[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Proposed Rules]
[Pages 63551-63607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25000]
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Part II
Federal Trade Commission
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16 CFR Part 260
Guides for the Use of Environmental Marketing Claims; Proposed Rule
Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 /
Proposed Rules
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FEDERAL TRADE COMMISSION
16 CFR Part 260
Guides for the Use of Environmental Marketing Claims
AGENCY: Federal Trade Commission.
ACTION: Proposed revisions to guidelines.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'')
conducted a comprehensive review of its Guides for the Use of
Environmental Marketing Claims (``Green Guides'' or ``Guides'') and
proposes retaining the Guides. After reviewing the public comments, the
transcripts of three public workshops that explored emerging issues,
and the results of its consumer perception research, the Commission
proposes several modifications and additions to the Guides. These
proposed revisions aim to respond to changes in the marketplace and
help marketers avoid making unfair or deceptive environmental marketing
claims. The Commission seeks comment on these proposed revisions and
other issues raised in this document.
DATES: Comments must be received on or before December 10, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form, by following the instructions in the
Request for Comment part of the SUPPLEMENTARY INFORMATION section
below. Comments in electronic form should be submitted at (https://ftcpublic.commentworks.com/ftc/revisedgreenguides) (and following the
instructions on the web-based form). Comments in paper form should be
mailed or delivered to the following address: Federal Trade Commission,
Office of the Secretary, Room H-135 (Annex J), 600 Pennsylvania Avenue,
NW, Washington, DC 20580, in the manner detailed in the Request for
Comment part of the SUPPLEMENTARY INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Laura Koss, Attorney, Division of
Enforcement, Bureau of Consumer Protection, Federal Trade Commission,
202-326-2890.
SUPPLEMENTARY INFORMATION:
I. Overview
Environmental marketing claims are useful sources of information
for consumers, but only when they are true. Ensuring that such claims
are truthful is particularly important because consumers often cannot
determine for themselves whether a product, package, or service
actually possesses the advertised environmental attribute. Because
there is a potential for consumer confusion about environmental claims,
guidance from the FTC can benefit both businesses and consumers alike.
To help marketers make truthful and substantiated environmental
claims, the Federal Trade Commission issued the Guides for the Use of
Environmental Marketing Claims (``Green Guides'' or ``Guides'') in
1992, and revised them in 1996 and 1998. The Guides help marketers
avoid making deceptive claims by outlining general principles that
apply to all environmental marketing claims and providing specific
guidance about how reasonable consumers are likely to interpret
particular claims, how marketers can substantiate them, and how they
can qualify those claims to avoid consumer deception.
Periodic review ensures that the Guides keep pace with evolving
consumer perceptions and new environmental claims. Since the FTC last
revised them in 1998, the marketplace has been dynamic. As consumers
have become increasingly concerned about the environmental impact of
the products and services they use, marketers have expanded their
promotion of the environmental attributes of their products and
services. Some of these promotions have prompted enforcement action by
the FTC, including cases challenging certain environmental benefit
claims as false, such as ``degradable'' paper products or so-called
``bamboo'' textiles that are made with an ``eco-friendly manufacturing
process.'' And, an increasing number of environmental claims are new or
were not common when the Guides were last reviewed and, therefore, are
not addressed by the current Guides. Thus, beginning in 2007, the FTC
sought public comments on the continuing effectiveness of the Guides,
held public workshops on emerging green marketing issues, and conducted
research on consumer perception of environmental claims. This review
affirms that the Guides have benefitted consumers and businesses but
suggests that the Guides should be updated.
The FTC, therefore, proposes several revisions to the Guides. Many
of these revisions strengthen, add specificity to, or enhance the
accessibility of the current guidance on general ``green'' claims and
environmental seals, and claims such as compostable, degradable, and
recyclable. Others propose new guidance regarding emerging claims not
currently addressed in the Guides, such as renewable materials,
renewable energy, and carbon-offsets. The FTC also proposes non-
substantive changes throughout the Guides to make them easier to read
and use, including simplifying language and reorganizing sections to
make information easier to find. The FTC is now seeking further public
comment on each of these proposed modifications to the Guides.
First, the FTC proposes strengthening its guidance regarding
general environmental benefit claims. The FTC's consumer perception
study confirms what the current Guides already state -- unqualified
claims that an item is ``environmentally friendly'' or ``eco-friendly''
are likely to convey that it has specific and far-reaching
environmental benefits. Very few products, if any, have all of the
attributes consumers seem to perceive from such claims. Therefore,
these claims may be impossible to substantiate. Accordingly, the
proposed guidance cautions marketers not to make unqualified general
claims. Our study indicates, however, that marketers may be able to
effectively qualify these claims to focus consumers on the specific
environmental benefits that marketers could substantiate. Therefore,
the proposed revised Guides provide more prominent guidance on how to
adequately qualify general environmental claims.
Similarly, the proposed revised Guides include a new section
devoted to certifications and seals of approval, which currently are
addressed in a single example. The proposed new section gives more
prominence to the current Guides' admonition that unqualified seals of
approval and certifications likely constitute general environmental
benefit claims. It also more directly cautions marketers not to use
unqualified certifications or seals, i.e., certifications or seals that
do not state the basis for the certification. The proposed section
further advises marketers that qualifications should be clear and
prominent and should convey that the certification or seal of approval
refers only to specific and limited benefits. Moreover, this new
section emphasizes that certifications and seals of approval constitute
endorsements covered by the FTC's Endorsement Guides and includes
examples explaining how those Guides apply to environmental claims.
The proposed revised Guides also suggest clarification for claims
that a product is degradable, compostable, or ``free of'' a particular
substance, and highlight guidance for recyclable claims. If a marketer
claims, in certain cases, that a product is ``degradable,'' it should
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decompose in a ``reasonably short period of time'' -- no more than one
year. Moreover, if a solid product is destined for a landfill, an
incinerator, or a recycling facility, the marketer should not make
unqualified degradable claims because the product will not degrade
within a year. Similarly, when making an unqualified ``compostable''
claim, a marketer should be able to show that the product will break
down into usable compost in a safe and timely manner -- approximately
the same time as the materials with which it is composted. The proposed
Guides also clarify and expand guidance about claims that products are
``free of'' particular materials. Finally, the proposed Guides
highlight advice in the current guides that the use of ``recyclable''
depends on how many consumers and communities have access to recycling
facilities for the advertised product.
The proposed revised Guides also include new sections for claims
not addressed by the current Guides, such as claims about the use of
``renewable materials'' and ``renewable energy'' The FTC's consumer
perception research suggests that these claims may be misleading
because consumers interpret them differently than marketers intend. The
proposed new sections advise marketers to provide context for these
claims, in the form of specific information about the materials and
energy used. Because the FTC's study did not test the effect of
qualifying these claims, however, the FTC specifically seeks comment on
whether providing this, or other information, would reduce consumer
confusion. The proposed revised Guides also provide advice about
``carbon offset'' claims: marketers should disclose if the offset
purchase funds emission reductions that will not occur within 2 years,
should make sure that they do not double count offsets, and should not
advertise an offset if the activity that produces the offset is already
required by law.
Environmental marketing presents complex, challenging issues.
Despite the voluminous record established by this review, the FTC would
benefit from additional input in many areas, including for the claims
discussed above and also for ``organic'' and ``made with recycled
content'' claims. Therefore, the FTC invites comment on all aspects of
the proposed revised Guides, as well as on the specific questions it
poses in this Notice. The FTC will take all suggestions into account as
it works to finalize the revised Guides.
II. Background
A. The Green Guides
The Commission issued the Green Guides, 16 CFR Part 260, to help
marketers avoid making environmental claims that are unfair or
deceptive under Section 5 of the Federal Trade Commission Act (FTC
Act), 15 U.S.C. 45.\1\ Industry guides, such as these, are
administrative interpretations of the law. Therefore, they do not have
the force and effect of law and are not independently enforceable. The
Commission, however, can take action under the FTC Act if a marketer
makes an environmental claim inconsistent with the Guides. In any such
enforcement action, the Commission must prove that the challenged act
or practice is unfair or deceptive.
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\1\ The Commission issued the Green Guides in 1992 (57 FR 36363
(Aug. 13, 1992)), and subsequently revised them in 1996 (61 FR 53311
(Oct. 11, 1996)) and 1998 (63 FR 24240 (May 1, 1998)). The FTC
administers several other environmental and energy-related rules and
guides. See Guide Concerning Fuel Economy Advertising for New
Automobiles (16 CFR Part 259), Appliance Labeling Rule (16 CFR Part
305), Fuel Rating Rule (16 CFR Part 306), Alternative Fuels and
Alternative Fueled Vehicles Rule (16 CFR Part 309), Recycled Oil
Rule (16 CFR Part 311), and Labeling and Advertising of Home
Insulation Rule (16 CFR Part 460).
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The Green Guides outline general principles that apply to all
environmental marketing claims and provide specific guidance regarding
many environmental benefit claims. For each such claim, the Green
Guides explain how reasonable consumers are likely to interpret the
claim, describe the basic elements necessary to substantiate the claim,
and present options for qualifying the claim to avoid deception.\2\ The
illustrative qualifications provide guidance for marketers who want
assurance about how to make nondeceptive environmental claims, but do
not represent the only permissible approaches to qualifying a claim.
This guidance assists marketers in making truthful and substantiated
statements about the environmental attributes of their products and
services.
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\2\ The Guides, however, do not establish standards for
environmental performance or prescribe testing protocols.
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In order to adequately substantiate environmental marketing claims,
the Guides advise marketers that they will often need ``competent and
reliable scientific evidence.''\3\ The Guides currently define
competent and reliable scientific evidence as ``tests, analyses,
research, studies or other evidence based on the expertise of
professionals in the relevant area, conducted and evaluated in an
objective manner by persons qualified to do so, using procedures
generally accepted in the profession to yield accurate and reliable
results.\4\ Since the last Green Guides review, the Commission has
clarified this standard, stating that such evidence ``should be
sufficient in quality and quantity based on standards generally
accepted in the relevant scientific fields, when considered in light of
the entire body of relevant and reliable scientific evidence, to
substantiate that [a] representation is true.''\5\
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\3\ 16 CFR 260.5.
\4\ Id.
\5\ See, e.g., Indoor Tanning Ass'n, Docket No. C-4290 (May 13,
2010) (consent order); see also Dietary Supplements: An Advertising
Guide for Industry FTC, Dietary Supplements: An Advertising Guide
for Industry (2001), available at (http://www.ftc.gov/bcp/edu/pubs/business/adv/bus09.pdf) (stating that ``the studies relied on by an
advertiser would be largely consistent with the surrounding body of
evidence'').
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B. The Green Guides Review
1. First Request for Public Comment\6\
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\6\ Citations to comments identify the commenter, the particular
Federal Register Notice to which the commenter responded (533431-
Green Guides Review; 533254 - Carbon Offsets and Renewable Energy
Certificates Workshop; 534743 - Green Packaging Workshop; or 536013
- Green Building and Textiles Workshop), and the assigned comment
number.
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Since the Commission last revised the Green Guides in 1998, both
anecdotal evidence and empirical research indicate that consumers have
a heightened awareness of environmental concerns and, therefore, place
increased importance on buying products and services that will cause
less harm to the environment.\7\ Marketers, in turn, have responded by
touting the environmental attributes of their products and services.
Because of the proliferation of these environmental claims, the
Commission began its decennial Guides review on November 26, 2007, one
year before scheduled. The Commission's
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November 2007 Federal Register Notice sought comment on a number of
general issues, including the continuing need for and economic impact
of the Guides, the effect of the Guides on the accuracy of
environmental claims, and whether the Commission should provide
guidance on certain environmental claims - such as carbon neutral,
sustainable, and renewable - not currently addressed in the Guides.\8\
The Commission received 75 written comments in response.
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\7\ See, e.g., American Chemistry Council (``ACC''), Comment
533431-00023 at 3 (citing a 2005 nationwide survey finding that 90
percent of consumers base their buying decisions, in part, on the
effect their choices will have on the environment); Environmental
Packaging International (``EPI''), Comment 533431-00063 at 8 (citing
studies by the Natural Marketing Institute, Landor Associates,
Datamonitor, Organic Consumers Association, and Global Marketing
Insite); Saint-Gobain Corporation (``Saint-Gobain''), Comment
533431-00037 at 5-6 (citing studies by Consumers International,
American Environics, EcoPinion); Seventh Generation, Comment 533431-
00033 at 2 (citing 2007 Cone Consumer Environmental Survey);
American Beverage Association (``ABA''), Comment 533431-00066 at 2-
3; Dow Chemical Company (``Dow''), Comment 533431-00010 at 1; North
American Insulation Manufacturers Association (``NAIMA''), Comment
536013-00017 at 5-6; Procter & Gamble Company (``P&G''), Comment
533431-00070 at 1; The Advertising Trade Associations (``ATA''),
Comment 533431-00041 at 7.
\8\ 72 FR 66091 (Nov. 27, 2007). This review has taken some time
because, in order to provide as useful advice as possible, the
Commission conducted a consumer perception study of certain
environmental marketing claims. The Commission discusses this study
in detail below.
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2. Workshops and Corresponding Requests for Public Comment
To establish a more robust record, the Commission also held three
public workshops to explore emerging environmental marketing claims.
Specifically, the workshops addressed carbon offsets and renewable
energy certificates;\9\ green packaging claims;\10\ and green building
and textiles.\11\ The workshops brought together over 450 people
representing industry, government, consumer groups, the academic
community, and non-profit environmental organizations.\12\ The
Commission requested comment in connection with each workshop\13\ and
received an additional 125 written comments.\14\
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\9\ See 72 FR 66094 (Nov. 27, 2007).
\10\ See 73 FR 11371 (Mar. 3, 2008).
\11\ See 73 FR 32662 (June 10, 2008).
\12\ Citations to workshop transcripts or presentations identify
the speaker's name and organization, the relevant workshop, and
either the transcript page or the hyperlink to the speaker's
presentation.
\13\ Documents relating to the Green Guides review, including
the public comments; workshop agendas, presentations, and
transcripts; and the Commission's consumer perception study are
available at (http://www.ftc.gov/green).
\14\ The Union of Concerned Scientists submitted a comment
containing letters from over 16,000 individuals. Although
approximately 1,300 of those letters vary in form, the substance of
all the letters is the same. They urged the FTC to review the
environmental marketing of corn-based ethanol as a ``green''
alternative to gasoline. The comments suggested that such marketing
is not based on ``sound science'' because corn ethanol production
could cause an increase in the production of global warming
pollution over regular gasoline.
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3. Consumer Perception Evidence
Because the Guides are based on consumer understanding of
environmental claims, consumer perception research can provide the
Commission with the best evidence upon which to formulate guidance. The
following discusses commenters' submissions of consumer research and
the Commission's 2009 consumer perception study.
a. Commenters' Submissions
Although the Notices solicited consumer perception evidence, few
commenters submitted such research.\15\ Rather, commenters submitted
research concerning: (1) consumers' attitudes and beliefs about
environmental claims;\16\ (2) consumers' environmental concerns and
interests;\17\ and (3) consumers' behavior regarding environmental
claims.\18\ These surveys do not provide a basis upon which the
Commission can formulate guidance on how to make truthful and
nondeceptive environmental marketing claims. Accordingly, the
Commission conducted its own consumer perception study in July and
August of 2009.
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\15\ The Commission discusses the consumer perception research
that commenters submitted in the substantive parts of this Notice.
\16\ ACC, Comment 536013-00030 at 2 (citing a survey of consumer
descriptions of a ``green company''); Rick L. Cantrell, Sustainable
Forestry Initiative, Inc. (``SFI''), Green Building and Textiles
Workshop Presentation at (http://www.ftc.gov/bcp/workshops/buildingandtextiles/presentations/3rcantrell.pdf) (citing a survey
regarding consumer concerns about ``sustainable forestry''); P&G,
Comment 533431-00070 at 1 (citing a study of consumer consideration
of ``sustainability factors'' in purchasing decisions); Kelly
Tullier, Grocery Manufacturers Association (``GMA''), Green
Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf) (same); U.S. Green
Building Council (``USGBC''), Comment 536013-00029 at 2 (citing a
study regarding consumer knowledge of green homebuilding).
\17\ John Kalkowski, Packaging Digest (``Packaging Digest''),
Green Packaging Workshop Tr. at 22-23 (citing a study concerning
consumers' lack of interest in environmental activities); Patricia
F. O'Leary, Cotton Incorporated (``Cotton Incorporated''), Green
Building and Textiles Workshop Tr. at 28 (citing a study regarding
consumers' reaction to apparel items that are not ``environmentally
friendly''); NAIMA, Comment 536013-00027 at 4-5 (citing a study
regarding consumers' concern about global warming); Saint-Gobain,
Comment 533431-00037 at 4-5 (same); Seventh Generation, Comment
533431-00033 at 2 (citing studies of consumers' interest in the
environment).
\18\ GMA, Green Packaging Workshop Tr. at 111 (citing a survey
concerning consumer Internet use to get information about
environmental initiatives and products); National Recycling
Coalition (``NRC''), Comment 533431-00078 at 2 (discussing its
research concerning consumers' recycling behavior); Sam Rashkin,
Environmental Protection Agency, Green Building and Textiles
Workshop Tr. at 178-179 (citing a survey concerning consumer
awareness of the Energy Star name and logo); Kirsten Ritchie,
Gensler (``Gensler''), Green Building and Textiles Workshop Tr. at
109 (same); Timothy Smith, University of Minnesota (``Univ. of
Minnesota''), Comment 536013-00004 at 1 (citing a study examining
life cycle information in advertising).
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b. The Commission's Consumer Perception Study
To conduct the study, the FTC contracted with Harris Interactive, a
consumer research firm with substantial experience surveying consumer
communications.\19\ The study sampled members of the contractor's
Internet panel, which consists of more than four million individuals
recruited through a variety of convenience sampling procedures.\20\
From this sample, Harris selected individuals who were invited to
complete the survey. Participants were selected to correspond, as much
as possible, with the known distribution of U.S. adults aged 18 and
over in terms of age, gender, race and ethnicity, and geographic
region. A total of 3,777 individuals completed the survey.\21\
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\19\ The Commission's consumer perception study is available at
(http://www.ftc.gov/green).
\20\ The sample for this research, therefore, does not
necessarily constitute a true, random sample of the adult U.S.
population. However, because the study focused primarily on
comparing responses across randomly assigned treatment groups, the
Internet panel provided an appropriate sample frame.
\21\ Additional detail on sample selection is available in the
methodology report prepared by Harris which is available at (http://www.ftc.gov/green).
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Harris presented participants with several questions aimed at
determining how they understand certain environmental claims. The first
portion of the study tested the following claims: ``green,'' ``eco-
friendly,'' ``sustainable,'' ``made with renewable materials,'' ``made
with renewable energy,'' and ``made with recycled materials.'' The
questionnaire asked about both unqualified and qualified general
environmental benefit claims (e.g., ``green'' vs. ``green - made with
recycled materials''), as well as specific-attribute claims alone
(e.g., ``made with recycled materials''). The study tested these claims
against a non-environmental control claim (e.g., ``new and improved'').
Moreover, to examine whether consumers' understanding of the claims
differed depending on the product being advertised, the study tested
the claims as they appeared on three different products - wrapping
paper, a laundry basket, and kitchen flooring.\22\ Harris tested 16
different claims with each of the three different products, resulting
in a total of 48 product-claim pairs. To avoid skewing an individual's
answers by asking the same person essentially the same set of questions
multiple times, and to limit the length of the survey presented to any
individual, each participant was
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asked questions regarding only two randomly-selected product-claim
pairs.
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\22\ The study results support the current Guides' approach of
providing general, rather than product-specific, guidance because
consumers generally viewed the tested claims similarly for the three
tested products. Moreover, the results were comparable for
respondents who indicated concern and interest in environmental
issues and those who did not.
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The second portion of the study tested carbon offset and carbon
neutral claims. The questionnaire asked half of the participants about
carbon offsets and half about carbon neutral claims. An initial
screening question gauged whether respondents understood these concepts
by asking them to identify what a carbon offset was or what carbon
neutral meant. Only those participants who demonstrated a general
understanding of these terms continued with the remainder of the study.
Both portions of the study used a combination of open- and closed-
ended questions exploring the same topic. The study questionnaire
described the claims to participants, rather than presenting an actual
advertisement. For example, a participant was asked: ``Suppose you see
some wrapping paper advertised or labeled as `green - made with
recycled materials.'''
After the study's completion, Harris provided FTC staff with data
summaries. The results of this study are discussed below in Parts IV.F,
V, and VI of this Notice.\23\
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\23\ The methodology used for this study may not be appropriate
for testing consumer perception of a particular advertising claim.
Among other differences, marketers must test the claim in the
context of a specific advertisement, which was impossible here.
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C. Outline of This Notice
After reviewing the public comments, the workshop proceedings, and
the consumer perception evidence, the Commission proposes retaining the
Green Guides and making several revisions. Part III of this Notice
proposes three non-substantive changes to make the Guides easier to
read and use. Part IV discusses comments on general issues, such as the
continuing need for the Guides and general comments on life cycle
analysis. Part V discusses issues relating to specific claims that
already are addressed by the Guides. Part VI addresses environmental
marketing claims not currently covered by the Guides. Part VII requests
public comment on the issues raised in this Notice, including the
proposed, revised Green Guides. Finally, Part VIII sets out the
proposed, revised Guides.
III. Proposed Non-substantive Changes to the Current Green Guides
The Commission proposes three changes to make the Guides easier to
read and use. First, wherever possible, the Commission has simplified
the Guides' language to make it clearer and easier to understand. For
example, the FTC has replaced its formal, legal description of the
Guides in Section 260.1 with a more reader-friendly version. Similarly,
the Commission has removed unnecessary language and redundant examples
from all sections of the Guides.\24\
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\24\ Among other things, the Commission proposes deleting from
Section 260.5 a reference to the FTC's law enforcement actions in
the green area and the telephone number to call to obtain copies of
those cases. Case information may be found on the Commission's
website, (http://www.ftc.gov). In addition, in Section 260.2, the
Commission proposes deleting the explicit statement that the Guides
apply to ``marketing through digital or electronic means.'' The
Commission added this reference in 1998, when Internet marketing was
emerging and online advertisers were uncertain about the Guides'
applicability. Because Internet marketing is now ubiquitous, the
Commission proposes revising the Guides to state that they apply to
marketing in any medium.
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Second, the Commission proposes reorganizing the Guides.
Specifically, the proposed, revised Guides combine the first three
sections into one section, which discusses the Guides' purpose, scope,
and structure. In addition, the Commission proposes splitting existing
Section 260.7 (titled ``Environmental Marketing Claims'') into multiple
sections. Currently, Section 260.7 provides advice on eight different
environmental claims, containing the bulk of the Commission's guidance.
To make the information easier to find, the Commission proposes moving
each environmental claim into its own section, organized
alphabetically, and dividing the guidance within each section into
subparts (e.g., section 260.9(a), 260.9(b), etc.). Because of these
organizational changes, the Commission has renumbered each Guide
section.
Third, the Commission proposes deleting Sections 260.4 and 260.8.
Section 260.4 states that the Commission reviews the Green Guides as
part of its ongoing, periodic review program, and explains that parties
may petition the Commission to amend the Guides in light of new
evidence. This information is common to all of the Commission's guides,
and it is unnecessary to repeat it in each one.\25\ Section 260.8
contains the FTC's environmental assessment of the Guides pursuant to
the National Environmental Policy Act. Because this information is
contained in the Federal Register Notice that enacted the Guides and is
not needed by marketers using the Guides, the Commission proposes
deleting it from the Guides' text.\26\ These deletions will streamline
the Guides, making them a more user-friendly document.
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\25\ Information about petitioning the FTC may be found in the
Commission's rules. See, e.g., 16 CFR 1.6.
\26\ As we did when issuing the Guides in 1992 and revising them
in 1996 and 1998, the Commission concludes that the proposed
revisions to the Guides would not have a significant impact on the
environment and any such impact ``would be so uncertain that
environmental analysis would be based on speculation.'' 16 C.F.R.
1.83(a).
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IV. General Issues
The Commission sought comment on several general issues, including:
(1) whether there is a continuing need for the Guides; (2) whether, and
to what degree, industry is complying with the Guides; (3) whether the
Commission should modify the Guides due to changes in technology or
economic conditions; (4) whether there are international laws or
standards the FTC should consider as part of its review; and (5)
whether the Guides overlap or conflict with other federal, state, or
local laws or regulations. This section discusses the commenters'
responses to these questions, as well as their views on life cycle
analysis, and provides the Commission's analysis of the issues.
A. Continuing Need for the Guides
1. Comments
Several commenters affirmed that the Guides have benefitted
consumers by stemming the tide of spurious environmental claims;
bolstering consumer confidence; imposing clarity and consistency in
environmental marketing claims; and increasing the flow of specific and
accurate environmental information to consumers, enabling them to make
informed purchasing decisions.\27\ No
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commenters suggested the Guides were no longer needed.
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\27\ See, e.g., ACC, Comment 533431-00023 at 3-4; ATA, Comment
533431-00041 at 3, 9; American Forest & Paper Association
(``AF&PA''), Comment 533431-00019 at 2; American Reusable Textile
Association, Comment 534743-00038 at 4; Business for Social
Responsibility (``BSR''), Comment 533431-00016 at 1; Carbonfund.org,
Comment 533431-00056 at 2; Carpet and Rug Institute (``CRI''),
Comment 533431-00026 at 3; Consumer Specialty Products Association
(``CSPA''), Comment 533431-00049 at 1-2; Dow, Comment 533431-00010
at 3; EHS Strategies, Inc. (``EHS''), Comment 534743-00011 at 1;
Fibre Box Association (``FBA''), Comment 533431-00015 at 1; Georgia-
Pacific LLC (``Georgia-Pacific''), Comment 533431-00007 at 1-3;
Graphic Arts Coalition, Comment 533431-00060 at 1; GreenBlue,
Comment 533431-00058 at 1; Rebecca Hammer (``Hammer''), Comment
533431-00017 at 1-2; Alison C. Healey, et al. (``Healey''), Comment
533431-00048 at 1; International Paper, Comment 533431-00055 at 1;
MeadWestvaco Corporation (``MeadWestvaco''), Comment 533431-00013 at
2; NAIMA, Comment 536013-00042 at 2-3; New York City Department of
Consumer Affairs, Comment 533431-00018 at 2; P&G, Comment 533431-
00070 at 1; Pratt Industries, Comment 533431-00081 at 1; Lynn
Preston (``Preston''), Comment 533431-00021 at 2; Saint-Gobain,
Comment 533431-00037 at 2-4; Seventh Generation, Comment 533431-
00033 at 7; The Soap and Detergent Association (``SDA''), Comment
533431-00020 at 1, 5; The Society of the Plastics Industry, Inc.
(``SPI''), Comment 533431-00036 at 13; U.S. Council for
International Business, Comment 533431-00052 at 2; Weyerhaeuser,
Comment 533431-00084 at 1.
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Several commenters stated that the Guides help those seeking to
make truthful and accurate environmental marketing claims, while
providing a level playing field that benefits both consumers and
compliant companies.\28\ Moreover, many agreed that the Guides
accomplish their goals without imposing an undue burden on
industry.\29\
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\28\ See, e.g., International Paper, Comment 533431-00055 at 2
(noting that the Guides level the playing field by standardizing
terms and requiring factual bases for claims); AF&PA, Comment
533431-00083 at 2; CSPA, Comment 533431-00049 at 1-2; EPI, 533431-
00063 at 2; MeadWestvaco, Comment 533431-00013 at 1; NAIMA, Comment
536013-00017 at 2.
\29\ See, e.g., GreenBlue, Comment 533431-00058 at 3 (stating
that the Guides' assurance of accuracy and specificity actually
reduces costs ``by providing a more common, consistent framework for
communicating product attributes''); AF&PA, Comment 533431-00083 at
2; ATA, Comment 533431-00041 at 7-9; Saint-Gobain, Comment 533431-
00037 at 6-7.
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2. Analysis
Based on the consensus that the Guides benefit both consumers and
businesses, the Commission proposes to retain them. As discussed below,
however, the Commission proposes several revisions to ensure that the
Guides reflect consumer perception and new claims in the marketplace.
B. Industry Compliance
1. Comments
In response to questions about industry compliance with the Guides,
some commenters asserted that deceptive marketing claims have increased
in the environmental area.\30\ For example, TerraChoice Environmental
Marketing, Inc. reported the results of its 2007 review of over 1,000
products and expressed concern that many marketers are using vague
claims, such as ``environmentally friendly'' and ``green,'' without
defining terms or providing evidence to support their claims.\31\ It
also noted that many marketers ``highlight relatively insignificant
environmental benefits of a product while distracting consumers from
much more significant impacts.''\32\ Another commenter observed that
companies are marketing the ``environmentally friendly'' nature of
their products ``through words or pictures while only minimally (if at
all) qualifying such claims.''\33\ In addition, other commenters noted
increased instances of ``greenwashing'' by marketers using a ``plethora
of buzzwords like sustainable, environmentally friendly, carbon
offsets, [and] green.''\34\ Some commenters suggested that bringing
more enforcement actions could help address this issue.\35\
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\30\ See, e.g., MeadWestvaco, Comment 533431-00013 at 1 (noting
that diligent companies are disadvantaged by those companies that
ignore or do not understand the Guides and capitalize on growing
interest in environmental issues); Saint-Gobain, Comment 533431-
00037 at 3 (commenting that manufacturers continue to make deceptive
claims, particularly in insulation and building industries);
TerraChoice Environmental Marketing, Inc. (``TerraChoice''), Comment
533431-00040 at 1-4 (stating that the use of false or misleading
claims is rampant); GreenBlue, Comment 533431-00058 at 4-6. But see
ATA, Comment 533431-00041 at 3 (stating that no evidence suggests
that consumers are being misled by claims); Georgia-Pacific, Comment
533431-00007 at 5 (commenting that there is a high degree of
industry compliance).
\31\ TerraChoice, Comment 533431-00040 at 3, 6.
\32\ Id. at 1.
\33\ Jim Krenn (``Krenn''), Comment 533431-00014 at 3.
\34\ Phil Bailey (``Bailey''), Comment 533431-00028 at 3; see
also Hammer, 533431-00017 at 4-5; Healey, Comment 533431-00048 at 2-
5.
\35\ GreenBlue, Comment 533431-00058 at 4; International Paper,
Comment 533431-00055 at 3; MeadWestvaco, Comment 533431-00013 at 2;
Eric Nguyen, Comment 533431-00009 at 5-6; SDA, Comment 533431-00020
at 5; Seventh Generation, Comment 533431-00033 at 7.
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Commenters also expressed concern that the Guides may not be
effectively reaching industry because many businesses are unfamiliar
with them or do not realize that they apply to business-to-business
transactions.\36\ For example, one commenter asserted that the Guides
have provided no benefit to the small business community, stating that
key players in the printing industry do not know about the Green
Guides.\37\ Packaging workshop panelist Environmental Packaging
International described a visit to a recent packaging trade show and
noted that, in its estimation, 20 percent of the exhibitors were making
misleading claims about the environmentally preferable qualities of
their packaging.\38\
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\36\ Joseph Cattaneo, Glass Packaging Institute (``GPI''), Green
Packaging Workshop Tr. at 249, 251 (noting that marketers are not
paying attention to the Guides when creating their campaigns); ACC,
Comment 536013-00030 at 3; Cheryl Baldwin, Green Seal (``Green
Seal''), Green Packaging Workshop Tr. at 192; Victor Bell, EPI
(``EPI''), Green Packaging Workshop Tr. at 232-233; Michelle Harvey,
Environmental Defense Fund (``EDF''), Green Packaging Workshop Tr.
at 53; Packaging Digest, Green Packaging Workshop Tr. at 52. The
Guides currently state that they apply to any environmental claim
made ``in connection with the sale, offering for sale or marketing
of the product, package, or service . . . for commercial,
institutional, or industrial use.'' 16 CFR 260.2.
\37\ Graphic Arts Coalition, Comment 533431-00060 at 1.
\38\ EPI, Green Packaging Workshop Tr. at 232-233.
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Panelist NatureWorks LLC echoed this concern, noting that even
industry members familiar with the Guides are not aware that they apply
to business-to-business transactions.\39\ Workshop panelists,
therefore, recommended that the Guides emphasize their application to
business-to-business transactions and not just business-to-consumer
marketing.\40\ Environmental Packaging International proposed, for
instance, that the Guides include specific examples of such business-
to-business transactions.\41\
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\39\ See Snehal Desai, NatureWorks LLC (``NatureWorks''), Green
Packaging Workshop Tr. at 246-247.
\40\ See, e.g., Scot Case, TerraChoice (``TerraChoice''), Green
Packaging Workshop Tr. at 244.
\41\ EPI, Green Packaging Workshop Tr. at 252.
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2. Analysis
The Guides' purpose is to help marketers avoid making unfair or
deceptive environmental claims. For marketers who nevertheless violate
the law, the Commission will continue its enforcement efforts. The
Commission brought several recent actions involving false or
unsubstantiated environmental claims. For example, last year, the
Commission announced three actions charging marketers with making false
and unsubstantiated claims that their products were biodegradable.\42\
In addition, the Commission charged four sellers of clothing and other
textile products with deceptively labeling and advertising these items
as made of bamboo fiber, manufactured using an environmentally friendly
process, and/or biodegradable.\43\
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\42\ Dyna-E Int'l, Inc., et al., Docket No. 9336 (Dec. 15,
2009); Kmart Corp., Docket No. C-4263 (July 15, 2009); Tender Corp.,
Docket No. C-4261 (July 13, 2009). According to the FTC's
complaints, the defendants' products typically are disposed in
landfills, incinerators, or recycling facilities, where it is
impossible for waste to biodegrade within a reasonably short time
period.
\43\ CSE, Inc., et al., Docket No. C-4276 (Dec. 15, 2009); Pure
Bamboo, LLC, et al., Docket No. C-4274 (Dec. 15, 2009); Sami
Designs, LLC, et al., Docket No. C-4275 (Dec. 15, 2009); The M
Group, Inc., et al., Docket No. 9340 (Apr. 2, 2010). According to
the complaints, these products are made of rayon, manufactured
through a process that uses toxic chemicals and releases hazardous
air pollutants, and cannot biodegrade within a reasonably short time
period. The Commission also brought five enforcement actions related
to deceptive energy claims, involving exaggerated claims about home
insulation and false claims about fuel-saving devices for motor
vehicles. See United States v. Enviromate, LLC., et al., No. 09-CV-
00386 (N.D. Ala. Mar. 2, 2009); United States v. Meyer Enterprises,
LLC, et al., No. 09-CV-1074 (C.D. Ill. Mar. 2, 2009); United States
v. Edward Sumpolec, No. 6:09-CV-379-ORL-35 (M.D. Fla. Feb. 26,
2009); FTC v. Dutchman Enterprises, LLC, et al., No. 09-141-FSH
(D.N.J. Jan. 12, 2009); FTC v. Five Star Auto Club, Inc., et al.,
No. 99-CIV-1963 (S.D.N.Y. Dec. 15, 2008).
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The Commission proposes revising the Guides to state more clearly
that they apply to business-to-business transactions and not just
business-to-
[[Page 63557]]
consumer marketing.\44\ The proposed, revised section on the ``Purpose,
Scope, and Structure of the Guides'' (260.1) explains that the Guides
apply to the marketing of products and services to ``individuals,
businesses, or other entities.''
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\44\ A business consumer may interpret a marketer's claims
differently than an individual consumer. As stated in the FTC Policy
Statement on Deception (``Deception Policy Statement''), appended to
Cliffdale Associates, Inc., 103 F.T.C. 110, 174 (1984), ``[w]hen
representations or sales practices are targeted to a specific
audience, the Commission determines the effect of the practice on a
reasonable member of that group. In evaluating a particular
practice, the Commission considers the totality of the practice in
determining how reasonable consumers are likely to respond.''
Marketers, therefore, must understand how their ads will be
interpreted by their customers.
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Moreover, the proposed, revised Guides include specific business-
to-business transaction examples.\45\ Additionally, to increase
businesses' familiarity with the revised Guides, the Commission plans
to expand its outreach efforts.
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\45\ See Section 260.6, Example 4; Section 260.12, Example 11.
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C. Changes in Technology or Economic Conditions
1. Comments
The Notice asked commenters to discuss what modifications, if any,
the Commission should make to the Guides to account for changes in
relevant technology or economic conditions. In response, many
commenters and workshop panelists observed that companies increasingly
use the Internet to communicate with consumers about their
environmental efforts,\46\ and more consumers use the Internet to check
on product claims and learn about products' environmental
attributes.\47\ The Soap and Detergent Association, for example, noted
that the ``quality and accessability of online technology has greatly
advanced'' since the FTC released the Guides.\48\ In its view, company
websites have become an increasingly valuable and growing source of
clarifying information for consumers about product benefits without the
space limitations of packaging.\49\
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\46\ See, e.g., GMA, Green Packaging Workshop Tr. at 111-115.
\47\ See GMA, Green Packaging Workshop Tr. at 111 (discussing a
2008 online survey showing that 80 percent of the 6,000 consumers
interviewed use the Internet to obtain information about
environmental initiatives and products); GMA, Comment 533431-00045
at 4; see also Cone LLC, Comment 534743-00007 at 8 (noting that when
seeking additional information about a product's environmental
aspects, consumers examine the company's website, third-party
websites, search engines, and the package).
\48\ SDA, Comment 534743-00028 at 4.
\49\ Id.
---------------------------------------------------------------------------
Accordingly, some commenters suggested that the Guides specifically
address the Internet and the opportunities it provides for increasing
consumer access to product information. For example, the Soap and
Detergent Association asked the FTC to determine appropriate
circumstances in which information on a company website would be
sufficient to explain an environmental claim.\50\ Similarly,
NatureWorks stated that the Guides should indicate that ``it is
acceptable to provide further levels of information on a website.''\51\
The Society of the Plastics Industry suggested that the FTC consider
allowing qualifiers that refer to websites, which would give companies
a means of providing more accurate and detailed information about the
availability of recycling facilities than can be provided on a typical
package.\52\ According to this commenter, encouraging consumers to
visit a website for information on available recycling options would
``both empower consumers to educate themselves about recycling options
. . . and provide them the necessary roadmap by which to find recycling
information quickly and readily, without a significant risk of
prompting undesirable consumer behavior (e.g., putting an item that
cannot be recycled locally into the curbside recycling bin . . .
.).''\53\
---------------------------------------------------------------------------
\50\ SDA, Comment 534743-00028 at 4. SDA, however, did not set
forth these circumstances.
\51\ NatureWorks, Green Packaging Workshop Tr. at 230; see also
AF&PA, Comment 534743-00031 at 2 (stating that specific sectors
should be able to develop focused definitions of sustainability that
meet the needs of that sector and that references to websites should
be sufficient to provide the necessary explanation).
\52\ SPI, Comment 534743-00034 at 3; see also Brenda Platt,
Institute for Local Self-Reliance (``ILSR''), Green Packaging
Workshop Tr. at 148 (suggesting that consumers could search a
website to identify composting facilities).
\53\ SPI, Comment 534743-00034 at 4 (emphasis in original).
---------------------------------------------------------------------------
Along these lines, EHS Strategies, Inc., noting the pervasiveness
of general environmental benefit terms such as ``eco'' and ``green'' in
marketing, suggested that the Guides recommend that package labeling
include a website, telephone number, or address so that consumers can
obtain a detailed explanation of a product's environmental
attributes.\54\ However, this commenter cautioned that ``[w]hile
reference to third-party standards and websites are useful, they are
likely not . . . investigated by the consumer at point of purchase.
Insofar as possible, sufficient point of sale information should be
made available to the consumer as to what the environmentally preferred
attributes are.''\55\
---------------------------------------------------------------------------
\54\ EHS, Comment 534743-00011 at 2; see also EnviroMedia Social
Marketing, Comment 534743-00032 at 1 (stating that companies making
claims about their carbon footprint should be required to list a
website to substantiate those claims); TerraChoice, Green Packaging
Workshop Tr. at 207 (noting that marketers should make claim
substantiation available to consumers via websites and toll-free
numbers).
\55\ EHS, Comment 533431-00057 at 2.
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2. Analysis
Using the Internet, marketers can provide consumers with useful
environmental information about products, packages, and services.
However, websites cannot be used to qualify otherwise misleading claims
that appear on labels or in other advertisements because consumers
likely would not see that information before their purchase. Any
disclosures needed to prevent an advertisement from being misleading
must be clear and prominent and in close proximity to the claim the
marketer is qualifying.\56\ These requirements help ensure that
consumers notice, read, and understand disclosures to prevent
deception.
---------------------------------------------------------------------------
\56\ Deception Policy Statement, 103 F.T.C. at 174.
---------------------------------------------------------------------------
D. International Laws
1. Comments
The Commission also sought comment on whether it should consider
international laws, regulations, or standards with respect to
environmental marketing claims in its Guides review. In response, many
commenters recommended that the Commission harmonize the Green Guides
with the International Organization for Standardization (``ISO'') 14021
environmental marketing standards\57\ or at least incorporate some of
its provisions.\58\
---------------------------------------------------------------------------
\57\ ISO is a non-governmental organization which develops
voluntary manufacturing and trade standards, including standards for
self-declared environmental marketing claims. ISO 14021:1999(E)
Environmental labels and declarations - Self-declared environmental
claims (Type II environmental labeling).
\58\ Dow, Comment 533431-00010 at 4 (noting, however, that the
Commission should not follow 14021's ``outdated'' prohibition on
sustainability); AF&PA, Comment 533431-00019 at 3; CSPA, Comment
533431-00049 at 2; EPI, Comment 533431-00063 at 4; EPA Environmental
Preferable Purchasing Program (``EPA-EPPP''), Comment 533431-00038
at 6; FBA, 533431-00015 at 2; Foodservice Packaging Institute
(``FPI''), Comment 533431-00074 at 3; Georgia-Pacific, Comment
533431-00007 at 6; GreenBlue, Comment 533431-00058 at 6;
MeadWestvaco, Comment 533431-00013 at 2; SDA, Comment 533431-00020
at 2-3.
---------------------------------------------------------------------------
For example, one commenter observed that because several countries
are in the process of adopting ISO 14021, the FTC should either align
the Guides with ISO standards or clarify whether products labeled
according to
[[Page 63558]]
ISO 14021 comply with the Guides when there is a discrepancy.\59\
Another commenter stressed the importance of ``close alignment with
global standards,'' noting that the discrepancy in how the Green Guides
and ISO treat recyclable claims\60\ causes problems with transnational
packaging.\61\
---------------------------------------------------------------------------
\59\ AF&PA, Comment 533431-00019 at 3; see also Georgia-Pacific,
Comment 533431-00007 at 6.
\60\ ISO states that marketers must qualify recyclable claims if
recycling facilities are not conveniently available to a
``reasonable proportion'' of purchasers where the product is sold.
ISO 14021 7.7.2:1999(E). In contrast, the Guides provide that
marketers should qualify recyclable claims if recycling facilities
are not available to a ``substantial majority'' of consumers or
communities where the product is sold. See 16 CFR 260.7(d), Example
4.
\61\ MeadWestvaco, Comment 533431-00013 at 3; see also Georgia-
Pacific, Comment 533431-00007 at 6 (suggesting that the Commission
address discrepancies such as the definition of ``post-consumer''
fiber, the references to access to recycling and composting
facilities, and the treatment of the M[ouml]bius Loop); Paper
Recycling Coalition (``PRC''), Comment 533431-00035 at 1 (noting
that the Guides should incorporate ISO definitions of recycling and
post-consumer recycled content because competing definitions
currently cause consumer confusion).
---------------------------------------------------------------------------
In addition, several commenters suggested that the FTC look to ISO
for guidance on how to conduct a life cycle analysis to ensure
consistency in the increasing number of claims using life cycle
assessments for substantiation.\62\ Two commenters, however, urged the
FTC not to fully harmonize the Green Guides with international
standards because ``the obstacles and barriers to maintaining, changing
or modifying, updating, and revising the system may be enormous'' and
could cause ``tremendous effort and delay.''\63\
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\62\ Georgia-Pacific, Comment 533431-00007 at 3-4 (citing ISO
14040 and 14044); see also ACC, Comment 533431-00023 at 5;
GreenBlue, Comment 533431-00058 at 6; P&G, Comment 533431-00070 at
3; Personal Care Products Council (``PCPC''), Comment 533431-00075
at 4; Preston, Comment 533431-00021 at 1; SDA, Comment 533431-00020
at 2-3.
\63\ NAIMA, Comment 533431-00042 at 12; Saint-Gobain, Comment
533431-00037 at 11-12.
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2. Analysis
Because the FTC tries to harmonize its guidance with international
standards when appropriate, the Commission gave careful consideration
to relevant ISO provisions during the course of its review. The goals
and purposes of ISO and the Green Guides, however, are not necessarily
congruent. The Guides' purpose is to prevent the dissemination of
misleading claims, not to encourage or discourage particular
environmental claims or consumer behavior based on environmental policy
concerns. ISO, in contrast, focuses not only on preventing misleading
claims, but also on encouraging the demand for and supply of products
that may cause less stress on the environment.\64\ In part because of
this difference, the proposed Guides do not necessarily align with the
ISO standards. The Commission further discusses ISO standards and any
inconsistencies with the proposed Guides in the relevant sections: (1)
General Environmental Benefit Claims (Part IV.A); (2) Recyclable Claims
(Part IV.E); (3) Recycled Content Claims (Part IV.F); and (4) Free-of
and Non-toxic Claims (Part IV.H).
---------------------------------------------------------------------------
\64\ The introduction to the ISO 14000 series describes the
``Objective of environmental labels and declarations'' as follows:
``The overall goal of environmental labels and declarations is,
through communication of verifiable and accurate information, that
is not misleading, on environmental aspects of products and
services, to encourage the demand for and supply of those products
and services that cause less stress on the environment, thereby
stimulating the potential for market-driven continuous environmental
improvement.'' ISO 14020 3:2000(E).
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E. Overlap with Other Federal, State, or Local Laws
1. Comments
The Commission sought comment on whether the Guides overlap or
conflict with other federal, state, or local laws or regulations, and
if so, how. Most commenters did not identify any specific overlap or
conflict. Two commenters, however, Saint-Gobain and the North American
Insulation Manufacturers Association, expressed concern about the array
of guidelines and standards emerging from local, state, and federal
government agencies, noting that conflicting and competing guidelines
vary in quality and, therefore, consumer utility.\65\ Both commenters
urged the FTC to ``consider preempting state and local laws and
regulations that are inconsistent with or frustrate the purposes of the
Guides.''\66\ Neither commenter, however, cited a specific law or
regulation.
---------------------------------------------------------------------------
\65\ NAIMA, Comment 533431-00042 at 2, 11; Saint-Gobain, Comment
533431-00031 at 3,11.
\66\ NAIMA, Comment 533431-00042 at 11; Saint-Gobain, Comment
533431-00031 at 11.
