The U.S. Lacey Act: Overview and Recent Developments

The U.S. Lacey Act:Overview and Recent Developments Caitlin Clarke World Resources Institute

Outcomes of Presentation • Review of the Lacey Act • Current developments • What is the Forest Legality Alliance?

The Lacey Act Amendments of 2008 • The Lacey Act Amendments of 2008 • Fact-based, demand-side policy • No trade in illegally sourced forest products • No entry without declaration form • No false claims Source: Food, Conservation and Energy Act of 2008, Section 8204. Prevention of Illegal Logging Practices. Representative John F. Lacey (R-IA)

Why a U.S. law? Why the Lacey Act? • A clear need existed for demand-side measures in consumer markets • Level the playing field for law-abiding companies • The Lacey Act has a long history as a successful wildlife and fish anti-trafficking statute • The Lacey Act sends a strong market signal, yet is a flexible and business-friendly model

Dispelling common misperceptions about the Lacey Act • The import ban on illegal goods is effective now and for all products. The phase-in schedule concerns only the declaration requirement. • There are no documents or processes that can be used as “get-out-of-jail free” cards. Only actual legality counts. • The entire supply chain is at risk for prosecution, not just importers.

Two necessary components of a Lacey Act violation • An underlying violation of a state, foreign, or tribal law that protects or manages plants and/or derivative products occurs. • The tainted good obtained through violation of such a law is traded in the United States. The Lacey Act regulates trade, not logging.

Declaration requirement • Requires scientific species name, country of harvest, volume, and value • Does not require information on legality or “chain of custody” • Does not establish standards or require verification by government or a third party

Declaration requirement phase-in schedule May 1, 2009 April 1, 2010 Fall 2010 and beyond Oct 1, 2009 May 22, 2008 Lacey Act plant provisions signed into law. Underlying prohibition on trade in illegal wood in effect. Declarations begin for headings of HTS 44: sawn timber, logs, fuel wood, tool handles, joinery, etc. Declarations begin for headings of HTS 44: charcoal, frames, kitchenware, statuettes, caskets Declarations begin for HTS 82, 92, 93, 94, 95, 97: including musical instruments, sporting, equipment, chairs Wood pulp Paper Newsprint Furniture * Timing reflects increase in wood processing and/or complexity of composition. “HTS” refers to Harmonized Tariff Schedule. Source: Federal Register, Vol. 74, No. 169, September 2, 2009.

Products not in declaration schedule are still covered by Lacey

Schedule of criminal and civil penalties

What is “due care”? Due care means: • that degree of care which a reasonably prudent person would exercise under the same or similar circumstances. • Due care is applied: • differently to different categories of persons with varying degrees of knowledge or responsibility. • Due care is not: • simply about obtaining documents. Rather, it is a flexible concept that continues to develop in the U.S. legal system.

Legislative and Regulatory Updates • In November, the Administration will provide a report to Congress on implementation of the Lacey Act amendments, as mandated by the Food, Conservation and Energy Act of 2008. • In June, a coalition of 57 stakeholders, including NGOs and industry leaders representing importers and domestic producers, released a second consensus statement of recommendations, designed to assist the Administration as it prepares this report to Congress.

Private sector response to Lacey • The Lacey Act has reshaped the U.S. wood products industry and exporters’ business practices – the industry generally supports the intent of the Act but has concerns about its implementation • Awareness of the Lacey Act is high, and has been moving up the supply chain from importers to retailers of forest products • Concerns about complying with the Lacey Act focus on understanding “due care,” rather than on completing new paperwork

Perspectives from the supply chain “Three years ago, only a few companies were concerned about [illegal logging]. And now, everyone who is serious about exporting to the U.S. or the EU is.” – Intermediary “Our association wants to avoid illegal logging and market our products in the U.S., and for us, working with the Lacey Act is not a problem.” – Exporter “I would want to know the list of questions I need to ask back through the supply chain so that I can sleep at night and know that I am fine.” – Intermediary “The risk assessment tools, and a definition of what ‘due care’ looks like, that is needed, and that would make things easier.” – Importer/Retailer

Public enforcement actions to date • Gibson Guitar Corp., famed U.S. musical instruments manufacturer • Raided Nov. 2009 as part of an investigation into the use of illegally logged wood from Madagascar • Major shock to U.S. wood products industry • Investigation ongoing; current developments not yet public • U.S. Dept. of the Interior v. Three Pallets of Tropical Hardwood,a small business case in which the U.S. seized a shipment of imported hardwoods from Peru • Found that importer “did not do all he could within his power to comply with regulations and ensure that the shipment was authorized” – in essence, a failure of “due care”

The Forest Legality Alliance Background and goals Activities • A clearinghouse for disseminating information and resources • Legality-only focused • No auditing, certification or verification of membership • A creator of appropriate tools to fill risk assessment and policy knowledge gaps • A platform for consensus and collaboration • Build awareness of forest legality issues and support supply chain efforts to deliver legal wood and paper products • Develop tools to help all parts of supply chains • Conduct feasibility demonstration studies

The Forest Legality Alliance www.forestlegality.org Thank You Caitlin Clarke – cclarke@wri.org

The U.S. Lacey Act: Overview and Recent Developments