LACEY ACT UPDATE AND YOU

[Duke of Pearl]

Since the Summer of 2011 I’ve been working closely with the National Association of Music Merchants (NAMM) as a member of their 18-person Lacey Task Force team in Washington, DC, urging Congress and the Senate to pass legislation remedying the Lacey Act’s unintended consequences which are crippling many businesses in the music industry (and others). I was also invited to join a second and much smaller (5 or 6 person) NAMM team involved in meeting with federal agency officials in seeking non-legislative solutions. This smaller team has had DC meetings in December and February, with the next scheduled for early April, the beginnings of a series of discussions which could last from one to three years. So far, we’ve been talking to officials from various branches of the U.S. Fish and Wildlife Service (USFWS), specifically their Division of Management Authority and Office of Law Enforcement. Our next session will add people from U.S. Customs and Border Protection (USCBP). It may be easier to achieve institutional/agency fixes than legislative, but both approaches are absolutely necessary to get permanent relief.

This last trip involved trying to get USFWS to back off on the $93.00 Inspection Fee and mandatory requirement of using expensive ($140.00) brokerage services for import/export shipments containing even the tiniest amount (such as one abalone dot) of wildlife material — this is the single most devastating factor in killing many small international transactions, which for many businesses are about 30% of total sales. It’s also the biggest sticking point in moving any instrument across U.S. borders which contains so little as a single piece of shell, thus incurring the special declaration requirement and expenses. And this is exactly why PRS Guitars, formerly the largest user of shell in the industry, in May of last year decided to switch to only plastics and Corian® in all their production guitars – and others seem to be headed that way also. USFWS is totally unwilling to accommodate exemptions for single instruments, or for small shipment values under our suggested $300.00 limit; in their experience, doing so would generate a vast number of shipments all falsely undervalued in order to qualify for the exemption, something they don’t have the time or manpower to sort out.

As for any wood stocks currently possessed by luthiers, especially any unpapered Brazilian rosewood or other listed species, USFWS is anxious to work with small builders to get their woods exempted so they can be shipped internationally as raw material, parts, or in an instrument. All that’s needed is for a builder to submit clearly detailed photos of currently held pieces, along with common and Latin name, country of origin, the exact amount of wood involved (in metric weight or volume), and an exact estimate of how many tops/backs/sides/fingerboards/bridges, etc. the wood is expected to yield (or number of existing pieces or sets). Include any and all paperwork associated with the wood, as well as a written and notarized statement detailing all you can remember about the wood or product’s history and provenance (when/where/whom it was purchased/inherited from, any prior owners, anyone who witnessed the sale, etc.). Also collect notarized statements, pictures, calendar entries, and any other supportive material from anyone involved in or witnessing any of the wood’s past history, and submit this information using a USFWS exemption application Form 3-200-32. Cost will run between $50-200, depending on whether applying for a single item/instrument or for setting up a “master file” on multiple things.

Nevada luthier Don Musser recently became the first to try this for unpapered tonewood (in a guitar headed for Canada), based on statements from both he and myself (I witnessed a transaction for his Brazilian in 1981), and he got an exemption certificate on the first try! He now plans to apply for a master file on his remaining wood. USFWS officials assure us that they’ll do everything possible for luthiers who submit a credible/believable account, for reasonable amounts of inventory which would be expected of a smaller shop (container loads would be more problematic!).

If an application is rejected, USFWS will indicate the reasons so that it can be corrected and resubmitted. If still rejected, our team has personal contact numbers for high ranking officials who are willing to intervene as far as the law allows, and who can pass their decisions on down to the subordinate agents in local offices processing the paperwork. Applying and being rejected will in no way cause USFWS to consider the wood in question to be “illegal”, or cause the luthier to be targeted for enforcement action or raids. The only way any given wood can be labeled as illegal is for the government to produce a paper trail (or witnesses) proving such is the case — an extremely unlikely situation with undocumented wood!

This encouraging information needs to be broadcast to luthiers as widely as possible, so please pass along this update to your own circle of music industry friends.

