Introduction
On October 6, 2010, the Federal Trade Commission
("FTC") published a 225-page Federal Register Notice that proposed
revisions to the Guides for the Use of Environmental Marketing
Claims ("Guides"), 16 C.F.R. Part 260. The proposed
revisions would clarify the guidance provided in the existing
Guides and provide new guidance on certain "green" claims
that are not addressed in the current Guides. The FTC is seeking
public comment on the proposed changes as well as on the specific
questions in its Federal Register Notice until December
10, 2010.
Some of the more significant changes to the Guides proposed by the
FTC include an explicit statement that marketers should not make
unqualified general claims that products are "green" or
"earth-friendly," more specific advice on how marketers
should qualify "recyclable" claims, and a new section on
the use of certifications and seals of approval.
The proposed Guides also contain new guidance on "renewable
materials" and "renewable energy" claims, as well as
"carbon offset" claims. The proposed Guides do not
address "sustainable," "natural," and
"organic" claims.
While the Guides are not binding regulations, the FTC may bring
enforcement actions under the FTC Act if a marketer makes an
environmental claim that the agency believes is deceptive.
Proposed Revisions to Claims Currently Addressed in the Guides
General Environmental Benefit (e.g., "green,"
"earth-friendly"). The current Guides warn
marketers that unqualified claims of general environment benefit
may be deceptive. The proposed revised Guides take a stronger
stand, stating that marketers "should not make"
unqualified general environmental claims because "it is highly
unlikely that marketers can substantiate all reasonable
interpretation of these claims."
Marketers should use clear and prominent language to qualify
general "green" claims to the specific and limited
environmental benefits that marketers can substantiate. In
addition, marketers should ensure that the advertisement's
context does not imply more in the way of environmental benefits
than the advertiser can deliver. (See proposed 16 C.F.R.
Part 260.4.)
Certifications and Seals of Approval. The current
Guides barely address certifications and seals of approval. The FTC
is proposing to add a new section to the Guides devoted to this
subject. That proposed new section cautions marketers not to use
unqualified certifications or seals of approval – those
that do not specify the basis for the certification or seal of
approval – because they likely convey general
environmental benefit claims. (As noted above, the FTC believes
marketers are unlikely to be able to substantiate such claims.)
Once again, qualifications should be clear and prominent and should
convey that the certification applies only to a specific and
limited benefit.
According to the new section, third-party certifications are
endorsements that must comply with the FTC's Endorsement
Guides. So if a marketer uses a certification from a trade
association of which it is a dues-paying member in its advertising,
it should disclose that "material connection." In
addition, the use of a certification will likely imply that there
has been an independent, third-party review, so the marketer must
disclose if it has created the certification itself.
Finally, the Guides note that third-party certification does not
eliminate a marketer's obligation to ensure that it has
adequate substantiation for any claims conveyed by the mention of
that certification. (See proposed 16 C.F.R. Part
260.6.)
Compostable. The proposal clarifies that the
"timely manner" requirement in the current Guides for an
unqualified "compostable" claim means that a product or
package will break down in approximately the same time as the
materials with which it is composted. Unqualified compostable
claims should not be made unless governmental or institutional
composting facilities are available to a "substantial
majority" (at least 60%) of consumers or communities where the
advertised product is sold. (See proposed 16 C.F.R. Part
260.7.)
Degradable. The Commission brought several cases
challenging "degradable" claims this past year. The
current Guides state that a marketer should qualify a
"degradable," "biodegradable," or similar claim
unless it can substantiate that the entire product or package will
completely break down and return to nature within a
"reasonably short period of time" after customary
disposal. For solid products, the "reasonably short period of
time" is defined as no more than one year after customary
disposal. Marketers should not make unqualified degradable claims
for items destined for landfills, incinerators, or recycling
facilities because complete decomposition will not occur in those
locations within one year. (See proposed 16 C.F.R. Part
260.8.)
Free-of/Non-toxic. The current Guides address
"free-of" and "non-toxic" claims only in
examples and do not contain a section that specifically discusses
such claims. Under the proposed revised Guides, claims that an item
is free-of a substance, even if true, may be deceptive if (1) the
item has substances that pose the same or similar environmental
risk, or (2) the substance has never been present in or otherwise
associated with the product category. Free-of claims may be
appropriate even if an item contains a de minimis amount
of a substance.
