Lacey Act bares its teeth, but does it have a future?

The parties agreed that Gibson Guitar will pay a penalty of 300,000 USD as well as a community service payment of 50,000 USD to the National Fish and Wildlife Foundation.
In addition, goods worth 261, 844 USD were confiscated. Based on the agreement, the US Federal Government will refrain from pressing any criminal charges against the company.

But this hardly marks the end of the debate that has surrounded the Lacey Act since its amendment in 2008 to effectively constitute the world’s first ban on import of illegal timber. While the act has sent shockwaves throughout the world’s timber industries and created a strong focus on the need to curb illegal timber trade, opposition has been building among some very vocal groups in the US.
 

The Lacey Act on trial

The settlement is welcomed by many stakeholders, including the World Resources Institute (WRI), an independent think-tank and research organisation.

Senior associate of WRI Adam Grant says: “This agreement closes an important chapter on the first major investigation and by far the most publicised cases under the 2008 amendments to the U.S. Lacey Act. The decision demonstrates that the Lacey Act has teeth. It shows that the law can be enacted with serious, but balanced penalties for violations.”

“Fair enforcement of the Lacey Act, the world’s first ban on the importation of illegally sourced wood, is important to ensure that the wood comes into the U.S. from legal sources. We are hopeful that this case will provide incentive to other wood product providers – and their suppliers – to engage in legal purchasing of wood and help protect endangered forests.”

However, others feel that the Lacey Act is going too far. Some groups are attempting to put the Lacey Act itself in the docks, accusing it of over-criminalising innocent actors and imposing oversized punishments.

Critics, especially among some actors in the music industry, the timber industries, and the political right wing, are lobbying strongly to curb the Lacey Act. The act has become part of the wider political struggle in the US, where the right-wing Tea Party movement has been trying to use it to beat the Democrats on their heads.
 

Will the Lacey Act be watered down?

A bill called The Retailers and Entertainers Lacey Implementation and Enforcement Fairness (RELIEF) Act was introduced in October 2011, including some elements that would effectively make the Lacey Act lose its bite. Among these were a drastic reduction of confiscation as a possible sanction, reduction of the penalty for ‘first-time violations’ to a symbolic sum of 250 USD, and exempting all non-solid wood from the Lacey Act.

The RELIEF Act generally met with opposition from environmental NGOs and American labour organisations, but some groups among the music industry as well as the wood industries lobbied strongly for it. However, a broad group of stakeholders representing all parties across the spectrum came together in a successful rally in support of the Lacey Act, and the RELIEF act was pulled from a slated July 2012 voting in the House of Representatives for lack of broad support.

“Among the wood industries, the RELIEF Act supporters were clearly in the minority. The majority were concerned that the proposed amendments went too far in watering down the effectiveness of the Lacey Act”, says Mr Grant.

One of the reasons for the original broad support to the Lacey Act was the need to create a level playing field for American timber industries facing unfair competition from illegally harvested wood imports.

Since the adoption of the 2008 Lacey amendments, US hardwood exports have been growing.

Before the RELIEF act was introduced there was broad consensus that the Lacey Act is not perfect. For example, the Lacey Coalition - a broad stakeholder group - agreed that goods imported prior to 2008 should be exempted from the Act. But overall, the fate of the RELIEF Act shows that most stakeholders want to maintain the power and strength of the Lacey Act.

However, in the longer term the future of Lacey could still depend on changes in the political landscape and related media coverage in the US.
 

The Lobster Spin

Much of the Lacey Act debate is entwined with partisan politics and spin. An example of this is a much-cited case where four US citizens importing and dealing in lobster tails from Honduras were sentenced up to 8 years in prison under the act. All because the tails were imported in plastic packaging rather than in cardboard packaging! - a violation of an obscure Honduran law that was even no longer enforced in Honduras.

Though not related to timber, the lobster case has been widely used in the recent debate as an example of absurd and unfair criminal prosecution under the Lacey Act.

The problem of using this example is that it is entirely wrong. Anyone who cares to read the court verdict or the appeals verdict will see that the case was not based on the use of plastic packaging. The convicts were found to have committed felonies such as conspiracy, smuggling, and/or money laundering, among others.

A key issue was the catch and unlawful export of undersized lobster tails in violation of Honduran nature protection laws.

One can only wonder why this case has been twisted to such an extreme degree in order to promote it as a prime example of Lacey Act over-criminalisation. Perhaps there is no better example available?
 

Confiscation is the main instrument 

The picture of a defenceless and innocent business owner being unfairly treated by a law with obscure requirements definitely deserves some qualification, according to Mr Grant: “Some of the concerns over Lacey Act liability are based on misrepresentation of the issues in the public debate,” he comments. “For example, it is not widely known that the burden of proof rests with the prosecutors, not the accused person or company.”

According to Mr Grant, the real power of the Lacey Act to halt illegal timber trade does not even lie in criminal prosecution.

“The act has often been criticised for being a toothless tiger and it is pointed out that nobody has been put to jail yet for importing illegal timber products. However, the real teeth of the amendment are found in the civil sanctions, in particular the possibility of confiscation of goods.”
 

The industry moves on

Meanwhile, American industries potentially facing the teeth of the Lacey Act are working to come to grips with its requirements. Fortunately, helpful guidelines and examples are starting to emerge, bringing more clarity to the process of ensuring compliance.

For example, Gibson Guitar has committed to implement a Lacey Act Due Care Programme which may become a model for others to follow. And the Forest Legality Alliance is collecting good examples and offers a range of guides and tools to help companies ensure that they are sourcing legal products.


Sources: US Department of Justice, Gibson Guitars, Hardwood Floors, Friends of the Earth, Woodworking Network, Environmental Investigation Agency and World Resources Institute.