Legislatively, nothing at all will happen unless a huge number of luthiers, dealers, collectors, repair people, musicians, roadies, and groupies are willing to spend a few minutes contacting their district congressional reps and state senators politely but firmly requesting that they support reasonable amendments which will fix the Lacey Act’s unintended consequences. The only vehicle available is through NAMM’s efforts at getting congressional co-sponsors of the Cooper-Blackburn HR 3210 Lacey RELIEF Act bill (see links and sample/template letters on NAMM’s website, at: http://www.namm.org/public-affairs/arti ... -hr-3210-r). It currently has only 18 sponsors, but at least 100 or so are needed for it to be taken seriously and not just die in committee. If not enough support is gained fairly soon, we’ll have to start from scratch again after the coming elections change the names we’ve been dealing with in DC.

The current issue of ASIA’s Guitarmaker (Winter 2011) includes a second publication containing extensive and very specific information about how to comply with CITES and Lacey and stay out of trouble. The GAL website also has a link to a long and detailed article which I authored, at: http://www.luth.org/cites.htm. Anyone wanting the real facts behind Gibson’s situation can contact me with their email address, and will reply with a load of attachments of thoroughly documented and sourced information — almost nothing in the media, from Gibson’s PR campaign, or from political sources is true or accurate.

PLEASE TAKE NOTE that none of the above Lacey information has anything at all to do with partisan (party) politics or any past or current administration policies -- the 2008 Lacey amendment was initiated with bi-partisan support, as are the current proposed legislative fixes. These are regulatory and enforcement issues that are adversely affecting us all, and not political problems. To make it into a political issue will only make it more difficult to get anything accomplished in Washington. It also has absolutely nothing to do directly with Gibson's situation: NAMM was already working closely with vintage instrument dealer George Gruhn and his Tennessee Congressman Jim Cooper in 2008, long before the first Gibson raid in 2009, to deal with Lacey's often overly-broad, undefined, and ambiguous wording which it was clear even then would cause widespread problems in the music industry. Lacey was never properly reviewed and discussed, having been eclipsed by the much larger Farm Bill to which it was paper-clipped -- in fact, almost none of those who voted to pass the very important and hotly debated Farm Bill had even read the Lacey rider!

[tippie53]

thank you for your effort Chuck , we all appreciate your hard work in this .

[Darryl Young]

What a fiasco!!! When it's stated "All you have to do is......." then list a paragraph or two of work and expense.....it seems like a lot! It seems unconstitutional that you have to "prove" wood legally obtained preban is legal; else, it's no longer legal. You should be assumed innocent till proven guilty.........so the burden of proof should be on the government, not the citizen. Why should a citizen have to pay anything to get what he legally purchased and rightfully owns documented? And possibly they can reject that if they feel your memory isn't good enough. It's extemally frustrating to see the government going after legal, law abiding citizens so they have to prove they are innocent. Wars have been fought over this type of action. Legal or not, it is unconstitutional, unreasonable, and violates rights of law abiding citizens. Laws must grandfather in previous actions that were legal. It's not illegal to drive a car without a rear view mirror if it was manufactured before mirrors were mandatory. Same principle.

I appreciate your efforts Chuck.......so please excuse my rant. I can only imagine how frustrating it is for you and the others trying to make a difference. I know how I will make a difference come voting time this fall........

[tippie53]

this topic can get heated. Chuck has been on the inside for this for a long time and is in my eyes pretty much an expert. The government often passes legislation that makes sense only to them. We need to let our congressmen know what we think.
I have a large investment in a lot of woods. many were purchased before the 2008 updated Lacey. This is a start to help but in the end you will have to make a change by your vote.
I saw on face book where someone posted that the congress needs a uniform like Nascar so we know who sponsors them.

[Darryl Young]

I saw on face book where someone posted that the congress needs a uniform like Nascar so we know who sponsors them.

