foreign
governments, nongovernmental organizations, private citizens, anonymous
tips, declarations, industry, and border agents, among others . . ..''
This disorganized, ad hoc enforcement approach raises the troubling
specter of Americans being prosecuted in U.S. courts for violations of
foreign laws enacted, interpreted and ``enforced'' by corrupt,
authoritarian regimes.\8\
---------------------------------------------------------------------------
\7\ Cong. Res. Service, ``The Lacey Act: Compliance Issues Related
to Importing Plants and Plant Products'' at 8 (May 10, 2013)(citations
omitted).
\8\ As one commentator put it: Consider, for example, the case of
Bigleaf mahogany imports from Peru . . . Peruvian officials have . . .
supplied false documentation for these products . . . Not only was
timber being illegally harvested in Peru, but illegal timber was also
being moved into Peru from neighboring countries to be laundered . . .
Such ``deeply entrenched patronage systems'' are most often linked to
political networks . . . Clearly, it is wrong to require U.S. importers
to comply with a myriad of foreign laws when the governments enacting
these laws not only fail to adhere to them, but seem to be at the very
root of the problem. Tanczos, A New Crime: Possession of Wood--
Remedying the Due Care Double Standard of the Revised Lacey Act, 42
Rutgers L. J. 549, 572 (2011); see also Henry Juszkiewicz, Repeal the
Lacey Act? Hell No, Make It Stronger! The Huffington Post Green Blog
(Nov. 2, 2011) available at http://www.huffingtonpost.com/henry-
juszkiewicz/gibson-guitars-lacey-act_b_1071770.html (accessed July 14,
2013) (``The U.S. should also use the power of the marketplace to
encourage sustainable harvesting practices in countries whose forestry
systems are rife with graft and corruption'') (emphasis added).
---------------------------------------------------------------------------
Finally, although there is ample evidence that implementation of
the 2008 Lacey Act amendments has proven to be expensive and unwieldy
and ineffective,\9\ there is no evidence that the amendments have
actually reduced the illegal logging rate.\10\ Although five years have
passed since enactment, the USDA still cannot provide specific cost
figures for the new requirements on legal plant imports or been able to
``determine whether the Act has led to a reduction in the level of
illegal logging and trafficking.''\11\
---------------------------------------------------------------------------
\9\ Animal and Plant Health Inspection Service, U.S. Dep't of
Agric., Report to Congress with Respect to Implementation of the 2008
Amendments to the Lacey Act at 10 (``15 percent of the electronic
declarations . . . [and] 32 percent of the paper declarations appear to
be missing . . . information''); 11-15 (describing implementation
problems and errors); 17 (``About 46% of the electronic declarations
are missing accurate information . . . This makes it impossible to
accurately reconcile the cumulative value reported on electronic import
declarations with the value reported for customs purposes'') (May,
2013).
\10\ Id. at 25.
\11\ Id.
---------------------------------------------------------------------------
ILR believes that Congress needs to take a hard look at the Lacey
Act to determine whether it has an appropriate threshold mens rea
requirement; adequately defines both the actus reus (guilty act) and
the mens rea of the offense in specific and unambiguous terms; clearly
states whether the mens rea requirement applies to all the elements of
the offense or, if not, which mens rea terms apply to which elements of
the offense; sets proper limits on enforcement discretion; and
incorporates the performance metrics required for meaningful
oversight.\12\ ILR further believes that Congress needs to correct the
Lacey Act's unduly broad incorporation of foreign law, perhaps by
specifically defining those foreign laws that are jeopardy
``triggers.'' Congress should also clarify the ``due care'' defense so
that Americans have fair notice of prohibited conduct. U.S. courts,
enforcement agencies and citizens all would benefit from clear ``rules
of the road.''\13\ In any event, our Constitution and our legal
traditions demand nothing less. Finally, Congress should address the
``contraband'' issue by ensuring that Civil Asset Forfeiture Relief Act
(``CAFRA'')-defined innocent owners \14\ are not subject to Lacey Act
forfeiture.
---------------------------------------------------------------------------
\12\ See generally Walsh & Joslyn, Without Intent: How Congress Is
Eroding the Intent Requirement in Federal Law 26-31 (2010) available at
http://www.nacdl.org/withoutintent/(accessed July 8, 2013).
\13\ See Juszkiewicz, supra at note 8. Gibson CEO Juszkiewicz
suggests that limited government enforcement dollars are likely better
devoted to fighting illegal logging and poaching by bad actors and not
to fights with American companies that try hard to comply with the law.
Therefore, he advocates creating a compliance system that allows
businesses to know before they buy wood and other plant products
whether or not they are in compliance. Id.
\14\ 18 U.S.C. Sec. Sec. 983(d)(2)-(3).
---------------------------------------------------------------------------
II. DISCUSSION.
A. The Lacey Act's Background.
Passed by Congress in 1900, the Lacey Act was the first federal
wildlife protection law. In its initial iteration, the Act supported
state game animal and bird protection efforts by prohibiting the
interstate shipment of wildlife killed in violation of state or
territorial law, requiring wildlife to be clearly marked when shipped
in interstate commerce, banning the importation of certain animals
(including English sparrows) that could harm U.S. crop production and
authorizing the federal government to preserve and restore game bird
populations.\15\ Amendments in 1935 prohibited interstate commerce in
wildlife captured or killed in violation of any federal or foreign law.
Amendments in 1945 banned the importation of wildlife under ``inhumane
or unhealthful'' conditions.\16\ Amendments in 1981 diluted the mens
rea requirement from ``willfully'' to ``knowingly.''\17\ And,
amendments in 2008 criminalized the import, export, transport, sale,
receipt, acquisition or purchase of any plant or plant product taken,
possessed, transported or sold in violation of any domestic or foreign
law.\18\
---------------------------------------------------------------------------
\15\ U.S. Fish & Wildlife Service, ``Nation Marks Lacey Act
Centennial, 100 Years of Federal Wildlife Law Enforcement,'' available
at http://www.fws.gov/pacific/news/2000/2000-98.htm (accessed July 12,
2012).
\16\ Id.
\17\ See Lacey Act Amendments of 1981, Pub. L. 97-79.
\18\ 16 U.S.C. Sec. 3372(a)(2).
---------------------------------------------------------------------------
Interestingly, the legislative history is bare of substantive
discussion regarding the consequences of the statute's uniquely broad
dynamic incorporation of foreign law into the U.S. Code.
B. Lacey Act Structure
The Lacey Act uniquely subjects American citizens to domestic
jeopardy for the violation of a foreign sovereign's enactments.\19\ 16
U.S.C. Sec. 3373 imposes strict civil and criminal liability for
conduct ``in violation of, or in a manner unlawful under, any
underlying law'' that is ``prohibited'' by the Act, subject only to a
``due care'' defense. Section 3372(a)(2) prohibits any person to
``import, export, transport, sell, receive, acquire, or purchase in
interstate or foreign commerce'' any fish or wildlife ``taken,
possessed, transported or sold in violation of . . . any foreign law,''
and plants ``taken, possessed, transported or sold in violation of . .
. any foreign law'' including laws governing the payment of appropriate
royalties, taxes or stumpage fees and ``the export or transshipment''
thereof. Section Sec. 3371(d) defines ``law'' to mean ``laws, treaties,
regulations or Indian tribal laws which regulate the taking,
possession, importation, exportation, transportation, or sale of fish
or wildlife or plants.''
---------------------------------------------------------------------------
\19\ McNab, 324 F.3d at 1274 (Fay, J. dissenting) (``the Lacey Act,
by its very terms, is dependent upon the laws of a foreign
sovereign''). As a Justice Department official testified in 2007: One
unique feature of the Lacey Act is that it allows the incorporation of
foreign law as an underlying law or predicate offense that ``triggers''
a Lacey Act violation . . . The law or regulation must be of general
applicability, but may be a local, provincial, or national law. The
defendant need not be the one who violated the foreign law . . .
However, the defendant must know or, in the exercise of due care,
should know, about its [violation]. See Testimony of Eileen Sobeck
Before the Subcommittee on Fisheries, Wildlife and Oceans, Committee on
Natural Resources, U.S. House of Representatives Concerning H.R. 1497
at 4 (Oct. 16, 2007) available at http://naturalresources.house.gov/
uploadedfiles/sobecktestimony10.16.07.pdf (accessed July 14, 2013). The
Alien Tort Statute (``ATS'') is commonly cited along with the Lacey Act
as the primary examples of federal statutes that incorporate foreign
laws into the U.S. Code. The ATS gives federal courts jurisdiction over
``any civil action by an alien, for a tort only, committed in violation
of the law of nations.'' 28 U.S.C. Sec. 1350; Sosa v. Alvarez-Machain,
542 U.S. 692, 723-24 (2004). However, U.S. courts have interpreted the
ATS's ``law of nations'' trigger far more narrowly than the Lacey Act's
``foreign law'' trigger. Compare Kiobel v. Royal Dutch Petroleum, ___
U.S. ___ (2013); Sosa, 542 U.S. at 724 (the ATS was designed to permit
adjudication of a narrow class of torts in violation of the law of
nations that would have been recognized within the common law at the
time of its enactment); Lee, 937 F.2d at 1391.
---------------------------------------------------------------------------
Lacey Act civil liability and criminal penalties attach when ``in
the exercise of due care'' a defendant ``should know'' that the fish,
wildlife or plants were taken in violation of the underlying law.\20\
The Lacey Act does not define ``due care.'' The legislative history
states that ``[d]ue care simply requires that a person facing a
particular set of circumstances undertakes certain steps which a
reasonable man would take to do his best to insure that he is not
violating the law.'' \21\ No clarifying regulations have been issued by
any enforcing federal agency.\22\
---------------------------------------------------------------------------
\20\ See 16 U.S.C. Sec. 3373.
\21\ Lacey Act Amendments of 1981, S. Rep. No. 97-123, 97th Cong.,
1st Sess. 10-12 (1981); 1981 U.S.C.C.A.N. 1758-59. The Committee
explained: [D]ue care means that degree of care which a reasonably
prudent person would exercise under the same or similar circumstances.
As a result, it is applied differently to different categories of
persons with varying degrees of knowledge and responsibility. For
example, zoo curator's [sic], as professionals, are expected to apply
their knowledge to each purchase of wildlife. If they know that a
reptile is Australian and that Australia does not allow export of that
reptile without special permits, they would fail to exercise due care
unless they checked for those permits. On the other hand, the airline
company which shipped the reptile might not have the expertise to know
that Australia does not normally allow that particular reptile to be
exported. However, if an airline is notified of the problem and still
transships the reptile, then it would probably fail to pass the due
care test. Id.
\22\ Tanczos, A New Crime: Possession of Wood--Remedying the Due
Care Double Standard of the Revised Lacey Act, 42 Rutgers L. J. 549,
567 (2011).
---------------------------------------------------------------------------
In 2010, the United States Department of Agriculture Animal and
Plant Health Inspection Service identified ``Tools to Demonstrate Due
Care'' in a PowerPoint presentation.\23\ These included ``asking
questions,'' ``compliance plans,'' ``industry standards,'' ``records of
efforts,'' and, helpfully, ``changes in above in response to practical
experiences.''\24\
---------------------------------------------------------------------------
\23\ U.S. Dep't of Agric., Lacey Act Primer 20 (April 2010)
available at http://www.aphis.usda.gov/plant_health/lacey_act/
downloads/LaceyActPrimer.pdf (accessed July 9, 2013).
\24\ Id.; EIA, Setting the Story Straight--The U.S. Lacey Act:
Separating Myth from Reality 2 (2010) available at http://www.eia-
global.org/PDF/Report--Mythbusters--forest--Jan10.pdf (accessed July 9,
2013)(```Lacey compliance' is not defined by any one document,
checkbox, due diligence system or due care check-list, and do not
expect the U.S. government to provide that'').
---------------------------------------------------------------------------
In a recent Justice Department presentation, the sum total of the
``due care'' discussion was a citation to the statutory language, a
quote from the legislative history and a list of seven ``Common Sense
Red Flags.'' The ``red flags'' included ``Goods significantly below
market rate'', ``Unusual sales methods or practices . . .'', ``News
articles or Internet information indicating a potential problem'' and
``Inability to get rational answers to questions'', among other
things.\25\
---------------------------------------------------------------------------
\25\ Hettenbach, supra at note 6.
---------------------------------------------------------------------------
III. WHY CONGRESS SHOULD REFORM THE LACEY ACT.
The Lacey Act's conservation goals are of critical importance to
all Americans. However, the statute's broad and non-specific
incorporation of foreign law is a prima facie threat to democratic
principles; functionally inconsistent with core republican values and
accepted notions of basic due process; and contrary to all prudential
principles of government transparency and accountability. Also, the
government's enforcement approach is constitutionally suspect and
practically problematic. Reform is appropriate.
A. The Lacey Act's Dynamic Incorporation Of Foreign Law Is Incompatible
With Bedrock American Legal Norms.
The Lacey Act's dynamic and broad incorporation of foreign law is
simply incompatible with bedrock American legal and constitutional
norms. Fundamentally, the Lacey Act's incorporation poses a prima facie
threat to democracy because it delegates decisions about American
citizens' conduct from the hands of the American people's
representatives to often unaccountable and corrupt persons who do not
share our Constitutional values or respect our basic Anglo-American
legal principles of government transparency and accountability.
Congress should not and need not protect wildlife, fish and plants by
outsourcing U.S. law to authoritarian or corrupt countries.
B. The Government's Refusal To Specify Applicable Foreign Laws Or To
Set Clear Compliance Standards Is Constitutionally Problematic
And Counterproductive.
The government's refusal both to create a database of applicable
foreign laws and to set clear compliance standards raises profound
constitutional concerns and frustrates the Lacey Act's conservation
purpose. To begin with, ``A vague law impermissibly delegates basic
policy matters to policemen, judges, and juries for resolution on an ad
hoc and subjective basis, with the attendant dangers of arbitrary and
discriminatory application.''\26\ The Gibson case, in which U.S.
regulators rejected the Indian government's interpretation of Indian
law, and the McNab decision, in which a U.S. court rejected the
Honduran government's interpretation of Honduran law, demonstrate that
Lacey Act enforcement is ``ad hoc and subjective'' because U.S.
regulators apparently are free to interpret and apply foreign law as
they see fit.\27\
---------------------------------------------------------------------------
\26\ Grayned, 408 U.S. at 108 (citations omitted).
\27\ See generally Morales, 527 U.S. at 41 (striking down an
ordinance providing absolute discretion to police officers to determine
prohibited ``loitering'').
---------------------------------------------------------------------------
The government's refusal to set ``clear rules of the road'' is
equally troubling. First, as the Supreme Court held almost a century
ago, ``a statute which either forbids or requires the doing of an act
in terms so vague that men of common intelligence must necessarily
guess at its meaning and differ as to its application, violates the
first essential of due process of law.''\28\ A legal regime that
requires citizens to guess about compliance, at the risk of their
liberty and property, cannot be justified. Second, the government's
refusal to provide compliance standards has hampered both Lacey Act
compliance and enforcement.
---------------------------------------------------------------------------
\28\ Connally v. General Constr. Co., 269 U.S. 385, 391 (1925).
---------------------------------------------------------------------------
C. The Lacey Act Is An Exemplar Of Over-Criminalization.
The Lacey Act is an exemplar of ``over-criminalization.'' Over-
criminalization results when Congressional enactments expand criminal
liability through strict liability offenses that dispense with culpable
mental states; vicarious liability for the acts of others without some
evidence of personal advertence; grossly disproportionate penalties
that bear no relation to the wrongfulness of the underlying crime, the
harmfulness of its commission, or the blameworthiness of the criminal;
and the broad delegation of criminal enforcement authority to
bureaucrats. Such enactments corrode individual civil liberties.\29\
---------------------------------------------------------------------------
\29\ See Luna, The Overcriminalization Phenomenon, 54 American
Univ. L. Rev. 703, 715 (2005).
---------------------------------------------------------------------------
The Lacey Act does all of these things. It holds Americans
vicariously liable for the violation of even the most technical foreign
law, rule or local ordinance without evidence of personal advertence or
intent. It penalizes without relation to the harm done by the
``violator'' to fish, wildlife or plant populations. It criminalizes
obscure foreign requirements, including civil customs, transportation,
and packaging rules and even local tax or royalty ordinances, and then
delegates unlimited prosecutorial power to federal regulators.
Perversely, the Lacey Act unleashes the coercive power of the federal
government not against the corrupt and lawless foreign individuals,
companies and governments that allow, encourage or conduct poaching,
clear-cutting and environmental degradation, but rather against
Americans who are innocent of wrong-doing, by any reasonable measure.
D. The Lacey Act's Structural Flaws Lead To Absurd And Unjust Results.
Through the Lacey Act, Congress requires Americans to know and then
``properly'' interpret the regulatory minutiae of fishery, wildlife and
forest management, tax, customs, logging, commercial and real property
``law'' in places like Egypt, Indonesia, Vietnam, Peru and China.\30\
Congress also now requires our citizens to ``verify'' that foreign
actors in a supply chain that may span countries rife with legal
inefficiency, imprecision and corruption appropriately ``comply'' with
all of these laws.\31\ Finally, Congress's failure to cabin regulatory
discretion has empowered U.S. regulators to ``Monday Morning
Quarterback'' good faith interpretative and verification efforts, and
then to raid and prosecute anyone whom the government decides has
failed to measure up. This leads to absurd results.
---------------------------------------------------------------------------
\30\ According to the government, ``It is the responsibility of the
importer to be aware of any foreign laws that may pertain to their
merchandise prior to its importation into the United States.'' See
Animal & Plant Health Inspection Serv., U.S. Dep't of Agric., Lacey Act
Amendments: Complete List of Questions and Answers 2 (Feb. 16, 2012)
available at
http://www.aphis.usda.gov/plant_health/lacey_act/downloads/faq.pdf
(accessed July 14, 2013) (emphasis added).
\31\ See 42 Rutgers L. J. at 572 (citations omitted); see also
Juszkiewicz, supra at note 8 (``The U.S. should also use the power of
the marketplace to encourage sustainable harvesting practices in
countries whose forestry systems are rife with graft and corruption'')
(emphasis added).
---------------------------------------------------------------------------
On August 24, 2011, Gibson Guitar factories in Nashville and
Memphis were raided by armed agents from the Department of Homeland
Security and the U.S. Fish & Wildlife Service. The company was not
accused of importing banned wood.\32\ Rather, the raid apparently
occurred because Gibson ran afoul of a technical Indian regulation
governing the export of finished wood products, which was designed to
protect Indian woodworkers from foreign competition.\33\ To make
matters worse, although the Indian government certified that the wood
was properly and legally exported, the regulators substituted their own
opinion to support their claims of a Lacey Act violation.\34\
---------------------------------------------------------------------------
\32\ See Affidavit of Special Agent John M. Rayfield in support of
Search Warrant 11-MJ-1067 A, B, C, D at para.para. 15-18 (Aug. 18,
2011) available at http://www.scribd.com/srcohiba/d/63869457-US-
Government-s-Affidavit-in-Support-of-Search-Warrant-at-Gibson-Guitar-
Factory (accessed May 4, 2012).
\33\ Juszkiewicz, supra at note 8.
