Guides for the Use of Environmental Marketing Claims, 63552-63607 [2010-25000]

Download as PDF 63552 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules FEDERAL TRADE COMMISSION 16 CFR Part 260 Guides for the Use of Environmental Marketing Claims Federal Trade Commission. Proposed revisions to guidelines. AGENCY: ACTION: 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: mstockstill on DSKH9S0YB1PROD with PROPOSALS2 SUMMARY: 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, VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 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 E:\FR\FM\15OCP2.SGM 15OCP2 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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. 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 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). 2 The Guides, however, do not establish standards for environmental performance or prescribe testing protocols. 3 16 CFR 260.5. PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 63553 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 B. The Green Guides Review 1. First Request for Public Comment6 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 Id. See, e.g., Indoor Tanning Ass’n, Docket No. C4290 (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 (https:// 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’’). 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. 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 53343100033 at 2 (citing 2007 Cone Consumer Environmental Survey); American Beverage Association (‘‘ABA’’), Comment 533431-00066 at 23; 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. 4 5 E:\FR\FM\15OCP2.SGM 15OCP2 63554 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. 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 workshop13 and received an additional 125 written comments.14 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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. 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 (https://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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. b. The Commission’s Consumer Perception Study To conduct the study, the FTC contracted with Harris Interactive, a 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 (https://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 (https:// www.ftc.gov/bcp/workshops/packaging/ presentations/tullier.pdf) (same); U.S. Green Building Council (‘‘USGBC’’), Comment 53601300029 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); SaintGobain, 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). PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 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 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 19 The Commission’s consumer perception study is available at (https://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 (https://www.ftc.gov/ green). 22 The study results support the current Guides’ approach of providing general, rather than productspecific, 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules asked questions regarding only two randomly-selected product-claim pairs. 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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, (https://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. 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 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 63555 will streamline the Guides, making them a more user-friendly document. 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 be so uncertain that environmental analysis would be based on speculation.’’ 16 C.F.R. 1.83(a). 27 See, e.g., ACC, Comment 533431-00023 at 34; 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 53343100016 at 1; Carbonfund.org, Comment 53343100056 at 2; Carpet and Rug Institute (‘‘CRI’’), Comment 533431-00026 at 3; Consumer Specialty Products Association (‘‘CSPA’’), Comment 53343100049 at 1-2; Dow, Comment 533431-00010 at 3; EHS Strategies, Inc. (‘‘EHS’’), Comment 53474300011 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 12; 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 53343100036 at 13; U.S. Council for International Business, Comment 533431-00052 at 2; Weyerhaeuser, Comment 533431-00084 at 1. E:\FR\FM\15OCP2.SGM 15OCP2 63556 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules commenters suggested the Guides were no longer needed. 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 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 53343100083 at 2; CSPA, Comment 533431-00049 at 1-2; EPI, 533431-00063 at 2; MeadWestvaco, Comment 533431-00013 at 1; NAIMA, Comment 53601300017 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. 30 See, e.g., MeadWestvaco, Comment 53343100013 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); SaintGobain, 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 14 (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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 Panelist NatureWorks LLC echoed this concern, noting that even industry members familiar with the Guides are not aware that they apply to business32 33 Id. at 1. 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. 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 53343100060 at 1. 38 EPI, Green Packaging Workshop Tr. at 232-233. PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 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 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 The Commission proposes revising the Guides to state more clearly that they apply to business-to-business transactions and not just business-to39 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. 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-CV379-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). E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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.’’ Moreover, the proposed, revised Guides include specific business-tobusiness transaction examples.45 Additionally, to increase businesses’ familiarity with the revised Guides, the Commission plans to expand its outreach efforts. C. Changes in Technology or Economic Conditions mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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. 45 See Section 260.6, Example 4; Section 260.12, Example 11. 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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). 54 EHS, Comment 534743-00011 at 2; see also EnviroMedia Social Marketing, Comment 53474300032 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). PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 63557 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 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. 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 standards57 or at least incorporate some of its provisions.58 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 EHS, Comment 533431-00057 at 2. Deception Policy Statement, 103 F.T.C. at 174. 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 – Selfdeclared 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 53343100058 at 6; MeadWestvaco, Comment 533431-00013 at 2; SDA, Comment 533431-00020 at 2-3. 55 56 E:\FR\FM\15OCP2.SGM 15OCP2 63558 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 claims60 causes problems with transnational packaging.61 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 ‘‘postconsumer’’ fiber, the references to access to recycling and composting facilities, and the ¨ treatment of the Mobius 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). 62 Georgia-Pacific, Comment 533431-00007 at 34 (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; SaintGobain, Comment 533431-00037 at 11-12. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 Nontoxic Claims (Part IV.H). 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. 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 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). 65 NAIMA, Comment 533431-00042 at 2, 11; Saint-Gobain, Comment 533431-00031 at 3,11. 66 NAIMA, Comment 533431-00042 at 11; SaintGobain, Comment 533431-00031 at 11. 67 EPI, Comment 533431-00063 at 4. 68 Id., citing Cal. Pub. Res. Code §§ 42355-42357, 42359-42359.6. ASTM International (‘‘ASTM’’) is an international standards organization that develops PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 Guides do not refer to a particular industry standard. 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. 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 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 One commenter recommended that the Commission coordinate with other federal agencies. The Commission actively consults with other agencies, and publishes voluntary consensus technical standards for a wide range of materials, products, systems, and services. 69 International Paper, Comment 533431-00055 at 3. 70 EPA-EPPP, Comment 533431-00038 at 7. 71 Indeed, since 1996, California has required marketers to follow the Green Guides. See Cal. Bus. & Prof. Code § 17580-81. 