October 6, 2010
by Justin Prochnow
On Oct. 6, FTC released in the Federal Register the long-awaited proposed revisions to the Guides for the Use of Environmental Marketing Claims, also known as the Green Guides. The Green Guides, first issued in 1992, provide guidance on environmental marketing claims and are issued by FTC with the stated purpose of helping marketers ensure that the claims they are making are truthful and substantiated. While the Green Guides are not law, they indicate how the agency will likely apply Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices, to environmental marketing claims. As FTC Chairman Jon Leibowitz indicated in the press release touting the proposed Green Guides, The proposed updates to the Green Guides will help business better align their product claims with consumer expectations.
FTC embarked on its journey to update the Green Guides after it became apparent the Green Guides, last revised in 1998, were severely outdated. Although initially intended to be completed in 2009, the proposed revisions come almost three years after FTC announced its intentions to revise the Green Guides in November 2007. After holding a series of three workshops in 2008, the agency determined more information was necessary and conducted a consumer perception survey in 2009 as well. With the release of the proposed Green Guides, industry companies finally get a chance to see what changes will be made to the Green Guides. The changes to the Green Guides consist of both revisions to sections contained in the current Green Guides, as well as the addition of new sections addressing new types of claims.
Revisions to Current Green Guides
The revised Green Guides caution marketers not to make unqualified, general claims that a product is green or eco-friendly, after FTCs consumer perception study confirmed such claims are likely to suggest the product has specific and far-reaching environmental benefits. FTC contends very few, if any, products have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate. In the current Green Guides, general claims are permitted as long as all express and implied claims can be substantiated.
One of the sections receiving revisions in the proposed Green Guides is the section on certifications and seals of approval. The proposed Green Guides emphasize that certifications and seals of approval are covered by FTCs Endorsement Guides, newly revised in December 2009, and caution marketers not to use unqualified certifications or seals of approval. Marketers must disclose material connections to the certifier and unqualified certifications or seals of approval and should use clear and prominent language to limit the claim to particular attributes for which they have substantiation. The proposed Green Guides provide new examples illustrating how the Endorsement Guides apply to environmental claims.
The proposed Green Guides also advise marketers how consumers are likely to understand certain environmental claims, including that a product is degradable, compostable or free of a particular substance. Certain phrases used with such terms, such as reasonably short period of time and timely manner, have been further defined to avoid confusion and uncertainty.
A three-tiered analysis for disclosing the availability of recycling programs was also included. If a substantial majority of consumers/communities have access to recycling facilities, marketers can make unqualified recyclable claims. If a significant percentage of consumers/communities have access to recycling facilities, marketers must make a qualified recyclable claim to indicate that recycling may not be available in the area. If there is less than a significant percentage, marketers must qualify the claims to indicate the product is recyclable only in the few communities that have recycling programs.
New Claims Addressed by the Proposed Green Guides
The proposed Green Guides also address three new claims not currently addressed in the Green Guides. The proposed Green Guides address claims for renewable materials and renewable energy. FTCs consumer perception research suggests consumers could be misled by these claims because they interpret them differently than marketers intend. Accordingly, the proposed Green Guides advise marketers to provide specific information about the materials and energy used. Marketers may not make unqualified renewable energy claims if the power used to manufacture any part of the product was derived from fossil fuels.
Carbon offset claims are another new area addressed by the proposed Green Guides. Carbon offsets fund projects that reduce greenhouse gas emissions in one place in order to counterbalance or offset emissions that occur elsewhere. The Green Guides advise marketers to disclose if the emission reductions that are being offset by a consumers purchase will not occur within two years. They also advise marketers to avoid advertising an offset if the activity that produces the offset is already required by law.
It is also interesting to note in the press release announcing the revisions, FTC specifically indicated the proposed Green Guides do not address use of the terms sustainable, natural and organic, stating it either lacks a sufficient basis to provide meaningful guidance or because it wants to avoid proposing guidance that duplicates rules or guidance of other agencies. Of particular note is the absence of any direction about use of the term natural, as such use has been a continued source of discussion and controversy for companies in the food, beverage and supplement industries. While USDA has defined natural in some instances, FDA has specifically declined to define the term natural. Several U.S. District Courts recently stayed pending matters with the hope that the FDA will define the term natural.
A telephone call was held with the media shortly after the release of the proposed Green Guides in which FTC Chairman Leibowitz, FTC Commissioner Julie Brill and FTC Enforcement Division Director James Kohm briefly summarized the proposed Green Guides and answered various questions from the media. The trio reiterated FTC is seeking public comment on all aspects of the proposed Green Guides through Dec. 10, 2010. Leibowitz quoted noted environmentalist Kermit the Frog in discussing the proposed Green Guides, stating, Its not easy being green, but these Guides will hopefully make it easier.
Justin J. Prochnow is an Of Counsel lawyer in the Denver office of the international law firm of Greenberg Traurig LLP. His practice concentrates on legal issues affecting the food & beverage, dietary supplement and cosmetic industries. He can be reached at (303) 572-6562 or [email protected] .
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