\34\ Apparently, Gibson was advised by the U.S. government that if
it finished its guitar fingerboards using Indian labor rather than
Tennessee craftsman, the Lacey Act issue would not exist. Id.
---------------------------------------------------------------------------
On July 27, 2012, Gibson and the government settled all of their
outstanding Lacey Act matters.\35\ Notably, the focus of the settlement
agreement was on Gibson's alleged failure to conduct sufficient due
diligence with respect to the purchase of wood originating in
Madagascar. As to the Indian ebony and rosewood that led government
agents to conduct an armed raid:
---------------------------------------------------------------------------
\35\ Letter from Jerry E. Martin to Donald A. Carr dated July 27,
2012 available at http://www2.gibson.com/News-Lifestyle/Features/en-us/
Gibson-Comments-on-Department-of-Justice-Settlemen.aspx (accessed July
14, 2013).
---------------------------------------------------------------------------
The Government and Gibson . . . agree that certain questions and
inconsistencies now exist regarding the tariff classification of ebony
and rosewood fingerboard blanks . . . Accordingly, the Government will
not undertake enforcement actions related to Gibson's future orders . .
. or imports of ebony and rosewood . . . from India, unless and until
the Government of India provides specific clarification that ebony and
rosewood fingerboard blanks are express prohibited by laws related to
Indian Foreign Trade Policy.\36\
---------------------------------------------------------------------------
\36\ Id. at 3.
---------------------------------------------------------------------------
Oddly, this final disposition of Gibson's Indian ebony and rosewood
was not mentioned in the government's celebratory press release
announcing the settlement.\37\
---------------------------------------------------------------------------
\37\ U.S. Dep't of Justice Office of Public Affairs, ``Gibson
Guitar Corp. Agrees to Resolve Investigation into Lacey Act
Violations'' (Aug. 6, 2012) available at http://www.justice.gov/opa/pr/
2012/August/12-enrd-976.html (accessed July 9, 2013).
---------------------------------------------------------------------------
E. The ``Contraband'' Problem Should Be Corrected.
In 2008, Congress amended Lacey by adding 16 U.S.C. Sec. 3374(d).
This section states that Lacey Act forfeitures of fish, wildlife or
plants are subject to CAFRA,\38\ which states (in relevant part) that
an innocent owner's interest in property shall not be forfeited under
any civil forfeiture statute.\39\ Congress enacted Sec. 3374(d) to
address compliance problems caused by the 2008 liability expansion \40\
and to cure a Ninth Circuit ruling holding that all fish, wildlife or
plants seized under the Lacey Act are ``contraband'' to which CAFRA's
innocent owner defense does not apply.\41\
---------------------------------------------------------------------------
\38\ 18 U.S.C. Sec. 981 et seq. In 2000, Congress enacted CAFRA and
created the ``innocent owner'' affirmative defense to cure the
government's ``abuses of fundamental fairness'' and to ensure that
property owners obtain adequate due process in civil forfeiture cases.
See generally Moores, Reforming The Civil Asset Forfeiture Reform Act,
51 Ariz. L. Rev. 777, 782-83 (2009) (citations omitted).
\39\ 18 U.S.C. Sec. 983(d)(1). Sections 983(d)(2) and (3) set the
criteria for proof of innocence.
\40\ As the House Report on H.R. 1497 (subsequently enacted as
Sec. 8204 of the Food, Conservation and Energy Act of 2008, Pub. L.
110-246) states: Under Lacey, the entire supply chain handling imported
plant material is held responsible for illegal acts of which they would
have no reasonable expectation to know the violation much less know the
underlying laws that exist in all foreign countries. Amending the Lacey
Act to include reaffirmation of CAFRA provides important forfeiture
liability protection for ``innocent owners''. . . . Recent case law had
effectively exempted Lacey Act forfeitures from the ``innocent owner''
defense . . . [so] the specificity of language in H.R. 1497 and
specific reference to CAFRA subsequent to the [Blue King Crab] case are
intended to clearly show that it is Congress' intent to provide
``innocent owner'' [sic] in forfeiture proceedings under the Lacey Act.
House Rep. 110-882, at 20-21; see also 42 Rutgers L. Rev. at 576-78
(discussing the ``missing'' innocent owner exception)(citations
omitted).
\41\ 18 U.S.C. Sec. 983(d)(4) states ``Notwithstanding any
provision of this subsection, no person may assert an ownership
interest under this subsection in contraband or other property that it
is illegal to possess.'' The Ninth Circuit ruled that all property
seized under Lacey was by definition ``illegal to possess'' and that
the innocent owner affirmative defense to forfeiture therefore should
be stricken. Blue King Crab, 410 F.3d at 1135-36.
---------------------------------------------------------------------------
The government denies that Lacey Act seizures are subject to
CAFRA.\42\ This is puzzling, because to do this the government renders
Sec. 3374(d) superfluous.\43\ Furthermore, there is no evidence that
punishing objectively blameless persons who act with due care better
protects fish, wildlife and plants. In a case where an importer
reasonably cannot have knowledge of illegality, the government's
position directly counters fundamental U.S. legal norms, Sec. 3374(d)
and CAFRA itself.\44\
---------------------------------------------------------------------------
\42\ See Hettenbach, supra at note 5 citing United States v.
1866.75 Board Feet and 11 Doors, More or Less., 587 F.Supp.2d 740 (E.D.
Va. 2008)(no innocent owner defense to forfeiture).
\43\ The government's position contradicts the basic canon of
statutory interpretation that Congress does not enact superfluous
provisions. See, e.g., Bailey v. United States, 516 U.S. 137, 146
(1995) (citations omitted).
\44\ 42 Rutgers L. Rev. at 578 (citations omitted); 51 Ariz. L.
Rev. 782-83 (citations omitted).
---------------------------------------------------------------------------
F. Lacey Act Performance Metrics Are Needed.
Although there is ample evidence that implementation of the 2008
Lacey Act amendments has proven to be expensive and unwieldy and
ineffective, there is no evidence that the amendments have actually
reduced the illegal logging rate. As a recent Congressional Research
Service Report points out, although five years have passed since
Congress enacted the 2008 Lacey Act amendments, the USDA still cannot
provide specific cost figures for the new requirements on legal plant
imports or ``determine whether the Act has led to a reduction in the
level of illegal logging and trafficking.''\45\ Without appropriate
performance metrics, Congress cannot evaluate the wisdom of the 2008
Lacey Act amendments or oversee the conduct of the agencies and
bureaucrats it has empowered.
---------------------------------------------------------------------------
\45\ See supra notes 7, 9-11.
---------------------------------------------------------------------------
IV. CONCLUSION.
The Lacey Act's fish, wildlife and plant conservation goals deserve
strong Congressional support. Nevertheless, Lacey Act reform is needed
and ILR urges Congress to move forward with this important work.\46\
Specifically:
---------------------------------------------------------------------------
\46\ Bipartisan actions in the 112th Congress, including the FOCUS
Act (H.R. 4171) and the RELIEF Act (H.R. 3210) suggest that the time is
right for reform. The FOCUS Act addressed over-criminalization and due
process problems by striking the foreign law references and criminal
sanctions while retaining the ``due care'' standard for civil liability
and potential forfeiture. The RELIEF Act resolved the ``contraband''
issue by ensuring CAFRA protection for innocent owners.
Congress needs to take a hard look and determine whether
the Lacey Act: (1) has an appropriate mens rea requirement as a
threshold matter; (2) adequately defines both the actus reus (guilty
act) and the mens rea of the offense in specific and unambiguous terms;
(3) clearly states whether the mens rea requirement applies to all the
elements of the offense or, if not, which mens rea terms apply to which
elements of the offense; (4) sets proper limits on enforcement
discretion; and (5) incorporates the performance metrics required for
meaningful oversight.
Congress needs to correct the Lacey Act's unduly broad
incorporation of foreign law, perhaps by specifically defining those
foreign laws that are jeopardy ``triggers.'' It should also clarify the
``due care'' defense so that Americans have fair notice of prohibited
conduct. U.S. courts, enforcement agencies and citizens all would
benefit from clear ``rules of the road.''\47\ In any event, the
Constitution and our legal traditions demand nothing less.
---------------------------------------------------------------------------
\47\ See Juszkiewicz, supra at note 8. Gibson CEO Juszkiewicz
suggests that limited government enforcement dollars are likely better
devoted to fighting illegal logging and poaching by bad actors and not
to fights with American companies that try hard to comply with the law.
Therefore, he advocates creating a compliance system that allows
businesses to know before they buy wood and other plant products
whether or not they are in compliance. Id.
---------------------------------------------------------------------------
Congress should address the ``contraband'' issue by
ensuring that CAFRA-defined ``innocent owners'' are not subject to
Lacey Act forfeiture.
We thank you for your attention to this important matter and look
forward to working with you.
______
Dr. Fleming. Thank you, Mr. Rubinstein.
Next, Mr. Larkin. You are recognized for 5 minutes.
STATEMENT OF PAUL J. LARKIN, JR.
Mr. Larkin. Thank you, Mr. Chairman. Thank you, Mr. Ranking
Member. My name is Paul Larkin. I am a senior legal fellow at
the Heritage Foundation. I want to thank you for the
opportunity to testify today. The views I express are my own,
and should not be taken as the views of the Heritage
Foundation.
In my opinion, the Lacey Act unreasonably demands that a
person who imports flora or fauna from a foreign nation, must
know, on pain of criminal liability, every law of every foreign
country in whatever form that law may take, however obscure
that law may be, and whatever language that law may be written.
That requirement is unreasonable, as a matter of criminal
justice policy, and unconstitutional, as a matter of
constitutional law.
The Lacey Act makes an essential element of a domestic
Federal crime a blank space that each and every foreign nation
can fill in as it sees fit. The Act does not identify any
specific laws that trigger criminal liability. The Act does not
limit the type of foreign laws that can trigger criminal
liability. The Act does not identify any elements that those
laws must contain, even though requirements of an act and an
intent are historic requirements in Anglo-American criminal
law.
In fact, the Lacey Act does not even require that a foreign
law be written in English. The Lacey Act does not restrict in
any manner a foreign government's power to select as law
whatever constitutional provisions, statutes, regulations,
judicial decisions, interpretive documents, or other legal
edicts it sees fit to choose. A foreign nation may also
delegate that law-making power to any body it chooses within or
outside of its own government. In sum, each foreign nation may
define the law however it wishes, and every foreign nation has
the same law-making power.
Consider the difficulties that someone would have in trying
to comply with foreign law on pain of criminal liability. Some
foreign laws may have English translations. Some will not. Some
foreign statutes may be codified in the same manner as the
United States Code. Some will not. Some foreign regulations may
be collected into their equivalent of our code of Federal
regulations. Some will not. Some foreign officials will make
their legal interpretations and decisions public and in
English. Some will not.
Foreign nations may also have very different allocations of
governmental power. Some countries will have one entity, and
not necessarily a court, that can speak authoritatively about
its own laws. Some will not. And different components of
foreign nations may alter their interpretations of their own
laws over time, perhaps nullifying the effect of prior
interpretations, and perhaps not.
In sum, the Lacey Act's standard list dynamic, open-ended
incorporation of foreign law effectively delegates law-making
authority to foreign officials who are neither legally nor
politically accountable for their actions to any supervisory
Federal official or to the public. Those features of the Act
make it a singularly unsound and unconstitutional example of
Federal criminal legislation.
There are at least four policy solutions to deal with these
problems. The first is to eliminate domestic criminal liability
for violation of a foreign law.
A second is to require that the government prove that a
person acted willfully. The Supreme Court has made clear that
the term ``willful'' requires an intentional violation of a
known legal duty. That is the interpretation the court has
given to the tax laws. Using that term in the Lacey Act would
carry through the Supreme Court's decisions in the Federal
income tax laws.
Third, authorize a defendant to raise a mistake-of-law
defense. The common law has never recognized the defense, but
that is because the common law dealt with crimes that mirrored
the contemporary moral code. That is no longer the case,
certainly not the case once you take into account regulatory
violations not only of our own domestic laws, but of foreign
lands.
Finally, require that every foreign law that could give
rise to criminal liability be identified and updated as
necessary. The Congress could take that task on itself, or the
Congress could assign that responsibility to an executive
branch agency, such as the Justice Department. That would allow
the public at least to find the laws, and to have some
opportunity to at least read the laws before they show up in an
indictment.
Thank you for your time; I am glad to answer any questions
you may have.
[The prepared statement of Mr. Larkin follows:]
Statement of Paul J. Larkin, Jr.
Mr. Chairman, Mr. Ranking Member, Members of the Subcommittee:
My name is Paul J. Larkin, Jr. I am a Senior Legal Research Fellow
at The Heritage Foundation. The views I express in this testimony are
my own and should not be construed as representing any official
position of The Heritage Foundation.
Thank you for the opportunity to testify about the criminal
enforcement provisions of the Lacey Act. In my opinion, the Act
unreasonably demands that a person who imports flora or fauna from a
foreign nation know every law of every foreign country--in whatever
form that law may take, in whatever language that law may be written,
however obscure that law may be--on pain of criminal liability. That
requirement is unreasonable as a matter of criminal justice policy and
impermissible as a matter of constitutional law.
I. The Lacey Act Unreasonably Requires Parties to Know Foreign Law on
Pain of Criminal Liability
The reach of the Lacey Act is remarkably broad. The act refers
simply to conduct done in violation of foreign ``law.'' The act does
not limit the particular foreign laws that can trigger domestic
criminal liability, specify what elements those laws must contain in
order to justify criminal punishment, or even identify what category of
actions is necessary and sufficient to constitute the criminal acts and
intent historically deemed necessary to define illegal conduct. The
Lacey Act also does not restrict in any manner a foreign government's
power to select the constitutional provisions, statutes, regulations,
judicial decisions, interpretive documents, or other legal edicts
creating the relevant ``law'' that serves as a predicate for a federal
crime. Furthermore, there is no limitation on the foreign nations whose
laws are incorporated into domestic law. Countries with a civil law
background count just as much as nations, like Great Britain, from
whence our common law arose. Finally, there is not even a requirement
that the foreign law, in whatever land and in whatever form it appears,
be written in English; the Lacey Act embraces laws written in a foreign
language. A foreign nation may define that ``law'' however it wishes
and may vest definitional power in any body it chooses, either within
or outside of the government.\1\
---------------------------------------------------------------------------
\1\ See 16 U.S.C. Sec. 3372(a)(2)(A) & (B)(i)-(iii) (2006) (``It is
unlawful for any person * * * to import, export, transport, sell,
receive, acquire, or purchase in interstate or foreign commerce (a) any
fish or wildlife taken, possessed, transported, or sold * * * in
violation of any foreign law; (b) any plant * * * (i) taken, possessed,
transported, or sold in violation of any law or regulation of * * * any
foreign law, that protects plants or that regulates--(I) the theft of
plants; (II) the taking of plants from a park, forest reserve, or other
officially protected area; (III) the taking of plants from an
officially designated area; or (IV) the taking of plants without, or
contrary to, required authorization; (ii) taken, possessed,
transported, or sold without the payment of appropriate royalties,
taxes, or stumpage fees required for the plant by any law or regulation
of any State or any foreign law; or (iii) taken, possessed,
transported, or sold in violation of any limitation * * * under any
foreign law, governing the export or transshipment of plants * * *.'').
The federal courts have construed the act to include not merely foreign
statutes, but also other forms of law, even ones that impose only civil
sanctions. See, e.g., United States v. McNabb, 331 F.3d 1228, 1239
(11th Cir. 2003) (``Regulations and other such legally binding
provisions that foreign governments may promulgate to protect wildlife
are encompassed by the phrase `any foreign law' in the Lacey Act.'');
United States v. Mitchell, 985 F.2d 1275, 1280-83 (4th Cir. 1993)
(Pakistani government orders); United States v. One Afghan . . .
Mounted Sheep, 964 F.2d 474 (5th Cir. 1992) (same); United States v.
Lee, 937 F.2d 1388, 1391-92 (9th Cir. 1991) (foreign regulations);
United States v. 594,464 Pounds of Salmon, 871 F.2d 824, 825 & n.2,
828-29 (9th Cir. 1989) (a Taiwanese board's ``announcement'' that was
not technically a ``regulation'' and imposed only a civil penalty).
---------------------------------------------------------------------------
A. The Due Process Clause Requires that the Criminal Law Be Readily
Understandable by the Average Person
The criminal law seeks to reconcile two ancient propositions.\2\
One is that everyone is presumed to know the criminal law.\3\ That
proposition makes sense for so-called ``street crimes,'' because
everyone knows that it is unlawful to murder, rob, rape, or swindle
others. That proposition, however, no longer makes sense as a general
rule, given the size of contemporary federal and state criminal codes.
The other proposition is that the average person must be able to find,
read, and understand the criminal law.\4\ Accessibility and clarity are
not just matters of good criminal justice policy; they are
constitutional commands.
---------------------------------------------------------------------------
\2\ See Edwin Meese III & Paul J. Larkin, Jr., Reconsidering the
Mistake of Law Defense, 102 J. Crim. L. & Criminology 725 (2012).
\3\ See, e.g., Barlow v. United States, 32 U.S. (7 Pet.) 404, 411
(1833) (``It is a common maxim, familiar to all minds, that ignorance
of the law will not excuse any person, either civilly or criminally * *
*.''); Oliver Wendell Holmes, The Common Law 40-41 (1881) (Reprint
2009); Wayne R. LaFave, Criminal Law Sec. 5.6, at 305-18 (5th ed.
2010).
\4\ See, e.g., FCC v. Fox Television Stations, Inc., 132 S. Ct.
2307, 2317 (2012) (collecting cases); Anthony G. Amsterdam, Note, The
Void-for-Vagueness Doctrine in the Supreme Court, 109 U. Pa. L. Rev. 67
(1960) (discussing the historical development of the void-for-vagueness
doctrine).
---------------------------------------------------------------------------
One of the most elementary requirements of criminal and
constitutional law is that the government must offer the public
adequate notice of what the law forbids before a person can be held
liable for violating a criminal statute.\5\ The Latin phrases ``Nullum
crimen sine lege'' (``There is no crime absent a written law.'') and
``Nulla poena sine lege'' (``There is no penalty absent a written
law.'') stand for the settled propositions that there can be no crime
or criminal punishment without a positive law, which means that no one
can be punished for doing something that was not prohibited by law at
the time that he or she acted.\6\ Moreover, unlike the laws of
Caligula, which were published in a location making them
inaccessible,\7\ criminal laws must be available to the public so that
they can be found and read.\8\ Finally, a statute that is unduly vague,
so indefinite that the average person is forced to guess at its
meaning, cannot serve as the basis for a criminal charge. The ``void-
for-vagueness'' doctrine, embodied in the Fifth Amendment Due Process
Clause, enforces the principal that no one may be held liable under a
criminal law that the average person cannot understand.\9\ Those
principles are essential to the very concept of ``law'' and are
enshrined in what we know as ``due process of law.''
---------------------------------------------------------------------------
\5\ See, e.g., Rogers v. Tennessee, 532 U.S. 451, 459 (2001)
(``core due process concepts of notice, foreseeability, and, in
particular, the right to fair warning as those concepts bear on the
constitutionality of attaching criminal penalties to what previously
had been innocent conduct'') (emphasis deleted).
