Congress is currently debating an amendment to the Lacey Act that would provide some consumer protection to downstream customers and homeowners as well as service providers—all of whom are currently liable for any Lacey violations in their upstream chain. This is something most flooring professionals should logically support. To illustrate how important this can be, let’s look at one of the recent big events in the industry.
As part of testimony at the International Trade Commission, representatives from both Anderson and Mannington spoke about their use of U.S. prison labor in their production. Anderson has always been a proud promoter of their program, using it in advertising and sending out press releases with every new prison factory opened. Mannington told the commission that they contracted their labor through third parties and were in the process of developing an automated system to replace the program.
All involved in the ITC process understood that there was nothing illegal about the use of domestic prison labor in creating floors for the domestic market. In contrast, it was further noted on the record that it was illegal to import into the United States any flooring produced with prison labor.
This public testimony comparing the legality of domestic prison labor vs. the international trade in prison production apparently drew the attention of the press. According to a Shaw statement, a reporter contacted them asking about the legality of their shipments to Canada.
Canada, like the United States and almost every country in the world, prohibits the import of any prisoner-produced material. There are two main reasons for this. One, in some countries, the prisoners have no choice in the matter, and could be considered virtually the same as slave labor. Rather than pass judgment on another country’s prison system and try to determine an “acceptable” standard of treatment for prisoners, it is simpler to just say “no prison labor allowed at all.” The second reason is practical economics—prison labor is subsidized labor. Material produced in prisons will often have a price advantage over non-prison production.
Both the Shaw/Anderson group and Mannington have said that they assumed their exports were legal since the prisoners were all volunteer workers. They violated no U.S. laws. They also stated that once they realized that they had been violating Canadian import laws for the past decade or so, they immediately volunteered to stop their shipments. I’ve not heard of any fines being imposed, nor of any stock in Canada being confiscated. No one is going to jail. No downstream customers are being punished in any way.
Now let’s pretend this had been a Lacey violation in the United States and compare the probable results.
Under our scenario here, the material was harvested and produced legally in the source country. However, a large international corporation has unknowingly violated a specific non-American trade/transport law relating to the wood sales for years. What would happen in this Lacey case?
To start, Lacey would allow for, possibly even require, the confiscation of all tainted stock. We’re talking seizure of every piece of tainted flooring currently in the country. Every distributor and dealer would forfeit their stock. Technically, Lacey would also allow the confiscation of material already sold and installed. Floors could be taken out of homes, ripped from living and dining rooms. After all, it had illegally entered the country and that’s the zero tolerance nature of Lacey.
If this had been a Lacey violation, then anyone involved in the business could have been held liable for their work. Lacey says specifically “It is unlawful for any person— (2) to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce.” That means that any individual involved in the transaction—the trucker, the freight forwarder, broker, the shipping company, etc.—all would be at risk of charges.
If this had been a Lacey offense, there would be fines and plenty of them. Each and every shipment can be considered a separate offense, so that’s a fine per shipment. The government would have to decide if the violation was done knowingly (criminal charge) or not (civil charge or criminal misdemeanor). If it were a criminal act, jail time would have been a possible penalty, as well as the monetary fines and forfeiture.
If the government decided it was an innocent mistake, then they have to decide if it is a mistake that could and would have been avoided by reasonable due care. Lacey allows for greater leniency for people like the average housewife or the trucker transporting material than for a wood professional. The government is unlikely to punish the trucker or confiscate the housewife’s bedroom floor, even though the law says that they could do so.
But certainly the government will look at the flooring companies. They would consider the size of the companies and their experience in international trade. They would have considered the number of lawyers employed directly by the companies or kept on retainer. Given the size, experience and easy and regular access both these large corporations have to legal advice, it seems likely that they would have been found negligent of exercising reasonable due care. If the government wanted to make an example out of them, the fines could reach up to US$200,000 per shipment and even prison time would be possible.
Let’s summarize. The flooring was legally harvested and produced in the source country. The law broken was not American. The law broken was not specifically related to the legality of the wood itself. The company says it was unfamiliar with the regulation and once it became aware of the problem, immediately ceased business. In the case of the prison shipments to Canada, despite the fact that illegal shipments had gone on for years, there was no punishment whatsoever. Under Lacey, they would not have been so lucky. Under Lacey, they and their customers would almost have certainly lost all their stock, probably faced fines reaching in the millions, and even potentially received jail time.
You might think I exaggerate, but it is hardly a stretch to compare the two cases—in fact, there is actually some parallel here to one of the charges against Gibson. But the bottom line is that if this had been a U.S. import, rather than a U.S. export, and if it had been determined to be a Lacey violation, no matter what track record these companies had with environmental work, no matter what certifications they held, no matter how responsible they were with the forests and manufacturing resources, no matter how innocent they were in intent, this could have bankrupted either corporation. And the negative effects could have easily, even almost certainly, moved downstream to at least their immediate distributors and retailers.
The Lacey Act has a noble intent: to help eliminate the trade in illegally logged wood. Based on all reports, it’s already had a good impact—all reports and studies show a significant reduction in illegal logging. However the Act needs to be tweaked to make it easier for companies to comply and to provide common-sense consumer protections.