How's your paper trail for logs? Why you can’t ignore the Lacey Act

Tree trunks photo by via Shutterstock

Lumber Liquidators, the largest U.S. retailer of specialty hardwood flooring, agreed last October to pay more than $13 million to settle charges related to the Lacey Act, which governs the trade of forests, fish and other wildlife. The settlement marked the first felony conviction related to illegal timber imports, plus the largest ever fine related to the law.

But a smaller investigation in Washington state also serves as an object lesson for companies with a stake in the lumber industry. The target: a local mill that sells specialty big-leaf maple wood to PRS Guitars, whose instruments are strummed by the likes of Carlos Santana, Journey, the Doobie Brothers and many other artists.

The case is unusual in that it’s focused on maple, not exotic imported woods as in other high-profile investigations. It also marks the first time that federal prosecutors have indicted a miller owner, since the 115-year-old law was amended in 2008.

Harold Kupers, owner of J&L Tonewoods, has pleaded guilty and faces up to five years in prison and a $250,000 fine. The poaching occurred on U.S. soil, within the Gifford Pinchot National Forest. Kupers purchased the maple without requesting to see a permit from his own suppliers — even after being explicitly warned to require one, according to federal prosecutors. Three loggers who supplied J&L Tonewoods will also be sentenced.

“In this case, a beautiful and valued resource that is home to endangered species was felled with some parts just discarded on the forest floor,” said U.S. Attorney Hayes, when her office went public with the case. “We are prosecuting not only the tree cutters, but also the mill owner who create a market for the sale of this stolen property.”

Why the paper trail matters

Both cases described above highlight the need for any company that trades in wood, plants, fish or other wildlife to verify the source of origin. The Lacey Act is most closely associated with illegal logging, although a recent case in Alaska involved halibut poaching without proper permits.

In the case of Lumber Liquidators, the company was accused of buying wood illegally logged in eastern Russia from habitat that is home to critically endangered Siberian tigers and Amur leopards. According to details released by the Department of Justice, the hardwood retailer actually had special processes in place related to doing business with high-risk countries or suppliers unable to provide thorough documentation. But its compliance team ignored many of the “red flags." 

“For example, Lumber Liquidators employees were aware that time from the Russian Far East was considered, within the flooring industry and within Lumber Liquidators, to carry a high risk of being illegally sourced due to corruption and illegal harvesting in that remote region,” the DOJ noted. “Despite the risk of illegality, Lumber Liquidators increased its purchases from Chinese manufacturers using timber sourced in the Russian Far East.”

In other words, it helped create a ripple effect.

Not surprisingly, the Lumber Liquidators settlement includes the creation of an “Environmental Compliance Plan” intended to help it avoid future violations. Gibson Guitar was required to create a similar program when it settled its own Lacey Act violations back in 2012. The program’s intent is to create a stronger chain of custody from the forest to the store.

“We have invested significant time and resources to strengthen our quality assurance procedures, from enhanced protocols designed to verify licensing, certification and regulatory compliance as well as product sample testing,” said Jill Witter, the company’s chief compliance and legal officer. “We are also committed to strengthening our tools and training programs to encourage secure and anonymous reporting of any potential concerns.”

What might that involve? For another high-profile lumber business, Anderson Hardwood Floors, that means checking operating permits, reviewing maps of timber tracts, and constantly reviewing manufacturing processes up and down its supply chain. It did all of this in order to provide documentation to authorities should the need arise, former Anderson CEO Don Finkell told GreenBiz. “Prior to that, we operated on our company policy of not engaging in harmful environmental practices,” he said in 2012.

The World Wildlife Fund’s Global Forest and Trade Network has created an interactive resource replete with fact sheets about high-risk regions as well as examples of responsible forest management processes. The journal Biological Conservation also recently published an article about emerging “forensic timber identification” techniques that could aid the cause of verifications. Registration (and payment) is required, but here are several of the approaches (still in their infancy) being explored:

  • Visual detection, which can be made more accurate through advances in image recognition technology.
  • Mass spectrometry, which uses the unique makeup of phytochemicals in a tree’s heartwood to verify its species.
  • Near infrared spectroscopy, which focuses on a piece of wood’s absorption spectra when exposed to electromagnetic energy.
  • Detector dogs, which can be used to sniff out certain types of lumber (including big-leaf mahogany and Brazilian rosewood).
  • DNA barcoding, although this technique appears limited.
  • DNA fingerprinting, which could be used to link wood back to specific stumps of illegally felled trees.

What’s next? Another potentially huge Lacey Act case is pending in Houston, where U.S. Customs officials have seized 71 shipping containers full of timber from the Amazon rainforest in Peru.

At the center of the dispute: shoddy paperwork, which calls into question where the logs were actually harvested. As of late December, no charges were filed but given Peru’s history of fraud in wood exports — and its fervent desire to clean up its act — it’s likely we’ll hear more about this case soon.