\6\ See Jerome Hall, Nulla Poena Sine Lege, 47 Yale L.J. 165, 165,
178 (1937).
\7\ See Screws v. United States, 325 U.S. 91, 96 (1945) (plurality
opinion) (``To enforce such a [vague] statute would be like sanctioning
the practice of Caligula, who `published the law, but it was written in
a very small hand, and posted up in a corner, so that no one could make
a copy of it.'''); Livingston Hall & Selig J. Seligman, Mistake of Law
and Mens Rea, 8 U. Chi. L. Rev. 641, 650 n.39 (1940) (``[W]here the law
was not available to the community, the principle of `nulla poena sine
lege' comes into play.'').
\8\ That rule does not rest on the fiction that people will read
the penal code before acting. Instead, the law requires that, were
someone to make that effort, the criminal statutes must be written with
sufficient clarity that a reader could understand them. See McBoyle v.
United States, 283 U.S. 25, 27 (1931).
\9\ See Meese & Larkin, supra note 2, at 760-61.
---------------------------------------------------------------------------
The void-for-vagueness doctrine is particularly relevant to the
Lacey Act. The Supreme Court has made it clear that ``[n]o one may be
required at peril of life, liberty or property to speculate as to the
meaning of penal statutes. All are entitled to be informed as to what
the State commands or forbids.''\10\ The Court also has devised a
minimum standard of clarity. ``The constitutional requirement of
definiteness is violated by a criminal statute that fails to give a
person of ordinary intelligence fair notice that his contemplated
conduct is forbidden by the statute.''\11\ Accordingly, ``a statute
which either forbids or requires the doing of an act in terms so vague
that men of common intelligence must necessarily guess at its meaning
and differ as to its application violates the first essential of due
process of law.''\12\ Note the terms that the Court used to describe
who must be able to understand what a criminal statute means: ``all,''
``men of common intelligence,'' and ``a person of ordinary
intelligence''--not lawyers, law professors, or judges.
---------------------------------------------------------------------------
\10\ Lanzetta v. New Jersey, 306 U.S. 451, 453 (1939) (footnote
omitted).
\11\ United States v. Harriss, 347 U.S. 612, 617 (1954).
\12\ Connally v. Gen. Constr. Co., 269 U.S. 385, 391 (1926).
---------------------------------------------------------------------------
All that is settled law. What is controversial, however, is whether
the two propositions that I mentioned at the outset can be reconciled
when criminal liability rests on a violation of foreign law. In my
opinion, they cannot.
B. It is Unreasonable to Require Parties to Know Foreign Law
Courts and commentators have justified the presumption that
everyone knows the criminal law on several grounds. One is the
proposition that everyone knows the laws in the locale in which he or
she resides.\13\ Another rationale is the fear that a contrary rule
would eviscerate the ability of the law to police the public's
conduct.\14\ Those defenses made sense at common law, because the few
criminal laws that existed at the time reflected contemporary mores,
and violations were recognized as morally blameworthy.\15\ Today,
however, the proposition that everyone knows the law is not just a
fiction \16\ or a ``legal cliche''\17\; it is an absurdity. The
criminal law no longer merely expresses societal condemnation of
inherently nefarious acts that everyone knows are wrong (e.g., murder),
so-called malum in se offenses. It also regulates the conduct of
individuals by making it a crime to commit a variety of acts that are
unlawful only because Congress has said so, crimes known as malum
prohibitum offenses.\18\ For more than a century, legislatures have
used the criminal law to enforce regulatory regimes.\19\ That is part
of the explanation why there are more than 4,500 federal criminal
statutes.\20\ Many recent federal statutes create regulatory regimes
and use the criminal law to implement those programs,\21\ and there
could be more than 300,000 relevant regulations.\22\
---------------------------------------------------------------------------
\13\ See, e.g., Cheek v. United States, 498 U.S. 192, 199 (1991)
(the rule that ignorance of the law is no defense is ``[b]ased on the
notion that the law is definite and knowable'').
\14\ See, e.g., Holmes, supra note 3, at 41.
\15\ See Hall & Seligman, supra note 7, at 644 (``[T]he early
criminal law appears to have been well integrated with the mores of the
time, out of which it arose as `custom.' ''); John Salmond,
Jurisprudence 426 (8th ed. 1930) (``The common law is in great part
nothing more than common honesty and common sense. Therefore although a
man may be ignorant that he is breaking the law, he knows very well in
most cases that he is breaking the rule of right.'').
\16\ Jerome Hall, Ignorance and Mistake in Criminal Law, 33 Ind. L.
Rev. 1, 14 (1957).
\17\ Flores-Figueroa v. United States, 556 U.S. 646, 652 (2009).
\18\ See LaFave, supra note 3, Sec. 1.3(f), at 14-15 (defining
malum in se and malum prohibitum offenses).
\19\ See Gerald E. Lynch, The Role of Criminal Law in Policing
Corporate Misconduct, 60 Law & Contemp. Probs. 23, 37 (1997)
(``Legislatures, concerned about the perceived weakness of
administrative regimes, have put criminal sanctions behind
administrative regulations governing everything from interstate
trucking to the distribution of food stamps to the regulation of the
environment.''); see also, e.g., Lawrence M. Friedman, Crime and
Punishment in American History 282-83 (1993); Graham Hughes, Criminal
Omissions, 67 Yale L.J. 590, 595 (1958); Sanford Kadish, Some
Observations on the Use of Criminal Sanctions in the Enforcement of
Economic Regulations, 30 U. Chi. L. Rev. 423, 424-25 (1963); Francis
Bowles Sayre, Public Welfare Offenses, 33 Colum. L. Rev. 55, 63-67
(1933).
\20\ See, e.g., John Baker, Jr., Heritage Found. Legal Memorandum
No. 26, Revisiting the Explosive Growth of Federal Crimes (June 16,
2008), available at http://www.heritage.org/research/reports/2008/06/
revisiting-the-explosive-growth-of-federal-crimes.
\21\ See Meese & Larkin, supra note 2, at 739-44.
\22\ One Nation, Under Arrest xv-xvi (Paul Rosenzweig ed., 2d ed.
2013).
---------------------------------------------------------------------------
Given this reality, it is dishonest to presume that anyone, much
less everyone, knows everything that the federal penal code outlaws
today. The Lacey Act exacerbates the notice problem by making it a
crime to violate a foreign law, whether that foreign law is criminal,
civil, or regulatory. That requirement makes unreasonable demands of
the average person. If the average person cannot keep track of
regulatory offenses defined by American law, they certainly cannot keep
track of regulatory offenses defined by hundreds of foreign nations.
Not even lawyers have that knowledge. In fact, as the distinguished
academic and late Harvard Law School professor William Stuntz put it:
``Ordinary people do not have the time or training to learn the
contents of criminal codes; indeed, even criminal law professors rarely
know much about what conduct is and isn't criminal in their
jurisdictions.''\23\
---------------------------------------------------------------------------
\23\ William J. Stuntz, Self-Defeating Crimes, 86 Va. L. Rev. 1871,
1871 (2000); see also, e.g., Glenn Harlan Reynolds, Ham Sandwich
Nation: Due Process When Everything Is a Crime, 113 Colum. L. Rev.
Sidebar 102 (2013) (``[A]ny reasonable observer would have to conclude
that actual knowledge of all applicable criminal laws and regulations
is impossible, especially when those regulations frequently depart from
any intuitive sense of what `ought' to be legal or illegal. Perhaps
placing citizens at risk in this regard constitutes a due process
violation; expecting people to do (or know) the impossible certainly
sounds like one.'').
---------------------------------------------------------------------------
Most people learn the criminal code through an informal process.
Religious precepts, morals, customs, traditions, and laws are the glue
that holds society together and keep it from becoming the war of all
against all. We learn them from family members, friends, schoolmates,
co-workers, the news media, and others, at home, church, school, work,
and play. Not surprisingly, what people learn in this nation are the
rules, policies, and mores of this nation. Just as the French,
Argentineans, Laotians, and Senegalese learn the rules demanded of them
in their own countries, in this country what children, adolescents, and
adults learn are the laws and mores of America.
There is no empirical basis for assuming that Americans will know
not only all domestic criminal, civil, and regulatory laws, policies,
and customs, but also the laws, policies, and customs in a foreign
land. Yes, Americans will know that it is illegal to murder, rape, rob,
burgle, and swindle foreign citizens, but few, if any, will be
conversant with the intricacies of a foreign nation's regulatory code.
The Lacey Act, however, imposes criminal liability for violations of
such laws.
Laws come in all forms (e.g., statutes vs. regulations); in all
shapes and sizes (e.g., the Sherman Act vs. the Clean Air Act); and in
all degrees of comprehensibility (e.g., the law of homicide vs. the
Resource Conservation and Recovery Act). Different bodies have
authority to create laws (e.g., legislatures vs. agencies); to
interpret them (e.g., the President or an agency's general counsel);
and to enforce them (e.g., city, state, and federal law enforcement
officers and prosecutors). And that is just in America. Including the
laws of nearly 200 foreign nations just makes a bad situation worse.
That is not all. There are additional difficulties that an American
must confront in complying with foreign regulatory law. Some foreign
laws may have English translations; some will not. Some foreign
statutes may be codified in the same manner as the United States Code;
some will not. Some foreign regulations may be collected into their
equivalent of our Code of Federal Regulations; some will not. Some
foreign statutes and regulations may have commentary that is publicly
available in the same manner as our congressional committee reports and
Federal Register notices; some will not. Some foreign officials and
judges will make their decisions public and in English; some will not.
Foreign nations also may have very different allocations of
governmental power, bureaucracies, and enforcement personnel. Some
countries will have one entity--and not necessarily a court--that can
speak authoritatively about its own laws; some will not. And different
components of foreign nations may alter their interpretations of their
laws over time, perhaps nullifying the effect of a prior
interpretation, or perhaps not.
It is unreasonable to assume that the average American citizen can
keep track of foreign laws and regulations, as well as the (potentially
multifarious) official government interpretations of them, let alone do
so by himself or herself without a supporting cast of lawyers--that is,
assuming that the average citizen could find or afford a lawyer
knowledgeable about the intricacies of a particular foreign nation's
laws. The vast majority of domestic lawyers and judges are not familiar
with foreign law, let alone qualified as experts.
C. It is Unconstitutional to Hold Parties Criminally Liable for
Violating Foreign Law
In any event, the relevant due process standard is not whether the
average lawyer knows the criminal law. The Supreme Court has made it
clear on numerous occasions that the criminal law must be clear not to
the average lawyer, but to the average person. Even if there were
lawyers who could readily answer intricate questions of foreign law--
and would be willing to do so for free--the criminal law is held to a
higher standard. Unless men and women ``of common intelligence'' can
understand what a law means, that law might as well not exist--and,
under our Constitution, no one can be convicted for violating it.\24\
---------------------------------------------------------------------------
\24\ See, e.g., United States v. Harriss, 347 U.S. 612, 617 (1954);
supra p. 3.
---------------------------------------------------------------------------
A 2012 paper published by the Union of Concerned Scientists
identifies some of the problems that men and women ``of common
intelligence'' must face. That paper stated that foreign nations may
have ``complex systems for legal timber extraction [that] motivate
working around them,'' and timber companies ``operate in countries that
often have conflicting and inconsistent laws * * *.''\25\ Those
statements are tantamount to a confession that the Lacey Act should
not--and cannot--be enforced via the criminal law. A person cannot be
convicted in this country for an alleged violation of ``complex,''
``conflicting[,] and inconsistent'' laws in the U.S. Code. If so, there
is no persuasive reason to hold a person criminally liable for
violating complex, conflicting, and inconsistent law in a foreign code.
The Union of Concerned Scientists paper does not explain why Americans
should be subject to a lower threshold of criminal liability for
violating a foreign law than a domestic law, and no sound justification
leaps to mind.
---------------------------------------------------------------------------
\25\ Patricia Elias, Logging and the Law: How the U.S. Lacey Act
Helps Reduce Illegal Logging in the Tropics 5 (Apr. 2012), available at
http://www.ucsusa.org/assets/documents/global_warming/illegal-logging-
and-lacey-act.pdf. In 2008, Congress added plants to the category of
potentially illegal imports. Acting at the behest of a coalition of
environmental organizations and the domestic timber industry, Congress
amended the act as part of a far larger farm policy bill, the Food,
Conservation, and Energy Act of 2008, Pub. L. No. 110-234, 122 Stat.
923 (2008), in order to include plants taken or processed and imported
in violation of a foreign nation's law. See Francis G. Tanzcos Note, A
New Crime--Possession of Wood: Remedying the Due Care Double Standard
of the Revised Lacey Act, 42 Rutgers L.J. 549 (2011). The rationale was
the desire to protect foreign ecosystems and the domestic timber
industry by targeting an alleged billion-dollar black market in foreign
logging. See H.R. Rep. No. 110-627, 110th Cong. (2008); Kristina
Alexander, Cong. Res. Serv., The Lacey Act: Protecting the Environment
by Restricting Trade 2, 6 (Apr. 12, 2012); Tanzcos, supra, at 549-50 &
n.4.
---------------------------------------------------------------------------
The concept that the public should be able to understand the
criminal law is the moral foundation for the proposition that
``Ignorance of the law is no excuse.'' Take away the practical ability
to understand the criminal law and you take away the moral
justification for using it to punish offenders. Take away the moral
justification, and you take away the legitimacy of our criminal justice
system.
This is not an abstract problem. Consider the case of United States
v. McNab.\26\ Abner Schoenwetter and several others were convicted of
several offenses in connection with their importation of Caribbean
spiny lobsters from Honduras. The federal government charged
Schoenwetter and the others with violating the Lacey Act by importing
Honduran lobsters in violation of Honduran law: The lobsters were too
small to be taken under Honduran law; some contained eggs and so could
not be exported; and the lobsters were packed in boxes rather than in
plastic as required by Honduran law. The jury convicted the defendants,
and both the district court and the U.S. Court of Appeals for the
Eleventh Circuit upheld the convictions. The district court relied on
the opinions of officials in the Honduran agriculture department that
the McNab defendants violated Honduran law. The appellate court,
however, refused to give any weight to the opinions of a Honduran
court, the Honduran embassy, and the Honduran Attorney General that the
regulations in question were invalid under Honduran law and could not
serve as predicate violations under the Lacey Act. The result was that
Schoenwetter was sentenced to eight years in a federal prison--a term
longer than what some violent criminals spend behind bars--for foreign
regulatory offenses that, according to key Honduran officials, did not
even violate foreign law. The McNab case illustrates why no one should
be held accountable under this country's law for violating a foreign
nation's law
---------------------------------------------------------------------------
\26\ 331 F.3d 1228 (11th Cir 2003).
---------------------------------------------------------------------------
The purpose of the criminal law should be to separate evil-minded
and evil-doing offenders from people who are, at worst, negligent, and,
at best, morally blameless. In most cases, the law is clear, but the
facts are in dispute. But if you add complex, conflicting, and
inconsistent foreign laws into the mix, both the facts and the law are
in dispute. There is no way to separate the morally blameworthy from
the morally blameless in a stew like that.\27\
---------------------------------------------------------------------------
\27\ Some Lacey Act violations are felonies; others, misdemeanors.
It is no argument that Lacey Act violations are simply misdemeanors and
therefore do not create a serious risk of long-term imprisonment.
Individual misdemeanor sentences can add up quickly. The federal
government can charge each Lacey Act violation as a separate offense,
and a judge can impose a separate one-year sentence for each
conviction. Consider a company, like Gibson Guitar, that imports
dozens, scores, or hundreds of guitar frets made from wood grown
overseas. The government doubtless could find some foreign law that
Gibson or an intermediary has violated or some required form that has
not been properly filled out or filed. The government then could charge
Gibson Guitar with a separate violation for each guitar fret. Or
consider a fisherman, like Abner Schoenwetter, who hauls in a net full
of lobsters. If he takes in 500 lobsters at one time, he exposes
himself to 500 years' imprisonment per haul.
---------------------------------------------------------------------------
II. The Constitution Prohibits the Delegation of Substantive Lawmaking
Authority to Foreign Nations
The Lacey Act makes the operative element of a domestic federal
crime a blank space that any and every foreign nation can fill in as it
chooses. As explained above and as illustrated by the McNab case, the
Lacey Act's delegation of substantive criminal lawmaking authority to a
foreign government renders the act subject to challenge under the void-
for-vagueness doctrine. That alone is sufficient to condemn the Lacey
Act on prudential and constitutional grounds.
But there are three additional, related constitutional problems
with the Lacey Act delegation. First, the act defines no ``intelligible
principle'' for a foreign government or a federal court to use in
deciding what laws should trigger a criminal prosecution, in violation
of the Article I delegation doctrine. Second, the act delegates federal
lawmaking power to a party who has not been appointed in compliance
with the Article II Appointments Clause. And third, the Fifth Amendment
Due Process Clause forbids delegation of substantive lawmaking power to
foreign officials. Together, Article I, Article II, and the Due Process
Clause reveal that Congress cannot delegate standardless, substantive
lawmaking authority to a party that is neither legally nor politically
accountable for its actions to supervisory federal officials or to the
public.
A. The Article I Bicameralism and Presentment Requirements
The Framers required that, in order to create a ``Law,'' each
chamber of Congress pass the identical bill and the President must sign
it (or both houses repass it by a two-thirds vote following a
veto).\28\ The bicameralism and presentment requirements force the
Senate, the House of Representatives, and the President to take a
public position on what they find necessary to regulate society and on
the conduct that they find it reasonable to outlaw, encourage, support,
or protect. The requirement that Congress and the President collaborate
to pass a ``Law'' also enables the electorate to decide whether
Senators, Representatives, and the President should remain in office or
be turned out every two, four, or six years. The Article I lawmaking
procedure therefore not only offers the opportunity for reasoned
consideration and debate over the merits of proposed legislation, but
also--and perhaps more importantly--provides voters with a basis for
holding elected federal officials politically accountable for the
decisions they make.
---------------------------------------------------------------------------
\28\ See INS v. Chadha, 462 U.S. 919 (1983); cf. Clinton v. City of
New York, 542 U.S. 417 (1988) (Article I requires the same process in
order to repeal or amend an existing law).
---------------------------------------------------------------------------
At the same time, the Supreme Court has permitted Congress to
delegate to federal administrative agencies the ability to adopt
implementing rules and regulations that have the force and effect of
law. With only two exceptions now almost 80 years old,\29\ the Supreme
Court has upheld over an Article I challenge every act of Congress
delegating authority to a federal agency to implement a statute through
rules.\30\ In each case, the Court upheld the delegation on the ground
that Congress had identified an ``intelligible principle'' for the
agency to use in determining how to exercise its delegated but limited
authority.\31\
---------------------------------------------------------------------------
\29\ See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S.
495 (1935); Panama Refining Co. v. Ryan, 293 U.S. 388 (1935).
\30\ See, e.g., Whitman v. Am. Trucking Ass'ns, 531 U.S. 457
(2001); Mistretta v. United States, 489 U.S. 361 (1989); Yakus v.
