September 26, 2013

Still Flopping? Efforts to Gut The Lacey Act Live On

Seller Beware: Consumer Protection Insights for Industry

Suppliers of seafood, wood and plant products have long known to pay close attention to their supply chains, both to protect their customers and brands, and to stay on regulators' good sides. In recent years, a lot of attention on the regulatory front has focused on the Lacey Act, the United States' oldest wildlife conservation law. The Lacey Act was passed in 1900 and has evolved to prohibit the trade in illegally-harvested fish, wildlife, plants and plant products. This Act drew attention for its 2008 amendments and has stayed in the spotlight thanks to the high-profile Gibson Guitar case (involving, among other things, the seizure and forfeiture of illegal wood from Madagascar) and recent Congressional hearings in May and July of this year. Offering supposed "fixes" to Lacey was all the rage for a while, but the reform-Lacey movement seems to have lost steam in recent months. While some might wonder whether Congress might have other, more pressing things to worry about, efforts to water down the Lacey Act, like bell bottoms, have never actually gone away completely. Suppliers need to follow these things, so we thought we'd give you the latest.

The most recent effort to "fix" the Lacey Act came on September 17, 2013, when Congressman Rick Crawford introduced H.R. 3105, the Aquaculture Risk Reduction Act. Congressman Crawford's bill would amend the Lacey Act "to exempt from such Act animals accidentally included in shipments of aquatic species produced in commercial aquaculture." In the Congressman's words, the Act "is a common-sense solution that proposes a technical fix to the Lacey Act for accidental infractions without changing the original intent of the underlying law." In our view, this bill is one of a long string of well-intentioned but uninformed efforts to change the Lacey Act in ways that aren't needed and may in fact do more harm than good.

Although illegal goods may be seized and forfeited under the Lacey Act, criminal penalties are imposed only if the perpetrator knew or, in the exercise of due care should have known, that the goods he or she traded were illegal. So while we understand Congressman Crawford's point that someone shouldn't go to jail under the Lacey Act for a simple accident, that is in fact already the law and has been for a very long time. Someone who commits an "accidental infraction" is not guilty of a crime under the Lacey Act.

In our view, the new bill is unnecessary because the protection it claims to provide is already built into the Lacey Act. So it appears that the only real impact of Congressman Crawford's bill would be to exempt accidentally-included, illegally-harvested animals from seizure and forfeiture. However, such an exemption could do real harm by creating a legal loophole, allowing illegal goods to enter the market. That, in turn, runs the risk of increasing the demand for illegal fish, giving shadier operations a lot of incentive to supply illegal fish by "accident." Allowing illegal goods with artificially-low prices in the market risks being bad for business, because it puts legitimate competitors at a disadvantage and may endanger long-term supplies.

The Lacey Act has been around a long time. Its requirements help level the playing field for legitimate businesses and ensure that the goods American consumers are buying are legal. Rather than providing additional protection for law-abiding farmers in the aquaculture industry, Congressman Crawford's Act may well inadvertently end up hurting the farmers it is designed to protect.

We'll continue to keep you posted about these issues.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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