Modding any console is against the DMCA anti-copy protection provisions.
The mod chip itself isn't the illegal thing, it's the BIOS that's on the chip that counters the copy protection mechanism of the PS2 and the games.
In order to be legal, you need to wipe the BIOS from the mod chip and sell it as a blank mod chip. If you sell it with the BIOS still on the chip, and then sell it out of state, you could be committing mail fraud, which is a federal crime, and conspiracy (with your buyer) to trade illegal goods.
[This message has been edited by helgs (edited 2/8/2009 8:46p).]