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October 6, 2010

FTC Releases Proposed Revisions to the “Green Guides”

The ACTA Group

On October 6, 2010, the U.S. Federal Trade Commission (FTC) released for public comment revisions to its Guides for the Use of Environmental Marketing Claims (Green Guides), which the FTC contends is designed to assist product marketers avoid making false and misleading environmental claims. The proposed changes, released in a pre-publication Federal Register notice, are designed to update the Green Guides and make them easier for companies to use and understand. They are the result of three public workshops exploring emerging issues, along with consumer perception research, and significant public comment. A copy of the proposed changes is available online. The FTC also provides a summary online.

The proposed Guides include revisions to existing guidance, along with addition of new guidance for claims that were not thought to be common when the Green Guides were last revised. Changes to existing guidance cautions marketers from making unqualified general claims that a product is “environmentally friendly” or “eco-friendly.” These types of claims suggest the product has specific and far-reaching environmental benefits that are difficult, if not impossible, to substantiate. The revised guidance also cautions marketers against the use of unqualified certifications or seals of approval that do not specify the basis for the certification. The FTC states that unqualified product certifications and seals of approval likely constitute general environmental benefit claims and cautions marketers that the qualifications applied to seals or certifications must be clear, prominent, and specific. Finally, the Green Guide revisions advise marketers on public perception and use of the terms “degradable,” “compostable,” “ozone-safe/ozone-friendly,” “recyclable,” and “free-of/non-toxic”. For example, a proper “degradable” claim means the product should decompose in a reasonably short period of time, or no more than one year.

The proposed changes add new advice to the Green Guides about claims for products made with “renewable materials” or “renewable energy.” The FTC suggests marketers qualify these claims with specific information about the renewable material (e.g., what it is; how it is sourced; why it is renewable) or renewable energy (e.g., wind or solar) and cautions against unqualified claims if any part of the product is made with non-renewable material or manufactured using fossil fuels. The new guidance also provides advice on carbon offset claims. It suggests marketers have competent and reliable scientific evidence to support the carbon offset claim and disclose if any offset purchase funds emissions reductions that will not occur for more than two years.

Importantly, and reportedly to avoid potentially “duplicative” rules or guidance issued by other agencies, the proposed Guides expressly do not address use of the terms “sustainable,” “natural,” and “organic.” Organic claims may be subject to U.S. Department of Agriculture regulations if made in association with agricultural products under the National Organic Program. “Natural” claims made in association with pesticide products are subject to U.S. Environmental Protection Agency regulations, while “natural flavor or natural flavorings” claims are subject to Food and Drug Administration jurisdiction. Other agencies regulate natural claims pertinent to other articles.

The FTC seeks comment on all aspects of the proposed revisions. Examples include: how should marketers qualify “made with renewable materials” claims, if at all, to avoid deceptions; should the FTC provide guidance concerning how long consumers think it will take a liquid substance to completely degrade; and how do consumers understand “carbon offset” and “carbon neutral” claims?

The proposed Guides are detailed, long, and important to any business that markets to consumers and other purchasing entities. The proliferation of green product claims in recent years has complicated considerably purchasing decisions and also, at times, invited abusive marketing practices, which the FTC has properly attempted to address. While the proposed Guides helpfully respond to many questions that have arisen over the years, based on a quick review, they also raise new issues while leaving unanswered others. The interface between the Guides and other regulatory programs remains unclear in many instances. Quality of information and level of specificity to substantiate claims remains unclear and somewhat fluid. For example, a manufacturer’s claim that a product is “formaldehyde free” would not be deceptive if the manufacturer is able to substantiate that any formaldehyde emissions “likely are inconsequential to consumers.” Reasonable people can be expected to disagree as to what is “inconsequential.” The proposal takes a much needed stab at renewable energy claims and renewable materials claims.

A careful read of the proposal is essential and the FTC is plainly solicitous of specific and meaningful public comment. Such comment will undoubtedly improve and help FTC to address any specific issues raised by the current proposal, which clearly reflects a great deal of thought and effort on the part of FTC. Comments are due December 10, 2010, and may be submitted in paper form by following the instructions in the “Request for Comments” section of the Federal Register notice or electronically online.