---------------------------------------------------------------------------
Commenter Environmental Packaging International noted that the
state of California has ``more specific requirements than the Guides
regarding the use of environmental marketing claims related to plastic
packaging.''\67\ For example, EPI stated that California requires that
plastic bags and food and beverage containers labeled as
``compostable,'' ``biodegradable,'' or ``degradable'' or marketed using
similar terms comply with the applicable ASTM International standard
for the term used.\68\ In contrast, the Green Guides do not refer to a
particular industry standard.
---------------------------------------------------------------------------
\67\ EPI, Comment 533431-00063 at 4.
\68\ Id., citing Cal. Pub. Res. Code Sec. Sec. 42355-42357,
42359-42359.6. ASTM International (``ASTM'') is an international
standards organization that develops and publishes voluntary
consensus technical standards for a wide range of materials,
products, systems, and services.
---------------------------------------------------------------------------
International Paper observed that, although it is not aware of any
specific conflicts with federal, state, and local laws, the Green
Guides may conflict with nongovernmental and international voluntary
standards, such as ASTM's compostability standard.\69\ It recommended
that the FTC monitor these standards to try to eliminate any such
issues. It also suggested that the FTC coordinate with other federal
agencies. For example, it suggested that the FTC coordinate with the
Environmental Protection Agency (``EPA'') in the recycling area to make
policy and product labeling consistent with current marketplace
reality.
---------------------------------------------------------------------------
\69\ International Paper, Comment 533431-00055 at 3.
---------------------------------------------------------------------------
Similarly, EPA's Environmentally Preferable Purchasing Program
suggested that the Guides specifically state that ``environmentally
preferable'' claims ``should follow established guidance in this area,
such as EPA's Guidance on Environmentally Preferable Purchasing, which
emphasizes that such determinations should take into account multiple
environmental attributes throughout the product's life cycle.''\70\
---------------------------------------------------------------------------
\70\ EPA-EPPP, Comment 533431-00038 at 7.
---------------------------------------------------------------------------
2. Analysis
Based on a review of the comments, the Green Guides do not appear
to significantly overlap or conflict with other federal, state, or
local laws. Although some commenters discussed the potential for
conflict, none cited any particular conflicting laws. State law may be
different from the Green Guides, but such differences do not
necessarily present a conflict. For example, a company may follow the
Green Guides' provisions on biodegradability and compostability and
still comply with California's specific requirements that plastic bags
and containers labeled as ``biodegradable'' and ``compostable'' meet
ASTM standards.\71\ Additionally, although some commenters sought FTC
preemption of state and local laws, the Green Guides are not
enforceable regulations and, therefore, cannot be legally
preemptive.\72\
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\71\ Indeed, since 1996, California has required marketers to
follow the Green Guides. See Cal. Bus. & Prof. Code Sec. 17580-81.
\72\ 16 CFR 260.2.
One commenter recommended that the Commission coordinate with other
federal agencies. The Commission actively consults with other agencies,
[[Page 63559]]
such as the EPA, the Department of Energy (``DOE''), and the Department
of Agriculture (``USDA''), regarding their areas of expertise to ensure
that the Commission does not issue guidance that duplicates or possibly
conflicts with their regulations and programs. For example, as
discussed below, the Commission does not propose specific guidance for
organic claims about agricultural products that already are covered by
the USDA's regulations.\73\
---------------------------------------------------------------------------
\73\ See Part VI.B, infra.
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F. Life Cycle Analysis
Life cycle analysis (``LCA'') refers to the assessment of a
product's environmental impact through all the stages of its ``life.''
The EPA defines the term ``life cycle'' as ``the major activities in
the course of the product's life-span from its manufacture, use, and
maintenance, to its final disposal, including the raw material
acquisition required to manufacture the product.''\74\ As the EPA notes
in its Final Guidance on Environmentally Preferable Purchasing, in the
context of making purchasing decisions, the term ``life cycle'' has
several interpretations: ``[t]o some, it connotes an exhaustive,
extremely time-consuming, and very expensive analysis. To others, a
life cycle perspective is possible in an abbreviated process, in which
a long list of potential environmental attributes and/or impacts is
narrowed to a few, allowing for comparison across a particular product
category.''\75\ Accordingly, in its Final Guidance on Environmentally
Preferable Purchasing, EPA states that it ``promotes the use of a range
of practices, from life cycle considerations to a more rigorous,
scientifically defensible life cycle assessment methodology.''\76\
---------------------------------------------------------------------------
\74\ See (http://www.epa.gov/nrmrl/lcaccess/pdfs/600r06060.pdf).
\75\ See (http://www.epa.gov/epp/pubs/guidance/finalguidance.htm).
\76\ Id.
---------------------------------------------------------------------------
The current Green Guides do not provide guidance on life cycle
claims. Instead, the Guides include a footnote indicating that the
Guides do not address such claims because the Commission ``lacks
sufficient information on which to base guidance.''\77\
---------------------------------------------------------------------------
\77\ 16 CFR 260.7 n.2.
---------------------------------------------------------------------------
1. Comments
Several commenters discussed whether and how the FTC should provide
LCA guidance. Many noted that, since the last Guides review, LCA has
become both a more accepted and better defined process,\78\ and
marketers increasingly utilize LCA to assess the environmental effect
of their products.\79\ For example, Georgia-Pacific observed that the
international expert community in life cycle assessment has developed
and agreed on requirements for making environmental comparisons or
assertions to the public, which the series of ISO 14040 and 14044
standards reflect.\80\ Other panelists, however, asserted that LCA is
still an emerging concept.\81\
---------------------------------------------------------------------------
\78\ SDA, Comment 534743-00028 at 3 (noting that procedures for
a life cycle analysis are now part of ISO environmental management
standards found under ISO 14000); Susan Selke, Michigan State
University (``Michigan State Univ.''), Green Packaging Workshop Tr.
at 163 (stating that in addition to ISO, there are numerous LCA
standards, including certain Canadian standards and standards
collected on EPA's website).
\79\ See, e.g., GMA, Comment 533431-00083 at 10; PCPC, Comment
533431-00075 at 4; SDA, Comment 533431-00020 at 2; SPI, Comment
533431-00036 at 11.
\80\ Georgia-Pacific, Comment 533431-00007 at 7.
\81\ See, e.g., Michigan State Univ., Green Packaging Workshop
Tr. at 188 (observing that LCA is not yet well understood by
industry, academics, or consumers); Thomas R. Reardon, The Business
and Institutional Furniture Manufacturer's Association (``BIFMA''),
Green Building and Textiles Workshop Tr. at 246-247.
---------------------------------------------------------------------------
In particular, commenters discussed: (1) whether marketers should
refer directly to LCAs in marketing materials; and (2) whether
marketers should substantiate certain claims with an LCA and, if so,
whether the Guides should address LCA substantiation methodologies.
a. LCAs as Marketing Claims
Because of the complexity of LCAs, several commenters asserted that
life cycle analysis should be regarded as a decision-making tool to
help improve environmental outcomes, rather than as a marketing
claim.\82\ A participant in the Green Packaging Workshop, Susan Selke,
for example, viewed life cycle analysis as ``the right philosophical
approach'' for making decisions, but discouraged its use for
communicating information or making claims to consumers, on the grounds
that one must ``interpret LCA in context for it to be meaningful.''\83\
Similarly, EHS Strategies, Inc., commented that terms such as ``cradle
to cradle'' and ``life cycle'' are ill-defined, comprised of multiple
factors, and not amenable to understanding on a package label.\84\
---------------------------------------------------------------------------
\82\ John Delfausse, Est[eacute]e Lauder Companies
(``Est[eacute]e Lauder''), Green Packaging Workshop Tr. at 186;
Michigan State Univ., Green Packaging Workshop Tr. at 186; see also
ACC, Comment 533431-00023 at 5 (suggesting that LCA can be a useful
tool in identifying marketing claims and what type of substantiation
or qualification is necessary).
\83\ Michigan State Univ., Green Packaging Workshop Tr. at 163
(asserting she would ``never advocate trying to summarize LCA
results on a package'').
\84\ EHS, Comment 534743-000211 at 1; see also Est[eacute]e
Lauder, Green Packaging Workshop Tr. at 186 (noting that although
consumers are interested in information pertaining to the life cycle
and sustainability aspects of packaging, Est[eacute]e Lauder does
not recommend encouraging such claims in the Guides).
---------------------------------------------------------------------------
In contrast, one commenter reported the results of a study finding
that LCA information showing quantitative and specific environmental
impact information in an advertisement positively influences consumers'
attitudes toward an advertisement, brand, company, and intention to
purchase a product.\85\ The commenter concluded that ``LCA-based
metrics'' may be the best method for effective communication of
environmental attributes.\86\ Another commenter stated it would support
the use of a standardized label conveying the results of an LCA to
consumers, such as an approach akin to the Food and Drug
Administration's (``FDA'') Nutrition Facts Label.\87\
---------------------------------------------------------------------------
\85\ Univ. of Minnesota, Comment 536013-00004 at 1.
\86\ Id.
\87\ Est[eacute]e Lauder, Green Packaging Workshop Tr. at 189
(noting that the Sustainable Packaging Coalition is working on a
label concept, and stating that it is important to the industry to
have some type of ``nutritional'' label that will be globally
acceptable).
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b. LCAs as Substantiation
Commenters also debated whether a full LCA should be required to
substantiate environmental claims. While some commenters argued that
marketers should be required to conduct a full LCA to support general
environmental benefit claims, others argued that this would not be
feasible due to inconsistent methodologies, complexity, and
expense.\88\
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\88\ See Part V.A, infra.
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Moreover, some commenters suggested that the Guides could help
ensure that companies conducting LCAs do so in a manner that meets the
FTC's substantiation standards.\89\ In particular, the Glass Packaging
Institute suggested that the Guides expressly state that LCAs must meet
the FTC's substantiation standard for environmental claims, which
requires that marketers have ``competent and reliable scientific
evidence, defined as tests, analyses, research, studies or other
evidence based on the expertise of professionals in the relevant area,
conducted and evaluated in an objective manner by persons qualified to
do so,
[[Page 63560]]
using procedures generally accepted in the profession to yield accurate
and reliable results.''\90\ Other commenters went further, noting that
because life cycle analyses can vary in requirements and robustness,
the Guides should indicate the LCA standards or methodologies that the
Commission considers adequate.\91\
---------------------------------------------------------------------------
\89\ See, e.g., Est[eacute]e Lauder, Green Packaging Workshop
Tr. at 176; GPI, Comment 534743-00026 at 10; SDA, Comment 534734-
00026 at 3; Michigan State Univ., Green Packaging Workshop Tr. at
161.
\90\ See, e.g., GPI, Comment 534743-00026 at 10 (citing 16 CFR
260.5).
\91\ ACC, Comment 536013-00030 at 4; NatureWorks, Green
Packaging Workshop Tr. at 217-18; see also Georgia-Pacific, Comment
533431-00007 at 7 (noting that the Guides should provide that claims
based on LCA studies be conducted with the full analysis required by
ISO 14044); P&G, Comment 533431-00070 at 2 (``While not all claims
require a full LCA, recognizing acceptable international standards
for LCA will help ensure consistency in claims that do rely upon
LCAs for substantiation.''); SPI, Comment 533431-00036 at 12
(stating that the scope of the LCA may differ from advertiser to
advertiser); USGBC, Comment 536013-00029 at 10-11 (suggesting that
if the FTC addresses LCA, it should adopt a particular LCA approach,
such as the National Renewable Energy Laboratory's Life Cycle
Inventory Database Project, or set forth specific LCA parameters
that standardize the relevant impact categories, life cycle stages,
and service periods that are the basis of these assessments).
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2. Consumer Perception Evidence
The Commission's study examined whether consumers believe that
environmental claims such as ``green,'' ``eco-friendly,'' or ``made
with recycled materials'' suggest anything about the environmental
impact of a product through its life cycle.\92\ For consumers who do
think about a product's life cycle, the study explored whether they
think of more than one stage in that cycle and, if they do, which of
the four specific stages (i.e., production, transportation, use, and
disposal). Only 16 percent of respondents viewing ``green'' claims and
14 percent of respondents viewing ``eco-friendly'' claims thought about
each of the life cycle stages.\93\
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\92\ The Commission did not test consumer perception of life
cycle claims in marketing, i.e., claims in which the environmental
impacts of a product throughout a product's life cycle are featured
in an advertisement or label. The University of Minnesota submitted
a study that examined life cycle-based information in marketing.
This study, however, focused on consumer perceptions toward the
advertiser and the brand, as well as ``message credibility,'' rather
than consumer understanding of environmental claims. Comment 536013-
00004 at 1.
\93\ Taking an average across all 15 tested claims (net of
control), only nine percent of respondents indicated they thought of
all four stages of a product's life cycle when viewing a claim.
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3. Analysis
After reviewing the comments and the results of its consumer
perception study, the Commission has decided not to propose guidance
about the use of life cycle information either in marketing or as
substantiation for environmental claims.\94\ First, the Commission
lacks information about how consumers interpret life cycle claims in
marketing. Moreover, due to the complexity and variability of these
claims, general advice is unlikely to be useful in any particular case.
Therefore, the Commission will continue to analyze these claims on a
case-by-case basis.
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\94\ Footnote 2 of the Guides currently states that the Guides
do not address LCA claims. 16 CFR 260.7 n.2. The Guides also do not
address other environmental claims, but they do not specifically
identify these claims. For consistency, the Commission proposes
deleting this footnote.
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Second, the Commission declines to propose advising marketers
either to conduct an LCA to substantiate environmental claims or to
follow a particular LCA methodology. Relatively few respondents viewing
broad environmental claims (approximately 15 percent) considered each
of the life cycle stages. Therefore, the results of the study do not
provide a basis for advising marketers to conduct an LCA to
substantiate environmental claims. Marketers may rely on the results of
an LCA as all, or part of, their substantiation, as long as they ensure
that the LCA results constitute competent and reliable scientific
evidence to support their claims. The Commission has no basis for
choosing one LCA methodology over another. Accordingly, the Commission
will continue to apply its substantiation analysis to claims relying on
an LCA to determine whether the assessment: (1) has been conducted and
evaluated in an objective manner by qualified persons and is generally
accepted in the profession to yield accurate and reliable results; and
(2) the LCA is sufficient in quality and quantity based on standards
generally accepted in the relevant scientific fields, when considered
in light of the entire body of relevant and reliable scientific
evidence, to substantiate that each of the marketer's claims is true.
V. Claims Addressed by the Current Green Guides
The Commission requested comment on what changes, if any, it should
make to its existing guidance on specific claims (currently, in Section
260.7). This part of the Notice summarizes the comments and relevant
workshop discussions, reviews the consumer perception evidence, and
provides the Commission's analysis of: (1) general environmental
benefit claims; (2) certifications and seals of approval; (3)
degradable claims; (4) compostable claims; (5) recyclable claims; (6)
recycled content claims; (7) ozone-safe and ozone-friendly claims; (8)
free-of and non-toxic claims; (9) source reduction claims; and (10)
refillable claims.
A. General Environmental Benefit Claims
1. The Current Guides
The current Guides section on general environmental benefit claims
( e.g ., ``environmentally friendly'') states: ``[u]nqualified general
claims of environmental benefit are difficult to interpret, and
depending on their context, may convey a wide range of meanings to
consumers. In many cases, such claims may convey that the product,
package, or service has specific and far-reaching environmental
benefits.''\95\ The Guides remind marketers that they have a duty to
substantiate ``every express and material implied claim that the
general assertion conveys to reasonable consumers about an objective
quality, feature or attribute of a product.'' Unless marketers can meet
this ``substantiation duty,'' they should avoid, or qualify, these
claims ``as necessary, to prevent deception about the specific nature
of the environmental benefit being asserted.''\96\ The following
addresses the comments discussing general environmental benefit claims,
the Commission's relevant consumer perception study findings, and the
Commission's proposed, revised guidance for such claims.
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\95\ 16 CFR 260.7(a).
\96\ Id.
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2. Comments
As discussed below, many commenters asserted that general
environmental benefit claims may confuse consumers and that the
Commission should provide additional guidance on use of these claims,
including what type of substantiation supports them and how marketers
can effectively qualify them. Other commenters asserted that the Green
Guides should prohibit general environmental claims altogether.
a. Substantiating General Environmental Benefit Claims - Life Cycle
Considerations
Several commenters recommended that the Guides state that marketers
making a general environmental claim have substantiation about the
environmental impact of a product throughout its entire life cycle (see
Part IV.F, supra, for a general discussion of comments regarding life
cycle
[[Page 63561]]
analysis).\97\ For example, Unilever United States, Inc. asserted that
marketers should review all aspects of the product's life cycle to
substantiate ``eco-friendly'' claims because consumers reasonably
interpret those claims to mean that the product as a whole offers a
material environmental benefit and presents no significant
environmental risk.\98\ Similarly, EPA's Sustainable Products Network
(``EPA-SPN'') asserted that ``general claims that imply overall
superiority in environmental performance must be substantiated by
information that addresses multiple environmental attributes over the
product's life cycle.''\99\
---------------------------------------------------------------------------
\97\ See, e.g., Michigan State Univ., Green Packaging Workshop
Tr. at 187 (``[I]t is precisely those broad claims that should never
be made unless you can back them up and the only way you could back
them up would be with a full blown life cycle analysis.''); Keith
Christman, American Chemistry Council (``ACC''), Green Packaging
Workshop Tr. at 210; GPI, Comment 534743-00026 at 9-10.
\98\ Unilever United States, Inc. (``Unilever''), Comment
534743-00030 at 1.
\99\ EPA-SPN, Comment 536013-00062 at 4; see also P&G, Comment
533431-00070 at 3 (stating that in the absence of a life cycle
analysis, comparative environmental claims should be limited to
specific and verifiable parameters regarding the sourcing of raw
materials, manufacturing, transportation, or packaging); Georgia-
Pacific, Comment 533431-00007 at 3.
---------------------------------------------------------------------------
Although these commenters agreed about the importance of
considering a product over its life cycle, they advocated different
types and levels of substantiation. Unilever, for example, suggested
that the FTC develop criteria under which marketers would have to
address the major stages of a product's life cycle - its production,
packaging, formula/ingredients, and disposability.\100\ Under
Unilever's framework, if a company can meet eligibility standards for
three out of these four criteria, it could still make a general
environmental benefit claim as long as that unmet criterion is clearly
and accurately disclosed (e.g., ``environmentally friendly, but not
recyclable'').
---------------------------------------------------------------------------
\100\ Unilever, Comment 534743-00030 at 1-2.
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EPA-SPN stated that a full quantitative life cycle assessment,
``while highly desirable,'' is not necessary. Instead, marketers should
demonstrate that they have addressed ``key attributes'' from a life
cycle perspective.\101\ Georgia-Pacific also suggested that the FTC
``recognize the use of the ISO 14040 series standards when comparing
products and, in particular, the need to include the life cycle impact
assessment phase of the LCA as one essential requirement in . . .
comparing products.''\102\
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\101\ Specifically, EPA-SPN recommended that the following types
of information provide ``adequate substantiation'' for general
environmental benefit claims: ``1) certification under voluntary
consensus standards that include multiple environmental attributes
based on consideration of the product's life cycle; 2) certification
under multi-attribute, life cycle-based eco-labeling programs, such
as labeling programs that follow the requirements of the ISO 14024
standard for Type 1 environmental labels; or 3) life cycle analyses
that follow the requirements of the ISO 14040-series of standards
for life cycle assessment.'' EPA-SPN, Comment 536013-00062 at 11;
see also EPA-EPPP, Comment 533431-00038 at 6.
\102\ Georgia-Pacific, Comment 533431-00007 at 3.
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Several other commenters, however, argued that the FTC should not
require marketers making general environmental claims to conduct a full
LCA. According to the Business and Institutional Furniture
Manufacturer's Association, while conducting an LCA is ``an admirable
aspiration,'' the science concerning LCA is not sufficiently well
established to mandate such a requirement.\103\ Similarly, the
Formaldehyde Council, Inc. asserted that there is a debate regarding
how various factors used in life cycle assessment are weighted in
developing an overall assessment.\104\ Other commenters similarly
argued that life cycle assessment should not be the only tool available
to marketers to substantiate general environmental claims, explaining
that LCAs are complex, difficult to interpret, and costly.\105\
Therefore, commenters noted that conducting an LCA may not be feasible
even for large companies.\106\
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\103\ BIFMA, Green Building and Textiles Workshop Tr. at 246;
Sophia Greenbaum, Sustainable Buildings Industry Council (``SBIC''),
Green Building and Textiles Workshop Tr. at 246 (suggesting that
there is no single methodology for establishing life cycle
analysis); see also Green Seal, Green Building and Textiles Workshop
Tr. at 247.
\104\ Formaldehyde Council, Inc., Comment 533431-00047 at 3.
\105\ SDA, Comment 534734-00028 at 3 (stating the FTC should not
require an LCA as substantiation for ``properly qualified, well-
supported claims'' due to the cost such a requirement would impose
on small businesses, but that the Guides, nevertheless, should
encourage marketers to conduct a ``sufficient inquiry to avoid the
use of claims . . . that do not acknowledge other significant
environmental impacts associated with a product's formulation
process or its use''); The Clorox Company (``Clorox''), Comment
534743-00017 at 1 (asserting that even when marketers are making
general claims, they should not be required to conduct a life cycle
assessment); see also ACC, Comment 533431-00023 at 5 (stating that
LCA studies should not be a necessary precondition to making an
environmental claim).
\106\ Est[eacute]e Lauder, Green Packaging Workshop Tr. at 176;
Michigan State Univ., Green Packaging Workshop Tr. at 161.
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b. Qualifying General Environmental Benefit Claims
Some commenters recommended that the Guides provide additional
advice on how marketers can effectively qualify general environmental
benefits. For example, one commenter suggested that the Guides should
advise marketers on how to use more effective qualifiers. This
commenter specifically advised the Commission to require that
qualifications be ``clear, understandable, prominently displayed, and
indicate an actual environmental benefit.''\107\ This commenter also
emphasized that a consumer evaluating an advertisement should be able
to ``quickly and easily tell that the environmental benefit that the
product has is the specific environmental benefit indicated, not the
wider general benefit included in the ad's message - i.e., by such
phrases as `environmentally friendly.'''\108\ Another commenter
asserted that the FTC should provide examples of accompanying language
that would be specific enough to allow the use of these types of
claims.\109\
---------------------------------------------------------------------------
\107\ Krenn, Comment 533431-00014 at 5.
\108\ Id.
\109\ 3M Company, Comment 533431-00027 at 3; see also EHS,
Comment 533431-00057 at 2 (suggesting that general claims should
never appear without a clear statement of the product's specific
attributes and that ``sufficient point of sale information should be
made available to the consumer as to what the environmentally
preferred attributes are'').
---------------------------------------------------------------------------
c. Prohibiting All General Environmental Benefit Claims
Some commenters argued that by allowing general environmental
benefit claims, even when qualified, the Guides facilitate
deception.\110\ These commenters, therefore, recommended that the Green
Guides prohibit all general environmental claims. For example,
GreenBlue argued that there is no single definition of general
environmental benefit terms such as ``green'' or ``environmentally
friendly.'' Therefore, their use only confuses consumers even if the
terms are qualified with text that describes the specific attribute
that contributes to their ``green'' status.\111\ GreenBlue noted that
``environmental excellence'' in one attribute can result in trade-offs
in another. For example, the increased use of recycled content may
require less energy for material production, but may result in greater
weight and, therefore, higher energy costs for transportation.
[[Page 63562]]
According to GreenBlue, because such trade-offs are sufficiently
common, the Guides should discourage general environmental benefit
claims, even when accompanied by a specific-attribute qualifier, unless
a company is willing to include a full explanation of environmental
trade-offs.
---------------------------------------------------------------------------
\110\ Banning general environmental benefit claims would be
consistent with ISO 14021, which prohibits general environmental
claims. Specifically, ISO 14021 provides that ``[a]n environmental
claim that is vague or non-specific or which broadly implies that a
product is environmentally beneficial or environmentally benign
shall not be used. Therefore, environmental claims such as
`environmentally safe,' `environmentally friendly,' `earth
friendly,' `non-polluting,' `green,' `nature's friend,' and `ozone
friendly' shall not be used.'' ISO 14021 5.3:1999(E).
\111\ GreenBlue, Comment 533431-00058 at 4-5.
---------------------------------------------------------------------------
Similarly, EPA-SPN provided an example of a potentially deceptive
qualified claim. It noted that a product advertised as ``Eco-safe
because of low-VOC content'' implies that VOC content is the most
important factor in determining ``overall environmental performance.''
EPA-SPN cautioned that it is not possible to know if this is actually
the case without information on other product attributes. EPA-SPN,
therefore, suggested that marketers ``state the claim in terms of the
relevant attribute without implying broader environmental benefit,
e.g., ``100% post-consumer content'' or ``low VOC.'' EPA-SPN also
recommended that any further description be limited to a statement of
environmental benefit directly related to the attribute. Thus,
according to EPA-SPN, a claim such as ``Low VOC - promotes cleaner
air'' would be proper because ``VOC emissions have a clear relationship
to air quality.''\112\
---------------------------------------------------------------------------
\112\ EPA-SPN, Comment 536013-00062 at 4-5; see also EPI,
Comment 533431-00063 at 4 (suggesting that the Commission revise the
Guides to make clear that information about specific product
attributes will not necessarily qualify general environmental
claims); Rebekah Lacey (``Lacey''), Comment 533431-00062 at 2
(``Manufacturers . . . should not be able to pick and choose the
criteria they use to make general environmental benefit claims. Even
if they disclose the criteria, they are still implying that the
criteria are appropriate, which is inherently misleading if the
criteria focus on a narrow aspect of the product's life cycle
environmental impact.''); USGBC, Comment 536013-00029 at 9 (noting
that qualifying broad environmental claims based on a single product
attribute may be misleading because it ignores the full impact of
the product on the environment).
---------------------------------------------------------------------------
3. Consumer Perception Evidence
Only a few commenters submitted consumer perception evidence
addressing general environmental benefit claims.\113\ Thus, the
Commission's study focused on this issue. The study examined whether
both unqualified and qualified general green claims suggested that the
product has particular environmental benefits. Specifically, the study
asked respondents whether these types of claims conveyed that the
product had any of the following seven environmental attributes: made
from recycled materials, made with renewable materials, recyclable,
made with renewable energy, biodegradable, non-toxic, and compostable.
Thus, for example, would consumers viewing a ``green'' or an ``eco-
friendly'' claim think that the advertised product had specific green
attributes, such as being made with recycled materials or being
recyclable? Additionally, if the general green claim were qualified
with a specific environmental attribute, such as ``green - made with
renewable materials,'' would consumers think the product had
environmental benefits beyond the specific attribute mentioned?\114\
---------------------------------------------------------------------------
\113\ See, e.g., Cone LLC, Comment 534743-00007 at 2 (describing
its February 2008 online survey of over 1,000 consumers and noting
that 48 percent of respondents believed a product marketed as
``green'' or ``environmentally friendly'' has a ``positive, (i.e.,
beneficial) impact'' on the environment).
\114\ The Commission tested the following qualified-general
claims: ``green - made with renewable materials''; ``green - made
with renewable energy''; ``green - made with recycled materials'';
``eco-friendly - made with renewable materials''; ``eco-friendly -
made with renewable energy''; and ``eco-friendly - made with
recycled materials.''
---------------------------------------------------------------------------
Averaging across the seven attributes, 52 percent of respondents
viewing an unqualified ``green'' claim indicated that they believed
that the product had a specific attribute about which the survey asked.
In particular, responses for individual attributes ranged from 61
percent (product is made from recycled materials) to 40 percent
(product is compostable). The responses concerning an unqualified
``eco-friendly'' claim were similar. Averaging across the seven
attributes, 49 percent indicated that the claim suggested that the
product had a particular attribute. Specifically, responses for
individual attributes ranged from 56 percent (product is made from
recycled materials) to 36 percent (product is made with renewable
energy). When the general environmental claims were qualified, however,
on average, 31 percent of consumers indicated that the claim implied
specific environmental benefits in addition to the attribute
stated.\115\
---------------------------------------------------------------------------
\115\ This figure was derived by calculating an average of
responses regarding six qualified-general claims (three of which
qualified ``green''; three of which qualified ``eco-friendly'').
When participants were asked to evaluate a claim that included one
of the specific-attribute claims, such as ``green - made with
renewable materials,'' we did not include responses regarding that
attribute (``made with renewable materials'') in that calculation.
---------------------------------------------------------------------------
In addition to asking consumers about unqualified and qualified-
general environmental benefit claims, the study asked consumers how
they perceive certain specific-attribute claims alone (i.e., claims
that a product is ``made with recycled materials,'' ``made with
renewable materials,'' or ``made with renewable energy''). This allowed
the Commission to compare qualified-general claims to specific-
attribute claims to determine the extent to which the general
environmental claim (e.g., ``green,'' ``eco-friendly'') contributed to
consumer perceptions. On average, 23 percent of respondents viewing
specific-attribute claims indicated that the claim implied specific
benefits in addition to the attribute stated.
The study further examined whether consumers believe that
environmental claims suggest anything about any negative environmental
impact that may come from the product. Twenty-seven percent of
respondents interpreted the unqualified claims ``green'' and ``eco-
friendly'' as suggesting the product has no negative environmental
impact.\116\ Sixteen percent of respondents viewing a qualified
``green'' claim and 17 percent of those viewing a qualified ``eco-
friendly'' claim made the same inference, while only ten percent of
respondents viewing a specific-attribute claim made this inference.
---------------------------------------------------------------------------
\116\ This figure is based on the responses to a closed-ended
question on what ``green'' or ``eco-friendly'' claims suggest or
imply about any negative environmental impact resulting from the
tested products. Responses to subsequent questions suggest that
respondents were not all thinking about negative environmental
impact in exactly the same way in answering this question.
---------------------------------------------------------------------------
4. Analysis and Guidance
Both the comments\117\ and FTC staff's Internet surf\118\ indicate
that general environmental claims are pervasive. Such general claims
appear both alone\119\ and accompanied by specific claims.\120\ To
address their potential for consumer deception, and based on the
comments and the Commission's consumer perception study, the Commission
proposes advising marketers not to make unqualified general
environmental benefit claims.\121\ The proposed, revised Guides also
provide more prominent guidance on how to effectively qualify general
environmental benefit claims.
---------------------------------------------------------------------------
\117\ See, e.g., ACC, Comment 533431-00023 at 6; Clorox, Comment
534743-00017 at 1; 3M Company, Comment 533431-00027 at 3; Krenn,
Comment 533431-00014 at 2; TerraChoice, Comment 533431-00040 at 3.
\118\ In December 2008, FTC staff conducted a review of Internet
sites to investigate the nature and incidence of certain
environmental marketing claims. See Green Marketing Internet Surf, A
Report by the FTC's Division of Enforcement (``FTC Staff Internet
Surf'').
\119\ In the FTC Staff Internet Surf, an express ``green'' claim
occurred in 49 percent of the 799 web pages containing general
environmental claims, and eco-/earth-/environmentally ``friendly''
occurred in 41 percent of them.
\120\ For example, in the FTC Staff Internet Surf, on the 799
web pages with general environmental claims, renewability claims co-
occurred on 36 percent of the pages; carbon claims co-occurred on 35
percent of them; recycled content claims co-occurred on 18 percent;
and biodegradability claims co-occurred on 12 percent.
\121\ This proposed guidance can be found in 16 CFR 260.4.
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[[Page 63563]]
a. Unqualified General Environmental Benefit Claims
The consumer perception evidence and some comments reaffirm the
current Guides' advice that unqualified general environmental benefit
claims convey a range of meanings. For example, the Commission's
consumer perception study found that 61 percent of respondents viewing
an unqualified ``green'' claim believed the product is made from
recycled materials; 59 percent believed the product is recyclable; 54
percent believed the product is made with renewable materials; 53
percent believed the product is biodegradable; 48 percent believed the
product is made with renewable energy; 45 percent believed the product
is non-toxic; and 40 percent believed the product is compostable.\122\
Averaging across these seven attributes, 52 percent of respondents
viewing an unqualified ``green'' claim stated that the claim definitely
or probably suggested that the product had these specific green
attributes. The percentages are similar for respondents viewing an
``eco-friendly'' claim.\123\ Moreover, 27 percent of respondents
interpreted the unqualified claims ``green'' and ``eco-friendly'' as
suggesting the product has no negative environmental impact.
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\122\ As discussed above, the Commission tested the claims as
they appeared on laundry baskets, kitchen flooring, and wrapping
paper. The response rates for laundry baskets and kitchen flooring
were very similar. A slightly larger percentage of respondents
perceived wrapping paper to possess unstated environmental
attributes. However, because the responses were interpreted net of a
non-environmental control claim, the analysis largely eliminated
this difference from the results.
\123\ Of respondents viewing an ``eco-friendly'' claim, 57
percent believed the product is recyclable; 56 percent believed the
product is made from recycled materials; 55 percent believed it is
biodegradable; 51 percent believed it is made with renewable
materials; 47 percent believed it is non-toxic; 43 percent believed
it is compostable; and 36 percent believed it is made with renewable
energy. The average value was 49 percent.
---------------------------------------------------------------------------
Given these findings, and because FTC law requires marketers to
substantiate every express and implied environmental benefit that
consumers reasonably could take from such a claim,\124\ unqualified
general environmental marketing claims remain very difficult, if not
impossible, to substantiate. Very few products, if any, have all of the
attributes consumers appear to perceive from general environmental
benefit claims. In addition, given that all products have some
environmental impact, it is doubtful that a marketer could substantiate
that a product has no or negligible negative environmental impact. The
Commission, therefore, proposes revising the Guides to more directly
caution marketers not to make unqualified general environmental benefit
claims.
---------------------------------------------------------------------------
\124\ FTC Policy Statement Regarding Advertising Substantiation
(``Substantiation Policy Statement''), appended to Thompson Medical
Co., 104 F.T.C. 648, 839 (1984), aff'd, 791 F.2d 189 (D.C. Cir.
1986), cert. denied, 479 U.S. 1086 (1987).
---------------------------------------------------------------------------
Because marketers should not make unqualified general environmental
benefit claims, the Commission declines to adopt commenters'
suggestions that the Guides delineate the particular substantiation
needed to support such claims. Moreover, unlike the approach taken by
ISO 14021, which prohibits general environmental claims, the Commission
does not propose advising marketers to never use a general
environmental benefit claim. As discussed below, marketers may be able
to effectively qualify these claims to focus consumers on the specific
environmental benefits that marketers could substantiate.
b. Qualified General Environmental Benefit Claims
The current Guides state that marketers may make broad
environmental claims if they are ``qualified, as necessary, to prevent
deception about the specific nature of the environmental benefit being
asserted.''\125\ Through examples, the Guides also advise marketers
that qualifications should be sufficiently ``clear and prominent'' to
convey the idea that the claim refers only to limited environmental
benefits and that ``no other deceptive implications are created by the
context.'' The Commission's consumer perception study supports this
advice by demonstrating that qualifying a general green claim reduces
the number of respondents believing: (1) that a product has specific,
unstated benefits; and (2) that a product has no negative environmental
impact.
---------------------------------------------------------------------------
\125\ 16 CFR 260.7(a).
---------------------------------------------------------------------------
First, as discussed above, on average, approximately half of the
respondents viewing a general, unqualified ``green'' claim believed
that the claim suggested specific, unstated environmental benefits.
When viewing a qualified ``green'' claim, on average, substantially
fewer consumers (30 percent) believed that the claim suggested
specific, unstated benefits.\126\ For example, when a ``green'' claim
was qualified with the statement ``made with recycled materials,'' 26
percent of respondents took away implied claims, a decrease of 26
percentage points. Similarly, when a ``green'' claim was qualified with
the statement ``made with renewable energy,'' 29 percent of respondents
took away implied claims, a decrease of 22 percentage points.
---------------------------------------------------------------------------
\126\ To calculate this number, the Commission took an average
across all three qualified- ``green'' claims: ``green - made with
renewable materials''; ``green - made with renewable energy''; and
``green - made with recycled materials.'' The results are similar
for qualified ``eco-friendly'' claims, where, on average, 32 percent
of participants took away the specific, unstated attributes,
compared to the 49 percent who took away specific, unstated
attributes when presented with the unqualified ``eco-friendly''
claim.
---------------------------------------------------------------------------
Second, the survey results indicate that the qualification of a
general claim reduces consumer misperception of a product's overall
environmental impact. While 27 percent of respondents stated that a
product advertised with an unqualified ``green'' or ``eco-friendly''
claim had no environmental impact, only 16 percent of respondents
viewing a qualified ``green'' claim, and 17 percent of those viewing a
qualified ``eco-friendly'' claim, made the same inference.
Although the percentage of respondents believing that a product had
specific, unstated benefits and had no negative impact significantly
decreased, some respondents still saw implied claims. Specifically, 31
percent of respondents saw implied claims, and 17 percent believed a
product had no negative impact. To determine the extent to which the
general environmental claim (e.g., ``green,'' ``eco-friendly'')
contributed to these continuing perceptions, the Commission compared
qualified-general claims to specific-attribute claims alone (e.g.,
``made with recycled materials''). Respondents viewing qualified-
general claims were only eight percent more likely to see implied
claims than those viewing the specific-attribute only claims.\127\
Moreover, respondents viewing qualified-general claims were only
approximately six percent more likely to state that the product had no
negative environmental impact than those viewing specific-attribute
claims alone.\128\ Thus, when qualified, the use of a general green
claim did not appear to significantly contribute to consumers'
propensity to see implied claims or to believe a product had no
negative environmental impact.
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\127\ On average, 31 percent of consumers viewing qualified-
general claims and 23 percent of consumers viewing specific-
attribute claims saw implied claims.
\128\ On average, approximately 16 percent of consumers viewing
qualified-general claims and 10 percent of consumers viewing
specific-attribute claims believed the claims implied no negative
environmental impact.
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The results, therefore, suggest that qualifying a general
environmental claim can focus consumers on the specific advertised
benefit and significantly reduce misperceptions
[[Page 63564]]
about negative environmental impact. Based on these findings, the
Commission proposes to emphasize the current Guides' advice on
qualifying general environmental benefit claims. The proposed, revised
section states that marketers must use clear and prominent qualifying
language to convey to consumers that a general environmental claim
refers only to a specific and limited environmental benefit. The
section also cautions marketers that explanations of specific
attributes, even when true and substantiated, will not adequately
qualify a general environmental marketing claim if the advertisement's
context implies other deceptive claims. Therefore, the proposed Guides
remind marketers they should ensure that the advertising's context
creates no deceptive implications.
Marketers also should use caution with qualifications to ensure
that they are not making additional claims they cannot substantiate.
The Commission's study demonstrates that even some specific-attribute
claims caused consumers to believe the advertised product had other,
unstated environmental attributes. For example, 30 percent of
respondents viewing a ``made with renewable materials'' claim believed
the advertised product had environmental attributes not expressly
mentioned in the claims. Therefore, marketers must substantiate
additional claims conveyed by the qualification itself.
Determining whether a general environmental claim is adequately
qualified depends heavily on the claim's context.\129\ To provide
additional guidance on this point, the Commission proposes adding a new
example to the Guides. In proposed Example 3, the marketer's claim that
its packaging is now ``Greener than our previous packaging'' is likely
deceptive even though the marketer reduced the weight of its packaging,
compared to previous packaging, by 15 percent. The example notes that
consumers likely interpret ``Greener'' in this context to mean that
other significant environmental aspects of the packaging have been
improved. Proposed Example 3 suggests that the marketer qualify the
claim by clearly stating that it reduced the weight of its packaging,
compared to previous packaging, by 15 percent. If the advertisement's
context does not imply other deceptive claims, this claim likely would
not be deceptive.
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\129\ In determining if reasonable consumers are likely to take
an implied claim, the Commission looks at the net impression created
by the advertisement as a whole. Deception Policy Statement, 103
F.T.C. at 179. Example 2 in the current and proposed Guides presents
a scenario in which the context of the claim creates ``deceptive
implications.'' 16 CFR 260.7(a), Example 2. In this example, a
product wrapper is printed with the claim ``environmentally
friendly.'' Text on the wrapper explains that the wrapper is
environmentally friendly because it was ``not chlorine bleached, a
process that has been shown to create harmful substances.'' Although
the wrapper was not bleached with chlorine, its production releases
other harmful substances. Since consumers are likely to interpret
the ``environmentally friendly'' claim, in combination with the
textual explanation, to mean that no significant harmful substances
are currently released into the environment, the ``environmentally
friendly'' claim would be deceptive.
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The Commission is concerned that a general environmental benefit
claim, in combination with a particular attribute, may imply that the
particular attribute provides the product with a net environmental
benefit. If a particular attribute represents an environmental
improvement in one area, but causes a negative impact elsewhere that
makes the product less environmentally beneficial than the product
otherwise would be, consumers may be misled. For example, a marketer
that claims its product is ``Green - Now contains 70 percent recycled
content,'' needs to import more materials from a distant source,
resulting in increased energy use which more than offsets the
environmental benefit achieved by using recycled content. If consumers
interpret the claim ``Green - Now contains 70 percent recycled
content'' to mean that the product has a net environmental benefit, the
claim would be deceptive. The Commission, therefore, requests comment
on consumer interpretation of qualified-general environmental benefit
claims and on whether to include guidance concerning this issue.
The following part on certifications and seals further discusses
the issue of broad, unqualified green claims and includes additional
examples of effective qualifications.
B. Certifications and Seals of Approval
1. The Current Guides
Currently, the Guides do not contain a section devoted to
certifications and seals of approval. However, one example notes that
an environmental seal of approval (``seal'') may imply that a product
is environmentally superior to other products. Specifically, Example 5
in the general environmental benefit claims section provides: ``A
product label contains an environmental seal, either in the form of a
globe icon, or a globe icon with only the text `Earth Smart' around it.
Either label is likely to convey to consumers that the product is
environmentally superior to other products. If the manufacturer cannot
substantiate this broad claim, the claim would be deceptive.''\130\
Accordingly, the Guides instruct marketers who use environmental seals
to accompany such claims with clear and prominent language limiting any
environmental superiority representation to the particular product
attribute or attributes it can substantiate.\131\
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\130\ 16 CFR 260.7(a), Example 5.
\131\ Id. FTC staff's brochure for businesses, ``Complying with
the Environmental Marketing Guides,'' (``FTC Staff's Business
Brochure'') reiterates this guidance and states that third-party
certification does not insulate an advertiser from Commission
scrutiny or eliminate an advertiser's obligation to ensure that it
has substantiation for the claims communicated by the certification.
In addition, the FTC Staff's Business Brochure advises that if a
seal of approval ``implies that a third party has certified the
product, the certifying party must be truly independent from the
advertiser and must have professional expertise in the area that is
being certified.'' FTC Staff's Business Brochure, Complying with the
Environmental Marketing Guides at 6, available at (http://www.ftc.gov/bcp/edu/pubs/business/energy/bus42.pdf).
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2. Comments
Several commenters and panelists identified the use of third-party
certifications as a significant green marketing trend\132\ and
highlighted the benefits of such certifications to businesses and
consumers.\133\ For example, Green Seal, Inc. asserted that third-party
certification provides marketers with independent and credible
substantiation.\134\ Weyerhaeuser stated that third-party
certifications are ``useful in technical areas, where consumers face
difficulty in understanding or directly measuring benefits.''\135\
Similarly, the U.S. Green Building Council observed that ``when
properly administered by certifying organizations truly independent of
the product manufacturer and appropriately represented by marketers, .
. . third-party certification takes the guesswork out of consumer
purchases, providing an independent and expert assessment of
[[Page 63565]]
technical product claims that may be difficult for consumers to
interpret or verify on their own.''\136\ Cone LLC affirmed that
consumers rely on certifications when evaluating environmental claims.
Its opinion survey found that 80 percent of respondents believed that
certification by third-party organizations is ``important in providing
oversight to ensure environmental messaging by companies is
accurate.''\137\
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\132\ See, e.g., Weyerhaeuser, Comment 534743-00033 at 2 (``The
emergence of environmental seals and third-party certifications is
one of the most important trends the FTC identified as posing
potential problems for consumers.''); AF&PA, Comment 534743-00031 at
2; David Mallen, National Advertising Division, CBBB (``NAD''),
Green Packaging Workshop Tr. at 46; USGBC, Comment 534743-00027 at
3.
\133\ See, e.g., USGBC, Comment 536013-00029 at 3-4 (noting that
rating systems provide a consistent and quantifiable definition of
``green building'' for consumers and an expert, third-party
assurance that technical claims are true); Clorox, Comment 534743-
00017 at 1.
\134\ Green Seal, Green Packaging Workshop Presentation at
(http://www.ftc.gov/bcp/workshops/packaging/presentations/baldwin.pdf).
\135\ Weyerhaeuser, Comment 534743-00033 at 2; see also Clorox,
Comment 534743-00017 at 1; Formaldehyde Council, Comment 533431-
00047 at 6.
\136\ USGBC, Comment 534753-00027 at 3.
\137\ Cone LLC, Comment 534743-00007 at 9; see also Tandus,
Comment 536013-00037 at 1 (``[I]ndependent, third party verification
and certification provides extra credibility and assurance that the
manufacturers' claims are truthful and accurate.'').
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One commenter, however, noted that consumers typically cannot
verify third-party certifications. Therefore, there is a ``heightened
degree of trust involved, and there is a heightened degree of
credibility that is at stake.''\138\ Other commenters cautioned that
seals and logos may communicate a general claim of environmental
preferability with no means for the consumer to determine which
environmental benefits form the basis for the claim.\139\
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\138\ NAD, Green Packaging Workshop Tr. at 46.
\139\ CSPA, Comment 533431-00049 at 2-3; P&G, Comment 533431-
00070 at 2; SDA, Comment 536013-00018 at 2; USGBC, Comment 536013-
00029 at 6; Saint-Gobain, Comment 533431-00037 at 7-8.
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Notwithstanding the benefits of third-party certifications, several
panelists and commenters highlighted areas of potential consumer
confusion and made various suggestions regarding how to address that
confusion. The following discusses commenters' suggestions addressing
the use of certifications and seals in marketing and when third-party
certifications adequately substantiate environmental claims.
a. Use of Certifications and Seals in Marketing
Several panelists and commenters suggested that the FTC provide
additional guidance on when the display of certifications and seals is
likely to mislead consumers.\140\ For example, one commenter asserted
that seals of approval and ``eco-labels'' ``that communicate a general
`environmentally friendly' message to consumers should be treated as
environmental claims within the scope of the guides and be subject to
applicable principles and criteria.''\141\ This commenter suggested
that the FTC more prominently feature its advice on the need to qualify
certain types of seals that could connote general environmental
benefits.\142\ Another commenter suggested that marketers generally
should not use ``vague, undefined'' environmental terms but should be
able to incorporate such terms into certifications, as long as the
marketer makes the method and terms of the certification publicly
available and easily accessible.\143\
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\140\ See, e.g., ACC, Comment 536013-00030 at 3-4; CSPA, Comment
533431-00049 at 2-3; Johns Manville, Comment 536013-00034 at 6;
Michelle Moore, USGBC, Green Building and Textiles Workshop Tr. at
197; SBIC, Green Building and Textiles Workshop Tr. at 224; SPI,
Comment 533431-00036 at 11; USGBC, Comment 536013-00029 at 3.
