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FTC Biodegradable Dispute Reflects Enforcement of Green Guides

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WASHINGTONRobert Sinclair is largely fighting for the survival of his company in a clash with the Federal Trade Commission (FTC).

The dispute, if it eventually reaches a federal court, could have relevance for a variety of industriesincluding food and dietary supplement firmswho make environmental claims and spar with the FTC over the validity of the science substantiating their statements.  

ECM BioFilms, Inc., based in Painesville, Ohio, makes additives for manufacturing biodegradable plastics. Its additives have been used in everything from shopping bags to golf tees.

The company declares on its website that plastic products manufactured with its additives will "fully biodegrade in 9 months to 5 years". The FTC also cites statements that note the materials will break down in more than a year.

In a case that may test the agency's revised "Green Guides", the FTC contends ECM is simply wrong and is relying on shoddy science to back up its claims.

"Approximately 92 percent of total municipal solid waste in the United States is disposed of either in landfills, incinerators, or recycling facilities. These disposal methods do not present conditions that would allow ECM Plastics to completely break down and decompose into elements found in nature within a reasonably short period of time," the FTC declared in an administrative complaint that alleges ECM has made false or misleading representations.

FTC and ECM are poised to square off probably sometime next year before an administrative law judge. ECM hasn't filed an answer yet to the complaint.

Sinclair, ECM's president and CEO, said he is gearing up for a long and expensive fight. He is well aware that even if the judge finds in his favor the matter will go before the entire FTC for a vote. Ultimately, the dispute could end up in federal court.

"We have spent hundreds of thousands already on fighting and negotiating with the FTC. It is probably going to be well over a million dollars when we finish up with this," Sinclair said in a phone interview Oct. 31. "Most people aren't willing to fight that far but we have to."

Others facing the FTC's wrath over biodegradable marketing claims have thrown in the towel, including two companies who have used ECM's products: Seattle-based American Plastic Manufacturing, a plastic bags maker; and CHAMP, a Massachusetts-based company that sells plastic golf tees. Both companies did not respond to requests for comment.

In the administrative complaint, FTC claims the scientific tests upon which the company relies "do not assure complete decomposition of ECM Plastics in a reasonably short period of time or" in the timeframes the company publicly cites.

Sinclair responded that ECM is relying on standard testing methods from ASTM (American Society for Testing and Materials) that are legitimate.

"They have been reapproved every five years for the last 15 or so years. This is the consensus scientific approach and the FTC says 'we disregard that,'" Sinclair said.

Under FTC's previous guidance on environmental claimsknown as the Green Guidesa product making a biodegradable claim "had to biodegrade in a reasonable period of time", Sinclair said. In October 2012, the FTC issued revisions to its 20-year-old environmental guides, requiring that products associated with unqualified biodegradable claims entirely break down within a year, he said.

The revised guidelines explicitly state that "an unqualified degradable claim should have competent and reliable scientific evidence that the entire item will completely break down and return to nature (i.e., decompose into elements found in nature) within a reasonably short period of time after customary disposal." For instance, FTC explains an unqualified degradable claim for items entering the solid waste stream would be deceptive if they do not entirely decompose within one year.

Justin Prochnow, a Colorado food and supplement lawyer, points out that the Green Guides are guidelines rather than actual law.

Even so, Sinclair said ECM immediately began qualifying its claims after the new guidelines took effect. But FTC still had a problem with its biodegradable claims and the parties were unable come to an agreement.

"We negotiated with them [FTC] and everything that came up with was unacceptable," Sinclair said. "If we are selling our product we got to be able to speak the truth as we know and as we can prove by the scientific method and they wouldnt allow us."

On Tuesday, the FTC also announced the imposition of a $450,000 civil penalty against a manufacturer of paper products, AJM Packaging Corporation, as well as two other proposed consent orders with companies that had incorporated additives and claimed that their products were biodegradable.

Although the cases were not filed against dietary supplement companies, Prochnow noted several of his clients in the beverage/liquid supplement market have featured designs "using the words 'biodegradable' and/or recyclable."

"The new guidelines, especially with respect to biodegradable, make it clear that unless your product will biodegrade under normal conditions, which in most cases is a landfill and unlikely, you cant make an unadorned biodegradable claim," said Prochnow, a shareholder with Greenberg Traurig, LLP.

While companies making environmental claims should be aware of the guidelines, Prochnow observed that states can pass laws imposing more stringent requirements than the FTC's Green Guides. For instance, he cited California, which has barred the use of biodegradable for plastic products even if a company has good science to substantiate the claims.

"Companies need to be aware of state requirements regarding biodegradable and other environmental claims," Prochnow said.

TAGS: Litigation
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