United States, 321 U.S. 414 (1944); J.W. Hampton, Jr. & Co. v. United
States, 276 U.S. 394 (1928); United States v. Grimaud, 220 U.S. 506
(1911); see also INS v. Chadha, 462 U.S. 919, 953 n.16 (1983)
(distinguishing administrative rulemaking from the Article I lawmaking
process because agencies ``cannot reach beyond the limits of the
statute'' creating them'').
\31\ See, e.g., Whitman, 531 U.S. at 472 (quoting J.W. Hampton, 276
U.S. at 409).
---------------------------------------------------------------------------
The Lacey Act, however, contains no principle of any kind limiting
the ``law'' a foreign nation may adopt that triggers the act. The act
does not specify what foreign laws trigger criminal liability, does not
limit a foreign nation's ability to make that decision, does not
identify any factors that a federal court should consider in deciding
what is a foreign ``law,'' and does not even say how a federal court
should go about selecting among conflicting interpretations of foreign
law offered by different foreign agencies.
The Lacey Act simply incorporates whatever ``law'' a foreign nation
has adopted and whatever interpretation that nation may place on its
``law.''\32\ The act offers ``literally no guidance for the exercise of
discretion'' cents a foreign nation or a federal court.\33\ Even under
the most charitable reading of the Supreme Court's cases, the Lacey Act
violates Article I.
---------------------------------------------------------------------------
\32\ See Michael C. Dorf, Dynamic Incorporation of Foreign Law, 157
U. Pa. L. Rev. 103, 105 (2008) (``dynamic incorporation does delegate
lawmaking authority'').
\33\ See, e.g., Whitman, 531 U.S. at 474.
---------------------------------------------------------------------------
Several circuit courts have rejected Article I nondelegation
challenges to the Lacey Act.\34\ Their rationales for rejecting that
argument, however, are utterly unpersuasive.
---------------------------------------------------------------------------
\34\ See, e.g., United States v. Lee, 937 F.2d 1388, 1393-94 (9th
Cir. 1991); United States v. Rioseco, 845 F.2d 299 (11th Cir. 1988);
United States v. 594,464 Pounds of Salmon, 871 F.2d 824, 829-30 & n.9
(9th Cir. 1989); United States v. Molt, 599 F.2d 1217, 1219 n.1 (3d
Cir. 1979); cf. United States v. Bryant, 716 F.2d 1091, 1094-95 (6th
Cir. 1983) (rejecting argument that the act impermissibly delegates
federal lawmaking authority to the states); Rupert v. United States,
187 F. 87, 90-91 (8th Cir. 1910) (same).
---------------------------------------------------------------------------
The Third Circuit concluded that the Lacey Act treats the violation
of a foreign law as ``simply a fact entering into the description of
the contraband article.'' \35\ The text of the Lacey Act, however,
makes proof that a defendant violated foreign law an essential element
of an offense by making it a crime to import flora or fauna in
violation of any foreign law. The most natural reading of the text is
that a violation of a foreign law is a predicate for a violation of the
act.
---------------------------------------------------------------------------
\35\ See United States v. Molt, 599 F.2d 1217, 1219 n.1 (3d Cir.
1979) (``The Act does not delegate legislative power to foreign
governments, but simply limits the exclusion from the stream of foreign
commerce to wildlife unlawfully taken abroad. The illegal taking is
simply a fact entering into the description of the contraband article *
* *.'').
---------------------------------------------------------------------------
The Ninth Circuit determined that a foreign law violation is not an
element of the offense, but is simply a matter for the government to
consider in its exercise of prosecutorial discretion.\36\ Nothing in
the text of the Lacey Act, however, remotely hints that the statute is
designed to identify instances in which the government may or should
exercise prosecutorial discretion. The term ``discretion'' can be found
nowhere in the Lacey Act, and for good reason. It has been settled law
for more than a century that the government enjoys discretion over
prosecutorial decisions,\37\ so it makes no sense to read the Lacey Act
as granting or reaffirming that principle.
---------------------------------------------------------------------------
\36\ See United States v. 594,464 Pounds of Salmon, 871 F.2d 824,
830 (9th Cir. 1989) (``[T]he Act does not call for the assimilation of
foreign law into federal law. Rather, the Act merely provides that once
a violation of a foreign law has occurred, that fact will be taken into
account by the government official entrusted with enforcement.'').
\37\ See The Confiscation Cases, 74 U.S. (7 Wall.). 454, 457
(1868).
---------------------------------------------------------------------------
The Eleventh Circuit held that Congress decided what should be made
a crime.\38\ But that only begins the analysis. Congress said nothing
about the type of laws that are incorporated (civil vs. criminal) or
the form that those laws may take (statutes vs. regulations vs.
judicial decisions). Congress punted those decisions to foreign
nations, empowering them to make every decision regarding what ``law''
incorporated by the Lacey Act. That is what Article I forbids.
---------------------------------------------------------------------------
\38\ See United States v. Rioseco, 845 F.2d 299, 302 (11th Cir.
1988) (citations omitted) (``Congress has made it a United States crime
to take, to sell, or to transport wildlife taken in violation of any
foreign law relating to wildlife . . .. Congress, itself, has set out
the penalties for violation of these Lacey Act provisions . . .. Thus,
Congress has delegated no power, but has itself set out its policies
and has implemented them.''); accord United States v. Guthrie, 50 F.3d
936 (11th Cir. 1995) (following Rioseco).
---------------------------------------------------------------------------
B. The Article II Appointments Clause
The Constitution contemplates that Congress may create executive
departments and give the officials who staff those offices the power
necessary to play their roles in a national government.\39\ The Article
II Appointments Clause is a critical element in the proper operation of
government because it governs the selection of any person who exercises
delegated federal authority.\40\ By limiting the parties who may
appoint federal officials, the Appointments Clause is a structural
protection against the arbitrary exercise of federal power.\41\ The
clause guarantees that only parties who have been properly appointed
and therefore (presumably) properly vetted can exercise such
authority.\42\ In addition, the clause ensures that any official
exercising federal power can be removed for misconduct, incompetence,
or for other reasons.\43\ Finally, the requirement that a specific
individual be appointed consistently with Article II ensures that there
always will be a person with authority to make a final agency
determination that can be challenged in an Article III court.\44\
---------------------------------------------------------------------------
\39\ See, e.g., U.S. Const. art. II, Sec. 2, cl. 1 (the Opinion
Clause); id. cl. 2 (the Appointments Clause). For instance, Congress
has the power to create ``Post Offices and postal Roads,'' U.S. Const.
art. I, Sec. 8, cl. 7, but the Framers did not expect that the
President would deliver the mail.
\40\ See, e.g., Buckley v. Valeo, 424 U.S. 1, 126 (1976) (``[A]ny
appointee exercising significant authority pursuant to the laws of the
United States is an `Officer of the United States,' and must,
therefore, be appointed in the manner prescribed by [the Appointments
Clause].'').
\41\ See, e.g., Freytag v. Comm'r, 501 U.S. 868, 880 (1991) (``The
Appointments Clause prevents Congress from dispensing power too freely;
it limits the universe of eligible recipients of the power to
appoint.'').
\42\ See, e.g., Pub. Citizen v. U.S. Dep't of Justice, 491 U.S.
440, 483-84 & n.4 (1989) (Kennedy, J., concurring) (quoting The
Federalist No. 76, at 455-56 (A. Hamilton) (Clinton Rossiter, ed.,
1961)).
\43\ See, e.g., Free Enterprise Fund v. PCAOB, 130 S. Ct. 3138,
3146-47 (2010).
\44\ The likely vehicle would be a lawsuit brought under the
Administrative Procedure Act, 5 U.S.C. Sec. 704 (2006). See, e.g.,
Sackett v. EPA, 132 S. Ct. 1367, 1371-72 (2012).
---------------------------------------------------------------------------
The Lacey Act, however, does not vest lawmaking authority in a
federal official. Instead, the statute delegates that power to a
foreign nation. That difference is critical. The Supreme Court's
decisions rejecting Article I challenges to the delegation of federal
authority involved a handoff of federal lawmaking power to officials in
the executive branch who must be appointed to their positions in
compliance with the Appointments Clause. Article II forbids Congress
from vesting federal lawmaking power in any person not appointed in
compliance with that provision. By definition that prohibition applies
to foreign officials, who are selected in accordance with the laws of
their own nations, not ours. The Lacey Act effectively hands a portion
of the federal lawmaking power over to a foreign state that is
unaccountable to any branch of the federal government or to the
American public. In so doing the Lacey Act not only disrupts the
carefully balanced federal scheme for allocating governmental
authority, but also deprives the electorate of information vital to
hold members of Congress and the President politically accountable for
their actions and those of their appointees. As far as Article II of
the Constitution is concerned, delegating federal government authority
to a foreign official is not materially different from delegating
lawmaking authority to a private party. Article II does not permit that
type of delegation.
C. The Fifth Amendment Due Process Clause
The Due Process Clause also forbids the delegation of substantive
lawmaking authority to a private party. The Supreme Court has resolved
several cases in which a state or the federal government has delegated
governmental authority of one type or another to just such parties. For
example in Eubank v. City of Richmond \45\ the municipality passed an
ordinance, enforceable by a fine, authorizing parties who owned two-
thirds of the property on any street to establish a building line
barring further house construction past the line and requiring existing
structures to be modified to conform to that line. The Supreme Court
ruled that the ordinance violated the Due Process Clause because it
created no standard for the property owners to use, permitting them to
act for their self-interest or even arbitrarily.\46\ In two later
cases--Washington ex rel. Seattle Title Trust Co. v. Roberge,\47\ and
Carter v. Carter Coal Co.\48\--the Court relied on Eubank in ruling
that those laws also unconstitutionally delegated standardless
government authority to private parties.\49\ Eubank, Roberge, and
Carter Coal therefore stand for the proposition that it is
impermissible to vest governmental authority in private parties who are
neither legally nor politically accountable to other government
officials or to the electorate.
---------------------------------------------------------------------------
\45\ 226 U.S. 137 (1912).
\46\ Id. at 140-44.
\47\ 278 U.S. 116 (1928). In Roberge, a trustee of a home for the
elderly poor sought to obtain a permit to enlarge the facility to allow
additional parties to reside there. A Seattle zoning ordinance limited
buildings in the relevant vicinity to single-family homes, public and
certain private schools, churches, parks, and the like, but empowered
the city to grant a zoning variance if at least one-half of the nearby
property owners consented. Id. at 50-51 & n. 1. The city building
superintendent denied the permit because the adjacent property owners
had not consented to the variance, and the trustee sued. Relying on
Eubank, the Court held that, while zoning ordinances are generally
valid, the Seattle ordinance was unconstitutional as applied in those
circumstances because it enabled the nearby property owners to deny a
variance for their own, capricious reasons. Id. at 121-22.
\48\ 298 U.S. 238 (1936). Carter Coal involved delegation challenge
to the Bituminous Coal Conservation Act of 1935, ch. 824, 49 Stat. 991
(1935). The act authorized local coal district boards to adopt a code
fixing agreed-upon minimum and maximum prices for coal. The act also
allowed producers of more than two-thirds of the annual tonnage of coal
and a majority of mine workers to set industry-wide wage and hour
agreements. Shareholders of other coal producers argued that the act
unlawfully delegated federal power to private parties. Relying on
Eubank and Roberge (and A.L.A. Schechter Poultry Co. v. United States,
295 U.S. 495 (1935), which held invalid a similar delegation of
authority under the National Industrial Recovery Act, ch. 90, 48 Stat.
195 (1933)), the Supreme Court held that the act vested federal power
in the hands of a party interested in the outcome of a business
transaction. 298 U.S. at 311.
\49\ See also City of Eastlake v. Forest City Enters., Inc., 426
U.S. 668 (1976) (noting and distinguishing the Eubank and Roberge cases
without criticizing them or suggesting that they no longer are good
law).
---------------------------------------------------------------------------
In other private delegation cases--such as Cusak v. Chicago,\50\
New Motor Vehicle Bd. v. Fox Co.,\51\ and Hawaii Housing Auth. v.
Midkiff \52\--the Supreme Court upheld the vesting of state authority
in private parties. The laws at issue there, however, left final
decisionmaking authority in the hands of a state official.\53\ The
Lacey Act, by contrast, leaves it entirely up to a foreign nation to
decide what it will deem a ``law.'' The decisions in Cusak, New Motor
Vehicle Bd., and Midkiff therefore do not justify the delegation that
the Lacey Act accomplishes.
---------------------------------------------------------------------------
\50\ 242 U.S. 526 (1917).
\51\ 439 U.S. 96 (1978).
\52\ 467 U.S. 229 (1984).
\53\ In Cusak, a Chicago ordinance prohibited the erection of
billboards in residential communities without the consent of a majority
of the residents on both sides of the relevant street. 242 U.S. at 527.
The Court distinguished Eubank on the ground that the Richmond
ordinance allowed a majority of local residents to impose a
restriction, while the Chicago ordinance allowed a majority of local
residents to lift an otherwise valid prohibition. Id. at 527, 531. New
Motor rejected a due process delegation challenge to a state law
directing a state agency to delay vehicle franchise establishments and
locations when an existing dealer objects. 439 U.S. at 108-09. Relying
on New Motor, Midkiff rejected the argument that due process prohibits
a state from allowing private parties to initiate the eminent domain
condemnation process. 467 U.S. at 243 n.6.
---------------------------------------------------------------------------
III. Solutions For Those Problems
There are some solutions for those problems.\54\
---------------------------------------------------------------------------
\54\ See, e.g., Meese & Larkin, supra note 2, at 738-83; Paul J.
Larkin, Jr., A Mistake of Law Defense as a Remedy for
Overcriminalization, 26 A.B.A.J. Criminal Justice 10 (Spring 2013);
Paul J. Larkin, Jr., ``The Injustice of Imposing Domestic Criminal
Liability for a Violation of Foreign Law,'' The Heritage Found., Legal
Memo. No. 94 (June 12, 2013), available at
http://thf_media.s3.amazonaws.com/2013/pdf/lm94.pdf (last visited June
13, 2013).
---------------------------------------------------------------------------
A. Eliminate Domestic Criminal Liability for a Violation of Foreign Law
The first, best, and easiest to implement is to eliminate domestic
criminal liability for a violation of a foreign law. If no one can be
expected to or should be required to know foreign law, there is no need
for a criminal statute exposing anyone to that liability. Tort and
administrative remedies can and should be sufficient remedies.
B. Require the Government to Prove that a Person Acted ``Willfully''
A second solution is to require the government to prove that the
defendant acted ``willfully.'' That requirement ensures that the
criminal law reaches only evil-minded individuals, those who knew what
foreign law prohibited and who intended to violate it nonetheless.
C. Adopt a Mistake of Law Defense
A third solution is to apply a mistake of law defense. A mistake of
law defense would exonerate a person who reasonably believed that what
he or she did was not a crime. Imposing criminal liability in those
circumstances would unjustly punish a morally blameless individual.
D. Identify the Foreign Laws
Finally, Congress could identify and update as necessary the
specific foreign ``laws'' that trigger criminal liability or could
direct the Justice Department to do so.
Conclusion
The question for this hearing is not whether the federal government
should assist foreign governments enforce their own domestic laws,
whether logging occurs overseas in violation of some foreign law, or
whether there are domestic economic benefits or worldwide environmental
gains from limiting the importation of foreign timber and reducing
deforestation. The relevant issue is whether it is prudent and
constitutional for this nation to use the Lacey Act to attempt to
accomplish those objectives via the criminal process. The answer is
``No.'' The Lacey Act asks far too much of lawyers, law professors, and
judges--let alone the average person. The open-ended, dynamic,
standardless incorporation of foreign law enforced by criminal
penalties is unsound as a matter of criminal justice policy and
impermissible as a matter of constitutional law.
______
Dr. Fleming. Thank you, Mr. Larkin.
And finally, Mr. Kamenar, you are recognized for 5 minutes.
STATEMENT OF PAUL D. KAMENAR, ESQ., ATTORNEY AT LAW
Mr. Kamenar. Thank you, Mr. Chairman, Mr. Ranking Member,
members of the Subcommittee. My name is Paul Kamenar, I am a
Washington, D.C. lawyer and legal public policy advisor with
over 35 years experience litigating Federal cases in the
Supreme Court and lower Federal courts, including criminal
enforcement of environmental laws.
As the former Senior Counsel to the Washington Legal
Foundation, I was counsel in the McNab case for the three
American citizens who were convicted for violating the Lacey
Act for importing frozen lobster tails in plastic bags from
Honduras, and sent to prison for over 8 years. I drafted and
filed their petition in the Supreme Court, which I would like
to make available as a copy for the record.
I am testifying today in my personal capacity, and not on
behalf of any other person or organization.
Mr. McNab was a Honduran seafood exporter who shipped the
frozen lobster tails in transparent plastic bags to seafood
importers Mr. Blandford and Schoenwetter in the United States,
where the shipments were subject to inspection and cleared by
U.S. Customs and the Food and Drug Administration.
February 1999, the ship was seized, but they were not told
why it was seized. Over the next 6 months, National Marine
Fisheries Service agents traveled back and forth to Honduras,
trying to figure out what Honduran law regulation might have
been violated. They concluded that three might be involved.
One, the size regulation limiting the size of lobster tails to
less than 5.5 inches, or under 4 ounces. Packaging regulations
said that the seafood must be packed in a cardboard box,
instead of plastic bags, and an egg-bearing regulation
prohibited capturing egg-bearing lobster tails.
Armed with rulers to measure the catch, the Federal agents
determined that only 3 percent of the catch was undersized, a
very low percentage that would not be unusual in catching and
processing 70,000 pounds of lobster tails.
While the government expected the importers to be aware of
this regulation, apparently the U.S. Government was not.
Indeed, in their weekly public posting of all frozen seafood
prices to the industry, the National Marine Fisheries Service
listed prices of 2-ounce and 3-ounce lobster tails from
Honduras in their price list. However, the packaging was such
that the entire 70,000 pounds was shipped in plastic bags. By
the way, these lobsters were neither endangered nor threatened.
And, therefore, the entire shipment became illegal and subject
to forfeiture. And it was this procedural regulation that
resulted in the Draconian sentence of 8 years in prison.
To reiterate, while over 90 percent of the shipment did not
contain illegal lobsters or contraband, as critics have
claimed, they were legal lobsters, simply packed in the wrong
packaging. Not satisfied with the Lacey Act violations, the
Federal prosecution charged them with smuggling. Now, how could
the shipment of these lobster tails in clear, transparent bags
going through Customs and FDA inspection constitute smuggling?
Well, for Federal prosecutors, that was like shooting fish
in a barrel. Anyone who brings in the United States merchandise
``contrary to law'' is guilty of smuggling. And since these
were packed in the wrong packaging, that was contrary to law,
and therefore, you are smuggling. Therefore, if you bought it
in opaque cardboard boxes which had to be pried open to see
what was in it, that was not smuggling. But if you bought it in
clear, transparent bags, that is smuggling.
``Oh, did you pay for this seafood? Well, I guess we will
have to charge you with money laundering.'' Well, they paid for
it. They had their invoices and bills of lading. And hence,
they were sentenced up to 97 months.
