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Green Blog: Elizabeth Baldwin

Lacey’s Legality Burden
The potential for legal liability falls on everyone in the chain. On an absolute level, Lacey allows for the confiscation of goods from anyone—even to the point of allowing the government to enter a home to pull up a living room floor, rip out the kitchen cabinets or seize Johnny’s new bunk bed. Now, in the real world, that’s just not going to happen, but that’s the potential extent of liability. Anyone in the chain, from the importer to the retailer to the homeowner, and even the trucking companies technically share the risk for the legality of their wood in the product.

While the greatest burdens and risks will be on the actual importers, distributors and retailers should also be asking some questions of their suppliers, if only to be able to respond to their customers’ questions. In some markets, domestic producers are using Lacey as a scare tactic in their marketing to try to pull customers away from imported products.

It is important to note that the Lacey Act does not specifically require importers to document the legality of their material at time of entry and there is no specific burden of documentation or labeling for anyone further down the chain of custody. So technically there is no immediate legal obligation to compel a company to ensure the legality of their supply chain. However, forcing companies to trace a product’s chain of legality is most definitely the intent and the expectation of the government and the government can prosecute based on a failure to do so if they determine that you’ve traded in “tainted” material.

Furthermore, in a Lacey violation case, ignorance will not be considered a sufficient defense. Even if a company or an individual had no idea that a product was “tainted,” they can still face fines if the government believes that they should have reasonably known.

The good news is that the U.S. government bears the burden of proof. For criminal charges, they must demonstrate beyond a reasonable doubt that you knowingly committed the crime or knowingly traded in tainted material. To assess civil penalties, they must show, again beyond a reasonable doubt, that you failed in your professional due diligence and truly should have known that a product was tainted.

The greatest challenge is that under Lacey, material can become tainted even if the law being broken is not an American one. The illegal action can occur at any point in the chain. From that point further, the wood is considered tainted, and thus it would be considered a violation of the Lacey Act to import it or sell it within the U.S. This means that importers must ensure not only that their immediate purchase is legal but also attempt to trace the origin of the material back to its original point of harvest, confirming that each step along the way was made in full accordance with local and international laws.

Many people assume that FSC certification protects them. It does not. While being certified or carrying/purchasing a certified product (be it by FSC, SFI, PEFC, MTCC or by any other internationally recognized program) does not specifically protect companies from prosecution under Lacey, it does help show that a company is doing its due diligence. Although it will certainly be considered a sign of good faith, the U.S. government does not accept any third-party verification regarding the legality (or illegality) of material.

Finally, it should be noted that foreign companies and individuals can also be prosecuted under Lacey and in some previous Lacey cases (for fish and wildlife, not wood), foreign nationals have been arrested during a visit to the United States and subsequently tried and jailed.

Lacey’s goal is to protect the world’s forests by encouraging a more detailed questioning of supply chains and to provide a means of enforcement against egregious offenders. So whether you choose to take action because it’s the right thing to do, or because you are afraid of potential prosecution, you will be following the spirit of the Law, perhaps even more so than the letter.
Lacey’s Documentary Burden for Importers
The initial focus by most companies when considering the Lacey Act is on the documentary burden. Lacey affects everything containing plant-based materials—even the wood burl veneer on a car’s dashboard must be documented. The total number of items impacted is expected to exceed 90,000.

Every importer must file a detailed declaration for incoming agricultural products specifying species and country of origin, no matter where the final product is produced. This includes material coming from Canada and Mexico—NAFTA does not eliminate any Lacey-related compliance requirements.
The international wood products trade often has a very complicated supply chain. An engineered floor might be made in China but contain a meranti plywood core made in Malaysia and a top veneer of red oak originally from the United States. The declaration requires that the importer know the source countries and exact scientific species for each component, including material originating from the United States.  

While difficult enough for a company importing a single type of solid decking, this is a significant challenge to companies that import mixed species production, such as furniture or kitchen cabinet companies. Wood is traded under a commercial or trade name, but is rarely purely a single species of tree. A meranti plywood core might require a declaration of over fifty species (out of over 250 possible). The top veneer might come from several countries and include dozens of species within the one genus. Developing a system to document and track the species is one of the challenges Lacey puts on companies.

In many cases, a freight forwarder or broker will file the declaration, but the company must provide the information for them. U.S. Customs is trying to accept information electronically, but is still receiving the majority of declaration on paper. They have developed a rolling implementation schedule, requiring declarations for different HS (Harmonized System) Codes to start on different dates. These dates are subject to change as Customs’ information collection system continues to be developed. An updated listing of items subject to declaration (listed by HS code) is available on the APHIS website.

Next week we’ll look at the Legality Burden, which is for absolutely everyone.
The Lacey Act: What it Says
As noted a few weeks ago, APHIS is looking for commentary on the Lacey Act. I thought it would be good to take a few posts to review the Act and what it means for everyone in the wood industry.

First, let’s look at what the Lacey Act requires. In a simplistic summary, there are three basic components:

1) It is a United States federal offense to trade in illegal or “tainted” plants and plant based products; and the action that made the product illegal (“tainted” the product) does not have to have occurred within the US. Included in the long list of ways to “taint” a product are actions such as harvesting it illegally, trading it without proper duties or other fees being paid, or smuggling/stealing it.

2) Importers need to declare both what species they are bringing in and where it came from.

3) Don’t lie to the government! (While this seems like common sense, the government has to specifically state that it’s wrong so they can prosecute you if you do it.)

The Lacey Act applies to everyone in the United States, from the individuals and companies doing business in wood to the final retail consumer—the law does not exclude anyone. Violations of the new law will be met with steep penalties if the government is able to prove that an individual or a corporation has knowingly traded in illegal material or has misreported an imported product. Ten years of imprisonment is a possible penalty and corporate fines can go as high as $500,000.

Lacey is not alone in the world—the international demand for legality documentation is here to stay, and it’s not just for the U.S. Japan began requiring some forms of legality statements over five years ago, the United Kingdom is debating the issue, and even the state of Illinois recently considered passing a law against the trade of illegal timber within the state. Furthermore, the European Union is currently developing legislation similar to the Lacey Act that will cover international trade with all of the countries in the Euro-zone. (There is rumor that this legislation may potentially require the submission of legality documentation at the point of entry, which Lacey currently does not require).  

So the work you do today, if you trade in other countries, may help you far beyond just complying with the Lacey Act. The documentary conditions created by Lacey Act may well become the default condition for the international trade of wood products.

Next week, we’ll look at the documentary burden on importers.

Malaysian Mission to the U.S.
Hello, folks! I picked up a cold while traveling and can’t seem to shake it. I definitely don’t want to write about technical green issues while my brain is fuzzy. (It’s hard enough to go through VOC emission testing standards while my head is clear!). So we’ll keep it simple this week.

Late last year I wrote about Malaysian timber and certification programs. Now there is an opportunity for everyone to get more information on the Malaysian programs and flooring supply direct from the source without going to the jungle yourselves.

Members of the Malaysian Timber Council and Malaysian Timber Certification Council will be in the U.S. next week on a three-city mission. They will be traveling with members from two associations from Sawarak, and they will also have six Malaysian companies with them, including flooring suppliers. They are hosting free seminars in Los Angeles, New Orleans, and Memphis. The Memphis one will be at the NHLA offices and apparently will also offer good info on the U.S. hardwood supply, as well.

You can get full details and register at If you can’t make one of the seminars, the site also gives contact details to all the participating associations and companies so you can contact them directly for more information.

Now I’m off for some chicken soup. I wish it were Peruvian chicken, but we can’t have everything…