Feds’ reliance on environmental activism underscores need for Lacey Act compliance

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By William M Sullivan Jr, Thomas G Allen and Benjamin J Cote

The search warrant recently executed by US Customs and Fish and Wildlife Service agents on a Virginia-based flooring wholesaler surrounded allegations that the company had illegally imported wood in violation of the Lacey Act, 16 USC § 3371 et seq. It now appears that the federal investigation preceding this raid on two separate locations of the flooring company was based, in part, on an investigation conducted by an independent environmental activist group. This development bolsters three significant trends in Lacey Act enforcement that companies engaged in the purchase, manufacture or sale of wood products should take note of.

First, the Virginia raid demonstrates a continued willingness by federal enforcement agencies to rely on investigations conducted by third-party activist groups as a basis for initiating a government investigation and supporting probable cause determinations. For example, just days after federal agents raided the Virginia-based flooring wholesaler, the activist group Environmental Investigation Agency (EIA) released a 64-page report detailing its three-year investigation into the wood-buying activities of the Virginia company. The investigation identified a Chinese supplier of the flooring company and allegedly traced the origin of the wood being supplied to an allegedly protected forest in eastern Russia that is known to be one of the last habitats of Siberian tigers. The report referenced recorded conversations allegedly inculpating the flooring company, as well as a raft of other information that had been collected pursuant to the investigation by this independent activist group.

As reported by The Wall Street Journal, EIA provided the results of its findings to government authorities in advance of the flooring company raid. EIA has also been linked to the 2009 and 2011 raids on Gibson Guitar over the disputed legality of certain wood or wood products allegedly originating in Madagascar and India. Gibson denied liability and reached a favorable settlement with the US Department of Justice and the US District Attorney’s office for the Middle District of Tennessee. Nonetheless, Gibson’s chief executive officer has publically stated that the government investigation cost Gibson between $2m and $3m (between £1.2m and £1.8m) and loss of untold productive personnel hours…

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