Now, on appeal in the 11th circuit the Honduran Government
and its agencies filed the brief saying that the official
position of the Honduran Government was that all three of these
regulations were either void or of no legal effect. In short,
none of the defendants could have been prosecuted in the
Honduras for violating these regulations. And the opinion in
the 11th circuit, the court upheld it. But in the strong
dissent, Judge Fay said, ``What was thought to be a crime turns
now not to be a crime.''
As for whether foreign regulations should be covered, the
court of appeals said that it was. However, as we know, the
Lacey Act precludes importing seafood, et cetera, that violates
any U.S. law or regulation, any State law or regulation, any
tribal law or regulation. But when it came to foreign law, it
didn't say any foreign law or regulation, it just said foreign
law. And, indeed, in the 1981 amendments, Congress considered
and rejected an expansive definition of foreign law to include
foreign law and regulations, and struck that provision down. In
short, Congress meant what it said and said what it meant, and
the courts are not to rewrite the legislation.
In conclusion, my recommendations, along with Mr. Larkin,
is that if Congress intended to incorporate foreign laws and
regulations, then Congress should say so expressly, and not
leave it to the courts to rewrite the legislation that Congress
enacted.
Moreover, in order to give proper notice to the public and
regulated community, these enforcement agencies should have a
data base of all the valid regulations, edicts, decrees, and
alike that are applicable in the Lacey Act. And finally,
Congress should decriminalize the Lacey Act. At a minimum, if
the foreign country uses only civil or administrative
penalties, so should the U.S. Government, rather than using the
heavy hand of criminal penalties and excessive prison terms.
Thank you.
[The prepared statement of Mr. Kamenar follows:]
Statement of Paul D. Kamenar, Esq., Attorney at Law
Mr. Chairman, Mr. Ranking Member, and Members of the Subcommittee:
My name is Paul D. Kamenar, a Washington, D.C. lawyer and legal
public policy advisor with over thirty-five years experience litigating
federal cases in the U.S. Supreme Court and lower federal courts,
including cases involving abusive criminal enforcement of environmental
laws such as the Clean Water Act, Endangered Species Act, and the Lacey
Act. I am also a Senior Fellow of the Administrative Conference of the
United States and Member of its Judicial Review Committee. I guest
lecture at the U.S. Naval Academy on National Security Law, which
includes a discussion of how certain environmental laws have hampered
military training exercises. I was also a Clinical Professor of Law at
George Mason University Law School and Adjunct Professor at Georgetown
University Law Center where I taught a separation of powers seminar.
As the former Senior Executive Counsel of the Washington Legal
Foundation, I litigated constitutional and regulatory cases, testified
before Congress on environmental enforcement and oversight, and
participated in symposia and conferences on overcriminalization. Of
relevance to this hearing, I was counsel in McKinney v. U.S. Dep't of
Treasury, 799 F.2d 1544 (Fed. Cir. 1986) representing Members of
Congress and the International Longshoremen's Union to stop the illegal
importation of goods from the former Soviet Union, including lumber,
made by forced labor in violation of Section 307 of the Smoot-Hawley
Tariff Act. Of more particular relevance, I was counsel to three
American citizens who were convicted of violating the Lacey Act for
importing frozen lobster tails from Honduras and sentenced to prison
for over eight years and for whom I drafted and filed their petition
for writ of certiorari to the Supreme Court. McNab/Blandford v. United
States, 324 F.3d 1266 (11th Cir. 2003), cert. denied, 540 U.S. 1177
(2004).
I am testifying today in my personal capacity and not on behalf of
any other person or organization. While I fully subscribe to the views
of the other witnesses who are critical of the Lacey Act's overly broad
and unconstitutional reach with respect to the enforcement of all
foreign laws and regulations regulating their wildlife and plants, I
will focus my testimony on the McNab case as an example of just how the
Lacey Act's reference to foreign law has been abused and misinterpreted
by the courts.
Foreign Law Enforcement under the Lacey Act: United States v. McNab
David McNab was a Honduran fisherman who owned and operated fishing
vessels that caught spiny lobsters up to 350 miles off the coast of
Honduras. After his catch was inspected at Roatan Island, Honduras, he
would ship the frozen spiny lobster tails in clear transparent plastic
bags to seafood importers Robert Blandford and Abner Schoenwetter in
the United States where the shipments were subjected to inspection and
cleared by U.S. Customs and the Food and Drug Administration. The
lobsters were then sold to seafood dealers, including Diane Huang, for
further processing and then resold to restaurants such as Red Lobster.
These shipments were made over the years with no question as to their
lawfulness.
On February 5, 1999, after receiving an anonymous facsimile that
the shipment coming in that day may contain allegedly ``undersized
lobster tails'' (i.e., those that were under four ounces), armed agents
from the National Marine Fishery Services (NMFS) seized the vessel.
Blandford, Schoenwetter, and McNab were not advised why the vessel was
being seized. Several weeks later, the lobster tails were transferred
from the ship to a facility in Florida. Over the next six months, NMFS
agents traveled back and forth to Honduras to determine what if any
Honduran laws or regulations might have been violated. They concluded
that three Honduran regulations or laws may have been violated: 1) a
regulation limiting harvesting of spiny lobsters whose tails are less
than 5.5 inches (or under 4 ounces); 2) a regulation detailing how the
seafood is to be packaged, namely, in cardboard boxes; and 3) a
provision that prohibits capturing egg-bearing female lobsters. NMFS
agents finally began their inspection of the shipment.
Armed with rulers, they determined that only three percent of the
catch was undersized according to the Honduran size regulation--a very
low percentage that would not be unusual in catching and processing
70,000 pounds of lobster tails. While the NMFS expected the importers
to be aware of this foreign regulation, apparently the United States
government was not. Indeed, in their weekly public posting of all
frozen seafood prices to the industry, the NMFS listed Spiny Lobster
Tails from Honduras as selling for $8.75 for those weighing two ounces;
$9.95 for those weighing three ounces, and $12.25 for those weighing
four ounces. A copy of the price list is attached hereto. Thus, not
only was it against the financial interest of the U.S. seafood dealers
to import smaller lobster tails, but also the federal government even
had an official price list for them.
Similarly, the NMFS determined that a small percentage of the catch
was egg-bearing, allegedly in violation of another Honduran law.
However, the entire catch of 70,000 pounds of spiny lobster--a species
which was neither endangered nor threatened--were shipped in
transparent plastic bags instead of cardboard boxes, and the entire
shipment thus became ``illegal'' and subject to forfeiture. Not
satisfied with the substantial forfeiture and severe civil penalties
available, and despite the fact that the importers were advised that
NMFS was only trying to build a civil case against Mr. McNab, federal
prosecutors filed felony criminal charges against McNab, Blandford,
Schoenwetter, and Huang. As Mr. Schoenwetter testified a few years ago
on the topic of overcriminalization before the House Subcommittee on
Crime, then Chaired by Congressman Bobby Scott, armed agents from the
FBI, IRS, and NMFS searched Mr. Schoenwetter's home in the early
morning, herding his wife, mother-in-law, and his young daughter in the
living room in their night clothes, ordering them to be quiet. A few
days later armed agents returned at 6:00 a.m. to arrest Mr.
Schoenwetter. None of the defendants had ever before been charged with
any offense, but were hard-working small businessmen trying to make a
living.
Smuggling and Money Laundering Charges
The U.S. defendants were charged with violating the Lacey Act for
importing frozen lobster tails in violation not of any U.S. law or
regulation, or any State law or regulation, but of the Honduran
regulations regarding size and packaging. As will be discussed, it was
this technical packaging violation that dictated the draconian sentence
of over eight years in prison. The U.S. defendants were not charged
with violating the egg-bearing provision. Not satisfied with invoking
the Lacey Act's felony provisions which provide a maximum punishment of
five years for the worst violation, overzealous Justice Department
prosecutors started to pile on with additional felony counts of
smuggling and money laundering which, if sustained, would add more
prison time to be served by these hardworking citizens.
One might be forgiven if one were to ask how could the shipment of
these lobster tails in clear transparent plastic bags that went through
Customs and FDA inspection constitute smuggling. After all, one would
normally consider a smuggling scenario where illegal or endangered
wildlife or parts are concealed in luggage or similar containers.
Indeed, the trial judge was puzzled as to how the defendants' conduct
constitutes smuggling. But for the federal prosecutors, making a
smuggling case was like shooting fish in a barrel. After all, under 18
U.S.C. 545, anyone who brings into the United States merchandise
``contrary to law'' is guilty of smuggling, subject to a prison term of
up to 20 years. So if the lobster tails were shipped in opaque
cardboard boxes which would have to be pried open to see what was
inside, then that would not constitute smuggling; however, if they were
transported in clear transparent plastic bags and inspected by Customs
and the FDA, then, according to the Justice Department, that
constitutes smuggling. Under this definition, any violation of the
Lacey Act's foreign law provision, even if it were an administrative,
civil or misdemeanor violation, can easily be prosecuted as a felony
smuggling offense since the seafood, wildlife, or plant was imported
``contrary to law.''
The prosecutors were still not finished. Did the importers pay for
this seafood? Of course they did. They had invoices, cancelled checks,
and bills of lading that were turned over to NMFS showing that they
paid for the seafood as they have been for several years in the normal
course of business. So now the prosecutors added money laundering
charges. One would normally consider money laundering as ``laundering''
cash proceeds from drug deals through an offshore bank and the like.
Even the trial judge also was puzzled as to how this offense could be
considered money laundering. Yet the money laundering statute, 18
U.S.C. 1957 and 1956(h), is written in such a way that the conversion
of the sale of unlawful goods--here, the lobsters ``illegally'' packed
in plastic bags--constitutes felony money laundering charges. Again,
the money laundering provision used this way can be used in almost any
Lacey Act violation where goods are sold. And the Justice Department
always adds a conspiracy count for good measure in cases where two or
more violators are involved. Accordingly, those who characterize the
McNab defendants as being notorious ``smugglers'' and ``money
launderers'' as well as Lacey Act violators are being disingenuous and
misleading.
As unfair as the heavy-handed prosecution was, it was made all the
more troubling in that questions were raised at trial requiring a
separate hearing as to whether the Honduran regulations at issue were
even valid under Honduran law. The defendants' expert witness testified
that the cardboard container regulation was invalid inasmuch as the
enabling legislation giving rise to that regulation was repealed in
1995; the size regulation was procedurally defective in its
promulgation; and the egg-bearing provision was repealed with
retroactive effect. Nevertheless, the trial court accepted the
testimony (later recanted) of a mid-level legal advisor to the Honduran
Agriculture Department that the laws were valid.
All the defendants were convicted, and due to the value of the
entire ``illegal'' shipment packed in plastic bags, the Court applied
the then mandatory Sentencing Guidelines which were based on the total
gross value of the ``smuggled'' goods, not the net profits. The Court
imposed draconian sentences of 97 months (eight years and one month) on
McNab, Blandford, and Schoenwetter and 24 months on Huang. That
sentence greatly exceeded the punishment for more serious crimes. See,
e.g., United States v. McPhee, 336 F.3d 1269 (11 Cir. 2003) (57-month
sentence for intent to distribute 100 kilograms of marijuana aboard a
vessel).
Although the maximum sentence under the Lacey Act was five years,
to meet the 97- month sentence, the Court was forced to make the
sentence of some charges consecutive with others rather than concurrent
as is usually the case. In short, the statutory maximum became the
mandatory minimum, and was especially excessive because parole has been
eliminated in the federal system. Keep in mind that what drove these
excessive sentences were goods that were not considered contraband per
se, but what has been referred to as ``derivative contraband,'' namely,
violations of procedural rules regulating shipping or transporting.
McNab was immediately incarcerated while the American defendants were
allowed on bail pending appeal.
During the appeal, McNab challenged the validity of the size limit
law in the Honduran courts and prevailed. Nevertheless, the federal
district court rejected any post-conviction challenge to the law. On
appeal to the Eleventh Circuit, the Honduran Government and its
agencies filed an amicus brief noting that all three of the regulations
were either void or of no legal effect. In short, none of the
defendants could have been prosecuted in Honduras for violating these
regulations. As noted, the government's star witness at trial from
Honduras recanted her testimony.
In a 2-1 opinion, the Eleventh Circuit upheld the convictions,
refusing to give any deference to the official position of the Honduran
government as to the validity of their own laws but deferred to federal
prosecutors as to the meaning of the foreign law. As Circuit Judge Fay
remarked in his strong dissent, ``what was thought to be a crime turns
out not to be a crime under Honduran law'' and that the convictions
should be reversed. That would be the outcome under our system if a
defendant were convicted of a law found defective on appeal. See United
States v. Goodner Bros. Aircraft, 966 F.2d 380 (8th Cir. 1992). The
Circuit Court also rejected the argument with little analysis that even
if the regulations were valid, the Lacey Act only makes it unlawful to
import goods in violation of ``foreign law,'' not a country's
regulations, edicts, or decrees, of which there are thousands.
Petition for Writ of Certiorari Judicial Deference to Foreign
Governments
In their petition for writ of certiorari, the defendants argued
that the Supreme Court should hear the case because the defendants' Due
Process rights were violated since they were not tried on the basis of
a valid law but rather on ones that were void or defective Honduran
regulations that were incorporated by reference in the Lacey Act.
Moreover, due to the nature of our global economy (and now, the
expansive reach of the Lacey Act Amendments of 2008 to include plants
and plant products), this case presented an exceptionally important
question of the level of deference the courts should afford the
official views of a foreign government in determining the meaning of
their own laws. Indeed, the decision of the Eleventh Circuit conflicted
with the decisions of the Supreme Court itself and other circuits where
``substantial deference'' is accorded a foreign government's views of
its own laws in other contexts, such as tax laws and the like. Indeed,
ignoring the foreign country's views of its own laws undermines the
Lacey Act which its proponents claimed in 1981 as aiding ``foreign
nations in enforcing their own wildlife laws.'' 127 Cong. Rec. 4737
(1981) (remarks of Senator Chafee).
In short, while it is grossly unfair and constitutionally suspect
to require U.S. citizens to comply with foreign law by incorporating
those laws wholesale by reference in the Lacey Act, at a minimum, the
interpretation of those laws should be within the province of the
foreign nation, not federal prosecutors, and substantial deference
should be provided to that interpretation.
``Foreign Law'' Does Not Include Foreign Regulations
In addition--and of particular relevance to this hearing--the
American defendants sought review in the Supreme Court of the Eleventh
Circuit's facile conclusion that ``foreign law'' includes the myriad of
foreign regulations and the like, including the (invalid) ones from
Honduras invoked by the prosecutors in the McNab case. With scant
analysis of the text and legislative history of the Lacey Act, the
Eleventh Circuit followed the equally flawed decisions of the Ninth
Circuit in concluding that ``foreign law'' also constitutes ``foreign
regulations'' and similar provisions. See United States v. 594,464
Pounds of Salmon, 871 F.2d 824 (9th Cir. 1991) and United States v.
Lee, 937 F,.2d 1388, 1391-92 (9th Cir. 1991).
Both the Eleventh Circuit and Ninth Circuit ignored fundamental
rules of statutory construction by disregarding the language used by
Congress regarding the applicability of foreign law. The Lacey Act
expressly prohibits the importation of wildlife that violates any
``law, treaty, or regulation'' of the United States'' (16 U.S.C.
3372(a)(1)); any ``law or regulation of any State''(16 U.S.C. 3372
(a)(2)(A)); and ``any tribal law'' (16 U.S.C. 3372(a)(1)) further
defined as meaning ``any [tribal] regulation . . . or other rule of
conduct enforceable by any Indian tribe . . ..'' 16 U.S.C. 3371(a)(c).
However, with respect to the term ``foreign law,'' Congress did not
include ``regulation'' to encompass that term. If Congress wanted to
include foreign regulations, it could have easily done so. Indeed, it
clearly decided not to do so in the 1981 amendments.
The pre-1981 version of the Lacey Act admittedly did proscribe the
transportation of wildlife ``in violation of any law or regulation of
any State or foreign country'' (formerly 18 U.S.C. 43(a)(2)). During
the 1981 amendment process, however, when the original Lacey Act was
actually repealed in toto along with the Black Bass Act, Congress
considered and rejected an expansive definition of ``foreign law'' in
the original Senate bill. See S. 736, 97th Cong., 1st Sess., 127 Cong.
Rec. 4738 (March 19, 1981) (```foreign law' means law or regulations of
a foreign country . . ..'') (emphasis added). In the final version of
the bill as passed by the Senate, this definition was replaced with the
current version of ``foreign law'' without including ``regulations.''
In short, Congress had the opportunity to adopt a broader definition of
foreign law and did not do so. By both repealing the pre-1981 version
of ``foreign law or regulation'' provision and rejecting the broad
proposed definition, Congress meant what it said and said what it
meant. It was impermissible for the Ninth and Eleventh Circuits to
rewrite the law to suit their view of what ``foreign law'' should mean.
The Supreme Court unfortunately denied review and has not ruled on
this important issue; consequently this expansive view of ``foreign
law'' is only valid in the Ninth and Eleventh Circuits. At a minimum,
it was incumbent on Congress in 2008 when it amended the law as it is
today to make it clear in statutory language whether ``foreign law''
encompasses the myriad of foreign regulations and decrees, many of
which are unknown to the American public and importers.
Even the Eleventh Circuit agreed that the meaning of ``foreign
law'' is ambiguous with respect to whether it encompasses foreign
regulations. But under Due Process and the Rule of Lenity, the language
of a statute that is enforced criminally should be strictly construed
in favor of the defendant. See United States v. Universal C.I.T. Credit
Corp., 344 U.S. 218, 221-22 (1952); Dunn v. United States, 442 U.S.
100, 112 (1979).
In short, Congress is the body constituted under Article I of the
Constitution to make laws, not the courts or foreign governments. If
Congress intended to incorporate foreign laws and regulations, then
fairness requires that the enforcement of those foreign laws under the
Lacey Act be treated as they would be in the foreign country, namely,
administratively or civilly rather than criminally as many foreign
regulations so provide. Moreover, in order to provide proper notice to
the public and the regulated community, the enforcing agencies should
have a database of all the valid foreign regulations, edicts, decrees,
and the like that are applicable to the natural resource at issue.
Incorporating ``Foreign Regulations'' in the Lacey Act Is Inconsistent
With the Congressional Review Act
In addition to the constitutionally suspect ``foreign law''
provision of the Lacey Act to include ``foreign regulations,'' the
incorporation of ``foreign regulations'' into a domestic law without
specifying which foreign regulations are required to be obeyed violates
the letter and spirit of the Congressional Review Act (CRA), 5 U.S.C.
801-888. The CRA requires each federal agency to send its covered final
rules to the Comptroller General at the Government Accountability
Office (GAO) and to both houses of Congress ``[b]efore [such rules] can
take effect.'' 5 U.S.C. 801(a)(1)(A).
The CRA was enacted in 1996 to give Congress the power to
disapprove agencies' final rules by enacting a joint resolution of
disapproval. Senator Don Nickles, a co-sponsor of the legislation,
noted, ``As more . . . of Congress' legislative functions have been
delegated to federal regulatory agencies . . . Congress has effectively
abdicated its constitutional role as the national legislature . . ..
This legislation will help to redress the balance, reclaiming for
Congress some of its policymaking authority . . ..'' Joint Statement of
House and Senate Sponsors, 142 Cong. Rec. S3683 at S3686 (daily ed.
