US Congress Reintroduces Bill to Restrict Imports Linked to Illegal Deforestation

On December 1, 2023, members of the US House of Representatives and Senate introduced a bill that would prohibit the import of products made from commodities produced on illegally deforested land. The bill, the "Fostering Overseas Rule of Law and Environmentally Sound Trade Act of 6 2023" ("FOREST Act of 2023"),¹ would require importers of certain specified products identified as being at high-risk for contributing to illegal deforestation to certify they have mitigated the risks that their product was produced on land that has been subjected to illegal deforestation. Targeted products include palm oil, soybeans, cocoa, cattle, and rubber. Importers would face stricter supply chain due diligence and disclosure requirements if any covered input in the product originates from countries designated as insufficiently enforcing deforestation laws. US Customs and Border Protection ("CBP") would deny entry to any import that cannot meet the applicable certification requirement, presuming the product to have been produced wholly or in part on illegally deforested land. The bill would also expand enforcement of US money laundering laws to target the proceeds of illegal deforestation, create a new technical assistance program to help countries enforce forestry laws, and establish a new government procurement preference for goods not linked to deforestation.

Status in Congress

The bill was introduced in the Senate by Foreign Relations Committee member Sen. Brian Schatz (D-HI) and in the House of Representatives by Ways & Means trade subcommittee ranking member Rep. Earl Blumenauer (D-OR). Republicans Sen. Mike Braun (R-IN) and Rep. Brian Fitzpatrick (R-PA) are cosponsoring, showing some amount of bipartisan support. Several US environmental groups and the US cattle industry have endorsed the bill as well. The House version was referred to the Committee on Ways and Means, along with the Committees on Foreign Affairs, Financial Services, Oversight and Accountability, and the Judiciary for relevant jurisdictional issues, while the Senate version was referred to the Committee on Finance.

Sen. Schatz, Rep. Blumenauer, and Rep. Fitzpatrick introduced a similar bill in 2021, which failed to advance despite bipartisan support in the House.² The FOREST Act of 2023 makes several changes to the original proposal and has gained support of some Republican senators. Whether those changes are enough for the bill to succeed in a sharply divided Congress remains to be seen.

Content of the bill

The bill includes an illegal deforestation import ban, a two-level system for certifying that subject supply chains are free of inputs linked to illegal deforestation, processes for designating products and countries as being subject to the ban and certification systems, a technical assistance program, an expansion of anti-money laundering laws, and new government procurement preferences. Key provisions of the bill are described below.

Definition of illegal deforestation

The import ban would focus specifically on illegal deforestation, which the bill defines as "deforestation conducted in violation of the law (or any action that has the force and effect of the law) of the country in which the deforestation is occurring, including anti-corruption laws, laws relating to land tenure rights laws, and laws relating to free, prior, and informed consent of indigenous peoples and local communities."

Import ban

The bill would establish a general ban on the import of "any product made wholly or in part of a covered commodity produced on land that undergoes illegal deforestation on or after the date of the enactment of the FOREST Act of 2023." The ban would follow a risk-based framework that prioritizes certain covered goods, commodities, and countries, of which USTR will maintain regularly update lists. CBP would enforce the ban by requiring importers of the covered products to file certain import declarations. Imports that cannot meet these declaration requirements will be denied entry on the presumption that they contain inputs derived from illegally deforested land.

Regulators are instructed to define "wholly or in part" "in a manner designed to limit the administrative burden on the importer of record while deterring illegal deforestation," creating opportunity for a de minimis exception to the ban.

Reasonable care declaration

Under the general entry requirement for covered products, an importer would have to certify they have "exercised reasonable care to assess and mitigate the risks that any covered commodity used to make the covered product was produced on land subject to illegal deforestation on or after such date of enactment [of the bill]." The bill instructs the Department of Homeland Security to develop guidance on what actions constitute "reasonable care," and leaves the details of the due diligence process unclear for the moment.