72 16 CFR 260.2. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 See Part VI.B, infra. See (https://www.epa.gov/nrmrl/lcaccess/pdfs/ 600r06060.pdf). 75 See (https://www.epa.gov/epp/pubs/guidance/ finalguidance.htm). 76 Id. 77 16 CFR 260.7 n.2. 73 74 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 63559 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 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. multiple factors, and not amenable to understanding on a package label.84 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 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 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 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, 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. 82 John Delfausse, Estee Lauder Companies ´ ´ (‘‘Estee 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’’). PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 84 EHS, Comment 534743-000211 at 1; see also ´ Estee 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, Estee Lauder does not recommend encouraging such claims in the Guides). 85 Univ. of Minnesota, Comment 536013-00004 at 1. 86 Id. 87 Estee 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). 88 See Part V.A, infra. 89 See, e.g., Estee 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. E:\FR\FM\15OCP2.SGM 15OCP2 63560 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 53343100007 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 53601300029 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). 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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) ozone94 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. PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 safe and ozone-friendly claims; (8) freeof 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. 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 95 96 16 CFR 260.7(a). Id. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 (‘‘EPASPN’’) 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 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’’). 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 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 53343100007 at 3. 100 Unilever, Comment 534743-00030 at 1-2. 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 b. Qualifying General Environmental Benefit Claims Some commenters recommended that the Guides provide additional advice on how marketers can effectively qualify 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. 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 53343100023 at 5 (stating that LCA studies should not be a necessary precondition to making an environmental claim). 106 Estee Lauder, Green Packaging Workshop Tr. ´ at 176; Michigan State Univ., Green Packaging Workshop Tr. at 161. PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 63561 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 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. Krenn, Comment 533431-00014 at 5. 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’’). 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,’ ‘nonpolluting,’ ‘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. 107 108 E:\FR\FM\15OCP2.SGM 15OCP2 63562 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules According to GreenBlue, because such trade-offs are sufficiently common, the Guides should discourage general environmental benefit claims, even when accompanied by a specificattribute qualifier, unless a company is willing to include a full explanation of environmental trade-offs. Similarly, EPA-SPN provided an example of a potentially deceptive qualified claim. It noted that a product advertised as ‘‘Eco-safe because of lowVOC 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% postconsumer content’’ or ‘‘low VOC.’’ EPASPN also recommended that any further description be limited to a statement of environmental benefit directly related to the attribute. Thus, according to EPASPN, a claim such as ‘‘Low VOC – promotes cleaner air’’ would be proper because ‘‘VOC emissions have a clear relationship to air quality.’’112 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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). 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). VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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 qualifiedgeneral claims to specific-attribute claims to determine the extent to which the general environmental claim (e.g., 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.’’ 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. PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 ‘‘green,’’ ‘‘eco-friendly’’) contributed to consumer perceptions. On average, 23 percent of respondents viewing specificattribute 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 ‘‘ecofriendly’’ 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 ‘‘ecofriendly’’ claim made the same inference, while only ten percent of respondents viewing a specific-attribute claim made this inference. 4. Analysis and Guidance Both the comments117 and FTC staff’s Internet surf118 indicate that general environmental claims are pervasive. Such general claims appear both alone119 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. 116 This figure is based on the responses to a closed-ended question on what ‘‘green’’ or ‘‘ecofriendly’’ 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. 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 53343100040 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 cooccurred on 18 percent; and biodegradability claims co-occurred on 12 percent. 121 This proposed guidance can be found in 16 CFR 260.4. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 ‘‘ecofriendly’’ claim.123 Moreover, 27 percent of respondents interpreted the unqualified claims ‘‘green’’ and ‘‘ecofriendly’’ as suggesting the product has no negative environmental impact. 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 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 nontoxic; 43 percent believed it is compostable; and 36 percent believed it is made with renewable energy. The average value was 49 percent. 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). VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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. 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 16 CFR 260.7(a). 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. 125 126 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 63563 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. 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,’’ ‘‘ecofriendly’’) 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. The results, therefore, suggest that qualifying a general environmental claim can focus consumers on the specific advertised benefit and significantly reduce misperceptions 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. E:\FR\FM\15OCP2.SGM 15OCP2 63564 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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 qualifiedgeneral 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 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 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 2. Comments Several commenters and panelists identified the use of third-party certifications as a significant green marketing trend132 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 16 CFR 260.7(a), Example 5. 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 (https://www.ftc.gov/bcp/ edu/pubs/business/energy/bus42.pdf). 132 See, e.g., Weyerhaeuser, Comment 53474300033 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 (https://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. 130 131 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 One commenter, however, noted that consumers typically cannot verify thirdparty 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 Notwithstanding the benefits of thirdparty 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 USGBC, Comment 534753-00027 at 3. 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.’’). 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 53601300029 at 6; Saint-Gobain, Comment 533431-00037 at 7-8. 140 See, e.g., ACC, Comment 536013-00030 at 34; 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 53601300029 at 3. 136 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 137 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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 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. 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. 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 53601300017 at 9; USGBC, Comment 536013-00029 at 23. 147 CRS, Comment 534743-00009 at 4-5; see also Gensler, Green Building and Textiles Workshop Tr. at 109 (highlighting the differences between selfcertification; 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). PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 63565 certifying organization and the company being certified.148 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 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 Skye Con, Comment 536013-00036 at 3. 