Global deforestation and the degradation of forests associated with the trade of timber, wildlife, and other commodities are responsible for at least 10 percent of climate change. Without the introduction of stringent regulations, the impacts of deforestation are expected to intensify—for example, the world lost an area of tropical forest the size of Switzerland in 2022. As nations grapple with the effects of deforestation and the illegal wildlife trade, governments worldwide have put forth laws to combat these issues. One such law is the United States (U.S.) Lacey Act. In this article, we'll explore Lacey Act compliance and its implications for your business.
When was the Lacey Act passed?
The Lacey Act is far from a recent endeavor. In fact, it passed over a century ago, in 1900. Initially, its purpose was to prohibit the trafficking of illegally sourced game animals, mainly birds and mammals. As such, it was one of the world’s first major conservation laws, aiming to preserve species of animals and protect habitats. Its scope has expanded significantly over the years, particularly with amendments in 2008 that included plants and a broader range of wildlife and timber products.
Which companies must comply with the Lacey Act?
The Lacey Act casts a broad net, affecting various industries and businesses. Companies that import, source, manufacture, or trade plant products – from timber to paper and even some musical instruments – must comply with the Act. Furthermore, industries dealing with wildlife (dead or alive), their body parts, or products derived from them fall under the Lacey Act's scope.
Businesses must assess their supply chains, especially those importing goods into the U.S., to ensure they aren't inadvertently violating the Lacey Act. This encompasses the direct acquisition of products and the potential for illegal logging or trade at any stage of the supply chain.
Which products are within the scope of the Lacey Act?
While the Lacey Act initially focused on game animals, its scope today is more extensive and now prohibits illegal wood and timber products. With its amendments over the years, the Act now covers:
- All plants, including trees and shrubs
- Wild animals, fish, and birds
- Any product derived from these plants or animals
This means that timber, paper products, furniture made from certain types of wood, certain foods, and even some instruments are within the Act's scope. It’s important for companies to note that products containing plant-based materials may fall within the scope of the Act. Due to the wide range of products covered under the Lacey Act, awareness of material composition is crucial. The Lacey Act also applies if:
- The shipment falls under any of the entry-type codes mentioned here
- The shipment has an aggregate value of at least $2,500 and is covered by a bond
- The imported product is classified under a Harmonized Tariff Schedule (HTS) code as listed on APHIS’ Implementation Schedule
How do companies comply with the Lacey Act?
Compliance with the Lacey Act revolves around due diligence, meaning companies must be certain about the origins of their products and materials. To comply with the Lacey Act, companies must first assess if any imported goods or products contain plant material, including wood. When certain other conditions are met and legality is confirmed, filing a Lacey Act Declaration is required.
A Lacey Act Declaration can be filed both electronically and on paper. The declaration must contain extensive information including (but not limited to):
- Scientific plant names
- Country of harvest
- Product value (USD)
- Quantity of plant material in the shipment.
- Supplier information
- HTS Code
- % recycled content
For more information, see the template.
Who enforces the Lacey Act?
The Lacey Act is administered by agencies of the Departments of Agriculture, Commerce, and Interior, which includes the Animal and Plant Health Inspection Service (APHIS), the National Marine Fisheries Service, and the U.S. Fish and Wildlife Service (FWS).
What are the penalties for non-compliance with the Lacey Act?
Non-compliance with the Lacey Act can have significant consequences. The penalties vary based on the nature and frequency of the violation, such as:
- Civil penalties: Unintentional violations can result in fines
- Criminal penalties: Knowingly violating the Act can lead to more severe fines and even imprisonment
- Forfeiture of goods: Products sourced or traded in violation of the Act can be seized by authorities
Beyond the direct legal implications, companies found in violation of the Act can suffer significant reputational damage.
Lacey Act compliance solutions
Complying with the Lacey Act is non-negotiable for in-scope companies, but effectively managing compliance requirements in-house creates administrative burdens, such as engaging with suppliers, tracing products, and assessing risk. However, because the Lacey Act deals with well-defined criteria with limited variables, this process can be streamlined with the right compliance software.
Source Intelligence offers a comprehensive deforestation program that streamlines compliance and supports deforestation-free sourcing for timber and other plant-based commodities. Our powerful compliance software facilitates supplier engagement, data validation, and document generation. Explore our deforestation program to learn more, or schedule a demo to discuss how we can help you achieve your compliance goals.