\141\ P&G, Comment 533431-00070 at 2; see also USGBC, Comment
536013-00029 at 6 (stating that marketers should specify the
attributes to which a seal refers in order to help consumers
interpret their meaning); CSPA, Comment 533431-00049 at 3; Saint-
Gobain, Comment 533431-00037 at 3.
\142\ P&G, Comment 533431-00070 at 2; see 16 CFR 260.7(a),
Example 5.
\143\ Greenpeace USA, Comment 536013-00020 at 3.
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Several commenters recommended that the Guides include examples
illustrating ways in which marketers could effectively qualify third-
party certifications and seals of approval.\144\ In the building
context, for example, commenters suggested the Guides include examples
illustrating how marketers can qualify certifications to distinguish
between building design features and performance and to clarify whether
a certification applies to a product or whole building.\145\
---------------------------------------------------------------------------
\144\ See, e.g., GMA, Comment 533431-00045 at 4; SPI, Comment
533431-00036 at 8-9.
\145\ See, e.g., ACC, Comment 536013-00030 at 1; Johns Manville,
Comment 536013-00034 at 6; USGBC, Comment 536013-00029 at 4-5.
---------------------------------------------------------------------------
Commenters also recommended that the Guides address how marketers
can avoid misleading consumers about the certifier's independence.\146\
For example, one commenter opined that self-certifications ``can be
misleading to consumers unless the company expressly discloses that the
certification has not been conducted by an independent third-
party.''\147\ Another asserted that the Guides should address the
financial relationship between the certifying organization and the
company being certified.\148\
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\146\ ACC, Comment 536013-00030 at 3 (noting that marketers
should distinguish seals based on voluntary consensus standards from
other certifications and that the FTC should aid consumers in
distinguishing among certification programs, including those that
use life cycle assessment as the basis for certification); Frank
Hurd, CRI (``CRI''), Green Building and Textile Workshop Tr. at 153;
Johns Manville, Comment 536013-00034 at 7-8; NAIMA, Comment 536013-
00017 at 9; USGBC, Comment 536013-00029 at 2-3.
\147\ CRS, Comment 534743-00009 at 4-5; see also Gensler, Green
Building and Textiles Workshop Tr. at 109 (highlighting the
differences between self-certification; certification where there is
a relationship between the certifying organization and marketer -
e.g., marketer is a member of the certifying trade association; and
certification by an independent third-party).
\148\ Skye Con, Comment 536013-00036 at 3.
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In addition, commenters addressed how marketers can avoid
misleading consumers about the basis for a certification. For example,
because consumers may confuse a logo that simply indicates membership
in an organization with one that certifies an aspect of a product's
environmental performance, a commenter recommended that marketers
distinguish between the two.\149\ Other commenters suggested that the
FTC provide guidance to help avoid confusion about certifications that
falsely appear to be bestowed by a government agency.\150\ Finally,
commenters observed that certification programs may address some, but
not all, aspects of a product.\151\ Therefore, they recommended
guidance cautioning marketers not to indicate approval of an
environmental attribute that the certifier did not evaluate.\152\
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\149\ SBIC, Green Building and Textile Workshop Tr. at 224; see
also Gensler, Green Building and Textile Workshop Tr. at 135
(stating that marketers need to make sure that graphics do not imply
more than is actually being delivered); OMI, Comment 536013-00022 at
3 (noting that advertisements must clearly state whether a logo
refers to membership only or a ``verifiable claim of
certification'').
\150\ ACC, Comment 536013-00030 at 4; NAIMA, Comment 536013-
00017 at 8.
\151\ USGBC, Comment 534743-00027 at 4; see also SDA, Comment
534743-00028 at 3.
\152\ USGBC, Comment 534743-00027 at 4.
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b. Third-Party Certifications as Substantiation
Commenters also advised the FTC to address the use of third-party
certifications to substantiate claims. Several urged the Commission not
to require third-party certification as substantiation for an
environmental claim.\153\ Others recommended that the FTC revise the
Guides to set forth the parameters of a third-party certification that
would constitute adequate substantiation.\154\ Some commenters
[[Page 63566]]
and panelists stated that marketers relying on a third-party
certification as substantiation must be able to show that the
certifying party is truly independent from the advertiser and that the
certifying party has professional expertise in the area that is being
certified.\155\ Thus, for example, some commenters proposed that the
Guides reiterate, or at least cross-reference, the principles outlined
in the Guides Concerning the Use of Endorsements and Testimonials in
Advertising (``Endorsement Guides''),\156\ including that endorsements
may not contain factual representations that would be deceptive or
could not be substantiated if made directly by the advertiser\157\ and
that marketers should not rely on endorsements by entities that have a
monetary or other relationship with the marketer.\158\
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\153\ ATA, Comment 533431-00041 at 8 (stating that requiring
third-party certification to substantiate claims ``would impose
unnecessary and impractical burdens on advertisers'' and that those
claims may already be adequately substantiated under the FTC Act);
AF&PA, Comment 533431-00019 at 2; Sappi Fine Paper North America
(``Sappi''), Comment 534743-00023 at 2; Skye Con, Comment 536013-
00036 at 3; The Vinyl Institute (``Vinyl Institute''), Comment
533431-00046 at 4. But see Healey, Comment 533431-00048 at 7
(stating that FTC could prohibit broad claims unless they are
certified by an independent party); Patagonia, Inc. (``Patagonia''),
Comment 536013-00011 at 1 (noting that marketers making ``safer''
chemical use or water/energy conservation claims in textiles should
substantiate claims with third-party certifications).
\154\ See, e.g., ACC, Comment 536013-00030 at 3-4; AF&PA,
Comment 536013-00021 at 2-3; AZS Consulting, Inc., Comment 536013-
00024 at 1-2; Healey, Comment 533431-00048 at 2; Johns Manville,
Comment 536013-00034 at 6; SDA, Comment 536013-00018 at 2; Skye Con,
Comment 536013-00036 at 3; SPI, Comment 533431-00036 at 12; USGBC,
Comment 536013-00029 at 4; Vinyl Institute, Comment 536013-00019 at
2-3; Weyerhaeuser, Comment 536013-00035 at 2.
\155\ See, e.g., GMA, Comment 533431-00045 at 6; see also Todd
Copeland, Patagonia, Inc. (``Patagonia''), Green Building and
Textiles Workshop Tr. at 81-82; ECOnscious, Comment 536013-00023 at
1-2; Grace Gershuny, Organic Trade Association (``OTA''), Green
Building and Textiles Workshop Tr. at 62; Oeko-Tex Certification
Body (USA) (``Oeko-Tex''), Comment 536013-00013 at 4; Skye Con,
Comment 536013-00036 at 3.
\156\ 16 CFR Part 255.
\157\ GMA, Comment 533431-00045 at 6; Johns Manville, Comment
536013-00034 at 6; Cassie Phillips, Weyerhaeuser (``Weyerhaeuser''),
Green Packaging Workshop Tr. at 220-221; Weyerhaeuser, Comment
534743-00033 at 2.
\158\ AF&PA, Comment 534743-00031 at 2; see also CRS, Comment
534743-00009 at 4 (stating that because consumers assume
certifications have been conducted by independent third-parties,
companies should expressly disclose when they have not); AF&PA,
Comment 534743-00031 at 2; Green Seal, Green Packaging Workshop Tr.
at 199-200; Healey, Comment 533431-00048 at 8.
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Panelists and commenters also suggested the Guides provide that
third-party certification programs be developed through an open,
transparent and balanced process, such as programs accredited through
the American National Standards Institute (``ANSI'').\159\ Other
commenters, however, observed that achieving openness and balance is
difficult because not all parties may be given a voice in the
proceedings, and those making the decisions on the standard may possess
ideological views adverse to certain interests.\160\
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\159\ USGBC, Green Building and Textile Workshop Tr. at 134,160-
61; USGBC, Comment 536013-00029 at 5; see also Oeko-Tex, Comment
536013-00013 at 6.
\160\ Vinyl Institute, Comment 536013-00019 at 2; see also ECM
Biofilms, Inc. (``ECM Biofilms''), Comment 534743-00025 at 2
(commenting that to be an active member of ASTM and to author
standards takes resources that are not available to many
organizations, and ``[a]s a result, standards are written to be
beneficial to certain organizations'').
---------------------------------------------------------------------------
In lieu of delineating general parameters, some panelists and
commenters urged the FTC to establish particular standards that, for
example, would establish a certification system.\161\ Others, however,
asserted this should not be the FTC's role.\162\
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\161\ See, e.g., Builders Association of South Florida, Comment
536013-00010 at 1; Stephen Richard Sides, National Paint and
Coatings Association, Inc. (``NPCA''), Green Building and Textiles
Workshop Tr. at 128.
\162\ See John Girman, EPA, Green Building and Textiles Workshop
Tr. at 200-201; Carlos Martin, National Association of Home Builders
(``NAHB''), Green Building and Textiles Workshop Tr. at 198-200.
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3. Analysis and Guidance
Marketers across industry sectors increasingly use certifications
and seals of approval to communicate environmental claims. These
certifications vary from seals of approval issued by third-parties to
logos developed internally pursuant to company-specific standards.
Third-party certification programs include certification for single
attributes (e.g., ``recycled content'') and multiple attributes, which
may incorporate environmental considerations throughout the life cycle
of the product.
Given the widespread use of certifications and seals and their
potential for consumer confusion, the Commission proposes providing
additional guidance, specifically in a new Guide section devoted to
this subject.\163\ This section emphasizes that third-party
certifications and seals constitute endorsements covered by the
Endorsement Guides.\164\ This section also states that the use of a
certification or seal by itself may imply a general environmental
benefit claim. Because, as discussed above, such claims are so
difficult to substantiate, this section further advises marketers not
to use unqualified seals or certifications. Marketers should accompany
seals or certifications with clear and prominent language limiting the
general environmental benefit claim to the particular attribute or
attributes for which they have substantiation. Finally, the section
addresses the use of certifications as substantiation.
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\163\ This proposed guidance can be found in 16 CFR 260.6.
\164\ 16 CFR Part 255. The Endorsement Guides provide guidance
on the non-deceptive use of endorsements in marketing and outline
the parameters of endorsements that would be considered adequate
substantiation for marketing claims.
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a. Certifications and Seals as Endorsements
The proposed new section advises marketers that it is deceptive to
misrepresent, directly or by implication, that a product, package, or
service has been endorsed or certified by an independent, third-party
organization. The proposed section states that third-party
certifications are endorsements,\165\ which should meet the criteria
for endorsements set forth in the FTC's Endorsement Guides. In
particular, the proposed section advises marketers to review the
following Endorsement Guides sections: Definitions,\166\ General
Considerations,\167\ Expert Endorsements,\168\ Disclosure of Material
Connections,\169\ and Endorsements by Organizations.\170\
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\165\ The Endorsement Guides define an endorsement as ``any
advertising message . . . that consumers are likely to believe
reflects the opinions, beliefs, findings, or experiences of a party
other than the sponsoring advertiser, even if the views expressed by
that party are identical to those of the sponsoring advertiser.'' 16
CFR 255.0.
\166\ Id.
\167\ 16 CFR 255.1. This section provides, among other things,
that ``[e]ndorsements must reflect the honest opinions, findings,
beliefs, or experience of the endorser,'' and that the endorsement
``may not convey any express or implied representation that would be
deceptive if made directly by the advertiser.''
\168\ 16 CFR 255.3. An expert endorser is someone who, as a
result of experience, study, or training, possesses knowledge of a
particular subject that is superior to that generally acquired by
ordinary individuals. 16 CFR 255.0(e). An expert endorser's
qualification must, in fact, give him or her the expertise that he
or she is represented as possessing with respect to the endorsement.
16 CFR 255.3(a). An expert endorsement must be supported by an
actual exercise of expertise, and the expert's evaluation of the
product must have been at least as extensive as someone with the
same degree of expertise would normally need to conduct in order to
support the conclusions presented. 16 CFR 255.3(b).
\169\ 16 CFR 255.5. When there is a connection between the
endorser and the seller of the advertised product that might
materially affect the weight or credibility of the endorsement
(i.e., the connection is not reasonably expected by the audience),
such connection must be fully disclosed. 16 CFR 255.5.
\170\ 16 CFR 255.4.
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Rather than simply repeating the Endorsement Guides' text, the
proposed Green Guides section provides several examples of how the
Endorsement Guides apply in the context of environmental claims.
Proposed Example 1 addresses the use of a seal of approval created by
the marketer itself, rather than bestowed by a third-party. In this
example, the advertisement implies that an independent third-party
certifier with appropriate expertise awarded the seal. The example
notes that this unqualified claim would be deceptive because consumers
would assume that an independent, third-party certifier
[[Page 63567]]
evaluated the product.\171\ The marketer could avoid deception by using
clear and prominent qualifying language to alert consumers that it
created the certifying program.
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\171\ See 16 CFR 255.0 (defining ``endorsement'' as a message
which ``consumers are likely to believe reflects the opinion . . .
of a party other than the sponsoring advertiser'') (emphasis added);
16 CFR 255.5 (stating that when there is a connection between the
endorser and the seller of the advertised product that might
materially affect the weight or credibility of the endorsement, such
connection must be fully disclosed); see also Trade Advertising
Assocs., Inc., 65 F.T.C. 650 (1964) (finding a newspaper's statement
about ``awards'' it won, which were, in fact, created by the
publisher, deceptive because consumers were misled into believing
that an objective third-party had evaluated the newspaper); Revco
D.S., Inc., 67 F.T.C. 1158 (1965) (finding an advertiser's creation
and use of a ``Consumer Protective Institute'' seal on products was
deceptive because the seal created the false impression that ``an
independent and disinterested organization . . . had approved these
products'').
---------------------------------------------------------------------------
Proposed Example 2 involves a marketer who displays a seal of
approval bestowed by a trade association in which the marketer is a
member. In this case, the trade association evaluated the environmental
attributes of the marketer's product. Because the seal of approval
implies that a third-party evaluated and certified the product,
consumers likely expect that the endorsing party is truly independent
from the marketer. In this case, however, the certifier is not a truly
independent entity because the marketer pays membership dues to the
association. Under Section 5 of the FTC Act, as explained by the
Endorsement Guides, marketers are required to disclose a ``material
connection,'' or a ``connection between the endorser and the seller of
the advertised product that might materially affect the weight or
credibility of the endorsement.''\172\ Accordingly, this example makes
clear that the marketer's failure to disclose its material connection
with the endorsing association, i.e., that it is a dues-paying member
of the endorsing association, is deceptive.
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\172\ 16 CFR 255.5.
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Proposed Example 3 similarly illustrates a failure to disclose a
material connection and shows how the name of a certifying organization
can be misleading. In this example, the marketer is a member of an
industry trade association, the American Institute of Degradable
Materials, that evaluates the biodegradability of its members'
products. The association's name may lead consumers to believe that the
association is an independent certifying organization. Consumers likely
place different weight on a certification from an industry association
than from an independent, third-party. Because this advertisement does
not disclose that the certifier is an industry trade association, the
advertisement is likely to be deceptive. As shown in the example, the
marketer could avoid this deception by disclosing that the American
Institute of Degradable Materials is an industry trade association.
Unlike the examples above, proposed Example 4 addresses a situation
in which a marketer touts its relationship with a third party that has
neither evaluated nor endorsed the environmental attributes of its
products. In this example, the marketer displays a seal to show that it
is a member of the ``U.S. EcoFriendly Building Association.'' The
proposed example makes clear that, in this circumstance, displaying the
organization's seal may cause consumers to mistakenly believe that the
organization has evaluated and endorsed the product. In this example,
the marketer could avoid deception by stating that the seal refers to
the company's membership only and that the association did not evaluate
the product's environmental attributes.
b. Certifications and Seals as General Environmental Benefit Claims
The current Green Guides state that unqualified certifications and
seals of approval likely convey general environmental benefit claims.
Specifically, Example 5 of the current general environmental benefit
section states that a marketer using an unqualified seal of approval
should be able to substantiate the broad claim that the product is
environmentally superior to others.\173\ If the marketer cannot, it
should accompany the seal with ``clear and prominent qualifying
language limiting the environmental superiority representation to the
particular product attribute or attributes for which they could be
substantiated . . . .''\174\ No commenters challenged this approach.
Therefore, the Commission continues to believe that consumers likely
interpret unqualified seals and certifications similarly to general
environmental benefit claims.\175\
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\173\ 16 CFR 260.7(a).
\174\ Id.
\175\ The Commission's study did not test consumer
interpretation of seals of approval or certifications. Given the
wide diversity of seal and certification designs, it would have been
difficult to draw general consumer perception conclusions from
testing a particular seal design. No commenter submitted relevant
consumer perception evidence.
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As discussed in Part V.A, above, the Commission's consumer
perception study shows that broad, general environmental benefit claims
suggest that a product has specific, unstated green attributes, such as
recyclability and biodegradability, and that the product has no
negative environmental impact. The study results also reinforce the
Guides' advice that marketers may be able to avoid making deceptive
general environmental claims by qualifying those claims.
The Commission proposes transferring a modified Example 5 into the
new certification section\176\ and moving the guidance from this
example into this section. Specifically, the guidance cautions
marketers that unqualified seals of approval and certifications likely
constitute general environmental benefit claims and, because marketers
are unlikely to be able to substantiate such claims, they should not
use unqualified certifications or seals of approval. The guidance
further states that marketers should qualify seals of approval or
certifications to prevent deception. Qualifying language should be
clear and prominent and should convey that the seal of approval or
certification applies only to a specific and limited benefit.\177\ The
Commission will consider whether the qualifying language successfully
limits the general environmental benefit claim on a case-by-case basis.
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\176\ This example is now Example 5 in the proposed new Section
260.6. The example now states that the environmental seal is likely
to convey that the product has far-reaching environmental benefits
and may also convey that it causes no negative environmental impact.
\177\ It is possible for this qualifying language to be part of
the certification or seal itself. For example, the name of a seal
may constitute all or part of the qualification. See proposed
Examples 2 and 6.
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In contrast, proposed Example 6 illustrates how a marketer can
properly use a third-party certification for a single-attribute claim,
e.g., ``chlorine-free.'' In this example, the name of the certifier
(``No Chlorine Products Association'') conveys that the certification
applies only to one environmental attribute, rather than to the overall
environmental benefit of the product.
c. Third-Party Certifications as Substantiation
Third-party certification may constitute adequate substantiation.
Therefore, the following describes the Commission's proposed guidance
on the use of certifications to substantiate environmental claims, as
well as the topics the Commission declines to address.
A marketer may rely on a third-party certification as all or part
of its substantiation if the marketer ensures that the certification
constitutes competent and reliable scientific evidence to support its
claims. In other
[[Page 63568]]
words, a marketer relying on a certification as substantiation must
ensure that the certification supports each of the marketer's claims
with tests, analyses, research, or studies that have been conducted and
evaluated in an objective manner by qualified persons and are generally
accepted in the profession to yield accurate and reliable results.\178\
This evidence should be sufficient in quality and quantity based on
standards generally accepted in the relevant scientific fields, when
considered in light of the entire body of relevant and reliable
scientific evidence, to substantiate that each of the claims is true.
It is the marketer's responsibility to ensure that the certification
adequately substantiates its claims. The proposed Guides, therefore,
remind marketers that simply possessing a third-party certification
does not eliminate their obligation to ensure that they have
substantiation for their claims, including all claims communicated by
the certification.
---------------------------------------------------------------------------
\178\ 16 CFR 260.5.
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The Commission does not propose incorporating four suggestions
raised by commenters. First, the Commission does not propose requiring
marketers to obtain a third-party certification to substantiate their
claims. Rather, Section 5 of the FTC Act gives marketers the
flexibility to substantiate their claims with any competent and
reliable scientific evidence.\179\ Because the Guides interpret Section
5 as applied to environmental claims, requiring a third-party
certification to substantiate claims is beyond the Guides' purview.
---------------------------------------------------------------------------
\179\ See Substantiation Policy Statement, 104 FTC at 840
(explaining that what constitutes a reasonable basis for claims
depends on a number of factors); see also FTC, Dietary Supplements:
An Advertising Guide for Industry (2001), available at (http://www.ftc.gov/bcp/edu/pubs/business/adv/bus09.pdf) (stating that
``[t]he FTC will consider all forms of competent and reliable
scientific research when evaluating substantiation'').
---------------------------------------------------------------------------
Second, the Commission does not propose establishing a particular
certification system. The Green Guides do not establish environmental
performance standards or identify environmentally preferable industry
practices. Instead, the Guides' purpose is to provide advice regarding
consumer interpretation of environmental marketing claims so that
marketers can avoid making false or misleading claims.
Third, the Commission declines to propose guidance on the
development of third-party certification programs. Experts in the field
are in the best position in a dynamic marketplace to determine how to
establish certification programs to assess the environmental attributes
of products. There may be multiple ways to develop standards that would
constitute adequate substantiation, i.e., substantiation that
constitutes competent and reliable scientific evidence. Accordingly,
the Commission will continue to evaluate the adequacy of a third-party
certification as substantiation on a case-by-case basis.
Finally, the proposed, revised Guides do not provide that
certifiers make their standards or any other criteria used to support
their certifications public. Although Section 5 requires that marketers
possess substantiation for their claims prior to making them, it does
not require that marketers make their substantiation publicly
available.
C. Degradable Claims
1. The Current Guides
The Guides state that an unqualified degradable claim should be
substantiated with competent and reliable scientific evidence that the
entire product or package will completely break down and return to
nature within a reasonably short period of time after customary
disposal.\180\ The Guides also provide that degradable claims should be
qualified to avoid consumer deception about: (1) the product or
package's ability to degrade in the environment where it is customarily
disposed; and (2) the rate and extent of degradation. For example, the
Guides discuss a trash bag labeled ``degradable,'' without
qualification. The marketer relies on tests showing that the bag will
degrade in the presence of water and oxygen. Because trash bags are
customarily incinerated or buried in landfills that inhibit degradation
by minimizing moisture and oxygen, the marketer lacks substantiation
that the bags will degrade in a reasonably short period of time. Thus,
the claim is deceptive.\181\
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\180\ 16 CFR 260.7(b).
\181\ Id., Example 1. The FTC Staff's Business Brochure provides
additional guidance, noting that a ``reasonably short period of
time'' depends on where the product is disposed. The brochure
explains that in landfills, where most trash is taken, materials
degrade very slowly and certain materials take decades to decompose.
FTC Staff's Business Brochure at 7.
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The Commission has challenged degradability claims more than any
other specific claim addressed by the Green Guides.\182\ These cases
were not based on products' inability to degrade under any conditions,
but rather on their inability to degrade in the manner consumers
expect.
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\182\ See, e.g., Dyna-E Int'l, Inc., et al., FTC Docket No. D-
9336 (Dec. 15, 2009) (viscose towels); Kmart Corp., FTC Docket No.
C-4263 (July 15, 2009) (paper plates); Tender Corp., FTC Docket No.
C-4261 (July 13, 2009) (moist wipes and plastic packaging).
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2. Comments
Most commenters supported the Commission's degradable claims
guidance.\183\ For example, the Soap and Detergent Association
supported the Guides' provision that ``degradability claims should be
qualified to the extent necessary to avoid consumer deception about the
product's ability to degrade in the environment where, or in the manner
in which, it is customarily disposed.''\184\
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\183\ See, e.g., Biodegradable Products Institute (``BPI''),
Comment 533431-00087 at 2 (supporting guidance, but proposing
changes); EPA-EPPP, Comment 533431-00038 at 7; EPA-SPN, Comment
536013-00062 at 12; P&G, Comment 533431-00070 at 2.
\184\ SDA, Comment 533431-00020 at 3; see also ACC, Comment
533431-00023 at 12.
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Although supporting the current guidance, commenters suggested four
modifications. First, many stressed that typical solid waste disposal
treatments inhibit degradation.\185\ Procter & Gamble summed up these
views, stating ``[i]n the United States, solid waste is predominantly
disposed of by incineration or in a landfill, where little or no
degradation occurs.''\186\ Consequently, these commenters argued that
unqualified biodegradable claims are inappropriate for items destined
for landfills and incinerators.\187\ Second, several commenters
recommended that the Commission provide guidance on the ``reasonably
short'' time period for complete decomposition. For example, the
Biodegradable Products Institute (``BPI'') urged that ``[t]he FTC . . .
cite a specific timeframe for the process.''\188\ Third, several
commenters suggested that the Commission reference technical protocols
that marketers could follow to adequately substantiate degradable
claims. These commenters did not form
[[Page 63569]]
a consensus, however, regarding which specific protocol(s) the
Commission should consider.\189\ Finally, the EPA's Sustainable
Products Network urged that the revised Guides address emerging ``oxo-
degradable'' claims.\190\
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\185\ See CSPA, Comment 533431-00049 at 3 (``Very little, if
any, degradationoccurs when the product is incinerated or disposed
of in a landfill.''); Georgia-Pacific, Comment 533431-00007 at 9
(``[M]odern landfills are in fact entombment facilities where air,
light and water are excluded by strict design. In those conditions,
degradability time far exceeds `the reasonable [sic] short period of
time' of the Guides.''); Tracy Artley, Comment 534743-00019 at 1;
EHS, Comment 534743-00011 at 1; EPI, Comment 533431-00063 at 5; NAD,
Comment 534743-00029 at 7; Tandus, Comment 533431-00021 at 1.
\186\ P&G, Comment 533431-00070 at 2.
\187\ No commenters specifically addressed disposal of liquid
waste into wastewater treatment systems or aquatic environments.
\188\ BPI, Comment 533431-00087 at 3; see also GPI, Comment
534743-00026 at 7 (``[I]t is important that the Commission provide
additional clarification regarding what constitutes a `reasonably
short period of time.'''); Graphic Arts Coalition, Comment 533431-
00060 at 1 (``The business community is now asking for a clearer
definition of `short period of time.''').
\189\ The following commenters favor some degree of reference to
technical standards or testing protocols: ECM BioFilms, Comment
534743-00011 at 3 (ASTM D 5526 (plastics under accelerated landfill
conditions)); EPA-SPN, Comment 536013-00062 at 12 (various
harmonized tests accessible online from the EPA); EPI, Comment
533431-00063 at 4 (``the applicable [unspecified] ASTM or ISO
standard''); Georgia-Pacific, Comment 533431-0007 at 9-10 (the
British Standards Institution's EN 14327:2000 (requirements for
packaging and packaging waste) and ISO 14855:1999 (aerobic
biodegradability of plastics)); SPI, Comment 533431-00036 at 8
(``existing [unspecified] ASTM standards''); see also Graphic Arts
Coalition, Comment 533431-00060 at 1 (``The business community . . .
oftentimes seeks a specific test method to verify the claims.
Inclusion in the guides of acceptable test methods might be an
appropriate step.''); Tandus, Comment 533431-00021 at 1 (``If a test
method could be specified, it might help qualification of such
claims.'').
\190\ EPA-SPN, Comment 536013-00062 at 12 (discussing
degradable, biodegradable, oxo-degradable, and photodegradable
claims).
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3. Consumer Perception Evidence
The Commission solicited from commenters evidence of consumer
understanding of degradable claims. Only BPI referenced detailed
research findings, which arose from a September 2006 survey conducted
by the opinion research firm APCO Insight for the American Chemistry
Council (``APCO survey'').
FTC staff has subsequently reviewed the underlying questionnaire
and data from the APCO survey.\191\ Using a widely-accepted
methodology, the survey asked 1,000 Americans about unqualified
biodegradable and compostable claims.\192\ It found that 60 percent of
consumers believed that a biodegradable package will disappear in one
year or less.\193\ Additionally, 83 percent of consumers believed a
biodegradable item will decompose even when disposed in a
landfill.\194\ The Commission is unaware of additional consumer
perception data on degradable claims.\195\
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\191\ The Commission has placed this information on the public
record.
\192\ The study did not explore other types of degradable
claims, such as photodegradable.
\193\ See APCO, Biodegradable and Compostable Survey Topline at
2.
\194\ Id. at 1.
\195\ The Commission's consumer perception study did not
specifically ask consumers about unqualified biodegradable claims.
---------------------------------------------------------------------------
4. Analysis and Guidance
In light of the comments and the APCO survey, as well as our own
enforcement experience, the Commission proposes retaining its guidance
on degradable claims but adding clarity regarding degradable claims for
solid waste.\196\ Given the lack of information on the record about
liquid waste, the Commission seeks comment on whether it should provide
additional specificity concerning claims for such materials. The
Commission declines to advise marketers that a particular test
constitutes adequate substantiation for degradability claims. Finally,
the Commission proposes addressing oxo-degradable claims in the Guides.
---------------------------------------------------------------------------
\196\ This proposed guidance can be found in 16 CFR 260.8.
---------------------------------------------------------------------------
a. Solid Waste - Time Period for Degradation
The Commission proposes revising the Guides to clarify that
unqualified degradable claims are deceptive for products or packages
destined for landfills, incinerators, or recycling facilities. Federal
environmental regulations require landfills to minimize interaction
with water, oxygen, and light.\197\ Absent a robust supply of these
elements, decomposition is severely retarded.\198\ Moreover,
incinerators combust materials at extreme temperatures, thereby
completely preventing decomposition.\199\ Together, landfills and
incinerators received 66 percent of municipal solid waste in 2008.\200\
In addition, in 2008, another 24 percent of consumers' trash went to
recycling facilities to be processed for reuse.\201\ Thus, these
materials also will not decompose. Accordingly, unqualified degradable
claims for a vast majority of disposable solid items are likely to be
deceptive because the customary methods of disposal do not present
conditions for decomposition in a reasonably short period of time.
---------------------------------------------------------------------------
\197\ See 40 CFR Part 258.
\198\ EPA, The Consumer's Handbook for Reducing Solid Waste, EPA
Pub. 530-K-96-003, at 17 (1996); William Rathje and Cullen Murphy,
Rubbish! The Archaeology of Garbage 112 (2001).
\199\ See National Research Council of the National Academy of
Sciences, Waste Incineration & Public Health 37 (2000).
\200\ EPA, Municipal Solid Waste Generation, Recycling, and
Disposal in the United States: Facts and Figures for 2008 at 2-3,
available at (http://www.epa.gov/waste/nonhaz/municipal/ pubs/
msw2008rpt.pdf).
\201\ Id.
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For those solid waste products that are not disposed of in these
traditional ways, some marketers seek more definite guidance regarding
what constitutes a ``reasonably short period of time.'' The Commission,
therefore, proposes the following two modifications to the Guides.
First, because the Guides do not currently illustrate a non-
deceptive unqualified degradable claim for a solid item, the Commission
proposes adding an example. Specifically, proposed new Example 5
describes a plant pot that, when buried in soil, quickly decomposes.
This example illustrates that an unqualified degradable claim can be
made non-deceptively about a solid item if the item is customarily
disposed of in a manner that promotes total and rapid decomposition.
Second, the APCO survey found that 60 percent of consumers expect
biodegradable solid waste to decompose in one year or less.
Accordingly, the Commission proposes adopting a maximum period of one
year for complete decomposition of solid materials marketed as
degradable without time qualification. The Commission requests comment
on whether this one-year period may lead to deceptive claims where
consumers would expect a material to degrade in a much shorter time
frame - e.g., a plant pot decomposing fully in a single growing season.
b. Solid Waste - Substantiation
As discussed above, several commenters suggested that the
Commission reference technical standards that marketers could follow to
substantiate degradability claims.\202\ Any technical protocol (or
combination of protocols) must assure complete decomposition within one
year and must replicate the physical conditions found in the relevant
disposal environment (e.g., in landfills, where most trash is
disposed). Commission staff has not identified testing protocols that
satisfy these needs.\203\ Accordingly, the Commission does not propose
creating a safe harbor for any particular technical standard.
---------------------------------------------------------------------------
\202\ The comments discussed numerous different standards. While
no single protocol attracted wide support, the standards published
by ASTM garnered the most mention.
\203\ Most trash is disposed in landfills, which have varied,
highly compressed, heterogeneous zones. The moisture, temperature,
and contact conditions in landfills differ from the laboratory
protocols. ASTM D 5511, for example, mimics a rare disposal
environment - a highly controlled anaerobic digester, such as may be
found on farms or in sewage treatment systems - with consistent
moisture, heat, and exposure to degradation catalysts.
---------------------------------------------------------------------------
c. Liquid Waste
The Commission received no comments concerning decomposition of
liquids (or dissolvable solids) in wastewater or aquatic environments,
and is unaware of consumer perception evidence relating to such
degradable claims. Therefore, the Commission lacks sufficient
information to give more
[[Page 63570]]
definitive guidance on the ``reasonably short period of time'' for
degradability claims for liquids.\204\ Accordingly, the Commission
seeks consumer perception evidence regarding these degradable claims
and requests comment on whether the Guides should specify a
decomposition time period for liquid substances or dissolvable solids
marketed without qualification.
---------------------------------------------------------------------------
\204\ Although one group of testing protocols for
biodegradability in water emphasizes a 28-day period for ``ready
biodegradability,'' these tests do not appear to ensure the complete
decomposition of the substance. EPA Office of Prevention, Pesticides
and Toxic Substances, 835.3110 Ready Biodegradability Guideline,
Pub. EPA 712-C-98-076 (1998), available at (http://www.epa.gov/opptsfrs/publications/OPPTS_Harmonized/835_Fate_Transport_and_Transformation_Test_Guidelines/Series/835-3110.pdf).
---------------------------------------------------------------------------
d. Emerging Oxo-degradable Claims
The EPA's Sustainable Products Network urged the Commission to
include guidance concerning emerging degradable claims - ``oxo-
degradable'' and ``oxo-biodegradable.''\205\ Claims relating to
purported oxo-degradability have entered the marketplace in connection
with some of the same disposable items, e.g., bottles and bags, that
have featured other degradable claims.\206\ According to relevant trade
associations, the technology behind these claims depends upon a
catalyst, typically light or oxygen, to commence and sustain the
decomposition process.\207\ However, as discussed above, these elements
are lacking in customary methods of disposal. Although commenters did
not provide any consumer perception evidence relating to oxo-degradable
claims, it is likely consumers would understand these claims similarly
to other degradable claims.\208\ Therefore, the Commission proposes
treating oxo-degradable and oxo-biodegradable claims like all other
degradable claims.\209\
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\205\ EPA-SPN, Comment 536013-00062 at 6, 12.
\206\ See, e.g., The recession: packaging fights back, Packaging
Today, Feb. 2009, at 32 (oxo-degradable bottle); Print Media:
Footprints with a lighter touch, Marketing Week, Mar. 27, 2008, at
23 (oxo-biodegradable bag).
\207\ OxoBiodegradable Plastics Institute, Frequently Asked
Question 11, (http://www.oxobio.org/faq.htm#q4) (``Heat and/or
sunlight are required to initiate degradation and there has to be
oxygen present.''); BPI, Background on Biodegradable Additives (Mar.
18, 2009) at 1 (``Oxo-biodegradables . . . theoretically foster
oxidation and chain scission in plastics when exposed to heat, air
and/or light.'').
\208\ The root word, degradable, is identical; consequently,
consumers' basic intuition about decomposition after customary
disposal is likely to be the same, regardless of prefixes such as
bio-, photo-, or oxo-. The National Advertising Division also found
that oxo-biodegradable is similar to degradable. With respect to
bags marketed as ``100% oxo-biodegradable,'' NAD recommended that
the marketer discontinue the claim ``and otherwise modify its
advertising to avoid conveying the message that PolyGreen bags will
quickly or completely biodegrade when disposed of through `ordinary
channels,' e.g., when placed in a landfill.'' NAD Press Release
Regarding GP Plastics Corp.'s PolyGreen Plastic Bags (Mar. 9, 2009).
\209\ For the purposes of interpreting and applying revised
Section 260.8, the FTC considers the term ``degradable'' to include
all variants, such as biodegradable, photodegradable, oxo-
degradable, and oxo-biodegradable. Thus, degradable claims include
any and all of the foregoing.
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D. Compostable Claims
1. The Current Guides
Currently, the Guides advise marketers to substantiate compostable
claims with competent and reliable scientific evidence demonstrating
that ``all of the materials in the product or package will break down
into, or otherwise become a part of, usable compost (e.g., soil-
conditioning material, mulch) in a safe and timely manner in an
appropriate composting program or facility, or in a home compost pile
or device.''\210\ Further, the Guides advise marketers to qualify
compostable claims ``to the extent necessary'' to avoid consumer
deception. For instance, they state: ``A claim that a product is
compostable in a municipal or institutional composting facility may
need to be qualified'' to alert consumers to any ``limited availability
of such composting facilities.''
---------------------------------------------------------------------------
\210\ 16 CFR 260.7(c).
---------------------------------------------------------------------------
The Guides provide six examples illustrating this guidance,
including several relating to the limited availability of large-scale
composting facilities. For instance, Example 4 discusses a product
designed to be composted only in yard trimmings composting programs but
merely labeled ``compostable.'' Such yard trimmings programs are not
available to a substantial majority of consumers or communities where
that particular product is sold. Consequently, the claim is deceptive,
but could be corrected with a clear and prominent disclosure indicating
the limited availability of such programs.
2. Comments
The comments on this issue were extremely limited. Some commenters
suggested that the Guides state that two ASTM tests, specifications D
6400 and D 6868, constitute adequate substantiation for compostable
claims.\211\
---------------------------------------------------------------------------
\211\ BPI, Comment 533431-00087 at 4; EPA-EPPP, Comment 533431-
00038 at 8; EPA-SPN, Comment 536013-00062 at 13; see also Earthcycle
Packaging Ltd., Comment 534743-00005 at 1.
---------------------------------------------------------------------------
3. Consumer Perception Evidence
As discussed above, the Biodegradable Products Institute submitted
a consumer research study conducted by APCO concerning degradable and
compostable claims. According to this study, 62 percent of consumers
said they do not have access, and an additional 28 percent do not know
if they have access, to large-scale composting facilities.\212\
Nevertheless, 43 percent of consumers interpreted an unqualified
compostable claim to mean that a large-scale composting facility is
available in their area.\213\ The study also found that 71 percent of
consumers believed that a package labeled ``compostable'' would
decompose in a home compost pile or device.\214\
---------------------------------------------------------------------------
\212\ See APCO, Biodegradable and Compostable Survey Topline at
9.
\213\ Id. at 8.
\214\ Id. at 6.
---------------------------------------------------------------------------
4. Analysis and Guidance
The Commission's current compostable guidance is consistent with
consumer perception data from the APCO survey. As discussed below, the
Commission does not propose adding references to ASTM's compostability
tests to the Guides but proposes including advice concerning the
``timely manner'' of compost production.\215\
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\215\ This proposed guidance can be found in 16 CFR 260.7.
---------------------------------------------------------------------------
a. Limited Availability of Composting Facilities
Large-scale composting facilities, particularly those taking
feedstocks other than yard trimmings (e.g., leaves and grass), are
still uncommon in the United States.\216\ Unsurprisingly, 90 percent of
consumers in the APCO survey reported having no access, or being
unaware of access, to such facilities. Nevertheless, 43 percent
interpreted an unqualified compostable claim to mean that such
facilities are available in their area.
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\216\ See Food Composting Infrastructure, BioCycle, Dec. 2008,
at 30 (noting that in 2008, only 92 commercial composters and 39
municipal composters provided food waste composting); EPA, Municipal
Solid Waste in the United States: 2007 Facts and Figures at 148,
available at (http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw07-rpt.pdf) (``In 2007, there were 16 mixed waste composting
facilities, two more than in 2006.'').
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In light of the persistent scarcity of municipal facilities and
many consumers' mistaken belief about their availability, the
Commission proposes retaining its advice that marketers qualify their
compostable claims to avoid deception about the limited availability of
composting facilities.\217\
[[Page 63571]]
Example 4 in the current Guides explains that this disclosure is needed
when facilities ``are not available to a substantial majority of
consumers or communities.''\218\ It does not, however, specify what
proportion of consumers constitutes a substantial majority. As
discussed below in the recyclable section, staff informally has
interpreted ``substantial majority'' in the recycling context to mean
at least 60 percent.\219\
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\217\ Example 4 in the current Guides suggests an effective
qualification that would convey the scarcity of large-scale
facilities, e.g., ``Appropriate facilities may not exist in your
area.'' 16 CFR 260.7(c), Example 4.
\218\ Id.
\219\ See Part V.E, infra.
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b. Substantiating Compostable Claims
Three commenters suggested that the Guides reference two laboratory
protocols adopted by ASTM: (1) Standard specification D 6400 for
compostable plastics; and (2) Standard specification D 6868 for
biodegradable plastics used as coatings. The commenters, however, did
not explain why these protocols would substantiate compostable claims
and thereby meet consumers' expectations about compostable products.
Based upon a review of the protocols' methodology, the Commission does
not propose referencing these protocols in the Guides.
ASTM created D 6400 and D 6868 in response to manufacturers'
increased production of plant-based plastic resins.\220\ Marketers of
these plant-based materials desired to contrast them with petroleum-
based plastics and advertise them as ``compostable.''\221\ ASTM
provides that a plastic item should be considered compostable if the
item sufficiently converts to carbon dioxide under these protocols'
specific laboratory conditions.\222\
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\220\ See Rhodes Yepsen, Compostable Products Go Mainstream,
BioCycle, July 2009, at 25.
\221\ See id.; Susan Moran, The New Bioplastics, More Than Just
Forks, N.Y. Times, Mar. 7, 2007.
\222\ See ASTM D 6400 - 04 at Sec. 4; ASTM D 6868 - 03 at Sec.
4. These two protocols incorporate a third ASTM protocol, D 5338, a
detailed test method for plastics disposed of in large-scale
composting facilities.
---------------------------------------------------------------------------
These protocols, however, have significant limitations. As a
threshold matter, they apply to materials discarded only in scarce
large-scale composting facilities, not home compost piles or
devices.\223\ Moreover, the laboratory procedures ignore ``wide
variation'' in actual composting facility operations, simulating
instead ``optimum conditions.''\224\
---------------------------------------------------------------------------
\223\ See ASTM D 6400 at Sec. 1.1; ASTM D 6868 at Sec. 1.1.
\224\ See ASTM D 5338 - 98 (Reapproved 2003) at Sec. 5.2
(``Because there is a wide variation in the construction and
operation of composting systems and because regulatory requirements
for composting systems vary, this procedure is not intended to
simulate the environment of any particular composting system.
However, it is expected to resemble the environment of a composting
process operated under optimum conditions.''). One example of such
an optimum condition is the testing of only a small piece of the
subject material - a two-centimeter scrap - rather than full-size
plastic feedstock waste items.
---------------------------------------------------------------------------
It is unclear whether these ``optimum conditions'' reflect real
world conditions. There are no comprehensive, mandatory operating
requirements for large-scale composting facilities.\225\ Instead,
individual facilities appear to accept incoming plastic feedstock based
upon a number of variables.\226\ Such variables include operator
assumptions concerning whether the plastic is petroleum-based and the
length of time an operator feasibly can wait to complete
composting.\227\ Therefore, it is doubtful that there are typical
large-scale composting practices consistent with the ASTM protocols,
but more likely numerous and varied facility-specific restrictions on
feedstock acceptance and processing.
---------------------------------------------------------------------------
\225\ EPA regulations contain detailed minimum requirements for
landfills (40 CFR Part 258) and guidelines for incinerators (40 CFR
Part 240). However, compost facility operations are not nationally
standardized, apart from certain requirements applying to end-
product safety - e.g., maximum hazardous materials levels (40 CFR
Part 503). States and localities range widely in their governance of
these facilities.
\226\ See, e.g., Lisa McKinnon, Compostable Controversy, Ventura
County Star, Mar. 16, 2009 (noting that a facility cannot convert
plastics to compost in a commercially viable way within 90 days);
Press Release, Ohio University, Aug. 24, 2009, available at (http://www.ohio.edu/outlook/08-09/August/791.cfm) (stating that a modern
facility cannot process a brand of plastic dining utensils in a
timely manner); Janice Sitton, Insider's Guide to Compostables
Collection at Events, BioCycle, Aug. 2009, at 25 (``[P]roducts
accepted for composting in one location may not be accepted for
composting in another location. It all depends on the infrastructure
and what a processor will accept as feedstock.''); Rhodes Yepsen,
Operation Insights: Compostable Products, BioCycle, June 2008
(Facilities may reject certain plastics because visually they ``are
indistinguishable from conventional plastics'' and can be ``tricky
to compost.'').
\227\ Id.
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Given this uncertainty, it does not appear that the ASTM protocols
substantiate compostable claims. Therefore, the Commission does not
propose referencing the ASTM standards in the Guides.
c. Time Period for Composting
As discussed above, the Commission proposes adding specificity to
the degradable guidance in connection with the ``period of time'' for
solid waste decomposition.\228\ Consistent with that advice, the
Commission proposes to clarify the time period referenced in the
compostable section (i.e., ``timely manner'').\229\ Specifically, the
Commission restates the position it articulated in its 1998 Green
Guides review and proposes adding it to the compostable section.\230\
That is, ``timely manner'' means that the product or package will break
down in approximately the same time as the materials with which it is
composted, e.g., natural plant matter.
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\228\ See Part V.C.4.a, supra.
\229\ GPI requested clarification on the ``timely manner''
guidance. Comment 534743-00026 at 8.
\230\ See 63 FR 24241 n.7 (May 1, 1998); FTC Staff's Business
Brochure at 7.
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E. Recyclable Claims
1. The Current Guides
The current Guides provide that marketers should not advertise a
product or package as ``recyclable'' unless ``it can be collected,
separated, or otherwise recovered from the solid waste stream for
reuse, or in the manufacture or assembly of another package or product,
through an established recycling program.''\231\ The Guides further
state that marketers should qualify recyclability claims to the extent
necessary to avoid deceiving consumers about the limited availability
of recycling programs and collection sites.
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\231\ 16 CFR 260.7(d).
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The Guides provide additional advice about the need for these
disclosures and suggest qualifications depending on the level of
available recycling facilities. Specifically, the Guides provide a
three-tiered disclosure approach. First, when recycling facilities are
available to a ``substantial majority'' of consumers or communities
where the item is sold, marketers can make unqualified recyclable
claims. Second, when facilities are available to a ``significant
percentage'' of the population or communities, but not to a substantial
majority, the Guides suggest that marketers qualify their claims by
stating ``This product [package] may not be recyclable in your area''
or ``Recycling programs for this product [package] may not exist in
your area'' or by providing the approximate percentage of communities
or the population to whom programs are available.\232\ Third, when
recycling facilities are available to less than a significant
percentage of communities or the population, the Guides recommend
either disclosing that the product is recyclable only in the few
communities with recycling facilities available for the particular
product or stating the number of communities, the percentage of
communities, or the percentage of the
[[Page 63572]]
population where programs are available to recycle the product.\233\
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\232\ See id., Examples 4, 6, and 7.