April 18, 1996). While a limited category of rules are exempt from
CRA's coverage, other rules, such as those governing ``foreign
affairs'' which are otherwise exempt from notice and comment under the
Administrative Procedure Act, are most notably not excluded from
coverage under the CRA. Accordingly, a strong argument can be made that
to the extent ``foreign regulations'' are incorporated in the Lacey
Act, those ``regulations'' are subject to the CRA and must be submitted
to Congress before they may take effect.
Conclusion
The Lacey Act violates the Rule of Law and gives prosecutors too
much enforcement power by incorporating ``foreign law'' and unspecified
``foreign regulations'' into the law's reach, especially with respect
to criminal prosecutions where an individual's liberty is at stake.
The prosecution in the McNab case illustrates how the Lacey Act can
be abused and how easy it is for the Justice Department to include
smuggling and money laundering felony charges where more reasonable
civil and administrative remedies are available and which would better
serve the interests of justice and the environment.
I look forward to answering any questions the Committee may have.
Thank you.
______
Dr. Fleming. Thank you, Mr. Kamenar. At this point we will
begin Member questioning of the witnesses. To allow all Members
to participate, and to ensure we can hear from all witnesses
today, Members are limited to 5 minutes for their questions.
However, if Members have additional questions, we can have more
than one round of questioning. I now recognize myself for 5
minutes.
I have a yes-or-no question for the panel. You will have a
chance to explain anything later, if you would like. But my
question is this. Do you think that the Lacey Act, a bill, law,
that is 113 years old now, was and is a good idea, that it has
a value to protect the illegal importation of living
substances, or post-living substances, from other countries? Do
you, panel, agree that is well intended? Starting over here.
Mr. von Bismarck. Yes.
Mr. Asner. It is a great idea.
Ms. Alexander. I am CRS, so I will have to qualify it.
Dr. Fleming. I figured you would say something like that.
That is OK, we will give you a pass.
Mr. Rubinstein. Provided it is consistent with our legal
norms and our Constitution, yes.
Mr. Larkin. Yes.
Mr. Kamenar. Yes, but qualified by making sure that due
process is applied.
Dr. Fleming. Right. So, at least conceptually, what could
be wrong with protecting against the illegal importation of
substances that could create, of course, endangered species
from other nations? Well, we will get into that a little bit.
Now, here is another question. And I will start with you,
Mr. Asner. Is it possible that in the wording of the 2008
amendments to the Lacey Act, we are subjecting United States
citizens potentially to Sharia law in certain countries?
Mr. Asner. I am not familiar with Sharia law, so I don't
know how it regulates, if at all, the taking of wood or wood
products or plants or plant products. But I can tell you that
certainly if Sharia law says you cannot steal from your
neighbor--and I suspect it does--then, yes, it would
incorporate that concept in it.
Now, would it incorporate all concepts of Sharia law? No,
because what it requires is----
Dr. Fleming. Let me get to some others. I understand. I get
your--good answer, thank you. That potentially it could,
although limited, not necessarily all of Sharia law, and I
certainly understand that.
Just to point out, countries that we do trade with include
Yemen, Saudi Arabia, Qatar, Pakistan, Iraq, Iran, Afghanistan,
Sudan, parts of Indonesia, Nigeria, and the United Emirates. So
certainly at one point or another, we are likely to interact
with this.
Other panel members, our attorneys, do you have any
comments about is there the potential, whether limited, whether
expanded, laws that could be ordinarily found to be
unacceptable in this country, as we know Sharia law often can
be, could we in fact be subjecting our own citizens to Sharia
law?
Mr. Larkin. Yes, sir. The Act doesn't limit the term
``foreign law.'' Whatever foreign country adopts as its law
must be treated as that.
If I could also add, it is not theft in the United States
to capture wildlife, because no one has a property interest in
wildlife. So it is--catching fish is not like stealing your
neighbor's car. You have a property interest in your car. But
for fish that are in the rivers and streams, no one has a
property interest in those, so it is not the same.
Mr. Rubinstein. I think that is right. The fundamental
problem here--and, frankly, it was recognized in a case called
United States Bryant--the laws that you are applying have to be
defined so that the people who are subject to them are able to
understand them and apply them. Michigan is not Madagascar.
Indiana is not India. And South Dakota is not Saudi Arabia.
And, unfortunately, the Lacey Act doesn't draw that
distinction, at least----
Dr. Fleming. So you are suggesting that if there are laws
in other nations that could be completely at odds with our
culture and our understanding and our own law and our own
civilization, that we could theoretically, by default, be
subjecting our citizens to the laws of that nation.
Mr. Rubinstein. That is correct.
Mr. Kamenar. I would also agree. I mean you could think of
other examples, as well. Let's assume that Venezuela and
Bolivia, which is going to offer asylum to William Snowden,
were to have a law saying that none of their exports could be
shipped to the United States, because they don't like the
United States, or we are an ally with Israel, or something like
that. Therefore, any goods coming from those countries would
violate the Lacey Act. And I think, again, there is another
example of where the law can be misused.
Dr. Fleming. Quickly, before my time runs out, just to
throw it out to the three panelists on this end, do you agree
with Mr. Asner that the Lacey Act does not subject Americans to
foreign law?
Mr. Larkin. It certainly does. The Supreme Court has made
clear that the violation of a statute is a question of law. The
statute here requires proof of a violation of foreign law.
Dr. Fleming. Yes.
Mr. Kamenar. And I agree. And what makes it more
complicated is that when the courts are to determine what that
foreign law is, you have days and days of hearings as to what
this law means. And in the McNab case, the Honduran Government
said, ``Here is the meaning of these laws. They are invalid
under our country.'' And yet the 11th circuit said, ``No, we
will decide what your law means.'' And because of that they
were subjected to these Draconian penalties.
Dr. Fleming. Real quickly.
Mr. Rubinstein. Yes, it does. Yes.
Dr. Fleming. OK. All right. My time is up. I yield to the
gentleman from the Marianas.
Mr. Sablan. Thank you. Thank you very much, Mr. Chairman.
I am going to ask all of you two questions. And if you
could, please just give me a yes or no answer. Do you think
American consumers have a right to know whether the goods they
buy are stolen? We will start from the left to the right. Mr.
von Bismarck?
Mr. von Bismarck. Yes, I do.
Mr. Asner. Absolutely.
Ms. Alexander. Pass.
Mr. Sablan. Oh, come on. I mean that is a simple question.
[Laughter.]
Mr. Sablan. You are a consumer.
Dr. Fleming. She wants to keep her job.
Ms. Alexander. In terms of CRS I am going to pass.
Mr. Sablan. All right.
Ms. Alexander. In terms of myself, I would like to know.
Mr. Sablan. OK, sure. Mr. Rubinstein, sir?
Mr. Rubinstein. Sure, they do. And it would be helpful----
Mr. Sablan. Yes or no. Yes or no.
Mr. Rubinstein. Yes, with an explanation.
Mr. Larkin. Yes, with my earlier explanation.
Mr. Kamenar. Yes, we should have a data base that has these
goods listed----
Mr. Sablan. No, no. It is just do they have a right to know
whether the goods they are buying----
Mr. Kamenar. They have a right to know it by the government
telling them, too, what it is.
Mr. Sablan. Now my next question is--and let's start with--
Mr. Kamar?
Mr. Kamenar. Kamenar.
Mr. Sablan. All right. My next question, do you think
foreign visitors and companies in the United States should have
to abide by U.S. laws?
Mr. Kamenar. I am sorry, could you repeat that?
Mr. Sablan. Do you think foreign visitors and companies in
the United States should have to abide by U.S. laws?
Mr. Kamenar. Foreign visitors here in the United States
have to comply with U.S. laws?
Mr. Sablan. Yes.
Mr. Kamenar. Yes, of course.
Mr. Sablan. No explanation, but yes. OK. Sir?
Mr. Larkin. Yes, sir.
Mr. Rubinstein. Yes, sir.
Mr. Sablan. Ms. Alexander?
Ms. Alexander. I believe that is U.S. law, yes.
Mr. Sablan. All right. Finally, thank you.
Mr. Asner. Yes.
Mr. von Bismarck. Yes.
Mr. Sablan. If you are saying that if you don't
understand--I think it was Mr. Kamenar--if you don't
understand--or one of you. Maybe Mr. Larkin was saying that if
you don't really understand the law, then you should not be
held responsible for it. Right?
Mr. Larkin. No. What I said is if a law is not
understandable by a reasonable person----
Mr. Sablan. If it is not----
Mr. Larkin [continuing]. You can't be criminally prosecuted
for it.
Mr. Sablan. If it is not written in English, so--wow.
Really? I won't go there.
Mr. Larkin. No, no, no, it is OK. I don't think any--I
don't think the Supreme Court----
Mr. Sablan. Let me go to Mr. Asner. Mr. Asner, other
witnesses have said it should not be a crime under the Lacey
Act to steal from other countries because people cannot
possibly be expected to know other countries' laws. But my
understanding is that in order to be criminally responsible
under Lacey, someone would have to know the law, and then break
it anyway, like what Gibson Guitar Corporation did.
Is that the case? And, if so, doesn't that standard give a
lot of protection to people who just didn't know better?
Mr. Asner. Absolutely. That is the law. And I have the
advantage of being perhaps the one person in this room who
actually has prosecuted a Lacey Act case. And the burden of
proof is on the government to prove the mental state of the
defendant with respect to the foreign predicate law. And to be
very clear, if an individual does not know the foreign law,
does not know he violated the foreign law, and in the exercise
of due care should not have known that he violated the foreign
law, the person is innocent.
Mr. Sablan. I am going to--under different venue or
circumstances, I am going to speak to Ms. Alexander eventually.
But Mr. Asner, once again, in his testimony Mr. Kamenar
insisted that the facts of the McNab case showed that the
defendant did nothing wrong, and that a correct interpretation
of the law shows they should not have been found guilty of
violating the Lacey Act.
As a lawyer, when the facts are on your side, and the law
is on your side, shouldn't you win the case? I am sure Mr.
Kamenar is a good lawyer, I don't doubt that. So is he leaving
something out in his description of the McNab case?
Mr. Asner. Look----
Mr. Sablan. Everything was in his favor and they lost the
case. Something is wrong here.
Mr. Asner. Yes. I mean I think the record is pretty clear.
You can go and read the court opinions. I have. You can go read
the briefs. I have. And the facts are extremely different from
what is described here.
He lost the case. And they lost it at the trial level, they
lost at the court of appeals. The Supreme Court didn't even
bother to look at it. The facts as they describe are not
correct. These individuals were found guilty of knowingly
violating the law, and they were put in jail because of it,
appropriately. That is the law.
Mr. Sablan. Because we are government rule of law, that is
the law.
I have one more question for Mr. Asner. In his testimony,
Mr. Asner, Mr. von Bismarck points out that the transnational
natural resources crime has grown incredibly sophisticated. The
framers of the United States Constitution could hardly have
envisioned militarized poaching rings that use disposable
mobile phones to avoid detection, GPS units, and night vision
goggles to track their prey, and helicopters and AK-47s to
track it down. So is it appropriate that both criminal law and
interpretation of the Constitution have evolved to keep pace
with criminals?
Mr. Asner. Well, the Lacey Act has evolved to take account
of the changes in law. So the best example, for example, is
just the fact that the airplane and the automobile were brought
into our lives has changed the Lacey Act. And the increased
coordination between law enforcement has definitely helped
enforcement.
Dr. Fleming. The gentleman's time is up. Ms. Shea-Porter,
you are recognized for 5 minutes.
Ms. Shea-Porter. Thank you, and thank you for being here. I
think former President George Bush would be very shocked to
find out that he had somehow or another exposed us to Sharia
law. I think the reality is that we have a problem in that this
stuff is in other people's countries. And just as we have stuff
in our country and we expect foreigners to obey our laws, I
think it is reasonable to say if a country feels that--whether
it is a national security issue, because there are poachers who
are drug dealers, et cetera, involved, or whether they are
running out of and facing potential extinction of some product,
or for whatever reason, that countries have a right to impose
their laws there.
Having said that, we certainly expect to trade fairly and
responsibly. But I just can't believe that if a foreign country
came up and decided they would start chipping away at one of
our plants and say, ``Well, we don't want to fall under
American law,'' that we would be offended. So it doesn't make
sense to me, what we are talking about with the Sharia law. And
I just felt that I needed to say that.
Now, the other part that I wanted to talk about was the
guitar. Didn't they plead guilty? Didn't Gibson Guitar plead
guilty?
Mr. Rubinstein. No. I have here the document.
Ms. Shea-Porter. They paid a fine, right?
Mr. Rubinstein. They paid a fine, they entered into an
agreement. And this is called a criminal enforcement agreement.
And it's quite lengthy.
Ms. Shea-Porter. But they accepted it?
Mr. Rubinstein. Well, they paid it because many times in
these kinds of situations--now, I did not represent Gibson
Guitar, but I have represented other clients, and there comes a
time when you do a cost benefit analysis.
Ms. Shea-Porter. Didn't they acknowledge that they had
somebody on their staff who went and saw this wood and knew
that this was not allowed? And didn't he report back? I could
be wrong, but it seems to me----
Mr. Rubinstein. Well, it is--I can show this to you,
because----
Ms. Shea-Porter. Did they acknowledge wrongdoing? I am just
asking did they acknowledge wrongdoing. A criminal
enforcement----
Mr. Rubinstein. Well, they paid a fine----
Ms. Shea-Porter. OK, so----
Mr. Rubinstein [continuing]. To resolve the matter with
respect to Madagascar.
Ms. Shea-Porter. They acknowledged wrongdoing, right?
Mr. Rubinstein. No, what--no, they said that there were
things that they could have done differently. And, in fact,
what they did was they implemented a due diligence program----
Ms. Shea-Porter. Well, let me ask you a personal question.
Would you acknowledge wrongdoing and pay a fine if you were
not, or would you keep----
Mr. Rubinstein. If I was threatened with bankruptcy as a
result of having to pay lawyers? Sure.
Ms. Shea-Porter. I just think this is one of those cultural
stories that we see passed around there.
But moving on, Mr. Asner, you have worked with the----
Mr. von Bismarck. May I contribute, Congressman? May I
contribute----
Ms. Shea-Porter. No, no. I need to ask Mr. Asner a
question. Thank you, though.
Mr. Asner, you have worked with a number of clients on
issues relating to the Lacey Act. I am wondering if any of your
clients don't attempt to work within the laws of foreign
nations when they work overseas. It would seem to me that any
business looking to operate overseas or purchase goods from
outside the country would want to do due diligence on what they
were buying and who they were buying from, maybe even find out
if what they are purchasing is contraband.
Mr. Asner. Absolutely. That is what responsible
organizations do. And going to Gibson, actually, it is quite
interesting, because what Gibson ended up agreeing to, in
addition to acknowledging wrongdoing, and acknowledging that
their agent knew full well that it was illegal to get this
wood, Gibson entered into an agreement to have a compliance
program. And that compliance program now sets the standard. And
it is very easy to follow. But what it does is it requires
companies to, when they are bringing stuff into the United
States, to do what you would expect, to take steps to make sure
it is legal, so that when I buy it, it is legal. And it is what
you would expect from a responsible company.
Ms. Shea-Porter. And the other question I had is, for these
companies who are doing their due diligence--and they obviously
need to have some staff assigned, right--is there a high rate
of bankruptcy, because they have to follow the law and they
have to hire somebody to see if the law is--or is it like a
corporation that maybe has to offer--fall under regulations if
they offer employee daycare, and there are lots of regulations,
so they hire somebody? So they must have outside expertise or
somebody within the organization that can help them comply.
Mr. Asner. Most legitimate companies were doing this
already, frankly. It is the companies that were trying to cut
corners and look the other way that were willfully importing
illegal wood into the United States. But from a compliance
function, it is actually relatively simple to comply, and most
companies operating internationally already have FCPA
compliance programs in similar sorts of things.
Ms. Shea-Porter. So they are not going bankrupt because of
these unbelievable regulations to----
Mr. Asner. I have not heard of anything like that.
Ms. Shea-Porter. OK. And we impose regulations on them, as
well, on----
Mr. Asner. We do impose regulations on them, as well.
Ms. Shea-Porter. Right.
Mr. Asner. And countries throughout the world are looking
to the Lacey Act as something that they want to model for their
own laws.
Ms. Shea-Porter. And countries expect this, and businesses
on both sides of the ocean expect that there will be
regulations.
Mr. Asner. And, frankly, American consumers should expect
it, too, because we have a right to legal goods.
Ms. Shea-Porter. Thank you. I yield back.
Dr. Fleming. The gentlelady yields back. The Chair now
recognizes Mr. Lowenthal for 5 minutes.
Dr. Lowenthal. Thank you, Mr. Chair, and thank you to our
witnesses for coming here to testify today.
It is quite perplexing why the Majority chose such a
successful law to attack, a law that keeps protected plants and
animals from being illegally smuggled into the United States,
and a law that protects Americans. It protects the American
timber industry from unfair competition, from illegally
harvested forest products.
And it is interesting. The Lacey Act has been repeatedly
found to be constitutional by the courts, as illustrated by the
ruling on three different U.S. district court rulings, and the
refusal of the Supreme Court to even hear the McNab case on
appeal. So let's move away from the constitutionality, and
let's ask whether the Lacey Act now is good policy for the
United States and for Americans, which--obviously, there are
some folks who--here, on the Committee, in the Majority, think
it clearly is not.
Let me pose an example to illustrate how this type of
policy would be in the best interests of the United States. If
a poacher in the United States illegally takes and smuggles
bald eagles out of our country and into the EU in contravention
of U.S. law, including the Federal Eagle Act of 1940, would it
be to our benefit for the EU to respect U.S. laws? And, in
fact, the EU currently does respect foreign wildlife laws.
What about China? You could say, well, what about China?
Would it be appropriate to ask China to respect U.S. law? Would
it be in the best interest of the United States to pass a law
that required Chinese port inspectors to prevent illegally
poached American Bald Eagles from being brought into China for
sale? Should the United States Administration and Congress
support the passage of a Chinese law that respects U.S. laws?
If we dismantle the Lacey Act, then we have to answer no to all
of these questions to be consistent with the reasoning that has
been heard here today, which I point out is not in the United
States' best interests.
It is not in the best interests of the United States for
the EU, for China, or for any other country to refuse to accord
deference to U.S. law. If we dismantle the Lacey Act, we will
have significantly weakened our leverage to encourage nations
like China to pass such measures that protect--and I repeat the
emphasis on protect--U.S. businesses, plant, and wildlife
interests by respecting U.S. law.
So, is the Lacey Act good U.S. policy? And the answer is
most certainly yes. It has been hailed by the U.S. Trade
Representative as an important tool in the U.S. efforts to
combat illegal logging and associated trade. The forest product
industry states that, ``Our organization stands in strong
support of the Lacey Act and all that it has accomplished in
addressing the issue of illegal logging.'' Yet we are here
today to discuss and we are attacking whether, in fact,
Americans have to comply with the laws of foreign nations, and
we are attacking the Lacey Act.
So, let me follow up these points with a question to Mr.
von Bismarck.