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. 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 53343100019 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 34; AF&PA, Comment 536013-00021 at 2-3; AZS 148 149 E:\FR\FM\15OCP2.SGM Continued 15OCP2 63566 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 advertiser157 and that marketers should not rely on endorsements by entities that have a monetary or other relationship with the marketer.158 Panelists and commenters also suggested the Guides provide that thirdparty 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 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. 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’’), VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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. Thirdparty 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. 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’’). 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 198200. 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. PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 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 thirdparty 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 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 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. 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. 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 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’’). 172 16 CFR 255.5. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 16 CFR 260.7(a). 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. 173 174 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 63567 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 section176 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. In contrast, proposed Example 6 illustrates how a marketer can properly use a third-party certification for a single-attribute claim, e.g., ‘‘chlorinefree.’’ 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 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. E:\FR\FM\15OCP2.SGM 15OCP2 63568 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. 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 thirdparty certification to substantiate claims is beyond the Guides’ purview. 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 16 CFR 260.5. 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 (https://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’’). 178 179 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 caseby-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 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 16 CFR 260.7(b). 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. 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). 180 181 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 their inability to degrade in the manner consumers expect. 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 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 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. 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.’’’). E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 53601300062 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, oxodegradable, and photodegradable claims). 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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. 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 196 This proposed guidance can be found in 16 CFR 260.8. 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 (https:// www.epa.gov/waste/nonhaz/municipal/ pubs/ msw2008rpt.pdf). 201 Id. PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 63569 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. 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 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. E:\FR\FM\15OCP2.SGM 15OCP2 63570 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 (https://www.epa.gov/opptsfrs/ publications/OPPTS_Harmonized/ 835_Fate_Transport_and_Transformation_ Test_Guidelines/Series/835-3110.pdf). 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 (oxobiodegradable bag). 207 OxoBiodegradable Plastics Institute, Frequently Asked Question 11, (https:// 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 (‘‘Oxobiodegradables . . . 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.’’ VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 Commission proposes treating oxodegradable and oxo-biodegradable claims like all other degradable claims.209 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.’’ 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 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. 210 16 CFR 260.7(c). 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. PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 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 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 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. 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.217 212 See APCO, Biodegradable and Compostable Survey Topline at 9. 213 Id. at 8. 214 Id. at 6. 215 This proposed guidance can be found in 16 CFR 260.7. 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 (https:// www.epa.gov/epawaste/nonhaz/municipal/pubs/ msw07-rpt.pdf) (‘‘In 2007, there were 16 mixed waste composting facilities, two more than in 2006.’’). 217 Example 4 in the current Guides suggests an effective qualification that would convey the E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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. 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 § 4; ASTM D 6868 – 03 at § 4. These two protocols incorporate a third ASTM protocol, D 5338, a detailed test method for plastics disposed of in large-scale composting facilities. 223 See ASTM D 6400 at § 1.1; ASTM D 6868 at § 1.1. 224 See ASTM D 5338 – 98 (Reapproved 2003) at § 5.2 (‘‘Because there is a wide variation in the construction and operation of composting systems and because regulatory requirements for VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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 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. 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 (https://www.ohio.edu/outlook/0809/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. 228 See Part V.C.4.a, supra. PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 63571 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. 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. 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 threetiered 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 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. 231 16 CFR 260.7(d). 232 See id., Examples 4, 6, and 7. E:\FR\FM\15OCP2.SGM 15OCP2 63572 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules population where programs are available to recycle the product.233 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 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 See id., Example 6. See id., Example 5. 235 FTC Staff’s Business Brochure at 8. 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 237238. 233 234 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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 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 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 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 238 EPA, Green Packaging Workshop Tr. at 81, 92- 93. 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. 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 53343100055 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 PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 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; Estee Lauder, Green Packaging Workshop Tr. at 183; NRC, Green Packaging Workshop Tr. at 92. 245 See, e.g., Tetra Pak, Comment 536013-00012 at 2-3; Vinyl Institute, Comment 536013-00019 at 45. 246 Tetra Pak, Comment 536013-00012 at 2-3. 247 The three-chasing-arrows symbol is also ¨ known as the ‘‘Mobius Loop.’’ 248 16 CFR 260.7(d), Example 2. 249 Id. 250 ABA, Comment 533431-00066 at 2-3; GPI, Comment 534743-00026 at 7. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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 threechasing-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. 255 SPI, Comment 533431-00036 at 6; SPI, Comment 534743-00034 at 1. 256 SPI, Comment 534743-00034 at 2. 257 Id. 258 Id. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 industry and its customers who are complying with state law.259 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 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. 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. Some commenters contended that the substantial majority threshold may stifle recycling efforts because it forces marketers to send their products or 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. 