By Liz Switzer
With the 2008 amendment to the U.S. Lacey Act outlawing illegally logged wood products, Congress with the stroke of a pen forever changed the flooring industry and the seemingly unending demand for endangered, exotic species.

Little more than two years later, the law is beginning to reap the environmental rewards it was designed to achieve, but effective enforcement is problematic and there is still a great deal of questionable product on the market. That has many major suppliers concerned, but it’s not just product sourcing that worries them. Not only is U.S. Customs beginning to bring pressure to bear on the industry, so are some financial institutions. One major lumber supplier was recently turned away for financing by the World Bank unless its products were certified by the Forest Stewardship Council (FSC), sources said.

But in today’s global economy— when an entire length of supply chain is difficult at best to document—third-party FSC certification may not even be good enough. That proved to be the case for the highly touted environmentally friendly Gibson Guitar Corp., which now has the dubious distinction of being the first company to face possible prosecution under the new Lacey Act following execution of a search warrant at the company’s Nashville, Tenn., plant in November 2009.

“Chain-of-custody documentation is still an emerging concept in the global wood products industry, and that may make material procurement more difficult,” said Kirk Teske, principal and chief sustainability officer of HKS, a top five global architectural firm headquartered in Dallas. “I would suspect the biggest impact for manufacturers is ensuring compliance.”

The basic intent of the regulation is appropriate, but how it plays out in the market is what concerns Dave Kitts, Mannington’s vice president, environment. “Our due diligence is definitely stronger than it was and is going to continue to get stronger due to Lacey. On the worry side, good intent in government regulation can go sour and hopefully that won’t occur with Lacey.” He added that he doesn’t see Lacey playing out to any great extent in the flooring market — at least not yet.

Anderson Hardwood Floors president and CEO, Don Finkell, who played a major role in the passage of the Lacey Act, said there are still a lot of cheap wood goods on the market from China and Indonesia, hotspots for the illegal logging trade. “[The Lacey law] is slow moving, but I think it’s getting rid of a lot of illegal logging. But there is still a lot of cheap stuff and I have never seen it cheaper. That is a puzzle to me.”

Finkell estimates the Lacey amendment has reduced the amount of illegal product on the market by about 25%, but industry leaders clearly believe there is still a lot of violation of the law taking place, as well as tariff code violations due to misclassified wood.

The largest volumes are seemingly coming into the country via reputable companies but everyone is concerned about potential public relations disasters that a violation would cause, according to Finkell. “I still think there is a lot of work that needs to be done to clean it up but I don’t think that it is going to really happen until somebody is embarrassed. Behind the scenes everybody is scrambling around trying to get on the right side of this. I see it starting to reach its fingers into the everyday of what’s happening.”

Boa-Franc, maker of the high-profile Mirage brand, has not felt any immediate financial impacts from the Lacey Act, according to Luc Robitaille, vice president of marketing. “However, these requirements have created a more level playing field. There is more seriousness about where and how companies source their wood, and this is a good thing for legitimate companies like ourselves.”

Many suppliers like Mirage and Anderson were taking precautionary steps with their suppliers well before the Lacey Act amendment with measures like Mirage’s product declaration. “We already had most of the information required by these standards and it was in line with steps we have been taking for a number of years now,” Robitaille added.

Mullican Flooring also requires documentation from its overseas partners and “we have conducted thorough due diligence internally and with the help of a third-party procurement advisor,” according to Neil Poland, the company’s president.

The recent tightening of standards related to forest sustainability and chain of custody are encouragement enough for many companies to source their wood domestically. Mullican and Anderson both have pursued and helped develop a new Responsible Procurement Program (RPP), established jointly by the National Wood Flooring Association ( NWFA) and FSC.

While no certification program is perfect, those assurances still matter a great deal to firms like HKS. “Over the past several years, HKS has elevated its emphasis on sustainable design and migrated to specifying sustainably harvested materials for flooring with a preference for FSC-certified material,” Teske said. “As a result, the impact of this legislation is not anticipated to have significant impact on our business; there are plenty of alternatives to exotic materials.”