\233\ See id., Example 6.
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The Guides further advise that the disclosure ``recyclable where
facilities exist'' is not an adequate qualification where recycling
facilities are not available to a substantial majority.\234\ Similarly,
the FTC Staff's Business Brochure cautions that the phrase ``check to
see if recycling facilities exist in your area'' is an inadequate
qualification where recycling is not available to a substantial
majority.\235\
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\234\ See id., Example 5.
\235\ FTC Staff's Business Brochure at 8.
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2. Comments
Recyclable claims garnered attention from many commenters. In
particular, they addressed two issues: (1) the need for clarity
regarding the ``substantial majority'' threshold; and (2) consumer
confusion about the Society of the Plastics Industry code.
a. The Substantial Majority Threshold
As discussed above, the Guides advise marketers to qualify
recyclable claims when recycling facilities are not available to a
``substantial majority'' of consumers or communities where a product is
sold. Commenters identified difficulties in substantiating recyclable
claims pursuant to this guidance. They did not agree, however, on how
to modify the guidance, suggesting that the Commission either: (1)
lower the substantial majority threshold; (2) quantify the substantial
majority threshold; or (3) permit more positive disclosures when
marketers do not meet the substantial majority threshold.
i. Lower the Substantial Majority Threshold
Several commenters urged the FTC to lower the Guides' substantial
majority threshold so that marketers could make an unqualified
recyclable claim even when recycling facilities are not available to a
substantial majority of consumers.\236\ Environmental Packaging
International (``EPI'') suggested that the FTC consider a ``middle
ground,'' where recyclability is available to ``20 to 60 percent'' of
communities.\237\ According to EPI, in order to meet the substantial
majority standard, marketers must send their packaging to numerous
communities to determine whether they can be recycled. Thus, EPI opined
that a more lenient threshold would reduce this financial burden. An
EPA staff member suggested that the substantial majority threshold may
limit marketers' ability to make recyclable claims for some products,
which in turn may stifle efforts to develop recycling programs for
those products.\238\
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\236\ Sara Hartwell, EPA (``EPA''), Green Packaging Workshop Tr.
at 81, 92-93; Tetra Pak, Comment 536013-00012 at 2; Vinyl Institute,
Comment 536013-00019 at 4-5.
\237\ EPI, Green Packaging Workshop Tr. at 237-238.
\238\ EPA, Green Packaging Workshop Tr. at 81, 92-93.
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Other commenters suggested that the Commission consider adopting
the ISO 14021 Environmental Labels and Declarations - Self-Declared
Environmental Claims Standard.\239\ In contrast to the Guides'
``substantial majority'' threshold, ISO 14021 provides that marketers
can make unqualified recyclable claims if recycling facilities are
available to a ``reasonable proportion'' of consumers where the product
is sold.\240\ However, the ISO standard does not quantify its
reasonable proportion threshold.\241\
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\239\ MeadWestvaco, Comment 533431-00013 at 2; Tetra Pak,
Comment 536013-00012 at 2; Vinyl Institute, Comment 536013-00019 at
4-5.
\240\ ISO 14021 7.72:1999(E).
\241\ Commenter MeadWestvaco explained that close alignment with
global standards is critical to preventing market segmentation, yet
because neither the Green Guides (with ``substantial majority'') nor
ISO (with ``reasonable proportion'') has given numeric value to
those terms, ``confusion is commonplace.'' Comment 533431-00013 at
2.
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ii. Quantify the Substantial Majority Threshold
Several commenters indicated that complying with the recyclable
guidance is difficult because the Guides do not quantify the
substantial majority threshold. Although Commission staff has
informally interpreted the substantial majority threshold to be
``around 60 percent of consumers or communities,''\242\ these
commenters suggested that the Guides provide a specific percentage of
consumers or communities that must have access to recycling to meet the
threshold.\243\ For example, EPI opined that while there have been
estimates of what constitutes a substantial majority, ``these are not
evident to businesses consulting the published Guides and should be
made explicit in the document.''\244\
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\242\ See, e.g., Janice Frankle, Federal Trade Commission, Green
Packaging Workshop Tr. at 100.
\243\ AF&PA, Comment 534743-00031 at 2 (stating that it ``would
be helpful for the FTC to clarify definition of `substantial
majority'''); EPA, Green Packaging Workshop Tr. at 100 (recommending
the FTC provide a ``quantitative'' interpretation of ``substantial
majority''); GreenBlue, Comment 533431-00058 at 3; Kate Krebs,
National Recycling Coalition (``NRC''), Green Packaging Workshop Tr.
at 92; see also International Paper, Comment 533431-00055 at 4
(noting that the access to recycling test needs to be made more
explicit).
\244\ EPI, Comment 533431-00063 at 3; see also AF&PA, Comment
534743-00031 at 2 (clarifying the definition of ``substantial
majority'' would encourage the recovery of more materials that have
the capacity to be recycled). Commenters also suggested that the
FTC, or another agency, compile data concerning consumers' access to
recycling facilities for specific materials and provide a ``safe
harbor'' list of materials that the FTC considers recyclable to a
``substantial majority.'' See, e.g., EPA, Green Packaging Workshop
Tr. at 79-80; EPI, Comment 533431-00063 at 3; Est[eacute]e Lauder,
Green Packaging Workshop Tr. at 183; NRC, Green Packaging Workshop
Tr. at 92.
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iii. Permit Positive Disclosures for Recyclable Claims
Several commenters recommended that the Guides permit ``positive''
disclosures for recyclable claims where recycling facilities are not
available to a substantial majority of consumers or communities.\245\
They contended that the Guides' suggested disclosures (e.g., ``this
bottle may not be recyclable in your area'') do not provide any
incentive for consumers to determine if the product may be recyclable.
One commenter suggested that the Guides permit disclosures, such as
``check to see if this product/package is recyclable.'' According to
that commenter, this disclosure would encourage consumers to inquire
whether recycling facilities exist, perhaps by referring to
websites.\246\
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\245\ See, e.g., Tetra Pak, Comment 536013-00012 at 2-3; Vinyl
Institute, Comment 536013-00019 at 4-5.
\246\ Tetra Pak, Comment 536013-00012 at 2-3.
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b. Use of the SPI Code
Developed by the Society of the Plastics Industry (``SPI''), the
SPI code consists of a triangle composed of chasing arrows with a
number in the middle that identifies the type of plastic resin from
which a product is made. The Green Guides recognize that consumers may
interpret the SPI code to mean that a package is recyclable because of
its similarity to the universal recycling symbol, the three chasing
arrows.\247\ To address this problem, the Guides explain that the SPI
code is not likely to convey a recyclability claim if inconspicuously
placed on the bottom of a product.\248\ In contrast, if the SPI code is
displayed conspicuously, it is a ``recyclable'' claim necessitating
disclosure of the limited availability of recycling programs for the
product, if facilities are not available to a substantial majority of
consumers.\249\
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\247\ The three-chasing-arrows symbol is also known as the
``M[ouml]bius Loop.''
\248\ 16 CFR 260.7(d), Example 2.
\249\ Id.
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Several commenters observed that even inconspicuous use of the SPI
code may cause consumer confusion.\250\ The Glass Packaging Institute,
for example, asserted that consumers believe the SPI code indicates the
packaging can be
[[Page 63573]]
recycled regardless of the consumer's geographic location.\251\
Similarly, the American Beverage Association (``ABA'') observed that
consumers interpret the SPI code - regardless of where the code is
located, or what number is inside the code - to mean the package is
``recyclable.''\252\ The ABA argued that due to this incorrect belief,
consumers discard non-recyclable packaging into recycling bins that
then require extra sorting or ultimately result in contamination of the
recycled plastic feedstock.\253\ These commenters urged the FTC to
revise the Guides to clarify that the SPI codes are, in fact,
recyclability claims that must be properly qualified.\254\
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\250\ ABA, Comment 533431-00066 at 2-3; GPI, Comment 534743-
00026 at 7.
\251\ GPI, Comment 534743-00026 at 7; see also ISLR, Green
Packaging Workshop Tr. at 141-42 (noting that consumers confusing
the SPI code on corn-based polylactic (``PLA'') bottles with the
three-chasing-arrows are inadvertently contaminating the recycling
stream with bioplastics since most recycling facilities do not
accept PLA).
\252\ ABA, Comment 533431-00066 at 2.
\253\ Id. at 2-3.
\254\ Id. at 3; GPI, Comment 534743-00026 at 7.
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SPI countered that the Guides properly recognize that inconspicuous
use of the SPI code is not a recyclability claim. It emphasized that
the code was designed to help companies easily and quickly communicate
the makeup of plastic packages to downstream consumers and recyclers
sorting these products into various recycling streams.\255\ As such,
SPI stated that it has guidelines, consistent with those mandated by
state law, for the proper sizing and positioning of the code on
containers and bottles.\256\ For example, SPI noted that its guidelines
provide that the code ``should be molded, formed or imprinted'' and
should appear on the bottom of the container, as close to the center as
feasible, so that it can be quickly located and easily identified.\257\
SPI's guidelines also state that the code should ``be applied where it
will be inconspicuous to the consumer at the point of purchase so it
does not influence the consumer's buying decision,'' and
``[r]ecyclable' and other environmental claims should not be made in
close proximity to the code, even if such claims are properly
qualified.''\258\ According to SPI, if the FTC were to abandon its
position that inconspicuous use of the SPI code is not an environmental
claim, it would impose an undue burden on the plastics industry and its
customers who are complying with state law.\259\
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\255\ SPI, Comment 533431-00036 at 6; SPI, Comment 534743-00034
at 1.
\256\ SPI, Comment 534743-00034 at 2.
\257\ Id.
\258\ Id.
\259\ Id. at 3. According to SPI, 39 states have laws requiring
use of the SPI code. SPI also commented that it is working to expand
the resin identification code to address new types of plastics
through an initiative with ASTM. SPI, Comment 533431-00036 at 7.
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3. Analysis and Guidance
The comments demonstrate the continuing importance of the
recyclable section of the Guides. However, commenters suggested certain
revisions to enhance the section's effectiveness for both businesses
and consumers. The following analysis addresses these comments.\260\
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\260\ In addition to the changes discussed below, the Commission
proposes revising footnote 4 in the recyclable section of the
Guides. 16 CFR 260.7(d) n.4. The existing footnote states the
Commission deems batteries labeled in accordance with the Mercury-
Containing and Rechargeable Battery Management Act to be in
compliance with the Guides. This footnote describes the required
labeling in detail, but does not explain that manufacturers may
apply to EPA to use alternative labels. Rather than explaining each
provision of the Act in this footnote, the Commission proposes to
simplify the note to simply state that batteries labeled in
accordance with the Act are deemed in compliance with the Guides.
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a. The Substantial Majority Threshold
Commenters offered several recommendations regarding the
substantial majority threshold for making unqualified recyclable
claims, including lowering the threshold and quantifying the threshold.
As explained below, the Commission does not believe that the record
warrants lowering the threshold.\261\ The Commission, however, requests
comment on whether the Guides should formally quantify the threshold,
and, if so, how.
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\261\ This proposed guidance can be found in 16 CFR 260.11.
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i. Retaining the Substantial Majority Threshold
At the end of its 1998 Green Guides review, the Commission retained
the substantial majority threshold, citing consumer perception research
demonstrating that consumers are likely to perceive unqualified
recyclable claims to mean that a product can be recycled in their
community.\262\ Several commenters in the current review disagreed with
this decision and recommended that the Commission lower the threshold.
No commenters, however, submitted consumer perception evidence that
would warrant such a change.
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\262\ 63 FR 24240, 24243 (May 1, 1998).
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Some commenters contended that the substantial majority threshold
may stifle recycling efforts because it forces marketers to send their
products or packaging to numerous communities to determine if they can
satisfy the threshold. Even if true, however, this argument would not
provide a sufficient basis to revise the threshold. The purpose of the
Green Guides is not to promote recycling or to minimize costs for
marketers making recycling claims. Rather, it is to ensure that
marketers' claims are consistent with consumer perception and thereby
prevent deception. Commenters did not submit any evidence demonstrating
that consumers have altered their view that an unqualified recyclable
claim means that recycling facilities are available in their area. As a
result, the Commission does not have any evidence that would warrant
changing its conclusion.
As noted above, several commenters recommended that the Commission
consider replacing the substantial majority threshold with the ISO
14021 ``reasonable proportion'' threshold. The ISO 14021 reasonable
proportion standard arguably permits unqualified recyclable claims
where less than a majority of communities have access to recycling
facilities for a given product or package. However, because consumers
interpret unqualified recyclable claims to mean that facilities are
available in their area, the Commission has no basis for adopting this
standard.
ii. Quantifying the Substantial Majority Threshold
As noted by several commenters, the ambiguity of the substantial
majority standard causes problems. One marketer might interpret 55
percent as a substantial majority and, thus, make an unqualified
recyclable claim. A competitor might believe that substantial majority
means 75 percent and, thus, decline to make the same claim. Commission
staff, therefore, has informally interpreted substantial majority to
mean at least 60 percent.\263\
[[Page 63574]]
The Commission proposes to advise marketers of this informal guidance
in a footnote in the Guides. The Commission also requests comment on
whether the Guides should formally quantify ``substantial majority,''
and, if so, what the appropriate minimum figure should be.
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\263\ FTC Staff concluded that the 60 percent figure is an
appropriate minimum threshold because it is consistent with the
plain meaning of ``substantial majority.'' The adjective
``substantial'' requires that there be something greater than a
simple majority. Sixty percent is not so high that it permits
unqualified claims only when nearly all communities have recycling
facilities. Staff further found that this figure is consistent with
previous Commission statements and court decisions. See, e.g., 73 FR
51164, 51177 (Aug. 29, 2008) (``[A] substantial majority of
consumers dislike telemarketing calls that deliver prerecorded
messages. . . . [A]t least 65 to 85 percent of consumers do not wish
to receive prerecorded telemarketing calls.''); Report to Congress:
Marketing Food to Children and Adolescents, at 3-4 (July 2008) (``In
addition . . . , the companies accounted for 60% to 90% of U.S.
sales. Therefore, the Commission believes that the companies that
received and responded . . . were responsible for a substantial
majority of expenditures for food and beverage marketing to children
and adolescents during 2006.''); Mihailovich v. Laatsch, 359 F.3d
892, 909-10 (7\th\ Cir. 2004) (75 percent is substantial majority);
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 39 (D.D.C. 2001)
(59 percent is substantial majority).
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The Commission also proposes to improve the readability of this
section and to make clear in the text of the recyclable section that it
is using a three-tiered analysis for qualifying recyclable claims. The
appropriate qualifications vary depending upon whether recycling
facilities are available to: (1) at least a substantial majority; (2)
at least a significant percentage but not a substantial majority; or
(3) less than a significant percentage of consumers or
communities.\264\ Currently, the recyclable section provides this
guidance only in the examples. By highlighting this guidance in the
text, the information should be more accessible.
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\264\ The Commission does not propose quantifying a
``significant percentage'' at this time. The comments focused on the
substantial majority threshold for making unqualified recyclable
claims and did not discuss the significant percentage threshold for
making certain qualified recyclable claims. It is unclear if
providing guidance on this phrase would be useful for marketers. The
Commission, therefore, requests comment on this issue.
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b. Use of Positive Disclosures
As noted above, several commenters recommended that the Guides
permit positive disclosures where recycling facilities are not
available to a substantial majority of communities or consumers (e.g.,
``check to see if facilities exist in your area''). The Commission
previously determined that these types of positive disclosures,
standing alone, are not sufficient to correct consumers'
misimpressions, and, in fact, may reinforce them. Prior to the 1998
revisions, the recyclable section expressly stated that ``recyclable
where facilities exist'' was an appropriate disclosure. However, in
1998, the Commission highlighted consumer perception data suggesting
that consumers interpreted this phrase and a similar phrase, ``check to
see if recycling facilities exist in your area,'' to mean that
recycling programs did, in fact, exist in their area.\265\ Based on
that data, the Commission changed its guidance and withdrew its
approval of those disclosures.\266\
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\265\ 63 FR 24244 (May 1, 1998).
\266\ Id. The Commission included an example in the Guides
demonstrating that the ``recyclable where facilities exist''
disclosure is inadequate. 16 CFR 260.7(d), Example 5. The FTC
Staff's Business Brochure included an example specifying that the
``check to see'' disclosure was inadequate. FTC Staff's Business
Brochure at 8.
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Commenters have provided no consumer perception evidence to alter
this conclusion. The Commission, therefore, declines to include such
disclosures in the Guides, and instead proposes to revise the Guides to
make clear that, standing alone, ``check to see'' disclosures do not
adequately qualify recyclable claims. The Commission proposes modifying
existing Example 5 to illustrate that both disclosures - ``recyclable
where facilities exist'' and ``check to see if recycling facilities
exist in your area'' - are inadequate.
Although the Commission retains its finding that ``check to see''
disclosures standing alone are insufficient, such positive disclosures,
including those referring to websites or toll-free telephone numbers,
may be appropriate in combination with the disclosures that the
Commission has provided in its examples. Thus, a disclosure such as
``Recyclable - recycling programs for this product may not exist. Call
1-800-XXX-XXXX'' likely would not be deceptive.
c. Use of the SPI Code
Although some commenters asserted that consumers perceive even
inconspicuously placed SPI codes as recyclable claims, they did not
provide any consumer perception evidence to support their assertions.
In the absence of consumer perception evidence, the Commission does not
propose modifying Example 2 of the recyclable guide, which discusses
the use of the SPI code.
F. Recycled Content Claims
1. The Current Guides
The Guides provide that marketers may make a recycled content claim
only for materials that have been recovered or otherwise diverted from
the solid waste stream, either during the manufacturing process (pre-
consumer) or after consumer use (post-consumer).\267\ To make a pre-
consumer recycled content claim, an advertiser must substantiate that
the pre-consumer material would otherwise have entered the solid waste
stream.\268\ The Guides do not advise marketers to distinguish between
pre-consumer and post-consumer materials, but marketers may do so.
Marketers must substantiate any express or implied claims about the
specific amount of pre- or post-consumer content in their products.
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\267\ 16 CFR 260.7(e).
\268\ As illustrated by Example 1, spills and scraps that are
normally reused by industry within the original manufacturing
process - and that, therefore, would not normally have entered the
waste stream - do not constitute recycled content.
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The Guides further advise marketers that consumers interpret
unqualified recycled content claims to mean that the entire product or
package, excluding minor, incidental components, is made from recycled
material. For products or packages that are only partially made of
recycled material, marketers should qualify a recycled content claim to
avoid consumer deception.\269\
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\269\ The Guides also provide that marketers should qualify a
recycled content claim for products containing used, reconditioned,
or remanufactured components. A claim need not be qualified where it
is clear that the recycled content comes from used, reconditioned,
or remanufactured components. 16 CFR 260.7(e). None of the
commenters addressed the Commission's guidance on these issues.
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Example 9 of the Guides indicates that a claim about the percentage
of recycled content may be based on the annual weighted average of the
recycled content in a product.\270\ The FTC Staff's Business Brochure,
however, cautions marketers not to use such averaging if reasonable
consumers interpret the recycled content claim to mean that each
labeled item contains at least the described amount of recycled
content.\271\
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\270\ Id., Example 9: ``A paper greeting card is labeled as
containing 50% recycled fiber. The seller purchases paper stock from
several sources and the amount of recycled fiber in the stock
provided by each source varies. Because the 50% figure is based on
the annual weighted average of recycled material purchased from the
sources after accounting for fiber loss during the production
process, the claim is permissible.''
\271\ FTC Staff's Business Brochure at 11.
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2. Comments
The commenters addressing recycled content claims discussed three
main issues: (1) pre-consumer recycled content claims for textile
products; (2) the distinction between pre- and post-consumer recycled
content claims; and (3) the methods for calculating recycled content.
a. Pre-consumer Recycled Content Claims for Textiles
Several commenters stated that the Guides do not provide sufficient
guidance regarding pre-consumer recycled content claims for textile
products. For instance, the EPA's Sustainable Products Network (``EPA-
SPN'') stated that it would be helpful to have more specific guidance,
including examples, to help determine whether certain materials qualify
as pre-
[[Page 63575]]
consumer recycled content.\272\ EPA-SPN noted that re-use of off-
quality materials generated during the manufacturing process presents
difficult questions and suggested that several factors may be relevant
to determine whether such materials should be regarded as pre-consumer
recycled content or as industrial scrap that is normally reused in the
manufacturing process. EPA-SPN indicated that an important factor may
be whether the material must undergo significant processing before it
can be reused.\273\
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\272\ EPA-SPN, Comment 536013-00062 at 2.
\273\ Id. at 2-3.
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Another commenter stated that the Guides do not account for
innovation in the textile industry.\274\ It noted that, for years, the
textile industry has sought to prevent material from entering the solid
waste stream and that ``down cycling'' (such as using waste yarn as
fiber fill in toys) was common. The commenter said that more recent
innovations seek to create high value raw materials from the waste
product and provided examples of such developments. This commenter
sought guidance on whether such material could be considered recycled
content.\275\
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\274\ Valdese Weavers, Comment 536013-0006 at 1.
\275\ Another commenter recommended that the Guides allow pre-
consumer recycled content claims if synthetic polymers change in
form, such as from a chip to fiber to yarn. Designtex, Comment
533431-00024 at 1.
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b. Distinction Between Pre- and Post-consumer Recycled Content
The commenters raised two issues with respect to the Guides'
distinction between pre-consumer and post-consumer recycled content.
First, two commenters stated that the Guides should ``eliminate the
artificial distinction'' between pre-consumer and post-consumer
materials for recycled paper.\276\ Although it is not entirely clear,
it appears that these commenters believe the Guides should advise
marketers not to distinguish between the amount of pre-consumer and
post-consumer materials used in an item. Rather, marketers should make
claims only about the total amount of recycled content (which combines
both pre- and post-consumer material).\277\
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\276\ AF&PA, Comment 533431-00083 at 1-2; FBA, Comment 533431-
00015 at 2. They contend that the overwhelming majority of fibers
recovered and recycled are post-consumer, and that the distinction
between pre-consumer and post-consumer materials ``is not meaningful
to the consumer.'' Id.
\277\ Another commenter, however, recommended that the Guides
continue to permit marketers to distinguish between pre-consumer and
post-consumer materials. Amy Wilson, Comment 534743-00004 at 1. A
different commenter recommended that the Guides should permit
recycled content claims only for post-consumer materials. Tracy
Artley, Comment 534743-00019 at 1.
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Second, another commenter recommended that the Guides adopt the ISO
14021 approach to post-consumer material.\278\ This commenter explained
that ISO 14021 contains a more expansive definition of ``post-
consumer'' material than the Guides because it includes ``returns of
material from the distribution chain.'' The commenter argued that U.S.
companies may be at a disadvantage relative to international companies
that can claim a higher percentage of post-consumer recycled content
under ISO 14021.\279\ The commenter urged the FTC to adopt ISO's
definition, noting that federal law requires government agencies to use
such voluntary standards when they are available.\280\
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\278\ PRC, Comment 533431-00035 at 1-2, Comment 534743-00024 at
1-2, Comment 534743-00023 at 3. ISO 14021 defines post-consumer
material as ``[m]aterial generated by households or by commercial,
industrial and institutional facilities in their role as end-users
of the product which can no longer be used for its intended purpose.
This includes returns of material from the distribution chain.'' ISO
14021 7.8.1.1(a)(2):1999(E).
\279\ PRC, Comment 534743-00024 at 2.
\280\ Id.
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c. Calculating Recycled Content
The commenters had differing opinions regarding the appropriate
methods to calculate recycled content. Several recommended that the
Guides continue to use the annual weighted average.\281\ Others
recommended revising the Green Guides to permit alternative calculation
methods.\282\ For example, one commenter recommended that the Guides
permit the use of the annual weighted average for the specific
company's business or the use of an industry sector annual weighted
average.\283\ Another argued that requiring each product to have a
minimum percentage of recycled content may limit the ability of
vertically-integrated manufacturers to use recycled content.\284\ Yet
another argued that the Commission should consider a ``mass
allocation'' methodology that would permit recycled content
``offsets.'' Under this approach, a company could earn credits for
using recycled content and allocate those credits to make claims for
other products.\285\ Some commenters, however, argued that these
alternative approaches could mislead consumers by implying that
individual products have a greater percentage of recycled content than
they actually do.\286\
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\281\ Bailey, Comment 533431-00028 at 6; GreenBlue, Comment
533431-00058 at 8; NAIMA, Comment 533431-00042 at 15; SDA, Comment
533431-00020 at 3; Saint-Gobain, Comment 533431-00037 at 15; Stepan
Company, Comment 533431-00011 at 3.
\282\ AF&PA, Comment 533431-00083 at 2-3; Georgia-Pacific,
Comment 533431-00007 at 9; MBDC, Comment 533431-00022 at 1-3;
MeadWestvaco, Comment 533431-00013 at 2; Weyerhaeuser, Comment
533431-00084 at 6.
\283\ Georgia-Pacific, Comment 533431-00007 at 9.
\284\ MBDC, Comment 533431-00022 at 1-2. This commenter claimed
that vertically-integrated manufacturers have difficulty achieving
high per-product percentages because of challenges tracking
materials in large operations, incorporating high percentages of
recycled content in high-volume product lines, and using high
percentages of recycled content in products without affecting their
performance.
\285\ Shaw Industries Group, Inc. (``Shaw''), Comment 533431-
00050 at 1-3; see also Sappi, Comment 534743-00023 at 3-5
(recommending ``credit system'' for recycled content).
\286\ Bailey, Comment 533431-00028 at 6; Stepan Company, Comment
533431-00011 at 3.
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3. Consumer Perception Evidence
The Commission's consumer perception study tested respondents'
understanding of the phrase ``made with recycled materials'' as this
claim appeared on three different products - wrapping paper, a laundry
basket, and kitchen flooring. The study asked respondents whether a
statement that a product is ``made with recycled materials'' suggests
that all, most, or some of the materials were made with recycled
material. The largest group, 35 percent, indicated that they would
interpret the claim as meaning that ``all'' of the product was made
with recycled materials, while 20 percent believed that ``most'' of the
product was made with recycled materials.\287\
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\287\ Further, 26 percent stated that the claim means that
``some'' of the product was made with recycled materials; 15 percent
stated that the claim does not suggest anything about how much of
the product was made with recycled materials; and 5 percent stated
they were not sure. These figures total 101 percent because of
rounding. These percentages were derived by combining the responses
to all claims that included the phrase ``made with recycled
materials'' (i.e., ``made with recycled materials,'' ``green - made
with recycled materials,'' ``eco-friendly - made with recycled
materials,'' and ``sustainable - made with recycled materials'').
---------------------------------------------------------------------------
The study further explored which claims were implied by a product
advertised as ``made with recycled materials.'' The responses to a
closed-ended question indicated that 52 percent of respondents believe
that a ``made with recycled materials'' claim suggests that the
advertised product was recyclable.\288\ The study also used an open-
ended question to explore this same point. In response, only three
percent said that the statement suggests the product is recyclable. Not
surprisingly, a majority, 57 percent, stated that the advertised
product was made of recycled content.
---------------------------------------------------------------------------
\288\ This number is net of the non-environmental control claim.
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[[Page 63576]]
4. Analysis and Guidance
The comments sought additional guidance concerning recycled content
claims, focusing mainly on pre-consumer recycled content claims for
textiles, the distinction between pre- and post-consumer recycled
content, and the appropriate methods for calculating recycled content.
The Commission analyzes these issues as well as issues raised by its
consumer perception study below.
a. Pre-consumer Recycled Content Claims for Textiles
Although the Guides do not specifically address textiles, they
provide advice concerning recycled content claims for all products,
including textiles. To constitute pre-consumer recycled content,
materials must have been ``recovered or otherwise diverted from the
solid waste stream . . . during the manufacturing process (pre-
consumer). . . .''\289\ Examples 1-3 in the current Guides discuss
factors relevant to determining whether the material was diverted from
the solid waste stream - the amount of reprocessing needed before reuse
and whether the material is normally reused in ``the original
manufacturing process.'' Specifically, when spilled raw materials and
scraps undergo only ``a minimal amount of reprocessing'' and are
``normally reused in the original manufacturing process,'' they are not
diverted from the solid waste stream (and, therefore, do not qualify as
recycled content).\290\
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\289\ 16 CFR 260.7(e). The Guides further specify that the
advertiser must have substantiation that the material would
otherwise have entered the solid waste stream.
\290\ See 16 CFR 260.7(e), Example 1; see also 16 CFR 260.7(e),
Examples 2 and 3.
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The commenters' discussion of innovations in the textile industry
highlights difficulties in using the existing guidance to determine
whether a particular material qualifies as recycled content.\291\ The
commenters explain that the textile industry for many years has sought
to reuse waste materials from the manufacturing process and that recent
innovations have allowed manufacturers to put that material to higher
use. These innovative processes likely do not divert the waste material
from the solid waste stream because the material already was being
reused (albeit in a lower value form). Despite the fact that these
higher-use processes do not satisfy the Commission's guidance on
recycled content (diversion from the solid waste stream), they satisfy
the two factors the Commission considers in determining if waste is
diverted from the solid waste stream. Specifically, the innovations may
involve significant reprocessing before the material can be reused, and
the material may be reused in something different from the original
manufacturing process. These innovations, therefore, reveal some
ambiguity in the Commission's current guidance.
---------------------------------------------------------------------------
\291\ The difficulty in determining whether material qualifies
as pre-consumer recycled content is not exclusive to the textile
industry. One commenter from the lumber industry expressed concern
about the pre-consumer recycled content claims of its competitors.
Weyerhaeuser, Comment 533431-00084 at 6. It asserted that some
companies interpret recycled content to include chips produced by
sawmills as a byproduct of lumber production. Weyerhaeuser stated
that it did not believe that this was a common interpretation of
recycled content and did not treat such materials as recycled
content. Id.
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The comments, however, did not address the broader issue of whether
the Commission should revise its guidance for pre-consumer recycled
materials generally, and, if so, what changes it should make.\292\ For
instance, the comments did not address whether the Commission should
eliminate the factors it currently uses to determine if material is
diverted from the solid waste stream. In addition, it is unclear
whether consumers interpret recycled content to mean more than
diversion from the solid waste stream. For example, do they believe
that any material that is significantly reprocessed and reused
constitutes recycled content? If material is reused in place of virgin
material, do consumers consider that material recycled content? If,
over time, it becomes standard practice within an industry to reuse
certain material, do consumers still regard that material as
constituting recycled content? The Commission, therefore, declines to
propose changes to its guidance at this time.\293\ Instead, the
Commission solicits comment on what changes, if any, it should make to
its existing guidance on pre-consumer recycled content claims for all
products. In particular, the Commission seeks evidence of consumer
perception of pre-consumer recycled content claims.
---------------------------------------------------------------------------
\292\ One textile industry member suggested that recycled
content claims hinge on whether there has been a change in form
(e.g., from chip to fiber to yarn). In the Commission's judgment, it
is unlikely that consumers would perceive material as recycled
content merely because of a change in form.
\293\ This guidance can now be found in 16 CFR 260.12.
---------------------------------------------------------------------------
b. Distinction Between Pre- and Post-consumer Recycled Content
Some commenters recommended that the Guides advise marketers to
make claims only for the total amount of recycled content in an item,
and not to distinguish between the amount of pre-consumer and post-
consumer materials used in that item. The Commission does not propose
adding this advice to the Guides. Currently, marketers making recycled
content claims have the option to disclose whether the recycled content
is pre-consumer or post-consumer. The Commission has no evidence that
specific claims about the type of recycled content mislead consumers.
In the absence of evidence that these terms are deceptive, the
Commission declines to advise marketers that they should discontinue
using them.
The Commission also does not propose incorporating the ISO 14021
definition of ``post-consumer'' material into the Guides. As discussed
above, material returned from the distribution chain (e.g., overstock
magazines) qualifies as ``post-consumer'' recycled material under ISO
14021. It is unlikely, however, that consumers would interpret such
material as ``post-consumer'' recycled content because the material
never actually reaches consumers. The commenters did not provide any
consumer perception evidence to the contrary. Under the Guides,
therefore, marketers may claim that this material constitutes recycled
content, but not ``post-consumer'' recycled content.
c. Calculating Recycled Content
Currently, the Guides advise marketers that recycled content claims
may be based on the annual weighted average of recycled content in an
item.\294\ Certain commenters suggested that the Guides allow for
alternative calculation methods, such as the average amount of recycled
content within a product line or across all product lines, or an
offset-based approach.\295\
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\294\ 16 CFR 260.7(e), Example 9.
\295\ As noted above, one commenter argued that requiring
products to have a minimum percentage of recycled content may
constrain the ability of vertically-integrated manufacturers to use
recycled content. The Guides do not specify minimum recycled content
levels for products. The Guides permit marketers to make recycled
content claims for products with only a small percentage of recycled
content, as long as the claims are adequately qualified.
---------------------------------------------------------------------------
The Commission does not propose making the suggested changes. As
some commenters cautioned, claims based on these alternative
calculation methods could mislead consumers by implying that products
contain more recycled content than they actually do. Indeed, these
approaches could permit marketers to make recycled content claims for
products that do not contain any such material. For example, a marketer
may sell residential carpeting
[[Page 63577]]
that contains no recycled content and commercial carpeting that
contains 50 percent. If the marketer believes that individuals are more
interested than businesses in recycled content, it could choose to
average the amount of recycled content in both products and then make a
25 percent recycled content claim for its residential carpeting (even
though this carpeting contains no recycled content).\296\ Such a claim
appears to be deceptive; therefore, without consumer perception
evidence to the contrary, the Commission declines to sanction it.
---------------------------------------------------------------------------
\296\ For mathematical simplicity, the hypothetical assumes
equal sales of each product.
---------------------------------------------------------------------------
The Commission, however, proposes retaining Example 9, which
illustrates that using annual weighted average is not deceptive.\297\
The Guides have included this example since 1992, and there is no
evidence that consumers have been deceived by recycled content claims
based on this type of calculation. Moreover, it does not appear that
consumers would likely be deceived by a percentage recycled content
claim for a single product because their chances of getting a product
with a lower percentage of recycled content is roughly the same as
their chances of getting one with a higher percentage. At least
theoretically, however, using annual weighted average could lead to
deception. For example, a company could use two manufacturing sites to
make the same product - one using recycled content but selling to local
consumers who give little weight to this fact, and another using no
recycled content but selling to local consumers who place a premium on
products containing recycled materials. In this circumstance, the
company could use the annual weighted average to make recycled content
claims to the second set of consumers, even though those consumers
would never receive products with such content. The Commission,
therefore, requests comment on whether recycled content claims based on
annual weighted average are misleading, and, if so, whether these
claims should be qualified.
---------------------------------------------------------------------------
\297\ 16 CFR 260.7(e), Example 9.
---------------------------------------------------------------------------
d. Unqualified Recycled Content Claims
The Guides currently advise marketers to qualify recycled content
claims unless the entire product or package, excluding minor,
incidental components, is made with recycled content. Any needed
qualifications should specify the percentage of recycled content in the
item. The Commission's study indicates that this guidance remains
valid. Specifically, a significant minority of respondents (35 percent)
indicated that an unqualified recycled content claim means that all of
the product was made with recycled materials. The Commission,
therefore, proposes retaining this guidance.
e. Implied Claims
The results of the Commission's consumer perception study suggest
that some consumers understand a ``made with recycled materials'' claim
to convey a recyclable claim. In response to a closed-ended question,
52 percent of respondents indicated that they believed that a ``made
with recycled materials'' claim suggested that the product was
recyclable. In response to an open-ended question, however, only three
percent of respondents stated that they thought the advertised product
was recyclable.
Although the responses to the closed-ended questions suggest that
many consumers may perceive an implied recyclable claim, the Commission
does not propose advising marketers that make unqualified recycled
content claims to disclose if their product is not recyclable. Even if
some consumers do perceive an implied recyclable claim, their
understanding appears to be accurate. The Commission's study asked
respondents only about an unqualified ``made with recycled materials''
claim. Assuming marketers are following the Guides, they make
unqualified recycled content claims only where the products are made
from 100 percent recycled materials. Products that are made of 100
percent recycled materials appear to be recyclable.\298\ Assuming this
is the case, marketers would be able to substantiate any implied claim
that their product is recyclable. Therefore, the Commission does not
propose advising marketers that make unqualified recycled content
claims to disclose that the product is not recyclable. The Commission
requests comment on this advice and seeks any additional consumer
perception evidence addressing this issue.
---------------------------------------------------------------------------
\298\ Although relatively few products are made from 100 percent
recycled materials, those that are - including some paper products
and some glass products - appear to be recyclable. See, e.g.,
(http://www.epa.gov/wastes/conserve/materials/paper/faqs.htm).
---------------------------------------------------------------------------
The Commission also does not propose such guidance for marketers
making qualified recycled materials claims, such as ``made with 50
percent recycled materials.'' It is unclear whether consumers believe
that a qualified recycled materials claim suggests that the product is
also recyclable. Without such evidence, the Commission is hesitant to
advise marketers to make such disclosures. The Commission,
nevertheless, requests comment on its proposal and, in particular,
seeks any consumer perception evidence.
G. Ozone-Safe and Ozone-Friendly Claims
1. The Current Guides
The current Guides state that it is deceptive to misrepresent,
directly or by implication, that a product is safe for, or ``friendly''
to, the ozone layer or the atmosphere.\299\ This section contains four
examples.
---------------------------------------------------------------------------
\299\ 16 CFR 260.7(h).
---------------------------------------------------------------------------
Example 1 provides that an ozone friendly claim is deceptive if the
product ``contains any ozone-depleting substance, including those
listed as Class I or Class II chemicals in Title VI of the Clean Air
Act Amendments of 1990, Pub. L. No. 101-549, and others subsequently
designated by the EPA as ozone-depleting substances.''\300\
---------------------------------------------------------------------------
\300\ Example 1 also notes that Class I chemicals include
chlorofluorocarbons (CFCs), halons, carbon tetrachloride, 1,1,1-
trichloroethane, methyl bromide, and hydrobromofluorocarbons (HBFCs)
and that Class II chemicals are hydrochlorofluorocarbons (HCFCs).
---------------------------------------------------------------------------
Example 2 illustrates that an ozone friendly claim may be
deceptive, even if the product does not contain ozone-depleting
chemicals. In this example, an aerosol air freshener is labeled
``ozone friendly'' but contains volatile organic compounds, which
may cause smog. Even though the product does not contain ozone-
depleting substances, the unqualified ozone friendly claim is deceptive
because it inaccurately conveys that the product is safe for the
atmosphere as a whole.
Example 3 discusses an unqualified claim that an aerosol product
``contains no CFCs.'' Although the product does not contain CFCs, it
contains HCFC-22, another ozone-depleting substance. Because the no-
CFCs claim likely implies that the product does not harm the ozone
layer, the claim is deceptive.
Finally, Example 4 illustrates a qualified comparative ozone-
related claim that is unlikely to be deceptive. This example states
that a product is labeled ``95% less damaging to the ozone layer than
past formulations that contained CFCs,'' and explains that the
manufacturer has substituted HCFCs for CFC-12. If the marketer can
substantiate the decrease in ozone depletion, this qualified
comparative claim is not likely to be deceptive.
2. Comments
Several commenters discussed the Guides' treatment of ozone-safe
and no-CFCs claims. The EPA's Stratospheric
[[Page 63578]]
Protection Division (``EPA-SPD''), which regulates ozone-depleting
substances, stated that the Guides should continue to provide guidance
concerning ozone-safe claims and allow marketers to use no-CFCs
claims.\301\ The EPA-SPD explained that no-CFCs claims may provide
useful information to consumers because many consumers do not realize
that CFCs are no longer used. Other commenters disagreed, and argued
that the Guides should advise marketers not to make no-CFCs
claims.\302\ One commenter stated that because CFCs have been banned
for almost 30 years, no-CFCs claims do not distinguish a marketer's
product from other CFC-free products.\303\ Another similarly stated
that ``given the universal ban on ozone depleting substances,'' ozone-
safe claims imply that products without that claim contain ozone-
depleting substances. Therefore, the commenter argued that ``there
really is no reason to continue use of this claim.''\304\
---------------------------------------------------------------------------
\301\ Letter from the EPA Stratospheric Protection Division,
Mar. 18, 2010, available at (http://www.ftc.gov/green).
\302\ Several commenters also mentioned no-CFCs claims, but only
to provide context for their recommendation that the Commission
provide guidance on free-of claims generally, which the Commission
discusses in detail in Part V.H below. Eastman Chemical Company
(``Eastman''), Comment 533431-00051 at 2; GPI, Comment 534743-00026
at 11; GreenBlue, Comment 533431-00058 at 4; SPI, Comment 533431-
00036 at 10.
\303\ TerraChoice, Comment 533431-00040 at 1, attached report
``The Six Sins of Greenwashing'' at 4.
\304\ EHS, Comment 534743-00011 at 2.
---------------------------------------------------------------------------
In addition to the general discussion regarding ozone-safe and no-
CFCs claims, the EPA-SPD recommended several modifications to the
examples in the Guides.\305\ First, the EPA-SPD stated that the
Commission should delete the references to HCFC-22 in Examples 3 and 4
because of EPA's general prohibition on the use of newly produced
ozone-depleting chemicals HCFC-22 and HCFC-14b. Second, the EPA-SPD
recommended that the Commission provide guidance for air conditioning
manufacturers that substitute non-ozone depleting refrigerants for the
prohibited HCFCs. Specifically, EPA-SPD suggested advising marketers
not to make unqualified ``environmentally friendly'' claims about their
air-conditioning equipment. The EPA-SPD noted this equipment still may
have adverse environmental effects because it uses large quantities of
energy and because its refrigerants are greenhouse gases.\306\
---------------------------------------------------------------------------
\305\ Letter from the EPA Stratospheric Protection Division.
\306\ At least with respect to ozone-depletion claims for
packaging, one commenter offered a different view, stating that
ozone-related claims are no longer of significant relevance because
of changes in packaging. GPI, Comment 534743-00026 at 11.
---------------------------------------------------------------------------
3. Analysis and Guidance
Based on the record, the Commission proposes retaining its guidance
regarding ozone- safe claims.\307\ Below, the Commission addresses the
two specific issues raised by commenters: (1) the use of no-CFCs
claims; and (2) modification to the Guides' examples.
---------------------------------------------------------------------------
\307\ This proposed guidance can be found in 16 CFR 260.10.
---------------------------------------------------------------------------
First, the Commission does not propose advising marketers to avoid
using no-CFCs claims. Although CFCs have been banned for years, the
Commission agrees with EPA-SPD that many consumers may not realize this
is the case. Consumers may still associate CFCs with certain products,
such as aerosol sprays. No-CFCs claims may provide valuable information
to these consumers who might otherwise assume that certain products
have the negative environmental effects associated with CFCs. This
conclusion is consistent with the Commission's proposed guidance
concerning no or free-of claims generally, discussed below.\308\ The
Commission, however, seeks any consumer perception evidence concerning
no-CFCs claims.
---------------------------------------------------------------------------
\308\ Specifically, the Commission proposes that a claim that a
product does not contain a substance may be deceptive if that
substance has never been associated with the product. category.
---------------------------------------------------------------------------
Second, the Commission proposes deleting current Examples 3 and 4
in the Guides, which both reference HCFC-22, in light of EPA's general
prohibition on its use. The Commission, however, proposes adding a new
example, as recommended by the EPA-SPD, to illustrate that
``environmentally friendly'' claims by an air conditioning equipment
manufacturer may be deceptive, even if the manufacturer has substituted
non-ozone depleting refrigerants. This general environmental benefit
claim likely would convey to consumers that the product has far
reaching environmental benefits. Because currently available air
conditioning equipment relies on refrigerants that are greenhouse gases
and also consume a substantial amount of energy, this claim likely
would be deceptive.
H. Free-of and Non-toxic Claims
1. The Current Guides
The current Guides do not contain a section that specifically
addresses claims that products or services have no, are free of, or do
not contain certain substances (``free-of claims'') or that they are
non-toxic. The current Guides, however, include three examples that
address such claims.
Example 4 in the ``overstatement of environmental attribute''
portion of Section 260.6 discusses a ``chlorine-free bleaching
process'' claim for coffee filters.\309\ The coffee filters are
bleached without chlorine, but with a process that releases a reduced,
but still significant, amount of the same harmful byproducts associated
with chlorine bleaching. The claim, therefore, likely overstates the
product's benefits because consumers likely would interpret the claim
to mean that the manufacturing process does not cause any of the
environmental harm that chlorine bleaching does.\310\
---------------------------------------------------------------------------
\309\ 16 CFR 260.6(c), Example 4.
\310\ Example 4 provides a qualified claim - ``bleached with a
process that substantially reduces, but does not eliminate, harmful
substances associated with chlorine bleaching'' - that likely would
not be deceptive.
---------------------------------------------------------------------------
Example 4 in the general environmental benefit claims section
addresses claims that a lawn care pesticide is ``essentially non-
toxic'' and ``practically non-toxic.''\311\ Consumers likely would
interpret these claims to mean that the pesticide does not pose any
risk to both human health and the environment. The example states that
the claims would be deceptive if the pesticide poses a significant risk
to either.
---------------------------------------------------------------------------
\311\ 16 CFR 260.7(a), Example 4.
---------------------------------------------------------------------------
Finally, Example 3 in the ozone safe and ozone friendly section
discusses an unqualified claim that an aerosol product ``contains no
CFCs.''\312\ Although the product does not contain CFCs, it contains
another ozone depleting substance. Because the no-CFCs claim likely
implies that the product does not harm the ozone layer, the claim is
deceptive.
---------------------------------------------------------------------------
\312\ 16 CFR 260.7(h), Example 3.
---------------------------------------------------------------------------
2. Comments
a. Free-of Claims
Numerous commenters recommended that the Commission provide further
guidance regarding free-of claims. Several noted that the Guides
address no-CFCs claims only in an example and suggested that the
Commission address free-of claims generally.\313\
---------------------------------------------------------------------------
\313\ Eastman, Comment 533431-00051 at 2; GPI, Comment 534743-
00026 at 11; GreenBlue, Comment 533431-00058 at 4; SPI, Comment
533431-00036 at 10. One commenter noted that because CFCs have been
banned it is not clear whether the Guides' treatment of no-CFCs
claims would also apply to other substances. Eastman, Comment
533431-00051 at 2.