As to non-toxic claims, the FTC believes that consumers likely
think that non-toxic claims apply both to humans and the
environment. Marketers should be cautious when relying on
regulatory standards as substantiation for non-toxic claims because
some regulatory thresholds will not be consistent with consumer
expectations. (For example, a standard relating to acute toxicity
may not be sufficient to support a non-toxic claim if the substance
may be toxic to humans or the environment over a longer time
period.) (See proposed 16 C.F.R. Part 260.9.)
Ozone-Safe/Ozone-Friendly. The new proposal
contains only minor modifications to the current Guides. A new
example cautions marketers not to make "environmentally
friendly" claims for non-ozone refrigerants because all
current non-ozone refrigerants are greenhouse gases and also
consume a substantial amount of energy. (See proposed 16
C.F.R. Part 260.10.)
Recyclable. The current Guides advise marketers to
qualify "recyclable" claims if necessary to avoid
deceiving consumers about the limited availability of recycling
programs and collection sites. Whether a disclosure of the limited
availability of recycling programs would be necessary depends on
whether recycling facilities are available to (1) a substantial
majority (once again, at least 60%) of consumers or communities,
(2) a "significant percentage" but not a substantial
majority or (3) less than a significant percentage. (The proposed
revision does not define "significant percentage.")
An unqualified recyclable claim is fine where recycling is
available to a substantial majority. Otherwise, the claim should be
qualified – e.g., "This product may not be
recyclable in your area." (The FTC believes that
"positive" disclosures – e.g., "Check to
see if recycling facilities exist in your area" –
are usually not adequate.) (See proposed 16 C.F.R. Part
260.11.)
Recycled Content. The new proposal, like the
current Guides, provide that marketers may make a "recycled
content" claim for materials that have been diverted from the
solid waste stream, either during the manufacturing process
("pre-consumer") or after sales to consumers
("post-consumer"). Spilled raw materials or scraps that
are normally reused by the manufacturer do not constitute recycled
content because they have not been diverted from the solid waste
stream. (See proposed 16 C.F.R. Part 260.12.)
Proposed New Guidance for Claims Not Currently Addressed in the Guides
The FTC also proposes to update the Guides by addressing claims
not included in the current Guides, such as "carbon
offsets," "renewable energy," and "renewable
materials."
Carbon Offsets. The FTC chose to tread lightly in
this area, acknowledging its limited authority, the limited
available data on consumer perceptions of such claims, and ongoing
policy debates among experts in the field concerning the
appropriate tests for offset claim substantiation.
The new section provides that sellers should have competent and
reliable evidence to properly quantify claimed emission reductions
and make sure that they do not sell the same reduction more than
once. The proposed Guides also advise marketers to disclose if the
offset purchase funds emission reductions that will not occur
within two years and provide that marketers should not advertise a
carbon offset, if the activity that produces the offset is already
required by law.
Finally, the FTC warns marketers that basing carbon offset claims
on the purchase of renewable energy certificates ("RECs")
could result in the double counting of emission reductions.
(See proposed 16 C.F.R. Part 260.5.)
Made with Renewable Energy. Marketers should not
make an unqualified "made with renewable energy" claim if
the power used to manufacture any of part of the product was
generated by fossil fuels. Marketers that sell renewable energy
certificates for all of the renewable energy they generate should
not represent that they use renewable energy. (See
proposed 16 C.F.R. Part 260.14.)
Made with Renewable Materials. The proposed new
section advises that marketers should qualify a "made with
renewable materials" claim with specific information about the
renewable material (e.g., what it is, how it is sourced, and why it
is renewable). Additionally, marketers should qualify renewable
materials claims unless the item is made entirely with renewable
materials (excluding minor, incidental components). (See
proposed 16 C.F.R. Part 260.15.)
Conclusion
If approved by the FTC, the proposed revised Green Guides could transform current green marketing practices. The FTC is seeking public comment on the proposed changes as well as on the specific questions in its Federal Register Notice until December 10, 2010. For further information on the FTC's proposals and advice on how to support or oppose any or all parts of the proposed changes, please contact Venable's Advertising and Marketing Group (Melissa Landau Steinman, Ian D. Volner or Gary D. Hailey) or Energy Practice Group (Elias B. Hinckley).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
