Recent developments in deforestation legislation – the UK, U.S. and EU

In recent months, there have been developments involving adopted, pending and proposed deforestation legislation in the United Kingdom, United States and European Union. In this post, we discuss some of these developments.

See here for our prior Alert that discusses in more detail some of the legislation addressed in this post.

UK Environment Act

When the UK Environment Act was passed, it deferred on the “forest risk commodities” that initially will be regulated and the compliance threshold. After a two year consultation process, in December 2023, the UK Department for Environment, Food & Rural Affairs, known as Defra, issued a press release announcing plans to finally introduce secondary legislation addressing these details. 

1. Covered entities: According to the Defra press release, a “regulated person” will be an organization that uses forest risk commodities in its UK supply chains and has global annual turnover of over £50 million. Persons that use less than 500 tons of forest risk commodities per year will be able to submit an exemption.

Under the Act, regulated persons may not use a forest risk commodity, or a product derived from that commodity, in their operations if it is sourced in violation of relevant local laws. Regulated persons will be required to establish and implement a due diligence system for the forest risk commodities and/or derived products used in their UK commercial activities and submit an annual report on their due diligence activities. According to the press release, covered entities will be provided a grace period to prepare for compliance before the first reporting period.

2. Forest risk commodities: According to the Defra press release, the initial list of forest risk commodities will include palm oil, cocoa, beef, leather and soy, as well as all products deriving from them.

The list of forest risk commodities notably excludes coffee, wood and rubber, which are included in the EU Deforestation Regulation. However, Defra has proposed a phased approach to introducing additional commodities in order to preserve the opportunity to capture commodities that may become key drivers of deforestation in the future.

3. Penalties: While Defra sought feedback on a proposed maximum penalty of £250,000 for noncompliance with the Act, the press release notes that there will be unlimited variable monetary penalties in place as part of civil sanctions.

U.S. FOREST Act

During November 2023, U.S. Senator Brian Schatz, a Democrat from Hawaii, re-introduced the Fostering Overseas Rule of law and Environmentally Sound Trade Act, known as the FOREST Act, in the U.S. Senate. The FOREST Act would prohibit the importation of specified products made from commodities produced on illegally deforested land and require importers of covered products to certify that they have taken measures to mitigate the risk of illegal deforestation. The November 2023 bill includes several changes to the initial bill introduced in October 2021, including the following:

1. Covered commodities and covered products: Removes wood pulp from the list of “covered commodities” and certain pulp or pulp products from the list of “covered products.” The proposed initial list of covered commodities would now consist of palm oil, soybeans, cocoa, cattle and rubber. At least annually, the U.S. Trade Representative would be required to review the list of covered commodities and covered products to assess whether anything should be added or removed.

2. Trusted Trader Program: Introduces a “Trusted Trader Program” to be administered by U.S. Customs and Border Protection that would streamline compliance requirements for importers that develop a due diligence system and maintain a track record of compliance, supply chain traceability and transparency in the sourcing of covered commodities and products. Each participant in the Trusted Trader Program would be required to publish information on their due diligence systems and supply chains to facilitate third-party monitoring. They also would be subject to random audits by CBP.

3. Deforestation policy for federal contractors: The Act would provide preferential treatment to U.S. federal government contractors with a policy in place to address deforestation. In assessing proposals for the purpose of awarding a contract involving a product made wholly or in part of a covered commodity, the relevant U.S. agency would be required to reduce the contractor’s bid price by 10% if it publishes an annual deforestation policy that meets certain requirements. Under the November 2023 bill, the policy is no longer required to include measures regarding consent from indigenous peoples and local communities and the protection of biodiversity and wildlife. 

To qualify for preferential treatment, contractors would be required to maintain a policy that at a minimum provides for:

• Measures to identify the point of origin of each commodity and ensure compliance when supply chain risks are present;
• A list of direct and indirect suppliers and supply chain traceability information;
• Measures taken to ensure that each commodity does not contribute to deforestation; and
• Measures taken to ensure compliance with the laws of the country in which the commodity is produced.

4. Enforcement: The Act would now require CBP to notify importers of suspected violations and provide them with an opportunity to demonstrate compliance before taking enforcement action.

New York Tropical Deforestation-Free Procurement Act

In December 2023, New York Governor Kathy Hochul vetoed the New York Tropical Deforestation-Free Procurement Act. The Act, originally introduced in March 2021 and re-introduced in February 2023, would have required contractors with the State of New York involved in the procurement of tropical forest risk commodities to certify that they were not contributing to tropical forest degradation or deforestation. 

EU Deforestation Regulation FAQs

The EU Deforestation Regulation applies starting on December 30, 2024. The European Commission has been publishing FAQs concerning the Regulation. There are now 86 FAQs. The FAQs were most recently updated in December 2023. The Regulation is discussed in detail in our Alert here.

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