Gibson Guitar’s agreement to pay a $300,000 fine to settle allegations that the company imported illegally harvested ebony and rosewood has amplified debate over the Lacey Act.
The law was enacted in 1900 to curb shipments of endangered animal species. It was amended in 2008 to include all plants and products. The amendments also required companies to certify they hadn’t violated laws of exporting nations.
Importers and industry groups don’t dispute the need to prevent illegal logging, but they complain the Lacey amendments are too broad and create unintended consequences for companies that import goods they thought were legal.
Gibson was accused of illegally importing ebony from Madagascar and rosewood and ebony from India. Federal agents seized wood in raids on the company’s Tennessee factories in 2009 and 2011. The raids attracted wide attention, including from members of Congress seeking changes in the Lacey Act.
In addition to the $300,000 fine, Gibson agreed to contribute $50,000 to the National Fish and Wildlife Foundation for conservation of endangered trees whose wood is used in musical instruments, and to forfeit the Madagascar-grown wood seized in 2009. The government will return wood valued at $155,000 that was seized in 2011. Gibson also will implement a program to strengthen compliance with Lacey Act controls and procedures.
Although Gibson said it paid the fine to avoid protracted litigation and expense, the guitar maker wasn’t happy about it.
A statement released via the company’s official Twitter account, @gibsonguitar, said Gibson was “inappropriately targeted” in an investigation that was “wrong and unfair.” CEO Henry Juszkiewicz said the case shows an “increasing trend on the part of the government to criminalize rules and regulations and treat U.S. businesses in the same way drug dealers are treated.”
In its settlement, the company acknowledged buying Madagascar ebony via a middleman after the country banned its exports in 2006. Ebony is used in fingerboards of guitars. Prosecutors agreed to drop the India case.
Environmental groups said the Gibson settlement showed the Lacey Act is working. “We are hopeful that this case will provide incentive to other wood product providers — and their suppliers — to engage in legal purchasing of wood and help protect endangered forests,” said Adam Grant, senior associate at the World Resources Institute.
Importers say the settlement highlights the need to amend the Lacey Act. The House Natural Resources Committee voted in June for changes including an exemption for goods made in or imported to the U.S. before 2008. Final action during the current Congress, however, is considered unlikely.
The Lacey Act Coalition, representing organizations such as the National Retail Federation, American Association of Exporters and Importers, and International Wood Products Association, cited the settlement’s acknowledgement that “certain questions and inconsistencies now exist regarding the tariff classification” of the imported wood.
“This cuts to the heart of the Lacey Act’s problems: How can a business be expected to know with absolute certainty that a wood product was harvested, shipped, and imported in compliance with a nearly limitless number of foreign laws when the United States government itself does not know how to classify or treat that product under the Lacey Act,” the coalition said in a statement.
“Inconsistencies in tariff classification should not trigger Lacey Act enforcement actions that result in questionable product seizures and business-destroying litigation,” the coalition said.
Gibson said its settlement doesn’t obviate the need for congressional action. “The outcome here deals only with this particular controversy about the particular fact pattern,” the company said. “A true legislative reform is necessary to avoid systemic criminalization of capitalism.”