Now that's the truth! <smile>

RD, I made the comment trying to show the how badly rights are being trampled on......and the unconstitutionality of this. I'm sorry you feel that folks with that opinion aren't yet grown up. In my view, folks that willingly give up their constitutional rights as citizens, even for a "good" cause, are naive. Even if good has come out of this legislation (and no doubt it has), it does not excuse the abuses it has created. The end doesn't justify the means.......and I don't consider it childish to have that opinion.

[Darryl Young]

So expecting the govenment to respect it's citizen's rights and honor actions taken under previous law without placing the burden of proof and expense on the citizen to prove he/she is legal is wild eyed and radical? Oh, I'm no lawyer......but this isn't rocket science. Didn't the government go into Gibson with guns for crying out loud? In the industry I work in there are numerous inspectors and they can shut a company down........but I've never seen one of them carrying a gun. Implementation of a law can be unconstitutional just as the law itself can be unconstitutional. Right now the implementation of the law bothers me as bad or worst than the law itself.

I hardly made a threat......that's quite the stretch. There is a difference between a threat (future) and a history reference.......so I'll let others decide who is "wild eyed and radical" (not my term). However, I will say there are things in life worth fighting for..........figuratively and literally. Our forefathers did so and thank God they did. I think it is our duty as citizens to hold the government accountable. I'm guessing this fall they will.......

I'm with you on having our government officials reveal their sponsors!!! Best idea I've heard lately.

[Duke of Pearl]

The situation is extremely maddening, but regardless of Lacey's glaring faults it's not unconstitutional. For one thing, anyone who signs an application form to receive a USFWS Import/Export License or some of the federal wood certification forms agrees to the written condition that the government can hold them accountable, at any time during normal business hours, by performing a surprise inspection of their premises, inventory, and office records. Gibson had signed off on these documents, and the raid occurred under these conditions which Gibson had agreed to - not randomly, but because Gibson became heavily implicated in very large wood shipments of questionable legality. Almost none of the "news" or Gibson's PR statements you've heard about this are correct (send me an email address and I'll reply with documented/source referenced details of what's really going on).

As for showing up at Gibson's facilities wearing guns, enforcement agents always have uniforms and carry weapons in their work. I've actually been stopped for having a tail light out by jack-booted men in black carrying guns, and wouldn't expect otherwise. This has been totally overblown by Gibson and a corrupt press, and we should have enough common sense to not buy into such infantile scare tactics!

Also, it's very important to understand that unpapered woods which are already inside the U.S. are completely legal to buy, sell, and make instruments from, and that nobody owning these woods is under any obligation to "prove" innocence. It's only at the U.S. border that you're required to prove the wood's legality, because of the U.S. being (rightly) one of the 170+ nations who have subscibed to CITES in order to stop trade in endangered species. The century-old Lacey Act was amended to serve as the domestic enforcement engine in regulating the CITES agreement (CITES itself has no enforcement mechanisms).

Complex legislation always generates a certain amount of "unintended consequences", and some of Lacey's wording which is overly broad, ambiguous, undefined, and self-contradictory has created serious fallout in many smaller industries. One of these is the guitar industry, which is tiny in comparison to the overall U.S. wood market, using only about 1% of imported woods (most goes into flooring and furniture). This is a regulatory and enforcement issue, not a political one; and fixing it has nothing at all directly to do with the separate (although related) problems at Gibson.

If we don't like what's going on, the only way to change anything is to actually get off our glutes and actually send as many letters as possible to our district congressmen pleading for support of the Cooper-Blackburn HR-3210 Lacey RELIEF Act bill (see opening article in this thread for details on how to do that). We also need to send similar letters to state senators asking that a similar bill be introduced in the Senate. If anyone's not willing to do that, they have no right to complain about the problems happening to our industry. "Put up or shut up".

As for needing to learn how to deal with a bit of red tape to get unpapered wood certified (so it can cross international borders), here's a note received this morning from an east coast luthier:

I knew a contact with 350 sets of certified 1960's BRW and put a Guitar Manufacturer in touch with him, who after confirming that the wood was legally certified bought it all except for 2 sets. The supplier is gifting me those 2 sets, but being able to get the proper permits and papers makes them legal to build with for an overseas sale.

