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- Proposed Revisions to Federal Trade Commission (FTC) Green Guides
Proposed Revisions to Federal Trade Commission (FTC) Green Guides
The Green Guides
On October 6, 2010, the Federal Trade Commission announced proposed revisions to its Green Guides, which were last revised in 1998. The Green Guides are designed to help marketers avoid making environmental claims that are unfair or deceptive as defined by Section 5 of the FTC Act, 15 U.S.C. § 45. Although the Green Guides are set forth in FTC regulations at 16 C.F.R. Part 260, they are administrative interpretations, do not have the force and effect of law, and are not independently enforceable. Nevertheless, the Green Guides indicate FTC policy, which the FTC implements in its enforcement actions.
2010 Revision Rationale and Process
Citing the proliferation of environmental claims, the FTC began this revision in 2007, a year earlier than scheduled. The review process involved requests for public comment and three public workshops. The FTC also commissioned a consumer perception study after the FTC’s request for consumer perception information yielded no responses. The proposed revisions draw heavily on this consumer perception study. The Federal Register notice published on October 6, 2010 explains the development process, comments, implementation of the existing guidelines, history of enforcement, and proposed revisions in considerable detail.
Key Proposed Changes and Additions
On the whole, the proposed changes and additions to the Green Guides require more specificity and substantiation of environmental claims. For example, the proposed new Green Guides include:
- A caution to marketers not to make blanket, general claims that a product is “environmentally friendly” or “eco-friendly” because such claims are difficult, if not impossible, to substantiate as required by law.
- A new section on certifications, including a caution not to use unqualified certifications or seals of approval that do not specify the basis for the certification. Instead, the FTC instructs manufacturers to limit any environmental superiority representation to the particular product attribute or attributes the seal can substantiate or to rely on a substantiated, specific third-party certification.
- Clarification on a number of environmental claims, such as that a product is recyclable, compostable, degradable, or “free from” a particular substance. For example, a product described as “degradable” (a claim that was the subject of three FTC enforcement actions settled in 2009) should decompose in no more than one year in the environment where it is customarily disposed.
- New guidance on claims about the use of “renewable materials” and “renewable energy.” Marketers should specify the type of renewable energy; should specify if conventional power offset by Renewable Energy Credits (RECs) was used; and, to prevent double-counting of renewable energy, should not claim that they use renewable energy if they generate renewable energy but sell the RECs.
- New advice regarding carbon or other greenhouse gas offset claims, reflecting the general concern (not limited to the FTC Green Guides) about the verifiability and “additionality” of offsets. For example, marketers should have competent and reliable scientific and accounting information to support offset claims, should disclose if greenhouse gas reductions will not take place within two years, and should take credit only for activities that are not already required by applicable law, although the FTC declined to select a single test for additionality.
In addition to these proposed changes, the FTC proposes revisionsthat highlight that the Green Guides apply to business-to-business transactions as well as marketing to consumers, and also proposes a reorganization of the Green Guides, with information the FTC regarded as unnecessary and redundant deleted.
The FTC declined to provide guidelines on life cycle assessments, “organic” claims for non-agricultural products, and claims that a product is “natural.” The FTC also declined to provide guidance on the use of the term “sustainable,” citing First Amendment concerns as the term may be used to describe a company’s environmental philosophy, rather than making a marketing claim about the environmental attributes of a product.
Nor does the FTC provide much clear guidance on third-party green building certifications such as LEED (Leadership in Energy and Environmental Design) that award buildings’ ratings without specifically listing the environmental attributes on which the rating is based, although the FTC held a workshop devoted to green buildings and textiles and considered extensive comments on green building issues. (Note: The guidelines more clearly apply to building materials, such as flooring, that are marketed with environmental claims.)
Comments Solicited by FTC Through December 10, 2010
Comments on the proposed revisions can be submitted to the FTC for consideration until December 10, 2010, after which the FTC may make additional changes before issuing the revised Green Guides in final form.
The complete notice explaining the rationale for the revisions and the full text of the proposed revised Green Guides are available on the FTC’s web site, at http://www.ftc.gov/opa/2010/10/greenguide.shtm.
Questions regarding this advisory should be addressed to author Judith Wallace (212-238-8743, firstname.lastname@example.org). You may also contact environmental practice group co-director Christine A. Fazio (212-238-8754, email@example.com).
Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
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