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. 261 This proposed guidance can be found in 16 CFR 260.11. 262 63 FR 24240, 24243 (May 1, 1998). PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 63573 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.263 263 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 34 (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 E:\FR\FM\15OCP2.SGM Continued 15OCP2 63574 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. 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. b. Use of Positive Disclosures mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 beverage marketing to children and adolescents during 2006.’’); Mihailovich v. Laatsch, 359 F.3d 892, 909-10 (7th 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). 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. 265 63 FR 24244 (May 1, 1998). VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 guidance and withdrew its approval of those disclosures.266 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 1-800XXX-XXXX’’ likely would not be deceptive. do not advise marketers to distinguish between pre-consumer and postconsumer materials, but marketers may do so. Marketers must substantiate any express or implied claims about the specific amount of pre- or postconsumer content in their products. 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 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 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. 2. Comments F. Recycled Content Claims 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 (‘‘EPASPN’’) stated that it would be helpful to have more specific guidance, including examples, to help determine whether certain materials qualify as pre- 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 (postconsumer).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 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. 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. PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 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 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. 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 preconsumer 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 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 b. Distinction Between Pre- and Postconsumer Recycled Content The commenters raised two issues with respect to the Guides’ distinction between pre-consumer and postconsumer 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 postconsumer 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 EPA-SPN, Comment 536013-00062 at 2. 273 Id. at 2-3. 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 53343100024 at 1. 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 postconsumer materials. Amy Wilson, Comment 534743-00004 at 1. A different commenter recommended that the Guides should permit recycled content claims only for post-consumer mstockstill on DSKH9S0YB1PROD with PROPOSALS2 272 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 materials. Tracy Artley, Comment 534743-00019 at 1. 278 PRC, Comment 533431-00035 at 1-2, Comment 534743-00024 at 1-2, Comment 53474300023 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. 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 53343100037 at 15; Stepan Company, Comment 53343100011 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 perproduct 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. PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 63575 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 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 The study further explored which claims were implied by a product advertised as ‘‘made with recycled materials.’’ The responses to a closedended 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. 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. 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’’). 288 This number is net of the non-environmental control claim. E:\FR\FM\15OCP2.SGM 15OCP2 63576 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 4. Analysis and Guidance The comments sought additional guidance concerning recycled content claims, focusing mainly on preconsumer recycled content claims for textiles, the distinction between preand 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 preconsumer 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 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 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. 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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 preconsumer recycled content claims. b. Distinction Between Pre- and Postconsumer 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 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. PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 distinguish between the amount of preconsumer 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 ‘‘postconsumer’’ 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 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 16 CFR 260.7(e), Example 9. 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. 294 295 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. 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. 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 296 For mathematical simplicity, the hypothetical assumes equal sales of each product. 297 16 CFR 260.7(e), Example 9. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 63577 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. marketers to make such disclosures. The Commission, nevertheless, requests comment on its proposal and, in particular, seeks any consumer perception evidence. 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 closedended 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. 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 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. 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 Example 2 illustrates that an ozone friendly claim may be deceptive, even if the product does not contain ozonedepleting 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. G. Ozone-Safe and Ozone-Friendly Claims 2. Comments Several commenters discussed the Guides’ treatment of ozone-safe and noCFCs claims. The EPA’s Stratospheric 16 CFR 260.7(h). 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). 299 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., (https:// www.epa.gov/wastes/conserve/materials/paper/ faqs.htm). 298 PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 300 E:\FR\FM\15OCP2.SGM 15OCP2 63578 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 Protection Division (‘‘EPA-SPD’’), which regulates ozone-depleting substances, stated that the Guides should continue to provide guidance concerning ozonesafe 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 ozonedepleting substances. Therefore, the commenter argued that ‘‘there really is no reason to continue use of this claim.’’304 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.306 301 Letter from the EPA Stratospheric Protection Division, Mar. 18, 2010, available at (https:// 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. 305 Letter from the EPA Stratospheric Protection Division. 306 At least with respect to ozone-depletion claims for packaging, one commenter offered a VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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. 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 different view, stating that ozone-related claims are no longer of significant relevance because of changes in packaging. GPI, Comment 534743-00026 at 11. 307 This proposed guidance can be found in 16 CFR 260.10. 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. PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 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 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. 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 noCFCs claim likely implies that the product does not harm the ozone layer, the claim is deceptive. 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 Several commenters discussed the appropriate standard for determining whether a product is free of a 16 CFR 260.6(c), Example 4. 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. 311 16 CFR 260.7(a), Example 4. 312 16 CFR 260.7(h), Example 3. 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. 309 310 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 offgas 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 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 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 chemicalfree. 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 53343100027 at 3. 317 Johns Manville, Comment 536013-00034 at 2. 