Without your work in educating me I would never have had this opportunity. For those of you interested in how it worked, the supplier had the CITIES documents for his wood. I called Scott at the Maryland office, he sent me 2 forms for importation of wood: Form PPQ-621 and PPQ-585 . I have to pay $70.00 for processing and in 30 days will get the paperwork for the shipment.

[Darryl Young]

A question for you, why do no FDA or USDA inspectors (who have a lot of authority as for as shutting plants down) never carry weapons........but the folks who raided Gibson did? I'm missing something there. I agree that cops need to carry weapons (to your point about being pulled over about a traffic violation) but should inspectors?

So I may be missing a piece of information. I can sell any BRW I legally own within the USA with no paperwork and no fees? If that's true, then you guys are correct, I'm misunderstanding/misinformed.

I don't have enough information about the first Gibson raid to comment. On the second raid, my understanding is they did nothing that all the other mfgs aren't doing and none of the other mfgs are getting harrassed. In other words, the other mfgs wood from India has the same codes as does Gibson's.......yet the gov is taking anyone else's wood and holding it without compensation.

It bothers me that Gibson hasn't yet been charged with anything for the first raid. Either charge them with something if there was indeed illegal activity........or give all the wood that was taken back to them. Seems there has been plenty of time now to make a decision.

[tippie53]

I had a contact with certified 1960's BRW , He had about 350 sets, I got him in touch with a Guitar Manufacturer who after certifying the wood and all certs were good they bought it all but for 2 sets , The supplier is gifting me them but being able to get the proper permits and papers makes this a legal piece that I can now build with for an overseas sale.
Without your work , and education for use I would never had gotten this opportunity. For those of you interested in how it worked , The suppliers has the CITIES Documents for his wood. I called Scott at the Maryland office , he sent me 2 forms for importation of wood Form # PPQ 621 and PPQ585 . I have to send $70 for the processing and in 30 days I will get the paperwork for the shipment.
Again Thanks Chuck and David. Your dedication for change and educating us goes way beyond a thank you. Personally , I can't say thanks enough.

[Duke of Pearl]

To answer Darryl Young:

Inspectors and investigators are different than enforcement agents (who are typically armed), and civil actions can be different than criminal.

You're correct about the BRW being completely legal as long as it's in the U.S. and wasn't imported illegally to begin with -- without any paperwork, the assumption is that it's legal.

Gibson’s 2011 raid issue isn’t as straightforward as it seems, since they were already under investigation from the 2009 raid and were obviously having any subsequent activities monitored by the feds. Because of several paperwork glitches, it understandably appeared as though they were engaged in more questionable imports. It was LMII who actually ordered and bought the Indian wood, to satisfy a sale of theirs to Gibson; but rather than take delivery in CA and then spending money reshipping to Nashville, LMII simply had the wood drop-shipped (a common business practice) to the people who are in charge of warehousing woods for Gibson (so it wasn't going directly to Gibson's plant address). Gibson wasn't the one bringing the wood in, it was being imported by LMII.

As for the tariff code being used, it was entered wrongly on only some, not all, of the paperwork -- something LMII had spotted and was in the process of correcting (but unable to get an agency response to). Inconsistent tariff codes are something that's happened on a couple of our own shell import shipments when some desk jockey at the brokerage decides to change the correct tariff codes we supply (thus instantly converting a load of shell blanks into a shipment of "jewelry", for instance!).

Here's a statement from Natalie Swango at Luthiers Mercantile International (LMII), who imported the wood involved in Gibson's latest raids:

“The exporter entered the correct code for his country's export according to Indian customs. I incorrectly listed Gibson as the consignee on the Lacey paperwork...the material was destined for them, but at this time LMI owns and is (was, ?) warehousing it. The broker made a mistake and listed the material as veneers, although all other paperwork correctly listed it as fingerboards (they have remedied this with an oops letter). The warehouse employee incorrectly informed the feds as to the ownership (although they bill me for the storage fees). The officers incorrectly came to the conclusion that we are smuggling wood.”