---------------------------------------------------------------------------
Several commenters discussed the appropriate standard for
determining whether a product is free of a
[[Page 63579]]
substance.\314\ One argued that a product is not free of a substance if
the substance is present at greater than background or regulated
levels.\315\ Similarly, one commenter noted that under the ISO 14021
standard, marketers can make free-of claims only if the ``specified
substance is no more than that which would be found as an acknowledged
trace contaminant or background level.''\316\ Finally, another
contended that free-of claims should be substantiated by evidence that:
``(1) none of the chemical was added during the manufacturing process,
and (2) when tested, the product does not emit or off-gas levels of the
chemical that are material to consumers, i.e., in the context of health
considerations, no more than background and applicable health-based
standards for safe exposure.''\317\
---------------------------------------------------------------------------
\314\ CSPA, Comment 533431-00049 at 4; EHS, Comment 533431-00057
at 1; Johns Manville, Comment 536013-00034 at 4. Several commenters
stated that generic ``chemical-free'' claims are misleading because
nothing is actually chemical-free. EHS, Comment 533431-00057 at 1;
OMI, Comment 536013-00022 at 1; TerraChoice, Comment 533431-00040,
attached report ``The Six Sins of Greenwashing'' at 3.
\315\ EHS, Comment 533431-00057 at 1.
\316\ CSPA, Comment 533431-00049 at 4 (quoting ISO 14021).
Another commenter recommended that the Commission look to ISO 14021
for guidance on free-of claims. 3M Company, Comment 533431-00027 at
3.
\317\ Johns Manville, Comment 536013-00034 at 2.
---------------------------------------------------------------------------
Several commenters stated that truthful free-of claims may be
misleading. For example, some commenters raised concerns that a
truthful free-of claim could mislead consumers if the marketer does not
disclose that the product contains other substances that may be harmful
to the environment.\318\ Others stated that a claim that a product is
free of a substance may be deceptive if the substance is not typically
associated with the product and competitors' products do not typically
contain the substance.\319\ One commenter noted that the ISO 14021
standard does not permit free-of claims if the substance has never been
associated with the product.\320\ Another commenter illustrated this
point with an ``extreme hypothetical,'' in which a marketer's claim
that its fruit juice does not contain cyanide could mislead consumers
by suggesting that other fruit juices do.\321\
---------------------------------------------------------------------------
\318\ See, e.g., GPI, Comment 534743-00026 at 11; NAIMA, Comment
533431-00042 at 10-11; Saint-Gobain, Comment 533431-00037 at 9-10.
\319\ CSPA, Comment 533431-00049 at 4; Johns Manville, Comment
536013-00034 at 2; NAIMA, Comment 533431-00042 at 10; Saint-Gobain,
Comment 533431-00037 at 9-10; TerraChoice, Comment 533431-00040,
attached report ``The Six Sins of Greenwashing'' at 4.
\320\ CSPA, Comment 533431-00049 at 4.
\321\ NAIMA, Comment 533431-00042 at 10.
---------------------------------------------------------------------------
Several commenters raised two concerns that unqualified free-of
claims imply other environmental claims.\322\ First, they stated that
while a free-of claim explicitly conveys that a product does not
contain a certain substance, it also implies that a product is superior
to other products that contain the substance.\323\ They argued that
free-of claims should be qualified to inform consumers of the basis of
the comparison, such as whether the free-of claim is relevant to the
environmental or health risks or the performance of the product.\324\
Second, they asserted that free-of claims are often general claims of
environmental benefit, i.e., claims that products without the specified
substance are good for the environment.\325\ They recommended that such
claims not be permitted without qualifying language that substantiates
both the express claim and all implied claims.\326\
---------------------------------------------------------------------------
\322\ ACC, Comment 533431-00023 at 4; Formaldehyde Council,
Comment 533431-00047 at 2-3; Vinyl Institute, Comment 533431-00046
at 2-3.
\323\ Id.
\324\ Id.
\325\ Id.
\326\ Id.
---------------------------------------------------------------------------
Other commenters, however, stated that free-of claims may provide
valuable information to consumers and do not necessarily imply
additional comparative or general environmental benefit claims.\327\
One commenter explained that these claims should be qualified only if
they are susceptible to more than one interpretation by a non-
insignificant portion of the target audience and at least one such
interpretation is false, misleading, or unsubstantiated.\328\ They
recommended that the Commission not establish a bright-line rule
requiring that marketers qualify all free-of claims.\329\
---------------------------------------------------------------------------
\327\ Eastman, Comment 533431-00051 at 2-3; Johns Manville,
Comment 536013-00034 at 3-5.
\328\ Johns Manville, Comment 536013-00034 at 3.
\329\ Eastman, Comment 533431-00051 at 2; Johns Manville,
Comment 536013-00048 at 3-4.
---------------------------------------------------------------------------
The National Advertising Review Council submitted comments
summarizing the National Advertising Division (``NAD'') cases
addressing environmental claims, including several cases that involved
claims that products were free of, or did not contain, certain
substances.\330\ In one case, the NAD found that a manufacturer
adequately substantiated a formaldehyde-free claim for insulation.\331\
The NAD concluded that it was appropriate for the advertiser to make a
formaldehyde-free claim, even if the insulation emitted a de minimis
amount of formaldehyde because it would be inconsequential to
consumers. The NAD noted that the determination of whether an amount is
de minimis depends on the substance at issue and requires a case-by-
case analysis.
---------------------------------------------------------------------------
\330\ NAD, Comment 534743-00029 at 4.
\331\ Although the NAD determined that the formaldehyde-free
claim was appropriate, it also found that the manufacturer should
discontinue comparative claims that, without proper support, raised
doubts about the safety of competing products. Id.
---------------------------------------------------------------------------
b. Non-toxic Claims
Commenters discussed several issues raised by non-toxic
claims.\332\ One commenter stated that a non-toxic claim is vague,
noting that everything is toxic in sufficient doses.\333\
---------------------------------------------------------------------------
\332\ EPA-SPN, Comment 536013-00062 at 4; Seventh Generation,
Comment 533431-00033 at 6; TerraChoice, Comment 533431-00040,
attached report ``The Six Sins of Greenwashing'' at 3.
\333\ TerraChoice, Comment 533431-00040, attached report ``The
Six Sins of Greenwashing'' at 3.
---------------------------------------------------------------------------
The EPA's Sustainable Products Network (``EPA-SPN'') stated that,
consistent with the example in the current Green Guides, consumers
likely would interpret non-toxic claims broadly. Accordingly, the EPA-
SPN stated that non-toxic claims should be supported by evidence that
addresses health and environmental effects for all exposed
populations.\334\
---------------------------------------------------------------------------
\334\ EPA-SPN, Comment 536013-00062 at 4.
---------------------------------------------------------------------------
The EPA-SPN also noted that non-toxic claims based on regulatory
definitions may mislead consumers.\335\ The EPA-SPN stated that
regulatory agencies typically set thresholds to identify moderate to
high toxicity levels, and the fact that a substance does not exceed the
regulatory standard does not necessarily mean that it is non-
toxic.\336\
---------------------------------------------------------------------------
\335\ Id.
\336\ Id.
---------------------------------------------------------------------------
Addressing specific products, two commenters stated that insulation
manufacturers make non-toxic claims but use toxic fire retardants.\337\
These commenters recommend prohibiting non-toxic claims if the product
contains toxic substances in amounts of 10 percent of weight or more.
---------------------------------------------------------------------------
\337\ NAIMA, Comment 533431-00042 at 8; Saint-Gobain, Comment
533431-00037 at 9.
---------------------------------------------------------------------------
3. Analysis and Guidance
The Commission agrees with commenters that it should provide
expanded guidance for free-of and non-toxic claims. Accordingly, the
Commission proposes including a new Guides section to address these
claims.\338\ The Commission also proposes moving two of the three
[[Page 63580]]
examples in the current Guides, cited above, into this section, and
adding an additional example.
---------------------------------------------------------------------------
\338\ This proposed guidance can be found in 16 CFR 260.9.
---------------------------------------------------------------------------
a. Free-of Claims
Marketers can always substantiate free-of claims by confirming that
their products are, in fact, completely free of the relevant substance.
As noted above, however, commenters raised a more difficult issue:
whether marketers should be able to make free-of claims if their
products contain background levels or trace amounts of a substance. No
commenters provided evidence regarding how consumers interpret free-of
claims. Accordingly, the Commission must apply its own expertise to
determine how consumers likely would interpret such claims. Consistent
with the NAD decision, discussed above, the Commission proposes
advising that free-of claims may be appropriate where a product
contains a de minimis amount of a substance that would be
inconsequential to consumers. To illustrate this point, the Commission
proposes adding a new example. In proposed Example 2, an insulation
seller advertises its product as ``formaldehyde-free.'' Although the
seller does not use formaldehyde as a binding agent to produce the
insulation, tests show that the insulation emits trace amounts of
formaldehyde. The seller has substantiation that formaldehyde is
produced both synthetically and at low levels by people, animals, and
plants; that the substance is present in most indoor and (to a lesser
extent) outdoor environments; and that its insulation emits lower
levels of formaldehyde than are typically present in outdoor
environments. In this context, the trace amount of formaldehyde likely
would be inconsequential to consumers, and, as a result, a
formaldehyde-free claim likely would not be deceptive.
However, as the NAD cautioned, the determination of what
constitutes de minimis depends upon the substance at issue and,
therefore, requires a case-by-case analysis. In some cases, consumers
may view the presence of even trace amounts of a substance as material.
For example, trace amounts of a substance such as mercury, which is
toxic and may accumulate in the tissues of humans and other organisms,
likely would be relevant to consumers.\339\
---------------------------------------------------------------------------
\339\ See 75 FR 41696, 41715 (July 10, 2010) (requiring that
labels for compact fluorescent light bulbs disclose that the bulbs
contain mercury).
---------------------------------------------------------------------------
As suggested by several commenters, the Commission proposes
cautioning marketers that an otherwise truthful free-of claim may
nevertheless be deceptive. For example, it may be deceptive if a
marketer claims that its product is free of a particular substance but
does not disclose that the product contains another substance that may
cause environmental harm, particularly if it is the same type of harm
caused by the absent substance. To illustrate this point, the
Commission proposes moving the chlorine-free coffee filter example,
discussed above, into the new proposed section.
The Commission also proposes advising marketers that an otherwise
truthful claim that a product is free of a substance may be deceptive
if the substance has never been associated with that product category.
This proposed guidance is consistent with ISO 14021's free-of
standards.\340\ Such claims may deceive consumers by falsely suggesting
that competing products contain the substance or that the marketer has
``improved'' the product by removing the substance. However, in some
circumstances, these claims may provide useful information to consumers
who are interested in knowing whether a particular substance is present
in a product. This could be the case, for example, where products in
one category contain a substance and products in a competing category
do not. Marketers making such ``free-of'' claims can minimize the risk
of deception if they clarify that the entire product category is free
of the substance. The Commission solicits comment on what guidance it
should give for ``free-of'' claims based on substances which have never
been associated with a product category. The Commission also seeks
consumer perception evidence regarding these claims.
---------------------------------------------------------------------------
\340\ ISO 14021 states that free-of claims should not be based
on ``the absence of ingredients or features which have never been
associated with the product category.'' ISO 14021 5.7(p):1999(E).
See also Environmental Claims: A Guide for Industry and Advertisers,
Competition Bureau Canada, Canadian Standards Association, June 25,
2008, Clause 5.17.
---------------------------------------------------------------------------
The Commission also agrees with several commenters that free-of
claims may, depending on the context, convey that the product has broad
environmental benefits or is environmentally superior to competing
products. Thus, a marketer who makes a free-of claim that reasonable
consumers would interpret to convey additional environmental claims
must have substantiation for all of those claims.\341\ The Commission,
however, declines to advise that all free-of claims be qualified. In
the absence of evidence that reasonable consumers would, no matter the
context, perceive free-of claims as making implied general
environmental benefit or comparative superiority claims, such guidance
is not appropriate.
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\341\ If reasonable consumers would interpret a particular free-
of claim as making a general environmental claim, then the marketer
should comply with the guidance in revised Section 260.4 regarding
general environmental benefit claims.
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b. Non-toxic Claims
The Commission proposes moving its guidance concerning non-toxic
claims from the existing example in current Section 260.7(a) to the
proposed new Section 260.9.\342\ This proposed section states that
consumers likely think a non-toxic claim conveys that a product is non-
toxic both for humans and for the environment. This section also
advises marketers to qualify non-toxic claims to the extent necessary
to avoid consumer deception.
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\342\ The Commission also proposes moving the example into this
new proposed section.
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Marketers should use caution when relying on regulatory standards
as substantiation for claims that products are non-toxic. Reasonable
consumers would likely interpret non-toxic claims to mean that a
product is not harmful to humans or to the environment. Yet, as EPA-SPN
noted, some regulatory thresholds allow moderately to highly toxic
substances that do not meet these consumer expectations. Therefore,
marketers should examine the scope and purpose of the regulatory
standard to ensure that it substantiates a non-toxic claim in light of
consumer expectations. For example, the standard for acute toxicity,
which measures the effects of the substance from exposure during a
short time period, may not provide an appropriate basis for non-toxic
claims if the substance may be toxic to humans or the environment over
a longer period of time.
I. Source Reduction Claims
Section 260.7(f) of the Guides states that it is deceptive to
misrepresent that a product or package has been reduced in size or is
lower in weight, volume, or toxicity. The Guides advise marketers to
qualify source reduction claims to avoid deception about the amount of
the reduction and the basis for any comparison. The Soap and Detergent
Association agreed that marketers should qualify source reduction
claims and ``measure source reduction through a `package weight per
unit or use of the product' approach as well as physical reduction of
packaging material.''\343\ No comments suggested modifying the guidance
in this section. The Commission, therefore, proposes retaining this
section without change.\344\
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\343\ SDA, Comment 534743-00028 at 2.
\344\ This guidance can now be found in 16 CFR 260.16.
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[[Page 63581]]
J. Refillable Claims
Section 260.7(g) states that it is deceptive to misrepresent that a
package is refillable. It advises marketers not to make an unqualified
refillable claims unless: (1) they provide a system to collect and
return the package for refill; or (2) consumers can refill the package
with a separately purchased product. The Glass Packaging Institute
stated that this guidance remains useful, and no other commenters
recommended changes.\345\ The Commission, therefore, proposes retaining
this section.\346\
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\345\ GPI, Comment 534743-00026 at 8-9.
\346\ This guidance can now be found in 16 CFR 260.13.
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VI. Claims Not Addressed by the Current Green Guides
The Commission asked commenters to discuss whether and how the
Guides should be modified to address the use of environmental marketing
claims that either are new or were not common during the last Guides
review. Commenters discussed five types of claims: (1) sustainable; (2)
organic/natural; (3) made with renewable materials; (4) made with
renewable energy; and (5) carbon offsets. For each of these claims, the
following summarizes the comments and the relevant workshop
discussions, reviews the consumer perception evidence, and provides the
Commission's analysis.
A. Sustainable Claims
1. Comments
Many commenters and workshop panelists addressed whether the
Commission should revise the Guides to address sustainable claims.
Commenters disagreed on the meaning of sustainable and whether the term
could even be defined. Some argued the claim should be banned, while
others asserted it could be used properly in certain contexts. Others
observed that the term may be used to convey information about a
company's environmental philosophies, independent of specific product
claims.
Many commenters observed that the term ``sustainable'' has become
part of the national vernacular.\347\ GMA, for example, cited a study
finding that from September 2006 through December 2007, the use of the
term on Internet blogs increased more than 100 percent.\348\
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\347\ See, e.g., Eastman, Comment 533431-00051 at 1 (stating
that ``sustainable'' and ``green'' are the most ``significant new
additions'' to the vocabulary describing the environmental benefits
of products); Dow, Comment 533431-00010 at 9.
\348\ GMA, Green Packaging Workshop Tr. at 112; see also ACC,
Green Packaging Workshop Tr. at 241; Weyerhaeuser, Comment 533431-
00084 at 2.
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Several Packaging Workshop panelists noted that sustainable claims
may embrace such diverse issues as child labor, community relations,
economic development, and other non-environmental considerations.\349\
For example, the Sustainable Packaging Coalition's ``vision'' for
sustainable packaging includes the aspiration that the packaging
``benefits individuals and communities throughout its life
cycle.''\350\ Another commenter, the Center for Sustainable Innovation,
broadly defined sustainability as ``how an organization contributes, or
aims to contribute in the future, to the improvement or deterioration
of economic, environmental, and social conditions, developments, and
trends at the local, regional, or global level.''\351\
---------------------------------------------------------------------------
\349\ See, e.g., Dow, Comment 533431-00010 at 8; FPI, Comment
533431-00074 at 2; GMA, Green Packaging Workshop Presentation at
(http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf); International Paper, Comment 533431-00055 at 8.
\350\ Anne Johnson, The Sustainable Packaging Coalition
(``SPC''), Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/johnson.pdf). SPC
remarked that this definition is an ``aspirational vision'' rather
than a standard. This definition includes packaging that, among
other things, ``is sourced, manufactured, transported, and recycled
using renewable energy''; ``is made from renewable or recycled
source materials''; and ``is made from materials healthy in all
probable end of life scenarios.'' See SPC, Green Packaging Workshop
Tr. at 127, 131.
\351\ Center for Sustainable Innovation, Comment 534743-00003 at
2.
---------------------------------------------------------------------------
Several commenters asserted that there is no clear understanding of
the term, not just for the typical consumer, but among experts and
business managers.\352\ These commenters, however, disagreed regarding
whether the FTC should attempt to define the specific attributes of
sustainability. For example, some urged the FTC ``to avoid tackling the
onerous and possibly unachievable task of defining the specific
attributes of sustainability.''\353\ In contrast, others argued that
the Guides should address the term.\354\ The Environmental Packaging
Institute, for example, suggested that the term ``sustainable''
warrants the addition of a new section ``complete with guidance,
specific criteria, and examples.''\355\
---------------------------------------------------------------------------
\352\ EHS, Comment 534743-00011 at 1; EPI, Comment 533431-00063
at 4; GMA, Comment 533431-00045 at 9; Georgia-Pacific, Comment
533431-00007 at 8; GreenBlue, Comment 533431-00058 at 7; NAIMA,
Comment 536013-00017 at 12-13; Saint-Gobain, Comment 533431-00037 at
12.
\353\ NAIMA, Comment 536013-00017 at 12-13; Saint-Gobain,
Comment 533431-00037 at 12.
\354\ EPI, Comment 533431-00063 at 4; see also GMA, Comment
533431-00045 at 9 (``[T]he Guides should be updated to include a
discussion of `sustainable' claims and what constitutes a reasonable
basis for substantiating such claims.'').
\355\ EPI, Comment 533431-00063 at 4.
---------------------------------------------------------------------------
Because of the claim's expansiveness, several commenters likened
the term ``sustainable'' to general environmental benefit claims.\356\
Thus, some of these commenters recommended that the Guides caution that
the term ``sustainable'' be accompanied by language limiting its
environmental superiority claim to the particular attribute, or
attributes, that can be substantiated.\357\ Others suggested that
marketers making sustainable claims should demonstrate that all aspects
of a product's life cycle meet the criteria for sustainability.\358\
Some suggested that the FTC include new examples using the term
``sustainable'' in the general environmental benefit claim section of
the Guides to clarify which sustainability claims may be
deceptive.\359\
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\356\ See 16 C.F.R. Part 260.7(a); see also BSR, Comment 533431-
00016 at 1; P&G, Comment 533431-00070 at 2; SDA, Comment 534743-
00028 at 1; SPI, Comment 533431-00036 at 5; Seventh Generation,
Comment 533431-00033 at 5; Weyerhaeuser, Comment 533431-00086 at 1.
\357\ SDA, Comment 534743-00028 at 1-2; see also GMA, Comment
533431-00045 at 8-9 (recognizing complexity of measuring
sustainability, but arguing for allowing such claims when qualified
with a statement identifying environmental product attributes); ACC,
Comment 533431-00023 at 8-9; Dow, Comment 533431-00010 at 10;
Formaldehyde Council, Comment 533431-00047 at 5; Georgia-Pacific,
Comment 533431-00007 at 8; Hammer, Comment 533431-00017 at 9; P&G,
Comment 533431-00070 at 3; Seventh Generation, Comment 533431-00033
at 5; Vinyl Institute, Comment 533431-00046 at 3.
\358\ CSPA, Comment 533431-00049 at 3 (stating comparative
sustainability claims ``should have a clear basis for verification,
such as certified life cycle assessment''); Rachel Chadderdon and
Meghan Genovese, Comment 533431-00054 at 1 (arguing that, because no
product can be fully sustainable unless all aspects of its life
cycle meet the criteria for sustainability, marketers wishing to
make environmental sustainability claims ``must disclose exactly
which components of the production cycle are and are not
sustainable''); Stepan Company, Comment 533431-00011 at 2; Tandus,
Comment 536013-00037 at 1.
\359\ Eastman, Comment 533431-00051 at 1 (suggesting the Guides
define sustainability for marketing purposes and provide categories
of industry practices and product properties that support this
definition); GMA, Green Packaging Workshop Tr. at 143 (recommending
the Guides include examples on how to qualify sustainability claims
to ``put [them] in the proper context''); EPI, Green Packaging
Workshop Tr. at 210; GPI, Comment 534743-00026 at 10; USGBC, Comment
534743-00027 at 3.
---------------------------------------------------------------------------
On the other hand, some commenters argued that the term
``sustainable'' simply should not be used as a marketing claim.\360\
The Sustainable
[[Page 63582]]
Packaging Coalition (``SPC''), for example, stated that currently no
accepted criteria with supporting test methods exists to qualify a
package as sustainable.\361\ According to SPC, the term
``sustainable,'' like the terms ``green'' or ``environmentally
friendly,'' has no intrinsic meaning and confuses consumers, even if
marketers qualified it with text that describes the specific
attribute(s) that make their product sustainable.\362\
---------------------------------------------------------------------------
\360\ See EHS, Comment 534743-00011 at 1 (stating that
``sustainable'' should not appear as a product or package descriptor
because ``[t]he term is ill-defined and made up of several factors,
often specific to a particular product or manufacturer'');
GreenBlue, Comment 533431-00058 at 7 (``We recommend strengthening
the Guides to actively discourage companies from describing their
products as . . . `sustainable.'''); William Mankin, Comment 534743-
00020 at 1 (stating that the FTC should prohibit use of the term
``sustainable'' and any claims related to the sustainability of a
product in all on-product or off-product labels or claims); ILSR,
Green Packaging Workshop Tr. at 144.
\361\ SPC, Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/johnson.pdf).
\362\ Id. But see ACC, Comment 533431-00023 at 9 (asserting the
Guides should cover sustainability claims because they can be
appropriately qualified); AF&PA, Comment 533431-00083 at 3-4
(recommending the Guides allow use of ``sustainable,'' provided the
marketer transparently communicates a reasonable basis for the
claim; also noting that ISO is expecting to amend its current
prohibition of the term due to growing experience and new consumer
attitudes).
---------------------------------------------------------------------------
Some commenters noted that, because there are no definitive methods
for measuring sustainability or confirming its accomplishment, the
Green Guides should discourage statements claiming achievement of
sustainability but permit general references to sustainablity goals or
processes.\363\ ACC, for example, recommended that the Guides clarify
that ``claims of a product or process being `sustainable' are more
properly characterized as that [the] product or process promotes or
contributes to sustainability and/or sustainable outcomes, since
sustainability is a process or a goal.''\364\ Weyerhaeuser noted that
ISO 14021 prohibits claims of achieving sustainability, but that this
prohibition does not apply to marketer's statements about their
``sustainability goals, processes, or aspirations.''\365\
---------------------------------------------------------------------------
\363\ See, e.g., CRI, Comment 533431-00026 at 1 (recommending
the Guides distinguish between ``sustainability (zero net impact)
and environmental attributes (minimal net impact),'' which
contribute to sustainability); ACC, Comment 533431-00023 at 8;
Weyerhaeuser, Comment 533431-00084 at 5-6.
\364\ ACC, Comment 533431-00023 at 8 (emphasis in original).
\365\ Weyerhaeuser, Comment 533431-00084 at 5. ISO 5.5 states
that no claim of achieving sustainability shall be made because
there are no definitive methods for measuring sustainability or
confirming its accomplishment. ISO 14021 5.5:1999(E).
---------------------------------------------------------------------------
Other commenters argued that the term ``sustainable'' can be used
properly in specific contexts. The Sustainable Forestry Initiative
(``SFI''), for example, stated that, in forestry, ``sustainable'' is a
well-recognized concept that can be clearly and specifically
defined.\366\ SFI explained that it has a specific forest certification
standard, the ``SFI Standard,'' which defines ``sustainable forestry,''
sets forth performance measures and indicators, and confirms compliance
with a third-party certification audit. Thus, SFI proposed that the
Guides state that a forest certification label may properly claim
compliance with a specific forest certification standard and that a
third-party audit verifying conformance with the standard is adequate
substantiation.\367\
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\366\ SFI, Comment 534743-00010 at 3-4; see also AF&PA, Comment
534743-00031 at 2 (``A broad definition of sustainability may be
adopted by the FTC, but . . . specific sectors should be able to
develop focused definitions that meet the needs of that sector.'');
Weyerhaeuser, Comment 534743-00033 at 1 (stating that a claim of
``sustainable forestry'' in the context of a forest certification
system ``provides consumers with specific, factual information and
is not a broad claim'').
\367\ In support of its argument, SFI referenced the Canadian
Competition Bureau's analysis of ISO 140121, clause 5.5, ``which
prohibits general and undefined claims of sustainability, but
permits claims that a seller conforms to a specific forest
certification standard.'' Id. at 5.
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In contrast, commenter William Mankin argued that sustainable
claims should not be used in any particular context, including
forestry.\368\ In his view, it is difficult to attain sustainability in
forests because forests are complex ecological systems. Moreover, he
asserted that there is no widespread consensus on a definition of the
term ``sustainable,'' particularly in fields involving the management
of ecological systems and biological resources. He noted, for example,
that in the field of forest management, some believe the term applies
primarily to the ecological attributes of forests, while others believe
it pertains more to social and economic concerns outside forests.\369\
---------------------------------------------------------------------------
\368\ William Mankin, Comment 534743-00020 at 1; see also
Caroline Pufalt, Comment 534743-00021 at 1.
\369\ Id.
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Finally, some commenters observed that terms such as
``sustainable'' may be used independently from product claims to
communicate important information about a company or organization's
mission and vision. For example, GMA referenced the following example
of a company's statement about its environmental efforts: ``The General
Mills Sustainability Initiative is a company-wide effort to responsibly
manage the natural resource base our business depends on.''\370\ GMA
argued that this is a broad statement about corporate philosophy rather
than a claim made for specific products or services, and, therefore,
should be outside the scope of the Guides.\371\ In addition, USGBC
recommended that the FTC distinguish between ``statements . . . which
are used to convey broad organizational goals and should not require
substantiation, and product claims, which make assertions about
specific product attributes.''\372\
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\370\ GMA, Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf).
\371\ GMA, Comment 533431-00045 at 8 (citing as examples company
website sections on environmental activities and discussions of
activities in annual reports or other comparable communication
vehicles); see also EHS, Comment 534743-00011 (asserting that
companies should discuss their programs regarding sustainable
development in a ``full text document,'' such as their website or in
their ``corporate sustainability report''); Georgia-Pacific, Comment
533431-00007 at 8 (recommending that the FTC discourage the
unqualified use of ``sustainable'' for products and reserve it for
``providing information about a company's [environmental] indicators
and overall improvement on those indicators in time''); PCPC,
Comment 533431-00075 at 6 (recommending that the FTC maintain the
Guides' focus on products, packages, and services, not ``general
company practices''); SPI, Comment 533431-00036 at 4 (stating that
businesses should be able to explain commitments and activities
intended to advance ``sustainability'').
\372\ USGBC, Comment 534743-00027 at 3.
---------------------------------------------------------------------------
2. Consumer Perception Evidence
Commenters submitted limited consumer perception evidence regarding
sustainable claims. Weyerhaeuser cited findings from its 2006 focus
groups in four U.S. cities indicating that consumers were unable to
define the term.\373\ Similarly, the National Cotton Council of America
(``National Cotton Council'') described its own 2006 research, which
found that only one third of consumers understand the term
``sustainable'' in the context of ``sustainable agriculture.''\374\ It
also cited a 2007 study by the Hartman Group finding that just over
half of consumers claim any familiarity with the term
``sustainability,'' and most cannot define it ``appropriately'' upon
probing.\375\ The National Cotton Council also provided the Commission
with findings from a 2008 study indicating that 43 percent of
respondents believed the term ``sustainable'' means ``will last longer/
good quality.''\376\
---------------------------------------------------------------------------
\373\ Weyerhaeuser, Comment 533431-00086 at 1.
\374\ National Cotton Council (``NCC''), Comment 536013-00027 at
4. This study is available at (http://www.ftc.gov/green). The NCC
considered the following responses to be correct interpretations of
``sustainable'': ``minimum impact on environment'' and ``reuse or
replenish land, use in future, doesn't deplete.'' E-mail from Cotton
Incorporated (Mar. 11, 2010).
\375\ NCC, Comment 536013-00027 at 52. The commenter did not
indicate what the Hartman Group considers the ``appropriate''
meaning of sustainable.
\376\ Cotton Incorporated, Lifestyle Monitor Survey, July 2008,
available at (http://www.ftc.gov/green).
---------------------------------------------------------------------------
These results are consistent with the Commission's consumer
perception
[[Page 63583]]
study. Specifically, in response to an open-ended question about the
meaning of the term ``sustainable,'' some respondents stated the term
means nothing (13 percent) or that they do not know what the term means
(eight percent). Many others stated that it suggests a product is
``strong/durable'' (19 percent) or long-lasting (16 percent).
Relatively few respondents indicated that the term ``sustainable'' was
related to any particular environmental benefit,\377\ and only seven
percent stated that the term suggested a product is ``good for,''
``helps,'' or ``benefits'' the environment.\378\
---------------------------------------------------------------------------
\377\ Although 25 percent of respondents cited a specific
environmental benefit, these responses were distributed over ten
different environmental benefits (e.g., ``made from recycled
materials''; ``recyclable''; ``made with renewable materials'';
``made from sustainable resources'').
\378\ In contrast, 27 percent of respondents viewing ``green,''
and 15 percent of respondents viewing ``eco-friendly,'' believed
those claims suggested the product is ``good for/helps/benefits the
environment.''
---------------------------------------------------------------------------
In addition, responses to the closed-ended questions suggested that
respondents did not view ``sustainable'' in the same way as a general
environmental benefit claim. Specifically, respondents were less likely
to believe that unqualified sustainable claims suggested specific,
unstated environmental benefits than respondents who viewed ``green''
and ``eco-friendly'' claims. For example, while, on average, 52 percent
of respondents viewing unqualified ``green'' claims, and 49 percent of
respondents viewing ``eco-friendly'' claims, stated that these claims
suggested that the product had several specific environmental
attributes, only 17 percent of respondents viewing ``sustainable''
claims stated the product had these attributes.\379\ Moreover, while
qualifying general environmental claims with a specific environmental
attribute made respondents less likely to believe those claims
suggested other, unstated environmental attributes, qualifying a
``sustainable'' claim did not have the same effect. Sixteen percent of
respondents viewing an unqualified ``sustainable'' claim saw unstated
environmental attributes, compared to 24 percent of respondents who saw
such attributes when the claim was qualified with a specific
environmental attribute.
---------------------------------------------------------------------------
\379\ These results were similar for all three tested products -
kitchen flooring, laundry basket, and wrapping paper.
---------------------------------------------------------------------------
3. Analysis
While marketers making sustainable claims may intend to convey that
a product has general and/or specific environmental benefits, the
consumer perception evidence indicates that the claim has no single
environmental meaning to a significant number of consumers or that it
conveys non-environmental characteristics (e.g., durable or long-
lasting).\380\ In addition, the evidence indicates that consumers view
sustainable claims differently than general environmental benefit
claims.\381\
---------------------------------------------------------------------------
\380\ Section 5 of the FTC Act does not require that an
advertiser have intended to convey a deceptive claim. See Chrysler
Corp. v. FTC, 561 F.2d 357, 363 and n.5 (D.C. Cir. 1977); Regina
Corp. v. FTC, 322 F.2d 765, 768 (3d Cir. 1963). Therefore, if, in
the particular context in which it is presented, a sustainable claim
implies to consumers that the product has non-environmental
characteristics, marketers must substantiate this implied claim.
\381\ Unlike the other tested claims, the term ``sustainable,''
on its face, did not suggest that the advertised product had
environmental attributes.
---------------------------------------------------------------------------
The Commission, however, is unable to provide specific advice on
sustainable as an environmental marketing claim. Unlike other claims we
tested, the term contains no cue alerting consumers that it refers to
the environment. If used in combination with environmental terms and
images, consumers may perceive ``sustainable'' as an environmental
claim. However, given the diversity of possible phrases and imagery,
testing the claim in context was not practical. Therefore, the
Commission lacks a sufficient basis to provide meaningful guidance on
the use of sustainable as an environmental marketing term. Marketers,
however, are responsible for substantiating consumers' understanding of
this claim in the context of their advertisements.
Some commenters noted that, to the extent the term ``sustainable''
is used to communicate information about a company's environmental
philosophy, such statements should be outside the scope of the Guides.
Corporate image advertising raises First Amendment issues. The degree
of constitutional protection provided to corporate image advertising is
determined by the category of speech into which that expression falls.
Therefore, as with all types of claims, the Commission evaluates each
advertisement to determine whether it constitutes commercial speech.
There is no clear standard for determining whether speech with elements
of both commercial and non-commercial speech will be considered
commercial, as opposed to non-commercial speech. Rather, the Supreme
Court has assessed the totality of circumstances surrounding the
expression to determine its character, including the content of the
speech, whether the speaker's motivation is economic, the audience to
whom and the manner in which the speech is directed, and whether its
commercial and non-commercial component parts are inextricably
intertwined.\382\ Because the determination of an advertisement's
constitutional status must be conducted on a case-by-case basis, the
issue is not appropriate for general guidance.
---------------------------------------------------------------------------
\382\ See generally Riley v. Nat'l Fed'n of the Blind, 487 U.S.
781, 795-96 (1988); Bolger v. Youngs Drug Prod. Corp., 463 U.S. 60,
67 n.14 (1983).
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B. Organic and Natural Claims
The current Guides do not specifically address claims that
products, packages, or services are organic or natural. Several
commenters discussed these claims and recommended that the Commission
provide guidance regarding their use.\383\ Below, the Commission
discusses other federal agencies' guidance concerning the terms
``organic'' and ``natural,'' summarizes the relevant comments, and
analyzes the issues.
---------------------------------------------------------------------------
\383\ EPA-EPPP, Comment 533431-00038 at 1, 5; SDA, Comment
533431-00020 at 3; Seventh Generation, Comment 533431-00033 at 3, 5;
Terressentials, Comment 534743-00012 at 1-2.
---------------------------------------------------------------------------
1. Overview - Guidance from Other Agencies
Other government agencies have provided guidance on the appropriate
scope of organic and, to a lesser extent, natural claims.
a. Organic Claims
The USDA's National Organic Program (``NOP'') regulates the term
``organic'' for agricultural products.\384\ Agricultural products that
are sold, labeled, or represented as ``100 percent organic,''
``organic,'' or ``made with organic ingredients'' must be produced and
processed in accordance with NOP standards.\385\ Under these standards,
organic agricultural products must be produced and handled without
using prohibited methods or synthetic substances, except as
specifically authorized on the National List of Allowed and Prohibited
Substances.\386\ Operators who produce or handle such products must be
certified by an NOP-accredited agent.\387\ Products that qualify as
``100 percent organic'' or ``organic'' may use the USDA's organic seal
on their packaging and in their advertisements.\388\
---------------------------------------------------------------------------
\384\ See 7 CFR Part 205.
\385\ See 7 CFR 301.
\386\ See 7 CFR 205.105; 205.601-606.
\387\ See 7 CFR 205.100.
\388\ See 7 CFR 205.311.
---------------------------------------------------------------------------
The USDA does not regulate organic claims for non-agricultural
products. No other federal agencies provide specific guidance regarding
organic claims for non-agricultural products.
[[Page 63584]]
b. Natural Claims
To the extent that federal agencies have defined, or administered
statutes defining, ``natural,'' they have done so only in specific
contexts. For example, the Textile Products Identification Act, which
is administered by the Commission, defines ``natural fiber'' as ``any
fiber that exists as such in the natural state.'' 15 U.S.C. Sec.
70(c). The USDA has defined ``natural'' meat and poultry as ``a product
containing no artificial ingredient or added color'' and which ``is
only minimally processed.''\389\ The FDA has defined ``natural flavor
or natural flavorings'' as substances containing the flavoring
constituents derived from specified items, such as spices, fruits,
vegetables, herbs, plant materials, meat, seafood, and eggs.\390\ At
least in part because of the difficulties in developing a definition of
``natural'' that would be appropriate in multiple contexts, both the
FDA and the FTC have previously declined to establish a general
definition.\391\
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\389\ USDA Food Safety and Inspection Service, Fact Sheet, Meat
and Poultry Labeling Terms, available at (http://www.fsis.usda.gov/Fact_Sheets/). The fact sheet further notes that the ``label must
explain the use of the term `natural' (such as - no added colorings
or artificial ingredients; minimally processed).''
\390\ 21 CFR 101.22.
\391\ See 58 FR 2407 (Jan. 6, 1993) (FDA declines to undertake
rulemaking to define ``natural''); 48 FR 23270 (May 24, 1983) (FTC
terminates rulemaking that would have regulated natural food
claims).
---------------------------------------------------------------------------
The FDA, however, has employed an informal policy regarding the
term ``natural.''
Specifically, it:
has considered ``natural'' to mean that nothing artificial or
synthetic (including colors regardless of source) is included in, or
has been added to, the product that would not normally be expected to
be there. For example, the addition of beet juice to lemonade to make
it pink would preclude the product being called ``natural.'' \392\
\392\ 56 FR 60466 (Nov. 27, 1991).
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2. Comments
Several commenters stated that marketers increasingly employ
organic and natural claims and recommended that the Commission provide
guidance regarding their use.\393\ Most commenters focused on the use
of these terms to describe textiles.\394\
---------------------------------------------------------------------------
\393\ EPA-EPPP, Comment 533431-00038 at 1, 5; SDA, Comment
533431-00020 at 3; Seventh Generation, Comment 533431-00033 at 3, 5;
Terressentials, Comment 534743-00012 at 1-2.
\394\ In addition to textiles, one commenter asserted that many
organic claims for personal care products may be misleading.
Terressentials, Comment 534743-00012 at 1. That commenter stated
that the USDA has issued a policy statement permitting companies
selling personal care products to apply for organic certification
under the NOP, but many companies are making organic claims for
personal care products without obtaining certification. Id. The
commenter argued that many consumers mistakenly believe that such
products comply with NOP standards. Id. On March 12, 2010, Consumers
Union and the Organic Consumers Association filed a petition raising
this concern and asking the Commission to investigate the use of
organic claims for personal care products. The Commission has placed
the petition on the record.
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a. Organic Claims
Several commenters recommended that the Commission provide guidance
for organically labeled textiles.\395\ Some suggested that the
Commission consult with the NOP to clarify guidance for organic claims
for textiles.\396\ Many of these commenters also recommended that the
Guides adopt NOP's production standards for organic raw fibers.\397\
Other commenters suggested that marketers of products that contain any
organic fiber should be able to make claims about the amount of organic
fiber, as long as the organic content has been certified by a third
party.\398\
---------------------------------------------------------------------------
\395\ Better for Babies, Comment 536013-00033 at 1; ECOnscious,
Comment 536013-00023 at 1-2; International Sleep Products
Association (``ISPA''), Comment 536013-00015 at 1; OMI, Comment
536013-00022 at 2-3; Organic Exchange, Comment 536013-00032 at 3-4;
Organic Trade Association (``OTA''), Comment 536013-00016 at 1.
\396\ Better for Babies, Comment 536013-00033 at 1-2;
ECOnscious, Comment 536013-00023 at 2; OTA, Comment 536013-00016 at
2.
\397\ Better for Babies, Comment 536013-00033 at 1-2;
ECOnscious, Comment 536013-00023 at 1; OTA, Comment 536013-00016 at
1; Harmony Susalla (``Susalla''), Comment 536013-00028 at 1.
\398\ Organic Exchange, Comment 536013-00032 at 3; Texas Organic
Cotton Marketing Cooperative (``TOCMC''), Comment 536013-00014 at 2.
---------------------------------------------------------------------------
Commenters noted that consumers may understand organic claims to
refer to the manufacturing of the textile and not just its fabric
content.\399\ The commenters differed, however, in their views
regarding how to address this issue. Several recommended that the
Guides reference the Global Organic Textile Standard (``GOTS'') for the
processing and manufacturing of organic textile products.\400\ One
commenter noted, however, that GOTS is a ``process review standard''
that ``leaves too many opportunities for mistakes and fraud within the
dyeing and finishing process for textiles.''\401\ That commenter stated
there is a need for analytical verification to determine the presence
of various chemicals in textile products.\402\ Another commenter
recommended that marketers disclose a complete list of ingredients when
they make organic claims.\403\
---------------------------------------------------------------------------
\399\ See, e.g., OTA, Comment 536013-00016 at 2. The NOP
standards apply only to the raw fibers; they do not cover the
processing and manufacturing of textile products.
\400\ Better for Babies, Comment 536013-00033 at 2; ECOnscious,
Comment 536013-00023 at 2; OMI, Comment 536013-00022 at 4; OTA,
Comment 536013-00016 at 4; Susalla, Comment 536013-00028 at 1-2;
TOCMC, Comment 536013-00014 at 2. One commenter recommended that the
Guides consider GOTS, as well as other processing standards such as
Oeko-Tex and Bluesign. Organic Exchange, Comment 536013-00032 at 4.
That commenter asserted that third-party organic certification
should be recognized as substantiation for an organic claim. Id.
Another commenter, however, expressed concern that references to the
Oeko-Tex certification process may be misleading if the marketer
does not disclose which Oeko-Tex certification process it is using.
Susalla, Comment 536013-00028 at 2.
\401\ Oeko-Tex, Comment 536013-00013 at 4.
\402\ Id.
\403\ OMI, Comment 536013-00022 at 2.
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Several commenters discussed whether marketers should be permitted
to claim that fibers are ``transitional organic'' fibers. The USDA
requires that to be certified as organic, fibers must be grown without
chemical fertilizers, defoliants, or pesticides for three years. The
term ``transitional organic'' refers to fiber grown according to these
guidelines that has not yet met the three-year requirement. One
commenter noted that some retailers are selling products containing
``transitional cotton,'' despite the fact that USDA does not recognize
that term.\404\ Other commenters recommended that the Guides permit
marketers to make ``transitional organic'' claims ``to enable the
organic fiber marketplace to grow while supporting the farmer during
the three-year transition period.''\405\
---------------------------------------------------------------------------
\404\ NCC, Comment 536013-00027 at 2.
\405\ Organic Exchange, Comment 536013-00032 at 4; TOCMC,
Comment 536013-00014 at 2. The Organic Exchange noted that the proof
for a transitional claim would be that the farm has applied for
organic certification, an initial on-site inspection has been
conducted, and the farm has an organic system plan which includes
the last date of use of prohibited substances. Organic Exchange,
Comment 536013-00032 at 4.
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One commenter indicated that numerous retailers appear to be
marketing products made with conventional cotton as organic.\406\ That
commenter also reported that retailers are making claims that products
are certified organic but are not providing information about the
certification.\407\ The commenter stated that research indicates
consumers are confused about the meaning of organic claims and do not
trust that products labeled as organic are, in fact, organic.\408\
---------------------------------------------------------------------------
\406\ NCC, Comment 536013-00027 at 3.
\407\ Id. The NOP regulations require that the products labeled
as ``100 percent organic'' or ``organic'' must identify the agent
that certified the products as organic. 7 CFR 205.303.
\408\ Id. at 4.
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b. Natural Claims
Several commenters stated that the term ``natural'' does not have a
clear
[[Page 63585]]
meaning.\409\ One commenter explained that natural claims for textiles
are unclear because the products have ``undergone significant
transformation from the raw materials'' they contain.\410\ Another
asserted that the term is meaningless and is used to exaggerate the
environmental benefits of a product.\411\ One commenter, however,
stated that consumers may understand the term given the context in
which it is used.\412\
---------------------------------------------------------------------------
\409\ ECOnscious, Comment 536013-00023 at 1; OTA, Comment
536013-00016 at 2; Oeko-Tex, Comment 536013-00013 at 5; Susalla,
Comment 536013-00028 at 1.
\410\ OTA, Comment 536013-00016 at 2 (stating also that the term
``natural'' ``has only rarely been used as a term of art . . . by
any U.S. regulatory agency'').
\411\ Susalla, Comment 536013-00028 at 1.
\412\ Tetra Pak, Comment 536013-00012 at 3. The commenter
provided an example of the use of natural in context. It stated that
claiming a product is ``made from trees, a natural and renewable
resource,'' would not be deceptive if the product is made entirely
using that material.
---------------------------------------------------------------------------
The commenters discussed whether the Guides should address the term
``natural.'' Several recommended generally that the Guides address or
define the term, but did not specify how the Guides should do so.\413\
Some commenters suggested that natural may be appropriately used to
distinguish between textiles derived from agricultural products and
those derived from petrochemicals.\414\ Another commenter recommended
that the Guides advise marketers to substantiate natural claims with
third-party verification or independent testing.\415\
---------------------------------------------------------------------------
\413\ ISPA, Comment 536013-00015 at 1 (proposing that the
Commission establish objective criteria regarding when natural may
be used as well as documentation required to substantiate the
claim); SDA, Comment 536013-00018 at 1 (stating that natural claims
for all products should be specific and verifiable); Susalla,
Comment 536013-00028 at 1; Tandus, Comment 536013-00037 at 1; Tetra
Pak, Comment 536013-00012 at 3.
\414\ Better for Babies, Comment 536013-00033 at 2; NCC, Comment
536013-00027 at 2; OTA, Comment 536013-00016 at 2.
\415\ TOCMC, Comment 536013-00014 at 1; see also OMI, Comment
536013-00022 at 3 (stating that if the Commission decides to address
natural claims, a clear definition is required); Oeko-Tex, Comment
536013-00013 at 5 (stating that marketers should substantiate
natural claims with specific, science-based definitions); Susalla,
Comment 536013-00028 at 1 (stating that the Cotton Incorporated
``green'' message is deceptive because although U.S. cotton is grown
on less land and with fewer chemicals, this is not the case with
farms around the world).
---------------------------------------------------------------------------
Others recommended that the Guides not allow the use of the term.
For example, one commenter stated that because the term lacks a clear
meaning in the textile sector, the Commission should not allow
marketers to use it.\416\ Another suggested that the Guides not allow
natural claims even for fibers grown agriculturally because agriculture
can have a negative impact on the environment, such as water and air
pollution and soil erosion.\417\
---------------------------------------------------------------------------
\416\ ECOnscious, Comment 536013-00023 at 1.
\417\ Todd Copeland, Patagonia, Comment 536013-00011 at 1; see
also REI, Comment 536013-00031 at 1 (stating that the Commission
should be mindful that agriculture can have a significant impact on
the environment).
