Dive Brief:

• U.S. District Judge Raymond Jackson in Norfolk, Virginia, Monday accepted a plea agreement from the U.S. Department of Justice and flooring retailer Lumber Liquidators over the retailer's sourcing of illegal materials.

• The plea deal includes $13.2 million in fines, the appointment by the company of an outside auditor, and a status of “probation” for five years during which the company will submit regular reports. It is the biggest financial penalty ever under the Lacey Act, which criminalizes importing to the U.S. any timber taken in violation of another country’s laws.

• The company admitted to federal charges that some of its flooring was sourced from protected habitats in Asia and Indonesia, and not properly recorded in official paperwork. 

• Lumber Liquidators still faces several federal lawsuits dealing with charges that its flooring contains excessive levels of formaldehyde, which had been revealed in a March 2015 “60 Minutes” report.

Dive Insight:

Lumber Liquidators is hardly finished with the federal government, and it faces lawsuits from officials and consumers in several states.

But this whopping fine—touted by Justice officials as the largest under the Lacey Act—is a sign that the company is beginning to put its woes behind it, and shares rose 7% Monday after the plea agreement was accepted by the judge.

“The case against Lumber Liquidators shows the true cost of turning a blind eye to the environmental laws that protect endangered wildlife,” Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division said in a statement. “This company left a trail of corrupt transactions and habitat destruction. Now they will pay a price for this callous and careless pursuit of profit.”

Per the agreement, the retailer can’t claim any public relations benefit from the fine, which will go to conservation efforts in the areas that its suppliers helped devastate. The most the retailer is saying at this point is that it has changed its sourcing systems and policies so that it ensures that its flooring is safe and environmentally sourced.

"We appreciate the opportunity to have collaborated with the DOJ to develop an Environmental Compliance Plan, which we believe when fully implemented will be one of the strongest and most comprehensive in the industry," Jill Witter, Lumber Liquidators chief compliance and legal officer.