For almost 20 years millions of Indian ebony and rosewood fingerboard blanks over 6mm thick have been exported and imported under HTS 9209.92.00. The worldwide guitar industry, not only the U.S., is dependent on this government controlled and sustainable wood source. The Indian Ministry of Commerce and Industry, Directorate General of Foreign Trade in New Delhi has explicitly declared in writing that fingerboard blanks are exportable under this tariff classification. Indian port inspectors have always cleared the export shipments, as have U.S. import inspectors and agents, never challenging the wood's legality until the sudden recent objections.

Many years ago there was a commercial classification known as “semi-finished raw materials” or “semi-finished parts”, but since the current HS definitions don’t allow that distinction the “finished” fingerboard blanks don’t neatly fit into the available taxonomy. They are certainly more than just “sawn logs” but definitely less than ready-to-install instrument parts. The tariff classifications need to be amended to conform to reality, not just Indian or U.S. interpretations, and this can be proposed by NAMM as an industry organization.

Depending on how the courts eventually decide the Harmonized Tariff Code number issues in the two Gibson cases, it's quite possible that all the rosewood and ebony which was over 6mm thick when imported for the last 20 years could be declared illegal, technically making all current inventories of those woods illegal to use (as well as all the instruments made from them in the last 20 years).

The issue of Gibson not being charged yet also isn't as simple as it sounds. In June, 2011, the U.S Attorney in Nashville ran out of patience. It told the U.S. District Court Judge that Gibson was not cooperating in discovery, and it filed a sealed document from the Environmental Crimes Division of the Department of Justice in WDC. Bear in mind, the Environmental Crimes Division is a separated investigative and prosecuting body from the civil forfeiture section of the U.S. Attorney's Office for the Middle District of Tennessee. The U.S Attorney asked that the District Court Judge stay the civil forfeiture procedure on the grounds that allowing Gibson to continue to conduct discovery (essentially in bad faith, because Gibson was not cooperating), was interfering with an ongoing criminal investigation and enforcement action by the Environmental Crimes Division of the DOJ in WDC. The District Court Judge held a status conference at which, according to the filed documents, Gibson agreed that it would cooperate with discovery. The government withdrew its motion.

According to the filings, at the meeting immediately after the status conference, Gibson's lawyers said that they would refuse to answer the "it is Madagascar ebony" question. Gibson did answer some very damning requests for admission under oath, regarding the illegality of importing Madagascar ebony in 2009. As long as Gibson refuses to sign this interrogatory statement, the court cannot bring charges, so Gibson's lawyers are using this tactic to delay the court; also, by signing the interrogatory, Gibson would automatiocally relinquish their claim to the impounded woods (since they would be illegal), and they're not about to do that.

When Gibson continued to refuse to respond to the government's request for an answer as to whether the wood was Madagascar ebony, the government refiled its motion to stay. The U.S. District Court Judge agreed that continuing to allow Gibson to conduct discovery would interfere with an ongoing criminal investigation and enforcement action. He dismissed all of Gibson's motions. He stayed the case. He apparently decided that Gibson wasn't following through on its promise to cooperate with discovery.

As for Gibson’s right to “due process”, U.S. courts have allowed seizures without charges being filed since 1827 (a regulatory loophole now being commonly used by underfunded agencies to raise money). Civil forfeiture is based on the concept that property is guilty, not the owner, and since property has no legal rights it can be confiscated for any reason without charges being filed – even if no crime was committed: http://www.facebook.com/l.php?u=http%3A ... 9JhheDix5Q. Charges were filed against Gibson's fingerboards, so the government is under no obligation to return them even though charges against the company have yet to be brought.

Anyone wanting the full story behind all this, send an email address and will reply with attachments that include full documentation and source links.