The 2008 U.S. Lacey Act Amendments ("Lacey Act"), the world's most punitive and far reaching "ban" on illegally harvested timber, continues to influence the floor covering and many other industries using wood products worldwide. As more industries come under its influence, and with the first U.S. government investigation of illegally logged wood underway, I thought now was a good time to revisit this subject. Here are some practical tips and a few busted myths.
The Lacey Act makes it a crime to receive, transport or sell timber products harvested in a manner contrary to the laws from which the timber originated. Mislabeling and making false statements as part of the mandatory disclosure requirements are also crimes. The act forces U.S. buyers and importers to take full responsibility for how their timber is harvested and extends that responsibility through the entire supply chain; everyone is accountable. We first wrote about the Lacey Act on this blog site back in September, 2009 in How the Lacey Act Affects Floor Covering and Wood Products Industries.
The first enforcement action under the Lacey Act took place in November, 2009 when inspectors from the Fish and Wildlife Service raided the offices of Gibson Guitar in Nashville for the suspected import of rosewood and ebony illegally harvested in Madagascar. It was widely reported that agents seized wood, guitars, computers and files from the company headquarters. Click here to read our initial post on the Gibson investigation.
Presently the investigation remains sealed; few verifiable, new facts in the case are known and as yet no charges have been filed but the lag between the raid and developing news shouldn’t be interpreted as an indication that the investigation has stalled. The latest news on Gibson coming this week from the Nashville Post (which follows their hometown guitar manufacturer closely) is that Gibson now faces an IRS investigation. The IRS has filed a lien for just under a half million dollars for unpaid corporate and payroll taxes. Raise your hand if you don’t want to be Gibson Guitars right now.
Meanwhile, on April 1st enforcement for reporting requirements under the Lacey Act was expanded to include some furniture, musical instruments, guns, hand tools, toys, pool cues and works of art, among others. Asian wood furniture exporters are described as “nervous as cats on hot bricks” as they wait for more detailed guidance about what they have to do to continue to export products to the U.S. The garden furniture industry (i.e. teak furniture) could be ripe for the next illegal wood investigation since much of the wood used for this furniture is harvested in high risk countries.
Back in the Spring of 2009, the floor covering supply chain was also on edge as deadlines for compliance approached with virtually no guidance available. Foreign floor covering suppliers were especially concerned and The Floor Covering Institute was among the first to address this angst starting with our white paper, Continuing Wood Trade Under the Lacey Act Amendments, which provides a broad range of information about the history and evolution of the Lacey Act, the standard of “due care,” compliance and penalties, the Department of Justice’s approach towards investigations and prosecutions, where high risk wood comes from and tips for wood products buyers.
Our follow up article, Will Your Wood Trade Business Meet the Lacey Act Due Care Standards? reached nine important conclusions that the wood products supply chain should consider when developing Lacey compliance protocols:
- Certifications are evidence of “due care,” they are not proof that wood is legal.
- The standard of “due care” may be applied differently to different people.
- There is no “innocent owner” defense and illegal flooring can be seized at any point in the chain.
- Relying solely upon others to comply may be insufficient in the face of investigations.
- Certain facts should trigger a heightened degree of care, i.e. (below market pricing).
- A Lacey violation can also lead to prosecution under other laws.
- The Act is violated as soon as illegal wood enters the supply chain, whether on domestic or foreign soil.
- To be in violation of the Lacey Act one only needs to have participated in the supply chain that received, transported or sold it.
- Developing procedures that demonstrate due care well beyond the mandatory “import declaration” is prudent.
- Create a written company policy stating the intent to buy/sell only legal wood products.
- Back that up with a standard operating procedure, checklist and questions for buyers to follow
- Do not allow wood products that have not passed those standards into inventory;
- Document actions. In the event of an investigation, written policies, checklists and documented actions will be primary evidence that due care was exercised;
- Ask suppliers to document the due care they exercised in sourcing the wood products;
- Know where the wood was harvested. If it’s coming from a higher risk country then realize your risk is greater. If it comes from a low risk country, verify that it was not first imported from a high risk area. Use third party certifications when you can.
It is important to remember that courts will likely hold those routinely involved routinely in importing flooring, or any wood product for that matter, to a relatively high standard of care. Relying upon your supplier to meet the standard of due care before the product reaches you will be insufficient.
Unfortunately there are still those who are not yet convinced that the Lacey Act can touch them. One commonly held myth is that domestically harvested wood is always "safe." The Lacey Act applies to both domestic and foreign sourced wood. While the highest instances of illegal logging exist outside of our domestic borders, we are not immune to illegal logging and just because your wood products may be made in the U.S. from domestic wood doesn’t mean that you are risk free. Timber is also stolen and illegally logged in the U.S., albeit on a smaller scale.
Another common misconception is that third-party certifications guarantee that your wood is legal. While certifications go a long way to show that you are exercising "due care," third party certifications are not guarantees. That is because the Lacey Act is a fact based, not a document based, law and compliance does not rest on any one document.
For a quick information about these and other myths I highly recommend that you read Setting the Story Straight The U.S. Lacey Act: Separating Myth from Reality
which addresses many practical questions relevant to our readers.
As always, you are encouraged to comment and give us feedback on any information we post here. Many of our readers comment directly to us via email but posting here helps to encourage conversation among our readers.
Thank you for reading,
Susan Negley is the Director of Communications for the Floor Covering Institute.