The latest on exemptions for Director’s Order 210 of the regulation of the sale of ivory

The American Society of Appraisers (ASA) has provided its members clarification of the exemptions of the Fish and Wildlife Service (FWS) regulations on the sale of ivory. It is posted here in its entirety:

FWS Releases Proposed Ivory Regulations
Creates De Minimus Exemption; Clarifies Antique Exemption from Director’s Order 210

On July 29, the Fish and Wildlife Service (FWS) released proposed regulations affecting the sale, transfer, donation, or other disposition of African elephant ivory. The regulations, long-expected in the personal property community, prohibit the “sale or offer for sale of ivory in interstate or foreign commerce and delivery, receipt, carrying, transport, or shipment of ivory in interstate or foreign commerce in the course of a commercial activity”. There are, however, several notable exceptions proposed in the regulation.

De Minimus Exemption

FWS has proposed a de minimus exemption for those items which contain a limited amount of ivory that is not the primary driver of the item’s value. Property that meets the de minimus exemption must meet the following requirements:
• Items located in the United States, if the ivory was imported into the United States prior to January 18, 1990 (the date the African elephant was listed in CITES Appendix I) or was imported into the United States under a CITES pre-Convention certificate with no limitation on its commercial use;
• Items located outside the United States, the ivory is pre-Convention (removed from the wild prior to February 26, 1976 (the date the African elephant was first listed under CITES));
• The ivory is a fixed component or components of a larger manufactured item and is not, in its current form, the primary source of value of the item;
• The manufactured item is not made wholly or primarily of ivory;
• The total weight of the ivory component or components in the item is less than 200 grams;
• The ivory in the item is not raw; and
• The item was manufactured before the effective date of the final rule for this action.

FWS provides examples of items it expects to meet the de minimus exemption, such as “the ivory veneer on a piano with a full set of ivory keys”, “insulators on old tea pots, decorative trim on baskets, and knife handles, for example”. FWS also lists examples of items it does not expect to meet the de minimus exemption requirements, such as “chess sets with ivory pieces”, “an ivory carving on a wooden base”, “ivory earrings or a pendant with metal fittings”, or “figurines, netsukes, and jewelry”.

Antique Exemption

The proposed regulation retains an exemption for bona fide antiques, in line with Directors Order 210 as amended on May 15, 2014. This exemption allows for items that are more than 100 years old to be “sold or offered for sale in interstate or foreign commerce and delivered, received, carried, transported, or shipped in interstate or foreign commerce in the course of a commercial activity”. The proposed regulation clarifies, however, that items which were “imported prior to September 22, 1982, and items created in the United States and never imported” are not required to demonstrate that the antique was imported through an endangered species “antique port”. The enumerated requirements for claiming the antique exemption are as follows:
• It is 100 years or older;
• It is composed in whole or in part of an ESA-listed species;
• It has not been repaired or modified with any such species after December 27, 1973; and
• It is being or was imported through an endangered species ‘‘antique port.’’
NOTE: Under Director’s Order No. 210, as a matter of enforcement discretion, items imported prior to September 22, 1982, and items created in the United States and never imported must comply with elements A, B, and C above, but not element D.

As part of substantiating that an item is 100 years or older, those wishing to sell may use a “qualified appraisal”. However, it is unclear under the proposed regulation whether the use of this term ties back to its use for Internal Revenue Service (IRS) noncash charitable contributions. It is also unclear whether the “qualified appraisal” referenced here must be performed by a “qualified appraiser”, as the term is used at IRS, or if other qualifications would be used to determine an appraiser’s ability to perform a “qualified appraisal” for the purposes of this proposed regulation.

Musical Instruments

FWS enumerates four requirements for a musical instrument containing worked ivory to be exempted from prohibitions on import or export. It also reinforces that owners of these musical instruments must provide documentation to support that the ivory was obtained legally prior to February 26, 1976, though FWS clarifies that:
[T]here is sufficient information to show that the ivory was harvested (taken from the wild) prior to February 26, 1976, even though the instrument may not have been manufactured until after that date. It also means that there is sufficient information to show that the ivory was harvested in compliance with all applicable laws of the range country and that any subsequent import and export of the ivory and the instrument containing the ivory was legal under CITES and other applicable laws (understanding that the instrument may have changed hands many times before being acquired by the current owner).

The stated requirements for musical instruments are as follows:
• The ivory was legally acquired prior to February 26, 1976;
• The instrument containing worked ivory is accompanied by a valid CITES musical instrument certificate or equivalent CITES document;
• The instrument is securely marked or uniquely identified so that authorities can verify that the certificate corresponds to the musical instrument in question; and
• The instrument is not sold, traded, or otherwise disposed of while outside the certificate holder’s country of usual residence.

