On November 17, 2009, agents of the Fish and Wildlife Service ("FWS") executed a search warrant on Gibson Guitars of Nashville, Tennessee, marking the first major enforcement action of the Lacey Act against an importer of wood products since it was amended in 2008.

According to published reports, the raid by FWS agents was based on information in a sealed affidavit alleging that Gibson is using illegally harvested rosewood and mahogany from Madagascar, which are banned under the Lacey Act. FWS agents and local police raided Gibson Guitar's Nashville factory apparently in search of the illegally harvested mahogany and rosewood. During the raid, FWS agents seized wood, guitars, computers and electronic files.

Since 1996, Gibson's Nashville factory has held a Forest Stewardship Council ("FSC") Chain-of-Custody certificate, guaranteeing that all certified wood comes from legal sources, such as community managed forests in Honduras and Guatemala. Gibson's factory and the guitars are subject to annual FSC inspection and were last re-certified in September 2008. Notwithstanding the FSC certification program, published reports allege that certain wood in Gibson's factory was illegally harvested from Madagascar and shipped to the United States through Germany. Prior to the raid, Gibson's Chief Executive Officer, Henry Juszkiewicz, served on the board of the Rainforest Alliance. In light of the investigation, Mr. Juszkiewicz announced that he will be taking a leave of absence from the Rainforest Alliance board.

Neither the FWS nor the U.S. Attorney's Office for the Middle Tennessee District has publicly commented on the raid, but Gibson Guitars issued a statement indicating that it is "fully cooperating" with FWS agents and the investigation.

While the facts of this case are still developing and the full extent of the allegations will not be known until the affidavit is unsealed, the little that is known underscores the importance of maintaining and regularly verifying the soundness of supply-chain and sourcing arrangements involving products regulated by the Lacey Act, even when FSC-certified inputs are involved.

Background on the Lacey Act

As reported in previous Miller & Chevalier Alerts, Congress amended the Lacey Act in the 2008 Farm Bill (P.L. 110-246, 16 U.S.C. 3372) by banning importations of illegally-harvested timber, and products containing illegally logged timber, including timber protected under the Convention on International Trade in Endangered Species ("CITES").

Under the amended Lacey Act, importers of all covered products, including, most notably, timber and wood products, are required to submit to U.S. Customs and Border Protection at the time of importation, a declaration that provides: (1) the scientific name of the plant, (2) the value of the importation, (3) quantity of the plant, and (4) name of the country from where the plant was harvested. Due to the significant administrative and logistical burdens imposed by the declaration requirement, the Animal and Plant Health Inspection Service ("APHIS") is phasing-in implementation of the declaration requirement in four traunches. APHIS has revised the declaration's implementation schedule three times, in October 2008, February 2009 and, most recently, in September 2009.

Under the current implementation schedule, in April 2009 the declaration requirement became effective for products classified under HTSUS headings 4401, 4403, 4404, 4406-4409, 4417-4418. Effective October 1, 2009, the declaration requirement entered into force for products classified under headings 4402, 4412, 4414, 4419, and 4420. Finally, in April 2010, the declaration requirement will become effective for products classified under heading 4421, chapter 66, heading 8201, 9201-9202, 9302, subheading 9305.1020, chapter 94, chapter 95 and chapter 97.

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