318 See, e.g., GPI, Comment 534743-00026 at 11; NAIMA, Comment 533431-00042 at 10-11; SaintGobain, 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 mislead consumers by suggesting that other fruit juices do.321 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 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 noninsignificant 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 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 NAIMA, Comment 533431-00042 at 10. 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. 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. 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 321 322 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 63579 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. 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 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 The EPA-SPN also noted that nontoxic 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 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. 3. Analysis and Guidance The Commission agrees with commenters that it should provide expanded guidance for free-of and nontoxic claims. Accordingly, the Commission proposes including a new Guides section to address these claims.338 The Commission also proposes moving two of the three comparative claims that, without proper support, raised doubts about the safety of competing products. Id. 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. 334 EPA-SPN, Comment 536013-00062 at 4. 335 Id. 336 Id. 337 NAIMA, Comment 533431-00042 at 8; SaintGobain, Comment 533431-00037 at 9. 338 This proposed guidance can be found in 16 CFR 260.9. E:\FR\FM\15OCP2.SGM 15OCP2 63580 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 examples in the current Guides, cited above, into this section, and adding an additional example. 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 freeof 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 freeof 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-bycase 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 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 339 See 75 FR 41696, 41715 (July 10, 2010) (requiring that labels for compact fluorescent light bulbs disclose that the bulbs contain mercury). VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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 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. 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. PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 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. 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 nontoxic 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. 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 nontoxic 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 nontoxic 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.344 342 The Commission also proposes moving the example into this new proposed section. 343 SDA, Comment 534743-00028 at 2. 344 This guidance can now be found in 16 CFR 260.16. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 GPI, Comment 534743-00026 at 8-9. This guidance can now be found in 16 CFR 260.13. 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. 345 346 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 Several Packaging Workshop panelists noted that sustainable claims may embrace such diverse issues as child labor, community relations, economic development, and other nonenvironmental 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 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.’’355 349 See, e.g., Dow, Comment 533431-00010 at 8; FPI, Comment 533431-00074 at 2; GMA, Green Packaging Workshop Presentation at (https:// 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 (https://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. 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 53343100058 at 7; NAIMA, Comment 536013-00017 at 1213; 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. PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 63581 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 On the other hand, some commenters argued that the term ‘‘sustainable’’ simply should not be used as a marketing claim.360 The Sustainable 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; GeorgiaPacific, 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. 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 illdefined 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, E:\FR\FM\15OCP2.SGM Continued 15OCP2 63582 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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 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 (https://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). 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). 366 SFI, Comment 534743-00010 at 3-4; see also AF&PA, Comment 534743-00031 at 2 (‘‘A broad VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 thirdparty audit verifying conformance with the standard is adequate substantiation.367 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 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 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 53474300033 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. 368 William Mankin, Comment 534743-00020 at 1; see also Caroline Pufalt, Comment 534743-00021 at 1. 369 Id. 370 GMA, Green Packaging Workshop Presentation at (https://www.ftc.gov/bcp/workshops/ packaging/presentations/tullier.pdf). PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 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 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 These results are consistent with the Commission’s consumer perception 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. 373 Weyerhaeuser, Comment 533431-00086 at 1. 374 National Cotton Council (‘‘NCC’’), Comment 536013-00027 at 4. This study is available at (https:// 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 (https://www.ftc.gov/ green). E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 In addition, responses to the closedended 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 3. Analysis While marketers making sustainable claims may intend to convey that a product has general and/or specific environmental benefits, the consumer 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.’’ 379 These results were similar for all three tested products – kitchen flooring, laundry basket, and wrapping paper. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 perception evidence indicates that the claim has no single environmental meaning to a significant number of consumers or that it conveys nonenvironmental 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 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 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. 380 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 63583 whether its commercial and noncommercial 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. 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. 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 NOPaccredited 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 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. 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). 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. 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. E:\FR\FM\15OCP2.SGM 15OCP2 63584 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. § 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 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 2. Comments mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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.394 389 USDA Food Safety and Inspection Service, Fact Sheet, Meat and Poultry Labeling Terms, available at (https://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). 56 FR 60466 (Nov. 27, 1991). 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 392 393 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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. 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. 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 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 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 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 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 b. Natural Claims Several commenters stated that the term ‘‘natural’’ does not have a clear 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. 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. 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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 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. 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). 416 ECOnscious, Comment 536013-00023 at 1. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 grown agriculturally because agriculture can have a negative impact on the environment, such as water and air pollution and soil erosion.417 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 twothirds 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 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 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. 