The recently released reports of two non-profit groups serve as reminders of how companies that trade in goods derived from certain plants, fish, and wildlife must ensure compliance with the Lacey Act. The Lacey Act prohibits, among other things, trade in plants, fish, or wildlife that have been taken, possessed, transported, or sold in violation of U.S., state, tribal, or foreign law. Violations of the Act can result in substantial criminal and civil penalties, a point not lost on the Environmental Investigation Agency and the Union of Concerned Scientists, the two non-profit organizations recently advocating for increased enforcement of the Lacey Act to impede the importation of illegally harvested wood into the U.S.
The Lacey Act and Its Criminal Implications
Although the Lacey Act, 16 U.S.C. §§ 3371-3378, is a broad federal statute that has application beyond commercial activities, it is intended, in part, to deter commerce in plants, fish, or wildlife – or products made from them – that were taken, possessed, transported, or sold illegally under U.S., state, tribal, or foreign law. A violation of these "trafficking provisions" of the Act is a felony offense when the offender knew that the item it imported, exported, transported, sold, received, acquired, or purchased came from plants, fish, or wildlife that were taken, possessed, transported, or sold in an unlawful manner. Moreover, one can be found guilty of a misdemeanor under the Act when, "in the exercise of due care," he or she "should have known" that the plants, fish, or wildlife involved were illegally taken, possessed, transported, or sold.
The Act also includes provisions related to the labeling and identification of plants, animals, and wildlife. One such provision requires anyone importing plants or plant products to file an import declaration containing specified information about the plant or plant product involved. Enforcement of this provision has been phased in over time and some plants, like certain "common food crops," are excluded from the definition of "plant" under the Act. Another provision in the Act outlaws the making or submission of any false record for, or identification of, any plant, fish, or wildlife that has been, or is intended to be, transported in interstate or foreign commerce or otherwise sourced from a foreign country. Knowing violations of these two provisions of the Lacey Act may also result in felony criminal charges.
The Lacey Act carries significant penalties and remedies. Criminal sanctions per knowing violation of the trafficking provisions of the Act include up to five years of imprisonment and a maximum fine of $500,000 for organizations ($250,000 for individuals) or twice the gross gain or loss resulting from the violation, whichever is greater. Those who knowingly violate either the Act's plant-declaration provision or false-labeling provision also face similar penalties if the violation involved the import, export, sale, or purchase of the goods involved.
Recent examples of criminal convictions under the Act include a case involving a large seafood wholesaler that knowingly purchased illegally caught striped bass. In that matter, a jury convicted the company, its vice-president, and one of its fish buyers. The court sentenced the company to three years of probation, a fine of $575,000, and restitution of $300,000. Moreover, the president received a prison term of 21 months, the buyer received 15 months of incarceration, and the court ordered both to pay fines and restitution. In another case, two caviar companies and their owners pleaded guilty to exporting caviar made from paddlefish eggs. There the defendants admitted that they should have known that the paddlefish were harvested in violation of Ohio law. All defendants in that case await sentencing.
Civil monetary penalties may also be imposed under the Lacey Act. Violators of the trafficking provisions of the Act may be assessed a civil penalty of up to $10,000 for each violation when they should have known that the plants, fish, or wildlife involved were unlawfully taken, possessed, transported, or sold. Those who knowingly falsify records related to plants, fish, or wildlife – or those who knowingly fail to file a plant-import declaration – may also receive a civil penalty of up to $10,000. The Act further provides for the forfeiture of items "imported, exported, transported, sold, received, acquired, or purchased" in violation of the Act, without regard to the possessor's knowledge as to whether the items were illegally sourced.
Recent Reports on the Importation of "Illegal Wood" into the U.S.
The Environmental Investigation Agency ("EIA"), a non-profit environmental organization, cited the Lacey Act in its recent report on wood exported from Peru. In its report, the EIA alleged that it had uncovered 112 shipments of "illegal wood" from Peru and urged action by the U.S. government, including an investigation into whether U.S. importers of Peruvian wood had violated the Act.
The EIA's report focused primarily on the trade in cedar and big-leaf mahogany. The report stated, however, that the same allegedly illegal trade practices used with those species were also applied to other species of wood from Peru. The EIA concluded that "illegal logging is the norm for all species from Peru, not just mahogany and cedar," and that "[w]ood from Peru should . . . currently be considered very 'high risk' for international buyers concerned about legality and compliance under laws such as the Lacey Act." The report named companies allegedly involved in the export and import of "legally questionable mahogany or cedar" to the U.S. According to media outlets, the EIA intends to provide its report and findings to the U.S. Department of Justice and other U.S. agencies.
In addition, the Union of Concerned Scientists ("UCS") recently issued a report regarding the illegal importation of wood into the U.S. The UCS asserted in its report that the domestic U.S. logging industry suffers when imports of illegal wood enter the U.S. market, as those imports undercut the market for legal, domestic hardwoods. Like the EIA, the UCS has encouraged enforcement of the Lacey Act to stop illegal wood from being imported into the U.S.
The EIA and UCS reports could contribute to policy decisions by federal agencies, such as the Department of Justice, to increase enforcement of the Lacey Act. However, regardless of their impact on future enforcement determinations, these reports underscore the importance of ensuring careful compliance with the Lacey Act and other laws applicable to the trade in goods made from certain plants, fish, and wildlife.
You may find a copy of the EIA report, The Laundering Machine: How Fraud and Corruption in Peru's Concession System are Destroying the Future of its Forests, at EIA's website: http://peruforests-bosquesperuanos.com/.
The UCS report, Logging and the Law: How the U.S. Lacey Act Helps Reduce Illegal Logging in the Tropics, can be found on the UCS website: http://www.ucsusa.org/global_warming/solutions/forest_solutions/lacey-act-illegal-logging-tropics.html.
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