---------------------------------------------------------------------------
3. Consumer Perception Evidence
Only one commenter, the National Cotton Council, cited consumer
perception evidence regarding organic claims. It asserted that its
research indicates that consumers are confused about these claims, with
more than two-thirds of respondents either believing, or not sure, if
organic cotton textiles were made from recycled materials or contain
soy.\418\ The research also indicated that consumers do not trust that
products labeled as organic are, in fact, organic.\419\
---------------------------------------------------------------------------
\418\ NCC Comment 536013-00027 at 4 (citing 2003 and 2006
studies conducted jointly with the OTA).
\419\ Id.
---------------------------------------------------------------------------
No commenters provided consumer perception evidence indicating how
consumers understand the term ``natural.''
4. Analysis
The Commission does not propose creating a new section of the
Guides to address organic and natural claims. The explanation for this
decision is discussed below separately for each claim.
Although the Commission is not proposing a new section for these
claims, the general principles set forth in the Guides still apply.
Marketers must have substantiation for their environmental benefit
claims, including implied claims.\420\ More specifically, to the extent
that reasonable consumers perceive organic or natural claims as general
environmental benefit claims or comparative claims, the marketer must
be able to substantiate those claims and all other reasonably implied
claims, as described in Part V.A.4 above.\421\
---------------------------------------------------------------------------
\420\ 16 CFR 260.5.
\421\ 16 CFR 260.6(d), 260.7(a).
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a. Organic Claims
The Commission does not propose addressing organic claims for two
reasons. First, the NOP already addresses organic claims for
agricultural products. Second, for products that are outside the NOP's
jurisdiction, the current record is insufficient for the Commission to
provide specific guidance.
i. Organic Claims for Agricultural Products
As described above, the NOP provides a comprehensive regulatory
framework governing organic claims for agricultural products. Because
of this framework and the NOP's ongoing work in this area, the
Commission does not want to propose duplicative or possibly
inconsistent advice. Therefore, the Commission declines to address
organic claims covered by NOP standards in the Guides.\422\
---------------------------------------------------------------------------
\422\ Although some commenters recommended that the Guides
endorse ``transitional organic'' claims for fibers, it is unlikely
consumers would understand the meaning of this term and the issue is
more appropriately addressed by the NOP.
---------------------------------------------------------------------------
For the same reason, the Commission does not propose addressing
standards for processing organic textiles. The USDA has indicated that
organic claims for finished textile products fall within its
jurisdiction. Following the Commission's Green Building and Textiles
Workshop, the NOP released a new fact sheet, ``Labeling of Textiles
Under National Organic Program (NOP) Regulations,'' which discussed
organic claims regarding textiles.\423\ Therefore, rather than
proposing duplicative or potentially inconsistent advice, Commission
staff will continue to consult with NOP staff to ensure that marketers
have sufficient guidance regarding organic claims for textile products.
---------------------------------------------------------------------------
\423\ USDA Labeling of Textiles Under National Organic Program
(NOP) Regulations Fact Sheet, July 2008, available at (http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=
STELPRDC5070818&acct=nopgeninfo).
---------------------------------------------------------------------------
ii. Organic Claims for Non-agricultural Products
Although the NOP's regulatory framework governs organic claims for
agricultural products, it does not apply to organic claims for non-
agricultural products. Therefore, within a particular category (e.g.,
cosmetics), some products are covered by NOP standards and other
products are not, depending on their ingredients.\424\ Yet, both
products could be advertised as organic. It is unclear how consumers
understand organic
[[Page 63586]]
claims that describe non-agricultural products, and how marketers of
those products substantiate their claims.
---------------------------------------------------------------------------
\424\ Cosmetics, body care products, and personal care products
illustrate this difference. The USDA has stated that if these
products contain agricultural ingredients and can satisfy NOP
organic production, handling, processing, and labeling standards,
they are eligible for certification under NOP regulations. However,
the USDA has stated that it does not have authority over the
production and labeling of such products if they do not contain
agricultural ingredients or do not make any claim that they meet
USDA organic standards. USDA Cosmetics, Body Care Products and
Personal Care Products Fact Sheet, April 2008, available at (http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5068442&acct=
nopgeninfo).
---------------------------------------------------------------------------
No commenters submitted consumer perception evidence on this issue.
The Commission, therefore, lacks a basis to provide guidance on the use
of organic claims for products outside NOP's jurisdiction. Accordingly,
the Commission requests comment on what guidance, if any, it should
provide regarding the use of organic claims to describe non-
agricultural products.
b. Natural Claims
The Commission also does not propose addressing natural claims. As
discussed above, the role of the Guides is to prevent consumer
deception, so definitions for terms such as natural must be based on
what consumers understand those terms to mean. However, no commenters
provided consumer perception evidence indicating how consumers
understand the term ``natural.'' In addition, natural may be used in
numerous contexts and may convey different meanings depending on that
context.\425\ Thus, the Commission does not have a basis to provide
general guidance on the use of the term.
---------------------------------------------------------------------------
\425\ As noted above, the FTC and the FDA have previously
declined to adopt a wide-ranging, formal definition of ``natural.''
---------------------------------------------------------------------------
Some commenters recommended that the Guides prohibit the use of
natural claims. In evaluating whether a representation is misleading,
the Commission examines not only the claim itself, but the net
impression of the entire advertisement.\426\ Thus, in order to state
that marketers should never use the term ``natural,'' the Commission
would have to conclude that the use of the term is deceptive in every
context and that no reasonable qualification is sufficient to prevent
that deception. In the absence of evidence demonstrating that natural
is always deceptive and that its use could not be qualified to avoid
such deception, the Commission cannot prohibit marketers from using the
term. Moreover, as noted above, several agencies, including the FTC,
the FDA, and the USDA, acknowledge that natural may be an appropriate
descriptor in some contexts.\427\
---------------------------------------------------------------------------
\426\ Deception Policy Statement, 103 F.T.C. at 179 (when
evaluating representations under a deception analysis, one looks at
the complete advertisement and formulates opinions ``on the basis of
the net general impression conveyed by them and not on isolated
excerpts''). Depending on the specific circumstances, qualifying
disclosures may or may not cure otherwise deceptive messages. Id. at
180-81.
\427\ See Part VI.B.1.b, supra.
---------------------------------------------------------------------------
Marketers that are using terms such as natural must ensure that
they can substantiate whatever claims they are conveying to reasonable
consumers. If reasonable consumers could interpret a natural claim as
representing that a product contains no artificial ingredients, then
the marketer must be able to substantiate that fact. Similarly, if, in
a given context, a natural claim is perceived by reasonable consumers
as a general environmental benefit claim or as a comparative claim
(e.g., that the product is superior to a product with synthetic
ingredients), then the marketer must be able to substantiate that claim
and all attendant reasonably implied claims.\428\
---------------------------------------------------------------------------
\428\ See Part V.A.4, supra.
---------------------------------------------------------------------------
C. Renewable Materials Claims
Although the Commission solicited comments on whether the Guides
should be revised generally to include renewable claims, the vast
majority of commenters addressed this term in the context of
``renewable materials''\429\ or ``renewable energy.''\430\ Therefore,
the Commission has focused on these two types of renewable claims. This
part discusses comments, relevant consumer perception evidence, and the
Commission's proposed guidance for renewable materials claims. Part
VI.D, below, addresses renewable energy claims.
---------------------------------------------------------------------------
\429\ Although commenters also referred to ``renewable
resources,'' the Commission uses the term ``materials'' for
consistency.
\430\ According to the FTC Staff Internet Surf, among
renewability claims, the phrases ``renewable energy'' and
``renewable resource'' occurred most frequently. ``Renewable
energy'' occurred in 46 percent of the 387 web pages containing
renewable claims, and ``renewable resource'' occurred in 37 percent.
---------------------------------------------------------------------------
1. Comments
Comments addressed the following issues: (1) use of an unqualified
renewable claim; (2) the elements of a renewable materials claim,
including the time frame under which material must be renewed; (3) the
quantity of renewable materials in a product or package marked ``made
with renewable materials''; (4) the specific substantiation for a
renewable materials claim; and (5) consumer confusion between renewable
materials claims and biodegradability.
a. Unqualified Renewable Claims
Two commenters recommended that the Guides clarify that ``the
characteristic of `renewable' must be ascribed to a material or fuel,''
and not to the product or package itself.\431\ According to these
commenters, ``it is not proper to ask if [a product] is renewable but
rather if the material composing it in a majority by weight is
renewable.''\432\ A third commenter asserted that a product labeled
with an unqualified renewable claim is deceptive because it does not
provide consumers with information that can be used to evaluate the
claim.\433\
---------------------------------------------------------------------------
\431\ FBA, Comment 533431-00015 at 4; Georgia-Pacific, Comment
533431-00007 at 8.
\432\ Id.
\433\ ACC, Comment 533431-00023 at 11 (suggesting that a product
labeled, for example, ``uses 20% renewable feedstock'' would not be
deceptive).
---------------------------------------------------------------------------
b. Elements of Renewable Materials Claims
Most commenters did not offer evidence or views on how consumers
perceive renewable materials claims.\434\ Rather, they suggested
definitions for the term. For example, two commenters defined renewable
materials as materials having ``the capacity of being regenerated
either through natural processes or with human assistance, for example,
through replanting with nursery seedlings or natural reseeding.''\435\
Another stated that renewable materials are ``capable of being replaced
by natural ecological cycles or sound management practices.''\436\
---------------------------------------------------------------------------
\434\ In fact, only one commenter, the National Cotton Council,
cited consumer perception evidence. NCC, Comment 536013-00027 at 4;
See Part VI.C.2, infra.
\435\ AF&PA, Comment 533431-00083 at 4; see also FBA, Comment
533431-00015 at 4.
\436\ NCC, Comment 536013-00027 at 1.
---------------------------------------------------------------------------
Commenters, however, argued that there is an ongoing debate
regarding the definition of ``renewable'' and strongly urged the
Commission to ``approach renewability broadly and recognize that there
is no consensus on what should be treated as a renewable
resource.''\437\ Moreover, although some commenters observed that
renewable materials include biobased products,\438\ one commenter
remarked that defining renewable materials to include only
agriculturally based materials is too limiting.\439\ According to this
commenter, although not agriculturally based, sand is a renewable
resource because deposits are increased daily ``by the normal, ongoing
geological processes that generate new deposits of sand in the hundreds
of millions of tons each year.''\440\
---------------------------------------------------------------------------
\437\ NAIMA, Comment 536013-00017 at 14; Saint-Gobain, Comment
533431-00037 at 13.
\438\ See, e.g., Dow, Comment 533431-00010 at 15; GreenBlue,
Comment 533431-00058 at 7.
\439\ NAIMA, Comment 536013-00017 at 14.
\440\ Id.; see also FBA, Comment 533431-00015 at 4; Georgia-
Pacific, Comment 533431-00007 at 8.
---------------------------------------------------------------------------
Another commenter provided a more detailed definition. According to
this
[[Page 63587]]
commenter, a material is renewable if: (1) the rate of the material's
replenishment matches the rate of consumption; (2) the sourcing of the
material does not harm the ecosystem or negatively impact
``sustainability''; (3) sourcing of the material reduces consumption of
non-renewable resources; and (4) use of the renewable material does not
``significantly increase the product's environmental footprint in other
relevant indicators (e.g., water, waste, energy, etc.).''\441\ Along
these lines, other commenters stated that renewability claims may
deceive consumers if the beneficial attributes associated with the
renewable materials do not account for every environmental trade-off,
after analyzing the entire life cycle of the source.\442\
---------------------------------------------------------------------------
\441\ P&G, Comment 533431-00070 at 3. This commenter's remarks
also applied to renewable energy.
\442\ Seventh Generation, Comment 533431-00033 at 5 (stating the
attribute should cover the entire life cycle of the source so as to
account for any trade-off); SDA, Comment 533431-00020 at 4.
---------------------------------------------------------------------------
Other commenters suggested that renewable materials claims may
convey some broader environmental benefit.\443\ In particular, one
commenter cautioned that advertisers should be careful not to equate
such claims with an overall environmental benefit, observing, for
example, that although ethanol may be renewable, its overall
environmental benefit is debated because of ``the large amount of
energy needed to create it (and the carbon emissions that its creation
entails).''\444\
---------------------------------------------------------------------------
\443\ SPI, Comment 533431-00036 at 6.
\444\ Hammer, Comment 533431-00017 at 9.
---------------------------------------------------------------------------
In contrast, another commenter stated that consumers understand
renewability to refer to only one attribute (i.e., the biological
properties of a material) and do not interpret renewability claims to
imply that ``there are no other environmental issues.''\445\ Thus, this
commenter urged the FTC not to expand renewability ``beyond a simple
biological claim.''\446\
---------------------------------------------------------------------------
\445\ Weyerhaeuser, Comment 533431-00084 at 6.
\446\ Id.
---------------------------------------------------------------------------
Some commenters specifically addressed whether and how the Guides
should address time frames for renewability. One commenter, for
example, suggested that the Guides provide that the time frame within
which a resource is renewed is ``commensurate with the rate of its use
and that the appropriate management practices are used to ensure a
material's renewability.''\447\ This commenter explained that the term
``begs the question `On what time scale?' The argument can be made that
everything is renewable in geologic time or that products are renewable
if fossilization is included in the life cycle.''\448\ Others similarly
asked the FTC to provide specific time frames for renewability.\449\
---------------------------------------------------------------------------
\447\ GreenBlue, Comment 533431-00058 at 7.
\448\ Id.
\449\ CRI, Comment 533431-00026 at 2 (stating that the FTC
should define applicable time frames but not recommending specific
time frames); Georgia-Pacific, Comment 533431-00007 at 4 (same);
Tandus, Comment 536013-00037 at 1 (suggesting, as an example, a 10-
year time frame).
---------------------------------------------------------------------------
c. Quantity of Renewable Materials
Several commenters addressed the question of how much of a product
should be renewable for a marketer to make an unqualified ``made with
renewable materials'' claim. Some recommended that the FTC use its
current guidance on recyclability and recycled content as a model,
i.e., a renewable claim could be made only if an entire product or
package, excluding minor incidental components, is made of renewable
materials.\450\ Otherwise, the marketer should qualify the renewability
claim by stating the percentage of renewable materials.
---------------------------------------------------------------------------
\450\ ACC, Comment 533431-00023 at 11; see also SPI, Comment
533431-00036 at 6 (recommending that the FTC address situations
where less than 100 percent of contents are ``renewable''; could
take approach similar to guidance on products containing less than
100 percent recycled content); Stepan Company, Comment 533431-00011
at 3.
---------------------------------------------------------------------------
Other commenters presented slightly differing views. The
Biodegradable Products Institute (``BPI,'') for example, recommended a
more specific cut-off, asserting that marketers make unqualified ``made
with renewable materials'' claims only for products that have greater
than 95 percent non-petroleum resources.\451\ In contrast, two
commenters argued that marketers should be able to make an unqualified
claim if a ``majority'' of the product consists of renewable
materials.\452\
---------------------------------------------------------------------------
\451\ Steve Mojo, Biodegradable Products Institute (``BPI''),
Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/mojo.pdf) (recommending that
products containing less than 95 percent renewable content should
state that percentage).
\452\ FBA, Comment 533431-00015 at 4; Georgia-Pacific, Comment
533431-00007 at 6, 8.
---------------------------------------------------------------------------
In addition to recommending a threshold for an unqualified claim,
some commenters suggested that marketers' promotional materials should
provide specific information about the renewable material, such as the
exact percentage of renewable materials in a product\453\ or the source
of specific raw materials used.\454\
---------------------------------------------------------------------------
\453\ ACC, Comment 533431-00023 at 11; see also Hammer, Comment
533431-00017 at 8 (stating marketers should specify the percentage
of the total product that is renewable).
\454\ SPI, Comment 533431-00036 at 6.
---------------------------------------------------------------------------
d. Substantiating Renewable Materials Claims
Some commenters suggested that the Guides specifically address the
procedures needed to substantiate renewable and biobased claims. For
example, one commenter suggested that the Guides recommend either self-
certification with publicly available documentation using EPA
definitions or a third-party certification.\455\ Others opined that the
Green Guides specify the methods used to determine biocontent.\456\ For
example, some commenters suggested ASTM D 6866\457\ could be used to
accurately determine the percentage of the product that comes from
renewable resources.\458\
---------------------------------------------------------------------------
\455\ CRI, Comment 533431-00026 at 2.
\456\ BPI, Green Packaging Workshop Tr. at 90-91; Georgia-
Pacific, Comment 533431-00007 at 8; ILSR, Green Packaging Workshop
Tr. at 136-138; Stepan Company, Comment 533431-00011 at 2.
\457\ ASTM D 6866 ``Standard Test Methods for Determining the
Biobased Content of Natural Range Materials Using Radiocarbon and
Isotope Ratio Mass Spectometry Analysis.''
\458\ BPI, Green Packaging Workshop Tr. at 83; Georgia-Pacific,
Comment 533431-00007 at 8; ILSR, Green Packaging Workshop Tr. at
136-138.
---------------------------------------------------------------------------
e. Confusion Between Renewable Materials Claims and Biodegradability
Two commenters noted that consumers may mistakenly believe that
products labeled ``made with renewable materials'' are also
biodegradable.\459\ Specifically, BPI cited a study conducted by APCO
Insight in 2006 finding that 80 percent of consumers believe that a
package made from natural materials, such as corn-based plastics, were
more likely to be biodegradable than a package made from synthetic
materials.\460\ However, some biobased products, such as products made
from sugar cane, contain non-degradable polymers.\461\ Moreover,
according to the Institute for Local Self-Reliance, some of the
plastics on the market that meet biodegradability standards contain no
plant matter.\462\ To address this confusion, BPI recommended that the
Guides make clear that naturally based materials may, or may not, be
compostable or biodegradable.\463\
---------------------------------------------------------------------------
\459\ BPI, Green Packaging Workshop Tr. at 89 and (http://www.ftc.gov/bcp/workshops/packaging/presentations/mojo.pdf).
\460\ See APCO, Biodegradable and Compostable Survey Topline at
4.
\461\ Id.; ILSR, Green Packaging Workshop Tr. at 137-138.
\462\ ILSR, Green Packaging Workshop Tr. at 137-138.
\463\ BPI, Green Packaging Workshop Tr. at 102-103.
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[[Page 63588]]
2. Consumer Perception Evidence
As noted above, one commenter, the National Cotton Council,
described a finding from its 2006 telephone/Internet study that ``only
one third of consumers correctly understand the term . . .
`renewable''' when referring to cotton.\464\
---------------------------------------------------------------------------
\464\ NCC, Comment 536013-00017 at 4. This study, which Cotton
Incorporated conducted, is available at (http://www.ftc.gov/green).
The NCC counted the terms ``recycled,'' ``reused/regrown,'' and
``sustainable for environment'' as ``correct'' interpretations of
the term. E-mail from Cotton Incorporated (Mar. 11, 2010).
---------------------------------------------------------------------------
The Commission's consumer perception study tested respondents'
understanding of the phrase ``made with renewable materials'' as this
claim appeared on three different products - wrapping paper, a laundry
basket, and kitchen flooring. The study results indicated that, for all
products, respondents thought this claim definitely or probably
suggested that the product had other environmental attributes. For
example, 53 percent believed that this phrase suggested that the
product was recyclable.\465\ In addition, 45 percent believed the
phrase suggested that the product was made from recycled materials.
Fewer, but still a significant number, believed that a ``made with
renewable materials'' claim suggested that the product was
biodegradable (28 percent), compostable (24 percent), and made with
renewable energy (23 percent).
---------------------------------------------------------------------------
\465\ This and the following numbers are net of the non-
environmental control claim.
---------------------------------------------------------------------------
Responses to the open-ended question ``[w]hat, if anything, does
this statement suggest or imply to you about the product,'' confirmed
these results. For all three tested products, a significant number said
that the product was made from recycled materials (31 percent) or
materials that can be recycled (17 percent).
A smaller number of respondents answering the open-ended questions
perceived the claim in the same way as marketers appear to intend.
Specifically, 10 percent stated the term implied that materials could
be replenished, replaced, or regrown; 4 percent stated the materials
were derived from plant matter; 0.4 percent suggested the materials
were non-petroleum based; and 0.6 percent indicated the materials could
be grown quickly.\466\
---------------------------------------------------------------------------
\466\ These findings are based on FTC staff's more detailed
analysis of the open-ended responses rather than Harris' general
findings.
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The study further tested what a ``made with renewable materials''
claim conveyed about the percentage of renewable materials in a
product. Specifically, the study asked respondents whether a statement
that a product is ``made with renewable materials'' suggests that all,
most, or some of the materials were renewable. In response, 37 percent
indicated that they would interpret the claim to mean that ``all'' of
the materials were renewable, and an additional 20 percent believed
that the claim meant ``most.''\467\
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\467\ Further, 26 percent stated that ``some'' of the product
was made with renewable materials; 13 percent stated that the claim
does not suggest anything about how much of the product was made
with renewable materials; and six percent stated that they were not
sure. The figures total 102 percent because of rounding. These
percentages were derived by combining the responses to all claims
that included ``made with renewable materials'' (i.e., ``made with
renewable materials,'' ``green - made with renewable materials,''
``eco-friendly - made with renewable materials,'' and ``sustainable
- made with renewable materials'').
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3. Analysis and Guidance
To avoid deception, the Commission proposes advising marketers to
qualify a ``made with renewable materials'' claim with specific
information about the material.\468\ In addition, marketers should
qualify this claim for products containing less than 100 percent
renewable materials, excluding minor, incidental components. The
Commission does not propose defining the term or endorsing any
particular test to substantiate such claims.
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\468\ This proposed guidance can be found in 16 CFR 260.15.
---------------------------------------------------------------------------
a. Qualifying Renewable Materials Claims
Rather than providing a technical or scientific definition for
environmental claims, the Guides state what consumers understand the
claims to mean. The results of the Commission's consumer perception
study suggest there is a disconnect between consumer understanding of
``made with renewable materials'' claims and what marketers appear to
intend to convey. Marketers, for example, may intend to communicate
that a product is made from a material that can be replenished at the
same rate, or faster, than consumption.\469\ Consumers, however, likely
believe the product has other specific environmental benefits, such as
being made with recycled content, recyclable material, and
biodegradable material. The Commission, therefore, proposes advising
marketers to qualify ``made with renewable materials'' claims to avoid
misleading consumers.
---------------------------------------------------------------------------
\469\ See, e.g., P&G, Comment 533431-00070 at 3.
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While the Commission did not test particular qualifiers, it
nevertheless believes that providing specific information about the
renewable material may correct consumers' misimpressions about this
claim. For example, providing information regarding which renewable
materials were used, how the materials were sourced, and why the
materials are renewable may align consumer perception with what
marketers are trying to convey. Accordingly, in proposed Example 1, the
Commission states that a ``made with renewable materials'' claim is
unlikely to be deceptive if the marketer provides specific information
about the material it uses (bamboo), how it sources the material (it
grows the bamboo), and why it is renewable (the bamboo grows at a rate
comparable or faster than its use). Providing this information should
reduce confusion by providing context for the claim. The Commission
seeks comment on whether providing this information, as in proposed
Example 1, adequately qualifies a ``made with renewable materials''
claim.
b. Quantity of Renewable Materials
As noted above, a significant percentage of respondents (37
percent) indicated that they would interpret a ``made with renewable
materials'' claim to mean that ``all'' of the materials in a product
are renewable. Based on this result, the Commission proposes that,
unless the entire product or package, excluding minor, incidental
components, is made from renewable materials, marketers need to qualify
the claim to specify the amount of renewable materials in a product or
package. Thus, as illustrated in proposed Example 2, a marketer's
``made with renewable materials'' claim would not be deceptive if it
clearly states that its product, made from a blend of 50 percent
petroleum-based plastic and 50 percent plant-based plastic, contains 50
percent renewable material. This proposed guidance is consistent with
many of the commenters' views and is modeled on the Commission's
current recycled content guidance.\470\
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\470\ The Guides currently provide that unqualified claims of
recycled content may be made if the entire product or package
(excluding minor, incidental components) is made from recycled
content. 16 CFR 260.7(e). The recyclable section of the current
Guides also contains similar language: ``Unqualified claims of
recyclability for a product or package may be made if the entire
product or package, excluding minor incidental components, is
recyclable.'' 16 CFR 260.7(d).
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c. Substantiating Renewable Materials Claims
As discussed above, several commenters suggested that the
Commission reference ASTM Method D 6866 as a means to substantiate
``made with renewable material'' claims. Although this protocol may
determine the biobased content of natural
[[Page 63589]]
materials, it does not necessarily substantiate all claims that
consumers reasonably infer. Therefore, the Commission declines to
reference it in the Guides as acceptable substantiation for renewable
materials claims.
Proposed Example 3 illustrates this point. In this example,
although the marketer used test results to determine that its product
consists entirely of biological material, the marketer cannot
substantiate other consumer interpretations of its unqualified ``made
with renewable materials'' claim, including that the product is
recyclable, made with recycled content, or biodegradable.
d. Biobased Claims
Some commenters used the term ``biobased'' interchangeably with the
phrase ``renewable material.''\471\ It is not clear whether consumers
interpret this claim in the same way as ``renewable.'' At this time,
the Commission does not propose addressing biobased claims in the
Guides because the USDA is conducting its own consumer perception study
of biobased claims as part of its proposed voluntary labeling program
for biobased products.\472\ In developing this program, USDA has sought
public comment on a proposed ``USDA Certified Biobased Product'' logo,
which will include a statement that identifies the biobased\473\
content of the product and that indicates whether the label applies to
the product or packaging (e.g., ``Product: 57% biobased; Packaging: 90%
biobased''). The USDA proposes that marketers determine biobased
content by testing products pursuant to the ASTM Method D 6866
standard. Given USDA's ongoing work in this area, the Commission does
not want to propose duplicative or potentially inconsistent advice.
Therefore, the Commission has decided not to address this issue in the
Guides at this time.
---------------------------------------------------------------------------
\471\ See, e.g., BPI, Green Packaging Workshop Tr. at 89; ILSR,
Green Packaging Workshop Tr. at 137-138; SDA, Comment 533431-00020
at 4.
\472\ 74 FR 38295, 38298 (July 31, 2009).
\473\ The USDA defines ``biobased product'' as a ``product
determined by the Secretary to be a commercial or industrial product
(other than food or feed) that is (A) composed, in whole or in
significant part, of biological products, including renewable
domestic agricultural materials and forestry materials; or (B) an
intermediate ingredient or feedstock.'' Id.
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D. Renewable Energy Claims
This section discusses claims about the sale of renewable energy as
well as claims that a product is ``made with renewable energy.''
Specifically, the Commission discusses the ways renewable energy is
sold, comments addressing renewable energy claims, relevant consumer
perception research, and the Commission's analysis of the issues.
1. Overview
Renewable energy generally refers to electricity derived from
constantly replenished sources (e.g., wind power).\474\ Once renewable
electricity is introduced into the grid, it is physically
indistinguishable from electricity generated from conventional sources.
Consumers, therefore, cannot determine for themselves the source of the
electricity flowing into their homes. Because electricity transactions
can be tracked, however, retail customers can ``buy'' renewable power
by either: (1) purchasing renewable energy certificates (RECs) \475\;
or (2) purchasing renewable power through contracts with their utility.
---------------------------------------------------------------------------
\474\ See (http://www.nrel.gov/learning/re_basics.html).
\475\ RECs are also known as green certificates, green tags, or
tradable renewable certificates. Lori Bird, National Renewable
Energy Laboratory (``NREL''), Carbon Offsets Workshop Tr. at 42.
---------------------------------------------------------------------------
Under the REC method, a renewable electricity generator splits its
output into two components: (1) the electricity itself; and (2)
certificates representing the renewable attributes of that
electricity.\476\ Specifically, generators that produce renewable
electricity sell their electricity at market prices for conventionally
produced power and then sell the renewable attributes of that
electricity through separate certificates.\477\ Organizations purchase
RECs to characterize all or a portion of their electricity usage as
``renewable'' by matching the certificates with the conventionally
produced electricity they normally purchase.\478\
---------------------------------------------------------------------------
\476\ Although one REC generally represents the right to
describe one megawatt hour of electricity as ``renewable,'' a REC's
precise attributes continue to be a matter of debate. NREL, Carbon
Offsets Workshop Tr. at 42, 52. Moreover, no single, national
standard dictates whether a REC also represents other environmental
attributes that may stem from renewable energy generation, such as a
reduction in air pollution. Id.; Ed Holt, Ed Holt & Associates
(``Holt''), Carbon Offsets Workshop Tr. at 151.
\477\ See NREL, Carbon Offsets Workshop Tr. at 45; NREL, Carbon
Offsets Workshop Presentation at (http://www.ftc.gov/bcp/workshops/carbonoffsets/ presentations/lbird.pdf); CRS, Comment 533254-00049
at 3; Lori Bird, Claire Kreycik, and Barry Friedman, Green Power
Marketing in the United States: A Status Report, National Renewable
Energy Laboratory (Sept. 2009) (``NREL Green Power Marketing
Report''), available at (http://www.nrel.gov/docs/fy09osti/46581.pdf) at 14.
\478\ Businesses and organizations purchase nearly 100 percent
of these unbundled RECs. See Renewable Energy Marketers Association
(``REMA''), Comment 533254-00028 at 2; NREL Green Power Marketing
Report at 18.
---------------------------------------------------------------------------
Under the contract method, consumers and businesses purchase
renewable energy through traditional electricity contracts with their
local utility or power provider.\479\ Energy sold through these ``green
power pricing'' programs generally costs more than conventional energy.
Utilities (or other electricity retailers) can obtain the renewable
energy they sell through different means. Some generate renewable
energy themselves and sell it to their customers. Others contract with
renewable energy generators to purchase electricity, which utilities
then sell to their customers. Additionally, some utilities purchase
RECs to match their own conventionally produced energy so that they can
characterize the energy they sell as renewable.\480\
---------------------------------------------------------------------------
\479\ CRS, Comment 533254-00049 at 2-3. Renewable energy is not
sold in all areas of the country. However, in the U.S., more than 50
percent of consumers can purchase green power directly from their
utility or electricity provider. NREL, Carbon Offsets Workshop
Presentation at (http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/lbird.pdf).
\480\ CRS, Comment 533254-00049 at 3; NREL, Carbon Offsets
Workshop Tr. at 45; NREL Green Power Marketing Report at 14.
---------------------------------------------------------------------------
Many businesses tout their renewable energy purchases to market
their products or services.\481\ For example, a clothing company may
claim that its garments are ``made with renewable energy,'' or a snack
food manufacturer may claim that it ``buys green energy credits to
match 100% of the electricity needed to produce'' its snacks.\482\ By
purchasing such products, consumers can indirectly support renewable
energy.
---------------------------------------------------------------------------
\481\ NREL, Carbon Offsets Workshop Tr. at 48-49. Businesses
also may purchase RECs to facilitate compliance with regulatory
requirements. The FTC's focus is not on these sales.
\482\ See, e.g., Rob Schasel, PepsiCo, Carbon Offsets Workshop
Tr. at 207.
---------------------------------------------------------------------------
2. Comments
The comments discussing renewable energy focused on three issues:
(1) the definition of ``renewable energy'' and guidance on ``made with
renewable energy'' claims; (2) whether utilities must disclose that the
renewable energy they sell is based on RECs; and (3) the types of
practices and advertising claims that should be considered ``double
counting.''
a. Defining Renewable Energy and Interpreting Renewable Energy Claims
Several comments discussed the definition and scope of the term
``renewable energy.'' One recommended that the Commission clearly state
what qualifies as renewable energy.\483\
[[Page 63590]]
Another asserted consumers may not have a clear understanding of the
term,\484\ but a different commenter believed that consumers understand
it to mean energy generated from sources other than fossil fuels or
nuclear power.\485\ Another commenter stated that there is no uniform
definition of ``renewable energy.''\486\
---------------------------------------------------------------------------
\483\ P&G, Comment 533431-00070 at 3 (stating that an energy
source is renewable if the rate of replenishment matches the rate of
its consumption, the sourcing and use of the energy does not harm
the ecosystem or increase the product's environmental footprint, and
the sourcing of the energy reduces consumption of non-renewable
resources). Another commenter stated that a federal Executive Order
defines renewable energy, and others noted that many states have
different definitions of what constitutes renewable energy. Dow,
Comment 533431-00010 at 13; see also Edison Electric Institute,
Comment 533254-00055 at 4-5; Exelon Corp., Comment 533431-00059 at
5.
\484\ Tandus, Comment 536013-00037 at 1.
\485\ CRS, Comment 533254-00049 at 4.
\486\ Edison Electric Institute, Comment 533254-00055 at 4-5.
---------------------------------------------------------------------------
Some commenters recommended that the Commission include guidance
about the scope of renewable energy claims and the possible need to
qualify them.\487\ One commenter provided examples of potentially
broad, implied claims and suggested that the Commission include these
examples in the Guides.\488\ For instance, consumers may interpret a
``made with renewable energy'' claim on a product label as applying to
the product, its packaging, and the label itself.\489\ Several
commenters also cautioned that consumers may interpret the claim
``manufactured with renewable energy'' to mean that the product was
made entirely with renewable energy.\490\ In these commenters' view,
marketers should not make an unqualified ``made with renewable energy''
claim if less than 100 percent of the electricity used comes from
renewable sources.\491\
---------------------------------------------------------------------------
\487\ Cameron Brooks, Renewable Choice Energy (``Renewable
Choice''), Carbon Offsets Workshop Tr. at 214 (encouraging the FTC
to provide guidance on making more precise claims); CRS, Comment
533254-00049 at 4-14; SDA, Comment 534743-00028 at 2 (suggesting
that the Commission provide guidance on which environmentally
beneficial attributes are associated with the use of renewable
energy, such as reductions in greenhouse gases); David A. Zonana,
California Department of Justice, Carbon Offsets Workshop Tr. at 219
(stating that it generally is easier for marketers to substantiate
more precise marketing claims).
\488\ CRS, Comment 533254-00049 at 4-14.
\489\ Id. at 10; CRS, Comment 534743-00009 at 2.
\490\ CRS, Comment 533254-00049 at 10; CRS, Comment 533431-00061
at 6; Jennifer Martin, CRS (``CRS''), Carbon Offsets Workshop Tr. at
194-195; Sharp Electronics Corporation, Solar Energy Solutions Group
(``Sharp Electronics''), Comment 533254-00036 at 1; see also Dow,
Comment 533431-00010 at 13 (recommending that marketers specify the
percentage of renewable energy used).
\491\ Id.
---------------------------------------------------------------------------
b. REC Disclosures
Some commenters discussed whether utilities or other electricity
retailers must disclose that the renewable energy they sell is based on
their purchase of RECs.\492\ Some argued that sellers should disclose
this fact so consumers will not believe mistakenly that the utility
either generated the renewable power itself or purchased it through
electricity contracts.\493\ As one commenter explained, consumers may
believe that the renewable energy they purchase is generated in their
geographic location, when, in fact, the utility may have purchased RECs
generated in a distant location.\494\ These commenters, therefore,
argued that without a disclosure, consumers might be misled. The
Renewable Energy Marketers Association disagreed, maintaining that a
disclosure about the source of the renewable energy is unnecessary
because there is no difference in the environmental benefits of REC-
based renewable energy and contract-based renewable energy.\495\
---------------------------------------------------------------------------
\492\ See,e.g., Ecology Center, Comment 533254-00020 at 1; Sol
Metz (``Metz''), Comment 533254-00023 at 1; REMA, Comment 533254-
00028 at 3-4; James Svensson (``Svensson''), Comment 533254-00021 at
1; Weyerhaeuser, Comment 533431-00084 at 13.
\493\ Ecology Center, Comment 533254-00020 at 1; Metz, Comment
533254-00023 at 1; Svensson, Comment 533254-00021 at 1.
\494\ Climate Clean, Comment 533254-00039 at 3 n.7 (stating that
claims such as ``made with green energy'' are ``misleading insofar
as they may imply on-site generation, not the market purchase
(possibly well out of market) of environmental attributes of
renewable energy production''). Another commenter stated that
marketers advertise products as ``produced with wind power'' and
questioned whether consumers understand that the wind power may be
generated in a distant location. The commenter stated that many
marketers include disclaimers that explain they use power from the
grid. Weyerhaeuser, Comment 533431-00084 at 3.
\495\ REMA, Comment 533254-00028 at 3-4; see also CRS, Comment
533254-00049 at 2-3 (explaining that in neither case ``is the
consumer directly receiving actual electrons generated by the
renewable energy facility, which is physically impossible'').
---------------------------------------------------------------------------
c. Double Counting
Commenters also discussed the problem of ``double counting.''
Double counting generally occurs when an entity sells the same REC to
more than one purchaser or when multiple parties make claims based on
the same REC. Although some instances of double counting are
straightforward,\496\ the commenters discussed more subtle variations.
Some argued a company should not generate renewable power onsite (e.g.,
by using solar panels on store roofs), sell RECs based on the renewable
attributes of that same power, and then advertise that they use
renewable energy (e.g., ``our stores are 100% solar-powered'').\497\ In
their view, such practices constitute double counting and are
misleading. Some commenters suggested, however, that it would not
constitute double counting if those companies simply claimed that they
``host'' a renewable energy facility.\498\
---------------------------------------------------------------------------
\496\ A marketer, for example, may knowingly sell the same REC
multiple times.
\497\ Matthew Clouse, EPA Green Power Partnership (``Green Power
Partnership''), Carbon Offsets Workshop Tr. at 221; CRS, Comment
533254-00049 at 6; REMA, Comment 533254-00028 at 10; Sharp
Electronics, Comment 533254-00036 at 1-2.
\498\ CRS, Comment 533254-00049 at 6; REMA, Comment 533254-00028
at 10; Sharp Electronics, Comment 533254-00036 at 1-2.
---------------------------------------------------------------------------
3. Consumer Perception Evidence
No commenters submitted research exploring how consumers perceive
renewable energy claims. The Commission's study, however, explored
respondents' understanding of such claims.
The study asked respondents to describe, in their own words, what a
``made with renewable energy'' claim means. In response to this open-
ended question, 16 percent referenced a particular form of renewable
energy, such as solar or wind power. Five percent stated that the
product was made with energy that is not derived from fossil fuels;
four percent stated the product was made with ``alternative'' or
``clean'' energy; and one percent stated that it was made with energy
that is readily replenished. Seventeen percent did not understand the
claim's meaning or stated that it meant nothing to them, and another 17
percent stated that the product was made from recycled materials.\499\
---------------------------------------------------------------------------
\499\ In addition to these responses, 11 percent stated that the
product was made with renewable energy without elaborating on what
the term ``renewable energy'' meant. Respondents provided numerous
other unique answers in response to this open-ended question. All
reported findings are based on FTC staff's more detailed analysis of
responses rather than Harris' general findings.
---------------------------------------------------------------------------
Through a closed-ended question, the study also explored what
claims respondents thought were implied by a product advertised as
``made with renewable energy.'' The study provided seven possible
claims from which respondents could choose. In response, 28 percent
thought the claim implied the product was made with renewable
materials, 21 percent thought the product was made from recycled
materials, and 18 percent thought the product was recyclable.\500\
---------------------------------------------------------------------------
\500\ Because consumers could choose one or more claims, or no
claims, the responses provided do not add up to 100 percent.
---------------------------------------------------------------------------
In addition, the study asked respondents whether a statement that a
product is ``made with renewable
[[Page 63591]]
energy'' suggests that all, most, or some of the product was made with
renewable energy. The largest group, 36 percent, indicated that they
interpret the claim as meaning that ``all'' of the product was made
with renewable energy and 17 percent believed that ``most'' of it was
made with renewable energy.\501\
---------------------------------------------------------------------------
\501\ Further, 23 percent stated that ``some'' of the product
was made with renewable energy, 18 percent stated that the claim
does not suggest anything about how much of the product was made
with renewable energy, and seven percent stated that they were not
sure. The provided figures total 101 percent because of rounding.
These percentages were derived by combining the responses to all
claims that included ``made with renewable energy'' (i.e., ``made
with renewable energy,'' ``green - made with renewable energy,''
``eco-friendly - made with renewable energy,'' and ``sustainable -
made with renewable energy'').
---------------------------------------------------------------------------
Finally, the study asked about a product advertisement that
included the statement ``our manufacturing plant hosts a solar [or
wind] power facility.''\502\ The study asked which, if any, of the
following three claims were implied by the statement: (1) there is a
solar/wind power facility on the company's premises; (2) solar/wind
power is used in making the company's products; and (3) the company
hosts a solar/wind power conference meeting in its manufacturing
plants. Respondents could choose more than one answer. Eighty-five
percent stated that there is a solar/wind power facility on the
company's premises, 62 percent stated that solar/wind power is used in
making the company's products, and 12 percent stated that the company
hosts a solar/wind power conference meeting in its manufacturing
plants.\503\
---------------------------------------------------------------------------
\502\ The survey asked half of the respondents about solar power
facilities and the other half about wind power facilities. Because
there were no meaningful differences between the responses of these
two groups, we discuss the combined results.
\503\ The results also were calculated using one response (that
the company hosts a meeting in its plant) as a control claim to
roughly adjust for guessing. The results net of the control are: 73
percent of respondents stated there is a solar/wind power facility
on the company's premises, and 50 percent stated that solar/wind
power is used in making the company's products.
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4. Analysis and Guidance
Based on the record, the Commission proposes new guidance
concerning renewable energy claims.\504\ The following discusses this
guidance and addresses the issues raised by commenters concerning
consumer interpretation of renewable energy claims, REC disclosures,
geographic location disclosures, and claims that could constitute
``double counting.''
---------------------------------------------------------------------------
\504\ This proposed guidance can be found in 16 CFR 260.14.
---------------------------------------------------------------------------
a. Consumer Interpretation of Renewable Energy Claims
The commenters and the Commission's study raise three main issues
related to consumer interpretation of renewable energy claims: (1) the
meaning of ``renewable energy''; (2) claims implied by renewable energy
advertisements; and (3) potentially overbroad renewable energy claims.
First, the term ``renewable energy'' has an emerging meaning.
Industry does not appear to have a uniform definition of the term, and
commenters discussed different energy sources that they believe are
``renewable.'' There appears to be a consensus, however, that renewable
energy excludes fossil fuels. The results of the Commission's study
suggests that a significant minority of consumers have a similar,
general understanding of renewable energy; specifically, it is not
derived from fossil fuels.\505\ Based on both this information and the
comments, the Commission proposes advising marketers not to make an
unqualified ``made with renewable energy'' claim if an item was
manufactured with energy produced using fossil fuels. Given the
available information, however, the Commission does not propose further
guidance on which specific energy sources consumers consider to be
renewable.
---------------------------------------------------------------------------
\505\ Responding to open-ended questions, 16 percent of
respondents explained the term by referring to a particular energy
source (e.g., the sun, wind, biomass, and other non-fossil fuel
sources), and five percent expressly stated that the energy was not
derived from fossil fuels.
---------------------------------------------------------------------------
The second issue is the extent to which renewable energy claims
require qualification. The Commission's study suggests that some
consumers believe that a ``made with renewable energy'' claim implies
that the advertised product is also made with renewable materials (28
percent of respondents) or made from recycled materials (21
percent).\506\ The cause of these consumers' confusion is not entirely
apparent. Although some renewable energy is itself made from renewable
or recycled materials (e.g., biomass), not all products made with
renewable energy are necessarily made with such materials.
---------------------------------------------------------------------------
\506\ The open-ended responses are consistent with these closed-
ended results.
---------------------------------------------------------------------------
When a claim misleads a small, but significant, minority of
consumers, the Commission generally advises marketers to qualify the
claim to prevent deception.\507\ Although the Commission did not test
any specific qualifiers, it proposes that marketers disclose the type
or source of the renewable energy (e.g., solar or wind). Similar to the
proposal to qualify renewable materials claims, discussed above, the
Commission believes that providing context for renewable energy claims
may help reduce consumers' misperception. If consumers are armed with a
better understanding of renewable energy, they may be less likely to
draw inferences that are unrelated to the claim.
---------------------------------------------------------------------------
\507\ For example, as discussed in the general environmental
benefit claims section (Part V.A, supra), the Commission's consumer
perception study indicated that 27 percent of respondents
interpreted the claims ``green'' and ``eco-friendly'' as suggesting
a product has no negative environmental impact. Based in part on
these findings, the Commission proposes to advise marketers to
qualify general environmental benefit claims.
---------------------------------------------------------------------------
The Commission does not propose advising marketers to qualify
renewable energy claims by specifically stating that the product does
not contain renewable or recycled materials. Qualifiers such as ``not
made with renewable materials'' or ``does not contain recycled
materials'' bear no relation to a renewable energy claim and,
therefore, could cause more consumer confusion than the qualifier
alleviates. The Commission, however, requests comment on whether
specifying the source of the renewable energy adequately qualifies a
``made with renewable energy'' claim.
Third, as with other environmental claims, marketers should be
cautious that they do not overstate their renewable energy claims. For
example, a vehicle manufacturer should not state that its product is
made with renewable energy when the claim applies only to certain
components of the vehicle. Section 260.6(b) of the Guides already
advises marketers to specify whether the advertised environmental
attributes apply to the product, its packaging, or only a component of
the product or packaging. This guidance applies equally to renewable
energy claims. The Commission proposes including new guidance about
whether consumers interpret a ``made with renewable energy'' claim to
mean the product was made entirely using renewable energy. In the
Commission's research, 36 percent of respondents interpreted a ``made
with renewable energy'' claim to mean that ``all'' of the product was
made with renewable energy.\508\ This result is consistent with several
commenters' views, as well as the Commission's existing guidance
regarding ``made with recycled content'' claims.\509\
---------------------------------------------------------------------------
\508\ In addition, 17 percent stated that most of the product
was made with renewable energy.
\509\ 16 CFR 260.7(e).
---------------------------------------------------------------------------
The Commission does not have evidence, however, regarding exactly
how consumers interpret the term ``all''
[[Page 63592]]
in this context or how broadly consumers interpret ``made with
renewable energy'' claims. For example, for a product advertised as
``made with renewable energy,'' it is unclear whether consumers would
expect that all product components are made with renewable energy. This
ambiguity, however, does not prevent the Commission from providing some
guidance. Specifically, based on its research, the commenters' views,
and its own judgment, the Commission proposes advising marketers not to
use unqualified ``made with renewable energy'' claims unless all, or
virtually all, of the significant manufacturing processes used to make
the product are powered by renewable energy or powered by
conventionally produced energy that is offset by RECs.\510\ For
example, it would be deceptive for a toy manufacturer to make an
unqualified renewable energy claim if it did not purchase renewable
energy to power all of the significant processes used to manufactured
its toys. Determining whether that same manufacturer could make an
unqualified claim if its plant were powered with renewable energy, but
its delivery trucks used fossil fuels, would require further consumer
perception research. The Commission requests comment on this proposed
advice and seeks any additional consumer perception evidence addressing
this issue.
---------------------------------------------------------------------------
\510\ The Commission also applies the ``all or virtually all''
standard to unqualified ``Made in USA'' claims. See Enforcement
Policy Statement on U.S. Origin Claims, 62 FR 63760, 63755 (Dec. 2,
1997).