Inheritance/Household Move

In line with Directors Order 210, items containing ivory that are imported or exported as part of an inheritance or household move are exempt from the prohibition, provided that they are for personal use only and accompanied by a valid CITES pre-Convention certificate. However, the regulation clarifies that ivory imported or exported under this exemption “could not subsequently be sold or offered for sale in interstate or foreign commerce or delivered, received, carried, transported, or shipped in interstate or foreign commerce in the course of a commercial activity, even if it qualified under the de minimus exception.” [Emphasis added.] This does not appear to preclude donations of items which are availed under this exemption.

Donations of Items Containing Ivory

Finally, FWS makes clear in the proposed regulation that “[t]he donation of an item consisting of or containing ivory also would not be considered commercial activity, even if the donor qualified for a tax benefit where the tax benefit is not income.” This makes clear that donations of items containing ivory are permissible under the regulation, and can be done to secure a tax deduction for the donor.

ASA continues to review the proposed regulation, and plans to file comments with FWS. For those who wish to file comments, they are due no later than September 28, 2015.

FacebookTwitterGoogle+Share

Endangered Species Act updates affecting the sale of ivory in the US

We frequently get calls from people with ivory objects that they want to sell. Due to recent changes to laws at the state and federal level governing the sale of ivory, it has become increasingly difficult to sell anything made of ivory in the United States. There are exemptions to the ban on ivory sale including if you have an ivory object over 100 years old or if the object that you wish to sell includes less than 20% ivory of the surface area among other exemptions. However,  the burden of proof is on the seller, who must obtain a permit by submitting documentation supporting their assertion to the governing state or federal agency. At the federal level, the latest update is Director’s Order #210 which you can click on and read here do210. Due to the outcry of dealers, auction houses and museums claiming that these laws are overly restrictive and punitive to sellers and collectors, these regulations are in the process of being modified. Since 1970 California has had the most restrictive regulations on objects made of endangered species including ivory, mammoth and rhinoceros horn which I have written about in previous post. Now states like New York, (see ivoryfaqs by New York law firm, Pearlstein and McCullough) and New Jersey have enacted similar regulations. Other states are expected to follow their lead and enact more stringent laws.

Old and New Rules for the Sale of Ivory

Image

ivory.objects.crush

Objects crushed by U.S. Fish and Wildlife Service, November, 2013 (Rick Wilking/Reuters)

In the past couple of years the sale of ivory has become fraught with legal jeopardy. A shot across the bow was fired in the Spring of 2012 when a squad of armed officers of California’s Fish and Game service, on behalf of the Federal Government, raided Slawinksy’s Auction house in northern California. Approximately $150,000 worth of ivory objects and objects decorated with ivory was confiscated. The property was eventually returned after it was determined that the ivory offered for sale was in compliance with Federal Endangered Species Act (ESA) which allows the sale of ivory more than 100 years old or if acquired before ESA’s enactment. On November 13th, 2013, the U.S. Fish and Wildlife Service dramatically signaled its intention to crack down on the global poaching epidemic by crushing 6 tons of illegal ivory at the Rocky Mountain Arsenal National Wildlife Refuge in Colorado. Three months later, on February 11, the Federal government announced new regulations prohibiting all importation of ivory objects including antiques. The export of worked ivory which has documentation proving it to be more than 100 years old is allowed. Selling documented antique ivory across state lines remains lawful, as well as ivory objects that were imported prior to the 1989 ban on African ivory or the 1976 ban on Asian ivory. A major development of this new law is that the burden of proof of age and date of importation falls on the importer, exporter or seller.

In California, the sale of ivory is even more restricted. California Penal Laws 653o and 653p ban the sale, or possession with intent to sell of ivory, within the state or across state lines. The law reads as follows:

It is unlawful to import into this state for commercial purposes, to possess with intent to sell, or to sell within the state, the dead body, or any part or product thereof, of any polar bear, leopard, ocelot, tiger, cheetah, jaguar, sable antelope, wolf (Canis lupus), zebra, whale, cobra, python, sea turtle, colobus monkey, kangaroo, vicuna, sea otter, free-roaming feral horse, dolphin or porpoise (Delphinidae), Spanish lynx, or ELEPHANT.

Penalties for violating Penal Law 653o are as follows:

Any person who violates any provision of this section is
guilty of a misdemeanor and shall be subject to a fine of not less
than one thousand dollars ($1,000) and not to exceed five thousand
dollars ($5,000) or imprisonment in the county jail not to exceed six
months, or both that fine and imprisonment, for each violation.
.

Although California Penal Law 653o has been on the books since 1970, it has not been enforced until early 2012. However, it appears that strict enforcement of this law prohibits the sale of all ivory objects whether antique or not. So, ivory owner beware: if you have in your possession a collection of Japanese netsuke, Chinese carved tusks or statues, scrimshaw, furniture or a musical instrument embellished with ivory and are contemplating selling it, contact an attorney.