lacey Act Compliance Strategies Tips on importing exotic hardwoods

fl IesoN Cutr,qn's recent settlement \fwith the Depanment oi Justicewhich included tirousand of dollars in fines-highlights the need for companies to use "due care" when purchasing and importing exotic hardwoods.

"The agreement should be a wakeup call for companies thinking about importing illegally logged wood, that the government is going to take violations of the Lacey Act very seriously," says Jameson French, c.e.o., Northland Forest Products, Troy, Va. He's also a board member of the Hardwood Federation, which worked to get tough new amendments to the Lacey Act passed in May 2008.

"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," says Adam Grant, senior associate at the World Resources Institute, Washington, D.C. "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."

Federal agents raided Gibson's manufacturing plant in Nashville, Tn., in November 2009, amid allegations that the company purchased and imported illegally harvested wood from India and Madagascar. After three years of investigation by the U.S. Department of Justice, Gibson agreed to:

. pay a $300,000 penalty;

. make a $50,000 community service payment to the National Fish & Wildlife Foundation, to be used "to promote the conservation, identification, and propagation of protected tree species;" relinquish its civil claims to wood seized by the government during the investigation, including Madagascar ebony valued at $261,844, and

. implement a detailed program to strengthen compliance controls and procedures.

In addition, Gibson accepted responsibility for importing illegal wood, not exercising due care in checking the source of the wood, and not acting on prior knowledge that legal ebony was difficult or impossible to source from Madagascar. In return, the government will not pursue criminal charges against the company or its employees, provided that Gibson carries out its compliance obligations and commits no future violations.

Under the Lacey Act. companies must exercise due care and understand the origin of its forest products, because a violation can occur at almost any point in the supply chain. Gibson's compliance program offers pointers for companies looking to avoid similar problems. Highlights include:

. annual training for all purchasing staff, disciplinary action for staff who fail to follow policies on legal wood procurement,

. requesting sample documentation from suppliers to ensure it satisfies Lacey Act requirements,

A new technology allows DNA testing of wood to ensure products are not illegally harvested and imported.

"This is like CSI meets save the planet," says Jonathan Geach, executive director of Singapore-based Double Helix Tracking Technologies, which started in 2008-the same year the Lacey Act was amended.

The technology promises to end common problems in the marketplace: mislabeling, lying about origin, or substituting one type of wood for another. Right now, experts say, the weakest link is between the forest and the sawmill, where stolen or illegally logged wood can be mixed with legalwood.

'The DNA is in every cell in a wood product and you can't falsify that DNA," says the company's chief scientific ofiL cer, Andrew Lowe, who developed the tracking technology in his lab at the

University of Adelaide, Australia.

By early 2011, Mr. Lowe was able to extrad degraded DNA from decadesold wood and get acdrate results. That led to an increase in business, which should increase even more when tougher new laws take affect next year in Europe. Within two yea$, DoubleHelix hopes to license the DNA-extraction technique to accredited laboratories globally, to help stamp out illegal wood, The company's ultimate goal is to make DNA testing so cheap that allcompanies will use it.

DNA testing is already aiding prosecutions, says Shelley Gardner, illegal logging program coordinator for the U.S. Forest Service. 'Any time we've gone to court, they've plea-bargained because the DNA was already such a detenent, and these are just small cases,' she says. "When you start talking about real trade, I think it could have a big impact."

. adherence to a detailed procurement checklist and maintenance of related records, and verification of foreign laws and licenses with in-country legal professionals or knowledgeable third parties.

4 ilAwlA presidenfs welcome

6 Home, sweel hone Chicogo

7 Schedule of evenlg

8 Kohle: lfs oll obout the risk l2 froders lhorket exhibitor list

I I Traders lhorket show floor

32 Key to ollrocing quolified employees

36 ileet the exhibitors

TRADERS PREVIEW is published annually at 4500 Campus Dr., Ste. 480, Newport Beach, Ca. 92660, (949) 852-1990, Fax 949-852-0231, www.building-products.com, by Cutler Publishing Inc. (a California Corporation), publisher ot Building Products Digest and The Merchant Magazine. Copyright@2012 by Cutler Publishing Inc. Cover and entire contents are fully protected and must not be reproduced in any manner without written permission. To advertise in next year's Traders' Preview, call Alan Oakes or Chuck Casey at (949) 852-1990. This supplement is published in conjunction with the NAWLA Traders Market.

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