---------------------------------------------------------------------------
b. REC Disclosures
The Commission also considered whether specific disclosures are
necessary for renewable energy claims based on the purchase of RECs,
rather than the purchase through contracts. As discussed earlier, the
commenters held different opinions on this issue. Some argued that
sellers must inform consumers when their renewable energy sales are
based on RECs because consumers would otherwise assume that the
marketer either generated the renewable energy itself or purchased it
through contracts. The commenters, however, did not submit consumer
perception evidence to support this view.
Even assuming that consumers thought renewable energy claims were
based on contractual purchases (rather than REC purchases), there is no
reason to believe that this fact would be material to consumers. No
evidence on the record suggests that a contract-based system more
reliably tracks renewable energy than a well-designed REC-based system.
Accordingly, the Commission does not have a sufficient basis to advise
marketers to disclose that their renewable energy claims are based on
RECs.
c. Geographic Location of Renewable Energy Generation
Regardless of whether the marketer purchases renewable energy
through RECs or contracts, the energy may have been generated in a
distant geographic location. It is unclear whether consumers interpret
renewable energy claims to mean that the energy was generated in their
location and, thus, yields local benefits. As discussed above,
marketers must have substantiation for all reasonably implied
interpretations of their claims. Therefore, marketers must evaluate the
net impression of their advertisements and, when needed, obtain
consumer research to determine if their advertisements imply that the
renewable energy was generated locally. If a particular advertisement
implies that renewable energy yields local benefits, marketers should
inform consumers that this is not the case to prevent deception.
Because the need for such disclosures will depend on the specific
advertisement in question, the Commission does not propose adding
guidance on this issue to the Guides. Nevertheless, marketers should be
mindful of this issue to avoid misleading consumers.
d. Double Counting
Double counting can occur as a result of fraud or inadequate
accounting, as well as in more subtle ways.\511\ Fraudulent activity,
such as knowingly selling the same offset to multiple purchasers, is
best addressed through law enforcement actions rather than Commission
guidance. The Commission's Guides are intended for those marketers
seeking to comply with the law.
---------------------------------------------------------------------------
\511\ CRS, Comment 533254-00049 at 5-6; see also Holt, Carbon
Offsets Workshop Tr. at 153; NREL, Carbon Offsets Workshop Tr. at
51. Because REC sales often involve multiple transactions and a
large number of entities, businesses must track RECs through the
market. Therefore, inadequate accounting or tracking practices can
lead marketers to sell multiple certificates based on the same
renewable energy activity. Accurate, well-designed registries or
tracking systems can help to minimize this problem. For example,
several regional tracking systems, covering more than 30 states, use
metered generation data for the issuance of RECs. CRS, Comment
533254-00049 at 3 n.3; REMA, Comment 533254-00028 at 4-5; see also
Holt, Carbon Offsets Workshop Tr. at 153; NREL, Carbon Offsets
Workshop Tr. at 51.
---------------------------------------------------------------------------
Aside from outright fraud, the written comments provide examples of
more subtle methods of double counting. Guidance for these types of
practices may be useful. The Commission agrees with commenters that
companies should not sell RECs for renewable energy they generate
onsite (e.g., by using solar panels on store roofs) and then tout their
renewable energy facilities or equipment in advertising (e.g., ``this
store is 100% solar powered''). By selling RECs, the company has
transferred the right to characterize its electricity as renewable.
Therefore, even if the company technically uses the electricity from
its onsite solar panels, an advertising claim about the renewable
aspects of this energy is misleading. The Commission, therefore,
proposes to include this example in the Guides.
Some commenters suggested companies in these circumstances should
be able to claim that they ``host a renewable energy facility.'' The
Commission's study, therefore, tested this claim, and 62 percent of
respondents stated that the company used solar/wind power to make its
products.\512\ The Commission, therefore, proposes advising marketers
that the phrase ``hosts a renewable energy facility'' is likely to
mislead consumers if, in fact, the company has sold its rights to claim
credit for the renewable energy.
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\512\ As discussed in note 503, using a control claim yields
similar results. Net of control, 50 percent of respondents believe
the company used solar/wind power to make its products.
---------------------------------------------------------------------------
E. Carbon Offset Claims
Carbon offsets, relatively new products in the green marketing
field, received significant attention in the comments. To provide
background on the consumer protection issues involved with these
products, the following describes offsets and the advertising claims
associated with them. It then discusses the comments addressing this
topic, relevant consumer perception research, and the Commission's
analysis of the issues.
1. Overview
Carbon offsets are credits or certificates that represent
reductions in greenhouse gas (``GHG'') emissions. These reductions stem
from different types of projects, such as methane capture from
landfills or livestock feedlots, tree planting, and industrial gas
destruction.\513\ Marketers quantify
[[Page 63593]]
their GHG reductions and then sell carbon offsets to purchasers seeking
to meet their own environmental goals by reducing their ``carbon
footprints'' or by striving to make themselves ``carbon neutral.''\514\
Offset purchasers include individual consumers, businesses, government
agencies, and non-profit organizations.\515\
---------------------------------------------------------------------------
\513\ These projects occur around the globe, often in locations
removed from offset purchasers. The location of an offset project is
immaterial to its impact on greenhouse gas levels because these
gases circulate evenly throughout the earth's atmosphere. Katherine
Hamilton, Ecosystem Marketplace (``Ecosystem''), Carbon Offsets
Workshop Tr. at 31.
\514\ No uniform definition for either term appears to exist.
See, e.g., Exelon Corp., Comment 533431-00059 at 4 (stating that
there is no clear consensus as to what the term ``carbon footprint''
includes); Carbon Claims and the Trade Practices Act, Australian
Competition & Consumer Commission (June 2008) at 7, available at
(http://www.accc.gov.au/content/index.phtml/itemId/833279)
(discussing ``carbon neutrality''). ``Carbon footprint'' generally
refers to the net greenhouse gas emissions caused by the activities
of an individual, business, or organization. ``Carbon neutral''
generally describes an entity whose greenhouse gas emissions net to
zero.
\515\ Ecosystem, Carbon Offsets Workshop Tr. at 37-38 and
(http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/khamilton.pdf). The vast majority (80 percent) of offset purchasers
in the international voluntary market are businesses. Across the
globe, offset sales generally occur in two types of markets: (1)
those that facilitate compliance with regulatory targets (so-called
``mandatory'' or ``compliance'' markets); and (2) those unrelated to
existing regulatory programs (so-called ``voluntary'' markets). This
discussion addresses offsets in the voluntary market.
---------------------------------------------------------------------------
Individual consumers, for example, generally purchase offsets to
reduce, balance, or neutralize greenhouse gas emissions associated with
their own activities, such as automobile use or airplane travel. In
these instances, offset sellers advertise their products directly to
individual consumers. For example, some online travel vendors have
partnered with offset sellers to allow consumers to buy offsets when
they purchase airplane tickets.\516\
---------------------------------------------------------------------------
\516\ Matthew Kotchen, University of California, Santa Barbara,
Carbon Offsets Workshop Tr. at 92.
---------------------------------------------------------------------------
Businesses purchase carbon offsets to balance the emissions
associated with the production, sale, or use of their own products and
services. They often tout these offsets in advertisements for their
products and services. For example, a potato chip seller that purchases
offsets to match its GHG emissions might advertise its chips as
``carbon neutral.'' Marketers make similar claims for a wide range of
products and services, from clothing to paper goods.\517\
---------------------------------------------------------------------------
\517\ See generally EcoSecurities, Comment 533254-00044 at 4-5.
Although many businesses purchase offsets to make advertising claims
for individual products, others do so to prepare for future
mandatory carbon markets, to help their corporate image more
generally, or to promote corporate responsibility efforts. See,
e.g., Ecosystem, Carbon Offsets Workshop Tr. at 40-41; Mario Teisl,
University of Maine, Carbon Offsets Workshop Tr. at 175. The
Commission has not identified any data addressing the volume of
purchases attributable to these various activities.
---------------------------------------------------------------------------
2. Comments
a. Defining Carbon Offsets and Requiring Disclosures
The comments differed in the degree and extent the FTC should be
involved in regulating carbon offset marketing. Several commenters
called on the Commission to provide detailed guidance or create a
regulatory framework for offsets.\518\ For example, some suggested that
the FTC define or clarify the meaning of certain terms, such as
``carbon neutral.''\519\ Another asked the FTC to establish a list of
allowable offset projects and mandate uniform calculation methods for
emission reductions.\520\ Others urged mandatory disclosures about the
type of activity (e.g., reforestation) that forms the basis for carbon
offsets.\521\ In addition, Consumers Union called for an annual FTC
statement about the amount of global carbon production to help
consumers compare the offset impacts in a global context.\522\
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\518\ See Climate Clean, Comment 533254-00039 at 5; Consumers
Union, Comment 533254-00026 at 1-2; NativeEnergy, Inc., Comment
533431-00044 at 2; State of New Jersey, Department of Environmental
Protection (``NJ DEP''), Comment 533431-00082 at 1; Pacific Gas &
Electric Company, Comment 533254-00041 at 1; Seventh Generation,
Comment 533431-00033 at 6.
\519\ See, e.g., Urvashi Rangan, Consumers Union (``Consumers
Union''), Carbon Offsets Workshop Tr. at 210 (``I think
clarification of terminology out there is really important. Things
like carbon-free, carbon neutral, carbon offset, carbon negative . .
. are really confusing to consumers.''); International Paper,
Comment 533431-00006 at 2; Kim Sheehan, Comment 533431-00004 at 1.
\520\ NJ DEP, Comment 533431-00082 at 2.
\521\ Consumers Union, Comment 533254-00026 at 2 (recommending
disclosure of offset type); Hydrodec North America LLC
(``Hydrodec''), Comment 533254-00046 at 8 (same); NJ DEP, Comment
533431-00082 at 2 (recommending disclosure of the name, owner, and
location of the project that produced the emission reductions, among
other things); 3M Company, Comment 533431-00027 at 2 (recommending
disclosure of the source of and methodology used to calculate the
carbon offsets); see also Carbon Offset Providers Coalition
(``COPC''), Comment 533254-00032 at 4 (recommending that the FTC
promote ``clarity and transparency'').
\522\ Consumers Union, Comment 533254-00026 at 1-2. Consumers
Union also recommended that sellers disclose the benefits that the
product yields beyond the baseline impacts (i.e., the emissions that
would have occurred in the absence of the offset project).
---------------------------------------------------------------------------
While some commenters called for regulatory requirements, others
urged the FTC to avoid setting standards.\523\ For example, Exelon
Corporation stated that the FTC lacks the technical expertise and
authority to set standards in this area.\524\ Walmart indicated that,
while the FTC should insist that marketers have a reasonable basis for
their claims, the agency should not mandate one reasonable approach
over another.\525\ In addition, Constellation Energy Group noted that,
given the relative youth of these products, ``market-driven solutions
are being and will continue to be developed to address consumer
confidence or credibility concerns.''\526\ Finally, commenters warned
that any FTC action in this area might negatively impact ongoing policy
debates at the federal and state levels.\527\
---------------------------------------------------------------------------
\523\ See, e.g., Constellation Energy Group, Inc.
(``Constellation''), Comment 533254-00029 at 4-5; Hydrodec, Comment
533254-00046 at 5; Wal-Mart Stores, Inc. (``Wal-Mart''), Comment
533254-00040 at 3-4.
\524\ Exelon Corp., Comment 533431-00059 at 2.
\525\ Wal-Mart, Comment 533254-00040 at 3-4.
\526\ Constellation, Comment 533254-00029 at 2.
\527\ See Exelon Corp., Comment 533431-00059 at 2; Wal-Mart,
Comment 533254-00040 at 3-4.
---------------------------------------------------------------------------
b. Timing of Emission Reductions
The comments also raised concerns about the timing of the actual
GHG emission reductions associated with carbon offsets. Some reductions
occur prior to the sale of offsets and others occur after. For example,
offsets generated from methane capture activities are typically sold
after the methane reductions occur. Other sellers, however, use offset
proceeds to fund future projects (such as constructing renewable energy
facilities) that are expected to create emission reductions at a later
date.
Many commenters stated that offsets should be based on prior
emission reductions because those reductions are verifiable.\528\ The
commenters disagreed, however, about the propriety of selling offsets
based on future GHG reductions. One commenter preferred such offsets
because, in its view, consumers are concerned with future GHG
emissions.\529\ Another suggested that consumers implicitly understand
that reductions from activities such as tree-planting do not happen
immediately but rather ``incrementally and over a longer time
horizon.''\530\ Others disagreed and argued that consumers do not
necessarily understand that emission reductions funded by their
purchase have not yet
[[Page 63594]]
occurred.\531\ In one commenter's view, sellers should disclose
prominently that the reductions caused by their products will occur in
the future.\532\
---------------------------------------------------------------------------
\528\ See, e.g., Edison Electric Institute, Comment 533254-00055
at 10; Michael Gillenwater (``Gillenwater''), Comment 533254-00005
at 3; The Fertilizer Institute, Comment 533254-00052 at 4. One
commenter, however, noted that such sellers cannot show that the
offset purchase caused an emission reduction. NativeEnergy, Inc.,
Comment 533431-00044 at 3 (``As one cannot change the past, it is
impossible for the purchase of a previously generated reduction to
be the cause of that reduction.'')
\529\ NativeEnergy, Inc., Comment 533431-00044 at 3.
\530\ Edison Electric Institute, Comment 533254-00055 at 17
(stating that as long as the offset is substantiated, timing should
not be an issue).
\531\ See, e.g., AgRefresh, Comment 533254-00004 at 1, 6;
TerraPass, Inc. (``TerraPass''), Comment 533254-00045 at 5.
\532\ AgRefresh, Comment 533254-00004 at 1, 6.
---------------------------------------------------------------------------
In addition to concerns about consumer understanding, many
commenters raised concerns about the certainty of future projects.\533\
With forestry-based offsets, for instance, events such as fire or
insect infestation may damage trees and release carbon stored within
them.\534\ Because of these uncertainties, one commenter stated that
offsets for unverified emission reductions should not be allowed.\535\
Others suggested that offset sellers take steps to account for such
uncertainties, such as using accounting practices to reflect the risks
associated with future projects.\536\
---------------------------------------------------------------------------
\533\ Climate Clean, Comment 533254-00039 at 5; see Wiley
Barbour, Environmental Resources Trust, Inc. (``ERT''), Carbon
Offsets Workshop Tr. at 216 (``There are real differences of opinion
about whether or not a forestry project, which is going to take
fifty years to grow, . . . should be counted as a reduction
today.'').
\534\ Offset Quality Initiative, Comment 533254-00047 at 8.
\535\ AgRefresh, Comment 533254-00004 at 6.
\536\ For example, one commenter stated that ``[s]elling
emission offsets before they are created is not inherently
problematic . . . . However, forward crediting should be done
transparently and provisions made for failure of delivery.''
Gillenwater, Comment 533254-00005 at 3.
---------------------------------------------------------------------------
c. Substantiating Carbon Offset Claims - Additionality
One of the most contentious issues surrounding the substantiation
of carbon offset claims is the concept of ``additionality,''
specifically, whether reductions associated with a carbon offset
product would have occurred without the offset sale.\537\ Both the
workshop participants and comments discussed this issue at length, with
most agreeing that offset sellers have a duty to demonstrate that their
underlying GHG reduction projects are additional.\538\ Without such a
showing, the underlying projects do not produce meaningful GHG
reductions.\539\
---------------------------------------------------------------------------
\537\ Some commenters noted that it is difficult to define
additionality, and FTC staff have set forth merely one variation
(examining whether the emission reduction project would have gone
forward without the additional revenue stream associated with the
sale of carbon offsets). Another variation examines whether the
project causes emissions beyond what is required by law or beyond
``business as usual.'' See, e.g., Anadarko Petroleum Corp.
(``Anadarko''), Comment 533254-00058 at 4. The Commission discusses
these differences in more detail below.
\538\ See, e.g., Anadarko, Comment 533254-00058 at 3; Derik
Broekhoff, World Resources Institute (``WRI''), Carbon Offsets
Workshop Tr. at 123-125, 165; COPC, Comment 533254-00032 at 5; CRS,
Comment 533254-00049 at 11; EcoSecurities, Comment 533254-00044 at
4; Gillenwater, Comment 533254-00005 at 3; Hydrodec, Comment 533254-
00046 at 6; Offset Quality Initiative, Comment 533254-00047 at 4;
TerraPass, Comment 533254-00045 at 5.
\539\ See, e.g., TerraPass, Comment 533254-0045 at 5.
---------------------------------------------------------------------------
The concept of additionality raises difficult technical and policy
challenges, which have generated substantial disagreement among
experts. In particular, the commenters did not form a consensus
regarding which tests industry members should use to determine whether
an offset project is additional. In fact, according to various
commenters, industry members rely on numerous, different tests, alone
or in combination. Examples of these various tests include:\540\
---------------------------------------------------------------------------
\540\ See Anadarko, Comment 533254-00058 at 4; EcoSecurities,
Comment 533254-00044 at 9; Gillenwater, Comment 533254-00006 at 8;
Green Power Partnership, Carbon Offsets Workshop Tr. at 241-242;
Holt, Carbon Offsets Workshop Tr. at 154-155; Hydrodec, Comment
533254-00046 at 4-5; Maurice LeFranc, EPA (``LeFranc EPA''), Carbon
Offsets Workshop Tr. at 143; Offset Quality Initiative, Comment
533254-00047 at 4-8; WRI, Carbon OffsetsWorkshop Tr. at 123-125;
Mark Trexler, Derik Broekoff, and Laura Kosloff, A Statistically-
Driven Approach to Offset-Based GHG Additionality Determinations:
What Can We Learn?, Sustainable Development Law and Policy (Winter
2006) at 30, available at (http://conserveonline.org/workspaces/climate.change/carbonmarkets/AdditionalityOffset).
---------------------------------------------------------------------------
Regulatory/Legal Test: Addresses whether the project, and,
thus, the emissions reductions, are required by law. If they are
required by law, the project is not additional.
Investment Test: Addresses whether the revenue from carbon
offset sales was a decisive factor in the project's implementation or
whether the project would have yielded a lower than acceptable rate of
return without offset revenue. If either is true, the project is
additional.
Common Practice Test: Addresses whether the project
involves widely-used technologies and is merely a ``business as usual''
project. If so, the project is not additional.
Technology Test: Addresses whether the project involves a
technology that is not considered ``business as usual'' or whether the
primary benefit yielded by the technology is a reduction in emissions.
If so, the project is additional.
Timing Test: Addresses whether the project began after a
specific date. This test eliminates older projects which could not have
been implemented with the intent of reducing emissions. If the project
began after the established date, it is additional.
Barriers Test: Addresses whether there are barriers, such
as local opposition or lack of knowledge, that must be overcome to
implement the project. If the project succeeds in overcoming unusual
barriers such as these, the project is additional.
Performance Test: Addresses whether the project achieves a
level of performance (e.g., an emission rate, a technology standard, or
a practice standard) with respect to emission reductions and/or
removals that is significantly better than ``business as usual.'' If
so, the project is additional.\541\
---------------------------------------------------------------------------
\541\ The EPA Climate Leaders program recommends this approach
for use in evaluating offsets by its partners. See (http://www.epa.gov/stateply/); LeFranc EPA, Carbon Offsets Workshop Tr. at
143.
---------------------------------------------------------------------------
The commenters variously criticized these tests as vague,
subjective, and likely to yield undesirable outcomes. For example, one
commenter noted that the investment test requires ``subjective analyses
of the intent of the project developer or the sufficiency of a
project's investment return . . . [and ignores] market realities as
they relate to capital formation and the tenure of commercial
arrangements which make private activity projects feasible.''\542\ Such
subjective criteria encourage ``gaming'' and usually result in
increased costs.\543\ Another criticized the common practice,
technology, and barrier tests because they all involve ``complex
counter-factual questions of what constitutes the baseline scenario . .
. and how the offset project differs.''\544\ Still another noted that
the timing test may create incentives to delay much-needed investments
until an offset system is established.\545\ Some workshop participants,
however, supported the regulatory additionality test because it offers
an objective standard (i.e., if the law requires the project, one
cannot sell offsets from it).\546\ But even this approach drew
criticism when one panelist explained that multiple regulations can
apply to a project, making it difficult to determine whether
regulations actually require a particular technology investment.\547\
---------------------------------------------------------------------------
\542\ COPC, Comment 533254-00032 at 3. Another commenter
explained that the investment test is subjective because there are
no industry-specific metrics on whether an internal rate of return
is ```attractive' or not to project developers.'' Anadarko, Comment
533254-00058 at 6.
\543\ COPC, Comment 533254-00032 at 3. A workshop participant
also noted that it may be difficult to determine which source of
funding ``made a difference.'' Green Power Partnership, Carbon
Offsets Workshop Tr. at 242.
\544\ Anadarko, Comment 533254-00058 at 6.
\545\ Hydrodec, Comment 533254-00046 at 5.
\546\ Anadarko, Comment 533431-00032 at 4; Renewable Choice,
Carbon Offsets Workshop Tr. at 262; see also LeFranc EPA, Carbon
Offsets Workshop Tr. at 143.
\547\ ERT, Carbon Offsets Workshop Tr. at 254-256; see also Anja
Kollmus, Stockholm Environmental Institute (``SEI''), Carbon Offsets
Workshop Tr. at 258-259.
---------------------------------------------------------------------------
[[Page 63595]]
Many commenters urged the FTC to refrain from issuing guidelines
that address additionality. They suggested that a combination of
legislative action, efforts by agencies with greater expertise, and
evolving market practices are the best means for addressing these
questions.\548\ For example, one commenter warned that the ``FTC risks
becoming entangled in highly complex policy issues at the core of
ongoing discussions concerning the design of market-based mechanisms
addressing climate change.''\549\ Another argued that, because pending
legislation would assign the role of addressing additionality standards
to agencies other than the FTC, it would be neither ``appropriate nor
productive for the FTC to take a stance on the issue'' at this
time.\550\
---------------------------------------------------------------------------
\548\ AF&PA, Comment 533254-00042 at 2-3; Anadarko, Comment
533254-00058 at 2; Clean Air Conservancy, Comment 533254-00027 at 1;
COPC, Comment 533254-00032 at 3; Edison Electric Institute, Comment
533254-00055 at 11-13; Exelon Corp., Comment 533431-00059 at 2-3;
Hydrodec, Comment 533254-00046 at 5-6; REMA, Comment 533254-00028 at
12; The Fertilizer Institute, Comment 533254-00052 at 5;
Weyerhaeuser, Comment 533431-00084 at 2.
\549\ Anadarko, Comment 533254-00058 at 2.
\550\ Hydrodec, Comment 533254-00046 at 6.
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d. Substantiating Carbon Offset Claims - Use of RECs
Some carbon offsets are based on the purchase of renewable energy
certificates (``RECs''). The practice of using RECs to create carbon
offsets is controversial and garnered significant attention at the
workshop and in the comments.\551\
---------------------------------------------------------------------------
\551\ Carbon Offsets Workshop participant Edward Holt provided
an overview of the issues involved in using RECs to form the basis
for carbon offset claims. Holt, Carbon Offsets Workshop Tr. at 150-
158.
---------------------------------------------------------------------------
Some workshop panelists and commenters approved of using RECs to
substantiate offset claims.\552\ In their view, renewable energy
generation (represented by RECs) creates emission reductions by causing
fossil fuel-fired facilities to produce less energy and, therefore,
fewer emissions.\553\
---------------------------------------------------------------------------
\552\ Adam Stern, TerraPass (``TerraPass''), Carbon Offsets
Workshop Tr. at 227-228 (stating that there are reputable
organizations such as ``the World Resources Institute, The Union of
Concerned Scientists, Natural Resources Defense Council, that have
all indicated a support for using RECs as an offset value''); Eric
Carlson, Carbonfund.org, Carbon Offsets Workshop Tr. at 229-230;
CRS, Comment 533254-0049 at 9; Edison Electric Institute, Comment
533254-00055 at 6.
\553\ Carbonfund.org, Carbon OffsetsWorkshop Tr. at 229-230;
CRS, Comment 533254-00049 at 4; Edison Electric Institute, Comment
533254-00055 at 6. One commenter argued that it ``is universally
accepted that the generation of renewable energy can displace and
reduce the emission of carbon and other greenhouse gases'' from
conventional facilities. The commenter further stated that the
practice is recognized by international offset programs including
the United Nations' Clean Development Mechanism of the Kyoto
Protocol, the Gold Standard, and the Voluntary Carbon Standard. CRS,
Comment 533254-00049 at 11. Some of these commenters, however,
cautioned that RECs do not always equate to reduced emissions from
conventional facilities, and offset sellers must demonstrate that
the reduced emissions are additional. COPC, Comment 533254-00032 at
2-3; CRS, Comment 533254-0049 at 3-7; Offset Quality Initiative,
Comment 533254-00047 at 11.
---------------------------------------------------------------------------
Others argued that RECs should not be used for offsets because the
two are distinctive commodities and conflating them could mislead
consumers.\554\ They provided three main arguments to support their
position. First, they argued that there is little or no evidence that
renewable energy generation always reduces traditional power
generation\555\ because the actual emission reductions associated with
grid power vary considerably across the United States, and there are no
uniform standards for calculating the emissions displaced by renewable
energy.\556\ Second, even if such displacement occurs, sellers cannot
prove that renewable energy generation, and any associated GHG emission
reductions, are additional.\557\ Some argued that RECs merely subsidize
existing projects and do not contribute sufficiently to a project's
income stream to create a market for new renewable energy
generation.\558\ Third, the critics questioned whether the renewable
energy generators can take credit for the emission reductions that
occur at fossil fuel-fired facilities.\559\ There is currently no
mechanism to establish who owns such emission reductions - the
renewable energy generator or the fossil fuel-fired generator.\560\
Therefore, the comments raised concerns about double counting if both
generators take credit for the same emission reduction.\561\
---------------------------------------------------------------------------
\554\ Climate Clean, Comments 533254-00038 at 1-3, 533254-00039
at 3 (stating that use of RECs as offsets is a ``uniquely American
practice''); Gillenwater, Comment 533254-00006 at 15-16; 533254-
00007 at 5 (stating that there is an incentive to rely on RECs as a
source of offsets because RECs are generally less expensive than
most offset projects); SEI, Carbon Offsets Workshop Tr. at 226-227.
\555\ Gillenwater, Comment 533254-00006 at 16 (stating that
``the effect of an input of electricity from a renewable generator
on other grid-connected generators [e.g., fossil fuel plants] is
difficult to quantify''); EcoSecurities, Comment 533254-00044 at 3-
4.
\556\ Id.
\557\ EcoSecurities, Comment 533254-00044 at 4 (stating that
RECs ``are subject to no . . . additionality testing requirements,
and require no reference to whether or not the REC market was
instrumental in the development of the project''); Climate Clean,
Comments 533254-00038 at 2, 533254-00039 at 2-3; see also NREL,
Carbon Offsets Workshop Tr. at 75-76 (explaining the concept of
additionality for RECs).
\558\ Id.
\559\ ERT, Carbon Offsets Workshop Tr. at 225 (``[W]hat you're
saying is [that] you own a reduction on someone else's property.'');
see also Gillenwater, Comment 533254-00006 at 14.
\560\ Holt, Carbon Offsets Workshop Tr. at 151-152. In contrast,
other emission reduction projects have a clear owner who can take
credit for the reductions or sell the reductions.
\561\ EcoSecurities, Comment 533254-00044 at 10. For example, a
renewable energy generator might claim that its RECs represent a
reduction in traditional electricity generation and a corresponding
reduction in emissions. However, these reductions actually occur at
the fossil fuel plant. The fossil fuel plant could argue that,
because it produced less energy, it caused the reduction in
emissions. The fossil fuel plant could sell offsets that represent
the same emission reduction as the RECs.
---------------------------------------------------------------------------
3. Consumer Perception Evidence
Some commenters emphasized the need to research consumer
understanding of specific terms and claims in carbon offset
advertisements.\562\ The commenters, however, did not identify existing
consumer perception data in this area.\563\ Therefore, the Commission
tested certain issues related to carbon offset claims in its consumer
research. The study split respondents into two groups - asking one
about carbon offsets and the other about carbon neutrality. The
research explored respondents' understanding of these terms, whether
respondents had seen advertisements for carbon offsets or for products
or services described as carbon neutral, and whether they had ever
purchased such items.
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\562\ Vermont Office of Attorney General (``Vermont AG''),
Comment 553254-00051 at 5 (writing on behalf of the Offices of the
Attorneys General of Arkansas, California, Connecticut, Delaware,
Illinois, Maine, Mississippi, New Hampshire, Oklahoma, and Vermont).
\563\ See Georgia-Pacific, Comment 553254-00059 at 2 (``We do
not know of specific, credible surveys or even market sensing
studies on this matter.''); Rebecca Tushnet, Georgetown University
Law Center, Carbon Offsets Workshop Tr. at 82-83 (stating that
companies' consumer research is likely to be part of a marketing
initiative and, therefore, proprietary). In considering potential
consumer research, some noted that consumer interpretation of claims
may change over time. Id.; Alan Levy, FDA, Carbon Offsets Workshop
Tr. at 80; GE AES Greenhouse Gas Services LLC, Comment 533254-00043
at 2.
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A significant percentage of respondents demonstrated a general
understanding of carbon offsets when they chose from a list of possible
descriptions, but a much smaller percentage could describe a carbon
offset in their own words. Specifically, in response to a closed-ended
question, 41 percent identified a carbon offset as ``a way of reducing
carbon dioxide and other greenhouse gases,'' while 35 percent stated
that they were not sure
[[Page 63596]]
what a carbon offset was.\564\ When asked to describe a carbon offset
in their own words, only 18 percent provided an answer which
communicated a general understanding of the term, while 58 percent
stated that they did not know or provided no response to the
question.\565\ A much smaller number (11 percent) reported seeing an
advertisement for an offset and only two percent actually recalled
purchasing a carbon offset.\566\
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\564\ The other responses were: a way of eliminating all
pollution that results from using a product or service; a method for
replacing scarce carbon resources; a way of reducing chemical
pollutants in water; a way of making carbonated beverages; a laundry
additive for removing pencil and ink stains from clothing; and none
of the above.
\565\ These figures are based on FTC staff's more detailed
analysis of responses rather than Harris' general findings. Examples
of responses that indicate an understanding of the term include: ``A
way to reduce greenhouse gases''; ``Trees are planted or other
environmental restoration is performed to supposedly make up for
environmental damage being caused by other activities''; and ``A
credit on the amount of carbon used in manufacturing process.''
\566\ Of those few who purchased an offset, 21 percent stated
that they were offsetting airline travel, 15 percent automobile
travel, and 15 percent lighting.
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In a closed-ended question, the study also asked respondents to
identify what it meant to be ``carbon neutral.'' Thirty-nine percent of
respondents answered that greenhouse gases, such as carbon dioxide,
were offset. Twenty-five percent were not sure what ``carbon neutral''
meant.\567\ When asked to describe the term in their own words, 22
percent provided an answer that demonstrated a general understanding of
the term, and 35 percent stated that they did not know or provided no
answer.\568\ Similar to the carbon offset results, few respondents
(only 10 percent) recalled seeing an advertisement for carbon neutral
products or services, and only four percent stated that they had
purchased a product or service at least partly because it was
advertised or labeled carbon neutral.
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\567\ The other responses were: no pollution was generated in
making the product; carbon resources were not used in making the
product; water pollutants were reduced to improve water quality;
clothing that resists pencil and ink stains; soft drinks that were
made without carbonation; and none of the above.
\568\ These findings are based on FTC staff's more detailed
analysis of responses rather than Harris' general findings. Examples
of responses that indicate an understanding of the term ``carbon
neutral'' include: ``The amount of carbon created in producing the
product is offset by other means that eliminates carbon''; ``doesn't
have a negative impact in terms of carbon emissions''; and ``does
not leave a carbon footprint.''
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For the subset of respondents who generally understood that carbon
offsets were a way to reduce greenhouse gas emissions, the study
attempted to gauge their understanding about the timing of greenhouse
gas emission reductions.\569\ The study asked each respondent to
consider an airline advertisement that states: ``For every flight you
take with us, we will buy carbon offsets to offset the greenhouse gas
emissions from your flight.'' The study explained that the offsets in
question involve capturing and destroying methane. It then described
two methane projects that both result in reduced emissions, but in
different timeframes. The study attempted to gauge respondents' views
on whether the timing of the emission reductions was material. For each
project, the study asked whether respondents agreed or disagreed with
the airline's statement that it offsets the emissions from their
flight. When the methane was to be captured ``within the next few
months,'' 53 percent of respondents agreed that the airline was
offsetting emissions from the flight and 20 percent disagreed.\570\ But
when the equipment used to capture methane had not yet been installed
and the methane was not to be captured ``for several years,'' only 28
percent of respondents agreed that the airline was offsetting emissions
from the flight, while 43 percent disagreed.\571\
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\569\ As mentioned above, the study asked approximately half of
all respondents about carbon offsets (and the remainder about carbon
neutral claims). Of the 1,879 respondents who answered carbon offset
questions, 770 generally understood carbon offsets. Only these 770
respondents answered questions about the timing of emission
reductions.
\570\ Additionally, 16 percent stated that they neither agreed
or disagreed and 11 percent stated that they were not sure.
\571\ Additionally, 16 percent stated that they neither agreed
or disagreed and 12 percent stated they were not sure. These figures
add up to 99 percent because of rounding.
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4. Analysis and Guidance
The Commission proposes to provide only limited guidance regarding
carbon offsets in the Guides.\572\ Although many commenters urged the
Commission to provide detailed advice or extensive regulatory
requirements, such an approach is not appropriate at this time given
the extent of the Commission's authority, the available consumer
perception evidence, and the ongoing policy debates among experts in
the field concerning the appropriate tests to substantiate offset
claims. However, it is appropriate for the Commission to provide advice
to marketers regarding some aspects of carbon offset marketing and we
discuss these below. Regardless of the Guides' scope, the Commission
may take law enforcement action to stop deceptive practices involving
carbon offset marketing pursuant to Section 5 of the FTC Act. For
example, clearly deceptive activity, such as knowingly selling the same
offset to multiple purchasers, does not need to be addressed in the
Guides and, indeed, is best addressed through enforcement actions.
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\572\ This proposed guidance can be found in 16 CFR 260.5.
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a. Consumer Interpretation of Claims and Disclosures
Some commenters asked the Commission to define terms such as carbon
offsets and require sellers to disclose to consumers certain
characteristics of their offsets. As previously discussed, under the
FTC Act, the Commission has authority to combat deceptive and unfair
practices. It does not have authority to develop environmental policies
or regulations. Accordingly, the Commission does not create definitions
or standards for environmental terms. Rather, it provides guidance to
marketers on how consumers understand those terms. The Commission's
study suggests that some consumers have a general understanding of
carbon offsets and products advertised as carbon neutral, but few
reported seeing advertisements for such items, and even fewer have
actually purchased them. The study did not identify any pattern of
confusion among respondents about what a carbon offset is that would
warrant any general FTC guidance. The Commission, therefore, does not
believe a discussion about consumer understanding of these terms in the
Guides would be useful to marketers. In addition, any such guidance
could become obsolete quickly given this rapidly evolving market.
Marketers also requested more detailed FTC guidance with respect to
the identification of allowable offset projects and the establishment
of uniform methodologies for calculating emission reductions. Such
guidance, however, would place the Commission in the role of setting
environmental policy, which is outside the agency's authority. The
Commission, therefore, declines to do so.
Except as described below, the Commission does not propose advising
offset sellers to make certain disclosures, such as the type of
projects funded by the offset sales. Although such disclosures may
provide helpful information to potential purchasers, there is no
evidence on the record to conclude that they are necessary to prevent
consumer deception. This distinction is critical under FTC law.
Pursuant to the FTC Act, advertisers must disclose information that is
necessary to prevent consumers from being misled - not all information
that
[[Page 63597]]
consumers may deem useful.\573\ Therefore, the Commission declines to
advise marketers to provide such information in every offset
advertisement.\574\
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\573\ FTC Deception Policy Statement, 103 F.T.C. at 165.
\574\ In some contexts, sellers may nevertheless wish to
disclose this information to differentiate their offsets.
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b. Timing of Emission Reductions
Some commenters suggested that the Commission advise marketers to
disclose the fact that their offsets reflect emission reductions
scheduled to occur in the future. The Commission's study, therefore,
explored respondents' views on the timing of emission reductions. The
results suggest that this timing is important to consumers.\575\
Specifically, when emission reductions did not occur for several years,
43 percent of respondents indicated that the carbon offset claim was
misleading.\576\ Accordingly, marketers may need to qualify their
offset claims to avoid deceiving consumers. Absent evidence that
consumers view their claims differently, the Commission proposes
advising marketers to disclose if the offset purchase funds emission
reductions that will not occur for two years or longer.\577\ The
Commission, however, requests comment on this proposed disclosure.
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\575\ As discussed above, this finding is based on the subset of
respondents who generally understood carbon offsets. Despite the
smaller sample size, the Commission relies on these findings because
they provide the only available consumer perception evidence upon
which to base guidance.
\576\ The study asked respondents about an airline's statement
that it would buy carbon offsets to offset the greenhouse gas
emissions from their flight.
\577\ Additionally, the Commission proposes advising offset
marketers that they should not state or imply that their products
have already reduced emissions or will do so in the near future if,
in fact, the reductions will occur at a significantly later date.
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c. Substantiating Carbon Offset Claims - Tracking Offsets
Like all marketers, carbon offset marketers must ensure that their
advertising claims are truthful, not misleading, and substantiated.
Section 260.2 of the proposed, revised Guides explains that
substantiation for environmental marketing claims often requires
competent and reliable scientific evidence. Carbon offset sellers -
particularly those new to the market - must pay special attention to
this substantiation requirement given the complexities of
substantiating offsets. For example, marketers must employ
sophisticated accounting protocols to properly quantify the GHG
emission reductions that result from a project, as well as rigorous
tracking methods to ensure that the reductions are not sold more than
once. Although savvy carbon offset marketers likely have these
procedures in place already, the Commission proposes adding this point
to the Guides to ensure that new market participants are fully informed
of their responsibilities.
d. Substantiating Carbon Offset Claims - Additionality
Many aspects of the additionality debate raise unresolved technical
and environmental policy issues. Because the Commission does not set
environmental standards or policy, establishing a specific
additionality test or tests appears to be outside of the FTC's purview.
However, in accordance with its responsibility to ensure that consumers
are not misled, the Commission proposes issuing guidance regarding
regulatory additionality.
When consumers purchase carbon offsets, they expect that they are
supporting a reduction in greenhouse gas emissions. If the law mandates
a particular emission reduction, however, that reduction will occur
whether or not someone buys an offset for the activity. In other words,
if a company sells an offset based on a mandatory emission reduction,
the purchaser is essentially funding that company's regulatory
compliance activities.\578\ Therefore, in such situations, the proposed
Guides advise marketers that offset sales are deceptive.\579\
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\578\ See Anadarko, Comment 533254-00058 at 5 (stating that it
is reasonable for consumers to assume, absent any disclaimers to the
contrary, that the GHG reduction was not taken to meet regulatory
requirements).
\579\ The Commission notes that this guidance represents its
interpretation of the FTC Act. In the future, other agencies may
issue comprehensive carbon offset regulations that address these
issues more specifically.
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The Commission does not propose promulgating guidance on which
specific additionality tests sellers must meet to substantiate offset
claims. Even if consumers have a vague expectation of
``additionality,'' it is still unclear which test is appropriate to
substantiate that interpretation.\580\ In addition, there is no
consensus among experts in the field about which tests are appropriate.
Of course, marketers are free to provide consumers with information
about how and why their offset products are additional. While such
disclosures may, or may not, be required to prevent deception,
depending on the context, they may aid consumers in differentiating
various offsets on the market.
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\580\ See Holt, Carbon Offsets Workshop Tr. at 165 (stating that
consumers expect their carbon offset purchase to ``make a
difference,'' and that ``making a difference means that it's
additional to what would have happened otherwise,'' but noting that
there is still a debate about how to determine what is additional);
WRI, Carbon Offsets Workshop Tr. at 166.
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e. Substantiating Carbon Offset Claims - Use of RECs
Similar to additionality, the use of RECs as a basis for offset
claims involves unresolved technical and policy issues. These issues
include the methods marketers should use to demonstrate that the RECs
they purchase cause the claimed GHG reductions and which additionality
tests they should apply. Further, it is unclear which entity owns the
GHG reductions - the renewable energy generator or the fossil fuel-
fired facility. Because of this uncertainty, there is a risk of double
counting the emission reductions.
It is unlikely that the Commission can provide general guidance on
these issues without setting environmental policy, which is beyond the
agency's purview. Nevertheless, as with other environmental claims,
marketers must substantiate their offset claims. Given the complexity
of the issues related to the use of RECs as a basis for offsets,
marketers should be cautious that they possess competent and reliable
scientific evidence to substantiate their claims and ensure that the
emission reductions are not double counted.
VII. Request for Comment
The Commission invites comment on all issues raised in this Notice,
including all aspects of the proposed, revised Green Guides. In
addition, the Commission requests responses to the following specific
questions:
1. Do consumers interpret general environmental claims, when qualified
by a particular attribute, to mean that the particular attribute
provides the product with a net environmental benefit? Please provide
any relevant consumer perception evidence. Should the Commission advise
marketers that a qualified-general environmental claim is deceptive if
a particular attribute represents an environmental improvement in one
area, but causes a negative impact elsewhere that makes the product
less environmentally beneficial than the product otherwise would be?
Why or why not?
2. Would it be helpful to include an example in the Guides illustrating
a qualified general environmental claim that is nevertheless deceptive?
For example, a marketer advertises its product as ``Eco-friendly sheets
- made from bamboo.'' Consumers would likely interpret this claim to
mean
[[Page 63598]]
that the sheets are made from a natural fiber, using a process that is
similar to that used for other natural fibers. The sheets, however, are
actually a man-made fiber, rayon. Although bamboo can be used to make
rayon, rayon is manufactured through a process that uses toxic
chemicals and releases hazardous air pollutants. In this instance, the
advertisement is deceptive.
3. The Commission's consumer perception study found that 27 percent of
respondents interpreted the claims ``green'' and ``eco-friendly'' as
suggesting that a product has no (rather than ``some'') negative
impact. Viewing this finding alone, would it be deceptive for a product
to be advertised with an unqualified general environmental benefit
claim if the product had a negligible environmental impact? Please
provide any relevant consumer perception evidence.
4. If a marketer makes an unqualified degradable claim for a liquid
substance (or dissolvable solid), how long do consumers believe the
substance will take to completely degrade? Please provide any relevant
consumer perception evidence. Should the Commission provide guidance
concerning this time period in the Guides? Why or why not?
5. The Commission proposes adopting a maximum period of one year for
complete decomposition of solid materials marketed as degradable
without time qualification. Would this guidance lead to deceptive
claims in circumstances where consumers would expect a material to
degrade in less than one year?
6. Should the Commission quantify the ``substantial majority''
threshold in the recyclable section of the Guides? If so, how? If not,
why not?
7. Should the Commission quantify the ``significant percentage''
threshold in the recyclable section of the Guides? If so, how? If not,
why not?
8. What changes, if any, should the Commission make to its guidance on
pre-consumer recycled content claims? How do consumers interpret such
claims? Please provide any relevant consumer perception evidence.
a. If the Commission should retain its guidance that pre-consumer
recycled materials be diverted from the solid waste stream: (1) should
the Commission continue to consider ``reuse in the original
manufacturing process'' and ``significant reprocessing'' to determine
if material is diverted from the solid waste stream; (2) what factors
should the Commission consider to determine whether material was
diverted from the solid waste stream; and (3) when processes that
divert material from the waste stream become standard practice in an
industry, do consumers continue to consider that material recycled
content?
b. If materials have historically been diverted from the solid waste
stream and reused for one purpose (e.g., fiber fill in toys), but now
may be reused for other higher purposes (e.g., as raw fiber for
textiles), do consumers still consider that material to be recycled
content even though the material was already being diverted from the
solid waste stream?
9. Do consumers understand the difference between pre-consumer and
post-consumer recycled content? Please provide any relevant consumer
perception evidence.
10. Should the Commission continue to advise marketers that recycled
content claims may be based on the annual weighted average of recycled
content in an item? If so, why? If not, why not? Are recycled content
claims based on this method likely to mislead consumers? Would
qualifying the claim avoid that deception? If so, please describe what
the disclosure should be, and why. Please also provide any relevant
consumer perception evidence.
11. If a product is advertised as ``made with recycled materials,''
either in whole or in part, should the Commission advise marketers to
qualify that claim to indicate that the product is not recyclable if it
is not? Why or why not? If a disclosure is needed, please describe what
the disclosure should be, and why.
12. Are consumers aware that manufacturers are no longer permitted to
use CFCs in their products? Do no-CFCs claims imply that other products
still contain CFCs? Please provide any relevant consumer perception
evidence.
13. What guidance, if any, should the Commission provide concerning
free-of claims based on substances which have never been associated
with a product category? How do consumers understand such claims?
Please provide any relevant consumer perception evidence.
14. What guidance, if any, should the Commission provide concerning
organic claims about non-agricultural products? How do consumers
interpret organic claims for non-agricultural products? Do consumers
understand such claims as referring to the products' ingredients,
manufacturing, or processing, or all three? Please provide any relevant
consumer perception evidence.
15. How should marketers qualify ``made with renewable materials''
claims, if at all, to avoid deception? Does disclosing the type of
material, how the material was sourced, and the reason the material is
renewable adequately qualify the claim? Why or why not? Are there other
disclosures that would adequately qualify a ``made with renewable
materials'' claim? Please describe such disclosures. Please also
provide any relevant consumer perception evidence.
16. How, and under what circumstances, should marketers qualify ``made
with renewable energy'' claims to avoid deception?
a. Does disclosing the source of the renewable energy adequately
qualify the claim and prevent deceptive implications that the
advertised product is made with renewable or recycled materials? Why or
why not? Are there other disclosures that would adequately qualify a
``made with renewable energy'' claim? Please describe such disclosures.
Please also provide any relevant consumer perception evidence.
b. Should the Commission advise marketers to qualify a ``made with
renewable energy'' claim if the advertised product is not made entirely
with renewable energy? If so, should marketers qualify such claims if
all or virtually all significant processes used in making a product are
powered by renewable energy? Why or why not? Please provide any
relevant consumer perception evidence.
17. How do consumers understand ``carbon offset'' and ``carbon
neutral'' claims? Is there any evidence of consumer confusion
concerning the use of these claims? Please provide any relevant
consumer perception evidence.
18. How should marketers qualify carbon offset claims, if at all, to
avoid deception about the timing of emission reductions? Should
marketers disclose if their offsets reflect emission reductions that
are not scheduled to occur in two years? Should marketers make a
disclosure if emission reductions are not scheduled to occur in some
other time period? If so, what time period, and why? Would such a
disclosure adequately qualify an offset claim to
[[Page 63599]]
avoid deception? Please provide any relevant consumer perception
evidence about this issue or on carbon offsets, generally.
