When it comes to importing and exporting, Customs takes their job seriously, especially regarding Lacey Act violations. Civil and criminal penalties are severe for companies that violate its terms.
In 2016, Customs fined a large flooring retailer $7.8 million for violating the Lacey Act. The company also forfeited $1 million in goods and had to pay $1.3 million in community service payments. This total doesn’t include legal expenses or reputational damage.
With stakes this high, it’s critical to understand today’s Lacey Act requirements and be prepared to meet new regulations.
What is the Lacey Act?
Congress first enacted the Lacey Act—the United States’ oldest wildlife protection statute—in 1900 to address the import and export of game bird feathers for hat making. Some game bird species were on the verge of extinction because of unrestricted import and export laws.
Congress later amended the Lacey Act in 1981 to combat trafficking in illegally harvested wildlife, fish, or plants.
In 2008, Congress modernized the Lacey Act to address illegal logging activities. These changes made it unlawful to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant that is taken, possessed, transported, or sold in violation of U.S., foreign, state, or tribal laws.
More updates to the Lacey Act are expected in 2023 and 2025.
When to File a Lacey Declaration
You must file a Lacey declaration when your product:
- Contains plant material
- Is classified under a Harmonized Tariff Schedule (HTS) code listed on the APHIS Implementation Schedule
- Is imported as a formal entry
- Falls under one of these entry types (01, 02, 03, 06, 07, 31, 32, 34, 38, 52)
Sometimes you may not need to make a Lacey Act declaration. For instance, exempt product categories can include common cultivars, common food crops, scientific specimens for research, and plants that will remain planted or will be planted. Finished products not classified under one of the HTSUS codes may not need a declaration.
Customs offers a list of tariff numbers subject to the Act, but this list isn’t all-inclusive. If your product contains plant material, it requires a Lacey Act declaration—even if it’s not on Customs’ list. You first need to verify the tariff number to see if it flags for the Lacey Act. If it does, your Customs broker must submit information to the USDA.
How is the Lacey Act Changing?
APHIS is working on Lacey Act Phase VII. In this phase, Lacey Act declarations will be required for all remaining plant product HTS codes that are not 100% composite materials.
This change will make an array of imported products such as furniture, essential oils, and cork subject to these declarations, despite never previously requiring them. APHIS will publish a list of affected HTS codes in the Federal Register in 2023 and require declarations within six months.
The remaining items will be addressed in Phase VIII, slated for release in 2025. The final list in the Federal Register will include a definition of composite materials. There is no definition currently in law.
You should give your Customs broker a list of all materials used in your products. Customs brokers can submit this information into the ACE portal electronically.
What About Pallets?
Controversy surrounded pallets in the 2021 implementation of Lacey, leading to confusion. If you ship new pallets into the U.S. from Canada, they are subject to the Lacey Act—but the Lacey Act doesn’t apply if you are shipping a machine on a pallet.
To keep it simple, you only have to worry about pallet imports if you sell them for the first time because the Lacey Act applies to those imports. If the pallets are already in use, declarations are not required. Specify this information on the invoice so Customs is aware of this.
This has nothing to do with the solid wood packing requirements for pallets; in that case, Lacey applies whether the pallets are sold, new, or used. The ITSM stamp is required for foreign pallets. Pallets imported from Canada must be insect or pest free. APHIS will inspect them at the border and look for bark on the wood or insects, which can lead to rejected shipments.
What Information Do Brokers Need to Process an Entry?
The ACE system requires specific information from the broker. Though not a comprehensive list, the information they need includes:
- Scientific plant names
- Country of harvest (where the material came from)
- Product value
- Quantity of plant material in metric units of measure
- HTSUS code
- Bill of lading
- Container number
If you don’t know the country of harvest, APHIS suggests you include all the countries where the plant material may have come from and has an entire page devoted to importing into the U.S. on its website.
What are Lacey Act Disclaimers?
Some products may be disclaimed with the Lacey Act. You must include the disclaimed codes on the form. The disclaimed categories include:
- Disclaimed A for packing material used to support or carry another item.
- Disclaimed B for used or recycled wood products carrying a product, such as a used pallet, fruit crate, or packing box.
- Disclaimed C when using another system to transmit the data to USDA via the Lacey Act Governance System instead of ACE.
- Disclaimed D when filing paper submissions via the PPQ Form 505 and mailing the form to USDA.
- Disclaimed G for Lacey Claim de minimis claims.
The Lacey Act is still important even if items are being disclaimed. Your Customs broker will require written verification if something doesn’t apply. Your entry can’t be processed until this information is in hand.
Takeaway
Penalties for violating the Lacey Act can include civil and criminal fines. Missing Lacey Act declaration requirements or false labeling of plants or plant products are some examples of violations.
You can be fined up to $10,000 per incident for civil penalties. Criminal penalties under the Lacey Act include five years of probation, a fine of $500,000, or twice the gross gain or loss. Customs may also enforce restitution and forfeiture.
Knowing what is in your products can help you correctly make Lacey Act declarations and file documentation. Hiring a Customs broker knowledgeable of Lacey Act declarations will help you avoid civil and criminal penalties that can cost you money and damage your reputation.