417 Todd Copeland, Patagonia, Comment 53601300011 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). 418 NCC Comment 536013-00027 at 4 (citing 2003 and 2006 studies conducted jointly with the OTA). 419 Id. 420 16 CFR 260.5. 421 16 CFR 260.6(d), 260.7(a). PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 63585 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 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. 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 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. 423 USDA Labeling of Textiles Under National Organic Program (NOP) Regulations Fact Sheet, July 2008, available at (https://www.ams.usda.gov/ AMSv1.0/getfile?dDocName= STELPRDC5070818&acct=nopgeninfo). 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 (https://www.ams.usda.gov/AMSv1.0/ getfile?dDocName=STELPRDC5068442&acct= nopgeninfo). E:\FR\FM\15OCP2.SGM 15OCP2 63586 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules claims that describe non-agricultural products, and how marketers of those products substantiate their claims. 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. 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.427 425 As noted above, the FTC and the FDA have previously declined to adopt a wide-ranging, formal definition of ‘‘natural.’’ 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 18081. 427 See Part VI.B.1.b, supra. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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. 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 See Part V.A.4, supra. 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. 431 FBA, Comment 533431-00015 at 4; GeorgiaPacific, Comment 533431-00007 at 8. 428 429 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 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 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 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 Another commenter provided a more detailed definition. According to this Id. ACC, Comment 533431-00023 at 11 (suggesting that a product labeled, for example, ‘‘uses 20% renewable feedstock’’ would not be deceptive). 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. 437 NAIMA, Comment 536013-00017 at 14; SaintGobain, 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. 432 433 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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 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 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 tradeoff); SDA, Comment 533431-00020 at 4. 443 SPI, Comment 533431-00036 at 6. 444 Hammer, Comment 533431-00017 at 9. 445 Weyerhaeuser, Comment 533431-00084 at 6. 446 Id. 447 GreenBlue, Comment 533431-00058 at 7. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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. 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 nonpetroleum 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 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 product453 or the source of specific raw materials used.454 Id. CRI, Comment 533431-00026 at 2 (stating that the FTC should define applicable time frames but not recommending specific time frames); GeorgiaPacific, Comment 533431-00007 at 4 (same); Tandus, Comment 536013-00037 at 1 (suggesting, as an example, a 10-year time frame). 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. 451 Steve Mojo, Biodegradable Products Institute (‘‘BPI’’), Green Packaging Workshop Presentation at (https://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; GeorgiaPacific, Comment 533431-00007 at 6, 8. 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. 448 449 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 63587 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 selfcertification 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 6866457 could be used to accurately determine the percentage of the product that comes from renewable resources.458 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 SelfReliance, 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 CRI, Comment 533431-00026 at 2. 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. 459 BPI, Green Packaging Workshop Tr. at 89 and (https://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 137138. 463 BPI, Green Packaging Workshop Tr. at 102103. 455 456 E:\FR\FM\15OCP2.SGM 15OCP2 63588 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 2. Consumer Perception Evidence mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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). 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 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 464 NCC, Comment 536013-00017 at 4. This study, which Cotton Incorporated conducted, is available at (https://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). 465 This and the following numbers are net of the non-environmental control claim. 466 These findings are based on FTC staff’s more detailed analysis of the open-ended responses rather than Harris’ general findings. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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. 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. 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 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,’’ ‘‘ecofriendly - made with renewable materials,’’ and ‘‘sustainable - made with renewable materials’’). 468 This proposed guidance can be found in 16 CFR 260.15. 469 See, e.g., P&G, Comment 533431-00070 at 3. PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 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 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 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). E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 biobased473 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 471 See, e.g., BPI, Green Packaging Workshop Tr. at 89; ILSR, Green Packaging Workshop Tr. at 137138; 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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 Under the contract method, consumers and businesses purchase 474 See (https://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. 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 (https://www.ftc.gov/bcp/workshops/carbonoffsets/ presentations/lbird.pdf); CRS, Comment 53325400049 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 (https:// 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. PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 63589 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 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. 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.483 479 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 (https:// 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. 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. 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 E:\FR\FM\15OCP2.SGM Continued 15OCP2 63590 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 b. REC Disclosures mstockstill on DSKH9S0YB1PROD with PROPOSALS2 Some commenters discussed whether utilities or other electricity retailers 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 53325400055 at 4-5. 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 53474300028 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 53343100010 at 13 (recommending that marketers specify the percentage of renewable energy used). 491 Id. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 492 See,e.g., Ecology Center, Comment 53325400020 at 1; Sol Metz (‘‘Metz’’), Comment 53325400023 at 1; REMA, Comment 533254-00028 at 3-4; James Svensson (‘‘Svensson’’), Comment 53325400021 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’’). 496 A marketer, for example, may knowingly sell the same REC multiple times. PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 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 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 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 In addition, the study asked respondents whether a statement that a product is ‘‘made with renewable 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. 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. 500 Because consumers could choose one or more claims, or no claims, the responses provided do not add up to 100 percent. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 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 4. Analysis and Guidance mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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.’’ 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’’). 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. 504 This proposed guidance can be found in 16 CFR 260.14. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. 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. 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 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. 506 The open-ended responses are consistent with these closed-ended results. 