Interested parties are invited to submit written comments
electronically or in paper form. Comments should state ``Proposed,
Revised Green Guides, 16 CFR Part 260, Project No. P954501'' in the
text and, if applicable, on the envelope.
The FTC will place your comment -- including your name and your
state -- on the public record of this proceeding, and to the extent
practicable, will make it available to the public on the FTC website at
(http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion,
the Commission endeavors to remove individuals' home contact
information from the comments before placing them on its website.
Because comments will be made public, they should not include: (1) any
sensitive personal information, such as any individual's Social
Security number, date of birth, driver's license number or other state
identification number or foreign country equivalent, passport number,
financial account number, or credit or debit card number; (2) any
sensitive health information, such as medical records or other
individually identifiable health information; or (3) any trade secret
or any commercial or financial information which is privileged or
confidential, as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing
material for which confidential treatment is requested must be filed in
paper form, must be clearly labeled ``Confidential,'' and must comply
with FTC Rule 4.9(c), 16 CFR 4.9(c).\581\
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\581\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The FTC's General Counsel
will grant or deny the request consistent with applicable law and
the public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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Because postal mail addressed to the FTC is subject to delay due to
heightened security screening, if possible, please submit your comments
in electronic form or send them by courier or overnight service. To
ensure that the Commission considers an electronic comment, you must
file it at (https://ftcpublic.commentworks.com/ftc/revisedgreenguides)
by following the instructions on the web-based form. If this Notice
appears at (http://www.regulations.gov/search/Regs/home.html#home), you
may also file a comment through that website. The Commission will
consider all comments that regulations.gov forwards to it. You may also
visit the FTC website at (http://www.ftc.gov) to read the Notice and
the news release describing it.
A comment filed in paper form should include the reference
``Proposed, Revised Green Guides, 16 CFR Part 260, Project No.
P954501'' in the text of the comment and, if applicable, on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission, Office of the Secretary, Room H-135 (Annex
J), 600 Pennsylvania Avenue, NW, Washington, DC 20580.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. The Commission will consider all timely and responsive
comments it receives. More information, including routine uses
permitted by the Privacy Act, may be found in the FTC's privacy policy
at (http://www.ftc.gov/ftc/privacy.shtm).
VIII. Proposed, Revised Green Guides
List of Subjects in 16 CFR Part 260
Advertising, Environmental protection, Labeling, Trade practices.
For the reasons set forth in the preamble, the Federal Trade
Commission is proposing to revise 16 CFR Part 260 to read as follows:
PART 260--GUIDES FOR THE USE OF ENVIRONMENTAL MARKETING CLAIMS
Sec.
260.1 Purpose, scope, and structure of the guides.
260.2 Interpretation and substantiation of environmental marketing
claims.
260.3 General principles.
260.4 General environmental benefit claims.
260.5 Carbon offsets.
260.6 Certifications and seals of approval.
260.7 Compostable claims.
260.8 Degradable claims.
260.9 Free-of and non-toxic claims.
260.10 Ozone-safe and ozone-friendly claims.
260.11 Recyclable claims.
260.12 Recycled content claims.
260.13 Refillable claims.
260.14 Renewable energy claims.
260.15 Renewable materials claims.
260.16 Source reduction claims.
Authority: 15 U.S.C. 41-58.
Sec. 260.1 Purpose, scope, and structure of the guides.
(a) These guides set forth the Federal Trade Commission's current
thinking about environmental claims. The guides help marketers avoid
making environmental marketing claims that are unfair or deceptive
under Section 5 of the Federal Trade Commission Act (FTC Act), 15
U.S.C.45. They do not confer any rights on any person and do not
operate to bind the FTC or the public. The Commission, however, can
take action under the FTC Act if a marketer makes an environmental
claim inconsistent with the guides. In any such enforcement action, the
Commission must prove that the challenged act or practice is unfair or
deceptive in violation of Section 5 of the FTC Act.
(b) These guides do not preempt federal, state, or local laws.
Compliance with those laws, however, will not necessarily preclude
Commission law enforcement action under the FTC Act.
(c) These guides apply to claims about the environmental attributes
of a product, package, or service in connection with the marketing,
offering for sale, or sale of such item or service to individuals,
businesses, or other entities. The guides apply to environmental claims
in labeling, advertising, promotional materials, and all other forms of
marketing in any medium, whether asserted directly or by implication,
through words, symbols, logos, depictions, product brand names, or any
other means.
(d) The guides consist of general principles, specific guidance on
the use of particular environmental claims, and examples. Claims may
raise issues that are addressed by more than one example and in more
than one section of the guides. The examples provide the Commission's
views on how reasonable consumers likely interpret certain claims.
Marketers can use an alternative approach if the approach satisfies the
requirements of Section 5 of the FTC Act. Whether a particular claim is
deceptive will depend on the net impression of the advertisement,
label, or other promotional material at issue. In addition, although
many examples present specific claims and options for qualifying
claims, the examples do not illustrate all permissible claims or
qualifications under Section 5 of the FTC Act.
Sec. 260.2 Interpretation and substantiation of environmental
marketing claims.
Section 5 of the FTC Act prohibits deceptive acts and practices in
or affecting commerce. A representation, omission, or practice is
deceptive if it is likely to mislead consumers acting reasonably under
the circumstances and is material to consumers' decisions. See FTC
Policy Statement on Deception, 103 F.T.C. 174 (1983). To determine if
an advertisement is deceptive, marketers must identify all express and
implied claims that the advertisement
[[Page 63600]]
reasonably conveys. Marketers must ensure that all reasonable
interpretations of their claims are truthful, not misleading, and
supported by a reasonable basis before they make the claims. See FTC
Policy Statement Regarding Advertising Substantiation, 104 F.T.C. 839
(1984). In the context of environmental marketing claims, a reasonable
basis often requires competent and reliable scientific evidence. Such
evidence consists of tests, analyses, research, or studies that have
been conducted and evaluated in an objective manner by qualified
persons and are generally accepted in the profession to yield accurate
and reliable results. Such evidence should be sufficient in quality and
quantity based on standards generally accepted in the relevant
scientific fields, when considered in light of the entire body of
relevant and reliable scientific evidence, to substantiate that each of
the marketing claims is true.
Sec. 260.3 General principles.
The following general principles apply to all environmental
marketing claims, including those described in Sec. Sec. 260.4 through
260.16. Claims should comport with all relevant provisions of these
guides.
(a) Qualifications and disclosures: To prevent deceptive claims,
qualifications and disclosures should be clear, prominent, and
understandable. To make disclosures clear and prominent, marketers
should use plain language and sufficiently large type, should place
disclosures in close proximity to the qualified claim, and should avoid
making inconsistent statements or using distracting elements that could
undercut or contradict the disclosure.
(b) Distinction between benefits of product, package, and service:
Unless it is clear from the context, an environmental marketing claim
should specify whether it refers to the product, the product's
packaging, a service, or just to a portion of the product, package, or
service. In general, if the environmental attribute applies to all but
minor, incidental components of a product or package, the marketer need
not qualify the claim to identify that fact. However, there may be
exceptions to this general principle. For example, if a marketer makes
an unqualified recyclable claim, and the presence of the incidental
component significantly limits the ability to recycle the product, the
claim would be deceptive.
Example 1: A plastic package containing a new shower curtain is
labeled ``recyclable'' without further elaboration. Because the context
of the claim does not make clear whether it refers to the plastic
package or the shower curtain, the claim is deceptive if any part of
either the package or the curtain, other than minor, incidental
components, cannot be recycled.
Example 2: A soft drink bottle is labeled ``recycled.'' The bottle is
made entirely from recycled materials, but the bottle cap is not.
Because the bottle cap is a minor, incidental component of the package,
the claim is not deceptive.
(c) Overstatement of environmental attribute: An environmental
marketing claim should not overstate, directly or by implication, an
environmental attribute or benefit. Marketers should not state or imply
environmental benefits if the benefits are negligible.
Example 1: An area rug is labeled ``50% more recycled content than
before.'' The manufacturer increased the recycled content of its rug
from 2% recycled fiber to 3%. Although the claim is technically true,
it likely conveys the false impression that the manufacturer has
increased significantly the use of recycled fiber.
Example 2: A trash bag is labeled ``recyclable'' without
qualification. Because trash bags ordinarily are not separated from
other trash at the landfill or incinerator for recycling, they are
highly unlikely to be used again for any purpose. Even if the bag is
technically capable of being recycled, the claim is deceptive since it
asserts an environmental benefit where no meaningful benefit exists.
(d) Comparative claims: Comparative environmental marketing claims
should be clear to avoid consumer confusion about the comparison.
Marketers should have substantiation for the comparison.
Example 1: An advertiser notes that its glass bathroom tiles contain
``20% more recycled content.'' Depending on the context, the claim
could be a comparison either to the advertiser's immediately preceding
product or to its competitors' products. The advertiser should have
substantiation for both interpretations. Otherwise, the advertiser
should make the basis for comparison clear, for example, by saying
``20% more recycled content than our previous bathroom tiles.''
Example 2: An advertiser claims that ``our plastic diaper liner has
the most recycled content.'' The diaper liner has more recycled
content, calculated as a percentage of weight, than any other on the
market, although it is still well under 100%. The claim likely conveys
that the product contains a significant percentage of recycled content
and has significantly more recycled content than its competitors. If
the advertiser cannot substantiate these messages, the claim would be
deceptive.
Example 3: An advertiser claims that its packaging creates ``less
waste than the leading national brand.'' The advertiser implemented the
source reduction several years ago and supported the claim by
calculating the relative solid waste contributions of the two packages.
The advertiser should have substantiation that the comparison remains
accurate.
Example 4: A product is advertised as ``environmentally preferable.''
This claim likely conveys that the product is environmentally superior
to other products. Because it is highly unlikely that the marketer can
substantiate the messages conveyed by this statement, this claim is
deceptive. The claim would not be deceptive if the marketer accompanied
it with clear and prominent language limiting the environmental
superiority representation to the particular attributes for which the
marketer has substantiation, provided the advertisement's context does
not imply other deceptive claims. For example, the claim
``Environmentally preferable: contains 50% recycled content compared to
20% for the leading brand'' would not be deceptive.
Sec. 260.4 General environmental benefit claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product, package, or service offers a general environmental
benefit.
(b) Unqualified general environmental benefit claims are difficult
to interpret and likely convey a wide range of meanings. In many cases,
such claims likely convey that the product, package, or service has
specific and far-reaching environmental benefits and may convey that
the item or service has no negative environmental impact. Because it is
highly unlikely that marketers can substantiate all reasonable
interpretations of these claims, marketers should not make unqualified
general environmental benefit claims.
(c) Marketers can qualify general environmental benefit claims to
prevent deception about the nature of the environmental benefit being
asserted. To avoid deception, marketers should use clear and prominent
qualifying language that limits the claim to a specific benefit.
[[Page 63601]]
(d) Even if a marketer explains, and has substantiation for, the
product's specific environmental attributes, this explanation will not
adequately qualify a general environmental benefit claim if the
advertisement otherwise implies deceptive claims. Therefore, marketers
should ensure that the advertisement's context does not imply deceptive
environmental claims.
Example 1: The brand name ``Eco-friendly'' likely conveys that the
product has far-reaching environmental benefits and may convey that the
product has no negative environmental impact. Because it is highly
unlikely that the marketer can substantiate these claims, the use of
such a brand name is deceptive. A claim, such as ``Eco-friendly: made
with recycled materials,'' would not be deceptive if the statement
``made with recycled materials'' is clear and prominent; the marketer
has substantiation for the statement; and provided that the
advertisement's context does not imply other deceptive claims.
Example 2: A product wrapper bears the claim ``Environmentally
Friendly.'' Text on the wrapper explains that it is environmentally
friendly because it was ``not chlorine bleached, a process that has
been shown to create harmful substances.'' Although the wrapper was not
bleached with chlorine, its production releases into the environment
other harmful substances. Since reasonable consumers likely would
interpret the ``Environmentally Friendly'' claim, in combination with
the explanation, to mean that no significant harmful substances are
released into the environment, the ``Environmentally Friendly'' claim
is deceptive.
Example 3: A marketer states that its packaging is now ``Greener than
our previous packaging.'' The packaging weighs 15% less than previous
packaging, but it is not recyclable nor has it been improved in any
other material respect. The claim is deceptive because reasonable
consumers likely would interpret ``Greener'' in this context to mean
that other significant environmental aspects of the packaging also are
improved over previous packaging. A claim stating ``Greener than our
previous packaging'' accompanied by clear and prominent language such
as, ``We've reduced the weight of our packaging by 15%,'' would not be
deceptive, provided that the advertisement's context does not imply
other deceptive claims.
Sec. 260.5 Carbon offsets.
(a) Given the complexities of carbon offsets, sellers should employ
competent and reliable scientific and accounting methods to properly
quantify claimed emission reductions and to ensure that they do not
sell the same reduction more than one time.
(b) It is deceptive to misrepresent, directly or by implication,
that a carbon offset represents emission reductions that have already
occurred or will occur in the immediate future. To avoid deception,
marketers should clearly and prominently disclose if the carbon offset
represents emission reductions that will not occur for two years or
longer.
(c) It is deceptive to claim, directly or by implication, that a
carbon offset represents an emission reduction if the reduction, or the
activity that caused the reduction, was required by law.
Example 1: On its website, an airline invites consumers to purchase
offsets to ``neutralize the carbon emissions from your flight.'' The
proceeds from the offset sales fund future projects that will not
reduce greenhouse gas emissions for two years. The claim likely conveys
that the emission reductions either already have occurred or will occur
in the near future. Therefore, the advertisement is deceptive. It would
not be deceptive if the airline's website stated ``Offset the carbon
emissions from your flight by funding new projects that will begin
reducing emissions in two years.''
Example 2: An offset provider claims that its product ``will offset
your own `dirty' driving habits.'' The offset is based on methane
capture at a landfill facility. State law requires this facility to
capture all methane emitted from the landfill. The claim is deceptive
because the emission reduction would have occurred regardless of
whether consumers purchased the offsets.
Sec. 260.6 Certifications and seals of approval.
(a) It is deceptive to misrepresent, directly or by implication,
that a product, package, or service has been endorsed or certified by
an independent third-party.
(b) A marketer's use of the name, logo, or seal of approval of a
third-party certifier is an endorsement, which should meet the criteria
for endorsements provided in the FTC's Endorsement Guides, 16 CFR Part
255, including Definitions (Sec. 255.0), General Considerations (Sec.
255.1), Expert Endorsements (Sec. 255.3), Endorsements by
Organizations (Sec. 255.4), and Disclosure of Material Connections
(Sec. 255.5).
(c) Third-party certification does not eliminate a marketer's
obligation to ensure that it has substantiation for all claims
reasonably communicated by the certification.
(d) A marketer's use of an unqualified environmental certification
or seal of approval (i.e., one that does not state the basis for the
certification) likely conveys a general environmental benefit claim
(addressed in Sec. 260.4). Because it is highly unlikely that
marketers can substantiate such claims, marketers should not use
unqualified certifications or seals of approval.
(e) To avoid deception, language qualifying a certification or seal
of approval should be clear and prominent and should clearly convey
that the certification or seal of approval refers only to specific and
limited benefits. This qualifying language may be part of the
certification or seal itself.
Example 1: An advertisement for paint features a ``GreenLogo'' seal
and the statement ``GreenLogo for Environmental Excellence.'' This
advertisement likely conveys that: the GreenLogo seal is awarded by an
independent, third-party certifier with expertise in evaluating the
environmental attributes of paint; and the product has far-reaching
environmental benefits. If the paint manufacturer placed the GreenLogo
seal in its advertisement, and no independent, third-party certifier
evaluated the paint, the claim would be deceptive. The claim would not
be deceptive if the marketer accompanied the seal with clear and
prominent language: indicating that the marketer itself created the
GreenLogo seal; and limiting the general environmental benefit
representation to the particular product attributes for which the
marketer has substantiation, provided that the advertisement's context
does not imply other deceptive claims.
Example 2: A product advertisement includes a seal with the text
``Certified by the Renewable Energy Association.'' The product
manufacturer is a dues-paying member of that association. Even if the
association certified that the manufacturer uses only renewable energy,
the use of the seal is deceptive because it likely conveys that the
association is independent from the product manufacturer. To avoid
deception, the manufacturer should accompany the seal with clear and
prominent language disclosing the material connection.
[[Page 63602]]
Example 3: A manufacturer advertises its product as ``certified by the
American Institute of Degradable Materials.'' The advertisement does
not mention that the American Institute of Degradable Materials is an
industry trade association. Regardless of whether the manufacturer is a
member, this advertisement is deceptive because it likely conveys that
the product is certified by an independent certifying organization, not
an industry group. The advertisement would not be deceptive if the
manufacturer accompanies its statement that the product is ``certified
by the American Institute of Degradable Materials'' with clear and
prominent language indicating that the Institute is an industry trade
association, and if the manufacturer otherwise complies with Sec.
260.8 of the Guides.
Example 4: A marketer's industry sales brochure for overhead lighting
features a seal with the text ``U.S. EcoFriendly Building Association''
to show that the marketer is a member of that organization. Although
the lighting manufacturer is, in fact, a member, this association has
not evaluated the environmental attributes of the company's product.
This advertisement would be deceptive because it likely conveys that
the U.S. EcoFriendly Building Association evaluated the product through
testing or other objective standards. It also is likely to convey that
the lighting has far-reaching environmental benefits. The use of the
seal would not be deceptive if the manufacturer accompanies it with
clear and prominent qualifying language: indicating that the seal
refers to the company's membership only and that the association did
not evaluate the product's environmental attributes, and limiting the
general environmental benefit representation to the particular product
attributes for which the marketer has substantiation, provided that the
advertisement's context does not imply other deceptive claims. For
example, the marketer could state, ``Although we are a member of the
U.S. EcoFriendly Building Association, it has not evaluated this
product. Our lighting is made from 100 percent recycled metal and uses
energy efficient LED technology.''
Example 5: A product label contains an environmental seal, either in
the form of a globe icon or a globe icon with the text ``EarthSmart.''
EarthSmart is an independent, third-party certifier that uses standards
previously adopted by EarthSmart and suitable for evaluating products'
chemical emissions. While the marketer meets EarthSmart's standards for
reduced chemical emissions during product usage, the product has no
other specific environmental benefits. Either seal likely conveys that
the product has far-reaching environmental benefits, and that Earth
Smart certified the product for all of these benefits. If the marketer
cannot substantiate these claims, the use of the seal would be
deceptive. The seal would not be deceptive if the marketer accompanied
it with clear and prominent language limiting the general environmental
benefit claim to the particular product attributes for which the
manufacturer has substantiation, provided that the advertisement's
context does not imply other deceptive claims. For example, the
marketer could state next to the globe icon: ``EarthSmart certifies
that this product meets EarthSmart standards for reduced chemical
emissions during product usage.'' Alternatively, the claim would not be
deceptive if the EarthSmart environmental seal itself stated:
``EarthSmart Certified for reduced chemical emissions during product
usage.''
Example 6: Great Paper Company sells photocopy paper with packaging
that has a seal of approval from the No Chlorine Products Association,
a non-profit third-party association. There are no material connections
between Great Paper Company and the No Chlorine Products Association.
Using standards widely recognized by industry experts, the No Chlorine
Products Association certifies that products are chlorine-free.
Moreover, the Association's endorsement was reached by a process
sufficient to ensure that the endorsement fairly reflects the
collective judgment of the Association. The claim would not be
deceptive.
Sec. 260.7 Compostable claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is compostable.
(b) A marketer claiming that an item is compostable should have
competent and reliable scientific evidence that all the materials in
the item will break down into, or otherwise become part of, usable
compost (e.g., soil-conditioning material, mulch) in a safe and timely
manner (i.e., in approximately the same time as the materials with
which it is composted) in an appropriate composting program or facility
or in a home compost pile or device.
(c) A marketer should clearly and prominently qualify compostable
claims to the extent necessary to avoid deception if: the item cannot
be composted safely or in a timely manner in a home compost pile or
device; or the claim misleads reasonable consumers about the
environmental benefit provided when the item is disposed of in a
landfill.
(d) To avoid deception about the limited availability of municipal
or institutional composting facilities, a marketer should clearly and
prominently qualify compostable claims if such facilities are not
available to a substantial majority of consumers or communities where
the item is sold.
Example 1: A manufacturer indicates that its unbleached coffee filter
is compostable. The unqualified claim is not deceptive, provided the
manufacturer has substantiation that the filter can be converted safely
to usable compost in a timely manner in a home compost pile or device.
If so, the extent of local municipal or institutional composting
facilities is irrelevant.
Example 2: A garden center sells grass clipping bags labeled as
``Compostable in California Municipal Yard Trimmings Composting
Facilities.'' When the bags break down, however, they release toxins
into the compost. The claim is deceptive if the presence of these
toxins prevents the compost from being usable.
Example 3: An electronics manufacturer makes an unqualified claim that
its package is compostable. Although municipal or institutional
composting facilities exist where the product is sold, the package will
not break down into usable compost in a home compost pile or device. To
avoid deception, the manufacturer should clearly and prominently
disclose that the package is not suitable for home composting.
Example 4: Nationally marketed lawn and leaf bags state
``compostable'' on each bag. The bags also feature text disclosing that
the bag is not designed for use in home compost piles. Yard trimmings
programs in many communities compost these bags, but such programs are
not available to a substantial majority of consumers or communities
where the bag is sold. The claim is deceptive because it likely conveys
that composting facilities are available to a substantial
[[Page 63603]]
majority of consumers or communities. To avoid deception, the marketer
should clearly and prominently indicate the limited availability of
such programs. A marketer could state ``Appropriate facilities may not
exist in your area,'' or provide the approximate percentage of
communities or consumers for which such programs are available.
Example 5: A manufacturer sells a disposable diaper that states,
``This diaper can be composted if your community is one of the 50 that
have composting facilities.'' The claim is not deceptive if composting
facilities are available as claimed and the manufacturer has
substantiation that the diaper can be converted safely to usable
compost in solid waste composting facilities.
Example 6: A manufacturer markets yard trimmings bags only to
consumers residing in particular geographic areas served by county yard
trimmings composting programs. The bags meet specifications for these
programs and are labeled, ``Compostable Yard Trimmings Bag for County
Composting Programs.'' The claim is not deceptive. Because the bags are
compostable where they are sold, a qualification is not needed to
indicate the limited availability of composting facilities.
Sec. 260.8 Degradable claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is degradable, biodegradable, oxo-degradable,
oxo-biodegradable, or photodegradable. The following guidance for
degradable claims also applies to biodegradable, oxo-degradable, oxo-
biodegradable, or photodegradable claims.
(b) A marketer making 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.
(c) It is deceptive to make an unqualified degradable claim for
solid items if the items do not completely decompose within one year
after customary disposal. Unqualified degradable claims for items that
are customarily disposed in landfills, incinerators, and recycling
facilities are deceptive because these locations do not present
conditions in which complete decomposition will occur within one year.
(d) Degradable claims should be qualified clearly and prominently
to the extent necessary to avoid deception about: the product or
package's ability to degrade in the environment where it is customarily
disposed; and the rate and extent of degradation.
Example 1: A marketer advertises its trash bags using an unqualified
``degradable'' claim. The marketer relies on soil burial tests to show
that the product will decompose in the presence of water and oxygen.
Consumers, however, customarily dispose of trash bags in incineration
facilities or landfills where they will not degrade within one year.
The claim is, therefore, deceptive.
Example 2: A marketer advertises a commercial agricultural plastic
mulch film with the claim ``Photodegradable,'' and clearly and
prominently qualifies the term with the phrase ``Will break down into
small pieces if left uncovered in sunlight.'' The advertiser possesses
competent and reliable scientific evidence that within one year, the
product will break down after being exposed to sunlight and into
sufficiently small pieces to become part of the soil. Thus, the
qualified claim is not deceptive. Because the claim is qualified to
indicate the limited extent of breakdown, the advertiser need not meet
the consumer expectations for an unqualified photodegradable claim,
i.e., that the product will not only break down, but also will
decompose into elements found in nature.
Example 3: A marketer advertises its shampoo as ``biodegradable''
without qualification. The advertisement makes clear that only the
shampoo, and not the bottle, is biodegradable. The marketer has
competent and reliable scientific evidence demonstrating that the
shampoo, which is customarily disposed in sewage systems, will break
down and decompose into elements found in nature in a reasonably short
period of time in the sewage system environment. Therefore, the claim
is not deceptive.
Example 4: A plastic six-pack ring carrier is marked with a small
diamond. Several state laws require that the carriers be marked with
this symbol to indicate that they meet certain degradability standards
if the carriers are littered. The use of the diamond, by itself, does
not constitute a degradable claim.\1\
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\1\ The guides' treatment of unqualified degradable claims is
intended to help prevent deception and is not intended to establish
performance standards to ensure the degradability of products when
littered.
Example 5: A fiber pot containing a plant is labeled
``biodegradable.'' The pot is customarily buried in the soil along with
the plant. Once buried, the pot fully decomposes during the growing
season, allowing the roots of the plant to grow into the surrounding
soil. The unqualified claim is not deceptive.
Sec. 260.9 Free-of and non-toxic claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product, package, or service is free of, or does not contain or
use, a substance or that a product, package, or service is non-toxic.
Such claims should be clearly and prominently qualified to the extent
necessary to avoid deception.
(b) A truthful claim that a product, package, or service is free
of, or does not contain or use, a substance may nevertheless be
deceptive if: the product, package, or service contains or uses
substances that pose the same or similar environmental risks as the
substance that is not present; or the substance has never been
associated with the product category.
(c) Depending on the context, some no, free-of, or does-not-contain
claims may be appropriate even where a product, package, or service
contains or uses a de minimis amount of a substance.
(d) A marketer that makes a no, free-of, or does-not-contain claim
that reasonable consumers would interpret to convey additional
environmental claims, including general environmental benefit claims or
comparative superiority claims, must have substantiation for each such
claim.
(e) A non-toxic claim likely conveys that a product, package, or
service is non-toxic both for humans and for the environment generally.
Therefore, marketers making non-toxic claims should have competent and
reliable scientific evidence that the product, package, or service is
non-toxic for humans and for the environment or should clearly and
prominently qualify their claims to avoid deception.
Example 1: A package of t-shirts is labeled ``Shirts made with a
chlorine-free bleaching process.'' The shirts, however, are bleached
with a process that releases a reduced, but still significant, amount
of the same harmful byproducts associated with
[[Page 63604]]
chlorine bleaching. The claim overstates the product's benefits because
reasonable consumers likely would interpret it to mean that the
product's manufacture does not cause any of the environmental risks
posed by chlorine bleaching. A claim, however, that the shirts were
``bleached with a process that substantially reduces harmful substances
associated with chlorine bleaching'' would not be deceptive, if
substantiated.
Example 2: A manufacturer advertises its insulation as ``formaldehyde
free.'' Although the manufacturer does not use formaldehyde as a
binding agent to produce the insulation, tests show that the insulation
still emits trace amounts of formaldehyde. The seller has
substantiation that formaldehyde is present in trace amounts in
virtually all indoor and (to a lesser extent) outdoor environments and
that its insulation emits less formaldehyde than is typically present
in outdoor environments. In this context, the trace levels of
formaldehyde emissions likely are inconsequential to consumers.
Therefore, the seller's free-of claim would not be deceptive.
Example 3: A marketer advertises a lawn care product as ``essentially
non-toxic'' and ``practically non-toxic.'' The advertisement likely
conveys that the product does not pose any risk to humans or the
environment. If the pesticide poses no risk to humans but is toxic to
the environment, the claims would be deceptive.
Sec. 260.10 Ozone-safe and ozone-friendly claims.
It is deceptive to misrepresent, directly or by implication, that a
product, package, or service is safe for, or friendly to, the ozone
layer or the atmosphere.
Example 1: A product is labeled ``ozone friendly.'' The claim is
deceptive if the product contains any ozone-depleting substance,
including those substances listed as Class I or Class II chemicals in
Title VI of the Clean Air Act Amendments of 1990, Pub. L. No. 101-549,
and others subsequently designated by EPA as ozone-depleting
substances. These chemicals include chlorofluorocarbons (CFCs), halons,
carbon tetrachloride, 1,1,1-trichloroethane, methyl bromide,
hydrobromofluorocarbons, and hydrochlorofluorocarbons (HCFCs).
Example 2: An aerosol air freshener is labeled ``ozone friendly.''
Some of the product's ingredients are volatile organic compounds (VOCs)
that may cause smog by contributing to ground-level ozone formation.
The claim likely conveys that the product is safe for the atmosphere as
a whole, and, therefore, is deceptive.
Example 3: A manufacturer has substituted non-ozone-depleting
refrigerants for the ozone-depleting substances in its residential air
conditioning equipment. The manufacturer advertises its equipment as
``environmentally friendly.'' This general environmental benefit claim
likely conveys that the product has far reaching environmental
benefits. However, the manufacturer's air conditioning equipment
consumes a substantial amount of energy and relies on refrigerants that
are greenhouse gases. Accordingly, this claim is deceptive.
Sec. 260.11 Recyclable claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is recyclable. A product or package should
not be marketed as recyclable unless it can be collected, separated, or
otherwise recovered from the solid waste stream through an established
recycling program for reuse or use in manufacturing or assembling
another item.
(b) Marketers should clearly and prominently qualify recyclable
claims to the extent necessary to avoid deception about the
availability of recycling programs and collection sites to consumers.
(1) When recycling facilities are available to a substantial
majority\2\ of consumers or communities where the item is sold,
marketers can make unqualified recyclable claims.
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\2\ Commission staff has informally interpreted the term
``substantial majority,'' as used in this context, to mean at least
60 percent.
---------------------------------------------------------------------------
(2) When recycling facilities are available to a significant
percentage of consumers or communities where the item is sold, but not
to a substantial majority, marketers should clearly and prominently
qualify their recyclable claims. Suggested qualifications are: ``This
product [package] may not be recyclable in your area,'' ``Recycling
programs for this product [package] may not exist in your area,'' or a
statement of the percentage of communities or the population that have
programs where the item can be recycled.
(3) When recycling facilities are available to less than a
significant percentage of consumers or communities where the item is
sold, marketers should clearly and prominently qualify their recyclable
claims. Suggested qualifications are: ``This product [package] is
recyclable only in the few communities that have recycling programs,''
or a statement of the percentage of communities or the population that
have programs where the item can be recycled.
(c) Marketers can make unqualified recyclable claims for a product
or package if the entire product or package, excluding minor incidental
components, is recyclable. For items that are partially made of
recyclable components, marketers should clearly and prominently qualify
the recyclable claim to avoid deception about which portions are
recyclable.
(d) If any component significantly limits the ability to recycle
the item, any recyclable claim would be deceptive. An item that is made
from recyclable material, but, because of its shape, size, or some
other attribute, is not accepted in recycling programs, should not be
marketed as recyclable.\3\
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\3\ Batteries labeled in accordance with the Mercury-Containing
and Rechargeable Battery Management Act, 42 U.S.C. Sec. 14322(b),
are deemed to be in compliance with these Guides.
Example 1: A packaged product is labeled with an unqualified claim,
``recyclable.'' It is unclear from the type of product and other
context whether the claim refers to the product or its package. The
unqualified claim likely conveys that both the product and its
packaging, except for minor, incidental components, can be recycled.
Unless the manufacturer has substantiation for both messages, it should
clearly and prominently qualify the claim to indicate which portions
---------------------------------------------------------------------------
are recyclable.
Example 2: A nationally marketed plastic yogurt container displays the
Society of the Plastics Industry (SPI) code (which consists of a design
of arrows in a triangular shape containing a number in the center and
an abbreviation identifying the component plastic resin) on the front
label of the container, in close proximity to the product name and
logo. This conspicuous use of the SPI code constitutes a recyclable
claim. Unless recycling facilities for this container are available to
a substantial majority of consumers or communities, the manufacturer
should qualify the claim to disclose the limited availability of
recycling programs. If the manufacturer places the SPI code, without
more, in an
[[Page 63605]]
inconspicuous location on the container (e.g., embedded in the bottom
of the container), it would not constitute a recyclable claim.
Example 3: A container can be burned in incinerator facilities to
produce heat and power. It cannot, however, be recycled into another
product or package. Any claim that the container is recyclable would be
deceptive.
Example 4: A paperboard package is marketed nationally and labeled
either ``Recyclable where facilities exist'' or ``Recyclable - Check to
see if recycling facilities exist in your area.'' Recycling programs
for these packages are available to a significant percentage of the
population, but not to a substantial majority of consumers nationwide.
Both claims are deceptive because they do not adequately disclose the
limited availability of recycling programs. To avoid deception, the
marketer should use a clearer qualification, such as those suggested in
Sec. 260.11(b)(2).
Example 5: Foam polystyrene cups are advertised as ``Recyclable in the
few communities with facilities for foam polystyrene cups.'' A half-
dozen major metropolitan areas have established collection sites for
recycling those cups. The claim is not deceptive because it clearly
discloses the limited availability of recycling programs.
Example 6: A package is labeled ``Includes some recyclable material.''
The package is composed of four layers of different materials, bonded
together. One of the layers is made from recyclable material, but the
others are not. While programs for recycling this type of package are
available to a substantial majority of consumers, only a few of those
programs have the capability to separate the recyclable layer from the
non-recyclable layers. Even though it is technologically possible to
separate the layers, the claim is deceptive. An appropriately qualified
claim would be ``Includes material recyclable in the few communities
that can process multi-layer products.''
Example 7: A product container is labeled ``recyclable.'' The marketer
advertises and distributes the product only in Missouri. Collection
sites for recycling the container are available to a substantial
majority of Missouri residents but are not yet available nationally.
Because programs are generally available where the product is sold, the
unqualified claim is not deceptive.
Example 8: A manufacturer of one-time use cameras, with dealers in a
substantial majority of communities, operates a take-back program that
collects those cameras through all of its dealers. The manufacturer
reconditions the cameras for resale and labels them ``Recyclable
through our dealership network.'' This claim is not deceptive, even
though the cameras are not recyclable through conventional curbside or
drop off recycling programs.
Example 9: A manufacturer advertises its toner cartridges for computer
printers as ``Recyclable. Contact your local dealer for details.''
Although all of the company's dealers recycle cartridges, the dealers
are not located in a substantial majority of communities where
cartridges are sold. Therefore, the claim is deceptive. If dealers are
located in a significant number of communities, the manufacturer should
qualify its claim as suggested in Sec. 260.11(b)(2). If participating
dealers are located in only a few communities, the manufacturer should
qualify the claim as suggested in Sec. 260.11(b)(3).
Example 10: An aluminum can is labeled ``Please Recycle.'' This
statement likely conveys that the can is recyclable. If collection
sites for recycling these cans are available to a substantial majority
of consumers or communities, the marketer does not need to qualify the
claim.
Sec. 260.12 Recycled content claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is made of recycled content. Recycled content
includes recycled raw material, as well as used,\4\ reconditioned, and
re-manufactured components.
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\4\ The term ``used'' refers to parts that are not new and that
have not undergone any re-manufacturing or reconditioning.
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(b) It is deceptive to represent, directly or by implication, that
an item contains recycled content unless it is composed of materials
that have been recovered or otherwise diverted from the solid waste
stream, either during the manufacturing process (pre-consumer), or
after consumer use (post-consumer). If the source of recycled content
includes pre-consumer material, the advertiser should have
substantiation that the pre-consumer material would otherwise have
entered the solid waste stream. Recycled content claims may - but do
not have to - distinguish between pre-consumer and post-consumer
materials. Where a marketer distinguishes between pre-consumer and
post-consumer materials, it should have substantiation for any express
or implied claim about the percentage of pre-consumer or post-consumer
content in an item.
(c) Marketers can make unqualified claims of recycled content if
the entire product or package, excluding minor, incidental components,
is made from recycled material. For items that are partially made of
recycled material, the marketer should clearly and prominently qualify
the claim to avoid deception about the amount or percentage, by weight,
of recycled content in the finished product or package.
(d) For products that contain used, reconditioned, or re-
manufactured components, the marketer should clearly and prominently
qualify the recycled content claim to avoid deception about the nature
of such components. No such qualification is necessary where it is
clear to reasonable consumers from context that a product's recycled
content consists of used, reconditioned, or re-manufactured components.
Example 1: A manufacturer collects spilled raw material and scraps
from the original manufacturing process. After a minimal amount of
reprocessing, the manufacturer combines the spills and scraps with
virgin material for use in production of the same product. A recycled
content claim is deceptive since the spills and scraps are normally
reused by industry within the original manufacturing process and would
not normally have entered the waste stream.
Example 2: A manufacturer purchases material from a firm that collects
discarded material from other manufacturers and resells it. All of the
material was diverted from the solid waste stream and is not normally
reused by industry within the original manufacturing process. The
manufacturer includes the weight of this material in its calculations
of the recycled content of its products. It would not be deceptive for
the manufacturer to advertise the amount of recycled content in its
product because, absent the purchase and reuse of this material, it
would have entered the solid waste stream.
Example 3: Fifty percent (50%) of a greeting card's fiber weight is
[[Page 63606]]
composed from paper that was diverted from the solid waste stream. Of
this material, 30% is post-consumer and 20% is pre-consumer. It would
not be deceptive if the marketer claimed that the card either
``contains 50% recycled fiber'' or ``contains 50% total recycled fiber,
including 30% post-consumer fiber.''
Example 4: A paperboard package with 20% recycled fiber by weight is
labeled ``20% post-consumer recycled fiber.'' The recycled content was
composed of overrun newspaper stock never sold to customers. Because
the newspapers never reached consumers, the claim is deceptive.
Example 5: A product in a multi-component package, such as a
paperboard box in a shrink-wrapped plastic cover, indicates that it has
recycled packaging. The paperboard box is made entirely of recycled
material, but the plastic cover is not. The claim is deceptive because,
without qualification, it suggests that both components are recycled. A
claim limited to the paperboard box would not be deceptive.
Example 6: A manufacturer makes a package from laminated layers of
foil, plastic, and paper, although the layers are indistinguishable to
consumers. The label claims that ``one of the three layers of this
package is made of recycled plastic.'' The plastic layer is made
entirely of recycled plastic. The claim is not deceptive, provided the
recycled plastic layer constitutes a significant component of the
entire package.
Example 7: A frozen dinner package is composed of a plastic tray
inside a cardboard box. It states ``package made from 30% recycled
material.'' Each packaging component is one-half the weight of the
total package. The box is 20% recycled content by weight, while the
plastic tray is 40% recycled content by weight. The claim is not
deceptive, since the average amount of recycled material is 30%.
Example 8: A manufacturer labels a paper greeting card ``50% recycled
fiber.'' The manufacturer purchases paper stock from several sources,
and the amount of recycled fiber in the stock provided by each source
varies. If the 50% figure is based on the annual weighted average of
recycled material purchased from the sources after accounting for fiber
loss during the production process, the claim is not deceptive.
Example 9: A packaged food product is labeled with a three-chasing-
arrows symbol (a M[ouml]bius loop) without explanation. By itself, the
symbol likely conveys that the packaging is both recyclable and made
entirely from recycled material. Unless the marketer has substantiation
for both messages, the claim should be qualified. The claim may need to
be further qualified, to the extent necessary, to disclose the limited
availability of recycling programs and/or the percentage of recycled
content used to make the package.
Example 10: In an office supply catalog, a manufacturer advertises its
printer toner cartridges ``65% recycled.'' The cartridges contain 25%
recycled raw materials and 40% reconditioned parts. The claim is
deceptive because reasonable consumers likely would not know or expect
that a cartridge's recycled content consists of reconditioned parts. It
would not be deceptive if the manufacturer claimed ``65% recycled
content; including 40% from reconditioned parts.''
Example 11: A store sells both new and used sporting goods. One of the
items for sale in the store is a baseball helmet that, although used,
is no different in appearance than a brand new item. The helmet bears
an unqualified ``Recycled'' label. This claim is deceptive because
reasonable consumers likely would believe that the helmet is made of
recycled raw materials, when it is, in fact, a used item. An acceptable
claim would bear a disclosure clearly and prominently stating that the
helmet is used.
Example 12: An automotive dealer recovers a serviceable engine from a
wrecked vehicle. Without repairing, rebuilding, re-manufacturing, or in
any way altering the engine or its components, the dealer attaches a
``Recycled'' label to the engine, and offers it for sale in its used
auto parts store. In this situation, an unqualified recycled content
claim likely is not deceptive because reasonable consumers likely would
understand that the engine is used and has not undergone any
rebuilding.
Example 13: An automobile parts dealer purchases a transmission that
has been recovered from a junked vehicle. Eighty-five percent of the
transmission, by weight, was rebuilt and 15% constitutes new materials.
After rebuilding\5\ the transmission in accordance with industry
practices, the dealer packages it for resale in a box labeled ``Rebuilt
Transmission,'' or ``Rebuilt Transmission (85% recycled content from
rebuilt parts),'' or ``Recycled Transmission (85% recycled content from
rebuilt parts).'' These claims are not deceptive.
---------------------------------------------------------------------------
\5\ The term ``rebuilding'' means that the dealer dismantled and
reconstructed the transmission as necessary, cleaned all of its
internal and external parts and eliminated rust and corrosion,
restored all impaired, defective or substantially worn parts to a
sound condition (or replaced them if necessary), and performed any
operations required to put the transmission in sound working
condition.
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Sec. 260.13 Refillable claims.
It is deceptive to misrepresent, directly or by implication, that a
package is refillable. A marketer should not make an unqualified
refillable claim unless the marketer provides the means for refilling
the package. The marketer may either provide a system for the
collection and refill of the package, or offer for sale a product that
consumers can purchase to refill the original package.
Example 1: A container is labeled ``refillable three times.'' The
manufacturer has the capability to refill returned containers and can
show that the container will withstand being refilled at least three
times. The manufacturer, however, has established no collection
program. The unqualified claim is deceptive because there is no means
to return the container to the manufacturer for refill.
Example 2: A small bottle of fabric softener states that it is in a
``handy refillable container.'' In the same market area, the
manufacturer also sells a large-sized bottle that consumers use to
refill the smaller bottles. The claim is not deceptive because there is
a reasonable means for the consumer to refill the smaller container.
Sec. 260.14 Renewable energy claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is made with renewable energy or that a
service uses renewable energy. Marketers should not make unqualified
renewable energy claims, directly or by implication, if power derived
from fossil fuels is used to manufacture any part of the advertised
item or is used to power any part of the advertised service.
(b) Research suggests that reasonable consumers may interpret
renewable energy claims differently than marketers may intend. Unless
marketers have substantiation for all their express and reasonably
implied claims, they should
[[Page 63607]]
clearly and prominently qualify their renewable energy claims by
specifying the source of the renewable energy (e.g., wind or solar
energy).
(c) It is deceptive to make an unqualified ``made with renewable
energy'' claim unless all or virtually all of the significant
manufacturing processes involved in making the product or package are
powered with renewable energy or conventional energy offset by
renewable energy certificates.
(d) If a marketer generates renewable electricity but sells
renewable energy certificates for all of that electricity, it would be
deceptive for the marketer to represent, directly or by implication,
that it uses renewable energy.
Example 1: A marketer advertises its clothing line as ``made with wind
power.'' The marketer buys renewable energy certificates to match only
50% of the energy it uses. The marketer's claim is deceptive because
reasonable consumers likely interpret the claim to mean that the power
was composed entirely of renewable energy. If the marketer stated ``we
purchase wind energy for half of our manufacturing facilities,'' the
claim would not be deceptive.
Example 2: A company places solar panels on its store roof to generate
power and advertises that its store is ``100% solar-powered.'' The
company, however, sells renewable energy certificates based on the
renewable attributes of all the power it generates. Even if the company
uses the electricity generated by the solar panels, it has, by selling
renewable energy certificates, transferred the right to characterize
that electricity as renewable. The company's claim is therefore
deceptive. It also would be deceptive for this company to advertise
that it ``hosts a renewable power facility'' because reasonable
consumers likely would interpret this claim to mean that the company
uses renewable energy.
Sec. 260.15 Renewable materials claims.
(a) It is deceptive to misrepresent, directly or by implication,
that a product or package is made with renewable materials.
(b) Research suggests that reasonable consumers may interpret
renewable materials claims differently than marketers may intend. For
example, reasonable consumers may believe an item advertised as being
``made with renewable materials'' is made with recycled content,
recyclable, and biodegradable. Unless marketers have substantiation for
all their express and reasonably implied claims, they should clearly
and prominently qualify their renewable materials claims by specifying
the material used, how the material is sourced, and why the material is
renewable.
(c) It is deceptive to make an unqualified ``made with renewable
materials'' claim unless the product or package (excluding minor,
incidental components) is made entirely with renewable materials.
Example 1: A marketer makes the unqualified claim that its flooring is
``made with renewable materials.'' Reasonable consumers likely
interpret this claim to mean that the flooring also is made with
recycled content, recyclable, and biodegradable. Unless the marketer
has substantiation for these implied claims, the unqualified ``made
with renewable materials'' claim is deceptive. The marketer could
qualify the claim by stating, clearly and prominently, ``Our flooring
is made from 100% bamboo, a fast-growing plant, which we cultivate at
the same rate, or faster, than we use it.''
Example 2: A marketer's packaging states that ``Our packaging is made
from 50% plant-based renewable materials. Because we turn fast-growing
plants into bio-plastics, only half of our product is made from
petroleum-based materials.'' If substantiated, this claim is unlikely
to be deceptive.
Example 3: Through testing, a marketer can establish that its product
is composed entirely of biological material. It markets its product as
``made with 100% renewable materials.'' This claim, without further
explanation, likely conveys that the product has other environmental
benefits, including that it is recyclable, made with recycled content,
or biodegradable. If the marketer cannot substantiate these messages,
the claim would be deceptive.
Sec. 260.16 Source reduction claims.
It is deceptive to misrepresent, directly or by implication, that a
product or package has been reduced or is lower in weight, volume, or
toxicity. Marketers should clearly and prominently qualify source
reduction claims to the extent necessary to avoid deception about the
amount of the source reduction and the basis for any comparison.
Example 1: An advertiser claims that disposal of its product generates
``10% less waste.'' Because this claim could be a comparison to the
advertiser's immediately preceding product or to its competitors'
products, the advertiser should have substantiation for both
interpretations. Otherwise, the advertiser should clarify which
comparison it intends and have substantiation for that comparison. A
claim of ``10% less waste than our previous product'' would not be
deceptive if the advertiser has substantiation that shows that the
current product's disposal contributes 10% less waste by weight or
volume to the solid waste stream when compared with the immediately
preceding version of the product.
By direction of the Commission.
Donald S. Clark
Secretary
[FR Doc. 2010-25000 Filed 10-14-10; 8:45 am]
BILLING CODE 6750-01-S