Additional declaration requirement for imports from countries under an action plan

If a covered product contains covered commodities sourced from a country under an action plan, the importer would face a tougher standard for overcoming the import ban. This reporting provision would require the importer to map the supply chain of the covered commodities back to their origins to certify that none of those origin points have been subject to illegal deforestation. Import declarations filed by the importer must include sufficient information to show either (i) the supply chain and origin of the covered commodity and steps taken to assess and mitigate the risk of illegal deforestation at that origin, or (ii) all possible points of origin that could have contributed to the supply chain (for when raw materials are often co-mingled) and the steps taken to assess and mitigate the risks that any of these possible points of origin are subject to illegal deforestation. The bill does not make clear how an importer would know when these additional reporting obligations would become mandatory. Further clarifications could emerge as Congress revises the bill or in the ensuing implementing regulations (should the bill pass).

CBP audits

CBP would conduct random audits of importers filing both forms of declaration. The audits will seek to ensure that the importers have retained documents showing that reasonable care was properly exercised. CBP would also establish a system for persons outside the US government to submit information alleging a violation. Before taking any enforcement action against an importer, CBP would provide the importer with notice and an opportunity for the importer to provide additional information to demonstrate compliance. The previous version of the bill from 2021 had a different enforcement system, relying on the US Department of Agriculture Animal and Plant Health Inspection Service (APHIS) to conduct audits and not providing any process for notifying importers they are subject to an investigation.

Covered products and commodities

The proposed ban and accompanying reporting requirements would apply specifically to certain covered products that contain certain covered commodities that are at a high risk of being produced on illegally deforested land. USTR would review the lists and publish updates annually to ensure that the coverage sufficiently deters illegal deforestation.

Under the bill, the initial list of covered commodities would include palm oil, soybeans, cocoa, cattle, and rubber. The covered products list would at first include products derived from palm oil, soybeans, cocoa, cattle, and rubber that are classified under the following US harmonized tariff schedule ("HTS") headings and subheadings:

• Palm oil and derivative products: HTS 1511, 2905.17.00, 3823.11.00, 1513.21.00, 2905.45.00, 3823.12.00, 1513.29.00, 2915.70.01, 3823.19, 2306.60.00, 2915.90, and 3823.70;
• Soybeans and derivative products: HTS 1201, 1507, and 2304.00.00;
• Cocoa and derivative products: HTS 1803, 1806, 1801.00.00, 1802.00.00, 1804.00.00, or 1805.00.00;
• Cattle and derivative products: HTS 0201, 0206.21.00, 1602.50, 0202, 0206.22.00, 4104 0206.10.00, 0206.29.00, 4107; and
• Rubber and derivative products: HTS 4001 and 4011.

Determining "action plan" countries

USTR would create the action plan country list for countries that should be subjected to the additional supply chain documentation requirements. To create the action plan country list, USTR would identify countries that "do not have adequate and effective protection against illegal deforestation for the production of commodities likely to enter the United States." USTR would consider (i) trends in illegal deforestation in that country, (ii) whether policies and practices in that country provide adequate enforcement against illegal deforestation, (iii) trends in the country’s enforcement capacity, and (iv) incidence of violations of the rights of indigenous peoples and local residents connected to illegal deforestation. USTR would publish the lists to the Federal Register and reassess the list at least every two years. After it lists a country, USTR would develop an action plan for that country. The action plan would explain how the listed country can reach a level of adequate and effective protection for purposes of this bill, including specific policies and benchmarks. The listed country could then petition for its removal by demonstrating achievement of these benchmarks.

Trusted trader program

The bill would also establish a trusted trader program for importers that have demonstrated a "transparent and credible due diligence system" and have a record of compliance. Qualifying traders would have access to a streamlined import process for covered goods and commodities but will be subject to random CBP audits to ensure they are still in compliance. This trusted trader program is a new addition to the bill since its previous introduction in 2021.