As bad as the current poaching crisis is, how bad would it
be if not for the Lacey Act? Does eliminating the United States
as a market for stolen wildlife and timber make a difference?
And how have other countries responded to the examples set by
the Lacey Act?
Mr. von Bismarck. Thank you, Congressman. In my
investigation and in my organization's investigations, the
Lacey Act has been the leading deterrent against poaching
around the world, whether it is tiger skins in Nepal, folks
know about the Lacey Act and are worried about it.
The United States is still, for most goods, the biggest
consumer. If we walk back the Lacey Act or the foreign law
components of the Lacey Act, we would make the current battle
on the ground where people are losing their lives, the battle
over poaching for ivory, we would give up on it. It would be
over. And currently we have a chance, for the reasons that you
articulated, Congressman, the Lacey Act not only shuts down our
major market as a driver for the money that goes to those
criminal networks, but it gives us leverage to reach a tipping
point for the overall global market to dry up that demand. So,
there is a lot riding on it, Congressman.
Dr. Lowenthal. Thank you. And I yield back my time.
Dr. Fleming. The gentleman yields back. Well, I think we
are up for a second round, if our panel is. So I now recognize
myself for 5 minutes.
First of all, let me mention that the 2008 amendments were
not signed into law by President Bush. It was actually a
Democrat-controlled Congress that overrode President Bush's
veto. So I don't think, if Mr. Bush were here today, he would
want to take credit for this.
Number two, we have established that even Sharia law could
potentially be provided to make citizens subject to vis a vis
the Lacey Act. And so, I would like to throw it out to our
members on this side of the panel. Mr. Asner instructs us that
he knows more about prosecuting the Lacey Act than anyone in
the room today. I would like to hear what you would have to say
in response, Mr. Larkin, about some of the statements made by
Mr. Asner, and also--and others, as well, but also about the
human cost.
We hear a lot about what happens to animals and plants.
But, as an American, I care more about what happens to
Americans. So, again, Mr. Larkin, I would be happy to hear your
comments.
Mr. Larkin. I think it is important to keep in mind that
every one of these cases has a very human cost. And the cost is
on people who are morally blameless. What you have is a problem
here that people do not know the law because it is so obscure,
it is so difficult. After all, Gibson Guitar was alleged to
have violated the Madagascar inter-ministerial order that, if
you read page seven of the appendix of that non-prosecution
agreement, apparently was written in a foreign language. The
idea that someone should be held liable for that seems to be
quite unfair.
No one also, by the way, is saying the Lacey Act should be
dismantled. I don't think anybody on this panel is. What we are
talking about is implementing it properly. And it would not at
all hurt prosecutions of the Lacey Act, if you required the
government to prove that someone willfully violated the law, if
you allowed someone to raise a mistake-of-law defense. Because
in either of those instances, someone would not be subject to
all the problems associated with the criminal process. And as a
Federal agent for 6 years and a DOJ employee for 9, I know what
that involves. Someone who is blameless would not have to go
through that process if either of those elements were added
into the Act.
Finally, if you just required the government to identify
all the laws that it says someone should know, you would not
have any diminution in the enforceability of the Lacey Act. You
would just be notifying the public what the requirements of the
law are. That has been a cardinal requirement of Anglo-American
criminal law for 1,000 years. The idea that somehow you are
going to hurt enforcement if you don't tell people what the law
is, is just silly. What it essentially amounts to is saying
that it is OK for us to play Gotcha. If you don't know what the
law is, you can still be held criminally liable for it. That is
not the way our system works.
Dr. Fleming. So, if, for instance, I am driving down the
highway and the speed limit is 70, and I am driving 80 because
there are no posted speed limit signs, then perhaps I would
have driven within the speed limit had I know what the speed
limit was. Is that what you are suggesting?
Mr. Larkin. If you are in the United States and you are
driving a car, you know that there is going to be a speed
limit. You have the responsibility of determining what that is.
And it is easy to find out, because they have signs and they
have Web sites and the like that will tell you what the speed
limit is. But there is no similar way of knowing what the law
is in more than 190 foreign nations. And you are putting people
at risk of not just the condemnation of the criminal process,
but, as in Mr. Kamenar's client's case, having to serve more
time in prison than some people do for violent offenses,
because you are unaware of what a foreign nation's law is.
Dr. Fleming. Well, Mr. Kamenar, tell us something about the
human price here that is being paid.
Mr. Kamenar. Well, it was paid by the defendants in this
case, especially the U.S. defendants. They were told by the
Marine Fisheries Service that they were trying to make out a
civil case against Mr. McNab. But at 6:00 in the morning, armed
Marine Fisheries Service, FBI, and IRS agents came into Mr.
Schoenwetter's home in Florida, herded his wife, mother-in-law,
and daughter, in their night clothes, into the living room and
told them to be quiet while they searched the house. And then,
a few days later, they came back to arrest this man, who has no
prior criminal record and no running afoul of the law. And he
spent 8--well, some time off for good behavior and so forth,
but well over 6 years in Federal prison, he and Mr. Blandford.
And it took a terrible toll on their health and their family.
And, here again, this case could have been handled
administratively. OK. Seize the lobster tails, even though only
3 percent were undersized. Take the whole thing. Fine me. But
why do we have to throw people in prison for 8 years? This is
very much of an excessive overkill----
Dr. Fleming. So what you are telling me--8 years in prison.
He didn't murder anybody, correct?
Mr. Kamenar. No, of course----
Dr. Fleming. He didn't knock over a convenience store, he
didn't assault anybody, he didn't rape anybody, right?
Mr. Kamenar. That is right.
Dr. Fleming. His crime was that the lobster tails were not
the right size?
Mr. Kamenar. Well, more importantly, the lobster tails were
in plastic bags, instead of cardboard boxes, because it was the
totality of that that drove the sentence.
And I might add that this sentence was twice as long as the
one that Mr. Asner prosecuted, where it was clear that they
knew they were doing wrong, they were bribing the South African
officials, they were smuggling it out, and yet our client is
serving twice as much time for a law that, by the way, the
Honduran Government said it was invalid under their own law. To
me, that is just a travesty of justice.
Dr. Fleming. Yes, I agree. Well, my time is up and I yield
to the gentleman--the Ranking Member for 5 minutes.
Mr. Sablan. Thank you very much, Mr. Chairman. Mr. von
Bismarck, earlier you cited evidence, sir, that wildlife and
timber crime is a threat to our national security. You also
cited a report that shows that the 2008 Lacey Act amendments
and similar efforts by the EU dramatically reduced the amount
of wood China bought from high-risk countries and increased the
amount of wood China bought from the United States. So is this
evidence that the 2008 amendments are working to combat illegal
logging?
Mr. von Bismarck. Absolutely. The impact that I have
personally witnessed in our investigations in dozens of Chinese
companies have been--it has been extraordinary to see that the
Lacey Act passed here in the United States is changing the
practices of factories on the other side of the globe.
In multiple meetings with Chinese factories, we saw the
orders of American wood that were coming in. We have recorded
the conversations where the CEOs of those companies explained
that they are worried about making products with timber that
comes from high-risk countries like Russia. And because they
are worried that those shipments might get in some trouble in
the United States, so they are changing their operations to get
wood from places they trust. One of those places is the United
States.
And the actual trade data from China themselves backs up
this on-the-ground information, where the proportion of wood
that is coming from the United States to China was 10 percent
in 2007, the year before Lacey was passed, and in 2010 went up
threefold.
Additionally, our trade surplus for manufactured goods with
China in the wood sector was at about a $20 billion deficit in
2006. And in 2010 went up to a $200 million surplus. Again,
because not only does it help companies importing wood in
China, but it helps U.S. manufacturing companies, this concern,
because it will be easier for them to compete by buying the
wood that is directly next to their company, their
manufacturing center in the United States.
Mr. Sablan. So something is going right here. So again, Mr.
von Bismarck, you also gave a number of compelling examples of
how organized crime in wildlife and timber threatens our
national security. Do we also have a national security interest
in helping other countries--apparently with just your earlier
conversation with China--develop the responsible and legal use
of their own natural resources? Their own natural resources. Do
the foreign law provisions of the Lacey Act help us achieve
that goal?
Mr. von Bismarck. Absolutely. This is the irony, that for
some of the markets that are maybe directly linked to some of
the national security concerns, whether it is a cocaine
shipment in Central America or rebels in Mindanao in the
Southern Philippines, we are right now at the precipice of
having markets that are directly adjacent to those situations
pick up this principle, this principle that they do not--they
will not accept shipments that have evidence attached that they
are coming from these practices.
Mr. Sablan. All right.
Mr. von Bismarck. They are looking at what is happening
here. If we backtrack on foreign laws in Lacey, we lose our
chance to do that.
Mr. Sablan. All right, thank you. I am going to go back.
Mr. Asner, I have a question. Last time you were here, when you
last appeared before the Subcommittee, you introduced Members
to the concept of warranties and guarantees that could be used
to shield importers from the unscrupulous actions of their
suppliers. So can you please explain again the options people
have to shield themselves from potential Lacey Act violations?
And could taking advantage of such options have allowed the
defendants in McNab or Gibson to avoid breaking the law and
paying the price?
Mr. Asner. Yes, it could have. It could have helped. So,
again, the Lacey Act has three different levels. If you
knowingly are involved with illegal wood, it is a felony. If
you should have known, it is a misdemeanor. If you didn't know,
but it is nonetheless illegal, then what happens is it could be
forfeited. You are not criminally liable, but it could be
forfeited. The advantage of having a warranty or representation
from your supplier is that it helps you on all three prongs.
With the forfeiture, it pushes the risk off to the
supplier. With the other two you get a representation, and it
helps you make the argument that you exercised due care.
Dr. Fleming. The gentleman's time is up. The Chair now
recognizes Ms. Shea-Porter for 5 minutes.
Ms. Shea-Porter. Thank you. And I had a question. The
comment was made that the rules weren't even in English, and
there is 194 nations. How on earth do they do business if it is
not even in English in the rules about the Lacey Act? How do
they even pick up the phone and start making a business deal?
Does everybody speak English except the ones that are looking
at the enforcement? Or--I mean I don't understand that comment.
Could you----
Mr. Larkin. Yes. No, I am glad to. I have here a copy, as
my colleague referred to, of the non-prosecution agreement. The
non-prosecution agreement talks about, at the invitation of
Greenpeace and other non-profit environmental groups on June 9,
2008, a Gibson wood product specialist, Gibson representative,
flew to Madagascar for a fact-finding trip with a group called
the Music Wood Coalition, spearheaded by Greenpeace. The trip
was designed to assess the potential for supporting sustainable
forestry in Madagascar. Part of the justification for the
Gibson representative's participation in the trip was the ebony
species preferred for some of Gibson's instruments is found in
Madagascar.
Now, in connection with the trip, the Gibson representative
received a translation of Madagascar inter-ministerial order
16-030/2006, banning the harvest of ebony and the export of any
ebony products that were not in finished form. The translation
of the order received by the Gibson representative stated that
the fingerboards are considered finished under Madagascar law.
Participants in the Music Wood----
Ms. Shea-Porter. OK, so--but what I----
Mr. Larkin. So let me--I will stop the quote.
Ms. Shea-Porter. No, because----
Mr. Larkin. No, I understand. I am not trying to eat up
your time. My point is----
Ms. Shea-Porter. No. What I am asking--I think you are,
actually. But what I am asking is if you say they don't speak
English, they are not writing it in English, then the question
has to be how on earth do they conduct business?
Mr. Larkin. No----
Ms. Shea-Porter. Somebody speaks English.
Mr. Larkin. I didn't say no one speaks English. What I said
was a lot of the laws that you can be held liable for
violating----
Ms. Shea-Porter. Are not in English.
Mr. Larkin [continuing]. Are not in English. And this is an
example of one.
Ms. Shea-Porter. Right. But I do know that businesses are
very savvy, and they know when they are signing contracts, that
they want it in their language, that they weigh every word,
they have attorneys, they have other business people. They know
to weigh the words and understand what they are signing. And I
know that they have lawyers who know how to do that.
So I don't understand the argument that they don't speak
English. And, if anything, that would make me think even more
that they hadn't paid enough attention to those aspects of the
law, which I think are just as critical as signing the contract
for the trade. But----
Mr. Larkin. Would you like me to respond to that?
Ms. Shea-Porter. No, not yet. If I get another round, sure.
But thank you.
All right, Mr. Asner, can you talk to me about that
lobster? Can you tell me, from your perspective----
Mr. Asner. The McNab case?
Ms. Shea-Porter [continuing]. The facts.
Mr. Asner. Yes, it is sort of interesting, because you lose
at the trial level, you lose at the court of appeals. Even
before then you get another bite at the apple at the trial
level. You lose at the court of appeals, you try and take it to
the Supreme Court, you lose every step of the way. The jury
finds the defendants guilty of knowingly violating these laws.
That is upheld by the court of appeals. And you take it to the
Supreme Court and then you lose there, so you bring it to
Congress. And that is what is happening here.
So, this hearing, or at least a good portion of this
hearing, is devoted to people who have lost a case. And they
lost a case because the evidence supports the prosecution.
Some of the things that we haven't talked about, they
intentionally falsified import documents using a secret code to
disguise the true size of the illegal undersized lobster. After
law enforcement intercepted one illegal shipment on its way to
Alabama, the co-conspirators tried to circumvent law
enforcement by putting lobster in a plane and flying it to LA.
When they got caught doing that, they tried to move it to
Panama and then fly it to Canada and come in through the
northern borders. That is criminal behavior. They got caught.
They were convicted. And that is the end of the story.
Ms. Shea-Porter. Does that concern any of you? Did you not
know that part of the story?
Mr. Kamenar. I certainly do know part of the story, and a
lot of it was left out by Mr. Asner. Namely that, again----
Ms. Shea-Porter. But let me just ask you about that. Did
Mr. Asner just tell the truth?
Mr. Kamenar. No, he did not. He misrepresented the facts of
the case.
Mr. Asner. It is in the record.
Mr. Kamenar. The point is that when this was first stopped
at--the first shipment that came in, there was 6 months before
the U.S. officials figured out what was wrong with this. In the
meanwhile, the U.S. importers did not think there was anything
wrong, but they figured if they can't get at what they thought
were lawful shipments, they will go to another port, where
California did not have a law with undersized lobster tails,
and neither did Canada. So they were trying to carry out their
business, in what they thought was in a lawful way, because
they weren't told for 6 months what was----
Ms. Shea-Porter. OK. All right. Mr. Asner, any comment, in
all fairness?
Mr. Asner. No, they were evading law enforcement. It is
pretty plain. This was presented before the jury, and the jury
found all the defendants guilty.
Ms. Shea-Porter. OK. Thank you. I think that is a good
point to yield back.
Dr. Fleming. The gentlelady's time is up. Again, I have
more questions. Would you all like another round, or just ask
questions ad lib? How would you like--we will have another
round. I will yield myself 5 minutes. I believe we are up to
me, next.
Let me understand kind of some central themes here. We have
a situation where Americans who try to do business across our
border with other nations are having to deal with very complex
laws in other nations. Often they have an inability to get
correct language description in English. And yes, somebody can
be prosecuted by the law. And when you add the law to facts, if
it is a bad law, you can send somebody to jail for a long time,
or you can certainly extort their business or certainly extort
some sort of plea agreement so that they can keep their
business going. We know this happens all the time. And that may
be constitutional, but it doesn't make it right. It does not
make it right.
For a man to go to prison for 8 years--and I don't care
whether or not he mislabeled. I don't even care if he went to
the wrong island first. To go to prison for 8 years over
lobster tails, because of violations from another nation? That
is absolutely absurd. And I understand that there are
disagreements on the facts of that, and there is no point in
going through that. It is immoral to send somebody to prison
for 8 years for getting the lobster tails the wrong size.
And we know that in the case of Gibson Guitar they were
going to end up in bankruptcy if they didn't sign the deal.
Nothing was proven in law. It never went to court, as far as I
know.
So, I would like to have some of your comments, gentlemen,
as to what you think about the law, the morality--I mean,
again, as an American, I understand that, when it comes to
criminal law, at least, that the government has a heavy, heavy
burden to make sure that the law is clear to me, that I get
every advantage, I get my day in court of protection. I am not
seeing this in the Lacey Act, particularly with the 2008
amendments. So I would love to have your comments on this.
Mr. Rubinstein. I will start. I would encourage all of you
who have an interest in this to actually read the Gibson
agreement, because it is--what they do is they admit to certain
facts, but they do not admit to criminal culpability. And the
fact of the matter is that armed agents went in, herded all the
employees into rooms, guns drawn, about the Indian wood. And
then, after a year and hundreds and hundreds and hundreds of
thousands of dollars, just said, ``Never mind, ignore all
that.'' It is wrong.
There are two real big problems that need to be fixed with
respect to Lacey. One, there is no reason that the government,
whether it is Congress or the executive branch, can specify and
provide a place where people can go and see what laws apply.
And, two, there ought to be some intelligible principles for
what appropriate behavior is. Congress does this all the time.
Take a look at Title 22 of the U.S. Code, and a whole bunch of
other laws. We do laws, we write regulations, we provide people
with notice. Under Lacey we should do the same thing.
Mr. Kamenar. I would like to follow up on that, and I agree
that we should have this information published. In fact, as I
said in my testimony, the government itself--and I have this as
exhibit to my testimony--published a price list of these so-
called illegally sized lobster tails, letting the people know,
``Here is what it costs for a two-ounce lobster tail from
Honduras is $8.75.''
And so, I am surprised that Mr. Asner, who, in his
testimony, his written testimony at least, said, ``Oh, no, we
should not have a data base. Consumers don't want that, that is
not good for consumers.'' I would think consumers would want
more information as to what is legal or not legal to be
imported. But yet Mr. Asner apparently believes people should
be kept in the dark.
Dr. Fleming. Well, I would suggest--I mean we have talked
about this before, Mr. Asner. You represent both plaintiffs and
defendants, is that correct?
Mr. Asner. That is correct, yes.
Dr. Fleming. And so, the more difficult and the more
complex the law, the more cases there are, the more legal
activity there is, the better for business. Right?
Mr. Asner. Your Honor, or Mr. Chairman, I don't actually
represent anybody in this--any criminal defense. I represent--
--
Dr. Fleming. But you are in private practice.
Mr. Asner. I am in private practice----
Dr. Fleming. And so you do charge fees for the consultant
work, for legal advice----
Mr. Asner. I think we all do. That is what lawyers do,
right, in private practice?
Dr. Fleming. OK. But we have these lawyers who are saying
let's fix a bad law, make it simple, and subject Americans to
less jeopardy. And you are saying, ``No, let's keep it the way
it is and make it as difficult as possible. Hey, it is good for
business.''
Mr. Asner. That is not what I am saying. What I am saying,
actually, is that the law, as it exists right now, makes a lot
of sense. We could strengthen it. But right now, with the law--
--
Dr. Fleming. Do you support the data base idea?
Mr. Asner. No, I don't support the----
Dr. Fleming. And why not?
Mr. Asner. Because the data base idea is bad for American
business, because what it does is it has some bureaucrat in
Washington laying out the statutes that somebody has to follow.
Whereas, if I am a company, I want to be the person who will
decide whether it is illegal.