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 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 63591 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. 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 The Commission does not have evidence, however, regarding exactly how consumers interpret the term ‘‘all’’ 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. 508 In addition, 17 percent stated that most of the product was made with renewable energy. 509 16 CFR 260.7(e). E:\FR\FM\15OCP2.SGM 15OCP2 63592 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. 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 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). VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. Aside from outright fraud, the written comments provide examples of more 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. PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 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. 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 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. 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 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.517 514 No uniform definition for either term appears to exist. See, e.g., Exelon Corp., Comment 53343100059 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 (https:// 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 (https://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. 516 Matthew Kotchen, University of California, Santa Barbara, Carbon Offsets Workshop Tr. at 92. 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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, 518 See Climate Clean, Comment 533254-00039 at 5; Consumers Union, Comment 533254-00026 at 12; 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 53325400041 at 1; Seventh Generation, Comment 53343100033 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). 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. PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 63593 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 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 Wal-Mart, Comment 533254-00040 at 3-4. Constellation, Comment 533254-00029 at 2. 527 See Exelon Corp., Comment 533431-00059 at 2; Wal-Mart, Comment 533254-00040 at 3-4. 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 53325400055 at 17 (stating that as long as the offset is substantiated, timing should not be an issue). 525 526 E:\FR\FM\15OCP2.SGM 15OCP2 63594 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules occurred.531 In one commenter’s view, sellers should disclose prominently that the reductions caused by their products will occur in the future.532 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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, 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. 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 53325400047 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. 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 53325400058 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 the underlying projects do not produce meaningful GHG reductions.539 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 ∑ 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 widelyused 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 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. 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 154155; 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 (https://conserveonline.org/ workspaces/climate.change/carbonmarkets/ AdditionalityOffset). PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 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 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.547 541 The EPA Climate Leaders program recommends this approach for use in evaluating offsets by its partners. See (https://www.epa.gov/ stateply/); LeFranc EPA, Carbon Offsets Workshop Tr. at 143. 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 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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 Institute (‘‘SEI’’), Carbon Offsets Workshop Tr. at 258-259. 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. 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 150158. 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 generation555 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 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. 554 Climate Clean, Comments 533254-00038 at 13, 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 226227. 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 23; 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. PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 63595 generator.560 Therefore, the comments raised concerns about double counting if both generators take credit for the same emission reduction.561 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. 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 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. 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 53325400043 at 2. E:\FR\FM\15OCP2.SGM 15OCP2 63596 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 In a closed-ended question, the study also asked respondents to identify what it meant to be ‘‘carbon neutral.’’ Thirtynine 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. 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 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. 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.’’ VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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 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. 572 This proposed guidance can be found in 16 CFR 260.5. PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 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. 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 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules consumers may deem useful.573 Therefore, the Commission declines to advise marketers to provide such information in every offset advertisement.574 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 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. 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 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, 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. 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. PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 63597 or may not, be required to prevent deception, depending on the context, they may aid consumers in differentiating various offsets on the market. 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 E:\FR\FM\15OCP2.SGM 15OCP2 63598 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 noCFCs 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 freeof 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 nonagricultural products? Do consumers understand such claims as referring to PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 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 E:\FR\FM\15OCP2.SGM 15OCP2 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 (https://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 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 (https:// www.regulations.gov/search/Regs/ home.html#home), you may also file a comment through that website. The Commission will consider all comments 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). 581 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 that regulations.gov forwards to it. You may also visit the FTC website at (https://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 (https://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. § 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 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 63599 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. § 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 E:\FR\FM\15OCP2.SGM 15OCP2 63600 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 § 260.3 General principles. The following general principles apply to all environmental marketing claims, including those described in §§ 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 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. § 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules (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 ‘‘Ecofriendly’’ 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 ‘‘Ecofriendly: 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 § 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. § 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 (§ 255.0), General Considerations (§ 255.1), Expert Endorsements (§ 255.3), Endorsements by Organizations (§ 255.4), and PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 63601 Disclosure of Material Connections (§ 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 § 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. E:\FR\FM\15OCP2.SGM 15OCP2 mstockstill on DSKH9S0YB1PROD with PROPOSALS2 63602 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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 § 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, thirdparty certifier that uses standards VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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. § 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 PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 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 E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 § 260.8 (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. Degradable claims. (a) It is deceptive to misrepresent, directly or by implication, that a product or package is degradable, biodegradable, oxo-degradable, oxobiodegradable, 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 PO 00000 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 Frm 00053 Fmt 4701 Sfmt 4702 63603 diamond, by itself, does not constitute a degradable claim.1 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. § 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, freeof, 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 chlorinefree 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 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. E:\FR\FM\15OCP2.SGM 15OCP2 63604 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules product’s ingredients are volatile organic compounds (VOCs) that may cause smog by contributing to groundlevel 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. 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 nontoxic’’ 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. § 260.10 claims. Ozone-safe and ozone-friendly mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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, 1,1,1trichloroethane, methyl bromide, hydrobromofluorocarbons, and hydrochlorofluorocarbons (HCFCs). § 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 majority2 of consumers or communities where the item is sold, marketers can make unqualified recyclable claims. (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, Commission staff has informally interpreted the term ‘‘substantial majority,’’ as used in this context, to mean at least 60 percent. 2 Example 2: An aerosol air freshener is labeled ‘‘ozone friendly.’’ Some of the VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 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 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 3 Batteries labeled in accordance with the Mercury-Containing and Rechargeable Battery Management Act, 42 U.S.C. § 14322(b), are deemed to be in compliance with these Guides. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules is sold, the unqualified claim is not deceptive. Example 8: A manufacturer of onetime 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 § 260.11(b)(2). If participating dealers are located in only a few communities, the manufacturer should qualify the claim as suggested in § 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. 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 § 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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 VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 § 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. (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 – 4 The term ‘‘used’’ refers to parts that are not new and that have not undergone any re-manufacturing or reconditioning. PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 63605 but do not have to – distinguish between pre-consumer and postconsumer 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 E:\FR\FM\15OCP2.SGM 15OCP2 63606 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules Example 9: A packaged food product is labeled with a three-chasing-arrows ¨ symbol (a Mobius 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. composed from paper that was diverted from the solid waste stream. Of this material, 30% is postconsumer 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 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 5: A product in a multicomponent 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 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 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. mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 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 rebuilding5 the transmission in 5 The term ‘‘rebuilding’’ means that the dealer dismantled and reconstructed the transmission as PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 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. § 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. § 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 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. E:\FR\FM\15OCP2.SGM 15OCP2 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS2 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. VerDate Mar<15>2010 16:03 Oct 14, 2010 Jkt 223001 § 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. PO 00000 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 fastgrowing plants into bio-plastics, only half of our product is made from petroleum-based materials.’’ If substantiated, this claim is unlikely to be deceptive. Frm 00057 Fmt 4701 Sfmt 9990 63607 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. § 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 E:\FR\FM\15OCP2.SGM 15OCP2

Agencies

FEDERAL TRADE COMMISSION

[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Proposed Rules]
[Pages 63552-63607]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-25000]

[[Page 63551]]

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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

[[Page 63552]]

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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

[[Page 63553]]

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 (https://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'').
---------------------------------------------------------------------------

B. The Green Guides Review

1. First Request for Public Comment\6\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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

[[Page 63554]]

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.
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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 (https://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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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 (https://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 (https://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).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\19\ The Commission's consumer perception study is available at
(https://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 (https://www.ftc.gov/green).
---------------------------------------------------------------------------

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

[[Page 63555]]

asked questions regarding only two randomly-selected product-claim
pairs.
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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, (https://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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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

[[Page 63556]]

commenters suggested the Guides were no longer needed.
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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.''
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\45\ See Section 260.6, Example 4; Section 260.12, Example 11.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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\
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\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).
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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\
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\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.
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\56\ Deception Policy Statement, 103 F.T.C. at 174.
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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\
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\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.
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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\
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\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.
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\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.
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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.
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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\
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\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

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