Technical assistance

The bill would direct the executive branch to provide technical assistance to help countries eliminate illegal deforestation. The technical assistance programs would include Department of State grants and technical assistance for countries implementing the deforestation action plans. The amount of assistance available through this program is however uncertain, and Congress does not intend to appropriate any new funding to support the program. Instead, the proceeds of fines collected by CBP against importers penalized under the import restrictions would fund the assistance. Forty percent of the proceeds of those fines will be credited towards these assistance programs while the remaining proceeds will fund the enforcement activities at CBP, USTR, and other involved agencies. In contrast, the previous version of the bill from 2021 directly appropriated $20 million for the technical assistance work.

Illegal deforestation as a financial crime

The law also establishes illegal deforestation as a specified unlawful activity under US money laundering law, by adding it to the list of specified forms of criminal activity in section 1956(c)(7)(B) of title 18. Under this provision of US law, individuals and entities (including foreign persons engaging in transactions in the United States) who are knowingly engaging in financial transactions involving property derived from a specified unlawful activity can be subject to fines and imprisonment. The global reach of the US financial system could make this provision a significant law enforcement tool in campaigns against illegal deforestation, as well as a new compliance consideration for financial institutions.

Government procurement

The bill would also establish a general preference in US government procurement regulations that would favor products that are not made on land that has undergone deforestation. This measure goes farther than the import restriction, applying to all deforestation instead of only illegal deforestation. Under this rule, when comparing procurement proposals for products made wholly in part of a covered commodity, the government should favor proposals from bidders that can meet similar certification requirements to those required of importers.

Other US illegal forestry import rules

The FOREST Act would be a substantial expansion of US efforts to combat illegal deforestation, though it would not be the first such measure. The Lacey Act and its 2008 amendments, managed by APHIS, ban the import of illegally harvested animals and plants and requires that imports of certain animal and plant products include additional declarations.³ In 2023, APHIS expanded the Lacy Act declaration obligations to cover various plant-derived products, including wood furniture, essential oils, and cork.

The FOREST Act’s sponsors have described their bill as an extension to the Lacey Act system, applying import restrictions to products produced on land that has undergone illegal harvesting. The bill also includes a provision seeking to ensure the government is fully enforcing the Lacey Act against imports of pulp and paper products. The 2021 version of the FOREST Act in contrast included pulp as a covered commodity, which the bill’s sponsors may have decided is redundant with the Lacey Act.

USTR has also involved itself directly in combatting illegal logging through various international fora. Notably, the Forest Annex of the United States – Peru Trade Promotion Agreement allows USTR to restrict imports of timber products from Peru linked to deforestation, which USTR has used several times.⁴

A growing trend

Interest in enforcing stricter regulations against products derived from deforestation is growing in other governments as well. The EU is similarly implementing a regulation restricting imports of products derived from deforested land in 2023 under its Deforestation Regulation.⁵ The United Kingdom has also adopted rules that would restrict the use of forest risk commodities and derivative products that violate local laws in UK supply chains under the UK Environment Act of 2021.⁶ Unlike the broader EU Deforestation Regulation, the US FOREST Act of 2023 would only apply to products linked to illegal deforestation.

A more aggressive effort to restrict products linked to all forms of deforestation would be unpopular in the United States, especially among Republicans. Rep. Fitzpatrick, for example, was recently among 66 Republican and Democratic representatives who called on USTR to ensure the EU’s deforestation regulation does not interfere with market access for US exporters.⁷ Rep. Blumenauer and Sen. Schatz have, on the other hand, been more receptive to the EU approach, praising EU leadership and hoping the EU’s actions will help build momentum for action in the United States.⁸

_{1 S.3371 – FOREST Act of 2023, 118th Congress (2023-2024), and H.R.6515 – FOREST Act of 2023, 118th Congress (2023-2024).
2 See details on the 2021 version of the bill at, "Schatz, Blumenauer Unveil New Bipartisan Legislation To Help Stop Illegal Deforestation Around The World, Fight Climate Change," October 6, 2021.
3 See, APHIS information on Lacey Act declarations. 
4 See, the environment chapter of the US-Peru TPA. 
5 Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010. 
6 UK Environment Act 2021
7 House letter to USTR regarding the EU deforestation regulation, September 29, 2023.
8 "EU ban on deforestation-linked goods sets benchmark, say US lawmakers," The Guardian, January 5, 2023.}

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