We don't have a data base of foreign laws with respect to
property, either. And yet it is illegal to----
Dr. Fleming. So the less information available to
Americans----
Mr. Asner. No----
Dr. Fleming [continuing]. The better for Americans?
Mr. Asner. Absolutely not. Businesses are in the best
position to decide for themselves how to do----
Dr. Fleming. If they have the information, correct?
Mr. Asner. Yes. And they are the ones who have that
information.
Dr. Fleming. My time is up. I yield to the gentleman, the
Ranking Member.
Mr. Sablan. Mr. Asner, apparently you are combative today.
I see. But we have heard a lot of outrage today over the
alleged injustice of the Lacey Act's foreign law provisions. So
is the Lacey Act unique among U.S. laws for its use of foreign
law violation as a predicate offense?
Mr. Asner. Absolutely not. In fact, many U.S. laws
incorporate foreign laws. I used the example in my oral
testimony a moment ago about how if you have illegal stolen
cattle and you bring it into the United States, that is a
violation of law. There are many examples. Stolen goods are
some, there are all sorts of import-export violations.
The key to all of this--and this is very important, and I
think the Chairman is missing this--is that the mens rea, the
scienter, knowledge requirement, is what protects people here.
If you don't know about the foreign law, and you have not
violated the foreign law knowingly, you are not guilty. And
that is constitutional. That has been in the Lacey Act for
decades. And nobody has really complained about that until now.
Mr. Sablan. Yes. Yes, I have one more question for Mr. von
Bismarck.
Shark finning is a serious problem that destroys marine
ecosystems and the economies of coastal communities that depend
on healthy fisheries, including the Northern Marianas, where I
come from. So do the Lacey Act's foreign law provisions have
the ability to support the conservation efforts of other
countries that ban shark finning in their waters?
Mr. von Bismarck. Absolutely. It is absolutely critical. I
mean some of that might be on CITES, but CITES is a mechanism
that is based on paperwork. And a lot of the problem is you can
fake paperwork. And for prosecutions to be effective, the fact
that the Lacey Act says if you broke a law overseas and you
illegally shark-finned overseas--we do not want to create a
market for that here--is absolutely critical to support a
variety of states that are trying to get that problem under
control.
Mr. Sablan. OK. So we are going to go back to China
earlier, because you said--the wood you are seeing in China is,
good business practice, transparency, and, so what are you
seeing in China, but why do you think illegal logging in Russia
hurts the United States, U.S. businesses?
Mr. von Bismarck. It is particularly pernicious for U.S.
businesses, because it happens to be the same kind of trees,
the same kind of timber that we produce here. So you could buy
your oak from a tiger habitat in the Russian Far East, or you
could buy it from family owned lands in the Eastern United
States. And that is, right now, at the tipping point. And
because of Lacey, we have a chance to make U.S. forests more
valuable in the international marketplace.
We are seeing those changes happen right now in Chinese
factories, as I discussed. But it will backtrack in a heartbeat
if a signal comes--everyone is looking at the U.S. and the
implementation of the Lacey Act, and wondering if it will
continue, and if it will be strong. And if we send a signal
that we are not interested in implementing the foreign law
provisions, or scaling it back in some way, we will hurt
American business in that way.
Mr. Sablan. All right. My first CODEL was flying into the
island of Espanola, and you just realize that half of the
island is lush forests and the other half was barren
deforestation, a lot of corruption and illegal logging. I am
not sure if we took part in any of that. Maybe we didn't, we
didn't buy any of those logs. But that is why we need laws. And
we must respect.
But, Mr. Chairman, I yield back my time.
Dr. Fleming. The gentleman yields back. Ms. Shea-Porter is
recognized for 5 minutes.
Ms. Shea-Porter. Thank you, Mr. Chairman. So, hearing how
difficult this is, I asked my staffer to Google the Lacey
amendment. And, lo and behold, within about 30 seconds it tells
you where to go if you need help. And I just wondered if that
seemed too difficult to Google it and get there for your
clients that seem to have trouble. There is an actual address
to go to.
Mr. Rubinstein. If you go, and this is laid out in some
detail in the written testimony, so forgive me if it is
repetitive a little bit, but the government does not provide
hard information about what is or isn't permitted behavior. The
Justice Department did a presentation where they put a Power
Point up. And it provided ``guidance'' on how to comply with
Lacey. And the guidance was to be charitable, less than
specific, and not terribly helpful, at least according to the
Justice Department's own admission, the idea being that due
care is going to differ in every circumstance.
This is not how we typically enforce our laws. Generally,
we tend to be a little more specific. And it is really not a
lot to ask, I don't think, the government to provide some
metrics for behavior. That would, according to CRS, by the way,
improve Lacey enforcement. I don't think anybody objects to an
effective Lacey Act. I think what we are trying to do is get to
a better place than where we are now, that, on the one hand,
achieves the wonderful goals that we hear from over here, but
on the other hand prevents situations like we had in Gibson,
where you have armed agents coming in and then the government
afterwards saying, ``Oh, Never mind.''
Ms. Shea-Porter. But that wood was clearly on the list. I
mean that wasn't vague, it wasn't unknown.
Mr. Rubinstein. Well, there are two, without getting too
much into the weeds, there are two situations in Gibson, one
related to Madagascar, one related to India. And the Madagascar
wood is laid out in some detail in here, exactly what was
agreed to and what wasn't. The Indian wood, though, the
government said, ``Oops, Never mind, we made a mistake.''
Ms. Shea-Porter. OK. So let me follow up by asking both of
you, please, what do you think about that? You talk to people
around the world, I am sure. You must have to communicate in
English, or whatever language, about these rules and
regulations and protections. And how is that going? Are the
people that you talk to, your counterparts in other parts of
the world, pretty clear on the rules? And how about you?
Mr. von Bismarck. Well, I tried. But I think it is clearly
an accurate point that the people that are overseas, whether it
is a U.S. company or whether it is myself as an investigator,
know better what the situation is than a bureaucrat in
Washington.
And I think the Lacey Act, as structured right now, already
takes, due to the due care standard, takes account of the fact
that, if you cannot know, if it is difficult for you to know
because you are a mom-and-pop shop making furniture in the
United States, you don't need to know.
And so I think, I very much take Mr. Asner's point that it
might be that there are many companies in the United States
that would not want a declarative list of what foreign laws
they are responsible for, in light that the current law exempts
them from being responsible for that. So I am quite surprised
that is the position being put forward.
I am also surprised that or rather I am not surprised that
every description of an improper so-called raid on Gibson
focuses on the India case. The India case was in the context of
the Madagascar case going on, which, as you describe, had an
extraordinarily clear circumstances of knowing import of
illegal wood. And so I think it is not a particularly, from my
point of view, unreasonable form of prosecution, that if you
just sped by recklessly, at 110 miles an hour, that then you
are pulled over the next time also, when you go with the same
car 20 miles an hour over the speed limit. It seems to be an
entirely reasonable way that things run forward.
And in the enforcement agreement, Gibson says, ``We knew
that logging was illegal since 2006. We knew that export was
illegal, and we continued to import it.''
Ms. Shea-Porter. So, Mr. von Bismarck, what you are saying
is, that line from the movie, ``I am shocked, shocked,'' is
actually somewhat the truth here, as well, that----
Mr. von Bismarck. Yes.
Ms. Shea-Porter. That they should know, that there are
certain things that you do know. And if you are a small mom-
and-pop, then it is, you don't need to read, like, every single
line all the way through, because it probably doesn't apply to
you, that we are talking about larger importers, right, that
should know.
Mr. von Bismarck. Absolutely. The supplier to Gibson in
this case was working exclusively with that timber boss, Mr.
Tuman, in Madagascar, for 15 years. He set him up. Every detail
of his operation was known by the supplier, by the company
called Nagel in Germany that directly dealt with Gibson. And,
on top of that, the representative of Gibson actually went to
that boss's yard at a time when all of the wood in the yard was
seized. He saw it seized. And there are a variety of other sort
of absolutely obvious examples for why that wood was illegal.
Thank you.
Ms. Shea-Porter. Thank you. And I yield back. Thank you for
the extra time.
Dr. Fleming. The gentlelady yields back. I am going to go
through one more set of questions, and I think we can call it a
day after that, after we are done with our next panel. I
recognize myself for 5 minutes.
Well, here are the conclusions I draw from the facts in the
testimony, that indeed the Lacey Act, particularly with the
2008 amendments, opens up Americans to be subject to foreign
laws, up to and including Sharia law. Although that may not be
a clear and present danger today, it is something to think
about with future laws.
It is also clear that those rules, regulations, and laws
from other nations are often unclear and unintelligible, which
I think is a very dangerous thing for Americans.
But I am also bothered by the fact that if the government
fouls up, nothing happens to the government. But if the
government fouls up, the American is screwed. And I am very
bothered by that. And we have a growing, growing government,
like cancer today. And whenever it misses its deadlines, as we
are seeing happening with all kind of laws today, Obamacare,
Dodd-Frank, you name it, we are missing all kind of deadlines,
nothing happens. But if something goes wrong, the American, the
individual American, pays the price.
So, I am going to yield the last 3-point-whatever minutes
that I have to you gentlemen on this side to explain to me how
do we fix the Lacey Act to make it right?
Mr. Kamenar. Well, as I said in my testimony, I think the
first thing Congress needs to do is assert its legislative
authority. And if it wants to include foreign regulations in
the Lacey Act, for goodness sakes, say so. Congress said so
with respect to U.S. laws and regulations, State laws and
regulations. And the Indian tribal law and their regulations.
But it just said ``foreign law.'' So, step number one, put that
in there.
Step number two, decriminalize the statute. And you can use
forfeiture all you want. You can impose civil penalties. But
for cases like McNab and others, where there is this heavy
Draconian criminal sense, I think, is outrageous.
And, number three, I still can't understand why no one
would, why Mr. Asner and his supporters object to a data base.
We have, with CITES and others, we list all the things that you
can't--that are on the endangered species list and so forth.
More information is better than less. And I think that is one
thing we should do.
Mr. Larkin. Of the four recommendations I mentioned
earlier, two directly speak to the problem you are now dealing
with. One would be to require that the government prove that
someone acted willfully. That is, someone intended to flout the
law. Someone knew that the law prohibited what he or she was
doing, but went ahead and did it, nonetheless.
In the alternative, rather than require the government to
prove that, you could allow the defendant to raise a defense of
mistake of law. If no reasonable person would have thought that
what the defendant did was a crime, the defendant would be
exonerated. That would put the burden on the defendant, rather
than the government, but it would also deal with the same
problem: someone who reasonably believes that he or she is
complying with the law, and nonetheless can get caught up in
the criminal justice system.
Mr. Rubinstein. ILR believes that Congress needs to take a
hard look at Lacey, determine whether there is an appropriate
threshold mens rea requirement, whether the statute adequately
defines both the guilty act and the mens rea for the offense in
specific and unambiguous terms, and clearly states whether the
mens rea requirement applies to all of the elements of the
offense, or, if not, which apply to the elements of the
offense, sets limits on enforcement discretion, and, most
importantly incorporates performance metrics required for
meaningful oversight.
We need to do something about the foreign law trigger.
Whether that is done by statute or administratively, there
needs to be a place that people can go to find out what laws
apply. There needs to be a place people can go to get, at least
in broad strokes, what the metrics for acceptable performance
are between proscribed and permitted conduct. This would help
enforcement, it would streamline compliance. And, oh, by the
way, it is what our Constitution and our legal norms require.
We support the Lacey Act, but the way it is being done now
is just wrong.
And there is one thing I cannot let go. We heard about a
so-called raid. The agents were not carrying so-called rifles.
Those were real rifles. And the people who were rounded up were
not so-called people, they were real people. And we have armed
agents going into guitar factories over something that the
government determined, a bureaucrat in Washington set that into
motion. So, please, let's make it clear where everybody, then,
where there is transparency, where there is government
accountability, and where you don't have a bureaucrat sitting
in an office somewhere talking to some NGO with the ability to
send armed agents into Americans' workplaces and homes. That is
wrong. That should not stand.
Dr. Fleming. Well, thank you, gentlemen. That about says it
all for me. And I will yield 5 minutes to Ms. Shea-Porter.
Ms. Shea-Porter. Thank you. Sitting next to a former
bureaucrat, I hope you would be a little more sensitive to him.
And I would like to know right now. How many people have worked
for the government on the panel? Raise your hand, please, if
you have been a bureaucrat.
Isn't that wonderful? And the taxpayers got their money's
worth out of you. And we thank you. You are obviously smart,
well educated, and have a lot of experience. So we thank you
for your service. And I----
Mr. Rubinstein. Yes, we do. We thank them for their
service.
Ms. Shea-Porter. I would appreciate if maybe, a few less
whacks at bureaucrats would be nice.
Mr. Rubinstein. That is a fair comment.
Ms. Shea-Porter. Now, I also heard a comment about the
government. So, let me start with Mr. Asner. Were there any
juries involved here? Is it always the big, bad government, or
did a jury of the peers ever say anything?
Mr. Asner. McNab had a jury of the peers. And with a lot of
these cases there are negotiations. And if you look, for
example, in Gibson, they keep on talking about Gibson in fact,
the agreement that they talk about there, they actually concede
that they knew in emails, in a report that went up to Gibson
from their agents on the ground, that it is currently illegal
to harvest or export ebony from Madagascar.
Gibson entered into a criminal enforcement agreement that
gave them the right to not be prosecuted as part of an
agreement, because the government, in its grace, decided not to
prosecute them. But they could have, under these facts.
Ms. Shea-Porter. OK. So we have had a combination of
government and also a jury of peers looking at this.
And then I wanted to add one more comment. When you talk
about not making it criminal, but rather making it just a civil
penalty, and you find a group that could pay pretty much any
kind of penalty, and yet they are working with criminals,
often, doing this, then it is pretty naive to say, well, you
just have to pay a little bit of cash. But the underlying
problem is that they are working with criminals that are doing
terrible things.
So, I think I will give Mr. von Bismarck the last chance to
talk about that. You are aware of some criminal activity, no
doubt. I am talking about overseas, using the import-export----
Mr. von Bismarck. Yes. I mean forests mean a lot of
different things to a lot of different people in this case.
And, unfortunately, it is a good place to hide for insurgents,
is one of the things it means. And a good place to finance
those insurgencies. You have ready-made trees that are very
valuable on the international market, if there are no questions
asked about those trees.
And so, as I mentioned before, we have very acute current
examples of that, where U.S. servicemen are in the line of
danger, where the killing of Americans is being financed by
illegal logging, and by the fact that countries are not asking
questions about whether foreign laws were being broken. I am
glad to hear we actually, it seems like no one on this panel is
actually against foreign, the concept of foreign laws being
important, and I find that very encouraging. I wasn't expecting
that.
But I think it is also very dangerous if we send a signal,
because we are talking about the specifics, that we are going
to scale back. We are going to lose our chance right now to
address serious international, increasingly sophisticated
organized crime and the funding of terrorism.
Mr. Asner. May I add something?
Ms. Shea-Porter. Yes.
Mr. Asner. Yes. Look. The fact that the Lacey Act is
criminal is crucially important, because the criminal part of
it reflects the serious nature of this and the criminal
behavior of this.
And let me give you an example from the case that I
prosecuted, the Bengis case. That was, as I mentioned before, a
massive scheme for decades to over-harvest rock lobster and
bring it into the United States. At one point, and they had all
sorts of shenanigans to hide it, and they just raped the
economy of South Africa, or at least the fish in South Africa,
at one point one of Arnold Bengis's lieutenants said to him,
``What will happen if you get caught?'' And this is in the
record, and I apologize for my language. His response was, ``I
will never get caught. I have f-you money.'' And that is what
happens when you have just civil violations, is that somebody
has f-you money, and can make it go away.
Ms. Shea-Porter. OK. Well, I am trying to breath again.
[Laughter.]
Ms. Shea-Porter. But let me just say that I think the point
is made across the board that we can't just put a civil
penalty, because it is not enough. It has to be prosecuted as a
crime.
Mr. Kamenar. If I could just comment on that, I mean, if it
is such a crime in South Africa, why don't we just extradite
these guys back to South Africa, where the crime took place? We
can have extradition treaties with all these countries.
Mr. Asner. That is reflected in the record repeatedly. The
South Africans weren't able to do this, and these people were
American citizens living in New York City and Maine.
Ms. Shea-Porter. Well, I thank you and I yield back.
Dr. Fleming. The gentlelady's time is up. I believe we have
had all of our questions answered.
I do thank the panel today. I think we learned a lot of
very valuable information. I am personally convinced that this
law needs some very significant changes. I think that we took a
wrong direction back in 2008, in particular, and I really look
forward to working with my colleagues on this.
Members of the Subcommittee may have, and I am pretty sure
will have, additional questions for the witnesses, and we will
ask for you to respond to these in writing.
The hearing record will be open for 10 days to receive
these responses.
Before closing, I must say that, based on our own
investigation and that of the Library of Congress, it is
stunning that nowhere in the Committee hearings, Committee
reports on the Floor debate on the Migratory Bird Hunting Stamp
Act of 1935, is there any legislative history on why the 74th
Congress felt it was necessary to force American citizens to
comply with the laws of foreign nations. It was almost as if
this provision was simply added as an afterthought.
And, again, unintended consequences. Everything we do up
here can morph into something very ugly.
And the sponsors did not feel this historic change merited
an explanation, in fact. Instead, what has happened is that the
Federal courts, particularly the 9th circuit court of appeals,
has been more than happy to fill that legislative void by ever
expanding the scope of foreign laws and thereby increasing the
likelihood that Americans will lose their property and/or
freedom for violating an obscure foreign law.
I ask unanimous consent to submit for the record a legal
memorandum prepared by Mr. Paul J. Larkin, Jr. of the Heritage
Foundation.
[No response.]
Dr. Fleming. Hearing no objection, so ordered.
[The information submitted by Dr. Fleming for the record
has been retained in the Committee's official files:]
Dr. Fleming. I want to thank Members and the staff for
their contributions to this hearing. If there is no further
business, without objection, the Subcommittee stands adjourned.
[Whereupon, at 4:45 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
The documents listed below have been retained in the
Committee's official files.
American Forest & Paper Association, ``Written
Testimony on the 2008 Lacey Act Amendments.''
Executive Order 13648--Combatting Wildlife
Trafficking
International Fund for Animal Welfare, ``Criminal
Nature: The Global Security Implications of the Illegal
Wildlife Trade.''
Larkin, Paul--article entitled, ``The Injustice
of Imposing Domestic Criminal Liability for a Violation of
Foreign Law''
Letter from the Honorable Ted Yoho, Member of
Congress from the State of Florida
On Petition for Writ to the United States Court
of Appeals for the Eleventh Circuit, ``Robert B. Blanford,
Abner Schoenwetter, and Diane H. Huang v. the United States of
America.''
Senate Select Committee on Intelligence,
``Worldwide Threat Assessment of the U.S. Intelligence
Community.''
United States Department of Commerce, National
Oceanic and Atmospheric Administration, National Marine
Fisheries Service, ``New York Frozen Seafood Prices.''
United Nations: Security Council, ``Report of the
Secretary-General on the Activities of the United Nations
Regional Office for Central Africa and on the Lord's Resistance
Army-affected areas.''